The Andersons, Inc. · NASDAQ:ANDE
The Andersons — Andersons — Investor Day (December 2017)
117 slides from The Andersons's investor day presentation, Dec 7, 2017
Slide 1: The Andersons Investor Day December 7, 2017
The Andersons Investor Day December 7, 2017 1
Slide 2: Safe Harbor and Non-GAAP Financial Measures
Investor Day 2017 | Safe Harbor and Non-GAAP Financial Measures Certain information discussed today constitutes forward-looking statements. Actual results could differ materially from those presented in the forward-looking statements as a result of many factors including general economic conditions,
Slide 3: Agenda
Investor Day 2017 | Agenda 3 Welcome & Opening Remarks John Kraus, Director of Investor Relations 8:30 AM Company Overview, Direction & Strategy Pat Bowe, President & CEO Grain Group Corey Jorgenson, President Ethanol Group Mike Irmen, President Q&A Bowe, Jorgenson & Irmen BREAK 10:05 AM Rail Group
Slide 4: Company Overview, Direction & Strategy
Company Overview, Direction & Strategy Pat Bowe | President & CEO 4
Slide 5: Key Messages
Investor Day 2017 | Key Messages 5 Headquarters in Maumee, OH Well Respected Company Legacy with Deep Customer Relationships; in Early Innings of Executing Turnaround Strategy Under New Leadership1 Proactively Managing Key Performance Drivers in Challenging, Cyclical Ag Markets2 Solid, Flexible Bala
Slide 6: The Andersons at a Glance
Investor Day 2017 | Founded Listed (NASDAQ) Headquarters Market Cap1 Employees U.S. Locations Dividend History2 1947 1996, ANDE Maumee, OH ~$890M ~1,900 97 21 Years The Andersons at a Glance Diversified Company Rooted in Agriculture Conducting Business Across North America 6 5 Year Avg. Adj. EBITDA
Slide 7: Strong Portfolio of Assets with Robust Geographic Footholds
Investor Day 2017 | Strong Portfolio of Assets with Robust Geographic Footholds 7 Grain Ethanol Rail Plant Nutrient • Purchase, store, handle and merchandize grain • Provide value-added risk management and pricing tools to growers • Focused in Eastern Corn Belt • Growing food ingredients and special
Slide 8: Strong Geographic Footprint: Facility Locations
Investor Day 2017 | Strong Geographic Footprint: Facility Locations 8 Grain Group Ethanol Group Plant Nutrient Group Rail Group Puerto Rico MN MI WI CA UT TX MS AL MD NY SC NC NE IA MO TN IL IN OH C A N A D ASK
Slide 9: A Diverse Network of Assets with Many Shared Attributes and Benefits
Investor Day 2017 | A Diverse Network of Assets with Many Shared Attributes and Benefits 9 Grain EthanolPlant Nutrient Rail Co-located to Leverage Labor In Different Seasons GDP-Driven; Portfolio Counterbalance Commodity Cycle-Driven Shared Market Intelligence and Many Common Markets Ethanol Uses Pr
Slide 10: Leveraging Our Solid Foundation
Investor Day 2017 | Leveraging Our Solid Foundation 10 CORE STRENGTHS COMPETITIVE DIFFERENTIATORS 70 years of market expertise and ingenuity with unique assets in place to provide customer solutions Well respected history as partner of choice with deep customer relationships Strong market presence i
Slide 11: New and Energized Leadership Team with Deep Industry Expertise
Investor Day 2017 | New and Energized Leadership Team with Deep Industry Expertise 11 Pat Bowe President & CEO Joined: 2015 Corey Jorgenson President, Grain 2016 Jeff Blair President, Plant Nutrient 2017 (December) Joe McNeely President, Rail 2018 (January) Val Blanchett VP, Human Resources 2016 Joh
Slide 12: Strategic Execution Is Underway
Investor Day 2017 | Strategic Execution Is Underway Completed Strategic Review and Executing for Profitable Growth 12 Market-focused Structure • Investing in performance improvement in core businesses • New leadership, perspective and higher accountability • Greater emphasis on talent management and
Slide 13: Strategic Growth Initiatives
Investor Day 2017 | Strategic Growth Initiatives 13 Invest to Grow Our Core Businesses and Product Lines Ensure Proper Talent Management to Support a High Performance Culture Emphasize Greater Sales Force Effectiveness to Deepen Relationships Focus on Accountability to Deliver Results
Slide 14: Invest to Grow Our Core Businesses and Product Lines
Investor Day 2017 | Invest to Grow Our Core Businesses and Product Lines • Provide higher-value, higher-margin offerings ̶ Grow in emerging specialty food grain business ̶ Expand value-added nutrient businesses • Pursue bolt-on, adjacent investments • Use new technology in ethanol production and cop
Slide 15: Ensure Proper Talent Management to Support a High Performance Culture
Investor Day 2017 | Ensure Proper Talent Management to Support a High Performance Culture • Launched a robust talent management process in 2016 to assess talent across the organization, identify gaps and build out our talent pipeline • Recruited key succession candidates for senior level roles • Str
