8-K
Andersons, Inc. (ANDE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | August 1, 2023 |
|---|
__________________________________________
The Andersons, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
| Ohio | 000-20557 | 34-1562374 |
|---|---|---|
| (State of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1947 Briarfield Boulevard
Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
(419) 893-5050
(Registrant’s telephone number, including area code)
__________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[☐] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[☐] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[☐] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[☐] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
__________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol | Name of each exchange on which registered: |
|---|---|---|
| Common stock, $0.00 par value, $0.01 stated value | ANDE | The NASDAQ Stock Market LLC |
__________________________________________
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
[☐] Emerging growth company
[☐] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
The Andersons, Inc. issued a press release announcing its second quarter 2023 earnings. This press release is attached as exhibit 99.1 to this filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
| Exhibit No. | Description |
|---|---|
| 99.1 | Second Quarter 2023 Earnings Release |
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Andersons, Inc. | ||
|---|---|---|
| August 1, 2023 | By: | /s/ Brian A. Valentine |
| Brian A. Valentine | ||
| Executive Vice President <br>and Chief Financial Officer |
Document
Exhibit 99.1
NEWS RELEASE
The Andersons, Inc. Reports Second Quarter Results
MAUMEE, OHIO, August 1, 2023 - The Andersons, Inc. (Nasdaq: ANDE) announces financial results for the second quarter ended June 30, 2023.
Second Quarter Highlights:
•Company reported net income attributable to The Andersons of $55 million, or $1.61 per diluted share and adjusted net income of $52 million, or $1.52 per diluted share
•Adjusted EBITDA was $144 million for the quarter
•Renewables reported pretax income of $67 million and adjusted pretax income attributable to The Andersons of $32 million on strong crush margins
•Nutrient & Industrial reported pretax income of $43 million on increased volume on delayed planting season
•Trade reported pretax income of $5 million and adjusted pretax income of $7 million
"Ethanol margins in the Renewables business and increased volume in our Nutrient & Industrial business led the way for the quarter. This was a significant improvement for Nutrient & Industrial after a softer first quarter. While we expected that some of the typical first quarter nutrient sales volume would shift into the second quarter, we are pleased with the extent of the recovery. In our Trade segment, we had some very strong merchandising results but, as expected, did not repeat the outsized second quarter 2022 performance due to good execution following the Russian invasion of Ukraine," said President and CEO Pat Bowe. "With the strong first quarter in Trade which likely pulled some sales forward, our year-to-date results remain ahead of last year in this business. Geopolitical concerns continue to bring price volatility which is typically beneficial to us."
"We remain focused on executing within our stated strategy in our core grain and fertilizer verticals. We recently closed on the acquisition of ACJ International, a pet food ingredient supplier that fits well within our strategy for growth in the premium pet food ingredient industry," continued Bowe. "We continue to explore opportunities for growth in the merchandising of renewable diesel feedstocks, while maintaining our strong position in renewable fuels production along with potential carbon-reduction opportunities."
| in millions, except per share amounts | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Q2 2022 | Variance | YTD 2023 | YTD 2022 | Variance | |||||||
| Pretax Income from Continuing Operations | 104.4 | $ | 118.2 | $ | (13.8) | $ | 39.4 | $ | 128.8 | $ | (89.4) |
| Pretax Income from Continuing Operations Attributable to the Company1 | 96.3 | (19.5) | 56.1 | 106.5 | (50.4) | ||||||
| Adjusted Pretax Income (Loss) from Continuing Operations Attributable to the Company1 | 97.0 | (24.5) | 80.6 | 107.2 | (26.6) | ||||||
| Trade1 | 24.4 | (17.2) | 30.9 | 28.0 | 2.9 | ||||||
| Renewables1 | 45.9 | (13.5) | 38.7 | 51.4 | (12.7) | ||||||
| Nutrient & Industrial | 38.3 | 4.3 | 32.1 | 49.1 | (17.0) | ||||||
| Other | (11.6) | 1.9 | (21.2) | (21.4) | 0.2 | ||||||
| Net Income from Continuing Operations Attributable to the Company | 80.5 | (25.5) | 40.3 | 86.6 | (46.3) | ||||||
| Adjusted Net Income from Continuing Operations Attributable to the Company1 | 82.2 | (30.4) | 58.6 | 88.2 | (29.6) | ||||||
| Diluted Earnings Per Share from Continuing Operations (EPS) | 2.34 | (0.73) | 1.18 | 2.52 | (1.34) | ||||||
| Adjusted Diluted Earnings Per Share from Continuing Operations1 | 2.39 | (0.87) | 1.72 | 2.57 | (0.85) | ||||||
| EBITDA from Continuing Operations1 | 168.6 | (19.9) | 132.6 | 224.5 | (91.9) | ||||||
| Adjusted EBITDA from Continuing Operations1 | 144.4 | $ | 169.3 | $ | (24.9) | $ | 199.7 | $ | 225.2 | $ | (25.5) |
| 1 Non-GAAP financial measures; see appendix for explanations and reconciliations. |
All values are in US Dollars.
