Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q3 2018 Earnings Presentation
24 slides from Archer-daniels-midland's earnings presentation, Nov 6, 2018
Slide 1: Third Quarter 2018 Earnings Conference Call
Third Quarter 2018 Earnings Conference Call November 6, 2018
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement Some of our comments constitute forward-looking statements that reflect management’s current views and estimates of future economic circumstances, industry conditions, Company performance and financial results. These statements are based on many assumptions and factors that a
Slide 3: Strategic Accomplishments
3 Strategic Accomplishments • Good risk management in • Operational excellence run- • Origination: Digital, South America Origination; rate cost savings of more innovation partnerships YTD results substantially than $200M YTD, meeting • Oilseeds: Algar Agro higher than 2017 target for full year • Ca
Slide 4: Q3 2018 Financial Highlights
4 Q3 2018 Financial Highlights Quarter Ended Sept. 30 (Amounts in millions except per share data and percentages) 2018 2017 Change Adjusted earnings per share (1) (2) $0.92 $0.45 $0.47 Adjusted segment operating profit (1) (3) $861 $541 $320 Trailing 4Q average adjusted ROIC (1) 8.3% 6.4% +190bps An
Slide 5: Segment Operating Profit and Corporate Results
5 Segment Operating Profit and Corporate Results Quarter Ended Sept. 30 (Amounts in millions) 2018 2017 Change Total Segment Operating Profit(1) $ 881 $ 485 $ 396 Specified items: (Gains) loss on sales of assets and businesses (21) (12) (9) Impairment and restructuring charges 1 63 (62) Hedge timing
Slide 6: Balanced Use of Cash Between Investments and Return of Capital to Shareholders
6 Balanced Use of Cash Between Investments and Return of Capital to Shareholders Nine Months Ended Sept. 30 (Amounts in millions) 2018 2017 Cash from operations before working capital changes $1,906 $1,600 Changes in working capital(1) (173) 555 Purchases of property, plant and equipment (555) (696)
Slide 7: Maintained Solid Balance Sheet
7 Maintained Solid Balance Sheet (Amounts in millions) Sep. 30, 2018 Sep. 30, 2017 Cash⁽¹⁾ $915 $779 Net property, plant, and equipment 9,885 9,956 Operating working capital⁽²⁾ 8,024 7,229 - Total inventories 8,483 8,326 Total debt 7,852 7,336 - CP outstanding 385 590 Shareholders’ Equity 19,000 17,
Slide 8: Adjusted Segment OP of $861 million, Up Almost 60%
8 Adjusted Segment OP of $861 million, Up Almost 60% Adjusted segment operating profit (in millions) Excludes specified items and timing effects Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 $541 $793 $717 $924 $861* Origination Oilseeds Carbohydrate Solutions Nutrition Other *Segment operating profit as
Slide 9: Origination: Up Substantially Across All Major Businesses
9 Origination: Up Substantially Across All Major Businesses Segment operating profit (in millions) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 • Managed well through volatile $39 $261 $45 $189 $129 price environment • Capitalized on asset base to deliver higher volumes and margins • Global Trade execute
Slide 10: Oilseeds: Another Strong Quarter
10 Oilseeds: Another Strong Quarter Segment operating profit (in millions) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 • C&O capitalized on strong global $113 $201 $350 $343 $349 asset base, setting all-time record crush volume; soy crush major driver of results • Higher biodiesel results and continued
Slide 11: Carbohydrate Solutions: S&S Solid, Ethanol Headwinds
11 Carbohydrate Solutions: S&S Solid, Ethanol Headwinds Segment operating profit (in millions) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 • S&S delivered solid results, $300 $285 $213 $247 $288 slightly below strong Q3 2017; NA liquid sweeteners delivered good margins and volumes • Bioproducts down; ma
Slide 12: Nutrition: Strong WFSI, Weakness in Lysine
