Q2 2025 The Andersons Inc Earnings Call
Joe: Good morning, ladies and gentlemen, and welcome to The Andersons 2025 second quarter earnings conference call. My name is Joe, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will facilitate a question and answer session. To ask a question, you may press star on your telephone keypad, star then one. To withdraw your question, please press star then two. On today's call, we ask that you please limit yourself to one question and one follow-up during Q&A. You may re-queue if you have additional questions. As a reminder, this conference call is being recorded for replay purposes. I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller, and Investor Relations. Please proceed.
Ladies and gentlemen, and welcome to the Andersons 2025 second quarter earnings Conference call My.
My name is Joe and I'll be your coordinator for today.
At this time all participants are in a listen only mode.
Later, we will facilitate a question and answer session.
To ask a question you May press Star one on your telephone Keypad Star then one.
To withdraw your question. Please press Star then two.
On today's call. We ask that you. Please limit yourself to one question one follow up during Q&A you may re queue. If you have additional questions.
A reminder, this conference call is being recorded for replay purposes.
I'll now hand, the presentation to your host for today, Mr. Mike Holter, Vice President corporate controller and Investor Relations. Please proceed.
Thanks, Joe Good morning, everyone and thank you for joining us for the Andersons second quarter earnings call. We have provided a slide presentation that will enhance today's discussion if you're viewing this presentation from our webcast the slides and commentary will be in sync.
Mike Hoelter: Thanks, Joe. Good morning, everyone, and thank you for joining us for The Andersons' second quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation from our webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website 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 factors which are described in the company's reports on file with the SEC.
This webcast is being recorded and the recording and the supporting slides will be made available on the investors page of our web site shortly.
Please direct your attention to the disclosure statement on slide two as well as the disclaimer 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 factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors.
Mike Hoelter: 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.
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 Kruger, 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. Thank you for joining the call to discuss our second quarter results and outlook for the remainder of 2025.
Bill Krueger: Thanks, Mike, and good morning, everyone. Thank you for joining the call to discuss our second quarter results and outlook for the remainder of 2025. I would like to start off by thanking all our employees for their continued hard work navigating the current markets while also evaluating several growth and M&A opportunities. Since our last earnings call, we have been able to advance our strategy through a number of projects. The most significant action was the purchase of our partner's share of our four ethanol plants. We have evaluated several ethanol opportunities and determined that this acquisition was the best use of our capital. I will talk more about this on the next slide. We have two significant long-term construction projects that we expect to have fully completed by mid-2026.
I'd like to start off by thanking all our employees for their continued hard work navigating the current markets, while also evaluating several growth and M&A.
M&A opportunities since our last earnings call, we have been able to advance our strategy through a number of projects. The most significant action was the purchase of our partner's share of our four ethanol plants, we have evaluated several ethanol opportunities and determined that this.
Acquisition was the best use of our capital.
I will talk more about this on the next slide.
We have two significant long term construction projects that we expect to have fully completed by mid 2026.
Bill Krueger: Construction continues at the Port of Houston, which includes improvements to the grain facility as well as the expansion that will allow us to export soybean meal. In June, the EPA released the proposed RVOs for 2026 and 2027. This signaled further regulatory support for biomass-based diesel production, which in turn should drive increased domestic soybean crush, allowing the Houston expansion project to be well-positioned to export the surplus meal. We have another project that builds on current capacity and serves a commercial need for a major energy company. We expect financial contributions from both projects starting in 2026. We have also recently completed projects to convert excess capacity at four of our grain elevators, to perform light processing of premium ingredients for CPG companies, allowing us to better serve our customers and further improve our strong farmer relationships.
Construction continues at the Port of Houston, which include improvements to the grain facility as well as the expansion that will allow us to export soybean meal.
In June the EPA released the.
Proposed RVO for 2026 and 2027.
This signaled further regulatory support for biomass based diesel production.
Which in turn should drive increased domestic soybean crush, allowing the Houston expansion project to be well positioned to act.
For the surplus meal.
We have another project that builds on current capacity and serves a commercial need for a major energy company.
We expect financial contributions from both projects starting in 2026.
We have also recently completed projects to convert excess capacity at four of our grain elevators to perform light processing of premium ingredients for CPG companies, allowing us to better serve our customers and further improve our strong pharma relationships.
With the current macro conditions in the AG industry, we remain focused on working hard for our customers and furthering our strategy.
Bill Krueger: With the current macro conditions in the ag industry, we remain focused on working hard for our customers and furthering our strategy. Our renewables business had a solid quarter with strong production numbers, including record yields and increased demand. In agribusiness, we had improved fertilizer results with increased volume and margin, as the increase in corn acres required additional nitrogen. We recently completed the wheat harvest, and our facilities are prepared for the increased corn volumes expected at harvest. With the next slide, we will discuss the ethanol acquisition. Our process to evaluate plants includes both strategic and financial criteria, and we have been disciplined in our approach. The strategic requirements include large and efficient production, the right geographic location to support the ethanol supply chain, and the capability to produce low carbon intensity ethanol. As we were actively evaluating options, we kept returning to our own plants.
Our renewables business had a solid quarter with strong production numbers, including record yields and increased demand in.
In agribusiness, we had improved fertilizer results with increased volume and margin as the increase in corn acres required additional nitrogen.
We recently completed the wheat harvest and our facilities are prepared for the increased corn volumes expected at harvest.
With the next slide we will discuss the ethanol acquisition.
Our process to evaluate plants includes both strategic and financial criteria and we have been disciplined in our approach to this.
