What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-04-25 compared with 2022-10-25 · 131 added, 361 removed, 148 unchanged (77% of the section changed)

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

On February 24, 2022, Russian troops invaded Ukraine.

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.

Facilities have been temporarily idled since February 24, 2022, most of which were brought back online by March 31, 2023, 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.

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.

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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 II, Item 1A, “Risk Factors”.

As of September 30, 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, 58% were inventories that represented 1% of ADM’s total inventories.

Market Factors Influencing Operations or Results in the Three Months Ended September 30, 2022

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

Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

As of March 31, 2023, 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, the majority related to inventories that represented less than 1% of ADM’s total inventories.

Market Factors Influencing Operations or Results in the Three Months Ended March 31, 2023

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

In Ag Services and Oilseeds, the unprecedented market volatility, higher energy prices, inflationary pressures, and supply chain challenges continued along the entire value chain.

The conflict in Ukraine continued to have an impact on global commodity flows and prices.

Global Trade results were driven by market disconnects, opening of the Black Sea grain corridor, supply distortions, and strong destination marketing results.

In South America, a more timely crop saw farmer selling return to historic norms and a tight global supply drove commodity prices higher while crush margins suffered from unprecedented farmer selling in Argentina.

North American origination was positively impacted by soybean demand shifting back to the U.S., partially offset by lower river levels which resulted in lower export volumes towards the end of the quarter.

Crushing margins continued to benefit from strong protein and renewable diesel demand despite market volatility.

In Refined Products and Other, margins were driven by strong oil demand and elevated oil values.

Biodiesel sales benefited from margin appreciation driven by volatile energy markets.

In Ag Services and Oilseeds, supply has been impacted by market dislocations such as the Russian-Ukraine war, a record harvest in Brazil, and extreme weather conditions in Argentina.

Inflationary pressures impacted the entire value chain.

Crushing was impacted by renewable fuel demand and protein consumption around the globe.

In Refined Products and Other, margins were driven by strong oil demand, elevated oil values that were supported by the release of renewable volume obligations towards the end of 2022, and favorable blend economics due to historically low distillate cost.

In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio.

Production and logistics issues in North America resulted in tightness in the market.

Ethanol demand for domestic gasoline was lower, in part due to high gas prices, while export demand remained strong.

Industry ethanol inventories were elevated compared to the prior year.

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

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 increased energy, transportation, and raw material costs, and a strong U.S.

dollar adversely impacted results.

Industry ethanol stocks remained elevated.

Solid export demand for ethanol helped minimize the imbalance between supply and demand.

In Nutrition, demand was softer in a few food and beverage product categories.

Human Nutrition was impacted by inflation which drove lower demand especially in higher priced product categories in the food, beverage, and dietary supplement segment and impacted volumes in flavors, flavor systems, emulsifiers, and alternative proteins.

In Animal Nutrition, amino acids margins were pressured due to competition returning to market and production cost inflation.

Results were also adversely affected by the devaluation of certain currencies 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.

Results were also adversely affected by weak demand in other product lines due to decreased market for feed, particularly in North America and Europe, Middle East, and Africa (EMEA), and animal disease impacts on farm, and some premix and additives customers cutting products out of formulation due to increased ingredient, freight, and energy costs.

Increased competition in Latin America also contributed to the weak demand in that region.

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

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Net earnings attributable to controlling interests increased $0.1 billion from $1.1 billion to $1.2 billion.

Segment operating profit increased $0.6 billion from $1.0 billion to $1.6 billion and included a net charge of $20 million consisting of charges totaling $49 million related to the impairment of certain assets, restructuring, and a contingency/settlement, partially offset by gains on the sale of certain assets of $29 million.

Included in segment operating profit in the prior year quarter was a net charge of $2 million consisting of restructuring charges.

Adjusted segment operating profit (a non-GAAP measure) increased $0.6 billion to $1.6 billion due primarily to higher results in all businesses except in Vantage Corn Processors and Animal Nutrition.

Segment operating profit increased $0.2 billion from $1.5 billion to $1.7 billion and included a net charge of $6 million consisting of charges totaling $7 million related to asset impairment and restructuring, partially offset by a gain on the sale of certain assets of $1 million.

Included in segment operating profit in the prior-year quarter was a net charge of $17 million consisting of asset impairment, restructuring, and settlement charges of $18 million, partially offset by a gain on the sale of certain assets of $1 million.

Adjusted segment operating profit (a non-GAAP measure) increased $0.2 billion to $1.7 billion due primarily to higher results in Ag Services, Refined Products and Other, and Other Business, partially offset by lower results in the rest of the businesses.

Corporate results in the current quarter were a net charge of $322 million and included a mark-to-market gain of $5 million on the conversion option of the exchangeable bonds issued in August 2020.

Corporate results in the prior year quarter were a net charge of $347 million and included early debt retirement charges of $36 million, a mark-to-market gain of $7 million on the conversion option of the exchangeable bonds issued in August 2020, expenses related to an acquisition of $3 million, and a pension settlement charge of $1 million.

Corporate results in the prior-year quarter were a net charge of $268 million and included a mark-to-market loss of $15 million on the conversion option of the exchangeable bonds issued in August 2020, acquisition-related expenses of $2 million, a loss on sale of assets of $3 million, and restructuring adjustment of $1 million.

