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,~~June 30, 2022

☐ 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 – ~~562,707,786~~560,561,569 shares

(~~April~~July 25, 2022)

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, 2021, as may be updated in our subsequent Quarterly Reports on Form 10-Q. To the extent permitted under applicable law, ~~the~~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

ITEM 1. FINANCIAL STATEMENTS

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

(Unaudited)


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021					2022		2021		2022		2021
		(In millions, except per share amounts)				(In millions, except per share amounts)

Revenues	Revenues	$	23,650	$	18,893			Revenues	$	27,284	$	22,926	$	50,934	$	41,819
Cost of products sold	Cost of products sold	21,753		17,345				Cost of products sold	25,184		21,463		46,937		38,808
Gross Profit	Gross Profit	1,897		1,548				Gross Profit	2,100		1,463		3,997		3,011

Selling, general, and administrative expenses	Selling, general, and administrative expenses	829		749				Selling, general, and administrative expenses	814		739		1,643		1,488
Asset impairment, exit, and restructuring costs	Asset impairment, exit, and restructuring costs	1		59				Asset impairment, exit, and restructuring costs	1		23		2		82
Equity in earnings of unconsolidated affiliates	Equity in earnings of unconsolidated affiliates	(204)		(125)				Equity in earnings of unconsolidated affiliates	(192)		(163)		(396)		(288)
Investment income	Investment income	(59)		(13)				Investment income	(32)		(50)		(91)		(63)
Interest expense	Interest expense	92		87				Interest expense	73		40		165		127
Other income – net		(33)		(33)
Other (income) expense – net								Other (income) expense – net	(83)		49		(116)		16
Earnings Before Income Taxes	Earnings Before Income Taxes	1,271		824				Earnings Before Income Taxes	1,519		825		2,790		1,649

Income tax expense	Income tax expense	207		131				Income tax expense	279		113		486		244
Net Earnings Including Noncontrolling Interests	Net Earnings Including Noncontrolling Interests	1,064		693				Net Earnings Including Noncontrolling Interests	1,240		712		2,304		1,405

Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	10		4				Less: Net earnings attributable to noncontrolling interests	4		—		14		4

Net Earnings Attributable to Controlling Interests	Net Earnings Attributable to Controlling Interests	$	1,054	$	689			Net Earnings Attributable to Controlling Interests	$	1,236	$	712	$	2,290	$	1,401

Average number of shares outstanding – basic	Average number of shares outstanding – basic	566		563				Average number of shares outstanding – basic	566		564		566		563

Average number of shares outstanding – diluted	Average number of shares outstanding – diluted	568		564				Average number of shares outstanding – diluted	568		566		568		565

Basic earnings per common share	Basic earnings per common share	$	1.86	$	1.22			Basic earnings per common share	$	2.18	$	1.26	$	4.05	$	2.49

Diluted earnings per common share	Diluted earnings per common share	$	1.86	$	1.22			Diluted earnings per common share	$	2.18	$	1.26	$	4.03	$	2.48

Dividends per common share	Dividends per common share	$	0.40	$	0.37			Dividends per common share	$	0.40	$	0.37	$	0.80	$	0.74

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021					2022		2021		2022		2021
		(In millions)				(In millions)

Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	1,064	$	693			Net earnings including noncontrolling interests	$	1,240	$	712	$	2,304	$	1,405
Other comprehensive income (loss):	Other comprehensive income (loss):							Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	149		294				Foreign currency translation adjustment	(7)		35		142		329
Tax effect	Tax effect	(31)		(56)				Tax effect	(84)		8		(115)		(48)
Net of tax amount	Net of tax amount	118		238				Net of tax amount	(91)		43		27		281

Pension and other postretirement benefit liabilities adjustment	Pension and other postretirement benefit liabilities adjustment	37		18				Pension and other postretirement benefit liabilities adjustment	—		71		37		89
Tax effect	Tax effect	(7)		(5)				Tax effect	(4)		(22)		(11)		(27)
Net of tax amount	Net of tax amount	30		13				Net of tax amount	(4)		49		26		62

Deferred gain (loss) on hedging activities	Deferred gain (loss) on hedging activities	282		101				Deferred gain (loss) on hedging activities	(80)		82		202		183
Tax effect	Tax effect	(47)		(25)				Tax effect	2		(15)		(45)		(40)
Net of tax amount	Net of tax amount	235		76				Net of tax amount	(78)		67		157		143

Unrealized gain (loss) on investments	Unrealized gain (loss) on investments	(5)		(1)				Unrealized gain (loss) on investments	(8)		(1)		(13)		(2)
Tax effect	Tax effect	—		—				Tax effect	1		(1)		1		(1)
Net of tax amount	Net of tax amount	(5)		(1)				Net of tax amount	(7)		(2)		(12)		(3)
Other comprehensive income (loss)	Other comprehensive income (loss)	378		326				Other comprehensive income (loss)	(180)		157		198		483
Comprehensive income (loss) including noncontrolling interests	Comprehensive income (loss) including noncontrolling interests	1,442		1,019				Comprehensive income (loss) including noncontrolling interests	1,060		869		2,502		1,888

Less: Comprehensive income (loss) attributable to noncontrolling interests	Less: Comprehensive income (loss) attributable to noncontrolling interests	5		4				Less: Comprehensive income (loss) attributable to noncontrolling interests	—		—		5		4

Comprehensive income (loss) attributable to controlling interests	Comprehensive income (loss) attributable to controlling interests	$	1,437	$	1,015			Comprehensive income (loss) attributable to controlling interests	$	1,060	$	869	$	2,497	$	1,884

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets


(In millions)	(In millions)	March 31, 2022		December 31, 2021		(In millions)	June 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,079	$	943	Cash and cash equivalents	$	906	$	943

Segregated cash and investments	Segregated cash and investments	10,132		8,016		Segregated cash and investments	9,974		8,016
Trade receivables	Trade receivables	4,235		3,311		Trade receivables	5,336		3,311
Inventories	Inventories	17,290		14,481		Inventories	14,485		14,481

Other current assets	Other current assets	7,717		5,158		Other current assets	6,946		5,158
Total Current Assets	Total Current Assets	40,453		31,909		Total Current Assets	37,647		31,909

Investments and Other Assets	Investments and Other Assets					Investments and Other Assets
Investments in and advances to affiliates	Investments in and advances to affiliates	5,404		5,285		Investments in and advances to affiliates	5,464		5,285

Goodwill and other intangible assets	Goodwill and other intangible assets	6,750		6,747		Goodwill and other intangible assets	6,547		6,747
Right of use assets	Right of use assets	999		1,023		Right of use assets	1,002		1,023
Other assets	Other assets	1,466		1,369		Other assets	1,488		1,369
Total Investments and Other Assets	Total Investments and Other Assets	14,619		14,424		Total Investments and Other Assets	14,501		14,424

Property, Plant, and Equipment	Property, Plant, and Equipment					Property, Plant, and Equipment
Land and land improvements	Land and land improvements	552		554		Land and land improvements	510		554
Buildings	Buildings	5,614		5,597		Buildings	5,596		5,597
Machinery and equipment	Machinery and equipment	19,096		19,112		Machinery and equipment	18,994		19,112
Construction in progress	Construction in progress	1,086		960		Construction in progress	1,175		960
		26,348		26,223			26,275		26,223
Accumulated depreciation	Accumulated depreciation	(16,554)		(16,420)		Accumulated depreciation	(16,595)		(16,420)
Net Property, Plant, and Equipment	Net Property, Plant, and Equipment	9,794		9,803		Net Property, Plant, and Equipment	9,680		9,803

Total Assets	Total Assets	$	64,866	$	56,136	Total Assets	$	61,828	$	56,136

Liabilities, Temporary Equity, and Shareholders’ Equity	Liabilities, Temporary Equity, and Shareholders’ Equity					Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities	Current Liabilities					Current Liabilities
Short-term debt	Short-term debt	$	3,777	$	958	Short-term debt	$	2,352	$	958
Trade payables	Trade payables	6,135		6,388		Trade payables	5,601		6,388
Payables to brokerage customers	Payables to brokerage customers	11,425		8,965		Payables to brokerage customers	11,307		8,965
Accrued expenses and other payables	Accrued expenses and other payables	6,363		4,790		Accrued expenses and other payables	5,014		4,790
Current lease liabilities	Current lease liabilities	280		277		Current lease liabilities	282		277
Current maturities of long-term debt	Current maturities of long-term debt	543		570		Current maturities of long-term debt	1,104		570

Total Current Liabilities	Total Current Liabilities	28,523		21,948		Total Current Liabilities	25,660		21,948

Long-Term Liabilities	Long-Term Liabilities					Long-Term Liabilities
Long-term debt	Long-term debt	8,752		8,011		Long-term debt	8,062		8,011
Deferred income taxes	Deferred income taxes	1,604		1,412		Deferred income taxes	1,579		1,412
Non-current lease liabilities	Non-current lease liabilities	739		765		Non-current lease liabilities	738		765
Other	Other	1,231		1,233		Other	1,102		1,233
Total Long-Term Liabilities	Total Long-Term Liabilities	12,326		11,421		Total Long-Term Liabilities	11,481		11,421

Temporary Equity - Redeemable noncontrolling interest	Temporary Equity - Redeemable noncontrolling interest	262		259		Temporary Equity - Redeemable noncontrolling interest	261		259

Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Common stock	Common stock	3,028		2,994		Common stock	3,066		2,994
Reinvested earnings	Reinvested earnings	22,483		21,655		Reinvested earnings	23,292		21,655
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,789)		(2,172)		Accumulated other comprehensive income (loss)	(1,965)		(2,172)
Noncontrolling interests	Noncontrolling interests	33		31		Noncontrolling interests	33		31
Total Shareholders’ Equity	Total Shareholders’ Equity	23,755		22,508		Total Shareholders’ Equity	24,426		22,508
Total Liabilities, Temporary Equity, and Shareholders’ Equity	Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	64,866	$	56,136	Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	61,828	$	56,136

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(Unaudited)


(In millions)	(In millions)	Three Months Ended March 31,				(In millions)	Six Months Ended June 30,
		2022		2021			2022		2021

Operating Activities	Operating Activities					Operating Activities
Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	1,064	$	693	Net earnings including noncontrolling interests	$	2,304	$	1,405
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities	Adjustments to reconcile net earnings to net cash provided by (used in) operating activities					Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	Depreciation and amortization	257		249		Depreciation and amortization	514		492
Asset impairment charges	Asset impairment charges	1		31		Asset impairment charges	4		54
Deferred income taxes	Deferred income taxes	144		(7)		Deferred income taxes	(15)		(37)
Equity in earnings of affiliates, net of dividends	Equity in earnings of affiliates, net of dividends	(159)		(81)		Equity in earnings of affiliates, net of dividends	(162)		(23)
Stock compensation expense	Stock compensation expense	69		76		Stock compensation expense	97		114

Deferred cash flow hedges	Deferred cash flow hedges	283		102		Deferred cash flow hedges	206		183
Gains on sales of assets and businesses/investment revaluation	Gains on sales of assets and businesses/investment revaluation	(34)		(11)		Gains on sales of assets and businesses/investment revaluation	(42)		(79)
Other – net	Other – net	(9)		150		Other – net	312		93
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Segregated investments	Segregated investments	(482)		666		Segregated investments	(1,753)		610
Trade receivables	Trade receivables	(937)		(515)		Trade receivables	(2,155)		(710)
Inventories	Inventories	(2,881)		(1,138)		Inventories	(349)		223

Other current assets	Other current assets	(2,141)		413		Other current assets	(1,593)		780
Trade payables	Trade payables	(245)		(441)		Trade payables	(710)		(1,023)
Payables to brokerage customers	Payables to brokerage customers	2,501		561		Payables to brokerage customers	2,520		1,349
Accrued expenses and other payables	Accrued expenses and other payables	1,363		(450)		Accrued expenses and other payables	147		(424)
Total Operating Activities	Total Operating Activities	(1,206)		298		Total Operating Activities	(675)		3,007

Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant, and equipment	Purchases of property, plant, and equipment	(217)		(174)		Purchases of property, plant, and equipment	(500)		(427)
Proceeds from sales of assets and businesses	Proceeds from sales of assets and businesses	5		14		Proceeds from sales of assets and businesses	12		58

Net assets of businesses acquired						Net assets of businesses acquired	—		(5)

Investments in and advances to affiliates	Investments in and advances to affiliates	(36)		(4)		Investments in and advances to affiliates	(58)		(8)
Distributions from affiliates	Distributions from affiliates	—		5		Distributions from affiliates	—		5

Other – net	Other – net	(94)		(10)		Other – net	(101)		(17)
Total Investing Activities	Total Investing Activities	(342)		(169)		Total Investing Activities	(647)		(394)

Financing Activities	Financing Activities					Financing Activities
Long-term debt borrowings	Long-term debt borrowings	750		593		Long-term debt borrowings	751		595

Long-term debt payments						Long-term debt payments	—		(2)
Net borrowings (payments) under short-term credit agreements	Net borrowings (payments) under short-term credit agreements	2,824		729		Net borrowings (payments) under short-term credit agreements	1,414		(752)

Share repurchases						Share repurchases	(200)		—
Cash dividends	Cash dividends	(226)		(208)		Cash dividends	(453)		(417)

Other – net	Other – net	(30)		(37)		Other – net	(21)		—
Total Financing Activities	Total Financing Activities	3,318		1,077		Total Financing Activities	1,491		(576)

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	1,770		1,206		Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	169		2,037
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	7,454		4,646		Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	7,454		4,646

Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	9,224	$	5,852	Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	7,623	$	6,683

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets	Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets					Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets

Cash and cash equivalents	Cash and cash equivalents	$	1,079	$	694	Cash and cash equivalents	$	906	$	869
Restricted cash and restricted cash equivalents included in segregated cash and investments	Restricted cash and restricted cash equivalents included in segregated cash and investments	8,145		5,158		Restricted cash and restricted cash equivalents included in segregated cash and investments	6,717		5,814
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	9,224	$	5,852	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	7,623	$	6,683

See notes to consolidated financial statements.

Archer-Daniels-Midland-Company

Consolidated Statements of Shareholders’ Equity

(Unaudited)


		Common Stock			Reinvested Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests				Total Shareholders’ Equity				Common Stock						Reinvested Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests				Total Shareholders’ Equity
(In millions, except per share amounts)	(In millions, except per share amounts)	Shares	Amount								(In millions, except per share amounts)	Shares								Amount
Balance, March 31, 2022																				Balance, March 31, 2022	563			$	3,028			$	22,483			$	(1,789)			$	33			$	23,755
Comprehensive income																				Comprehensive income
Net earnings																				Net earnings							1,236								4
Other comprehensive income (loss)																				Other comprehensive income (loss)											(176)				(4)
Total comprehensive income																				Total comprehensive income																			1,060
Cash dividends paid - $0.40 per share																				Cash dividends paid - $0.40 per share							(227)												(227)
Share repurchases																				Share repurchases	(2)						(200)												(200)
Stock compensation expense																				Stock compensation expense	—			28															28
Stock option exercises net of taxes																				Stock option exercises net of taxes	—			10															10

Balance, June 30, 2022																				Balance, June 30, 2022	561			$	3,066		$	23,292			$	(1,965)			$	33			$	24,426

Balance, December 31, 2021	Balance, December 31, 2021	560	$	2,994			$	21,655							$	(2,172)			$	31		$	22,508	Balance, December 31, 2021		560			$	2,994			$	21,655			$	(2,172)			$	31	$	22,508
Comprehensive income	Comprehensive income																			Comprehensive income
Net earnings	Net earnings				1,054								10							Net earnings							2,290								14
Other comprehensive income (loss)	Other comprehensive income (loss)								383				(5)							Other comprehensive income (loss)											207				(9)
Total comprehensive income	Total comprehensive income																1,442			Total comprehensive income																			2,502
Dividends paid - $0.40 per share					(226)												(226)

Cash dividends paid - $0.80 per share																				Cash dividends paid - $0.80 per share							(453)												(453)
Share repurchases																				Share repurchases	(2)						(200)												(200)
Stock compensation expense	Stock compensation expense	3	69														69			Stock compensation expense	3			97															97
Stock option exercises net of taxes	Stock option exercises net of taxes	—	(36)														(36)			Stock option exercises net of taxes	—			(26)															(26)

Other	Other	—	1		—				0				(3)				(2)			Other	—			1			—				—				(3)				(2)
Balance, March 31, 2022		563	$	3,028	$	22,483			$	(1,789)			$	33			$	23,755
Balance, June 30, 2022																				Balance, June 30, 2022	561			$	3,066		$	23,292			$	(1,965)			$	33			$	24,426

Balance, March 31, 2021																				Balance, March 31, 2021	559			$	2,858		$	20,261			$	(2,278)			$	20			$	20,861

Comprehensive income																				Comprehensive income
Net earnings																				Net earnings							712								—
Other comprehensive income (loss)																				Other comprehensive income (loss)											157				—
Total comprehensive income																				Total comprehensive income																			869
Cash dividends paid - $0.37 per share																				Cash dividends paid - $0.37 per share							(209)												(209)

Stock compensation expense																				Stock compensation expense	—			38															38
Stock option exercises net of taxes																				Stock option exercises net of taxes	—			36															36
Other																				Other	—			9			(2)				—				1				8
Balance, June 30, 2021																				Balance, June 30, 2021	559			$	2,941		$	20,762			$	(2,121)			$	21			$	21,603

Balance, December 31, 2020	Balance, December 31, 2020	556	$	2,824	$	19,780			$	(2,604)			$	22			$	20,022		Balance, December 31, 2020	556			$	2,824		$	19,780			$	(2,604)			$	22			$	20,022

Comprehensive income	Comprehensive income																			Comprehensive income
Net earnings	Net earnings				689								4							Net earnings							1,401								4
Other comprehensive income (loss)	Other comprehensive income (loss)								326				—							Other comprehensive income (loss)											483				—
Total comprehensive income	Total comprehensive income																1,019			Total comprehensive income																			1,888
Dividends paid - $0.37 per share					(208)												(208)
Cash dividends paid - $0.74 per share																				Cash dividends paid - $0.74 per share							(417)												(417)

Stock compensation expense	Stock compensation expense	3	76														76			Stock compensation expense	3			114															114
Stock option exercises net of taxes	Stock option exercises net of taxes	—	(37)														(37)			Stock option exercises net of taxes	—			(1)															(1)
Other	Other	—	(5)		—				—				(6)				(11)			Other	—			4			(2)				—				(5)				(3)
Balance, March 31, 2021		559	$	2,858	$	20,261			$	(2,278)			$	20			$	20,861
Balance, June 30, 2021																				Balance, June 30, 2021	559			$	2,941		$	20,762			$	(2,121)			$	21			$	21,603

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by ~~generally accepted accounting principles~~GAAP for audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~three~~six months ended ~~March 31,~~June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. For further information, refer to the consolidated financial statements and notes thereto included in the ~~Company’s~~ Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2021 for Archer-Daniels-Midland Company (the Company or ADM).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company consolidates all entities, including variable interest entities (VIEs), in which it has a controlling financial interest. For VIEs, the Company assesses whether it is the primary beneficiary as defined under the applicable accounting standard. Investments in affiliates, including VIEs through which the Company exercises significant influence but does not control the investee and is not the primary beneficiary of the investee’s activities, are carried at cost plus equity in undistributed earnings since acquisition and are adjusted, where appropriate, for basis differences between the investment balance and the underlying net assets of the investee. The Company’s portion of the results of certain affiliates and results of certain VIEs are included using the most recent available financial statements. In each case, the financial statements are within 93 days of the Company’s year end and are consistent from period to period.

