The Andersons, Inc. · NASDAQ:ANDE
The Andersons — Andersons — Investor Day (December 2020)
113 slides from The Andersons's investor day presentation, Dec 8, 2020
Slide 1: The Andersons Investor Day 2020
The Andersons Investor Day 2020 December 8, 2020
Slide 2: Safe Harbor and Non-GAAP Financial Measures
Investor Day 2020 | 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 2020 | Agenda Welcome and Opening Remarks John Kraus | Director of Investor Relations 9:00 AM Company Overview and Strategy Pat Bowe | President & CEO Trade and Ethanol Bill Krueger | President, Trade and Processing Q&A Above Presenters 10:00 AM BREAK 10:20 AM Plant Nutrient and Rail Jo
Slide 4: Company Overview and Strategy
Company Overview and Strategy Pat Bowe | President & CEO
Slide 5: Key Messages
Investor Day 2020 | Key Messages Significant player in North American ag supply chain with strategic and interrelated businesses1 Customer-centric offerings and solutions driven by deep relationships and market expertise2 Broad product portfolio that leverages nimbleness and innovation to drive asse
Slide 6: The Andersons at a Glance
Investor Day 2020 | Success Factors Customer Service and Relationships Increased Product Breadth Knowledge and Expertise ANDExcellence Plant Nutrient Distributes, stores and formulates products through strategically located facilities and extensive network The Andersons at a Glance Founded Listed (N
Slide 7: Strong Portfolio of Assets with Nationwide Reach
Investor Day 2020 | Plant Nutrient RailEthanolTrade Strong Portfolio of Assets with Nationwide Reach Strategically Positioned Businesses Throughout the Ag Supply Chain • Supply primary nutrients; strong warehouse and farm center network in Eastern Corn Belt • Manufacture engineered granular products
Slide 8: Strong Portfolio of Businesses Serving Critical Links Across Ag Supply Chain
Investor Day 2020 | Strong Portfolio of Businesses Serving Critical Links Across North American Ag Supply Chain Plant Nutrient Warehouse Farm Center Trade Elevator Ethanol Plant Feeder Refinery Blender Retailer Meat Packer Consumer Consumer Food Product Consumer Farmer Fertilizer Producer Processor
Slide 9: Strong Geographic Footprint
Investor Day 2020 | Strong Geographic Footprint Facilities Located Across the North American Ag Supply Chain Maumee Office (HQ) Overland Park Office Trade Ethanol Plant Nutrient Rail CO KS OK SD WY IA NE MO NM TX AZ UTNV CA OR WA ID MT ND MN IL WI MI IN AR LA MS AL TN KY GA FL SC NC VA WV MD DE PA O
Slide 10: Our Transformational Journey Continues
Investor Day 2020 | Our Transformational Journey Continues Significant Progress toward Optimizing the Organization to Prepare for Growth SINCE 2017 INVESTOR DAY 2021 AND BEYOND • Successfully purchased and integrated Lansing/Thompsons, deriving commercial and cost synergies • Merged ethanol entities
Slide 11: Experienced Leadership Team
Investor Day 2020 | Experienced Leadership Team New executive team with deep industry expertise Succession ladder with staggered age and experience Hired outside talent with diverse skills and backgrounds Streamlined Leadership Team Pat Bowe President & CEO Former: 30+ years with Cargill Joine
Slide 12: Experienced Board of Directors with Diverse Backgrounds
Investor Day 2020 | Catherine Kilbane Retired SVP, General Counsel, Secretary, The Sherwin-Williams Co. Joined: 2007 Pat Bowe President & CEO, The Andersons, Inc. 2015 Gerard Anderson Exec. Chairman & Former CEO, DTE Energy 2008 Patrick Mullin Retired Managing Partner, Deloitte & Touche LLP 2013 Joh
Slide 13: Building a Robust Corporate Sustainability Program
Investor Day 2020 | Building a Robust Corporate Sustainability Program Serve with a Focus on Doing What’s Right for All Stakeholders in a Balanced Way • Foster a culture in which all employees feel safe, included and engaged • Stand for a work environment that promotes diversity, inclusion and equal
Slide 14: Unique Competitive Advantages
Investor Day 2020 | Unique Competitive Advantages Building Upon a Foundation of Strong Capabilities and Assets • Multi-generational relationships with customers and suppliers • Nurture partnerships with producers to understand their agronomic and marketing needs • Technology and processes to stay cl
Slide 15: Strategic Growth Initiatives
