Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Overview

This MD&A should be read in conjunction with the accompanying unaudited consolidated financial statements.

ADM is an indispensable global agricultural supply chain manager and processor; a premier human and animal nutrition provider; a trailblazer in groundbreaking solutions to support healthier living; an industry-leading innovator in replacing petroleum-based products; and a company concerned about sustainability. The Company is one of the world’s leading producers of ingredients for sustainable nutrition. The Company uses its significant global asset base to originate and transport agricultural commodities, connecting to markets in over 190 countries. The Company also processes corn, oilseeds, and wheat into products for food, animal feed, industrial, and energy uses. The Company also engages in the manufacturing, sale, and distribution of a wide array of ingredients and solutions including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, and other specialty food and feed ingredients. The Company uses its global asset network, business acumen, and its relationships with suppliers and customers to efficiently connect the harvest to the home thereby generating returns for its shareholders, principally from margins earned on these activities.

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. The Company’s remaining operations are not reportable business segments, as defined by the applicable accounting standard, and are classified as Other Business. Financial information with respect to the Company’s reportable business segments is set forth in Note 12 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”.

ADM’s recent significant portfolio actions and announcements include:

the opening in February 2023 of a new production facility in Valencia, Spain to help meet rising global demand for probiotics, postbiotics, and other products that support health and well-being;
the announcement in March 2023 of the signing of a joint venture agreement with Marel, a leading provider of advanced food processing solutions, to build an innovation center in the heart of the Netherlands food valley at the Wageningen Campus, subject to regulatory approvals;
the announcement in May 2023 of a Strategic Development Agreement with Air Protein, a pioneer in air-based nutritional protein that requires no agriculture or farmland, decoupling protein production from traditional supply chain risks, to collaborate on research and development to further advance new and novel proteins for nutrition;
the announcement in May 2023 of an agreement to acquire D.C.A. Finance B.V., a commodity derivative brokerage service provider, subject to required regulatory approvals;
the announcement in June 2023 of the opening of a new Customer Creation and Innovation Center in Manchester, England, serving as a United Kingdom (UK) hub for food innovation and building upon ADM’s strong presence in the UK and;
the launch in July 2023 of a growth initiative of its re:generations™ regenerative agriculture program that will drive expansion to cover 2 million acres across 18 U.S. states and Canada in 2023, and 4 million acres globally by 2025.

Sustainability is a key driver in ADM’s expanding portfolio of environmentally responsible, plant-derived products. Consumers today increasingly expect their food and drink to come from sustainable ingredients, produced by companies that share their values, and ADM is continually finding new ways to meet those needs through its portfolio actions.

The Company’s strategic transformation is focused on three strategic pillars: Productivity, Innovation, and Culture.

The Productivity pillar includes (1) partnering across various global teams including procurement, supply chain, operations, and commercial to optimize costs and improve production volumes across the enterprise; (2) continued roll out of the 1ADM business transformation program and implementation of improved standardized business processes; and (3) increased use of technology, data analytics, and automation at production facilities, in offices, and with customers to improve efficiencies and customer service.

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

The Innovation pillar includes expansions and investments in (1) improving the customer experience by leveraging producer relationships and enhancing the use of state-of-the-art digital technology; (2) sustainability-driven innovation, which encompasses the full range of products, solutions, capabilities, and commitments to serve customers’ needs; and (3) growth initiatives, including organic growth with additional capacity to meet growing market demand and strategic objectives.

The Culture pillar focuses on building capabilities and enabling collaboration, teamwork, and agility from process standardization and digitalization and ADM’s diversity, equity, and inclusion initiatives, which bring new perspectives and expertise to the Company’s decision-making.

ADM will support the three pillars with investments in technology, which include expanding digital capabilities and investing further in research and development. All of these efforts will continue to be strengthened by the Company’s ongoing commitment to its Readiness initiative as described in Part I Item 4 “Controls and Procedures” on page 55.

Environmental and Social Responsibility

The Company’s policy to protect forests, biodiversity, and communities includes provisions that promote conservation of water resources and biodiversity in agricultural landscapes, promote solutions to reduce climate change and greenhouse gas emissions, and support agriculture as a means to advance sustainable development by reducing poverty and increasing food security. Additionally, the policy confirms ADM’s commitment to protect human rights defenders, whistleblowers, complainants, and community spokespersons; ADM’s aspiration to cooperate with all parties necessary to enable access to fair and just remediation; and the Company’s non-compliance protocol for suppliers. In 2022, the Company achieved full traceability of its direct and indirect sourcing throughout its soy supply chains in Brazil, Paraguay, and Argentina. ADM aims to eliminate deforestation from all of the Company’s supply chains by 2025.

The Company’s environmental goals, collectively called “Strive 35” – an ambitious plan to, by 2035, reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 25 percent from a 2019 baseline, reduce absolute Scope 3 emissions by 25 percent, reduce energy intensity by 15 percent, reduce water intensity by 10 percent, and achieve a 90 percent landfill diversion rate – are part of an aggressive plan to continue to reduce the Company’s environmental footprint.