Segregated Cash and Investments

The Company segregates certain cash, cash equivalents, and investment balances in accordance with regulatory requirements, commodity exchange requirements, and insurance arrangements. These balances represent deposits received from customers of the Company’s registered futures commission merchant and commodity brokerage services, cash margins and securities pledged to commodity exchange clearinghouses, and cash pledged as security under certain insurance arrangements. Segregated cash and investments also include restricted cash collateral for the various insurance programs of the Company’s captive insurance business. To the degree these segregated balances are comprised of cash and cash equivalents, they are considered restricted cash and cash equivalents on the consolidated statements of cash flows.

Receivables

The Company records receivables at net realizable value in trade receivables, other current assets, and other assets. These amounts included allowances for estimated uncollectible accounts totaling ~~$137~~$144 million and $122 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, to reflect any loss anticipated on the accounts receivable balances including any accrued interest receivables thereon. Long-term receivables recorded in other assets were not material to the Company’s overall receivables portfolio.

The Company recorded bad debt expense in selling, general, and administrative expenses of $22 million and $4$44 million in the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $4 million and $8 million in the three and six months ended June 30, 2021, respectively.

Cost Method Investments

Cost method investments of ~~$434~~$466 million and $297 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, were included in Other Assets in the Company’s consolidated balance sheets. Revaluation gains of ~~$34~~$3 million and $37 million in the ~~quarter~~three and six months ended ~~March 31,~~June 30, 2022, respectively, and $40 million in the three and six months ended June 30, 2021, in connection with observable third-party transactions, were recorded in investment income in the Company's consolidated ~~statement~~statements of earnings. ~~There were no revaluation gains in the quarter ended March 31, 2021.~~

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 1. Basis of Presentation (Continued)

Operations in Ukraine and Russia

ADM employs approximately 650 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office. Most of the facilities have been temporarily idled since February 24, 2022. The Company’s footprint in Russia is limited and operations have been ~~recently~~ scaled down to those related to the production and transport of essential food commodities and ingredients.

As a result of the recent events in Ukraine, the Company reviewed the valuation of its assets and recorded immaterial charges in the ~~quarter~~three and six months ended ~~March 31,~~June 30, 2022 related to receivables and inventories. As of ~~March 31,~~June 30, 2022, ADM concluded that 1) receivables, net of allowances, are deemed collectible; and 2) market inventories presented as level 3 in the fair value measurements table in Note 4 are valued appropriately at the February 24, 2022 market price due to the temporary lack of ~~a more recent~~ market ~~price.~~activity. The temporarily idled property, plant, and equipment, which was immaterial, was not considered impaired. As the conflict in Ukraine evolves, the Company will continue to review the valuation of these assets and make any required adjustments, which are not expected to be material to the Company’s consolidated financial statements.

Note 2. Pending Accounting Standards

Through December 31, 2022, the Company has the option to adopt the amended guidance of ~~ASC~~Accounting Standards Codification (ASC) Topic 848, Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amended guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company plans to adopt the expedients and exceptions provided by the amended guidance before the December 31, 2022 expiry date and does not expect the adoption of the amended guidance to have an impact on its consolidated financial statements.

Effective January 1, 2023, the Company will be required to adopt the amended guidance of ASC Topic 805, Business Combinations, which improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amended guidance requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic ~~606.~~606, Revenue from Contracts with Customers,(Topic 606). Early adoption is permitted. The Company does not expect the adoption of this amended guidance to have a significant impact on its consolidated financial statements.

Note 3. Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities, and manufacturing products for use in food, beverages, feed, energy, and industrial applications, and ingredients and solutions for human and animal nutrition. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. The majority of the Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The Company applies the practical expedient in paragraph 10-50-14 of ~~ASC~~Topic 606~~Revenue from Contracts with Customers~~ ~~(Topic 606)~~ and does not disclose information about remaining performance obligations that have original expected durations of one year or less. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. The Company recognized revenue from transportation service contracts of ~~$175~~$209 million and ~~$104~~$384 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $151 million and $255 million for the three and six months ended June 30, 2021, respectively. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20).

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)

Shipping and Handling Costs

Shipping and handling costs related to contracts with customers for the sale of goods are accounted for as a fulfillment activity and are included in cost of products sold. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Taxes Collected from Customers and Remitted to Governmental Authorities

The Company does not include taxes assessed by governmental authorities that are (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers, in the measurement of transaction prices or as a component of revenues and cost of products sold.

Contract Liabilities

Contract liabilities relate to advance payments from customers for goods and services that the Company has yet to provide. Contract liabilities of ~~$574~~$340 million and $581 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheets. Contract liabilities recognized as revenues were ~~$324~~$335 million and ~~$282~~$581 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $287 million and $569 million for the three and six months ended June 30, 2021, respectively.

Disaggregation of Revenues

The following tables present revenue disaggregated by timing of recognition and major product lines for the three and six months ended ~~March 31,~~June 30, 2022 and 2021.


		Three Months Ended March 31, 2022											Three Months Ended June 30, 2022
		Topic 606 Revenue						Topic 815(1)		Total			Topic 606 Revenue						Topic 815(1)		Total
		Point in Time		Over Time		Total		Revenue		Revenues			Point in Time		Over Time		Total		Revenue		Revenues
		(In millions)											(In millions)

Ag Services and Oilseeds	Ag Services and Oilseeds											Ag Services and Oilseeds
Ag Services	Ag Services	$	970	$	175	$	1,145	$	10,702	$	11,847	Ag Services	$	1,013	$	209	$	1,222	$	13,111	$	14,333
Crushing	Crushing	125		—		125		3,097		3,222		Crushing	128		—		128		3,234		3,362
Refined Products and Other	Refined Products and Other	632		—		632		2,552		3,184		Refined Products and Other	744		—		744		2,990		3,734
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	1,727		175		1,902		16,351		18,253		Total Ag Services and Oilseeds	1,885		209		2,094		19,335		21,429
Carbohydrate Solutions	Carbohydrate Solutions											Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	1,930		—		1,930		568		2,498		Starches and Sweeteners	1,889		—		1,889		630		2,519
Vantage Corn Processors	Vantage Corn Processors	868		—		868		—		868		Vantage Corn Processors	1,232		—		1,232		—		1,232
Total Carbohydrate Solutions	Total Carbohydrate Solutions	2,798		—		2,798		568		3,366		Total Carbohydrate Solutions	3,121		—		3,121		630		3,751
Nutrition	Nutrition											Nutrition
Human Nutrition	Human Nutrition	958		—		958		—		958		Human Nutrition	1,020		—		1,020		—		1,020
Animal Nutrition	Animal Nutrition	966		—		966		—		966		Animal Nutrition	983		—		983		—		983
Total Nutrition	Total Nutrition	1,924		—		1,924		—		1,924		Total Nutrition	2,003		—		2,003		—		2,003

Other Business	Other Business	107		—		107		—		107		Other Business	101		—		101		—		101
Total Revenues	Total Revenues	$	6,556	$	175	$	6,731	$	16,919	$	23,650	Total Revenues	$	7,110	$	209	$	7,319	$	19,965	$	27,284

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)


		Three Months Ended March 31, 2021
		Topic 606 Revenue						Topic 815(1)		Total
		Point in Time		Over Time		Total		Revenue		Revenues
		(In millions)

													Six Months Ended June 30, 2022
													Topic 606 Revenue						Topic 815(1)		Total
													Point in Time		Over Time		Total		Revenue		Revenues
													(In millions)
Ag Services and Oilseeds	Ag Services and Oilseeds											Ag Services and Oilseeds
Ag Services	Ag Services	$	662	$	104	$	766	$	9,380	$	10,146	Ag Services	$	1,983	$	384	$	2,367	$	23,813	$	26,180
Crushing	Crushing	124		—		124		2,618		2,742		Crushing	253		—		253		6,331		6,584
Refined Products and Other	Refined Products and Other	512		—		512		1,607		2,119		Refined Products and Other	1,376		—		1,376		5,542		6,918
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	1,298		104		1,402		13,605		15,007		Total Ag Services and Oilseeds	3,612		384		3,996		35,686		39,682
Carbohydrate Solutions	Carbohydrate Solutions											Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	1,361		—		1,361		384		1,745		Starches and Sweeteners	3,819		—		3,819		1,198		5,017
Vantage Corn Processors	Vantage Corn Processors	478		—		478		—		478		Vantage Corn Processors	2,100		—		2,100		—		2,100
Total Carbohydrate Solutions	Total Carbohydrate Solutions	1,839		—		1,839		384		2,223		Total Carbohydrate Solutions	5,919		—		5,919		1,198		7,117
Nutrition	Nutrition											Nutrition
Human Nutrition	Human Nutrition	754		—		754		—		754		Human Nutrition	1,978		—		1,978		—		1,978
Animal Nutrition	Animal Nutrition	809		—		809		—		809		Animal Nutrition	1,949		—		1,949		—		1,949
Total Nutrition	Total Nutrition	1,563		—		1,563		—		1,563		Total Nutrition	3,927		—		3,927		—		3,927

Other Business	Other Business	100		—		100		—		100		Other Business	208		—		208		—		208
Total Revenues	Total Revenues	$	4,800	$	104	$	4,904	$	13,989	$	18,893	Total Revenues	$	13,666	$	384	$	14,050	$	36,884	$	50,934


	Three Months Ended June 30, 2021
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)









Ag Services and Oilseeds
Ag Services	$	802	$	151	$	953	$	11,862	$	12,815
Crushing	92		—		92		2,735		2,827
Refined Products and Other	659		—		659		1,970		2,629
Total Ag Services and Oilseeds	1,553		151		1,704		16,567		18,271
Carbohydrate Solutions
Starches and Sweeteners	1,449		—		1,449		397		1,846
Vantage Corn Processors	974		—		974		—		974
Total Carbohydrate Solutions	2,423		—		2,423		397		2,820
Nutrition
Human Nutrition	848		—		848		—		848
Animal Nutrition	885		—		885		—		885
Total Nutrition	1,733		—		1,733		—		1,733

Other Business	102		—		102		—		102
Total Revenues	$	5,811	$	151	$	5,962	$	16,964	$	22,926

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)


	Six Months Ended June 30, 2021
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	1,464	$	255	$	1,719	$	21,242	$	22,961
Crushing	216		—		216		5,353		5,569
Refined Products and Other	1,171		—		1,171		3,577		4,748
Total Ag Services and Oilseeds	2,851		255		3,106		30,172		33,278
Carbohydrate Solutions
Starches and Sweeteners	2,810		—		2,810		781		3,591
Vantage Corn Processors	1,452		—		1,452		—		1,452
Total Carbohydrate Solutions	4,262		—		4,262		781		5,043
Nutrition
Human Nutrition	1,602		—		1,602		—		1,602
Animal Nutrition	1,694		—		1,694		—		1,694
Total Nutrition	3,296		—		3,296		—		3,296

Other Business	202		—		202		—		202
Total Revenues	$	10,611	$	255	$	10,866	$	30,953	$	41,819

(1) Topic 815 revenue relates to the physical delivery or the settlement of the Company’s sales contracts that are accounted for as derivatives and are outside the scope of Topic 606.

Ag Services and Oilseeds

The Ag Services and Oilseeds segment generates revenue from the sale of commodities, from service fees for the transportation of goods, from the sale of products manufactured in its global processing facilities, and from its structured trade finance activities. Revenue is measured based on the consideration specified in the contract and excludes any sales incentives and amounts collected on behalf of third parties. Revenue is recognized when a performance obligation is satisfied by transferring control over a product or providing service to a customer. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. The amount of revenue recognized follows the contractually specified price, which may include freight or other contractually specified cost components. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.

Carbohydrate Solutions

The Carbohydrate Solutions segment generates revenue from the sale of products manufactured at the Company’s global corn and wheat milling facilities around the world. Revenue is recognized when control over products is transferred to the customer. Products are shipped to customers from the Company’s various facilities and from its network of storage terminals. The amount of revenue recognized is based on the consideration specified in the contract, which could include freight and other costs depending on the specific shipping terms of each contract. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.

1112

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)

Nutrition

The Nutrition segment sells ingredients and solutions including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, edible beans, formula feeds, animal health and nutrition products, pet food and treats, and other specialty food and feed ingredients. Revenue is recognized when control over products is transferred to the customer. The amount of revenue recognized follows the contracted price or the mutually agreed price of the product. Freight and shipping are recognized as a component of revenue at the same time control transfers to the customer.

Other Business

Other Business includes the Company’s futures commission business whose primary sources of revenue are commissions and brokerage income generated from executing orders and clearing futures contracts and options on futures contracts on behalf of its customers. Commissions and brokerage revenue are recognized on the date the transaction is executed. Other Business also includes the Company’s captive insurance business, which generates third party revenue through its proportionate share of premiums from third-party reinsurance pools. Reinsurance premiums are recognized on a straight-line basis over the period underlying the policy.

Note 4. Fair Value Measurements

The following tables set forth, by level, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of ~~March 31,~~June 30, 2022 and December 31, 2021.


		Fair Value Measurements at March 31, 2022									Fair Value Measurements at June 30, 2022
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
		(In millions)									(In millions)

Assets:	Assets:									Assets:
Inventories carried at market	Inventories carried at market	$	—	$	8,033	$	3,959	$	11,992	Inventories carried at market	$	—	$	5,686	$	3,245	$	8,931
Unrealized derivative gains:	Unrealized derivative gains:									Unrealized derivative gains:
Commodity contracts	Commodity contracts	—		1,578		828		2,406		Commodity contracts	—		1,013		880		1,893
Foreign currency contracts	Foreign currency contracts	—		461		—		461		Foreign currency contracts	—		532		—		532
Interest rate contracts	Interest rate contracts	—		67		—		67		Interest rate contracts	—		95		—		95

Cash equivalents	Cash equivalents	419		—		—		419		Cash equivalents	399		—		—		399

Segregated investments	Segregated investments	1,548		—		—		1,548		Segregated investments	1,507		—		—		1,507

Total Assets	Total Assets	$	1,967	$	10,139	$	4,787	$	16,893	Total Assets	$	1,906	$	7,326	$	4,125	$	13,357

Liabilities:	Liabilities:									Liabilities:
Unrealized derivative losses:	Unrealized derivative losses:									Unrealized derivative losses:
Commodity contracts	Commodity contracts	$	—	$	1,544	$	1,856	$	3,400	Commodity contracts	$	—	$	942	$	960	$	1,902
Foreign currency contracts	Foreign currency contracts	—		238		—		238		Foreign currency contracts	—		223		—		223
Interest rate contracts		—		1		—		1

Debt conversion option	Debt conversion option	—		—		30		30		Debt conversion option	—		—		11		11
Inventory-related payables	Inventory-related payables	—		1,860		53		1,913		Inventory-related payables	—		975		55		1,030

Total Liabilities	Total Liabilities	$	—	$	3,643	$	1,939	$	5,582	Total Liabilities	$	—	$	2,140	$	1,026	$	3,166

1213

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)


	Fair Value Measurements at December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In millions)

Assets:
Inventories carried at market	$	—	$	6,765	$	3,004	$	9,769
Unrealized derivative gains:
Commodity contracts	—		902		460		1,362
Foreign currency contracts	—		238		—		238
Interest rate contracts	—		46		—		46
Cash equivalents	448		—		—		448

Segregated investments	1,338		—		—		1,338

Total Assets	$	1,786	$	7,951	$	3,464	$	13,201

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	—	$	944	$	815	$	1,759
Foreign currency contracts	—		191		—		191

Debt conversion option	—		—		15		15
Inventory-related payables	—		859		106		965
Total Liabilities	$	—	$	1,994	$	936	$	2,930

Estimated fair values for inventories and inventory-related payables carried at market are based on exchange-quoted prices, adjusted for differences in local markets and quality, referred to as basis. Market valuations for the Company’s inventories are adjusted for location and quality (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using the inputs from competitor and broker quotations or market transactions in either the listed or over the counter (OTC) markets and are considered observable. In some cases, the basis adjustments are unobservable because they are supported by little to no market activity. When unobservable inputs have a significant impact (more than 10%) on the measurement of fair value, the inventory is classified in Level 3. Changes in the fair value of inventories are recognized in the consolidated statements of earnings as a component of cost of products sold.