Investor Day 2020 | Strategic Growth Initiatives Drive Margin Expansion and Reduce Capital Intensity Innovate and Develop New Products and Services Grow Profitably and Leverage Specialty Market Opportunities 1 2 3 15
Slide 16: Drive Margin Expansion and Reduce Capital Intensity
Investor Day 2020 | Drive Margin Expansion and Reduce Capital Intensity Focusing on Higher Margin, Higher ROIC Opportunities • Leveraging our current asset base to develop more customers and markets that we can serve with an asset-light business model • Increasing use of risk management services by
Slide 17: Innovate and Develop New Products and Services
Investor Day 2020 | Goal is to “Learn and Earn,” Stay Abreast of Cutting-Edge and Potentially Disruptive Technologies Innovate and Develop New Products and Services Focus on Ag Supply Chain Innovation • Our unique position in the ag value chain enables us to spot trends and opportunities that are no
Slide 18: Grow Profitably and Leverage Specialty Market Opportunities
Investor Day 2020 | • Beyond primary row crops (corn, soybeans, wheat) • Specialty ingredients, foods and grains for humans and pets • Broad portfolio including ancient grains, lentils and various food ingredients • Robust suite of risk management tools for producers and end users • Higher value fee
Slide 19: Key Takeaways
Investor Day 2020 | Key Takeaways 1 2 3 4 5 Significant player in North American ag supply chain with strategic and interrelated businesses Customer-centric offerings and solutions driven by deep relationships and market expertise Broad product portfolio that leverages nimbleness and innovation to d
Slide 20: Trade
Trade Bill Krueger | President, Trade and Processing
Slide 21: Key Messages
Investor Day 2020 | Key Messages Focusing on our diversified merchandising and logistics business across a wide and expanding range of commodities1 Driving value by understanding needs of producers and end users through strong relationships, market intelligence and discovering arbitrage opportunitie
Slide 22: Trade at a Glance
Investor Day 2020 | Trade at a Glance A Meaningful Market Presence in North America, While Participating in Niche International Markets 1 Twelve months ended September 30, 2020 2 Non-GAAP measure. See reconciliation tables in Appendix Gross Profit $276M Adjusted Pretax Income $18M Employees ~870 KEY
Slide 23: Broad Geographic Asset Reach and Production
Investor Day 2020 | Broad Geographic Asset Reach and Production Top 5 U.S. Grain and Ingredients Merchant Bliss, ID GRAIN TRADED ~30M TONNES SPACE CAPACITY ~210M BUSHELS COMMODITIES 67 MERCHANDIZED FEED INGREDIENTS 2.2M TONNES SPECIALITY INGREDIENTS 1.5M TONNES Key Metrics1 Champaign, IL Delhi, LAHo
Slide 24: Broad Geographic Footprint
Investor Day 2020 | Broad Geographic Footprint • Integration with Lansing and Thompsons provided: Geographic expansion into Western Corn Belt and Eastern Canada Significant diversification of trade flows outside of traditional products Much greater scale in the agricultural marketplace • Prima
Slide 25: How Trade Makes Money
Investor Day 2020 | How Trade Makes Money Diverse Margin Base from Broad Portfolio of Products PRODUCTS AND SERVICES • Grains & Oilseeds • Food & Feed Ingredients • Pulses, Lentils and Other Niche Crops • Propane Distribution • Merchandising • Storage and Handling • Risk Management Products – Freedo
Slide 26: Secular Trends Supporting the Business
Investor Day 2020 | Secular Trends Supporting the Business Well-positioned to Benefit from Long-term Secular Trends 1 Calendar 2019 data in American Pet Products Association press release dated February 27, 2020 Growing Demand Changing Consumer Habits Changing Producer Needs TRENDS FOCUS AREA ANDE I
Slide 27: Durable Business Model
Investor Day 2020 | Durable Business Model Well-positioned with Expertise and Assets to Stand Out in the Competitive Landscape Diversified Income Streams • Buy and sell broad range of commodities via trade flows in key supply and demand regions across North America • Team of experts in grains, oilse
Slide 28: Strategic Growth Initiatives
Investor Day 2020 | Strategic Growth Initiatives Drive Organic Growth1 Leverage Grain Assets to Increase Profitability2 Invest in Customer-facing Applications3 28
Slide 29: Driving Organic Growth