Operating Performance Indicators

The Company is exposed to certain risks inherent to an agricultural-based commodity business. These risks are further described in Part I Item 1A, “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The Company’s Ag Services and Oilseeds operations are principally agricultural commodity-based businesses where changes in

selling prices move in relationship to changes in prices of the commodity-based agricultural raw materials. As a result, changes in agricultural commodity prices have relatively equal impacts on both revenues and cost of products sold. Therefore, changes in revenues of these businesses do not necessarily correspond to changes in margins or gross profit. Thus, gross margins per volume or metric ton are more meaningful than gross margins as percentage of revenues.

The Company’s Carbohydrate Solutions operations and Nutrition businesses also utilize agricultural commodities (or products derived from agricultural commodities) as raw materials. However, in these operations, agricultural commodity market price changes do not necessarily correlate to changes in cost of products sold. Therefore, changes in revenues of these businesses may correspond to changes in margins or gross profit. Thus, gross margins rates are more meaningful as a performance indicator in these businesses.

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

The Company has consolidated subsidiaries in more than 70 countries. For the majority of the Company’s subsidiaries located outside the United States, the local currency is the functional currency except for certain significant subsidiaries in Switzerland where Euro is the functional currency, and Brazil and Argentina where U.S. dollar is the functional currency. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the weighted average exchange rates for the applicable periods. For the majority of the Company’s business activities in Brazil and Argentina, the functional currency is the U.S. dollar; however, certain transactions, including taxes, occur in local currency and require remeasurement to the functional currency. Changes in revenues are expected to be correlated to changes in expenses reported by the Company caused by fluctuations in the exchange rates of foreign currencies, primarily the Euro, British pound, Canadian dollar, and Brazilian real, as compared to the U.S. dollar. Effective April 1, 2022, the Company changed the functional currency of its Turkish entities to the U.S. dollar which did not and is not expected to have a material impact on the Company’s consolidated financial statements.

The Company measures its performance using key financial metrics including net earnings, adjusted earnings per share (EPS), gross margins, constant currency revenue and operating profit, segment operating profit, adjusted segment operating profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, return on invested capital, economic value added, and operating cash flows before working capital. Some of these metrics are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures. For more information, see “Non-GAAP Financial Measures” on pages 44 to 45 and 51 to 52. The Company’s financial results can vary significantly due to changes in factors such as fluctuations in energy prices, weather conditions, crop plantings, government programs and policies, trade policies, changes in global demand, general global economic conditions, changes in standards of living, global production of similar and competitive crops, and geopolitical developments. Due to the unpredictable nature of these and other factors, the Company undertakes no responsibility for updating any forward-looking information contained within “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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. 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 0.2% of consolidated revenues, the direct and indirect impacts of the ongoing military action could negatively affect ADM’s future operating results. The conflict in Ukraine has created disruptions in global supply chains and has created dislocations of key agricultural commodities. The indirect impact of these dislocations on the Company’s operating results will be a function of a number of variables including supply and demand responses from the rest of the world as well as the length of the conflict and the condition of the agricultural industry and export infrastructure after the conflict ends. The Black Sea Grain Initiative, an agreement that allowed Ukraine to export grain and other food products, expired on July 17, 2023. In September 2023, a new alternative shipping corridor in the Black Sea took effect with Ukraine setting up temporary route from ports in Greater Odessa. 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 September 30, 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.

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

Market Factors Influencing Operations or Results in the Three Months Ended September 30, 2023

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, supply has been impacted by market dislocations driven by geopolitical uncertainty, longer Brazilian export season, and low North American water levels. Crushing was impacted by renewable fuel demand, adequate crop supplies, and protein consumption around the globe. In Refined Products and Other, margins were driven by renewable fuel demand and biodiesel market volatility. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio. Ethanol’s extremely favorable price as an oxygenate relative to competing petroleum-based oxygenates supported demand. Discretionary blending was supported by the ethanol blend economics on the domestic front. The U.S. remained as the main supplier for ethanol exports as the world dynamics for sugar shifted Brazil to favor sugar production over ethanol. In Nutrition, demand was softer in a few food and beverage product categories. Human Nutrition was impacted by inflation which drove lower demand especially in higher priced product categories in the food, beverage, and dietary supplement segment and impacted volumes in flavors, flavor systems, emulsifiers, bioactives, and alternative proteins. In Animal Nutrition, amino acids margins were pressured due to competition returning to the 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 farms, 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 September 30, 2023 Compared to Three Months Ended September 30, 2022

