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. Third Quarter Conference Call 2014 November 6, 2014
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.
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
3 The Andersons, Inc.» Company Accomplishments KEY BUSINESS RESULTS» Record year-to-date diluted earnings per share of $2.95» Ethanol Group had record third quarter operating income of $21.3 million 72nd consecutive dividend payment
4 The Andersons, Inc.» Company Accomplishments RECENT ACQUISITION AUBURN BEAN & GRAIN» Six grain and four agronomy locations Grain Agronomy Auburn- 2 Auburn Standish Oakley- 2 Oakley- 2 Hemlock Hemlock» Grain storage capacity of 18.1 million bushels» 16,000 tons of dry and 3.7 million gallons of liquid nutrient capacity
5 The Andersons, Inc.» Business and Financial Highlights In Millions COMPANY RESULTS Net Income Net Income attributable to The Andersons, Inc. Diluted EPS EPS adjusted for 3-for-2 stock split Nine Months Three Months Ended Sept. 30, Ended Sept. 30, $17.2 $16.8 $59.3 $83.8 $0.61 $0.59 $2.10 $2.95
6 The Andersons, Inc.» Business and Financial Highlights COMPANY RESULTS Revenues Gross Profit Gross Profit Margin In Billions In Millions Nine Months Three Months Ended Sept. 30, Ended Sept 30, $1.2 $4.0 $1.0 $3.3 $84.9 $73.1 $283.2 $255.6 6.2% 6.4% 8.9% 8.7%
7 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 Nine Months Three Months Ended Sept. 30, Ended Sept. 30, $46.3 $47.2 $12.2 $22.2 $23.9 $194.4 $154.5 Q2 14 Q2 14 $76.6 $40.0 $152.1 $0.5 $$$0 $82.9
8 The Andersons, Inc.» Business and Financial Highlights COMPANY RESULTS Other Income Effective Tax Rate In Millions Nine Months Three Months Ended Sept. 30, Ended Sept. 30, $7.6 $1.7 $11.6 $25.1 36.5% 34.7% 37.7% 34.5%
9 The Andersons, Inc.» Business and Financial Highlights OPERATING INCOME Three Months Ended Sept. 30, year-over-year, 2014 Operating Income Bridge $27,509 ($1,874) $10,349 $1,514 ($8,200) ($2,802) $1,075 ($495) $27,076 OTHER In Thousands
10 The Andersons, Inc.» Business and Financial Highlights Q314 Record operating income Solid margins at all four facilities. Record E-85 sales Nine Months Three Months Ended Sept. 30, Ended Sept. 30, ETHANOL GROUP Consolidated Equity in Earnings Ops. & Ethanol Revenue of Affiliates Service Fees Operating Income In Millions In Millions In Millions In Millions $7.6 $213.4 $13.7 $14.1 $21.3 $179.4 $10.2 $634.9 $56.1 $18.9 $594.6 $75.0 $8.9 $15.1 $10.9 $0.7 $24.0
11 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 Not all tons shipped are sold thru The Andersons, Inc. CORN OIL Pounds Shipped In millions In thousands
12 The Andersons, Inc.» Business and Financial Highlights GRAIN GROUP Revenue Gross Profit Operating Income In Millions In Millions In Millions Decreased revenues due to lower commodity prices 11% increase in bushels shipped Nine Months Three Months Ended Sept. 30, Ended Sept. 30, $32.7 $765.8 $14.3 $27.0 $575.4 $2,494 $77.7 $73.9 $1,815 $24.7 $12.4 $34.1
13 The Andersons, Inc.» Business and Financial Highlights STORAGE CAPACITY In Bushels BUSHELS SHIPPED As of Sept. 30, In millions In millions INVENTORY In Bushels As of Sept. 30, In millions
14 The Andersons, Inc.» CORN HARVEST» Nationwide, 65% has been harvested as of November 2, 2014 compared to 71% in 2013, and a five-year average of 73% The Andersons Grain facilities The Andersons Plant Nutrient facilities Ethanol facilities 48 71 61 33 31 51 60 61 77 52 61 58 88 78 82 96 96 Percentage harvested 86
