ADM
#Thanks, <UNK>, and good morning, everyone
Slide 4 provides some financial highlights for the quarter
Adjusted EPS for the quarter was $0.57, up from the $0.41 in the prior-year quarter
Excluding specified items, adjusted segment operating profit was $658 million, up $85 million from the year-ago quarter
The effective tax rate for the second quarter was 28% compared to the 29% in the second quarter of the prior year
Our trailing four-quarter average adjusted ROIC of 6.8% is 100 basis points higher than the same period last year and 80 basis points above our 2017 annual WACC of 6.0%, thus generating positive EVA of $195 million on an annualized basis
Our ROIC has continued to improve for the fourth consecutive quarter
On chart 19 of the appendix you can see the reconciliation of our reported quarterly earnings of $0.48 per share to the adjusted earnings of $0.57 per share
For this quarter, we had a $0.04 per share net charge related to an adjustment of the proceeds of the 2015 sale of the cocoa business partially offset by the gain on the sale of the crop risk services business
We also had $0.04 per share charge for impairments, restructurings and settlements, and a $0.01 charge related to LIFO
Slide 5 provides an operating profit summary and the components of our corporate line
Before <UNK> discusses the operating results, I'd like to highlight some of the corporate items affecting our quarterly results
Net interest expense was up approximately $18 million to $81 million primarily due to higher short-term interest rates, our overall mix of short-term and long-term debt following the issuance of our new fixed-rate debt in August of last year, a favorable interest rate expense adjustment last year, and some additional interest expense related to foreign income taxes due from prior years
Looking ahead, we're continuing to project net interest expense of approximately $320 million for the full year 2017, consistent with what we indicated at the beginning of the year
Unallocated corporate costs of $134 million were up versus the prior year and modestly below our $140 million per quarter guidance for fiscal year 2017. The increase is primarily due to the planned increased investments in innovation, IT, and business transformation
Minority interest and other charges increased to $35 million primarily due to updated portfolio investment valuations in CIP
Turning to our cash flow statements for the first six months on slide 6, we generated $1 billion from operations before working capital changes similar to the prior year
We had favorable changes in working capital of a bit over $300 million
Total capital spending was $452 million
Our current expectation for fiscal year 2017 is capital spending of approximately $1 billion
Acquisitions of $180 million were primarily related to Crosswind Industries, a pet treat manufacturer; and Chamtor, a French producer of wheat-based sweeteners and starches
We spent about $511 million to repurchase shares and including dividends, we returned $875 million of capital to shareholders by midyear
Our average share count for the quarter is 574 million diluted shares outstanding, down 20 million shares from this time one year ago
At the end of the quarter, we had 571 million shares outstanding on a fully diluted basis
Slide 7 shows the highlights of our corporate balance sheet as of June 30, 2017 and 2016. Our balance sheet remains solid
Our working capital of $7 billion was down $1.2 billion from the year-ago period
Total debt was $7 billion, resulting in a net debt balance of $6.3 billion
Our leverage position remains comfortable with a net debt-to-total capital ratio of about 27%
Our shareholders' equity of $17.4 billion was down slightly from the $17.7 billion last year, due primarily to returns of capital shareholders in excess of net earnings
We had $5.1 billion in available global credit capacity at end of June
If we add available cash, we had access to $5.8 billion of short-term liquidity
Next, <UNK> will take us through a review of our business performance
Morning, <UNK>
Morning, <UNK>
In terms of, <UNK>, I mean, naturally you mentioned there are things that we can control and there's things that we can't control
For the things that we can control, as <UNK> indicated, some of the actions that we're taking in terms of delayering spans of control
In addition, yesterday we announced that we're going to effectively sunset our U.S
salary DB plan
So, when you take a look at things that we can control, when I look at 2018, again, we haven't started our 2018 planning process yet
But when you take a look at our run-rate type of savings, right, for 2018, for the things that we can control of the list that – of what <UNK> announced, there's probably at least about $100 million of run-rate savings that we will be able to benefit in 2018. And that's going to continue into the future there
So, again, we do believe – again, we haven't started our 2018 planning process yet
But, again, for things that we're working on right now, at least of what we have announced, at least $100 million of run-rate savings
And don't forget, in terms of the savings that we're going to generate this year, as <UNK> indicated, we are well on track to pass our cost reduction targets for this year
I mean, that will also be ongoing savings into the future
So, again, I think we – that's the reason why we feel good about the future
We feel good about our path towards getting back past our historical earnings and towards our long-term 10% ROIC target with the actions that we're taking
I mean I think, <UNK>, I mean when I take a look at our second quarter results, I mean, clearly our Tianjin operation is improving, so that helps in terms of improving the S&S line
Our European operations are improving, year-over-year improvements there
So, that's a positive in terms of numbers
Our cost reduction efforts in corn also translate to year-over-year improvement
So, there's a lot of actions that we've taken which have driven the improvements in sweeteners and starches
You mentioned some of the other improvements
Remember, lysine is actually part of the Bioproducts division
And so the – some of the Bioproducts' improvements are actually related -relate to lysine around that particular alliance
So, all in all, <UNK>, again, I don't have the exact numbers but I can assure you that a lot of the improvements in sweeteners and starches are actions that we have taken either to grow the portfolio or actually make our cost even more competitive in our processing plants
