What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-18 compared with 2023-09-11 · 424 added, 29 removed, 37 unchanged (92% of the section changed)

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

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 for 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.

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.

Effective April 1, 2022, the Company changed the functional currency of its Turkish entities to the U.S.

dollar which did not and is not expected to have a material impact on the Company’s consolidated financial statements.

The Company measures its performance using key financial metrics including net earnings, adjusted earnings per share (EPS), gross margins, segment operating profit, total segment operating profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, return on invested capital, economic value added, and operating cash flows before working capital.

Some of these metrics 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.

For more information, see “Non-GAAP Financial Measures” on page 46 .

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, global production of similar and competitive crops, and geopolitical developments.

Due to the unpredictable nature of these and other 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.”

Market Factors Influencing Operations or Results in the Three Months Ended June 30, 2024

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

In Ag Services and Oilseeds, following two years of very favorable market conditions, several headwinds in the agriculture cycle led to more normalized conditions throughout the entire value chain.

Ag Services experienced slow South American farmer selling, depressed margins, low demand for North American exports along with limited trade opportunities as a carry market has contributed to slow farmer selling.

Crushing saw good demand with lower North American meal exports.

In Refined Products and Other, despite strong global demand for oil and biodiesel, margins were limited by oil values, particularly in North America, due to low carbon intensity feedstocks competing in the renewable diesel market.

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

Demand for ethanol was strong going into summer driving season.

Strong ethanol export demand was due to higher mandates in certain jurisdictions and discretionary blending.

Industry ethanol stocks declined and ethanol margins improved.

In Nutrition, demand was softer in a few food and beverage product categories driven by shifts in consumer discretionary spend.

Human Nutrition was impacted by inflation which drove lower demand and impacted sales volumes in alternative proteins.

In Animal Nutrition, a soft amino acids market driven by price weakness in North America was partially compensated by a slightly improved market in Europe, Middle East, and Africa (EMEA).

The global feed and feed additives market remained challenged on the demand side, with weakness in the Chinese beef and pork business and continued subdued global shrimp prices.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Earnings before income taxes decreased $536 million from $1.1 billion to $596 million due to lower pricing and execution margins as well as higher Corporate costs.

Total segment operating profit (a non-GAAP measure) decreased $617 million from $1.5 billion to $925 million due primarily to lower results in Ag Services and Oilseeds, and Human Nutrition, partially offset by higher results in Carbohydrate Solutions, Other Business, and Animal Nutrition.

Total segment operating profit (a non-GAAP measure) excluded asset impairment and restructuring charges totaling $7 million.

Excluded from total segment operating profit (a non-GAAP measure) in the prior-year quarter was a net charge of $103 million consisting of charges totaling $114 million and a gain on the sale of certain assets of $11 million.

Corporate results in the current quarter were a net charge of $418 million.

Corporate results in the prior-year quarter were a net charge of $393 million and included a mark-to-market gain of $1 million on the conversion option of the exchangeable bonds issued in August 2020.

Income tax expense decreased $89 million to $115 million.

The effective tax rate for the quarter ended June 30, 2024 was 19.3% compared to 18.0% for the quarter ended June 30, 2023.

The increase in the rate was primarily due to the impact of discrete tax items, partially offset by the change in the geographic mix of forecasted pretax earnings.

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

Analysis of Statements of Earnings

Processed volumes by product for the quarter were as follows (in metric tons):

Three Months Ended

(In thousands) 2024 2023 Change

Oilseeds 8,872 8,783 89

Corn 4,482 4,448 34

Total 13,354 13,231 123

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.

Oilseeds and corn processed volumes were fairly consistent between the quarters with increases due to more favorable weather and reduced unplanned downtime compared to the previous year.

Revenues by segment for the quarter were as follows:

Three Months Ended

2024 2023 Change

(In millions)

Ag Services and Oilseeds

Ag Services $ 11,746 $ 13,366 $ (1,620)

Crushing 2,850 3,480 (630)

Refined Products and Other 2,737 2,998 (261)

Total Ag Services and Oilseeds 17,333 19,844 (2,511)

Carbohydrate Solutions

Starches and Sweeteners 2,211 2,475 (264)

Vantage Corn Processors 683 906 (223)

Total Carbohydrate Solutions 2,894 3,381 (487)

Human Nutrition 1,061 966 95

Animal Nutrition 847 887 (40)

Total Nutrition 1,908 1,853 55

Total Segment Revenues 22,135 25,078 (2,943)

Other Business 113 112 1

Total Revenues $ 22,248 $ 25,190 $ (2,942)

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 market price changes, which generally result in an insignificant impact to gross profit.