Income tax expense increased $18 million to $225 million.

The effective tax rate for the quarter ended September 30, 2022 was 15.7% compared to 18.4% for the quarter ended September 30, 2021.

The decreased rate was driven primarily by changes in the geographic mix of pretax earnings, partially offset by the impact of discrete tax items.

The effective tax rate for the quarter ended March 31, 2023 was 16.1% compared to 16.3% for the quarter ended March 31, 2022.

The change in the rate was driven primarily by the impact of discrete tax items, partially offset by changes in the geographic mix of forecasted earnings.

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

2 unchanged sentences

Three Months Ended

September 30,

(In thousands) 2023 2022 Change

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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 primarily related to decreased crush rates resulting from the decline in canola crop due to the drought condition in North America, a temporarily idled facility in Paraguay due to crop failure, the indefinite shutdown of a Ukraine facility since February 2022, and seasonal maintenance and shutdown of facilities.

The overall decrease in corn processed volumes was primarily related to logistical challenges surrounding railcar availability and the sale of the Peoria, Illinois facility in November 2021.

The overall increase in oilseeds processed volumes was primarily related to improved crush rates in the current quarter compared to lower crush rates in the prior-year quarter resulting from unplanned downtime due to logistics and staffing issues.

The overall decrease in corn processed volumes was related to downtime due in part to a fire at the Cedar Rapids, Iowa dry mill facility.

Revenues by segment for the quarter are as follows:

Three Months Ended

September 30,

2023 2022 Change

17 unchanged sentences

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

Revenues increased $4.3 billion to $24.7 billion due to higher sales prices ($3.7 billion) and higher sales volumes ($0.6 billion).

Higher sales prices of corn, oils and soybeans and higher sales volumes of corn and milled rice were partially offset by lower sales volumes of oils and wheat and lower sales prices of canola seed.

Ag Services and Oilseeds revenues increased 22% to $19.1 billion due to higher sales prices ($2.8 billion) and higher sales volumes ($0.6 billion).

Carbohydrate Solutions revenues increased 25% to $3.6 billion due to higher sales prices ($0.7 billion).

Nutrition revenues increased 10% to $1.9 billion due to higher sales prices ($0.2 billion).

Revenues increased $0.4 billion to $24.1 billion due to higher sales prices ($1.3 billion), partially offset by lower sales volumes ($0.9 billion).

Higher sales prices of biodiesel, oils, and soybeans and higher sales volumes of corn and corn by-products, meal, and sweeteners were partially offset by lower sales prices of corn and wheat and lower sales volumes of oils and biodiesel.

Ag Services and Oilseeds revenues increased 2% to $18.6 billion due to higher sales prices ($0.4 billion), partially offset by lower sales volumes ($0.1 billion).

Carbohydrate Solutions revenues increased 5% to $3.5 billion due to higher sales prices ($0.8 billion), partially offset by lower sales volumes ($0.6 billion).

Nutrition revenues decreased 4% to $1.9 billion due to lower sales volumes ($0.2 billion), partially offset by higher sales prices ($0.1 million).

Cost of products sold increased $0.2 billion to $22.0 billion due principally to higher average commodity costs and higher manufacturing expenses.

Manufacturing expenses increased $0.2 billion to $1.8 billion due principally to higher energy costs, higher maintenance expenses, and increased operating supplies.

Foreign currency translation decreased revenues and cost of products sold by $1.0 billion and $0.9 billion, respectively.

Gross profit increased $0.5 billion or 37%, to $1.8 billion due principally to higher results in Ag Services and Oilseeds ($354 million), Starches and Sweeteners ($177 million), and Human Nutrition ($12 million), partially offset by lower results in Vantage Corn Processors ($42 million), Animal Nutrition ($6 million), and Other ($4 million).

Manufacturing expenses increased $0.3 billion to $1.9 billion due principally to increases in energy costs, maintenance expenses, salaries and benefit costs, commercial service fees, and operating supplies.

Foreign currency translation decreased revenues and cost of products sold by $0.3 billion.

Gross profit increased $0.2 billion or 10%, to $2.1 billion due principally to higher results in Ag Services and Oilseeds ($257 million) and Starches and Sweeteners ($13 million), partially offset by lower results in Nutrition ($54 million) and Vantage Corn Processors ($34 million).

These factors are explained in the segment operating profit discussion on page 37.

Selling, general, and administrative expenses increased $0.1 billion to $0.8 billion due primarily to higher IT and project-related expenses, increased provisions for bad debt, amortization of intangibles from new acquisitions, and higher salaries and benefit costs.

Selling, general, and administrative expenses increased $52 million to $881 million due primarily to higher salaries and benefit costs and higher financing fees, partially offset by decreased provisions for bad debt.

Asset impairment, exit, and restructuring costs increased $6 million to $7 million.

Charges in the current quarter consisted of $3 million of impairments related to certain long-lived assets and $4 million of restructuring charges, presented as specified items within segment operating profit.

Charges in the prior year quarter consisted of $2 million of restructuring charges, presented as a specified item within segment operating profit.

Equity in earnings of unconsolidated affiliates increased $100 million to $210 million due primarily to higher earnings from the Company’s investment in Wilmar and Almidones Mexicanos S.A.

Charges in the prior-year quarter consisted of immaterial charges.

Equity in earnings of unconsolidated affiliates decreased $30 million to $174 million due primarily to lower earnings from the Company’s investments in Wilmar and Almidones Mexicanos S.A., partially offset by higher earnings from the Company’s investment in Stratas Foods LLC.

Interest and investment income increased $75 million to $134 million due primarily to higher interest income, partially offset by revaluation gains of $34 million in the prior-year quarter.

Interest expense increased $36 million to $97 million due to higher debt balances and increased short-term rates on the Company’s U.S.

and European commercial paper borrowing programs.

Interest expense in the current quarter also included a $8 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020, compared to a $7 million mark-to-market gain adjustment in the prior year quarter.

Other income-net increased from a net expense of $20 million in the prior year quarter to net income of $67 million.

Income in the current quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and foreign exchange gains.

Expense in the prior year quarter included charges of $36 million related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025 and other expense, partially offset by gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and foreign exchange gains from hedge activity.

Interest expense increased $55 million to $147 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs and customer deposit balances at ADM Investor Services.

Interest expense in the current quarter also included a $5 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020, compared to a $15 million mark-to-market loss adjustment in the prior-year quarter.

Other income-net increased $11 million to $44 million.

Income in the prior-year quarter included the non-service components of net pension benefit income, net foreign exchange gains, and other net income.

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

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Three Months Ended

September 30,

Segment Operating Profit (Loss) 2023 2022 Change

27 unchanged sentences

Ag Services and Oilseeds operating profit increased 20%.

Ag Services results were significantly higher than the third quarter of 2021.

The short crops in South America supported U.S.

exports, driving improved volumes and margins in North American origination, which had significant negative impacts from Hurricane Ida in the prior-year quarter.

Better margins in global ocean freight, driven by good execution amid dynamic global trade flows, powered better results in Global Trade.

South American origination saw improved volumes and margins driven by increased farmer selling in addition to higher volumes through the Company’s export facilities.

Crushing results were significantly higher, with margins driven by resilient global demand for both meal and oil.

Strong rapeseed margins in Europe, Middle East, and Africa (EMEA), driven by robust oil demand and continued market dislocations, along with positive impacts from an insurance settlement, helped drive improved results.

North America soy crush margins continued to benefit from renewable diesel demand.

Also, net positive timing effects in the quarter were more than the prior-year quarter.

Positive results were partially offset by lower crush volumes, including impacts from idled facilities in Ukraine and Paraguay.

Refined Products and Other results were higher year-over-year in a strong margin environment for both refined oils and biodiesel.

Robust performance in global refined oils was driven by healthy demand and elevated refined oil margins amid supply chain disruptions.

Equity earnings from Wilmar were much higher versus the third quarter of 2021.

Carbohydrate Solutions operating profit increased 45%.

Starches and Sweeteners, which includes ethanol production from the wet mills, delivered much improved year-over-year results amid steady global demand for sweeteners and starches.

Corn co-products, including continued robust demand for corn oil, as well as effective risk management, drove higher execution margins in North America.

Wheat milling had a strong performance, delivering improved volumes and margins to meet healthy demand for flour.

In EMEA, the business delivered solid volumes and margins and managed through a dynamic energy environment to drive stronger results.

Vantage Corn Processors results were substantially lower.

Ethanol margins were pressured by lower domestic demand and elevated corn costs.

In addition, the prior-year quarter’s results included contributions from the now-sold Peoria, Illinois facility .

Nutrition operating profit increased 1%.

Human Nutrition results were higher than the third quarter of 2021.

Strong demand for plant-based proteins, as well as solid performance in texturants, drove continued growth in Specialty Ingredients.

Flavors results were impacted by adverse currency translation effects in EMEA, partially offset by continued strong demand growth in the region.

Demand fulfillment challenges in North America and lower demand in Asia Pacific, driven partly by lockdowns in China, also negatively impacted results.

Health and Wellness was lower versus the prior-year quarter, which included higher fermentation income.

Animal Nutrition results were down versus the prior-year quarter.

Pet results were lower in Latin America on lower volumes, partially offset by strong volumes and margins in North America.

Softer animal protein demand affected feed volumes .

Ag Services results were higher than the first quarter of 2022.

In South American origination, effective risk management and higher export demand due to the record Brazilian soybean crop drove significantly higher year-over-year results.

Results for North America origination were also higher, driven by stronger soybean exports.

In Global Trade, solid margins and efficient execution led to strong results.

Crushing results were in-line with the prior-year quarter.

In North America, the crushing business capitalized on historically strong soybean and softseed crush margins that were supported by robust demand for renewable fuels.

In EMEA, crush margins were lower year-over-year as trade flows adjusted from the dislocations caused last year by the war in Ukraine.

Additionally, positive timing effects, including positive impacts from declining crush margins, contributed to the results in the current quarter.

Refined Products and Other results were higher than the prior-year quarter.

North America biodiesel results were higher with record volumes and strong margins, supported by favorable blend economics and tight diesel stocks.

In EMEA, domestic demand for food oil and export demand for biodiesel drove strong margins.

Equity earnings from Wilmar were lower versus the first quarter of 2022.

Carbohydrate Solutions operating profit decreased 14%.

