Archer-Daniels-Midland 10-Q 2023-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-44

ARCHER-DANIELS-MIDLAND COMPANY

(Exact name of registrant as specified in its charter)

Delaware									41-0129150
(State or other jurisdiction of incorporation or organization)									(I. R. S. Employer Identification No.)
77 West Wacker Drive, Suite 4600
Chicago,			Illinois						60601
(Address of principal executive offices)									(Zip Code)

(312) 634-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, no par value			ADM			NYSE
1.000% Notes due 2025						NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer			☒			Accelerated Filer			☐			Emerging Growth Company			☐
Non-accelerated Filer			☐			Smaller Reporting Company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, no par value – 544,634,817 shares

(April 24, 2023)

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q contains forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 that is subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking information. Risks and uncertainties that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A, “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022, as may be updated in our subsequent Quarterly Reports on Form 10-Q. To the extent permitted under applicable law, Archer-Daniels-Midland Company assumes no obligation to update any forward-looking statements as a result of new information or future events.

PART I - FINANCIAL INFORMATION

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

(Unaudited)

			Three Months Ended March 31,
			2023						2022
			(In millions, except per share amounts)
Revenues			$	24,072					$	23,650
Cost of products sold			21,992						21,753
Gross Profit			2,080						1,897
Selling, general, and administrative expenses			881						829
Asset impairment, exit, and restructuring costs			7						1
Equity in earnings of unconsolidated affiliates			(174)						(204)
Interest and investment income			(134)						(59)
Interest expense			147						92
Other (income) expense – net			(44)						(33)
Earnings Before Income Taxes			1,397						1,271
Income tax expense			225						207
Net Earnings Including Noncontrolling Interests			1,172						1,064
Less: Net earnings attributable to noncontrolling interests			2						10
Net Earnings Attributable to Controlling Interests			$	1,170					$	1,054
Average number of shares outstanding – basic			550						566
Average number of shares outstanding – diluted			551						568
Basic earnings per common share			$	2.13					$	1.86
Diluted earnings per common share			$	2.12					$	1.86
Dividends per common share			$	0.45					$	0.40

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

			Three Months Ended March 31,
			2023						2022
			(In millions)
Net earnings including noncontrolling interests			$	1,172					$	1,064
Other comprehensive income (loss):
Foreign currency translation adjustment			153						149
Tax effect			14						(31)
Net of tax amount			167						118
Pension and other postretirement benefit liabilities adjustment			(26)						37
Tax effect			(13)						(7)
Net of tax amount			(39)						30
Deferred gain (loss) on hedging activities			(104)						282
Tax effect			16						(47)
Net of tax amount			(88)						235
Unrealized gain (loss) on investments			4						(5)
Tax effect			(1)						—
Net of tax amount			3						(5)
Other comprehensive income (loss)			43						378
Comprehensive income (loss)			1,215						1,442
Less: Comprehensive income (loss) attributable to noncontrolling interests			(1)						5
Comprehensive income (loss) attributable to controlling interests			$	1,216					$	1,437

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets

(In millions)			March 31, 2023						December 31, 2022
			(Unaudited)
Assets
Current Assets
Cash and cash equivalents			$	899					$	1,037
Segregated cash and investments			8,736						9,010
Trade receivables - net			4,471						4,926
Inventories			14,771						14,771
Other current assets			5,448						5,666
Total Current Assets			34,325						35,410
Investments and Other Assets
Investments in affilia

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Operations in Ukraine and Russia

ADM employs approximately 640 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office. Facilities have been temporarily idled since February 24, 2022, most of which were brought back online by March 31, 2023, due in part to the opening of the Black Sea grain export corridor. The Company’s footprint in Russia is limited to operations related to the production and transport of essential food commodities and ingredients.

While the Company’s Ukraine and Russian operations have historically represented less than 1.0% of consolidated revenues, the direct and indirect impacts of the ongoing military action could negatively affect ADM’s future operating results. The conflict in Ukraine has created disruptions in global supply chains and has created dislocations of key agricultural commodities. The indirect impact of these dislocations on the Company’s operating results will be a function of a number of variables including supply and demand responses from the rest of the world as well as the length of the conflict and the condition of the agricultural industry and export infrastructure after the conflict ends. For more information, refer to Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

As of March 31, 2023, ADM’s assets in Ukraine consisted primarily of current assets that were less than 1% of the Company’s total current assets and an immaterial amount of non-current assets. Of the total current assets in Ukraine, the majority related to inventories that represented less than 1% of ADM’s total inventories.

