The Andersons, Inc. (NASDAQ:ANDE) Q1 2023 Results Conference Call May 3, 2023 11:00 AM ET Company Participants Mike Hoelter - Vice President, Corporate Controller and Investor Relations Pat Bowe - President and Chief Executive Officer Brian Valentine - Executive Vice President and Chief Financial Officer Conference Call Participants Ben Bienvenu - Stephens Ben Klieve - Lake Street Capital Markets Eric Larson - Seaport Research Partners Operator Good morning, and welcome to the Andersons 2023 First Quarter E ...

Financial Performance - The Company reported total sales and merchandising revenues of $3,881,238 thousand for Q1 2023, a decrease from $3,977,954 thousand in Q1 2022 [99][100]. - Operating results for the Renewables segment decreased by $43.7 million, despite a $156.3 million increase in sales and merchandising revenues [103]. - Nutrient & Industrial segment operating results decreased by $21.2 million, with sales and merchandising revenues down $46.1 million and fertilizer prices decreasing by almost 60% [105]. - The Trade segment's operating results improved by $35.7 million compared to the prior year, with a gross profit increase of $49.6 million attributed to strong asset and merchandising performance [101]. Inventory and Production - Agricultural inventories on hand were 99.6 million bushels as of March 31, 2023, down from 188.9 million bushels a year earlier, indicating a significant reduction in available stock [91]. - Ethanol volumes shipped decreased to 186,566 thousand gallons in Q1 2023 from 197,318 thousand gallons in Q1 2022, reflecting a decline in production [94]. - The Nutrient & Industrial segment's operating results decreased from record levels in the prior year, with a total of 315 thousand tons sold in Q1 2023 compared to 210,042 thousand tons in Q1 2022 [97][95]. Expenses and Liabilities - Operating, administrative and general expenses increased by $12.4 million year-over-year, primarily due to $6.2 million in higher labor, benefits, and incentives [102]. - Interest expense rose by $3.6 million due to increasing interest rates on the Company's short-term line of credit compared to the prior year [102]. - Current liabilities from continuing operations decreased by $940.3 million, mainly due to reduced utilization of the Company's short-term revolving credit line [114]. Future Outlook and Investments - The Company anticipates improved second quarter volumes in the Nutrient & Industrial segment due to strong farmer income and high planted acres, despite some margin decline not likely to be recovered [95]. - The Company expects to invest approximately $125 million in property, plant, and equipment in 2023, with spending split evenly between growth projects and maintaining current facilities [117]. - The Company believes that current market conditions in agriculture are strong, with a positive long-term outlook despite recent market fluctuations [89]. Cash Flow and Dividends - Working capital from continuing operations increased by $70.3 million to $938.2 million as of March 31, 2023 [112]. - The Company paid $6.3 million in dividends in Q1 2023, compared to $6.1 million in the prior period [119]. - As of March 31, 2023, the Company had $1,294.9 million available for borrowing, with $220.8 million being non-recourse [118]. Impairments and Charges - The Renewables segment experienced a decrease in operating results due to an impairment charge on the ELEMENT joint venture, which was placed into receivership [93]. - An asset impairment charge of $87.2 million was recorded for the ELEMENT ethanol plant, with approximately $44.4 million attributable to noncontrolling interest [104]. - The asset-based business contributed approximately $24 million to gross profit, aided by $17 million in insurance proceeds from a fire incident at a Michigan grain asset [101]. Storage Capacity - Total Trade storage space capacity was approximately 180 million bushels as of March 31, 2023, comparable to the prior year, indicating stable storage capabilities [91].

