Attached files
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| 8-K - ADM 8-K 2013 Q2 - Archer-Daniels-Midland Co | adm8k2013q2.htm |
| 8-K - PDF - Archer-Daniels-Midland Co | adm8k2013q2.pdf |
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Archer Daniels Midland Company
4666 Faries Parkway
Decatur, Ill 62526
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ADM Reports Second Quarter 2013 Earnings of $223 Million or $0.34 per Share
Adjusted EPS of $0.46, up 21 percent from year-ago quarter
DECATUR, Ill., Aug. 6, 2013 – Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended June 30, 2013. The company reported net earnings for the quarter of $223 million, or $0.34 per share, down from $0.43 per share in the same period one year earlier. Adjusted earnings per share1 were $0.46, up from $0.38 in the same period last year. Segment operating profit1 was $647 million, up 19 percent from the prior year.
“The team managed well through this period, as tight U.S. crop supplies reduced volumes,” said ADM Chairman and CEO Patricia Woertz. “Also, corn results improved amid volatile ethanol industry conditions.
“During the quarter, we continued our work to improve the company’s future returns and earnings power over the cycle. Our effort to unlock cash reached $2 billion, with the team reaching this milestone a half-year ahead of schedule. And, in cost, we made solid progress toward our goal of $200 million in additional cost reductions by the end of 2014.
“Looking ahead, we’ll be managing through tight crop supplies until the forecast large but delayed U.S. harvest.”
Second Quarter 2013 Highlights
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·
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Adjusted EPS of $0.46 excludes approximately $39 million in pretax LIFO charges, or $0.04 per share; $51 million, or $0.05 per share, in foreign-currency hedging losses related to the GrainCorp acquisition; and $29 million, or $0.03 per share, of additional provisions related to the previously disclosed FCPA matter.
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Oilseeds Processing profit decreased $10 million as solid performance in crushing and origination was offset by weaker cocoa results.
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Corn Processing profit increased $149 million due to improved ethanol results.
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Agricultural Services profit decreased $42 million amid expected lower U.S. origination volumes as well as weaker international merchandising results.
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ADM’s net debt position fell to $5.5 billion, down from $8.9 billion a year ago, as ADM’s focus on capital efficiency further strengthened the balance sheet.
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________________________________
1 Non-GAAP financial measures, see pages 5 and 10 for explanations and reconciliations
Adjusted EPS of 46 Cents, up 8 Cents
Adjusted EPS increased primarily due to higher segment operating profit.
This quarter’s effective tax rate of 29 percent was below the 30 percent rate during the same period last year.
Oilseeds Earnings Essentially Flat as Stronger Crushing and Origination Profits Were Offset by Lower Cocoa Results
Oilseeds operating profit in the second quarter was $321 million, similar to the same period one year earlier.
Crushing and origination operating profit was $185 million, up $35 million from the year-ago quarter. European crushing results improved significantly year-over-year as delays in the arrival of South American meal contributed to stronger margins. In North America, tighter crop supplies resulted in weaker soy and softseed crush margins. South American operations recovered from the first quarter and generated strong overall results, equivalent to the year-ago quarter.
Refining, packaging, biodiesel and other generated a profit of $93 million for the quarter, up
$9 million on stronger European results.
Cocoa and other results decreased $58 million due to lower margins on business contracted in earlier quarters.
Oilseeds results in Asia for the quarter were up $4 million from the same period last year, principally reflecting ADM’s share of the improved results from Wilmar International Limited.
Corn Processing Results Reflect Improved Ethanol Conditions
Corn processing operating profit of $223 million represented an increase of $149 million from the same period one year earlier.
Sweeteners and starches operating profit decreased $9 million to $126 million. Excluding the impact of corn hedge ineffectiveness, sweeteners and starches results improved by $25 million, with overall demand and margins remaining solid.
Bioproducts results increased $158 million to $97 million. Overall ethanol margins were profitable, albeit volatile.
Agricultural Services Impacted by Lower U.S. Volumes and Weaker International Merchandising Results
Agricultural Services operating profit was $81 million, down $42 million from the same period one year earlier.
Merchandising and handling earnings declined $16 million to $14 million, due to smaller U.S. origination and export volumes, and lower margins in international merchandising.
Transportation results decreased $14 million to $3 million as lower U.S. export volumes reduced barge freight utilization.
Milling and other results remained steady, excluding Gruma, as the milling business continued to perform well.
Provision for FCPA Matter
ADM has been in discussions with the U.S. Department of Justice and the U.S. Securities and Exchange Commission regarding a previously disclosed FCPA matter dating back to 2008 and earlier. Based upon recent progress in these discussions, ADM believes it is appropriate to increase its provision to $54 million, a $29 million increase over the $25 million established in the first quarter.