1314

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

Derivative contracts include exchange-traded commodity futures and options contracts, forward commodity purchase and sale contracts, and OTC instruments related primarily to agricultural commodities, energy, interest rates, and foreign currencies. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the Company’s exchange-traded futures and options contracts are cash-settled on a daily basis and, therefore, are not included in these tables. Fair value for forward commodity purchase and sale contracts is estimated based on exchange-quoted prices adjusted for differences in local markets. Market valuations for the Company’s forward commodity purchase and sale contracts are adjusted for location (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions in either the listed or OTC markets and are considered observable. In some cases, the basis adjustments are unobservable because they are supported by little to no market activity. When observable inputs are available for substantially the full term of the contract, it is classified in Level 2. When unobservable inputs have a significant impact (more than 10%) on the measurement of fair value, the contract is classified in Level 3. Except for certain derivatives designated as cash flow hedges, changes in the fair value of commodity-related derivatives are recognized in the consolidated statements of earnings as a component of cost of products sold. Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, or other (income) expense - net, depending upon the purpose of the contract. The changes in the fair value of derivatives designated as effective cash flow hedges are recognized in the consolidated balance sheets as a component of accumulated other comprehensive income (loss) (AOCI) until the hedged items are recorded in earnings or it is probable the hedged transaction will no longer occur.

The Company’s cash equivalents are comprised of money market funds valued using quoted market prices and are classified in Level 1.

The Company’s segregated investments are comprised of U.S. Treasury securities. U.S. Treasury securities are valued using quoted market prices and are classified in Level 1.

The debt conversion option is the equity-linked embedded derivative related to the exchangeable bonds issued in August 2020. The fair value of the embedded derivative is included in long-term debt, with changes in fair value recognized as interest, and is valued with the assistance of a third-party pricing service (a level 3 measurement).

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended ~~March 31,~~June 30, 2022.


		Level 3 Fair Value Asset Measurements at							Level 3 Fair Value Asset Measurements at
		March 31, 2022							June 30, 2022
		Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets			Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
		(In millions)							(In millions)
Balance, December 31, 2021		$	3,004	$	460	$	3,464
Balance, March 31, 2022								Balance, March 31, 2022	$	3,959	$	828	$	4,787
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	647		633		1,280		Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	(216)		319		103
Purchases	Purchases	9,552		—		9,552		Purchases	11,678		—		11,678
Sales	Sales	(9,315)		—		(9,315)		Sales	(11,993)		—		(11,993)
Settlements	Settlements	—		(276)		(276)		Settlements	—		(495)		(495)
Transfers into Level 3**		327		23		350
Transfers into Level 3								Transfers into Level 3	222		293		515
Transfers out of Level 3	Transfers out of Level 3	(256)		(12)		(268)		Transfers out of Level 3	(405)		(65)		(470)
Ending balance, March 31, 2022		$	3,959	$	828	$	4,787
Ending balance, June 30, 2022								Ending balance, June 30, 2022	$	3,245	$	880	$	4,125

* Includes increase in unrealized gains of ~~$1.4 billion~~$253 million relating to Level 3 assets still held at ~~March 31,~~June 30, 2022.

** Inventories carried at market includes Ukraine inventory as discussed in Note 1.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~Note 4. Fair Value Measurements (Continued)~~

~~The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2022.~~

Level 3 Fair Value Liability Measurements at
March 31, 2022
Inventory-
related
Payables Commodity
Derivative
Contracts
Losses Debt Conversion Option

Total
Liabilities
(In millions)
Balance, December 31, 2021 $ 106 $ 815 $ 15 $ 936
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense* (2) 1,376 15 1,389
Purchases 2 — — 2
Sales (53) — — (53)
Settlements — (478) — (478)
Transfers into Level 3 — 161 — 161
Transfers out of Level 3 — (18) — (18)
Ending balance, March 31, 2022 $ 53 $ 1,856 $ 30 $ 1,939

* Includes increase in unrealized losses of $1.4 billion relating to Level 3 liabilities still held at March 31, 2022.

~~The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2021.~~

Level 3 Fair Value Asset Measurements at
March 31, 2021
Inventories
Carried at
Market Commodity
Derivative
Contracts
Gains

Total
Assets
(In millions)
Balance, December 31, 2020 $ 2,183 $ 859 $ 3,042
Total increase (decrease) in net realized/unrealized gains included in cost of products sold* 730 243 973
Purchases 6,385 — 6,385
Sales (6,632) — (6,632)
Settlements — (428) (428)
Transfers into Level 3 516 23 539
Transfers out of Level 3 (112) (13) (125)
Ending balance, March 31, 2021 $ 3,070 $ 684 $ 3,754

* Includes increase in unrealized gains of $847 million relating to Level 3 assets still held at March 31, 2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended ~~March 31, 2021.~~June 30, 2022.

Level 3 Fair Value Liability Measurements at
March 31, 2021
Inventory-
related
Payables Commodity
Derivative
Contracts
Losses Foreign Currency Derivative Contracts Losses Debt Conversion Option

Total
Liabilities
(In millions)
Balance, December 31, 2020 $ 11 $ 918 $ — $ 34 $ 963
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense* — 381 — 20 401
Purchases 12 — — — 12
Sales (2) — — — (2)
Settlements — (566) — — (566)
Transfers into Level 3 — 54 11 — 65
Transfers out of Level 3 — (139) — — (139)
Ending balance, March 31, 2021 $ 21 $ 648 $ 11 $ 54 $ 734


	Level 3 Fair Value Liability Measurements at
	June 30, 2022
	Inventory- related Payables		Commodity Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
	(In millions)

Balance, March 31, 2022	$	53	$	1,856	$	30	$	1,939
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	(2)		293		(19)		272
Purchases	7		—		—		7
Sales	(3)		—		—		(3)
Settlements	—		(1,251)		—		(1,251)
Transfers into Level 3	—		161		—		161
Transfers out of Level 3	—		(99)		—		(99)
Ending balance, June 30, 2022	$	55	$	960	$	11	$	1,026

* Includes increase in unrealized losses of ~~$383~~$294 million relating to Level 3 liabilities still held at ~~March 31,~~June 30, 2022.

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended June 30, 2021.


	Level 3 Fair Value Asset Measurements at
	June 30, 2021
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, March 31, 2021	$	3,070	$	684	$	3,754
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	75		273		348
Purchases	7,163		—		7,163
Sales	(7,356)		—		(7,356)
Settlements	—		(395)		(395)
Transfers into Level 3	410		22		432
Transfers out of Level 3	(538)		(33)		(571)
Ending balance, June 30, 2021	$	2,824	$	551	$	3,375

* Includes increase in unrealized gains of $380 million relating to Level 3 assets still held at June 30, 2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended June 30, 2021.


	Level 3 Fair Value Liability Measurements at
	June 30, 2021
	Inventory- related Payables		Commodity Derivative Contracts Losses		Foreign Currency Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
	(In millions)

Balance, March 31, 2021	$	21	$	648	$	11	$	54	$	734
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	—		681		—		(30)		651
Purchases	17		—		—		—		17

Settlements	—		(447)		—		—		(447)
Transfers into Level 3	—		170		—		—		170
Transfers out of Level 3	—		(15)		(11)		—		(26)
Ending balance, June 30, 2021	$	38	$	1,037	$	—	$	24	$	1,099

* Includes increase in unrealized losses of $683 million relating to Level 3 liabilities still held at June 30, 2021.

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2022.


	Level 3 Fair Value Asset Measurements at
	June 30, 2022
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, December 31, 2021	$	3,004	$	460	$	3,464
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	431		952		1,383
Purchases	21,230		—		21,230
Sales	(21,308)		—		(21,308)
Settlements	—		(771)		(771)
Transfers into Level 3**	549		316		865
Transfers out of Level 3	(661)		(77)		(738)
Ending balance, June 30, 2022	$	3,245	$	880	$	4,125

* Includes increase in unrealized gains of $1.7 billion relating to Level 3 assets still held at June 30, 2022.

** Inventories carried at market includes Ukraine inventory as discussed in Note 1.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2022.


	Level 3 Fair Value Liability Measurements at
	June 30, 2022
	Inventory- related Payables		Commodity Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
	(In millions)

Balance, December 31, 2021	$	106	$	815	$	15	$	936
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	(4)		1,669		(4)		1,661
Purchase	9		—		—		9
Sales	(56)		—		—		(56)
Settlements	—		(1,729)		—		(1,729)
Transfers into Level 3	—		322		—		322
Transfers out of Level 3	—		(117)		—		(117)
Ending balance, June 30, 2022	$	55	$	960	$	11	$	1,026

* Includes increase in unrealized losses of $1.7 billion relating to Level 3 liabilities still held at June 30, 2022.

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2021.


	Level 3 Fair Value Asset Measurements at
	June 30, 2021
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, December 31, 2020	$	2,183	$	859	$	3,042
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	805		516		1,321
Purchases	13,548		—		13,548
Sales	(13,988)		—		(13,988)
Settlements	—		(823)		(823)
Transfers into Level 3	926		45		971
Transfers out of Level 3	(650)		(46)		(696)
Ending balance, June 30, 2021	$	2,824	$	551	$	3,375

* Includes increase in unrealized gains of $1.2 billion relating to Level 3 assets still held at June 30, 2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2021.


	Level 3 Fair Value Liability Measurements at
	June 30, 2021
	Inventory- related Payables		Commodity Derivative Contracts Losses		Foreign Currency Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
	(In millions)

Balance, December 31, 2020	$	11	$	918	$	—	$	34	$	963
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	—		1,062		—		(10)		1,052
Purchases	29		—		—		—		29
Sales	(2)		—		—		—		(2)
Settlements	—		(1,013)		—		—		(1,013)
Transfers into Level 3	—		224		11		—		235
Transfers out of Level 3	—		(154)		(11)		—		(165)
Ending balance, June 30, 2021	$	38	$	1,037	$	—	$	24	$	1,099

* Includes increase in unrealized losses of $1.1 billion relating to Level 3 liabilities still held at June 30, 2021.

Transfers into Level 3 of assets and liabilities previously classified in Level 2 were due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts rising above the 10% threshold. Transfers out of Level 3 were primarily due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts falling below the 10% threshold and thus permitting reclassification to Level 2.

In some cases, the price components that result in differences between exchange-traded prices and local prices for inventories and commodity purchase and sale contracts are observable based upon available quotations for these pricing components, and in some cases, the differences are unobservable. These price components primarily include transportation costs and other adjustments required due to location, quality, or other contract terms. In the table below, these other adjustments are referred to as basis. The changes in unobservable price components are determined by specific local supply and demand characteristics at each facility and the overall market. Factors such as substitute products, weather, fuel costs, contract terms, and futures prices also impact the movement of these unobservable price components.

1619

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

The following table sets forth the weighted average percentage of the unobservable price components included in the Company’s Level 3 valuations as of ~~March 31,~~June 30, 2022 and December 31, 2021. The Company’s Level 3 measurements may include basis only, transportation cost only, or both price components. As an example, for Level 3 inventories with basis, the unobservable component as of ~~March 31,~~June 30, 2022 is a weighted average ~~28.9%~~37.3% of the total price for assets and ~~13.9%~~20.1% of the total price for liabilities.


		Weighted Average % of Total Price									Weighted Average % of Total Price
		March 31, 2022				December 31, 2021					June 30, 2022				December 31, 2021
Component Type	Component Type	Assets		Liabilities		Assets		Liabilities		Component Type	Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables	Inventories and Related Payables									Inventories and Related Payables
Basis	Basis	28.9	%	13.9	%	28.7	%	13.1	%	Basis	37.3	%	20.1	%	28.7	%	13.1	%
Transportation cost	Transportation cost	11.4	%	—	%	13.0	%	—	%	Transportation cost	12.1	%	—	%	13.0	%	—	%

Commodity Derivative Contracts	Commodity Derivative Contracts									Commodity Derivative Contracts
Basis	Basis	22.1	%	22.5	%	30.0	%	27.1	%	Basis	24.6	%	29.3	%	30.0	%	27.1	%
Transportation cost	Transportation cost	9.1	%	2.6	%	8.1	%	0.7	%	Transportation cost	6.3	%	7.6	%	8.1	%	0.7	%

In certain of the Company’s principal markets, the Company relies on price quotes from third parties to value its inventories and physical commodity purchase and sale contracts. These price quotes are generally not further adjusted by the Company in determining the applicable market price. In some cases, availability of third-party quotes is limited to only one or two independent sources. In these situations, absent other corroborating evidence, the Company considers these price quotes as 100% unobservable and, therefore, the fair value of these items is reported in Level 3.

Note 5. Derivative Instruments and Hedging Activities

Derivatives Not Designated as Hedging Instruments

The majority of the Company’s derivative instruments have not been designated as hedging instruments. The Company uses exchange-traded futures and exchange-traded and OTC options contracts to manage its net position of merchandisable agricultural product inventories and forward cash purchase and sales contracts to reduce price risk caused by market fluctuations in agricultural commodities and foreign currencies. The Company also uses exchange-traded futures and exchange-traded and OTC options contracts as components of merchandising strategies designed to enhance margins. The results of these strategies can be significantly impacted by factors such as the correlation between the value of exchange-traded commodities futures contracts and the value of the underlying commodities, counterparty contract defaults, and volatility of freight markets. Derivatives, including exchange-traded contracts and forward commodity purchase or sale contracts, and inventories of certain merchandisable agricultural products, which include amounts acquired under deferred pricing contracts, are stated at fair value or market value. Inventory is not a derivative and therefore fair values of and changes in fair values of inventories are not included in the tables below.

The following table sets forth the fair value of derivatives not designated as hedging instruments as of June 30, 2022 and December 31, 2021.


	June 30, 2022				December 31, 2021
	Assets		Liabilities		Assets		Liabilities
	(In millions)

Foreign Currency Contracts	$	368	$	223	$	217	$	116
Interest Rate Contracts	3		—		—		—
Commodity Contracts	1,781		1,902		1,276		1,759
Debt Conversion Option	—		11		—		15
Total	$	2,152	$	2,136	$	1,493	$	1,890

1720

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

~~The following table sets forth the fair value of derivatives not designated as hedging instruments as of March 31, 2022 and December 31, 2021.~~

March 31, 2022 December 31, 2021
Assets Liabilities Assets Liabilities
(In millions)
Foreign Currency Contracts $ 437 $ 190 $ 217 $ 116
Interest Rate Contracts 2 1 — —
Commodity Contracts 2,280 3,400 1,276 1,759
Debt Conversion Option — 30 — 15
Total $ 2,719 $ 3,621 $ 1,493 $ 1,890

The following tables set forth the pre-tax gains (losses) on derivatives not designated as hedging instruments that have been included in the consolidated statements of earnings for the three and six months ended ~~March 31,~~June 30, 2022 and 2021.