Cash, Liquidity, and Long-Term Debt Management
"Our businesses continue to generate strong cash flows," said Executive Vice President and CFO Brian Valentine. "With some moderation of commodity pricing and intentional working capital management in light of the higher interest rate environment, our short-term debt at the end of the second quarter of 2023 totaled $103 million, a steep decline from the $1.2 billion outstanding a year ago. We remain well below our long-term debt to EBITDA target of less than 2.5 times and are pleased with the strength of our balance sheet."
The company generated $541 million and $353 million in cash from operating activities for the second quarters of 2023 and 2022, respectively, and $118 million and $135 million in cash from operations before working capital changes for the same periods, respectively. Included in our investing activities are several strategic growth projects along with normal spending to maintain our facilities.
Second Quarter Segment Overview
Trade Merchandising Remains Solid; YTD Results Ahead of Strong Prior Year
The Trade segment recorded pretax income of $5 million and adjusted pretax income of $7 million for the quarter compared to pretax income of $24 million in the second quarter of 2022.
Trade results were mixed with an overall decline in gross profit from the second quarter of 2022, which included certain margin impacts from the Russian invasion of Ukraine that were not expected to repeat. Volumes handled declined from the second quarter of 2022, but the Group generated strong earnings from certain well-positioned merchandising businesses. Recent investments in food and pet food ingredients also contributed to earnings in the quarter. When combined with the very strong first quarter, adjusted
earnings and gross profit remain ahead of 2022. Winter wheat volume accumulated from the just-completed harvest was higher than expected and at good qualities in our draw area.
With the strong South American harvest, combined with improving U.S. crop conditions, the outlook for global grain stocks has improved. With the mix of assets and merchandising capabilities across key geographies, Trade is well-positioned.
Trade’s second quarter adjusted EBITDA was $27 million, compared to second quarter 2022 adjusted EBITDA of $47 million.
Renewables Generates Solid Earnings on Strong Margins
The Renewables segment reported pretax income of $67 million and adjusted pretax income attributable to the company of $32 million in the second quarter. For the same period in 2022, the segment reported pretax income of $68 million and pretax income attributable to the company of $46 million. These 2022 results included $9 million of USDA Biofuels Producer COVID relief funds and $24 million of positive mark-to-market impacts.
A $7 million pretax gain on the deconsolidation of ELEMENT, triggered when the entity was placed into receivership, has been adjusted from 2023 earnings.
Ethanol crush margins strengthened over the quarter, and the current margin outlook, despite volatility, remains strong. Production facilities operated efficiently in the quarter with improved ethanol and corn oil yield and lower costs than the comparable quarter in 2022. The merchandising businesses, including renewable diesel feedstocks, continue to deliver solid earnings on higher volumes and strong co-product values, and exceeded our second quarter 2022 results. Our eastern corn belt production facilities remain well-positioned for corn supply.
Renewables had second quarter adjusted EBITDA of $74 million in 2023, compared to 2022 second quarter EBITDA of $86 million.
Nutrient & Industrial Ag Businesses Recover on Improved Volume
The Nutrient & Industrial segment posted pretax income of $43 million, compared to prior year second quarter pretax income of $38 million. After a slow first quarter when reduced sales reflected the falling price environment and planting delays, volumes improved during the 2023 planting period driving a 21% increase in tons sold from the second quarter of 2022. Gross profit improved by $4 million, and reflects these higher volumes partially offset by margin compression from peak levels in 2022.
Nutrient & Industrial’s second quarter EBITDA was $52 million compared to 2022 second quarter EBITDA of $47 million.
Income Taxes; Corporate
The company recorded an income tax benefit at an effective rate of 21% for the quarter due to the tax treatment of non-controlling interests. We anticipate a full-year adjusted effective rate of approximately 22% - 25%.
Conference Call
The company will host a webcast on Wednesday, August 2, 2023, at 11 a.m. Eastern Daylight Time, to discuss its performance and provide its outlook for the remainder of 2023. To access the call, please dial 888-317-6003 or 412-317-6061 (elite entry number is 5878900). It is recommended that you call 10 minutes before the conference call begins.
To access the webcast, click on the link: https://app.webinar.net/dwMKAr514rB and submit the requested information as directed. A replay of the call can also be accessed under the heading "Investors" on the company’s website at www.andersonsinc.com.
Forward-Looking Statements
This release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially. Without limitation, these risks include economic, weather and regulatory conditions, competition, the ongoing economic impacts from the war in Ukraine, and the risk factors set forth from time to time in the company’s filings with the Securities and Exchange Commission. Although the company believes that the assumptions upon which the financial information and its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct.