Conference Call Information
ADM will host a conference call and audio webcast Tuesday, Aug. 6, 2013, at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call.
To listen to the call via the Internet or to download the slide presentation, go to www.adm.com/webcast. To listen by telephone, dial (888) 522-5398 in the U.S. or (706) 902-2121 if calling from outside the U.S. The access code is 16833630.
Replay of the call will be available from Aug. 7, 2013, to Aug. 13, 2013. To listen to the replay by telephone, dial (855) 859-2056 in the U.S. or (404) 537-3406 if calling from outside the U.S. The access code is 16833630. The replay will also be available online for an extended period of time at www.adm.com/webcast.
About ADM
For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve vital needs. Today, 30,000 ADM employees around the globe convert oilseeds, corn, wheat and cocoa into products for food, animal feed, industrial and energy uses. With more than 265 processing plants, 460 crop procurement facilities, and the world’s premier crop transportation network, ADM helps connect the harvest to the home in more than 140 countries. For more information about ADM and its products, visit www.adm.com.
Archer Daniels Midland Company
Media Relations Contact
David Weintraub
217-424-5413
Investor Relations Contact
Ruth Ann Wisener
217-451-8286
Financial Tables Follow
Segment Operating Profit and Corporate Results
A non-GAAP financial measure (unaudited)
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Quarter ended
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Six months ended
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June 30
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June 30
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2013
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2012
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Change
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2013
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2012
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Change
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(in millions)
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||||||||||||||||||||||||
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Oilseeds Processing Operating Profit
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Crushing and origination
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$ | 185 | $ | 150 | $ | 35 | $ | 341 | $ | 414 | $ | (73 | ) | |||||||||||
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Refining, packaging, biodiesel, and other
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93 | 84 | 9 | 201 | 163 | 38 | ||||||||||||||||||
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Cocoa and other
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(6 | ) | 52 | (58 | ) | (28 | ) | 211 | (239 | ) | ||||||||||||||
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Asia
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49 | 45 | 4 | 120 | 85 | 35 | ||||||||||||||||||
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Total Oilseeds Processing
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$ | 321 | $ | 331 | $ | (10 | ) | $ | 634 | $ | 873 | $ | (239 | ) | ||||||||||
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Corn Processing Operating Profit
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Sweeteners and starches
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$ | 126 | $ | 135 | $ | (9 | ) | $ | 202 | $ | 230 | $ | (28 | ) | ||||||||||
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Bioproducts (excluding charges)
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97 | (61 | ) | 158 | 174 | (13 | ) | 187 | ||||||||||||||||
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Restructuring and exit costs
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0 | 0 | 0 | 0 | (10 | ) | 10 | |||||||||||||||||
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Total Corn Processing
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$ | 223 | $ | 74 | $ | 149 | $ | 376 | $ | 207 | $ | 169 | ||||||||||||
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Agricultural Services Operating Profit
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Merchandising and handling
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$ | 14 | $ | 30 | $ | (16 | ) | $ | 100 | $ | 178 | $ | (78 | ) | ||||||||||
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Milling and other
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64 | 76 | (12 | ) | 123 | 162 | (39 | ) | ||||||||||||||||
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Transportation
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3 | 17 | (14 | ) | 9 | 44 | (35 | ) | ||||||||||||||||
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Total Agricultural Services
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$ | 81 | $ | 123 | $ | (42 | ) | $ | 232 | $ | 384 | $ | (152 | ) | ||||||||||
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Other Operating Profit
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Financial
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$ | 22 | $ | 16 | $ | 6 | $ | 35 | $ | (2 | ) | $ | 37 | |||||||||||
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Total Other
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$ | 22 | $ | 16 | $ | 6 | $ | 35 | $ | (2 | ) | $ | 37 | |||||||||||
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Segment Operating Profit
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$ | 647 | $ | 544 | $ | 103 | $ | 1,277 | $ | 1,462 | $ | (185 | ) | |||||||||||
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Corporate Results
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LIFO credit (charge)
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$ | (39 | ) | $ | 50 | $ | (89 | ) | $ | (73 | ) | $ | (57 | ) | $ | (16 | ) | |||||||
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Interest expense - net
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(104 | ) | (112 | ) | 8 | (209 | ) | (226 | ) | 17 | ||||||||||||||
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Corporate costs
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(71 | ) | (67 | ) | (4 | ) | (153 | ) | (134 | ) | (19 | ) | ||||||||||||
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Employee-related exit costs
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0 | 0 | 0 | 0 | (71 | ) | 71 | |||||||||||||||||
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Loss on Australian foreign exchange hedges
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(51 | ) | 0 | (51 | ) | (51 | ) | 0 | (51 | ) | ||||||||||||||
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Other
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(65 | ) | 1 | (66 | ) | (99 | ) | 10 | (109 | ) | ||||||||||||||
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Total Corporate
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$ | (330 | ) | $ | (128 | ) | $ | (202 | ) | $ | (585 | ) | $ | (478 | ) | $ | (107 | ) | ||||||
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Earnings Before Income Taxes
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$ | 317 | $ | 416 | $ | (99 | ) | $ | 692 | $ | 984 | $ | (292 | ) | ||||||||||
Total segment operating profit is ADM’s consolidated income from operations before income tax that excludes certain corporate items. Management believes that segment operating profit is a useful measure of ADM’s performance because it provides investors information about ADM’s business unit performance excluding certain corporate overhead costs. Total segment operating profit is a non-GAAP financial measure and is not intended to replace earnings before income tax, the most directly comparable GAAP financial measure. Total segment operating profit is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to income before income taxes or any other measure of consolidated operating results under U.S. GAAP.