12 Nutrition: Strong WFSI, Weakness in Lysine Segment operating profit (in millions) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 • WFSI significantly higher YOY: $68 $73 $96 $114 $67 Revenue up 10% on constant currency basis, profit up more than 30%; strength across portfolio • Completed Rodelle and Pro
Slide 13: Growth Benefits Accelerating in 2019 and Beyond
13 Growth Benefits Accelerating in 2019 and Beyond 6 5 17 4 New Plants Innovation Centers Acquisitions Joint Ventures and Labs More than $5 billion invested in growth projects since 2014; Full impact of recent investments coming in 2019 and 2020
Slide 14: Accelerating Readiness
Accelerating Readiness oprmuze!? DRIVE The Core B DRIVE —_| 14 rt _| EXPAND" Strategically OS READINESS = Diligence > Planning Implementation ADM
Slide 15: Upcoming Investor Events
15 Upcoming Investor Events Baird's 2018 Global Industrial Conference Chicago, IL November 7 Stephens Investment Conference New York, NY November 8
Slide 16: Appendix
Appendix
Slide 17: GAAP Statement of Earnings Summary
17 GAAP Statement of Earnings Summary (Amounts in millions except per share data) Quarter Ended Sept. 30 (Amounts in millions except per share data) 2018 2017 Change Revenues $15,800 $14,827 $973 Gross profit 1,058 812 246 Selling, general and administrative expenses 534 478 56 Asset impairment, exi
Slide 18: Adjusted Earnings Per Share (EPS)
18 Adjusted Earnings Per Share (EPS) (Amounts in millions except per share data) Quarter Ended Sept. 30 2018 2017 Pre-tax After-tax Per share Pre-tax After-tax Per share Earnings and EPS (fully diluted) as reported $ 632 $ 536 $ 0.94 $ 225 $ 192 $ 0.34 Adjustments LIFO (credit)/charge 7 5 0.01 — — —
Slide 19: ROIC versus WACC
19 ROIC versus WACC Q3 CY18 (1)(2) LT ROIC Objective: 10% Trailing 4Q Average Adjusted ROIC Annual WACC 8.3% 6.25% Trailing 4Q Average Adjusted EVA $546M 11% Long-Term WACC 7.0% Trailing 4Q Average ROIC (1)(3) 9.5% 10% 9% 8% 7% 6% 5% 4% Q3 Q3 Q3 Q3 Q3 CY14 CY15 CY16 CY17 CY18 Trailing 4Q Average ROI
Slide 20: Return on Invested Capital
20 Return on Invested Capital Adjusted ROIC Earnings(1) (Amounts in millions) Four Quarters Quarter Ended Ended Dec. 31, 2017 Mar. 31, 2018 June 30, 2018 Sep. 30, 2018 Sep. 30, 2018 Net earnings attributable to ADM $ 788 $ 393 $ 566 $ 536 $ 2,283 Adjustments Interest expense 84 91 89 87 351 LIFO cha
Slide 21: Segment OP and Adjusted OP Comparatives Introducing New Segments
21 Segment OP and Adjusted OP (a non-GAAP measure) Comparatives Introducing New Segments Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended Year Ended Mar. 31, 2017 Jun. 30, 2017 Sep. 30, 2017 Dec. 31, 2017 Dec. 31, 2017 As Pro As Pro As Pro As Pro As Pro As Pro Reported Forma Reported Forma Reported Forma
Slide 22: Segment OP and Adjusted OP as Currently Reported vs Previous Segments
22 Segment OP and Adjusted OP (a non-GAAP measure) as Currently Reported vs Previous Segments Quarter Ended September 30, 2018 As Currently Pro As Currently Reported Pro Forma Reported Forma (In millions) Segment Operating Profit(1) Segment Operating Profit(1) $ 881 $ 881 Specified items: Specified
Slide 23: Processed Volumes (by commodity)
23 Processed Volumes (by commodity) Metric Tons Processed (000s) Calendar Year 2013 2014 2015 2016 2017 Oilseeds 31,768 32,208 33,817 33,788 34,733 Corn 23,688 23,668 23,126 22,273 22,700 55,456 55,876 56,943 56,061 57,433 CY16 CY17 CY18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Oilseeds 8,281 8,468 8,388 8,
Slide 24: Notes: Non-GAAP Reconciliation
24 Notes: Non-GAAP Reconciliation The Company uses certain “Non-GAAP” financial measures as defined by the Securities and Exchange Commission. These are measures of performance not defined by accounting principles generally accepted in the United States, and should be considered in addition to, not
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