Archer-Daniels-Midland Company

Company Overview

Business Model: Archer-Daniels-Midland Company (ADM) operates as an essential global agricultural supply chain manager and processor, connecting local agricultural supply with global demand to provide food security. The Company transforms raw commodities into a broad array of products for food, feed, fuel, industrial, and consumer markets. ADM is also a premier human and animal nutrition provider, offering a broad portfolio of ingredients and solutions, and is an innovator in health and well-being products, as well as new consumer and industrial solutions derived from nature, including through precision fermentation. The Company is committed to sustainability, working with growers on regenerative agriculture and decarbonizing industries.

Market Position: ADM is a pillar of the global food supply system, playing a critical role in fundamental nutrition. It is a leader in animal nutrition and a global leader in health and well-being, offering an industry-leading range of probiotics, enzymes, and supplements. The Company leverages unparalleled expertise and capacity in precision fermentation for new consumer and industrial solutions. ADM competes based on price, foreign exchange rates, quality, global supply, and alternative products, focusing on managing unit costs and improving efficiency through technology.

Recent Strategic Developments:

• Acquisitions (2024): Acquired Revela Foods (dairy flavor ingredients), FDL (flavor and functional ingredient systems), PT Trouw Nutrition Indonesia (livestock farming solutions), and Totally Natural Solutions Ltd. (hops flavoring producer) for an aggregate cash consideration of $948 million. These acquisitions enhance the Nutrition segment.
• Regenerative Agriculture Expansion: Expanded its regenerative agriculture program to cover over 2.8 million acres across 18 U.S. states and Canada, with projects launched in Europe and South America, targeting 5 million acres globally by the end of 2025.
• Sustainability Commitments: Advanced Strive 35 commitments to reduce Scope 1 and 2 GHG emissions by 25% (from 2019 baseline), Scope 3 GHG emissions by 25% (from 2021 baseline), increase low-carbon energy use to 25%, reduce water withdrawal by 10%, and achieve a 90% landfill diversion rate by 2035.
• Internal Control Remediation: Implemented enhancements to internal controls related to accounting practices and procedures for segment disclosures following an identified material weakness.

Geographic Footprint: ADM operates globally, with consolidated subsidiaries in approximately 80 countries and connecting crops and markets in over 180 countries.

• Primary Operational Regions: North America, South America, Europe, Middle East, and Africa (EMEA), Asia, and Australia.
• Revenue Distribution (2024): United States (39.2%), Switzerland (23.2%), Cayman Islands (6.5%), Brazil (3.9%), Mexico (3.7%), Canada (2.4%), United Kingdom (2.6%), Other Foreign (18.3%).
• Long-Lived Assets (2024): United States (64.0%), Brazil (7.1%), Other Foreign (28.9%).

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 6.76%
• Operating Margin: 1.79%
• Net Margin: 2.10%

Investment in Growth (2024):

• R&D Expenditure: $269 million (0.31% of revenue)
• Capital Expenditures: $1.6 billion
• Strategic Investments: Aggregate cash consideration of $948 million for business acquisitions (Revela Foods, FDL, PT Trouw Nutrition Indonesia, Totally Natural Solutions Ltd.).

Business Segment Analysis

Ag Services and Oilseeds

Financial Performance (2024 vs. 2023):

• Revenue: $66.52 billion (-9.41% YoY)
• Operating Profit: $2.45 billion (-39.83% YoY)
• Key Growth Drivers (2024): Benefited from improved river conditions and an excellent crop in North America, which improved export volumes. Global Trade saw solid trading and continued structured trade finance opportunities.
• Headwinds (2024): Fewer market dislocations and high cost inflation led to normalized results. South America Origination margins were negatively impacted by take or pay contracts with railroads. Crushing experienced depressed vegetable oil demand and lower prices due to increased market supply, imports of used cooking oil, uncertainty with the Producer Tax Credit policy change, and the delay of the European Union's Deforestation Regulation requirements. Refined Products and Other margins were pressured by increased supply of low carbon intensity feedstock and limited forward sales opportunities due to policy uncertainty.
• Processed Volumes (2024): Oilseeds processed volumes increased by 820 thousand metric tons to 35,719 thousand metric tons, primarily due to improved crush capacity in North America (including the new Spiritwood, North Dakota facility) and EMEA.

