What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-02-14 compared with 2022-02-17 · 127 added, 157 removed, 180 unchanged (61% of the section changed)

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(1) Total shares purchased represent those shares purchased in the open market as part of the Company’s publicly announced stock repurchase program described below, shares received as payment for the exercise price of stock option exercises, and shares received as payment for the withholding taxes on vested restricted stock awards.

During the three-month period ended December 31, 2021, there were no shares purchased in the open market or shares received as payments for the exercise price of stock option exercises and withholding taxes on vested restricted stock awards.

During the three-month period ended December 31, 2022, there were 2,502 shares purchased in the open market or shares received as payments for the exercise price of stock option exercises and withholding taxes on vested restricted stock awards.

(2) On November 5, 2014, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to 100,000,000 shares of the Company’s common stock during the period commencing January 1, 2015 and ending December 31, 2019.

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The consolidated financial statements presented in Item 8 herein reflect immaterial revisions to certain line items in the consolidated statements of earnings and statements of cash flows presented in the Company’s press release filed on January 26, 2023 announcing fourth quarter and annual results for the quarter and year ended December 31, 2022.

The revisions to the consolidated statements of earnings did not impact gross profit and earnings before income taxes, and the revisions to the consolidated statements of cash flows did not impact net cash provided by operating activities.

Further, these revisions did not affect the consolidated statements of comprehensive income (loss), balance sheets, and statements of shareholders’ equity.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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The Company’s recent significant portfolio actions and announcements include:

• the announcement in March 2021 of a new ADM policy to protect forests, biodiversity and communities, furthering the Company’s commitment to sustainable, ethical, and responsible production;

• the announcement in April 2021 of the resumption of dry mill ethanol production;

• the acquisition in April 2021 of Golden Farm Production & Commerce Company Limited;

• the announcement in May 2021 of ADM’s participation as a signatory to the German Charter for Diversity in the Workplace which aims to advance the recognition and inclusion of diversity in companies;

• the announcement in May 2021 of a plan to build a dedicated soybean crushing plant and refinery in North Dakota to meet fast-growing demand from food, feed, industrial and biofuel customers, including producers of renewable diesel, which is expected to be open in 2023;

• the announcement in June 2021 of ADM Ventures, the corporate venture capital arm of ADM, joining the Genesis Consortium, a global alliance of venture capital firms and corporations dedicated to supporting startups that leverage biology to promote human and planetary health;

• the acquisition in September 2021 of a 75% majority stake in P4, premier providers of private label pet treats and supplements;

• the announcement in September 2021 of a memorandum of understanding with LG Chem, a leading global diversified chemical company, to explore US-based production of lactic acid to meet growing demand for a wide variety of plant-based products, including bioplastics, through the creation of two joint ventures;

• the unveiling in September 2021 of a state-of-the-art, fully automated flavor production facility situated in Pinghu, Zhejiang Province, China;

• the announcement in October 2021 of an agreement with Qingdao Vland Biotech Group Co., Ltd., a leading producer of enzymes and probiotics, to form a joint venture, subject to regulatory approval, to manufacture and sell human probiotics to serve growing Chinese demand;

• the announcement in October 2021 of an equity investment in Acies Bio, a Slovenia-based biotechnology company specializing in research and development and manufacturing services for developing and scaling synthetic biology and precision fermentation technologies for food, agriculture, and industrial applications;

• the announcement in October 2021 of a memorandum of understanding with Gevo, Inc., a pioneer in transforming renewable energy into low carbon, energy-dense liquid hydrocarbons, to support the production of up to 500 million gallons of sustainable aviation fuel and other low carbon-footprint hydrocarbon fuels;

• the announcement in November 2021 of an agreement to form a 50-50 joint venture with Asia Sustainable Foods Platform, a wholly-owned company of Temasek, to provide technology development and precision fermentation for companies serving the growing consumer demand for a wide variety of bio-based products, including alternative protein, in Singapore and the wider Asia-Pacific region;

• the announcement in November 2021 of an equity investment in Farmers Business Network, a global farmer-to-farmer network and AgTech company, and a letter of intent to expand the existing relationship through a wide range of potential future areas of cooperation;

• the acquisition in November 2021 of Deerland, a leader in probiotic, prebiotic, and enzyme technology;

• the acquisition in November 2021 of Sojaprotein, a leading European provider of non-GMO soy ingredients;

• the sale in November 2021 of the Company’s ethanol production complex in Peoria, Illinois to BioUrja Group;

• the formation in December 2021 of a joint venture with Marathon Petroleum Corp.

for the production of soybean oil to supply rapidly growing demand for renewable diesel fuel;

• the acquisition in December 2021 of Flavor Infusion International, S.A., a full-range provider of flavor and specialty ingredient solutions for customers across Latin America and the Caribbean;

• the acquisition in February 2022 of Comhan, a leading South African flavour distributor.