Slide 16: Emphasize Greater Sales Effectiveness to Deepen Relationships
Investor Day 2017 | Emphasize Greater Sales Effectiveness to Deepen Relationships • Reenergizing our customer-facing sales force in Grain and Plant Nutrient • Recruited external talent to bolster commercial skills in all four groups • Utilizing new digital tools ̶ Andersonsgrain.com, Grain web porta
Slide 17: Focus on Accountability to Deliver Results
Investor Day 2017 | Focus on Accountability to Deliver Results Established Framework to Align Goals Across Our Company 17 Personal Safety Partner of Choice People Productivity Profitable Growth 5P Execution Framework
Slide 18: Near- and Long-term Goals
Investor Day 2017 | Near- and Long-term Goals Committed to Delivering Shareholder Value 18 • Achieve run-rate cost savings of $20M by end of 2018 from 2015 base • Further integrate technology platforms across organization • Drive continued, steady financial performance improvement in 2018 • Drive sh
Slide 19: Grain Group
Grain Group Corey Jorgenson | President 19
Slide 20: Grain Group Key Messages
Investor Day 2017 | Grain Group Key Messages 20 Strategically Located Assets and Deep Farmer Relationships1 Driving Solutions for Farmers through Trading and Risk Management Expertise2 Advancing Up the Value Chain In Food Ingredients and Specialty Grains3 Leveraging Scalable IT Investments and Other
Slide 21: Grain Group at a Glance
Investor Day 2017 | Grain Group at a Glance 21 2016 Pretax Income $(15.7)M 2016 Gross Profit $108.1M Employees ~460 Key Highlights ► Strong Grain Assets in the Eastern U.S.; Risk Management Services for Farmers; Connection between Specialty Grains Grower and Food Users 2 Adj. EBITDA ($M)1 $72 $66 $3
Slide 22: Production Metrics
Investor Day 2017 | Production Metrics Top 10 U.S. Grain Merchant 22 Dunkirk, IN Dyer, TN Toledo, OH ~550M Bushels ~150M Bushels 1.3M Tons 50-60M Bushels 50M Bushels ~500k Acres Total Grain Traded Total Space Capacity DDG Marketed Risk Management Products Food Grain Supply Crops Insured Champaign, I
Slide 23: Footprint: Grain Facilities
Investor Day 2017 | Footprint: 36 Grain Facilities 23 Base Grain – Merchant & Services • Leverages storage and handling capabilities to create value • Provides value-added services to farmers, including full suite of best-in-class risk management and pricing tools Affiliate Investments Grain Facilit
Slide 24: Grain JVs Leverage Reach and Provide Earnings Diversification
Investor Day 2017 | Grain JVs Leverage Reach and Provide Earnings Diversification 24 • Merchandising physical commodities including grains, feed ingredients, energy products, and freight within N.A. and internationally • Leading Canadian provider of risk management, advanced agronomy, food grade bea
Slide 25: U.S. Storage Capacity / Supply Impact
Investor Day 2017 | U.S. Storage Capacity / Supply Impact U.S. Grain Storage Will Continue to Have Value Based on Strong Market Demand 25 Crop Year ’06-’07 ’07-’08 ’08-’09 ’09-’10 ’10-’11 ’11-’12 ’12-’13 ’13-’14 ’14-’15 ’15-’16 ’16-’17 ’17-'18E Supply1 18.7 20.3 19.8 21.3 21.0 19.8 18.3 21.3 22.3 22
Slide 26: Supportive Trends
Investor Day 2017 | Supportive Trends 26 Secular Trends Impact Growing Global Middle Class • Growing demand for protein, fat, dairy and sugar intensive diets • U.S. is a global leader in corn and soybean production • Increasing need for capacity that bridges surplus and deficit Increasing Yields • G
Slide 27: Strategic Growth Initiatives
Investor Day 2017 | Strategic Growth Initiatives 27 Strengthen Share & Presence in Eastern Corn Belt Drive Income through Trading & Risk Management Solutions Aggressively Grow Food Ingredients & Specialty Grains
Slide 28: Strengthen Share and Presence in Eastern Corn Belt
Investor Day 2017 | Strengthen Share and Presence in Eastern Corn Belt • Drive increased origination through disciplined processes, talent upgrades and leadership to drive a heightened culture of accountability • Deploy capital to enhance existing facilities in alignment with local supply/demand and
Slide 29: Drive Income through Trading & Risk Management Solutions
Investor Day 2017 | Drive Income through Trading & Risk Management Solutions Increase Fee and Trading Income by Creating Value for Customers 29 Market Drivers Shift from U.S.-centric to global factors and large financial flows increasingly driving prices and market action Depressed farm income since
Slide 30: Aggressively Grow Food Ingredients and Specialty Grains
Investor Day 2017 | Aggressively Grow Food Ingredients and Specialty Grains • Expand portfolio of products including food ingredients and organic, non-GMO and specialty/ancient grains and seeds • Link the grower of specialty and niche grains to food manufacturers and consumers, utilizing capabilitie