Non-GAAP Measures
This release contains non-GAAP financial measures. The company believes that pretax income (loss) from continuing operations attributable to the company; adjusted pretax income (loss) from continuing operations attributable to the company; adjusted pretax income (loss) from continuing operations; adjusted net income from continuing operations attributable to the company; adjusted diluted earnings per share from continuing operations; earnings before interest, taxes, depreciation, and amortization (or EBITDA); EBITDA from continuing operations; adjusted EBITDA; adjusted EBITDA from continuing operations; and cash from operations before working capital changes provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and liquidity and better period-to-period comparability. The above measures are not and should not be considered as alternatives to net income from continuing operations, pretax income from continuing operations or income (loss) before income taxes from continuing operations, diluted earnings (loss) per share attributable to The Andersons, Inc. common shareholders from continuing operations and cash provided by (used in) operating activities as determined by generally accepted accounting principles. Reconciliations of the GAAP to non-GAAP measures may be found within this press release and the financial tables provided herein.
Company Description
The Andersons, Inc., named to Forbes list of America's Best Small Companies for 2023 and one of America's Greatest Workplaces for Diversity 2023 by Newsweek®, is a diversified company rooted in agriculture that conducts business in the commodity merchandising, renewables, and nutrient and industrial sectors. Guided by its Statement of Principles, The Andersons is committed to providing extraordinary service to its customers, helping its employees improve, supporting its communities, and increasing the value of the company. For more information, please visit www.andersonsinc.com.
Investor Relations Contact
Mike Hoelter
Vice President, Corporate Controller and Investor Relations
Phone: 419-897-6715
E-mail: investorrelations@andersonsinc.com
The Andersons, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||
| Sales and merchandising revenues | $ | 4,020,183 | $ | 4,450,617 | $ | 7,901,421 | $ | 8,428,571 |
| Cost of sales and merchandising revenues | 3,798,246 | 4,219,776 | 7,531,473 | 8,078,195 | ||||
| Gross profit | 221,937 | 230,841 | 369,948 | 350,376 | ||||
| Operating, administrative and general expenses | 116,007 | 112,559 | 233,242 | 214,546 | ||||
| Asset impairment | — | — | 87,156 | — | ||||
| Interest expense, net | 13,953 | 16,921 | 30,578 | 27,780 | ||||
| Other income, net | 12,441 | 16,792 | 20,445 | 20,710 | ||||
| Income before income taxes from continuing operations | 104,418 | 118,153 | 39,417 | 128,760 | ||||
| Income tax provision from continuing operations | 21,732 | 15,753 | 15,848 | 19,856 | ||||
| Net income from continuing operations | 82,686 | 102,400 | 23,569 | 108,904 | ||||
| Loss from discontinued operations, net of income taxes | — | (739) | — | (1,294) | ||||
| Net income | 82,686 | 101,661 | 23,569 | 107,610 | ||||
| Net income (loss) attributable to noncontrolling interests | 27,640 | 21,856 | (16,727) | 22,303 | ||||
| Net income attributable to The Andersons, Inc. | $ | 55,046 | $ | 79,805 | $ | 40,296 | $ | 85,307 |
| Earnings (loss) per share attributable to The Andersons, Inc. common shareholders: | ||||||||
| Basic earnings (loss): | ||||||||
| Continuing operations | $ | 1.63 | $ | 2.38 | $ | 1.20 | $ | 2.56 |
| Discontinued operations | — | (0.02) | — | (0.04) | ||||
| $ | 1.63 | $ | 2.36 | $ | 1.20 | $ | 2.52 | |
| Diluted earnings (loss): | ||||||||
| Continuing operations | $ | 1.61 | $ | 2.34 | $ | 1.18 | $ | 2.52 |
| Discontinued operations | — | (0.02) | — | (0.04) | ||||
| $ | 1.61 | $ | 2.32 | $ | 1.18 | $ | 2.48 |
The Andersons, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
| (in thousands) | June 30, 2023 | December 31, 2022 | June 30, 2022 | |||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 96,293 | $ | 115,269 | $ | 86,035 |
| Accounts receivable, net | 1,030,271 | 1,248,878 | 1,141,167 | |||
| Inventories | 990,789 | 1,731,725 | 1,618,326 | |||
| Commodity derivative assets – current | 347,684 | 295,588 | 638,357 | |||
| Current assets held-for-sale | — | 2,871 | 18,627 | |||
| Other current assets | 72,228 | 71,622 | 70,367 | |||
| Total current assets | 2,537,265 | 3,465,953 | 3,572,879 | |||
| Other assets: | ||||||