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

Revenues decreased $2.9 billion to $22.2 billion due to lower sales prices ($3.6 billion), partially offset by higher sales volumes ($0.7 billion).

Lower sales prices of emulsifiers and thickeners, biodiesel, and corn and lower sales volumes of meal and farming materials, were partially offset by higher sales volumes of animal feeds, oils, soybeans and rapeseed.

Ag Services and Oilseeds revenues decreased 13% to $17.3 billion due to lower sales prices ($3.1 billion), partially offset by higher sales volumes ($0.6 billion).

Carbohydrate Solutions revenues decreased 14% to $2.9 billion due to lower sales prices ($0.5 billion).

Nutrition revenues increased 3% to $1.9 billion due to slightly higher sales volumes ($0.2 billion), partially offset by lower prices ($0.1 billion).

Cost of products sold decreased $2.5 billion to $20.9 billion due principally to lower average commodity costs.

Manufacturing expenses increased $20 million to $1.9 billion due principally to higher salaries and benefit costs, maintenance costs, and commercial services, partially offset by lower energy costs.

Foreign currency translation decreased revenues by $114 million and cost of products sold by $95 million.

Gross profit decreased $0.5 billion or 26% to $1.4 billion.

Lower results in Ag Services and Oilseeds ($507 million), and Human Nutrition ($54 million) were partially offset by higher results in Carbohydrate Solutions ($32 million), Animal Nutrition ($24 million), and Other ($20 million).

These factors are explained in the segment operating profit discussion on page 4 5 .

Selling, general, and administrative expenses increased $66 million to $907 million due primarily to increased legal and professional fees, increased amortization of intangibles, and higher salaries and benefit costs.

Asset impairment, exit, and restructuring costs decreased $53 million to $7 million.

Charges in the current quarter consisted of $7 million of impairments related to certain long-lived assets presented as specified items.

Charges in the prior-year quarter consisted of $43 million of impairments related to certain long-lived assets and intangibles and $17 million of restructuring, presented as specified items.

Equity in earnings of unconsolidated affiliates increased $1 million to $152 million due primarily to higher earnings from the Company’s investments in Hungrana, Almindones Mexicanos S.A., and Stratas, partially offset by lower earnings from the Company’s investment in Wilmar.

Interest and investment income decreased $2 million to $140 million due primarily to lower interest income.

Interest expense increased $7 million to $187 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services.

Interest expense in the prior-year quarter also included a mark-to-market gain adjustment of $1 million related to the conversion option of the exchangeable bonds issued in August 2020.

Other income-net decreased $28 million to $9 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, net foreign exchange gains, and net other income.

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

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 quarters ended June 30, 2024 and 2023 as follows:

Three Months Ended

2024 2023 Change

(In millions)

Earnings before income taxes $ 596 $ 1,132 $ (536)

Other Business (earnings) loss (96) (86) (10)

Corporate 418 393 25

Specified Items:

Gains on sale of assets — (11) 11

Impairment and restructuring charges 7 114 (107)

Total Segment Operating Profit $ 925 $ 1,542 $ (617)

Segment Operating Profit

Ag Services and Oilseeds

Ag Services $ 122 $ 380 $ (258)

Crushing 132 224 (92)

Refined Products and Other 137 362 (225)

Wilmar 68 88 (20)

Total Ag Services and Oilseeds $ 459 $ 1,054 $ (595)

Carbohydrate Solutions

Starches and Sweeteners $ 323 $ 301 $ 22

Vantage Corn Processors 34 18 16

Total Carbohydrate Solutions $ 357 $ 319 $ 38

Human Nutrition $ 103 $ 185 $ (82)

Animal Nutrition 6 (16) 22

Total Nutrition $ 109 $ 169 $ (60)

Ag Services and Oilseeds segment operating profit decreased 56%.

Ag Services results were lower than the second quarter of 2023 due to the stabilization of trade flows leading to lower global trade and risk management results.

