The Andersons(US:ANDE)2020-11-04 21:24Financial Data and Key Metrics Changes - In Q3 2020, the company reported a net loss of $1.1 million or $0.03 per diluted share, compared to a net loss of $4.2 million or $0.15 per diluted share in Q3 2019, indicating an improvement [10] - Adjusted net loss was $2.4 million or $0.07 per diluted share in Q3 2020, compared to an adjusted net loss of $2.3 million or $0.07 per diluted share in Q3 2019 [10] - Revenues decreased to $1.9 billion in Q3 2020 from $2 billion in Q3 2019 [10] - Adjusted EBITDA increased by 21% to $46.2 million in Q3 2020 from $38.2 million in Q3 2019 [11] Business Segment Data and Key Metrics Changes - The Trade segment reported a pretax income of $5.9 million in Q3 2020, a significant improvement from a pretax loss of $2.1 million in Q3 2019 [13] - The Ethanol segment's pretax income was $1.1 million in Q3 2020, slightly up from the previous year, with EBITDA attributable to the company increasing to $11.1 million from $3.9 million [15] - The Plant Nutrient segment recorded a pretax loss of $5.4 million, an improvement from a loss of $7.4 million in Q3 2019, with EBITDA increasing to $2.2 million [16] - The Rail segment was essentially breakeven in Q3 2020, down from pretax earnings of $3.1 million in the same quarter last year [19] Market Data and Key Metrics Changes - The company noted improved grain production in the East, with strong merchandising opportunities due to increased market volatility and robust export demand, particularly from China [17] - Nearby grain futures prices have rallied, creating an inverse in corn and soybean markets, impacting storage income opportunities [18] Company Strategy and Development Direction - The company is focused on achieving a long-term EBITDA target of $300 million for 2021, with ongoing improvements in agricultural markets [22] - Strategic cost reductions are expected to yield over $25 million in permanent savings from 2019 to 2021 [9] - The company is evolving towards a leaner structure to enhance growth potential [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the agricultural recovery driven by strong demand, particularly from China, and improved farmer balance sheets due to government payments and higher commodity prices [45] - The outlook for the trading business is strong, with expectations for improved results in 2021 compared to 2020 [18] - The company anticipates challenges in the rail segment, expecting flat results in 2021 due to ongoing weak demand [20] Other Important Information - The company completed a sustainability review, which is available on its website [6] - Long-term debt decreased by approximately $100 million compared to the beginning of the year, with debt reduction remaining a priority [12] Q&A Session Summary Question: Discussion on $300 million EBITDA target for 2021 - Management is currently working on long-term strategy and budgets for 2021, with encouragement from recent improvements in agricultural markets [22] Question: Impact of restored crops in the Eastern corn belt - Management noted significant improvements in crop volumes and strong demand, leading to a much better outlook compared to the previous year [24] Question: Incremental cost savings from 2020 to 2021 - Management indicated an incremental savings of about $5 to $10 million is expected from cost containment and productivity improvements [26] Question: Carry opportunities in grain markets - Management highlighted the unusual market conditions with inverted carries across corn, soybeans, and wheat, impacting storage income opportunities [30] Question: Update on the ELEMENT plant and its ramp-up - The ELEMENT plant is running at full capacity, with expectations for California CARB approval impacting operations in the second half of 2021 [54]