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

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, supply has been impacted by market dislocations such as the Russian-Ukraine war, a record harvest in Brazil, and extreme weather conditions in Argentina. Inflationary pressures impacted the entire value chain. Crushing was impacted by renewable fuel demand and protein consumption around the globe. In Refined Products and Other, margins were driven by strong oil demand, elevated oil values that were supported by the release of renewable volume obligations towards the end of 2022, and favorable blend economics due to historically low distillate cost. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio. Industry ethanol stocks remained elevated. Solid export demand for ethanol helped minimize the imbalance between supply and demand. In Nutrition, demand was softer in a few food and beverage product categories. Human Nutrition was impacted by inflation which drove lower demand especially in higher priced product categories in the food, beverage, and dietary supplement segment and impacted volumes in flavors, flavor systems, emulsifiers, and alternative proteins. In Animal Nutrition, amino acids margins were pressured due to competition returning to market and production cost inflation. Results were also adversely affected by weak demand in other product lines due to decreased market for feed, particularly in North America and Europe, Middle East, and Africa (EMEA), and animal disease impacts on farm, and some premix and additives customers cutting products out of formulation due to increased ingredient, freight, and energy costs. Increased competition in Latin America also contributed to the weak demand in that region.

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

Net earnings attributable to controlling interests increased $0.1 billion from $1.1 billion to $1.2 billion. Segment operating profit increased $0.2 billion from $1.5 billion to $1.7 billion and included a net charge of $6 million consisting of charges totaling $7 million related to asset impairment and restructuring, partially offset by a gain on the sale of certain assets of $1 million. Included in segment operating profit in the prior-year quarter was a net charge of $17 million consisting of asset impairment, restructuring, and settlement charges of $18 million, partially offset by a gain on the sale of certain assets of $1 million. Adjusted segment operating profit (a non-GAAP measure) increased $0.2 billion to $1.7 billion due primarily to higher results in Ag Services, Refined Products and Other, and Other Business, partially offset by lower results in the rest of the businesses. Corporate results in the current quarter were a net charge of $322 million and included a mark-to-market gain of $5 million on the conversion option of the exchangeable bonds issued in August 2020. Corporate results in the prior-year quarter were a net charge of $268 million and included a mark-to-market loss of $15 million on the conversion option of the exchangeable bonds issued in August 2020, acquisition-related expenses of $2 million, a loss on sale of assets of $3 million, and restructuring adjustment of $1 million.

Income tax expense increased $18 million to $225 million. The effective tax rate for the quarter ended March 31, 2023 was 16.1% compared to 16.3% for the quarter ended March 31, 2022. The change in the rate was driven primarily by the impact of discrete tax items, partially offset by changes in the geographic mix of forecasted earnings.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Analysis of Statements of Earnings

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

			Three Months Ended
			March 31,
(In thousands)			2023						2022						Change
Oilseeds			8,627						8,491						136
Corn			4,394						4,812						(418)
Total			13,021						13,303						(282)

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall increase in oilseeds processed volumes was primarily related to improved crush rates in the current quarter compared to lower crush rates in the prior-year quarter resulting from unplanned downtime due to logistics and staffing issues. The overall decrease in corn processed volumes was related to downtime due in part to a fire at the Cedar Rapids, Iowa dry mill facility.

Revenues by segment for the quarter are as follows:

			Three Months Ended
			March 31,
			2023						2022						Change
			(In millions)
Ag Services and Oilseeds
Ag Services			$	11,695					$	11,847					$	(152)
Crushing			3,683						3,222						461
Refined Products and Other			3,201						3,184						17
Total Ag Services and Oilseeds			18,579						18,253						326
Carbohydrate Solutions
Starches and Sweeteners			2,737						2,498						239
Vantage Corn Processors			800						868						(68)
Total Carbohydrate Solutions			3,537						3,366						171
Nutrition
Human Nutrition			936						958						(22)
Animal Nutrition			917						966						(49)
Total Nutrition			1,853						1,924						(71)
Other Business			103						107						(4)
Total			$	24,072					$	23,650					$	422