Our strategic requirements include large and efficient production the right geographic location to support the ethanol supply chain and the capability to produce low carbon intensity ethanol.
As we were actively evaluating options, we kept returning to our own plants.
Bill Krueger: We know the plants since we have been operating them for over a decade and know that they have been well maintained. We have plans to improve both efficiency and profitability moving forward. Completing this transaction affirms our commitment to the ethanol industry. Details of the transaction are listed on the slide. We purchased approximately 250 million gallons for $1.54 per gallon before considering working capital. We have a limited integration risk given that we already manage and operate these sites. Plant management, marketing, and administrative support will remain the same going forward under the new name of The Andersons Renewables LLC. We were able to fund this transaction with cash on hand of $300 million and borrowings under our existing credit facility.
We know the plants since we have been operating them for over a decade and know that they have been well maintained.
We have plans to improve both efficiency and profitability moving forward completing this transaction affirms our commitment to the ethanol industry.
Details of the transaction are listed on this slide.
We purchased approximately 250 million gallons for a $1 54 per gallon before considering working cap.
We have a limited integration risk given that we already manage and operate these sites.
Plant management marketing and administrative support will remain the same going forward under the new name of the Andersons renewables LLC.
We're able to fund this transaction with cash on hand of $300 million.
And borrowings under our existing credit facility.
This transaction should be immediately accretive to EPS and will better align our reported EPS and EBITDA as we now control 100% of the EBITDA within the renewable segment.
Bill Krueger: This transaction should be immediately accretive to EPS and will better align our reported EPS and EBITDA, as we now control 100% of the EBITDA within the renewable segment. Cash can be managed across the enterprise, allowing more flexibility, and will drive efficiencies in capital deployment. Next, Brian will cover some key financial data on the second quarter. After that, I'll be back to discuss our forward strategy and outlook.
Cash can be managed across the enterprise, allowing more flexibility and we will drive efficiencies and capital deployment.
Next Brian will cover some key financial data on the second quarter.
After that I'll be back to discuss our forward strategy and outlook.
Thanks, Bill we're now turning to our second quarter results on slide number six.
Joe: Thanks, Bill. We are now turning to our second quarter results on slide number six. In the second quarter of 2025, the company's reported and adjusted net income attributable to The Andersons was $8 million, resulting in earnings per diluted share of $0.23 and $0.24 on an adjusted basis. This compares to adjusted net income of $39 million or $1.15 per share in the second quarter of 2024. Revenues increased slightly with the addition of Skyland Grain, despite overall lower commodity prices. Gross profit declined due to challenging ag fundamentals and an outsized year-over-year comparative in renewables. Expenses also increased with the majority relating to the addition of Skyland Grain. Adjusted pre-tax earnings were $15 million for the quarter compared to $45 million in 2024, with the decline coming from both segments. Adjusted EBITDA for the second quarter was $65 million compared to $98 million in 2024.
In the second quarter of 2025, the company's reported an adjusted net income attributable to the Andersons was $8 million.
Resulting in earnings per diluted share up 23 and 24.
On an adjusted basis.
This compares to adjusted net income of $39 million or $1 15 per share in the second quarter of 2024.
Revenues increased slightly with the addition of skylanders, despite overall lower commodity prices.
Gross profit declined due to challenging AG fundamentals in an outsized year over year comparative in renewals.
Expenses also increased with the majority relating to the addition of skyline.
Adjusted pre tax earnings were $15 million for the quarter compared to $45 million in 2024 with the decline coming from both segments.
Adjusted EBITDA for the second quarter was $65 million <unk>.
Compared to $98 million in 2024.
Our effective tax rate varies each quarter based primarily on the amount of income or loss attributable to noncontrolling interests as well as tax credits.
Joe: Our effective tax rate varies each quarter based primarily on the amount of income or loss attributable to non-controlling interests, as well as tax credits. With the ethanol transaction Bill discussed and the reduction in income attributable to non-controlling interests, our full-year adjusted effective tax rate is now expected to be in the range of 22% to 25%. Next, we will move to slide seven to discuss cash, liquidity, and debt. We generated cash flow from operations before changes in working capital of $43 million in the second quarter compared to $89 million in the second quarter of 2024. While down year over year, this continues to demonstrate our ability to generate positive cash flows throughout the ag cycle. Our readily marketable grain inventories continue to be well in excess of our short-term debt, and we ended the quarter with a cash balance of more than $350 million.
With the ethanol transaction Bill discussed and the reduction in income attributable to Noncontrolling interests. Our full year adjusted effective tax rate is now expected to be in the range of 22% to 25%.
Next we'll move to slide seven to discuss cash liquidity and debt.
We generated cash flow from operations before changes in working capital of $43 million in the second quarter compared to $89 million in the second quarter of 2024.
While down year over year. This continues to demonstrate our ability to generate positive cash flows throughout the AG cycle.
Ah readily marketable grain inventories continue to be well in excess of our short term debt and we ended the quarter with a cash balance of more than $350 million.
Joe: Next, we will take a look at capital spending and long-term debt on slide eight. Second quarter capital spending was $49 million compared to $29 million in 2024, with the increase attributable to spending on long-term growth projects, as well as normal maintenance capital on the addition of the Skyland Grain assets. We continue to take a disciplined, responsible approach to capital spending, which we expect could reach $200 million for the year, excluding acquisitions. Our long-term debt to EBITDA is approximately 1.9 times, which remains well below our stated target of less than 2.5 times. We funded the post-quarter ethanol transaction using cash on hand and borrowings on our line of credit and continue to have a balance sheet with significant capacity to support further growth investments.