Product Portfolio:

• Origination, merchandising, transportation, and storage of agricultural raw materials.
• Crushing and processing of oilseeds (soybeans, soft seeds) into vegetable oils and protein meals.
• Products for food, feed, fuel, and industrial customers, including salad oils, margarine, shortening, biodiesel, glycols, and ingredients for chemicals and paints.
• Peanuts and peanut-derived ingredients.
• Cotton cellulose pulp (North America).
• Agricultural commodity and feed product import, export, and global distribution.
• Structured trade finance activities.

Market Dynamics:

• Highly sensitive to agricultural commodity prices, global supply/demand, and geopolitical factors.
• Impacted by biofuel policy changes and environmental regulations (e.g., EU Deforestation Regulation).

Equity Investments:

• Wilmar International Limited (22.5% equity interest)
• Pacificor (32.2% equity interest)
• SoyVen (50.0% equity interest with Cargill)
• Olenex Sarl (37.5% equity interest with Wilmar International Limited)
• Stratas Foods LLC (50.0% equity interest with ACH Jupiter, LLC)
• Edible Oils Limited (50.0% equity interest with Princes Limited)
• Terminal de Grãos Ponta da Montanha S.A. (50.0% equity interest with Viterra)
• Gradable, LLC (50.0% equity interest with Farmers Business Network)

Carbohydrate Solutions

Financial Performance (2024 vs. 2023):

• Revenue: $11.23 billion (-12.74% YoY)
• Operating Profit: $1.38 billion (+0.07% YoY)
• Key Growth Drivers (2024): Solid demand for starches and sweeteners with steady margins. Strong export demand for ethanol helped offset higher industry production. Improved cost position from higher utilization rates, higher joint-venture earnings, and insurance proceeds for the Decatur East and Decatur West incidents.
• Headwinds (2024): Weaker domestic ethanol margins, co-product values, and margins in EMEA.
• Processed Volumes (2024): Corn processed volumes increased by 474 thousand metric tons to 18,541 thousand metric tons, due to increased plant reliability compared to prior year's unplanned downtime.

Product Portfolio:

• Corn and wheat wet and dry milling.
• Sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose.
• Alcohol (industrial use, ethanol for gasoline) and other food/animal feed ingredients via fermentation of dextrose.
• Corn gluten feed and meal, distillers’ grains (animal feed).
• Vegetable oil and protein meal from corn germ.
• Citric acids (food and industrial products).
• Carbon capture and sequestration initiatives.

Market Dynamics:

• Benefits from plant-based alternatives replacing fossil fuel-based products.
• Impacted by ethanol market dynamics, including industry production levels and export demand.

Equity Investments:

• Hungrana Ltd. (50.0% equity interest)
• Almidones Mexicanos S.A. (50.0% equity interest)
• Aston Foods and Food Ingredients (50.0% equity interest)
• Red Star Yeast Company, LLC (40.0% equity interest)
• LSCP, LLLP (22.1% equity interest)

Nutrition

Financial Performance (2024 vs. 2023):

• Revenue: $7.35 billion (+1.91% YoY)
• Operating Profit: $386 million (-9.60% YoY)
• Key Growth Drivers (2024): Animal Nutrition saw market recovery in amino acids, cost optimization efforts, and lower input costs. Stronger growth in biotics and botanicals. Flavors results were higher due to current year acquisitions.
• Headwinds (2024): Human Nutrition was impacted by inflation, leading to lower demand and decreased volumes for alternative proteins in some regions. Specialty Ingredients faced unplanned downtime at Decatur East, higher costs from an unfavorable supply agreement termination, and a normalizing texturants market. Health and Wellness experienced lower profits due to inventory reserve adjustments, changes in customer demand fulfillment, and softer margins within Vitamins.

Product Portfolio:

• Ingredients and solutions for food, beverages, and nutritional supplements (human).
• Complete feed, feed premix and additives, pet food and pet treats (livestock, aquaculture, pets).
• Plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, botanical extracts.
• Procurement, processing, and distribution of edible beans.
• Processing and distribution of formula feeds and animal health and nutrition products.
• Manufacture of contract and private label pet treats and foods.