15 The Andersons, Inc.» SOYBEANS HARVEST» Nationwide, 83% has been harvested as of November 2, 2014 compared to 85% in 2013, and a five-year average of 83% The Andersons Grain facilities The Andersons Plant Nutrient facilities Ethanol facilities Percentage harvested Source 97 99 98 80 71 95 91 83 72 72 64 73 51 62 86 98 88 30
16 The Andersons, Inc.» PLANT NUTRIENT GROUP Revenue Gross Profit Operating Income In Millions In Millions In Millions Volume up almost 25% Lower gross profit per ton Nine Months Three Months Ended Sept. 30, Ended Sept. 30, $110.8 $13.6 $13.9 $95.7 ($1.6) $537.9 $530.3 $68.7 $64.7 $21.0 ($0.1) $23.5
17 The Andersons, Inc.» Business and Financial Highlights SALES AND SERVICE VOLUME Tons In thousands STORAGE CAPACITY Tons 935 total tons As of Sept. 30, 889 total tons 833 total tons In thousands
18 The Andersons, Inc.» Business and Financial Highlights Lower revenues due primarily to lower railcar sales Prior year Q3 included onetime gains of $4.3 million Higher freight cost Nine Months Three Months Ended Sept. 30, Ended Sept. 30, RAIL GROUP Revenue Gross Profit Operating Income In Millions In Millions In Millions $47.5 $13.0 $12.4 $10.8 $32.0 $4.2 $132.5 $46.5 $46.6 $36.6 $117.7 $25.9
19 The Andersons, Inc.» Business and Financial Highlights RAILCAR FLEET REPAIR FACILITIES As of Sept. 30, Includes Locomotives 122 95 46 As of Sept. 30, AVERAGE UTILIZATION RATE Three Months Ended Sept. 30,
20 The Andersons, Inc.» Business and Financial Highlights TURF & SPECIALTY GROUP RETAIL GROUP Nine Months Three Months Ended Sept. 30, Ended Sept. 30, In Millions In Millions In Millions In Millions $27.6 ($2.9) Q1 13 Q1 13 Q1 14 $118.0 Revenue Operating Income Revenue Operating Income $22.6 $109.3 ($0.1) $6.1 $0.5 $31.3 $103.3 $32.7 $101.8 ($2.0) ($3.7) ($1.0) ($1.7)
21 The Andersons, Inc.» Business and Financial Highlights LONG-TERM DEBT AND WORKING CAPITAL» Line of credit committed under syndicated facility is $850 million Working Capital Long-Term Funded Debt-to-Equity Ratio In Millions Long-term debt, less current maturities/total equity As of Sept. 30, $232.9 $257.3 As of Sept. 30, 0.57 0.36 $36.4 Million 0.25
22 The Andersons, Inc.» Business and Financial Highlights BALANCE SHEET Unaudited In thousands September 30, December 31, September 30, 2014 2013 2013 Assets Current assets: Cash and cash equivalents $ 326,946 $ 309,085 $ 134,441 Restricted cash 173 408 164 Accounts receivable, net 162,270 173,930 178,970 Inventories 396,464 614,923 429,017 Commodity derivative assets - current 126,396 71,319 105,390 Deferred income taxes 148 4,931 5,254 Other current assets 36,518 47,188 42,278 Total current assets 1,048,915 1,221,784 895,514 Other assets: Commodity derivative assets - noncurrent 2,383 246 5 Other assets, net 113,141 118,010 110,731 Pension assets 13,738 14,328 0 Equiy method investments 257,166 291,109 262,643 386,428 423,693 373,379 Railcar assets leased to others, net 245,849 240,621 233,024 Property, plant and equipment 401,800 387,458 380,374 Total assets 2,082,992 $ 1,882,291 Q1 Q1 13 $ 2,273,556 $ 14
