# Archer-Daniels-Midland Co: Form 10-Q for the period ended Sep 30, 2023

- Company: [Archer-Daniels-Midland Co](/companies/adm.md) (CIK 7084)
- Form: 10-Q
- Filed: 2023-10-24
- Accepted by EDGAR: Oct 24, 2023, 20:12 ET
- Period: 2023-09-30
- Accession: 0000007084-23-000039
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/7084/000000708423000039/adm-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/7084/000000708423000039/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $21.70bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $70.96bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $19.89bn | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $65.18bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $1.81bn | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $5.77bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $815.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $2.54bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $155.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $482.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $207.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $636.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $821.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $2.92bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $1.52 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $5.35 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $1.52 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $5.36 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 540,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 546,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $1.89bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $1.05bn | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $738.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $1.12bn | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $1.50bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $30.52bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $55.09bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $18.11bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $8.22bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $1.0m | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2023-09-30 | $116.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2023-09-30 | $25.27bn | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 5,456 characters.

### Liquidity and Capital Resources

A Company objective is to have sufficient liquidity, balance sheet strength, and financial flexibility to fund the operating and capital requirements of a capital-intensive agricultural commodity-based business. The Company depends on access to credit markets, which can be impacted by its credit rating and factors outside of ADM’s control, to fund its working capital needs and capital expenditures. The primary source of funds to finance ADM’s operations, capital expenditures, and advancement of its growth strategy is cash generated by operations and lines of credit, including a commercial paper borrowing facility and accounts receivable securitization programs. In addition, the Company believes it has access to funds from public and private equity and debt capital markets in both U.S. and international markets.

Cash provided by operating activities was $1.9 billion for the nine months ended September 30, 2023 compared to $3.3 billion for the same period last year. Working capital changes decreased cash by $1.9 billion for the nine months ended September 30, 2023 compared to a decrease of $1.3 billion for the same period last year. Segregated investments increased $1.2 billion driven by higher interest rates. Trade receivables decreased $0.4 billion due to lower revenues. Inventories decreased $3.5 billion due to lower inventory volumes and prices. Trade payables decreased $2.6 billion primarily due to lower payables related to grain and other inventory purchases. Brokerage payables decreased approximately $1.6 billion due to decreased trading activity in the Company’s futures commission and brokerage business. Accrued expenses and other payables decreased $0.7 billion primarily due to decreases in contract liability and unrealized losses on derivative contracts.

Cash used in investing activities was $1.1 billion for the nine months ended September 30, 2023 compared to $0.9 billion for the same period last year. Capital expenditures for the nine months ended September 30, 2023 were $1.1 billion compared to $0.8 billion for the same period last year. There were $5 million additional cost method investments for the nine months ended September 30, 2023 compared to $0.1 billion for the same period last year.

Cash used in financing activities was $2.8 billion for the nine months ended September 30, 2023 compared to $2.4 billion for the same period last year. Long-term debt borrowings for the nine months ended September 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 $1.0 billion for the nine months ended September 30, 2023 which consisted of the €600 million aggregate principal amount of 1.750% Notes due 2023 and the $300 million aggregate amount of zero coupon exchangeable bonds due 2023, compared to $0.5 billion for the same period last year which consisted of the €0.5 billion aggregate principal amount of fixed-to-floating rate senior notes due 2022 issued in a private placement on March 25, 2021. Net borrowings on short-term credit agreements for the nine months ended September 30, 2023 were $0.4 billion compared to $0.8 billion for the same period last year. Share repurchases for the nine months ended September 30, 2023 were $1.1 billion compared to $1.2 billion for the same period last year. Dividends were $0.7 billion for the nine months ended September 30, 2023 and the same period last year.

At September 30, 2023, the Company had $1.5 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.7 to 1. Included in working capital was $6.0 billion of readily marketable commodity inventories. At September 30, 2023, the Company’s capital resources included shareholders’ equity of $25.3 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $13.5 billion, of which $11.7 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 September 30, 2023 and December 31, 2022, 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 21% and 25% at September 30, 2023 and December 31, 2022, respectively. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was $10 million of commercial paper outstanding at September 30, 2023.