In South America, slower farmer selling led to much lower margins.

North American results were lower due to strong supplies out of Brazil and Argentina shifting export demand to South America.

Crushing results were lower than the prior year quarter as global soy crush margins moderated due to more balanced supply and demand conditions and lower oil values caused by an increase in imports of used cooking oil.

During the quarter, negative mark-to-market timing impacts were significantly lower than in the prior-year quarter.

Refined Products & Other (RPO) results were lower, as the margin structure in North America and EMEA has eased from historically high levels in the prior year period.

RPO negative mark-to-market timing impacts affected current quarter results versus positive impacts in the prior-year quarter.

Equity earnings from Wilmar were lower versus the second quarter of 2023.

Carbohydrate Solutions segment operating profit increased 12%.

Starches and Sweeteners results were higher year-over-year as strong starches and sweeteners margins and higher volumes were partially offset by lower domestic ethanol margins, as well as moderating margins in the EMEA region.

Vantage Corn Processors results improved year-over-year as strong demand for exports of ethanol supported higher margins .

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

Nutrition segment operating profit decreased 36%.

Human Nutrition results were lower than the second quarter of 2023 as impacts related to unplanned downtime at Decatur East, a normalizing texturants market, and higher manufacturing costs negatively impacted margins.

Animal Nutrition results were higher compared to the same quarter last year as cost optimization efforts and lower input costs bolstered margins.

Other Business operating profit increased $10 million.

Captive insurance results were higher due to lower claim activity.

ADM Investor Services was lower on higher operating costs.

Corporate results for the quarter were as follows:

Three Months Ended

2024 2023 Change

(In millions)

Interest expense-net $ (128) $ (125) $ (3)

Unallocated corporate costs (292) (262) (30)

Expenses related to acquisitions (4) (3) (1)

Gain on debt conversion option — 1 (1)

Restructuring charges — (3) 3

Other income (expense) 6 (1) 7

Total Corporate $ (418) $ (393) $ (25)

Corporate results were a net charge of $418 million in the current quarter compared to a net charge of $393 million in the prior-year quarter.

Interest expense-net increased $3 million due to higher borrowings.

Unallocated corporate costs increased $30 million due primarily to increases in legal and professional fees, global technology spend, and securitization fees.

Gain on debt conversion option in the prior-year quarter 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 includes foreign exchange gains of $12 million and the non-service components of net pension benefit income of $5 million.

Other expense in the prior-year quarter included foreign exchange losses and railroad maintenance expenses, partially offset by the non-service components of net pension benefit income of $5 million.

Non-GAAP Financial Measures

The Company uses adjusted net earnings, adjusted earnings per share (EPS), EBITDA, adjusted EBITDA, and total 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 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 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 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.

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

The table on page 4 5 provides a reconciliation of total segment operating profit to earnings before income taxes for the three months ended June 30, 2024 and 2023.

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 13.

Segment Information 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.

The table below provides a reconciliation of net earnings to adjusted net earnings and diluted EPS to adjusted EPS for the three months ended June 30, 2024 and 2023.

Three Months Ended June 30,

In millions Per share In millions Per share

Average number of shares outstanding - diluted 493 546

Net earnings and reported EPS (fully diluted) $ 486 $ 0.98 $ 927 $ 1.70

Gains on sale of assets and businesses - net of tax of $3 million in 2023 (1)

— — (8) (0.02)

Gain on debt conversion option — — (1) —

Impairment and restructuring charges and contingency provisions - net of tax of $2 million in 2024 and $24 million in 2023 (1)

5 0.01 93 0.17

Expenses related to acquisitions - net of tax of $1 million in 2024 and 2023 (1)

Certain discrete tax adjustments 14 0.03 21 0.04

Total adjustments 22 0.05 107 0.19

Adjusted net earnings and adjusted EPS $ 508 $ 1.03 $ 1,034 $ 1.89

(1) Tax effected using the U.S.

and other applicable tax rates.

The tables below provide a reconciliation of net earnings to EBITDA and adjusted EBITDA for the three months ended June 30, 2024 and 2023.