Market Dynamics:

• Sensitive to shifts in consumer discretionary spending and preferences.
• Highly competitive environment with ingredient suppliers, contract manufacturers, global fast-moving consumer goods companies, and private label brands.
• Focus on innovation and science-based solutions to meet evolving customer needs.

Equity Investments:

• Vimison S.A. de C.V. (45.3% equity interest)
• ADM Matsutani LLC (50% equity interest)
• Matsutani Singapore Pte. Ltd. (50% equity interest)
• ADM Vland Biotech Shandong Co., Ltd. (50% equity interest, ceased operations as of December 31, 2024)
• Dusial S.A. (42.8% equity interest)
• Vitafort ZRT (34.3% equity interest)

Capital Allocation Strategy

Shareholder Returns (2024):

• Share Repurchases: $2.3 billion (2,327 million shares)
• Dividend Payments: $985 million ($2.00 per share)
• Future Capital Return Commitments: Stock repurchase program extended through December 31, 2029, authorizing the repurchase of up to an additional 100,000,000 shares. As of December 31, 2024, 115 million shares remained available for repurchase.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $611 million
• Total Debt: $10.16 billion (Short-term debt: $1.90 billion; Current maturities of long-term debt: $674 million; Long-term debt: $7.58 billion)
• Net Cash Position: -$9.30 billion (Net Debt)
• Credit Rating: Investment grade with a negative outlook from the three major credit rating agencies.
• Debt Maturity Profile: $675 million in 2025, $1,007 million in 2026, $265 million in 2027, $1 million in 2028, $145 million in 2029, and $6,428 million thereafter.

Cash Flow Generation (2024):

• Operating Cash Flow: $2.8 billion
• Free Cash Flow: $1.2 billion (Operating Cash Flow of $2.8 billion minus Capital Expenditures of $1.6 billion)
• Cash Conversion Metrics: Changes in net working capital (segregated investments, inventory, trade payables, payables to brokerage customers) were a primary driver of the decrease in operating cash flow compared to the prior year.

Operational Excellence

Production & Service Model: ADM utilizes an integrated global network to move crops from supply to demand areas and transform them into a broad array of products. The Company generally operates its production facilities at or near capacity, adjusting individual facilities based on market conditions and seasonal supply/demand.

Supply Chain Architecture:

• Raw Material Sourcing: Procures agricultural commodities from thousands of growers, grain elevators, and wholesale merchants in North America, South America, Europe, Middle East, Africa, Asia, and Australia, primarily through short-term agreements or on a spot basis. Not dependent on any single supplier.
• Transportation Network: Owns or leases trucks, trailers, railroad tank and hopper cars, river barges, towboats, and ocean-going vessels to efficiently move commodities and processed products globally.
• Processing Network: Strategically located plants near raw material sources.

Key Suppliers & Partners:

• Joint Ventures: Wilmar International Limited, Cargill (SoyVen), Associated British Foods (Stratas Foods LLC), Princes Limited (Edible Oils Limited), Viterra (Terminal de Grãos Ponta da Montanha S.A.), Farmers Business Network (Gradable, LLC).
• Sustainability Partners: Works with growers to develop and enhance conservation practices, including regenerative agriculture.

Facility Network (as of December 31, 2024):

• Manufacturing: Owns/leases processing plants with a total daily capacity of 500 thousand metric tons (410k owned, 90k leased).
• Research & Development: Operates 68 innovation centers across three continents.
• Distribution: Owns approximately 150 warehouses and terminals primarily for bulk storage. Owns/leases a fleet of approximately 2,600 barges/boats, 31,950 rail cars, 610 trucks, 1,740 trailers, and 23 ocean-going vessels.
• Procurement Facilities: Owns/leases procurement facilities with a total storage capacity of 18,428 thousand metric tons (17,260k owned, 1,168k leased).

