Post on 17-Sep-2020
Second Quarter 2020 Earnings Conference Call July30,2020
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ationofADM.
Safe Harbor Statement
Someofourcommentsandmaterialsinthispresentationconstituteforward-lookingstatementsthatreflectmanagement’scurrentviewsandestimatesoffutureeconomiccircumstances,industryconditions,Companyperformanceandfinancialresults.
Thesestatementsandmaterialsarebasedonmanyassumptionsandfactorsthataresubjecttoriskanduncertainties.ADMhasprovidedadditionalinformationinitsreportsonfilewiththeSECconcerningassumptionsandfactorsthatcouldcauseactualresultstodiffermateriallyfromthoseinthispresentation,andyoushouldcarefullyreviewtheassumptionsandfactorsinourSECreports.
Totheextentpermittedunderapplicablelaw,ADMassumesnoobligationtoupdateanyforward-lookingstatementsasaresultofnewinformationorfutureevents.
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ationofADM.
Q2 Accomplishments
• 1ADM:Launchedprocurementandcontractspendapplications
• Expandedsustainabilitygoals
• $50MinAS&Ocapitalreductioninitiatives,includingongoingglobaloriginationfootprintoptimization,exitfromtwoGPTNbusinesses
• ClosingLosAngelesflourmill• Temporarilyidledtwodrymills
• Continueddestinationmarketinggrowth,extendingproductofferingsinAsia,LatinAmerica,Europe
• ExpandedproductionofhighqualityUSP-gradeindustrialethanol
• PlantPlusFoodsTMjointventurewithMarfrig
• Totalof$1Binrun-ratebenefitssinceinception;ontracktoexceed$1.2Bgoal
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ationofADM.
Q2 2020 Financial Highlights (inmillionsexceptpersharedataandpercentages)
QuarterEndedJune30
2020 2019 Change
Adjustedearningspershare(1)(2) $0.85 $0.60 $0.25
Totalsegmentoperatingprofit(unadjusted)(3) $813 $645 $168
Adjustedsegmentoperatingprofit(1)(3) $804 $682 $122
Trailing4QaverageadjustedROIC(1) 8.1% 6.9% 115bps
Trailing4QadjustedEBITDA(1)(4) $3,629 $3,314 $315
AnnualadjustedEVA(1) $683 $42 $641
Quarterlyeffectivetaxrate 14% 13%
SixMonthsEndedJune30
2020 2019 Change
Cashfromoperationsbeforeworkingcapitalchanges $1,611 $1,016 $595
Purchasesofproperty,plant,andequipment $360 $383 $(23)
Returnofcapitaltoshareholders $517 $489 $28
Increase(decrease)incash,cashequivalents,restrictedcash,andrestrictedcashequivalents $1,509 $(1,094) $2,603
Netdebttototalcapitalratio(asofJune30) 29% 31%
(1)Non-GAAPmeasures-seenotesonpage26(2)Seeearningspershare,themostdirectlycomparableGAAPmeasure,onpage20(3)Seesegmentoperatingprofitasreportedonpage16(4)Seeearningsbeforeincometaxes,themostdirectlycomparableGAAPmeasure,onpages23and24
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ationofADM.
Q2 Other and Corporate ResultsOtherBusiness
Q22019 Q32019 Q42019 Q12020 Q22020$(371) $(255) $(438) $(224) $(261)
• Otherresultsuponimprovedcaptiveinsuranceperformance
• Unallocatedcorporatehigheroncompensationaccrual,centralizationactivities
• TotalCorporateimprovedonforeigncurrencyhedgingresults,improvedinvestmentperformance,partiallyoffsetbydebtextinguishmentexpenses
Unallocatedcorporate Interestexpense OtherchargesLIFO Otherspecifieditems
Q22019 Q32019 Q42019 Q12020 Q22020$11 $47 $13 $11 $38
CorporateCharges
(Inmillions)
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ationofADM.
AgServices Crushing RefinedProductsandOther Wilmar
Q22019 Q32019 Q42019 Q12020 Q22020$362 $417 $739 $422 $413
AS&O: Strong Performance, Led by Ag Services
• AgServicessubstantiallyhigheronSouthAmericaorigination,globaltraderesults
• LowerCrushing;strongglobalvolumes,goodresultsinSAandEMEAIoffsetbysoftermarginenvironmentinNA
• RPOuponimprovedbiodieselmarginsinNAandSA,refinedandpackagedoilsinSA
• WilmarlowerYOY
Segmentoperatingprofit(inmillions)
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ationofADM.