## Market risk

As filed, 1,892 characters.

#### Commodities

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

The fair value of the Company’s commodity position is a summation of the fair values calculated for each commodity by valuing all of the commodity positions at quoted market prices for the period, where available, or utilizing a close proxy. The Company has established metrics to monitor the amount of market risk exposure, which consist of volumetric limits and value-at-risk (VaR) limits. VaR measures the potential loss, at a 95% confidence level, that could be incurred over a one-year period. Volumetric limits are monitored daily and VaR calculations and sensitivity analysis are monitored weekly.

In addition to measuring the hypothetical loss resulting from an adverse two standard deviation move in market prices (assuming no correlations) over a one-year period using VaR, sensitivity analysis is performed measuring the potential loss in fair value resulting from a hypothetical 10% adverse change in market prices. The highest, lowest, and average weekly position together with the market risk from a hypothetical 10% adverse price change is as follows:

| Long/(Short) (In millions) | Nine months ended September 30, 2023 Fair Value | Market Risk | Year ended December 31, 2022 Fair Value | Market Risk |
| --- | ---: | ---: | ---: | ---: |
| Highest position | **$498** | **$50** | $986 | $99 |
| Lowest position | **(139)** | **(14)** | 44 | 4 |
| Average position | **210** | **21** | 388 | 39 |

The change in fair value of the average position was due to the decrease in prices of certain commodities.

## Controls and procedures

As filed, 2,349 characters.

As of September 30, 2023, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. There was no change in the Company’s internal controls over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

During 2018, the Company launched an initiative called Readiness to drive new efficiencies and improve the customer experience in the Company’s existing businesses through a combination of data analytics, process simplification and standardization, and behavioral and cultural change, building upon its earlier 1ADM and operational excellence programs. As part of this transformation, the Company is implementing a new enterprise resource planning (ERP) system on a worldwide basis, which is expected to occur in phases over the next several years. During the quarter ended September 30, 2023, the Company deployed the ERP system to 18 legal entities. The Company has appropriately considered this change in its design of and testing for effectiveness of internal controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, the implementation of the new ERP system in these instances has not materially affected its internal control over financial reporting.

## Risk factors

As filed, 2,553 characters.

The information presented below updates, and should be read in conjunction with, the risk factors in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Except as presented below, there were no other significant changes in the Company’s risk factors during the quarter ended September 30, 2023.

***The Company is subject to numerous laws, regulations, and mandates globally which could adversely affect the Company’s operating results and forward strategy.***

The Company does business globally, connecting crops and markets in over 190 countries, and is required to comply with laws and regulations administered by the United States federal government as well as state, local, and non-U.S. governmental authorities in numerous areas including: accounting and income taxes, anti-corruption, anti-bribery, global trade, trade sanctions, privacy and security, environmental, product safety, and handling and production of regulated substances. The Company frequently faces challenges from U.S. and foreign tax authorities regarding the amount of taxes due including questions regarding the timing, amount of deductions, the allocation of income among various tax jurisdictions. Legislatures and taxing authorities in many jurisdictions in which ADM operates may enact changes to their tax rules. For example, the Organization for Economic Cooperation and Development (the “OECD”), the European Union, and other countries (including countries in which the Company operates) have committed to enacting substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed. In particular, the OECD’s Pillar Two initiative introduces a 15% global minimum tax applied on a country-by-country basis and for which many jurisdictions have now committed to an effective enactment date starting January 1, 2024. ADM will continually monitor potential and enacted tax changes, including the implementation of Pillar Two legislation, in the countries in which the Company operates. The impact of these potential new rules, as well as any other changes in domestic and international tax rules and regulations, could have a material effect on ADM’s effective tax rate. Any failure to comply with applicable laws and regulations or appropriately resolve these challenges could subject the Company to administrative, civil, and criminal remedies, including fines, penalties, disgorgement, injunctions, and recalls of its products, and damage to its reputation.

Filed Oct 24, 2023.
Source: SEC EDGAR, the filing index for accession 0000007084-23-000039. Last ingested by Listed: Oct 24, 2026, 14:51 ET. No prices; not investment advice.