Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q3 2017 Earnings Presentation
22 slides from Archer-daniels-midland's earnings presentation, Oct 31, 2017
Slide 1: Third Quarter 2017 Earnings Conference Call
Third Quarter 2017 Earnings Conference Call October 31, 2017
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 • Challenging Q3 Operating Environment ◦ Ag Services and Oilseeds faced challenging operating environment ◦ Took several actions in Q3 to be even more competitive in the future ◦ Transitioning to a period of lower capital spending and increasing benefits from investments
Slide 4: Q3 2017 Financial Highlights
4 Q3 2017 Financial Highlights Quarter Ended Sept. 30 (Amounts in millions except per share data and percentages) 2017 2016 Change Adjusted earnings per share (1) (2) $0.45 $0.59 ($0.14) Adjusted segment operating profit (1) (3) $541 $650 -$109 Effective tax rate 13% 28% Trailing 4Q average adjusted
Slide 5: Segment Operating Profit and Corporate Results
5 Segment Operating Profit and Corporate Results Quarter Ended Sept. 30 (Amounts in millions) 2017 2016 Change Total Segment Operating Profit(1) $485 $645 ($160) Specified items: (Gains) loss on sales of assets and businesses (12) 4 (16) Impairment, restructuring, and settlement charges 63 4 59 Hedg
Slide 6: Balanced Use of Cash Between CapEx, M&A and Return of Capital to Shareholders
6 Balanced Use of Cash Between CapEx, M&A and Return of Capital to Shareholders Nine Months Ended Sept. 30 (Amounts in millions) 2017 2016 Cash from operations before working capital changes $1,600 $1,561 Changes in working capital 555 (265) Purchases of property, plant and equipment (696) (621) Net
Slide 7: Balance Sheet Highlights
7 Balance Sheet Highlights (Amounts in millions) Sep. 30, 2017 Sep. 30, 2016 Cash⁽¹⁾ $779 $957 Net property, plant and equipment 9,956 9,853 Operating working capital⁽²⁾ 7,229 7,328 - Total inventories 8,326 7,228 Total debt 7,336 7,073 - CP outstanding 590 — Shareholders’ Equity 17,577 17,556 Memo:
Slide 8: Adjusted Segment Operating Profit of $541 million
8 Adjusted Segment Operating Profit of $541 million Adjusted segment operating profit (in millions) Excludes specified items and timing effects Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 $650 $827 $678 $658 $541* • Q3 adjusted segment operating profit down 17% vs. year-ago quarter Ag Services Corn Oils
Slide 9: Ag Services: Earnings Down Compared to Strong Year-Ago Period
9 Ag Services: Earnings Down Compared to Strong Year-Ago Period Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 • Lack of competitiveness of U.S. $195 $245 $88 $109 $87 grains led to margin compression and decrease in export volumes • Transportation down due to lower volumes • Solid quarter for Milling, wit
Slide 10: Corn: Strong Quarter With Earnings Up Year-Over-Year
10 Corn: Strong Quarter With Earnings Up Year-Over-Year Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 • Solid margins in North America $214 $255 $171 $224 $253 Sweeteners and Starches • Bioproducts up on ethanol margins • Animal Nutrition up, driven by improving cost position Bioproducts Sweeteners & Star
Slide 11: Oilseeds: Results Down Amid Challenging Operating Environment
11 Oilseeds: Results Down Amid Challenging Operating Environment Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 • Crush margins low, with ample $145 $239 $314 $206 $119 meal supplies • Compressed origination margins in South America • RPBO down on biodiesel • Asia up on Wilmar results Asia Refining, Packag
Slide 12: WFSI: Strong Sales, Impacts from Start-Ups
12 WFSI: Strong Sales, Impacts from Start-Ups • Continued double-digit earnings Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 $73 $38 $75 $92 $61 growth in WILD • Specialty Ingredients had solid sales; results impacted by operational start-ups
Slide 13: Driving Value Creation
13 Driving Value Creation Optimize the Core Drive Project Readiness Expand Strategically • Exceeded $300M in • Operational cost savings of • Germany non-GMO monetizations almost $200 million soybean expansion ◦ Achieved $1B target ◦ On pace to exceed set two years ago $225M target in 2017 • Midwest
Slide 14: Looking Ahead
Looking Ahead
Slide 15: Upcoming Investor Event
15 Upcoming Investor Event Baird Global Industrial Conference November 8 Chicago
Slide 16: Appendix
Appendix
Slide 17: GAAP Statement of Earnings Summary
17 GAAP Statement of Earnings Summary Quarter Ended Sept. 30 (Amounts in millions except per share data) 2017 2016 Change Revenues $14,827 $15,832 ($1,005) Gross profit 812 1,090 (278) Selling, general and administrative expenses 478 546 (68) Asset impairment, exit, and restructuring charges 107 11
Slide 18: Adjusted Earnings Per Share
18 Adjusted Earnings Per Share Quarter Ended Sept. 30 2017 2016 Earnings per share (fully diluted) as reported $ 0.34 $ 0.58 Adjustments LIFO (credit)/charge — (0.09) (Gains) loss on sales of assets and businesses/revaluation (0.02) 0.02 Asset impairment, restructuring, and settlement charges 0.12 0
Slide 19: ROIC versus WACC
19 ROIC versus WACC Q3 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 $98M Trailing 4Q Average ROIC (1)(3) 5.9% 10% 8% 6% 4% 2% 0% Q3 Q3 Q3 Q3 Q3 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 Dec. 31, 2016 Mar. 31, 2017 June 30, 2017 Sep. 30, 2017 Sep. 30, 2017 Net earnings attributable to ADM $ 424 $ 339 $ 276 $ 192 $ 1,231 Adjustments Interest expense 80 81 86 79 326 LIFO 2 (
Slide 21: Processed Volumes
21 Processed Volumes Metric Tons Processed (000s) Calendar Year 2012 2013 2014 2015 2016 Oilseeds Processing 31,820 31,768 32,208 33,817 33,788 Corn Processing 24,517 23,688 23,668 23,126 22,273 56,337 55,456 55,876 56,943 56,061 CY15 CY16 CY17 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Oilseeds Processing 8,
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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