What changed in Archer Daniels Midland's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Archer Daniels Midland's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+464 added−390 removedSource: 10-K (2025-02-20) vs 10-K (2024-03-12)
Top changes in Archer Daniels Midland's 2024 10-K
464 paragraphs added · 390 removed · 135 edited across 7 sections
- Item 7. Management's Discussion & Analysis+167 / −215 · 74 edited
- Item 1. Business+135 / −113 · 19 edited
- Item 1A. Risk Factors+133 / −34 · 22 edited
- Item 1C. Cybersecurity+12 / −9 · 7 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+7 / −11 · 7 edited
Item 1. Business
Business — how the company describes what it does
19 edited+116 added−94 removed2 unchanged
Item 1. Business
Business — how the company describes what it does
19 edited+116 added−94 removed2 unchanged
2023 filing
2024 filing
Biggest changeThe inaugural group focused on women as part of the Company’s DE&I vision and strategy. The ERGs, also known as Affinity Groups, are voluntary, employee-led groups where colleagues with shared experiences, interests or goals can come together in a safe space to provide support, build a sense of community, and promote personal and professional development.
Biggest changeThese ERGs are voluntary, employee-led groups where colleagues with shared experiences or interests can come together to build a sense of community and engage in personal and professional development. ADM’s ERGs are open to all employees and offer forums for fostering collaboration, connection and belonging. The following tables set forth information about the Company’s employees as of December 31, 2024.
Talented colleagues can be found in a wide variety of roles – including front-line workers who enable the production of ADM’s products, supply chain experts who deliver to customers all over the world, engineering teams who continuously improve the Company’s operations, sales and commercial teams who work closely with customers, information technology professionals who implement the technologies to enable the Company’s processes, and so many more.
Talented colleagues can be found in a wide variety of roles – including front-line employees who enable the production of ADM’s products, supply chain experts who deliver to customers all over the world, engineering teams who continuously improve the Company’s operations, sales and commercial teams who work closely with customers, information technology professionals who implement the technologies to enable the Company’s processes, and so many more.
ADM’s annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; directors’ and officers’ Forms 3, 4, and 5; and amendments to those reports, if any, are available, free of charge, through its website, as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the Securities and Exchange Commission (SEC).
ADM’s annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; directors’ and officers’ Forms 3, 4, and 5; and amendments to those reports, if any, are available, free of charge, through its website, as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.
In addition, ADM offers many voluntary training opportunities, including in-person, virtual and on-demand training that have largely moved to virtual and on-demand learning. Among the offerings are an Ability to Connect Program that cultivates business language skills to foster collaboration and LinkedIn Learning Platform which offers access to over 16,000 courses in 7 languages to support career development.
In addition, ADM offers many voluntary training opportunities, including in-person, virtual and on-demand training. Among the offerings are an Ability to Connect Program that cultivates business language skills to foster collaboration and LinkedIn Learning Platform which offers access to over 16,000 courses in 7 languages to support career development.
The Company’s Code of Conduct, Corporate Governance Guidelines, and the written charters of the Audit, Compensation and Succession, Nominating and Corporate Governance, Sustainability and Corporate Responsibility, and Executive Committees are also available through its website.
The Company’s Code of Conduct, Corporate Governance Guidelines, and the written charters of the Audit, Compensation and Succession, Nominating and Corporate Governance, and Sustainability and Technology Committees are also available through its website.
ADM’s global bonus plan has clearly defined enterprise metrics and objectives which are the same for all eligible employees – creating a strong team spirit and fostering collaboration among colleagues. Employee Development All ADM employees participate annually in training and development that further increases knowledge, skills, and awareness on current and important topics.
ADM’s global bonus plan has clearly defined enterprise metrics and objectives which are the same for all eligible employees – creating a strong team spirit and fostering collaboration among colleagues. 13 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I Employee Development All ADM employees participate annually in training and development that further increases knowledge, skills, and awareness on important topics.
Compensation and Benefits ADM offers market-competitive pay, benefits, and services that help meet the needs of its employees. The Company’s global rewards package includes base pay, short-term incentive plans, long-term equity grants, paid time-off, employee assistance programs, and benefits that meet the country-specific competitive markets in which ADM operates.
The Company’s global rewards package includes base pay, short-term incentive plans, long-term equity grants, paid time-off, employee assistance programs, and benefits that meet the country-specific competitive markets in which ADM operates.
The Company continues to take steps to further enhance the safety of its workplaces through occupational safety and process safety improvements and maintains a goal of zero fatalities.
In 2024, the Company had one ADM colleague fatality and nine serious injuries. The Company continues to take steps to further enhance the safety of its workplaces through occupational safety and process safety improvements and maintains a goal of zero fatalities.
Part of ADM’s vision is to foster an inclusive culture with equitable opportunities for all employees so that all members of its diverse, global workforce belong and make meaningful contributions to the success of each other and the Company.
Part of ADM’s vision is to foster an inclusive culture with opportunities for all employees so that all members of its diverse, global workforce belong and make meaningful contributions to the success of each other and the Company. ADM holds an annual Global Week of Understanding, a signature week-long investment focused on continuous learning and strengthening ADM’s culture of belonging.
ADM prides itself in offering equitable career opportunities that include global assignments for its high potential talent, internal career growth for those who wish to learn more, and experiential learning through projects, mentorships, and on-the-job development.
ADM prides itself in offering an array of career opportunities that include global assignments for its high potential talent, internal career growth for those who wish to learn more, and experiential learning through projects, mentorships, and on-the-job development. Workplace Safety ADM is committed to driving a safe and reliable culture that protects its people, its processes and the planet.
Recruitment partnerships with a variety of organizations ensure that ADM engages with, supports, recruits, and hires inclusively, from front line production associates, to interns, to college graduates that begin their career across ADM’s business units, functions and regions. In 2021, ADM launched the first of its Employee Resource Groups (ERGs).
Recruitment partnerships with a variety of organizations help ADM to engage with, support, recruit, and hire inclusively, from front line production associates, to interns, to college graduates that begin their career across ADM’s business units, functions and regions.
ADM holds an annual Global Week of Understanding, a signature week-long investment focused on continuous learning and strengthening ADM’s culture of belonging. The week features keynote presentations, training programs, ERG roundtable sessions, and onsite inclusion activities that foster an environment where all can thrive, and diversity of perspectives are harnessed to fuel innovation and growth.
The week features keynote presentations, training programs, roundtable sessions, and onsite activities that foster an environment where all can thrive, and diversity of perspectives are harnessed to fuel innovation and growth. In support of ADM’s commitment to a productive, diverse, and inclusive workforce, ADM supports Employee Resource Groups (ERGs).
The SEC maintains a website which contains reports, proxy and information statements, and other information regarding issuers that file information electronically with the SEC. The SEC’s website is http://www.sec.gov. Item 1A. RISK FACTORS The risks described below, as well as the other information contained in this Annual Report on Form 10-K, should be carefully considered.
The SEC maintains a website which contains reports, proxy and information statements, and other information regarding issuers that file information electronically with the SEC. The SEC’s website is http://www.sec.gov. Information about Our Executive Officers Certain information with respect to executive officers of the Company as of the date of this filing is set forth below.
Emphasizing diversity and inclusion, Together We Grow works to build a modern workforce with the skills, experience, and capabilities needed to keep pace with the growing world. 15 Item 1. BUSINESS (Continued) ADM’s early career programs are focused on attracting and cultivating a diverse pipeline of early career talent which will become future leaders in the organization.
ADM’s early career programs are focused on attracting and cultivating a strong pipeline of early career talent to become future leaders in the organization.
Board Diversity The Nominating and Corporate Governance Committee has worked hard to recommend nominees who have skills and experiences relevant to ADM’s strategy and operations and who reflect the diversity of the world around us.
Board Diversity The Nominating and Corporate Governance Committee strives to recommend nominees who reflect a diversity of background and experience with the necessary skills to effectively perform the functions of the Board and its committees, including the Board's role in overseeing ADM’s strategy and operations.
The availability and prices of agricultural commodities are subject to wide fluctuations, including impacts from factors outside the Company’s control such as changes in market conditions, weather conditions, crop disease, plantings, government programs and policies, climate change, competition, and changes in global demand, which could adversely affect the Company’s operating results.
In any single year, the availability and price of these commodities are subject to factors such as changes in weather conditions, plantings, government programs and policies, competition, changes in global demand, changes in standards of living, and global production of similar and competitive crops.
Item 1. BUSINESS (Continued) The Company’s culture is grounded in its values of integrity, respect, excellence, resourcefulness, teamwork, and responsibility. ADM is a truly global company of 41,802 employees working together to achieve extraordinary results.
ADM is a truly global company of approximately 44,000 employees working together to achieve extraordinary results.
In 2023, about 76% of ADM’s sites completed the year without recordable injuries and about 90% without lost workday injuries. The Company’s Total Recordable Incident Rate and Lost Workday Incident Rate for ADM colleagues (excluding unsupervised contractors) were 0.68 and 0.23, respectively. 16 Item 1. BUSINESS (Continued) In 2023, the Company had two ADM colleague fatalities and 12 serious injuries.
The Company’s Total Recordable Incident Rate and Lost Workday Incident Rate, based upon the number of incidents per 100 employees (or per 200,000 work hours), as defined by OSHA, for ADM colleagues (excluding unsupervised contractors) in 2024 were 0.68 and 0.23, respectively. Notably, the Decatur, Illinois complex achieved significant safety improvements in 2024, with zero fatalities or serious injuries.
As of December 31, 2023, 64% of ADM’s 11 board members identify as members of underrepresented groups – five are African-American, Hispanic or Asian, and four are women. Workplace Safety ADM is committed to providing a safe working environment for all of its employees and contractors.
As of December 31, 2024, 58% of ADM’s 12 board members identified as members of underrepresented groups – five are African-American, Hispanic or Asian, and four are women. 14 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I Available Information The Company’s website is http://www.adm.com.
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ADM continues to develop its workforce to remain relevant and deliver on the Company’s growth aspirations with a strong focus on sustainability. The following tables set forth information about the Company’s employees as of December 31, 2023.
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Item 1. BUSINESS Company Overview Archer-Daniels-Midland Company (the "Company" or "ADM") unlocks the power of nature to enrich the quality of life. The Company is an essential global agricultural supply chain manager and processor, providing food security by connecting local needs with global capabilities.
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Number of Employees by Contract and Region Salaried Hourly Part-Time/ Seasonal Total North America 9,527 10,589 217 20,333 EMEA 5,168 4,341 543 10,052 South America 2,605 4,461 794 7,860 Asia Pacific 1,962 1,093 30 3,085 Central America/Caribbean 234 233 5 472 Total 19,496 20,717 1,589 41,802 Number of Employees by Type and Gender Male % Female % Total % Full-time 30,497 76 % 9,716 24 % 40,213 100 % Part-time 603 38 % 986 62 % 1,589 100 % Total 31,100 74 % 10,702 26 % 41,802 100 % Percentage of Employees by Level and Gender Percentage 2023 2022 Male Female Total Male Female Total Executive Council 67 % 33 % 100 % 71 % 29 % 100 % Senior Leadership 69 % 31 % 100 % 72 % 28 % 100 % Salaried Colleagues 61 % 39 % 100 % 62 % 38 % 100 % The Company believes diversity, equity, and inclusion (DE&I) are key business priorities that will enable ADM to continue innovating, driving growth through customer focus, and delivering outstanding performance for shareholders.
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ADM is a premier human and animal nutrition provider, offering one of the industry's broadest portfolios of ingredients and solutions from nature. The Company is a trailblazer in health and well-being, with an industry-leading range of products for consumers looking for new ways to live healthier lives.
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The Company’s comprehensive DE&I strategy is focused on Recruitment, Advancement, Development, Retention and Culture, and is supported by a global DE&I council, which reflects the Company’s global business strategy across four regions of the world.
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ADM is a cutting-edge innovator, guiding the way to a future of new consumer and industrial solutions. ADM is a leader in sustainability, scaling across entire value chains to help decarbonize the multiple industries it serves. Around the globe, the Company's innovation and expertise are meeting critical needs while nourishing quality of life and supporting a healthier planet.