Slide 31: Near- and Long-term Goals
Investor Day 2017 | Near- and Long-term Goals Executing on Growth Initiatives to Improve Earnings Capacity 31 • Grow grain market share by 20M bushels, driving additional gross profit of ~$2M • Grow market value-added products from 13% to 14%+ of total gross profit • Generate Annual EBITDA of $70M t
Slide 32: Grain Group Summary
Investor Day 2017 | Grain Group Summary 32 Strong Eastern Corn Belt Assets and Talent In-place to Serve the Evolving U.S. Farmer Our Strategy is to Build Resiliency into Our Earnings Capacity by Leveraging Existing Trading and Risk Expertise and Growing the Foods Portfolio Volatility Exists in the G
Slide 33: Ethanol Group
Ethanol Group Mike Irmen | President 33
Slide 34: Ethanol Group Key Messages
Investor Day 2017 | Ethanol Group Key Messages 34 Own and Operate Facilities with an Emphasis on the Right Technology, Process, People and Locations to Efficiently and Economically Produce Ethanol and Coproducts Our Partnership with Marathon Petroleum Is a Significant Competitive Advantage and Is a
Slide 35: Ethanol Group at a Glance
Investor Day 2017 | Ethanol Group at a Glance 35 2016 Pretax Income $24.7M 2016 E85 Sales 37MGY Employees ~230 Key Highlights ► Provider of Facility Operations, Risk Management, Ethanol, Distiller Dried Grains, Corn Oil and E85 Marketing and Grain Originations Services Ethanol Production1 (MGY) 363
Slide 36: Strategically Located Ethanol Plants
Investor Day 2017 | Strategically Located Ethanol Plants Top 10 U.S. Ethanol Producer 36 Greenville, OH Clymers, INAlbion, MI Denison, IA IA MI IN OH
Slide 37: Ethanol Contribution Margin Per Gallon
Investor Day 2017 | Ethanol 101 37 Contribution Margin Per Gallon of Ethanol Produced • Ethanol is a low cost, clean burning, high octane, renewable fuel product • E85, Distillers Dried Grains (DDGs), Corn Oil and CO2 • We market the CO2 produced as part of the process at 3 out of our 4 plants • Our
Slide 38: Overview of JVs
Investor Day 2017 | Overview of JVs Production Capacity Attributable to ANDE: ~230MGY 38 Investment Date Capacity (MGY) Ownership The Andersons Albion Ethanol Aug. 2006 140 55% The Andersons Clymers Ethanol Apr. 2007 135 39% The Andersons Marathon Ethanol Feb. 2008 140 33% The Andersons Denison Etha
Slide 39: Supportive Trends
Investor Day 2017 | Supportive Trends 39 Secular Trends Impact Global Biofuels Demand • Domestic demand via higher blends continues to grow • Exports should continue to increase • Clean air emissions continue to support increased world demand for ethanol Policy/Regulations • Renewable Fuel Standard
Slide 40: Growing U.S. Ethanol Exports Continue to Support Market Price
Investor Day 2017 | Growing U.S. Ethanol Exports Continue to Support Market Price • Exports to Canada have increased significantly • China, Mexico and India have implemented blending mandates beyond their production capacity • Opportunity in China appears to be open again Export Forecast is for Cont
Slide 41: Strategic Growth Initiatives
Investor Day 2017 | Strategic Growth Initiatives 41 Fine-tune Plant Productivity and Efficiency Develop Higher Value Coproducts Increase Gallons Under Management
Slide 42: Fine-tune Plant Productivity and Efficiency
Investor Day 2017 | Fine-tune Plant Productivity and Efficiency • Technology: Own and operate ethanol facilities with an emphasis on the right technology to efficiently produce ethanol and high value coproducts through strategic investments • Process: Operational excellence in running facilities and
Slide 43: Develop Higher Value Coproducts
Investor Day 2017 | Develop Higher Value Coproducts • Develop higher-protein DDGs; shift from 32% 40% protein • Produce cellulosic ethanol from corn kernel fiber feedstock • Grow E85 volume by 20% per year, resulting in $0.05 - $0.07 per gallon increase in margin • Double current corn oil product
Slide 44: Increase Gallons Under Management
Investor Day 2017 | Increase Gallons Under Management • We have a disciplined and strategic approach • Targets will need to meet our criteria ̶ Industry-leading technology (i.e., ICM) ̶ Strong local feedstock supply ̶ Solid ethanol demand ̶ Opportunity for higher value coproducts ̶ Ability to levera
Slide 45: Near- and Long-term Goals
Investor Day 2017 | Near- and Long-term Goals Executing on Growth Initiatives to Improve Earnings Capacity 45 • Lower controllable costs by $0.01/gallon • Add high-protein DDGs production at 1-2 plants • Increase gallons under management from ~475M to 550M+ • Produce cellulosic ethanol from corn ker
Slide 46: Ethanol Group Summary
