On November 7, The Andersons reported its financial results for the third quarter ended September 30.
- Company reported net income attributable to The Andersons of $10 million, or $0.28 per diluted share, and adjusted net income of $5 million, or $0.13 per diluted share
- Adjusted EBITDA was $70 million for the quarter
- Expect full year adjusted EBITDA to achieve previous expectations of $350 to $375 million
- Renewables reported record Q3 pretax income of $47 million and record pretax income attributable to The Andersons of $26 million on strong operations and industry fundamentals
"Our third quarter includes record results from our Renewables team with great operating performance in our ethanol plants, a strong margin environment and good results from our renewable diesel feedstock merchandising team," said president and CEO Pat Bowe. "We had solid core operating performance in our Trade segment which was offset by a currency loss in our international business.
"Lastly, our Nutrient & Industrial segment's third quarter, which is typically a loss in this seasonally slow period, had year-over-year improvements in both its ag and manufacturing businesses," Bowe continued.. "We remain confident about the balance of the year and expect to achieve our previously communicated full year adjusted EBITDA outlook of $350 to $375 million."
The Nutrient & Industrial segment posted a pretax loss of $8 million, compared to a 2022 third quarter pretax loss of $12 million. During this seasonally slow period, volumes were down 6% with an overall increase in margins.
Gross profit improved by $4 million and reflects these higher margins partially offset by the volume decline. The Sioux City specialty liquid plant was impacted by a rail service interruption which had an impact on volumes for approximately one month. Outlook for the fourth quarter remains solid, said the company.
Bowe noted the company continues to make progress on its growth strategy.
"Our third quarter acquisition of ACJ International, a pet food ingredient supplier, contributed positively to these results," he noted. "We are pleased with this complementary addition to our core grain and fertilizer verticals."
Growth in Renewables business
The company continues to actively pursuing opportunities for growth in its Renewables business.
"These opportunities include expansion of our renewable diesel feedstock merchandising business and investments to lower the carbon intensity of our ethanol plants," said Bowe. "With our well-positioned balance sheet, we have good capacity for growth."
Ethanol crush margins were outstanding throughout the quarter, and the current margin outlook remains strong, said the company.
Production facilities operated efficiently in the quarter with improved ethanol yield and lower operating costs than the comparable quarter in 2022.
Results from the merchandising businesses, including renewable diesel feedstocks, exceeded our third quarter 2022 results by nearly $5 million.
The three large eastern plants completed their semiannual maintenance shutdowns in the third quarter and the western plant completed shortly thereafter. Board crush values remain historically high into the fourth quarter.
Underlying fundamentals remain solid
Aggregate results for most of The Andersons' product lines were comparable to the strong third quarter of 2022. Its asset business benefited from another solid Louisiana harvest and strong space income after a very large soft wheat harvest.
Underlying merchandising fundamentals were solid; however, earnings were negatively impacted by a $19 million pretax loss ($0.43 per share) in Egypt, noted the company.
The Trade business remains focused on domestic grain flows and is less impacted by slowdowns in U.S. exports.
"With the large and ongoing U.S. harvest, our assets are well-positioned to accumulate, condition and store large quantities of grain," said the company. "In this harvest, we expect drying income due to receipts of higher moisture corn. Trade is also receiving increased storage rates including variable storage fates (VSR) in wheat. With increased domestic supply, the merchandising focus will continue to be on serving customers and opportunistic arbitrage."
