Chicago, IL - ADM (NYSE: ADM) on Oct. 29, 2020 reported financial results for the quarter ended September 30, 2020.
• Net earnings of $225 million; adjusted net earnings of $499 million
• Outstanding results, great execution in all three businesses
• Continued focus on Readiness to drive growth, innovation, sustainability
“We delivered an outstanding quarter, and I am proud of our team’s continued great performance,” said Chairman and CEO Juan Luciano.
“Across the enterprise, ADM colleagues are doing what it takes to help our customers and our company succeed and grow.
"Our strategic initiatives, combined with exceptional execution, are driving strong results across all of our businesses.
"Readiness is enhancing our performance, accelerating our work in areas ranging from operations to sales.
"Our strong cash generation is allowing us to retire higher-cost debt while retaining balance sheet flexibility. And Nutrition continues its impressive upward trajectory, delivering a fifth consecutive quarter of 20-plus percent year-over-year operating profit growth.
“From our Strive 35 sustainability goals, to our partnership with Spiber to produce plant-based polymers, to the announcement of a significant expansion in probiotics with our new state-of-the art facility in Valencia, we’re advancing our work to enrich the quality of life around the globe.
"We’re excited about our future as we look ahead to another strong quarter, with positive momentum continuing through 2021.”
Results of Operations
Ag Services & Oilseeds results were higher than the third quarter of 2019. Both Ag Services and Crushing saw expanding margins during the quarter, resulting in approximately $155 million in total negative timing effects, which are expected to reverse in the coming quarters.
Carbohydrate Solutions results were significantly higher year over year.
Nutrition delivered its fifth consecutive quarter of 20-plus percent year-over-year profit growth.
Other Business results were lower, driven by lower ADM Investor Services earnings and captive insurance underwriting losses, including a $17 million settlement impact for the high water claim with Ag Services & Oilseeds.
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 $904 million for the quarter includes charges related to asset impairment, restructuring, and settlement activities of $2 million and gains on the sale of Wilmar shares and certain assets of $57 million ($0.10 per share).
During the quarter, the company leveraged its strong cash position to re-balance its mix of long- and short-term debt, which will also reduce future interest payments, by economically retiring $1.2 billion of higher-coupon debt, resulting in a debt extinguishment charge of $396 million ($0.53 per share).
In Corporate results, unallocated corporate costs for the quarter were higher year over year due primarily to variable performance-related compensation expense accruals, which were low in the prior year.
Other charges increased due to railroad maintenance expenses, partially offset by improved foreign hedging results on intercompany funding and investment gains in ADM Ventures.
Corporate results also include the early debt retirement charge referenced above, a mark-to-market loss on the exchangeable bonds issued in August 2020 of $15 million ($0.03 per share), and an impairment charge of $6 million ($0.01 per share).
The effective tax rate for the quarter was a benefit of 13 percent compared to an expense of 19 percent in the prior year.
The current quarter rate reflects the effects of the early debt retirement as well as the sale of Wilmar shares and increased year-over-year Wilmar earnings on the annual effective tax rate.
The impact of U.S. tax credits, primarily the biodiesel and railroad tax credits, also contributed significantly to the decreased Q3 rate from the prior year; the railroad tax credits have an offsetting expense in cost of products sold.
Absent the effect of EPS adjusting items, the effective tax rate for the current quarter was approximately 11 percent.
For more information, please contact Jackie Anderson at 312-634-8484.