Q22019 Q32019 Q42019 Q12020 Q22020$192 $182 $174 $68 $195
Carbohydrate Solutions: Similar to Prior Year
• S&Sdownonlowerfoodservicedemand,mark-to-marketlossesoncornoil,partiallyoffsetbylowerrawmaterialcosts,positiveriskmanagementandcontinuedstrengthinwheatmilling
• VCPYOYresultshigheronfavorableriskmanagementoninventorypositionsandstrongdemandforindustrialethanol;lowerindustryproduction—includingtwoidledADMdrymills—helpedtoright-sizestocks
Segmentoperatingprofit(inmillions)
VantageCornProcessors(VCP) StarchesandSweeteners
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ationofADM.
Nutrition: Significant Growth Continues
• HumanNutritionsubstantiallyhigher;favorablesalesmixandmarginexpansionforNAflavors;meetingstrongdemandforplant-basedproteins,probiotics
• AnimalNutritionuponNeoviasynergies,gooddemandinpet
Segmentoperatingprofit(inmillions)
Q22019 Q32019 Q42019 Q12020 Q22020$117 $118 $102 $142 $158
HumanNutrition AnimalNutrition
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ationofADM.
Strategy is Powering Results
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ationofADM.
Upcoming Investor Events(Alleventsvirtual)
BarclaysGlobalConsumerStaplesConferenceSeptember8
J.P.MorganAllStarsConferenceSeptember15-16
BerenbergFoodIngredients&ChemicalsConferenceSeptember16
Additional Facts and Explanations
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ationofADM.
Industry Environment
Corn
US 85% 94% 95% 7% 12% 13%
Brazil 50% 45% 44% n/a n/a n/a
Soybeans
US 83% 96% 93% 9% 15% 5%
Brazil 93% 75% 71% 40% 12% 15%
Argentina 37% 40% 34% n/a n/a n/a
Soybeans
US $15-$25 $20-$25
Europe $25-$30 $25-$35
BrazilExp:$0-$5Dom:$15-$25
Exp:$15-$25Dom:$15-$25
Argentina ∼ $5 $7-$12
China $25-$30 $30-$35
FrontMonthBoardCrush ~$27 ~$30
Canola/Rapeseed
NorthAmerica $25-$40 $20-$25
Europe $20-$25 $20-$30AverageIndustryEthanolEBITDAMargins/gal3
$(0.15) $(0.23) $(0.07)
AverageIndustryDailyProductionVolume(thousandsofbarrels/day)4
721 1,008 1,052
U.S.EthanolInventory(thousandsofbarrels)4
20,620 25,717 22,844
1ADMestimates2ADMestimates;reflectsmostcurrentmodelassumptionsanddataregardingcropproduction,quality,storage,andmarketinginformation3Bloomberg4EIAWeeklyPetroleumStatusReport
SpotGrossCrushMargins1
CurrentUS$/MT
Q1CallUS$/MT
U.S.EthanolMargins/Production Q220 Q120 Q219
FarmerSelling2
Current 5-YearAverage
PriorYear
2019/2020CropYear
Current 5-YearAverage
PriorYear
2020/2021CropYear
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ationofADM.
