The Andersons(US:ANDE)2023-02-15 21:25Financial 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]