						Other expense (income) - net																				Other expense (income) - net
				Cost of				Interest												Cost of								Interest
(In millions)	(In millions)	Revenues		products sold				expense						(In millions)		Revenues				products sold								expense
Three Months Ended March 31, 2022
Three Months Ended June 30, 2022																	Three Months Ended June 30, 2022
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	23,650	$	21,753			$	(33)			$	92						Consolidated Statement of Earnings	$	27,284			$	25,184			$	(83)			$	73

Pre-tax gains (losses) on:	Pre-tax gains (losses) on:																Pre-tax gains (losses) on:

Foreign Currency Contracts	Foreign Currency Contracts	$	(38)	$	443	$	23			$	—						Foreign Currency Contracts	$	13			$	(95)			$	240			$	—
Commodity Contracts	Commodity Contracts	—		(1,101)		—				—							Commodity Contracts	—				1,062				—				—
Debt Conversion Option	Debt Conversion Option	—		—		—				(15)							Debt Conversion Option	—				—				—				19
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	(38)	$	(658)	$	23			$	(15)			$	(688)		Total gain (loss) recognized in earnings	$	13			$	967			$	240			$	19			$	1,239

Three Months Ended March 31, 2021
Three Months Ended June 30, 2021																	Three Months Ended June 30, 2021
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	18,893	$	17,345	$	(33)			$	87						Consolidated Statement of Earnings	$	22,926			$	21,463			$	49			$	40

Pre-tax gains (losses) on:	Pre-tax gains (losses) on:																Pre-tax gains (losses) on:
Foreign Currency Contracts	Foreign Currency Contracts	$	30	$	(262)	$	120			$	—						Foreign Currency Contracts	$	(43)			$	214			$	(45)			$	—
Commodity Contracts	Commodity Contracts	—		(782)		—				—							Commodity Contracts	—				(673)				—				—
Debt Conversion Option	Debt Conversion Option	—		—		—				(20)							Debt Conversion Option	—				—				—				30
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	30	$	(1,044)	$	120			$	(20)			$	(914)		Total gain (loss) recognized in earnings	$	(43)			$	(459)			$	(45)			$	30			$	(517)


					Other expense (income) - net
			Cost of				Interest
(In millions)	Revenues		products sold				expense
Six Months Ended June 30, 2022
Consolidated Statement of Earnings	$	50,934	$	46,937	$	(116)	$	165

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	(25)	$	348	$	263	$	—
Commodity Contracts	—		(39)		—		—
Debt Conversion Option	—		—		—		4
Total gain (loss) recognized in earnings	$	(25)	$	309	$	263	$	4	$	551

Six Months Ended June 30, 2021
Consolidated Statement of Earnings	$	41,819	$	38,808	$	16	$	127

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	(13)	$	(48)	$	75	$	—
Commodity Contracts	—		(1,455)		—		—
Debt Conversion Option	—		—		—		10
Total gain (loss) recognized in earnings	$	(13)	$	(1,503)	$	75	$	10	$	(1,431)

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

Changes in the market value of inventories of certain merchandisable agricultural commodities, forward cash purchase and sales contracts, exchange-traded futures and exchange-traded and OTC options contracts are recognized in earnings immediately as a component of cost of products sold.

Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, and other (income) expense - net depending on the purpose of the contract.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~Note 5. Derivative Instruments and Hedging Activities (Continued)~~

Derivatives Designated as Cash Flow and Net Investment Hedging Strategies

The Company had certain derivatives designated as cash flow and net investment hedges as of ~~March 31,~~June 30, 2022 and December 31, 2021.

For derivative instruments that are designated and qualify as net investment hedges, foreign exchange gains and losses related to changes in foreign currency exchange rates are deferred in AOCI until the underlying investment is divested.

The Company uses cross-currency swaps and foreign exchange forwards designated as net investment hedges to protect the Company’s investment in a foreign subsidiary against changes in foreign currency exchange rates. The Company executed USD-fixed to Euro-fixed cross-currency swaps with an aggregate notional amount of $0.8 billion and $1.2 billion as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, and foreign exchange forwards with an aggregate notional amount of ~~$2.3~~$2.5 billion and $2.6 billion as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had after-tax gains of $125 million and after-tax losses of ~~$24 million and~~ $44 million in AOCI, respectively, related to foreign exchange gains and losses from these net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested.

For derivative instruments that are designated and qualify as highly-effective cash flow hedges (i.e., hedging the exposure to variability in expected future cash flow that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of AOCI and as an operating activity in the statement of cash flows, and is reclassified into earnings in the same line item affected by the hedged transaction in the same period or periods during which the hedged transaction affects earnings. Hedge components excluded from the assessment of effectiveness and gains and losses related to discontinued hedges are recognized in the consolidated statement of earnings during the current period.

The Company’s structured trade finance programs use interest rate swaps designated as cash flow hedges to hedge the forecasted interest payments on certain letters of credit from banks. The terms of the interest rate swaps match the terms of the forecasted interest payments. The deferred gains and losses are recognized in revenues over the period in which the related interest payments are paid to the banks. The amounts are recorded in revenues as the related results are also recorded in revenues. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had interest rate swaps maturing on various dates with aggregate notional amounts of $0.8 billion and $1.0 ~~billion.~~billion, respectively.

The Company also uses swap locks designated as cash flow hedges to hedge the changes in the forecasted interest payments due to changes in the benchmark rate leading up to future bond issuance dates. The terms of the swap locks match the terms of the forecasted interest payments. The deferred gains and losses will be recognized in interest expense over the period in which the related interest payments will be paid. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company executed swap locks maturing on various dates with an aggregate notional amount of $400 million.

As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had after-tax gains of ~~$49~~$70 million and $35 million in AOCI, respectively, related to the interest rate swaps and swap locks. The Company expects to recognize amounts deferred in AOCI in its consolidated statement of earnings during the life of the debt instruments.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

For each of the hedge programs described below, the derivatives are designated as cash flow hedges. The changes in the market value of such derivative contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Once the hedged item is recognized in earnings, the gains and losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had after-tax gains of ~~$370~~$282 million and $161 million in AOCI, respectively, related to gains and losses from these programs. The Company expects to recognize ~~$370~~$282 million of the ~~March 31,~~June 30, 2022 after-tax gains in its consolidated statement of earnings during the next 12 months.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~Note 5. Derivative Instruments and Hedging Activities (Continued)~~

The Company uses futures or options contracts to hedge the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The objective of this hedging program is to reduce the variability of cash flows associated with the Company’s forecasted purchases of corn. The Company’s corn processing plants normally grind approximately 65 million bushels of corn per month. During the past 12 months, the Company hedged between 17% and ~~42%~~33% of its monthly grind. At ~~March 31,~~June 30, 2022, the Company had designated hedges representing between 0%1% and ~~29%~~32% of its anticipated monthly grind of corn for the next 12 months.

The Company, from time to time, also uses futures, options, and swaps to hedge the sales price of certain ethanol sales contracts. The Company has established hedging programs for ethanol sales contracts that are indexed to unleaded gasoline prices and to various exchange-traded ethanol contracts. The objective of these hedging programs is to reduce the variability of cash flows associated with the Company’s sales of ethanol. During the past 12 months and as of ~~March 31,~~June 30, 2022, the Company had no hedges related to ethanol sales under these programs.

The Company uses futures and options contracts to hedge the purchase price of the anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities, subject to certain program limits. The Company also uses futures or options contracts to hedge the sales prices of anticipated soybean meal and soybean oil sales proportionate to the soybean crushing process at these facilities, subject to certain program limits. During the past 12 months, the Company hedged between 57% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. At ~~March 31,~~June 30, 2022, the Company had designated hedges representing between 0% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities over the next 12 months.

The Company uses futures and OTC swaps to hedge the purchase price of anticipated volumes of natural gas consumption in a future month for certain of its facilities in North America and Europe, subject to certain program limits. During the past 12 months, the Company hedged between 0% and ~~84%~~121% of the anticipated monthly natural gas consumption at the designated facilities. At ~~March 31,~~June 30, 2022, the Company had designated hedges representing between 0% and ~~95%~~111% of the anticipated monthly natural gas consumption over the next 12 months.

The following table sets forth the fair value of derivatives designated as hedging instruments as of ~~March 31,~~June 30, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021
Assets Liabilities Assets Liabilities
(In millions)
Commodity Contracts $ 126 $ — $ 86 $ —
Foreign Currency Contracts 24 48 21 $ 75
Interest Rate Contracts 65 — 46 —
Total $ 215 $ 48 $ 153 $ 75


	June 30, 2022				December 31, 2021
	Assets		Liabilities		Assets		Liabilities
	(In millions)
Commodity Contracts	$	112	$	—	$	86	$	—
Foreign Currency Contracts	164		—		21		$	75
Interest Rate Contracts	92		—		46		—
Total	$	368	$	—	$	153	$	75

2023

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statements of earnings for the three and six months ended ~~March 31,~~June 30, 2022 and 2021.

Cost of products sold
(In millions) Revenues
Three Months Ended March 31, 2022
Consolidated Statement of Earnings $ 23,650 $ 21,753
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts $ — $ 98
Total gain (loss) recognized in earnings $ — $ 98 $ 98
Three Months Ended March 31, 2021
Consolidated Statement of Earnings $ 18,893 $ 17,345
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts $ — $ 89
Interest Contracts (14) —
Total gain (loss) recognized in earnings $ (14) $ 89 $ 75


			Cost of products sold
(In millions)	Revenues
Three Months Ended June 30, 2022
Consolidated Statement of Earnings	$	27,284	$	25,184

Effective amounts recognized in earnings
Pre-tax gains (losses) on:

Commodity Contracts	$	—	$	150

Total gain (loss) recognized in earnings	$	—	$	150	$	150

Three Months Ended June 30, 2021
Consolidated Statement of Earnings	$	22,926	$	21,463

Effective amounts recognized in earnings
Pre-tax gains (losses) on:

Commodity Contracts	$	—	$	239
Interest Contracts	(1)		—



Total gain (loss) recognized in earnings	$	(1)	$	239	$	238


			Cost of products sold
(In millions)	Revenues
Six Months Ended June 30, 2022
Consolidated Statement of Earnings	$	50,934	$	46,937

Effective amounts recognized in earnings
Pre-tax gains (losses) on:

Commodity Contracts	$	—	$	248

Total gain (loss) recognized in earnings	$	—	$	248	$	248

Six Months Ended June 30, 2021
Consolidated Statement of Earnings	$	41,819	$	38,808

Effective amounts recognized in earnings
Pre-tax gains (losses) on:

Commodity Contracts	$	—	$	328
Interest Contracts	(15)		—



Total gain (loss) recognized in earnings	$	(15)	$	328	$	313

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

Other Net Investment Hedging Strategies

The Company has designated ~~€2.6 billion and~~ €1.8 billion of its outstanding long-term debt and commercial paper borrowings at ~~March 31,~~June 30, 2022 and December 31, 2021 ~~respectively,~~ as hedges of its net investment in a foreign subsidiary. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had after-tax gains of ~~$113~~$227 million and $55 million in AOCI, respectively, related to foreign exchange gains and losses from these net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Note 6. Other Current Assets

The following table sets forth the items in other current assets:


		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
		(In millions)					(In millions)

Unrealized gains on derivative contracts	Unrealized gains on derivative contracts	$	2,934	$	1,646	Unrealized gains on derivative contracts	$	2,520	$	1,646

Margin deposits and grain accounts	Margin deposits and grain accounts	1,112		600		Margin deposits and grain accounts	815		600
Customer omnibus receivable	Customer omnibus receivable	1,539		1,179		Customer omnibus receivable	1,660		1,179
Financing receivables - net (1)	Financing receivables - net (1)	233		189		Financing receivables - net (1)	153		189
Insurance premiums receivable	Insurance premiums receivable	26		20		Insurance premiums receivable	74		20
Prepaid expenses	Prepaid expenses	377		370		Prepaid expenses	389		370
Biodiesel tax credit	Biodiesel tax credit	70		79		Biodiesel tax credit	44		79
Tax receivables	Tax receivables	764		708		Tax receivables	712		708
Non-trade receivables (2)	Non-trade receivables (2)	421		285		Non-trade receivables (2)	330		285
Other current assets	Other current assets	241		82		Other current assets	249		82
		$	7,717	$	5,158		$	6,946	$	5,158

(1) The Company provides financing to certain suppliers, primarily Brazilian farmers, to finance a portion of the suppliers’ production costs. The amounts are reported net of allowances of $5$3 million and $4 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Interest earned on financing receivables of $4 million and $8 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively and $2 million and $6 million for the three and six months ended June 30, 2021, respectively, is included in investment income in the consolidated statements of earnings.

(2) Non-trade receivables included $29 million and $27 million of reinsurance recoverables as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 7. Accrued Expenses and Other Payables

The following table sets forth the items in accrued expenses and other payables:


		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
		(In millions)					(In millions)

Unrealized losses on derivative contracts	Unrealized losses on derivative contracts	$	3,639	$	1,950	Unrealized losses on derivative contracts	$	2,125	$	1,950
Accrued compensation	Accrued compensation	332		445		Accrued compensation	377		445
Income tax payable	Income tax payable	211		132		Income tax payable	346		132
Other taxes payable	Other taxes payable	178		168		Other taxes payable	169		168

Insurance claims payable	Insurance claims payable	235		220		Insurance claims payable	222		220
Contract liability	Contract liability	574		581		Contract liability	340		581

Other accruals and payables	Other accruals and payables	1,194		1,294		Other accruals and payables	1,435		1,294
		$	6,363	$	4,790		$	5,014	$	4,790

Note 8. Debt and Financing Arrangements

On February 28, 2022, the Company issued its first sustainability bond of $750 million aggregate principal amount of 2.900% notes due March 1, 2032. Net proceeds before expenses were $748 million. The Company expects to apply an amount equal to the net proceeds to finance or refinance eligible green projects and/or eligible social projects.

At ~~March 31,~~June 30, 2022, the fair value of the Company’s long-term debt exceeded the carrying value by ~~$1.0~~$0.2 billion, as estimated using quoted market prices (a Level 2 measurement under applicable accounting standards).

At ~~March 31,~~June 30, 2022, the Company had lines of credit, including the accounts receivable securitization programs described below, totaling ~~$14.3~~$14.7 billion, of which ~~$8.2~~$10.6 billion was unused. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2022, the Company expanded its combined U.S. and European commercial paper borrowing programs from $5.0 billion to $6.5 billion under the same terms, against which there was ~~$0.7~~$0.2 billion commercial paper outstanding at ~~March 31,~~June 30, 2022. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2022, the Company also added $1.5 billion of short-term ~~borrowings~~notes at an average interest rate of 1.64% due in September 2022.

The Company has accounts receivable securitization programs (the “Programs”). The Programs provide the Company with up to ~~$2.3~~$2.6 billion in funding resulting from the sale of accounts receivable with ~~$24 million~~$0.9 billion unused capacity as of ~~March 31,~~June 30, 2022 (see Note 14 for more information about the Programs).

2326

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 9. Income Taxes

The Company’s effective tax ~~rate was 16.3%~~rates were 18.4% and 17.4% for the three and six months ended ~~March 31,~~June 30, 2022, respectively, compared to ~~15.9%~~13.7% and 14.8% for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. The change in the rate was primarily due to changes in the geographic mix of ~~earnings.~~earnings and the impact of discrete tax items.

The Company is subject to income taxation and routine examinations in many jurisdictions around the world and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions. In its routine evaluations of the exposure associated with various tax filing positions, the Company recognizes a liability, when necessary, for estimated potential tax owed by the Company in accordance with applicable accounting standards. Resolution of the related tax positions, through negotiations with relevant tax authorities or through litigation, may take years to complete. Therefore, it is difficult to predict the timing for resolution of tax positions and the Company cannot predict or provide assurance as to the ultimate outcome of these ongoing or future examinations. However, the Company does not anticipate that the total amount of unrecognized tax benefits will increase or decrease significantly in the next twelve months. Given the long periods of time involved in resolving tax positions, the Company does not expect that the recognition of unrecognized tax benefits will have a material impact on the Company’s effective income tax rate in any given period.

The Company’s subsidiary in Argentina, ADM Agro SRL (formerly ADM Argentina SA and Alfred C. Toepfer Argentina SRL), received tax assessments challenging transfer prices used to price grain exports for the tax years 1999 through 2011 and 2014. As of ~~March 31,~~June 30, 2022, these assessments totaled $8$7 million in tax and up to ~~$36~~$33 million in interest (adjusted for variation in currency exchange rates). The Argentine tax authorities conducted a review of income and other taxes paid by large exporters and processors of cereals and other agricultural commodities resulting in allegations of income tax evasion. The Company strongly believes that it has complied with all Argentine tax laws. To date, the Company has not received assessments for closed years subsequent to 2014. While the statute of limitations has expired for tax years 2012 and 2013, the Company cannot rule out receiving additional assessments challenging transfer prices used to price grain exports for years subsequent to 2014, and estimates that these potential assessments could be approximately ~~$104~~$92 million in tax and ~~$42~~$43 million in interest (adjusted for variation in currency exchange rates as of ~~March 31,~~June 30, 2022). The Company believes that it has appropriately evaluated the transactions underlying these assessments, and has concluded, based on Argentine tax law, that its tax position would be sustained, and accordingly, has not recorded a tax liability for these assessments. In accordance with the accounting requirements for uncertain tax positions, the Company has not recorded an uncertain tax liability for this assessment because it has concluded that it is more likely than not to prevail on the matter based upon its technical merits and because the taxing jurisdiction’s process does not provide a mechanism for settling at less than the full amount of the assessment. The Company intends to vigorously defend its position against the current assessments and any similar assessments that may be issued for years subsequent to 2014.

