ADM(ADM) - 2022 Q4 - Annual Report

Part I Business ADM is a global agricultural supply chain manager and processor, structured into three segments, emphasizing food security and sustainability - ADM operates as a global agricultural supply chain manager and processor, structured into three reportable segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition, focusing on food security and sustainability[6][13] - The company's "Strive 35" environmental goals aim to reduce Scope 1, 2, and 3 GHG emissions by 25%, energy intensity by 15%, and water intensity by 10% by 2035 from a 2019 baseline[11][47] Product Revenue Contribution | Product | % of Revenues (2022) | % of Revenues (2021) | % of Revenues (2020) | | :--- | :--- | :--- | :--- | | Soybeans | 17% | 18% | 18% | | Corn | 14% | 14% | 12% | | Soybean Meal | 12% | 12% | 14% | - As of December 31, 2022, ADM employed approximately 42,001 people globally, with 75% male and 25% female employees[57][58][59] - ADM aims for gender parity in senior leadership by 2030, with female representation at 28% in 2022, up from 21% in 2018[60] Risk Factors The company manages diverse risks including operational, strategic, geopolitical, and regulatory factors, impacting its global operations - Operational risks include business disruptions from equipment failure, natural disasters, and transportation issues, alongside sensitivity to energy price fluctuations affecting costs and product prices[72][73][74] - Strategic and economic risks arise from highly volatile agricultural commodity prices influenced by weather, government policies, and global demand, alongside intense competition based on price and quality[81][87] - Geopolitical risks, particularly the conflict in Ukraine, could impact global margins through increased commodity and energy costs, supply chain disruptions, and risks to regional assets and operations[96][97] - Technological risks include reliance on key IT systems and exposure to cybersecurity breaches, with a new ERP system being implemented to mitigate legacy system risks[100][101][102] - Regulatory risks stem from operating in over 190 countries, requiring compliance with diverse laws, where changes in government policies like the U.S. Renewable Fuel Standard can significantly impact operating results[104][106] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - The Company has no unresolved staff comments[108] Properties ADM owns and leases extensive processing plants, storage facilities, and a comprehensive transportation network globally - The Company owns a significant transportation fleet, including approximately 1,800 barges, 10,000 rail cars, 240 trucks, and 3 ocean-going vessels, supplemented by leased assets[110] Daily Processing Capacity by Segment | Segment | Owned Daily Processing Capacity (metric tons) | Leased Daily Processing Capacity (metric tons) | | :--- | :--- | :--- | | Ag Services and Oilseeds | 160,000 | 2,000 | | Carbohydrate Solutions | 95,000 | 1,000 | | Nutrition | 101,000 | 88,000 | Storage Capacity by Segment | Segment | Owned Storage Capacity (metric tons) | Leased Storage Capacity (metric tons) | | :--- | :--- | :--- | | Ag Services and Oilseeds | 17,352,000 | 2,239,000 | | Carbohydrate Solutions | 588,000 | 104,000 | | Nutrition | 344,000 | 2,000 | Legal Proceedings The company is routinely involved in legal actions and regulatory inquiries, including ethanol price manipulation lawsuits - The Company is routinely involved in legal actions and regulatory inquiries, recording liabilities for probable and estimable material loss contingencies[119] - ADM is defending against class-action lawsuits alleging ethanol benchmark price manipulation, denying liability and expecting no material adverse effect on its financial condition[477] Mine Safety Disclosures The company reports no applicable mine safety disclosures for its operations - None[120] Part II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities ADM common stock trades on NYSE, with an active repurchase program extended through 2024 for up to 100 million shares - The Company's common stock trades on the NYSE under symbol "ADM", with 8,153 registered stockholders as of December 31, 2022[122] Stock Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 1 - Oct 31, 2022 | 115,433 | $94.162 | | Nov 1 - Nov 30, 2022 | 837,596 | $94.786 | | Dec 1 - Dec 31, 2022 | 1,722,577 | $92.864 | | Total Q4 2022 | 2,675,606 | $93.522 | - The Board extended the stock repurchase program through December 31, 2024, authorizing up to an additional 100 million shares, with 87,812,005 shares remaining available as of December 31, 2022[124] Management's Discussion and Analysis of Financial Condition and Results of Operations ADM's 2022 net earnings increased 60% to $4.3 billion, driven by strong segment performance and robust liquidity - Net earnings attributable to controlling interests for 2022 increased by 60% to $4.3 billion, up from $2.7 billion in 2021, with adjusted segment operating profit rising to $6.6 billion from $4.8 billion[142] - Ag Services and Oilseeds operating profit increased 58%, driven by strong global trade, higher South American origination margins, and robust demand for protein and renewable diesel[158] - Carbohydrate Solutions operating profit increased 6%, with strong Starches and Sweeteners results offsetting lower ethanol margins in Vantage Corn Processors[159] - Nutrition operating profit grew 7%, driven by strong Health and Wellness and Animal Nutrition performance, despite lower Flavors results due to demand and cost challenges[160] - Cash provided by operating activities was $3.5 billion in 2022, a