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In support of ADM’s commitment to a productive, diverse, and inclusive workforce, it is a signatory to the CEO Action for Diversity & Inclusion TM and a member of Paradigm for Parity®.
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The Company works with thousands of growers in the world’s most productive agricultural regions to purchase their crops.
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At the industry level, ADM founded and currently participates in Together We Grow, a consortium of agricultural industry leaders united in a shared belief that American agriculture’s best days are yet to come.
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The Company uses its integrated global network of elevators, trucks, railcars, barges and ships to move those crops from areas of supply to areas of demand, and transforms many of those raw commodities into a broad array of products serving customers spanning food, feed, fuel, industrial, and consumer products.
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Recognizing the broad spectrum of intersectionality, the Company has expanded its ERGs in 2022 across its four regions (North America, APAC, EMEA, and LATAM) to include, depending on geographic relevance, Multicultural, Black Colleague, Hispanic, Veterans, and LGBTQIA+ affinity groups. ADM’s ERGs are open to all employees.
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ADM is a pillar of the global food supply system, playing a critical role in helping billions of people to obtain access to the fundamental nutrition they need.
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For the last several years, the Company has been working to significantly reduce its incident rate by strengthening its safety culture and systems so everyone will go home safely to their families and the things that are most important to them.
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From staple foods, such as flour, oils, and sweeteners, to innovative alternatives like plant-based meat and dairy and lower-sugar, fat and salt solutions, ADM offers the industry’s broadest portfolio of food and beverage solutions.
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Through the guidance of the Environmental, Health, and Safety Technology Center, the operations teams focused on three programs to reduce the most serious injuries: – Safe Work Permit and Last Minute Risk Assessment Standards; – Gloves Clock-to-Clock Program; – New Site Integration Process; and – Loss Prevention Principles Through continued application of these programs, ADM aims to continue to reduce its recordable injury rate in 2024 versus 2023 .
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The Company is also a leader in animal nutrition, innovating in a world where more and more people want to feed their pets with the same kind of clean, simple, and healthy products that they eat themselves, and consumers expect livestock and poultry to be fed and raised naturally, humanely, and sustainably.
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Any one or more of such risks could materially and adversely affect the Company’s business, financial condition, results of operations, and stock price and could cause actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition.
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ADM is a global leader in health and well-being, with an industry-leading range of probiotics, enzymes, supplements, and more to meet the needs of consumers looking for new ways to live healthier lives. The Company is also leading the way to a future of new consumer and industrial solutions from nature.
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Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial may also adversely affect the Company. Operational Risks The Company is exposed to potential business disruption which could adversely affect the Company’s operating results.
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With unparalleled expertise and capacity in precision fermentation, ADM is reimagining the world of lubricants, adhesives, home and personal care products, and more. ADM also has significant investments and joint ventures that aim to expand or enhance the market for its products or offer other benefits including, but not limited to, geographic or product-line expansion.
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The assets and operations of the Company could be subject to unplanned downtime or extensive property damage and business disruption from various events which include, but are not limited to, equipment failure, raw material shortages, natural disasters, severe weather conditions, accidents, explosions, fires, or other unexpected outages.
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The continued demand from customers for sustainably sourced products is a growth driver for ADM, and the Company invests in and supports sustainability efforts to enhance the long-term resilience of farmers, agriculture and critical supply chains, including the global food system.
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ADM is committed to resiliency but these efforts may not resolve emergencies timely or effectively, and the associated liability which could result from these risks may not always be covered by or could exceed liability insurance. 17 Item 1A.
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ADM’s Board of Directors actively oversees the Company’s sustainability strategy through a board-level Sustainability and Technology Committee (Sustainability Committee), and ADM’s Chief Sustainability Officer is part of the core strategy team and reports to the Chief Executive Officer and Chair of the Board.
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RISK FACTORS (Continued) The Company’s operations rely on dependable and efficient transportation services, the disruption of which could result in difficulties supplying materials to the Company’s facilities and impair the Company’s ability to deliver products to its customers in a timely manner.
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Utilizing ADM’s unique position in the agricultural value chain, including relationships with farmers around the globe and an unparalleled origination, transportation, and processing network, the Company works with growers by supporting them with personalized services and innovative technologies and partnering with them to develop and enhance conservation practices, including a goal of enrolling five million regenerative agriculture acres by the end of 2025.
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The Company relies on access to navigable rivers and waterways in order to fulfill its transportation obligations more effectively. In addition, if certain non-agricultural commodity raw materials, such as water or certain chemicals used in the Company’s processing operations, are not available, the Company’s business could be disrupted.
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The Company is actively working to improve the efficiency of its facilities and vehicles, finding alternative uses for waste, reusing and recycling water, and sequestering carbon at its onsite capture and storage facility.
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Any major lack of available water for use in certain of the Company’s processing operations could have a material adverse impact on operating results.
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These efforts are helping advance ADM’s Strive 35 commitments to, by 2035, reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 25% from a 2019 baseline, reduce absolute Scope 3 GHG emissions by 25% from a 2021 baseline, increase use of low-carbon energy sources to 25% of total energy used, reduce absolute water withdrawal by 10%, and achieve a 90% landfill diversion rate.
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Certain factors which may impact the availability of non-agricultural commodity raw materials are out of the Company’s control including, but not limited to, disruptions resulting from weather, high or low river water conditions, economic conditions, border closures, manufacturing delays or disruptions at suppliers, shortage of materials, interruption of energy supply, and unavailable or poor supplier credit conditions.
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As a global organization, the Company is strongly committed to a culture of inclusion and belonging.
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Transportation, inflationary impacts, and fluctuations in energy prices could affect the Company’s operating results. The Company’s operating costs and the selling prices of certain finished products are sensitive to changes in energy prices, inflationary pressures, and certain logistic constraints. The Company’s processing plants are powered principally by electricity, natural gas, and coal.
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ADM fundamentally values the differences between individuals and believes a variety of perspectives and backgrounds support innovation, growth, and value creation. 5 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I The Company’s innovation and expertise are helping people live healthier lives and support a stronger future.
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The Company’s transportation operations are partially dependent upon rail access, diesel fuel and other petroleum-based products. Significant increases in the cost or access of these items, including any consequences of regulation or taxation of greenhouse gases, could adversely affect the Company’s production costs and operating results.
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The Company’s globally-integrated footprint combines with local insights to give ADM capabilities few other companies have to meet critical global needs. Segment Descriptions The Company’s operations are organized, managed, and classified into three reportable business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered.
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The Company continues to use internal and external resources to identify opportunities and take action to reduce associated impacts and its energy intensity globally to meet its demand while mitigating the effects of climate change. Human capital availability may not be sufficient to effectively support global operations.
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The Company’s remaining operations are not reportable business segments, as defined by the applicable accounting standard, and are classified within either Corporate or Other Business. Financial information with respect to the Company’s reportable business segments is set forth in Part II. Item 8. Note 17. Segment and Geographic Information.
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ADM’s global operations function with trained individuals necessary for the processing, warehousing, and shipping of raw materials for products used in other areas of manufacturing or sold as inputs or products to third-party customers. The availability of skilled trade and production workers has been a specific focus for the United States manufacturing industry.
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Ag Services and Oilseeds The Ag Services and Oilseeds segment includes global activities related to the origination, merchandising, transportation, and storage of agricultural raw materials, and the crushing and further processing of oilseeds such as soybeans and soft seeds (cottonseed, sunflower seed, canola, rapeseed, and flaxseed) into vegetable oils and protein meals.
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The Company has various methods and tactics to mitigate potential shortfalls. The inability to properly staff manufacturing facilities with skilled trades and hourly labor due to a limited number of qualified resources could negatively impact operations. The Company may fail to realize the benefits of or experience delays in the execution of its growth strategy.
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Oilseeds products produced and marketed by the segment include ingredients for food, feed, fuel, and industrial customers. Crude vegetable oils produced by the segment’s crushing activities are sold “as is” to manufacturers of renewable diesel and other customers or are further processed by refining, blending, bleaching, and deodorizing into salad oils.
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As the Company executes its growth strategy, through both organic and inorganic growth, it may encounter risks which could result in increased costs, decreased revenues, and delayed synergies. Growth in new geographies outside the U.S. can expose the Company to volatile economic, political, and regulatory risks that may negatively impact its operations and ability to achieve its growth strategy.
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Salad oils are sold “as is” or are further processed by hydrogenating and/or interesterifying into margarine, shortening, and other food products. Partially refined oils are used to produce biodiesel and glycols or are sold to other manufacturers for use in chemicals, paints, and other industrial products.
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Expanding businesses where the Company has limited presence may expose the Company to risks related to the inability to identify an appropriate partner or target and favorable terms, inability to retain/hire strategic talent, or integration risks that may require significant management resources that would have otherwise been available for ongoing growth or operational initiatives.
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Oilseed protein meals are principally sold to third parties to be used as ingredients in commercial livestock and poultry feeds. The Ag Services and Oilseeds segment is also a major supplier of peanuts and peanut-derived ingredients to both the U.S. and export markets.
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Acquisitions may involve unanticipated delays, costs, and other problems. Due diligence performed prior to an acquisition may not identify a material liability or issue that could impact the Company’s reputation or adversely affect results of operations resulting in a reduction of the anticipated acquisition benefits.
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In North America, cotton cellulose pulp is manufactured and sold to the chemical, paper, and other industrial markets. The Ag Services and Oilseeds segment’s grain sourcing, handling, and transportation network (including barge, ocean-going vessel, truck, rail, and container freight services) provides reliable and efficient services to the Company’s customers and agricultural processing operations.
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Additionally, acquisitions may involve integration risks such as: internal control effectiveness, system integration risks, the risk of impairment charges related to goodwill and other intangibles, ability to retain acquired employees, and other unanticipated risks. The Company may fail to realize the operational or financial benefits expected from acquisitions, which may impact the Company’s growth strategy. 18 Item 1A.
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The Ag Services and Oilseeds segment also includes agricultural commodity and feed product import, export, and global distribution, and structured trade finance activities. The Company engages in various structured trade finance activities to leverage its global trade flows. The Company has a 22.5% equity interest in Wilmar International Limited ("Wilmar"), a Singapore publicly listed company.
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RISK FACTORS (Continued) The Company has limited control over and may not realize the expected benefits of its equity investments and joint ventures and may not be able to monetize the investments at an attractive value when the Company decides to exit the investments.
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Wilmar is a leading global agribusiness group headquartered in Asia engaged in the businesses of packaged oils and packaged foods, oil palm cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, specialty fats, oleo chemicals, biodiesel and fertilizers manufacturing, and grains processing. The Company has a 32.2% equity interest in Pacificor.
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The Company has $5.5 billion invested in or advanced to joint ventures and investments over which the Company has limited control as to governance and management activities. Net sales to unconsolidated affiliates during the year ended December 31, 2023 were $7.0 billion.
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Pacificor owns and operates grain export elevators in Kalama, Washington and Portland, Oregon. The Company has a 50.0% equity interest in SoyVen, a joint venture between ADM and Cargill to provide soybean meal and oil for customers in Egypt.
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Risks related to these investments may include: the financial strength of the investment partner; loss of revenues and cash flows to the investment partner and related gross profit; the inability to implement beneficial management strategies, including risk management and compliance monitoring, with respect to the investment’s activities; the risk that the Company may not be able to resolve disputes with the partners; and the risk that the Company may not realize the operational or financial benefits expected from the investment.
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The Company has a 37.5% equity interest in Olenex Sarl ("Olenex"), a joint venture between ADM and Wilmar that produces and sells a comprehensive portfolio of edible oils and fats to customers around the globe. In addition, Olenex markets refined oils and fats from the Company’s plants in the Czech Republic, Germany, the Netherlands, Poland, and the U.K.
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The Company may encounter unanticipated operating issues, financial results, or compliance and reputational risks related to these investments. The Company mitigates this risk using controls and policies related to joint venture formation, governance (including board of directors’ representation), merger and acquisition integration management, and harmonization of joint venture policies with the Company’s policies and controls.
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The Company has a 50.0% equity interest in Stratas Foods LLC, a joint venture between ADM and ACH Jupiter, LLC, a subsidiary of Associated British Foods, that procures, packages, and sells edible oils in North America.
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The Company faces risks related to health epidemics, pandemics, and similar outbreaks. The Company could be materially impacted in the future if a more severe variant of the coronavirus (COVID-19) or other disease would arise causing disruptions far more severe than previously experienced.
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The Company has a 50.0% equity interest in Edible Oils Limited, a joint venture between ADM and Princes Limited to procure, package, and sell edible oils in the United Kingdom. The Company also formed a joint venture with Princes Limited in Poland to procure, package, and sell edible oils in Poland, the Czech Republic, Slovakia, Hungary, and Austria.
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In such circumstances, ADM may be unable to perform fully on its contractual obligations, critical global supply chain and logistical networks may be affected, and costs and working capital needs may increase. These cost increases may not be fully recoverable or adequately covered by insurance.
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Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
22 edited+111 added−12 removed14 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
22 edited+111 added−12 removed14 unchanged
2023 filing
2024 filing
Biggest changeThe Company is subject to industry-specific risks which include, but are not limited to: launch of new products by other industries that can replace the functionalities of the Company’s production; shifting consumer preferences; and product safety and quality.
Biggest changeThe Company is subject to industry-specific risks which include but are not limited to: launch of new products by other industries that can replace the functionalities of the Company’s production; shifting consumer preferences; and product safety and quality. 22 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I In the case of the Nutrition business, while maintaining efficient and cost-effective operations are important, the ability to drive innovation and develop quality nutritional and wellness solutions for human and animal needs are key factors to remain competitive in the nutrition market.
However, if the Company’s IT systems are breached, damaged, or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, or cyber-based attacks, and the Company’s recovery efforts do not effectively mitigate the risks on a timely basis, the Company may suffer significant interruptions in its ability to manage its operations, loss of valuable data, actual or threatened legal actions, and damage to its reputation, which may adversely impact the Company’s revenues, operating results, and financial condition.
If the Company’s IT systems are breached, damaged, or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, or cyber-based attacks, and the Company’s recovery efforts do not effectively mitigate the risks on a timely basis, the Company may suffer significant interruptions in its ability to manage its operations, loss of valuable data, actual or threatened legal actions, and damage to its reputation, which may adversely impact the Company’s revenues, operating results, and financial condition.
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 does business globally, connecting crops and markets in over 180 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 compliance and safety, and handling and production of regulated substances.
Competition impacts the Company’s ability to generate and increase its gross profit as a result of the following factors: Pricing of the Company’s products is partly dependent upon industry processing capacity, which is impacted by competitor actions to bring idled capacity on-line, build new production capacity or execute aggressive consolidation; many of the products bought and sold by the Company are global commodities or are derived from global commodities that are highly price competitive and, in many cases, subject to substitution; significant changes in exchange rates of foreign currencies versus the U.S. dollar, particularly the currencies of major crop growing countries, could also make goods and products of these countries more competitive than U.S. products; improved yields in different crop growing regions may reduce the reliance on origination territories in which the Company has a significant presence; and continued merger and acquisition activities resulting in further consolidations could result in greater cost competitiveness and global scale of certain players in the industry, especially when acquirers are state-owned and/or backed by public funds and have profit and return objectives that may differ from publicly traded enterprises.
Competition impacts the Company’s ability to generate and increase its gross profit as a result of the following factors: – Pricing of the Company’s products is partly dependent upon industry processing capacity, which is impacted by competitor actions to bring idled capacity on-line, build new production capacity or execute aggressive consolidation; – Many of the products bought and sold by the Company are global commodities or are derived from global commodities that are highly price competitive and, in many cases, subject to substitution; – Significant changes in exchange rates of foreign currencies versus the U.S. dollar, particularly the currencies of major crop growing countries, could also make goods and products of these countries more competitive than U.S. products; – Improved yields in different crop growing regions may reduce the reliance on origination territories in which the Company has a significant presence; and – Continued merger and acquisition activities resulting in further consolidations could result in greater cost competitiveness and global scale of certain players in the industry, especially when acquirers are state-owned and have profit and return objectives that may differ from private sector enterprises.
The Company is subject to a variety of laws and regulations in the United States and other jurisdictions regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data.
The Company is subject to a variety of laws and regulations in the United States and other jurisdictions regarding artificial intelligence (AI), privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data.
RISK FACTORS (Continued) Regulations specifically affecting the agricultural sector and related industries; regulatory policies or matters that affect a variety of businesses; and taxation polices could adversely affect the Company’s operating results.
Regulations specifically affecting the agricultural sector and related industries; regulatory policies or matters that affect a variety of businesses; and taxation polices could adversely affect the Company’s operating results.
Agricultural production and trade flows are subject to government policies, mandates, regulations, and trade agreements, including taxes, tariffs, duties, subsidies, incentives, foreign exchange rates, and import and export restrictions, including policies related to genetically modified organisms, traceability standards, sustainable practices, product safety and labeling, renewable fuels, and low carbon fuel mandates.
Agricultural production and trade flows are subject to government policies, mandates, regulations, and trade agreements, including taxes and tax credits, tariffs, duties, subsidies, incentives, foreign exchange rates, and import and export restrictions, including policies related to genetically modified organisms, traceability standards, sustainable practices, product safety and labeling, renewable fuels, low carbon fuel mandates, and technology related to energy production and/or emissions reductions.
Item 1A. RISK FACTORS (Continued) The Company is subject to economic downturns and regional economic volatilities, which could adversely affect the Company’s operating results. The Company conducts its business and has substantial assets located in many countries and geographic areas.
The Company is subject to economic downturns and regional economic volatilities, which could adversely affect the Company’s operating results. The Company conducts its business and has substantial assets located in many countries and geographic areas.
For example, changes in government policies or regulations of ethanol and biodiesel including, but not limited to, changes in the Renewable Fuel Standard program under the Energy Independence and Security Act of 2007 in the United States, including the treatment of small refinery exemptions, can have an impact on the Company’s operating results.
For example, changes in government policies, tax credits, and/or regulation of ethanol and biodiesel, including, but not limited to, the Clean Fuels Production Tax Credit and the Renewable Fuel Standard under the Energy Independence and Security Act of 2007 in the United States, including the treatment of small refinery exemptions, can have an impact on the Company’s operating results.
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. 25 Item 1A.
Non-compliance with these regulations could result in significant fines, legal penalties, and operational disruptions. 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.
The Company’s operations rely on certain key IT systems, some of which are dependent on services provided by third parties, to provide critical data connectivity, information, and services for internal and external users.
Information technology systems are subject to interruptions or failures which may affect the Company’s ability to conduct its business. The Company’s operations rely on certain key IT systems, some of which are dependent on services provided by third parties, to provide critical data connectivity, information, and services for internal and external users.
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.
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.
Additionally, legacy technologies are used to support significant business functions. The instability of aging legacy systems could diminish performance and elevate the risk of system failures, reduce compatibility with modern software, and impact growth initiatives.
Additionally, legacy technologies are used to support significant business functions. The instability of aging legacy systems could diminish performance and elevate the risk of system failures, reduce compatibility with modern software, and impact growth initiatives. The Company’s IT systems, processes, and sites may suffer cybersecurity breaches, which could expose the Company to operational and various regulatory risks.
RISK FACTORS (Continued) The Company’s risk management strategies may not be effective. The Company has a Chief Risk Officer who oversees the ERM Program and regularly reports to the Board of Directors on the myriad of risks facing the Company and the Company’s strategies for mitigating those risks.
The Company has a Chief Risk Officer who oversees the ERM Program and regularly reports to the Board of Directors through the Audit Committee, which assists the Board in its oversight of the Company's ERM program, on the myriad of risks facing the Company and the Company’s strategies for mitigating those risks.
Government policies including, but not limited to, antitrust and competition law, trade restrictions, food safety regulations, sustainability requirements, and traceability, can impact the Company’s ability to execute this strategy successfully. Technological Risks Information technology (IT) systems are subject to interruptions or failures which may affect the Company’s ability to conduct its business.
Government policies including, but not limited to, antitrust and competition law, trade restrictions, food safety regulations, sustainability requirements, and traceability, can impact the Company’s ability to execute this strategy successfully.
Generative AI advancements are progressing at an unprecedented pace, which brings risks that could subject the Company to loss through various technical, legal, and opportunistic-related risks.
Generative AI advancements are progressing at an unprecedented pace, which brings risks that could subject the Company to loss through various technical, legal, and opportunistic-related risks. The Company continues to advance in the development and integration of AI systems across its operations. AI technologies introduce a range of potential risks and challenges as detailed below.
While 63% of the Company’s long-lived assets are located in the United States, the Company also has significant operations in both developed areas (such as Western Europe, Canada, and Brazil) and emerging market areas.
While 64% of the Company’s long-lived assets are in the United States, the Company also has significant operations in both developed areas (such as Western Europe and Canada) and emerging market areas. One of the Company’s strategies is to expand the global reach of its core model, which may include expanding or developing its business in emerging market areas.
Compliance with and interpretation of various data privacy regulations continue to evolve and any violation could subject the Company to legal claims, regulatory penalties, and damage to its reputation. The Company has put in place security measures to endeavor to prevent, detect, and mitigate cyber-based attacks, and has instituted control procedures for cybersecurity incident response plans for its critical systems.
Compliance with and interpretation of various data privacy regulations continue to evolve, and any violation could subject the Company to legal claims, regulatory penalties, and damage to its reputation.
The Company faces significant competition in each of its businesses and has numerous competitors, who can be different depending upon each of the business segments in which it participates. The Company competes for the acquisition of inputs such as raw materials, transportation services, and other materials and supplies, as well as for workforce and talent.
The Company competes for the acquisition of inputs such as raw materials, transportation services, and other materials and supplies, as well as for workforce and talent.
The Company’s risk monitoring efforts may not be successful at detecting a significant risk exposure. If these controls and strategies are not successful in mitigating the Company’s exposure to these fluctuations, it could adversely affect the Company’s operating results.
The Company’s business is affected by fluctuations in agricultural commodity cash prices and derivative prices, transportation costs, energy prices, interest rates, foreign currency exchange rates, and equity markets. The Company’s risk monitoring efforts may not be successful at detecting a significant risk exposure, and such exposure could adversely affect the Company’s operating results.
The Company mitigates this risk in many ways, including country risk and exposure analysis, government relations and tax compliance activities, and robust ethics compliance training requirements. The Company has significant competition in the markets in which it operates and is subject to industry-specific risks which could adversely affect the Company’s operating results.
The Company has significant competition in the markets in which it operates and is subject to industry-specific risks which could adversely affect the Company’s operating results. The Company faces significant competition in each of its businesses and has numerous competitors, who can be different depending upon each of the business segments in which it participates.
In the case of the Nutrition business, while maintaining efficient and cost-effective operations are important, the ability to drive innovation and develop quality nutritional and wellness solutions for human and animal needs are key factors to remain competitive in the nutrition market. Certain of the Company’s merchandised commodities and finished products are used as ingredients in livestock and poultry feed.
Certain of the Company’s merchandised commodities and finished products are used as ingredients in livestock and poultry feed.
Removed
One of the Company’s strategies is to expand the global reach of its core model, which may include expanding or developing its business in emerging market areas.
Added
Item 1A. RISK FACTORS The risks described below, as well as the other information contained in this Annual Report on Form 10-K, should be carefully considered.
Removed
To compete effectively, the Company focuses on safely improving efficiency in its production and distribution operations, developing and maintaining appropriate market presence, maintaining a high level of product safety and quality, supporting socially responsible and sustainable practices, promoting environmental responsibility, and working with customers to develop new products and tailored solutions.
Added
Any one or more of such risks could materially and adversely affect the Company’s business, financial condition, results of operations, and stock price and could cause actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition.
Removed
In addition, ADM’s increased investment in the flavors and ingredients businesses exposes the Company to increased risks related to rapidly changing consumer preferences and the impacts these changes could have on the success of certain of the Company’s customers. The Company continually assesses opportunities and demand in various regions. 24 Item 1A.
Added
Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial may also adversely affect the Company. Operational Risks The Company is exposed to potential business disruption which could adversely affect the Company’s operating results.
Removed
The Company’s business is affected by fluctuations in agricultural commodity cash prices and derivative prices, transportation costs, energy prices, interest rates, foreign currency exchange rates, and equity markets. The Company monitors position limits, counterparty risks, and liquidity levels, and engages in other strategies and controls to manage these risks.
Added
The assets and operations of the Company could be subject to unplanned downtime or extensive property damage and business disruption from various events which include, but are not limited to, equipment failure, raw material shortages, natural disasters, severe weather conditions, accidents, explosions, fires, or other unexpected outages.
Removed
The Company regularly reports its aggregate commodity risk exposures to the Board of Directors through the ERM process. The Company has an established commodity merchandising governance process that ensures proper position reporting and monitoring, limit approvals, and executes training on trade compliance, commodity regulatory reporting controls, and other policies.
Added
The Company may not be able to resolve emergencies timely or effectively, and the associated liability which could result from these risks may not always be covered by or could exceed liability insurance.
Removed
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.
Added
The Company’s operations rely on dependable and efficient transportation services, the disruption of which could result in difficulties supplying materials to the Company’s facilities and impair the Company’s ability to deliver products to its customers in a timely manner. The Company relies on access to navigable rivers and waterways in order to fulfill its transportation obligations more effectively.
Removed
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.
Added
In addition, if certain non-agricultural commodity raw materials, such as water or certain chemicals used in the Company’s processing operations, are not available, the Company’s business could be disrupted. Any major lack of available water for use in certain of the Company’s processing operations could have a material adverse impact on operating results.
Removed
The Company is implementing a new enterprise resource planning (ERP) system and integrating it with various third party service providers on a worldwide basis as part of its ongoing business transformation program, which will improve the efficiency and effectiveness of certain financial and business transaction processes and the underlying systems environment.
Added
Certain factors which may impact the availability of non-agricultural commodity raw materials are out of the Company’s control including, but not limited to, disruptions resulting from weather, high or low river water conditions, economic conditions, border closures, manufacturing delays or disruptions at suppliers, shortage of materials, interruption of energy supply, and unavailable or poor supplier credit conditions.
Removed
The new ERP system will mitigate the instability of aging legacy systems as the Company transitions to the new 1ADM platform. 26 Item 1A. RISK FACTORS (Continued) The Company’s IT systems, processes, and sites may suffer cyber security breaches, which could expose the Company to operational and various regulatory risks.
Added
Transportation, inflationary impacts, and fluctuations in energy prices could affect the Company’s operating results. The Company’s operating costs and the selling prices of certain finished products are sensitive to changes in energy prices, inflationary pressures, and certain logistic constraints. The Company’s processing plants are powered principally by electricity, natural gas, and coal.
Removed
In addition, the Company monitors this risk on an ongoing basis to detect and correct breaches, and reports metrics on the quality of the Company’s data security efforts and control environment to the highest level of management and to the Board of Directors.
Added
The Company’s transportation operations are partially dependent upon rail access, diesel fuel and other petroleum-based products. Significant increases in the cost or access of these items, including any consequences of regulation or taxation of greenhouse gases, could adversely affect the Company’s production costs and operating results. Human capital availability may not be sufficient to effectively support global operations.
Removed
The pace of Generative AI and the complex and dynamic regulatory environment subjects the Company to a variety of risks including, but not limited to, data privacy and security vulnerabilities, unauthorized third-party usage of Company data associated with training models, malicious use and advanced deceitful communication methods, missed innovation opportunities, and potential competitive disadvantages.
Added
ADM’s global operations function with skilled individuals necessary for the processing, warehousing, and shipping of raw materials for products used in other areas of manufacturing or sold as inputs or products to third-party customers. The availability of skilled trade and production workers has been a specific focus for the manufacturing industry.
Removed
Guidance for awareness and responsible Generative AI use to protect ADM data from a legal and ethical standpoint, along with technological development for opportunistic uses, monitoring, and oversight are important components of the Company’s risk mitigation approach.
Added
The inability to properly staff manufacturing facilities with skilled trades and hourly labor due to a limited number of qualified resources could negatively impact operations. 16 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I The Company may fail to realize the benefits of or experience delays in the execution of its growth strategy.
Added
As the Company executes its growth strategy, through both organic and inorganic growth, it may encounter risks which could result in increased costs, decreased revenues, and delayed synergies. Growth in new geographies outside the U.S. can expose the Company to volatile economic, political, and regulatory risks that may negatively impact its operations and ability to achieve its growth strategy.
Added
Expanding businesses where the Company has limited presence may expose the Company to risks related to the inability to identify an appropriate partner or target and favorable terms, inability to retain/hire strategic talent, or integration risks that may require significant management resources that would have otherwise been available for ongoing growth or operational initiatives.
Added
Acquisitions may involve unanticipated delays, costs, and other problems. Due diligence performed prior to an acquisition may not identify a material liability or issue that could impact the Company’s reputation or adversely affect results of operations resulting in a reduction of the anticipated acquisition benefits.
Added
Additionally, acquisitions may involve integration risks such as: internal control effectiveness, system integration risks, the risk of impairment charges related to goodwill and other intangibles, ability to retain acquired employees, and other unanticipated risks. The Company may fail to realize the operational or financial benefits expected from acquisitions, which may impact the Company’s growth strategy.
Added
The Company has limited control over and may not realize the expected benefits of its equity investments and joint ventures and may not be able to monetize the investments at an attractive value when the Company decides to exit the investments.
Added
The Company has invested in or advanced funds to joint ventures and investments over which the Company has limited control as to governance and management activities (see Part II. Item 8. Note 8. Investments in and Advances to Affiliates for investment balances and related net sales amounts).
Added
Risks related to these investments may include: the financial strength of the investment partner; loss of revenues and cash flows to the investment partner and related gross profit; the inability to implement beneficial management strategies, including risk management and compliance monitoring, with respect to the investment’s activities; the risk that the Company may not be able to resolve disputes with the partners; and the risk that the Company may not realize the operational or financial benefits expected from the investment.
Added
The Company may encounter unanticipated operating issues, financial results, or compliance and reputational risks related to these investments. The Company faces risks related to health epidemics, pandemics, and similar outbreaks. The Company could be materially impacted in the future if a health epidemic, pandemic, or similar outbreak would arise causing severe disruptions.
Added
In such circumstances, ADM may be unable to perform fully on its contractual obligations, critical global supply chain and logistical networks may be affected, and costs and working capital needs may increase. These cost increases may not be fully recoverable or adequately covered by insurance.
Added
In addition, demand for certain products that ADM produces, particularly biofuels and ingredients that go into food and beverages that support the food services channels, could be materially impacted from a prolonged regional or global outbreak, leading to government-imposed lockdowns, quarantines, or other restrictions.
Added
Geopolitical Risks The Company faces risks related to international conflicts, acts of terrorism or war, or other geopolitical events, such as the ongoing Russia-Ukraine war, Israel-Hamas war, sanctions, maritime piracy, and other economic disruptions.
Added
ADM’s assets and operations could be subject to extensive property damage, business disruption, loss in value, nationalization, and expropriation as a result of geopolitical conflicts, acts of terrorism (e.g. purposeful adulteration of the Company’s products), war, and piracy, as well as any sanctions or embargoes resulting from these events.
Added
The assets and operations located in the region affected by the war between Russia and Ukraine are at an increased risk of property damage, inventory loss, business disruption, and expropriation. In addition, the Company may not be able to realize any financial or other benefits from its investments in Russia due to ongoing sanctions or actions of the Russian government.
Added
The Black Sea region is a major exporter of wheat and corn to the world, and the disruption of supply may continue to cause volatility in volumes, prices, and margins of these commodities and related products.
Added
Further, there is a risk that ADM and its related parties could trade with a sanctioned partner due to the number of sanctions taken against Russia. 17 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I Trade receivables may be at risk of higher defaults, and other third-party risks could affect ADM’s ability to obtain inputs if suppliers are unable to perform or face insolvency, as certain supplies may not be attainable due to sanctions and/or restrictions on cross-border payment transactions.
Added
The Company could be materially impacted if, in the worst-case scenario, the conflict in Ukraine advances to other countries. The risk to ADM’s business from the war in Israel could increase if it expands into other countries.
Added
As the Company continues to monitor geopolitical developments, shipping routes are adjusted accordingly as increased use of technology, including drones, has provided pirates with enhanced capabilities to identify and target vessels. Most attacks on ships in high-risk areas result in boarding, which poses significant safety and security risks to crew and cargo.
Added
Piracy and related maritime threats could negatively impact the Company. Crew extractions, potential ransom payments, lease obligations, and expenses related to rerouting vessels to circumvent high-risk areas may result in financial loss. Furthermore, disruptions in shipping schedules may be impacted for an extensive period.
Added
In these circumstances, trade policies and the Company’s critical global supply chain and logistical networks could be affected, impairing the Company’s ability to satisfy contractual obligations, and impacting working capital requirements. Insurance may not adequately cover these risks. In addition, provisions for certain products that ADM produces, particularly those that support the food services channels, could be materially impacted.
Added
Political instability and changes in trade policies could negatively impact the Company’s financial results.
Added
The Company’s operating results could be affected by political instability and by changes in monetary, fiscal, trade, and environmental policies, laws, regulations, and acquisition approvals, creating risks including, but not limited to: changes in a country’s or region’s economic or political conditions; local labor conditions and regulations, and safety and environmental regulations; reduced protection of intellectual property rights; changes in the regulatory or legal environment; restrictions on currency exchange activities; currency exchange fluctuations; burdensome taxes and trade tariffs; enforceability of legal agreements and judgments; adverse tax, administrative agency or judicial outcomes; and regulation or taxation of greenhouse gases.
Added
International risks and uncertainties, including changing social and economic conditions as well as terrorism, political hostilities, and war, could limit the Company’s ability to transact business in these markets. The Company has historically benefited from the free flow of agricultural and food and feed ingredient products from the U.S. and other sources to markets around the world.
Added
Increases in tariff and restrictive trade policies around the world could negatively impact the Company’s ability to enter certain markets or the price of products may become less competitive in those markets. Investigation Risks The Investigation and related events have had and may continue to have a material adverse impact on the Company.
Added
As previously disclosed, following 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, the Company conducted an internal investigation into certain accounting practices and procedures with respect to its Nutrition reporting segment, including as related to certain intersegment sales (the “Investigation”).
Added
The Company had historically disclosed in the footnotes to its financial statements that intersegment sales have been recorded at amounts approximating market.
Added
In connection with the Investigation, the Company identified certain intersegment sales that occurred between the Company’s Nutrition reporting segment and the Company’s Ag Services and Oilseeds and Carbohydrate Solutions reporting segments that were not recorded at amounts approximating market.
Added
The Company corrected those errors in its fiscal year 2023 Form 10-K, along with subsequently identified errors that the Company corrected in an amendment to its Annual Report on Form 10‑K for the fiscal year ended December 31, 2023 (the “FY2023 10-K/A”), and its Form 10-Qs for the first and second quarters of 2024, all of which were filed on November 18, 2024, to restate the segment disclosures included in those filings.
Added
As a result of the Investigation, correction of identified errors and related events, the Company has experienced, and may continue to experience, a number of adverse impacts and risks, including, but not limited to: – the Company’s Board of Directors and senior management have been required to devote significant time to the Investigation, the correction of certain segment-specific historical financial information and related matters, resulting in potential management distraction from the operation of the business; – the price of the Company’s common stock has declined significantly, has been subject to fluctuations and could continue to fluctuate upon further announcements or actions; 18 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I – the Company is facing securities litigation and could face additional litigation under federal and state securities laws or other claims arising from the Investigation, such litigation can be costly to defend, and if decided against the Company, such litigation could require the Company to pay substantial judgments or settlements; – the Company could discover additional material or immaterial errors in its financial statements; and – the three major credit rating agencies have maintained the Company’s credit ratings at investment grade levels with a negative outlook; however, if the ratings are downgraded, the Company’s access to the credit markets and its ability to fund its working capital and capital expenditures may be affected.
Added
The risks described above have had and may in the future have a material adverse effect on the Company’s business, results of operations, financial condition and liquidity.
Added
In addition, although the Company has taken certain actions in response to the findings of the Investigation, the Company could take new or different actions in addition to those taken to date if it determines those actions are appropriate.
Added
Such actions are uncertain and could have a material adverse impact on the Company’s business and the price of its common stock. The Company is subject to ongoing government investigations, and the timing for their resolution and outcome cannot be predicted. As previously disclosed, and as described more fully in Part II. Item 8. Note 20.
Added
Legal Proceedings of this report, the Company is under investigation by the United States Securities and Exchange Commission (“SEC”) and the Department of Justice (“DOJ”) relating to, among other things, intersegment sales between the Company’s Nutrition reporting segment and the Company’s Ag Services and Oilseeds and Carbohydrate Solutions reporting segments.
Added
The Company cannot predict when the SEC and DOJ investigations will be completed, nor can it predict the results of these investigations with any reasonable degree of certainty.
Added
Expenses incurred in connection with these investigations (which include substantial fees of lawyers and other professional advisors and potential obligations to indemnify officers and directors who are parties to these investigations) could adversely affect the Company’s results of operations and liquidity position.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
7 edited+5 added−2 removed7 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
7 edited+5 added−2 removed7 unchanged
2023 filing
2024 filing
Biggest changeItem 1C. CYBERSECURITY (Continued) The Company has a dedicated cybersecurity team that collaborates with compliance, privacy, legal, and other teams across the global organization to assess the risk landscape. ADM’s cybersecurity program is designed to be aligned with applicable industry standards and is assessed regularly by independent third-party auditors.
Biggest changeIntegrating cybersecurity risk into the overall ERM process in this manner assists the Company in identifying, assessing, and managing material cybersecurity risks. 26 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I The Company has a dedicated cybersecurity team that collaborates with compliance, privacy, legal, and other teams across the global organization to assess the risk landscape.
The CISO has served in that position since 2018 and, was previously the Vice President, Head of Enterprise Security, Americas at Worldpay and a Security Principal/Strategist for Hewlett Packard Enterprises for a combined cybersecurity experience of 20 years.
The CISO and CTO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk. The CISO has served in that position since 2018 and, was previously the Vice President, Head of Enterprise Security, Americas at Worldpay and a Security Principal/Strategist for Hewlett Packard Enterprises for a combined cybersecurity experience of 20 years.
The Board of Directors has oversight of cybersecurity risk, which it manages as part of the ERM program. The Board of Directors is assisted by the Audit Committee, which regularly reviews the cybersecurity program with management and reports to the Board of Directors.
Governance The Board of Directors has oversight of cybersecurity risk as part of the ERM program. The Board of Directors is assisted by the Sustainability and Technology Committee, which regularly reviews the cybersecurity program with management and reports to the Board of Directors and the Audit Committee, which assists the Board in its oversight of the Company's ERM program.
Cybersecurity reviews by the Audit Committee or the Board of Directors generally occur quarterly, or more frequently as determined to be necessary or advisable. In recent years, the Board added a director who had served as Chief Information Officer for a large public company with sensitive information to assist the Board and Audit Committee in overseeing cybersecurity risks.
In recent years, the Board added a director who had served as Chief Information Officer for a large public company with sensitive information to assist the Board and Sustainability and Technology Committee in overseeing cybersecurity risks.
The multifaceted nature of the Company’s cybersecurity measures includes aspects of prevention, detection, and response capabilities, employee training programs, threat intelligence monitoring, and the implementation of an array of technologies.
ADM’s cybersecurity program is designed to be aligned with applicable industry standards and is assessed regularly by independent third-party auditors. The multifaceted nature of the Company’s cybersecurity measures includes aspects of prevention, detection, and response capabilities, employee training programs, threat intelligence monitoring, and the implementation of an array of technologies.
The Council promotes alignment and communication of new and ongoing cybersecurity prevention techniques and provides a forum for staying current on the latest cybersecurity threats. The CISO and CTO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk.
The Council promotes alignment and communication of new and ongoing cybersecurity prevention techniques and provides a forum for staying current on the latest cybersecurity threats. The CTO and CISO report information about such risks to the Board of Directors, the Sustainability and Technology Committee, or the Audit Committee during the regular cybersecurity reviews.
The CTO joined ADM in 2016 and was previously Senior Vice President and Chief Information Officer at Dow Corning Corporation for approximately 6 years. Item 2. PROPERTIES The Company’s operations are such that most products are efficiently processed near the source of raw materials. Consequently, the Company has many plants strategically located in agricultural commodity producing areas.
The CTO joined ADM in 2016 and was previously Senior Vice President and Chief Information Officer at Dow Corning Corporation for approximately 6 years. 27 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART I
Removed
The annual volume of commodities processed will vary depending upon availability of raw materials and demand for finished products. The Company also owns approximately 160 warehouses and terminals primarily used as bulk storage facilities and has 67 innovation centers. Processing plants and procurement facilities owned or leased by unconsolidated joint ventures are not included in the tables below.
Added
CYBERSECURITY Risk Management and Strategy The Company faces significant and persistent cybersecurity risks due to: the breadth of geographies, networks, and systems ADM must defend against cybersecurity attacks such as exploitation of vulnerabilities, ransomware, denial of service, supply chain attacks, or other similar threats; the attractiveness of the Company’s systems and processes to threat actors (including state-sponsored organizations) seeking to inflict harm on ADM or its customers; the substantial level of harm that could occur to the Company and its customers in case of a material cybersecurity incident; and ADM’s use of third-party products, services and components.
Removed
To enhance the efficiency of transporting large quantities of raw materials and finished products between the Company’s procurement facilities and processing plants and also the final delivery of products to its customers around the world, the Company owns approximately 1,900 barges, 10,100 rail cars, 230 trucks, 1,200 trailers, 140 boats, and 3 oceangoing vessels; and leases, under operating leases, approximately 640 barges, 21,800 rail cars, 350 trucks, 500 trailers, 24 boats, and 22 oceangoing vessels. 28
Added
During the year ended December 31, 2024, the Company has not identified risks from cybersecurity threats, including as a result of prior cybersecurity incidents, that have materially affected or are reasonably anticipated to materially affect the Company, including its business strategy, results of operations, or financial condition. Nevertheless, the Company recognizes cybersecurity threats are ongoing and evolving.
Added
For more information on the Company's cybersecurity risks, refer to Item 1A. Risk Factors. ADM is committed to supporting the governance and oversight of cybersecurity risks and to implementing mechanisms, controls, technologies, and processes designed to help the Company assess, identify, and manage these risks.
Added
Cybersecurity risks are included in the risk universe that the Company’s Enterprise Risk Management (ERM) function evaluates, with input from information security subject matter experts at the Company, to assess top risks to the enterprise. The ERM process provides input into our strategic planning process, such as development of action plans to address and mitigate identified risks.
Added
Cybersecurity reviews by the Sustainability and Technology Committee or the Board of Directors generally occur quarterly, or more frequently as determined to be necessary or advisable.
Item 2. Properties
Properties — owned and leased real estate
1 edited+3 added−1 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+3 added−1 removed0 unchanged
2023 filing
2024 filing
Biggest changePROPERTIES (Continued) The daily capacities of the processing plants and storage capacities of the procurement facilities that the Company owns or leases, under operating leases, are as follows: Ag Services and Oilseeds Processing Facilities (in 1,000s metric tons) Owned Leased Refined Ag Products Services Crushing and Other Total Crushing North America 2 64 19 85 — South America — 20 12 32 1 Europe 1 34 15 50 — Asia — 1 — 1 1 Total daily capacity 3 119 46 168 2 Ag Services and Oilseeds Procurement Facilities (in 1,000s metric tons) Owned Leased Refined Refined Ag Products Ag Products Services Crushing and Other Total Services Crushing and Other Total North America 12,185 360 830 13,375 675 — 181 856 South America 2,105 60 — 2,165 941 — — 941 Europe 1,385 288 — 1,673 — — — — Asia — — — — 130 4 — 134 Total storage capacity 15,675 708 830 17,213 1,746 4 181 1,931 Carbohydrate Solutions Processing Plants (in 1,000s metric tons) Owned Leased Starches & Sweeteners Vantage Corn Processors Total Starches & Sweeteners North America 72 17 89 — Europe 6 — 6 1 Total daily capacity 78 17 95 1 Carbohydrate Solutions Procurement Facilities (in 1,000s metric tons) Owned Leased Starches & Sweeteners Starches & Sweeteners North America 589 86 Europe — 18 Total storage capacity 589 104 29 Item 2.
Biggest changeThe daily capacities of the processing plants and storage capacities of the procurement facilities that the Company owns or leases, under operating leases, are as follows: Processing Facilities (in '000 metric tons) Owned Leased Ag Services Carbohydrate Ag Services Carbohydrate and Oilseeds Solutions Nutrition Total and Oilseeds Solutions Nutrition Total North America 85 88 101 274 — — 74 74 South America 32 — 3 35 1 — 3 4 Europe 50 6 13 69 — 1 — 1 Asia-Pacific 1 — 31 32 1 — 10 11 Total daily capacity 168 94 148 410 2 1 87 90 Procurement Facilities (in '000 metric tons) Owned Leased Ag Services Carbohydrate Ag Services Carbohydrate and Oilseeds Solutions Nutrition Total and Oilseeds Solutions Nutrition Total North America 12,922 589 62 13,573 766 68 — 834 South America 2,134 — — 2,134 231 — — 231 Europe 1,478 — — 1,478 — 18 — 18 Asia-Pacific 75 — — 75 81 — 4 85 Total storage capacity 16,609 589 62 17,260 1,078 86 4 1,168
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PROPERTIES (Continued) Nutrition Processing Plants (in 1,000s metric tons) Owned Leased Human Nutrition Animal Nutrition Total Human Nutrition Animal Nutrition Total North America 80 10 90 25 50 75 South America — 3 3 2 1 3 Europe 3 8 11 — — — Asia — 3 3 — 10 10 Total daily capacity 83 24 107 27 61 88 Nutrition Procurement Facilities (in 1,000s metric tons) Owned Leased Human Nutrition Animal Nutrition Total Human Nutrition North America 316 28 344 2 Total storage capacity 316 28 344 2
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Item 2. PROPERTIES The Company’s operations are such that most products are efficiently processed near the source of raw materials. Consequently, the Company has many plants strategically located in agricultural commodity producing areas. The annual volume of commodities processed will vary depending upon availability of raw materials and demand for finished products.
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The Company owns approximately 150 warehouses and terminals primarily used as bulk storage facilities and has 68 innovation centers. Processing plants and procurement facilities owned or leased by unconsolidated affiliates are not included in the tables below.
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To enhance the efficiency of transporting large quantities of raw materials and finished products between the Company’s procurement facilities and processing plants and also the final delivery of products to its customers around the world, the Company owns approximately 1,900 barges, 9,500 rail cars, 360 trucks, 1,210 trailers, 140 boats, and 3 oceangoing vessels; and leases, under operating leases, approximately 700 barges, 22,450 rail cars, 250 trucks, 530 trailers, 31 boats, and 20 oceangoing vessels.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
5 edited+1 added−1 removed1 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
5 edited+1 added−1 removed1 unchanged
2023 filing
2024 filing
Biggest changeThe 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.
Biggest changeThe graph assumes an initial investment of $100 on December 31, 2019 and assumes all dividends have been reinvested through December 31, 2024. The stock performance shown in the graph is not indicative of nor intended to forecast the potential future performance of ADM's common stock. COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURNS Index Data: Copyright Standard and Poor’s, Inc.
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. 31 Item 5.
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.
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.
During the three-month period ended December 31, 2024, there were 1,110 shares received as payments for the withholding taxes on vested restricted stock awards.
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.
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 February 14, 2025, was 7,524.
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.
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, 2024 to October 31, 2024 — $ — — 14,764,049 November 1, 2024 to November 30, 2024 1,110 52.333 — 14,764,049 December 1, 2024 to December 31, 2024 — — — 114,764,049 Total 1,110 $ 52.333 — 114,764,049 (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.
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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.
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On December 11, 2024, the Company's Board of Directors approved a second extension of the stock repurchase program through December 31, 2029 and the repurchase of up to an additional 100,000,000 shares under the extended program. 30 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART II 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.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
74 edited+93 added−141 removed12 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
74 edited+93 added−141 removed12 unchanged
2023 filing
2024 filing
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Segment operating profit, adjusted segment operating profit (a non-GAAP measure), and earnings before income taxes for the years ended December 31, 2023 and 2022 are as follows: (In millions) 2023 2022 Change Segment Operating Profit $ 5,900 $ 6,549 $ (649) Specified Items: Gains on sale of assets (17) (47) 30 Impairment, restructuring, and net settlement contingencies 361 147 214 Adjusted Segment Operating Profit $ 6,244 $ 6,649 $ (405) 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) Other Business 375 167 208 Total Other 375 167 208 Segment Operating Profit $ 5,900 $ 6,549 $ (649) Corporate (1,606) (1,316) (290) Earnings Before Income Taxes $ 4,294 $ 5,233 $ (939) 40 Item 7.
Biggest changeThe increase in the effective rate was driven primarily by the impairment of the Company’s investment in Wilmar and changes in the Company's geographic mix of earnings. 37 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Segment Operating Profit Segment operating profit for the years ended December 31, 2024 and 2023 was as follows (in millions): 2024 2023 Change Segment Operating Profit Ag Services and Oilseeds Ag Services $ 715 $ 1,168 $ (453) Crushing 844 1,290 (446) Refined Products and Other 552 1,306 (754) Wilmar 336 303 33 Total Ag Services and Oilseeds $ 2,447 $ 4,067 $ (1,620) Carbohydrate Solutions Starches and Sweeteners $ 1,343 $ 1,329 $ 14 Vantage Corn Processors 33 46 (13) Total Carbohydrate Solutions $ 1,376 $ 1,375 $ 1 Nutrition Human Nutrition $ 327 $ 417 $ (90) Animal Nutrition 59 10 49 Total Nutrition $ 386 $ 427 $ (41) In the Ag Services and Oilseeds segment, segment operating profit decreased 40%.
Critical accounting estimates are those estimates made in accordance with GAAP which involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on ADM’s financial condition and results of operations. Management has discussed with the Company’s Audit Committee the development, selection, disclosure, and application of these critical accounting policies and estimates.
Critical accounting estimates are those estimates made in accordance with GAAP which involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on ADM’s financial condition and results of operations. Management has discussed with the Company’s Audit Committee the development, selection, disclosure, and application of these critical accounting estimates.
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.
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 the Ag Services and Oilseeds segment, generally have a relatively equal impact from market price changes which generally result in an insignificant impact to gross profit.
Critical Accounting Policies and Estimates The process of preparing financial statements requires management to make estimates and judgments that affect the carrying values of the Company’s assets and liabilities as well as the recognition of revenues and expenses. These estimates and judgments are based on the Company’s historical experience and management’s knowledge and understanding of current facts and circumstances.
Critical Accounting Estimates The process of preparing financial statements requires management to make estimates and judgments that affect the carrying values of the Company’s assets and liabilities as well as the recognition of revenues and expenses. These estimates and judgments are based on the Company’s historical experience and management’s knowledge and understanding of current facts and circumstances.
Certain of the Company’s accounting policies and estimates are considered critical, as these policies and estimates are important to the depiction of the Company’s financial statements and require significant or complex judgment by management.
Certain of the Company’s accounting estimates are considered critical, as these estimates are important to the depiction of the Company’s financial statements and require significant or complex judgment by management.
The Company’s credit facilities and certain debentures require the Company to comply with specified financial and non-financial covenants including maintenance of minimum tangible net worth as well as limitations related to incurring liens, secured debt, and certain other financing arrangements. The Company was in compliance with these covenants as of December 31, 2023.
The Company’s credit facilities and certain debentures require the Company to comply with specified financial and non-financial covenants including maintenance of minimum tangible net worth as well as limitations related to incurring liens, secured debt, and certain other financing arrangements. The Company was in compliance with these covenants as of December 31, 2024.
These investments in affiliates are carried at cost plus equity in undistributed earnings and are adjusted, where appropriate, for amortizable basis differences between the investment balance and the underlying net assets of the investee. Judgments and Uncertainties: Generally, the minimum ownership threshold for asserting significant influence is 20% ownership of the investee.
These investments in affiliates are carried at cost plus equity in undistributed earnings and are adjusted, where appropriate, for amortizable basis differences between the investment balance and the underlying net assets of the investee. Generally, the minimum ownership threshold for asserting significant influence is 20% ownership of the investee.
Management believes that adjusted net earnings, adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability.
Management believes that adjusted net earnings, adjusted diluted 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.
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.
The primary source of funds to finance the Company’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.
The Company accounts for any redeemable noncontrolling interest in temporary equity - redeemable noncontrolling interest at redemption value with periodic changes recorded in retained earnings. Judgments and Uncertainties: Fair values allocated to assets acquired and liabilities assumed in business combinations require management to make significant judgments, estimates, and assumptions, especially with respect to intangible assets.
The Company accounts for any redeemable non-controlling interest in temporary equity - redeemable non-controlling interest at redemption value with periodic changes recorded in retained earnings. Judgments and Uncertainties: Fair values allocated to assets acquired and liabilities assumed in business combinations require management to make significant judgments, estimates, and assumptions, especially with respect to intangible assets.
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 Company depends on access to credit markets, which can be impacted by its credit rating and factors outside of the Company’s control, to fund its working capital needs and capital expenditures.
Level 3 fair value measurements of approximately $3.4 billion of assets and $0.6 billion of liabilities represent fair value estimates where unobservable price components represent 10% or more of the total fair value price. For more information concerning amounts reported as Level 3, see Note 4 in Item 8.
Level 3 fair value measurements of approximately $3.5 billion of assets and $0.5 billion of liabilities represent fair value estimates where unobservable price components represent 10% or more of the total fair value price. For more information concerning amounts reported as Level 3, see Part II. Item 8. Note 4 Fair Value Measurements.
The Programs provide the Company with up to $3.0 billion in funding against accounts receivable transferred into the Programs and expand the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 19 in Item 8 for more information and disclosures on the Programs).
The Programs provide the Company with up to $2.8 billion in funding against accounts receivable transferred into the Programs and expand the Company’s access to liquidity through efficient use of its balance sheet assets (see Part II. Item 8. Note 19 Sale of Accounts Receivable for more information and disclosures on the Programs).
Adjusted net earnings, adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS, net earnings, and segment operating profit, respectively, the most directly comparable amounts reported under GAAP.
Adjusted net earnings, adjusted diluted 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 Company expects to make payments related to purchase obligations and other material cash requirements beyond the next twelve months of $16.8 billion.
The Company expects to make payments related to purchase obligations and other material cash requirements beyond the next twelve months of $15.9 billion.
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 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. Income taxes of $476 million decreased $352 million.
A decline in the actual cash flows of the reporting units in future periods, as compared to the projected cash flows used in the discounted cash flow analysis, could result in the carrying value of the reporting units exceeding their respective fair values.
A decline in the actual cash flows of a reporting unit in future periods, as compared to the projected cash flows used in the discounted cash flow analysis, could result in the carrying value of the reporting unit exceeding its fair value.
The Company’s ratio of net debt (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 and the sum of short-term debt of $0.5 billion, current maturities of long-term debt of $0.9 billion, and long-term debt of $7.7 billion less the sum of cash and cash equivalents of $1.0 billion and short-term marketable securities of none in 2022) to capital (the sum of net debt of $7.0 billion and shareholders’ equity of $24.1 billion in 2023 and the sum of net debt of $8.1 billion and shareholders' equity of $24.3 billion in 2022) was 22% and 25% at December 31, 2023 and 2022, respectively.
The Company’s ratio of net debt (the sum of short-term debt of $1.9 billion, current maturities of long-term debt of $674 million, and long-term debt of $7.6 billion less the sum of cash and cash equivalents of $611 million and short-term marketable securities of $246 million in 2024, and the sum of short-term debt of $105 million, 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 $9.3 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 30% and 22% at December 31, 2024 and 2023, respectively.
Critical estimates in the determination of the fair value, when using a discounted cash flow analysis, of each reporting unit include, but are not limited to, future expected cash flows, revenue growth, EBITDA margins, and discount rates.
Critical estimates in the determination of the fair value, when using a discounted cash flow analysis, of each reporting unit require management to make assumptions including, but not limited to, future expected cash flows of the reporting unit utilizing appropriate revenue growth, EBITDA margins, and discount rates.
Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, adjusted for specified items.
Adjusted diluted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items as more fully described in the reconciliation tables. EBITDA is defined as earnings before interest on borrowings, taxes, and depreciation and amortization.
ADM’s ratio of long-term debt to total capital (the sum of long-term debt of $8.3 billion and shareholders’ equity of $24.1 billion in 2023 and the sum of long-term debt of $7.7 billion and shareholders’ equity of $24.3 billion in 2022) was 25% and 24% at December 31, 2023 and 2022, respectively.
The Company’s ratio of long-term debt to total capital (the sum of long-term debt of $7.6 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 25% at each of December 31, 2024 and 2023.
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 within segment operating profit, and $6 million of restructuring in Corporate.
Charges in 2023 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, $27 million of reportable segment specific restructuring charges, and $6 million of restructuring in Corporate.
In 2024, the Company expects capital expenditures of $1.3 billion and additional cash outlays of approximately $1.0 billion in dividends and up to $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 In 2025, the Company expects capital expenditures of $1.5 billion and additional cash outlays of approximately $1.0 billion in dividends and up to $155 million 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.
The Company’s other material cash requirements within the next 12 months include current maturities of long-term debt of $1 million, interest payments of $0.4 billion, operating lease payments of $0.3 billion, transition tax liability of $49 million, and pension and other postretirement plan contributions of $114 million.
The Company’s other material cash requirements within the next 12 months include current maturities of long-term debt of $674 million, interest payments of $325 million, operating lease payments of $377 million, transition tax liability of $61 million, and pension, other postretirement, and defined contribution plan contributions of $114 million.
Following are the accounting policies and estimates management considers critical to the Company’s financial statements. 52 Item 7.
Following are the accounting estimates management considers critical to the Company’s financial statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Fair Value Measurements - Inventories and Commodity Derivatives Description: Certain of the Company’s inventory, inventory-related payables, and commodity derivative assets and liabilities as of December 31, 2023 are valued at estimated fair values, including $7.0 billion of merchandisable agricultural commodity inventories, $1.4 billion of commodity derivative assets, $1.0 billion of commodity derivative liabilities, and $1.3 billion of inventory-related payables.
Fair Value Measurements - Inventories and Commodity Derivatives Description: Certain of the Company’s inventory, inventory-related payables, and commodity derivative assets and liabilities as of December 31, 2024 are valued at estimated fair values, including $7.0 billion of merchandisable agricultural commodity inventories, $0.8 billion of commodity derivative assets, $0.8 billion of commodity derivative liabilities, and $0.7 billion of inventory-related payables.
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. 42 Item 7.
The table below provides a reconciliation of net earnings (the most directly comparable GAAP measure) to adjusted net earnings (a non-GAAP measure) and diluted EPS to adjusted diluted EPS (a non-GAAP measure) for the years ended December 31, 2024 and 2023. 2024 2023 In millions Per share In millions Per share Average number of shares outstanding - diluted 493 542 Net earnings and reported EPS (fully diluted) $ 1,800 $ 3.65 $ 3,483 $ 6.43 Adjustments: Gains on sale of assets (net of tax of $3 million in 2024 and $5 million in 2023) (1) (8) (0.02) (12) (0.03) Asset impairment, restructuring, and net settlement contingencies (net of tax of $1 million in 2024 and $57 million in 2023) (1) 512 1.04 310 0.57 Expenses related to acquisitions (net of tax of $2 million in 2024 and $1 million in 2023) (1) 5 0.01 6 0.01 Gain on debt conversion option (net of tax of $0) (1) — — (6) (0.01) Certain discrete tax adjustments (2) 30 0.06 4 0.01 Adjusted net earnings and adjusted diluted EPS $ 2,339 $ 4.74 $ 3,785 $ 6.98 (1) Tax effected using the U.S. and applicable tax rates.
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.
Equity in earnings of unconsolidated affiliates increased $70 million to $621 million due primarily to higher earnings from the Company’s investments in Almidones Mexicanos S.A., Wilmar, Skyland Grain, LLC, and Hungrana Ltd., partially offset by lower earnings from the Company’s investment in Olenex Sarl and SoyVen.
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 expense in the prior year included the non-service components of net pension benefit income of $18 million and foreign exchange gains, partially offset by railroad maintenance expenses of $67 million and investment revaluation losses of $57 million. Non-GAAP Financial Measures The Company uses certain “Non-GAAP” financial measures as defined by the SEC.
Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of $6.8 billion, the Company has asserted these funds are indefinitely reinvested outside the U.S. The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers.
Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of $4.5 billion, the Company has asserted these funds are indefinitely reinvested outside the U.S.
Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any such adjustments are charged to the consolidated statements of earnings. Goodwill Description: Goodwill is subject to annual impairment tests.
Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any such adjustments are charged to the Consolidated Statements of Earnings. Goodwill Impairment Description: Goodwill represents the aggregate of the excess consideration paid for acquired businesses over the fair value of the net assets acquired.
Changes in enacted tax rates are reflected in the tax provision as they occur. Judgments and Uncertainties: ADM calculates its provision for income taxes based on the statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which it operates.
Changes in enacted tax rates are reflected in the tax provision as they occur. 44 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Judgments and Uncertainties: ADM calculates its provision for income taxes based on the statutory tax rates and tax attributes available to the Company in the various jurisdictions in which it operates.
The Company also periodically compares the book value of its investment in Wilmar against its market value as determined through quoted market prices, and evaluates any potential other than temporary impairment based on the near-term prospects of Wilmar in relation to the severity and duration of the decline in fair value and the Company’s intent and ability to retain its investment in Wilmar.
The Company also periodically compares the book value of its investment in Wilmar against its market value as determined through quoted market prices, and evaluates any potential other-than-temporary impairment.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Sensitivity of Estimate to Change: While ADM considers all of its tax positions fully supportable, the Company faces challenges from U.S. and foreign tax authorities regarding the amount of taxes due.
The Company uses judgment in evaluating the Company’s tax positions and determining its annual tax provision. Sensitivity of Estimate to Change: While ADM considers all of its tax positions fully supportable, the Company faces challenges from U.S. and foreign tax authorities regarding the amount of taxes due.
However, the Company considers all relevant factors in determining its ability to assert significant influence including but not limited to, ownership percentage, board membership, customer and vendor relationships, and other arrangements.
However, the Company considers all relevant factors in determining its ability to assert significant influence including but not limited to, ownership percentage, board membership, customer and vendor relationships, and other arrangements. Judgments and Uncertainties: The Company has evaluated its investments in affiliates as of December 31, 2024 to be appropriately stated at carrying values.
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.
Nutrition revenues increased 2% to $7.3 billion driven by higher sales volumes ($386 million), partially offset by lower sales prices ($248 million). Cost of products sold decreased $6.7 billion to $79.8 billion driven primarily by lower average commodity costs.
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. The Company has acquired approximately 148.0 million shares under this program and its extension as of December 31, 2023.
On December 11, 2024, the Company's Board of Directors approved a second extension of the stock repurchase program through December 31, 2029 and the repurchase of up to an additional 100,000,000 shares under the extended program.
Sensitivity of Estimate to Change: During the year ended December 31, 2023, the Company evaluated goodwill for impairment using a qualitative assessment in five reporting units and using a quantitative assessment in two reporting units. 54 Item 7.
During the year ended December 31, 2024, the Company evaluated goodwill for impairment using a qualitative assessment for two reporting units and using a quantitative assessment for five reporting units. See Part II. Item 8. Note 9.
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.
Some of these metrics are not defined by generally accepted accounting principles in the United States (GAAP) and should be considered in addition to, and not in lieu of, GAAP financial measures. For more information, see the “ Non-GAAP Financial Measures ” section below.
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.
These are measures of performance not defined by accounting principles generally accepted in the United States, and should be considered in addition to, not in lieu of, GAAP reported measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this section.
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).
Ag Services and Oilseeds revenues decreased 9% to $66.5 billion driven by lower sales prices ($13.5 billion), partially offset by higher sales volumes ($6.6 billion). Carbohydrate Solutions revenues decreased 13% to $11.2 billion driven by lower sales prices ($2.3 billion), partially offset by higher sales volumes ($612 million).
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 feed additives market was impacted by volatility on vitamins due to supply disruptions, however overall it modestly improved, following the improvement in the feed sector. 34 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Processed volumes by product for the years ended December 31, 2024 and 2023 are as follows (in metric tons): (In thousands) 2024 2023 Change Oilseeds 35,719 34,899 820 Corn 18,541 18,067 474 Total 54,260 52,966 1,294 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.
Income Taxes Description: The Company accounts for income taxes in accordance with the applicable accounting standards which prescribe a minimum threshold a tax position is required to meet before being recognized in the consolidated financial statements. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law.
Additionally, if market conditions change subsequent to year-end, amounts reported in future periods could differ materially. Income Taxes Description: The Company accounts for income taxes in accordance with the applicable accounting standards which prescribe a minimum threshold a tax position is required to meet before being recognized in the Consolidated Financial Statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) As of December 31, 2023, the Company had $1.4 billion of cash and cash equivalents, $0.5 billion of which is cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested.
Of the Company’s total lines of credit, $5.1 billion supported the commercial paper borrowing programs, against which there was $1.7 billion of commercial paper outstanding at December 31, 2024. 41 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As of December 31, 2024, the Company had $611 million of cash and cash equivalents, $354 million of which is cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested.
The estimated fair value of the other reporting unit evaluated for impairment using a quantitative assessment during the year ended December 31, 2023 was in excess of 198% of its carrying value, and therefore no impairment was recorded for that reporting unit.
Per the results of the impairment testing within the Nutrition reportable segment for the year ended December 31, 2024, the estimated fair value of the Animal Nutrition and Human Nutrition reporting units evaluated for impairment using a quantitative assessment was in excess of 7% and 32% of its carrying value, respectively, and no impairment was recorded for either of the Nutrition reporting units.
At December 31, 2023, the Company’s capital resources included shareholders’ equity of $24.1 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $13.2 billion, of which $11.5 billion was unused.
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. At December 31, 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 $13.0 billion, of which $9.1 billion was unused.
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 intersegment sales.
The Company is continuing to cooperate with the SEC and DOJ investigations and is unable to predict the outcome of these investigations. 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.
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, 2023 The Company is subject to a variety of market factors which affect the Company’s operating results.
Due to the unpredictable nature of these and other factors, the Company undertakes no responsibility for updating any forward-looking information contained within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Market Factors Influencing Operations or Results in the Twelve Months Ended December 31, 2024 The Company is subject to a variety of market factors which affect the Company’s operating results, including those discussed below related to 2024.
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.
Revenues decreased $8.4 billion to $85.5 billion driven by lower sales prices ($16.0 billion), partially offset by higher sales volumes ($7.6 billion). Lower sales prices of soybeans, corn, meal, oils, wheat and alcohol, were partially offset by higher sales volumes of soybeans, corn, oils, wheat, alcohol, and flavors.
The Company evaluates goodwill for impairment at the reporting unit level annually on October 1 or whenever there are indicators that the carrying value may not be fully recoverable. The Company has seven reporting units with goodwill identified at one level below the operating segment using the criteria in ASC 350, Intangibles - Goodwill and Other (Topic 350).
The Company has seven reporting units with goodwill identified at one level below the operating segment using the criteria in ASC 350, Intangibles - Goodwill and Other (Topic 350). Two reporting units do not have any recorded goodwill.
Segment operating profit decreased 10% or $0.6 billion, to $5.9 billion, and included 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) in 2023 excluded asset impairment, restructuring, and net settlement contingencies of $361 million, and a gain on the sale of certain assets of $17 million.
Following the recording of the impairment charge, the remaining carrying value of goodwill in the Animal Nutrition reporting unit as of December 31, 2023 was $0.9 billion. The Company performed a sensitivity analysis for the significant assumptions used in the goodwill impairment testing analysis for the Animal Nutrition reporting unit.
The estimated fair value calculated by the GPC method was within 5% of the estimated fair value calculated by the income approach. The Company performed a sensitivity analysis for the significant assumptions used in the goodwill impairment testing analysis for the Animal Nutrition reporting unit.
As of December 31, 2023, the three major credit rating agencies maintained the Company’s credit ratings at investment grade levels. Subsequent to December 31, 2023, the Company’s ratings were placed “On Credit Watch” and “Ratings Under Review” by two of the credit rating agencies.
Credit Ratings As of December 31, 2024, the three major credit rating agencies maintained the Company’s credit ratings at investment grade levels with a negative outlook.
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) Other Business 424 396 28 Total Other Business 424 396 28 Total $ 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.
Total segment operating profit (a non-GAAP measure) is reconciled to earnings before income taxes, the most directly comparable GAAP measure, in the " Non-GAAP Financial Measures " section below. 35 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Revenues for the years ended December 31, 2024 and 2023, were as follows (in millions): 2024 2023 Change Ag Services and Oilseeds Ag Services $ 44,083 $ 47,420 $ (3,337) Crushing 11,836 14,020 (2,184) Refined Products and Other 10,597 11,986 (1,389) Total Ag Services and Oilseeds 66,516 73,426 (6,910) Carbohydrate Solutions Starches and Sweeteners 8,587 9,885 (1,298) Vantage Corn Processors 2,647 2,989 (342) Total Carbohydrate Solutions 11,234 12,874 (1,640) Nutrition Human Nutrition 3,944 3,634 310 Animal Nutrition 3,405 3,577 (172) Total Nutrition 7,349 7,211 138 Total Segment Revenues 85,099 93,511 (8,412) Other Business 431 424 7 Total Revenues $ 85,530 $ 93,935 $ (8,405) Revenues and cost of products sold in agricultural merchandising and processing businesses are significantly correlated to the underlying commodity prices and volumes.
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.
(4) Other expense in the current year included railroad maintenance expenses of $64 million and net valuation losses of approximately $16 million in the Company’s ADM Ventures portfolio. Other income in the current year also included foreign exchange gains of $78 million and the non-service components of net pension benefit income of $18 million.
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.
Flavors results were higher than the prior year driven by current year acquisitions, and a prior year $45 million negative impact primarily related to the deconsolidation and write-down of a joint venture. Animal Nutrition results were higher compared to the prior year, as amino acids market recovery, cost optimization efforts and lower input costs bolstered margins.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Company has historically disclosed in the footnotes to its financial statements that intersegment sales have been recorded at amounts approximating market. In connection with the Investigation, the Company identified certain intersegment sales that were not recorded at amounts approximating market.
See Part II. Item 8. Note 3. Acquisitions of “Notes to Consolidated Financial Statements” for further information. Internal and Government Investigation The Company has historically disclosed in the footnotes to its financial statements that intersegment sales have been recorded at amounts approximating market.
Non-GAAP Financial Measures The Company uses adjusted net earnings, adjusted earnings per share (EPS), adjusted EBITDA, and adjusted segment operating profit, non-GAAP financial measures as defined by the SEC, to evaluate the Company’s financial performance.
The Company uses adjusted net earnings, adjusted diluted EPS, EBITDA, adjusted EBITDA, and total segment operating profit, non-GAAP financial measures as defined by the SEC, to evaluate the Company’s financial performance. 39 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Adjusted net earnings is defined as net earnings adjusted for the effects on net earnings of specified items as more fully described in the reconciliation tables.
The sensitivities for revenue growth and EBITDA margins do not consider the offsetting impact of a lower discount rate assumption to reflect the reduced risk in estimated future cash flow growth used under the income approach or the related impacts on pricing multiples used under the market approach. • A hypothetical increase to the discount rate of approximately 25 basis points would result in additional goodwill impairment of approximately $65 million; • A hypothetical decrease in the expected annual revenue growth rate over the entire forecast period of approximately 100 basis points would result in additional goodwill impairment of approximately $60 million; and • A hypothetical decrease in the expected EBITDA margins in each year over the entire forecast period of approximately 15 basis points would result in additional goodwill impairment of approximately $60 million.
The sensitivities for revenue growth and EBITDA growth do not consider the offsetting impact of a lower discount rate assumption to reflect the reduced risk in estimated future cash flow growth used under the income approach or the related impacts on pricing multiples used under the market approach. 46 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As of December 31, 2024, goodwill allocated to the Animal Nutrition reporting unit totaled $887 million.
At December 31, 2023, ADM had $1.4 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.6 to 1. Included in working capital is $7.0 billion of readily marketable commodity inventories.
Included in working capital was $7.0 billion of readily marketable commodity inventories at each of December 31, 2024 and 2023.
The Company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.
Adjusted EBITDA is defined as earnings before interest on borrowings, taxes, depreciation, and amortization, adjusted to exclude the impact of specified items as more fully described in the reconciliation tables. Total segment operating profit is defined as ADM’s consolidated earnings before income taxes, adjusted for Other Business, Corporate, and specified items as more fully described in the reconciliation tables.
As of December 31, 2023, the Company has total available liquidity of $12.9 billion comprised of cash and cash equivalents and unused lines of credit.
As of December 31, 2024, the Company has total available liquidity of $9.7 billion comprised of cash and cash equivalents and unused lines of credit. The Company believes that cash flows from operations, cash and cash equivalents on hand, and unused lines of credit will be sufficient to meet its ongoing liquidity requirements for at least the next twelve months.
Working capital changes decreased cash by $0.3 billion in the current year compared to a decrease of $1.5 billion in the prior year. Segregated investments increased $0.2 billion driven by higher interest rates. Trade receivables decreased $0.7 billion due to lower revenues. Inventories decreased $2.9 billion due to lower inventory prices and volumes.
Changes in net working capital were driven by changes in segregated investments, changes in inventory, changes in trade payables and changes in payables to brokerage customers. Segregated investments increased $693 million in the current year compared to an increase of $194 million in the prior year, driven by higher interest rates.
Long-term debt payments in the current year of $1.0 billion consisted of the €600 million aggregate principal amount of 1.750% Notes due 2023 and $300 million aggregate principal amount of zero coupon exchangeable bonds due 2023.
Net cash used in financing activities for the year ended December 31, 2023, was driven by net borrowings of short-term credit agreements of $390 million, corporate bond repayments of $963 million, which consisted of the €600 million aggregate principal amount of 1.750% Notes due 2023 and $300 million aggregate principal amount of zero coupon exchangeable bonds due 2023, partially offset by proceeds from debt of $501 million.
Adjusted segment operating profit (a non-GAAP measure) decreased $0.4 billion to $6.2 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, Other Business, and Vantage Corn Processors.
Total segment operating profit (a non-GAAP measure) in 2024 decreased 28% or $1.7 billion, to $4.2 billion, driven by lower results in the Ag Services and Oilseeds segment and the Nutrition segment.
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) 41 Item 7.
Corporate results were as follows (in millions): 2024 2023 Change Interest expense - net (1) $ (482) $ (431) $ (51) Unallocated corporate costs (2) (1,205) (1,144) (61) Expenses related to acquisitions (7) (7) — Gain on debt conversion option — 6 (6) Restructuring charges (3) (23) (6) (17) Other expense - net (4) (4) (24) 20 Total Corporate $ (1,721) $ (1,606) $ (115) (1) Interest expense-net increased $51 million driven by increased borrowings and higher interest rates on the Company’s commercial paper borrowing programs and increased interest expense relating to uncertain tax positions.
Trade payables decreased $1.5 billion due to lower payables related to grain and other inventory purchases. Payables to brokerage customers decreased $2.1 billion due to decreased trading activity in the Company’s futures commission and brokerage business. Cash used in investing activities was $1.5 billion this year compared to $1.4 billion last year.
Brokerage payables decreased $78 million in the current year compared to a decrease of $2.1 billion in the prior year which was driven by decreased trading activity in the Company’s futures commission and brokerage business.
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.
In Health and Wellness, lower profits were driven by inventory reserve adjustments due primarily to changes in customer demand fulfillment, non-recurring benefits in the prior year, and softer margins within Vitamins, offset by stronger growth in biotics and botanicals. The prior year was impacted by a revaluation loss of $19 million related to an investment in precision fermentation.
As of December 31, 2023, the Company expects to make payments related to purchase obligations of $13.4 billion within the next twelve months.
The decrease is primarily related to a decrease in obligations to energy commitments. 43 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As of December 31, 2024, the Company expects to make payments related to purchase obligations of $11.8 billion within the next twelve months.
The Company’s purchase obligations as of December 31, 2023 and 2022 were $14.0 billion and $15.8 billion, respectively. The decrease is primarily related to a decrease in obligations to purchase agricultural commodity inventories, partially offset by an increase in energy commitments.
The Company’s purchase obligations as of December 31, 2024 and 2023 were $12.4 billion and $14.0 billion, respectively.
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.
Human Nutrition was impacted by inflation, which drove lower demand and decreased volumes for alternative proteins in some regions. Demand started to recover in the food, beverage, and dietary supplement categories. In Animal Nutrition, a soft amino acids market driven by price weakness in North America was partially offset by an improved market in EMEA.
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.
Selling, general, and administrative expenses increased 7% to $3.7 billion driven by higher legal and financing fees, higher salary and benefit costs, and increased amortization of intangibles, driven by the Company’s investment in computer software and intangibles acquired in business combinations, partially offset by decreased incentive compensation reflecting lower Company performance and reduced provisions for bad debt.
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 increase in oilseeds processed volumes was primarily related to improved crush capacity in North America, driven by the Company's new facility in Spiritwood, North Dakota, and in EMEA in 2024 compared to lower crush rates in the previous year due to inclement weather, unplanned downtime, and reduced capacity due to the Russian-Ukraine war.
Included in segment operating profit in the prior year was 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.
Total segment operating profit (a non-GAAP measure) in 2024 excluded asset impairment, restructuring and net settlement contingencies of $490 million, and a gain on the sale of certain assets of $10 million.
Removed
The immaterial error corrections generally arise from the measurement of intersegment sales pricing or rebates relating to products sold to the Nutrition reporting segment by the Ag Services and Oilseeds and Carbohydrate Solutions reporting segments.
Added
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying Consolidated Financial Statements, which can be found in Part II. Item 8. Financial Statements and Supplementary Data.
Removed
Because each sale to be adjusted occurred between the Company’s reporting segments, the adjustments have no impact on the Company’s consolidated balance sheets and statements of earnings, comprehensive income (loss), or cash flows. The Company determined that the adjustments are not material to the Company’s consolidated financial statements taken as a whole for any period.
Added
This MD&A generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II.
Removed
For more information, see Note 17, Segment and Geographic Information of “Notes to Consolidated Financial Statements” included in Part II, Item 8 herein.
Added
Item 7 of the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, filed on November 18, 2024. Company Overview Archer-Daniels-Midland Company and its subsidiaries (the "Company" or "ADM") unlock the power of nature to enrich the quality of life.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
7 edited+0 added−4 removed11 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
7 edited+0 added−4 removed11 unchanged
2023 filing
2024 filing
Biggest changeThe potential loss in fair value for such net currency position resulting from a hypothetical 10% adverse change in foreign currency exchange rates is not material. Effective April 1, 2022, the Company changed the functional currency of its Turkish entities to the U.S. dollar which did not have a material impact on the Company’s consolidated financial statements.
Biggest changeThe changes in market value of such contracts have a high correlation to the price changes in the currency of the related transactions. The potential loss in fair value for such net currency position resulting from a hypothetical 10% adverse change in foreign currency exchange rates is not material.
Interest The fair value of the Company’s long-term debt is estimated using quoted market prices, where available, and discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Market risk is estimated as the potential increase in fair value resulting from a hypothetical 50 basis points decrease in interest rates.
Interest Rate Risk The fair value of the Company’s long-term debt is estimated using quoted market prices, where available, and discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Market risk is estimated as the potential increase in fair value resulting from a hypothetical 50 basis points decrease in interest rates.
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.
Commodity Price Risk 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 Company also uses currency exchange contracts as hedges against amounts indefinitely invested in foreign subsidiaries and affiliates. The currency exchange contracts used are forward contracts, swaps with banks, exchange-traded futures contracts, and over-the-counter options. The changes in market value of such contracts have a high correlation to the price changes in the currency of the related transactions.
The Company also uses currency exchange contracts and foreign currency denominated debt as hedges against amounts indefinitely invested in foreign subsidiaries and affiliates. The currency exchange contracts used are forward contracts, swaps with banks, exchange-traded futures contracts, and over-the-counter options.
December 31, 2023 December 31, 2022 (In millions) Fair value of long-term debt $ 8,557 $ 7,502 Fair value amount over (under) carrying value 298 (232) Market risk 378 342 The increase in the fair value of long-term debt at December 31, 2023 is due to a new debt issuance and a decrease in corporate bond interest rates. 57
December 31, 2024 December 31, 2023 (In millions) Fair value of long-term debt $ 7,055 $ 8,557 Fair value amount over (under) carrying value (501) 298 Market risk 271 378 The decrease in the fair value of long-term debt at December 31, 2024 is due to an increase in corporate bond interest rates. 49 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY
The highest, lowest, and average weekly position for the years ended December 31, 2023 and 2022 together with the market risk from a hypothetical 10% adverse price change is as follows: December 31, 2023 December 31, 2022 Long/(Short) Fair Value Market Risk Fair Value Market Risk (In millions) Highest position $ 498 $ 50 $ 986 $ 99 Lowest position (6) (1) 44 4 Average position 125 13 388 39 The change in fair value of the average position was due to the overall decrease in average quantities of certain commodities. 56 Item 7A.
The highest, lowest, and average weekly long (short) position for the years ended December 31, 2024 and 2023 together with the market risk from a hypothetical 10% adverse price change is as follows (in millions): December 31, 2024 December 31, 2023 Fair Value Market Risk Fair Value Market Risk Highest position $ 543 $ 54 $ 498 $ 50 Lowest position (265) (27) (6) (1) Average position 168 17 125 13 The change in fair value of the average position was due to the overall decrease in average quantities of certain commodities. 48 Table of Contents ARCHER-DANIELS-MIDLAND COMPANY PART II Foreign Currency Exchange Risk The Company has consolidated subsidiaries in more than 80 countries.
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 Company performs sensitivity analyses measuring the potential loss in fair value resulting from a hypothetical 10% adverse change in market prices.
Removed
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued) Currencies The Company has consolidated subsidiaries in more than 70 countries.
Removed
The amount the Company considers indefinitely invested in foreign subsidiaries and corporate joint ventures translated into dollars using the year-end exchange rates is $15.5 billion and $13.0 billion ($17.9 billion and $15.5 billion at historical rates) at December 31, 2023 and 2022, respectively.
Removed
The increase is due to the increase in retained earnings of the foreign subsidiaries of $2.4 billion and the appreciation of foreign currencies versus the U.S. dollar of $0.1 billion.
Removed
The potential loss in fair value, which would principally be recognized in Other Comprehensive Income, resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates is $1.8 billion and $1.6 billion for December 31, 2023 and 2022, respectively. Actual results may differ.