Investor Day 2017 | Ethanol Group Summary 46 Strong Performance Track Record Building on Our Strengths Across Multiple Skillsets Well Positioned to Profit from Continued Growth in World Biofuel Demand Continue to Opportunistically Build on Our Strategy
Slide 47: Rail Group
Rail Group Rasesh Shah | President 47
Slide 48: Rail Group Key Messages
Investor Day 2017 | Rail Group Key Messages 48 Grew Business Out of Service to Grain Customers to Become a Top 10 Railcar Leasing Provider in N.A. with Diversified Customers, Car Types and Railcars1 Repair and Fabrication Capabilities Support Full Service Leasing and Ability to Provide Solutions for
Slide 49: Rail Group at a Glance
Investor Day 2017 | Rail Group at a Glance 49 2016 Pretax Income $32.4M 2016 Gross Profit $55.9M Employees ~230 Key Highlights ► Provides Various Services Including Leasing, Repair, and Custom Fabrication to the Rail Industry Adjusted EBITDA ($M)1 $60 $52 $76 $59 $41 2013 2014 2015 2016 2017 • Full-
Slide 50: Rail Group Fleet
Investor Day 2017 | Rail Group Fleet Extensive Rail Market Expertise to Provide Solutions for Our Customers 50 Railcar Fleet by Commodity2 14% 4% 5% 5% 7% 8% 9% 10% 12% 26% Other Aggregates & Limestone Chemicals Metals & Products Ethanol & Gasoline Sand/Sand Products Wood & Forestry/Paper Plastics F
Slide 51: We Have a Diverse Fleet of Railcar Types
Investor Day 2017 | We Have a Diverse Fleet of Railcar Types • Expanded from ag-related cars (grain and fertilizer covered hopper) to broad range of car types • Have only ~1% of railcars in the pressured crude oil and coal markets • Limited exposure to intermodal/flat car market • Focused on improvi
Slide 52: We Are a Top Player Well Positioned in Industry
Investor Day 2017 | We Are a Top 10 Player Well Positioned in Industry with Strong Customer Service Focus 52 Top 25 Private Railcar Owners • ~1.6M U.S. railcars ̶ 65% private owners ̶ 35% railroad owned • More nimble than larger players, providing speed and flexibility • More cars than smaller playe
Slide 53: Leasing and Car Sales Are Primary Income Sources
Investor Day 2017 | Leasing and Car Sales Are Primary Income Sources 53 2013 2014 2015 2016 2017 Lease Income Car Sales Rail Services & Other Pretax Income by Platform ($M) 1 $42.8 $31.4 $50.7 $32.4 $18.1 • Generate lease income from long-lived assets • 20% - 25% of cars come due every year • Tank c
Slide 54: Rail Repair Network Complements Leasing Business
Investor Day 2017 | Rail Repair Network Complements Leasing Business 54 • Strategically located and geographically diverse network • High-quality repairs • Broad range of capabilities (from simple repairs to re- manufacturing) • Growing tank car capabilities • Serves both ANDE fleet and third-party
Slide 55: Supportive Trends
Investor Day 2017 | Supportive Trends 55 Secular Trends Impact Continued Shift of Railcar Ownership from Class I to Shippers and Lessors • Growth of private railcar fleet • Opportunity for value-added solutions • Improved cargo integrity Truck Transportation Challenges • Driver shortage and aging ro
Slide 56: Strategic Growth Initiatives
Investor Day 2017 | Strategic Growth Initiatives 56 Grow Railcar Fleet in a Disciplined Manner Expand Railcar Repair Network Focus on Adjacent Growth
Slide 57: Grow Railcar Fleet in a Disciplined Manner
Investor Day 2017 | Grow Railcar Fleet in a Disciplined Manner • Remain a disciplined value buyer of railcar portfolios • Focus on railcars in middle to second half of life while increasing average remaining life of fleet by concentrating purchases on newer cars • Buy idle cars and put into service
Slide 58: Expand Railcar Repair Network
Investor Day 2017 | Expand Railcar Repair Network • Continue to grow the business with a mix of large, full-service facilities and small mobile locations • Maintain focus on efficiency and volume • Drive higher sales and gross profit at newly improved Kansas City, MO facility • Maintain and increase
Slide 59: Focus on Adjacent Growth
Investor Day 2017 | Focus on Adjacent Growth Opportunistically Acquire Adjacent Businesses and Assets 59 Establishing strategic partnership opportunities with short line railroads Exploring alignment with a manufacturer to secure steady and reliable source of new railcars Expanding railcar component
Slide 60: Near- and Long-term Goals
Investor Day 2017 | Near- and Long-term Goals Executing on Growth Initiatives to Improve Earnings Capacity 60 • Grow railcar fleet from 23,000+ to 24,000 - 25,000 cars • Increase repair facilities from 19 to 22 • Generate Annual EBITDA of $65M to $70M • Grow railcar fleet to 28,000 - 30,000 cars • I
Slide 61: Rail Group Summary
Investor Day 2017 | Rail Group Summary 61 Grow Fleet (Secondary Markets, New Car Additions, Acquisitions) and Leverage the Scalability of Our Platform Improve Selling and Utilization (Goal: 92%+) Selectively Expand Repair Facility Network and Tank Car Repair Capacity Explore/Take Advantage of Adjace
