The Andersons, Inc. Reports Strong Third Quarter Results
MAUMEE, Ohio, Nov. 4, 2024 /PRNewswire/ -- The Andersons, Inc. (NASDAQ:ANDE) announces financial results for the third quarter ended September 30, 2024.
Third Quarter Highlights:
Company reported net income attributable to The Andersons of $27 million, or $0.80 per diluted share and adjusted net income of $25 million, or $0.72 per diluted share
Adjusted EBITDA was $97 million, producing a record for the third quarter
Renewables reported best-ever third quarter pretax income of $53 million and pretax income attributable to The Andersons of $28 million on strong operating performance and ethanol margins
Trade generated increased year-over-year pretax income of $26 million and adjusted pretax income of $23 million
"Overall, we are pleased with our third quarter results given the lower commodity prices and reduced volatility in the ag markets. Renewables had a very strong quarter with increased ethanol production and improved yields in a period of good but softening crush margins. Trade results were significantly better than last year and include improved performance in our assets. Increased volume and margins in our specialty liquids and manufactured product lines resulted in improved results in Nutrient & Industrial," said President and CEO Bill Krueger. "Harvest is almost complete due to the near-perfect harvest weather, with both higher-than-normal quality and above trend-line yields. We have been able to buy grain at good basis values which should allow for carry opportunities into 2025. We continue to see the benefits of our portfolio mix with well-placed assets, a growing specialty ingredients business, efficient ethanol plant performance and merchandising opportunities across our businesses."
"We continue to pursue growth opportunities. Most recently, we announced the closing of an $85 million investment for a 65% ownership interest in Skyland Grain, LLC, which operates a large grain and agronomy footprint spread across Southwest Kansas, Eastern Colorado, and the Texas and Oklahoma panhandles. These assets extend our geographic footprint and support our existing merchandising presence in the region," continued Krueger. "In addition, we announced a significant investment in our leased facility at the port of Houston to improve our current grain export program and add capacity for storing and exporting soybean meal. We continue to make progress on our longer-term Renewables projects, which are focused on lowering the carbon intensity of our high-performing ethanol plants. In addition to these projects, we continue our investment philosophy to improve efficiency and add capacity at our existing plants, as well as acquisition opportunities, which are in line with our strategy and generate appropriate returns."
$ in millions, except per share amounts
Q3 2024
Q3 2023
Variance
YTD 2024
YTD 2023
Variance
Pretax Income
$ 62.2
$ 38.4
$ 23.8
$ 133.5
$ 77.8
$ 55.7
Pretax Income Attributable to the Company1
38.1
17.6
20.5
85.8
73.7
12.1
Adjusted Pretax Income
Attributable to the Company1
34.6
10.1
24.5
86.1
90.7
(4.6)
Trade1
22.7
5.4
17.3
41.0
36.3
4.7
Renewables1
28.5
26.3
2.2
63.8
65.0
(1.2)
Nutrient & Industrial
(6.1)
(8.5)
2.4
15.4
23.7
(8.3)
Other1
(10.5)
(13.1)
2.6
(34.1)
(34.3)
0.2
Net Income Attributable to the Company
27.4
9.7
17.7
68.9
50.0
18.9
Adjusted Net Income Attributable to the Company1
24.7
4.6
20.1
69.8
63.7
6.1
Diluted Earnings Per Share ("EPS")
0.80
0.28
0.52
2.01
1.46
0.55
Adjusted EPS1
0.72
0.13
0.59
2.04
1.86
0.18
EBITDA1
101.0
77.8
23.2
246.6
210.4
36.2
Adjusted EBITDA from Continuing Operations1
$ 97.4
$ 70.3
$ 27.1
$ 246.9
$ 270.0
$ (23.1)
1 Non-GAAP financial measures; see appendix for explanations and reconciliations.
Cash, Liquidity, and Long-Term Debt Management
"Our businesses continue to generate consistent cash flows throughout the shift in ag markets, and our debt remains at a modest level," said Executive Vice President and CFO Brian Valentine. "With the strong cash flows and lower commodity prices, we continue to show a higher-than-normal cash position at this point in the year. We remain well below our long-term debt to EBITDA target of less than 2.5 times and are pleased with the strength of our balance sheet. We continue to evaluate new growth investments and acquisitions in a variety of strategic projects. We anticipate increased spending on growth projects in the fourth quarter and into 2025, in addition to the Skyland investment."
