First Quarter 2024 Earnings Conference Call April 30, 2024 Proprietary business information of ADM. Proprietary business information of ADM. Cautionary Note Regarding Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact included in this release, are forward-looking statements. You can identify forwa ...

Financial Data and Key Metrics - Q1 2024 adjusted EPS was $1.46, a decrease from the prior year, driven by lower pricing and execution margins in the AS&O business [10] - Adjusted segment operating profit was $1.3 billion, down 24% YoY, primarily due to declines in ag services, oilseeds, and nutrition [10] - Operating cash flow before working capital was $900 million, reflecting strong cash generation despite market headwinds [4] - Trailing fourth quarter average adjusted ROIC was 11.2%, demonstrating disciplined capital management [4] Business Line Performance Ag Services & Oilseeds (AS&O) - AS&O operating profit was $864 million, impacted by lower commodity prices and ample supplies, partially offset by improved process volumes and manufacturing costs [12] - Ag Services subsegment saw lower operating profit due to stabilized trade flows and slower farmer selling in South America [13] - Crushing subsegment operating profit was $232 million, negatively impacted by increased imports of used cooking oil and anticipation of large South American supplies [13] - Refined products and other subsegment results were $157 million, with weaker North American refining margins due to increased used cooking oil imports [14] Carbohydrate Solutions - Carbohydrate solutions segment operating profit was $248 million, driven by strong demand and volume growth in BioSolutions [14] - Starches and sweeteners margins were strong in North America, but domestic ethanol margins were pressured due to high industry production and elevated stocks [15] - Vantage corn processing subsegment saw improved margins due to strong export demand for sustainably certified ethanol [15] Nutrition - Nutrition revenues were $1.8 billion, with human nutrition subsegment revenues partially offset by lower volumes in plant-based proteins and normalizing pricing in texturants markets [15] - Nutrition segment operating profit was $84 million, with human nutrition subsegment results of $76 million, lower than the prior year due to higher fixed cost absorption at Decatur East [16] - Animal nutrition subsegment results were $8 million, higher YoY due to cost optimization efforts and lower commodity prices [17] Market Performance - South America saw improved crush margins in Q2 due to increased farmer selling and currency devaluation, while Argentina faced challenges due to economic uncertainty and strikes [27] - North America is expected to see lower crush margins in Q2 and Q3, with recovery anticipated in Q4 due to increased soybean oil demand from renewable diesel facilities [28] - Europe is expected to maintain crush margins around $40 per metric ton, while China remains spot-driven with limited visibility [44] Strategic Direction and Industry Competition - The company is focused on three priorities for 2024: managing through the cycle, nutrition recovery, and enhanced return of cash to shareholders [5] - ADM is advancing its BioSolutions platform, with nearly 10% volume growth in Q1, and has increased its regenerative agriculture acreage goal to 5 million acres by 2025 [6] - The Drive for Excellence program has generated a pipeline of 1,200 validated proposals, targeting $500 million in cost savings over the next two years [7] - The company is leveraging its improved M&A playbook to integrate recent flavor acquisitions, with better-than-expected results forecasted [8] Management Commentary on Operating Environment and Future Outlook - Management expects global grain and oilseed supplies to increase, leading to easing commodity prices and moderating soybean crush margins in 2024 [19] - The company