Consolidated Statements of Earnings
(unaudited)
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2013
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2012
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(in millions, except per share amounts)
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Net sales and other operating income
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$ | 22,541 | $ | 22,675 | $ | 44,268 | $ | 43,830 | ||||||||
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Cost of products sold
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21,734 | 21,862 | 42,705 | 42,009 | ||||||||||||
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Gross profit
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807 | 813 | 1,563 | 1,821 | ||||||||||||
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Selling, general, and administrative expenses
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452 | 394 | 888 | 796 | ||||||||||||
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Asset impairment charges and exit costs
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0 | 0 | 0 | 85 | ||||||||||||
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Equity in (earnings) losses of unconsolidated affiliates
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(62 | ) | (106 | ) | (199 | ) | (221 | ) | ||||||||
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Interest income
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(29 | ) | (24 | ) | (56 | ) | (50 | ) | ||||||||
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Interest expense
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107 | 116 | 213 | 232 | ||||||||||||
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Other (income) expense - net
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22 | 17 | 25 | (5 | ) | |||||||||||
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Earnings before income taxes
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317 | 416 | 692 | 984 | ||||||||||||
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Income taxes
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(91 | ) | (123 | ) | (196 | ) | (286 | ) | ||||||||
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Net earnings including noncontrolling interests
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226 | 293 | 496 | 698 | ||||||||||||
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Less: Net earnings (losses) attributable to noncontrolling
interests
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3 | 9 | 4 | 15 | ||||||||||||
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Net earnings attributable to ADM
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$ | 223 | $ | 284 | $ | 492 | $ | 683 | ||||||||
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Diluted earnings per common share
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$ | 0.34 | $ | 0.43 | $ | 0.74 | $ | 1.03 | ||||||||
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Average number of shares outstanding
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663 | 661 | 663 | 662 | ||||||||||||
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Other (income) expense - net consists of:
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Net loss (gain) on marketable securities transactions
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$ | (5 | ) | $ | (1 | ) | $ | (5 | ) | $ | (9 | ) | ||||
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Gain on sale of assets
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(16 | ) | 0 | (21 | ) | (9 | ) | |||||||||
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Loss on Australian foreign exchange hedges
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51 | 0 | 51 | 0 | ||||||||||||
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Other - net
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(8 | ) | 18 | 0 | 13 | |||||||||||
| $ | 22 | $ | 17 | $ | 25 | $ | (5 | ) | ||||||||
Summary of Financial Condition
(unaudited)
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June 30,
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June 30,
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2013
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2012
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(in millions)
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NET INVESTMENT IN
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Cash and cash equivalents
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$ | 1,848 | $ | 1,291 | ||||
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Short-term marketable securities
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181 | 176 | ||||||
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Operating working capital (a)
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12,042 | 14,646 | ||||||
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Property, plant, and equipment
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10,091 | 9,812 | ||||||
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Investments in and advances to affiliates
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3,145 | 3,388 | ||||||
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Long-term marketable securities
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720 | 262 | ||||||
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Other non-current assets
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1,246 | 1,355 | ||||||
| $ | 29,273 | $ | 30,930 | |||||
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FINANCED BY
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Short-term debt
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$ | 1,016 | $ | 2,108 | ||||
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Long-term debt, including current maturities
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6,508 | 8,212 | ||||||
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Deferred liabilities
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2,736 | 2,441 | ||||||
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Shareholders' equity
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19,013 | 18,169 | ||||||
| $ | 29,273 | $ | 30,930 | |||||
(a) Current assets (excluding cash and cash equivalents and short-term marketable securities) less current liabilities (excluding short-term debt and current maturities of long-term debt).
