The Andersons, Inc. Second Quarter Conference Call We are well-positioned to capitalize on macro trends such as

Transcription

1 We are well-positioned to capitalize on macro trends such as» Expanding world population» Escalating global demand for protein» Increasing North American crop production which continues to drive strong demand for our products and services At the end of the day, people need to eat and products need to move. By leveraging our deep operational experience, we are focused on serving these needs. The Andersons, Inc. Second Quarter Conference Call 2014 August 7, 2014

2 1 The Andersons, Inc.» FORWARD LOOKING STATEMENTS Certain information discussed today constitutes forward-looking statements. Actual results could differ materially from those presented in the forwardlooking statements as a result of many factors, including general economic conditions, weather, competitive conditions, conditions in the Company s industries, both in the U.S. and internationally, and additional factors that are described in the Company s publicly-filed documents, including its 34 act filings and the prospectuses prepared in connection with the Company s offerings. Today s call includes financial information for which the Company s independent auditors have not completed their review. 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.

3 2 The Andersons, Inc.»»Mike Anderson Chairman & Chief Executive Officer Hal Reed Chief Operating Officer John Granato Chief Financial Officer Nick Conrad Vice-President, Finance & Treasurer

4 3 The Andersons, Inc.» Company Accomplishments KEY BUSINESS RESULTS» Ethanol Group achieved record operating income of $33.9 million» Second quarter diluted earnings per share up almost 50 percent from same period last year» Plant Nutrient Group had solid operating income of $25.0 million 71 consecutive dividend payments

5 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 4 The Andersons, Inc.» Business and Financial Highlights In Millions COMPANY RESULTS Net Income Net Income attributable to The Andersons, Inc. Diluted EPS 2013 EPS adjusted for 3-for-2 stock split $44.3 $1.56 $29.5 $1.05 $42.1 $67.0 $1.49 $2.36

6 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 5 The Andersons, Inc.» Business and Financial Highlights COMPANY RESULTS Revenues Gross Profit Gross Profit Margin In Billions In Millions $1.6 $1.3 $103.2 $ % 9.3% $2.8 $2.3 $182.5 $ % 8.6%

7 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 6 The Andersons, Inc.» Business and Financial Highlights COMPANY RESULTS Pre-Tax Earnings Average Short-Term EBITDA From Affiliates Borrowings In Millions In Millions In Millions $90.7 $32.2 $180 $165 $65.3 $10.0 $147.2 $52.7 $222 $108.1 $122 $17.8

8 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 7 The Andersons, Inc.» Business and Financial Highlights COMPANY RESULTS Other Income Effective Tax Rate In Millions $ % 34.2% $1.3 $ % 34.4% $4.0

9 OTHER 8 The Andersons, Inc.» Business and Financial Highlights OPERATING INCOME Three Months Ended June 30, year-over-year, 2014 Operating Income Bridge $47,019 $8,302 $23,303 $1,764 ($2,996) ($197) $98 ($7,278) $70,015 In Thousands

10 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 9 The Andersons, Inc.» Business and Financial Highlights Q214 Record operating income ETHANOL GROUP Consolidated Equity in Earnings Ops. & Ethanol Revenue of Affiliates Service Fees Operating Income In Millions In Millions In Millions In Millions $222.2 $226.4 $23.7 $10.2 $33.9 Improved ethanol margins, record ethanol production, increased co-products income $5.6 $10.6 $5.0 $421.6 $415.2 $42.4 $11.4 $8.2 $53.7 $4.9 $13.1

11 10 The Andersons, Inc.» Business and Financial Highlights ETHANOL Gallons Produced Not all gallons produced are sold thru The Andersons, Inc. E-85 Gallons Shipped In millions In millions DDGS Tons Shipped CORN OIL Pounds Shipped In millions In thousands

12 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 11 The Andersons, Inc.» Business and Financial Highlights Recapture of lost Q1 volume Slight increase in margins for the quarter and year-to-date PLANT NUTRIENT GROUP Revenue Gross Profit Operating Income In Millions In Millions In Millions $330.3 $311.9 $40.7 $25.0 $37.2 $23.2 $442.2 $419.5 $51.2 $54.8 $22.7 $23.6

13 As of Jun. 30, 12 The Andersons, Inc.» Business and Financial Highlights SALES AND SERVICE VOLUME Tons In thousands STORAGE CAPACITY Tons 902 total tons 867 total tons 833 total tons In thousands

14 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 13 The Andersons, Inc.» Business and Financial Highlights GRAIN GROUP Revenue Gross Profit Operating Income In Millions In Millions In Millions Improved space income Higher income from investments $27.9 $891.4 $22.1 $656.0 $2.9 $2.1 $10.4 $1,728 $46.9 $44.9 $21.7 $1,239 $10.4