Operational Metrics (2024):

• Oilseeds Processed: 35,719 thousand metric tons (up 820 thousand metric tons YoY)
• Corn Processed: 18,541 thousand metric tons (up 474 thousand metric tons YoY)
• Total Recordable Incident Rate (TRIR): 0.68 (per 100 employees)
• Lost Workday Incident Rate (LWIR): 0.23 (per 100 employees)
• Workplace Safety: Approximately 76% of sites completed the year with zero injuries; approximately 89% with no lost workday injuries.

Market Access & Customer Relationships

Go-to-Market Strategy:

• Distribution Channels: Products are mainly distributed in bulk directly from processing plants or storage facilities to customers. Leverages a comprehensive transportation capability.
• Digital Platforms: Utilizes digital grain procurement platforms like Gradable, LLC to connect farmers and buyers for sustainably produced grain.
• Direct Sales: Emphasizes building direct-to-consumer sales channels, particularly in the Nutrition business.

Customer Portfolio:

• Customer Concentration: No material part of the Company’s business is dependent upon a single customer or very few customers, indicating a diversified worldwide customer base.
• Key Customer Types: Spans food, feed, fuel, industrial, and consumer products. Includes manufacturers of renewable diesel, commercial livestock and poultry feed producers, and various food and beverage industry customers.

Geographic Revenue Distribution (2024):

• United States: $33.55 billion
• Switzerland: $19.88 billion
• Cayman Islands: $5.60 billion
• Brazil: $3.35 billion
• Mexico: $3.21 billion
• Canada: $2.06 billion
• United Kingdom: $2.19 billion
• Other Foreign: $15.70 billion

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The Company operates in commodity-based markets characterized by significant competition based on price, foreign exchange rates, quality, global supply, and alternative products. The Nutrition business is a vertically integrated segment with a highly competitive environment, including ingredient suppliers, contract manufacturers, global fast-moving consumer goods companies, private label brands, and niche specialists.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The Company faces numerous competitors across its businesses, which can vary by segment. The filing does not name specific direct competitors beyond general categories (e.g., ingredient suppliers, contract manufacturers).

Emerging Competitive Threats: New entrants, disruptive technologies, and alternative solutions (including those made from different raw materials) pose competitive threats.

Competitive Response Strategy: ADM's strategy includes managing unit costs, improving efficiency through technology and productivity, regular evaluation of its asset portfolio, driving innovation and science-based solutions, building direct-to-consumer sales channels, expanding into new markets, forming strategic partnerships, and leveraging data and technology to build a strong distribution network.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Exposure to wide fluctuations in agricultural commodity availability and prices due to weather, crop disease, government policies, climate change, global demand, and competition. Selling prices of ethanol and biodiesel are sensitive to petroleum product prices.
• Growth Strategy Execution: Risks associated with organic and inorganic growth, including increased costs, decreased revenues, delayed synergies, and volatile economic, political, and regulatory risks in new geographies. Acquisitions may involve unanticipated delays, costs, integration risks, and potential failure to realize expected benefits.
• Equity Investments & Joint Ventures: Limited control over governance and management, financial strength of partners, inability to implement beneficial strategies, and potential for disputes or failure to realize expected benefits.
• Health Epidemics & Pandemics: Potential for severe disruptions to contractual obligations, global supply chains, increased costs, and reduced demand for certain products (e.g., biofuels, food services ingredients).

Operational & Execution Risks

• Business Disruption: Unplanned downtime or property damage from equipment failure, raw material shortages, natural disasters, severe weather, accidents, or other outages.
• Transportation Services: Reliance on dependable and efficient transportation, disruption of which could impair material supply and product delivery. Access to navigable rivers and waterways is critical.
• Raw Material Availability: Risks related to the availability of non-agricultural raw materials (e.g., water, chemicals) and agricultural commodities, which can be impacted by factors outside the Company's control.
• Human Capital Availability: Inability to properly staff manufacturing facilities with skilled trade and hourly labor due to a limited number of qualified resources could negatively impact operations.

