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Item 2. Management’s Discussion and Analysis

2022-07-26 compared with 2022-04-26 · 36 added, 31 removed, 30 unchanged (69% of the section changed)

6 unchanged sentences

and international markets.

Cash used in operating activities was $1.2 billion for the three months ended March 31, 2022 compared to cash provided of $0.3 billion for the same period last year.

Working capital changes decreased cash by $2.8 billion for the three months ended March 31, 2022 compared to a decrease of $0.9 billion for the same period last year.

Cash used in operating activities was $0.7 billion for the six months ended June 30, 2022 compared to cash provided of $3.0 billion for the same period last year.

Working capital changes decreased cash by $3.9 billion for the six months ended June 30, 2022 compared to an increase of $0.8 billion for the same period last year.

Segregated cash and investments increased approximately $1.8 due to increased trading activity in the Company’s futures commission and brokerage business.

Trade receivables increased $2.2 billion due to higher revenues.

Inventories increased approximately $0.3 billion due to higher inventory prices partially offset by lower inventory volumes.

Other current assets increased $2.1 billion primarily due to increases in contracts and futures gains and margin deposits and grain accounts.

Other current assets increased $1.6 billion primarily due to increases in contracts and futures gains, margin deposits and grain accounts, and customer omnibus receivable.

Brokerage payables increased approximately $2.5 billion due to increased customer trading activity in the Company’s futures commission and brokerage business.

Accrued expenses and other payables increased $1.4 billion primarily due to increases in contracts and futures losses.

Cash used in investing activities was $0.3 billion for the three months ended March 31, 2022 compared to $0.2 billion for the same period last year.

Capital expenditures for the three months ended March 31, 2022 of $0.2 billion were comparable to the same period last year.

Other-net for the three months ended March 31, 2022 of $0.1 billion consisted of new and additional cost method equity investments.

Cash provided by financing activities was $3.3 billion for the three months ended March 31, 2022 compared to $1.1 billion for the same period last year.

Long-term debt borrowings for the three months ended March 31, 2022 of $0.8 billion consisted of the $750 million aggregate principal amount of 2.900% notes due 2032, compared to long-term debt borrowings for the same period last year of $0.6 billion which consisted of the €0.5 billion aggregate principal amount of fixed-to-floating rate senior notes due 2022 issued in a private placement on March 25, 2021.

Cash used in investing activities was $0.6 billion for the six months ended June 30, 2022 compared to $0.4 billion for the same period last year.

Capital expenditures for the six months ended June 30, 2022 were $0.5 billion compared to $0.4 billion for the same period last year.

Other-net for the six months ended June 30, 2022 of $0.1 billion consisted of new and additional cost method equity investments.

Cash provided by financing activities was $1.5 billion for the six months ended June 30, 2022 compared to a use of $0.6 billion for the same period last year.

Long-term debt borrowings for the six months ended June 30, 2022 of $0.8 billion consisted of the $750 million aggregate principal amount of 2.900% notes due 2032, compared to long-term debt borrowings for the same period last year of $0.6 billion which consisted of the €0.5 billion aggregate principal amount of fixed-to-floating rate senior notes due 2022 issued in a private placement on March 25, 2021.

The Company expects to apply an amount equal to the proceeds from the borrowings in the current period to finance or refinance eligible green projects and/or eligible social projects.

Proceeds from the borrowings in the prior period were used for general corporate purposes.

Net borrowings from short-term credit agreements for the three months ended March 31, 2022 were $2.8 billion compared to $0.7 billion for the same period last year.

Proceeds from short-term borrowings were used to fund working capital needs.

Dividends of $0.2 billion for the three months ended March 31, 2022 were comparable to the same period last year.

At March 31, 2022, the Company had $1.1 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.4 to 1.

Net borrowings from short-term credit agreements for the six months ended June 30, 2022 were $1.4 billion compared to net payments of $0.8 billion for the same period last year.

Proceeds from the current period short-term borrowings were used to fund working capital needs.

Dividends of $0.5 billion for the six months ended June 30, 2022 were comparable to the same period last year.

Share repurchases for the six months ended June 30, 2022 were $0.2 billion compared to an insignificant amount for the same period last year.

At June 30, 2022, the Company had $0.9 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.5 to 1.

Included in working capital was $8.9 billion of readily marketable commodity inventories.

At March 31, 2022, the Company’s capital resources included shareholders’ equity of $23.8 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $14.3 billion, of which $8.2 billion was unused.

The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 27% and 26% at March 31, 2022 and December 31, 2021, respectively.

At June 30, 2022, the Company’s capital resources included shareholders’ equity of $24.4 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $14.7 billion, of which $10.6 billion was unused.

The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 25% and 26% at June 30, 2022 and December 31, 2021, respectively.