15 As of Jun. 30, As of Jun. 30, 14 The Andersons, Inc.» Business and Financial Highlights STORAGE CAPACITY In Bushels BUSHELS SHIPPED In millions In millions INVENTORY In Bushels In millions

16 15 The Andersons, Inc.» Business and Financial Highlights CORN CONDITION (PERCENTAGE RATED GOOD-TO-EXCELLENT)» 18 states planted 91% of 2013 corn acreage The Andersons Grain facilities The Andersons Plant Nutrient facilities Ethanol facilities» Nationwide, 73% is rated good-toexcellent as of August 3, 2014 compared to 64% in Source

17 16 The Andersons, Inc.» SOYBEANS CONDITION (PERCENTAGE RATED GOOD-TO-EXCELLENT)» These 18 states planted 95% of 2013 soybeans acreage The Andersons Grain facilities The Andersons Plant Nutrient facilities Ethanol facilities» Nationwide, 71% is rated good-toexcellent as of August 3, 2014 compared to 64% in Source

18 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 17 The Andersons, Inc.» Business and Financial Highlights Gain of $2.5 million in pre-tax sales of railcars and related leases and nonrecourse transactions, compared to $4.4 million in Q Higher lease rates and utilization rate RAIL GROUP Revenue Gross Profit Operating Income In Millions In Millions In Millions $38.6 $14.6 $13.9 $33.4 $9.7 $6.7 $85.0 $85.7 $35.7 $33.5 $24.3 $21.7

19 As of Jun. 30, Three Months Ended Jun. 30, As of Jun. 30, 18 The Andersons, Inc.» Business and Financial Highlights RAILCAR FLEET REPAIR FACILITIES Includes Locomotives AVERAGE UTILIZATION RATE

20 Six Months Three Months Ended Jun. 30, Ended Jun. 30, 19 The Andersons, Inc.» Business and Financial Highlights TURF & SPECIALTY GROUP RETAIL GROUP Revenue Operating Income Revenue Operating Income In Millions In Millions In Millions In Millions $2.2 $41.3 $41.5 $43.1 $42.9 $1.5 $1.6 $2.0 Q1 13 Q1 14 Q1 13 Q1 14 $90.3 $86.6 $6.2 $72.0 $69.1 $3.4 ($0.7) ($1.6)

21 20 The Andersons, Inc.» Business and Financial Highlights BALANCE SHEET Unaudited In thousands June 30, December 31, June 30, Assets Current assets: Cash and cash equivalents, restricted cash $ 47,190 $ 309,085 $ 75,920 Restricted cash Accounts receivable, net 189, , ,432 Inventories 432, , ,523 Commodity derivative assets - current 162,427 71, ,789 Deferred income taxes 7,443 4,931 2,797 Other current assets 24,596 47,188 44,936 Total current assets 865,193 1,221, ,269 Other assets: Commodity derivative assets - noncurrent Other assets, net 116, , ,781 Pension assets 13,023 14,328 0 Equiy method investments 264, , , , , ,109 Railcar assets leased to others, net 242, , ,887 Property, plant and equipment 390, , ,716 Total assets $ 1,892,628 $ 2,273,556 $ 1,820,981 Q1 Q

22 21 The Andersons, Inc.» Business and Financial Highlights BALANCE SHEET Unaudited In thousands June 30, December 31, June 30, Liabilities and equity Current liabilities: Borrowings under short-term line of credit $ 27,000 $ - $ 50,000 Accounts payable for grain 164, , ,017 Other accounts payable 143, , ,971 Customer prepayments and deferred revenue 21,670 59,304 25,621 Commodity derivative liabilities - current 86,134 63,954 58,183 Accrued expenses and other current liabilities 81,260 70,295 57,456 Current maturities of long-term debt 89,387 51,998 45,096 Total current liabilities 613, , ,344 Other long-term liabilities 15,032 15,386 15,634 Commodity derivative liabilities - current 7,444 6,644 5,863 Employee benefit plan obligations 39,178 39,477 50,754 Long-term debt, less current maturities 300, , ,020 Deferred income taxes 126, ,082 87,486 Total liabilities 1,101,348 1,549,135 1,167,101 Total equity 791, , ,880 Total liabilities and equity 1,892,628 $ 1,820,981 Q1 Q1 13 $ 2,273,556 $ 14

23 As of Jun. 30, As of Jun. 30, 22 The Andersons, Inc.» Business and Financial Highlights LONG-TERM DEBT & WORKING CAPITAL» Line of credit committed under syndicated facility is $850 million In Millions Working Capital Long-Term Funded Debt-to-Equity Long-term debt, less current maturities/total equity $308.9 $ $36.4 Million 0.25

24 23 The Andersons, Inc.» COMPANY OUTLOOK» Expect to have record earnings for 2014» Anticipated strong 2014 crop should improve Grain Group results» Continued strong ethanol exports and lower corn prices will benefit Ethanol Group» Plant Nutrient Group expects to improve on 2013 results» Anticipate continued strong results from the Rail Group» Ongoing information technology expense related to SAP implementation Q1 Q