ADM Additional Information
NutritionGrowth
Growth Growth
Q220 vs.Q219 YTD20 vs.YTD19
GAAPRevenues
HumanNutrition $723M —% $1,442 3%
AnimalNutrition $714M (10)% $1,466 4%
Q12020 ~$80M
Q22020 ~$95M
CumulativeCrushDeferredTimingGains/(Losses)
ProcessedVolumesbyYear(000sofmetrictons)
CalendarYear
2018 2019Oilseeds 36,308 36,271
Corn 22,343 22,079
58,651 58,350
ProcessedVolumesbyQuarter(000sofmetrictons)
CY19 CY20
Q1 Q2 Q3 Q4 Q1 Q2
Oilseeds 9,167 8,773 9,062 9,269 9,163 9,103
Corn 5,132 5,546 5,619 5,782 5,534 4,099
14,299 14,319 14,681 15,051 14,697 13,202
AsofJune30,2020,approximately$95Mofdeferredmark-to-markettiminggainsareexpectedtoberecognizedinsubsequentquarters
(1)Non-GAAPmeasure-seenotesonpage26(2)Seeearningsbeforeincometaxes,themostdirectlycomparableGAAPmeasure,onpages23and24
Trailing4-Quarters
Q220 Q219 Q220 Q219AdjustedEBITDA(1)(2) $ 890 $ 794 $ 3,629 $ 3,314
AgServicesandOilseeds $ 502 $ 457 $ 2,360 $ 2,258CarbohydrateSolutions $ 274 $ 274 $ 944 $ 1,097Nutrition $ 217 $ 173 $ 751 $ 509OtherBusiness $ 39 $ 18 $ 129 $ 76Corporate $ (142)$ (128) $ (555)$ (626)
AdjustedEBITDA(1)(2)bySegment(inmillions)
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Financial Appendix
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ationofADM.
Q2 Adjusted Segment OP $804 millionAdjustedsegmentoperatingprofit(1,2)(inmillions)Excludesspecifieditems
*Segmentoperatingprofitasreportedwas$813M
(1)Non-GAAPmeasure-seenotesonpage26;(2)Adjustedsegmentoperatingprofitequalstotalsegmentoperatingprofitexcludingspecifieditemsandtimingeffects.
AgServicesandOilseeds CarbohydrateSolutions Nutrition OtherBusiness
Q22019 Q32019 Q42019 Q12020 Q22020$682 $764 $1,028 $643 $804*
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ationofADM.
Segment Operating Profit and Corporate ResultsQuarterEndedJune30
(Amountsinmillions) 2020 2019 Change
TotalSegmentOperatingProfit(1) $ 813 $ 645 $ 168
Specifieditems:(Gains)lossonsalesofassetsandbusinesses (23) — (23)
Impairment,restructuring,andsettlementcharges 14 37 (23)
AdjustedSegmentOperatingProfit(1)(2) $ 804 $ 682 $ 122
AgServicesandOilseeds $ 413 $ 362 $ 51
AgServices 171 90 81
Crushing 113 139 (26)
RefinedProductsandOther 78 71 7
Wilmar 51 62 (11)
CarbohydrateSolutions $ 195 $ 192 $ 3
StarchesandSweeteners 177 215 (38)
VantageCornProcessors 18 (23) 41
Nutrition $ 158 $ 117 $ 41
HumanNutrition 131 103 28
AnimalNutrition 27 14 13
OtherBusiness $ 38 $ 11 $ 27
TotalSegmentOperatingProfit(1) $ 813 $ 645 $ 168
Corporate $ (261) $ (371) $ 110
Interestexpense–net (86) (101) 15
Unallocatedcorporatecosts (194) (132) (62)
Othercharges 35 (12) 47
Specifieditems:LIFOcredit(charge) — (25) 25
Earlydebtrepaymentexpenses (14) — (14)
Impairmentandrestructuringcharges (2) (101) 99
EarningsBeforeIncomeTaxes $ 552 $ 274 $ 278
(1)Non-GAAPmeasure-seenotesonpage26;(2)Adjustedsegmentoperatingprofitequalstotalsegmentoperatingprofitexcludingspecifieditemsandtimingeffects.
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ationofADM.
Balance Sheet Highlights(Amountsinmillions) June30,2020 June30,2019Cash(1) $1,203 $853Netproperty,plant,andequipment 9,833 10,245Operatingworkingcapital(2) 8,540 7,804-Totalinventories 7,626 8,294
Totaldebt 9,173 9,412-CPoutstanding — 1,479
Shareholders’equity 19,311 18,979
Memos:AvailablecreditcapacityJune30-CP $5.0bil $3.5bil-Other $4.7bil $2.3bil
Readilymarketableinventory $4.6bil $4.9bil
(1)Cash=cashandcashequivalentsandshort-termmarketablesecurities(2)Currentassets(excludingcashandcashequivalentsandshort-termmarketablesecuritieslesscurrentliabilities(excludingshort-termdebtandcurrentmaturitiesoflong-termdebt)
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ationofADM.