• the acquisition in February 2022 of Comhan, a leading South African flavor distributor;

• the announcement in April 2022 of a growth investment in the Company’s oilseed facility in Mainz, Germany, which is expected to be completed in the third quarter of 2023;

• the announcement in April 2022 of a $300 million investment in Decatur, Illinois to expand alternative protein production and the opening of a new, state-of-the-art protein innovation center, which is expected to be completed in the first quarter of 2025;

• the announcement in April 2022 of a commitment to achieve 100% deforestation-free supply chains by 2025, five years earlier than previously targeted;

• the announcement in May 2022 to significantly expand starch production at the Company’s Marshall, Minnesota facility, which is expected to be completed in the second half of 2023;

• the announcement in May 2022 of five projects funded with support from ADM, in partnership with the U.S.

Department of Agriculture’s Natural Resources Conservation Service, to provide farmers with technical and financial resources to help plant cover crop on half a million acres;

• the announcement in June 2022 of the signing of a memorandum of understanding with Bayer, a global enterprise with core competencies in the life science fields of healthcare and agriculture, to build and implement a sustainable crop protection model to soybean farmers in India;

• the announcement in July 2022 of the signing of an agreement with Farmers Business Network (FBN) to expand availability of FBN’s leading-edge digital farm business management platform, Gradable, to ADM’s network of farmers across North America, offering 55,000 growers a comprehensive digital solution to manage their businesses and measure sustainable production data;

• the announcement in August 2022 of the official inauguration of ScaleUp Bio, a joint venture with Nurasa (formerly Asia Sustainable Foods Platform), a company focused on accelerating the commercialization of sustainable foods in Asia.

ScaleUp Bio is the first company in Singapore to provide contract development and manufacturing organization services for precision fermentation for food applications;

• the announcement in August 2022 of a long-term strategic partnership with Benson Hill, Inc., a food tech company unlocking the natural genetic diversity of plants, to scale innovative high-protein soy ingredients that will help meet the rapidly growing demand for plant-based proteins;

• the announcement in August 2022 of the launch of two joint ventures, GreenWise Lactic and LG Chem Illinois Biochem, with LG Chem, a leading global diversified chemical company, for the U.S.

production of lactic acid and polylactic acid to meet growing demand for a wide variety of plant-based products, including bioplastics;

• the announcement in August 2022 of a strategic partnership with New Culture, a pioneering animal-free dairy company, to accelerate the development and commercialization of alternative dairy products;

• the opening in September 2022 of the Company’s first Science and Technology Center in China that will leverage its unparalleled research and development, technology, and product innovation capabilities to spur high-quality development in the nutrition and health industry and meet growing and evolving needs in China and Asia Pacific;

• the announcement in September 2022 of a seven-and-a-half-year strategic commercial agreement with PepsiCo to collaborate closely on projects that aim to significantly expand regenerative agriculture across their shared North American supply chains;

• the opening in September 2022 of a new extrusion facility in Serbia that will further expand ADM’s footprint in Europe, extending its production of non-GMO textured soy to include vital origination and extrusion capabilities;

• the opening in November 2022 of a new North America Microbiology Laboratory at the ADM Specialty Manufacturing Facility in Decatur, Illinois, which doubles ADM’s current microbiology laboratory footprint and reflects a significant expansion of its testing capabilities, as well as its footprint in the Decatur community;

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

• the announcement in November 2022 of the signing of the Agri-Commodity Sector Roadmap, an agreement which aims to remove deforestation from supply chains by 2025 while protecting global food systems and producer livelihoods, an important step toward putting the global economy on a 1.5C trajectory through forest positive action

Sustainability is a key driver of ADM’s expanding portfolio of environmentally responsible, plant-derived products.

Consumers today increasingly expect their food and drink to come from sustainable ingredients, produced by companies that share their values and ADM is continually finding new ways to meet those needs through its portfolio actions.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The next phase of the Company’s strategic transformation is focused on two strategic pillars:

Productivity and Innovation.

The Company’s strategic transformation is focused on three strategic pillars:

Productivity, Innovation, and Culture.

The Productivity pillar includes (1) advancing the roles of the Company’s Centers of Excellence in procurement, supply chain, and operations to deliver additional efficiencies across the enterprise;

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and (3) growth initiatives, including organic growth to support additional capacity and meet growing demand, and mergers and acquisitions opportunities.

ADM will support both pillars with investments in technology, which include expanding digital capabilities and investing further in product research and development.

The Culture pillar focuses on enabling collaboration, teamwork, and agility from process standardization and digitalization and ADM’s DE&I work which brings new perspectives and expertise to the Company’s decision-making.

ADM will support the three pillars with investments in technology, which include expanding digital capabilities and investing further in product research and development.

All of these efforts will continue to be strengthened by the Company’s ongoing commitment to Readiness.

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Changes in revenues are expected to be correlated to changes in expenses reported by the Company caused by fluctuations in the exchange rates of foreign currencies, primarily the Euro, British pound, Canadian dollar, and Brazilian real, as compared to the U.S.

