ADM(ADM) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record fourth quarter adjusted earnings per share of $1.50, with adjusted segment operating profit of $1.4 billion, a 23% increase from Q4 2020 [8] - Full year adjusted EPS was $5.19, also a record, with full year adjusted segment operating profit of $4.8 billion [9] - Trailing four quarter adjusted EBITDA was $4.9 billion, $1.25 billion more than the previous year, with an average adjusted ROIC of 10% [8] Business Line Data and Key Metrics Changes - Ag Services and Oilseeds delivered full year operating profit of $2.8 billion, with strong performance across sub-segments [9] - Carbohydrate Solutions achieved full year operating profits of $1.3 billion, despite lower results in EMEA due to higher input costs [10][15] - The Nutrition segment saw full year revenues increase by 16% and operating profit of $691 million, a 20% year-over-year increase [11] Market Data and Key Metrics Changes - The ag services team performed well with increased export volumes outside of China, driven by strong global demand [14] - The company expects a favorable global demand environment for ag services and oilseeds in 2022, particularly due to a drought in South America [24] - The nutrition business is projected to continue growing with operating profits expected to increase by over 15% in 2022 [26] Company Strategy and Development Direction - The company unveiled a strategic plan focused on organic growth and productivity, with a planned increase in CapEx to about $1.3 billion for expansion projects [12][29] - The company aims to enhance shareholder value through a balanced financial framework, including an 8% increase in quarterly dividends [12] - The focus remains on aligning with global trends in food security, health, and sustainability [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting strong performance across all segments, particularly in ag services and oilseeds [30] - The company anticipates continued strong demand for ethanol, supported by recovering domestic demand and favorable regulatory conditions [39] - Geopolitical tensions and supply chain disruptions are acknowledged as potential risks, but the company remains focused on managing these challenges [43][74] Other Important Information - The effective tax rate for Q4 2021 was approximately 21%, up from 8% in the prior year, with expectations for 2022 to be in the range of 16% to 19% [22] - The company maintains a solid balance sheet with a net debt to total capital ratio of about 28% and available liquidity of approximately $9 billion [22] Q&A Session Summary Question: CapEx needs and investment priorities - Management indicated a higher CapEx of about $1.3 billion for 2022, focusing on organic growth and productivity enhancements [29] Question: Outlook for ethanol business - Management expressed optimism for the ethanol business, expecting strong domestic demand and favorable export conditions [39] Question: Impact of geopolitical tensions on business - Management noted that supply disruptions could prolong high commodity prices, with close monitoring of crop developments in South America and geopolitical situations [43] Question: Pricing for corn sweeteners - Management confirmed that they have maintained margins through negotiations, offsetting higher corn costs [57] Question: Renewable diesel and legislative outlook - Management is optimistic about the extension of the biodiesel blender's credit and supportive legislation for sustainable aviation fuel [80]