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This webcast is being recorded and the recording and the supporting slides will be made available on the Investors page of our website at andersonsinc.com shortly. Please direct your attention to the disclosure statement on Slide two as well as the disclaimers in the press release related to forward looking statements. Certain information discussed today constitutes forward looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many which are described in the company's reports on file with the SEC. We encourage you to review these factors. This presentation and today's prepared remarks contain non GAAP financial measures. Reconciliations of the GAAP to non GAAP measures are included within the appendix of this presentation. On the call with me today are Bill Krueger, President and Chief Executive Officer and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Bill. Thanks, Mike. And good morning, everyone.
11m 42s
Thank you for joining the call to discuss our first quarter results and outlook for the remainder of 2025. We had mixed results in the first quarter with a strong performance from renewables, while agribusiness was weaker than expected.
11m 59s
Global trade uncertainty resulting from threatened tariffs and pork fees disrupted typical grain flows and negatively impacted commodity values. This resulted in limited merchandising activity beyond immediate customer needs. The nutrient and agronomy teams had a solid start to the planting season and are well positioned to support the expected increase in corn acres. At the same time, our renewables group had one of its best first quarters, with improved yields and solid margins from ethanol production coupled with contributions from ethanol and renewable diesel feedstock merchandise Results in Agribusiness were down as our ag supply chain assets were hit particularly hard by domestic demand challenges and the overall trade flow uncertainties.
13m 1s
Reducing exports of wheat and sorghum, These broad market conditions which we believe are temporary and unusual, impacted the entire network but were amplified the Western Corn Belt. A bright spot for the group was our agronomy business where we experienced increased volumes and margins. We remain pleased with our operating performance in Renewables, We again had increased year over year production including higher ethanol, and corn yields.
13m 39s
Increased board crush margins also positively impact impacted our results and our ethanol and co product merchandising provided comparable uplift. Contributions from dry distillers grains were lower year over year on reduced values considering an oversupply of alternative protein sources. Brian will now cover some key financial data After that, I'll be back to discuss our outlook.
14m 11s
Thanks, Bill, and good morning, everyone. We're now turning to our first quarter results on slide five. In the first quarter of twenty twenty five, the company reported net income attributable to The Andersons of $300,000 or $01 per diluted share and adjusted net income of $4,000,000 or $0.12 per diluted share. This compares to net income of $6,000,000 or $0.16 per diluted share the first quarter of twenty twenty four. Revenues declined slightly on overall lower commodity prices. Gross profit improved while expenses increased with a large portion resulting from the addition of Skyland's results. Adjusted pre tax earnings $3,000,000 for the quarter compared to $7,000,000 in 2024 with the decline coming from the Agribusiness segment. Adjusted EBITDA for the first quarter of twenty twenty five was $57,000,000 compared to $51,000,000 in 2024. Trailing twelve months adjusted EBITDA totaled $369,000,000 Our effective tax rate varies each quarter based primarily on the amount of income or loss attributable to non controlling interests.
15m 31s
We recorded a $2,000,000 tax benefit for the quarter. Which was impacted by a discrete adjustment for research and development tax credits related to prior periods.
15m 42s
We continue to expect a full year adjusted effective tax rate between 1822%. Next, we'll move to slide six to discuss cash, liquidity and debt. We generated cash flow from operations before changes in working capital of $57,000,000 in the first quarter of twenty twenty five an increase of more than $8,000,000 from 2024.
16m 10s
This continues to demonstrate our ability to generate strong cash flows throughout the ag cycle. This strong cash flow generation combined with continuing lower commodity prices resulted in a cash position of $219,000,000 at the end of the quarter.
16m 29s
Next, we'll take a look at capital spending and long term debt on Slide seven.
16m 36s
First quarter capital spending was $47,000,000 compared to $27,000,000 in 2024 with the increase attributable to spending on long term growth projects as well as normal maintenance capital on the addition of the Skylane grain assets. We continue to take a disciplined responsible approach to capital spending and investments, we expect could reach $200,000,000 for the year. Our long term debt to EBITDA is approximately 1.8 times, which is well below our stated target of less than 2.5 times.
17m 14s
We continue to have a balance sheet with significant capacity to support growth investments that meet our strategic and financial criteria.
17m 22s
We are evaluating additional capital projects in our pipeline including projects to improve efficiency and add capacity at our existing facilities, as well as M and A opportunities that align with our growth strategy. Now, we'll move on to a review of each of our businesses beginning with Agribusiness on slide eight. The Agribusiness segment reported a pretax loss attributable to the company of $5,000,000 and breakeven adjusted pretax income compared to adjusted pretax income of $5,000,000 in the same period of 2024. As Bill mentioned, the threat of tariffs and additional port fees had a dampening impact on the commodity markets in the first quarter.