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Revenues increased $0.4 billion to $24.1 billion due to higher sales prices ($1.3 billion), partially offset by lower sales volumes ($0.9 billion). Higher sales prices of biodiesel, oils, and soybeans and higher sales volumes of corn and corn by-products, meal, and sweeteners were partially offset by lower sales prices of corn and wheat and lower sales volumes of oils and biodiesel. Ag Services and Oilseeds revenues increased 2% to $18.6 billion due to higher sales prices ($0.4 billion), partially offset by lower sales volumes ($0.1 billion). Carbohydrate Solutions revenues increased 5% to $3.5 billion due to higher sales prices ($0.8 billion), partially offset by lower sales volumes ($0.6 billion). Nutrition revenues decreased 4% to $1.9 billion due to lower sales volumes ($0.2 billion), partially offset by higher sales prices ($0.1 million).

Cost of products sold increased $0.2 billion to $22.0 billion due principally to higher average commodity costs and higher manufacturing expenses. Manufacturing expenses increased $0.3 billion to $1.9 billion due principally to increases in energy costs, maintenance expenses, salaries and benefit costs, commercial service fees, and operating supplies.

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

Gross profit increased $0.2 billion or 10%, to $2.1 billion due principally to higher results in Ag Services and Oilseeds ($257 million) and Starches and Sweeteners ($13 million), partially offset by lower results in Nutrition ($54 million) and Vantage Corn Processors ($34 million). These factors are explained in the segment operating profit discussion on page 37.

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

Asset impairment, exit, and restructuring costs increased $6 million to $7 million. Charges in the current quarter consisted of $3 million of impairments related to certain long-lived assets and $4 million of restructuring charges, presented as specified items within segment operating profit. Charges in the prior-year quarter consisted of immaterial charges.

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

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

Interest expense increased $55 million to $147 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs and customer deposit balances at ADM Investor Services. Interest expense in the current quarter also included a $5 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020, compared to a $15 million mark-to-market loss adjustment in the prior-year quarter.

Other income-net increased $11 million to $44 million. Income in the current quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, net foreign exchange gains, and other net income. Income in the prior-year quarter included the non-service components of net pension benefit income, net foreign exchange gains, and other net income.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Segment operating profit (loss), adjusted segment operating profit (a non-GAAP measure), and earnings before income taxes for the quarter are as follows:

			Three Months Ended
			March 31,
Segment Operating Profit (Loss)			2023						2022						Change
			(In millions)
Ag Services and Oilseeds
Ag Services			$	348					$	258					$	90
Crushing			426						428						(2)
Refined Products and Other			327						198						129
Wilmar			109						124						(15)
Total Ag Services and Oilseeds			1,210						1,008						202
Carbohydrate Solutions
Starches and Sweeteners			307						316						(9)
Vantage Corn Processors			(34)						1						(35)
Total Carbohydrate Solutions			273						317						(44)
Nutrition
Human Nutrition			138						141						(3)
Animal Nutrition			7						48						(41)
Total Nutrition			145						189						(44)
Other Business			97						42						55
Specified Items:
Gains on sales of assets and businesses			1						1						—
Asset impairment, restructuring, and settlement charges			(7)						(18)						11
Total Specified Items			(6)						(17)						11
Total Segment Operating Profit			$	1,719					$	1,539					$	180
Adjusted Segment Operating Profit(1)			$	1,725					$	1,556					$	169
Segment Operating Profit			$	1,719					$	1,539					$	180
Corporate			(322)						(268)						(54)
Earnings Before Income Taxes			$	1,397					$	1,271					$	126

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Ag Services and Oilseeds operating profit increased 20%. Ag Services results were higher than the first quarter of 2022. In South American origination, effective risk management and higher export demand due to the record Brazilian soybean crop drove significantly higher year-over-year results. Results for North America origination were also higher, driven by stronger soybean exports. In Global Trade, solid margins and efficient execution led to strong results. Crushing results were in-line with the prior-year quarter. In North America, the crushing business capitalized on historically strong soybean and softseed crush margins that were supported by robust demand for renewable fuels. In EMEA, crush margins were lower year-over-year as trade flows adjusted from the dislocations caused last year by the war in Ukraine. Additionally, positive timing effects, including positive impacts from declining crush margins, contributed to the results in the current quarter. Refined Products and Other results were higher than the prior-year quarter. North America biodiesel results were higher with record volumes and strong margins, supported by favorable blend economics and tight diesel stocks. In EMEA, domestic demand for food oil and export demand for biodiesel drove strong margins. Equity earnings from Wilmar were lower versus the first quarter of 2022.

Carbohydrate Solutions operating profit decreased 14%. Starches and Sweeteners capitalized on solid demand in the current quarter. North America starches and sweeteners delivered strong volumes and margins. Ethanol margins, pressured by high industry stock levels, were down relative to the prior-year quarter. In EMEA, the business effectively managed margins in a dynamic operating environment to deliver improved results. The global wheat milling business posted much higher margins driven by solid customer demand. Vantage Corn Processors results were significantly lower due to weaker ethanol margins.

Nutrition operating profit decreased 23%. Human Nutrition results were in-line with the first quarter of 2022, as the business continued to manage demand fulfillment challenges and destocking in certain categories. Flavors results were slightly lower than the prior-year quarter as strong results in EMEA were offset by lower results in North America. Specialty Ingredients results were higher year-over-year driven by healthy margins. Health and Wellness results were lower year-over-year. Animal Nutrition results were significantly lower compared to the prior-year quarter, primarily due to lower margins in amino acids.

Other Business operating profit increased $55 million. Higher interest income drove improved earnings in ADM Investor Services. Captive insurance results were in line with the prior-year quarter.

Corporate results for the quarter are as follows:

			Three Months Ended
			March 31,
			2023						2022						Change
			(In millions)
Interest expense-net			$	(103)					$	(76)					$	(27)
Unallocated corporate costs			(248)						(209)						(39)
Loss on sale of assets			—						(3)						3
Expenses related to acquisitions			—						(2)						2
Gain (loss) on debt conversion option			5						(15)						20
Restructuring adjustment			—						1						(1)
Other income			24						36						(12)
Total Corporate			$	(322)					$	(268)					$	(54)

Corporate results were a net charge of $322 million in the current quarter compared to a net charge of $268 million in the prior-year quarter. Interest expense-net increased $27 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs. Unallocated corporate costs increased $39 million due primarily to higher financing and centers of excellence costs. Gain (loss) on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other income in the current quarter included the non-service components of net pension benefit income of $4 million and foreign currency transaction gains of $22 million. Other income in the prior-year quarter included the non-service components of net pension benefit income of $6 million and an investment revaluation gain of $34 million, partially offset by foreign exchange losses.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Non-GAAP Financial Measures

The Company uses adjusted EPS, adjusted EBITDA, and adjusted segment operating profit, non-GAAP financial measures as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance. These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.

Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. Adjusted EBITDA is defined as earnings before interest on borrowings, taxes, depreciation, and amortization, adjusted for specified items. The Company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense on borrowings and depreciation and amortization to earnings before income taxes. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.

Management believes that adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are not intended to replace or be an alternative to diluted EPS, earnings before income taxes, and segment operating profit, respectively, the most directly comparable amounts reported under GAAP.

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

			Three months ended March 31,
			2023												2022
			In millions						Per share						In millions						Per share
Average number of shares outstanding - diluted			551												568
Net earnings and reported EPS (fully diluted)			$	1,170					$	2.12					$	1,054					$	1.86
Adjustments:
Loss (gain) on sales of assets and businesses - net of tax of $0 million (1)			(1)						—						2						—
Loss (gain) on debt conversion option - net of tax of $0 (1)			(5)						(0.01)						15						0.03
Asset impairment, restructuring, and settlement charges - net of tax of $2 million in 2023 and $3 million in 2022 (1)			5						0.01						14						0.02
Expenses related to acquisitions - net of tax of $1 million in 2022 (1)			—						—						1						—
Certain discrete tax adjustments			(18)						(0.03)						(4)						(0.01)
Total adjustments			(19)						(0.03)						28						0.04
Adjusted net earnings and adjusted EPS			$	1,151					$	2.09					$	1,082					$	1.90

(1) Tax effected using the U.S. and other applicable tax rates.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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

