Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q1 2018 Earnings Presentation
25 slides from Archer-daniels-midland's earnings presentation, May 1, 2018
Slide 1: First Quarter 2018 Earnings Conference Call
First Quarter 2018 Earnings Conference Call May 1, 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 • Team executed exceptionally well in the first quarter, and we harvested the benefits of the strategic actions we took over the last few years, delivering strong results ◦ Realigned businesses to accelerate growth ◦ Focusing growth efforts on five key platforms: animal nutr
Slide 4: Q1 2018 Financial Highlights
4 Q1 2018 Financial Highlights Quarter Ended Mar. 31 (Amounts in millions except per share data and percentages) 2018 2017 Change Adjusted earnings per share (1) (2) $0.68 $0.60 $0.08 Adjusted segment operating profit (1) (3) $717 $678 $39 Effective tax rate 15% 26% Trailing 4Q average adjusted ROIC
Slide 5: Segment Operating Profit and Corporate Results
5 Segment Operating Profit and Corporate Results Quarter Ended Mar. 31 (Amounts in millions) 2018 2017 Change Total Segment Operating Profit(1) $ 704 $ 676 $ 28 Specified items: Impairment and restructuring charges 13 9 4 Hedge timing effects — (7) 7 Adjusted Segment Operating Profit(1)(2) $ 717 $ 6
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; Investments in Inventory Under More Favorable Conditions Three Months Ended Mar. 31 (Amounts in millions) 2018 2017 Cash from operations before working capital changes $553 $508 Change in retained interest in securitiz
Slide 7: Maintained Solid Balance Sheet
7 Maintained Solid Balance Sheet (Amounts in millions) Mar. 31, 2018 Mar. 31, 2017 Cash⁽¹⁾ $797 $748 Net property, plant, and equipment 10,123 9,771 Operating working capital⁽²⁾ 9,167 7,387 - Total inventories 9,820 8,664 Total debt 9,000 7,207 - CP outstanding 1,400 300 Shareholders’ Equity 18,737
Slide 8: Adjusted Segment Operating Profit of $717 million
8 Adjusted Segment Operating Profit of $717 million Adjusted segment operating profit (in millions) Excludes specified items and timing effects Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 $678 $658 $541 $793 $717* • Q1 adjusted segment OP up year- over-year • Includes negative MTM timing effects, largel
Slide 9: Origination: Earnings in Line With Prior-Year Quarter
9 Origination: Earnings in Line With Prior-Year Quarter Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 • Continued turnaround in Global $47 $57 $39 $261 $45 Trade, with higher margins and volumes • NA Grain down on U.S. export competitiveness, timing effects • Transportation down due to high river levels T
Slide 10: Oilseeds: Higher Results in Improving Operating Environment
10 Oilseeds: Higher Results in Improving Operating Environment Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 • In C&O, higher soybean crush $313 $201 $117 $201 $350 margins, record crush volumes, turnaround in South America; significant negative MTM timing effects, which are expected to reverse in coming
Slide 11: Carbohydrate Solutions: In Line With Year-Ago Quarter
11 Carbohydrate Solutions: In Line With Year-Ago Quarter Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 • Continued strength in Starches $211 $279 $296 $285 $213 & Sweeteners; contributions from NA joint ventures, Chamtor; Wheat Milling up on stronger margins • Bioproducts down on ethanol industry margins
Slide 12: Nutrition: Up Year-Over-Year
12 Nutrition: Up Year-Over-Year • WFSI in line with Q1 2017; Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 $77 $94 $68 $73 $96 double-digit profit increase in WILD; Specialty Ingredients lower • Animal Nutrition up significantly, with strong trade sales, good sale mix Animal Nutrition WFSI
Slide 13: Realigning For Efficiency, Agility and Growth
13 Realigning For Efficiency, Agility and Growth Strong businesses with leading Focusing growth efforts in five positions key platforms • Origination • Animal Nutrition • Oilseeds • Bioactives • Carbohydrate Solutions • Carbohydrates • Nutrition • Human Nutrition • Taste Readiness • Lean Manufacturi
Slide 14: Driving Value Creation
14 Driving Value Creation • Global Trade • New, expanded Readiness: • Growth platforms: turnaround ◦ Operational excellence ◦ Enhancing Health & spanning the entire Wellness • South American cost ADM business model capabilities with savings and margin ◦ New leadership to new enzyme lab recovery spea
Slide 15: Looking Ahead
Looking Ahead
Slide 16: Upcoming Investor Events
16 Upcoming Investor Events Citi Consumer Staples Access Day New York, NY May 7 Goldman Sachs Materials Conference New York, NY May 15 BMO 13th Annual Farm to Market Conference New York, NY May 16
Slide 17: Appendix
Appendix
Slide 18: GAAP Statement of Earnings Summary
18 GAAP Statement of Earnings Summary Quarter Ended Mar. 31 (Amounts in millions except per share data) 2018 2017 Change Revenues $15,526 $14,988 $538 Gross profit 889 872 17 Selling, general and administrative expenses 513 516 (3) Asset impairment, exit, and restructuring charges 16 10 6 Equity in
Slide 19: Adjusted Earnings Per Share (EPS)
19 Adjusted Earnings Per Share (EPS) Quarter Ended Mar. 31 2018 2017 In millions Per share In millions Per share Net earnings and EPS (fully diluted) as reported $ 393 $ 0.70 $ 339 $ 0.59 Adjustments LIFO (credit)/charge (6) (0.01) (8) (0.01) Asset impairment and restructuring charges 12 0.02 8 0.01
Slide 20: ROIC versus WACC
20 ROIC versus WACC Q1 CY18 (1)(2) LT ROIC Objective: 10% Trailing 4Q Average Adjusted ROIC Annual WACC 6.4% 6.25% Trailing 4Q Average Adjusted EVA $39M 12% Long-Term WACC 7.0% Trailing 4Q Average ROIC (1)(3) 7.2% 10% 8% 6% 4% 2% 0% Q1 Q1 Q1 Q1 Q1 CY14 CY15 CY16 CY17 CY18 Trailing 4Q Average ROIC Tr
Slide 21: Return on Invested Capital
21 Return on Invested Capital Adjusted ROIC Earnings(1) (Amounts in millions) Four Quarters Quarter Ended Ended June 30, 2017 Sep. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Mar. 31, 2018 Net earnings attributable to ADM $ 276 $ 192 $ 788 $ 393 $ 1,649 Adjustments Interest expense 86 79 84 91 340 LIFO cha
Slide 22: Segment OP and Adjusted OP Comparatives Introducing New Segments
22 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 23: Segment OP and Adjusted OP as Currently Reported vs Previous Segments
23 Segment OP and Adjusted OP (a non-GAAP measure) as Currently Reported vs Previous Segments Quarter Ended March 31, 2018 As Currently Pro As Currently Reported Pro Forma Reported Forma (In millions) Segment Operating Profit(1) Segment Operating Profit(1) $ 704 $ 704 Less specified items: Less spec
Slide 24: Processed Volumes (by commodity)
24 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 Oilseeds 8,281 8,468 8,388 8,651 8,
Slide 25: Notes: Non-GAAP Reconciliation
25 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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