The Andersons, Inc. · NASDAQ:ANDE
The Andersons — Q1 2020 Earnings Presentation
24 slides from The Andersons's earnings presentation, May 6, 2020
Slide 1: First Quarter Earnings Call
First Quarter Earnings Call May 6, 2020 1
Slide 2: Safe Harbor and Non-GAAP Financial Measures
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, weather, competitiv
Slide 3: Speakers
Speakers Pat Bowe President and Chief Executive Officer Brian Valentine Executive Vice President and Chief Financial Officer John Kraus Director, Investor Relations 3
Slide 4: COVID-19 Response
COVID-19 Response • Mission-driven and here to serve • Part of a critical infrastructure industry • Facilities are essential to the North American ag supply chain • Employee health and safety has been top priority • Made charitable contributions and matched employees’ gifts We are proud of our seaml
Slide 5: Q1 '20 Highlights
Q1 ‘20 Highlights Asset income decreased as weak ethanol demand drove corn basis lower, food and specialty ingredients business improved Stay-at-home orders limited gasoline and ethanol demand, causing margins to decline, resulting in large non-cash mark-to-market adjustments Results improved on con
Slide 6: Financial Management of COVID-19
Financial Management of COVID-19 Liquidity and Debt Expenses Capital Spending • We have adequate liquidity, • We have built an expense • We have spent an average of with more than $850 million of management culture, reducing more than $200 million on undrawn credit legacy expenses or creating mainte
Slide 7: Key Financial Data – First Quarter 2020
Key Financial Data – First Quarter 2020 $ In millions except per share data, long-term debt-to-equity Q1 ‘20 Q1 ’19 VPY Sales and merchandising revenues $1,853.1 $1,976.8 ($123.7) Gross profit $63.1 $109.7 ($46.6) Operating and general expenses $105.1 $113.3 ($8.2) Equity in earnings (loss) of affil
Slide 8: Trade Group Q1 '20 Highlights
Trade Group Q1 ’20 Highlights • The impact of COVID-19 reduced demand, which lowered the corn basis significantly • Group increased credit reserves for an ethanol customer • Food, feed, specialty grains and The Andersons Canada businesses performed well Adjusted EBITDA ($M) Unaudited in $M Q1 ‘20 Q1
Slide 9: Ethanol Group Q1 '20 Highlights
Ethanol Group Q1 ’20 Highlights • Ethanol margins declined in March due to stay-at-home orders • Recorded $14.7 million in non-cash mark-to-market adjustments • Efficient operations and cost reduction efforts helped mitigate lower margins Unaudited in $M Q1 ‘20 Q1 ’19 VPY Adj. EBITDA Attributable to
Slide 10: Plant Nutrient Group Q1 '20 Highlights
Plant Nutrient Group Q1 ’20 Highlights • Pretax income improved by $2.7 million on lower operating expenses • Adjusted EBITDA improved by $1.9 million year over year • Business reorganized into Ag Supply Chain, Specialty Liquids and Engineered Granules as of January Adjusted EBITDA ($M) Unaudited in
Slide 11: Rail Group Q1 '20 Highlights
Rail Group Q1 ’20 Highlights • Lease income declined on lower lease rates, fewer cars on lease • Credit concerns continued in the sand and ethanol markets • EBITDA stays relatively consistent but down 11 percent year over year Unaudited in $M Q1 ‘20 Q1 ‘19 VPY EBITDA ($M) $66 Revenues $37.1 $41.4 ($
Slide 12: 2020 Outlook
2020 Outlook Potential record corn crop and large carryout should result in increased space income beginning in the fall and throughout 2021 Margins expected to improve as U.S. economy reopens; plants positioned well to restart production quickly Favorable weather coupled with more corn acres plante
Slide 13: Q&A Session
Pe gees Sa Q&A Session he © @ OS
Slide 14: Thank you for joining us
Thank you for joining us. Our next earnings call is scheduled for August 5, 2020 at 11:00 a.m. 14
Slide 15: Appendix
Pe gees Sa Appendix he © @ OS
Slide 16: Definitions
Definitions EBITDA: Earnings before interest, taxes, depreciation and amortization; a non-GAAP measure. A primary measure of period-over-period comparisons, and we believe they are meaningful measures for investors to compare our results from period to period Ethanol Margin Hedging: From time to tim
Slide 17: Long Term Debt Maturities
Long Term Debt Maturities Long-term Debt Maturities by Quarters ($000) $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 2025 and After Recourse Non-Recourse No material long-term
Slide 18: U.S. Corn Planting Progress
U.S. Corn Planting Progress Percentage Completed 4% Percent planted change from 2019 Gold states = ahead of 2019 progress May 3, 2020 76% Grey states = behind 2019 progress 38% 33% 11% 51% 78% 1% 61% 33% 10% 56% May 3, 2019 33% 42% 44% 57% 21% 54% 79% 5 Year Average 69% 39% Source: USDA crop progres
Slide 19: U.S. Soybeans Planting Progress
U.S. Soybeans Planting Progress Percentage Completed Percent planted change from 2019 1% Gold states = ahead of 2019 progress 35% May 3, 2020 Grey states = behind 2019 progress 14% 11% 23% 46% 13% 32% 7% 31% 22% May 3, 2019 11% 7% 25% 5% 14% 10% 20% 39% 5 Year Average 46% 11% Source: USDA crop progr
Slide 20: Ethanol Group Production
Ethanol Group Production Ethanol Gallons Produced E-85 Gallons Shipped DDG Tons Shipped Corn Oil Pounds Shipped in millions in millions in thousands in millions 61.4 1,262 1,240 117.2 119.4 481.1 448.6 47.7 536 147.3 14.9 314 305 29.3 116.8 118.1 27.5 28.9 8.9 9.1 2018 2019 2020 2018 2019 2020 2018
Slide 21: 2019 Exports Decline Due to Loss of China Demand
2019 Exports Decline Due to Loss of China Demand U.S. Ethanol Exports (MGY) Total for 2019 1,583 United 1,391 Kingdom, 2% 1,325 Other, 11% Mexico, 2% 1,171 Oman, 3% 1,108 Brazil, 23% Peru, 3% 868 814 Netherlands, 4% 668 Philippines, 5% 602 Canada, 22% 397 Colombia, 5% Korea, 7% India, 12% 2010 2011
Slide 22: Plant Nutrient Tons Sold
Plant Nutrient Tons Sold Historical Seasonality in Volume (000’s) 149 133 158 149 87 83 74 79 57 73 59 72 610 56 58 129 63 527 121 130 352 336 280 201 217 170 210 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Ag Supply Chain Specialty Liquids Engineered Granules Committed to Growth
Slide 23: Rail Group Fleet
Rail Group Fleet Key Metrics Railcar Fleet by Commodity2 Grain/Grain Products 25.5% ~24,400 Railcars1 Fertilizer/Minerals 14.3% Ethanol & Gasoline 9.2% 89.0% Average Utilization Rate1 Plastics 9.0% Chemicals 8.0% Sand/Sand Products 6.2% ~21,900 Cars on Lease2 Wood & Forrestry/Paper 4.9% Aggregates &
Slide 24: Rail Group Earning Power: Sources of Income
Rail Group Earning Power $ in millions YE 2016 YE 2017 YE 2018 YE 2019 YTD 2020 Average # of Railcars 23,057 23,314 22,899 24,250 24,416 Beg. $ on Bal. Sheet $338.1 $327.2 $423.4 $521.8 $584.3 Sources of Income Average % Utilization 87.8% 85.0% 90.8% 92.4% 89.0% • Generates lease income from long-li