Three Months Ended

(In millions) 2024 2023 Change

Net earnings $ 486 $ 927 $ (441)

Net earnings (losses) attributable to noncontrolling interests (5) 1 (6)

Income tax expense 115 204 (89)

Interest expense 135 124 11

Depreciation and amortization 286 262 24

EBITDA 1,017 1,518 (501)

(Gain) loss on sales of assets and businesses — (11) 11

Expenses related to acquisitions 4 3 1

Railroad maintenance expenses 4 2 2

Impairment and restructuring charges and contingency provisions 7 117 (110)

Adjusted EBITDA $ 1,032 $ 1,629 $ (597)

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

Market Factors Influencing Operations or Results in the Six Months Ended June 30, 2024

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

In Ag Services and Oilseeds, following two years of very favorable market conditions, several headwinds in the agriculture cycle led to more normalized results throughout the entire value chain.

Ag Services experienced slow South American farmer selling, low demand for North American exports, with good crop prospects in North America.

Crushing experienced strong run rates in Europe and South America, the anticipation of a more normal global supply environment, and new capacity suppressing meal and oil values.

In Refined Products and Other, oil values in North America were under pressure due to low carbon intensity feedstocks competing in the renewable diesel market, nevertheless the biodiesel mandate increase from B12 to B14 in Brazil had a positive impact on results.

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

Strong export demand for ethanol helped offset higher industry production to minimize the imbalance between supply and demand.

In Nutrition, demand was softer in a few food and beverage product categories driven by shifts in consumer discretionary spend.

Human Nutrition was impacted by inflation which drove lower demand and impacted sales volumes in alternative proteins.

Demand has started to recover in the food, beverage, and dietary supplement segment.

In Animal Nutrition, a soft amino acids market driven by price weakness in North America was partially compensated by a slightly improved market in Europe, Middle East, and Africa (EMEA).

The global feed and feed additives market remained challenged on the demand side, with weakness in the Chinese beef and pork business and continued subdued global shrimp prices.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Earnings before income taxes decreased $1.0 billion from $2.5 billion to $1.5 billion due to lower pricing and execution margins as well as higher Corporate costs.

Total segment operating profit (a non-GAAP measure) decreased $1.0 billion to $2.1 billion due primarily to lower results in Crushing, Refined Products and Other, Ag Services, Human Nutrition, and Starches and Sweeteners, partially offset by higher results in Wilmar, Vantage Corn Processors, and Animal Nutrition.

Total segment operating profit (a non-GAAP measure) excluded a net charge of $13 million consisting of asset impairment charges totaling $13 million.

Excluded from the total segment operating profit (a non-GAAP measure) in the prior period was a net charge of $109 million consisting of charges totaling $121 million related to the impairment of certain assets, restructuring, and a contingency/settlement, partially offset by gains on the sale of certain assets of $12 million.

Corporate results in the current period were a net charge of $0.8 billion.

Corporate results in the prior period were a net charge of $0.7 billion and included a mark-to-market gain of $6 million on the conversion option of the exchangeable bonds issued in August 2020.

The bonds were paid off in full, as scheduled, in August 2023.

Income taxes of $281 million decreased $148 million.

The Company’s effective tax rate for the six months ended June 30, 2024 was 19.0% compared to 17.0% for the six months ended June 30, 2023.

The increase in the rate was primarily due to the impact of discrete tax items, partially offset by the change in the geographic mix of forecasted pretax earnings.

Analysis of Statements of Earnings

Processed volumes by product for the six months ended June 30, 2024 and 2023 were as follows (in metric tons):

Six Months Ended

(In thousands) 2024 2023 Change

Oilseeds 18,259 17,410 849

Corn 8,890 8,842 48

Total 27,149 26,252 897

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

The overall increase in oilseeds processed volumes was primarily related to improved crush rates in South America and EMEA compared to lower crush rates in the prior year due to inclement weather, unplanned downtime, and reduced capacity due to the Russian-Ukraine war.

In addition, plant reliability has increased slightly year over year.