| Goodwill | 129,342 | 129,342 | 129,342 | |||
| Other intangible assets, net | 89,605 | 100,907 | 105,222 | |||
| Right of use assets, net | 60,003 | 61,890 | 50,233 | |||
| Other assets held-for-sale | — | — | 24,298 | |||
| Other assets, net | 90,390 | 87,175 | 91,758 | |||
| Total other assets | 369,340 | 379,314 | 400,853 | |||
| Property, plant and equipment, net | 663,441 | 762,729 | 763,443 | |||
| Total assets | $ | 3,570,046 | $ | 4,607,996 | $ | 4,737,175 |
| Liabilities and equity | ||||||
| Current liabilities: | ||||||
| Short-term debt | $ | 102,752 | $ | 272,575 | $ | 1,161,428 |
| Trade and other payables | 641,376 | 1,423,633 | 772,996 | |||
| Customer prepayments and deferred revenue | 189,947 | 370,524 | 184,154 | |||
| Commodity derivative liabilities – current | 251,101 | 98,519 | 185,903 | |||
| Current maturities of long-term debt | 27,511 | 110,155 | 53,951 | |||
| Current liabilities held-for-sale | — | — | 7,314 | |||
| Accrued expenses and other current liabilities | 180,552 | 245,916 | 211,830 | |||
| Total current liabilities | 1,393,239 | 2,521,322 | 2,577,576 | |||
| Long-term lease liabilities | 34,435 | 37,147 | 28,929 | |||
| Long-term debt, less current maturities | 576,489 | 492,518 | 563,447 | |||
| Deferred income taxes | 57,030 | 64,080 | 63,383 | |||
| Other long-term liabilities held-for-sale | — | — | 3,113 | |||
| Other long-term liabilities | 70,371 | 63,160 | 83,521 | |||
| Total liabilities | 2,131,564 | 3,178,227 | 3,319,969 | |||
| Total equity | 1,438,482 | 1,429,769 | 1,417,206 | |||
| Total liabilities and equity | $ | 3,570,046 | $ | 4,607,996 | $ | 4,737,175 |
The Andersons, Inc.
Consolidated Statements of Cash Flows
(unaudited)
| Six months ended June 30, | ||||
|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | ||
| Operating Activities | ||||
| Net income from continuing operations | $ | 23,569 | $ | 108,904 |
| Loss from discontinued operations, net of income taxes | — | (1,294) | ||
| Net income | 23,569 | 107,610 | ||
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||
| Depreciation and amortization | 62,585 | 67,945 | ||
| Bad debt expense, net | 3,720 | 3,069 | ||
| Equity in losses of affiliates, net of dividends | 231 | 6,278 | ||
| Losses (gains) on sales of assets, net | 679 | (10,305) | ||
| Stock-based compensation expense | 6,000 | 4,708 | ||
| Deferred federal income tax | (7,948) | (13,755) | ||
| Asset impairment | 87,156 | — | ||
| Other | (1,730) | 8,549 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 207,867 | (289,196) | ||
| Inventories | 734,855 | 186,685 | ||
| Commodity derivatives | 102,753 | (189,090) | ||
| Other current and non-current assets | (1,247) | 5,106 | ||
| Payables and other current and non-current liabilities | (1,011,086) | (609,403) | ||
| Net cash provided by (used in) operating activities | 207,404 | (721,799) | ||
| Investing Activities | ||||
| Purchases of property, plant and equipment and capitalized software | (74,991) | (43,472) | ||
| Proceeds from sale of assets | 1,192 | 4,672 | ||
| Purchases of investments | (544) | (2,105) | ||
| Purchases of Rail assets | — | (27,276) | ||
| Proceeds from sale of Rail assets | 2,871 | 36,341 | ||
| Other | (201) | 1,746 | ||
| Net cash used in investing activities | (71,673) | (30,094) | ||
| Financing Activities | ||||
| Net receipts (payments) under short-term lines of credit | (173,384) | 862,698 | ||
| Proceeds from issuance of short-term debt | — | 350,000 | ||
| Payments of short-term debt | — | (550,000) | ||
| Proceeds from issuance of long-term debt | 100,000 | — | ||
| Payments of long-term debt | (35,861) | (15,077) | ||
| Contributions from noncontrolling interest owner | — | 2,450 | ||
| Distributions to noncontrolling interest owner | (24,344) | (9,980) | ||
| Payments of debt issuance costs | (767) | (7,802) | ||
| Dividends paid | (12,527) | (12,245) | ||
| Proceeds from exercises of stock options | — | 5,024 | ||
| Common stock repurchased | (1,747) | — | ||
| Value of shares withheld for taxes | (6,616) | (3,349) | ||
| Other | 259 | 394 | ||
| Net cash (used in) provided by financing activities | (154,987) | 622,113 | ||
| Effect of exchange rates on cash and cash equivalents | 280 | (629) | ||
| Decrease in cash and cash equivalents | (18,976) | (130,409) | ||
| Cash and cash equivalents at beginning of period | 115,269 | 216,444 | ||
| Cash and cash equivalents at end of period | $ | 96,293 | $ | 86,035 |
The Andersons, Inc.
Adjusted Net Income Attributable to The Andersons, Inc.