25 24 The Andersons, Inc.» MISSION We firmly believe that our Company is a powerful vehicle through which we channel our time, talent, and energy in pursuit of the fundamental goal of serving God by serving others. Through our collective action we greatly magnify the impact of our individual efforts to: Provide extraordinary service to our customers Help each other improve Support our communities Increase the value of our Company Q Q1 14

26 25 The Andersons, Inc. Q1 12 Thank you for joining us. Our next earnings call is scheduled Q1 14 for Thursday November 6 th at 11:00 a.m. $16.8 Million To learn more about The Andersons, Inc., visit our web-site at

27 APPENDIX

28 27 The Andersons, Inc.» Appendix DEFINITIONS EBITDA: Operating income: Bushels shipped: F2M: Bushels owned: Earnings before interest, taxes, depreciation, and amortization, is a non-gaap measure. It is one of the measures the company uses to evaluate liquidity and leverage. 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 controlling interest share of income. Includes shipments from our facilities, farm-to-market(f2m) and origination services for corn, soybeans, wheat, and oats. Bushels that The Andersons, Inc. purchases from the farm and are delivered directly to an Andersons customer. The bushels are never delivered to an Andersons facility. Bushels delivered to an Andersons elevator or storage facility rented by The Andersons, Inc. where title to the grain is transferred to The Andersons, Inc. Bushels stored for Others Volume-fertilizer: The bushels are stored by The Andersons, Inc. for the owner of the bushels for which a storage fee is charged the bushels owner. Q1 Q1 14 Sales is bulk and packaged basic materials and formulated products; service is third party basic bulk and packaged material and formulated products. Railcar fleet utilization: Percentage of railcars and locomotives in leased service.

29 In Millions of Bushels The Andersons, Inc.» U.S. STORAGE CAPACITY Storage Capacity vs. Total Corn, Soybeans, and Wheat Supply *Storage Capacity Utilization 98% 93% 99% 94% 99% 96% 88% 79% 91% 92% *Storage Capacity Utilization = total supply / total storage capacity Projection source 28

30 The Andersons, Inc.» U.S. STORAGE CAPACITY Top 10 U.S. Commercial (off-farm) storage capacity (in millions) Company Bushels % 1 ADM % 2 The Gav ilion Group % 3 Cargill, Inc % 4 CHS, Inc % 5 Bunge North America % Company Bushels % 6 CGB Enterprises, Inc % 7 Attebury Grain, Inc % 8 The Andersons, Inc % 9 The Scoular Company % 10 Riceland Foods, Inc % Total U.S. Commercial (off-farm) storage capacity 10,430 million bushels Total On-farm storage capacity 13,101 million bushels (In Millions of bushles) Off-Farm Andersons' State Storage Storage Percentage Capacity Capacity Ohio % Michigan % Indiana % Illinois 1, % Nebraska % Iowa 1, % Tennessee % TOTAL 4, % Source: 2014 Milling Annual 29

31 Ending Stocks (MMT) 30 The Andersons, Inc.» WORLD CORN ENDING STOCKS VS. STOCKS / USAGE RATIO Stocks / Usage Ratio Percentage Crop Year source Forecast

32 Ending Stocks in Millions of Bushels 31 The Andersons, Inc.» U.S. CORN ENDING STOCKS VS. STOCK / USAGE RATIO Stocks / Usage Ratio Percentage Crop Year source Forecast

33 32 The Andersons, Inc.» U.S. ETHANOL NET EXPORTS source

34 33 The Andersons, Inc.» DIVIDEND / DILUTED EPS EPS adjusted for 3-for-2 stock split

35 34 The Andersons, Inc.» Appendix GROSS PROFIT Three Months Ended June 30, year-over-year, 2014 Gross Profit Bridge $103,229 $5,817 $8,989 $3,532 ($694) $484 $138 $121,495 Q2 Q In Thousands

36 OTHER 35 The Andersons, Inc.» Business and Financial Highlights OPERATING INCOME Six Months Ended June 30, year-over-year, 2014 Operating Income Bridge $68,676 $11,309 $40,648 $915 ($2,525) ($2,823) $932 ($10,537) $106,595 In Thousands

37 36 The Andersons, Inc.» Appendix GROSS PROFIT Six Months Ended June 30, year-over-year, 2014 Gross Profit Bridge $182,502 ($2,025) $11,549 $3,658 $2,192 ($59) $453 $198,270 Q2 Q In Thousands

38 In millions In millions 37 The Andersons, Inc.» Appendix Net Income Earnings Per Share - Diluted EBITDA Adjusted for 3-for-2 stock split Return on Equity

39 Q1 12 Q1 14 $16.8 Million