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ADM is a global leader in agricultural supply chain management and processing, offering a diverse range of products and solutions across three main business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The company is involved in the origination, merchandising, transportation, and storage of agricultural raw materials, and processes oilseeds into vegetable oils and protein meals . ADM also converts corn and wheat into sweeteners, starches, syrups, glucose, and dextrose, and produces industrial alcohol . Additionally, ADM provides plant-based proteins, natural flavors, probiotics, and animal health and nutrition products .
- Ag Services and Oilseeds - Manages the origination, merchandising, transportation, and storage of agricultural raw materials, and processes oilseeds into vegetable oils and protein meals. Supplies peanuts and peanut-derived ingredients and engages in structured trade finance activities .
- Carbohydrate Solutions - Converts corn and wheat into products such as sweeteners, starches, syrups, glucose, and dextrose, and produces alcohol for industrial use. Involved in carbon capture and sequestration initiatives .
- Nutrition - Provides ingredients and solutions including plant-based proteins, natural flavors, and probiotics, and processes and distributes animal health and nutrition products .
- Given the material weaknesses identified in your internal controls and financial reporting, can you elaborate on the specific steps you are taking to remediate these issues and ensure integrity moving forward?
- You've lowered your full year 2024 adjusted earnings per share guidance due to internal operational challenges and slow market demand; can you provide more detail on these challenges and how you plan to address them?
- With regulatory uncertainty impacting canola crush margins and delays in new nutrition projects due to customer cost management, what strategies are you implementing to mitigate these headwinds and drive growth in these areas?
- Considering your plans to optimize the portfolio through targeted divestitures or rationalizations, can you specify which areas or assets you're evaluating and how these actions will enhance shareholder value?
- As you focus on capital allocation and mentioned capital expenditures of approximately $1.5 billion, how are you balancing necessary maintenance investments with opportunities in digital enhancements and operational improvements in a challenging market environment?
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Recent developments and announcements about ADM.
Corporate Leadership
Leadership Change
Carrie Nichol is appointed as the new Vice President and Chief Accounting Officer of ADM, effective March 1, 2025. She will succeed Molly Strader Fruit, who will transition to the role of Vice President, Total Rewards and HR Operations. Nichol joins ADM from Cargill, where she was the Senior Vice President, Chief Accounting Officer, and Global Process Leader.
Financial Reporting
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Net Earnings: ADM reported net earnings of $18 million for the third quarter of 2024. However, adjusted net earnings were significantly higher at $530 million, reflecting adjustments for non-cash charges and other specified items .
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Earnings Per Share (EPS): The company reported a GAAP EPS of $0.04, while the adjusted EPS was $1.09, both showing a decline compared to the previous year .
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Revenue and Profit: Total revenues for the quarter were $19,937 million, down from $21,695 million in the same quarter last year. The total segment operating profit was $1,037 million, a decrease of 28% from the previous year .
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Segment Performance:
- Ag Services & Oilseeds: This segment saw a 43% decline in operating profit to $480 million, impacted by lower margins and higher logistics costs .
- Carbohydrate Solutions: Operating profit was slightly down by 3% to $452 million, with strong performance in starches and sweeteners offset by lower margins in other areas .
- Nutrition: The segment's operating profit decreased by 19% to $105 million, affected by lower margins and higher costs in Human Nutrition .
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Cash Flows: Year-to-date cash flows from operating activities were $2,468 million, compared to $1,891 million in the prior year period .
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Outlook: ADM anticipates continued challenges with softer market conditions expected into the next year. The company is focusing on productivity and operational excellence to drive value creation .
Earnings Call
ADM recently held its third quarter earnings call, where several key points were discussed. The company reported a third quarter adjusted earnings per share of $1.09 and a total segment operating profit of $1 billion, bringing the year-to-date figures to $3.61 per share and $3.2 billion in operating profit for 2024 . Despite these results, ADM acknowledged challenges, including a decline in total segment operating profit and operating cash flow due to lower net earnings compared to the previous year .
Management provided forward guidance, lowering the full-year 2024 adjusted earnings per share to a range of $4.50 to $5.00, citing slow market demand and internal operational challenges as contributing factors . The company also anticipates corporate costs to be between $1.7 billion and $1.8 billion, with capital expenditures expected to be approximately $1.5 billion .
Strategically, ADM is focusing on cost management and operational resilience, with efforts to enhance internal controls and financial reporting . The company is also prioritizing cash generation and portfolio optimization to improve returns on invested capital (ROIC) .
During the call, analysts inquired about various aspects of ADM's operations. Questions were raised about the Nutrition segment, particularly regarding the impact of unplanned downtime at the Decatur East facility and the performance of the Human Nutrition business . Management highlighted growth in the Flavors and Health & Wellness segments, despite some challenges in other areas .
ADM also discussed the impact of global market conditions, including regulatory uncertainties and changes in commodity production in China, which have affected trade dynamics . The company is actively managing these challenges through scenario planning and maintaining agility in its operations .
Overall, ADM is navigating a challenging market environment by focusing on internal efficiencies and strategic initiatives to drive future growth and shareholder value.
Earnings Report
ADM Third Quarter 2024 Earnings Results
Archer-Daniels-Midland Company (ADM) released its third quarter 2024 earnings results on November 18, 2024. Here are the key highlights from the report:
These results reflect the ongoing challenges in the market, including lower margins and higher costs, which have impacted ADM's financial performance in the third quarter of 2024.
Financial Restatements
Financial Restatement Alert: Archer-Daniels-Midland Company (ADM)
Date of Announcement: November 4, 2024
Details of the Restatement: Archer-Daniels-Midland Company (ADM) has announced that it will restate its financial statements for fiscal year 2023 and the first two quarters of 2024. This decision follows discussions with the U.S. Securities and Exchange Commission and is due to errors in segment information disclosure. The restatement will address intersegment sales that were either not in accordance with prior disclosures or misclassified as intrasegment sales. These errors were identified during the testing of new controls implemented to remediate a previously identified material weakness in the company's internal control over financial reporting .
Potential Effects on the Company: The restatements are not expected to materially impact ADM's consolidated financial statements, including earnings, comprehensive income, balance sheets, cash flow, or shareholders' equity. However, the company is actively working on enhancing its internal controls and has provided training to relevant personnel to prevent future errors. The management is also in discussions with its independent registered public accounting firm, Ernst & Young LLP, to ensure the accuracy and integrity of its financial reporting .
Forward-Looking Statements: ADM has issued cautionary notes regarding forward-looking statements, highlighting the risks and uncertainties involved. These statements are not guarantees of future performance and are subject to change based on various factors .
Conclusion: ADM is taking significant steps to address the identified issues and improve its financial reporting processes. The restatement is a proactive measure to ensure compliance and accuracy in its financial disclosures.
For more detailed information, please refer to the company's official filings and announcements.