A non-GAAP financial measure
(unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||
| Net income from continuing operations | $ | 82,686 | $ | 102,400 | $ | 23,569 | $ | 108,904 |
| Net income (loss) attributable to noncontrolling interests | 27,640 | 21,856 | (16,727) | 22,303 | ||||
| Net income from continuing operations attributable to The Andersons, Inc. | 55,046 | 80,544 | 40,296 | 86,601 | ||||
| Adjustments: | ||||||||
| Gain on deconsolidation of joint venture | (6,544) | — | (6,544) | — | ||||
| Insured inventory expenses (recoveries) | 1,310 | — | (16,080) | — | ||||
| Transaction related compensation | 939 | — | 2,607 | — | ||||
| Gain on sale of frac sand assets | — | (3,762) | — | (3,762) | ||||
| Impairment on equity method and cost method investments | — | 4,455 | — | 4,455 | ||||
| Asset Impairment | — | — | 44,450 | — | ||||
| Income tax impact of adjustments1 | 1,074 | 940 | (6,108) | 940 | ||||
| Total adjusting items, net of tax | (3,221) | 1,633 | 18,325 | 1,633 | ||||
| Adjusted net income from continuing operations attributable to The Andersons, Inc. | $ | 51,825 | $ | 82,177 | $ | 58,621 | $ | 88,234 |
| Diluted earnings per share from continuing operations attributable to The Andersons, Inc. common shareholders | $ | 1.61 | $ | 2.34 | $ | 1.18 | $ | 2.52 |
| Impact on diluted earnings (loss) per share from continuing operations | $ | (0.09) | $ | 0.05 | $ | 0.54 | $ | 0.05 |
| Adjusted diluted earnings per share from continuing operations | $ | 1.52 | $ | 2.39 | $ | 1.72 | $ | 2.57 |
1 The income tax impact of adjustments is taken at the statutory tax rate of 25%.
Adjusted net income (loss) from continuing operations attributable to The Andersons, Inc. reflects reported net income (loss) from continuing operations available to The Andersons, Inc. common shareholders after the removal of specified items described above. Adjusted diluted earnings (loss) from continuing operations per share reflects the fully diluted EPS of The Andersons, Inc. after removal of the effect on EPS as reported of specified items described above. Management believes that Adjusted net income (loss) from continuing operations attributable to The Andersons, Inc. and Adjusted diluted earnings (loss) from continuing operations per share are useful measures of The Andersons, Inc. performance as they provide investors additional information about the operations of the company allowing better evaluation of underlying business performance and better comparability to previous periods. These non-GAAP financial measures are not intended to replace or be alternatives to Net income from continuing operations attributable to The Andersons, Inc. and Diluted earnings per share from continuing operations attributable to The Andersons, Inc. common shareholders as reported, the most directly comparable GAAP financial measures, or any other measures of operating results under GAAP. Earnings amounts described above have been divided by the company’s average number of diluted shares outstanding for each respective period in order to arrive at an adjusted diluted earnings (loss) from continuing operations per share amount for each specified item.
The Andersons, Inc.
Segment Data
(unaudited)
| (in thousands) | Trade | Renewables | Nutrient & Industrial | Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended June 30, 2023 | ||||||||||
| Sales and merchandising revenues | $ | 2,696,810 | $ | 877,781 | $ | 445,592 | $ | — | $ | 4,020,183 |
| Gross profit | 80,711 | 68,292 | 72,934 | — | 221,937 | |||||
| Operating, administrative and general expenses | 69,146 | 7,568 | 28,886 | 10,407 | 116,007 | |||||
| Other income, net | 4,328 | 7,468 | 500 | 145 | 12,441 | |||||
| Income (loss) before income taxes from continuing operations | 4,990 | 66,604 | 42,565 | (9,741) | 104,418 | |||||
| Income attributable to noncontrolling interests | — | 27,640 | — | — | 27,640 | |||||
| Income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 4,990 | $ | 38,964 | $ | 42,565 | $ | (9,741) | $ | 76,778 |
| Adjustments to income (loss) before income taxes from continuing operations2 | 2,249 | (6,544) | — | — | (4,295) | |||||
| Adjusted income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 7,239 | $ | 32,420 | $ | 42,565 | $ | (9,741) | $ | 72,483 |
| Three months ended June 30, 2022 | ||||||||||
| Sales and merchandising revenues | $ | 3,097,767 | $ | 882,567 | $ | 470,283 | $ | — | $ | 4,450,617 |
| Gross profit | 101,994 | 59,888 | 68,959 | — | 230,841 | |||||
| Operating, administrative and general expenses | 62,977 | 8,590 | 29,591 | 11,401 | 112,559 | |||||
| Other income (loss), net | (2,051) | 18,490 | 866 | (513) | 16,792 | |||||
| Income (loss) before income taxes from continuing operations | 23,666 | 67,776 | 38,311 | (11,600) | 118,153 | |||||
| Income attributable to noncontrolling interests | — | 21,856 | — | — | 21,856 | |||||
| Income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 23,666 | $ | 45,920 | $ | 38,311 | $ | (11,600) | $ | 96,297 |
| Adjustments to income before income taxes from continuing operations2 | 693 | — | — | — | 693 | |||||
| Adjusted income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 24,359 | $ | 45,920 | $ | 38,311 | $ | (11,600) | $ | 96,990 |
| 1 Income (loss) from continuing operations before income taxes attributable to The Andersons, Inc. for each operating segment is defined as net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets and is reported net of the noncontrolling interest share of income.<br><br>2 Additional information on the individual adjustments that are included in the adjustments to income (loss) from continuing operations before income taxes can be found in the Reconciliation to EBITDA and Adjusted EBITDA table. |
The Andersons, Inc.