The Company measures its performance using key financial metrics including net earnings, gross margins, segment operating profit, return on invested capital, earnings before taxes, interest, and depreciation and amortization (EBITDA), economic value added, manufacturing expenses, and selling, general, and administrative expenses.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The Company measures its performance using key financial metrics including net earnings, gross margins, constant currency revenue and operating profit, segment operating profit, adjusted segment operating profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, manufacturing expenses, selling, general, and administrative expenses, return on invested capital, economic value added, and operating cash flows before working capital.

The Company’s financial results can vary significantly due to changes in factors such as fluctuations in energy prices, weather conditions, crop plantings, government programs and policies, trade policies, changes in global demand, general global economic conditions, changes in standards of living, and global production of similar and competitive crops.

Due to these unpredictable factors, the Company undertakes no responsibility for updating any forward-looking information contained within “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Operations in Ukraine and Russia

ADM employs approximately 640 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office.

Most of the facilities have been temporarily idled since February 24, 2022, some of which were brought back online during the quarter ended September 30, 2022, due in part to the opening of the Black Sea grain export corridor.

The Company’s footprint in Russia is limited to operations related to the production and transport of essential food commodities and ingredients.

On February 24, 2022, Russian troops invaded Ukraine.

While the Company’s Ukraine and Russian operations have historically represented less than 1.0% of consolidated revenues, the direct and indirect impacts of the ongoing military action could negatively affect ADM’s future operating results.

The conflict in Ukraine has created disruptions in global supply chains and has created dislocations of key agricultural commodities.

The indirect impact of these dislocations on the Company’s operating results will be a function of a number of variables including supply and demand responses from the rest of the world as well as the length of the conflict and the condition of the agricultural industry and export infrastructure after the conflict ends.

For more information, refer to Part I, Item 1A, “Risk Factors”.

As of December 31, 2022, ADM’s assets in Ukraine consisted primarily of current assets that were less than 1% of the Company’s total current assets and an immaterial amount of non-current assets.

Of the total current assets in Ukraine, majority related to inventories that represented less than 1% of ADM’s total inventories.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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The Company is subject to a variety of market factors which affect the Company’s operating results.

In Ag Services and Oilseeds, North American origination volumes benefited from strong export demand throughout the year while South American origination volumes were impacted by a delayed harvest and low farmer selling activity.

Crushing margins benefited from strong demand and tight soybean and canola/rapeseed stocks.

Demand for refined oils was strong, driven by the regional lifting of COVID-19 restrictions in the U.S.

and demand for renewable green diesel.

In Carbohydrate Solutions, margins in starches and sweeteners were solid despite softer sweetener demand early in the year due to continued COVID-19 restrictions.

Starch demand continued to be robust.

Co-product prices were strong.

Ethanol demand returned closer to pre-pandemic levels.

For most of year, ethanol margins were volatile initially supported by improving domestic demand, then challenged in the summer months prior to harvest due to limited availability of corn.

Ethanol inventory levels were at a five-year low for the majority of the fourth quarter due to strong domestic demand and some supply chain bottlenecks resulting in elevated margins for the industry late in the year.

Nutrition benefited from overall strong demand in various product categories.

In Human Nutrition, demand for flavors, flavor systems, specialty proteins, bioactives, and fibers were strong.

In Animal Nutrition, weak demand and higher input costs as a result of COVID-19 in South America and Asia were partially offset by the growing demand in complete food for petfood.

Amino acids pricing and margins improved due to a tighter global supply environment.

In Ag Services and Oilseeds, strong global demand continued due to a short crop in South America.

The conflict in Ukraine resulted in even tighter global stocks of commodities and created high volatility, which had a positive impact on North and South American origination prices.

Global Trade results were driven by market disconnects, tight supply, strong destination marketing margins, and firm ocean freight rates.

North American origination was negatively impacted by weather-related supply disruption and delayed planting and lower river levels.

Crushing margins continued to benefit from strong protein and renewable diesel demand and tight oilseeds stocks.

In Refined Products and Other, margins were driven by strong oil demand and tight supply with volatile energy markets driving up biodiesel margins.

In Carbohydrate Solutions, demand for starches and sweeteners was solid with margins remaining steady despite higher input costs.

Ethanol demand for domestic gasoline was lower, in part due to high gas prices, while export demand remained strong, driven by favorable blending economics and government incentives.

Corn milling margins benefited from strong co-product results, as prices for oil and feed products rose in line with higher underlying corn prices.

Corn costs were volatile and higher, in part due to a relatively low projected corn stocks-to-use ratio and uncertainty caused by the conflict in Ukraine.

Nutrition benefited from overall strong demand in various food, beverage, and dietary supplement categories.

In Human Nutrition, demand for flavors, flavor systems, specialty proteins, bioactives, and fibers was strong, but higher energy, transportation, and raw material costs, and a strong U.S.

dollar adversely impacted results.

In Animal Nutrition, amino acids pricing and margins improved due to a tighter global supply environment but the devaluation of certain currencies, a bird flu outbreak, and weak demand in other product lines, with some premix and additives customers cutting products out of formulation due to increased ingredient, freight, and energy costs, adversely impacted results.

