Slide 1: First Quarter Earnings Call
First Quarter Earnings Call May 7, 2019 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 Senior Vice President and Chief Financial Officer John Kraus Director, Investor Relations 3
Slide 4: Q1 '19 Highlights
Q1 ‘19 Highlights Integration of Lansing to form new Trade Group going extremely well; low volatility, lack of farmer selling and insured Nebraska loss lead to slow start Timely hedging and continued improvement in plant efficiency allowed for profitable quarter in a weak margin environment Delayed
Slide 5: Key Financial Data – First Quarter 2019
Key Financial Data – First Quarter 2019 $ In millions except per share data, long-term debt-to-equity Q1 ‘19 Q1 ‘18 VPY Sales and merchandising revenues $2,079.4 $635.7 $1,443.7 Gross profit $109.7 $63.7 $46.0 Operating and general expenses $113.3 $64.3 $49.0 Equity in earnings (loss) of affiliates
Slide 6: Q1 '18 Pretax Income to Q1 '19 Adjusted Pretax Income Reconciliation
Pretax Income Q1 ’18 Pretax Income to Q1 ’19 Adjusted Pretax Income Q1 ‘19 Reconciliation $5,000 $0 ($2,010) ($5,000) ($4,650) $3,953 $11,570 ($000) ($481) ($7,865) ($7,865) ($10,000) $343 ($5,020) ($15,000) ($20,000) ($19,435) Q1 '18 Trade Ethanol Plant Nutrient Rail Other Q1 '19 Q1 '19 Acquisition
Slide 7: Trade (formerly Grain) Group Q1 '19 Highlights
Trade (formerly Grain) Group Q1 ‘19 Highlights • Lansing acquisition closed successfully; integration going well • Adjusted pretax loss includes $4.4 million of acquisition-related depreciation and amortization expenses • Low sales by farmers, less wheat income, and $2.2 million insured property los
Slide 8: Ethanol Group Q1 '19 Highlights
Ethanol Group Q1 ’19 Highlights • Group remained profitable in a weak margin environment • Continued focus on plant efficiency improved yields and lowered cost; hedging also improved results • ELEMENTTM plant construction nearing completion; anticipate early Q3 startup Unaudited in $M Q1 ‘19 Q1 ’18
Slide 9: Plant Nutrient Group Q1 '19 Highlights
Plant Nutrient Group Q1 ’19 Highlights • Delayed application season drove primary and specialty nutrient volumes lower • Lawn and contract manufacturing results were $2.1 million lower than prior year Adj. Pretax Income ($M) Unaudited Tons in 000’s, $M Q1 ‘19 Q1 ’18 VPY $14 $14 Primary Nutrients Ton
Slide 10: Rail Group Q1 '19 Highlights
Rail Group Q1 ’19 Highlights • Lease income was up on record utilization, more cars on lease • Repair income recovered year over year on higher revenues, better margins • EBITDA up 20 percent year over year Unaudited in $M Q1 ‘19 Q1 ’18 VPY Pretax Income ($M) Revenues $41.4 $50.4 ($9.0) $51 Gross Pr
Slide 11: 2019 Outlook
2019 Outlook Expect increasing earnings momentum from Lansing integration; anticipate increased volatility due to wet spring and China trade resolution Near-term margins showing normal seasonal improvement; remain focused on operational efficiencies and an effective hedging program Full-year results
Slide 12: Q&A Session
Pe gees Sa Q&A Session he © @ OS
Slide 13: Thank you for joining us
Thank you for joining us. Our next earnings call is scheduled for August 7, 2019 at 11:00 a.m. 13
Slide 14: Appendix
Pe gees Sa Appendix he © @ OS
Slide 15: 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 16: Grain Storage Capacity/Adjusted Pretax Income Per Bushel
Trade Group Grain Storage Capacity/Adjusted Pretax Income Per Bushel Base Grain Average Storage Capacity Adj. Pre-tax Income per Bushel Target Range Excess Wheat Basis 180 $0.70 160 $0.60 Excess wheat basis Pretax Income per bushel 140 appreciation $0.50 Millions of bushels 120 $0.40 100 $0.30 80 $0
Slide 17: U.S. Corn Planting Progress
U.S. Corn Planting Progress Percentage Completed Percent planted change from 2018 3% Gold states = ahead of 2018 progress May 6, 2019 6% Grey states = behind 2018 progress 0% 7% 23% 36% 3% 17% 35% 3% 2% 11% May 5, 2018 21% 49% 2% 12% 36% 65% 73% 5 Year Average 70% 46% Source: USDA crop progress repo
Slide 18: U.S. Soybeans Planting Progress
U.S. Soybeans Planting Progress Percentage Completed Percent planted change from 2018 1% Gold states = ahead of 2018 progress May 6, 2019 0% Grey states = behind 2018 progress 1% 0% 6% 2% 8% 14% 1% 3% 3% May 5, 2018 5% 3% 8% 14% 9% 14% 17% 5 Year Average 27% 46% 14% Source: USDA crop progress report
Slide 19: 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 448.6 61.4 1,238 1,262 117.2 387.3 103.0 47.7 116.8 118.1 314 98.4 14.9 280 305 28.9 27.5 9.3 20.9 8.9 2017 2018 2019 2017 2018 2019 2017 2
Slide 20: Growing U.S. Ethanol Exports Continue to Support Market Price
Growing U.S. Ethanol Exports Continue to Support Market Price U.S. Ethanol Exports (MGY) February 2019 1,705 1,540 Mexico, 2.2% Colombia, Nigeria, 3.1% Other, 0.3% 1,367 2.9% Peru, 4.6% 1,193 1,046 Spain, 4.9% Brazil, 31.7% 836 836 Philippines, 740 6.6% 620 South Korea, 7.4% 397 Oman, Canada, 15.0%
Slide 21: Plant Nutrient Tons Sold
Plant Nutrient Tons Sold Historical Seasonality in Volume (000’s) 13 16 247 221 15 14 23 132 153 15 16 657 13 16 209 628 109 186 108 165 360 351 217 254 214 202 178 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Primary Nutrients Specialty Nutrients Other Tons Committed to Growth of
Slide 22: Rail Group Fleet
Rail Group Fleet Key Metrics Railcar Fleet by Commodity2 ~23,600 Railcars Grain/Grain Products 24% Fertilizer/Minerals 11% Sand/Sand Products 9% 95.7% Average Utilization Rate1 Plastics 9% Wood & Forestry/Paper 8% ~22,500 Cars on Lease2 Ethanol & Gasoline 6% Metals & Products 6% 24 Railcar Repair Fa
Slide 23: Rail Group Earning Power
Rail Group Earning Power $ in millions YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 Average # of Assets 22,199 23,017 23,057 23,314 22,693 Beg. $ on Bal. Sheet $240.6 $297.7 $338.1 $327.2 $521.8 Sources of Income Average % Utilization 89.5% 92.4% 87.8% 85.0% 90.3% • Generates lease income from long-lived