The company used cash from operating activities of $2 million and generated cash from operating activities of $489 million in the third quarter of 2024 and 2023, respectively. Cash from operations before working capital changes in the same periods was $86 million and $50 million, respectively. Cash spent on capital projects in the quarter totaled $38 million, a $4 million increase from 2023.
Third Quarter Segment Overview
Trade Results Resilient in Less Volatile Ag Markets
The Trade segment recorded pretax income of $26 million and adjusted pretax income of $23 million for the quarter compared to pretax income of $8 million and adjusted pretax income of $5 million in the third quarter of 2023.
Results from our grain asset footprint were better than the prior year, due to strong elevation margins and space income, primarily related to corn and wheat. Trade's growing specialty ingredients business continued to benefit from recent growth investments. The merchandising business remained profitable with well-supplied commodity markets and limited volatility. As expected, farmer engagement ramped up during the quarter to bring significant old crop bushels to market and forward sell new crop in anticipation of an early and robust harvest. For comparison, prior year results include a $19 million pretax loss on a foreign currency issue.
The portfolio mix of assets, ingredients and merchandising businesses provides a solid foundation to benefit from large crops and carry markets, as well as tight, demand-driven markets. Assets are well-positioned for an early and large harvest, which should allow us to buy bushels at low basis levels. Domestic specialty ingredient demand is also expected to stay solid and should continue to support recent capital growth investments.
Trade's third quarter adjusted EBITDA was $38 million, compared to $21 million in 2023.
Renewables had Record Quarter on Efficient Operations and Favorable Ethanol Margins
The Renewables segment reported pretax income of $53 million and pretax income attributable to the company of $28 million in the third quarter. For the same period in 2023, the segment reported a pretax income of $47 million and pretax income attributable to the company of $26 million.
Margins on ethanol production improved year-over-year on significantly lower corn basis in the eastern plants, despite a reduction in ethanol board crush margins in the quarter. Production facilities continued to operate efficiently with increased volume and higher ethanol yields. Plant co-product values were lower, with feed ingredients following the overall price reduction of corn; however, feed ingredient demand improved year-over-year. Renewable diesel feedstock volumes continue to grow albeit with compressed margins on industry fundamentals. All four plants completed their semi-annual maintenance shutdowns in the third quarter. A favorable ethanol margin environment should continue, supported by exports, higher blending rates and continued lower corn basis levels in the east.
Renewables had third quarter EBITDA of $65 million in 2024, compared to $60 million in 2023.
Nutrient & Industrial Improved in Seasonally Quiet Quarter
The Nutrient & Industrial segment reported a pretax loss of $6 million, compared to a loss of $8 million in 2023. Overall volumes improved during a seasonally slow third quarter, but margins in base nutrients have reset to more normalized levels and did not repeat the outsized margin opportunities seen in recent years. The engineered granules business saw significant improvement in the quarter on higher sales volume and margins, with continued focus on operational improvements in this business. Looking forward, the fourth quarter should benefit from high yields and an early harvest, allowing for fall applications.
Nutrient & Industrial's third quarter EBITDA was $5 million compared to breakeven EBITDA in the third quarter of 2023.
Income Taxes; Corporate
The company recorded income tax expense at an effective rate of 17% for the quarter. This rate was impacted by the tax treatment of noncontrolling interests and federal tax credits. We anticipate a full-year adjusted effective rate of approximately 14% - 18%.
Conference Call
The company will host a webcast on Tuesday, November 5, 2024, at 11 a.m. Eastern Time, to discuss its performance and provide its outlook for the remainder of 2024 and preliminary views for 2025. To access the call, please dial 888-317-6003 or 412-317-6061 (elite entry number is 2387329). It is recommended that you call 10 minutes before the conference call begins.
To access the webcast, click on the link: https://app.webinar.net/Bz3omkN6Ver and submit the requested information as directed. A replay of the call can also be accessed under the heading "Investors" on the company's website at www.andersonsinc.com.
Forward-Looking Statements
This release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially. Without limitation, these risks include economic, weather and regulatory conditions, competition, geopolitical risk, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission. Although the company believes that the assumptions upon which the financial information and its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct.
Non-GAAP Measures
This release contains non-GAAP financial measures. The company believes that pretax income (loss) attributable to the company; adjusted pretax income (loss) attributable to the company; adjusted pretax income (loss); adjusted net income attributable to the company; adjusted diluted earnings per share; earnings before interest, taxes, depreciation, and amortization (or EBITDA); adjusted EBITDA; and cash from operations before working capital changes provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and liquidity and better period-to-period comparability. The above measures are not and should not be considered as alternatives to pretax income (loss) or income (loss) before income taxes, net income (loss), diluted earnings (loss) per share attributable to The Andersons, Inc. common shareholders and cash provided by (used in) operating activities as determined by generally accepted accounting principles. Reconciliations of the GAAP to non-GAAP measures may be found within this press release and the financial tables provided herein.
