Archer-Daniels-Midland Co 10-K/A

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Market The Company’s common stock is listed and traded on the New York Stock Exchange under the trading symbol “ADM”. The number of registered stockholders of the Company’s common stock at March 8, 2024, was 7,795. Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Number of Shares Remaining to be Purchased Under the Program (2) October 1, 2023 to October 31, 2023 2,815,562 $ 72.453 2,815,562 70,433,792 November 1, 2023 to November 30, 2023 8,514,616 73.033 8,513,387 61,920,405 December 1, 2023 to December 31, 2023 9,886,971 73.709 9,886,971 52,033,434 Total 21,217,149 $ 73.271 21,215,920 52,033,434 (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, 2023, there were 1,229 shares received as payments for the 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. On August 7, 2019, the Company’s Board of Directors approved the extension of the stock repurchase program through December 31, 2024 and the repurchase of up to an additional 100,000,000 shares under the extended program. 32 Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES (Continued) Performance Graph The graph below compares the Company’s common stock with those of the S&P 500 Index and the S&P Consumer Staples Index. The graph assumes an initial investment of $100 on December 31, 2018 and assumes all dividends have been reinvested through December 31, 2023. COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN Among Archer-Daniels-Midland Company (ADM), the S&P 500 Index, and the S&P Consumer Staples Index Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved. Item 6. [RESERVED] 33 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This MD&A should be read in conjunction with the accompanying consolidated financial statements. Intersegment Sales Background As previously disclosed, the Company received a voluntary document request from the SEC relating to intersegment sales between the Company’s Nutrition reporting segment and the Company’s Ag Services and Oilseeds and Carbohydrate Solutions reporting segments. In response, the Company engaged external counsel, assisted by a forensic accounting firm, to conduct an internal investigation, overseen by the Audit Committee of the Company’s Board of Directors, which is separately advised by external counsel (the "Investigation"). As previously disclosed on January 21, 2024, the Company placed Vikram Luthar, Chief Financial Officer and Senior Vice President, on administrative leave. As of the date of filing, Mr. Luthar is no longer with the Company. Restatement of Previously Issued Consolidated Financial Statements As described in the Explanatory Note above and in Part II, Item 8, Note 1 to the Consolidated Financial Statements, the Company has restated its Consolidated Financial Statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 contained in this Amendment. As a result, the previously reported financial information as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022, and 2021 in this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, has been updated to reflect the relevant restatements. See Part II, Item 8, Note 1. Summary of Significant Accounting Policies and Restatement of Previously Filed Consolidated Financial Statements, Note 17. Segment and Geographic Information, and Note 21. Quarterly Financial Data (Unaudited), in the Consolidated Financial Statements for additional information related to the restatements, including descriptions of the adjustments and the impacts on the Consolidated Financial Statements. The Company also is correcting certain segment disclosure presentation errors. In this Amendment, the Company is revising its reconciliation and calculation of total segment operating profit. The revised reconciliation in Note 17. Segment and Geographic Information, and elsewhere in this Amendment, presents a subtotal for total segment operating profit that is equal to the sum of the segment operating profit reported for each of the Ag Services and Oilseeds, Carbohydrate Solutions and Nutrition segments. Amounts for other business and specified items, which previously were reflected in the calculation of total segment operating profit, are now reflected as reconciling items, similar to Corporate, between total segment operating profit and earnings before income taxes. In addition, because the Investigation covers the period between January 2018 and September 2023, the Company is providing below information with respect to the adjustments effected to operating profit for each of the Company’s reporting segments for each of the years ended December 31, 2018 through 2023. Impact of the Restatement on Ag Services and Oilseeds Segment Operating Profit Years Ended December 31 (In millions) 2023 (Restated) 2022 (Restated) 2021 (Restated) 2020 (Restated) 2019 (Restated) 2018 (Restated) Segment operating profit, as originally reported $ 4,066 $ 4,386 $ 2,775 $ 2,105 $ 1,935 $ 2,020 Adjustments 1 15 24 1 1 — Segment operating profit, as restated $ 4,067 $ 4,401 $ 2,799 $ 2,106 $ 1,936 $ 2,020 34 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Impact of the Restatement on Carbohydrate Solutions Segment Operating Profit Years Ended December 31 (In millions) 2023 (Restated) 2022 (Restated) 2021 (Restated) 2020 (Restated) 2019 (Restated) 2018 (Restated) Segment operating profit, as originally reported $ 1,345 $ 1,360 $ 1,283 $ 717 $ 644 $ 945 Adjustments 30 53 35 15 26 27 Segment operating profit, as restated $ 1,375 $ 1,413 $ 1,318 $ 732 $ 670 $ 972 Impact of the Restatement on Nutrition Segment Operating Profit Years Ended December 31 (In millions) 2023 (Restated) 2022 (Restated) 2021 (Restated) 2020 (Restated) 2019 (Restated) 2018 (Restated) Segment operating profit, as originally reported $ 458 $ 736 $ 691 $ 574 $ 418 $ 339 Adjustments (31) (68) (59) (16) (27) (27) Segment operating profit, as restated $ 427 $ 668 $ 632 $ 558 $ 391 $ 312 As further described in Note 17. Segment and Geographic Information of “Notes to Consolidated Financial Statements” included in Part II, Item 8 herein, the Company also corrected certain errors relating to the classification of certain intrasegment revenues. More information about such error correction is set forth in Note 17. Segment and Geographic Information. Material Weakness In connection with the Investigation, the Company identified a material weakness in the Company’s internal control over financial reporting related to its accounting practices and procedures for segment disclosures. For more information, see “Controls and Procedures” in Part II, Item 9A herein. Government Investigations The Company continues to cooperate with the SEC. Following the Company’s January 21, 2024 announcement of the Investigation, the Company received voluntary document requests from the Department of Justice (DOJ) focused primarily on the same subject matter, and the DOJ directed grand jury subpoenas to certain current and former Company employees. The Company is cooperating with the DOJ. The foregoing is a summary of the Investigation and related matters. The Company could take new or different actions in addition to those taken to date if it determines those actions are appropriate. Company Overview The Company’s significant portfolio actions and announcements during 2023 include: • the opening in February 2023 of a new production facility in Valencia, Spain to help meet rising global demand for probiotics, postbiotics, and other products that support health and well-being; • the announcement in March 2023 of the signing of a joint venture agreement with Marel, a leading provider of advanced food processing solutions, to build an innovation center in the heart of the Netherlands food valley at the Wageningen Campus, subject to regulatory approvals; • the announcement in May 2023 of a Strategic Development Agreement with Air Protein, a pioneer in air-based nutritional protein that requires no agriculture or farmland, decoupling protein production from traditional supply chain risks, to collaborate on research and development to advance new and novel proteins for nutrition; • the announcement in June 2023 of the opening of a new Customer Creation and Innovation Center in Manchester, England, serving as a United Kingdom (UK) hub for food innovation and building upon ADM’s strong presence in the UK; • the launch in July 2023 of a growth initiative of its re:generations™ regenerative agriculture program that will drive expansion to cover 2 million acres across 18 U.S. states and Canada in 2023, and 4 million acres globally by 2025; • the announcement in October 2023 of a strategic partnership with Solugen, a rapidly scaling climate technology company that is reimagining the chemistry of everyday to scale a range of innovative, plant-based specialty chemicals and bio-based building block molecules in a new manufacturing facility in Marshall, Minnesota.; 35 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) • the opening in November 2023 of Green Bison Soy Processing, a joint venture with Marathon Petroleum Corp, a leading, integrated, downstream energy company headquartered in Findlay, Ohio; • the announcement in November 2023 of an expansion of the Company’s global regenerative agriculture efforts with the launch of the Brazil program that aims to promote and support sustainable agricultural production with a focus on soil health, biodiversity protection, improved soil fertility and resilience, and increased farm productivity; • the announcement in November 2023 to expand crush capacity in Brazil and the acquisition of a controlling stake in Buckminster Química, a Macatuba, São Paulo-based producer of refined glycerin; and • the acquisition in December 2023 of D.C.A. Finance B.V., a commodity derivative brokerage service provider. Sustainability is a key driver in 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. The Company’s strategic transformation is focused on three strategic pillars: Productivity, Innovation, and Culture. The Productivity pillar includes (1) partnering across various global teams including procurement, supply chain, operations, and commercial to optimize costs and improve production volumes across the enterprise; (2) continued roll out of the 1ADM business transformation program and implementation of improved standardized business processes; and (3) increased use of technology, data analytics, and automation at production facilities, in offices, and with customers to improve efficiencies and customer service. The Innovation pillar includes expansions and investments in (1) improving the customer experience by leveraging producer relationships and enhancing the use of state-of-the-art digital technology; (2) sustainability-driven innovation, which encompasses the