Financial Performance - The Trade segment achieved sales and merchandising revenues of $13,047.5 million in 2022, up from $9,304.4 million in 2021, marking a significant increase of approximately 40%[101] - The Renewables segment reported sales of $3,178.5 million in 2022, compared to $2,440.8 million in 2021, reflecting a growth of about 30%[102] - The Plant Nutrient segment's operating results decreased slightly in 2022, with sales of $1,099.3 million compared to $866.9 million in 2021, indicating a growth of approximately 27% despite a decline in volumes[101] - Total sales and merchandising revenues for 2022 reached $17,325.4 million, a 37% increase from $12,612.1 million in 2021[158] - Gross profit for 2022 was $684.2 million, up from $592.7 million in 2021, reflecting a 15.4% increase[158] - Net income attributable to The Andersons, Inc. for 2022 was $131.1 million, compared to $104.0 million in 2021, representing a 26.3% increase[158] - Earnings per share attributable to common shareholders for continuing operations was $3.53 in 2022, up from $2.99 in 2021, a 17.9% increase[158] - Comprehensive income attributable to The Andersons, Inc. for 2022 was $150.4 million, an increase from $117.3 million in 2021[161] Expenses and Liabilities - Operating, administrative, and general expenses rose by $22.7 million, primarily due to $18.1 million in higher labor and benefits costs[105] - Interest expense increased by $18.9 million, attributed to rising interest rates and higher borrowings related to new merchandising locations[105] - Current liabilities from continuing operations increased by $70.8 million, primarily due to increases in current maturities of long-term debt[115] - The company had outstanding long-term debt of $541.4 million (recourse) and $64.2 million (non-recourse) with $46.3 million and $63.8 million payable within 12 months respectively[125] - Future interest payments associated with recourse long-term debt total $165.6 million, with $28.1 million payable within 12 months[126] - The company had fixed operating lease payment obligations of $67.5 million, with $28.1 million payable within 12 months[127] Cash Flow and Investments - Net cash provided by operating activities was $287.1 million in 2022, compared to cash used of $51.1 million in 2021[119] - Capital expenditures for 2022 totaled $108.3 million, with expectations to invest approximately $125 to $150 million in 2023[120] - The company paid $24.6 million in dividends in 2022, an increase from $23.7 million in 2021, with a declared cash dividend of $0.185 per common share for January 2023[122] - Total current assets increased to $3,465,953 in 2022, up from $3,372,328 in 2021, reflecting a growth of 2.8%[163] - Total liabilities decreased to $3,178,227 in 2022, down 2.5% from $3,261,515 in 2021[163] - Total shareholders' equity increased to $1,429,769 in 2022, up from $1,307,704 in 2021, representing a growth of 9.3%[163] Inventory and Asset Management - Agricultural inventories on hand were 129.7 million bushels as of December 31, 2022, down from 187.0 million bushels in 2021, indicating a decrease of approximately 30.6%[92] - The Company reported a total inventory of $1,731.7 million as of December 31, 2022, down from $1,814.5 million in 2021, reflecting a decrease of approximately 4.5%[206] - The Company incurred inventory damage charges of $17.3 million in 2022, with $16.2 million related to a fire at a Michigan grain asset[207] - The Company recorded depreciation expense on property, plant, and equipment amounting to $110.6 million for the year ended December 31, 2022[209] - The Company recorded impairment charges of $9.0 million for property, plant, and equipment in December 2022 related to a Nebraska grain asset[210] Taxation and Compliance - The effective tax rate for 2022 was approximately 20.3%, compared to 18.2% in 2021[260] - The company recognized a federal income tax provision of $25,376 in 2022, up from $19,646 in 2021[260] - Unrecognized tax benefits as of December 31, 2022, totaled $79.2 million, including $60.3 million associated with federal and state R&D credits[269] - The company has $47.3 million of state net operating loss carryforwards beginning to expire in 2023[265] - The gross unrecognized tax benefits may change within the next twelve months by a range of $18.6 million to $40.7 million due to ongoing tax examinations[268] Risk Management - The company has established controls to manage and limit risk exposure related to commodity prices through daily reviews of position limits[139] - The company utilizes interest rate swaps to manage its mix of fixed and variable interest rate debt, effectively limiting interest rate volatility[145] - The company is a significant consumer of short-term debt, with a capacity of approximately $2.0 billion, and is exposed to interest rate increases impacting profitability[145] Segment Performance - The Trade business segment includes commodity merchandising and terminal grain elevator operations, contributing significantly to overall revenue[285] - The Renewables business segment produced and sold ethanol and co-products, indicating a focus on sustainable energy solutions[285] - The Plant Nutrient business segment manufactures and distributes agricultural inputs, highlighting the company's commitment to agricultural support[285]

