Archer-Daniels-Midland Co [ADM] Filings

10-Q 1 adm-20240630.htm 10-Q adm-20240630

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 June 30, 2024

☐ 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 – 478,142,028 shares

(July 29, 2024)

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, are forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “outlook,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements the Company makes relating to its future results and operations, growth opportunities, pending litigation and investigations, and timing of the remediation of the Company’s material weakness in the Company’s internal control over financial reporting are forward-looking statements. All forward-looking statements are subject to significant risks, uncertainties and changes in circumstances that could cause actual results and outcomes to differ materially from the forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, without limitation, those that are described in Item 1A, "Risk Factors" included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as may be updated in this or subsequent Quarterly Reports on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. Except to the extent required by law, Archer-Daniels- Midland Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement whether as a result of new information, future events, changes in assumptions or otherwise.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In millions, except per share amounts)

Revenues	$	22,248	$	25,190	$	44,095	$	49,262
Cost of products sold	20,852		23,307		41,040		45,299
Gross Profit	1,396		1,883		3,055		3,963

Selling, general, and administrative expenses	907		841		1,858		1,722
Asset impairment, exit, and restructuring costs	7		60		25		67
Equity in earnings of unconsolidated affiliates	(152)		(151)		(364)		(325)
Interest and investment income	(140)		(142)		(263)		(276)
Interest expense	187		180		353		327
Other (income) expense – net	(9)		(37)		(35)		(81)
Earnings Before Income Taxes	596		1,132		1,481		2,529

Income tax expense	115		204		281		429
Net Earnings Including Noncontrolling Interests	481		928		1,200		2,100

Less: Net earnings (losses) attributable to noncontrolling interests	(5)		1		(15)		3

Net Earnings Attributable to Controlling Interests	$	486	$	927	$	1,215	$	2,097

Average number of shares outstanding – basic	492		545		503		548

Average number of shares outstanding – diluted	493		546		503		549

Basic earnings per common share	$	0.99	$	1.70	$	2.42	$	3.83

Diluted earnings per common share	$	0.98	$	1.70	$	2.41	$	3.82

Dividends per common share	$	0.50	$	0.45	$	1.00	$	0.90

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In millions)

Net earnings including noncontrolling interests	$	481	$	928	$	1,200	$	2,100
Other comprehensive income (loss):
Foreign currency translation adjustment	(261)		35		(257)		188
Tax effect	(6)		14		(26)		28
Net of tax amount	(267)		49		(283)		216

Pension and other postretirement benefit liabilities adjustment	(3)		(6)		(7)		(32)
Tax effect	1		4		2		(9)
Net of tax amount	(2)		(2)		(5)		(41)

Deferred gain (loss) on hedging activities	(48)		(37)		(117)		(141)
Tax effect	6		16		16		32
Net of tax amount	(42)		(21)		(101)		(109)

Unrealized gain (loss) on investments	—		4		(7)		8
Tax effect	—		(1)		(1)		(2)
Net of tax amount	—		3		(8)		6
Other comprehensive income (loss)	(311)		29		(397)		72
Comprehensive income (loss)	170		957		803		2,172

Less: Comprehensive income (loss) attributable to noncontrolling interests	(6)		—		(19)		(1)

Comprehensive income (loss) attributable to controlling interests	$	176	$	957	$	822	$	2,173

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets


(In millions)	June 30, 2024		December 31, 2023
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	764	$	1,368

Segregated cash and investments	6,975		7,228
Trade receivables - net	4,382		4,232
Inventories	10,443		11,957

Other current assets	4,398		4,982
Total Current Assets	26,962		29,767

Investments and Other Assets
Investments in affiliates	5,557		5,500

Goodwill and other intangible assets	6,970		6,341
Right of use assets	1,293		1,211
Other assets	1,288		1,304
Total Investments and Other Assets	15,108		14,356

Property, Plant, and Equipment
Land and land improvements	570		573
Buildings	6,002		5,876
Machinery and equipment	20,397		20,223
Construction in progress	1,458		1,360
	28,427		28,032
Accumulated depreciation	(17,799)		(17,524)
Net Property, Plant, and Equipment	10,628		10,508

Total Assets	$	52,698	$	54,631

Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities
Short-term debt	$	2,312	$	105
Trade payables	5,035		6,313
Payables to brokerage customers	7,468		7,867
Accrued expenses and other payables	3,569		4,076
Current lease liabilities	299		300
Current maturities of long-term debt	1		1