Company Description
The Andersons, Inc., named in 2024 to Forbes list of America's Most Successful Small Companies, Newsweek's list of America's Most Responsible Companies, and one of The Americas' Fastest Growing Companies by the Financial Times, is a diversified company rooted in agriculture that conducts business in the commodity merchandising, renewables, and nutrient & industrial sectors. Guided by its Statement of Principles, The Andersons is committed to providing extraordinary service to its customers, helping its employees improve, supporting its communities, and increasing the value of the company. For more information, please visit www.andersonsinc.com.
The Andersons, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
Three months endedSeptember 30,
Nine months endedSeptember 30,
(in thousands, except per share data)
2024
2023
2024
2023
Sales and merchandising revenues
$ 2,620,988
$ 3,635,691
$ 8,134,410
$ 11,537,112
Cost of sales and merchandising revenues
2,443,863
3,477,990
7,653,594
11,009,463
Gross profit
177,125
157,701
480,816
527,649
Operating, administrative and general expenses
120,494
126,306
356,466
359,548
Asset impairment
—
—
—
87,156
Interest expense, net
8,361
8,188
21,494
38,766
Other income, net
13,922
15,178
30,651
35,623
Income before income taxes
62,192
38,385
133,507
77,802
Income tax provision
10,731
7,862
16,911
23,710
Net income
51,461
30,523
116,596
54,092
Net income attributable to noncontrolling interests
24,096
20,815
47,674
4,088
Net income attributable to The Andersons, Inc.
$ 27,365
$ 9,708
$ 68,922
$ 50,004
Earnings per share attributable to
The Andersons, Inc. common shareholders:
Basic earnings:
$ 0.80
$ 0.29
$ 2.03
$ 1.48
Diluted earnings:
$ 0.80
$ 0.28
$ 2.01
$ 1.46
The Andersons, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
September 30, 2024
December 31, 2023
September 30, 2023
Assets
Current assets:
Cash and cash equivalents
$ 454,065
$ 643,854
$ 418,055
Accounts receivable, net
756,618
762,549
816,686
Inventories
884,339
1,166,700
985,292
Commodity derivative assets, current
122,326
178,083
239,595
Other current assets
113,726
55,777
67,471
Total current assets
2,331,074
2,806,963
2,527,099
Property, plant and equipment, net
709,951
693,365
680,188
Other assets, net
347,274
354,679
380,815
Total assets
$ 3,388,299
$ 3,855,007
$ 3,588,102
Liabilities and equity
Current liabilities:
Short-term debt
$ 14,716
$ 43,106
$ 14,138
Trade and other payables
774,347
1,055,473
822,153
Customer prepayments and deferred revenue
67,899
187,054
211,867
Commodity derivative liabilities, current
85,640
90,849
142,511
Current maturities of long-term debt
27,727
27,561
27,535
Accrued expenses and other current liabilities
207,543
232,288
189,430
Total current liabilities
1,177,872
1,636,331
1,407,634
Long-term debt, less current maturities
542,564
562,960
569,730
Other long-term liabilities
144,855
139,329
161,652
Total liabilities
1,865,291
2,338,620
2,139,016
Total equity
1,523,008
1,516,387
1,449,086
Total liabilities and equity
$ 3,388,299
$ 3,855,007
$ 3,588,102
The Andersons, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine months ended September 30,
(in thousands)
2024
2023
Operating Activities
Net income
$ 116,596
$ 54,092
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
91,626
93,800
Asset impairment
—
87,156
Other
15,146
1,347
Changes in operating assets and liabilities:
Accounts receivable
3,498
406,263
Inventories
278,947
748,118
Commodity derivatives
49,327
99,479
Other current and non-current assets
(59,376)
2,048
Payables and other current and non-current liabilities
(433,069)
(796,216)
Net cash provided by operating activities
62,695
696,087
Investing Activities
Purchases of property, plant and equipment and capitalized software
(93,230)
(108,718)
Acquisition of businesses, net of cash acquired
(9,561)
(24,385)
Insurance proceeds
9,219
—
Proceeds from sale of a business
—
10,318
Other
2,980
5,522
Net cash used in investing activities
(90,592)
(117,263)
Financing Activities
Net payments ...