Net earnings attributable to controlling interests decreased $0.2 billion from $1.0 billion to $0.8 billion. Segment operating profit decreased $0.1 billion from $1.6 billion to $1.4 billion and included a net charge of $71 million consisting of asset impairment and restructuring charges and a contingency loss adjustment totaling $69 million and a loss on the sale of certain assets of $2 million. Included in segment operating profit in the prior-year quarter was a net charge of $20 million consisting of charges totaling $49 million related to the impairment of certain assets, restructuring, and a contingency/settlement, partially offset by gains on the sale of certain assets of $29 million. Adjusted segment operating profit (a non-GAAP measure) decreased $0.1 billion to $1.5 billion due primarily to lower results in Wilmar, Crushing, Ag Services, and Nutrition, partially offset by higher results in Carbohydrate Solutions, Refined Products and Other, and Other Business. Corporate results in the current quarter were a net charge of $390 million. Corporate results in the prior-year quarter were a net charge of $329 million and included a mark-to-market gain of $8 million on the conversion option of the exchangeable bonds issued in August 2020.

Income tax expense increased $14 million to $207 million. The effective tax rate for the quarter ended September 30, 2023 was 20.1% compared to 15.7% for the quarter ended September 30, 2022. The increase in the rate was primarily due to changes in the geographic mix of forecasted pretax earnings.

Analysis of Statements of Earnings

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


	Three Months Ended
	September 30,
(In thousands)	2023	2022	Change
Oilseeds	8,648	7,688	960
Corn	4,507	4,381	126
Total	13,155	12,069	1,086

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 decreased crush rates in the prior-year quarter resulting from the decline in canola crop due to the drought condition in North America and a temporarily idled facility in Paraguay due to reduced crop. The overall increase in corn processed volumes was related to higher grind for fuel alcohol, partially offset by lower export volumes for amino acids and unplanned downtime from the recent Decatur, Illinois incident.

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

Revenues by segment for the quarter are as follows:


	Three Months Ended
	September 30,
	2023		2022		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	10,198	$	12,537	$	(2,339)
Crushing	3,352		3,220		132
Refined Products and Other	2,929		3,384		(455)
Total Ag Services and Oilseeds	16,479		19,141		(2,662)

Carbohydrate Solutions
Starches and Sweeteners	2,448		2,680		(232)
Vantage Corn Processors	877		901		(24)
Total Carbohydrate Solutions	3,325		3,581		(256)

Nutrition
Human Nutrition	900		906		(6)
Animal Nutrition	884		958		(74)
Total Nutrition	1,784		1,864		(80)

Other Business	107		97		10

Total	$	21,695	$	24,683	$	(2,988)

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.

Revenues decreased $3.0 billion to $21.7 billion due to lower sales prices ($4.2 billion), partially offset by higher sales volumes ($1.2 billion). Lower sales prices of oils, corn, soybeans, biodiesel, farming materials, wheat, canola seed, and meal and lower sales volumes of corn and milled rice, were partially offset by higher sales volumes of biodiesel, meal, oils, soybeans, canola seed, and farming materials. Ag Services and Oilseeds revenues decreased 14% to $16.5 billion due to lower sales prices ($4.3 billion), partially offset by higher sales volumes ($1.6 billion). Carbohydrate Solutions revenues decreased 7% to $3.3 billion due to lower sales volumes ($0.2 billion). Nutrition revenues decreased 4% to $1.8 billion due to lower sales volumes ($0.2 billion), partially offset by higher sales prices ($0.1 billion).

Cost of products sold decreased $3.0 billion to $19.9 billion due principally to lower average commodity costs. Manufacturing expenses increased $19 million to $1.8 billion due principally to increases in salaries and benefit costs and commercial service fees, partially offset by decreases in maintenance expenses and operating supplies.

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

Gross profit was unchanged at $1.8 billion. Higher results in Carbohydrate Solutions ($139 million) and Refined Products and Other ($34 million) were offset by lower results in Ag Services ($71 million), Human Nutrition ($63 million), and Crushing ($55 million). These factors are explained in the segment operating profit discussion on page 43.

Selling, general, and administrative expenses decreased $3 million to $815 million due primarily to lower provisions for bad debt, partially offset by higher salaries and benefit costs.

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

Asset impairment, exit, and restructuring costs increased $51 million to $79 million. Charges in the current quarter consisted of $74 million of impairments related to certain long-lived assets and intangibles and $3 million of restructuring, presented as specified items within segment operating profit, and restructuring of $2 million in Corporate. Intangibles impairments in the current quarter of $37 million was related to discontinued animal nutrition trademarks in the Nutrition segment. Charges in the prior-year quarter consisted of $16 million of impairments related to long-lived assets and $12 million of restructuring, presented as specified items within segment operating profit.

Equity in earnings of unconsolidated affiliates decreased $127 million to $83 million due primarily to lower earnings from the Company’s investments in Wilmar and Skyland Grain, LLC.

Interest and investment income increased $67 million to $152 million due primarily to higher interest income driven by higher interest rates.

Interest expense increased $58 million to $155 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services and on the Company’s commercial paper borrowing programs. Interest expense in the prior-year quarter also included a mark-to-market gain adjustment of $8 million related to the conversion option of the exchangeable bonds issued in August 2020.

