ADM Reports Record Second Quarter Earnings per Share of $1.26, $1.33 on an Adjusted Basis; Expects Momentum to Continue in Second Half, Leading to Very Strong Full-Year Outlook

• Q2 net earnings of $712 million; adjusted net earnings of $754 million
• Segment operating profit up more than 40%
• ROIC of 9.7%, significantly higher than the prior-year period’s 8.1%
• 27% year-over-year Q2 operating profit growth in Nutrition, raising segment’s OP growth expectations for full year to 20%

ADM (NYSE: ADM) today reported financial results for the quarter ended June 30, 2021.

“It was yet another excellent quarter for ADM, as our team delivered record earnings, with strong year-over-year profit growth across all three business units,” said Chairman and CEO Juan Luciano.

“This is a very different ADM than even a few short years ago, and our transformation is far from over. Our productivity efforts are powering our execution, and — combined with our unparalleled global footprint and strong risk management — supported outstanding results in both Ag Services & Oilseeds and Carbohydrate Solutions. And we’re driving innovation, which helped support record top-line and bottom-line results in Nutrition; in fact, we are now raising our expectations of full-year profit growth for Nutrition to 20 percent.

“We’re excited about our growth trajectory as we continue to expand our participation in large and fast-growing categories, from alternative proteins to renewable green diesel to plant-based biosolutions, with all of our strategic efforts underpinned by our unique opportunity to use ADM’s integrated value chain to advance decarbonization of the food and agriculture industries. Given our great start to the year and our expectation of continued momentum in the second half, we are confident in delivering very strong full-year earnings, and we remain well-positioned for robust, sustained growth in the years to come.”

Second Quarter 2021 Highlights

• Q2 2021 EPS as reported of $1.26 includes a $0.16 per share charge related to asset impairment and non-cash pension settlement, a $0.06 per share gain related to the mark-to-market adjustment on the Wilmar exchangeable bond, and a $0.03 gain related to the sale of certain assets. Adjusted EPS, which excludes these items, was $1.33.¹

¹ Non-GAAP financial measures; see pages 5, 10, 11 and 12 for explanations and reconciliations, including after-tax amounts.

Quarterly Results of Operations

Ag Services & Oilseeds delivered operating profits almost 40 percent higher than the previous year’s quarter.

• Ag Services results were higher year over year. The North American origination business effectively managed its positions in a dynamic pricing environment, and also delivered significantly higher export volumes, driven by corn sales to China. South American origination was impacted by slower farmer selling and high commodity prices, which impacted contract fulfillment. Global trade performance was lower than the strong second quarter of 2020, with results driven partially by timing impacts that should reverse.

• Crushing had substantially higher year-over-year results. The business executed well in an environment of strong vegetable oil demand to deliver higher execution margins in North American soy and EU softseeds. Results were partially offset by weaker soybean crush margins in South America. In addition, there were approximately $70 million in net incremental negative timing effects, which should reverse in the coming quarters.

• Refined Products and Other results were significantly higher than the prior-year period, driven by continued recovery in foodservice as well as positive timing effects in North America, partially offset by impacts of the reduction in Brazilian biodiesel mandates.

• Equity earnings from Wilmar were higher year over year.

Carbohydrate Solutions results were almost double those of the prior-year period.

• Starches and Sweeteners, including ethanol production from our wet mills, delivered substantially higher year-over-year results, driven by about $90 million in positioning gains across the ethanol complex in a highly dynamic environment, as well as more normalized results from corn oil. Sweetener volumes were higher, reflecting the beginnings of a recovery in demand from the foodservice channel. Ethanol margins improved versus the prior-year period, driven by a resurgence in driving miles in the U.S.

• Vantage Corn Processors results were much higher than the second quarter of 2020, supported by the resumption of production at our two dry mills, improved fuel ethanol margins and favorable performance in USP-grade industrial alcohol from our Peoria complex.

Nutrition delivered a record Q2, with 15 percent revenue growth and 27 percent higher year-over-year profits.

• Human Nutrition revenues were 13 percent higher than the second quarter of last year on a constant currency basis, and operating profits were up 24 percent. In North America and EMEA, the flavors business delivered strong volumes and improved product mix, particularly in the beverage segment. Specialty Ingredients delivered strong sales growth in specialty proteins, though results were lower due to certain one-time costs, mainly in texturants. In Health & Wellness, stronger sales and margins in probiotics were offset by higher costs in fibers due to planned facility downtime.