Increased competition in Brazil also contributed to the weak demand in that country.

ADM’s productivity initiatives are improving the Company’s capabilities to help mitigate the impact of inflation.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net earnings attributable to controlling interests increased 60% or $1.6 billion, to $4.3 billion.

Segment operating profit increased 34% or $1.2 billion, to $4.6 billion, and included a net charge of $136 million consisting of asset impairment, restructuring, and settlement charges of $213 million, partially offset by gains on the sale of certain assets of $77 million.

Included in segment operating profit in the prior year was net income of $7 million consisting of gains on the sale of a portion of the Company’s shares in Wilmar and certain other assets, partially offset by asset impairment, restructuring, and settlement charges.

Adjusted segment operating profit increased $1.3 billion to $4.8 billion due primarily to higher results in most businesses except in Ag Services and Other Business.

Corporate results in the current year were a net charge of $1.3 billion and included a pension settlement charge of $83 million, loss on debt extinguishment of $36 million, a mark-to-market gain of $19 million on the conversion option of the exchangeable bonds issued in August 2020, acquisition-related expenses of $7 million, and a restructuring charge of $4 million.

Corporate results in the prior year were a net charge of $1.6 billion and included early debt retirement charges of $409 million, a mark-to-market loss of $17 million on the conversion option of the exchangeable bonds issued in August 2020, impairment and restructuring charges of $16 million, acquisition-related expenses of $4 million, gains on the sale of certain assets of $7 million, and a credit of $91 million from the elimination of the last-in, first-out (LIFO) reserve in connection with the accounting change effective January 1, 2020.

Segment operating profit increased 41% or $1.9 billion, to $6.5 billion, and included a net charge of $100 million consisting of charges totaling $147 million related to the impairment of certain assets, restructuring, and contingencies/settlements, partially offset by gains on the sale of certain assets of $47 million.

Included in segment operating profit in the prior year was a net charge of $136 million consisting of charges totaling $213 million related to the impairment of certain assets, restructuring, and settlement, partially offset by gains on the sale of ethanol and certain other assets of $77 million.

Adjusted segment operating profit (a non-GAAP measure) increased $1.9 billion to $6.6 billion due primarily to higher results in most businesses except in Vantage Corn Processors.

Corporate results in the current year were a net charge of $1.3 billion and included a mark-to-market gain of $9 million on the conversion option of the exchangeable bonds issued in August 2020.

Corporate results in the prior year were a net charge of $1.3 billion and included a pension settlement charge of $83 million, loss on debt extinguishment of $36 million, a mark-to-market gain of $19 million on the conversion option of the exchangeable bonds issued in August 2020, acquisition-related expenses of $7 million, and a restructuring charge of $4 million.

Income taxes of $868 million increased $290 million.

The Company’s effective tax rate for 2022 was 16.6% compared to 17.4% for 2021 .

The increase in rate for 2021 was due primarily to changes in the geographic mix of earnings and current year discrete tax items, including valuation allowance and return to provision adjustments.

The 2020 tax rate also included the impact of U.S.

tax credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad tax credits recognized in the quarter ended March 31, 2020.

The 45G railroad tax credits had an offsetting impact in cost of products sold.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The change in the rate was due primarily to changes in the geographic mix of pretax earnings and the impact of discrete tax items.

Analysis of Statements of Earnings

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Total 51,510 54,251 (2,741)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions.

The overall decrease in oilseeds processed volumes was due to cold weather and natural gas curtailments in North America, delays in soybean harvest in South America, and some production challenges in certain North American oilseeds processing plants.

The overall increase in corn processed volumes was primarily related to the idling of two dry mill facilities in the second quarter of 2020.

The Company restarted these idled facilities in April 2021.

The overall decrease in oilseeds processed volumes was primarily related to decreased crush rates resulting from the decline in seeds availability, a temporarily idled facility in Paraguay due to crop failure, weather-related challenges, and the indefinite shutdown of a Ukraine facility since February 2022.

The overall decrease in corn processed volumes was primarily related to reduced volumes of fuel alcohol due to market conditions, the sale of the Peoria, Illinois facility in November 2021, and logistical challenges surrounding railcar availability since the second quarter of 2022.

Revenues by segment for the years ended December 31, 2022 and 2021 are as follows:

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In periods of significant changes in market prices, the underlying performance of the Company is better evaluated by looking at margins since both revenues and cost of products sold, particularly in Ag Services and Oilseeds, generally have a relatively equal impact from market price changes which generally result in an insignificant impact to gross profit.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Revenues increased $16.3 billion to $101.6 billion due to higher sales prices ($17.1 billion), partially offset by lower sales volumes ($0.8 billion).

Higher sales prices of oils, soybeans, corn, meal, animal feed, alcohol, biodiesel, wheat, and flavors and higher sales volumes of wheat and processed cotton, were partially offset by lower sales volumes of soybeans and oils.

Ag Services and Oilseeds revenues increased 35% to $67.0 billion due to higher sales prices ($17.3 billion).