Other income-net decreased $32 million to $35 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, and net foreign exchange gains, and net other income. Income in the prior-year quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and net foreign exchange gains.

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
	September 30,
Segment Operating Profit (Loss)	2023		2022		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	226	$	292	$	(66)
Crushing	250		346		(96)
Refined Products and Other	337		295		42
Wilmar	35		142		(107)
Total Ag Services and Oilseeds	848		1,075		(227)

Carbohydrate Solutions
Starches and Sweeteners	395		327		68
Vantage Corn Processors	65		(18)		83
Total Carbohydrate Solutions	460		309		151

Nutrition
Human Nutrition	118		146		(28)
Animal Nutrition	20		31		(11)
Total Nutrition	138		177		(39)

Other Business	46		18		28

Specified Items:
Gain (loss) on sales of assets and businesses	(2)		29		(31)
Impairment, restructuring, and settlement charges, net of a contingency adjustment	(69)		(49)		(20)

Total Specified Items	(71)		(20)		(51)

Total Segment Operating Profit	$	1,421	$	1,559	$	(138)

Adjusted Segment Operating Profit(1)	$	1,492	$	1,579	$	(87)

Segment Operating Profit	$	1,421	$	1,559	$	(138)
Corporate	(390)		(329)		(61)
Earnings Before Income Taxes	$	1,031	$	1,230	$	(199)

(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 decreased 21%. Ag Services results were lower than the strong third quarter of 2022. South American origination results were higher year-over-year, as the business delivered significantly higher volumes and margins on strong export demand. Results for North America origination were lower year-over-year, driven by shift of exports to South America. Effective risk management and higher volumes and margins in global trade led to strong results, however, lower year-over-year. The current quarter also included a $48 million insurance settlement related to damages from Hurricane Ida. Crushing results were lower than the prior-year’s record third quarter. Global soy crush margins remained robust, but lower than the strong levels of the prior-year quarter. In EMEA, the business continued to optimize its flex capacity to higher margin softseeds, in-line with market opportunities. Positive mark-to-market timing effects contributed to the current quarter’s results, however, lower than the net positive impacts from the prior-year quarter. Refined Products and Other results were higher than the prior-year quarter. EMEA results were higher year-over-year as strong export demand for biodiesel and domestic demand for food oil supported higher margins. Additionally, net positive mark-to-market timing effects that are expected to reverse as contracts execute in future periods contributed to the current quarter’s results. Equity earnings from Wilmar were significantly lower versus the third quarter of 2022.

Carbohydrate Solutions operating profit increased 49%. Starches and Sweeteners results, including ethanol production from the wet mills, were higher year-over-year on a steady demand environment. North America starches and sweeteners delivered higher margins on similar volumes versus the prior-year quarter and capitalized on a strong ethanol backdrop. The global wheat milling business posted higher margins on similar volumes, supported by steady customer demand. Vantage Corn Processors results were significantly higher year-over-year as the business executed on a robust demand and margin environment for ethanol.

Nutrition operating profit decreased 22%. Human Nutrition results were lower than the third quarter of 2022. Flavors results were substantially higher than the prior-year quarter, driven by pricing actions in EMEA and strong win rates pipeline in North America. Specialty Ingredients results were lower year-over-year due to continued lower market demand for plant-based proteins in meat alternatives, inventory adjustments, and unplanned downtime resulting from the recent Decatur, Illinois incident. In Health and Wellness, a favorable impact related to a revised commercial agreement as well as stronger probiotics sales, led to higher results versus the prior-year quarter. Animal Nutrition results were lower compared to the same quarter last year due to lower contributions from amino acids and persistent demand fulfillment challenges in pet solutions, partially offset by cost management optimization actions and improving volumes.

Other Business operating profit increased $28 million. Higher net interest income drove improved earnings in ADM Investor Services. Captive insurance results were lower on higher claim settlements, partially offset by premiums from new programs.

Corporate results for the quarter are as follows:


	Three Months Ended
	September 30,
	2023		2022		Change
	(In millions)

Interest expense-net	$	(98)	$	(76)	$	(22)
Unallocated corporate costs	(298)		(251)		(47)

Expenses related to acquisitions	(3)		—		(3)

Gain on debt conversion option	—		8		(8)
Restructuring charges	(2)		—		(2)
Other income	11		(10)		21
Total Corporate	$	(390)	$	(329)	$	(61)

Corporate results were a net charge of $390 million in the current quarter compared to a net charge of $329 million in the prior-

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

year quarter. Interest expense-net increased $22 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs. Unallocated corporate costs increased $47 million due primarily to higher information technology costs. Gain on debt conversion option in the prior-year quarter was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other income in the current quarter included foreign exchange gains and the non-service components of net pension benefit income of $4 million, partially offset by railroad maintenance expenses of $26 million. Other expense in the prior-year quarter included railroad maintenance expenses of $32 million, partially offset by the non-service components of net pension benefit income of $7 million and foreign exchange gains.