Starches and Sweeteners capitalized on solid demand in the current quarter.

North America starches and sweeteners delivered strong volumes and margins.

Ethanol margins, pressured by high industry stock levels, were down relative to the prior-year quarter.

In EMEA, the business effectively managed margins in a dynamic operating environment to deliver improved results.

The global wheat milling business posted much higher margins driven by solid customer demand.

Vantage Corn Processors results were significantly lower due to weaker ethanol margins.

Nutrition operating profit decreased 23%.

Human Nutrition results were in-line with the first quarter of 2022, as the business continued to manage demand fulfillment challenges and destocking in certain categories.

Flavors results were slightly lower than the prior-year quarter as strong results in EMEA were offset by lower results in North America.

Specialty Ingredients results were higher year-over-year driven by healthy margins.

Health and Wellness results were lower year-over-year.

Animal Nutrition results were significantly lower compared to the prior-year quarter, primarily due to lower margins in amino acids.

Other Business operating profit increased $55 million.

Higher short-term interest rates drove improved earnings in ADM Investor Services, partially offset by increased claim settlements in captive insurance .

Higher interest income drove improved earnings in ADM Investor Services.

Captive insurance results were in line with the prior-year quarter .

Corporate results for the quarter are as follows:

Three Months Ended

September 30,

2023 2022 Change

2 unchanged sentences

Unallocated corporate costs (248) (209) (39)

Expenses related to acquisitions — (3) 3

Debt extinguishment charges — (36) 36

Gain on debt conversion option 8 7 1

Settlement charges — (1) 1

Other expense (10) (17) 7

Total Corporate $ (329) $ (347) $ 18

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

Corporate results were a net charge of $329 million in the current quarter compared to a net charge of $347 million in the prior year quarter.

Interest expense-net increased $10 million due to higher debt balances and increased short-term rates on the Company’s U.S.

and European commercial paper borrowing programs.

Unallocated corporate costs increased $20 million due primarily to higher performance-related compensation accruals, higher IT operating and project-related costs and higher costs in the Company’s centers of excellence.

Acquisition expenses in the prior year quarter were related to the acquisition of a 75% majority stake in U.S.-based PetDine, Pedigree Ovens, the Pound Bakery, and NutraDine.

Debt extinguishment charges in the prior year quarter were 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.

Other expense in the current quarter included railroad maintenance expenses of $32 million, partially offset by the non-service components of net pension benefit income of $7 million and foreign exchange gains from hedge activity.

Other expense in the prior year quarter included railroad repairs and maintenance expenses of $31 million, partially offset by an investment revaluation gain of $9 million, the non-service components of net pension benefit income of $1 million, and other income.

Non-GAAP Financial Measures

The Company uses adjusted earnings per share (EPS), adjusted EBITDA, and adjusted segment operating profit, non-GAAP financial measures as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance.

These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.

Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items.

Adjusted EBITDA is defined as earnings before interest, taxes, 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.

Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.

Management believes that adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability.

Adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are not intended to replace or be an alternative to diluted EPS, earnings before income taxes, and segment operating profit, respectively, the most directly comparable amounts reported under GAAP.

The table below provides a reconciliation of diluted EPS to adjusted EPS for the three months ended September 30, 2022 and 2021.

Three months ended September 30,

In millions Per share In millions Per share

Average number of shares outstanding - diluted 563 566

Net earnings and reported EPS (fully diluted) $ 1,031 $ 1.83 $ 526 $ 0.93

Debt extinguishment charges - net of tax of $9 million (1)

Gains on sales of assets and businesses - net of tax of $7 million (1)

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

(8) (0.01) (7) (0.01)

Asset impairment, restructuring, and settlement charges - net of tax of $9 million in 2022 and $0 million in 2021 (1)

40 0.07 3 0.01

Expenses related to acquisitions - net of tax of $1 million (1)

Certain discrete tax adjustments 7 0.01 (3) (0.01)

Total adjustments 17 0.03 22 0.04

Adjusted net earnings and adjusted EPS $ 1,048 $ 1.86 $ 548 $ 0.97

(1) Tax effected using the U.S.

and other applicable tax rates.

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

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the three months ended September 30, 2022 and 2021.

Three months ended

September 30,

(In millions) 2022 2021 Change

Earnings before income taxes $ 1,230 $ 653 $ 577

Interest expense 97 61 36

Depreciation and amortization 260 247 13

Gains on sales of assets and businesses (29) — (29)

Debt extinguishment charges — 36 (36)

Expenses related to acquisitions — 3 (3)

Railroad maintenance expenses 32 31 1

Asset impairment, restructuring, and settlement charges 49 3 46

Adjusted EBITDA $ 1,639 $ 1,034 $ 605

Three months ended

September 30,

(In millions) 2022 2021 Change

Ag Services and Oilseeds $ 1,166 $ 711 $ 455

Carbohydrate Solutions 391 297 94

Nutrition 242 230 12

Other Business 35 (3) 38

Corporate (195) (201) 6

Adjusted EBITDA $ 1,639 $ 1,034 $ 605

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

Market Factors Influencing Operations or Results in the Nine Months Ended September 30, 2022

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

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, partially offset by the devaluation of certain currencies 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.