anticipates strong demand for vegetable oil from renewable diesel facilities, despite increased imports of used cooking oil [20] - ADM remains confident in its full-year planning assumptions, with expectations for sequential improvement in nutrition demand fulfillment and recovery in the second half of the year [22] Other Key Information - The company returned $1.3 billion to shareholders via share repurchases in Q1, with an additional $1 billion planned for the remainder of the year [18] - Corporate net interest expense guidance was raised from $500 million to $525 million due to reduced expectations for Federal Reserve rate cuts in 2024 [19] - The Decatur East plant is expected to resume operations in Q4, with headwinds in specialty ingredients persisting through the year [40] Q&A Summary Question: Impact of South American crop timing on crush margins [26] - South American farmer selling has improved in Brazil due to harvest progress and currency devaluation, while Argentina faces challenges from economic uncertainty and strikes [27] - Crush margins are expected to move to the lower end of the guided range in Q2 and Q3, with recovery anticipated in Q4 as U.S. production comes online [28] Question: Carbohydrate solutions segment outlook [31] - Strong demand and margins in starches and sweeteners are expected to drive Q2 performance, with solid export demand for sustainably certified ethanol supporting VCP results [32] Question: Refined products margin pressures [35] - North American refining margins were negatively impacted by increased used cooking oil imports, while EMEA and South America saw stronger biodiesel margins [36] - Timing impacts resulted in a $72 million negative YoY impact in Q1 [37] Question: Decatur East plant restart timeline [39] - The plant is expected to resume operations in Q4, with headwinds in specialty ingredients persisting through the year [40] Question: Soy crush margin outlook [42] - North America is expected to see lower crush margins in Q2 and Q3, with recovery in Q4 driven by increased soybean oil demand from renewable diesel facilities [43] Question: Ethanol margin divergence between starches and sweeteners and VCP [47] - VCP results were supported by strong export demand for sustainably certified ethanol, while domestic ethanol margins were pressured by high industry production [48] Question: Nutrition business restructuring [51] - The company is focusing on portfolio optimization and simplification, with a shift toward higher-margin specialty products in animal nutrition [52] - Sequential improvement in nutrition is expected, with headwinds from raw material price corrections and plant-based protein demand shifts [53] Question: Volume trends in nutrition [59] - Volumes held up well across most segments, except for specialty ingredients, which were impacted by the Decatur East plant downtime [61] Question: Soy meal demand and cost savings initiatives [63] - Increased soybean meal demand is expected in Q4, driven by lower prices and higher inclusion rates in poultry feed [64] - The Drive for Excellence program targets $500 million in cost savings, with 1/3 of the initiatives already showing progress [67] Question: Impact of blenders tax credit transition [69] - The transition to a producers tax credit in 2025 could create price discovery challenges, with regulatory clarity needed to support industry investments [70] Question: Green Bison JV contribution [75] - The Green Bison JV is ramping up and is expected to contribute to profits in 2024, with full capacity expected soon [77] Question: Sustainability initiatives in dry mills [79] - ADM is expanding its carbon capture and sequestration efforts, with plans to increase capacity from 2 to 7 wells, supporting decarbonization goals [80] - The doubling of regenerative agriculture acreage is driven by customer demand for Scope 3 emissions reductions and voluntary market growth [82]