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 September 30, 2023 and 2022.


	Three months ended September 30,
	2023				2022
	In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	540				563

Net earnings and reported EPS (fully diluted)	$	821	$	1.52	$	1,031	$	1.83
Adjustments:

Loss (gain) on sales of assets and businesses - net of tax of $0 million in 2023 and $7 million in 2022 (1)	2		—		(22)		(0.04)
Gain on debt conversion option - net of tax of $0 (1)	—		—		(8)		(0.01)
Impairment, restructuring, and settlement charges, net of a contingency adjustment - net of tax of $17 million in 2023 and $9 million in 2022 (1)	54		0.10		40		0.07
Expenses related to acquisitions - net of tax of $0 million (1)	3		0.01		—		—
Certain discrete tax adjustments	—		—		7		0.01
Total adjustments	59		0.11		17		0.03
Adjusted net earnings and adjusted EPS	$	880	$	1.63	$	1,048	$	1.86

(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 September 30, 2023 and 2022.


	Three months ended
	September 30,
(In millions)	2023		2022		Change
Earnings before income taxes	$	1,031	$	1,230	$	(199)
Interest expense	97		97		—
Depreciation and amortization	261		260		1
(Gain) loss on sales of assets and businesses	2		(29)		31

Expenses related to acquisitions	3		—		3
Railroad maintenance expenses	26		32		(6)
Impairment, restructuring, and settlement charges, net of a contingency adjustment	71		49		22
Adjusted EBITDA	$	1,491	$	1,639	$	(148)


	Three months ended
	September 30,
(In millions)	2023		2022		Change


Ag Services and Oilseeds	$	937	$	1,166	$	(229)
Carbohydrate Solutions	538		391		147
Nutrition	205		242		(37)
Other Business	44		35		9
Corporate	(233)		(195)		(38)
Adjusted EBITDA	$	1,491	$	1,639	$	(148)

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

Market Factors Influencing Operations or Results in the Nine Months Ended September 30, 2023

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, supply has been impacted by market dislocations driven by geopolitical uncertainty, record world soybean production, and extreme drought conditions in Argentina. Inflationary pressures impacted the entire value chain. Crushing was impacted by sustainable biofuel demand and protein consumption around the globe. In Refined Products and Other, margins were driven by strong oil demand and elevated oil values that were supported by biofuels demand, driven by favorable blend economics due to historically low distillate levels. Mediocre growth in mandated renewable volume obligations for 2023 to 2025 drove further market volatility. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio. Industry ethanol inventories were restrained as production slowed due to seasonal maintenance at processing plants and strong domestic demand heading into the summer driving season. Solid export demand for ethanol supported the improved balance 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, bioactives, and alternative proteins. In Animal Nutrition, amino acids margins were pressured due to competition returning to the 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 EMEA, and animal disease impacts on farms, 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.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Net earnings attributable to controlling interests decreased $0.4 billion to $2.9 billion. Segment operating profit decreased $0.3 billion to $4.7 billion and included a net charge of $180 million consisting of asset impairment and restructuring charges and contingency provisions totaling $190 million and a gain on the sale of certain assets of $10 million. Included in segment operating profit in the prior period was a net charge of $46 million consisting of charges totaling $76 million related to the impairment of certain assets, restructuring, and a contingency/settlement, partially offset by gains on the sale of certain assets of $30 million. Adjusted segment operating profit (a non-GAAP measure) decreased $0.1 billion to $4.8 billion due primarily to lower results in Crushing, Wilmar, Nutrition, Carbohydrate Solutions, and Ag Services, partially offset by higher results in Refined Products and Other and Other Business. Corporate results in the current period were a net charge of $1.1 billion and included a mark-to-market gain of $6 million on the conversion option of the exchangeable bonds issued in August 2020. Corporate results in the prior period were a net charge of $0.9 billion and included a mark-to-market gain of $12 million on the conversion option of the exchangeable bonds issued in August 2020.

Income taxes of $636 million decreased $43 million. The Company’s effective tax rate for the nine months ended September 30, 2023 was 17.9% compared to 16.9% for the nine months ended September 30, 2022. The increase in the rate was primarily due to changes in the geographic mix of forecasted pretax earnings.

Analysis of Statements of Earnings

Processed volumes by product for the nine months ended September 30, 2023 and 2022 are as follows (in metric tons):


	Nine Months Ended
	September 30,
(In thousands)	2023	2022	Change
Oilseeds	26,058	24,387	1,671
Corn	13,349	13,969	(620)
Total	39,407	38,356	1,051

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

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall increase in oilseeds processed volumes was primarily related to improved crush rates in the current period compared to decreased crush rates in the prior period resulting from the decline in global demand for rapeseed and the decline in canola crop due to the drought condition in North America and a temporarily idled facility in Paraguay due to reduced crop. The overall decrease in corn processed volumes was related to unplanned downtime from the recent Decatur, Illinois incident and due to the earthquake in Turkey and fire at the Cedar Rapids, Iowa dry mill.