Segment Data (continued)
(unaudited)
| (in thousands) | Trade | Renewables | Nutrient & Industrial | Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Six months ended June 30, 2023 | ||||||||||
| Sales and merchandising revenues | $ | 5,574,590 | $ | 1,717,297 | $ | 609,534 | $ | — | $ | 7,901,421 |
| Gross profit | 197,889 | 84,095 | 87,964 | — | 369,948 | |||||
| Operating, administrative and general expenses | 141,126 | 16,472 | 53,018 | 22,626 | 233,242 | |||||
| Other income, net | 10,311 | 8,309 | 1,346 | 479 | 20,445 | |||||
| Income (loss) before income taxes from continuing operations | 44,354 | (15,909) | 32,127 | (21,155) | 39,417 | |||||
| Loss attributable to noncontrolling interests | — | (16,727) | — | — | (16,727) | |||||
| Income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 44,354 | $ | 818 | $ | 32,127 | $ | (21,155) | $ | 56,144 |
| Adjustments to income (loss) before income taxes from continuing operations2 | (13,473) | 37,906 | — | — | 24,433 | |||||
| Adjusted income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 30,881 | $ | 38,724 | $ | 32,127 | $ | (21,155) | $ | 80,577 |
| Six months ended June 30, 2022 | ||||||||||
| Sales and merchandising revenues | $ | 6,182,448 | $ | 1,565,798 | $ | 680,325 | $ | — | $ | 8,428,571 |
| Gross profit | 169,613 | 75,079 | 105,684 | — | 350,376 | |||||
| Operating, administrative and general expenses | 122,520 | 16,480 | 54,916 | 20,630 | 214,546 | |||||
| Other income (loss), net | 1,729 | 18,918 | 1,670 | (1,607) | 20,710 | |||||
| Income (loss) before income taxes from continuing operations | 27,335 | 73,738 | 49,054 | (21,367) | 128,760 | |||||
| Income attributable to noncontrolling interests | — | 22,303 | — | — | 22,303 | |||||
| Income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 27,335 | $ | 51,435 | $ | 49,054 | $ | (21,367) | $ | 106,457 |
| Adjustments to income before income taxes from continuing operations2 | 693 | — | — | — | 693 | |||||
| Adjusted income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1 | $ | 28,028 | $ | 51,435 | $ | 49,054 | $ | (21,367) | $ | 107,150 |
| 1 Income (loss) from continuing operations before income taxes attributable to The Andersons, Inc. for each operating segment is defined as net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets and is reported net of the noncontrolling interest share of income.<br><br>2 Additional information on the individual adjustments that are included in the adjustments to income (loss) from continuing operations before income taxes can be found in the Reconciliation to EBITDA and Adjusted EBITDA table. |
The Andersons, Inc.
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
A non-GAAP financial measure
(unaudited)
| (in thousands) | Trade | Renewables | Nutrient & Industrial | Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended June 30, 2023 | ||||||||||
| Net income (loss)1 | $ | 4,990 | $ | 66,604 | $ | 42,565 | $ | (31,473) | $ | 82,686 |
| Interest expense (income) | 10,903 | 1,588 | 1,983 | (521) | 13,953 | |||||
| Tax provision | — | — | — | 21,732 | 21,732 | |||||
| Depreciation and amortization | 8,683 | 12,425 | 7,097 | 2,160 | 30,365 | |||||
| EBITDA1 | 24,576 | 80,617 | 51,645 | (8,102) | 148,736 | |||||
| Adjusting items impacting EBITDA: | ||||||||||
| Transaction related compensation | 939 | — | — | — | 939 | |||||
| Insured inventory expenses | 1,310 | — | — | — | 1,310 | |||||
| Gain on deconsolidation of joint venture | — | (6,544) | — | — | (6,544) | |||||
| Total adjusting items | 2,249 | (6,544) | — | — | (4,295) | |||||
| Adjusted EBITDA1 | $ | 26,825 | $ | 74,073 | $ | 51,645 | $ | (8,102) | $ | 144,441 |
| Three months ended June 30, 2022 | ||||||||||
| Net income (loss) from continuing operations | $ | 23,666 | $ | 67,776 | $ | 38,311 | $ | (27,353) | $ | 102,400 |
| Interest expense (income) | 13,300 | 2,012 | 1,923 | (314) | 16,921 | |||||
| Tax provision | — | — | — | 15,753 | 15,753 | |||||
| Depreciation and amortization | 8,914 | 15,875 | 6,595 | 2,183 | 33,567 | |||||
| EBITDA from continuing operations | 45,880 | 85,663 | 46,829 | (9,731) | 168,641 | |||||
| Adjusting items impacting EBITDA: | ||||||||||
| Gain on sale of frac sand assets | (3,762) | — | — | — | (3,762) | |||||
| Impairment on equity method and cost method investments | 4,455 | — | — | — | 4,455 | |||||
| Total adjusting items | 693 | — | — | — | 693 | |||||
| Adjusted EBITDA from continuing operations | $ | 46,573 | $ | 85,663 | $ | 46,829 | $ | (9,731) | $ | 169,334 |
1 Amounts for the three months ended June 30, 2023, contain no activity from discontinued operations. As such, references to EBITDA and EBITDA from continuing operations, as well as, Adjusted EBITDA and Adjusted EBITDA from continuing operations will yield the same results for the three months ended June 30, 2023.
Adjusted EBITDA is defined as earnings before interest, taxes and depreciation and amortization, adjusted for specified items. The company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense, tax expense and depreciation and amortization to net income (loss). Management believes that adjusted EBITDA is a useful measure of the company’s performance as it provides investors additional information about the company’s operations allowing better evaluation of underlying business performance and improved comparability to prior periods. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace or be an alternative to net income (loss), the most directly comparable GAAP financial measure.
The Andersons, Inc.
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
A non-GAAP financial measure
(unaudited)
| (in thousands) | Trade | Renewables | Nutrient & Industrial | Other | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Six months ended June 30, 2023 | ||||||||||
| Net income (loss)1 | $ | 44,354 | $ | (15,909) | $ | 32,127 | $ | (37,003) | $ | 23,569 |
| Interest expense (income) | 22,720 | 4,685 | 4,165 | (992) | 30,578 | |||||
| Tax provision | — | — | — | 15,848 | 15,848 | |||||
| Depreciation and amortization | 17,328 | 26,896 | 14,054 | 4,307 | 62,585 | |||||
| EBITDA1 | 84,402 | 15,672 | 50,346 | (17,840) | 132,580 | |||||
| Adjusting items impacting EBITDA: | ||||||||||
| Transaction related compensation | 2,607 | — | — | — | 2,607 | |||||
| Insured inventory recoveries | (16,080) | — | — | — | (16,080) | |||||
| Gain on deconsolidation of joint venture | — | (6,544) | — | — | (6,544) | |||||
| Asset Impairment | — | 87,156 | — | — | 87,156 | |||||
| Total adjusting items | (13,473) | 80,612 | — | — | 67,139 | |||||
| Adjusted EBITDA1 | $ | 70,929 | $ | 96,284 | $ | 50,346 | $ | (17,840) | $ | 199,719 |
| Six months ended June 30, 2022 | ||||||||||
| Net income (loss) from continuing operations | $ | 27,335 | $ | 73,738 | $ | 49,054 | $ | (41,223) | $ | 108,904 |
| Interest expense (income) | 21,487 | 3,779 | 3,384 | (870) | 27,780 | |||||
| Tax provision | — | — | — | 19,856 | 19,856 | |||||
| Depreciation and amortization | 17,888 | 32,514 | 13,174 | 4,368 | 67,944 | |||||
| EBITDA from continuing operations | 66,710 | 110,031 | 65,612 | (17,869) | 224,484 | |||||
| Adjusting items impacting EBITDA: | ||||||||||
| Gain on sale of frac sand assets | (3,762) | — | — | — | (3,762) | |||||
| Impairment on equity method and cost method investments | 4,455 | — | — | — | 4,455 | |||||
| Total adjusting items | 693 | — | — | — | 693 | |||||
| Adjusted EBITDA from continuing operations | $ | 67,403 | $ | 110,031 | $ | 65,612 | $ | (17,869) | $ | 225,177 |
1 Amounts for the six months ended June 30, 2023, contain no activity from discontinued operations. As such, references to EBITDA and EBITDA from continuing operations, as well as, Adjusted EBITDA and Adjusted EBITDA from continuing operations will yield the same results for the six months ended June 30, 2023.
Adjusted EBITDA is defined as earnings before interest, taxes and depreciation and amortization, adjusted for specified items. The company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense, tax expense and depreciation and amortization to net income (loss). Management believes that adjusted EBITDA is a useful measure of the company’s performance as it provides investors additional information about the company’s operations allowing better evaluation of underlying business performance and improved comparability to prior periods. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace or be an alternative to net income (loss), the most directly comparable GAAP financial measure.
The Andersons, Inc.