Carbohydrate Solutions revenues increased 31% to $11.1 billion due to higher sales prices ($2.6 billion).

Nutrition revenues increased 16% to $6.7 billion due to higher sales prices ($1.0 billion), partially offset by lower sales volumes of ($0.1 billion).

Cost of products sold increased $19.4 billion to $79.3 billion due principally to higher average commodity costs.

Included in cost of products sold in the prior year was a credit of $91 million from the effect of the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020.

Manufacturing expenses increased $0.5 billion to $6.1 billion due principally to higher maintenance and energy costs and salaries and benefits, partially offset by lower railroad maintenance expenses.

Foreign currency translation impacts increased revenues by $0.9 billion and cost of products sold by $0.8 billion.

Gross profit increased $1.5 billion or 34%, to $6.0 billion due to higher results in Ag Services and Oilseeds ($737 million), Carbohydrate Solutions ($577 million), Nutrition ($199 million), and Other ($47 million).

Higher sales prices of corn, wheat, oil, soybean, and meal, and higher sales volumes of rice, flavors, biodiesel, and corn, were partially offset by lower sales prices of rice and flavors, and lower sales volumes of wheat and oil.

Ag Services and Oilseeds revenues increased 19% to $79.6 billion due to higher sales prices ($14.3 billion), partially offset by lower sales volumes ($1.8 billion).

Carbohydrate Solutions revenues increased 26% to $14.0 billion due to higher sales prices ($2.6 billion) and higher sales volumes ($0.3 billion), despite the loss of USD-grade industrial alcohol volumes from the divested Peoria, Illinois facility.

Nutrition revenues increased 14% to $7.6 billion due to higher sales prices ($0.2 billion) and higher sales volumes ($0.7 billion).

Cost of products sold increased $14.7 billion to $94.0 billion due principally to higher average commodity costs and higher manufacturing expenses.

Manufacturing expenses increased $0.9 billion to $7.0 billion due principally to higher energy costs, higher maintenance expenses, increased operating supplies, and higher salaries and benefit costs.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Foreign currency translation impacts decreased revenues by $2.6 billion and cost of products sold by $2.4 billion.

Gross profit increased $1.6 billion or 26%, to $7.6 billion due to higher results in Ag Services and Oilseeds ($1.3 billion), Starches and Sweeteners ($477 million), and Nutrition ($149 million), partially offset by lower results in Vantage Corn Processors ($352 million).

These factors are explained in the segment operating profit discussion on page 35.

In Corporate, the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 had a positive impact on gross profit of $91 million in the prior year.

Selling, general, and administrative expenses increased 11% to $3.0 billion due principally to higher salaries and benefits, performance-based compensation accruals, IT expenses, and a legal settlement.

Asset impairment, exit, and restructuring costs increased $84 million to $164 million.

Charges in the current year consisted of $125 million of impairments related to certain long-lived assets, goodwill, and other intangible assets and $35 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate.

Charges in the prior year consisted primarily of $47 million of impairments related to certain intangible and other long-lived assets and $17 million of individually insignificant restructuring charges presented as specified items within segment operating profit, $7 million of individually insignificant impairments and $9 million of individually insignificant restructuring charges in Corporate.

Interest expense decreased $74 million to $265 million due to lower interest rates and the favorable liability management actions taken in the prior year.

Interest expense in the current year also included a $19 million mark-to-market gain adjustment related to the conversion option of the Wilmar exchangeable bonds issued in August 2020 compared to a $17 million mark-to-market loss adjustment in the prior period.

Equity in earnings of unconsolidated affiliates increased $16 million to $595 million due to higher earnings from the Company’s investment in Stratas Foods LLC, partially offset by lower earnings from the Company’s investments in SoyVen, Hungrana Ltd., and Almidones Mexicanos S.A.

Loss on debt extinguishment in the current year of $36 million was related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025.

Loss on debt extinguishment of $409 million in the prior year related to multiple early debt redemptions including the $0.7 billion debt tender in September 2020.

Investment income decreased $15 million to $96 million due to lower interest rates on segregated funds in the Company’s futures commission and brokerage business and lower interest earned on financing receivables, partially offset by a $49 million investment revaluation gain in the current year compared to a $23 million investment revaluation gain in the prior year.

Other income - net of $94 million decreased $161 million.

Current year income included gains on the sale of certain ethanol and other assets and disposals of individually insignificant assets in the ordinary course of business, foreign exchange gains, the non-service components of net pension benefit income, and other income, partially offset by a non-cash pension settlement charge related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plant and ADM Pension Plan for Hourly-Wage Employees.

Prior year income included gains related to the sale of a portion of the Company’s shares in Wilmar and certain other assets, the non-service components of net pension benefit income, foreign exchange gains, and other income.

Selling, general, and administrative expenses increased 12% to $3.4 billion due principally to provisions for bad debt, higher IT and project-related expenses, higher salaries and benefit costs, increased travel expenses, and amortization of intangibles from new acquisitions.

Asset impairment, exit, and restructuring costs decreased $98 million to $66 million.