Investor Day 2020 | Driving Organic Growth Leveraging Asset-light Opportunities Through Existing and New Relationships • Focused on growing the business both organically and through asset-light acquisitions, with a platform structured to allow for growth • Well-positioned to grow revenue by providin
Slide 30: Leverage Grain Assets to Increase Profitability
Investor Day 2020 | Leverage Grain Assets to Increase Profitability We Empower and Reward Our Teams to Create Financial Value for Our Business 3.2 5.6 6.4 0 1 2 3 4 5 6 7 8 2017 TTM 2023E Total Turns through Licensed Capacity Total Volume Traded vs. Licensed Capacity • Transitioned businesses into i
Slide 31: Invest in Customer-Facing Applications
Investor Day 2020 | Invest in Customer-Facing Applications Continuously Improving Everything We Do for Better Decision-making and Customer Service • Increase cost efficiencies and provide best system for profit centers • Improve data aggregation by reducing the number of applications used • Leverage
Slide 32: Trade Long-term Goals
Investor Day 2020 | Trade Long-term Goals Strategic Focus 2023 Target EBITDA of $130M - $140M • Improve grain asset profitability by expanding its focus to include sales side and arbitrage − Increase percentage of bushels settled that don’t flow through facilities • Leverage key strengths of custome
Slide 33: Key Takeaways
Investor Day 2020 | Key Takeaways 1 2 3 4 Focusing on our diversified merchandising and logistics business across a wide and expanding range of commodities Driving value by understanding needs of producers and end users through strong relationships, market intelligence and discovering arbitrage oppo
Slide 34: Ethanol
Ethanol Bill Krueger | President, Trade and Processing
Slide 35: Key Messages
Investor Day 2020 | Key Messages Focused on leading the industry in margin per bushel 1 Expertise in ethanol plant management, logistics and commercialization of ethanol and feed products2 Leveraging partnerships to expand market knowledge and shared technology across plants 3 Developing high protei
Slide 36: Ethanol at a Glance
Investor Day 2020 | Ethanol at a Glance Focused on Leading the Corn Dry Milling Industry in Margin Per Bushel 1 Twelve months ended September 30, 2020 2 Non-GAAP measure. See reconciliation tables in Appendix Gross Profit ~($9M) Adjusted Pretax Income (Loss) Attributable to The Andersons, Inc.2 ~($1
Slide 37: Ethanol Overview
Investor Day 2020 | Ethanol Overview Sustainable Margin Advantage Over the Long Term PRODUCTION VOLUME 2021 FORECAST • Ethanol is a low-cost, clean-burning, high- octane, renewable fuel product • Our ethanol customers are refiners, fuel blenders and convenience stores • Additional products include d
Slide 38: Strategically Positioned Ethanol Plants
Investor Day 2020 | Strategically Positioned Ethanol Plants 6th Largest U.S. Ethanol Producer KS IA NE MO MN IL WI MI IN KY OH The Andersons Marathon Holdings LLC (TAMH) Consolidation effective October 2019 Opened/acquired between 2006 and 2012 ELEMENT, LLC (Colwich, KS) Opened August 2019 Greenvill
Slide 39: Benefits from Strategic Partnerships
Investor Day 2020 | Benefits from Strategic Partnerships Positioning in the Industry as Partner of Choice R&D Decouple margin from corn/ethanol spread by developing new products and applications Uses waste wood to produce steam and electricity Technology First to market with significant lead time ov
Slide 40: Secular Trends Supporting the Business
Investor Day 2020 | Secular Trends Supporting the Business Well-positioned to Benefit from Long-term Secular Trends TRENDS FOCUS AREA ANDE INITIATIVE • Lowest-cost and greenest octane-enhancing agent for gasoline engines to meet current and future needs • Support for a low-carbon future expected to
Slide 41: Durable Business Model
Investor Day 2020 | Durable Business Model Being a Low-cost Operator and Applying Our Core Competencies Produces Better Financial Results • Leveraging technology to maintain industry-leading yields, high capacity utilization and low-cost position • Technological capabilities enable significantly imp
Slide 42: Strategic Growth Initiatives
Investor Day 2020 | Strategic Growth Initiatives Create Higher-Margin Products1 Advance ANDExcellence for Continuous Improvement2 Pursue Commercial Market Development3 42
Slide 43: Create Higher-Margin Products
Investor Day 2020 | Create Higher-Margin Products Diversify from Commodity-based Business to Development of Higher-margin Products Transforming By-products • Working with Plant Nutrient to transform by- product streams into raw materials • Producing higher-margin specialty fertilizer products such a
Slide 44: Advance ANDExcellence for Continuous Improvement
Investor Day 2020 | Advance ANDExcellence for Continuous Improvement Overall Equipment Effectiveness (OEE) Initiatives Resulting in Increased Efficiencies • Our teams innovate and improve by aligning processes, services and products to safely achieve the best possible product quality, employee engag
Slide 45: Case Study: ANDExcellence in Action
Investor Day 2020 | Case Study: ANDExcellence in Action Building an Increasingly Productive and Safe Culture Background • Goal to be the best-in-class in every aspect of plant operations • Our research revealed an opportunity to improve ethanol and corn oil yields Solution • Optimized particle size
Slide 46: Pursue Commercial Market Development
Investor Day 2020 | • Staying ahead of the competition: In-house corn origination Ethanol and feed products marketing Prudent risk management • Developing a vegetable oil trading business to serve the renewable diesel industry • Investing in talent to retain merchandising advantage through ris
Slide 47: Ethanol Long-term Goals
Investor Day 2020 | Ethanol Long-term Goals Strategic Focus 2023 Target EBITDA of $100M - $110M • Expand ethanol, DDG and vegetable oil trading • Replace commoditized DDGs with higher-margin feed products • Decouple ethanol financial results from the corn-to-ethanol relationship by creating more val
Slide 48: Key Takeaways
Investor Day 2020 | Key Takeaways 1 2 3 4 Focused on leading the industry in margin per bushel Expertise in ethanol plant management, logistics and commercialization of ethanol and feed products Leveraging partnerships to expand market knowledge and shared technology across plants Developing high pr
Slide 49: The Andersons: Q&A Session
The Andersons: Q&A Session
Slide 50: The Andersons: Break
The Andersons: Break
Slide 51: Plant Nutrient
Plant Nutrient Joe McNeely | President, Plant Nutrient and Industrial
Slide 52: Key Messages
Investor Day 2020 | Key Messages Significant Eastern Corn Belt presence with a diverse and growing portfolio of plant nutrient products1 Three business lines with improved returns through operational and commercial excellence2 Recognized provider of high-performance golf, professional turf and other
Slide 53: Plant Nutrient at a Glance
Investor Day 2020 | Plant Nutrient at a Glance Provider of Innovative Plant Nutrients, Agronomy Services, Specialty Liquids and Engineered Granules 1 Twelve months ended September 30, 2020 2 Non-GAAP measure. See reconciliation tables in Appendix Gross Profit ~$99M Adj. Pretax Income2 ~$17M Employee
Slide 54: Business Lines and Key Metrics
Investor Day 2020 | Business Lines and Key Metrics Ag Supply Chain • Receives, stores and markets nitrogen, phosphate and potash fertilizers (NPK) • Network of independent dealers and nine farm centers serving the Eastern Corn Belt Specialty liquid manufacturing and distribution: • Agriculture – hig
Slide 55: Well-positioned in Key Geographies
Investor Day 2020 | KS OK SD IA NE MO TX ND MN IL WI MI IN AR LA MS AL TN KY GA FL SC NC VA WV MD DE PA OH Well-positioned in Key Geographies Ample Opportunity to Expand in Current and New Markets without Substantial Capital Investment Ag Supply Chain Eastern Corn Belt • Provides wholesale nutrients
Slide 56: Well-Positioned to Benefit from Secular Trends
Investor Day 2020 | Well-Positioned to Benefit from Secular Trends TRENDS FOCUS AREA ANDE INITIATIVE Sustainability • Reduce fertilizer runoff • Improve water quality • Developing next-gen nutrients and organic products • Working with farmers and independent retailers on sustainability practices Bas
Slide 57: Durable Business Model
Investor Day 2020 | Durable Business Model Strong Assets Generating Steady Cash Flows Nimble and Innovative • Enabled by close customer relationships • Regimented stage-gate R&D process • Experienced in successful innovation and product launches Deep Industry Relationships • Farm centers providing c
Slide 58: Case Study: Engineered Granules
Investor Day 2020 | Case Study: Engineered Granules Over Two Decades of Reliable, Consistent Performance with Earned Mutual Trust • Top 3 Plant Nutrient customer • 20+ year partnership • Focus on formulation and packaging • Produce insecticides and herbicides sold through retail Background Solutions
Slide 59: Strategic Growth Initiatives
Investor Day 2020 | Strategic Growth Initiatives Target Growth in Ag Supply Chain Core Markets1 Leverage Expertise in Engineered Granules2 Improve Specialty Liquids Business3 59
Slide 60: Target Growth in Ag Supply Chain Core Markets
Investor Day 2020 | Target Growth in Ag Supply Chain Core Markets Strengthening Our Market Position through Select Strategic Initiatives Leverage Strategically-Positioned Wholesale Facilities • Well-positioned assets focused on the Eastern Corn Belt • Strategic warehousing partnerships with key supp
Slide 61: Leverage Expertise in Engineered Granules
Investor Day 2020 | Leverage Expertise in Engineered Granules Expand Sales by Leveraging Wide Variety of High-Value Products without Increasing Capacity Innovation and Commercialization • Build on proven success in creating new IP-protected products such as DG LiteTM and other patented products • Ex
Slide 62: Improve Specialty Liquids Business
Investor Day 2020 | Improve Specialty Liquids Business Portfolio of Next-Generation Products Designed to Provide Sustainable and Profitable Cropping Systems Leverage Technical Innovation • Build upon innovation leadership as one of the top manufacturers of specialty ag liquids in the U.S. in seed st
Slide 63: Plant Nutrient Long-term Goals
Investor Day 2020 | Plant Nutrient Long-term Goals Strategic Focus 2023 Target EBITDA of $55M - $60M Committed to Delivering Shareholder Value • Improve top-line growth through innovation and sales excellence • Expand margin by enhancing procurement and operational excellence • Lead in engineered gr
Slide 64: Key Takeaways
Investor Day 2020 | Key Takeaways 1 2 3 4 Significant Eastern Corn Belt presence with a diverse and growing portfolio of plant nutrient products Three business lines with improved returns through operational and commercial excellence Recognized provider of high- performance golf, professional turf a
Slide 65: Rail
Rail Joe McNeely | President, Plant Nutrient and Industrial
Slide 66: Key Messages
Investor Day 2020 | Key Messages Top 10 North American railcar leasing provider with diversified customers, railcar types and repair capabilities1 Lowering capital intensity of the business with increased focus on fleet management services2 Strong customer and industry relationships with full suite
Slide 67: Rail at a Glance
Investor Day 2020 | Rail at a Glance Providing Cost-Effective Leasing Solutions, Full Suite of Railcar Repair and Management Services Gross Profit ~$44M Pretax Income ~$8M # of Railcars Controlled and Managed ~24,000 Repair Locations 28 Employees ~320 KEY HIGHLIGHTS1 Deep Industry and Customer Relat
Slide 68: Diverse Fleet of Railcar Types across Many Industries
Investor Day 2020 | ALL OTHERS Diverse Fleet of Railcar Types across Many Industries Diversified Portfolio Provides Wide Range of Solutions to Customers Railcars Controlled ~23,400 Cars on Lease ~20,400 Utilization Rate 87.0% Commodities Handled ~150 Railcar as Percent of North American Fleet COVERE
Slide 69: We Are a Top Player in North America
Investor Day 2020 | We Are a Top 10 Player in North America Size and Scale to Meet Customer Needs, Yet Small Enough to be Nimble and Flexible • ~1.7M railcars in North America − 65% privately owned − 35% railroad owned • More nimble than larger players, providing flexibility • Owning more cars than
Slide 70: Rail Sources of Income
Investor Day 2020 | Railcar Repair Shops Rail Leasing Rail Sources of Income 2016 2017 2018 2019 TTM Leasing Railcar Sales Repair/Other Adjusted EBITDA by Platform ($M)1 $59 $55 $58 $66 $60 Increasing Income from Leasing and Railcar Management Services Business • Generate lease income from long-live
Slide 71: Rail Repair Network Complements Leasing Business
Investor Day 2020 | Rail Repair Network Complements Leasing Business Strategically Located Network of Repair Facilities Strategically located where cars move empty with geographically diverse network High-quality repairs Broad range of capabilities (from simple repairs to remanufacturing) Gr
Slide 72: Secular Trends Supporting the Business
Investor Day 2020 | Secular Trends Supporting the Business Long-term Secular Trends Support Growth Plan Sustainability • Railcars are nearly 100% recyclable, thus more environmentally friendly than trucks • Modern and large-capacity railcars improving rail transportation efficiency • Continue to sel
Slide 73: Unique Competitive Advantages
Investor Day 2020 | Unique Competitive Advantages Well-positioned to Stand Out in the Competitive Landscape • Diverse customer mix – Top 10 customers account for less than 20% of lease revenue • Strong industry relationships • High-touch customer service • High number of requests from railroads prop
Slide 74: Case Study: Solving Leasing Customer Problems
Investor Day 2020 | Case Study: Solving Leasing Customer Problems • Rail resolved both customers’ immediate car needs • The newer sand cars use less track space, allowing Customer A to load more cars at one time. As a result, Customer A leased an additional 20 newer sand cars from Rail • Customer A
Slide 75: Strategic Initiatives
Investor Day 2020 | Strategic Initiatives Reduce Capital Intensity of Lease Fleet and Grow Railcar Management Business 1 Expand Railcar Repair Network and Service Offerings 2 75
Slide 76: Reduce Capital Intensity of Railcar Lease Fleet
Investor Day 2020 | Reduce Capital Intensity of Railcar Lease Fleet Leveraging Our Competitive Advantages to Offer Creative Leasing and Management Solutions Profitable Growth • Replace current fleet as it ages and selectively grow owned or managed railcar fleet by partnering with established investo
Slide 77: Growing Railcar Repair Network and Service Offerings
Investor Day 2020 | Expand • Add two to three shops per year • Establish strategic relationships with more short line railroads • Support ANDE leasing and fleet management business Growing Railcar Repair Network and Service Offerings Geographically Diverse Network with a Full Suite of Railcar Repair
Slide 78: Rail Long-term Goals
Investor Day 2020 | Rail Long-term Goals Strategic Focus Committed to Delivering Shareholder Value 2023 Target EBITDA of $55M - $60M • Maintain current level of railcars controlled and managed • Continue to expand repair network across the U.S. • Reduce capital intensity coupled with disciplined ass
Slide 79: Key Takeaways
Investor Day 2020 | Key Takeaways 1 2 3 4 Top 10 North American railcar leasing provider with diversified customers, railcar types and repair capabilities Lowering capital intensity of the business with increased focus on fleet management services Strong customer and industry relationships with full
Slide 80: Financial Overview
Financial Overview Brian Valentine | Executive Vice President and CFO
Slide 81: Key Messages
Investor Day 2020 | Key Messages Maximizing synergies and benefits through optimized business structure1 Refined key financial metrics and aligned them with management incentives 2 Efficient working capital management to achieve stronger cash flow, reduce debt and maintain a flexible balance sheet3
Slide 82: Financial Performance Overview
Investor Day 2020 | Financial Performance Overview ($M) Gross Profit Adjusted EBITDA1 Adjusted Pretax Income Attributable to The Andersons1 Cash from Operations before Working Capital Changes1 • Increase in 2019 largely due to acquisition of Lansing Trade Group and Thompsons Limited • Decline during
Slide 83: Refined Key Financial Metrics to Track Performance
Investor Day 2020 | 2.7% 4.2% 4.2% 3.4% 1.2% 2016 2017 2018 2019 TTM Adjusted ROIC1 Refined Key Financial Metrics to Track Performance • Pretax Income • Adjusted EBITDA Historical Focus • Adjusted EBITDA • Pretax Income • ROIC • Free Cash Flow New Emphasis 1 Non-GAAP measure. See reconciliation tabl
Slide 84: Renewed Focus on Working Capital
Investor Day 2020 | 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Readily Marketable Inventories Short-term Debt Working Capital Renewed Focus on Working Capital Taken Specific Steps to Improve Cash Flows Much of Working Capital is Readily Marketable Inventory (RMI) Important Initiatives / Milestones Achi
Slide 85: On Track to Achieve Consistent Positive Free Cash Flow
Investor Day 2020 | On Track to Achieve Consistent Positive Free Cash Flow Poised to Generate Stronger Cash Flow Over the Long Term • Net capital spending of $100M to $150M annually • Smaller bolt-on acquisitions and asset-light growth • Continued pruning of the asset portfolio as needed • Continued
Slide 86: Focused on Debt Reduction
Investor Day 2020 | Focused on Debt Reduction Prioritizing Debt Reduction to Maintain a Flexible Balance Sheet $445 $473 $518 $1,079 $984 $29 $22 $205 $147 $100 3.5x 3.0x 2.9x 4.3x 4.4x -0.5 1.5 3.5 5.5 7.5 9.5 11.5 13.5 0 200 400 600 800 1000 1200 1400 2016 2017 2018 2019 TTM Short-term Debt Long-t
Slide 87: Capital Allocation Framework
Investor Day 2020 | Capital Allocation Framework Reducing Debt and Focused on Returning Cash to Shareholders REDUCE LONG-TERM DEBT Reduce debt to achieve target long-term debt-to-adjusted EBITDA ratio of <2.5x PURSUE OPPORTUNISTIC ACQUISITIONS Consider bolt-on acquisition targets and strategic oppor
Slide 88: Year Track Record of Consecutive Dividend Payments
Investor Day 2020 | 24 - Year Track Record of Consecutive Dividend Payments . . . . . . and Yield Consistent with Larger Industry Peers $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201
Slide 89: The Anderson Growth Process
Investor Day 2020 | Pre-Pipeline Teaser (one-page briefing) Strategic Alignment Summary Business Analysis Due Diligence Execution/ Implementation The Anderson Growth Process Disciplined Project Selection Ensures Alignment with Financial Goals and Strategic Objectives Growth idea documented Potential
Slide 90: M&A Framework
Investor Day 2020 | M&A Framework Disciplined, Focused and Strategic Approach to M&A Fits Strategically; Core or Adjacent Provides Differentiation: Enables Ability to “Move Up Value Chain” Increases Scale Strengthens Geographic Footprint Addresses Validated Customer Needs S T R A T E G I C F I L T E
Slide 91: Disciplined & Strategic M&A: Lansing Acquisition
Investor Day 2020 | Disciplined & Strategic M&A Lansing Acquisition Acquired January 2019 Line of Business Trade Purchase Price ($M) $329M Strategic Fit Accretive to Margins and Cash Flows Accretive to EPS within Two Years ROIC > 200 bps above WACC Financial Criteria Below Criteria In Progr
Slide 92: Financial Milestones
Investor Day 2020 | Financial Milestones Near and Long-term Milestones • Reduce long-term debt by an additional $200M to $250M by year-end 2023 • Reduce long-term debt-to-EBITDA ratio to less than 2.5x by year-end 2023 • Continue disciplined approach to capital deployment • Work steadily toward ROIC
Slide 93: Key Takeaways
Investor Day 2020 | Key Takeaways 1 2 3 4 Maximizing synergies and benefits through optimized business structure Refined key financial metrics and aligned them with management incentives Efficient working capital management to achieve stronger cash flow, reduce debt and maintain a flexible balance s
Slide 94: The Andersons: Q&A Session
The Andersons: Q&A Session
Slide 95: Closing Remarks
Pat Bowe | President & CEO Closing Remarks
Slide 96: Why Invest in The Andersons
Investor Day 2020 | Significant player in North American ag supply chain with strategic and interrelated businesses, serving critical links and connecting production to demand across time and geographies Building upon a foundation of strong capabilities and assets with customer-centric offerings and
Slide 97: The Andersons: Appendix
The Andersons: Appendix
Slide 98: Non-GAAP Reconciliation (Adjusted Pretax Income)
Investor Day 2020 | Non-GAAP Reconciliation (Adjusted Pretax Income Attributable to The Andersons, Inc.) (in thousands) 2016 2017 2018 20191 20201,2 Pre-tax income (loss) $ 21,381 $ (20,525) $ 53,156 $ 28,111 $ (26,867) (Income) loss attributable to the noncontrolling interests (2,876) (98) 259 3,24
Slide 99: Non-GAAP Reconciliation (Adjusted EBITDA)
Investor Day 2020 | Non-GAAP Reconciliation (Adjusted EBITDA) (in thousands) 2016 2017 2018 20191 20201,2 Net income (loss) $ 14,470 $ 42,609 $ 41,225 $ 15,060 $ (23,197) Interest expense 21,119 21,567 27,848 59,691 52,061 Income tax provision (benefit) 6,911 (63,134) 11,931 13,051 (3,670) Depreciat
Slide 100: Non-GAAP Reconciliation (Adjusted Return on Invested Capital)
Investor Day 2020 | Non-GAAP Reconciliation (Adjusted Return on Invested Capital) (in thousands, except for percentages) 2016 2017 2018 20191 20201,2 Pre-tax income (loss) $ 21,381 $ (20,525) $ 53,156 $ 28,111 $ (26,867) Adjusting items to return on invested capital (ROIC): Interest expense 21,119 2
Slide 101: Non-GAAP Reconciliation (Cash from Operations Before Working Capital Changes)
Investor Day 2020 | Non-GAAP Reconciliation (Cash from Operations Before Working Capital Changes) (in thousands) 2016 2017 2018 20191 20201,2 Cash provided by (used in) operating activities $ 39,585 $ 75,285 $ (35,519) $ 348,562 $ 224,728 Changes in operating assets and liabilities: Accounts receiva
Slide 102: Non-GAAP Reconciliation (Free Cash Flow)
Investor Day 2020 | Non-GAAP Reconciliation (Free Cash Flow) (in thousands) 2016 2017 2018 20191 20201,2 Cash provided by (used in) operating activities $ 39,585 $ 75,285 $ (35,519) $ 348,562 $ 224,728 Adjustments to free cash flow: Purchases of Rail assets (85,268) (143,020) (167,005) (105,254) (63
Slide 103: Non-GAAP Reconciliation (Adjusted EBITDA – Trade)
Investor Day 2020 | Non-GAAP Reconciliation (Adjusted EBITDA – Trade) (in thousands) 2016 2017 2018 2019 20201 Net income (loss)2 $ (15,651) $ 8,197 $ 21,715 $ (14,780) $ (22,698) Interest expense 7,955 8,320 11,845 35,202 22,799 Depreciation & amortization 18,232 18,757 16,062 50,973 46,928 Earning
Slide 104: Non-GAAP Reconciliation (Adjusted EBITDA – Ethanol)
Investor Day 2020 | Non-GAAP Reconciliation (Adjusted EBITDA – Ethanol) (in thousands) 2016 2017 2018 2019 20201 Net income (loss)2 $ 27,602 $ 23,623 $ 26,817 $ 45,112 $ (1,335) Interest expense (income) 35 (67) (1,890) 584 8,012 Depreciation & amortization 5,925 5,970 6,136 23,727 70,419 Earnings b
Slide 105: Non-GAAP Reconciliation (Adjusted EBITDA – Plant Nutrient)
Investor Day 2020 | Non-GAAP Reconciliation (Adjusted EBITDA – Plant Nutrient) (in thousands) 2016 2017 2018 2019 20201 Net income (loss)2 $ 14,176 $ (45,121) $ 12,030 $ 9,159 $ 17,453 Interest expense 6,448 6,420 6,499 7,954 6,011 Depreciation & amortization 28,663 26,628 26,871 25,985 25,228 Earni
Slide 106: Non-GAAP Reconciliation (EBITDA – Rail)
Investor Day 2020 | Non-GAAP Reconciliation (EBITDA – Rail) (in thousands) 2016 2017 2018 2019 20201 Net income2 $ 32,428 $ 24,798 $ 17,379 $ 15,090 $ 7,935 Interest expense 6,461 7,023 11,377 16,486 16,447 Depreciation & amortization 20,082 23,081 29,164 34,122 35,415 Earnings before interest, taxe
Slide 107: Non-GAAP Reconciliation (TTM Pretax Income by Segment)
Investor Day 2020 | Non-GAAP Reconciliation (TTM1 Pretax Income by Segment) (in thousands) Trade Ethanol Plant Nutrient Rail Other Total Pre-tax income (loss) $ (22,698) $ (1,335) $ 17,453 $ 7,935 $ (28,222) $ (26,867) Adjusting items to pre-tax income (loss): Prior period recasts2 (210) 210 - - - -
Slide 108: The Andersons: Leadership Biographies
The Andersons: Leadership Biographies
Slide 109: Pat Bowe | President and Chief Executive Officer
Investor Day 2020 | Pat Bowe | President and Chief Executive Officer Pat Bowe has served as president and chief executive officer of The Andersons since 2015. And in that time, he has led the company through numerous momentous changes, including the acquisition of Lansing Trade Group. Pat has more t
Slide 110: Brian Valentine | EVP, Chief Financial Officer
Investor Day 2020 | Brian Valentine | EVP, Chief Financial Officer Brian Valentine is the executive vice president and chief financial officer for The Andersons. He joined the company in August 2018 after more than 20 years of senior management experience. His expertise encompasses corporate finance
Slide 111: Christine Castellano | EVP, General Counsel
Investor Day 2020 | Christine Castellano | EVP, General Council Christine Castellano is executive vice president, general counsel and secretary of The Andersons. Christine joined The Andersons in 2020. She has extensive experience in national and international agribusiness law. Prior to joining The
Slide 112: Bill Krueger | President, Trade and Ethanol
Investor Day 2020 | Bill Krueger | President, Trade and Ethanol Bill Krueger is president of The Andersons Trade and Processing business group. He joined The Andersons as president of the former Trade Group in January 2019 when the company acquired Lansing Trade Group. Prior to the acquisition, he s
Slide 113: Joe McNeely | President, Plant Nutrient and Rail
Investor Day 2020 | Joe McNeely | President, Plant Nutrient and Rail Joe McNeely joined The Andersons in January 2018 as president of the former Rail Group. He now serves as president of The Andersons Nutrient and Industrial business group. Joe has more than 30 years of experience in the financial,