Financial & Regulatory Risks

• Access to Financing: Significant capital requirements for operations and growth, dependent on access to credit markets and maintaining sufficient credit ratings. Downgrades could adversely affect access and borrowing costs.
• Carbon Emission Regulations: Exposure to carbon pricing programs and regulations (e.g., EU Green Deal, Illinois legislation) in multiple regions, potentially leading to increased energy, transportation, raw material, and administrative costs, and requiring additional investments.
• Deforestation Regulations: Impact from regulations like the EU deforestation-free regulation and Brazil's Amazon soy moratorium, with risks of non-compliance penalties, reputational damage, and increased costs.
• Food & Feed Risks: Regulatory or reputational risks from quality issues, off-label product usage, occupational health and safety issues, and ineffective diversification programs.
• Sustainability Reporting: Increased compliance costs and regulatory reporting risks due to the growing multitude of corporate sustainability reporting standards (e.g., CSRD).
• Government Investigations: Ongoing investigations by the SEC and DOJ related to intersegment sales, with unpredictable timing and outcome, potential for material fines, injunctions, and adverse effects on business, results, and liquidity.
• Material Weakness in Internal Control: Identified material weakness in internal control over financial reporting related to segment disclosures, which could impact the accuracy and timeliness of future reports and filings.
• Negative Publicity: Adverse effects from negative publicity related to investigations and other events on stock price, customer/supplier relationships, employee morale, and talent attraction.

Geopolitical & External Risks

• International Conflicts: Risks to assets and operations from geopolitical conflicts (e.g., Russia-Ukraine war, Israel-Hamas war), acts of terrorism, war, and piracy, including property damage, business disruption, loss in value, nationalization, expropriation, and supply chain disruptions.
• Political Instability & Trade Policies: Negative impact from changes in monetary, fiscal, trade, and environmental policies, laws, regulations, and acquisition approvals, including tariffs, trade restrictions, and currency fluctuations.

Innovation & Technology Leadership

Research & Development Focus:

• Core Technology Areas: Global health and sustainable products, science-based products, solutions, and technologies aligned with macro trends in food security, sustainable processes, health, and personalized nutrition.
• Innovation Pipeline: Strategic investments across the entire nutrition value chain, leveraging innovative processes and product optimization. Engaged in BioSolutions initiatives to reduce carbon footprint, redesign core products with sustainable alternatives, and explore new markets.
• R&D Expense (2024): $269 million.

Intellectual Property Portfolio (as of December 31, 2024):

• Patent Strategy: Owns trademarks, brands, recipes, and other intellectual property, including patents, with a net book value of $660 million. Over 90% of these intangibles are in the Nutrition segment.
• Licensing Programs: Not explicitly detailed, but IP portfolio supports competitive moats.
• IP Litigation: Not specifically mentioned as material.

Technology Partnerships:

• Maintains an external network of collaborators, including customers, key opinion leaders, start-ups, and academia, to amplify scientific excellence and accelerate innovation.

Leadership & Governance

Executive Leadership Team (as of February 20, 2025)

Leadership Continuity: The Company continues to develop its workforce to remain relevant and deliver on growth aspirations, including leadership development programs.

Board Composition (as of December 31, 2024):

• The Board of Directors consists of 12 members.
• 58% of board members identified as members of underrepresented groups (5 African-American, Hispanic or Asian; 4 women).
• The Sustainability and Technology Committee of the Board actively oversees the Company’s sustainability strategy. The Board also added a director with Chief Information Officer experience to assist in cybersecurity oversight.

Human Capital Strategy

Workforce Composition (as of December 31, 2024):

• Total Employees: 44,043
• Geographic Distribution: North America (21,420), EMEA (11,183), South America (8,288), Asia Pacific (2,648), Central America/Caribbean (504).
• Skill Mix: 20,978 salaried, 21,405 hourly, 1,660 part-time.
• Gender Distribution: Full-time (75% Male, 25% Female); Part-time (40% Male, 60% Female).
• Leadership Diversity: Executive Council (69% Male, 31% Female); Senior Leadership (69% Male, 31% Female).

Talent Management:

• Acquisition & Retention: Offers market-competitive pay, benefits, and services. Global bonus plan with defined enterprise metrics fosters teamwork. Supports Employee Resource Groups (ERGs) for community building and professional development.
• Employee Value Proposition: Focuses on cultivating an inclusive culture of care and continuous learning. Holds an annual Global Week of Understanding for learning and belonging.
• Development Programs: All employees participate in annual training. Voluntary training opportunities include in-person, virtual, and on-demand options (e.g., Ability to Connect Program, LinkedIn Learning Platform). Leadership development programs include "Ability to Lead" and "Leadership Essentials" for first-time and front-line leaders. Early career programs focus on attracting and cultivating future leaders. Offers global assignments, internal career growth, and experiential learning.