Trailing Twelve Months of EBITDA and Adjusted EBITDA from Continuing Operations
A non-GAAP financial measure
(unaudited)
| Three Months Ended, | Twelve months ended June 30, 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30, 2022 | December 31, 2022 | March 31, 2023 | June 30, 2023 | ||||||
| Net income (loss) from continuing operations | $ | 24,880 | $ | 21,170 | $ | (59,117) | $ | 82,686 | $ | 69,619 |
| Interest expense | 14,982 | 14,087 | 16,625 | 13,953 | 59,647 | |||||
| Tax provision (benefit) | 9,839 | 9,933 | (5,884) | 21,732 | 35,620 | |||||
| Depreciation and amortization | 33,322 | 33,476 | 32,220 | 30,365 | 129,383 | |||||
| EBITDA from continuing operations | 83,023 | 78,666 | (16,156) | 148,736 | 294,269 | |||||
| Adjusting items impacting EBITDA from continuing operations: | ||||||||||
| Transaction related compensation expense | — | — | 1,668 | 939 | 2,607 | |||||
| Insured inventory expenses (recoveries) | — | 15,993 | (17,390) | 1,310 | (87) | |||||
| Gain on deconsolidation of joint venture | — | — | — | (6,544) | (6,544) | |||||
| Asset impairment including equity method investments | — | 9,000 | 87,156 | — | 96,156 | |||||
| Total adjusting items | — | 24,993 | 71,434 | (4,295) | 92,132 | |||||
| Adjusted EBITDA from continuing operations | $ | 83,023 | $ | 103,659 | $ | 55,278 | $ | 144,441 | $ | 386,401 |
| Three Months Ended, | Twelve months ended June 30, 2022 | |||||||||
| September 30, 2021 | December 31, 2021 | March 31, 2022 | June 30, 2022 | |||||||
| Net income from continuing operations | $ | 12,290 | $ | 65,473 | $ | 6,504 | $ | 102,400 | $ | 186,667 |
| Interest expense | 8,799 | 8,444 | 10,859 | 16,921 | 45,023 | |||||
| Tax provision | 4,027 | 11,163 | 4,103 | 15,753 | 35,046 | |||||
| Depreciation and amortization | 42,811 | 36,797 | 34,377 | 33,567 | 147,552 | |||||
| EBITDA from continuing operations | 67,927 | 121,877 | 55,843 | $ | 168,641 | 414,288 | ||||
| Adjusting items impacting EBITDA from continuing operations: | ||||||||||
| Transaction related compensation expense | 243 | 274 | — | — | 517 | |||||
| Gain on sale of a business | (14,619) | — | — | — | (14,619) | |||||
| Asset impairments including equity method investments | — | 8,321 | — | 4,455 | 12,776 | |||||
| Loss from cost method investment | 2,784 | — | — | — | 2,784 | |||||
| Gain on sales of assets | — | — | — | (3,762) | (3,762) | |||||
| Total adjusting items | (11,592) | 8,595 | — | 693 | (2,304) | |||||
| Adjusted EBITDA from continuing operations | $ | 56,335 | $ | 130,472 | $ | 55,843 | $ | 169,334 | $ | 411,984 |
The Andersons, Inc.
Cash from Operations Before Working Capital Changes
A non-GAAP financial measure
(unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
| Cash provided by (used in) operating activities | $ | 540,939 | $ | 353,199 | $ | 207,404 | $ | (721,799) |
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | 82,754 | (74,184) | 207,867 | (289,196) | ||||
| Inventories | 556,845 | 323,505 | 734,855 | 186,685 | ||||
| Commodity derivatives | 19,605 | 88,671 | 102,753 | (189,090) | ||||
| Other current and non-current assets | 16,296 | 43,916 | (1,247) | 5,106 | ||||
| Payables and other current and non-current liabilities | (250,794) | (163,307) | (1,011,086) | (609,403) | ||||
| Total changes in operating assets and liabilities | 424,706 | 218,601 | 33,142 | (895,898) | ||||
| Adjusting items impacting cash from operations before working capital changes: | ||||||||
| Less: Insured inventory expenses (recoveries) | 1,310 | — | (16,080) | — | ||||
| Cash from operations before working capital changes | $ | 117,543 | $ | 134,598 | $ | 158,182 | $ | 174,099 |
Cash from operations before working capital changes is defined as cash provided by (used in) operating activities before the impact of changes in working capital within the statement of cash flows. The Company calculates cash from operations by eliminating the effect of changes in accounts receivable, inventories, commodity derivatives, other assets, and payables and accrued expenses from the cash provided by (used in) operating activities. Management believes that cash from operations before working capital changes is a useful measure of the company’s performance as it provides investors additional information about the company’s operations allowing better evaluation of underlying business performance and improved comparability to prior periods. Cash from operations before working capital changes is a non-GAAP financial measure and is not intended to replace or be an alternative to cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.