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The Andersons Sets Earnings Record in Fourth Quarter

Both the company and plant nutrient business saw record growth

The Andersons logo January 2021

The Andersons, Inc. announces financial results for the fourth quarter ended December 31, 2021.

"I'm very pleased with our performance which includes record fourth quarter results for the company and for our Plant Nutrient business," said President and CEO Pat Bowe in a released statement.

"We continued to execute well throughout a good 2021 harvest, particularly in the eastern grain belt, made good operating and commercial decisions and enjoyed additional profit from growth in new markets, such as renewable diesel and supply chain extensions with our new Swiss trading office.

"During 2021, our teams operated safely and effectively in these strong agriculture markets leading to each of our three business segments reaching record or near-record performance in the quarter."

Bowe said the company enjoyed strong renewable fuels margins in the fourth quarter and remained focused on risk management, effective hedging and strong operational performance, and continued to see good returns from co-products, particularly distillers' corn oil.

"We continue to diversify revenues for this group into attractive new product lines," he said.

An example of this would be renewable diesel feedstocks. Bowe notes the company has renamed its ethanol segment 'Renewables' to reflect its broader scope of products and services.

"We continue to see robust activity in our Trade business profit centers and are focused on executing well and serving customer needs in a continuing volatile commodity environment," he said.

"Finally, Plant Nutrient followed up a very strong first half with a great second half, leading to a record year. Fertilizer prices and farm income both remain high, but we continue to receive good support from our suppliers in this time of tight stocks and expect continued strong performance as we move into 2022."

Bowe said the company has a robust pipeline of growth projects it is evaluating which are aligned with its strategy.

"Our evaluation includes both financial and business considerations, and we continue to exercise discipline in our diligence processes," he said.

"We are focused on organic growth projects in grain, renewables and fertilizer as well as potential acquisitions and investments."

Fourth Quarter Highlights:

  • Company reported net income attributable to The Andersons from continuing operations of $32.8 million, or $0.95 per diluted share, and adjusted net income from continuing operations of $39.2 million, or $1.14 per diluted share
  • Company reported its best ever fourth quarter adjusted pretax income from continuing operations
  • Trade reported pretax income of $18.3 million and adjusted pretax income of $26.9 million driven by strong asset and merchandising income
  • Renewables (formerly Ethanol) reported pretax income attributable to the company of $26.5 million, the best fourth quarter since 2013 on strong margins
  • Plant Nutrient posted a record fourth quarter with pretax income of $15.9 million
  • Adjusted EBITDA from continuing operations of $130.5 million, also a record quarter

Trade Records strong results driven by grain assets performance

The Andersons' Trade segment recorded adjusted pretax income of $26.9 million for the quarter, a slight decline when compared to adjusted pretax income of $29.3 million in the fourth quarter of 2020.

An asset impairment charge of $8.3 million for certain assets primarily relating to the remaining sand processing business was the main adjustment to pretax income in 2021.

Strong elevation margins in core grain assets and the additional ag supply chain businesses have added incremental gross profit and earnings.

The quarter over quarter decrease reflects exceptional 2020 fourth quarter results in propane and cottonseed performance that did not fully repeat as well as reduced earnings in the sand business.

Ag supply chain opportunities are expected to remain strong into 2022. Continued demand and uncertainty about growing conditions in global grain production regions has resulted in continued high commodity prices post-harvest and can make U.S. grain production increasingly important.

Trade's fourth quarter adjusted EBITDA was $41.9 million, compared to fourth quarter 2020 adjusted EBITDA of $45.8 million. Its full year adjusted EBITDA increased from $95.5 million in 2020 to a record $150.9 million in 2021, primarily as a result of improved full year elevation margin and merchandising improvements.

Renewables posts best fourth quarter since 2013

The Renewables segment reported pretax income attributable to the company of $26.5 million in the fourth quarter compared to a pretax loss attributable to the company of $3.5 million in the same period in 2020. Ethanol crush margins for the 2021 fourth quarter were significantly higher than those realized in the fourth quarter of 2020 and record corn oil prices also contributed to the improved results.

Sales volumes for ethanol, corn oil, and feed ingredients were up, driven by higher production and additional third-party sales from the merchandising business. Hedges on forward ethanol sales are in place for a portion of expected 2022 production. More recently, spot ethanol crush margins have declined and are expected to be closer to historical averages and seasonally move with driving demand. Corn oil demand is expected to remain high and merchandising of third-party renewable feedstocks should remain strong.

Renewables recorded EBITDA of $78.0 million in the fourth quarter of 2021, up significantly from 2020 fourth quarter EBITDA of $16.2 million.

Plant Nutrient achieves record year

Plant Nutrient recorded pretax income of $15.9 million in the fourth quarter compared to pretax income of $3.2 million in the same period of 2020. Gross profit increased over $8.6 million from strong margins in agricultural and industrial product lines resulting from continued strength in both fertilizer prices and farmer income.

While a smaller portion of the business, manufactured products were negatively impacted by raw material and plant labor availability as well as wage inflation.

Full year pretax income of $42.6 million was also a record.

Plant Nutrient's current quarter EBITDA was $23.5 million compared to 2020 fourth quarter EBITDA of $10.8 million.

For the full year, Plant Nutrient recorded EBITDA of $72.9 million in 2021, an increase of more than 50% from $47.2 million in 2020 as a result of margin expansion and strong demand. Agricultural fundamentals remain strong.

Fertilizers will benefit from continuing limited supply and elevated fertilizer prices but are not expected to experience significant price increases as in 2021.

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