Cash Flow HighlightsSixMonthsEndedJune30
(Amountsinmillions) 2020 2019Cashfromoperationsbeforeworkingcapitalchanges $1,611 $1,016Changesinworkingcapital(1) 409 (116)Purchasesofproperty,plant,andequipment (360) (383)Netassetsofbusinessesacquired (3) (1,944)Sub-total 1,657 (1,427)
Marketablesecuritiesinvestment (3) 65Otherinvestingactivities 83 (5)Debtincrease/(decrease) 286 804Dividends (405) (395)Stockbuyback (112) (94)Other 3 (42)Increase(decrease)incash,cashequivalents,restrictedcash,andrestrictedcashequivalents $1,509 ($1,094)
(1)Includesthechangeindeferredconsiderationof($2,456million)in2020and($3,613million)in2019andthenetproceedsfromretainedinterestinsecuritizedreceivablesof$2,456millionin2020and$3,613millionin2019whicharepresentedseparatelyasoperatingactivitiesandinvestingactivities,respectively,inthestatementofcashflowsasrequiredbyASU2016-15whichtookeffect1/1/18.
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ationofADM.
GAAP Statement of Earnings Summary
QuarterEndedJune30
2020 2019 Change
Revenues $16,281 $16,297 ($16)
Grossprofit 1,108 972 136
Selling,generalandadministrativeexpenses 638 602 36
Assetimpairment,exit,andrestructuringcharges 16 136 (120)
Equityin(earnings)lossesofunconsolidatedaffiliates (103) (90) (13)
Interestincome (15) (46) 31
Interestexpense 87 109 (22)
Other(income)expense–net (67) (13) (54)
Earningsbeforeincometaxes 552 274 278
Incometax(benefit)expense 80 36 44
Netearningsincludingnoncontrollinginterests 472 238 234
Less:Netearnings(losses)attributabletononcontrollinginterests 3 3 —
NetearningsattributabletoADM $ 469 $ 235 $ 234
Earningspershare(fullydiluted) $ 0.84 $ 0.42 $ 0.42
(Amountsinmillionsexceptpersharedata)
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ationofADM.
Adjusted Earnings Per Share (EPS)(Amountsinmillionsexceptpersharedata)
QuarterEndedJune302020 2019
Pre-tax After-tax Pershare Pre-tax After-tax PershareEarningsandEPS(fullydiluted)asreported $ 552 $ 469 $ 0.84 $ 274 $ 235 $ 0.42
AdjustmentsLIFO(credit)/charge — — — 25 19 0.03(Gains)lossonsalesofassets (23) (18) (0.03) — — —Impairment,restructuring,andsettlementcharges 16 12 0.02 138 105 0.18Earlydebtrepaymentexpenses 14 11 0.02 — — —Taxadjustment 1 1 — (19) (19) (0.03)AdjustedEarningsandadjustedEPS(non-GAAP)(1) $ 560 $ 475 $ 0.85 $ 418 $ 340 $ 0.60
(1)Non-GAAPmeasure-seenotesonpage26
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ationofADM.
ROIC versus WACCLT ROIC Objective: 10%
(1)Non-GAAPmeasure-seenotesonpage26(2)AdjustedforLIFOandspecifieditems-seenotesonpage26(3)AdjustedforLIFO-seenotesonpage26
Trailing4QAverageROIC Trailing4QAverageAdjustedROIC
Q2CY16
Q2CY17
Q2CY18
Q2CY19
Q2CY20
4%
5%
6%
7%
8%
9%
10%
11%
Q2CY20
Trailing4QAverageAdjustedROIC(1)(2) 8.1 %
AnnualWACC 5.75 %
Trailing4QAverageAdjustedEVA $683M
Long-TermWACC 7.0 %
Trailing4QAverageROIC(1)(3) 6.9 %
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ationofADM.