Diversity & Development:

• Committed to a culture of inclusion and belonging, valuing diverse perspectives for innovation and growth.
• Supports Employee Resource Groups (ERGs) to foster collaboration, connection, and belonging.
• Board diversity includes 58% members from underrepresented groups.

Workplace Safety (2024):

• Approximately 76% of ADM’s sites completed the year with zero injuries.
• Approximately 89% of sites had no lost workday injuries.
• Total Recordable Incident Rate (TRIR): 0.68 (per 100 employees).
• Lost Workday Incident Rate (LWIR): 0.23 (per 100 employees).
• One ADM colleague fatality and nine serious injuries occurred in 2024.
• The Company is advancing occupational and process safety initiatives, including Life-Critical Standards, Stop Work Authority, Total Process Safety training, and focused support for high-risk sites, with a goal of zero fatalities.

Environmental & Social Impact

Environmental Commitments:

• Climate Strategy: Committed to mitigating climate change and protecting biodiversity through renewable product and process innovations. Strive 35 plan aims by 2035 to reduce absolute Scope 1 and 2 GHG emissions by 25% (from a 2019 baseline), reduce absolute Scope 3 GHG emissions by 25% (from a 2021 baseline), increase use of low-carbon energy sources to 25% of total energy used, reduce absolute water withdrawal by 10%, and achieve a 90% landfill diversion rate.
• Carbon Neutrality: Actively working to improve facility and vehicle efficiency, finding alternative uses for waste, reusing and recycling water, and sequestering carbon at its onsite capture and storage facility.
• Renewable Energy: Aims to increase use of low-carbon energy sources to 25% of total energy used by 2035.
• Progress (as of December 31, 2023): Reduced absolute Scope 1 and 2 GHG emissions by 14.7%, reduced Scope 3 GHG emissions by 7.7%, reduced absolute water withdrawal by 4.2%, and achieved 86.1% waste diverted from landfill.
• Capital Investment: Anticipates spending $400 million to $500 million on capital projects to achieve Strive 35 targets, with $297 million spent since inception through December 31, 2024 ($139 million in 2024).
• Pollution Control: Spent $64 million in 2024 to improve equipment, facilities, and programs for pollution control.

Supply Chain Sustainability:

• Supplier Engagement: Committed to eliminating deforestation from all supply chains in 2025. Committed to eliminate conversion of native habitats in high-risk areas in South America for direct suppliers by 2025 and indirect suppliers by 2027 (with a 2025 cutoff date).
• Responsible Sourcing: Engages and encourages growers to implement regenerative agriculture practices, with a goal of enrolling five million acres globally by the end of 2025. Utilizes third-party certification programs such as ADM Responsible Soy, Round Table for Responsible Soy, and Round Table on Sustainable Palm Oil.

Social Impact Initiatives:

• Community Investment: ADM Cares program aligns corporate giving with business strategies and sustainability objectives, directing funding to initiatives supporting food security, health and well-being, and sustainability in communities.
• Product Impact: Focuses on nourishing quality of life and supporting a healthier planet through its products and innovations.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The Company experiences a degree of seasonality in the growing cycles, procurement, and transportation of its principal raw materials (oilseeds, corn, wheat, and other grains). Inventory levels typically peak after the northern hemisphere fall harvest and are generally lower during the northern hemisphere summer months.
• Economic Sensitivity: While many of the Company's products (food and feed ingredients) are less sensitive to demand reductions in economic downcycles, overall operating results can be affected by economic downturns and regional volatilities.
• Industry Cycles: The availability and prices of agricultural commodities are subject to wide fluctuations due to factors such as weather, crop disease, plantings, government policies, and global demand.

Planning & Forecasting:

• The Company has seasonal financing arrangements with farmers in certain countries, with advances typically occurring during planting season and repayment at harvest.
• Working capital requirements historically trend with inventory levels, which are directly affected by agricultural commodity prices.