• Animal Nutrition revenue was 17 percent higher year over year on a constant currency basis and profits were up 44 percent as improved demand and margins in amino acids, strength in feed additives and ingredients, and better performance in EMEA more than offset COVID-19 and labor-related impacts in other regions.

Other Business results were substantially lower than the prior-year period, driven primarily by captive insurance underwriting losses, most of which were offset by corresponding recoveries in other business segments.

Other Items of Note

As additional information to help clarify underlying business performance, the table on page 10 includes reported earnings and EPS as well as adjusted earnings and EPS.

Segment operating profit of $1.1 billion for the quarter includes charges related to asset impairment and restructuring of $37 million ($0.05 per share) and gains on sales of assets of $22 million ($0.03 per share).

In Corporate results, interest expense decreased from the prior year on lower interest rates and the favorable liability management actions taken in the prior year. Unallocated corporate costs were higher year over year due primarily to higher performance-related compensation accruals, higher IT operating and project-related costs, and transfers of costs from business segments into the centralized centers of excellence in supply chain and operations. Other income increased due primarily to a mark-to-market investment gain in the ADM Ventures portfolio. Corporate results also included a non-cash pension settlement charge of $82 million ($0.11 per share) and a gain related to the mark-to-market adjustment on the Wilmar exchangeable bond of $30 million ($0.06 per share).

The effective tax rate for the quarter was approximately 14 percent.

Note: Additional Facts and Explanations

Additional facts and explanations about results and industry environment can be found at the end of the ADM Q2 Earnings Presentation at www.adm.com/webcast.

Conference Call Information

ADM will host a webcast on July 27, 2021, at 8 a.m. Central Time to discuss financial results and provide a company update. To listen to the webcast, 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 our comments and materials in this presentation constitute forward-looking statements that reflect management’s current views and estimates of future economic circumstances, industry conditions, Company performance and financial results. These statements and materials 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 as a result of new information or future events.

About ADM

At ADM, we unlock the power of nature to provide access to nutrition worldwide. With industry-advancing innovations, a complete portfolio of ingredients and solutions to meet any taste, and a commitment to sustainability, we give customers an edge in solving the nutritional challenges of today and tomorrow. We’re a global leader in human and animal nutrition and the world’s premier agricultural origination and processing company. Our breadth, depth, insights, facilities and logistical expertise give us unparalleled capabilities to meet needs for food, beverages, health and wellness, and more. From the seed of the idea to the outcome of the solution, we enrich the quality of life the world over. Learn more at www.adm.com.

Financial Tables Follow

Source: Corporate Release

Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit, a non-GAAP financial measure, is segment operating profit excluding specified items. Management believes that segment operating profit and adjusted segment operating profit are useful measures of ADM’s performance because they provide investors information about ADM’s business unit performance excluding corporate overhead costs as well as specified items. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not be considered alternatives to income before income taxes, the most directly comparable GAAP financial measure, or any other measure of consolidated operating results under U.S. GAAP.

Adjusted net earnings reflects ADM’s reported net earnings after removal of the effect on net earnings of specified items as more fully described above. Adjusted EPS reflects ADM’s fully diluted EPS after removal of the effect on EPS as reported of specified items as more fully described above. Management believes that Adjusted net earnings and Adjusted EPS are useful measures of ADM’s performance because they provide investors additional information about ADM’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. These non-GAAP financial measures are not intended to replace or be alternatives to net earnings and EPS as reported, the most directly comparable GAAP financial measures, or any other measures of operating results under GAAP. Earnings amounts described above have been divided by the company’s diluted shares outstanding for each respective period in order to arrive at an adjusted EPS amount for each specified item.

Adjusted ROIC is Adjusted ROIC earnings divided by adjusted invested capital. Adjusted ROIC earnings is ADM’s net earnings adjusted for the after-tax effects of interest expense and specified items. Adjusted invested capital is the sum of ADM’s equity (excluding noncontrolling interests) and interest-bearing liabilities adjusted for the after-tax effect of specified items. Management believes Adjusted ROIC is a useful financial measure because it provides investors information about ADM’s returns excluding the impacts of specified items and increases period-to-period comparability of underlying business performance. Management uses Adjusted ROIC to measure ADM’s performance by comparing Adjusted ROIC to its weighted average cost of capital (WACC). Adjusted ROIC, Adjusted ROIC earnings and Adjusted invested capital are non-GAAP financial measures and are not intended to replace or be alternatives to GAAP financial measures.

Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. Management believes that adjusted EBITDA is a useful measure of the Company’s performance because it provides investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace or be an alternative to earnings before income taxes, the most directly comparable GAAP financial measure.

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