Summary of Cash Flows
(unaudited)
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2012
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(in millions)
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Operating Activities
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Net earnings
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$ | 496 | $ | 698 | ||||
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Depreciation and amortization
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454 | 434 | ||||||
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Asset impairment charges
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0 | 30 | ||||||
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Other - net
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(243 | ) | (17 | ) | ||||
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Changes in operating assets and liabilities
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1,641 | (1,291 | ) | |||||
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Total Operating Activities
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2,348 | (146 | ) | |||||
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Investing Activities
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Purchases of property, plant and equipment
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(442 | ) | (625 | ) | ||||
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Net assets of businesses acquired
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(16 | ) | (35 | ) | ||||
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Marketable securities - net
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324 | 453 | ||||||
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Other investing activities
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192 | 19 | ||||||
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Total Investing Activities
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58 | (188 | ) | |||||
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Financing Activities
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Long-term debt borrowings
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20 | 6 | ||||||
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Long-term debt payments
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(260 | ) | (185 | ) | ||||
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Net borrowings (payments) under lines of credit
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(1,787 | ) | 1,273 | |||||
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Debt repayment premium and costs
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(12 | ) | ||||||
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Purchases of treasury stock
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(11 | ) | (100 | ) | ||||
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Cash dividends
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(250 | ) | (231 | ) | ||||
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Other
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16 | 10 | ||||||
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Total Financing Activities
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(2,272 | ) | 761 | |||||
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Increase (decrease) in cash and cash equivalents
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134 | 427 | ||||||
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Cash and cash equivalents - beginning of period
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1,714 | 864 | ||||||
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Cash and cash equivalents - end of period
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$ | 1,848 | $ | 1,291 | ||||
Segment Operating Analysis
(unaudited)
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(in '000s metric tons)
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Processed volumes
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Oilseeds
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7,382 | 7,793 | 15,737 | 15,952 | ||||||||||||
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Corn
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6,226 | 6,036 | 11,520 | 12,210 | ||||||||||||
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Milling and Cocoa
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1,755 | 1,680 | 3,486 | 3,420 | ||||||||||||
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Total processed volumes
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15,363 | 15,509 | 30,743 | 31,582 | ||||||||||||
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(in millions)
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Net sales and other operating income
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Oilseeds Processing
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$ | 9,336 | $ | 9,663 | $ | 17,479 | $ | 17,378 | ||||||||
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Corn Processing
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3,638 | 2,828 | 6,691 | 5,663 | ||||||||||||
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Agricultural Services
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9,530 | 10,147 | 20,030 | 20,718 | ||||||||||||
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Other
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37 | 37 | 68 | 71 | ||||||||||||
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Total net sales and other operating income
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$ | 22,541 | $ | 22,675 | $ | 44,268 | $ | 43,830 | ||||||||
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
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Reported EPS (fully diluted)
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$ | 0.34 | $ | 0.43 | $ | 0.74 | $ | 1.03 | ||||||||
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Adjustments:
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LIFO (credit) charge (a)
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0.04 | (0.05 | ) | 0.07 | 0.05 | |||||||||||
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Loss on Australian-dollar foreign exchange hedges (b)
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0.05 | 0.05 | ||||||||||||||
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FCPA charge (c)
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0.03 | 0.06 | ||||||||||||||
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Restructuring and exit costs (d)
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0.08 | |||||||||||||||
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Sub-total adjustments
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0.12 | (0.05 | ) | 0.18 | 0.13 | |||||||||||
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Adjusted earnings per share (non-GAAP)
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$ | 0.46 | $ | 0.38 | $ | 0.92 | $ | 1.16 | ||||||||
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(a)
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The Company’s pretax changes in its LIFO reserves during the period, tax effected using the Company’s U.S. effective income tax rate.
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(b)
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The loss on Australian-dollar foreign exchange hedges tax effected using the Company’s U.S. effective income tax rate.
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(c)
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The FCPA charge related to an estimated provision for settlement with the government agencies pertaining to potential violations of anti-corruption practices net of estimated tax.
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(d)
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The restructuring and exit costs related primarily to the global workforce reduction program, tax effected using the applicable U.S., European and South American tax rates.
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Adjusted EPS is ADM’s fully diluted EPS after removal of the effect on Reported EPS of certain specified items as more fully described above. Management believes that Adjusted EPS is a useful measure of ADM’s performance because it provides investors additional information about ADM’s operations allowing better evaluation of ongoing business performance. Adjusted EPS is a non-GAAP financial measure and is not intended to replace or be an alternative to EPS, the most directly comparable GAAP financial measure, or any other measures of operating results under GAAP. Earnings amounts in the tables above have been divided by the company’s diluted shares outstanding for each respective quarter in order to arrive at an adjusted EPS amount for each specified item.