The Andersons, Inc. reported its financial results for the first quarter ended March 31, 2022, and announced its selling its railcar repair business.
During the first quarter, President and CEO Pat Bowe said grain markets were impacted by the extreme run-up in futures prices resulting from the war in Ukraine.
"This drove grain basis values sharply lower," said Bowe. "I'm proud of the merchandising teams as they worked through this unprecedented price volatility which allowed us to take larger ownership positions at good basis values."
Plant Nutrient continues strong run
Plant Nutrient continued its strong run by setting its second consecutive quarterly earnings record.
"This strong performance resulted from well-positioned inventory and particularly strong specialty liquid results," said Bowe. "In Renewables, production volume increased for both ethanol and corn oil. Renewable feedstocks and co-product merchandising were well above expectations."
Highlights of Q1 include:
- Company reported net income attributable to The Andersons from continuing operations of $6.1 million, or $0.18 per diluted share
- EBITDA from continuing operations was $55.8 million for the quarter
- Plant Nutrient reported record first quarter pretax income of $10.7 million
- Renewables had a strong quarter with pretax income of $5.5 million despite an $8.3 million mark to market loss, most of which is expected to reverse in Q2
- Trade reported pretax income of $3.7 million amid global disruption and against higher 2021 results; amassing strong grain ownership positions at low basis values
- Amended and extended credit agreement, expanding capacity and extending maturity date to 2027
Impact of planting delays, fertilizer prices
Bowe says he believes the company is well-positioned in all businesses for the remainder of 2022.
"We are closely monitoring the weather-related planting delays in both corn and soybeans," he says.
"While progress is being made, we are behind the five-year national average for this date and expect planting activities to ramp up quickly as soon as fields allow it."
The Andersons has an opportunity to earn good elevation margins on its grain position, says Bowe.
"Ethanol margins have strengthened as we entered the spring maintenance season along with seasonal increases in driving demand and expectations for an increased U.S. export program," he notes.
"Our renewable feedstock business continues to grow and we are exploring further opportunities to improve corn oil production and quality from our plants."
Fertilizer prices and farm income both remain very high, and while producers are feeling the impact of high input costs, commodity prices still support fertilizer application.
"We continue to receive good support from our suppliers in this time of tight stocks," says Bowe.
"Supply remains a factor in our industry and market prices reflect reduced global stocks for most fertilizers and grains. Our teams are executing well and remain focused on customer needs and operational excellence."
Selling railcar repair business
The company has also signed an agreement to sell its railcar repair business to Cathcart Rail. The purchase is expected to close this summer.
"As announced in August of last year, we made a strategic decision to exit our rail segment to allow us to focus on and invest in our core agricultural verticals of grain and fertilizer," said Bowe.
"This sale also further strengthens our balance sheet and should enhance shareholder returns. Finalizing the sale of our railcar repair business will complete our exit from our rail segment."
The Andersons railcar repair network aligns well with Cathcart Rail's strategic goal of offering a broad array of rail services across a national footprint, said Casey Cathcart, chairman and CEO of Cathcart Rail.
"With the addition of The Andersons railcar repair network, Cathcart Rail's nearly 1,000 employees across 100-plus locations make it the leading railcar services company in the country."
Joe McNeely, president, The Andersons Nutrient and Industrial business, says the company is determined to make railcar repair employees' transition to Cathcart Rail "as smooth as possible."