In 2014, the Company’s wholly-owned subsidiary in the Netherlands, ADM Europe B.V., received a tax assessment from the Netherlands tax authority challenging the transfer pricing aspects of a 2009 business reorganization, which involved two of its subsidiary companies in the Netherlands. As of ~~March 31,~~June 30, 2022, this assessment was ~~$90~~$81 million in tax and ~~$32~~$29 million in interest (adjusted for variation in currency exchange rates). On April 23, 2020, the court issued an unfavorable ruling and in October 2020, assigned a third party expert to establish a valuation by early 2021. During the second quarter of 2021, the third party expert issued a final valuation. The Company expects the court to issue a ruling on this matter in the second ~~quarter~~half of 2022. Subsequent appeals may take an extended period of time and could result in additional financial impacts of up to the entire amount of the assessment. The Company has carefully evaluated the underlying transactions and has concluded that the amount of gain recognized on the reorganization for tax purposes was appropriate. As of ~~March 31,~~June 30, 2022, the Company has accrued its best estimate of what it believes will be the likely outcome of the litigation.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 10. Accumulated Other Comprehensive Income

The following tables set forth the changes in AOCI by component for the three and six months ended ~~March 31,~~June 30, 2022 and the reclassifications out of AOCI for the three and six months ended ~~March 31,~~June 30, 2022 and 2021:


													Three months ended June 30, 2022
													Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total
													(In millions)
Balance at March 31, 2022												Balance at March 31, 2022	$	(2,125)	$	460	$	(117)	$	(7)	$	(1,789)
Other comprehensive income (loss) before reclassifications												Other comprehensive income (loss) before reclassifications	(339)		70		8		(8)		(269)
Gain (loss) on net investment hedges												Gain (loss) on net investment hedges	336		—		—		—		336
Amounts reclassified from AOCI												Amounts reclassified from AOCI	—		(150)		(8)		—		(158)
Tax effect												Tax effect	(84)		2		(4)		1		(85)
Net of tax amount												Net of tax amount	(87)		(78)		(4)		(7)		(176)
Balance at June 30, 2022												Balance at June 30, 2022	$	(2,212)	$	382	$	(121)	$	(14)	$	(1,965)

		Three months ended March 31, 2022											Six months ended June 30, 2022
		Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total			Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total
		(In millions)											(In millions)
Balance at December 31, 2021	Balance at December 31, 2021	$	(2,248)	$	225	$	(147)	$	(2)	$	(2,172)	Balance at December 31, 2021	$	(2,248)	$	225	$	(147)	$	(2)	$	(2,172)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	31		380		6		(5)		412		Other comprehensive income (loss) before reclassifications	(308)		450		14		(13)		143
Gain (loss) on net investment hedges	Gain (loss) on net investment hedges	123		—		—		—		123		Gain (loss) on net investment hedges	459		—		—		—		459
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		(98)		31		—		(67)		Amounts reclassified from AOCI	—		(248)		23		—		(225)
Tax effect	Tax effect	(31)		(47)		(7)		—		(85)		Tax effect	(115)		(45)		(11)		1		(170)
Net of tax amount	Net of tax amount	123		235		30		(5)		383		Net of tax amount	36		157		26		(12)		207
Balance at March 31, 2022		$	(2,125)	$	460	$	(117)	$	(7)	$	(1,789)

Balance at June 30, 2022												Balance at June 30, 2022	$	(2,212)	$	382	$	(121)	$	(14)	$	(1,965)

Amount reclassified from AOCI
Three months ended March 31, Affected line item in the consolidated statements of earnings
Details about AOCI components 2022 2021
(In millions)
Deferred loss (gain) on hedging activities
$ — $ 14 Revenues
(98) (89) Cost of products sold
(98) (75) Total before tax
19 21 Tax
$ (79) $ (54) Net of tax
Pension liability adjustment
Amortization of defined benefit pension items:
Prior service loss (credit) $ 8 $ (6) Other (income) expense-net
Actuarial losses 23 16 Other (income) expense-net
31 10 Total before tax
(6) (4) Tax
$ 25 $ 6 Net of tax

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 10. Accumulated Other Comprehensive Income (Continued)


	Amount reclassified from AOCI
	Three months ended June 30,				Six months ended June 30,				Affected line item in the consolidated statements of earnings
Details about AOCI components	2022		2021		2022		2021
	(In millions)





Deferred loss (gain) on hedging activities
	$	—	$	1	$	—	$	15	Revenues
	(150)		(239)		(248)		(328)		Cost of products sold


	(150)		(238)		(248)		(313)		Total before tax
	33		57		52		79		Tax
	$	(117)	$	(181)	$	(196)	$	(234)	Net of tax

Pension liability adjustment
Amortization of defined benefit pension items:
Prior service loss (credit)	$	(112)	$	(61)	$	(104)	$	(67)	Other (income) expense-net
Actuarial losses	104		133		127		149		Other (income) expense-net
	(8)		72		23		82		Total before tax
	(2)		(22)		(8)		(26)		Tax
	$	(10)	$	50	$	15	$	56	Net of tax

The Company’s accounting policy is to release the income tax effects from AOCI when the individual units of account are sold, terminated, or extinguished.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Note 11. Other (Income) Expense - Net

The following table sets forth the items in other (income) expense:


		Three Months Ended					Three Months Ended				Six Months Ended
		March 31,					June 30,				June 30,
		2022		2021					2022		2021		2022		2021
		(In millions)				(In millions)
Gains on sales of assets	Gains on sales of assets	$	—	$	(11)			Gains on sales of assets	$	(5)	$	(28)	$	(5)	$	(39)

Pension settlement								Pension settlement	—		82		—		82

Other – net	Other – net	(33)		(22)				Other – net	(78)		(5)		(111)		(27)
Other (Income) Expense - Net	Other (Income) Expense - Net	$	(33)	$	(33)			Other (Income) Expense - Net	$	(83)	$	49	$	(116)	$	16

Gains on sales of assets in the three and six months ended ~~March 31,~~June 30, 2022 and 2021 consisted of gains on disposals of individually insignificant assets in the ordinary course of business.

Pension settlement in the three and six months ended June 30, 2021 was related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties.

Other - net in the three and six months ended June 30, 2022 included the non-service components of net pension benefit income of $6 million and $12 million, respectively, a $50 million one-time payment from the USDA Biofuel Producer Recovery Program, foreign exchange gains, and other expense. Other - net in the three and six months ended June 30, 2021 included the non-service components of net pension benefit income of $5 million and $11 million, respectively, foreign exchange gains, and other income ~~in the three months ended March 31, 2022~~ and ~~2021.~~expense.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 12. Segment Information

The Company’s operations are organized, managed, and classified into 3 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 segments, as defined by the applicable accounting standard, and are classified as Other Business.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating expenses. Also included in operating profit for each segment is equity in earnings of affiliates based on the equity method of accounting. Specified items included in total segment operating profit and certain corporate items are not allocated to the Company’s individual business segments because operating performance of each business segment is evaluated by management exclusive of these items. Corporate results principally include unallocated corporate expenses and interest expense net of interest income. Corporate results also include revaluation gains and losses on cost method investments and the share of the results of equity investments in early-stage start-up companies that ADM Ventures has investments in.

For more information about the Company’s business segments, refer to Note 17 of “Notes to Consolidated Financial Statements” included in Item 8, “Financial Statements and Supplementary Data” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 12. Segment Information (Continued)


		Three Months Ended				Three Months Ended				Six Months Ended
		March 31,				June 30,				June 30,
(In millions)	(In millions)	2022		2021			(In millions)	2022		2021		2022		2021
Gross revenues	Gross revenues						Gross revenues

Ag Services and Oilseeds	Ag Services and Oilseeds	$	19,132	$	15,939		Ag Services and Oilseeds	$	22,468	$	18,799	$	41,600	$	34,738
Carbohydrate Solutions	Carbohydrate Solutions	4,180		2,634			Carbohydrate Solutions	4,500		3,271		8,680		5,905
Nutrition	Nutrition	1,966		1,624			Nutrition	2,055		1,793		4,021		3,417
Other Business	Other Business	107		100			Other Business	101		102		208		202
Intersegment elimination	Intersegment elimination	(1,735)		(1,404)			Intersegment elimination	(1,840)		(1,039)		(3,575)		(2,443)
Total gross revenues	Total gross revenues	$	23,650	$	18,893		Total gross revenues	$	27,284	$	22,926	$	50,934	$	41,819

Intersegment sales	Intersegment sales						Intersegment sales

Ag Services and Oilseeds	Ag Services and Oilseeds	$	879	$	932		Ag Services and Oilseeds	$	1,039	$	528	$	1,918	$	1,460
Carbohydrate Solutions	Carbohydrate Solutions	814		411			Carbohydrate Solutions	749		451		1,563		862
Nutrition	Nutrition	42		61			Nutrition	52		60		94		121

Total intersegment sales	Total intersegment sales	$	1,735	$	1,404		Total intersegment sales	$	1,840	$	1,039	$	3,575	$	2,443

Revenues from external customers	Revenues from external customers						Revenues from external customers

Ag Services and Oilseeds	Ag Services and Oilseeds						Ag Services and Oilseeds
Ag Services	Ag Services	$	11,847	$	10,146		Ag Services	$	14,333	$	12,815	$	26,180	$	22,961
Crushing	Crushing	3,222		2,742			Crushing	3,362		2,827		6,584		5,569
Refined Products and Other	Refined Products and Other	3,184		2,119			Refined Products and Other	3,734		2,629		6,918		4,748
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	18,253		15,007			Total Ag Services and Oilseeds	21,429		18,271		39,682		33,278
Carbohydrate Solutions	Carbohydrate Solutions						Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	2,498		1,745			Starches and Sweeteners	2,519		1,846		5,017		3,591
Vantage Corn Processors	Vantage Corn Processors	868		478			Vantage Corn Processors	1,232		974		2,100		1,452
Total Carbohydrate Solutions	Total Carbohydrate Solutions	3,366		2,223			Total Carbohydrate Solutions	3,751		2,820		7,117		5,043
Nutrition	Nutrition						Nutrition
Human Nutrition	Human Nutrition	958		754			Human Nutrition	1,020		848		1,978		1,602
Animal Nutrition	Animal Nutrition	966		809			Animal Nutrition	983		885		1,949		1,694
Total Nutrition	Total Nutrition	1,924		1,563			Total Nutrition	2,003		1,733		3,927		3,296

Other Business	Other Business	107		100			Other Business	101		102		208		202

Total revenues from external customers	Total revenues from external customers	$	23,650	$	18,893		Total revenues from external customers	$	27,284	$	22,926	$	50,934	$	41,819

2731

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 12. Segment Information (Continued)


		Three Months Ended				Three Months Ended				Six Months Ended
		March 31,				June 30,				June 30,
(In millions)	(In millions)	2022		2021			(In millions)	2022		2021		2022		2021
Segment operating profit	Segment operating profit						Segment operating profit

Ag Services and Oilseeds	Ag Services and Oilseeds	$	1,008	$	777		Ag Services and Oilseeds	$	1,119	$	570	$	2,127	$	1,347
Carbohydrate Solutions	Carbohydrate Solutions	317		259			Carbohydrate Solutions	473		383		790		642
Nutrition	Nutrition	189		154			Nutrition	239		201		428		355
Other Business	Other Business	42		9			Other Business	18		6		60		15
Specified Items:	Specified Items:						Specified Items:
Gains on sales of assets and businesses(1)	Gains on sales of assets and businesses(1)	1		—			Gains on sales of assets and businesses(1)	—		22		1		22
Impairment, restructuring, and settlement charges~~(1)~~(2)	Impairment, restructuring, and settlement charges~~(1)~~(2)	(18)		(94)			Impairment, restructuring, and settlement charges~~(1)~~(2)	(9)		(37)		(27)		(131)

Total segment operating profit	Total segment operating profit	1,539		1,105			Total segment operating profit	1,840		1,145		3,379		2,250
Corporate	Corporate	(268)		(281)			Corporate	(321)		(320)		(589)		(601)

Earnings before income taxes	Earnings before income taxes	$	1,271	$	824		Earnings before income taxes	$	1,519	$	825	$	2,790	$	1,649

(1) Consists of gains on the sale of certain assets in all periods presented.

~~(1)~~(2) Current quarter and year-to-date charges related primarily to the impairment of certain Ukraine ~~assets~~assets. Current year-to-date charges was partially offset by an insurance settlement. Prior quarter and year-to-date charges were related to the impairment of certain long-lived assets ~~restructuring,~~ and restructuring. Prior year-to-date charges also included a legal settlement.

Note 13. Asset Impairment, Exit, and Restructuring Costs

Asset impairment, exit, and restructuring costs in the three and six months ended ~~March 31,~~June 30, 2022 consisted of immaterial charges.

Asset impairment, exit, and restructuring costs in the three months ended ~~March 31,~~June 30, 2021 consisted of ~~$31~~$23 million of impairments related to certain long-lived assets and ~~$23~~$1 million of restructuring charges, presented as specified items within segment operating profit, and $5a restructuring adjustment of $1 million in Corporate. Asset impairment, exit, and restructuring costs in the six months ended June 30, 2021 consisted of $54 million of impairments related to certain long-lived assets and $24 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate.

Note 14. Sale of Accounts Receivable

The Company has an accounts receivable securitization program (the “First Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “First Purchasers”). Under the First Program, certain U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Receivables, LLC (“ADM Receivables”). ADM Receivables transfers certain of the purchased accounts receivable to each of the First Purchasers together with a security interest in all of its right, title, and interest in the remaining purchased accounts receivable. In exchange, ADM Receivables receives a cash payment of up to ~~$1.6~~$1.8 billion, as amended, for the accounts receivable transferred. The First Program terminates on ~~May~~November 18, 2022, unless extended.

The Company also has an accounts receivable securitization program (the “Second Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “Second Purchasers”). Under the Second Program, certain non-U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Ireland Receivables Company (ADM Ireland Receivables). ADM Ireland Receivables transfers certain of the purchased accounts receivable to each of the Second Purchasers together with a security interest in all of its right, title, and interest in the remaining purchased accounts receivable. In exchange, ADM Ireland Receivables receives a cash payment of up to ~~$0.7~~$0.8 billion (€~~0.6~~0.8 billion), as amended, for the accounts receivables transferred. The Second Program terminates on February 16, 2023, unless extended.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 14. Sale of Accounts Receivable (Continued)

Under the First and Second Programs (collectively, the “Programs”), ADM Receivables and ADM Ireland Receivables use the cash proceeds from the transfer of receivables to the First Purchasers and Second Purchasers (collectively, the “Purchasers”) and other consideration, as applicable, to finance the purchase of receivables from the Company and the ADM subsidiaries originating the receivables. The Company accounts for these transfers as sales. The Company acts as a servicer for the transferred receivables. At ~~March 31,~~June 30, 2022 and December 31, 2021, the Company did not record a servicing asset or liability related to its retained responsibility, based on its assessment of the servicing fee, market values for similar transactions, and its cost of servicing the receivables sold.

A~~rcher-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~Note 14. Sale of Accounts Receivable (Continued)~~

As of ~~March 31,~~June 30, 2022 and December 31, 2021, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheets was ~~$2.3~~$1.8 billion and $2.2 billion, respectively. Total receivables sold were ~~$14.3~~$29.3 billion and ~~$12.1~~$24.8 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively. Cash collections from customers on receivables sold were ~~$13.7~~$28.2 billion and ~~$10.5~~$22.5 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively. As of ~~March 31,~~June 30, 2022 and December 31, 2021, receivables pledged as collateral to the Purchasers were ~~$0.8~~$1.7 billion and $0.5 billion, respectively.

Transfers of receivables under the Programs resulted in an expense for the loss on sale of $5$3 million and $4$8 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $2 million and $6 million for the three and six months ended June 30, 2021, respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings.

All cash flows under the Programs are classified as operating activities because the cash received from the Purchasers upon both the sale and collection of the receivables is not subject to significant interest rate risk given the short-term nature of the Company’s trade receivables.

2933

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 a global leader in human and animal nutrition and one of the world’s premier agricultural origination and processing companies. It is one of the world’s leading producers of ingredients for human and animal nutrition, and other products made from nature. The Company uses its significant global asset base to originate and transport agricultural commodities, connecting to markets in 200 countries. The Company also processes corn, oilseeds, and wheat into products for food, animal feed, ~~chemical~~industrial, and energy uses. The Company also engages in the manufacturing, sale, and distribution of specialty products including natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products, 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 our 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”.

~~The Company’s~~ADM’s recent significant portfolio actions and announcements include:

•the acquisition in February 2022 of Comhan, a leading South African flavor distributor;

•the announcement in April 2022 of a growth investment in the Company’s oilseed facility in Mainz, Germany, which is expected to be completed in Q3 2023;

•the announcement in April 2022 of a $300 million investment in Decatur, ILIllinois to expand alternative protein production and the opening of a new, state-of-the-art protein innovation ~~center; and~~center, which is expected to be completed in the first quarter of 2025;

•the announcement in April 2022 of a commitment to achieve 100% deforestation-free supply chains by 2025, five years earlier than previously ~~targeted.~~targeted;

•the announcement in May 2022 to significantly expand starch production at the Company’s Marshall, Minnesota facility, which is expected to be completed in the second half of 2023;

•the announcement in May 2022 of five projects funded with support from ADM, in partnership with the U.S. Department of Agriculture’s Natural Resources Conservation Service, to provide farmers with technical and financial resources to help plant cover crop on half a million acres;

•the announcement in June 2022 of the signing of a memorandum of understanding with Bayer, a global enterprise with core competencies in the life science fields of healthcare and agriculture, to build and implement a sustainable crop protection model to soybean farmers in India; and

•the announcement in July 2021 of the signing of an agreement with Farmers Business Network (FBN) to expand availability of FBN’s leading-edge digital farm business management platform, Gradable, to ADM’s network of farmers across North America, offering 55,000 growers a comprehensive digital solution to manage their businesses and measure sustainable production data.

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 current phase of the Company’s strategic transformation is focused on two strategic pillars: Productivity and Innovation.

The Productivity pillar includes (1) advancing the roles of the Company’s Centers of Excellence in procurement, supply chain, and operations to deliver additional efficiencies 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, analytics, and automation at production facilities, in offices, and with customers.