Next we'll take a look at capital spending and long term debt on slide eight.
Second quarter capital spending was $49 million compared to $29 million in 2024 with the increase attributable to spending on long term growth projects as well as normal maintenance capital and the addition of the skyline grain assets.
We continue to take a disciplined responsible approach to capital spending.
Which we expect could reach $200 million for the year excluding acquisitions.
Our long term debt to EBITDA is approximately one nine times, which remains well below our stated target of less than two five times.
We funded the post quarter ethanol transaction using cash on hand, and borrowings on our line of credit and continue to have a balance sheet with significant capacity to support further growth investments.
Joe: We are evaluating additional projects in our pipeline, including projects to improve efficiency and increase capacity at our existing facilities, as well as further M&A opportunities that align with our growth strategy. We will move on to a review of each of our businesses, beginning with agribusiness on slide nine. The agribusiness segment reported pre-tax income attributable to the company of $18 million and adjusted pre-tax income of $17 million, compared to adjusted pre-tax income of $33 million in the second quarter of 2024. As expected, our nutrient business benefited from strong demand driven by the high corn plantings. Volumes were up substantially, and we saw a modest increase in margins as well. Similar to the first quarter, oversupplies of grain and weak demand in the Western Grain Belt impacted our asset locations and merchandising businesses as end users continued to make short-term purchasing decisions.
We are evaluating additional projects in our pipeline, including projects to improve efficiency and increased capacity at our existing facilities as well as further M&A opportunities that align with our growth strategy.
Now, we'll move on to review of each of our businesses beginning with agribusiness on slide nine.
The agribusiness segment reported pre tax income attributable to the company of $18 million.
And adjusted pre tax income of $17 million compared to adjusted pre tax income of $33 million in the second quarter of 2024.
As expected our nutrient business benefited from strong demand driven by the high high corn plantings.
Volumes were up substantially and we saw a modest increase in margins as well.
Similar to the first quarter oversupplies of grain and weak demand in the western grain belt impacted our asset locations and merchandising businesses as end users continued to make short term purchasing decisions.
We continue to evaluate opportunities to optimize our business portfolio as well as achieve efficiencies from combining the management of the former trade and nutrient business segments.
Joe: We continue to evaluate opportunities to optimize our business portfolio, as well as achieve efficiencies from combining the management of the former trade and nutrient business segments. During the quarter, we made the decision to exit a few underperforming businesses and minority investments that no longer align with our strategy. We will continue to review our portfolio, which could result in some additional changes going forward. Agribusiness had adjusted EBITDA for the quarter of $46 million compared to $56 million in the second quarter of 2024. Moving to slide ten, renewables generated pre-tax income attributable to the company of $10 million compared to $23 million in the second quarter of 2024. Ethanol margins remained favorable on efficient plant operations and elevated demand. Plant production remained high, with record yields and gallons produced up year over year.
During the quarter, we made the decision to exit a few underperforming businesses and minority investments that no longer aligned with our strategy.
We will continue to review our portfolio, which could result in some additional changes going forward.
Agribusiness had adjusted EBITA for the quarter up $46 million compared to $56 million in the second quarter of 2024.
Moving to slide 10.
Renewables generated pre tax income attributable to the company of $10 million compared to $23 million in the second quarter of 2024.
Ethanol margins remained favorable on efficient plant operations and elevated demand.
Plant production remained high with record yields and gallons produced up year over year.
Joe: Partially offsetting these factors were lower ethanol board crush and increased input costs, including higher Eastern corn basis and natural gas costs. Feed values were lower and are expected to remain challenged with a surplus of soybean meal in the market. Renewables had EBITDA of $30 million in the second quarter compared to $52 million last year. With that, I will turn things back over to Bill for some comments about our outlook for the remainder of the year.
Partially offsetting these factors were lower ethanol board crush and increased input costs, including higher eastern corn basis, and natural gas costs.
Feed values were lower and are expected to remain challenged with a surplus of soybean meal in the market.
Renewables had EBITDA of $30 million in the second quarter compared to $52 million last year.
And with that I'll turn things back over to Bill for some comments about our outlook for the remainder of the year.
Thanks, Brian.
Bill Krueger: Thanks, Brian. We are positive about the last half of the year. We are prepared for the fall harvest and are excited about the opportunities ahead of us. In our renewable segment, the recent uptick in board crush and continuing increased demand suggest a stronger margin environment through the end of 2025. We could see record exports and expect that a large harvest will lower Eastern corn basis. We are interested in pursuing additional opportunities in ethanol and renewable feedstocks. We continue to make progress on plans to improve efficiencies, increase capacity, and lower the carbon intensity of our ethanol. We expect that all four of our plants will begin to generate 45Z tax credits over the next year.
We are positive about the last half of the year, we're prepared for the fall harvest and are excited about the opportunities ahead of us.
In our renewable segment the recent uptick in board crush and continuing increased demand suggests a stronger margin environment through the end of 2025.
We could see record exports and expect that a large harvest will lower eastern corn basis.
We're interested in pursuing additional opportunities in ethanol and renewable feedstocks.
We continue to make progress on plans to improve efficiencies increase capacity and lower the carbon intensity of our ethanol.
We expect that all four of our plants will begin to generate 45 C tax credits over the next year.