full range of products, solutions, capabilities, and commitments to serve customers’ needs; and (3) growth initiatives, including organic growth with additional capacity to meet growing market demand and strategic objectives. The Culture pillar focuses on building capabilities and enabling collaboration, teamwork, and agility from process standardization and digitalization and ADM’s diversity, equity, and inclusion initiatives, which bring new perspectives and expertise to the Company’s decision-making. ADM plans to support the three pillars with investments in technology, which include expanding digital capabilities and investing further in research and development. Operating Performance Indicators The Company’s Ag Services and Oilseeds operations are principally agricultural commodity-based businesses where changes in selling prices move in relationship to changes in prices of the commodity-based agricultural raw materials. As a result, changes in agricultural commodity prices have relatively equal impacts on both revenues and cost of products sold. Therefore, changes in revenues of these businesses do not necessarily correspond to the changes in margins or gross profit. Thus, gross margins per volume or metric ton are more meaningful than gross margins as percentage of revenues. The Company’s Carbohydrate Solutions operations and Nutrition businesses also utilize agricultural commodities (or products derived from agricultural commodities) as raw materials. However, in these operations, agricultural commodity market price changes do not necessarily correlate to changes in cost of products sold. Therefore, changes in revenues of these businesses may correspond to changes in margins or gross profit. Thus, gross margin rates are more meaningful as a performance indicator in these businesses. The Company has consolidated subsidiaries in more than 70 countries. For the majority of the Company’s subsidiaries located outside the United States, the local currency is the functional currency except certain significant subsidiaries in Switzerland where Euro is the functional currency, and Brazil and Argentina where U.S. dollar is the functional currency. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the weighted average exchange rates for the applicable periods. For the majority of the Company’s business activities in Brazil and Argentina, the functional currency is the U.S. dollar; however, certain transactions, including taxes, occur in local currency and require remeasurement to the functional currency. 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. dollar. 36 Item 7. 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, total 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 630 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office. 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 0.1% 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. The Black Sea Grain Initiative, an agreement that allowed Ukraine to export grain and other food products, expired on July 17, 2023. In September 2023, a new alternative shipping corridor in the Black Sea took effect with Ukraine setting up temporary routes from ports in Greater Odessa. For more information, refer to Part I, Item 1A, “Risk Factors”. As of December 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 were related to inventories that represented less than 2% of ADM’s total inventories. Market Factors Influencing Operations or Results in the Twelve Months Ended December 31, 2023 The Company is subject to a variety of market factors which affect the Company’s operating results. In Ag Services and Oilseeds, supply has been impacted by market dislocations driven by geopolitical uncertainty, record Brazil soybean production, and extreme drought conditions in Argentina. Inflationary pressures impacted the entire value chain. Crushing was positively impacted by sustainable biofuel demand and protein consumption around the globe. In Refined Products and Other, margins were driven by strong oil demand and elevated oil prices that were supported by biofuels demand, driven by favorable blend economics as historically low distillate fuel oil inventory drove diesel prices to all-time highs. Mediocre growth in mandated renewable volume obligations for 2023 to 2025 drove further market volatility. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with stronger overall margins due to specialty products pricing. Lower gasoline prices in 2023 were supportive of higher domestic gasoline consumption and ethanol demand. Strong ethanol exports helped balance overall supply and demand and were supported by discretionary blending at export markets. 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, bioactives, and alternative proteins. In Animal Nutrition, overall market remained weak with pressured farm gate prices in China and structurally decreasing European production. Certain tailwinds, however, including softening raw material prices, predominantly in micro ingredients, and recovery in global poultry production helped offset the negative impacts. The amino acids market continued to be subdued with ample supply from China. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Earnings before income taxes decreased 18% or $939 million, to $4.3 billion. Total segment operating profit (a non-GAAP measure) decreased 9% or $613 million, to $5.9 billion, due primarily to lower results in Crushing, Wilmar, Nutrition, Ag Services, and Starches and Sweeteners, partially offset by higher results in Refined Products and Other and Vantage Corn Processors. Lower margins partially offset by improved pricing and positive timing impacts, overall decline in volume, higher manufacturing costs, and unplanned downtime at Decatur East decreased total segment operating profit (a non-GAAP 37 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) measure). Total segment operating profit (a non-GAAP measure) excluded a net charge of $344 million consisting of asset impairment and restructuring charges and net settlement contingencies totaling $361 million and a gain on the sale of certain assets of $17 million. Total segment operating profit (a non-GAAP measure) excluded in the prior year 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. Corporate results in the current year were a net charge of $1.6 billion and included a mark-to-market gain of $6 million on the conversion option of the exchangeable bonds issued in August 2020, acquisition-related expenses of $7 million, and restructuring charges of $6 million. Corporate results in the prior 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. Income taxes of $828 million decreased $40 million. The Company’s effective tax rate for 2023 was 19.3% compared to 16.6% for 2022 . The change in the rate was due primarily to changes in the geographic mix of pretax earnings. Analysis of Statements of Earnings Processed volumes by product for the years ended December 31, 2023 and 2022 are as follows (in metric tons): (In thousands) 2023 2022 Change Oilseeds 34,899 32,952 1,947 Corn 18,067 18,558 (491) Total 52,966 51,510 1,456 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 increase in oilseeds processed volumes was primarily related to improved crush rates in the current year compared to decreased crush rates in the prior year resulting from the decline in global demand for rapeseed and the decline in canola crop due to the drought condition in North America. The overall decrease in corn processed volumes was related to unplanned downtime from plants in Decatur, Illinois and due to the earthquake in Turkey and fire at the Cedar Rapids, Iowa dry mill. 38 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Revenues by segment for the years ended December 31, 2023 and 2022 are as follows: (In millions) 2023 2022 Change Ag Services and Oilseeds Ag Services $ 47,420 $ 53,181 $ (5,761) Crushing 14,020 13,139 881 Refined Products and Other 11,986 13,243 (1,257) Total Ag Services and Oilseeds 73,426 79,563 (6,137) Carbohydrate Solutions Starches and Sweeteners 9,885 10,251 (366) Vantage Corn Processors 2,989 3,710 (721) Total Carbohydrate Solutions 12,874 13,961 (1,087) Nutrition Human Nutrition 3,634 3,769 (135) Animal Nutrition 3,577 3,867 (290) Total Nutrition 7,211 7,636 (425) Total Segment Revenues 93,511 101,160 (7,649) Other Business 424 396 28 Total Revenues $ 93,935 $ 101,556 $ (7,621) Revenues and cost of products sold in agricultural merchandising and processing businesses are significantly correlated to the underlying commodity prices and volumes. 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. Revenues decreased $7.6 billion to $93.9 billion due to lower sales prices ($10.3 billion), partially offset by higher sales volumes ($2.7 billion). Lower sales prices of oils, soybeans, corn, biodiesel, and farming materials and lower sales volumes of corn, were partially offset by higher sales volumes of soybeans and biodiesel. Ag Services and Oilseeds revenues decreased 8% to $73.4 billion due to lower sales prices ($10.1 billion), partially offset by higher sales volumes ($4.0 billion). Carbohydrate Solutions revenues decreased 8% to $12.9 billion due to lower sales prices ($0.6 billion) and lower sales volumes ($0.5 billion). Nutrition revenues decreased 6% to $7.2 billion due to lower sales volumes ($0.8 billion), partially offset by higher sales prices ($0.4 billion). Cost of products sold decreased $7.6 billion to $86.4 billion due principally to lower average commodity costs partially offset by higher volumes and increased manufacturing expenses. Manufacturing expenses increased $0.3 billion due to individually insignificant increases in various expense categories. Foreign currency translation impacts increased revenues by $0.1 billion and cost of goods sold by $0.1 billion with no impact to gross profit. Gross profit decreased $0.1 billion or 1%, to $7.5 billion due to lower results in Crushing ($273 million), Nutrition ($232 million) and Ag Services ($68 million), partially offset by higher results in Refined Products and Other ($431 million) and Carbohydrate Solutions ($46 million). These factors are explained in the segment operating profit discussion on page 4 1 . 39 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Selling, general, and administrative expenses increased 3% to $3.5 billion due principally to higher salaries and benefit costs, increased expenses for contracted outside labor, and higher professional and financing fees, partially offset by lower provisions for bad debt. Asset impairment, exit, and restructuring costs increased $276 million to $342 million. Charges in the current year consisted of $137 million of impairments related to goodwill in the Animal Nutrition reporting unit, $108 million of impairments related to property, plant, and equipment and an equity method investment, $64 million of impairments related to customer list and discontinued Animal Nutrition trademarks, and $27 million of restructuring, presented as specified items, and $6 million of restructuring in Corporate. Charges in the prior year consisted of $37 million of impairments related to certain long-lived assets and $28 million of restructuring, presented as specified items, and $1 million of restructuring in Corporate. Equity in earnings of unconsolidated affiliates decreased $281 million to $551 million due primarily to lower earnings from the Company’s investments in Wilmar, Skyland Grain, LLC, and Hungrana Ltd., partially offset by higher earnings from ADM’s investment in Olenex. Interest and investment income increased $206 million to $499 million due primarily to higher interest rates, partially offset by revaluation losses of $76 million compared to revaluation gains of $37 million in the prior year. Interest expense increased $251 million to $647 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services and on the Company’s commercial paper borrowing programs and increased interest expense from a new debt issuance at a higher rate. Interest expense in the current year also included a $6 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 compared to a $9 million mark-to-market gain adjustment in the prior year. Other income - net of $176 million decreased $182 million. Current year income included net gains on disposals of individually insignificant assets in the ordinary course of business of $38 million, the non-service components of net pension benefit income of $18 million, net foreign exchange gains of $85 million, and net other income. Prior year income included a legal recovery of $110 million related to the 2020 and 2019 closure of the Company’s export facility in Reserve, Louisiana, net foreign exchange gains of $105 million, a $50 million payment from the USDA Biofuel Producer Recovery Program, gains on disposals of individually insignificant assets in the ordinary course of business of $78 million, and the non-service components of net pension benefit income of $25 million, partially offset by net other expense. 40 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Total segment operating profit (a non-GAAP measure) is reconciled to earnings before income taxes, the most directly comparable GAAP measure, for the years ended December 31, 2023 and 2022 as follows: (In millions) 2023 2022 Change Earnings Before Income Taxes $ 4,294 $ 5,233 $ (939) Other Business (earnings) loss (375) (167) (208) Corporate 1,606 1,316 290 Specified Items: Gains on sale of assets (17) (47) 30 Impairment, restructuring, and net settlement contingencies 361 147 214 Total Segment Operating Profit $ 5,869 $ 6,482 $ (613) Segment Operating Profit Ag Services and Oilseeds Ag Services $ 1,168 $ 1,374 $ (206) Crushing 1,290 1,636 (346) Refined Products and Other 1,306 837 469 Wilmar 303 554 (251) Total Ag Services and Oilseeds $ 4,067 $ 4,401 $ (334) Carbohydrate Solutions Starches and Sweeteners $ 1,329 $ 1,376 $ (47) Vantage Corn Processors 46 37 9 Total Carbohydrate Solutions $ 1,375 $ 1,413 $ (38) Nutrition Human Nutrition $ 417 $ 557 $ (140) Animal Nutrition 10 111 (101) Total Nutrition $ 427 $ 668 $ (241) Ag Services and Oilseeds segment operating profit decreased 8%. In Ag Services, significantly higher origination volumes and margins in South America due to a record Brazilian soybean crop were mostly offset by decreased North American origination results from lower export demand and low water levels. Destination marketing, global ocean freight, and transportation results decreased due to less favorable timing effects and higher freight rates. Current year results also included a $48 million insurance settlement related to damages from Hurricane Ida compared to the prior year's $110 million legal recovery related to the 2019 and 2020 closure of the Company’s Reserve, Louisiana, export facility. In Crushing, global crush margins were historically strong, yet lower than the prior year’s record highs with the lower Argentine soybean crop driving a tight soybean meal supply, partially offset by improved processed volumes. In EMEA, lower meal demand and exports were offset by the switch capacity in the region. In Refined Products and Other, increasing global demand for fuel and food created elevated margins in North America and Europe for refined oils and biodiesel. In North America, sales volumes were also higher supported by U.S. renewable volume obligations and margins for food oil in Europe expanding year-over-year. Additionally, net positive mark-to-market timing effects that are expected to reverse as contracts execute in future periods contributed to the results in the current year. Equity earnings from Wilmar were lower versus the prior year. Carbohydrate Solutions segment operating profit decreased 3%. Starches and Sweeteners, including ethanol production from the wet mills, capitalized on a solid demand environment during the year. North America starches and sweeteners delivered volumes and margins similar to the prior year with higher margins led by specialty products. Ethanol margins were solid as industry stocks moderated, though lower relative to the prior year. Results were negatively impacted due to unplanned downtime at one of the corn germ plants. In EMEA, the business effectively managed margins to deliver improved results. The global wheat milling business posted higher margins driven by solid customer demand. Vantage Corn Processors results 41 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) were higher as the business executed on a robust demand and margin environment for ethanol partially offset by the absence of the prior year’s $50 million payment from the USDA Biofuel Producer Recovery Program. Nutrition segment operating profit decreased 36%. Human Nutrition results were lower than the prior year, as the business continued to manage demand fulfillment challenges and destocking in certain categories. Flavors results were lower than the prior year driven by softer sales, higher expenses, and $45 million of negative impacts primarily related to the deconsolidation and write-down of a joint venture. Specialty Ingredients results were lower year-over-year due to continued lower market demand for plant-based proteins in meat alternatives and unplanned downtime at Decatur East. Health and Wellness results were lower than the prior year due to a revaluation loss of $19 million related to an investment in precision fermentation, partially offset by continued growth in the biotics category. Animal Nutrition results were lower compared to the prior year due to lower contribution from amino acids, pockets of softer global feed demand affecting volumes, and continued supply chain challenges and inventory losses in pet solutions. Other Business operating profit increased 125%. Higher interest rates drove improved earnings in ADM Investor Services. Captive insurance results improved on premiums from new programs, partially offset by increased claim settlements. Corporate results are as follows: (In millions) 2023 2022 Change Interest expense - net $ (431) $ (333) $ (98) Unallocated corporate costs (1,144) (1,026) (118) Loss on sale of assets — (3) 3 Expenses related to acquisitions (7) (2) (5) Gain on debt conversion option 6 9 (3) Restructuring charges (6) (1) (5) Other (expense) income (24) 40 (64) Total Corporate $ (1,606) $ (1,316) $ (290) Corporate results were a net charge of $1.6 billion in the current year compared to $1.3 billion in the prior year. Interest expense-net increased $98 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs and increased interest expense from a new debt issuance at a higher rate. Unallocated corporate costs increased $118 million due primarily to higher financing, information technology, and centers of excellence costs, partially offset by lower incentive compensation expense accruals and higher corporate cost allocation. 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 income in the current year included the non-service components of net pension benefit income of $18 million and foreign exchange gains, partially offset by investment revaluation losses of $57 million and railroad maintenance expenses of $67 million. Other income in the prior year included investment revaluation gains of $37 million, the non-service components of net pension benefit income of $25 million, and foreign exchange gains, partially offset by railroad maintenance expenses of $67 million. Non-GAAP Financial Measures The Company uses adjusted net earnings, adjusted earnings per share (EPS), adjusted EBITDA, and total segment operating profit, non-GAAP financial measures as defined by the SEC, 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 net earnings is defined as net earnings adjusted for the effects on net earnings of specified items. Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. EBITDA is defined as earnings before interest on borrowings, taxes, and depreciation and amortization. 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 income tax expense, interest expense on borrowings, and depreciation and amortization to net earnings. Total segment operating profit is defined as ADM's consolidated earnings before income taxes, adjusted for Other business, Corporate, and specified items. The table on page 4 1 provides a reconciliation of total segment operating profit to earnings before income taxes for the years ended December 31, 2023 and 2022. 42 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In this Amendment, the Company is revising its reconciliation and calculation of total segment operating profit. The revised reconciliation in Note 17. Segment and Geographic Information, of the Consolidated Financial Statements, presents a subtotal for total segment operating profit that is equal to the sum of the segment operating profit reported for each of the Ag Services and Oilseeds, Carbohydrate Solutions and Nutrition segments. Amounts for other business and specified items, which previously were reflected in the calculation of total segment operating profit, are now reflected as reconciling items, similar to Corporate, between total segment operating profit and earnings before income taxes. Management believes that adjusted net earnings, adjusted EPS, adjusted EBITDA, and total 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 net earnings, adjusted EPS, adjusted EBITDA, and total segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS, net earnings, and earnings before income taxes, respectively, the most directly comparable amounts reported under GAAP. The table below provides a reconciliation of net earnings to adjusted net earnings and diluted EPS to adjusted EPS for the years ended December 31, 2023 and 2022. 2023 2022 In millions Per share In millions Per share Average number of shares outstanding - diluted 542 563 Net earnings and reported EPS (fully diluted) $ 3,483 $ 6.43 $ 4,340 $ 7.71 Adjustments: Gains on sale of assets (net of tax of $5 million in 2023 and $11 million in 2022) (1) (12) (0.03) (33) (0.06) Asset impairment, restructuring, and net settlement contingencies (net of tax of $57 million in 2023 and $33 million in 2022) (1) 310 0.57 115 0.21 Expenses related to acquisitions (net of tax of $1 million in 2023 and $1 million in 2022) (1) 6 0.01 1 — Gain on debt conversion option (net of tax of $0) (1) (6) (0.01) (9) (0.02) Tax adjustments 4 0.01 7 0.01 Adjusted net earnings and adjusted EPS $ 3,785 $ 6.98 $ 4,421 $ 7.85 (1) Tax effected using the U.S. and applicable tax rates. The tables below provide a reconciliation of net earnings to adjusted EBITDA for the years ended December 31, 2023 and 2022. (In millions) 2023 2022 Change Net earnings $ 3,483 $ 4,340 $ (857) Net earnings (losses) attributable to noncontrolling interests (17) 25 (42) Income tax expense 828 868 (40) Earnings before income taxes 4,294 5,233 (939) Interest expense 430 396 34 Depreciation and amortization 1,059 1,028 31 Gains on sale of assets (17) (44) 27 Asset impairment, restructuring, and net settlement contingencies 367 148 219 Railroad maintenance expense 67 67 — Expenses related to acquisitions 7 2 5 Adjusted EBITDA $ 6,207 $ 6,830 $ (623) 43 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Market Factors Influencing Operations or Results in the Twelve Months Ended December 31, 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 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 Earnings before income taxes increased 58% or $1.9 billion, to $5.2 billion. Total segment operating profit (a non-GAAP measure) increased 37% or $1.7 billion, to $6.5 billion due primarily to higher results in most businesses except in Vantage Corn Processors. Total segment operating profit (a non-GAAP measure) excluded 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. Excluded from total segment operating profit (a non-GAAP measure) 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. Corporate results in 2022 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 2021 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 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 years ended December 31, 2022 and 2021 are as follows (in metric tons): (In thousands) 2022 2021 Change Oilseeds 32,952 35,125 (2,173) Corn 18,558 19,126 (568) Total 51,510 54,251 (2,741) 44 Item 7. 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 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: (In millions) 2022 2021 Change Ag Services and Oilseeds Ag Services $ 53,181 $ 45,017 $ 8,164 Crushing 13,139 11,368 1,771 Refined Products and Other 13,243 10,662 2,581 Total Ag Services and Oilseeds 79,563 67,047 12,516 Carbohydrate Solutions Starches and Sweeteners 10,251 7,611 2,640 Vantage Corn Processors 3,710 3,499 211 Total Carbohydrate Solutions 13,961 11,110 2,851 Nutrition Human Nutrition 3,769 3,189 580 Animal Nutrition 3,867 3,523 344 Total Nutrition 7,636 6,712 924 Total Segment Revenues 101,160 84,869 16,291 Other Business 396 380 16 Total Revenues $ 101,556 $ 85,249 $ 16,307 Revenues and cost of products sold in agricultural merchandising and processing businesses are significantly correlated to the underlying commodity prices and volumes. 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. 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 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. 45 Item 7. 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 4 7 . 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, 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, 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 2022 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 2021. Other income - net of $358 million increased $264 million. Income in 2022 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. Income in 2021 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 Plan and ADM Pension Plan for Hourly-Wage Employees. 46 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Total segment operating profit (a non-GAAP measure) is reconciled to earnings before income taxes, the most directly comparable GAAP measure, for the years ended December 31, 2022 and 2021 as follows: (In millions) 2022 2021 Change Earnings Before Income Taxes $ 5,233 $ 3,313 $ 1,920 Other Business (earnings) loss (167) (25) (142) Corporate 1,316 1,325 (9) Specified Items: Gain on sales of assets and businesses (47) (77) 30 Impairment, restructuring, and exit charges 147 213 (66) Total Segment Operating Profit $ 6,482 $ 4,749 $ 1,733 Segment Operating Profit Ag Services and Oilseeds Ag Services $ 1,374 $ 770 $ 604 Crushing 1,636 999 637 Refined Products and Other 837 652 185 Wilmar 554 378 176 Total Ag Services and Oilseeds $ 4,401 $ 2,799 $ 1,602 Carbohydrate Solutions Sweeteners and Starches $ 1,376 $ 948 $ 428 Vantage Corn Processors 37 370 (333) Total Carbohydrate Solutions $ 1,413 $ 1,318 $ 95 Nutrition Human Nutrition $ 557 $ 520 $ 37 Animal Nutrition 111 112 (1) Total Nutrition $ 668 $ 632 $ 36 Ag Services and Oilseeds segment operating profit increased 57%. Ag Services results were significantly higher versus 2021. 