Return on Invested Capital AdjustedROICEarnings(1)
(Amountsinmillions) FourthQuarters
QuarterEnded Ended
Sep.30,2019 Dec.31,2019 Mar.31,2020 June30,2020 June30,2020
NetearningsattributabletoADM $ 407 $ 504 $ 391 $ 469 $ 1,771
Adjustments
Interestexpense 97 95 83 87 362
LIFOcharge(credit) (16) 27 (91) — (80)
Otheradjustments 48 253 48 8 357
Totaladjustments 129 375 40 95 639
Taxonadjustments (32) (8) (7) (23) (70)
Netadjustments 97 367 33 72 569
TotalAdjustedROICEarnings $ 504 $ 871 $ 424 $ 541 $ 2,340
AdjustedInvestedCapital(1)
(Amountsinmillions) Trailing
QuarterEnded FourQuarter
Sep.30,2019 Dec.31,2019 Mar.31,2020 June30,2020 Average
Equity(2) $ 18,873 $ 19,208 $ 18,952 $ 19,293 $ 19,082
+ Interest-bearingliabilities(3) 8,891 8,891 12,512 9,181 9,869
+ LIFOadjustment(netoftax) 49 69 — — 30
+ Otheradjustments(netoftax) 36 274 39 6 89
TotalAdjustedInvestedCapital $ 27,849 $ 28,442 $ 31,503 $ 28,480 $ 29,070
(1)Non-GAAPmeasure–seenotesonpage26(2)Excludesnoncontrollinginterests(3)Includesshort-termdebt,currentmaturitiesoflong-termdebt,financeleaseobligations,andlong-termdebt
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ationofADM.
Adjusted Earnings Before Taxes, Interest, and Depreciation and Amortization (EBITDA)(1)
Four Quarters Ended June 30, 2020
AdjustedEBITDA(1)
(Amountsinmillions) FourthQuarters
QuarterEnded Ended
Sep.30,2019 Dec.31,2019 Mar.31,2020 June30,2020 June30,2020
Earningsbeforeincometaxes $ 503 $ 496 $ 375 $ 552 $ 1,926
Interestexpense 97 95 83 87 362
Depreciationamortization 249 251 245 244 989
LIFOcharge(credit) (16) 27 (91) — (80)
Losses(gains)onsalesofassetsandbusinesses — 101 — (23) 78
Assetimpairment,exit,andrestructuringcharges 53 103 41 16 213
Railroadmaintenanceexpense — 51 73 — 124
Earlydebtrepaymentexpenses — — — 14 14
Expensesrelatedtoacquisitions — 3 — — 3
AdjustedEBITDA $ 886 $ 1,127 $ 726 $ 890 $ 3,629
AdjustedEBITDA(1)bySegment
(Amountsinmillions) FourQuarters
QuarterEnded Ended
Sep.30,2019 Dec.31,2019 Mar.31,2020 June30,2020 June30,2020
AgServicesandOilseeds $ 511 $ 833 $ 514 $ 502 $ 2,360
CarbohydrateSolutions 264 258 148 274 944
Nutrition 175 160 199 217 751
OtherBusiness 55 20 15 39 129
Corporate (119) (144) (150) (142) (555)
AdjustedEBITDA $ 886 $ 1,127 $ 726 $ 890 $ 3,629(1)Non-GAAPmeasure–seenotesonpage26
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ationofADM.
Adjusted Earnings Before Taxes, Interest, and Depreciation and Amortization (EBITDA)(1)
Four Quarters Ended June 30, 2019
AdjustedEBITDA(1)
(Amountsinmillions) FourthQuarters
QuarterEnded Ended
Sep.30,2018 Dec.31,2018 Mar.31,2019 Jun.30,2019 Jun.30,2019
Earningsbeforeincometaxes $ 632 $ 312 $ 315 $ 274 $ 1,533
Interestexpense 87 97 101 109 394
Depreciationamortization 232 235 245 248 960
LIFOcharge(credit) 7 (4) 1 25 29
Losses(gains)onsalesofassetsandbusinesses (21) 8 (12) — (25)
Assetimpairment,exit,restructuring,andsettlementcharges 2 250 11 138 401
Expensesrelatedtoacquisitions (4) 12 14 — 22
AdjustedEBITDA $ 935 $ 910 $ 675 $ 794 $ 3,314
AdjustedEBITDA(1)bySegment
(Amountsinmillions) FourQuarters
QuarterEnded Ended
Sep.30,2018 Dec.31,2018 Mar.31,2019 Jun.30,2019 Jun.30,2019
AgServicesandOilseeds $ 580 $ 711 $ 510 $ 457 $ 2,258
CarbohydrateSolutions 364 281 178 274 1,097
Nutrition 103 99 134 173 509
OtherBusiness 37 (3) 24 18 76