Slide 62: Plant Nutrient Group
Plant Nutrient Group John Granato | Chief Financial Officer 62
Slide 63: Plant Nutrient Group Key Messages
Investor Day 2017 | Plant Nutrient Group Key Messages 63 Leverage Our Position as a Large Midwestern Wholesale Nutrient Manufacturer and Distributor; Selectively Grow Base Nutrients Business and Expand into Value-added Nutrient Markets Deliver Sustainable and Precision Ag Solutions to Improve Econom
Slide 64: Plant Nutrient Group at a Glance
Investor Day 2017 | Plant Nutrient Group at a Glance 64 2016 Pretax Income $14.2M 2016 Gross Profit $122.1M Employees ~710 Key Highlights ► Formulates, Stores, Manufactures and Distributes Nutrient, Specialty, and Industrial Inputs and Corncob-based Products through Our Extensive Network Adjusted EB
Slide 65: Products and Customers
Investor Day 2017 | Products and Customers • Provide market intelligence to help customers make optimal purchasing decisions • Serve our farm customers to ensure right agronomic solutions for maximum economic yields • Deliver the right products and services at the right time from our strategically l
Slide 66: Geographic Footprint
Investor Day 2017 | Geographic Footprint Plant Nutrient Foundation with a Value-added Focus... • Natural adjacency to the Grain business, leveraging grower relationships and intelligence and a drive to bring growers value and sustainability • Founded in wholesale distribution of basic row crop ferti
Slide 67: Life Cycle of Nutrients
Investor Day 2017 | Life Cycle of Nutrients 67 Spring Pre-Planting Spring & Summer Growing Season Fall Post Harvest Mar Apr May Jun Jul Aug Sept Oct Activities Pre-Season: • Agronomy Testing • Base load of Nitrogen, Phosphorus and Potassium (NPK) Application • Micro-Nutrient Application Post-Season:
Slide 68: Nutrient Demand
Investor Day 2017 | Nutrient Demand Strong Corn Acreage Supports NPK Demand 68 Crop Nutrient Use Is Highest for Corn 44% 17% 2% 5% 41% 15% 14% 5% 43% 5% 19% 6% Corn Wheat Soybeans Cotton Corn Wheat Soybeans Cotton Corn Wheat Soybeans Cotton Nitrogen Phosphorous K Potassium
Slide 69: Tons Sold
Investor Day 2017 | Tons Sold • 2.3M tons sold is about 4.5% of total ~50M ton fertilizer market • Our market share is 15% to 18%1 in our core areas • Maintaining our market share ̶ Volumes steady, lower margins ̶ Wholesale entitlement radius 100 miles, retail 30 miles Committed to Growth of Value-a
Slide 70: Corn Price vs. Composite Nutrient Price
Investor Day 2017 | Corn Price vs. Composite Nutrient Price Corn and Nutrient Prices are Tightly Correlated 70 $- $100 $200 $300 $400 $500 $600 $700 $800 $- $1 $2 $3 $4 $5 $6 $7 $8 Maumee, OH: 1999 through Oct. 2017 Monthly Avg. Corn Price Composite Nutrient Price Base Nutrients Are Affordable for F
Slide 71: 2017 U.S. Farm Income Expected to Remain Very Low
Investor Day 2017 | 2017 U.S. Farm Income Expected to Remain Very Low Over the Cycle, Farmer Income Is a Key Driver 71 51 55 39 61 87 79 57 70 78 62 77 114 97 124 92 81 62 63 57 62 51 72 84 87 68 77 85 74 96 123 135 136 132 106 89 100 0 20 40 60 80 100 120 140 160 2000 2001 2002 2003 2004 2005 2006
Slide 72: Physical Product Flow: Factory to Field
Investor Day 2017 | Physical Product Flow: Factory to Field 72 Wholesale Distribution Capacity Is Critical to Ag Supply Chain 75% of Supply Moves through Distributors Like ANDE Storage (Distribution) Suppliers Farmers Retailers, Dealers and Co-ops
Slide 73: Supportive Trends
Investor Day 2017 | Supportive Trends 73 Secular Trends Impact Environmental Benefits of Value-added Nutrients Demand • Continue to develop next generation nutrients with a focus on nutrient stewardship, which fosters lower impact to the environment • Work with organizations (e.g., NGOs) to promote
Slide 74: Strategic Growth Initiatives
Investor Day 2017 | Strategic Growth Initiatives 74 Selectively Grow Base NPK Business Grow, Invest in and Develop Value-added Products Expand Technology and Product Development in Turf Optimize Sales Effectiveness
Slide 75: Selectively Grow Base NPK Business
Investor Day 2017 | Selectively Grow Base NPK Business Growth Initiatives • Organically grow and expand in our core market geographies • Collaborate with supplier partners to support volume/market growth and expansion Margin Initiatives • Integrate all supply procurement processes into a centralized
Slide 76: Grow, Invest in and Develop Value-added Products
Investor Day 2017 | Grow, Invest in and Develop Value-added Products • Pull products through Plant Nutrient’s existing market channels to drive organic growth and incremental sales • Reduce production costs of value-added products using proprietary technologies • Develop and distribute products that