The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility.

The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was 34% and 28% at March 31, 2022 and December 31, 2021, respectively.

The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was 30% and 28% at June 30, 2022 and December 31, 2021, respectively.

Of the Company’s total lines of credit, $6.5 billion supported the combined U.S.

and European commercial paper borrowing programs, against which there was $0.7 billion commercial paper outstanding at March 31, 2022.

As of March 31, 2022, the Company had $1.1 billion of cash and cash equivalents, $0.4 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested.

and European commercial paper borrowing programs, against which there was $0.2 billion commercial paper outstanding at June 30, 2022.

As of June 30, 2022, the Company had $0.9 billion of cash and cash equivalents, $0.4 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested.

Based on the Company’s historical ability to generate sufficient cash flows from its U.S.

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The Programs provide the Company with up to $2.6 billion in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 14 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs).

As of March 31, 2022, the Company had $24 million unused capacity of its facility under the Programs.

As of March 31, 2022, the Company has total available liquidity of $9.3 billion comprised of cash and cash equivalents and unused lines of credit.

For the three months ended March 31, 2022, the Company spent approximately $0.2 billion in capital expenditures and $0.2 billion in dividends.

As of June 30, 2022, the Company had $0.9 billion unused capacity of its facility under the Programs.

As of June 30, 2022, the Company has total available liquidity of $11.5 billion comprised of cash and cash equivalents and unused lines of credit.

For the six months ended June 30, 2022, the Company spent approximately $0.5 billion in capital expenditures, $0.5 billion in dividends, and $0.2 billion in share repurchases.

The Company has a stock repurchase program.

Under the program, the Company has 104.5 million shares remaining as of March 31, 2022 that may be repurchased until December 31, 2024.

In 2022, the Company expects total capital expenditures of $1.3 billion and additional cash outlays of approximately $0.9 billion in dividends and up to $150 million in share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.

Under the program, the Company has 102.2 million shares remaining as of June 30, 2022 that may be repurchased until December 31, 2024.

In 2022, the Company expects total capital expenditures of approximately $1.3 billion and additional cash outlays of approximately $0.9 billion in dividends and up to $1.2 billion in share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of March 31, 2022 and December 31, 2021 were $22.9 billion and $18.6 billion, respectively.

The Company’s purchase obligations as of June 30, 2022 and December 31, 2021 were $19.7 billion and $18.6 billion, respectively.

The increase is primarily related to obligations to purchase agricultural commodity inventories at higher prices.

As of March 31, 2022, the Company expects to make payments related to purchase obligations of $21.8 billion within the next twelve months.

There were no other material changes in the Company’s contractual obligations during the quarter ended March 31, 2022.

As of June 30, 2022, the Company expects to make payments related to purchase obligations of $18.4 billion within the next twelve months.

There were no other material changes in the Company’s contractual obligations during the quarter ended June 30, 2022.

Off Balance Sheet Arrangements

There were no material changes in the Company’s off balance sheet arrangements during the quarter ended March 31, 2022.

Critical Accounting Policies

There were no material changes in the Company’s critical accounting policies during the quarter ended March 31, 2022.

In May 2022, the Company extended its First Program with certain commercial and conduit purchases and committed purchasers and increased its facility from $1.6 billion to $1.8 billion.

The First Program terminates on November 18, 2022 unless extended.

In June 2022, the Company amended its Second Program with certain commercial and conduit purchases and committed purchasers and increased its facility from €0.6 billion ($0.6 billion) to €0.8 billion ($0.8 billion).

For more information and disclosures on the Programs, see Note 14 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”.

There were no other material changes in the Company’s off balance sheet arrangements during the quarter ended June 30, 2022.

Critical Accounting Policies and Estimates

There were no material changes in the Company’s critical accounting policies and estimates during the quarter ended June 30, 2022.

For a description of the Company’s critical accounting policies, estimates, and assumptions used in the preparation of the Company’s financial statements, see Part II, Item 7 and Note 1 of “Notes to Consolidated Financial Statements” included in Part II, Item 8, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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commodity market prices as they relate to the Company’s net commodity position, foreign currency exchange rates, and interest rates.

Significant changes in market risk sensitive instruments and positions for the quarter ended March 31, 2022 are described below.

Significant changes in market risk sensitive instruments and positions for the quarter ended June 30, 2022 are described below.

There were no material changes during the period in the Company’s potential loss arising from changes in foreign currency exchange rates and interest rates.

For detailed information regarding the Company’s market risk sensitive instruments and positions, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The availability and prices of agricultural commodities are subject to wide fluctuations due to factors such as changes in weather conditions, crop disease, plantings, government programs and policies, competition, changes in global demand, changes in customer preferences and standards of living, and global production of similar and competitive crops.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis