Good morning, ladies and gentlemen, and welcome to the Andersons 2025 First Quarter Earnings Conference Call. My name is Joe, and I will be your coordinator for today. At this time, all participants are in listen-only mode. And as a reminder, this conference is being recorded for replay purposes. I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed.

Thanks, Joe. Good morning, everyone, and thank you for joining us for the Andersons first quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation from our webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website at andersonsinc.com shortly. Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements. Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance, and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors. This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of the GAAP to non-GAAP measures are included within the appendix of this presentation. On the call with me today are Bill Krueger, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Bill.

Thanks, Mike, and good morning, everyone. Thank you for joining the call to discuss our first quarter results and outlook for the remainder of 2025. We had mixed results in the first quarter with a strong performance from Renewables, while Agribusiness was weaker than expected. Global trade uncertainty resulting from threatened tariffs and port fees disrupted typical grain flows and negatively impacted commodity values. This resulted in limited merchandising activity beyond immediate customer needs. The nutrient and agronomy teams had a solid start to the planting season and are well positioned to support the expected increase in corn acres. At the same time, our Renewables Group had one of its best first quarters with improved yields and solid margins from ethanol production, coupled with contributions from ethanol and renewable diesel feedstock merchandising. Results in Agribusiness were down as our ag supply chain assets were hit particularly hard by domestic demand challenges and the overall trade flow uncertainties, reducing exports of wheat and sorghum. These broad market conditions, which we believe are temporary and unusual, impacted the entire network but were amplified in the Western Corn Belt. A bright spot for the group was our agronomy business, where we experienced increased volumes and margins. We remain pleased with our operating performance in renewables. We again had increased year-over-year production, including higher ethanol and corn yields. Increased board crush margins also positively impacted our results, and our ethanol and co-product merchandising provided comparable uplift. Contributions from dried distiller grains were lower year-over-year on reduced values considering an oversupply of alternative protein sources. Brian will now cover some key financial data. After that, I'll be back to discuss our outlook.

Thanks, Bill, and good morning, everyone. We're now turning to our first quarter results on Slide 5. In the first quarter of 2025, the company reported net income attributable to the Andersons of $300,000 or $0.01 per diluted share and adjusted net income of $4 million or $0.12 per diluted share. This compares to net income of $6 million or $0.16 per diluted share in the first quarter of 2024. Revenues declined slightly on overall lower commodity prices. Gross profit improved while expenses increased, with a large portion resulting from the addition of Skyland's results. Adjusted pretax earnings were $3 million for the quarter compared to $7 million in 2024, with the decline coming from the Agribusiness segment. Adjusted EBITDA for the first quarter of 2025 was $57 million compared to $51 million in 2024. Trailing 12 months adjusted EBITDA totaled $369 million. Our effective tax rate varies each quarter based primarily on the amount of income or loss attributable to noncontrolling interests. We recorded a $2 million tax benefit for the quarter, which was impacted by a discrete adjustment for research and development tax credits related to prior periods. We continue to expect a full year adjusted effective tax rate between 18% and 22%. Next, we'll move to Slide 6 to discuss cash, liquidity, and debt. We generated cash flow from operations before changes in working capital of $57 million in the first quarter of 2025, an increase of more than $8 million from 2024. This continues to demonstrate our ability to generate strong cash flows throughout the ag cycle. This strong cash flow generation, combined with continuing lower commodity prices, resulted in a cash position of $219 million at the end of the quarter. Next, we'll take a look at capital spending and long-term debt on Slide 7. First quarter capital spending was $47 million compared to $27 million in 2024, with the increase attributable to spending on long-term growth projects, as well as normal maintenance capital on the addition of the Skyland grain assets. We continue to take a disciplined, responsible approach to capital spending and investments, which we expect could reach $200 million for the year. Our long-term debt-to-EBITDA is approximately 1.8 times, which is well below our stated target of less than 2.5 times. We continue to have a balance sheet with significant capacity to support growth investments that meet our strategic and financial criteria. We are evaluating additional capital projects in our pipeline, including projects to improve efficiency and add capacity at our existing facilities, as well as M&A opportunities that align with our growth strategy. Now we'll move on to a review of each of our businesses, beginning with Agribusiness on Slide 8. The Agribusiness segment reported a pretax loss attributable to the company of $5 million and breakeven adjusted pretax income compared to adjusted pretax income of $5 million in the same period of 2024. As Bill mentioned, the threat of tariffs and additional port fees had a dampening impact on the commodity markets in the first quarter. This resulted in stagnant conditions across much of our asset footprint. Our Western ag supply chain assets, including Skyland, were faced with declining grain basis. Cross Country commodity merchandising and the premium ingredients portfolio were also impacted by the overall market conditions. On the agronomy front, we saw improved volumes and margins as customers prepare for potential record corn acres. Agribusiness adjusted EBITDA for the quarter was $31 million compared to $29 million for the first quarter of 2024. Moving to Slide 9. Renewables had an outstanding first quarter, generating pretax income attributable to the company of $15 million compared to adjusted pretax income of $14 million in the first quarter of 2024. Ethanol margins remained favorable in the quarter on higher yields and board crush. Plant production remained high, and gallons produced exceeded last year. As Bill noted, feed values were lower and are expected to remain challenged. Overall, ethanol and RD feedstock merchandising were up year-over-year. Renewables had EBITDA of $37 million in the first quarter compared to adjusted EBITDA of $34 million last year. And with that, I'll turn things back over to Bill for some comments about our outlook for the remainder of 2025.

Thanks, Brian. Overall, we remain positive about our outlook despite the near-term market challenges we've noted in our Agribusiness segment. With this being the first quarter reporting in our new segment structure of Agribusiness and Renewables, I want to acknowledge the work that is occurring to bring together the nutrient and trade groups. We are working very hard on this, and we'll continue to focus on it through 2025 as we anticipate additional commercial, operational, and functional synergies. We are also continuing to invest in our safety culture, particularly around assets new to our portfolio. Our Agribusiness outlook remains optimistic, and we expect that the additional clarity recently provided on tariffs and port fee regulations will reduce some of the market uncertainties that we experienced throughout the first quarter. Farmers are in the fields, and planting progress is above the 5-year average. With a solid growing season, we anticipate additional storage and handling opportunities in the last half of the year. The upcoming wheat harvest is being closely watched as both soft red and hard red wheat contracts will receive increased variable storage rates. The outlook for the fertilizer and agronomy business for the second quarter is strong as we were well positioned prior to the start of the planting season, and the large expected corn plantings require higher levels of nutrients. We continue to evaluate additional growth projects and acquisition opportunities while staying focused on execution of previously approved projects. In addition to the integration of Skyland, this includes the improvements and expansion at the Port of Houston to support soybean meal exports. We have several other organic growth capital projects that are in process to support key customer contracts at various stages of completion. In our Renewables segment, we have now successfully completed our spring maintenance shutdowns and expect our plants to continue their highly efficient production. Demand remains solid for ethanol and co-products used in production of renewable diesel, which should benefit from the expected change in the RVO requirements. Since quarter end, there has been a drawdown of U.S. ethanol supply corresponding to the industry-wide spring maintenance season. We believe export demand will remain strong. However, we expect higher Eastern corn basis and natural gas costs. We are very focused on maintaining and improving our four production facilities for optimal efficiency. The Renewables business is an important part of our long-term growth strategy. We continue to make progress on plans to increase ethanol production efficiency and capacity and to lower the carbon intensity of our ethanol. We are implementing process enhancements at two of our plants to improve the yield of distillers corn oil. Also, as we have previously disclosed, we are evaluating potential acquisitions of ethanol production facilities that align with our strategy. I am proud of our team's resilience in this dynamic environment. We increased our cash flow from operations before changes in working capital, and our balance sheet is strong. With our growth projects and potential acquisition opportunities, we remain very excited about our future. We will continue to make responsible decisions that benefit our customers and maximize shareholder value as we execute our strategy. And with that, we are happy to answer your questions.

We will now begin the question-and-answer session. Our first question will come from Ben Mayhew with BMO Capital Markets. Please go ahead.

Hey. Good morning, guys. And congrats on the solid performance in a really difficult environment. So my first question has to do with the fertilizer business. So it sounds like you have some good visibility on second quarter fertilizer profits given the strong corn plant. So I'm just wondering if you can frame it against maybe the last two years' second quarter performance. Do you expect it to maybe be a little bit higher from a profit standpoint? And that will be my first question. Thanks.

Thanks for the question. Yeah, this year's planting season compared to the last two has really started off well. We are obviously looking at a much larger geographic area with the addition of the Skyland Farm Centers, doubling our size. But compared to last year, we've seen the opportunities in the fertilizer and nutrient business expand, not only due to increased corn acres, but also we just had a solid plan working with our suppliers coming into this planting season, which has really benefited us.

And so my second question has to do with the ethanol business. So I think the first quarter came in probably stronger than at least I expected, and it seems like most others expected. Had another major competitor yesterday post a pretty strong result and give a stronger outlook. You mentioned the difference in corn basis between the Eastern and Western Belt, which I thought was pretty interesting for this year because the last couple of years, the Eastern Belt has been cheaper. So I was hoping you could just dive into that difference this year and what's causing the Eastern Belt to be a little more expensive on basis versus the Western Belt.

Yeah. That relates back to a couple of the comments that I made. So the Western Corn Belt has had less demand this year than it has the past couple of years. With the port fees and the looming tariff discussions, we had substantially less sorghum and wheat exports. Sorghum was down materially year-over-year. So you had a lot more grain fighting for the demand in the Western Corn Belt than we've had the last couple of years. Also, we've had a substantial drop in the cattle on feed numbers in the West, which is also a competing demand. So those would be the two largest reasons that I would tell you that we've seen a little higher basis in the East than the West versus the last couple of years. Freight has also been a little easier to get in the West, again, because of the lack of exports. But those would be the three reasons that I would tell you that we've seen kind of a shift this year versus the last two years.

Cool. And then if I could sneak in one more. I saw in the press release that you called out the renewable diesel feedstock trading desk as having a better performance. So I'm wondering, are you seeing improved transacting ahead of maybe an expected RVO announcement in May? It would seem like we're starting to see more plants kind of step into the market, have a little more confidence and start buying some feedstocks ahead of this. So I'm just wondering what your internal visibility is on this and how it might portend to kind of the rest of the year?

I think in short, our internal visibility is about as clear as anyone else's in the industry. There's a lot of conversation around the ag and refiners working together on setting the RVO. There's a wide varying range of numbers. A lot of people want to say, over the next two years, we'll get north of $5 billion. We'll wait and see what the number comes out. We have heard that we'll likely have more information by the end of May. But I agree with you. You are spot on when we've talked a lot about both the RVOs and trying to understand the ILEC on soybeans and corn. And so there has been a focus or a feeling of more positive results potentially for the renewable diesel processing plants.

Okay. Thank you so much. I'm going to get back in the queue.

And our next question will come from Ben Klieve with Lake Street Capital Markets. Please go ahead.

Thanks for taking my questions. And congratulations, good start here to the year. First question around the Skyland acquisition. There's a lot of kind of converging factors here. It seems like the macro condition in that - it seems like the macro condition has kind of deteriorated over the last 6 months relative to what you guys have considered, but maybe that this business performed relatively well against that macro backdrop. I'm wondering if you can just kind of talk about its performance relative to your expectations. And then if you're able to isolate the level of EBITDA generated by that business here in the first quarter, that would be great, too.

Thanks. I'll take the first portion of that question. As we mentioned, the entire network was impacted in Q1; we had a sharp run-up in the board early in the quarter. So we saw a second wave of a lot of farmer selling, which put pressure on the basis. Generally, that is exactly what we're looking for after the first of the year. But then February 21, you have the announcement by the USTR of the port fees that just absolutely put the brakes on any forward activity. And you can look at that, as I mentioned, on the export. So all of our Western Corn Belt operations struggled just with the lack of trade flow. Skyland, in particular, is more of an asset-based business versus some of our merchandising businesses. So yes, they did have the same issue with their business as - or that portion of our business did as anyone else in the Western Corn Belt did. In terms of thinking through the investment, we're actually doing a very good job integrating the business into the Andersons, and we continue to find synergies and opportunities that look very positive for the long-term investment in Skyland.