Total Current Liabilities	18,684		18,662

Long-Term Liabilities
Long-term debt	8,247		8,259
Deferred income taxes	1,289		1,309
Non-current lease liabilities	1,017		931
Other	1,000		1,005
Total Long-Term Liabilities	11,553		11,504

Temporary Equity - Redeemable noncontrolling interest	302		320

Shareholders’ Equity
Common stock	3,200		3,154
Reinvested earnings	21,828		23,465
Accumulated other comprehensive income (loss)	(2,880)		(2,487)
Noncontrolling interests	11		13
Total Shareholders’ Equity	22,159		24,145
Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	52,698	$	54,631

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(Unaudited)


(In millions)	Six Months Ended June 30,
	2024		2023


Operating Activities
Net earnings including noncontrolling interests	$	1,200	$	2,100
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	566		521
Asset impairment charges	10		46
Deferred income taxes	(92)		8
Equity in earnings of affiliates, net of dividends	(121)		(80)
Stock compensation expense	84		86


Deferred cash flow hedges	(118)		(141)
(Gain) losses on sales/revaluation of assets	9		(32)
Other – net	154		(18)
Changes in operating assets and liabilities, net of acquisitions and dispositions
Segregated investments	(261)		(1,392)
Trade receivables	(180)		846
Inventories	1,443		2,917

Other current assets	628		582
Trade payables	(1,257)		(2,762)
Payables to brokerage customers	(390)		(1,213)
Accrued expenses and other payables	(507)		(569)
Total Operating Activities	1,168		899

Investing Activities
Capital expenditures	(690)		(614)
Net assets of businesses acquired	(936)		—
Proceeds from sales of assets	16		17


Investments in affiliates	(8)		(6)
Distributions from affiliates	2		—


Cost method investments	—		(5)
Other – net	4		(3)
Total Investing Activities	(1,612)		(611)

Financing Activities
Long-term debt borrowings	—		500
Long-term debt payments	—		(662)
Net borrowings (payments) under lines of credit agreements	2,208		(371)

Share repurchases	(2,327)		(1,001)
Cash dividends	(503)		(494)

Other – net	(39)		(103)
Total Financing Activities	(661)		(2,131)

Effect of exchange rate on cash, cash equivalents, restricted cash, and restricted cash equivalents	(14)		(3)
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	(1,119)		(1,846)
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	5,390		7,033

Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	4,271	$	5,187

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

Cash and cash equivalents	$	764	$	1,426
Restricted cash and restricted cash equivalents included in segregated cash and investments	3,507		3,761
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	4,271	$	5,187

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
(In millions, except per share amounts)	Shares	Amount
Balance, March 31, 2024	502	$	2,720	$	23,069	$	(2,570)	$	13	$	23,232
Comprehensive income
Net earnings				486				(5)
Other comprehensive income (loss)						(310)		(1)
Total comprehensive income										170
Cash dividends paid - $0.50 per share				(247)						(247)
Share repurchases	(24)	462		(1,480)						(1,018)
Stock compensation expense		18								18

Other	—	—		—		—		4		4
Balance, June 30, 2024	478	3,200		$	21,828	$	(2,880)	$	11	$	22,159

Balance, December 31, 2023	513	$	3,154	$	23,465	$	(2,487)	$	13	$	24,145
Comprehensive income
Net earnings				1,215				(15)
Other comprehensive income (loss)						(393)		(4)
Total comprehensive income										803
Cash dividends paid - $1.00 per share				(503)						(503)
Share repurchases	(37)			(2,349)						(2,349)

Stock compensation expense	3	84								84
Stock option exercises net of taxes	(1)	(41)								(41)

Other	—	3		—		—		17		20
Balance, June 30, 2024	478	$	3,200	$	21,828	$	(2,880)	$	11	$	22,159

Balance, March 31, 2023	545	$	3,106	$	24,217	$	(2,463)	$	36	$	24,896


Comprehensive income
Net earnings				927				1
Other comprehensive income (loss)						30		(1)
Total comprehensive income										957
Cash dividends paid - $0.45 per share				(246)						(246)
Share repurchases	(9)			(654)						(654)
Stock compensation expense	—	21								21
Stock option exercises net of taxes	—	1								1