Revenues by segment for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended

2024 2023 Change

(In millions)

Ag Services and Oilseeds

Ag Services $ 22,943 $ 25,061 $ (2,118)

Crushing 6,177 7,163 (986)

Refined Products and Other 5,432 6,199 (767)

Total Ag Services and Oilseeds 34,552 38,423 (3,871)

Carbohydrate Solutions

Starches and Sweeteners 4,367 5,212 (845)

Vantage Corn Processors 1,210 1,706 (496)

Total Carbohydrate Solutions 5,577 6,918 (1,341)

Human Nutrition 2,025 1,902 123

Animal Nutrition 1,719 1,804 (85)

Total Nutrition 3,744 3,706 38

Total Segment Revenues 43,873 49,047 (5,174)

Other Business 222 215 7

Total Revenues $ 44,095 $ 49,262 $ (5,167)

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, management believes that margins can be a helpful indicator of the Company’s underlying performance 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 decreased $5.2 billion to $44.1 billion due to lower sales prices ($8.5 billion), partially offset by higher sales volumes ($3.4 billion).

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

Ag Services and Oilseeds revenues decreased 10% to $34.6 billion due to lower sales prices ($7.4 billion), partially offset by higher sales volumes ($3.6 billion).

Carbohydrate Solutions revenues decreased 19% to $5.6 billion due to lower sales prices ($1.2 billion) and lower sales volumes ($0.2 billion).

Nutrition revenues increased 1% to $3.7 billion due to higher volumes ($0.1 billion), partially offset by lower prices ($0.1 billion).

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

Cost of products sold decreased $4.3 billion to $41.0 billion due principally to lower average commodity costs.

Manufacturing expenses decreased $0.1 billion to $3.7 billion due principally to decreases in energy costs, and operating supplies, partially offset by increases in salaries and benefits, legal, professional, and other fees, and commercial services.

Foreign currency translation decreased revenues and cost of products sold by $50 million and $32 million, respectively.

Gross profit decreased $0.9 billion or 23% to $3.1 billion due principally to lower results in Ag Services and Oilseeds ($870 million), Human Nutrition ($102 million), and Starches and Sweeteners ($35 million), partially offset by Animal Nutrition ($44 million), Vantage Corn Processors ($24 million), and Other ($37 million).

These factors are explained in the segment operating profit discussion on page 5 1 .

Selling, general, and administrative expenses increased $0.1 billion to $1.9 billion due primarily to higher salaries and benefit costs, increased expenses for contracted outside labor, and higher legal and financing fees, partially offset by decreased provisions for bad debt.

Asset impairment, exit, and restructuring costs decreased $42 million to $25 million.

Charges in the current period consisted of $10 million of impairments related to certain long-lived assets, and $4 million of restructuring, presented as specified items, and $11 million of restructuring in Corporate.

Charges in the prior period consisted of $46 million of impairments related to certain long-lived assets and intangible assets and $21 million of restructuring, presented as specified items.

Equity in earnings of unconsolidated affiliates increased $39 million to $364 million due primarily to higher earnings from the Company’s investments in Almindones Mexicanos S.A., Wilmar, Skyland Grain, LLC, and Hungrana Kft., partially offset by lower earnings from ADM’s investment in SoyVen, Olenex Sarl, and Stratas.

Interest and investment income decreased $13 million to $263 million due primarily to a valuation loss related to an investment in alternative protein and precision fermentation, partially offset by higher interest income driven by higher interest rates.

Interest expense increased $26 million to $353 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services.

Interest expense in the prior period included a $6 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020.

The exchangeable bonds were paid off in full in August 2023.

Other income-net decreased $46 million to $35 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, and net foreign exchange gains.

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

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 six months ended June 30, 2024 and 2023 as follows:

Six Months Ended

2024 2023 Change

(In millions)

Earnings before income taxes $ 1,481 $ 2,529 $ (1,048)

Other Business (earnings) loss (217) (183) (34)

Corporate 844 715 129

Specified Items:

Gains on sale of assets — (12) 12

Impairment and restructuring charges 13 121 (108)

Total Segment Operating Profit $ 2,121 $ 3,170 $ (1,049)

Ag Services and Oilseeds

Ag Services $ 354 $ 728 $ (374)

Crushing 445 651 (206)

Refined Products and Other 307 689 (382)

Wilmar 217 197 20

Total Ag Services and Oilseeds $ 1,323 $ 2,265 $ (942)

Carbohydrate Solutions

Starches and Sweeteners $ 584 $ 614 $ (30)

Vantage Corn Processors 21 (16) 37

Total Carbohydrate Solutions $ 605 $ 598 $ 7

Human Nutrition $ 179 $ 323 $ (144)

Animal Nutrition 14 (16) 30

Total Nutrition $ 193 $ 307 $ (114)

Ag Services and Oilseeds segment operating profit decreased 42%.