Revenues by segment for the nine months ended September 30, 2023 and 2022 are as follows:


	Nine Months Ended
	September 30,
	2023		2022		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	35,259	$	38,717	$	(3,458)
Crushing	10,515		9,804		711
Refined Products and Other	9,128		10,302		(1,174)
Total Ag Services and Oilseeds	54,902		58,823		(3,921)

Carbohydrate Solutions
Starches and Sweeteners	7,660		7,697		(37)
Vantage Corn Processors	2,583		3,001		(418)
Total Carbohydrate Solutions	10,243		10,698		(455)

Nutrition
Human Nutrition	2,802		2,884		(82)
Animal Nutrition	2,688		2,907		(219)
Total Nutrition	5,490		5,791		(301)

Other Business	322		305		17
Total	$	70,957	$	75,617	$	(4,660)

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

Revenues decreased $4.7 billion to $71.0 billion due to lower sales prices ($6.8 billion), partially offset by higher sales volumes ($2.1 billion). Lower sales prices of oils, soybeans, biodiesel, farming materials, and corn and lower sales volumes of corn, were partially offset by higher sales volumes of soybeans and biodiesel. Ag Services and Oilseeds revenues decreased 7% to $54.9 billion due to lower sales prices ($6.8 billion), partially offset by higher sales volumes ($2.9 billion). Carbohydrate Solutions revenues decreased 4% to $10.2 billion due to lower sales volumes ($0.1 billion) and lower sales prices ($0.4 billion). Nutrition revenues decreased 5% to $5.5 billion due to lower sales volumes ($0.7 billion), partially offset by higher sales prices ($0.4 billion).

Cost of products sold decreased $4.6 billion to $65.2 billion due principally to lower average commodity costs partially offset by higher manufacturing expenses. Manufacturing expenses increased $0.4 billion to $5.5 billion due principally to increases in energy costs, maintenance expenses, salaries and benefit costs, commercial service fees, and lease expense.

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

Foreign currency translation decreased revenues and cost of products sold by $74 million and $47 million, respectively.

Gross profit decreased $0.0 billion or 1% to $5.8 billion due principally to lower results in Crushing ($287 million) and Nutrition ($151 million), partially offset by higher results in Refined Products and Other ($364 million), Vantage Corn Processors ($19 million), and Ag Services ($18 million). These factors are explained in the segment operating profit discussion on page 50.

Selling, general, and administrative expenses increased $0.1 billion to $2.5 billion due primarily to higher salaries and benefit costs, increased expenses for contracted outside labor, and higher professional and financing fees, partially offset by decreased provisions for bad debt.

Asset impairment, exit, and restructuring costs increased $116 million to $146 million. Charges in the current period consisted of $120 million of impairments related to certain long-lived assets and intangibles and $21 million of restructuring, presented as specified items within segment operating profit, and $5 million of restructuring in Corporate. Intangibles impairments in the current period of $62 million was primarily related to discontinued animal nutrition trademarks in the Nutrition segment. Charges in the prior period consisted of $20 million of impairments related to certain long-lived assets and $12 million of restructuring, presented as specified items within segment operating profit, and a $2 million restructuring adjustment in Corporate.

Equity in earnings of unconsolidated affiliates decreased $198 million to $408 million due primarily to lower earnings from the Company’s investments in Wilmar, Skyland Grain, LLC, and Almidones Mexicanos S.A., partially offset by higher earnings from ADM’s investment in Olenex Sarl.

Interest and investment income increased $252 million to $428 million due primarily to higher interest income, partially offset by revaluation gains of $37 million in the prior period.

Interest expense increased $220 million to $482 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services and on the Company’s commercial paper borrowing programs and increased interest expense from new debt issuances. Interest expense in the current period also included a $6 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 compared to a $12 million mark-to-market gain adjustment in the prior period.

Other income-net decreased $67 million to $116 million. Income in the current period included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and net foreign exchange gains. Income in the prior period included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, a $50 million payment from USDA Biofuel Producer Recovery Program, net foreign exchange gains, and net other income.

