Slide 1: Fourth Quarter Earnings Call
Fourth Quarter Earnings Call February 13, 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: Q4 '19 Highlights
Q4 ‘19 Highlights Newer product lines performed well, but income was lower due to the small, late and wet harvest in the Eastern Corn Belt Pretax income increased on solid merchandising and production despite margin headwinds and a slower than panned ramp-up for ELEMENT Slight year-over-year improve
Slide 5: Key Financial Data – Fourth Quarter 2019
Key Financial Data – Fourth Quarter 2019 $ In millions except per share data, long-term debt-to-equity Q4 ’19 Q4 ‘18 VPY YTD ‘19 YTD ‘18 VPY Sales and merchandising revenues $1,885.6 $812.7 $1,072.9 $8,170.2 $3,045.4 $5,124.8 Gross profit 138.4 $94.0 44.4 517.9 $302.0 215.9 Operating and general exp
Slide 6: Q4 '18 Adjusted Pretax Income to Q4 '19 Adjusted Pretax Income
Pretax Income Q4 ’18 Adjusted Pretax Income to Q4 ’19 Adjusted Pretax Income Q4 ‘19 Reconciliation $70,000 $43,097 $65,000 $60,000 $55,000 $50,000 $45,000 ($000) $40,000 $35,000 $33,067 $30,000 $854 $65 $23,677 $4,156 $25,000 ($5,667) $23,677 ($2,273) ($2,369) $21,357 ($44,933) $20,000 $15,000 $10,0
Slide 7: YTD '18 Adjusted Pretax Income to YTD '19 Adjusted Pretax Income
Pretax Income YTD ’18 Adjusted Pretax Income to YTD ’19 Adjusted Pretax Income YTD ‘19 Reconciliation $100,000 $46,178 $90,000 $80,000 $18,396 $70,000 $59,929 ($13,679) $60,000 ($000) ($3,640) ($2,289) $51,020 $51,020 $50,000 ($7,697) $17,344 ($43,860) $40,000 $31,358 $30,000 $20,000 $10,000 $0 YTD
Slide 8: Trade (formerly Grain) Group Q4 '19 Highlights
Trade (formerly Grain) Group Q4 ‘19 Highlights • Lansing acquisition proved its value again • Solid results from new product lines helped offset lower income from Eastern Corn Belt assets • Strong earnings from propane distribution more than offset weakness in sand transloading Adj. Pretax Income ($
Slide 9: Ethanol Group Q4 '19 Highlights
Ethanol Group Q4 ’19 Highlights • Adjusted pretax income attributable to the group up 13 percent on solid manufacturing and merchandising • Industry oversupply weakened margins; elevated corn basis remained a headwind • TAMH merger added $2.5 million in incremental depreciation expense for the quart
Slide 10: Plant Nutrient Group
Plant Nutrient Group Q4 ’19 Highlights • Adjusted pretax income improved slightly on lower operating and interest expenses • Volumes were marginally higher for primary nutrients and farm centers on good late-season weather • Primary nutrient margins were lower due to product mix Adj. Pretax Income (
Slide 11: Rail Group
Rail Group Q4 ’19 Highlights • Lease income fell on continued headwinds in grain, frac sand and ethanol markets and falling lease rates • Income from car sales doubled • 2018 Service and Other Income included $2.4 million gain on sale of barges Unaudited in $M Q4 ‘19 Q4 ‘18 VPY YTD ‘19 YTD ‘18 VPY P
Slide 12: Adjustments Related to Lansing Acquisition
Adjustments Related to Lansing Acquisition Actual Estimated Estimated Q4 2019 (pretax, in millions) FY 2019 FY 2020 FY 2021 Acquisition costs $0.8 $6.7 $— $— Loss on pre-existing equity method investment — 1.1 — — Transaction-related stock compensation 2.0 9.3 4.3 1.5 Total acquisition-related adjus
Slide 13: Adjustments Related to Ethanol Merger
Adjustments Related to Ethanol Merger Actual Estimated Estimated Q4 2019 FY 2019 FY 2020 FY 2021 (pretax, in millions) Acquisition costs $1.3 $1.3 $ — $ — Gain on pre-existing equity method investment (36.3) (36.3) — — Total merger-related adjustments (35.0) (35.0) — — Income tax impact of adjustmen
Slide 14: 2020 Outlook
2020 Outlook Difficult 2019 harvest will pressure earnings through 2020 harvest; merchandising opportunities and increased cost savings should provide lift Near-term margin environment suggestions caution in the first half; ELEMENT plant should improve results later in the year Expected robust incre
Slide 15: Q&A Session
Pe gees Sa Q&A Session he © @ OS
Slide 16: Thank you for joining us.
Thank you for joining us. Our next earnings call is scheduled for Wednesday, May 6, 2020 at 11:00 a.m. EDT 16
Slide 17: Appendix
Pe gees Sa Appendix he © @ OS
Slide 18: 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 19: Ethanol Group Production
Ethanol Group Production Ethanol Gallons Produced E-85 Gallons Shipped DDG Tons Sold Corn Oil Pounds Shipped in millions in millions in thousands in millions 61.4 1,262 1,238 1,240 119.4 482.2 481.8 117.2 448.6 103.0 47.7 47.7 122.1 127.0 15.3 326 321 325 32.2 31.7 118.0 13.9 28.2 11.3 2017 2018 201
Slide 20: U.S. Ethanol Exports Expected to Fall from 2018 Peak
U.S. Ethanol Exports Expected to Fall from 2018 Peak U.S. Ethanol Exports (MGY) YTD through November 2019 1,583 Nigeria, 2% 1,325 1,374 UK, 2% Mexico, 2% Other, 10% 1,171 1,108 Oman, 3% Brazil, 23% 868 Netherlands, 3% 814 668 Peru, 3% 602 Philippines, 5% 397 Canada, 22% Colombia, 5% Korea, 7% India,
Slide 21: Plant Nutrient Tons Sold
Plant Nutrient Tons Sold Historical Seasonality in Volume (in thousands) 13 16 13 247 221 207 15 14 14 23 132 16 153 13 138 15 16 13 95 209 628 109 657 186 590 108 165 360 351 340 254 287 217 202 214 178 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4' '19 Primary Nut
Slide 22: Rail Group Fleet
Rail Group Fleet Key Metrics Railcar Fleet by Commodity2 Grain/Grain Products 25.6% ~24,800 Railcars1 Fertilizer/Minerals 14.3% Ethanol & Gasoline 9.0% 89.4% Average Utilization Rate1 Plastics 8.8% Chemicals 7.9% Sand/Sand Products 6.3% ~22,200 Cars on Lease2 Wood & Forrestry/Paper 5.2% Aggregates &
Slide 23: Rail Group Earning Power
Rail Group Earning Power $ in millions YE 2015 YE 2016 YE 2017 YE 2018 YE 2019 Average # of Railcars 23,017 23,057 23,314 22,899 24,250 Beg. $ on Bal. Sheet $297.7 $338.1 $327.2 $423.4 $521.8 Sources of Income Average % Utilization 92.4% 87.8% 85.0% 90.8% 92.4% • Generates lease income from long-liv