Ag Services results are down from the prior period.

South America Origination margins have compressed due to slower farmer selling and increased freight costs.

North America Origination continues to see weak export demand and a carry market has contributed to slow farmer selling limiting trade opportunities.

Execution in destination marketing as well as effective risk management continued to deliver strong Global Trade results, though lower than the prior year.

Crushing results were lower than the prior period, particularly in North America.

Increased industry capacity pressured Crush margins and increased supply of competing low carbon intensity feedstocks affected margins.

Board crush rallied the end of the quarter due to industry downtime, strong product demand and ample supply.

Refined Products and Other results are down from the prior period.

North America margins compressed due to increased used cooking oil imports.

Europe biodiesel benefited from high spot margins due to supply shortage.

Wilmar earnings are higher versus the prior period.

Carbohydrate Solutions segment operating profit increased 1%.

Starches and Sweeteners results were lower year-over-year on moderating margins in the EMEA region and lower domestic ethanol margins due to strong industry production that were offset in part by strong starches and sweeteners margins.

Vantage Corn Processors results improved year-over-year as strong demand for exports of ethanol supported volumes and margins.

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

Nutrition segment operating profit decreased 37%.

Human Nutrition results were lower than the prior period, as impacts related to unplanned downtime at Decatur East, and a normalizing texturants market negatively impacted margins.

Animal Nutrition results were higher compared to the prior period, as amino acids market recovery, cost optimization efforts and lower input costs bolstered margins.

Other Business operating profit increased $34 million.

Captive insurance results were higher due to lower claim activity.

ADM Investor Services profits were lower on higher operating costs.

Corporate results for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended

2024 2023 Change

(In millions)

Interest expense-net $ (238) $ (228) (10)

Unallocated corporate costs (596) (510) (86)

Expenses related to acquisitions (4) (3) (1)

Gain on debt conversion option — 6 (6)

Restructuring (charges) (12) (3) (9)

Other income 6 23 (17)

Total Corporate $ (844) $ (715) $ (129)

Corporate results were a net charge of $0.8 billion in the current period compared to a net charge of $0.7 billion in the prior period.

Interest expense-net increased $10 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs and increased interest expense from new debt issuances.

Unallocated corporate costs increased $86 million due primarily to increases in legal and professional fees, global technology spend, and securitization fees.

Gain on debt conversion option in the prior period 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 period included the non-service components of net pension benefit income of $9 million and foreign exchange gains of $27 million, partially offset by railroad maintenance expenses of $4 million.

This was offset by valuation losses of approximately $18 million in the Company’s ADM Ventures portfolio.

Other income in the prior period included the non-service components of net pension benefit income of $9 million, and foreign exchange gains, partially offset by railroad maintenance expenses.

Non-GAAP Financial Measures

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 on borrowings, taxes, depreciation, and amortization, adjusted for specified items.

Total segment operating profit is defined as ADM’s consolidated earnings before income taxes, adjusted for Other business, Corporate, and specified items.

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

The table on page 5 1 provides a reconciliation of total segment operating profit to earnings before income taxes for the six months ended June 30, 2024 and 2023.

In this Amendment, the Company is revising its reconciliation and calculation of total segment operating profit in Note 13.

Segment Information.

The revised reconciliation in Note 13.

The table below provides a reconciliation of net earnings to adjusted net earnings and diluted EPS to adjusted EPS for the six months ended June 30, 2024 and 2023.

Six Months Ended June 30,

In millions Per share In millions Per share

Average number of shares outstanding - diluted 503 549

Net earnings and reported EPS (fully diluted) $ 1,215 $ 2.41 $ 2,097 $ 3.82

Gains on sales of assets and businesses - net of tax of $3 million in 2023 (1)

— — (9) (0.02)

Impairment and restructuring charges and contingency provisions - net of tax of $2 million in 2024 and $26 million in 2023 (1)

23 0.04 98 0.18

Expenses related to acquisitions - net of tax of $1 million in 2024 and $1 million in 2023 (1)

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

— — (6) (0.01)

Certain discrete tax adjustments 17 0.03 3 0.01

Total adjustments 43 0.08 88 0.16

Adjusted net earnings and adjusted EPS $ 1,258 $ 2.49 $ 2,185 $ 3.98

(1) Tax effected using the U.S.

and other applicable tax rates.