Slide 77: Expand Technology and Product Development in Turf
Investor Day 2017 | Expand Technology and Product Development in Turf • Natural extension of our Plant Nutrient business by leveraging operating efficiencies among our production facilities • Launching pad for new products for both turf and commercial agriculture • Standardize and integrate the comm
Slide 78: Optimize Sales Effectiveness
Investor Day 2017 | Optimize Sales Effectiveness • Standardize our go-to-market strategies across multiple product lines • Maximize our sales effectiveness based on metrics, milestones and incentives to measure and pay for performance • Train and educate sales team to more effectively communicate th
Slide 79: Near- and Long-term Goals
Investor Day 2017 | Near- and Long-term Goals Executing on Growth Initiatives to Improve Earnings Capacity 79 • Implement new IT system successfully • Align organizational structure for productivity and future growth • Continue to expand in value-added businesses • EBITDA of $60M - $65M • Build best
Slide 80: Plant Nutrient Group Summary
Investor Day 2017 | Plant Nutrient Group Summary 80 Aggressively Grow Our Value-added Lines of Business through Organic, Greenfield and M&A Growth Opportunities Drive Sales and Standardize Our Go-to-Market Strategies Successfully Implement Our New IT Platform Develop Products and Services that Help
Slide 81: Financial Overview
Financial Overview John Granato | Chief Financial Officer 81
Slide 82: Key Messages
Investor Day 2017 | Key Messages 82 Focused on Profitable Growth, Talent Management and Operational Excellence1 Portfolio Rationalization Largely Complete, Resulting in More Profitable Business Platform; On-track to Achieve $20M In Cost Savings by End of 20182 Recently Put Tools in Place to Enhance
Slide 83: Historical Performance
Investor Day 2017 | Historical Performance ($M) 83 Gross Profit Adj. EBITDA1 Adj. Pretax Income1 Capital Investments2 $365 $397 $376 $346 $234 2013 2014 2015 2016 2017 $220 $238 $175 $124 $104 2013 2014 2015 2016 2017 $144 $154 $76 $19 $22 2013 2014 2015 2016 2017 $42 $118 $111 $106 $86 2013 2014 20
Slide 84: Recent Financial Highlights
Investor Day 2017 | Recent Financial Highlights Built Strong Foundation to Leverage for Profitable Growth 84 • Exited underperforming assets in Iowa and Florida • Consolidated Cob operations to one location to optimize performance • Closed Retail Group • Made significant strides towards a leaner com
Slide 85: Scalable Businesses with Capacity to Grow
Investor Day 2017 | Scalable Businesses with Capacity to Grow • Well on our way to $20M of run-rate cost and productivity savings since 2015 ̶ SAP investment is improving operations in Grain and is near go-live in Plant Nutrient ̶ New indirect procurement system is reducing the number of vendors, au
Slide 86: We Are Beginning Our Operational Excellence Journey
Investor Day 2017 | We Are Beginning Our Operational Excellence Journey Significant Progress Made; Still in Early Innings of Impact 86 EARLY STAGE MORE MATURE SALES EFFECTIVENESS Volume and Pricing LEVERAGE TECHNOLOGY Innovation and New Product Introductions4 OPERATIONAL EXCELLENCE Performance and Q
Slide 87: Implemented Leverage and Liquidity Strategy
Investor Day 2017 | Implemented Leverage and Liquidity Strategy… • Long-term Debt to Equity ̶ < 1:1 for Grain, Ethanol and Plant Nutrient ̶ 3:1 for Rail • No more than 20% of long-term debt maturing in any single year • Working capital >$175M • Net Debt to Adjusted EBITDA expected to remain < 4.0x …
Slide 88: Capital Allocation Framework
Investor Day 2017 | Capital Allocation Framework 88 INVEST IN ORGANIC GROWTH RETURN CASH TO SHAREHOLDERS PURSUE STRATEGIC ACQUISITIONS • Invest in adjacencies to increase penetration of existing service offerings and expand footprint • Seek strategic, bolt-on targets • Selectively use minority partn
Slide 89: M&A Strategy
Investor Day 2017 | M&A Strategy Disciplined, Focused and Strategic Approach 89 Addresses Validated Customer Needs Strengthens Geographic Footprint Increases Scale Provides Differentiation: Enables Ability to “Move Up Value Chain” Fits Strategically; Core Or Adjacent S T R A T E G I C F I L T E R S
Slide 90: M&A Scorecard | Disciplined & Strategic M&A
Investor Day 2017 | M&A Scorecard | Disciplined & Strategic M&A 90 Denison, IA Kansas City, MO Lytle, TX Auburn, MI Sioux Falls, IA Humboldt, TN Acquired May 2012 May 2013 Oct. 2014 Oct. 2014 May 2015 Jun. 2016 Line of Business Ethanol: Base Rail: Repair Grain: FISG Grain: Base PNG: VAP Grain: Base
Slide 91: Annual Dividends Per Share
Investor Day 2017 | Annual Dividends Per Share1 Strong Track Record of Returning Cash to Shareholders 91 $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $0.64 $0.04 1 Adjusted for stock splits.