18m 9s
This resulted in stagnant conditions across much of our asset footprint.
18m 14s
Our Western ag supply chain assets including Skyland, were faced with declining grain basis. Cross country commodity merchandising and the premium ingredients portfolio were also impacted by the overall market conditions. On the agronomy front, we saw improved volumes and margins, as customers prepare for potential record corn acres. Agribusiness adjusted EBITDA for the quarter was $31,000,000 compared to $29,000,000 for the first quarter of twenty twenty four. Moving to slide nine, Renewables had an outstanding first quarter generating pretax income attributable to the company of $15,000,000 compared to adjusted pre tax income of $14,000,000 in the first quarter of twenty twenty four. Ethanol margins remained favorable in the quarter on higher yields in board crush. Plant production remained high and gallons produced exceeded last year. As Bill noted, feed values were lower, and are expected to remain challenged.
19m 23s
Overall, ethanol, and RD feedstock merchandising were up year over year. Renewables had EBITDA of $37,000,000 in the first quarter compared to adjusted EBITDA of $34,000,000 last year. And with that, I'll turn things back over to Bill for some comments about our outlook for the remainder of 2025.
19m 47s
Thanks, Brian. Overall, we remain positive about our outlook despite the near term market challenges we've noted in our Agribusiness segment. With this being the first quarter reporting in our new segment structure of agribusiness and renewables, I want to acknowledge the work that is occurring to bring together the nutrient and trade groups. We're working very hard on this and we'll continue to focus on it through 2025 as we anticipate additional commercial, operational and functional synergies. We are also continuing to invest in our safety culture particularly around assets new to our portfolio. Our Agribusiness outlook remains optimistic, and we expect that the additional clarity recently provided on tariffs, and pork fee regulations will reduce some of the market uncertainties that we experienced throughout the first quarter.
20m 54s
Farmers are in the fields, and planning progress is above the five year average.
20m 59s
With a solid growing season we anticipate additional storage and handling opportunities in the last half of the year. The upcoming wheat harvest is being closely watched as both soft bread and hard red weak contracts will receive increased variable storage rates.
21m 21s
Outlook for the Fertilizer and Agronomy business for the second quarter is strong as we were well positioned prior to the start of the planting season and the large expected corn plantings require higher levels of nutrients. We continue to evaluate additional growth projects and acquisition opportunities while staying focused on execution of Privy previously approved projects. In addition to the integration of Skyland, this includes the improvements and expansion at the Port Of Houston to support soybean meal exports. Have several other organic growth capital projects that are in process to support key customer contracts at various stages of completion. In our Renewables segment, we have now successfully completed our spring maintenance shutdowns and expect our plants to continue their highly efficient production. Demand remains solid for ethanol and co products used in production of renewable diesel which should benefit from the expected change in the RVO requirements. Since quarter end, there has been a drawdown of U. S. Ethanol supply, corresponding to the industry wide spring maintenance season. We believe export demand will remain strong. However, we expect higher Eastern corn basis and natural gas costs. We are very focused on maintaining and improving our four production facilities for optimal efficiency.
23m 6s
The renewables business is an important part of our long term growth strategy. We continue to make progress on plans to increase ethanol production efficiency and capacity and to lower the carbon intensity of our ethanol. We are implementing process enhancements at two of our plants to improve the yield of distillers corn oil.
23m 32s
Also, as we have previously disclosed, are evaluating potential acquisitions of ethanol production facilities that align with our strategy. I am proud of our team's resilience this dynamic environment.
23m 49s
We increased our cash flow from operations before changes in working capital and our balance sheet is strong. With our growth projects and potential acquisition opportunities, we we remain very excited about our future. Will continue to make responsible decisions that benefit our customers and maximize shareholder value as we execute our strategy. And with that, we're happy to answer your questions.
24m 22s
We will now begin the question and answer session. And our first question will come from Ben Mayhew with BMO Capital Markets. Please go ahead.
25m 6s
Hey, good morning guys.
25m 7s
And congrats on the solid performance in a really difficult environment.
25m 15s
So my first question has to do with fertilizer business. So it sounds like you have some good visibility on second quarter fertilizer profits given the strong corn plant. So I'm just wondering if you can if you can frame it against maybe the last two years second quarter performance do you expect it to maybe be a little bit higher from a profit standpoint?
25m 44s
And that will be my first question. Thanks. Thanks for the question. [indiscernible] this year's planting season compared to the last two has really started off well. We are obviously looking at a much larger geographic area with the addition of the Skyland farm centers.
26m 8s
Doubling our size But compared to last year, we've seen the opportunities in the fertilizer and nutrient business expand, not only due to increased corn acres, but also we just had a solid plan working with our suppliers coming into this planting season, which has really benefited us.
26m 39s
And so my second question has to do with the ethanol business. So I think the first quarter came in probably stronger than at least I expected and it seems like most others expected had another major competitor [indiscernible] posted pretty strong results and give a stronger outlook You mentioned the difference in corn basis between the Eastern And Western Belt. Which I thought was pretty interesting for this year because the last couple of years, the Eastern Belt has been cheaper So I was hoping you could just dive into that difference this year and what's causing the Eastern Belt to be a little more expensive on basis versus the Western Belt?
27m 36s
Yes. That relates back to a couple of the comments that I made. So the Western Corn Belt has had less demand this year than it has the past couple of years. With the pork fees and the looming tariff discussions, had substantially less sorghum and wheat exports Sorghum was down materially year over year. So you had a lot more grain fighting for the demand in the Western Corn Belt than we've had the last couple of years. Also, we've had a substantial drop in the catalog feed numbers in the West. Which is also a competing demand. So those would be the two largest reasons that I would tell you that we've seen a little higher basis in the East than the West. Versus the last couple of years. Freight has also been a little easier to get in the West again because of the lack of exports. But those would be the three reasons that I would tell you that we've seen kind of a shift this year versus the last two years. Cool. And then if I could sneak in one more I saw in the press release that you called out the renewal renewable diesel feedstock trading desk as as having a better performance So I'm wondering, are you seeing improved transacting ahead of maybe an expected RVO announcement in May.
29m 22s
It would seem like we're starting to see more plants kind of step into the market have a little more confidence and start start buying some feedstocks ahead of this. So I'm just wondering what what your internal visibility is on this and how it might portend to kind of the rest of the year.
29m 49s
I think in short, our internal visibility is about as clear as anyone else's in the There's a lot of conversation around the ag and refiners working together on setting the RVO There's a wide varying range of numbers. A lot of people want to say, over the next two years, we'll get north of 5,000,000,000 We'll wait and see what the number comes out. We have heard that we'll likely have more information by the May. But I agree with you. You You're spot on when we've talked a lot about both the RVOs and trying to understand the ILEC on soybeans and corn. And so there has been a focus or a feeling of more positive results. Potentially for the renewable diesel. Processing plants.
30m 52s
Okay. Thank you so much. I'm going to step back in the queue. And our next question will come from Ben Klieve with Lake Street Capital Markets. Please go ahead. Thanks for taking my questions and congratulations. Good start here to the year. First question around the Skylands acquisition. There's a lot of kind of converging factors here. It seems like the macro condition in that it seems like the macro conditions kind of deteriorated over the last six months relative to what you guys have considered, but maybe that this business performed relatively well against that macro backdrop. Wondering if you can just kind of talk about its performance relative to your expectations. And then if you're able to isolate the level of EBITDA generated by that business here in the first quarter that would be great too. Thanks. I'll take the first portion of that that question. As we mentioned, the entire network was hit by in Q1, we had a sharp run up in the board early in the quarter So we saw a second wave of a lot of farmers selling which put pressure on the basis. Generally, is exactly what we're looking for after the first of the year.
32m 18s
But then February 21, you have the announcement by the U. S. TR of the port fees that just absolutely put the brakes on any forward activity. And you can look at that, as I mentioned, the export. So all of our Western Corn Belt operations struggled. Just with the lack of trade flow. Skyland in particular is more of an asset based business. Versus some of our merchandising businesses. So So yes, they did have that the same issue with their business. As or that portion of our business did as anyone else in the Western Corn Belt did. In terms of thinking through the investment, we're actually doing a very good job on integrating the business into The Andersons. And we continue to find synergies and opportunities that look very positive for the long term investment. In SkyMet. Yes, Ben, this is Brian. I would just add a few comments to that. I think when we talked in our conference call at the end of the year, we kind of said the first couple of months November, December we're in the 5,000,000 to $10,000,000 range of EBITDA. And we talked about a 30,000,000 to $40,000,000 expected kind of annual run rate.
33m 48s
Bill said, I mean, we remain positive about the long term fundamentals. The first quarter was tough. It was It was positive EBITDA, but just slightly positive. And so I would say if we think about the full year for that business it's probably I would say we're still comfortable with that thirty million to forty million dollars range, but I would lean it towards the low end of that range as opposed to the high side. Okay. That fair enough and that all tracks. Last one for me and then I'll get back in queue. Your it seems like the investments that you are making are kind of continuing without much change. And I'm curious the degree to which that that's an accurate assessment. On the investments, especially in Houston, location explicitly focused around international trade flows. Those investments, it seems like are going on without any kind of change even against this kind of uncertain macro backdrop. Is that a fair characterization? [indiscernible] very fair characterization. And if you think through the net effect of an increase in RVOs, that's going to generate more demand for soybean oil. Which will create more supply of soybean meal exports. So, feel very confident in the strategy and the investments that we are as we've talked about in the press release, are long lead item investments.
35m 25s
Is still being very strategic. And quite honestly today, may feel more comfortable than they had previously. Got it. Very good. So Well, I appreciate the color from both of you. Thanks for taking my questions and I'll get back in queue.
35m 44s
And our next question will come from Piran Sharma with Stephens. Please go ahead.
35m 52s
Thanks for the question guys. I just wanted to start out and ask about the renewables business. Been seeing ethanol exports meaningfully up year to date through March. To Canada, I know we had a little bit of a back and forth in terms of trade tariff discussions. But just wanted to ask if you think some of the momentum that we're seeing thus far is a little bit of pull forward [indiscernible] do you expect this type of momentum to carry for the whole year? Would just love to hear your thoughts on ethanol exports to Canada.
36m 39s
It's a good observation in looking at the Q1 exports year over year. As we look at the market today, we would tend to agree with you that it is a little bit of a pull forward.
36m 53s
Our thoughts are we're at 1,900,000,000 gallons of exports last year. It feels like the tariff potential is out there. So we're not materially lower nor are we materially higher than that. If you wanted to say 1.85 to 1.9, that's about as solid guesses as we would have. Obviously, there are a lot of outstanding variables and the tariffs are the one item that we have to be But exports have been very strong. In Q1 and feel like they're going to at least keep pace with last year in Q2.
37m 45s
Great. Appreciate that. And wanted to kind of just hone in about grain here. And A, just ask I think you addressed it in your prepared comments, but [indiscernible] with prospective planning, there's 95,000,000 acres and then we've just been hearing reports that planting pace ahead of schedule So wanted to see what this means for your ability to store for storage income within your grain business? Yes. That's first quarter, as we stated, was hit with a lot of headwinds. Simultaneously, we're looking at the potential of a relatively large wheat crop with substantial carries.
38m 46s
And we are looking at north of 95 to 95,500,000 acres. So there is a small area of the country in the Ohio River Valley that is struggling to get corn in. But that's not going to be material. We think So yes, we are hopeful that we have the opportunity the last half of the year to make up any shortfalls that we had in the first quarter. Now that all is going to vary on, the size and quality of both the wheat crop and the fall harvest and the assumption that we will see this recent increase in wheat exports coming out of The U. S. Maintained. So, there's a lot of variables. We like to think that most of them are positive as we look at the market today.
39m 52s
Great. Appreciate the color. And this concludes our question and answer session. I'd like to turn the conference back over to Mike Holter for any closing remarks.
40m 7s
Thanks, Joe. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Tuesday, August 5, at 08:30 a. M. Eastern Time when we will review our second quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon.
40m 29s
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Key Insights
The Andersons reported mixed Q1 2025 results: strong performance in Renewables, but weaker-than-expected Agribusiness due to global trade uncertainty, threatened tariffs, and reduced exports impacting grain flows and commodity values.
Q1 2025 net income attributable to The Andersons was $0.3M ($0.01/diluted share), with adjusted net income of $4M ($0.12/diluted share), down from $6M ($0.16/diluted share) in Q1 2024; adjusted EBITDA rose to $57M from $51M last year.
Renewables segment had an outstanding quarter with $15M pretax income and $37M EBITDA (up from $14M and $34M in Q1 2024), driven by improved ethanol yields, strong margins, and higher production, though feed values were lower and expected to remain challenged.
Agribusiness segment reported a pretax loss of $5M and breakeven adjusted pretax income (down from $5M adjusted pretax income in Q1 2024); however, agronomy business saw improved volumes and margins, and outlook for fertilizer and agronomy is strong for Q2 due to increased corn acres.
The company maintains a strong balance sheet with $219M cash, long-term debt/EBITDA at 1.8x, and expects full-year capital spending up to $200M; management remains optimistic for the remainder of 2025, expecting reduced market uncertainty, continued investment in growth projects (including Houston port expansion), and ongoing evaluation of M&A opportunities.
