Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q3 2019 Earnings Presentation
24 slides from Archer-daniels-midland's earnings presentation, Oct 31, 2019
Slide 1: Third Quarter 2019 Earnings Conference Call
Third Quarter 2019 Earnings Conference Call October 31, 2019
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: Third Quarter Accomplishments
3 Third Quarter Accomplishments • Capturing synergies from • Growing benefits of advanced • Growing in major global trend creation of AS&O segment analytics and new areas • Completion of Midwest technologies, including AI ◦ Flexitarian Diets: elevator exchange with and machine learning partnership w
Slide 4: Readiness: Making ADM Better, On Track to Deliver Benefits
44 Readiness: Making ADM Better, On Track to Deliver Benefits Targets 650 Prioritized Initiatives 280 $1.2B Run Rate Savings by end of 2020 $515M $250-300M Accrued Benefits by end of 2019 $200M
Slide 5: Q3 2019 Financial Highlights
5 Q3 2019 Financial Highlights (in millions except per share data and percentages) Quarter Ended Sept. 30 2019 2018 Change (1) (2) Adjusted earnings per share $0.77 $0.92 ($0.15) (3) Total segment operating profit (unadjusted) $758 $881 ($123) (1) (3) Adjusted segment operating profit $764 $861 ($97
Slide 6: Q3 Other and Corporate Results
6 Q3 Other and Corporate Results (in millions) Other Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 • Other results higher on captive $28 $(14) $14 $11 $47 insurance underwriting earnings Corporate Charges Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 • Total Corporate similar YOY $(249) $(474) $(296) $(371) $(2
Slide 7: AS&O: Solid Results, Including Golden Peanut Improvement
7 AS&O: Solid Results, Including Golden Peanut Improvement Segment operating profit (in millions) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 • Ag Services in line YOY; $478 $615 $417 $362 $417 improved NA merchandising, SA origination margins • Crush down vs. strong prior- year results; solid margins i
Slide 8: Carbohydrate Solutions: Challenging External Conditions
8 Carbohydrate Solutions: Challenging External Conditions Segment operating profit (in millions) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 • S&S: higher net corn costs in $288 $197 $96 $192 $182 NA, partially offset by lower manufacturing costs; continued challenging market conditions in EMEA; limited
Slide 9: Nutrition: Substantially Higher; Growth Across the Portfolio
9 Nutrition: Substantially Higher; Growth Across the Portfolio Segment operating profit (in millions) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 $67 $62 $81 $117 $118 • Strongest WILD quarter in history; SI up on plant- based protein growth; growth investments contributing in Health & Wellness • Animal
Slide 10: Advancing Growth and Driving Returns
10 Advancing Growth and Driving Returns Business Harvesting Growth Turnarounds Investments Strategy, Disciplined Capital Allocation Position ADM Well for Stronger Results in 2020 and Beyond
Slide 11: Upcoming Investor Events
11 Upcoming Investor Events Baird’s 2019 Global Industrial Conference Chicago, IL Nov. 5 Stephens Investment Conference Nashville, TN Nov. 13-14
Slide 12: Appendix
Appendix
Slide 13: Q3 Adjusted Segment OP $764 million
13 Q3 Adjusted Segment OP $764 million Adjusted segment operating profit (1,2) (in millions) Excludes specified items Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 $861 $860 $608 $682 $764* Ag Services and Oilseeds Carbohydrate Solutions Nutrition Other *Segment operating profit as reported was $758M (1)
Slide 14: Segment Operating Profit and Corporate Results
14 Segment Operating Profit and Corporate Results Quarter Ended Sept. 30 (Amounts in millions) 2019 2018 Change (1) Total Segment Operating Profit $ 758 $ 881 $ (123) Specified items: (Gains) loss on sales of assets and businesses — (21) 21 Impairment and settlement charges 6 1 5 Adjusted Segment Op
Slide 15: Cash Flow Highlights
15 Cash Flow Highlights Nine Months Ended Sept. 30 (Amounts in millions) 2019 2018 Cash from operations before working capital changes $1,700 $1,906 Changes in working capital (1) 375 (173) Purchases of property, plant, and equipment (566) (555) Net assets of businesses acquired (1,946) (324) Sub-to
Slide 16: Balance Sheet Highlights
16 Balance Sheet Highlights (Amounts in millions) Sep. 30, 2019 Sep. 30, 2018 Cash (1) $958 $915 Net property, plant, and equipment 10,101 9,885 (2) Operating working capital 7,457 8,024 - Total inventories 8,075 8,483 Total debt 8,888 7,852 - CP outstanding 1,086 385 Shareholders’ Equity 18,895 19,
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) 2019 2018 Change Revenues $16,726 $15,800 $926 Gross profit 1,078 1,058 20 Selling, general and administrative expenses 578 534 44 Asset impairment, ex
Slide 18: Adjusted Earnings Per Share (EPS)
18 Adjusted Earnings Per Share (EPS) (Amounts in millions except per share data) Quarter Ended Sep. 30 2019 2018 Pre-tax After-tax Per share Pre-tax After-tax Per share Earnings and EPS (fully diluted) as reported $ 503 $ 407 $ 0.72 $ 632 $ 536 $ 0.94 Adjustments LIFO (credit)/charge (16) (12) (0.02
Slide 19: ROIC versus WACC
19 ROIC versus WACC Q3 CY19 (1)(2) Trailing 4Q Average Adjusted ROIC 6.5 % LT ROIC Objective: 10% Annual WACC 6.75 % Trailing 4Q Average Adjusted EVA ($71M) 11% Long-Term WACC 7.0 % Trailing 4Q Average ROIC (1)(3) 5.3 % 10% 9% 8% 7% 6% 5% 4% Q3 Q3 Q3 Q3 Q3 CY15 CY16 CY17 CY18 CY19 Trailing 4Q Averag
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, 2018 Mar. 31, 2019 Jun. 30, 2019 Sep. 30, 2019 Sep. 30, 2019 Net earnings attributable to ADM $ 315 $ 233 $ 235 $ 407 $ 1,190 Adjustments Interest expense 97 101 109 97 404 LIFO c
Slide 21: 2018 Segment OP and Adjusted Segment OP Comparatives with New Segments
21 2018 Segment OP and Adjusted Segment OP(1,2) Comparatives with New Segments (in millions) Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended Year Ended Mar. 31, 2018 Jun. 30, 2018 Sep. 30, 2018 Dec. 31, 2018 Dec. 31, 2018 As As As As As As As As As As As As Reported Restated Reported Restated Reported R
Slide 22: 2019 Segment OP and Adjusted Segment OP as Currently Reported vs Old Segments
22 (1,2) 2019 Segment OP and Adjusted Segment OP as Currently Reported vs Old Segments Quarter Ended Quarter Ended Quarter Ended Nine Months Ended March 31, 2019 June 30, 2019 September 30, 2019 September 30, 2019 Previously Currently Previously Currently Previously Currently Previously Currently As
Slide 23: Processed Volumes (by commodity)
23 Processed Volumes (by commodity) Metric Tons Processed (000s) 2014 2015 2016 2017 2018 Oilseeds 32,208 33,817 33,788 34,733 36,308 Corn 23,668 23,126 22,273 22,700 22,343 55,876 56,943 56,061 57,433 58,651 CY17 CY18 CY19 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Oilseeds 8,818 8,519 8,265 9,131 9,047 9,07
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
Archer-Daniels-Midland Company — Q3 2019 Earnings Presentation on 6ix