ADM Reports Second Quarter Earnings of $1.00 per Share, $1.02 per Share on an Adjusted Basis

July 31, 2018

CHICAGO--(BUSINESS WIRE)--Jul 31, 2018--Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended June 30, 2018.

“Our team executed exceptionally well to deliver outstanding results in the second quarter,” said ADM Chairman and CEO Juan Luciano.

“We continue to accelerate the execution of our strategic plan — optimizing our core, driving efficiencies, and expanding strategically — generating more than $150 million in run-rate savings, announcing three acquisitions in Nutrition, and closing on two new joint ventures overseas. Our actions, combined with robust global demand, position us to navigate today’s dynamic business environment and deliver strong results in the second half of 2018, and put us on a trajectory for continued future growth in earnings, returns and shareholder value.

“We are proud of the results we are delivering, committed to our continued improvement and growth, and confident about ADM’s future.”

EPS as reported of $1.00 includes a $0.03 per share charge related to asset impairment and restructuring activities, a negative $0.01 per share tax adjustment related to U.S. tax reform and certain discrete items, and a positive $0.02 per share adjustment related to LIFO. Adjusted EPS, which excludes these items, was $1.02. 1

1 Non-GAAP financial measures; see pages 4, 9 and 10 for explanations and reconciliations, including after-tax amounts.

Results of Operations

Origination results were up significantly over the second quarter of 2017.

Merchandising and Handling was up substantially year-over-year. North American Grain was a major contributor, as supply disruptions in Argentina and Brazil led to strong global demand for U.S. commodities, resulting in significantly higher volumes and margins for corn, wheat and soybean exports. Grain also benefited from solid risk management in basis positions, and from timing impacts from the first quarter. Global Trade’s diversified earnings base contributed positively to results, as losses related to the potential sorghum duty deposits were offset by strong performances in other areas, particularly ocean freight. Destination marketing volumes continued to grow in the quarter.

Transportation was significantly higher year-over-year, driven by increased volumes as U.S. waterways returned to more normal conditions. Transportation also benefited from ARTCO’s growing businesses in backhaul freight and stevedoring.

Oilseeds results were also up significantly over the prior-year period.

Crushing and Origination achieved a second-quarter record in crush volumes, delivering significantly higher year-over-year results amid continued strong soybean meal demand and robust crush margins. In South America, high origination volumes and improved margins, largely driven by more aggressive farmer selling and robust demand from China, contributed to strong results. Timing effects for the quarter were a net positive.

Refining, Packaging, Biodiesel and Other was up over the second quarter of 2017. Solid specialty and refined oils results were partially offset by weaker results in Golden Peanut and Tree Nuts.

Asia was lower on Wilmar results.

Carbohydrate Solutions results were modestly lower than the year-ago quarter.

Starches and Sweeteners was down versus the prior-year period. North American liquid sweeteners had a solid quarter and was in line with the year-ago period. Globally, starch volumes and dry sweetener margins were strong in the quarter, leading to good performances. The end of the EU sugar regime and the delay in the implementation of quotas in Turkey negatively impacted results in European liquid sweeteners. Flour milling was impacted by negative timing effects, and lower volumes in Caribbean operations.

Bioproducts results were down primarily on lower ethanol production volumes and higher costs due to plant downtime. Execution margins for ethanol were lower versus the prior year.

Nutrition delivered a 7 percent increase in revenue on a constant currency basis for the quarter, and earnings were significantly higher than the year-ago period.

WFSI results were up substantially versus the second quarter of 2017, with Specialty Ingredients, WILD Flavors and Health & Wellness all delivering improved sales and earnings. Specialty Ingredients benefited from improved volumes and margins in proteins, and from increased sales in fibers. In WILD Flavors, new business and an improved portfolio mix boosted sales and margins.

Animal Nutrition results were higher year-over-year, driven by stronger performances in lysine, as well as in pet premix and treats.

Other results increased on stronger ADM Investor Services earnings due to higher short-term interest rates.

Other Items of Note

ADM made changes to its segment reporting in the first quarter of 2018 to reflect the company’s new operating structure. To assist in reconciling the new segment results to the prior presentation, the table on page 11 provides financial information under the historical segmentation.

As additional information to help clarify underlying business performance, the table on page nine includes reported earnings and EPS as well as adjusted earnings and EPS.

Segment operating profit of $902 million for the quarter includes charges of $22 million ($0.03 per share) related to asset impairment and restructuring.

In Corporate results, unallocated corporate costs for the quarter increased due to higher accruals for performance-related compensation based upon a more favorable outlook for the year.

Other charges for the quarter in Corporate improved due to better results in the company’s investment in Compagnie Industrielle et Financiere des Produits Amylaces SA (CIP), and lower pension expenses.

The effective tax rate for the quarter was approximately 13 percent, down from approximately 28 percent in the prior year, due mainly to U.S. tax reform, which reduced the federal income tax rate from 35 percent to 21 percent; the 2017 biodiesel tax credit recorded in the first quarter that impacts our overall calendar-year rate; and certain favorable second-quarter discrete tax items.

Conference Call Information

ADM will host a webcast on July 31, 2018, 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 webcast or to download the slide presentation, go to www.adm.com/webcast. A replay of the webcast will also be available for an extended period of time at www.adm.com/webcast.

Forward-Looking Statements

Some of the above statements constitute forward-looking statements. These statements are based on many assumptions and factors that are subject to risk and uncertainties. ADM has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC reports. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements.

About ADM

For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve the vital needs of a growing world. Today, we’re one of the world’s largest agricultural processors and food ingredient providers, with approximately 31,000 employees serving customers in more than 170 countries. With a global value chain that includes approximately 500 crop procurement locations, 270 ingredient manufacturing facilities, 44 innovation centers and the world’s premier crop transportation network, we connect the harvest to the home, making products for food, animal feed, industrial and energy uses. Learn more at www.adm.com.

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