Corporate (149) (178) (171) (128) (626)
AdjustedEBITDA $ 935 $ 910 $ 675 $ 794 $ 3,314
(1)Non-GAAPmeasure–seenotesonpage26
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2019 Segment OP and Adjusted Segment OP(1,2) Comparatives with VCP in Carbohydrate Solutions (in millions)
Qtr.Ended Qtr.Ended Qtr.Ended Qtr.Ended YearEnded
Mar.31,2019 Jun.30,2019 Sep.30,2019 Dec.31,2019 Dec.31,2019
As As As As As As As As As As As As
Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
SegmentOperatingProfit(1) SegmentOperatingProfit(1) $ 611 $ 611 $ 645 $ 645 $ 758 $ 758 $ 934 $ 934 $ 2,948 $ 2,948
Specifieditems: Specifieditems:
(Gains)lossesonsalesofassets/businesses (Gains)lossesonsalesofassets/businesses (12) (12) — — — — — — (12) (12)
Impairment,restructuring,andsettlementchargesImpairment,restructuring,andsettlementcharges 9 9 37 37 6 6 94 94 146 146
AdjustedSegmentOperatingProfit(1)(2) AdjustedSegmentOperatingProfit(1)(2) $ 608 $ 608 $ 682 $ 682 $ 764 $ 764 $ 1,028 $ 1,028 $ 3,082 $ 3,082
AgServicesandOilseeds AgServicesandOilseeds $ 417 $ 417 $ 362 $ 362 $ 417 $ 417 $ 739 $ 739 $ 1,935 $ 1,935
AgServices AgServices 75 75 90 90 161 161 176 176 502 502
Crushing Crushing 216 216 139 139 138 138 87 87 580 580
RefinedProductsandOther RefinedProductsandOther 72 72 71 71 80 80 363 363 586 586
Wilmar Wilmar 54 54 62 62 38 38 113 113 267 267
CarbohydrateSolutions CarbohydrateSolutions $ 96 $ 96 $ 192 $ 192 $ 182 $ 182 $ 174 $ 174 $ 644 $ 644
StarchesandSweeteners StarchesandSweeteners 170 135 218 215 207 197 208 206 803 753
Bioproducts VantageCornProcessors (74) (39) (26) (23) (25) (15) (34) (32) (159) (109)
Nutrition Nutrition $ 81 $ 81 $ 117 $ 117 $ 118 $ 118 $ 102 $ 102 $ 418 $ 418
WildFlavorsandSpecialtyIngredients HumanNutrition 88 88 103 103 102 102 83 83 376 376
AnimalNutrition AnimalNutrition (7) (7) 14 14 16 16 19 19 42 42
Other OtherBusiness $ 14 $ 14 $ 11 $ 11 $ 47 $ 47 $ 13 $ 13 $ 85 $ 85
(1)Non-GAAPmeasure-seenotesonpage26;(2)Adjustedsegmentoperatingprofitequalstotalsegmentoperatingprofitexcludingspecifieditemsandtimingeffects.
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Notes: Non-GAAP ReconciliationTheCompanyusescertain“Non-GAAP”financialmeasuresasdefinedbytheSecuritiesandExchangeCommission.ThesearemeasuresofperformancenotdefinedbyaccountingprinciplesgenerallyacceptedintheUnitedStates,andshouldbeconsideredinadditionto,notinlieuof,GAAPreportedmeasures.
(1) AdjustednetearningsandAdjustedearningspershare(EPS)AdjustednetearningsreflectsADM’sreportednetearningsafterremovaloftheeffectonnetearningsofspecifieditemsasmorefullydescribedabove.AdjustedEPSreflectsADM’sfullydilutedEPSafterremovaloftheeffectonEPSasreportedofspecifieditemsasmorefullydescribedabove.ManagementbelievesthatAdjustednetearningsandAdjustedEPSareusefulmeasuresofADM’sperformancebecausetheyprovideinvestorsadditionalinformationaboutADM’soperationsallowingbetterevaluationofunderlyingbusinessperformanceandbetterperiod-to-periodcomparability.Thesenon-GAAPfinancialmeasuresarenotintendedtoreplaceorbealternativestonetearningsandEPSasreported,themostdirectlycomparableGAAPfinancialmeasures,oranyothermeasuresofoperatingresultsunderGAAP.Earningsamountsdescribedabovehavebeendividedbythecompany’sdilutedsharesoutstandingforeachrespectiveperiodinordertoarriveatanadjustedEPSamountforeachspecifieditem.