decrease from $6.6 billion in 2021 due to working capital changes, while maintaining strong liquidity with $10.3 billion available at year-end[173][178] Quantitative and Qualitative Disclosures About Market Risk ADM manages market risks from commodity prices, foreign currency, and interest rates using derivatives and VaR limits - The company manages commodity price risk using derivative contracts, volumetric limits, and VaR monitoring, with a hypothetical 10% adverse price change resulting in a $39 million market risk for 2022[197][198][199] - The company faces foreign currency risk from operations in over 70 countries; a hypothetical 10% adverse exchange rate change could result in a $1.6 billion loss on $13.0 billion invested in foreign subsidiaries[201][202] Fair Value of Long-Term Debt and Market Risk | Metric | Dec 31, 2022 (in millions) | Dec 31, 2021 (in millions) | | :--- | :--- | :--- | | Fair value of long-term debt | $7,502 | $9,512 | | Fair value amount over (under) carrying value | $(232) | $1,500 | | Market risk (from 50 bps rate decrease) | $342 | $490 | Financial Statements and Supplementary Data This section presents audited consolidated financial statements for 2020-2022, including revenues, net earnings, and balance sheet data Consolidated Statements of Earnings | (In millions, except per share amounts) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenues | $101,556 | $85,249 | $64,355 | | Gross Profit | $7,570 | $5,987 | $4,453 | | Net Earnings Attributable to Controlling Interests | $4,340 | $2,709 | $1,772 | | Diluted earnings per common share | $7.71 | $4.79 | $3.15 | Consolidated Balance Sheets | (In millions) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Total Current Assets | $35,410 | $31,909 | | Total Assets | $59,774 | $56,136 | | Liabilities & Equity | | | | Total Current Liabilities | $24,191 | $21,948 | | Long-term debt | $7,735 | $8,011 | | Total Shareholders' Equity | $24,317 | $22,508 | Consolidated Statements of Cash Flows | (In millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by Operating Activities | $3,478 | $6,595 | $(2,386) | | Net cash used in Investing Activities | $(1,400) | $(2,669) | $4,465 | | Net cash used in Financing Activities | $(2,499) | $(1,118) | $(423) | - In fiscal year 2021, the Nutrition segment completed five acquisitions for an aggregate consideration of $1.6 billion, significantly expanding capabilities with additions like P4, Deerland, and Sojaprotein[279] - The company's accounts receivable securitization program provides up to $2.6 billion in funding, fully utilized as of December 31, 2022[358] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on accounting or financial disclosure matters - None[495] Controls and Procedures Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded the Company's disclosure controls and procedures were effective as of December 31, 2022[496] - Management assessed and concluded internal control over financial reporting was effective as of December 31, 2022, attested by Ernst & Young LLP[499] Other Information The company reports no other information for this item - None[500] Part III Directors, Executive Officers and Corporate Governance This section details executive officers and incorporates director and corporate governance information by reference - Information on directors, code of conduct, and the audit committee is incorporated by reference from the definitive proxy statement[502] - Executive officers include Juan R. Luciano (Chairman, CEO, and President, age 61) and Vikram Luthar (SVP and CFO, age 56)[504][505] Executive Compensation Executive and director compensation information is incorporated by reference from the definitive proxy statement - Information responsive to this item is incorporated by reference from the definitive proxy statement for the Company's annual meeting of stockholders[507] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information for beneficial owners, management, and equity plans is incorporated by reference - Information responsive to this item is incorporated by reference from the definitive proxy statement for the Company's annual meeting of stockholders[508] Certain Relationships and Related Transactions, and Director Independence Related party transactions and director independence information is incorporated by reference from the proxy statement - Information responsive to this item is incorporated by reference from the definitive proxy statement for the Company's annual meeting of stockholders[509] Principal Accounting Fees and Services Information on independent auditor fees and audit committee pre-approval policies is incorporated by reference - Information responsive to this item is incorporated by reference from the definitive proxy statement for the Company's annual meeting of stockholders[510] Part IV Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and exhibits filed with the Form 10-K, including valuation allowances Schedule II - Valuation and Qualifying Accounts and Reserves | (In millions) | Beginning Balance (Jan 1, 2022) | Additions | Deductions | Ending Balance (Dec 31, 2022) | | :--- | :--- | :--- | :--- | :--- | | Allowance for doubtful accounts | $122 | $88 | $(12) | $199 | | Income tax valuation allowance | $281 | $18 | $(90) | $209 | - A detailed list of exhibits includes the company's Bylaws, debt instrument Indentures, equity compensation plans, and required CEO/CFO certifications[515][521][528] Form 10-K Summary This item is listed in the table of contents but contains no substantive information - This item is noted as 'Not Applicable' in the exhibit list[528]