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

Innovation activities include expansions and investments in (1) improving the customer experience, including leveraging producer relationships and enhancing the use of state-of-the-art digital technology to help customers grow; (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 to support additional capacity and meet growing demand, and targeted mergers and ~~acquisitions opportunities.~~acquisitions.

ADM will support both pillars with investments in science and technology, which include expanding digital capabilities and investing further in product research and development. All of these efforts will continue to be strengthened by the Company’s ongoing commitment to Readiness.

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

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. By the end of 2022, the Company expects to achieve 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.

In 2020, ADM announced its environmental stewardship 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 energy intensity by 15 percent, reduce water intensity by 10 percent, and achieve a 90 percent landfill diversion rate.

In 2021, ADM added 5-year interim targets to ensure the Company stays on track to meet its 2035 goals. By 2025, the Company aims to reduce absolute GHG emissions by 1.5%, reduce energy and water intensity by 6% and 5%, respectively, and achieve 87% of its waste diverted from landfill.

In 2021, the Company announced its Scope 3 GHG reduction goal, focused upon the five most material Scope 3 categories for the Company; purchased goods and services; fuel and energy related emissions; upstream transportation and distribution; waste; and processing of solid products/goods. ADM aims to reduce its absolute Scope 3 emissions by 25% from a 2019 baseline by 2035.

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, 2021 and in Part II Item 1A “Risk Factors” on page ~~44.~~55.

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 margin 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.

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

The Company measures its performance using key financial metrics including net earnings, gross margins, constant currency revenue, segment operating profit, adjusted segment operating profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, manufacturing expenses, selling, general, and administrative expenses, return on invested capital, ~~and~~ economic value ~~added.~~added, and operating cash flows before working capital. Some of these metrics are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures. For more information, see “Non-GAAP Financial Measures” on ~~page 38.~~pages 42 and 49. 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 ~~geopolitics.~~geopolitical developments. Due to the unpredictable nature of these ~~unpredictable~~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

On February 24, 2022, Russian troops invaded Ukraine. While the Company’s Ukraine and Russian operations have historically represented less than 0.1% 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 ~~is expected to create~~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 II, Item 1A, “Risk Factors”.

As of ~~March 31,~~June 30, 2022, 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, ~~79%~~76% were inventories that represented less than 2% 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 ~~March 31,~~June 30, 2022

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, ~~tight global stocks driven by a short crop in South America and good global demand drove commodity prices higher.~~the unprecedented market volatility continued along the entire value chain. The conflict in Ukraine ~~resulted in even tighter global stocks of commodities and created high volatility which had a positive~~continued to have an impact on ~~South American origination~~global commodity flows and prices. Global Trade results were driven by market disconnects, tight supply, and strong destination marketing ~~volumes~~margins. In South America, a more timely crop saw farmer selling return to historic norms and ~~margins, and firm ocean freight rates.~~a tight global supply drove commodity prices higher. North American origination was negatively impacted by ~~weather-related supply disruption.~~slow farmer selling, strained truck and rail systems in the interior, and weather disruption that resulted in delayed planting which negatively impacted fertilizer volume. Crushing margins benefited from strong protein and renewable diesel demand and tight oilseeds stocks. In Refined ~~oil~~Products and Other, margins were driven by strong oil demand and tight supply with volatile energy markets driving ~~premiums up.~~up biodiesel margins. In Carbohydrate Solutions, demand infor starches and sweeteners ~~was strong~~remained solid with margins remaining ~~fairly~~ steady ~~on higher input costs.~~across the entire portfolio. Production and logistics issues in North America resulted in tightness in the market ahead of peak summer demand. Ethanol export demand was strong, driven by favorable blending economics and government incentives. Domestic ~~ethanol~~gasoline demand ~~improved significantly from the~~was tracking at or above prior year levels, despite elevated gasoline prices. Industry ethanol production increased past the normal spring maintenance period, but ~~remained below pre-pandemic levels. Industry~~poor railroad logistics and heat hampered production ~~of ethanol returned to pre-pandemic levels, with ethanol margins under pressure due to persistently high industry stocks.~~later in the quarter. Corn milling margins benefited from strong co-product results, as prices for oil and feed products rose in line with higher underlying corn prices. ~~Corn costs were volatile and higher, in part due to a relatively low projected corn stocks-to-use ratio and uncertainty caused by the conflict in Ukraine and other inflationary pressures.~~ Nutrition benefited from overall strong demand in various ~~product~~food, beverage, and dietary supplement categories. In Human Nutrition, demand for flavors, flavor systems, specialty proteins, bioactives, and fibers was strong, but increased energy and raw material costs adversely impacted results. In Animal Nutrition, amino acids pricing and margins improved due to a tighter global supply ~~environment. Growing demand in complete food for petfood was~~environment, partially offset by the devaluation of certain currencies and weak demand in other product lines ~~with some customers cutting products out of formulation~~ due to increased ingredient, freight, and energy costs. ADM’s productivity initiatives are improving the Company’s capabilities to help mitigate the impact of inflation.

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

Three Months Ended ~~March 31,~~June 30, 2022 Compared to Three Months Ended ~~March 31,~~June 30, 2021

Net earnings attributable to controlling interests increased ~~$0.4~~$0.5 billion from $0.7 billion to ~~$1.1~~$1.2 billion. Segment operating profit increased ~~$0.4~~$0.7 billion from $1.1 billion to ~~$1.5~~$1.8 billion and included a net charge of ~~$17~~$9 million consisting of asset impairment ~~restructuring, and settlement charges of $18 million and a gain on sale of assets of $1 million.~~charges. Included in segment operating profit in the prior year quarter was ~~$94~~a net charge of $15 million consisting of asset impairment and restructuring ~~and legal settlement charges.~~charges of $37 million, partially offset by gains on the sale of assets of $22 million. Adjusted segment operating profit (a non-GAAP measure) increased ~~$0.4~~$0.7 billion to ~~$1.6~~$1.8 billion due primarily to higher results in all ~~businesses except in Vantage Corn Processors.~~businesses. Corporate results in the current quarter were a net charge of ~~$268~~$321 million and included a mark-to-market ~~loss~~gain of ~~$15~~$19 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 ~~$281~~$320 million and included a pension settlement charge of $82 million and a mark-to-market ~~loss~~gain of ~~$20~~$30 million on the conversion option of the exchangeable bonds issued in August ~~2020 and a restructuring charge of $5 million.~~2020.

Income tax expense increased ~~$76~~$166 million to ~~$207~~$279 million. The effective tax rate for the quarter ended ~~March 31,~~June 30, 2022 was ~~16.3%~~18.4% compared to ~~15.9%~~13.7% for the quarter ended ~~March 31,~~June 30, 2021. The change in the rate was due primarily to changes in the geographic mix of ~~earnings.~~pretax earnings and the impact of discrete tax items.

Analysis of Statements of Earnings

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


		Three Months Ended				Three Months Ended
		March 31,				June 30,
(In thousands)	(In thousands)	2022	2021	Change	(In thousands)	2022	2021	Change
Oilseeds	Oilseeds	8,491	8,960	(469)	Oilseeds	8,208	8,778	(570)
Corn	Corn	4,812	3,650	1,162	Corn	4,776	5,042	(266)
Total	Total	13,303	12,610	693	Total	12,984	13,820	(836)

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 decrease in oilseeds processed volumes was primarily related to decreased crush rates resulting from the decline in global demand for ~~canola oil~~rapeseed, temporarily idled facility in Paraguay due to crop failure, and the indefinite shutdown of a Ukraine facility since February 2022. The overall ~~increase~~decrease in corn was primarily related to ~~two dry mill facilities that were idled since April 2020~~logistical challenges surrounding railcar availability and ~~restarted in April 2021, partially offset by~~ the sale of the Peoria, ILIllinois facility in November 2021.

~~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							Three Months Ended
		March 31,							June 30,
		2022		2021		Change			2022		2021		Change
		(In millions)							(In millions)

Ag Services and Oilseeds	Ag Services and Oilseeds							Ag Services and Oilseeds
Ag Services	Ag Services	$	11,847	$	10,146	$	1,701	Ag Services	$	14,333	$	12,815	$	1,518
Crushing	Crushing	3,222		2,742		480		Crushing	3,362		2,827		535
Refined Products and Other	Refined Products and Other	3,184		2,119		1,065		Refined Products and Other	3,734		2,629		1,105
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	18,253		15,007		3,246		Total Ag Services and Oilseeds	21,429		18,271		3,158

Carbohydrate Solutions	Carbohydrate Solutions							Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	2,498		1,745		753		Starches and Sweeteners	2,519		1,846		673
Vantage Corn Processors	Vantage Corn Processors	868		478		390		Vantage Corn Processors	1,232		974		258
Total Carbohydrate Solutions	Total Carbohydrate Solutions	3,366		2,223		1,143		Total Carbohydrate Solutions	3,751		2,820		931

Nutrition	Nutrition							Nutrition
Human Nutrition	Human Nutrition	958		754		204		Human Nutrition	1,020		848		172
Animal Nutrition	Animal Nutrition	966		809		157		Animal Nutrition	983		885		98
Total Nutrition	Total Nutrition	1,924		1,563		361		Total Nutrition	2,003		1,733		270

Other Business	Other Business	107		100		7		Other Business	101		102		(1)

Total	Total	$	23,650	$	18,893	$	4,757	Total	$	27,284	$	22,926	$	4,358

Revenues and cost of products sold in ~~agricultural~~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 increased ~~$4.8~~$4.4 billion to ~~$23.7~~$27.3 billion due to higher sales prices ($~~4.6~~5.2 billion) ~~and higher~~, partially offset by lower sales volumes ($~~0.2~~0.8 billion). Higher sales prices of oils, soybeans, corn, ~~soybeans, animal feeds,~~meal, farming materials, wheat, biodiesel, ~~farming materials,~~flours, and alcohol and ~~flour, and~~ higher sales volumes of ~~alcohol and~~ milled rice, were partially offset by lower ~~sales~~ volumes of soybeans, oils, and ~~wheat.~~corn. Ag Services and Oilseeds revenues increased ~~22%~~17% to ~~$18.3~~$21.4 billion due to higher sales prices ($~~3.6~~4.2 billion), partially offset by lower sales volumes ($~~0.3~~1.0 billion). Carbohydrate Solutions revenues increased ~~51%~~33% to ~~$3.4~~$3.8 billion due to higher sales prices ($~~0.7~~0.8 billion) and higher sales volumes ($~~0.4~~0.1 billion) despite the loss of USD-grade industrial alcohol volumes from the divested Peoria, ILIllinois facility. Nutrition revenues increased ~~23%~~16% to ~~$1.9~~$2.0 billion due to higher sales prices ($~~0.3~~0.2 billion) and higher sales volumes ($0.1 billion).

Cost of products sold increased ~~$4.4~~$3.7 billion to ~~$21.8~~$25.2 billion due principally to higher average commodity costs. Manufacturing expenses increased ~~$0.3~~$0.2 billion to $1.7 billion due principally to higher energy costs, ~~maintenance,~~operating supplies, and ~~operating supplies.~~maintenance.

Foreign currency translation decreased revenues and cost of products sold by ~~$0.5 billion and $0.4 billion, respectively.~~

Gross profit increased $349 million or 23%, to $1.9 billion due principally to higher results in Ag Services and Oilseeds ($182 million), Starches and Sweeteners ($106 million), Nutrition ($82 million), and Other ($13 million), partially offset by lower results in Vantage Corn Processors ($33 million). These factors are explained in the segment operating profit discussion on page 37.

$0.7 billion.

3438

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

Gross profit increased $637 million or 44%, to $2.1 billion due principally to higher results in Ag Services and Oilseeds ($563 million), Starches and Sweeteners ($97 million), and Nutrition ($63 million), partially offset by lower results in Vantage Corn Processors ($45 million) and Other ($36 million). These factors are explained in the segment operating profit discussion on page 41.

Selling, general, and administrative expenses increased ~~$80~~$75 million to ~~$829~~$814 million due primarily to higher IT and project-related expenses, ~~and~~higher insurance costs, increased provisions for bad debt, and amortization of intangibles from new acquisitions.

Asset impairment, exit, and restructuring costs decreased ~~$58~~$22 million to $1 million. Charges in the current quarter were not material. Charges in the prior year quarter consisted of ~~$31~~$23 million of impairments related to certain long-lived assets and ~~$23~~$1 million of restructuring charges, presented as specified items within segment operating profit, and $5a restructuring adjustment of $1 million ~~of restructuring charges~~ in Corporate.

Equity in earnings of unconsolidated affiliates increased ~~$79~~$29 million to ~~$204~~$192 million due primarily to higher earnings from the Company’s ~~investments~~investment in ~~Wilmar, Almidones Mexicanos S.A., SoyVen, and Stratas Foods LLC.~~Wilmar.

Investment income ~~increased $46~~decreased $18 million to ~~$59~~$32 million due primarily to lower revaluation gains of ~~$34~~$2 million ~~and interest income of $11~~compared to $40 million ~~related to a tax item~~ in the ~~current quarter.~~prior year quarter, partially offset by higher interest income.

Interest expense increased $5$33 million to ~~$92~~$73 million due to higher debt balances and ~~interest related to a tax item.~~increased short-term rates on the Company’s U.S. and European commercial paper borrowing programs. Interest expense in the current quarter also included a ~~$15~~$19 million mark-to-market ~~loss~~gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020, compared to a ~~$20~~$30 million mark-to-market ~~loss~~gain adjustment in the prior year quarter.

Other income-net increased from a net expense of ~~$33~~$49 million ~~was comparable to~~in the prior ~~period.~~year quarter to a net income of $83 million. Income in the current ~~quarter included the non-service components of net pension benefit income, foreign exchange gains, and 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, a $50 million one-time payment from the USDA Biofuel Producer Recovery Program, foreign exchange gains, and other ~~income.~~expense. Expense in the prior year quarter included a non-cash pension settlement charge of $82 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties, partially offset by gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and foreign exchange gains.

3539

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							Three Months Ended
		March 31,							June 30,
Segment Operating Profit (Loss)	Segment Operating Profit (Loss)	2022		2021		Change		Segment Operating Profit (Loss)	2022		2021		Change
		(In millions)							(In millions)

Ag Services and Oilseeds	Ag Services and Oilseeds							Ag Services and Oilseeds
Ag Services	Ag Services	$	258	$	209	$	49	Ag Services	$	407	$	190	$	217
Crushing	Crushing	428		382		46		Crushing	468		150		318
Refined Products and Other	Refined Products and Other	198		101		97		Refined Products and Other	130		130		—
Wilmar	Wilmar	124		85		39		Wilmar	114		100		14
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	1,008		777		231		Total Ag Services and Oilseeds	1,119		570		549

Carbohydrate Solutions	Carbohydrate Solutions							Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	316		222		94		Starches and Sweeteners	393		306		87
Vantage Corn Processors	Vantage Corn Processors	1		37		(36)		Vantage Corn Processors	80		77		3
Total Carbohydrate Solutions	Total Carbohydrate Solutions	317		259		58		Total Carbohydrate Solutions	473		383		90

Nutrition	Nutrition							Nutrition
Human Nutrition	Human Nutrition	141		128		13		Human Nutrition	183		162		21
Animal Nutrition	Animal Nutrition	48		26		22		Animal Nutrition	56		39		17
Total Nutrition	Total Nutrition	189		154		35		Total Nutrition	239		201		38

Other Business	Other Business	42		9		33		Other Business	18		6		12

Specified Items:	Specified Items:							Specified Items:
Gains on sales of assets and businesses	Gains on sales of assets and businesses	1		—		1		Gains on sales of assets and businesses	—		22		(22)
Asset impairment, restructuring, and settlement charges	Asset impairment, restructuring, and settlement charges	(18)		(94)		76		Asset impairment, restructuring, and settlement charges	(9)		(37)		28

Total Specified Items	Total Specified Items	(17)		(94)		77		Total Specified Items	(9)		(15)		6

Total Segment Operating Profit	Total Segment Operating Profit	$	1,539	$	1,105	$	434	Total Segment Operating Profit	$	1,840	$	1,145	$	695

Adjusted Segment Operating Profit(1)	Adjusted Segment Operating Profit(1)	$	1,556	$	1,199	$	357	Adjusted Segment Operating Profit(1)	$	1,849	$	1,160	$	689

Segment Operating Profit	Segment Operating Profit	$	1,539	$	1,105	$	434	Segment Operating Profit	$	1,840	$	1,145	$	695
Corporate	Corporate	(268)		(281)		13		Corporate	(321)		(320)		(1)
Earnings Before Income Taxes	Earnings Before Income Taxes	$	1,271	$	824	$	447	Earnings Before Income Taxes	$	1,519	$	825	$	694

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

3640

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

Ag Services and Oilseeds operating profit increased ~~30%~~96%. Ag Services and Oilseeds delivered substantially higher year-over-year results, effectively managing risk and executing well in a dynamic environment of robust global demand and tight supply, driven primarily by the short South American crop. Ag Services results were significantly higher versus the ~~first quarter of 2021.~~year-ago quarter. Global trade profits were significantly higher year-over-year driven by the destination marketing’s ability to meet customer demand across the globe which helped drive strong volumes and margins and good execution in global ocean freight, as well as net timing gains for the quarter. North America had solid performance as export volumes remained strong in a good global demand environment, though year-over-year results were lower due to an insurance settlement as well as strong positioning gains in the prior year quarter. In South America, results were higher based on stronger origination volumes and better margins driven by strong ~~performances~~global grain demand. Crushing delivered substantially higher results. Strong soy crush margins drove improved performance in ~~destination marketing~~all three regions, as meal and ~~global ocean freight. North American origination margins and volumes were lower year-over-year, including~~oil demand remained robust. Positive net timing effects for the quarter, versus the negative timing ~~effects~~. ~~Crushing was higher year over year in a strong global margin environment driven by robust protein and vegetable oil demand. Improving margins~~ in the prior year quarter, ~~resulted in negative timing effects versus positive timing effects in the prior-year quarter.~~also helped drive higher year-over-year results. Refined Products and Other results were ~~much higher than~~similar to the prior-year quarter, ~~driven by healthy~~as strong demand for biofuels and food oils drove strong refining premiums and ~~good refined oils demand in North America, as well as strong~~ biodiesel margins, ~~in Europe, Middle East, and Africa (EMEA) biodiesel as well as healthy refining premiums and good demand in North American refined oils.~~were offset by negative timing effects. Equity earnings from Wilmar were significantly higher versus the ~~first~~second quarter of 2021.

Carbohydrate Solutions operating profit increased ~~22%~~23%. ~~Carbohydrate Solutions delivered results that were substantially higher year-over-year.~~ Starches and Sweeteners, including ethanol production from the wet mills, delivered much ~~higher~~better results ~~versus the prior-year quarter, driven by higher corn co-product revenues and improved citric acid profits in North America; higher~~due to solid demand as food service volumes ~~and margins in EMEA; and higher volumes and margins in wheat milling. Sales volumes for starches and sweeteners continued their recovery. The biosolutions platform continued~~reached close to ~~deliver revenue growth as~~pre-pandemic levels. Corn co-products, including strong demand for ~~plant-based products expands into more diverse applications.~~ corn oil, and effective risk management results drove higher ethanol and sweetener margins. Vantage Corn Processors ~~delivered solid execution margins but position~~results were slightly higher in an environment of good gasoline demand and strong ethanol blending economics. A $50 million one-time payment from the USDA Biofuel Producer Recovery Program helped offset the prior year’s strong industrial alcohol results from the now-sold Peoria, Illinois facility as well as valuation losses on ethanol inventory as prices fell ~~early~~late in the ~~quarter drove lower results versus the prior-year quarter, which benefited from demand for USP-grade industrial alcohol from the Peoria facility that was divested in November 2021.~~quarter.

Nutrition operating profit increased ~~23%~~19%. ~~Nutrition delivered strong revenue growth of 23% and maintained healthy margins, driving substantially higher results.~~ Human Nutrition delivered higher year-over-year ~~results.~~results as demand across its diverse product portfolio remained robust. Flavors ~~continued~~grew revenue in North America, Europe, Middle East, and Africa (EMEA), and South America, though profits were lower due to ~~deliver solid revenue growth, offset by some higher costs. Strong sales growth~~negative currency effects in EMEA as well as weaker results in Asia-Pacific. Healthy demand for alternative proteins ~~including contribution~~resulted in strong soy protein volumes and margins, as contributions from the Sojaprotein acquisition, ~~and positive currency timing impacts in South America, offset some~~as well as good demand for texturants, drove higher ~~operating costs to help deliver better year-over-year~~ results in Specialty Ingredients. ~~Health and Wellness was also higher year-over-year, powered by~~Strength across probiotics, including ~~contribution from~~in the ~~November 2021~~recently-acquired Deerland Probiotics and Enzymes ~~acquisition, and~~business, as well as robust demand for ~~fiber.~~fibers, contributed to a stronger quarter in Health and Wellness. Animal Nutrition profits were ~~nearly double the prior-year quarter, due primarily to strength~~up substantially year-over-year, driven by continued strong volumes and margins in amino ~~acids, which was driven by a combination of product mix changes, improved North American demand and global supply chain disruptions.~~acids.

Other Business operating profit increased ~~$33~~$12 million, driven primarily by ~~better performance in captive insurance, including reduced claim settlements versus the prior-year quarter.~~higher ADM Investor Services earnings.

Corporate results for the quarter are as follows:


		Three Months Ended							Three Months Ended
		March 31,							June 30,
		2022		2021		Change			2022		2021		Change
		(In millions)							(In millions)

Interest expense-net	Interest expense-net	$	(76)	$	(64)	$	(12)	Interest expense-net	$	(87)	$	(70)	$	(17)
Unallocated corporate costs	Unallocated corporate costs	(209)		(202)		(7)		Unallocated corporate costs	(267)		(248)		(19)
Loss on sale of assets		(3)		—		(3)
Expenses related to acquisitions		(2)		—		(2)

Loss on debt conversion option		(15)		(20)		5
Restructuring adjustment (charges)		1		(5)		6

Gain on debt conversion option								Gain on debt conversion option	19		30		(11)
Restructuring and settlement charges								Restructuring and settlement charges	1		(81)		82
Other income	Other income	36		10		26		Other income	13		49		(36)
Total Corporate	Total Corporate	$	(268)	$	(281)	$	13	Total Corporate	$	(321)	$	(320)	$	(1)

3741

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

Corporate results were a net charge of ~~$268~~$321 million in the current quarter compared to a net charge of ~~$281~~$320 million in the prior year quarter. Interest expense-net increased ~~$12~~$17 million due to higher debt balances and ~~interest related to a tax item.~~increased short-term rates on the Company’s U.S. and European commercial paper borrowing programs. Unallocated corporate costs increased $7$19 million due primarily to higher IT ~~operating~~ and project-related costs and higher costs in the Company’s centers of ~~excellence, partially offset by lower incentive compensation accruals. Loss~~excellence. 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. Restructuring and settlement charges in the prior year quarter included a pension settlement charge of $82 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties. Other income in the current quarter included the non-service components of net pension benefit income of $6 million, ~~and~~ an investment revaluation gain of ~~$34~~$2 million, and foreign exchange gains, partially offset by ~~foreign exchange losses.~~railroad maintenance expenses. Other income in the prior year quarter included the non-service components of net pension benefit income of $6$5 million, an investment revaluation gain of $40 million, and foreign exchange gains.

Non-GAAP Financial Measures

The Company uses adjusted earnings per share (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, 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 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,~~June 30, 2022 and 2021.


		Three months ended March 31,									Three months ended June 30,
		2022				2021					2022				2021
		In millions		Per share		In millions		Per share			In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	Average number of shares outstanding - diluted	568				564				Average number of shares outstanding - diluted	568				566

Net earnings and reported EPS (fully diluted)	Net earnings and reported EPS (fully diluted)	$	1,054	$	1.86	$	689	$	1.22	Net earnings and reported EPS (fully diluted)	$	1,236	$	2.18	$	712	$	1.26
Adjustments:	Adjustments:									Adjustments:
Losses on sales of assets and businesses - net of tax of $0 million in 2022(1)		2		—		—		—
Loss on debt conversion option - net of tax of $0 (1)		15		0.03		20		0.04
Asset impairment, restructuring, and settlement charges - net of tax of $3 million in 2022 and $25 million in 2021 (1)		14		0.02		74		0.13
Expenses related to acquisitions - net of tax of $1 million in 2022 (1)		1		—		—		—
Gains on sales of assets and businesses - net of tax of $5 million in 2021(1)										Gains on sales of assets and businesses - net of tax of $5 million in 2021(1)	—		—		(17)		(0.03)
Gain on debt conversion option - net of tax of $0 (1)										Gain on debt conversion option - net of tax of $0 (1)	(19)		(0.04)		(30)		(0.06)
Asset impairment, restructuring, and settlement charges - net of tax of $2 million in 2022 and $28 million in 2021 (1)										Asset impairment, restructuring, and settlement charges - net of tax of $2 million in 2022 and $28 million in 2021 (1)	6		0.01		90		0.16
Certain discrete tax adjustments	Certain discrete tax adjustments	(4)		(0.01)		—		—		Certain discrete tax adjustments	(1)		—		(1)		—
Total adjustments	Total adjustments	28		0.04		94		0.17		Total adjustments	(14)		(0.03)		42		0.07
Adjusted net earnings and adjusted EPS	Adjusted net earnings and adjusted EPS	$	1,082	$	1.90	$	783	$	1.39	Adjusted net earnings and adjusted EPS	$	1,222	$	2.15	$	754	$	1.33

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

3842

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,~~June 30, 2022 and 2021.


		Three months ended							Three months ended
		March 31,							June 30,
(In millions)	(In millions)	2022		2021		Change		(In millions)	2022		2021		Change
Earnings before income taxes	Earnings before income taxes	$	1,271	$	824	$	447	Earnings before income taxes	$	1,519	$	825	$	694
Interest expense	Interest expense	92		87		5		Interest expense	73		40		33
Depreciation and amortization	Depreciation and amortization	257		249		8		Depreciation and amortization	257		243		14
Losses on sales of assets and businesses		2		—		2
Expenses related to acquisition		2		—		2
Gains on sales of assets and businesses								Gains on sales of assets and businesses	—		(22)		22
Railroad maintenance expenses								Railroad maintenance expenses	9		3		6
Asset impairment, restructuring, and settlement charges	Asset impairment, restructuring, and settlement charges	17		99		(82)		Asset impairment, restructuring, and settlement charges	8		118		(110)
Adjusted EBITDA	Adjusted EBITDA	$	1,641	$	1,259	$	382	Adjusted EBITDA	$	1,866	$	1,207	$	659

		Three months ended							Three months ended
		March 31,							June 30,
(In millions)	(In millions)	2022		2021		Change		(In millions)	2022		2021		Change

Ag Services and Oilseeds	Ag Services and Oilseeds	$	1,096	$	871	$	225	Ag Services and Oilseeds	$	1,207	$	661	$	546
Carbohydrate Solutions	Carbohydrate Solutions	396		342		54		Carbohydrate Solutions	550		467		83
Nutrition	Nutrition	254		209		45		Nutrition	304		253		51
Other Business	Other Business	44		11		33		Other Business	24		7		17
Corporate	Corporate	(149)		(174)		25		Corporate	(219)		(181)		(38)
Adjusted EBITDA	Adjusted EBITDA	$	1,641	$	1,259	$	382	Adjusted EBITDA	$	1,866	$	1,207	$	659

3943

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

Market Factors Influencing Operations or Results in the Six Months Ended June 30, 2022

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, tight global stocks driven by a short crop in South America and good global demand drove commodity prices higher. The conflict in Ukraine resulted in even tighter global stocks of commodities and created high volatility which had a positive impact on North and South American origination prices. Global Trade results were driven by market disconnects, tight supply, strong destination marketing margins, and firm ocean freight rates. North American origination was negatively impacted by weather-related supply disruption and delayed planting due to unfavorable weather which negatively impacted fertilizer volume. Crushing margins benefited from strong protein and renewable diesel demand and tight oilseeds stocks. In Refined Products and Other, margins were driven by strong oil demand and tight supply with volatile energy markets driving up biodiesel margins. In Carbohydrate Solutions, demand for starches and sweeteners was solid with margins remaining steady despite higher input costs. Domestic ethanol demand remained at or above the prior year, but below pre-pandemic levels. Export ethanol demand was strong, driven by favorable blending economics and government incentives. Industry production of ethanol returned to pre-pandemic levels as gasoline consumption remained robust even at higher gas prices. Corn milling margins benefited from strong co-product results, as prices for oil and feed products rose in line with higher underlying corn prices. Corn costs were volatile and higher, in part due to a relatively low projected corn stocks-to-use ratio and uncertainty caused by the conflict in Ukraine. Nutrition benefited from overall strong demand in various various food, beverage, and dietary supplement categories. In Human Nutrition, strong demand for flavors, flavor systems, specialty proteins, bioactives, and fibers were partially offset by higher energy and raw material costs. Margins remained robust on strong price actions. In Animal Nutrition, amino acids pricing and margins improved due to a tighter global supply environment, partially offset by the devaluation of certain currencies and weak demand in other product lines with some customers cutting products out of formulation due to increased ingredient, freight, and energy costs. ADM’s productivity initiatives are improving the Company’s capabilities to help mitigate the impact of inflation.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Net earnings attributable to controlling interests increased $0.9 billion to $2.3 billion. Segment operating profit increased $1.1 billion to $3.4 billion and included a net charge of $26 million consisting of asset impairment, restructuring, and settlement charges of $27 million and a gain on sale of assets of $1 million. Included in segment operating profit in the prior period was a net charge of $109 million consisting of gains on the sale of assets of $22 million and asset impairment, restructuring, and settlement charges of $131 million. Adjusted segment operating profit (a non-GAAP measure) increased $1.0 billion to $3.4 billion due primarily to higher results in all businesses except in Vantage Corn Processors. Corporate results in the current and prior periods were a net charge of $0.6 billion. Corporate results in the current period included a mark-to-market gain of $4 million on the conversion option of the exchangeable bonds issued in August 2020. Corporate results in the prior period included a pension settlement charge of $82 million and a mark-to-market gain of $10 million on the conversion option of the exchangeable bonds issued in August 2020.

Income taxes of $486 million increased $242 million. The Company’s effective tax rate for the six months ended June 30, 2022 was 17.4% compared to 14.8% for the six months ended June 30, 2021. The change in the rate was due primarily to changes in the geographic mix of pretax earnings and the impact of discrete tax items.

Analysis of Statements of Earnings

Processed volumes by product for the six months ended June 30, 2022 and 2021 are as follows (in metric tons):


	Six Months Ended
	June 30,
(In thousands)	2022	2021	Change
Oilseeds	16,699	17,738	(1,039)
Corn	9,588	8,692	896
Total	26,287	26,430	(143)

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 decrease in oilseeds processed volumes was primarily related to decreased crush rates resulting from the decline in global demand for rapeseed, temporarily idled facility in Paraguay due to crop failure, and the indefinite shutdown of a Ukraine facility since February 2022. The overall increase in corn was primarily related to two dry mill facilities that were idled since April 2020 and restarted in April 2021, partially offset by the sale of the Peoria, Illinois facility in November 2021 and logistical challenges surrounding railcar availability in the second quarter of 2022.

Revenues by segment for the six months ended six months ended June 30, 2022 and 2021 are as follows:


	Six Months Ended
	June 30,
	2022		2021		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	26,180	$	22,961	$	3,219
Crushing	6,584		5,569		1,015
Refined Products and Other	6,918		4,748		2,170
Total Ag Services and Oilseeds	39,682		33,278		6,404

Carbohydrate Solutions
Starches and Sweeteners	5,017		3,591		1,426
Vantage Corn Processors	2,100		1,452		648
Total Carbohydrate Solutions	7,117		5,043		2,074

Nutrition
Human Nutrition	1,978		1,602		376
Animal Nutrition	1,949		1,694		255
Total Nutrition	3,927		3,296		631

Other Business	208		202		6
Total	$	50,934	$	41,819	$	9,115

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 increased $9.1 billion to $50.9 billion due to higher sales prices ($9.9 billion), partially offset by lower sales volumes ($0.8 billion). Higher sales prices of oils, soybeans, corn, wheat, farming materials, meal, biodiesel, flours, and alcohol, and higher sales volumes of milled rice and alcohol, were partially offset by lower volumes of soybeans, oils, corn, and wheat. Ag Services and Oilseeds revenues increased 19% to $39.7 billion due to higher sales prices ($7.9 billion), partially offset by lower sales volumes ($1.5 billion). Carbohydrate Solutions revenues increased 41% to $7.1 billion due to higher sales prices ($1.6 billion) and higher sales volumes ($0.5 billion) despite the loss of USD-grade industrial alcohol volumes from the divested Peoria, Illinois facility. Nutrition revenues increased 19% to $3.9 billion due to higher sales prices ($0.4 billion) and higher sales volumes ($0.2 billion).

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

Cost of products sold increased $8.1 billion to $46.9 billion due principally to higher average commodity costs. Manufacturing expenses increased $0.4 billion to $3.3 billion due principally to higher energy costs, operating supplies, and maintenance.

Foreign currency translation decreased revenues and cost of goods sold by $1.2 billion and $1.1 billion, respectively.

Gross profit increased $1.0 billion or 33% to $4.0 billion due principally to higher results in Ag Services and Oilseeds ($745 million), Starches and Sweeteners ($203 million), and Nutrition ($145 million), partially offset by lower results in Vantage Corn Processors ($78 million) and Other ($23 million) These factors are explained in the segment operating profit discussion on page 48.

Selling, general, and administrative expenses increased $0.2 billion to $1.6 billion due principally to higher IT and project-related expenses, higher insurance costs, increased provisions for bad debt, amortization of intangibles from new acquisitions, and higher salaries and benefit costs.

Asset impairment, exit, and restructuring costs decreased $80 million to $2 million. Charges in the current period were not material. Charges in the prior period consisted of $54 million of impairments related to certain long-lived assets and $24 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate.

Equity in earnings of unconsolidated affiliates increased $108 million to $396 million due primarily to higher earnings from the Company’s investments in Wilmar, Almidones Mexicanos S.A., Olenex, SoyVen, and Stratas Foods LLC.

Investment income increased $28 million to $91 million due primarily to higher interest income, partially offset by lower revaluation gains of $36 million compared to $40 million in the prior period.

Interest expense increased $38 million to $165 million due to higher debt balances and increased short-term rates on the Company’s U.S. and European commercial paper borrowing programs. Interest expense in the current period also included a $4 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 compared to a $10 million mark-to-market gain adjustment in the prior period.

Other income-net increased from a net expense of $16 million in the prior period to a net income of $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, a $50 million one-time payment from the USDA Biofuel Producer Recovery Program, foreign exchange gains, and other expense. Expense in the prior period included a non-cash pension settlement charge of $82 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties, partially offset by gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, foreign exchange gains, and 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 six months ended June 30, 2022 and 2021 are as follows:


	Six Months Ended
	June 30,
Segment Operating Profit (Loss)	2022		2021		Change
	(In millions)











Ag Services and Oilseeds
Ag Services	$	665	$	399	$	266
Crushing	896		532		364
Refined Products and Other	328		231		97
Wilmar	238		185		53
Total Ag Services and Oilseeds	2,127		1,347		780

Carbohydrate Solutions
Starches and Sweeteners	709		528		181
Vantage Corn Processors	81		114		(33)
Total Carbohydrate Solutions	790		642		148

Nutrition
Human Nutrition	324		290		34
Animal Nutrition	104		65		39
Total Nutrition	428		355		73

Other Business	60		15		45

Specified Items:
Gains (losses) on sales of assets and businesses	1		22		(21)
Asset impairment, restructuring, and settlement charges	(27)		(131)		104

Total Specified Items	(26)		(109)		83

Total Segment Operating Profit	$	3,379	$	2,250	$	1,129

Adjusted Segment Operating Profit(1)	$	3,405	$	2,359	$	1,046

Segment Operating Profit	$	3,379	$	2,250	$	1,129
Corporate	(589)		(601)		12
Earnings Before Income Taxes	$	2,790	$	1,649	$	1,141

(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 58%. Ag Services results were significantly higher versus the first half of 2021. Global trade results were higher, driven by strong performances in destination marketing and global ocean freight. North American origination margins and volumes were lower year-over-year. South America results were higher, driven by better origination margins on good demand for grain. Crushing was higher year over year in a strong global margin environment driven by robust protein and vegetable oil demand. Positive net timing effects in the current period versus negative timing effects in the prior period helped drive higher year-over-year results. Refined Products and Other results were higher than the prior period, driven by healthy refining premiums and good refined oils demand in North America, as well as strong biodiesel margins in EMEA. Equity earnings from Wilmar were higher versus the first half of 2021.

Carbohydrate Solutions operating profit increased 23%. Starches and Sweeteners, including ethanol production from the wet mills, delivered higher results versus the prior period, driven by solid margins across sweeteners and starches as well corn co-products, improved ethanol margins, and effective risk management. Sales volumes for starches and sweeteners continued their recovery, and the biosolutions platform continued to deliver revenue growth as demand for plant-based products expanded into more diverse applications. Vantage Corn Processors results were lower versus the prior period with improved ethanol margins and a $50 million one-time payment from the USDA Biofuel Producer Recovery Program partially offsetting the prior period’s strong positioning gains and industrial alcohol results from the now-sold Peoria, Illinois facility.

Nutrition operating profit increased 21%. Human Nutrition delivered higher year-over-year results. Flavors results were lower driven by softer demand in China. Strong sales growth in alternative proteins, including contribution from the Sojaprotein acquisition, and good demand for texturants offset some higher operating costs to help deliver better year-over-year results in Specialty Ingredients. Health and Wellness was also higher year-over-year, powered by probiotics, including contribution from the November 2021 Deerland Probiotics and Enzymes acquisition, and robust demand for fiber and Vitamin E. Animal Nutrition profits were higher than the prior period, due primarily to strength in amino acids.

Other Business operating profit increased $45 million, driven primarily by better performance in captive insurance, including reduced claim settlements versus the prior period and higher ADM Investor Services earnings.

Corporate results for the six months ended June 30, 2022 and 2021 are as follows:


	Six Months Ended
	June 30,
	2022		2021		Change
	(In millions)

Interest expense-net	$	(163)	$	(134)	(29)
Unallocated corporate costs	(476)		(450)		(26)
Loss on sale of assets	(3)		—		(3)
Expenses related to acquisitions	(2)		—		(2)

Gain on debt conversion option	4		10		(6)
Restructuring and settlement charges	2		(86)		88
Other income	49		59		(10)
Total Corporate	$	(589)	$	(601)	$	12

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

Corporate results were a net charge of $0.6 billion in the current period which was comparable to the prior period. Interest expense-net increased $29 million due to higher debt balances, increased short-term rates on the Company’s U.S. and European commercial paper borrowing programs, and interest related to a tax item. Unallocated corporate costs increased $26 million due primarily to higher IT and project-related costs and higher costs in the Company’s centers of excellence, 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. Restructuring and settlement charges in the prior period included a non-cash pension settlement charge of $82 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the ADM Retirement Plant and ADM Pension Plan for Hourly-Wage Employees to independent third parties, and restructuring charges. Other income in the current period included the non-service components of net pension benefit income of $12 million, an investment revaluation gain of $36 million and foreign exchange gains, partially offset by railroad maintenance expenses. Other income in the prior period included the non-service components of net pension benefit income of $11 million, an investment revaluation gain of $40 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.

The table below provides a reconciliation of diluted EPS to adjusted EPS for the six months ended June 30, 2022 and 2021.


	Six months ended June 30,
	2022				2021
	In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	568				565

Net earnings and reported EPS (fully diluted)	$	2,290	$	4.03	$	1,401	$	2.48
Adjustments:
(Gains) losses on sales of assets and businesses - net of tax of $0 million in 2022 and $5 million in 2021 (1)	2		—		(17)		(0.03)
Asset impairment, restructuring, and settlement charges - net of tax of $5 million in 2022 and $53 million in 2021 (1)	20		0.04		164		0.29
Expenses related to acquisitions - net of tax of $1 million (1)	1		—		—		—

Gain on debt conversion option - net of tax of $0 (1)	(4)		(0.01)		(10)		(0.02)
Certain discrete tax adjustments	(5)		(0.01)		(1)		—
Total adjustments	14		0.02		136		0.24
Adjusted net earnings and adjusted EPS	$	2,304	$	4.05	$	1,537	$	2.72

(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 six months ended June 30, 2022 and 2021.


	Six months ended
	June 30,
(In millions)	2022		2021		Change
Earnings before income taxes	$	2,790	$	1,649	$	1,141
Interest expense	165		127		38
Depreciation and amortization	514		492		22
(Gains) losses on sales of assets and businesses	2		(22)		24

Expenses related to acquisitions	2		—		2
Railroad maintenance expenses	9		3		6
Asset impairment, restructuring, and settlement charges	25		217		(192)
Adjusted EBITDA	$	3,507	$	2,466	$	1,041









	Six months ended
	June 30,
(In millions)	2022		2021		Change













Ag Services and Oilseeds	$	2,303	$	1,532	$	771
Carbohydrate Solutions	946		809		137






Nutrition	558		462		96






Other Business	68		18		50





Corporate	(368)		(355)		(13)









Adjusted EBITDA	$	3,507	$	2,466	$	1,041

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 ~~$1.2~~$0.7 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to cash provided of ~~$0.3~~$3.0 billion for the same period last year. Working capital changes decreased cash by ~~$2.8~~$3.9 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to ~~a decrease~~an increase of ~~$0.9~~$0.8 billion for the same period last year. Segregated cash and investments increased approximately $1.8 due to increased trading activity in the Company’s futures commission and brokerage business. Trade receivables increased ~~$0.9~~$2.2 billion due to higher revenues. Inventories increased approximately ~~$2.9~~$0.3 billion due to higher inventory prices partially offset by lower inventory volumes. Other current assets increased ~~$2.1~~$1.6 billion primarily due to increases in contracts and futures gains, ~~and~~ margin deposits and grain ~~accounts.~~accounts, and customer omnibus receivable. Brokerage payables increased approximately $2.5 billion due to increased customer trading activity in the Company’s futures commission and brokerage business. ~~Accrued expenses and other payables increased $1.4 billion primarily due to increases in contracts and futures losses.~~

Cash used in investing activities was ~~$0.3~~$0.6 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to ~~$0.2~~$0.4 billion for the same period last year. Capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~of $0.2~~were $0.5 billion ~~were comparable~~compared to $0.4 billion for the same period last year. Other-net for the ~~three~~six months ended ~~March 31,~~June 30, 2022 of $0.1 billion consisted of new and additional cost method equity investments.

Cash provided by financing activities was ~~$3.3~~$1.5 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to ~~$1.1~~a use of $0.6 billion for the same period last year. Long-term debt borrowings for the ~~three~~six months ended ~~March 31,~~June 30, 2022 of $0.8 billion consisted of the $750 million aggregate principal amount of 2.900% notes due 2032, compared to long-term debt borrowings for the same period last year of $0.6 billion 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. The Company expects to apply an amount equal to the proceeds from the borrowings in the current period to finance or refinance eligible green projects and/or eligible social projects. Proceeds from the borrowings in the prior period were used for general corporate purposes. Net borrowings from short-term credit agreements for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were ~~$2.8~~$1.4 billion compared to ~~$0.7~~net payments of $0.8 billion for the same period last year. Proceeds from the current period short-term borrowings were used to fund working capital needs. Dividends of ~~$0.2~~$0.5 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were comparable to the same period last year. Share repurchases for the six months ended June 30, 2022 were $0.2 billion compared to an insignificant amount for the same period last year.

At ~~March 31,~~June 30, 2022, the Company had ~~$1.1~~$0.9 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of ~~1.4~~1.5 to 1. Included in working capital was ~~$12.0~~$8.9 billion of readily marketable commodity inventories. At ~~March 31,~~June 30, 2022, the Company’s capital resources included shareholders’ equity of ~~$23.8~~$24.4 billion and lines of credit, including the accounts receivable securitization programs described below, totaling ~~$14.3~~$14.7 billion, of which ~~$8.2~~$10.6 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 ~~27%~~25% and 26% at ~~March 31,~~June 30, 2022 and December 31, 2021, 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 ~~34%~~30% and 28% at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Of the Company’s total lines of credit, $6.5 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was ~~$0.7~~$0.2 billion commercial paper outstanding at ~~March 31,~~June 30, 2022.

As of ~~March 31,~~June 30, 2022, the Company had ~~$1.1~~$0.9 billion of cash and cash equivalents, $0.4 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 ~~$6.5~~$9.5 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.

4051

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

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 ~~$2.3~~$2.6 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,~~June 30, 2022, the Company had ~~$24 million~~$0.9 billion unused capacity of its facility under the Programs.

As of ~~March 31,~~June 30, 2022, the Company has total available liquidity of ~~$9.3~~$11.5 billion comprised of cash and cash equivalents and unused lines of credit.

For the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company spent approximately ~~$0.2~~$0.5 billion in capital expenditures, $0.5 billion in dividends, and $0.2 billion in ~~dividends.~~share repurchases. The Company has a stock repurchase program. Under the program, the Company has ~~104.5~~102.2 million shares remaining as of ~~March 31,~~June 30, 2022 that may be repurchased until December 31, 2024.

In 2022, the Company expects total capital expenditures of approximately $1.3 billion and additional cash outlays of approximately $0.9 billion in dividends and up to ~~$150 million~~$1.2 billion in share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of ~~March 31,~~June 30, 2022 and December 31, 2021 were ~~$22.9~~$19.7 billion and $18.6 billion, respectively. The increase is primarily related to obligations to purchase agricultural commodity inventories at higher prices. As of ~~March 31,~~June 30, 2022, the Company expects to make payments related to purchase obligations of ~~$21.8~~$18.4 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended ~~March 31,~~June 30, 2022.

Off Balance Sheet Arrangements

In May 2022, the Company extended its First Program with certain commercial and conduit purchases and committed purchasers and increased its facility from $1.6 billion to $1.8 billion. The First Program terminates on November 18, 2022 unless extended. In June 2022, the Company amended its Second Program with certain commercial and conduit purchases and committed purchasers and increased its facility from €0.6 billion ($0.6 billion) to €0.8 billion ($0.8 billion). For more information and disclosures on the Programs, see Note 14 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”. There were no other material changes in the Company’s off balance sheet arrangements during the quarter ended ~~March 31,~~June 30, 2022.

Critical Accounting Policies and Estimates

There were no material changes in the Company’s critical accounting policies and estimates during the quarter ended ~~March~~June 30, 2022. 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.~~2021.

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,~~June 30, 2022 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, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)

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.

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)~~

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					Six months ended				Year ended
		March 31, 2022				December 31, 2021					June 30, 2022				December 31, 2021
Long/(Short) (In millions)	Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk		Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk
Highest position	Highest position	$	986	$	99	$	1,426	$	143	Highest position	$	986	$	99	$	1,426	$	143
Lowest position	Lowest position	238		24		(98)		(10)		Lowest position	238		24		(98)		(10)
Average position	Average position	485		49		671		67		Average position	479		48		671		67

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

ITEM 4. CONTROLS AND PROCEDURES

As of ~~March 31,~~June 30, 2022, 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. The first phase of the ERP system implementation occurred in October 2021 to a limited pilot scope of legal entities. 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 its business, and at any given time, the Company has matters at various stages of resolution. The outcomes of these matters are not within the Company’s 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.

~~ITEM 1. LEGAL PROCEEDINGS (Continued)~~

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 ~~“hundreds of millions of dollars in damages”~~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 ~~ADM moved to dismiss~~the court dismissed on ~~December 9, 2021.~~July 12, 2022. 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. 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.

ITEM 1A. RISK FACTORS

The information presented below updates, and should be read in conjunction with, the risk factors in Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Except as presented below, there were no other significant changes in the Company’s risk factors during the quarter ended ~~March 31,~~June 30, 2022.

The Company faces risks related to international conflicts, terrorism or other geopolitical events, such as the conflict in Ukraine, and related sanctions and other economic disruptions.

ADM’s assets and operations located in the region affected by the conflict in Ukraine are at an increased risk to property damage, inventory loss, business disruption, and expropriation. The conflict could continue to impact global margins due to increased commodity, energy, and input costs. The Black Sea region is a major exporter of wheat and corn to the world, and the disruption of supply could cause volatility in prices and margins of these commodities and related products. Ukraine is also the largest supplier of sun seed and sun oil in the world which cannot be completely replaced from other origins. If current inventories are depleted prior to the restoration of operations, Europe will have to reformulate to alternative oils. In addition to ADM’s operations, one of the Company’s joint ventures is also exposed to the same risks. While the Company has a robust sanction program, there is a risk that ADM and its related parties could trade with a sanctioned partner due to the number ~~and fast-changing nature~~ of sanctions ~~being~~ taken against Russia. The Company may also face increased cyber risk given that Russia is known to have extensive capabilities to engage in cyber attacks. Trade receivables may be at risk of higher defaults and other third-party risks could affect ADM’s ability to obtain inputs if suppliers are unable to perform or face insolvency, as certain supplies may not be attainable due to sanctions and/or restrictions on cross-border payment transactions. The Company could be materially impacted if, in the worst-case scenario, the conflict advances to other countries. In such circumstances, trade policies and the Company’s critical global supply chain and logistical networks could be affected, impairing the Company’s ability to satisfy contractual obligations and impacting working capital requirements. Insurance may not adequately cover these risks. In addition, provisions for certain products that ADM produces, particularly those that support the food services channels, could be materially impacted. The Company continues to monitor the conflict in Ukraine and evaluate alternatives to mitigate the impacts of these risks.

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, 2022 to
January 31, 2022 559 $ 69.743 — 104,505,703
February 1, 2022 to
February 28, 2022 1,022,806 76.470 — 104,505,703
March 1, 2022 to
March 31, 2022 28,736 82.738 — 104,505,703
Total 1,052,101 $ 76.638 — 104,505,703


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)
April 1, 2022 to
April 30, 2022	704	$	96.387	—	104,505,703

May 1, 2022 to
May 31, 2022	1,621,109	86.346		1,620,950	102,884,753

June 1, 2022 to
June 30, 2022	681,060	88.146		681,060	102,203,693
Total	2,302,873	$	86.882	2,302,010	102,203,693

(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,~~June 30, 2022, there were ~~1,052,101~~863 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.

4555

ITEM 6. EXHIBITS


(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 for the quarter ended September 30, 2001).

(3)(ii)						Bylaws, as amended through May 1, 2019 (incorporated by reference to Exhibit 3(ii) to the Company’s Current Report on Form 8-K filed on May 7, 2019).

~~(4.1)~~						~~Form of 2.~~9 ~~00% Notes due 20~~32 ~~(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on~~ ~~February~~28 ~~, 202~~2 ).

~~(10.1)~~						~~Form of Performance Share Unit Award Agreement under the Company’s 2020 Incentive Plan.~~

~~(10.2)~~						~~Form of Restricted Stock Unit Award Agreement under the Company’s 2020 Incentive 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.

4656

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~~July 26, 2022

4757


	Level 3 Fair Value Asset Measurements at
	March 31, 2021
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, December 31, 2020	$	2,183	$	859	$	3,042
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	730		243		973
Purchases	6,385		—		6,385
Sales	(6,632)		—		(6,632)
Settlements	—		(428)		(428)
Transfers into Level 3	516		23		539
Transfers out of Level 3	(112)		(13)		(125)
Ending balance, March 31, 2021	$	3,070	$	684	$	3,754