Bill Krueger: A Class VI well permit has been filed on our behalf for a potential carbon sequestration project at our Climbers, Indiana, production facility, which, if approved, would allow us to generate additional tax credits through on-site sequestration in the future. Agribusiness should see improvement in the last half of the year as wheat harvest concludes and fall harvest has the potential to be one of the largest in recent history. Our U.S. grain asset footprint should allow us additional storage and handling opportunities as we accumulate large quantities of grain at reasonable values. That will be positioned for both domestic and export use. Additional clarity on trade negotiations will help reduce market uncertainties. The third quarter is generally quiet for the fertilizer business, but we could see increased post-harvest application as weather permits. We are going to primarily focus on completing our long-term capital projects and integration in agribusiness.
Class six well permit has been filed on our behalf for a potential carbon sequestration projects at our climbers, Indiana production facility, which if approved would allow us to generate additional tax credits through onsite sequestration in the future.
Agribusiness should see improvement in the last half of the year as wheat harvest includes and fall harvest has the potential to be one of the largest in recent history.
Our U S grain asset footprint should allow us additional storage and handling opportunities as we accumulate large corners of grain at reasonable values.
That will be positioned for both domestic and export use.
Additional clarity on trade negotiations will help reduce market uncertainties.
The third quarter is generally quiet for the fertilizer business, but we could see increased post harvest application.
As the weather permits.
We are going.
And primarily focused on completing our long term capital projects and integration in agribusiness we.
Bill Krueger: We continue to evaluate additional growth projects and acquisitions aligned with our strategy. As mentioned earlier, with the near-term macro challenges in U.S. agricultural markets, we are taking this opportunity to assess our portfolio businesses and the enterprise organizations that support them to extract more value for the shareholder. We will continue to invest in our safety practices and culture, particularly around assets newer to our portfolio. We had previously provided a run rate target of $475 million of EBITDA by 2026. With the acquisition of the minority interest in our ethanol plant and the potential impact of tax credits to be delivered from our renewable segment, we are now converting our existing EBITDA target into an EPS measure. At the time we set the target, the $475 million EBITDA would have equated to EPS of approximately $4.30 per share.
We continue to evaluate additional growth projects and acquisitions aligned with our strategy.
As mentioned earlier with the near term macro challenges in the U S. Agricultural markets. We are taking this opportunity to assess our portfolio of businesses and the enterprise organizations that support them to extract more value for the shareholder.
We will continue to invest in our safety practices and culture, particularly around assets newer to our portfolio.
We had previously provided a run rate target of $475 million of EBITDA by 2026 with the acquisition of the minority interest in our ethanol plant.
And the potential impact of tax credits to be delivered from our renewables segment. We are now converting our existing EBITDA target into Etfs may issue.
At the time, we set the target the $475 million EBITDA would have equated to EPS of approximately $4 30 per share.
Bill Krueger: We anticipate meeting the run rate EPS target by the end of 2026. I am proud of our team's resilience in this dynamic environment. Our balance sheet remains strong, allowing us to fund additional growth. We will continue to make responsible decisions that benefit our customers and maximize shareholder value as we execute on our strategy. With that, we are happy to answer your questions.
We anticipate meeting the run rate EPS target by the end of 2026.
I am proud of our team's resilience in this dynamic environment, our balance sheet remains strong, allowing us to fund additional growth.
We will continue to make responsible decisions that benefit our customers and maximize shareholder value as we execute on our strategy.
And with that we're happy to answer your questions.
We will now begin the question and answer session.
Joe: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your headset before pressing the keys. To withdraw a question, you may press star then two. At this time, we will pause just momentarily to assemble our roster. We will take our first question here. Our first question will come from Ben Klieve with Lake Street Capital. Please go ahead.
Ask a question you May press star one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing piece and to withdraw question you May Press Star then two.
At this time, we will pause momentarily to assemble our roster.
And we will take our first question here. Our first question will come from Ben <unk> with Lake Street Capital. Please go ahead.
Alright, thanks for taking my questions and congratulations on the.
Ben Klieve: All right. Thanks for taking my questions and congratulations on the transaction you announced. It is really great to see. First question on this. You noted the kind of regulatory dynamic here is supportive of the space, which is clear and in an accelerating fashion. I am wondering two things. One, did the timing of the transaction correlate to this kind of regulatory tailwinds? Also, you noted that there are some opportunities to unlock more capacity within the existing four facilities given regulatory tailwinds. Can you talk about the incremental capacity that you could potentially introduce into these four facilities here given the regulatory dynamic?
Transaction units, it's really great to see on first first question on this you noted.
The kind of regulatory dynamic here is supportive of the space, which is.
It just seems to certainly be clearer than that.
In an accelerating fashion and I'm wondering two things one did the timing of the transaction.
Was that correlated to this kind of regulatory tailwind and then also you noted that there are some opportunity to unlock more capacity within the existing four facilities given regulatory.
<unk> can you talk about kind of the incremental capacity that you could potentially introduce into these four facility here given the regulatory dynamic.
Yes, thanks, good morning.
Bill Krueger: Yeah, thanks. Good morning. I would tell you that we've been pretty clear over the past eight quarters that we've been looking at ethanol, additional ethanol capacity. I would not say that the recent regulatory changes, which were actually only signed in the law July 4th, really had a material effect on the transaction. We'd been working on this transaction for a few months prior to that. In terms of additional capacity that we can unlock, as I mentioned in my stated remarks, Ben, is that we do have a Class VI well permit that was filed on our behalf that we're waiting for approval, which would unlock more opportunity at the Clymers, Indiana facility. If we do that, both our Clymers, Indiana facility, and potentially Albion would be locations where we have plenty of corn supply, again, meeting our criteria that we could look at expansion opportunities.
Yes.
I would tell you that we've been pretty clear over the past.
Eight quarters that we've been looking at ethanol additional ethanol capacity.
I would not say that the reset regulatory changes, which were actually only signed into law July 4th.
Really had a material.
<unk> on the transaction we've been working on this.
Transaction for a few months prior to that.
In terms of additional capacity.
That we can unlock as I mentioned in my stated remarks is that we do have a class six well permit that was filed on our behalf that we are waiting for approval, which would unlock.
More opportunity at the climbers, Indiana facility, if we do that.
Both our climbers, Indiana facility.
And potentially Albion would be locations, where we have plenty of corn supply again meeting our criteria that we could look at expansion opportunities.
Got it thank you.
Ben Klieve: Got it. Thank you. On the agribusiness segment, you noted some non-strategic exits. Can you characterize what those businesses were and what the financial impact was either in the quarter or on a full-year basis?
On.
On the Agribusiness segment you noted some non strategic exits can you characterize what those businesses were and what the financial impact.
Either in the quarter or on a full year basis.
Yes, sure, but let me go through those.
Brian Valentine: Yeah, sure, Ben. We can go through those. I would say it is a couple of things. There were a couple minority investments that were probably, it was an impact of about $7 million in the adjustments. Then there was a wind-down in sale of a couple of facilities. We sold a facility in Idaho and also announced some closure on some of our contract manufacturing business on the fertilizer side. So net-net, those were probably a few million dollars. Actually, there was a small gain on one of those sales. Then there were a few other modest adjustments, but those were the main pieces.
A couple of things there were a couple.
Minority investments that were probably it was an impact of about $7 million in the adjustments.
And then there was.
Wind down and sale of a couple of facilities.
Sold a facility in Idaho.
Also announced some closure on.
Some of our contract manufacturing business on the fertilizer side. So net net those were probably a few million dollars actually there was a small gain on one of those sales.
And then there were there were a few other modest adjustments, but those were the main pieces.
Ben Klieve: Got it. Okay. That's helpful. Thank you, Brian. I guess one more for me, and I will get back in queue. You talked about the conditions on the ground here where you have got kind of a stale grain network here over the past quarter, and also a bumper crop coming up. Given these conditions, can you talk about the outlook here for kind of the mix between merchandising and storage for the second half of the year?
Got it Okay. That's helpful. Thank you, Brian and then I guess, one more for me and I'll get back in queue, you talked about the conditions on the ground here, where <unk> got kind of a scale.
<unk>.
Green.
<unk> network here over the past the past quarter, and then also a bumper crop coming up.
Given given these conditions can you talk about the outlook here for kind of the mix between.
Merchandising and storage for the second half of the year.
Sure Ben.
Bill Krueger: Sure, Ben. As we look at the wheat harvest that was just completed, there has been more opportunity on space utilization than pure merchandising opportunities. Obviously, we still have to finish what appears to be a very large corn crop. That also should allow us to generate more income from our elevators than from our traditional merchandising. With the size of the crop that we are looking at, we expect both of those opportunities to be improved in the second half of the year.
As we look at the wheat harvest that was just completed there was there.
There has been.
More opportunity on space utilization than peer merchandising opportunities.
And obviously, we still have to finish what appears to be a very large corn.
Crop, but that also should allow us to generate.
More income from our elevators than from our traditional merchandising, but with the size of the crop that we're looking at we expect both of those opportunities to be improved in the second half of the year.
Got it very good.
Ben Klieve: Got it. Very good. All right. Well, plenty more to talk about, but I will leave it there. Congratulations again, and I will get back in queue.
Alright, well plenty more to talk about but I'll leave it there congratulations again and I will get back in queue.
And our next question will come from Ben Mayhew with BMO capital. Please go ahead.
Joe: Our next question will come from Ben Mayhew with BMO Capital. Please go ahead.
Hey, good morning, guys congratulations on the deal.
Ben Mayhew: Hey, good morning, guys. Congratulations on the deal. I think it's great that you are bringing it in-house. On that topic, can you discuss why acquiring the balance at TAMH Ethanol Assets was the right move now for The Andersons? How does this deal fit into your longer-term strategic objectives to grow your EBITDA? I think you said at the end of the prepared remarks there that you expected to hit your EBITDA run rate by 2026. I am assuming that this all kind of ties into that. If you could just elaborate, please. Thank you.
I think it's great that you're bringing it in house.
So on that topic.
Can you discuss why acquiring the balance of Cam H ethanol assets.
With the right move now for the Andersons.
And how does this deal fit into your longer term strategic objective to grow your EBITDA and I think you said at the end of the prepared remarks, there that you expected to hit.
Your EBITDA run rate.
By 2000.
So I'm, assuming that that's all kind of ties into that but if you could just elaborate please thank you.
Thanks for the question Beth I will hit the first part of the question and then have Brian address the EBITDA versus EPS.
Bill Krueger: Thanks for the question, Ben. I will hit the first part of the question and then have Brian address the EBITDA versus EPS portion of the question. From our perspective, if we want to invest more in ethanol, taking the opportunity to acquire 50% of four plants, three of which we've built, the fourth one we've been operating since 2014, felt like a better deployment of capital, allowing us to be able to capture more EPS for our shareholders. And quite honestly, as I mentioned, very little integration risk. All the employees are Andersons employees. The management, the marketing will all remain the exact same. We just simply have more financial opportunity from this investment versus buying plants that may need additional capital investment and that we don't know the marketplace as well as we do around the four plants that we already own.
A portion of the question so.
From our perspective.
If we want to invest more in ethanol.
Taking the opportunity to acquire.
50% of four plants three of which we built.
The fourth one we've been operating since 2014.
Felt like a better deployment of capital.
Allowing us to be able to capture more EPS for our shareholders and quite honestly as I mentioned very little integration risk all the employees of our Anderson employees. The management the marketing will all remain the exact same we just simply have more phi.
Actual opportunity from this investment versus buying plants that may need additional capital investment and that we don't know the marketplace as well as we do around the four plants that we already own so in terms of something right down the <unk>.
Bill Krueger: So in terms of something right down the center of the fairway for us, this feels like it couldn't hardly be better. Second of all, it also allows us to grow in the space and not have to take additional risk in terms of integration, allowing us to continue to look at additional plants and/or opportunities in renewable feedstocks simultaneously.
Enter the fairway for us this feels like it's it couldnt hardly be better.
Second of all it also allows us to grow in the in the space.
And not have to take additional risk in terms of integration, allowing us to continue to look at additional plants and or opportunities in renewable feedstocks simultaneously.
And then just to comment on kind of the EBITDA versus EPS.
Brian Valentine: To comment on the EBITDA versus EPS, since The Andersons was already consolidating TAM into the results, our EBITDA already included 100% of TAM because EBITDA is before non-controlling interests. From a practical perspective, The Andersons shareholders were really only benefiting from about 50% of that plant's EBITDA. Going forward, we will really have the full earnings benefit as well as the full cash flow benefit and impact to those cash flows on an unrestricted basis because it will not be in a joint venture anymore. To frame the context from an EPS perspective, if we did a pro forma over the last four years, the incremental EPS impact for us would be in the range of $0.70 to $0.75 per share on an annual basis. If you look at 2021 to 2024, and in a peak year like 2023, it frankly could be north of a dollar a share.
Anderson's was already consolidating.
<unk> into the results.
The our EBITDA already included a 100% of Tam because EBITDA is before noncontrolling interests, but from a practical perspective Anderson shareholders will really only benefited from about 50% of that plant EBITA. So now going forward, we will really have the full earnings benefit us all as well as.
The full cash flow benefit and impact to those cash flows on sort of <unk>.
Unrestricted basis, because it won't be in our new joint venture anymore, and I guess just to kind of frame.
The context from an EPS perspective, if we kind of did.
Pro forma over the last four years.
The incremental EPS impact for us would be sort of in the range of 70 to 75 cents.
Per share on an annual basis.
Kind of if you look at 'twenty, one to 'twenty four.
And in a peak year like 2023, and frankly, it could be north of $1 a share so.
Brian Valentine: That is why between now owning 100% of it and getting the full earnings per share, as well as going forward, things like tax credits are not factored into an EBITDA number either. We felt it made more sense to convert to an earnings per share number and focus on that going forward.
That's why between now.
Now owning 100% of it and getting the full earnings per share as well as going forward things like tax credits aren't factored in.
And EBITA number either we felt it made more sense to convert to an earnings per share number and focus on that.
Going forward.
Got it that's very clear. Thank you for the context, there and then just staying on ethanol.
Ben Mayhew: Got it. That's very clear. Thank you for the context there. Staying on ethanol, the fundamental environment, it seems like, clearly first half had its struggles, higher corn basis in the Eastern Belt, higher natural gas costs there during periods of times. It seems like we may have turned a corner here headed into the second half. I was just hoping if you guys could give a little more updated outlook detail-wise on where you think things are headed margin-wise. If you think 2026 could potentially be better with all of the policy stuff that's going on. Thank you.
And just the fundamental environment. It seems like I mean, clearly first half had its struggles.
Higher corn basis in the eastern Bell.
Higher Nat gas cost there.
During periods of times.
But it seems like we may have turned the corner here headed into the second half and I was just hoping if you guys could just.
Give a little more.
<unk> outlook kind of detail wise on where you think things are headed margin wise.
And.
If you if you think 26 could potentially be better with all of the.
With all of the policy stuff that's going on thank you.
Yes I'll.
Bill Krueger: Yeah, I'll take that question, Ben. Until we get to new crop harvest, where we will have some relief to the Eastern corn basis, we will have to focus on the current margin structure. However, I would tell you that I believe our team has done an excellent job in getting ownership of the corn basis in the east, at or below the market, through this period of time. That's one of the benefits that having the large corn program has brought to us. If you look at exports, you look at driving demand, the balance of 2025 feels like it should be better than the first half of 2025 has been.
I'll take.
That question Ben So.
Again until we get to new crop harvest, where we.
We'll have some relief to the eastern corn basis.
We will.
Have to focus on the current margin structure. However, I would tell you that I believe our team has done an excellent job in getting ownership of the corn basis in the east.
At or below the market.
Through this period of time, so that's one of the benefits that having the large corn program.
<unk> to us.
But if you look at exports.
You look at driving demand.
The balance of 25 feels like it.
Should be better than the first half of 'twenty five as Ben and then as you look into 2006, there are a lot of opportunities that we're evaluating today in order to drive more free cash flow out of our plants use.
Bill Krueger: As you look into 2026, there are a lot of opportunities that we are evaluating today in order to drive more free cash flow out of our plants, using the entire set of regulatory and traditional methods of managing the ethanol plants. I do think it's important to understand that these plants have been successful without regulatory changes for a number of years. We feel very confident in their location and their ability to continue to generate profits like they have in the past with the potential addition of some regulatory benefits, with the extension of 45Z through 2029.
The entire set of regulatory.
And traditional methods.
Managing the ethanol plants.
I do think it's important to understand that.
These plants have been successful without regulatory changes for a number of years.
And we feel very confident.
In their location and their ability to continue to generate profits like they have in the past.
With the potential addition of some regulatory benefits with the extension of 45 to <unk> through 2029.
Okay, I'm going to sneak one more in here.
Ben Mayhew: Okay. I am going to sneak one more in here. On the Port of Houston investment, you know, soybean meal prices have been falling. Crush capacity is expanding in the U.S. Obviously, the RVO has, you know, very important implications for that. Can you just walk us through how this investment works, even with lower prices? I mean, is it a situation where you are taking advantage of, you know, the elevation margin aspect of the soybean meal transaction? This might actually be more beneficial because you are getting it at, you know, at cheaper interior costs, then you are shipping it overseas for more expensive prices. Just kind of allay any concerns over, you know, lower soybean meal prices and the impact it might have on that investment. That will be it for me. Thanks.
On the port of Houston investment.
Soybean meal prices have been falling crush capacity.
<unk> is expanding in the U S.
Obviously, the RVO has.
Barry.
Important implications for that.
<unk>.
Can you just walk us through like.
How this investment.
Work, even with lower prices I mean is it a situation where you are taking advantage of.
The elevation margin aspect.
Of the soybean meal transaction and this might actually be more beneficial because youre getting it at.
At cheaper.
Cheaper interior.
And then you're shipping it overseas for our more expensive prices just kind of a layout allay any concerns over lower soybean meal prices and the impact that might have on that investment and that'll be it for me.
Yes.
Bill Krueger: Yeah, good question. For the export execution of soybean meal, the flat price or even the basis of the meal is not nearly as relevant as the fact that the U.S. is likely going to produce more soybean meal than there is demand. With the shelf life of soybean meal being very different than wheat or corn because it has to ship, we believe that there are going to be opportunities where soybean meal is forced to move to export parity. That is going to be driven by price. That is going to be driven by much more than just the U.S. crush industry. It is going to be driven by global S&Ds, specifically South America, of soybean meal. As that price drop goes lower, it actually will make us more competitive.
Good question so.
The export execution of soybean meal, the flat price or even the basis of the meal is not nearly as relevant as the fact that the U S is likely going to produce more soybean meal.
Then.
There is demand.
So with the shelf life of soybean meal being very different than wheat or corn, because it has to ship. We believe that there is going to be opportunities.
Where soybean meal is forced.
To move to export parity, that's going to be driven by price that's going to be driven by much more than just the U S. Crush industry, it's going to be driven by global Snd's, specifically South America.
Soybean meal, so as that price strip goes lower it actually will make us more competitive.
Bill Krueger: As you think through it for the export arm of our facility in Houston, the price of the meal only matters in order to drive it to export parity versus how it affects the crush margin for the soybean plant.
So as you think through it for the export arm of our facility in Houston, the price of the meal only matters in order to drive it to export parity versus how it affects the crush margin for the soybean plant.
Thank you very much.
Joe: Thank you very much. Again, if you have a question, you may press star then one to join the queue. Our next question here will come from Pooran Sharma with Stephen Zink. Please go ahead.
And again, if you have a question you May press Star then one to join the queue.
Our next question Arrow come from <unk> Sharma with Stephens, Inc. Please go ahead.
Good morning, Thanks, Thanks for the question.
Pooran Sharma: Good morning. Thanks for the question. I just wanted to ask about Skyland Grain. You mentioned in the prepared comments that there was some revenue contribution. I was wondering if you could detail what that was from the quarter. I believe last time you had mentioned that you were anticipating achieving the lower end of the $30 million to $40 million EBITDA guide. I was just wondering if you could provide some updated thoughts on Skyland Grain.
Just wanted to ask about skylines.
You mentioned in the prepared comments that there was some revenue contribution was.
I was wondering if you could detail what that was from the quarter and I believe the last time you had mentioned that you were anticipating.
Achieving the lower end of the $30 million to $40 million EBITDA.
Died and was just wondering if you could provide some updated thoughts on skylanders.
Yes, I will.
Bill Krueger: Yeah, I will start with that, Brian. I am good to talk to you this morning. As we mentioned with the first quarter results, the lack of export demand for milo or sorghum specifically and hard wheat has made it very difficult for Western assets to generate the expected profitability that we were looking at. That did not change in Q2 as we had hoped it had. The Skyland assets were faced with an environment where they had to compete for the domestic feed demand, which was lower due to the cattle on feed in the region. As we sit here today, looking forward, the setup for Western grain assets looks very good. We had above expected hard wheat or wheat handle at Skyland. The carries in the wheat market are very good to pay us for our space income.
I will start with that Brian good to talk to you. This morning, So as we mentioned in.
<unk>.
For the first quarter results.
The lack of export demand for Milo or sorghum, specifically and hard we has had made it very difficult for western assets to generate the expected profitability that we were looking at.
<unk>.
That did not change in Q2 as we had hoped it had so the skylanders assets, we're faced with an environment, where they had to compete for the domestic.
<unk> feed demand, which was lower due to the cattle on feed in the region.
As we sit here today looking forward.
The setup for western grain assets.
It looks very good.
We had above expected hard we are.
Handle at Sky land.
The carriers and the weak market are very good to pay us for our utility of our space income and following right behind that is a corn crop that in that area, sometimes can run the risk of not yielding quite as good because there is a fair amount of dry land.
Bill Krueger: Following right behind that is a corn crop that in that area sometimes can run the risk of not yielding quite as good because there is a fair amount of dry land corn. From our perspective, the results coming out of Skyland for the first half were below expectations. The results coming out of Skyland potentially for the last half, should meet and hopefully, exceed expectations. Just to be clear, as I said after Q1, Western grain assets had a struggle in the first half of 2025. Skyland was not immune to that.
Corn, so from our perspective.
The results coming out of scale and for the first half were below expectations.
The results coming out of Sky land potentially for the last half.
Should meet and hopefully exceed expectations, but all just to be clear and as I said after Q1.
Western grain assets had a struggle in the first half of 2025 skylanders was not immune to that.
Brian Valentine: Yeah, and Brian, just to provide a little context from a financial perspective, you asked about revenue. It was about $200 million in each of the first two quarters, so just a little under $400 million year to date. With regard to the full-year EBITDA outlook, you are right. We previously said we thought it would be on the low end of that $30 million to $40 million range. If we had to characterize it today, I would probably put it somewhere in the $25 million to $30 million EBITDA range for the full year.
And probably just to provide a little context from a financial perspective, you asked about revenue.
It was about $200 million.
In each of the first two quarters, so just a little under $400 million year to date.
And with regard to the full year EBITDA outlook.
Youre right. We previously said we thought it would be on the low end of that 30 million to $40 million range. If we had to characterize it today I would probably put it somewhere in the $25 million to $30 million EBITDA range for the full year.
Okay I appreciate the color there gentlemen.
Joe: Okay. Appreciate the color there, gentlemen. I wanted to also ask about, you know, you mentioned in the prepared comments that all four plants did get 45Z tax credits over the next year. I was just wondering if you could help us flush that out a little bit. What type of CI score are you ultimately trying to get to, or what type of, how much of a tax credit do you think you could squeeze out of your plants?
Wanted to also.
Ask about.
You mentioned in the prepared comments that all four plants.
Get 45.
Tax credits over over the next year.
Was just wondering if you could help us flush that out a little bit what type of Ci score are you ultimately trying to get to or what type of.
How much of a tax credit do you think you can squeeze out of out of your plants.
Brian I would tell you that.
Bill Krueger: Brian, I would tell you that, today we are still working on the benefit of that tax credit. We will be much more prepared to talk about that at the end of Q3 and into Q4 as we get some clarity on the legislation that was passed on July 4th of 2025.
Today, we are still working on the benefit of that tax credit and we will be much more prepared to talk about that at the end of Q3 and into Q4 as we get some clarity on.
The.
Legislation that was passed on July 4th of 2025.
Okay.
Joe: No, I appreciate that. Nonetheless, I think it is positive that you will be getting those credits. But maybe, we could understand the deal a little bit more here. You mentioned in the prepared comments, I believe you said you bought the incremental $250 at $1.54 a gallon. So, from a per gallon perspective, what else is kind of out there do you think, because $1.54 sounds like a steal? I am assuming I am comparing this to like a Red Trail and Gevo asset that was at $3.23 a gallon, but that had all the bells and whistles in terms of sequestration. I just wanted to get a sense of what you saw out there in the marketplace and why, ultimately $1.54 was the best choice for you.
I appreciate that.
Nonetheless, I think it's positive that youll be youll be getting those credits, but maybe we can we can understand the deal a little bit more here.
You mentioned in the prepared comments I believe you said you bought the incremental $2 50 at $1 54.
<unk> so.
From a.
<unk> per gallon perspective, what what else is kind of out there do you think because of Dol.
54, it sounds like a steel.
I'm, assuming I'm comparing this till I read trail <unk> asset that was at $3 23, a gallon, but that had all the bells and whistles in terms of sequestration.
So just wanted to get a sense of what you saw.
Out there in the marketplace and why.
Ultimately $1 54 was the best choice for you.
Bill Krueger: To be clear, that $1.54 was for the structural assets. When we add that, working capital is closer to $1.70, but we have to compare it against the new builds or the expansion gallons. That is why we use the $1.54. You can do the math when you add the $40 million spent. Ethanol plants are very interesting, and we have looked at many, certainly more than 20 plants over the course of the last 18 months. To be able to say what have we been able to see out there? As we have talked about location, size, technology, the ability to originate corn, all bring in a different dynamic for, as I mentioned, both the strategic and financial criteria. We, as an organization, felt like the purchase price that we paid for the remaining 49.9% was fair to both parties.
To.
To be clear that dollars 54 was further structural assets.
And when we add back.
Working capital is closer to $1 70, but we have to compare it against.
The new builds or the expansion.
Gallons and so that's why we use the $1 54, but you can do the math.
Add the $40 million back.
Ethanol plants are very interesting and we've looked at many.
Certainly more than 20 plants over the course of the last 18 months and to be able to say what have we been able to see out there and as we've talked about location size technology.
<unk>.
Our ability to originate corn.
All bring in a different dynamic for as I mentioned, both the strategic and financial criteria, but.
We as an organization.
We felt like the purchase price.
We paid for the remaining 49, 9% was fair to both parties.
Okay.
Joe: Okay, appreciate that detail. I will jump back in the queue. This will conclude our question and answer session. I would like to turn the conference back over to Mike Hoelter for any closing remarks.
I appreciate that detail I will I will jump back in the queue.
And this will conclude our question and answer session I would like to turn the conference back over to Mike <unk> for any closing remarks.
Thanks, Joe we want to thank you all for joining US. This morning, Our next earnings conference call scheduled for Wednesday November 5th at 830, a M. Eastern time, when we will review our third quarter results as always thank you for your interest in the Andersons and we look forward to speaking with you again soon.
Mike Hoelter: Thanks, Joe. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, November 5, at 8:30 A.M. Eastern Time, when we will review our third quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Joe: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.