Andersons, Inc. Q4 FY2024 earnings call

• Trade had strong fourth quarter driven by strong harvest execution in eastern grain assets and stable elevation margins, with premium ingredients business showing earnings growth and merchandising portfolio delivering improved performance. Mid-fourth quarter investment in Skyland Grain contributed positively. - Renewables set production records but lower earnings due to lower market values of ethanol and co-products. - Nutrient and industrial results improved slightly on higher manufactured products volume. - Completed 65% investment in Skyland mid-quarter with integration progressing well. - Shift to two operating and reporting segments starting Q1 2025 to streamline efficiency and enhance collaboration.

Trade reported record fourth quarter pretax income and adjusted pretax income of $54 million compared to $47 million in 2023. Its adjusted EBITDA for the quarter was $76 million vs $62 million in 2023, and full year adjusted EBITDA was $161 million vs $155 million. Renewables generated fourth quarter pretax income attributable to the company of $16 million vs $33 million in 2023, with EBITDA of $40 million vs $73 million in 2023. Full year adjusted EBITDA was $189 million vs $230 million. Nutrient and industrial results improved slightly over last year, with fourth quarter adjusted pretax income $3 million (slight increase from 2023) and full year EBITDA $57 million vs $62 million in 2023.

• 2025 outlook: Optimistic but faces challenges from lower grain prices and reduced farmer engagement. Anticipate increase in US corn planted acres benefiting nutrient and agronomy business. Evaluate growth projects and acquisitions, including expansion at Port of Houston and renewables investments to lower carbon intensity. - Skyland integration expected to contribute $30-40 million in EBITDA in 2025, with November-December contributing $5-10 million in EBITDA before synergies. - Renewables expect seasonally weak demand in Q1, but second quarter may improve due to industry maintenance shutdowns and spring driving miles.

• Market risks related to ag markets, including oversupply and low prices. Ethanol board crush down sixteen cents per gallon. - Tariffs between US, Canada, Mexico could affect business but not expected to have material impact on 2025 earnings. - Regulatory uncertainties around carbon intensity investments and the tax credit environment for renewable diesel feedstock trading.

Q: Can you elaborate on the thought process regarding investments to lower carbon intensity in the renewable segment and their inclusion in CapEx?

A: The decision to invest in lowering carbon intensity is tied to potential integration with farm bill and inflation reduction act, and having one solution from producer to ethanol plant. CapEx is deployed as needed to prepare for final decisions once clarity on regulations is gained.

Q: Comment on synergies from consolidating NNI and Trade Group?

A: Combining NNI and Trade Group has upper opportunities to consolidate positions and grow in both areas, especially with potential benefits from farm bill and carbon intensity initiatives.

Q: Thoughts on trade tariffs and their impact on business?

A: The Andersons is less susceptible to major swings from tariffs, but focuses on US-Canada-Mexico tariffs, which are not expected to have material impact on 2025 earnings.

Q: Progress of Skyland integration and EBITDA contribution?

A: 119 days into the transaction, commercial aspect with The Andersons merchants and Skyland originators went better than expected. 30-40 million dollar EBITDA contribution range remains intact, with November-December contributing $5-10 million before synergies.

Q: Momentum in renewable diesel feedstock trading since 45z guidelines?

A: There's still caution in the market regarding which tax credit (Blender's or Producer's) to use, with smaller plants more restricted by tax credit needs, so activity has increased but not back to pre-election levels.

Q: Market environment for acquiring ethanol plants with 45z guidelines?

A: Larger scale plants with good technology and favorable geographic locations for corn origination and co-product sales are preferred. Cost of plants with carbon sequestration/utilization capabilities has elevated, and The Andersons is strict on its investment criteria.