Charges in the current year consisted of $37 million of impairments related to certain long-lived assets and $28 million of restructuring charges, presented as specified items within segment operating profit, and $1 million of restructuring charges in Corporate.

Charges in the prior year consisted primarily of $125 million of impairments related to certain long-lived assets, goodwill, and other intangible assets and $35 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate.

Equity in earnings of unconsolidated affiliates increased $237 million to $832 million due to higher earnings from the Company’s investments in Wilmar and Olenex.

Loss on debt extinguishment in the prior year of $36 million was related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025.

Interest and investment income increased $197 million to $293 million due primarily to higher interest income, partially offset by lower revaluation gains of $37 million compared to $49 million in the prior period.

Interest expense increased $131 million to $396 million due to higher long-term debt balances and increased short-term rates on the Company’s U.S.

and European commercial paper borrowing programs.

Interest expense in the current year also included a $9 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 compared to a $19 million mark-to-market gain adjustment in the prior year.

Other income - net of $358 million increased $264 million.

Current year income included a legal recovery related to the 2019 and 2020 closure of the Company’s Reserve, Louisiana, export facility of $110 million, net foreign exchange gains of $105 million, a $50 million one-time payment from the USDA Biofuel Producer Recovery Program, gains on disposals of individually insignificant assets in the ordinary course of business, and the non-service components of net pension benefit income of $25 million, partially offset by other net expense.

Prior year income included gains on the sale of ethanol and certain other assets and disposals of individually insignificant assets in the ordinary course of business, net foreign exchange gains of $24 million, the non-service components of net pension benefit income of $33 million, and other income, partially offset by a non-cash pension settlement charge of $83 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plant and ADM Pension Plan for Hourly-Wage Employees.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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Specified Items:

Gain on sales of assets 77 83 (6)

Gains on sale of assets 47 77 (30)

Impairment, restructuring, and settlement charges (147) (213) 66

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Ag Services and Oilseeds operating profit increased 58%.

Ag Services results were lower than the prior year.

In North America, strong Chinese demand and favorable positions in a dynamic pricing environment delivered significantly higher results.

South American origination results were significantly lower due to decreased farmer selling activity versus the prior year and the effects from a slightly delayed harvest and higher freight costs.

Global Trade results were impacted by lower margins in structured trade finance and negative timing effects related to ocean freight positions which are expected to reverse in the coming quarters.

Crushing results were significantly higher.

In North America and Europe, tight supplies and strong demand that drove higher crush margins were partially offset by results in South America which were impacted by slower farmer selling and higher cost of beans.

Refined Products and Other results were higher year-over-year on stronger margins in North America and Europe, Middle East, Africa, and India (EMEAI), partially offset by impacts related to the reduction in Brazilian biodiesel mandates.

Ag Services results were significantly higher versus the prior year.

Global trade results were higher, driven by strong performances in destination marketing and global ocean freight.

North American origination volumes were lower but margins were higher year-over-year.

South America results were higher, driven by better origination margins on good demand for grain.

Crushing was higher year-over-year driven by robust protein and renewable diesel demand.

Positive net timing effects in the current year versus negative timing effects in the prior year helped drive higher year-over-year results.

Refined Products and Other results were higher than the prior year, driven by higher margins due to strong oils demand.

Biodiesel margins also benefited from direct sales compared to the historical auction sales.

Equity earnings from Wilmar were higher versus the prior year.

Carbohydrate Solutions operating profit increased 6%.

Starches and Sweeteners results, including ethanol production from the wet mills, were significantly higher than the prior year.

The business capitalized on rising prices in the ethanol complex and favorable co-product values in an industry environment of improving margins, falling inventories, and higher input costs.

Corn oil results significantly improved from the prior year, which had been impacted by significant mark-to-market effects.

Current year results benefited from strong risk management gains that enhanced margins and trading opportunities.

Demand for flour by the foodservice sector remained below the prior year.

Vantage Corn Processors results were substantially higher, driven by improved margins on the distribution of fuel ethanol and strong performance in USP-grade alcohol and the resumption of production at the two dry mills.

Starches and Sweeteners, including ethanol production from the wet mills, delivered higher results versus the prior year, driven by solid margins across sweeteners and starches, strong contributions from corn co-products, and effective risk management, partially offset by weaker ethanol margins.

Sales volumes for starches and sweeteners continued their recovery and the biosolutions platform continued to deliver revenue growth as demand for plant-based products expanded into more diverse applications.

Vantage Corn Processors results were lower versus the prior year as ethanol margins decreased from the 2021 strong positioning gains and industrial alcohol results from the now-sold Peoria, Illinois facility, partially offset by the $50 million one-time payment from the USDA Biofuel Producer Recovery Program.

Nutrition operating profit increased 7%.

Human Nutrition results were higher than the prior year.

Flavors results were up, driven by strong sales across various market segments.

In North America and EMEAI, the flavors business delivered strong volumes and improved product mix, particularly in the beverage segment.