			Three months ended
			March 31,
(In millions)			2023						2022						Change
Earnings before income taxes			$	1,397					$	1,271					$	126
Interest expense			100						92						8
Depreciation and amortization			259						257						2
Gains (losses) on sales of assets and businesses			(1)						2						(3)
Expenses related to acquisitions			—						2						(2)
Asset impairment, restructuring, and settlement charges			7						17						(10)
Adjusted EBITDA			$	1,762					$	1,641					$	121
			Three months ended
			March 31,
(In millions)			2023						2022						Change
Ag Services and Oilseeds			$	1,300					$	1,096					$	204
Carbohydrate Solutions			352						396						(44)
Nutrition			210						254						(44)
Other Business			97						44						53
Corporate			(197)						(149)						(48)
Adjusted EBITDA			$	1,762					$	1,641					$	121

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources

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

Cash used in operating activities was $1.6 billion for the three months ended March 31, 2023 compared to a use of $1.2 billion for the same period last year. Working capital changes decreased cash by $2.9 billion for the three months ended March 31, 2023 compared to a decrease of $2.8 billion for the same period last year. Segregated investments increased approximately $0.9 billion driven by higher interest rates. Trade receivables decreased $0.5 billion due to lower revenues in the current quarter compared to the prior year fourth quarter. Inventories decreased approximately $0.1 billion due to lower inventory volumes, partially offset by higher inventory prices. Other current assets decreased $0.3 billion primarily due to decreases in margin deposits and grain accounts, customer omnibus receivable, and tax receivables. Trade payables decreased $1.6 billion due to lower payables related to grain purchases. Brokerage payables decreased approximately $0.5 billion due to decreased trading activity in the Company’s futures commission and brokerage business. Accrued expenses and other payables decreased $0.8 billion primarily due to decreases in contracts and futures losses, contract liability, and compensation accruals.

Cash used in investing activities was $0.3 billion for the three months ended March 31, 2023 compared to $0.3 billion for the same period last year. Capital expenditures for the three months ended March 31, 2023 were $0.3 billion compared to $0.2 billion for the same period last year. There were no additional cost method investments for the three months ended March 31, 2023 compared to $0.1 billion for the same period last year.

Cash provided by financing activities was $0.6 billion for the three months ended March 31, 2023 compared to cash provided of $3.3 billion for the same period last year. Long-term debt borrowings for the three months ended March 31, 2023 were immaterial compared to long-term debt borrowings for the same period last year of $0.8 billion which consisted of the $750 million aggregate principal amount of 2.900% Notes due 2032. Proceeds from the borrowings in the prior period were used to finance investments and expenditures in eligible green projects that contribute to environmental objectives and/or eligible social projects that aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes. Long-term debt payments were $2 million for the three months ended March 31, 2023 compared to an immaterial amount for the same period last year. Net borrowings on short-term credit agreements for the three months ended March 31, 2023 were $1.3 billion compared to $2.8 billion for the same period last year. Share repurchases for the three months ended March 31, 2023 were $0.4 billion compared to none for the same period last year. Dividends for the three months ended March 31, 2023 of $0.2 billion comparable to the same period last year.

At March 31, 2023, the Company had $0.9 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.5 to 1. Included in working capital was $9.2 billion of readily marketable commodity inventories. At March 31, 2023, the Company’s capital resources included shareholders’ equity of $24.9 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $13.3 billion, of which $8.9 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 24% at March 31, 2023 and December 31, 2022. The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility. The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was 28% and 25% at March 31, 2023 and December 31, 2022, respectively. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was $0.8 billion commercial paper outstanding at March 31, 2023.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

As of March 31, 2023, the Company had $0.9 billion of cash and cash equivalents, $0.5 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested. Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of $5.2 billion, the Company has asserted that 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. The Programs provide the Company with up to $2.9 billion in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 14 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of March 31, 2023, the Company had $0.3 billion unused capacity of its facility under the Programs.

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

For the three months ended March 31, 2023, the Company spent approximately $0.3 billion in capital expenditures, $0.2 billion in dividends, and $0.4 billion in share repurchases. The Company has a stock repurchase program. Under the program, the Company has 83.4 million shares remaining as of March 31, 2023 that may be repurchased until December 31, 2024.

On April 3, 2023, the Company issued $500 million aggregate principal amount of 4.500% Notes due in August 15, 2033. Net proceeds before expenses were $493 million. Proceeds of the borrowings will be used for general corporate purposes which may include repayment of commercial paper borrowings.

In 2023, the Company expects total capital expenditures of approximately $1.3 billion and additional cash outlays of approximately $1.0 billion in dividends and $1.0 billion in opportunistic share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of March 31, 2023 and December 31, 2022 were $14.5 billion and $15.8 billion, respectively. The decrease is primarily related to obligations to purchase lower quantities of agricultural commodity inventories. As of March 31, 2023, the Company expects to make payments related to purchase obligations of $13.7 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended March 31, 2023.

Off Balance Sheet Arrangements

In March 2023, the Company amended its Second Program with certain commercial and conduit purchasers and committed purchasers and increased its facility from €0.8 billion ($0.9 billion) to €1.0 billion ($1.1 billion). The Second Program terminates on February 20, 2024 unless extended. There were no other material changes in the Company’s off balance sheet arrangements during the quarter ended March 31, 2023.

Critical Accounting Policies and Estimates

There were no material changes in the Company’s critical accounting policies and estimates during the quarter ended March 31, 2023. For a description of the Company’s critical accounting policies, estimates, and assumptions used in the preparation of the Company’s financial statements, see Part II, Item 7 and Note 1 of “Notes to Consolidated Financial Statements” included in Part II, Item 8, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company’s market risk sensitive instruments and positions is the potential loss arising from adverse changes in: commodity market prices as they relate to the Company’s net commodity position, foreign currency exchange rates, and interest rates. Significant changes in market risk sensitive instruments and positions for the quarter ended March 31, 2023 are described below. There were no material changes during the period in the Company’s potential loss arising from changes in foreign currency exchange rates and interest rates.

For detailed information regarding the Company’s market risk sensitive instruments and positions, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Commodities

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

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

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

						Three months ended												Year ended
						March 31, 2023												December 31, 2022
Long/(Short) (In millions)						Fair Value						Market Risk						Fair Value						Market Risk
Highest position						$	498					$	50					$	986					$	99
Lowest position						256						26						44						4
Average position						367						37						388						39

The change in fair value of the average position was due to the overall decrease in average quantities, partially offset by the increase in prices of certain commodities.

As of March 31, 2023, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. There was no change in the Company’s internal controls over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

During 2018, the Company launched an initiative called Readiness to drive new efficiencies and improve the customer experience in the Company’s existing businesses through a combination of data analytics, process simplification and standardization, and behavioral and cultural change, building upon its earlier 1ADM and operational excellence programs. As part of this transformation, the Company is implementing a new enterprise resource planning (ERP) system on a worldwide basis, which is expected to occur in phases over the next several years. During the quarter ended March 31, 2023, there were no deployments of the ERP system. The Company continues to consider these changes in its design of and testing for effectiveness of internal controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, that the implementation of the new ERP system in these circumstances has not materially affected its internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is routinely involved in a number of actual or threatened legal actions, including those involving alleged personal injuries, employment law, product liability, intellectual property, environmental issues, alleged tax liability (see Note 9 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for information on income tax matters), and class actions. The Company also routinely receives inquiries from regulators and other government authorities relating to various aspects of our business, and at any given time, the Company has matters at various stages of resolution. The outcomes of these matters are not within our complete control and may not be known for prolonged periods of time. In some actions, claimants seek damages, as well as other relief including injunctive relief, that could require significant expenditures or result in lost revenues. In accordance with applicable accounting standards, the Company records a liability in its consolidated financial statements for material loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a material loss contingency is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages, with incomplete facts or legal discovery; involve unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, disgorgement, or punitive damages; or could result in a change in business practice.