Increased competition in Latin America also contributed to the weak demand in that region.

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

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net earnings attributable to controlling interests increased $1.4 billion to $3.3 billion.

Segment operating profit increased $1.7 billion to $4.9 billion and included a net charge of $46 million consisting of charges totaling $76 million related to the impairment of certain assets, restructuring, and a contingency/settlement, partially offset by gains on the sale of certain assets of $30 million.

Included in segment operating profit in the prior period was a net charge of $111 million consisting of asset impairment, restructuring, and settlement charges of $133 million, partially offset by gains on the sale of certain assets of $22 million.

Adjusted segment operating profit (a non-GAAP measure) increased $1.6 billion to $5.0 billion due primarily to higher results in all businesses except in Vantage Corn Processors.

Corporate results in the current and prior periods were a net charge of $0.9 billion.

Corporate results in the current period included a mark-to-market gain of $12 million on the conversion option of the exchangeable bonds issued in August 2020.

Corporate results in the prior period included a pension settlement charge of $83 million, early debt retirement charges of $36 million, a mark-to-market gain of $17 million on the conversion option of the exchangeable bonds issued in August 2020, expenses related to an acquisition of $3 million, and a restructuring charge of $4 million.

Income taxes of $679 million increased $315 million.

The Company’s effective tax rate for the nine months ended September 30, 2022 was 16.9% compared to 15.8% for the nine months ended September 30, 2021.

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

Processed volumes by product for the nine months ended September 30, 2022 and 2021 are as follows (in metric tons):

Nine Months Ended

September 30,

(In thousands) 2022 2021 Change

Oilseeds 24,387 26,247 (1,860)

Corn 13,969 13,743 226

Total 38,356 39,990 (1,634)

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

The overall decrease in oilseeds processed volumes was primarily related to decreased crush rates resulting from the decline in global demand for rapeseed and the decline in canola crop due to the drought condition in North America, a temporarily idled facility in Paraguay due to crop failure, and the indefinite shutdown of a Ukraine facility since February 2022.

The overall increase in corn processed volumes was primarily related to two dry mill facilities that were idled since April 2020 and restarted in April 2021, partially offset by 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 nine months ended nine months ended September 30, 2022 and 2021 are as follows:

Nine Months Ended

September 30,

2022 2021 Change

(In millions)

Ag Services and Oilseeds

Ag Services $ 38,717 $ 32,860 $ 5,857

Crushing 9,804 8,411 1,393

Refined Products and Other 10,302 7,696 2,606

Total Ag Services and Oilseeds 58,823 48,967 9,856

Carbohydrate Solutions

Starches and Sweeteners 7,697 5,563 2,134

Vantage Corn Processors 3,001 2,346 655

Total Carbohydrate Solutions 10,698 7,909 2,789

Human Nutrition 2,884 2,410 474

Animal Nutrition 2,907 2,583 324

Total Nutrition 5,791 4,993 798

Other Business 305 290 15

Total $ 75,617 $ 62,159 $ 13,458

Revenues and cost of products sold in a commodity merchandising and processing business are significantly correlated to the underlying commodity prices and volumes.

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

Revenues increased $13.5 billion to $75.6 billion due to higher sales prices ($14.2 billion), partially offset by lower sales volumes ($0.7 billion).

Higher sales prices of corn, oils and soybeans, and higher sales volumes of milled rice, were partially offset by lower sales volumes of soybeans, oils, and wheat.

Ag Services and Oilseeds revenues increased 20% to $58.8 billion due to higher sales prices ($11.3 billion), partially offset by lower sales volumes ($1.4 billion).

Carbohydrate Solutions revenues increased 35% to $10.7 billion due to higher sales prices ($2.3 billion) and higher sales volumes ($0.5 billion) despite the loss of USD-grade industrial alcohol volumes from the divested Peoria, Illinois facility.

Nutrition revenues increased 16% to $5.8 billion due to higher sales prices ($0.6 billion) and higher sales volumes ($0.2 billion).

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

Cost of products sold increased $12.0 billion to $69.8 billion due principally to higher average commodity costs and higher manufacturing expenses.

Manufacturing expenses increased $0.7 billion to $5.1 billion due principally to higher energy costs, higher maintenance expenses, increased operating supplies, and higher salaries and benefit costs.

Foreign currency translation decreased revenues and cost of goods sold by $2.1 billion and $2.0 billion, respectively.

Gross profit increased $1.5 billion or 34% to $5.8 billion due principally to higher results in Ag Services and Oilseeds ($1.1 billion), Starches and Sweeteners ($280 million), and Nutrition ($151 million), partially offset by lower results in Vantage Corn Processors ($120 million) and Other ($27 million) These factors are explained in the segment operating profit discussion on page 49.

Selling, general, and administrative expenses increased $0.3 billion to $2.5 billion due principally to higher IT and project-related expenses, higher insurance costs, increased provisions for bad debt, amortization of intangibles from new acquisitions, and higher salaries and benefit costs.

Asset impairment, exit, and restructuring costs decreased $54 million to $30 million.

Charges in the current period consisted of $20 million of impairments related to certain long-lived assets and $12 million of restructuring charges, presented as specified items within segment operating profit, and $2 million of restructuring adjustment in Corporate.