Lower agricultural prices hurt performance at the agricultural company.Shares of Archer-Daniels-Midland (ADM -3.25%) were heading lower today after the agricultural company missed top-line estimates in its first-quarter earnings report. It did beat profit expectations, but earnings still fell.As a result, the stock was down 3.3% as of 11:05 a.m. ET on Tuesday. Falling prices weigh on resultsAs a grain processor and trader, ADM is sensitive to commodity prices, and falling prices due to an increase in supply ...

Archer Daniels Midland (ADM) reported $21.85 billion in revenue for the quarter ended March 2024, representing a year-over-year decline of 9.2%. EPS of $1.46 for the same period compares to $2.09 a year ago.The reported revenue represents a surprise of -2.46% over the Zacks Consensus Estimate of $22.4 billion. With the consensus EPS estimate being $1.35, the EPS surprise was +8.15%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to de ...

Financial Performance - Reported EPS for Q1 2024 was $1.42, with adjusted EPS at $1.46, reflecting a decrease of 33% and 30% respectively compared to Q1 2023[1][5][7] - Adjusted net earnings for Q1 2024 were $750 million, compared to $1,151 million in Q1 2023, reflecting a year-over-year decline of 34.8%[38] - The company reported a net earnings attributable to ADM of $729 million in Q1 2024, down from $1,170 million in Q1 2023, a decline of 37.8%[30] - Adjusted net earnings for the quarter ended June 30, 2023, were $927 million, with a projected decrease to $821 million for the quarter ended September 30, 2023[41] - Net earnings attributable to ADM for the four quarters ended March 31, 2024, totaled $3,042 million[41] Segment Performance - Segment operating profit for Q1 2024 was $1,311 million, down 24% year-over-year, while adjusted segment operating profit was $1,317 million, also a 24% decrease[2][5][7] - The Ag Services & Oilseeds segment reported an operating profit of $864 million, a decline of 29% from the prior year, primarily due to lower trade flows and margins[10][11] - Carbohydrate Solutions segment operating profit was $248 million, down 11% year-over-year, with the Starches & Sweeteners subsegment decreasing by $52 million[12][13] - Nutrition segment operating profit fell to $84 million, a 39% decrease, with Human Nutrition subsegment profit down approximately $62 million[14][15] - Other segment operating profit increased by 25% to $121 million, driven by higher Captive Insurance results[16] Revenue and Profitability - Revenues for Q1 2024 were $21,847 million, down from $24,072 million in Q4 2023, representing a decrease of 9.2%[30] - Gross profit fell to $1,659 million in Q1 2024 from $2,080 million in Q4 2023, a decrease of 20.2%[30] - Segment operating profit decreased to $1,311 million in Q1 2024 from $1,719 million in Q4 2023, a decline of 23.7%[28] Capital and Investments - The trailing four-quarter average adjusted return on invested capital (ROIC) was 11.2%[2] - Total adjusted Return on Invested Capital (ROIC) for the trailing four quarters ended March 31, 2024, was 11.2%[43] - Total adjusted invested capital as of June 30, 2023, was $33,722 million, with a slight decrease to $33,633 million projected for September 30, 2023[42] Cash Flow and Expenses - Cash and cash equivalents decreased to $830 million as of March 31, 2024, down from $899 million a year earlier, a decline of 7.7%[32] - Operating working capital decreased to $10,181 million in Q1 2024 from $13,457 million in Q1 2023, a decrease of 24.4%[32] - Interest expense increased to $166 million in Q1 2024 from $147 million in Q4 2023, a rise of 12.9%[30] - Interest expense for the quarter ended June 30, 2023, was $124 million, with a projected decrease to $97 million for the quarter ended September 30, 2023[41] - Income tax expense for the quarter ended June 30, 2023, was $204 million, with a slight increase to $207 million projected for the quarter ended September 30, 2023[45] Strategic Initiatives - The company is focusing on strategic initiatives including production ramp-up at Green Bison JV and scaling regenerative agriculture efforts[3] - The company aims to enhance comparability of underlying business performance through the use of non-GAAP financial measures like adjusted net earnings and adjusted EBITDA[39] Other Notable Metrics - Total processed volumes increased to 13,794,000 metric tons in Q1 2024 from 13,021,000 metric tons in Q1 2023, an increase of 5.9%[36] - The company reported a total of $1,080 million in depreciation and amortization for the four quarters ended March 31, 2024[45] - Equity earnings from Wilmar increased by 37% to $149 million compared to the prior year[10][11] - Adjusted EBITDA for the quarter ended June 30, 2023, was $1,629 million, with a decrease to $1,491 million projected for the quarter ended September 30, 2023[46] - Total adjustments for net earnings in the quarter ended September 30, 2023, were $173 million, leading to net adjustments of $133 million[41]

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Core Insights - The article emphasizes the importance of long-term investing over market timing, highlighting that trying to time the market can lead to significant missed opportunities for returns [11][17][19] - It discusses the historical performance of dividend aristocrats, which have consistently outperformed the market and provided reliable income through various economic cycles [40][46][50] - The article suggests that market downturns should be viewed as opportunities to buy quality companies at discounted prices, rather than as threats [91] Market Volatility and Investor Behavior - Stocks typically experience a 14% to 15% decline in any given year, driven by various economic factors, and the media often creates narratives to explain these fluctuations [4][5] - Historical data shows that there have been 28 pullbacks, corrections, and bear markets in the last 15 years, averaging one every six months [6][8] - Investors who remained invested during these downturns saw substantial gains, with tech investors achieving over 700% returns [8][11] Performance of Dividend Aristocrats - Dividend aristocrats, companies with a history of increasing dividends for at least 25 consecutive years, have shown resilience during economic downturns and have outperformed the S&P 500 [40][46] - The average yield of these aristocrats is 4.6%, significantly higher than the S&P 500, and they have a historical discount to fair value of 18% [46][47] - Analysts project a consensus total return potential of 29% for these companies over the next year, driven by their strong fundamentals and dividend growth [47][48] Investment Strategy Recommendations - The article advocates for a focus on high-yield dividend aristocrats as a strategy for long-term wealth accumulation, especially during market corrections [40][91] - It highlights the importance of reinvesting dividends to maximize returns, with expectations of 12% to 13% annual income growth if these companies perform as anticipated [47][57] - The analysis suggests that missing the best market days can significantly impact long-term returns, reinforcing the need for a buy-and-hold strategy [19][33][37]