The tables below provide a reconciliation of net earnings to EBITDA and adjusted EBITDA for the six months ended June 30, 2024 and 2023.

Six Months Ended

(In millions) 2024 2023 Change

Net earnings $ 1,215 $ 2,097 $ (882)

Net earnings (losses) attributable to noncontrolling interests (15) 3 (18)

Income tax expense 281 429 (148)

Interest expense 250 224 26

Depreciation and amortization 566 521 45

EBITDA 2,297 3,274 (977)

Gains on sales of assets and businesses — (12) 12

Expenses related to acquisitions 4 3 1

Railroad maintenance expenses 4 2 2

Impairment and restructuring charges and contingency provisions 25 124 (99)

Adjusted EBITDA $ 2,330 $ 3,391 $ (1,061)

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

Liquidity and Capital Resources

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and international markets.

Cash provided by operating activities was $0.9 billion for the six months ended June 30, 2023 compared to a use of $0.7 billion for the same period last year.

Cash provided by operating activities was $1.2 billion for the six months ended June 30, 2024 compared to cash provided of $0.9 billion for the same period last year.

Working capital changes decreased cash by $0.5 billion for the six months ended June 30, 2024 compared to a decrease of $1.6 billion for the same period last year.

Segregated investments increased approximately $1.4 billion driven by higher interest rates.

Trade receivables decreased $0.8 billion due to lower revenues.

Inventories decreased approximately $2.9 billion due to lower inventory volumes, partially offset by higher inventory prices.

Other current assets decreased $0.6 billion primarily due to decreases in margin deposits and grain accounts, customer omnibus receivable, and prepaid expenses.

Trade payables decreased $2.8 billion due to lower payables related to grain purchases.

Segregated investments increased $0.3 billion due to increased trading activity in the Company’s futures commission and brokerage business.

Trade receivables increased $0.2 billion due to timing of sales.

Inventories decreased $1.4 billion due to lower inventory prices and volumes.

Trade payables decreased $1.3 billion primarily due to lower payables related to grain purchases.

Brokerage payables decreased approximately $0.4 billion due to decreased trading activity in the Company’s futures commission and brokerage business.

Accrued expenses and other payables decreased $0.6 billion primarily due to decreases in contract liability, and compensation accruals.

Cash used in investing activities was $1.6 billion for the six months ended June 30, 2024 compared to $0.6 billion for the same period last year.

Capital expenditures for the six months ended June 30, 2023 were $0.6 billion compared to $0.5 billion for the same period last year.

There were $5 million additional cost method investments for the six months ended June 30, 2023 compared to $0.1 billion for the same period last year.

Cash used in financing activities was $2.1 billion for the six months ended June 30, 2023 compared to cash provided of $1.5 billion for the same period last year.

Long-term debt borrowings for the six months ended June 30, 2023 were $0.5 billion which consisted of the $500 million aggregate principle amount of 4.500% Notes due 2033 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 current period were used for general corporate purposes.

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 $0.7 billion for the six months ended June 30, 2023 which consisted of the €600 million aggregate principal amount of 1.750% Notes due 2023 compared to an immaterial amount for the same period last year.

Net borrowings on short-term credit agreements for the six months ended June 30, 2023 were $0.4 billion compared to $1.4 billion for the same period last year.

Capital expenditures for the six months ended June 30, 2024 of $0.7 billion were comparable to the same period last year.

Net assets of businesses acquired in the six months ended June 30, 2024 were $0.9 billion compared to none in the same period last year.

Cash used in financing activities was $0.7 billion for the six months ended June 30, 2024 compared to cash used of $2.1 billion for the same period last year.

Long-term debt payments were immaterial for the six months ended June 30, 2024 compared to $0.7 billion for the same period last year, due to no corporate bond issues coming due in the current year period, compared to one issue coming due in the prior year period.

Net borrowings on short-term credit agreements for the six months ended June 30, 2024 were $2.2 billion compared to net payments of $0.4 billion for the same period last year.