ITEM 2. MANAGEMENT’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 nine months ended September 30, 2023 and 2022 are as follows:


	Nine Months Ended
	September 30,
Segment Operating Profit (Loss)	2023		2022		Change
	(In millions)











Ag Services and Oilseeds
Ag Services	$	954	$	957	$	(3)
Crushing	900		1,242		(342)
Refined Products and Other	1,026		623		403
Wilmar	232		380		(148)
Total Ag Services and Oilseeds	3,112		3,202		(90)

Carbohydrate Solutions
Starches and Sweeteners	987		1,036		(49)
Vantage Corn Processors	49		63		(14)
Total Carbohydrate Solutions	1,036		1,099		(63)

Nutrition
Human Nutrition	440		470		(30)
Animal Nutrition	28		135		(107)
Total Nutrition	468		605		(137)

Other Business	229		78		151

Specified Items:
Gains on sales of assets and businesses	10		30		(20)
Impairment, restructuring, and settlement charges and contingency provisions	(190)		(76)		(114)

Total Specified Items	(180)		(46)		(134)

Total Segment Operating Profit	$	4,665	$	4,938	$	(273)

Adjusted Segment Operating Profit(1)	$	4,845	$	4,984	$	(139)

Segment Operating Profit	$	4,665	$	4,938	$	(273)
Corporate	(1,105)		(918)		(187)
Earnings Before Income Taxes	$	3,560	$	4,020	$	(460)

(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 decreased 3%. Ag Services results were in-line with the prior period. 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 lower year-over-year driven by shift of exports to South America. Execution in destination marketing as well as effective risk management continued to deliver strong Global Trade results, though lower than the prior period. Current period results also included a $48 million insurance settlement related to damages from Hurricane Ida. Crushing results were lower than the prior period. Global soy crush margins remained strong, but lower year-over-year in all regions due to softer demand for both meal and oil, and a tight U.S. soybean carryout. This was partially offset by strong softseed margins and higher volumes, supported by a strong Canadian canola crop and utilization of flex capacity in EMEA. Refined Products and Other results were significantly higher than the prior period. North America results were higher, driven by strong food oil demand and improved biodiesel volumes. In EMEA, strong export demand for biodiesel and domestic food oil demand supported stronger margins. Additionally, net positive mark-to-market timing effects that are expected to reverse as contracts execute in future periods contributed to the results in the current quarter. Equity earnings from Wilmar were lower versus the prior period.

Carbohydrate Solutions operating profit decreased 6%. Starches and Sweeteners, including ethanol production from the wet mills, capitalized on a solid demand environment during the period. North America starches and sweeteners delivered volumes and margins similar to the prior period and ethanol margins were solid as industry stocks moderated, though lower relative to the prior period. Results were negatively impacted due to unplanned downtime at one of the corn germ plants. In EMEA, the business effectively managed margins to deliver improved results. The global wheat milling business posted higher margins driven by solid customer demand. Vantage Corn Processors results were lower due to the absence of the prior period’s $50 million payment from the USDA Biofuel Producer Recovery Program, partially offset by higher operating results as the business executed on a robust demand and margin environment for ethanol.

Nutrition operating profit decreased 23%. Human Nutrition results were lower than the prior period, as the business continued to manage demand fulfillment challenges and destocking in certain categories. Flavors results were higher than the prior period driven by pricing actions in EMEA and strong win rates in North America. Specialty Ingredients results were lower year-over-year due to continued lower market demand for plant-based proteins in meat alternatives, inventory adjustments, and unplanned downtime resulting from the recent Decatur, Illinois incident. Health and Wellness results were in-line with the prior period. Animal Nutrition results were significantly lower compared to the prior period due to lower contribution from amino acids, pockets of softer global feed demand affecting volumes, and continued demand fulfillment challenges and inventory losses in pet solutions.

Other Business operating profit increased $151 million. Higher net interest income drove improved earnings in ADM Investor Services. Captive insurance results improved on premiums from new programs, partially offset by increased claim settlements.

Corporate results for the nine months ended September 30, 2023 and 2022 are as follows:


	Nine Months Ended
	September 30,
	2023		2022		Change
	(In millions)

Interest expense-net	$	(326)	$	(239)	(87)
Unallocated corporate costs	(808)		(727)		(81)
Loss on sale of assets	—		(3)		3
Expenses related to acquisitions	(6)		(2)		(4)

Gain on debt conversion option	6		12		(6)
Restructuring (charges) adjustment	(5)		2		(7)
Other income	34		39		(5)
Total Corporate	$	(1,105)	$	(918)	$	(187)

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

Corporate results were a net charge of $1.1 billion in the current period compared to a net charge of $0.9 billion in the prior period. Interest expense-net increased $87 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs and increased interest expense from new debt issuances. Unallocated corporate costs increased $81 million due primarily to higher financing, information technology, and centers of excellence costs, partially offset by lower incentive compensation accruals. Gain on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other income in the current period included the non-service components of net pension benefit income of $13 million and foreign exchange gains, partially offset by railroad maintenance expenses of $28 million. Other income in the prior period included the non-service components of net pension benefit income of $19 million, an investment revaluation gain of $37 million, and foreign exchange gains, partially offset by railroad maintenance expenses of $41 million.

Non-GAAP Financial Measures

The table below provides a reconciliation of diluted EPS to adjusted EPS for the nine months ended September 30, 2023 and 2022.