Core Viewpoint - Archer Daniels Midland (ADM) is expected to report a significant decline in quarterly earnings and revenues, with analysts predicting earnings of $1.35 per share, a 35.4% decrease year-over-year, and revenues of $22.4 billion, down 7% from the previous year [1] Revenue and Earnings Estimates - The consensus EPS estimate has been revised down by 2.7% in the last 30 days, indicating a reassessment by analysts [1] - Analysts forecast 'Revenues- Other' at $104.39 million, reflecting a year-over-year increase of 1.4% [2] - 'Revenues- Carbohydrate Solutions' is expected to reach $3.15 billion, showing a decline of 10.9% year-over-year [2] - 'Revenues- Total Ag Services and Oilseeds' is projected at $17.13 billion, indicating a decrease of 7.8% year-over-year [2] Sales to External Customers - 'Sales to external customers- Ag Services and Oilseeds- Crushing' is estimated at $3.23 billion, down 12.3% year-over-year [3] - 'Sales to external customers- Ag Services and Oilseeds- Refined Products and Other' is expected to be $2.92 billion, reflecting an 8.7% decline [3] - 'Sales to external customers- Carbohydrate Solutions- Starches and Sweeteners' is projected at $2.44 billion, indicating a decrease of 10.8% year-over-year [3] - 'Sales to external customers- Nutrition- Human Nutrition' is estimated at $932.21 million, showing a slight decline of 0.4% [3] - 'Sales to external customers- Carbohydrate Solutions- Vantage Corn Processors' is expected to reach $713.54 million, down 10.8% year-over-year [3] Processed Volumes - 'Revenues- Total Nutrition' is projected at $1.83 billion, indicating a year-over-year change of -1.1% [4] - 'Processed volumes - Oilseeds' are estimated at 8,825.02 Kmt, compared to 8,627 Kmt in the same quarter last year [4] - 'Total processed volumes' are expected to reach 13,161.86 Kmt, up from 13,021 Kmt reported in the same quarter last year [4] - 'Processed volumes - Corn' are projected at 4,414.62 Kmt, slightly up from 4,394 Kmt in the same quarter last year [4] Stock Performance - ADM shares have decreased by 2.9% over the past month, compared to a 3.2% decline in the Zacks S&P 500 composite [5] - ADM holds a Zacks Rank 3 (Hold), indicating it is expected to closely follow overall market performance in the near term [5]

Core Insights - Global crop supplies have reached a cyclical low, necessitating increased agricultural production to avoid food inflation [2][3] - Three key stocks in the agricultural sector are highlighted: Deere & Co. (DE), Corteva Inc. (CTVA), and Archer-Daniels-Midland Co. (ADM), each offering different risk and reward profiles [2][3] Group 1: Deere & Co. (DE) - Deere's stock is currently priced at $394.31, with a P/E ratio of 11.48 and a dividend yield of 1.49% [6] - The stock has a price target of $433.28, indicating a potential upside of 10% from current levels [6] - Despite a projected 2.5% decline in EPS for the year, Deere's turf and utility equipment sales have seen double-digit growth, suggesting resilience in its business model [6][3] Group 2: Corteva Inc. (CTVA) - Corteva's stock is trading at $54.79, with a P/E ratio of 53.72 and a dividend yield of 1.17% [7] - The stock commands a significant premium, trading at 458% above the agricultural production industry's average P/E of 9.3x, justified by a projected 22.2% EPS growth [7] - Analysts project a price target of $63.29, representing a potential upside of 15% from current levels [7] Group 3: Archer-Daniels-Midland Co. (ADM) - Archer-Daniels' stock is priced at $60.65, with a P/E ratio of 9.48 and a dividend yield of 3.30% [10] - The stock trades at a discount compared to Deere and Corteva, with a price target of $67.50, indicating a potential upside of 11.5% [10] - With a low beta of 0.7, Archer-Daniels offers stability during high inflation periods, making it an attractive option for risk-averse investors [10]

Archer Daniels Midland Company (ADM) is slated to report first-quarter 2024 results on Apr 30, before market open. The company is likely to report top and bottom-line declines when it posts first-quarter 2024 results.The Zacks Consensus Estimate for the company’s quarterly earnings is pegged at $1.35 per share, which suggests a decline of 35.4% from the year-ago quarter’s reported figure. The consensus mark has remained stable in the past 30 days. For first-quarter 2024 revenues, the consensus mark is pegge ...