Specialty Ingredients delivered sales growth in specialty proteins and improved pricing and product mix, though results were negatively impacted by the effects of higher production costs, normalization of prices in the wholesale ingredients business, and COVID-related shifts in demand across the portfolio.

Health and Wellness results were strong, with robust demand driving strong results in probiotics and fibers.

Animal Nutrition results were higher on favorable results in amino acids, driven by improved margins and product mix, partially offset by lower demand and higher input costs as a result of pandemic effects in South America and Asia.

Other Business operating profit decreased 52% primarily due to lower underwriting results from the captive insurance operations, most of which were offset by corresponding recoveries in other business segments.

Human Nutrition delivered higher year-over-year results.

Flavors results were lower driven by demand fulfillment challenges, the impact of the strong U.S.

dollar in EMEA, softer demand in Asia Pacific, and higher costs in North America.

Strong sales growth in alternative proteins, including contribution from the Sojaprotein acquisition, and good demand for texturants offset some higher operating costs to help deliver better year-over-year results in Specialty Ingredients.

Health and Wellness was also higher year-over-year, powered by probiotics, including the contribution from the November 2021 Deerland Probiotics and Enzymes acquisition, and robust demand for fiber and Vitamin E.

Animal Nutrition profits were higher than the prior year due primarily to strength in amino acids.

Other Business operating profit increased 568%.

Higher short-term interest rates drove improved earnings in ADM Investor Services and improved underwriting performance resulted in better captive insurance results.

Corporate results are as follows:

(In millions) 2022 2021 Change

LIFO credit (charge) $ — $ 91 $ (91)

Interest expense - net $ (333) $ (277) $ (56)

Unallocated corporate costs (1,026) (957) (69)

Gain (loss) on sale of assets — 7 (7)

Loss on sale of assets (3) — (3)

Expenses related to acquisitions (2) (7) 5

Loss on debt extinguishment — (36) 36

Gain (loss) on debt conversion option 19 (17) 36

Impairment, restructuring, and settlement charges (87) (16) (71)

Other charges 20 (54) 74

Gain on debt conversion option 9 19 (10)

Restructuring and settlement charges (1) (87) 86

Other income 40 20 20

Total Corporate $ (1,316) $ (1,325) $ 9

1 unchanged sentence

Corporate results were a net charge of $1.3 billion in the current year compared to $1.3 billion in the prior year.

The elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 resulted in a credit of $91 million in the prior year.

Interest expense-net decreased $36 million due principally to lower interest rates and the favorable liability management actions taken in the prior year.

Unallocated corporate costs increased $100 million due primarily to higher variable performance-related compensation expense accruals, the continued cost centralization in procurement, supply chain, and operations, and additional investments in IT and related projects.

Loss on debt extinguishment in the current year related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025.

Loss on debt extinguishment in the prior year related to multiple early debt redemptions.

Gain (loss) on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020.

Impairment, restructuring, and settlement charges in the current year included a non-cash pension settlement charge of $83 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties, and individually insignificant restructuring charges.

Impairment, restructuring, and settlement charges in the prior year were related to impairment of certain assets and individually insignificant restructuring charges.

Other charges in the current year included railroad maintenance expenses of $67 million partially offset by the non-service components of net pension benefit income of $16 million and an investment revaluation gain of $49 million.

Other charges in the prior year included railroad maintenance expenses of $138 million, partially offset by foreign exchange gains, an investment revaluation gain of $23 million, and the non-service components of net pension benefit income of $33 million.

Interest expense-net increased $56 million due primarily to higher long-term debt balances and increased average rates on the Company’s U.S.

and European commercial paper borrowing programs.

Unallocated corporate costs increased $69 million due primarily to higher IT and project-related costs and higher costs in the Company’s centers of excellence, partially offset by lower incentive compensation accruals.

Loss on debt extinguishment in the prior year related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025.

Gain on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020.

Impairment, restructuring, and settlement charges in the prior year included a non-cash pension settlement charge of $83 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties, and individually insignificant restructuring charges.

Other income in the current year included investment revaluation gains of $37 million, the non-service components of net pension benefit income of $25 million, and foreign exchange gains from hedge activity, partially offset by railroad maintenance expenses of $67 million.

Other income in the prior year included investment revaluation gains of $49 million, the non-service components of net pension benefit income of $16 million, and foreign exchange gains from hedge activity, partially offset by railroad maintenance expenses of $67 million.

Non-GAAP Financial Measures

12 unchanged sentences

Net earnings and reported EPS (fully diluted) $ 4,340 $ 7.71 $ 2,709 $ 4.79

LIFO charge (credit) (net of tax of $22 million in 2020) (1)

— — (69) (0.12)

(Gain) loss on sales of assets (net of tax of $20 million in 2021 and $10 million in 2020) (2)

Gains on sale of assets (net of tax of $11 million in 2022 and $20 million in 2021) (1)

(33) (0.06) (57) (0.10)

2 unchanged sentences

Expenses related to acquisitions (net of tax of $1 million in 2022 and $2 million in 2021) (1)

5 0.01 3 0.01

Loss on debt extinguishment (net of tax of $9 million in 2021 and $99 million in 2020) (2)

27 0.05 310 0.55

(Gain) loss on debt conversion option (net of tax of $0) (2)

Loss on debt extinguishment (net of tax of $9 million in 2021) (1)

Gain on debt conversion option (net of tax of $0) (1)

(9) (0.02) (19) (0.03)

1 unchanged sentence

Adjusted net earnings and adjusted EPS $ 4,421 $ 7.85 $ 2,935 $ 5.19

(1) Tax effected using the Company’s U.S.