On September 4, 2019, AOT Holding AG (“AOT”) filed a putative class action under the U.S. Commodities Exchange Act in federal district court in Urbana, Illinois, alleging that the Company sought to manipulate the benchmark price used to price and settle ethanol derivatives traded on futures exchanges. On March 16, 2021, AOT filed an amended complaint adding a second named plaintiff Maize Capital Group, LLC (“Maize”). AOT and Maize allege that members of the putative class collectively suffered damages calculated to be between approximately $500 million to over $2.0 billion as a result of the Company’s alleged actions. On July 14, 2020, Green Plains Inc. and its related entities (“GP”) filed a putative class action lawsuit, alleging substantially the same operative facts, in federal court in Nebraska, seeking to represent sellers of ethanol. On July 23, 2020, Midwest Renewable Energy, LLC (“MRE”) filed a putative class action in federal court in Illinois alleging substantially the same operative facts and asserting claims under the Sherman Act. On November 11, 2020, United Wisconsin Grain Producers LLC (“UWGP”) and five other ethanol producers filed a lawsuit in federal court in Illinois alleging substantially the same facts and asserting claims under the Sherman Act and Illinois, Iowa, and Wisconsin law. The court granted ADM’s motion to dismiss the MRE and UWGP complaints without prejudice on August 9, 2021 and September 28, 2021, respectively. On August 16, 2021, the court granted ADM’s motion to dismiss the GP complaint, dismissing one claim with prejudice and declining jurisdiction over the remaining state law claim. MRE filed an amended complaint on August 30, 2021, which ADM moved to dismiss on September 27, 2021. UWGP filed an amended complaint on October 19, 2021, which the court dismissed on July 12, 2022. UWGP has appealed the dismissal to the United States Court of Appeals for the Seventh Circuit. On October 26, 2021, GP filed a new complaint in Nebraska federal district court, alleging substantially the same facts and asserting a claim for tortious interference with contractual relations. On March 18, 2022, the Nebraska federal district court granted ADM’s motion to transfer the GP case back to the Central District of Illinois for further proceedings. ADM moved to dismiss the complaint on May 20, 2022 and on December 30, 2022, the court dismissed GP’s complaint with prejudice. GP has appealed the dismissal. The Company denies liability, and is vigorously defending itself in these actions. As these actions are in pretrial proceedings, the Company is unable at this time to predict the final outcome with any reasonable degree of certainty, but believes the outcome will not have a material adverse effect on its financial condition, results of operations, or cash flows.

The Company is not currently a party to any legal proceeding or environmental claim that it believes would have a material adverse effect on its financial position, results of operations, or liquidity.

There were no significant changes in the Company’s risk factors during the quarter ended March 31, 2023. For further information about the Company’s risk factors, refer to Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 a Publicly Announced Program**(2)**						Number of Shares Remaining that May be Purchased Under the Program**(2)**
January 1, 2023 to
January 31, 2023						71,704						$	84.012					71,445						87,740,560
February 1, 2023 to
February 28, 2023						3,400,945						82.029						2,085,050						85,655,510
March 1, 2023 to
March 31, 2023						2,208,616						78.371						2,208,616						83,446,894
Total						5,681,265						$	80.632					4,365,111						83,446,894

(1)Total shares purchased represents those shares purchased in the open market as part of the Company’s publicly announced share repurchase program described below, shares received as payment for the exercise price of stock option exercises, and shares received as payment for the withholding taxes on vested restricted stock awards. During the three-month period ended March 31, 2023, there were 1,316,154 shares received as payments for the minimum withholding taxes on vested restricted stock awards and for the exercise price of stock option exercises.

(2)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.

(3)(i)						Composite Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2001).
(3)(ii)						Bylaws, as amended through November 2, 2022 (incorporated by reference to Exhibit 3(ii) to the Company’s Annual Report on Form 10-K filed on February 14, 2023).
(4.1)						Form of 4.500% Notes due 2033 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 3, 2023).
(10.1)						Form of Performance Share Unit Award Agreement under the Company’s 2020 Incentive Compensation Plan.
(10.2)						Form of Restricted Stock Unit Award Agreement under the Company’s 2020 Incentive Compensation Plan.
(31.1)						Certification of Chief Executive Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act of 1934, as amended.
(31.2)						Certification of Chief Financial Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act of 1934, as amended.
(32.1)						Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.2)						Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(101)						Inline XBRL file set for the consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
(104)						Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL file set.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			ARCHER-DANIELS-MIDLAND COMPANY
			/s/ V. Luthar
			V. Luthar
			Senior Vice President and Chief Financial Officer
			/s/ D. C. Findlay
			D. C. Findlay
			Senior Vice President, General Counsel, and Secretary

Dated: April 25, 2023