Slide 92: EBITDA by Segment
Investor Day 2017 | EBITDA by Segment Target EBITDA and Cashflow Generation Remains Healthy for All Four Groups 92 2017E EBITDA1 2020E EBITDA1 Rail 30% to 32% 24% to 27% Grain 28% to 31% 27% to 30% Plant Nutrient 25% to 27% 21% to 24% Ethanol 12% to 14% 22% to 25% R an ge s 1 Excludes corporate expe
Slide 93: Near- and Long-term Goals
Investor Day 2017 | Near- and Long-term Goals Committed to Delivering Shareholder Value 93 • Continue to focus on enhancing portfolio performance, managing costs and improving margins • Grow market share in both grain origination and fertilizer distribution and manufacturing • Achieve $20M in cost s
Slide 94: Summary
Investor Day 2017 | Summary 94 Strong Central Finance Team Partnering with Business Leadership to Enhance Analytically-based Decisions Maturing Model to Balance Business/Center-led Decision Making Continued Focus on Driving Productivity and Leveraging Our Talented Team and Installed Technology Stron
Slide 95: Closing Remarks
Closing Remarks Pat Bowe | President & CEO 95
Slide 96: Well Positioned to Maximize Long-term Shareholder Value Creation
Investor Day 2017 | Well Positioned to Maximize Long-term Shareholder Value Creation 96 Building on Strong Foundation; Executing Turnaround Strategy (Still in Early Innings) Under New Leadership Managing What We Can Control in Context of Oversupplied Markets Organically Growing Our Core Businesses a
Slide 97: Appendix
LOL oS NSN Appendix i rrr
Slide 98: Reconciliation to Adjusted EBITDA (1 of 5)
Investor Day 2017 | Reconciliation to Adjusted EBITDA (1 of 5) 98 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Nine Months Ended September 30, 2017 Income (loss) before income taxes 4.5 12.5 (27.1) 18.1 (9.1) (18.5) (19.6) Income (loss) attributable to the noncontrolling interests - 0.1
Slide 99: Reconciliation to Adjusted EBITDA (2 of 5)
Investor Day 2017 | Reconciliation to Adjusted EBITDA (2 of 5) 99 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2016 Income (loss) before income taxes (15.7) 27.6 14.2 32.4 (8.8) (28.3) 21.4 Income (loss) attributable to the noncontrolling interests - 2.9 - - - -
Slide 100: Reconciliation to Adjusted EBITDA (3 of 5)
Investor Day 2017 | Reconciliation to Adjusted EBITDA (3 of 5) 100 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2015 Income (loss) before income taxes (9.5) 30.3 0.1 50.7 (0.5) (82.7) (11.6) Income (loss) attributable to the noncontrolling interests - 1.8 - - - -
Slide 101: Reconciliation to Adjusted EBITDA (4 of 5)
Investor Day 2017 | Reconciliation to Adjusted EBITDA (4 of 5) 101 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2014 Income (loss) before income taxes 58.1 105.2 24.5 31.4 (0.6) (34.5) 184.1 Income (loss) attributable to the noncontrolling interests - 12.9 - - -
Slide 102: Reconciliation to Adjusted EBITDA (5 of 5)
Investor Day 2017 | Reconciliation to Adjusted EBITDA (5 of 5) 102 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2013 Income (loss) before income taxes 46.8 56.4 32.0 42.8 (7.5) (20.8) 149.7 Income (loss) attributable to the noncontrolling interests - 5.8 - - - -
Slide 103: Reconciliation to Adjusted Pretax Income (1 of 5)
Investor Day 2017 | Reconciliation to Adjusted Pretax Income (1 of 5) 103 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Nine Months Ended September 30, 2017 Income (loss) before income taxes 4.5 12.5 (27.1) 18.1 (9.1) (18.5) (19.6) Income (loss) attributable to the noncontrolling interes
Slide 104: Reconciliation to Adjusted Pretax Income (2 of 5)
Investor Day 2017 | Reconciliation to Adjusted Pretax Income (2 of 5) 104 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2016 Income (loss) before income taxes (15.7) 27.6 14.2 32.4 (8.8) (28.3) 21.4 Income (loss) attributable to the noncontrolling interests - 2.9
Slide 105: Reconciliation to Adjusted Pretax Income (3 of 5)
Investor Day 2017 | Reconciliation to Adjusted Pretax Income (3 of 5) 105 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2015 Income (loss) before income taxes (9.5) 30.3 0.1 50.7 (0.5) (82.7) (11.6) Income (loss) attributable to the noncontrolling interests - 1.8