Balance, June 30, 2023	536	$	3,128	$	24,244	$	(2,433)	$	36	$	24,975

Balance, December 31, 2022	547	$	3,147	$	23,646	$	(2,509)	$	33	$	24,317


Comprehensive income
Net earnings				2,097				3
Other comprehensive income (loss)						76		(4)
Total comprehensive income										2,172
Cash dividends paid - $0.90 per share				(494)						(494)
Share repurchases	(13)			(1,005)						(1,005)
Stock compensation expense	3	86								86
Stock option exercises net of taxes	(1)	(107)								(107)
Other	—	2		—		—		4		6
Balance, June 30, 2023	536	$	3,128	$	24,244	$	(2,433)	$	36	$	24,975

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 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 six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023 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 and impairments determined to be other than temporary in nature. 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 include allowances for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances including any accrued interest thereon. The Company estimates uncollectible accounts by pooling receivables according to type, region, credit risk rating, and age. Each pool is assigned an expected loss co-efficient to arrive at a general reserve based on historical write-offs adjusted, as needed, for regional, economic, and other forward-looking factors. The Company minimizes credit risk due to the large and diversified nature of its worldwide customer base. ADM manages its exposure to counter-party credit risk through credit analysis and approvals, credit limits, and monitoring procedures. Long-term receivables recorded in other assets were not material to the Company’s overall receivables portfolio.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 1. Basis of Presentation (Continued)

Changes to the allowance for estimated uncollectible accounts were as follows:


	Three Months Ended June 30
	2024		2023
	(In millions)
Beginning, April 1	$	216	$	182
Current year provisions	(12)		9

Write-offs against allowance	(3)		(16)
Foreign exchange translation adjustment	(1)		—
Other	(6)		(1)
Ending, June 30	$	194	$	174

	Six Months Ended June 30
	2024		2023
	(In millions)
Beginning, January 1	$	215	$	199
Current year provisions	(7)		13
Recoveries	8		1
Write-offs against allowance	(16)		(40)
Foreign exchange translation adjustment	—		1
Other	(6)		—
Ending, June 30	$	194	$	174

Current year provisions in the three months ended June 30, 2024 include reversals of prior general provisions for economic factors related to the pandemic. Write-offs against allowance in the three months and six months ended June 30, 2024 were primarily related to trade receivables and long-term receivables, respectively. Write-offs against allowance in the three months ended June 30, 2023 were primarily related to a customer in Brazil. Also included in write-offs against allowance in the six months ended June 30, 2023 was allowance on receivables that were subsequently sold.

Inventories

Certain merchandisable agricultural commodity inventories, which include inventories acquired under deferred pricing contracts, are stated at market value. In addition, the Company values certain inventories using the first-in, first-out (FIFO) method at the lower of cost or net realizable value.

The following table sets forth the Company’s inventories as of June 30, 2024 and December 31, 2023.


	June 30, 2024		December 31, 2023
	(In millions)
Raw materials and supplies	$	1,787	$	1,944
Finished goods	2,909		3,026
Market inventories	5,747		6,987
Total inventories	$	10,443	$	11,957

Included in raw materials and supplies are work in process inventories which were not material as of June 30, 2024 and December 31, 2023.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 1. Basis of Presentation (Continued)

Cost Method Investments

Cost method investments of $440 million and $438 million as of June 30, 2024 and December 31, 2023, respectively, were included in Other Assets in the Company’s consolidated balance sheets. Revaluation losses of $18 million in the six months ended June 30, 2024 were related to an investment in alternative protein and precision fermentation, partially offset by an upward adjustment of $2 million in the six months ended June 30, 2024. There were no revaluation gains or losses in the three and six months ended June 30, 2023. Revaluation gains and losses are recorded in interest and investment income in the Company’s consolidated statements of earnings. As of June 30, 2024, the cumulative amounts of upward and downward adjustments were $115 million and $94 million, respectively.

Investments in Affiliates

The Company applies the equity method of accounting for investments over which the Company has the ability to exercise significant influence, including its 22.5% investment in Wilmar International Limited (“Wilmar”). The Company’s investment in Wilmar had a carrying value of $4.1 billion as of June 30, 2024, and a market value of $3.2 billion based on the quoted Singapore Exchange market price converted to U.S. dollars at the applicable exchange rate at June 30, 2024. Wilmar does not have a recent history of operating losses, has positive working capital and positive cash flows and has a long history of paying dividends.

A significant portion of the decline in market value of Wilmar based on the quoted Singapore Exchange market price occurred during the quarter ended June 30, 2024. The Company considers its investment in Wilmar a significant and strategic relationship and has the intent and ability to retain its investment in Wilmar for a period of time sufficient to allow for any anticipated recovery in market value.