LIFO accounting was discontinued effective January 1, 2020.

(2) Tax effected using the applicable tax rates.

(1) Tax effected using the U.S.

and applicable tax rates.

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the years ended December 31, 2022 and 2021.

3 unchanged sentences

Depreciation and amortization 1,028 996 32

LIFO charge (credit) — (91) 91

(Gain) loss on sales of assets (77) (90) 13

Gains on sale of assets (44) (77) 33

Asset impairment, restructuring, and settlement charges 148 300 (152)

10 unchanged sentences

Adjusted EBITDA $ 6,830 $ 4,907 $ 1,923

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources

A Company objective is to have sufficient liquidity, balance sheet strength, and financial flexibility to fund the operating and capital requirements of a capital intensive agricultural commodity-based business.

The Company depends on access to credit markets, which can be impacted by its credit rating and factors outside of ADM’s control, to fund its working capital needs and capital expenditures.

The primary source of funds to finance ADM’s operations, capital expenditures, and advancement of its growth strategy is cash generated by operations and lines of credit, including a commercial paper borrowing facility and accounts receivable securitization programs.

In addition, the Company believes it has access to funds from public and private equity and debt capital markets in both U.S.

and international markets.

Cash provided by operating activities was $6.6 billion in 2021 compared to a use of $2.4 billion in 2020.

Working capital changes as described below increased cash by $2.7 billion in the current year compared to a decrease of $5.5 billion in the prior year which included the impact of deferred consideration.

During 2020, the Company restructured its accounts receivable securitization programs from a deferred purchase price to a pledge structure.

As a result, operating cash flows in the current year no longer include the impact of deferred consideration in securitized receivables which decreased operating cash flows in previous years.

Trade receivables increased $0.6 billion primarily due to higher revenues.

Inventories increased $2.8 billion primarily due to higher inventory prices and, to a lesser extent, higher volumes.

Other current assets decreased $1.3 billion primarily due to decreases in contracts and futures gains.

Trade payables increased $1.9 billion due principally to increased grain purchases.

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

Deferred consideration in securitized receivables of $4.6 billion in 2020 was offset by the same amount of net consideration received for beneficial interest obtained for selling trade receivables.

Cash used in investing activities was $2.7 billion this year compared to cash provided of $4.5 billion last year.

Capital expenditures in the current year were $1.2 billion compared to $0.8 billion in the prior year.

Net assets of businesses acquired were $1.6 billion this year compared to $15 million last year primarily due to the acquisitions of P4, Sojaprotein, and Deerland in 2021.

Proceeds from sales of businesses and assets of $0.2 billion in the current year related to the sale of the ethanol production complex in Peoria, Illinois and certain other assets compared to $0.7 billion in the prior year which related to the sale of a portion of the Company shares in Wilmar and certain other assets.

Net consideration received for beneficial interest obtained for selling trade receivables was $4.6 billion in 2020.

Cash used in financing activities was $1.1 billion this year compared to $0.4 billion last year.

Long-term debt borrowings in the current year of $1.3 billion consisted of the $750 million aggregate principal amount of 2.700% Notes due 2051 issued on September 10, 2021 and 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.

Long-term debt borrowings in the prior year of $1.8 billion consisted of $0.5 billion and $1.0 billion aggregate principal amounts of 2.75% Notes due in 2025 and 3.25% Notes due in 2030, respectively, issued on March 27, 2020 and the $0.3 billion aggregate principal amount of zero coupon exchangeable bonds due in 2023 issued on August 26, 2020.

Proceeds from the borrowings in 2021 and 2020 were used to redeem debt and for general corporate purposes.

Commercial paper net payments were $1.1 billion in the current year compared to net borrowings of $0.8 billion in the prior year.

Long-term debt payments in the current year of $0.5 billion consisted of the early redemption of the $500 million aggregate principal amount of 2.750% notes due 2025 in September 2021.

Long-term debt payments in the prior year of $2.1 billion related primarily to the early redemption of the $0.5 billion and $0.4 billion aggregate principal amounts of 4.479% debentures due in 2021 and 3.375% debentures due in 2022, respectively, the repurchase of $0.7 billion aggregate principal amount of certain outstanding notes and debentures, and the redemption of $0.2 billion aggregate principal amount of private placement notes due in 2021 and 2024.

Share repurchases in the current year were insignificant compared to $0.1 billion in the prior year.

Dividends paid in the current year of $0.8 billion were comparable to the prior year.

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-K

Item 5. Market for Registrant’s Common Equity