Share repurchases for the six months ended June 30, 2024 were $2.3 billion compared to $1.0 billion for the same period last year.

Dividends for the six months ended June 30, 2023 of $0.5 billion were comparable for the same period last year.

Dividends were $0.5 billion for the six months ended June 30, 2024 compared to $0.5 billion for the same period last year.

At June 30, 2024, the Company had $0.8 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.4 to 1.

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At June 30, 2024, the Company’s capital resources included shareholders’ equity of $22.2 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $12.3 billion, of which $7.8 billion was unused.

The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 25% and 24% at June 30, 2023 and December 31, 2022, respectively.

The Company’s ratio of long-term debt to total capital (the sum of long-term debt of $8.2 billion and shareholders’ equity of $22.2 billion in 2024 and the sum of long-term debt of $8.3 billion and shareholders’ equity of $24.1 billion in 2023) was 27% and 25% at June 30, 2024 and December 31, 2023, respectively.

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

The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was 22% and 25% at June 30, 2023 and December 31, 2022, respectively.

The Company’s ratio of net debt (the sum of short-term debt of $2.3 billion, current maturities of long-term debt of $1 million, and long-term debt of $8.2 billion less the sum of cash and cash equivalents of $0.8 billion and short-term marketable securities of none in 2024 and the sum of short-term debt of $0.1 billion, current maturities of long-term debt of $1 million, and long-term debt of $8.3 billion less the sum of cash and cash equivalents of $1.4 billion and short-term marketable securities of none in 2023) to capital (the sum of net debt of $9.8 billion and shareholders’ equity of $22.2 billion in 2024 and the sum of net debt of $7.0 billion and shareholders' equity of $24.1 billion in 2023) was 31% and 22% at June 30, 2024 and December 31, 2023, 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 June 30, 2023.

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

and European commercial paper borrowing programs, against which there was $1.0 billion of commercial paper outstanding at June 30, 2024.

As of June 30, 2024, the Company had $0.8 billion of cash and cash equivalents, $0.5 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested.

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The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers.

The Programs provide the Company with up to $3.0 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).

The Programs provide the Company with up to $2.8 billion in funding against accounts

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

receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 15 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs).

As of June 30, 2024, the Company had $0.7 billion unused capacity of its facility under the Programs.

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The Company has a stock repurchase program.

Under the program, the Company has 74.8 million shares remaining as of June 30, 2023 that may be repurchased until December 31, 2024.

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 $2.0 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.

On March 12, 2024, the Company entered into an ASR Agreement with Merrill Lynch International, an affiliate of BofA Securities, Inc., to repurchase $1.0 billion of ADM common stock as part of ADM’s existing share repurchase program to repurchase up to 200 million shares through December 31, 2024.

On March 28, 2024, the Company received an interim delivery of 8,880,986 shares at an average share price of $60.596 or $538 million.

On April 15, 2024, the Company received a final delivery of 7,325,733 shares as final settlement of the ASR transaction (see Notes 11 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information).

As of June 30, 2024, the Company had 14.8 million shares remaining that may be repurchased under the program until December 31, 2024.

In 2024, the Company expects total capital expenditures of approximately $1.4 billion and additional cash outlays of approximately $1.0 billion in dividends and $2.3 billion in share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of June 30, 2024 and December 31, 2023 were $12.7 billion and $14.0 billion, respectively.

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

The decrease is primarily related to lower energy commitments.

As of June 30, 2024, the Company expects to make payments related to purchase obligations of $11.9 billion within the next twelve months.

1 unchanged sentence

Off Balance Sheet Arrangements

In May 2023, the Company amended its First Program with certain commercial and conduit purchasers and committed purchasers and increased its facility from $1.8 billion to $1.9 billion.

The First Program terminates on May 17, 2024, unless extended.

There were no other material changes in the Company’s off balance sheet arrangements during the quarter ended June 30, 2023.

There were no material changes in the Company’s off balance sheet arrangements during the quarter ended June 30, 2024.

Critical Accounting Policies and Estimates

There were no material changes in the Company’s critical accounting policies and estimates during the quarter ended June 30, 2024.

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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, 2022.

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/A

Item 2. Management’s Discussion and Analysis