Yes. Ben, this is Brian. I would just add a few comments to that. I think when we talked in our conference call at the end of the year, we were kind of saying that the first couple of months, November, December, were in the $5 million to $10 million range of EBITDA. And we talked about a $30 million to $40 million expected kind of annual run rate. As Bill said, I mean, we remain positive about the long-term fundamentals. The first quarter was tough. It was positive EBITDA, but just slightly positive. And so I would say, if we think about the full year for that business, it's probably - I would say we're still comfortable with that $30 million to $40 million range, but I would lean it towards the low end of that range as opposed to the high side.

Okay. That's fair enough and that all tracks. Last one for me, and then I'll get back in queue. Your - it seems like the investments that you are making are continuing without much change. And I'm curious the degree to which that's an accurate assessment on the investments, especially in Houston, a location explicitly focused on international trade flows. Those investments, it seems like are going on without any kind of change even against this kind of uncertain macro backdrop. Is that a fair characterization?

Yeah, it's a very fair characterization. And if you think through the net effect of an increase in RVOs, that's going to generate more demand for soybean oil, which will create more supply of soybean meal exports. So we feel very confident in the strategy and the investments that we are making, as we've talked about in the press release. Our long lead item investments are still being very strategic and, quite honestly, today, may feel more comfortable than they had previously.

Got it. Very good. Well, I appreciate the color from both of you. Thanks for taking my question. And I'm going to get back in the queue.

And our next question will come from Pooran Sharma with Stephens. Please go ahead.

Thanks for the question, guys. I just wanted to start out and ask about the Renewables business. Bill, seeing ethanol exports meaningfully up year-to-date through March to Canada. I know we had a little bit of back and forth in terms of trade tariff discussions. But just wanted to ask if you think some of the momentum that we're seeing thus far is a little bit of pull forward? Or do you expect this type of momentum to carry for the whole year? Would just love to hear your thoughts on ethanol exports to Canada.

It's a good observation in looking at the Q1 exports year-over-year. As we look at the market today, we would tend to agree with you that it is a little bit of a pull forward. Our thoughts are we are at 1.9 billion gallons of exports last year. It feels like the tariff potential is out there. So we're not materially lower nor are we materially higher than that. If you wanted to say 1.85 to 1.9, that's about as solid a guess as we would have. Obviously, there are a lot of outstanding variables, and the tariffs are the one item that we have to be monitoring. But exports have been very strong in Q1 and feel like they're going to at least keep pace with last year in Q2.

Great. Appreciate that. And I wanted to kind of just hone in about grain here. And just ask, I think you addressed it in your prepared comments, but with prospective plantings, there was 95 million acres. And then we've just been hearing reports that planting pace is ahead of schedule. So I wanted to see what this means for your ability to store for storage income within your grain business.

Yes. That's - first quarter, as we stated, was hit with a lot of headwinds. Simultaneously, we're looking at the potential of a relatively large wheat crop with substantial carries. And we are looking at north of 95 to 95.5 million acres. There is a small area of the country in the Ohio River Valley that is struggling to get corn in, but that's not going to be material. We don't think. So yes, we are hopeful that we have the opportunity in the last half of the year to make up any shortfalls that we had in the first quarter. Now that all is going to vary on the size and quality of both the wheat crop and the fall harvest and the assumption that we will see this recent increase in wheat exports coming out of the U.S. maintain. So there's a lot of variables. We like to think that most of them are positive as we look at the market today.

Great. Appreciate the color.

And this concludes our question-and-answer session. I'd like to turn the conference back over to Mike Hoelter for any closing remarks.

Thanks, Joe. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Tuesday, August 5, at 8:30 a.m. Eastern Time when we will review our second quarter results. As always, thank you for your interest in the Andersons, and we look forward to speaking with you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.