Charges in the prior period consisted of $54 million of impairments related to certain long-lived assets and $26 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 $208 million to $606 million due primarily to higher earnings from the Company’s investments in Wilmar, Almidones Mexicanos S.A., Olenex, SoyVen, and Stratas Foods LLC.

Interest and investment income increased $93 million to $176 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 $74 million to $262 million due to higher debt balances and increased short-term rates on the Company’s U.S.

and European commercial paper borrowing programs.

Interest expense in the current period also included a $12 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 compared to a $17 million mark-to-market gain adjustment in the prior period.

Other income-net increased from a net expense of $36 million in the prior period to net income of $183 million.

Income in the current period included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, a $50 million one-time payment from the USDA Biofuel Producer Recovery Program, foreign exchange gains, and other income.

Expense in the prior period 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 ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties, charges of $36 million related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025, and other expense, partially offset by gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and foreign exchange gains from hedge activity.

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

Segment operating profit, adjusted segment operating profit (a non-GAAP measure), and earnings before income taxes for the nine months ended September 30, 2022 and 2021 are as follows:

Nine Months Ended

September 30,

Segment Operating Profit (Loss) 2022 2021 Change

(In millions)

Ag Services and Oilseeds

Ag Services $ 957 $ 435 $ 522

Crushing 1,242 812 430

Refined Products and Other 623 467 156

Wilmar 380 251 129

Total Ag Services and Oilseeds 3,202 1,965 1,237

Carbohydrate Solutions

Starches and Sweeteners 1,036 706 330

Vantage Corn Processors 63 149 (86)

Total Carbohydrate Solutions 1,099 855 244

Human Nutrition 470 429 41

Animal Nutrition 135 102 33

Total Nutrition 605 531 74

Other Business 78 10 68

Specified Items:

Gains (losses) on sales of assets and businesses 30 22 8

Asset impairment, restructuring, and settlement charges (76) (133) 57

Total Specified Items (46) (111) 65

Total Segment Operating Profit $ 4,938 $ 3,250 $ 1,688

Adjusted Segment Operating Profit (1)

$ 4,984 $ 3,361 $ 1,623

Segment Operating Profit $ 4,938 $ 3,250 $ 1,688

Corporate (918) (948) 30

Earnings Before Income Taxes $ 4,020 $ 2,302 $ 1,718

(1) Adjusted segment operating profit is segment operating profit excluding the above specified items.

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

Ag Services and Oilseeds operating profit increased 63%.

Ag Services results were significantly higher versus the prior period.

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

North American origination margins and volumes were lower 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 period versus negative timing effects in the prior period helped drive higher year-over-year results.

Refined Products and Other results were higher than the prior period, 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 period.

Carbohydrate Solutions operating profit increased 29%.

Starches and Sweeteners, including ethanol production from the wet mills, delivered higher results versus the prior period, driven by solid margins across sweeteners and starches and corn co-products, improved ethanol margins, and effective risk management.

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 period with the $50 million one-time payment from the USDA Biofuel Producer Recovery Program partially offsetting the prior period’s strong positioning gains and industrial alcohol results from the now-sold Peoria, Illinois facility.

Nutrition operating profit increased 14%.

Human Nutrition delivered higher year-over-year results.

Flavors results were lower driven by 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 period due primarily to strength in amino acids.

Other Business operating profit increased $68 million.

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

Corporate results for the nine months ended September 30, 2022 and 2021 are as follows:

Nine Months Ended

September 30,

2022 2021 Change

(In millions)

Interest expense-net $ (239) $ (200) (39)

Unallocated corporate costs (727) (681) (46)

Loss on sale of assets — (3) 3

Expenses related to acquisitions — (2) 2

Debt extinguishment charges — (36) 36

Gain on debt conversion option 12 17 (5)

Restructuring and settlement adjustment (charges) 2 (87) 89

Gain (loss) on debt conversion option 5 (15) 20

Restructuring adjustment — 1 (1)

Other income 24 36 (12)

Total Corporate $ (322) $ (268) $ (54)

Corporate results were a net charge of $322 million in the current quarter compared to a net charge of $268 million in the prior-year quarter.

Interest expense-net increased $27 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs.

Unallocated corporate costs increased $39 million due primarily to higher financing and centers of excellence costs.

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.

Other income in the current quarter included the non-service components of net pension benefit income of $4 million and foreign currency transaction gains of $22 million.

Other income in the prior-year quarter included the non-service components of net pension benefit income of $6 million and an investment revaluation gain of $34 million, partially offset by foreign exchange losses.

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

Corporate results were a net charge of $0.9 billion in the current period, which was comparable to the prior period.

Interest expense-net increased $39 million due to higher debt balances, increased short-term rates on the Company’s U.S.

and European commercial paper borrowing programs, and interest related to a tax item.

Unallocated corporate costs increased $46 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.

Debt extinguishment charges in the prior year quarter were 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.

Restructuring and settlement charges in the prior period 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 ADM Retirement Plant and ADM Pension Plan for Hourly-Wage Employees to independent third parties, and restructuring charges.

Other income in the current period included the non-service components of net pension benefit income of $19 million, an investment revaluation gain of $37 million and foreign exchange gains from hedge activity, partially offset by railroad maintenance expenses of $41 million.

Other income in the prior period included the non-service components of net pension benefit income of $12 million, an investment revaluation gain of $49 million, and other income, partially offset by railroad maintenance expenses of $34 million.

Non-GAAP Financial Measures

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Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items.

Adjusted EBITDA is defined as earnings before interest, taxes, 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.

Adjusted EBITDA is defined as earnings before interest on borrowings, taxes, 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 on borrowings and depreciation and amortization to earnings before income taxes.

Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.

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

The table below provides a reconciliation of diluted EPS to adjusted EPS for the nine months ended September 30, 2022 and 2021.

Nine months ended September 30,

The table below provides a reconciliation of diluted EPS to adjusted EPS for the three months ended March 31, 2023 and 2022.

Three months ended March 31,

In millions Per share In millions Per share

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Net earnings and reported EPS (fully diluted) $ 1,170 $ 2.12 $ 1,054 $ 1.86

Gains on sales of assets and businesses - net of tax of $7 million in 2022 and $5 million in 2021 (1)

Loss (gain) on sales of assets and businesses - net of tax of $0 million (1)

Loss (gain) on debt conversion option - net of tax of $0 (1)

(5) (0.01) 15 0.03

1 unchanged sentence

5 0.01 14 0.02

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

Debt extinguishment charges - net of tax of $9 million (1)

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

(12) (0.02) (17) (0.03)

Expenses related to acquisitions - net of tax of $1 million in 2022 (1)

Certain discrete tax adjustments (18) (0.03) (4) (0.01)

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and other applicable tax rates.

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the nine months ended September 30, 2022 and 2021.

Nine months ended

September 30,

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

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the three months ended March 31, 2023 and 2022.

Three months ended

(In millions) 2023 2022 Change

2 unchanged sentences

Depreciation and amortization 259 257 2

Gains on sales of assets and businesses (27) (22) (5)

Debt extinguishment charges — 36 (36)

Gains (losses) on sales of assets and businesses (1) 2 (3)

Expenses related to acquisitions — 2 (2)

Railroad maintenance expenses 41 34 7

Asset impairment, restructuring, and settlement charges 7 17 (10)

Adjusted EBITDA $ 1,762 $ 1,641 $ 121

Nine months ended

September 30,

Three months ended

(In millions) 2023 2022 Change

12 unchanged sentences

and international markets.

Cash provided by operating activities was $3.3 billion for the nine months ended September 30, 2022 compared to $5.9 billion for the same period last year.

Working capital changes decreased cash by $1.3 billion for the nine months ended September 30, 2022 compared to an increase of $2.8 billion for the same period last year.

Segregated cash and investments increased approximately $1.5 billion due to increased trading activity in the Company’s futures commission and brokerage business.

Trade receivables increased $1.6 billion due to higher revenues.

Cash used in operating activities was $1.6 billion for the three months ended March 31, 2023 compared to a use of $1.2 billion for the same period last year.

Working capital changes decreased cash by $2.9 billion for the three months ended March 31, 2023 compared to a decrease of $2.8 billion for the same period last year.

Segregated investments increased approximately $0.9 billion driven by higher interest rates.

Trade receivables decreased $0.5 billion due to lower revenues in the current quarter compared to the prior year fourth quarter.

Inventories decreased approximately $0.1 billion due to lower inventory volumes, partially offset by higher inventory prices.

Other current assets increased $0.9 billion primarily due to increases in contracts and futures gains, margin deposits and grain accounts, and customer omnibus receivable.

Brokerage payables increased approximately $1.7 billion due to increased customer trading activity in the Company’s futures commission and brokerage business.

Cash used in investing activities was $0.9 billion for the nine months ended September 30, 2022 compared to $1.3 billion for the same period last year.

Capital expenditures for the nine months ended September 30, 2022 were $0.8 billion compared to $0.7 billion for the same period last year.

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

Cash used in financing activities was $2.4 billion for the nine months ended September 30, 2022 compared to $1.6 billion for the same period last year.

Long-term debt borrowings for the nine months ended September 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 $1.3 billion which 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.

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 to redeem debt and for general corporate purposes.

Long-term debt payments of $0.5 billion for the nine months ended September 30, 2022 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, compared to $0.5 billion for the same period last year which consisted of the early redemption of the $500 million aggregate principal amount of 2.750% notes due 2025 in September 2021.

Net payments on short-term credit agreements for the nine months ended September 30, 2022 were $0.8 billion compared to $1.7 billion for the same period last year.

Dividends for the nine months ended September 30, 2022 were $0.7 billion compared to $0.6 billion for the same period last year.

Share repurchases for the nine months ended September 30, 2022 were $1.2 billion compared to an insignificant amount for the same period last year.

At September 30, 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 1.5 to 1.

Other current assets decreased $0.3 billion primarily due to decreases in margin deposits and grain accounts, customer omnibus receivable, and tax receivables.

Trade payables decreased $1.6 billion due to lower payables related to grain purchases.

Brokerage payables decreased approximately $0.5 billion due to decreased trading activity in the Company’s futures commission and brokerage business.

Accrued expenses and other payables decreased $0.8 billion primarily due to decreases in contracts and futures losses, contract liability, and compensation accruals.

Cash used in investing activities was $0.3 billion for the three months ended March 31, 2023 compared to $0.3 billion for the same period last year.

Capital expenditures for the three months ended March 31, 2023 were $0.3 billion compared to $0.2 billion for the same period last year.

There were no additional cost method investments for the three months ended March 31, 2023 compared to $0.1 billion for the same period last year.

Cash provided by financing activities was $0.6 billion for the three months ended March 31, 2023 compared to cash provided of $3.3 billion for the same period last year.

Long-term debt borrowings for the three months ended March 31, 2023 were immaterial compared to long-term debt borrowings for the same period last year of $0.8 billion which consisted of the $750 million aggregate principal amount of 2.900% Notes due 2032.

Proceeds from the borrowings in the prior period were used to finance investments and expenditures in eligible green projects that contribute to environmental objectives and/or eligible social projects that aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes.

Long-term debt payments were $2 million for the three months ended March 31, 2023 compared to an immaterial amount for the same period last year.

Net borrowings on short-term credit agreements for the three months ended March 31, 2023 were $1.3 billion compared to $2.8 billion for the same period last year.

Share repurchases for the three months ended March 31, 2023 were $0.4 billion compared to none for the same period last year.

Dividends for the three months ended March 31, 2023 of $0.2 billion comparable to the same period last year.

At March 31, 2023, 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 $9.2 billion of readily marketable commodity inventories.

At September 30, 2022, the Company’s capital resources included shareholders’ equity of $24.0 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $12.2 billion, of which $10.1 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 24% and 26% at September 30, 2022 and December 31, 2021, respectively.

At March 31, 2023, the Company’s capital resources included shareholders’ equity of $24.9 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $13.3 billion, of which $8.9 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 24% at March 31, 2023 and December 31, 2022.

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 24% and 28% at September 30, 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 28% and 25% at March 31, 2023 and December 31, 2022, respectively.

Of the Company’s total lines of credit, $5.0 billion supported the combined U.S.

and European commercial paper borrowing programs, against which there was no commercial paper outstanding at September 30, 2022.

and European commercial paper borrowing programs, against which there was $0.8 billion commercial paper outstanding at March 31, 2023.

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

As of September 30, 2022, the Company had $1.1 billion of cash and cash equivalents, $0.5 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested.

As of March 31, 2023, the Company had $0.9 billion of cash and cash equivalents, $0.5 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.

3 unchanged sentences

The Programs provide the Company with up to $2.9 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 September 30, 2022, the Company had $0.6 billion unused capacity of its facility under the Programs.

As of September 30, 2022, the Company has total available liquidity of $11.2 billion comprised of cash and cash equivalents and unused lines of credit.

For the nine months ended September 30, 2022, the Company spent approximately $0.8 billion in capital expenditures, $0.7 billion in dividends, and $1.2 billion in share repurchases.

As of March 31, 2023, the Company had $0.3 billion unused capacity of its facility under the Programs.

As of March 31, 2023, the Company has total available liquidity of $9.8 billion comprised of cash and cash equivalents and unused lines of credit with a well-diversified group of primarily investment-grade institutions.

For the three months ended March 31, 2023, the Company spent approximately $0.3 billion in capital expenditures, $0.2 billion in dividends, and $0.4 billion in share repurchases.

The Company has a stock repurchase program.

Under the program, the Company has 90.5 million shares remaining as of September 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 outlay of approximately $0.9 billion in dividends, 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 83.4 million shares remaining as of March 31, 2023 that may be repurchased until December 31, 2024.

On April 3, 2023, the Company issued $500 million aggregate principal amount of 4.500% Notes due in August 15, 2033.

Net proceeds before expenses were $493 million.

Proceeds of the borrowings will be used for general corporate purposes which may include repayment of commercial paper borrowings.

In 2023, the Company expects total capital expenditures of approximately $1.3 billion and additional cash outlays of approximately $1.0 billion in dividends and $1.0 billion in opportunistic 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 September 30, 2022 and December 31, 2021 were $17.9 billion and $18.6 billion, respectively.

The change is primarily related to a decrease in obligations for commitments other than energy and inventory.

As of September 30, 2022, the Company expects to make payments related to purchase obligations of $16.7 billion within the next twelve months.

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

The Company’s purchase obligations as of March 31, 2023 and December 31, 2022 were $14.5 billion and $15.8 billion, respectively.

The decrease is primarily related to obligations to purchase lower quantities of agricultural commodity inventories.

As of March 31, 2023, the Company expects to make payments related to purchase obligations of $13.7 billion within the next twelve months.

There were no other material changes in the Company’s contractual obligations during the quarter ended March 31, 2023.

Off Balance Sheet Arrangements

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

In March 2023, the Company amended its Second Program with certain commercial and conduit purchasers and committed purchasers and increased its facility from €0.8 billion ($0.9 billion) to €1.0 billion ($1.1 billion).

The Second Program terminates on February 20, 2024 unless extended.

There were no other material changes in the Company’s off balance sheet arrangements during the quarter ended March 31, 2023.

Critical Accounting Policies and Estimates

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

There were no material changes in the Company’s critical accounting policies and estimates during the quarter ended March 31, 2023.

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, 2022.

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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 September 30, 2022 are described below.

Significant changes in market risk sensitive instruments and positions for the quarter ended March 31, 2023 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.

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