Based on the evaluation of the factors above and the Company’s evaluation of the near-term prospects of Wilmar in relation to the severity and duration of the decline in fair value, the Company does not consider the investment to be other-than-temporarily impaired at June 30, 2024.

Note 2. New Accounting Standards

Through December 31, 2024, the Company has the option to adopt the amended guidance of Accounting Standards Codification (ASC) 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, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. ADM has completed the transition of its financing, funding, and hedging portfolios from LIBOR to alternative reference rates. The transition did not have an impact on the Company’s consolidated financial statements.

Effective December 31, 2024, the Company will be required to adopt the amended guidance of ASC 280, Segment Reporting, which improves disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for more detailed information about a reportable segment’s expenses. The amended guidance improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and permits entities to disclose more than one measure of a reportable segment’s profitability used by the Chief Operating Decision Maker. The adoption of the amended guidance will result in expanded disclosures in the Company’s segment and geographic information footnote but will not have an impact on the consolidated financial statements.

Effective December 31, 2025, the Company will be required to adopt the amended guidance of ASC 740, Income Taxes, which enhances the transparency and decision usefulness of income tax disclosures. The amendments address investor requests for more transparency about income tax information. The adoption of the amended guidance will result in expanded disclosures in the Company’s income taxes footnote but will not have an impact on the consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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. 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 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 mode of transportation moves towards its destination in accordance with the transfer of control guidance of Topic 606. The Company recognized revenue from transportation service contracts of $252 million and $445 million for the three and six months ended June 30, 2024, respectively, and $200 million and $378 million for the three and six months ended June 30, 2023, 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).

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 the Company has yet to provide. Contract liabilities of $364 million and $626 million as of June 30, 2024 and December 31, 2023, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheets. Revenues recognized in the three and six months ended June 30, 2024 from the December 31, 2023 contract liabilities were $120 million and $355 million, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)

Disaggregation of Revenues

The following tables present revenue disaggregated by timing of recognition and major product lines for the three and six months ended June 30, 2024 and 2023.


	Three Months Ended June 30, 2024
	Topic 606 Revenue						Topic 815(1)		Total
(In millions)	Point in Time		Over Time		Total		Revenue		Revenues









Ag Services and Oilseeds
Ag Services	$	925	$	252	$	1,177	$	10,569	$	11,746
Crushing	104		—		104		2,746		2,850
Refined Products and Other	523		—		523		2,214		2,737
Total Ag Services and Oilseeds	1,552		252		1,804		15,529		17,333
Carbohydrate Solutions
Starches and Sweeteners	1,654		—		1,654		557		2,211
Vantage Corn Processors	683		—		683		—		683
Total Carbohydrate Solutions	2,337		—		2,337		557		2,894
Nutrition
Human Nutrition	1,061		—		1,061		—		1,061
Animal Nutrition	847		—		847		—		847
Total Nutrition	1,908		—		1,908		—		1,908

Other Business	113		—		113		—		113
Total Revenues	$	5,910	$	252	$	6,162	$	16,086	$	22,248

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)


	Six Months Ended June 30, 2024
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	1,947	$	445	$	2,392	$	20,551	$	22,943
Crushing	220		—		220		5,957		6,177
Refined Products and Other	1,070		—		1,070		4,362		5,432
Total Ag Services and Oilseeds	3,237		445		3,682		30,870		34,552
Carbohydrate Solutions
Starches and Sweeteners	3,247		—		3,247		1,120		4,367
Vantage Corn Processors	1,210		—		1,210		—		1,210
Total Carbohydrate Solutions	4,457		—		4,457		1,120		5,577
Nutrition
Human Nutrition	2,025		—		2,025		—		2,025
Animal Nutrition	1,719		—		1,719		—		1,719
Total Nutrition	3,744		—		3,744		—		3,744

Other Business	222		—		222		—		222
Total Revenues	$	11,660	$	445	$	12,105	$	31,990	$	44,095


	Three Months Ended June 30, 2023
	Topic 606 Revenue						Topic 815(1)		Total
(In millions)	Point in Time		Over Time		Total		Revenue		Revenues









