On Tuesday, The Andersons reported earnings of $55 million and revenue of just over $4 billion for the second-quarter ended June 30.
- 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," said president and CEO Pat Bowe. "This was a significant improvement for Nutrient & Industrial after a softer first quarter."
In May, the company reported a $15 million loss in the first quarter ended March 31. At the time, it noted lower ethanol crush margins and declining fertilizer prices impacted those business segments.
"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," said Bowe. "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."
"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," Bowe continued. "Geopolitical concerns continue to bring price volatility which is typically beneficial to us."
Bowe said The Andersons remains focused on executing within its stated strategy in its 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."
Trade
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
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
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.