(2) SegmentoperatingprofitandadjustedsegmentoperatingprofitSegmentoperatingprofitisADM’sconsolidatedincomefromoperationsbeforeincometaxexcludingcorporateitems.Adjustedsegmentoperatingprofit,anon-GAAPmeasure,issegmentoperatingprofitexcludingspecifieditems.ManagementbelievesthatsegmentoperatingprofitandadjustedsegmentoperatingprofitareusefulmeasuresofADM’sperformancebecausetheyprovideinvestorsinformationaboutADM’sbusinessunitperformanceexcludingcorporateoverheadcostsaswellasspecifieditems.SegmentoperatingprofitandadjustedsegmentoperatingprofitarenotmeasuresofconsolidatedoperatingresultsunderU.S.GAAPandshouldnotbeconsideredalternativestoincomebeforeincometaxes,themostdirectlycomparableGAAPfinancialmeasure,oranyothermeasureofconsolidatedoperatingresultsunderU.S.GAAP.
(3) AdjustedReturnonInvestedCapital(ROIC)AdjustedROICisAdjustedROICearningsdividedbyadjustedinvestedcapital.AdjustedROICearningsisADM’snetearningsadjustedfortheaftertaxeffectsofinterestexpense,changesintheLIFOreserveandotherspecifieditems.AdjustedinvestedcapitalisthesumofADM’sequity(excludingnoncontrollinginterests)andinterest-bearingliabilitiesadjustedfortheaftertaxeffectoftheLIFOreserve,andotherspecifieditems.ManagementbelievesAdjustedROICisausefulfinancialmeasurebecauseitprovidesinvestorsinformationaboutADM’sreturnsexcludingtheimpactsofLIFOinventoryreservesandotherspecifieditemsandincreasesperiod-to-periodcomparabilityofunderlyingbusinessperformance.ManagementusesAdjustedROICtomeasureADM’sperformancebycomparingAdjustedROICtoitsweightedaveragecostofcapital(WACC).AdjustedROIC,AdjustedROICearningsandAdjustedinvestedcapitalarenon-GAAPfinancialmeasuresandarenotintendedtoreplaceorbealternativestoGAAPfinancialmeasures.
(4) AverageROICAverageROICisADM’strailing4-quarternetearningsadjustedfortheafter-taxeffectsofinterestexpenseandchangesintheLIFOreservedividedbythesumofADM’sequity(excludingnon-controllinginterests)andinterest-bearingliabilitiesadjustedfortheafter-taxeffectoftheLIFOreserve.ManagementusesaverageROICforinvestorsasadditionalinformationaboutADM’sreturns.AverageROICisanon-GAAPfinancialmeasureandisnotintendedtoreplaceorbeanalternativetoGAAPfinancialmeasures.
(5) AdjustedEconomicValueAddedAdjustedeconomicvalueaddedisADM’strailing4-quartereconomicvalueaddedadjustedforLIFOandotherspecifieditems.TheCompanycalculateseconomicvalueaddedbycomparingADM’strailing4-quarteradjustedreturnstoitsAnnualWACCmultipliedbyadjustedinvestedcapital.Adjustedeconomicvalueaddedisanon-GAAPfinancialmeasureandisnotintendedtoreplaceorbeanalternativetoGAAPfinancialmeasures.
(6) AdjustedEBITDAAdjustedEBITDAisADM’searningsbeforetaxes,interest,anddepreciationandamortization,adjustedforLIFOandotherspecifieditems.TheCompanycalculatesadjustedEBITDAbyremovingtheimpactofLIFOandotherspecifieditemsandaddingbacktheamountsofinterestexpenseanddepreciationandamortizationtoearningsbeforeincometaxes.ManagementbelievesthatadjustedEBITDAisausefulmeasureoftheCompany'sperformancebecauseitprovidesinvestorsadditionalinformationabouttheCompany'soperationsallowingbetterevaluationofunderlyingbusinessperformanceandbetterperiodtoperiodcomparability.AdjustedEBITDAisanon-GAAPfinancialmeasureandisnotintendedtoreplaceorbeanalternativetoearningsbeforeincometaxes,themostdirectlycomparableGAAPfinancialmeasure.