Ag Services and Oilseeds
Ag Services	$	1,071	$	200	$	1,271	$	12,095	$	13,366
Crushing	32		—		32		3,448		3,480
Refined Products and Other	577		—		577		2,421		2,998
Total Ag Services and Oilseeds	1,680		200		1,880		17,964		19,844
Carbohydrate Solutions
Starches and Sweeteners	1,872		—		1,872		603		2,475
Vantage Corn Processors	906		—		906		—		906
Total Carbohydrate Solutions	2,778		—		2,778		603		3,381
Nutrition
Human Nutrition	966		—		966		—		966
Animal Nutrition	887		—		887		—		887
Total Nutrition	1,853		—		1,853		—		1,853

Other Business	112		—		112		—		112
Total Revenues	$	6,423	$	200	$	6,623	$	18,567	$	25,190

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)


	Six Months Ended June 30, 2023
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	2,088	$	378	$	2,466	$	22,595	$	25,061
Crushing	223		—		223		6,940		7,163
Refined Products and Other	1,203		—		1,203		4,996		6,199
Total Ag Services and Oilseeds	3,514		378		3,892		34,531		38,423
Carbohydrate Solutions
Starches and Sweeteners	3,956		—		3,956		1,256		5,212
Vantage Corn Processors	1,706		—		1,706		—		1,706
Total Carbohydrate Solutions	5,662		—		5,662		1,256		6,918
Nutrition
Human Nutrition	1,902		—		1,902		—		1,902
Animal Nutrition	1,804		—		1,804		—		1,804
Total Nutrition	3,706		—		3,706		—		3,706

Other Business	215		—		215		—		215
Total Revenues	$	13,097	$	378	$	13,475	$	35,787	$	49,262

(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. 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 mode of transportation 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.

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. Acquisitions

During the six months ended June 30, 2024, the Company acquired Revela Foods (“Revela”), a Wisconsin-based developer and manufacturer of innovative dairy flavor ingredients and solutions, FDL, a UK-based leading developer and producer of premium flavor and functional ingredient systems, PT Trouw Nutrition Indonesia (“PT”), a subsidiary of Nutreco and leading provider of functional and nutritional solutions for livestock farming in Indonesia, and Totally Natural Solutions (“TNS”), a UK-based hops flavoring producer, for an aggregate cash consideration of $948 million.

The aggregate cash consideration of these acquisitions, net of $12 million in cash acquired, was allocated as follows, subject to final measurement period adjustments:


(In millions)	Revela		FDL		PT		TNS		Total
Working capital	$	50	$	16	$	5	$	2	$	73
Property, plant, and equipment	38		34		5		2		79
Goodwill	410		128		5		8		551
Other intangible assets	166		97		—		11		274
Other long-term assets	28		1		—		—		29
Long-term liabilities	(43)		(26)		—		(1)		(70)
Aggregate cash consideration	$	649	$	250	$	15	$	22	$	936

Goodwill recorded in connection with the acquisitions is primarily attributable to the synergies expected to arise after the Company’s acquisition of the businesses. Of the $551 million allocated to goodwill, $313 million is expected to be deductible for tax purposes.

These acquisitions add capabilities to the Human and Animal Nutrition businesses. The Company’s consolidated statement of earnings for the three and six months ended June 30, 2024 includes the post-acquisition results of the acquired businesses which were immaterial.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Acquisitions (Continued)

The following table sets forth the fair values and the useful lives of the other intangible assets acquired.


	Useful Lives			Revela		FDL		TNS		Total
	(In years)			(In millions)



Intangible assets with finite lives:
Trademarks/brands	3			$	—	$	4	$	1	$	5
Customer lists	10	to	18	124		73		8		205
Recipes and others	10	to	21	42		20		2		64
Total other intangible assets acquired				$	166	$	97	$	11	$	274

Note 5. 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 June 30, 2024 and December 31, 2023.


	Fair Value Measurements at June 30, 2024
	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	$	—	$	3,201	$	2,546	$	5,747
Unrealized derivative gains:
Commodity contracts	—		735		395		1,130
Foreign currency contracts	—		188		—		188
Interest rate contracts	—		5		—		5

Cash equivalents	260		—		—		260

Segregated investments	1,748		—		—		1,748

Total Assets	$	2,008	$	4,129	$	2,941	$	9,078

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	—	$	545	$	367	$	912
Foreign currency contracts	—		158		—		158


Inventory-related payables	—		1,149		34		1,183

Total Liabilities	$	—	$	1,852	$	401	$	2,253

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Fair Value Measurements (Continued)


	Fair Value Measurements at December 31, 2023
	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	$	—	$	4,274	$	2,713	$	6,987
Unrealized derivative gains:
Commodity contracts	—		628		731		1,359
Foreign currency contracts	—