Regulatory Environment & Compliance

Regulatory Framework:

• Industry-Specific Regulations: Subject to federal, state, local, and non-U.S. regulations across numerous areas, including accounting, income taxes, anti-corruption, anti-bribery, global trade, trade sanctions, privacy and security, environmental, product compliance and safety, and handling/production of regulated substances.
• International Compliance: Operates in over 80 countries, requiring compliance with multi-jurisdictional requirements. The EU Network and Information Security (NIS2) directive will require robust cybersecurity measures and business continuity plans.
• Regulatory Changes: Government policies, mandates, regulations, and trade agreements (e.g., tariffs, subsidies, renewable fuels, GMOs, traceability, sustainability) can influence crop planting, trade flows, feedstock availability, product viability, and profitability.

Trade & Export Controls:

• Export Restrictions: International trade regulations can limit or disrupt trade between countries or regions.
• Sanctions Compliance: Exposed to risks of trading with sanctioned partners due to the number of sanctions against countries like Russia.

Legal Proceedings:

• Commodities Class Actions: Facing multiple class action lawsuits alleging manipulation of ethanol derivatives benchmark prices, with potential damages ranging from $500 million to over $2.0 billion. The Company denies liability and is vigorously defending itself.
• Government Investigations: Under investigation by the United States Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) regarding intersegment sales between the Nutrition segment and the Ag Services and Oilseeds and Carbohydrate Solutions segments. The Company is cooperating but cannot predict the outcome or timing of resolution.
• Shareholder Litigation: Facing securities fraud class action and derivative lawsuits following the announcement of the internal investigation into intersegment sales.

Material Weakness in Internal Control:

• Identified a material weakness in internal control over financial reporting related to accounting practices and procedures for segment disclosures, specifically concerning the measurement and reporting of certain intersegment sales.
• Remediation plan includes enhanced accounting policies, improved documentation of pricing guidelines, and enhanced design/documentation of controls for segment disclosure and impairment analyses.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 21.1% for 2024, compared to 19.3% for 2023. The increase was driven primarily by the impairment of the Company’s investment in Wilmar International Limited and changes in the Company's geographic mix of earnings.
• Geographic Tax Planning: Foreign operations accounted for 71% of total pre-tax earnings in 2024. The Company manages its tax affairs to comply with applicable laws and regulations in all jurisdictions, aiming for effective and sustainable tax management.
• Unrecognized Tax Benefits: Total unrecognized tax benefits were $185 million as of December 31, 2024.

Tax Reform Impact:

• Inflation Reduction Act of 2022: Includes a 15% minimum tax based on "adjusted financial statement income" and a 1% excise tax on net stock repurchases. The Company does not expect a material adverse effect but continues to evaluate its impact.
• OECD Pillar Two Initiative: Introduces a 15% global minimum tax, with certain aspects effective for ADM in 2024 and additional components in 2025. The Company does not expect a material impact on consolidated financial statements in 2025, but the analysis is ongoing.
• U.S. Tax Code Changes: Potential alterations in the U.S. tax code or global tax landscape due to changes in administration or legislative priorities could influence compliance requirements and financial results.
• Transition Tax: Remaining transition tax liability on accumulated foreign earnings was $61 million as of December 31, 2024, to be paid in 2025.

Insurance & Risk Transfer

Risk Management Framework:

• Enterprise Risk Management (ERM): The Chief Risk Officer oversees the ERM Program, which evaluates top risks to the enterprise, including cybersecurity, and reports regularly to the Board of Directors through the Audit Committee.
• Insurance Coverage: Agrinational Insurance Company, a wholly owned subsidiary, provides insurance coverage for certain property, casualty, marine, medical, and other miscellaneous risks of the Company, and participates in third-party reinsurance arrangements.
• Risk Transfer Mechanisms: The Company uses derivative contracts as anticipatory hedges for commodity purchases and sales to protect against price changes and maximize processing margins. It also uses currency exchange contracts and foreign currency denominated debt as hedges against investments in foreign subsidiaries and affiliates. Interest rate swaps are used as fair value hedges for fixed-rate debt.