	Nine months ended September 30,
	2023				2022
	In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	546				566

Net earnings and reported EPS (fully diluted)	$	2,918	$	5.35	$	3,321	$	5.87
Adjustments:
Gains on sales of assets and businesses - net of tax of $3 million in 2023 and $7 million in 2022 (1)	(7)		(0.02)		(20)		(0.04)
Impairment and restructuring charges and settlement contingencies - net of tax of $43 million in 2023 and $14 million in 2022 (1)	152		0.28		60		0.10
Expenses related to acquisitions - net of tax of $1 million in 2023 and 2022 (1)	5		0.01		1		—

Gain on debt conversion option - net of tax of $0 (1)	(6)		(0.01)		(12)		(0.02)
Certain discrete tax adjustments	3		0.01		2		—
Total adjustments	147		0.27		31		0.04
Adjusted net earnings and adjusted EPS	$	3,065	$	5.62	$	3,352	$	5.91

(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 nine months ended September 30, 2023 and 2022.


	Nine months ended
	September 30,
(In millions)	2023		2022		Change
Earnings before income taxes	$	3,560	$	4,020	$	(460)
Interest expense	321		262		59
Depreciation and amortization	782		774		8
Gains on sales of assets and businesses	(10)		(27)		17

Expenses related to acquisitions	6		2		4
Railroad maintenance expenses	28		41		(13)
Impairment and restructuring charges and settlement contingencies	195		74		121
Adjusted EBITDA	$	4,882	$	5,146	$	(264)









	Nine months ended
	September 30,
(In millions)	2023		2022		Change













Ag Services and Oilseeds	$	3,380	$	3,469	$	(89)
Carbohydrate Solutions	1,271		1,337		(66)






Nutrition	668		800		(132)






Other Business	225		103		122





Corporate	(662)		(563)		(99)









Adjusted EBITDA	$	4,882	$	5,146	$	(264)

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

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

Cash used in financing activities was $2.8 billion for the nine months ended September 30, 2023 compared to $2.4 billion for the same period last year. Long-term debt borrowings for the nine months ended September 30, 2023 were $0.5 billion which consisted of the $500 million aggregate principle amount of 4.500% Notes due 2033 compared to long-term debt borrowings for the same period last year of $0.8 billion which consisted of the $750 million aggregate principal amount of 2.900% Notes due 2032. Proceeds from the borrowings in the current period were used for general corporate purposes. Proceeds from the borrowings in the prior period were used to finance investments and expenditures in eligible green projects that contribute to environmental objectives and/or eligible social projects that aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes. Long-term debt payments were $1.0 billion for the nine months ended September 30, 2023 which consisted of the €600 million aggregate principal amount of 1.750% Notes due 2023 and the $300 million aggregate amount of zero coupon exchangeable bonds due 2023, compared to $0.5 billion for the same period last year which consisted of the €0.5 billion aggregate principal amount of fixed-to-floating rate senior notes due 2022 issued in a private placement on March 25, 2021. Net borrowings on short-term credit agreements for the nine months ended September 30, 2023 were $0.4 billion compared to $0.8 billion for the same period last year. Share repurchases for the nine months ended September 30, 2023 were $1.1 billion compared to $1.2 billion for the same period last year. Dividends were $0.7 billion for the nine months ended September 30, 2023 and the same period last year.

At September 30, 2023, the Company had $1.5 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.7 to 1. Included in working capital was $6.0 billion of readily marketable commodity inventories. At September 30, 2023, the Company’s capital resources included shareholders’ equity of $25.3 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $13.5 billion, of which $11.7 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 25% and 24% at September 30, 2023 and December 31, 2022, respectively. The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility. The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was 21% and 25% at September 30, 2023 and December 31, 2022, respectively. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was $10 million of commercial paper outstanding at September 30, 2023.

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

As of September 30, 2023, the Company had $1.5 billion of cash and cash equivalents, $0.8 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 $7.1 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 $3.0 billion in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 14 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of September 30, 2023, the Company had $1.3 billion unused capacity of its facility under the Programs.

As of September 30, 2023, the Company has total available liquidity of $13.2 billion comprised of cash and cash equivalents and unused lines of credit with a well-diversified group of primarily investment-grade institutions.

For the nine months ended September 30, 2023, the Company spent approximately $1.1 billion in capital expenditures, $0.7 billion in dividends, and $1.1 billion in share repurchases. The Company has a stock repurchase program. Under the program, the Company has 73.2 million shares remaining as of September 30, 2023 that may be repurchased until December 31, 2024.

In 2023, the Company expects total capital expenditures of approximately $1.5 billion and additional cash outlays of approximately $1.0 billion in dividends and $2.0 billion in opportunistic share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of September 30, 2023 and December 31, 2022 were $16.5 billion and $15.8 billion, respectively. The increase is primarily related to obligations for energy commitments, partially offset by obligations to purchase lower quantities of agricultural commodity inventories. As of September 30, 2023, the Company expects to make payments related to purchase obligations of $15.7 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended September 30, 2023.

Off Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

Previous: Item 1. FINANCIAL STATEMENTS · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK