The Andersons, Inc. (ANDE) Earnings

Management highlights

- Overall Financial Performance * Reported net income attributable to the Andersons was $57 million ($1.65 per diluted share), and adjusted net income was $74 million ($2.15 per diluted share), compared to just $8 million adjusted net income ($0.24 per diluted share) in Q2 2025. * Adjusted EBITDA hit $140 million for the quarter, more than doubling the $65 million adjusted EBITDA from Q2 2025, with most of the improvement coming from the renewables segment. * Gross profit increased over 40% year-over-year, as fundamentals improved across both business segments. * Generated $113 million operating cash flow before working capital changes, up from $43 million in Q2 2025, driven by strong quarterly earnings. * Second quarter capital spending totaled $76 million, up from $49 million in 2025, including funding for previously announced long-term growth projects and routine maintenance capital. * Long-term debt to EBITDA stands at 1.3x, well below the company's 2.5x target, supporting a strong balance sheet for future strategic investments. - Segment Operational Highlights * Agribusiness: Achieved year-over-year improvement, led by stronger-than-expected performance from the fertilizer business, which benefited from improved operating efficiency, integration into the broader agribusiness segment, and strong risk management during the primary application season. Higher commodity price volatility created increased merchandising opportunities, though space income from the company's asset footprint was limited in volatile market conditions. The premium ingredients business continues to operate well. Grain elevator upgrades at the Houston agribusiness project are complete, with only the soybean meal export portion remaining, expected to enter full operation in Q4 2026. * Renewables: Delivered record quarterly earnings, driven by record ethanol production, significantly higher year-over-year margins from strong domestic and export demand, and higher co-product values. The segment recorded $24 million in 45Z tax credits in the quarter. The renewables trading and merchandising business improved significantly across all products, with improved corn oil prices and volumes compared to 2025. All four ethanol plants are operating well, and recent capital expenditures have delivered increased efficiency and higher production volumes. The Class 6 well permit for the Climbers Indiana carbon intensity reduction project continues to progress through regulatory review.

Guidance

- Full-year 2026 capital spending is expected to total approximately $225 million, excluding acquisitions, maintaining the company's disciplined approach to investment. - Full-year adjusted effective tax rate is projected to be in the range of 14% to 18%. - Full-year 45Z tax credits are expected to total between $90 million and $100 million, with quarterly amounts varying by only a couple million dollars: Q2 and Q3 will be slightly lower, while Q1 and Q4 will be slightly higher. - The company reaffirms its long-range target of reaching a $7 per share run-rate EPS by the end of 2028; recent performance has already exceeded a $6 per share trailing 12-month run rate, putting the company on track to hit its long-term target with successful project completion and continued operational excellence. - Domestic ethanol blend rates are expected to continue increasing at a steady rate similar to or slightly higher than the 14 basis point gain seen from 2024 to 2025, driven by voluntary blending from favorable ethanol versus gasoline economics. - Ethanol exports are expected to remain strong through the rest of 2026, with some recent competition from Brazil offset by continued global demand growth driven by elevated global fuel prices that support ethanol's appeal.

Segment performance

Agribusiness segment: Adjusted pre-tax income attributable was $20 million in Q2 2026, up from $17 million in Q2 2025. Adjusted EBITDA was $53 million in Q2 2026, compared to $46 million in the prior year quarter. This segment contributes approximately 21.5% of total company adjusted pre-tax earnings and 33.9% of total adjusted EBITDA for the quarter. Renewables segment: Adjusted pre-tax income attributable was $88 million in Q2 2026, up sharply from $10 million in Q2 2025. Adjusted EBITDA was $103 million in Q2 2026, up from $30 million in the prior year quarter. This segment contributes approximately 78.5% of total company adjusted pre-tax earnings and 66.1% of total adjusted EBITDA for the quarter. Overall company consolidated adjusted EBITDA for Q2 2026 was $156 million, with the two segments adding up to the combined segment total.

Risks & headwinds

- Ongoing geopolitical tension, uncertainty around biofuels policy and the U.S. Farm Bill, and unpredictable weather events create more market variables than usual for the remainder of 2026. - Above-normal temperatures and reduced rainfall across much of the western Corn Belt have created a weather-dependent market for current corn and soybean crops, and drought has significantly reduced hard wheat production in the region, particularly the Skyland assets. - Potential changes in farm gate fertilizer pricing may impact farmer purchasing decisions for fall fertilizer applications, and ongoing Middle East geopolitical tensions continue to influence global fertilizer supply dynamics. - U.S. ethanol faces recent competitive pressure from Brazil, with U.S. ethanol currently trading near price parity with Brazilian ethanol, leading to increased volatility in board crush margins. - Potential small refinery exemptions (SREs) under the Renewable Fuel Standard create policy uncertainty, though management does not expect the final outcome to be material to Anderson's earnings. - The Houston agribusiness export project was slightly delayed by heavy rainfall and adverse weather in the region.

Analyst Q&A

• Q: Ben Cleavey asked about fertilizer seasonality in 1H 2026, and the impact of elevated fertilizer pricing on Q2 2026 profitability. /

  A: Management confirmed fertilizer application skewed slightly more toward Q1 than Q2 2026, in line with full-year expectations. Profitability improvements came primarily from operational efficiencies, better integration into agribusiness, and strong volume placement execution across locations, rather than just elevated market pricing. The overall result aligned with pre-season expectations.

• Q: Derek Whitfield asked for details on additional carbon intensity (CI) reduction projects the company is evaluating outside of the Climbers Indiana facility. /

  A: Management stated it will not publicly discuss unannounced projects before final execution and approval. On the Climbers project, management confirmed it is already developing demand for the additional low-CI ethanol production from the facility, and believes the local eastern U.S. market can absorb all incremental output from the project.

• Q: Ben Mayhew asked about the impact of potential small refinery exemptions (SREs) under the RFS on Anderson's business and earnings. /

  A: Management declined to speculate on EPA or administration policy regarding SREs, noting the company supports granting exemptions only to refineries that can prove economic harm from the RFS. Management applauded the EPA's progress on expediting the SRE process, and stated that under current expectations, the final SRE outcome will not be material to Anderson's earnings.

• Q: Jack Harden asked where incremental earnings opportunity will be greater over the next 12-18 months: agribusiness recovery or sustained renewables strength. /

  A: Management noted renewables has clear tailwinds from active growth projects and a strategy to add production capacity when pricing is attractive. For agribusiness, management believes the 2025 market trough is likely behind the segment, with growing North American grain demand supporting a gradual recovery. Management expressed confidence in balanced earnings growth from both segments over the forecast period.