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 2022 versus negative timing effects in 2021 helped drive higher year-over-year results. Refined Products and Other results were higher than in 2021, 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 2021. Carbohydrate Solutions segment operating profit increased 7%. Starches and Sweeteners, including ethanol production from the wet mills, delivered higher results versus 2021, 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 2021 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 segment operating profit increased 6%. 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 47 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) 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 comparable to 2021. 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 Interest expense - net $ (333) $ (277) (56) Unallocated corporate costs (1,026) (957) (69) 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 9 19 (10) Restructuring and settlement charges (1) (87) 86 Other income 40 20 20 Total Corporate $ (1,316) $ (1,325) $ 9 Corporate results were a net charge of $1.3 billion in 2022 compared to $1.3 billion in 2021. 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 2021 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 2021 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 2022 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 2021 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 The Company uses adjusted net earnings, adjusted earnings per share (EPS), adjusted EBITDA, and total segment operating profit, non-GAAP financial measures as defined by the SEC, 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 net earnings is defined as net earnings adjusted for the effects on net earnings of specified items. Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. EBITDA is defined as earnings before interest on borrowings, taxes, and depreciation and amortization. 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 income tax expense, interest expense on borrowings, and depreciation and amortization to net earnings. Total segment operating profit is defined as ADM's consolidated earnings before income taxes, adjusted for Other business, Corporate, and specified items. The table on page 4 7 provides a reconciliation of total segment operating profit to earnings before income taxes for the years ended December 31, 2022 and 2021. 48 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In this Amendment, the Company is revising its reconciliation and calculation of total segment operating profit. The revised reconciliation in Note 17. Segment and Geographic Information, of the Consolidated Financial Statements, and elsewhere in this Amendment, presents a subtotal for total segment operating profit that is equal to the sum of the segment operating profit reported for Ag Services and Oilseeds, Carbohydrate Solutions and Nutrition segments. Amounts for other business and specified items, which previously were reflected in the calculation of total segment operating profit, are now reflected as reconciling items, similar to Corporate, between total segment operating profit and earnings before income taxes. Management believes that adjusted net earnings, adjusted EPS, adjusted EBITDA, and total 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 net earnings, adjusted EPS, adjusted EBITDA, and total segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS, net earnings, and earnings before income taxes, respectively, the most directly comparable amounts reported under GAAP. The table below provides a reconciliation of net earnings to adjusted net earnings and diluted EPS to adjusted EPS for the years ended December 31, 2022 and 2021. 2022 2021 In millions Per share In millions Per share Average number of shares outstanding - diluted 563 566 Net earnings and reported EPS (fully diluted) $ 4,340 $ 7.71 $ 2,709 $ 4.79 Adjustments: Gains on sale of assets (net of tax of $11 million in 2022 and $20 million in 2021) (1) (33) (0.06) (57) (0.1) Asset impairment, restructuring, and settlement charges (net of tax of $33 million in 2022 and $63 million in 2021) (1) 115 0.21 237 0.42 Expenses related to acquisitions (net of tax of $1 million in 2022 and $2 million in 2021) (1) 1 — 5 0.01 Loss on debt extinguishment (net of tax of $9 million) (1) — — 27 0.05 Gain on debt conversion (net of tax of $0) (1) (9) (0.02) (19) (0.03) Tax adjustments 7 0.01 33 0.05 Adjusted net earnings and adjusted EPS $ 4,421 $ 7.85 $ 2,935 $ 5.19 (1) Tax effected using the U.S. and applicable tax rates. 49 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The tables below provide a reconciliation of net earnings to adjusted EBITDA and adjusted EBITDA by segment for the years ended December 31, 2022 and 2021. (In millions) 2022 2021 Change Net earnings $ 4,340 $ 2,709 $ 1,631 Net earnings attributable to noncontrolling interests 25 26 (1) Income tax expense 868 578 290 Earnings before income taxes 5,233 3,313 1,920 Interest expense 396 265 131 Depreciation and amortization 1,028 996 32 Gains on sale of assets (44) (77) 33 Asset impairment, restructuring, and settlement charges 148 300 (152) Railroad maintenance expense 67 67 — Expenses related to acquisitions 2 7 (5) Loss on debt extinguishment — 36 (36) Adjusted EBITDA $ 6,830 $ 4,907 $ 1,923 50