Slide 106: Reconciliation to Adjusted Pretax Income (4 of 5)
Investor Day 2017 | Reconciliation to Adjusted Pretax Income (4 of 5) 106 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2014 Income (loss) before income taxes 58.1 105.2 24.5 31.4 (0.6) (34.5) 184.1 Income (loss) attributable to the noncontrolling interests - 12.9
Slide 107: Reconciliation to Adjusted Pretax Income (5 of 5)
Investor Day 2017 | Reconciliation to Adjusted Pretax Income (5 of 5) 107 ($M) Grain Ethanol Plant Nutrient Rail Retail Other Total Year Ended December 31, 2013 Income (loss) before income taxes 46.8 56.4 32.0 42.8 (7.5) (20.8) 149.7 Income (loss) attributable to the noncontrolling interests - 5.8 -
Slide 108: Reconciliation to EBITDA to Operating Cash Flows
Investor Day 2017 | Reconciliation to EBITDA to Operating Cash Flows1 108 ($M) Total Nine months ended September 30, 2017 Income (loss) before income taxes (19.6) Income (loss) attributable to the noncontrolling interests 0.1 Income (loss) before income taxes attributable to The Andersons’ Inc.1 (19
Slide 109: Biographies: Pat Bowe
Investor Day 2017 | Biographies PAT BOWE PRESIDENT AND CHIEF EXECUTIVE OFFICER Pat Bowe is President and Chief Executive Officer of The Andersons, Inc. Pat joined The Andersons in November 2015 with more than 35 years of experience in the agricultural sector. Prior to joining the company, Pat served
Slide 110: Biographies: John Granato
Investor Day 2017 | Biographies JOHN GRANATO CHIEF FINANCIAL OFFICER John Granato is Chief Financial Officer for The Andersons, Inc. John began his career with The Andersons in April 2012 in his current role. Prior to joining The Andersons, he most recently served as a Principal of Finance and Opera
Slide 111: Biographies: Corey Jorgenson
Investor Day 2017 | Biographies COREY JORGENSON PRESIDENT, GRAIN GROUP Corey Jorgenson is President of the Grain Group of The Andersons, Inc. Corey joined The Andersons in 2016 in his current position. He has nearly 20 years of experience in general management, agricultural trading and risk manageme
Slide 112: Biographies: Mike Irmen
Investor Day 2017 | Biographies MIKE IRMEN PRESIDENT, ETHANOL GROUP Mike Irmen is the President of the Ethanol Group at The Andersons, Inc. Mike began his career with The Andersons in 1976. He has more than 40 years of experience in grain merchandising, commodities risk management and ethanol admini
Slide 113: Biographies: Jeff Blair
Investor Day 2017 | Biographies JEFF BLAIR PRESIDENT, PLANT NUTRIENT GROUP (EFFECTIVE: DECEMBER 2017) Jeff Blair is President of the Plant Nutrient Group of The Andersons, Inc. Jeff joined The Andersons in December 2017 from Intrepid Potash, Inc., where he served as the Vice President of Sales and M
Slide 114: Biographies: Rash Shah
Investor Day 2017 | Biographies RASH SHAH PRESIDENT, RAIL GROUP Rash Shah is President of the Rail Group of The Andersons, Inc. Rash began his career with The Andersons in 1978. He held various positions within the engineering and maintenance department before being named Director of Engineering and
Slide 115: Biographies: Joe McNeely
Investor Day 2017 | Biographies JOE McNEELY PRESIDENT, RAIL GROUP (EFFECTIVE: JANUARY 2018) Joe McNeely will join the company as the new President of the Rail Group in January 2018. Joe has more than 30 years of experience in the financial, manufacturing and distribution industries, specializing in
Slide 116: Biographies: Naran Burchinow
Investor Day 2017 | Biographies NARAN BURCHINOW SENIOR VICE PRESIDENT, GENERAL COUNSEL & SECRETARY Naran Burchinow is Senior Vice President, General Counsel and Secretary of The Andersons, Inc. Naran joined The Andersons in 2004 in his current position. Prior to joining The Andersons, Naran served i
Slide 117: Biographies: Val Blanchett
Investor Day 2017 | Biographies VAL BLANCHETT VICE PRESIDENT, HUMAN RESOURCES Val Blanchett is Vice President, Human Resources of The Andersons, Inc. She joined the company in 2016 in her current position. Val has more than 30 years of HR experience, including organizational effectiveness, leading l