Financial Data and Key Metrics Changes - The company reported net income from continuing operations of $15 million or $0.44 per diluted share for Q4 2022, compared to adjusted net income of $39 million or $1.14 per diluted share in Q4 2021 [9] - Full year adjusted EBITDA reached $412 million, an increase of nearly $60 million compared to 2021, marking a second consecutive record [10][12] - Gross profit for the full year increased to $684 million, up more than $90 million or 15% compared to 2021 [10] Business Line Data and Key Metrics Changes - The Trade business achieved record fourth quarter adjusted EBITDA of $72 million, up from $42 million in Q4 2021, with pretax income of $27 million [13] - The Renewables segment reported fourth quarter EBITDA of $36 million, down from $78 million in Q4 2021, with pretax income of $13 million compared to $27 million in the prior year [14] - The Plant Nutrient business saw a decrease in fourth quarter pretax income to $2 million from $16 million in Q4 2021, with EBITDA dropping to $11 million from $24 million [15] Market Data and Key Metrics Changes - The company noted that fertilizer prices have declined significantly, impacting the Plant Nutrient business, while farmer income remains high, supporting margins in specialty liquid products [8][15] - The company expects higher US corn plantings, which is positive for all business segments, despite challenges in the western Corn Belt from the 2022 harvest [17] Company Strategy and Development Direction - The company aims to grow within and adjacent to its core grain and fertilizer verticals, focusing on sustainable and carbon reduction opportunities [19] - The revised EBITDA target for 2025 has been increased to $475 million, representing a compound annual growth rate of almost 20% from 2018 to 2025 [20] - The company is exploring M&A opportunities within its core areas of strength, including farm centers and product line extensions [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2023 EBITDA target of $350 million to $375 million, despite a weaker start due to low ethanol crush margins and declining fertilizer prices [24][25] - The company anticipates a stronger second half of the year, driven by increased corn plantings and improved trading opportunities in grain markets [26][42] - Management highlighted the importance of monitoring risks in core fertilizer positions as market prices have declined [18] Other Important Information - The company generated $90 million in cash from operations before working capital changes in Q4 2022, compared to $84 million in Q4 2021 [11] - The company executed over $5 million in share repurchases during the quarter, with a total cash used for this program exceeding $14 million [12] Q&A Session Summary Question: Earnings cadence for the year - Management expects earnings to moderate from the peak of the previous year, with a slow start in Q1 but optimism for a stronger finish later in the year [24][25] Question: Renewable diesel and feedstock business - Management indicated that the renewable diesel trading desk has been successful, and they expect strong demand for feedstocks as new plants come online [28][29] Question: CapEx budget for 2023 - The estimated CapEx spend for 2023 is projected to be between $125 million to $150 million, with half allocated for maintenance capital [32][33] Question: Financial goals and growth investments - Management emphasized a balanced approach to growth investments and maintaining a long-term debt-to-EBITDA ratio below 2.5x [38][39] Question: Wheat business outlook - Management expressed optimism for the wheat business, expecting strong volumes and favorable conditions for soft red wheat production [60][61]

The Andersons, Inc. (NASDAQ:ANDE) Q3 2022 Earnings Conference Call November 2, 2022 11:00 AM ET Company Participants Mike Hoelter - VP, Corporate Controller & IR Pat Bowe - President & CEO Brian Valentine - EVP & CFO Conference Call Participants Ben Bienvenu - Stephens Inc. Ben Klieve - Lake Street Capital Markets Ken Zaslow - BMO Eric Larson - Seaport Research Partners Operator Good morning, ladies and gentlemen. And welcome to the Andersons 2022 Third Quarter Earnings Conference Call. My name is Joe, and ...

The Andersons, Inc. (NASDAQ:ANDE) Q2 2022 Earnings Conference Call August 3, 2022 11:00 AM ET Company Participants Mike Hoelter - VP, Corporate Controller & IR Pat Bowe - President & CEO Brian Valentine - EVP & CFO Conference Call Participants Ken Zaslow - BMO Ben Klieve - Lake Street Capital Markets Eric Larson - Seaport Research Partners Operator Good morning, and welcome to The Andersons 2022 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] ...

The Andersons, Inc. (NASDAQ:ANDE) Q1 2022 Earnings Conference Call May 4, 2022 11:00 AM ET Company Participants Mike Hoelter - VP, Corporate Controller & IR Pat Bowe - President & CEO Brian Valentine - EVP & CFO Conference Call Participants Ben Bienvenu - Stephens Ken Zaslow - Bank of Montreal Ben Klieve - Lake Street Capital Markets Eric Larson - Seaport Research Partners Operator Good morning, ladies and gentlemen, and welcome to The Andersons 2022 First Quarter Earnings Conference Call. My name is Matthe ...