Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q4 2017 Earnings Presentation
22 slides from Archer-daniels-midland's earnings presentation, Feb 6, 2018
Slide 1: Fourth Quarter 2017 Earnings Conference Call
Fourth Quarter 2017 Earnings Conference Call February 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: Chairman's Perspective
3 Chairman’s Perspective • A Solid Quarter; Momentum Going into 2018 ◦ Safest quarterly employee safety record ◦ Pulled levers under our control to deliver value for shareholders ◦ For the year, grew EPS, improved ROIC and generated positive EVA ◦ Optimistic about 2018: poised to capitalize on trend
Slide 4: Q4 2017 Financial Highlights
4 Q4 2017 Financial Highlights Quarter Ended Dec. 31 (Amounts in millions except per share data and percentages) 2017 2016 Change Adjusted earnings per share (1) (2) $0.82 $0.75 $0.07 Adjusted segment operating profit (1) (3) $793 $827 -$34 Effective tax rate (46)% 32% Effective tax rate excluding U
Slide 5: Segment Operating Profit and Corporate Results
5 Segment Operating Profit and Corporate Results Quarter Ended Dec. 31 (Amounts in millions) 2017 2016 Change Total Segment Operating Profit(1) $733 $806 ($73) Specified items: (Gains) loss on sales of assets and businesses (2) — (2) Impairment, restructuring, and settlement charges 62 16 46 Hedge t
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 Years Ended Dec. 31 (Amounts in millions) 2017 2016 Cash from operations before working capital changes $1,895 $2,060 Changes in working capital 316 (505) Purchases of property, plant and equipment (1,049) (882) Net ass
Slide 7: Maintained Strong Balance Sheet
7 Maintained Strong Balance Sheet (Amounts in millions) Dec. 31, 2017 Dec. 31, 2016 Cash⁽¹⁾ $804 $915 Net property, plant, and equipment 10,138 9,758 Operating working capital⁽²⁾ 7,421 7,384 - Total inventories 9,173 8,831 Total debt 7,493 6,931 - CP outstanding 700 — Shareholders’ Equity 18,322 17,
Slide 8: Adjusted Segment Operating Profit of $793 million
8 Adjusted Segment Operating Profit of $793 million Adjusted segment operating profit (in millions) Excludes specified items and timing effects Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 $827 $678 $658 $541 $793* • Q4 adjusted segment OP down slightly year-over-year • Calendar year OP of $2.7 billion u
Slide 9: Ag Services: Earnings Up Year-Over-Year
9 Ag Services: Earnings Up Year-Over-Year Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 • Solid execution from Global Trade, $245 $88 $109 $87 $301 growing contributions from destination marketing • Transportation down due to lower volumes and freight values • Milling down on volumes and margins Transport
Slide 10: Corn: Solid Quarter With Earnings Up Year-Over-Year
10 Corn: Solid Quarter With Earnings Up Year-Over-Year Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 • Good sales growth and solid $255 $171 $224 $253 $261 margins in Sweeteners and Starches; European operations continue to deliver • Bioproducts down on ethanol margins • Animal Nutrition up significantly,
Slide 11: Oilseeds: Results Down, Signs of Improving Operating Environment
11 Oilseeds: Results Down, Signs of Improving Operating Environment Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 • C&O down on weak crush $239 $314 $206 $119 $202 margins and SA origination • Indications of improving global demand for meal • RPBO down on biodiesel • Asia up slightly on Wilmar Asia Refini
Slide 12: WFSI: Solid Quarter, Up Year-Over-Year
12 WFSI: Solid Quarter, Up Year-Over-Year • Another quarter of double-digit Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 $38 $75 $92 $61 $56 earnings growth in WILD Flavors • Specialty Ingredients up vs difficult year-ago quarter
Slide 13: Driving Value Creation Throughout 2017
13 Driving Value Creation Throughout 2017 Optimize the Core Drive Readiness Expand Strategically • Almost $400M in • Generated $285 million in • Expanded destination monetizations in 2017 run-rate cost savings for marketing; ADM Israel the year • Divested CRS, • Grew S&S with Chamtor announced sale
Slide 14: Looking Ahead
Looking Ahead
Slide 15: Upcoming Investor Event
15 Upcoming Investor Event Bank of America/Merrill Lynch 2018 Global Agriculture and Materials Conference Ft. Lauderdale, FL February 28 and March 1
Slide 16: Appendix
Appendix
Slide 17: GAAP Statement of Earnings Summary
17 GAAP Statement of Earnings Summary Quarter Ended Dec. 31 (Amounts in millions except per share data) 2017 2016 Change Revenues $16,070 $16,501 ($431) Gross profit 939 1,011 (72) Selling, general and administrative expenses 463 455 8 Asset impairment, exit, and restructuring charges 33 19 14 Equit
Slide 18: Adjusted Earnings Per Share
18 Adjusted Earnings Per Share Quarter Ended Dec. 31 2017 2016 Earnings per share (fully diluted) as reported $ 1.39 $ 0.73 Adjustments LIFO (credit)/charge — — (Gains) loss on sales of assets and businesses/revaluation — — Asset impairment, restructuring, and settlement charges 0.08 0.03 Post-retir
Slide 19: ROIC versus WACC
19 ROIC versus WACC Q4 CY17 (1)(2) LT ROIC Objective: 10% Trailing 4Q Average Adjusted ROIC Annual WACC 6.4% 6.0% Long-Term WACC 7.0% 12% Trailing 4Q Average Adjusted EVA $99M Trailing 4Q Average ROIC (1)(3) 7.2% 10% 8% 6% 4% 2% 0% Q4 Q4 Q4 Q4 Q4 CY13 CY14 CY15 CY16 CY17 Trailing 4Q Average ROIC Tra
Slide 20: Return on Invested Capital
20 Return on Invested Capital Adjusted ROIC Earnings(1) (Amounts in millions) Four Quarters Quarter Ended Ended Mar. 31, 2017 June 30, 2017 Sep. 30, 2017 Dec. 31, 2017 Dec. 31, 2017 Net earnings attributable to ADM $ 339 $ 276 $ 192 $ 788 $ 1,595 Adjustments Interest expense 81 86 79 84 330 LIFO cha
Slide 21: Processed Volumes
21 Processed Volumes Metric Tons Processed (000s) Calendar Year 2012 2013 2014 2015 2016 2017 Oilseeds Processing 31,820 31,768 32,208 33,817 33,788 34,733 Corn Processing 24,517 23,688 23,668 23,126 22,273 22,700 56,337 55,456 55,876 56,943 56,061 57,433 CY16 CY17 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Oilseeds P
Slide 22: Notes: Non-GAAP Reconciliation
22 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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