23 The Andersons, Inc.» Business and Financial Highlights BALANCE SHEET Unaudited In thousands September 30, December 31, September 30, 2014 2013 2013 Liabilities and equity Current liabilities: Short-term debt $ 451 $ - $ - Accounts payable for grain 222,178 592,183 241,575 Other accounts payable 165,133 154,599 200,664 Customer prepayments and deferred revenue 27,246 59,304 23,974 Commodity derivative liabilities - current 229,265 63,954 88,234 Accrued expenses and other current liabilities 70,598 70,295 63,900 Current maturities of long-term debt 76,757 51,998 44,232 Total current liabilities 791,628 992,333 662,579 Other long-term liabilities 13,902 15,386 17,129 Commodity derivative liabilities - current 26,203 6,644 9,636 Employee benefit plan obligations 39,606 39,477 49,768 Long-term debt, less current maturities 289,448 375,213 381,018 Deferred income taxes 120,628 120,082 91,869 Total liabilities 1,281,415 1,549,135 1,211,999 Total equity 801,577 724,421 670,292 Q1 $ 2,273,556 $ Q1 13 14 Total liabilities and equity 2,082,992 $ 1,882,291
24 The Andersons, Inc.» SHARE REPURCHASE» Maximum of $50 million, over a two year period» Execution based on stock price, market conditions and other factors Q1 Q1 13 14
The Andersons, Inc.» COMPANY OUTLOOK 2015» Strong 2014 crop should benefit Grain and Plant Nutrient Groups results» Ethanol Group can envision record production, however, reduced earnings expected» Anticipate strong results from the Rail Group» Increased information technology expense related to SAP implementation Q1 Q1 13 14 25
26 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
27 The Andersons, Inc. Q1 12 Thank you for joining us. Our next earnings call is scheduled for Q1 14 Wednesday February 11th at 11:00 a.m. $16.8 Million To learn more about The Andersons, Inc., visit our web-site at www.andersonsinc.com
APPENDIX
29 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.
The Andersons, Inc.» Appendix 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% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *Storage Capacity Utilization = total supply / total storage capacity Projection In Millions of Bushels Estimate source 30
The Andersons, Inc.» Appendix U.S. STORAGE CAPACITY Top 10 U.S. Commercial (off-farm) storage capacity (in millions) Company Bushels % 1 ADM 468 4.57% 2 The Gav ilion Group 354 3.45% 3 Cargill, Inc. 348 3.40% 4 CHS, Inc. 300 2.93% 5 Bunge North America 219 2.14% Company Bushels % 6 CGB Enterprises, Inc 167 1.63% 7 Attebury Grain, Inc. 165 1.61% 8 The Andersons, Inc. 139 1.36% 9 The Scoular Company 125 1.22% 10 Riceland Foods, Inc. 112 1.09% 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 412 41.6 10.1% Michigan 190 16.6 8.7% Indiana 464 24.6 5.3% Illinois 1,451 13.4 0.9% Nebraska 856 10.9 1.3% Iowa 1,380 19.6 1.4% Tennessee 58 12.4 21.4% TOTAL 4,811 139.1 2.9% Source: 2014 Milling Annual 31
32 The Andersons, Inc.» Appendix WORLD CORN ENDING STOCKS VS. STOCKS / USAGE RATIO Crop Year
33 The Andersons, Inc.» Appendix U.S. CORN ENDING STOCKS VS. STOCK / USAGE RATIO Crop Year
34 The Andersons, Inc.» Appendix CORN SPREAD
35 The Andersons, Inc.» Appendix U.S. ETHANOL EXPORTS
36 The Andersons, Inc.» Appendix DIVIDEND / DILUTED EPS EPS adjusted for 3-for-2 stock split in 2014
37 The Andersons, Inc.» Appendix GROSS PROFIT Three Months Ended Sept. 30, year-over-year, 2014 Gross Profit Bridge $73,146 $5,743 $8,035 $381 ($2,159) ($1,102) $874 $84,918 Q3 Q3 13 14 In Thousands
38 The Andersons, Inc.» Appendix GROSS PROFIT Nine Months Ended Sept. 30, year-over-year, 2014 Gross Profit Bridge $255,648 $3,718 $19,584 $4,039 $33 ($1,161) $1,327 $283,188 Q3 Q3 13 14 In Thousands
39 The Andersons, Inc.» Appendix OPERATING INCOME Nine Months Ended Sept. 30, year-over-year, 2014 Operating Income Bridge $96,185 $9,435 $50,997 $2,429 ($10,725) ($5,625) $2,007 ($11,032) $133,671 OTHER In Thousands
40 The Andersons, Inc.» Appendix Net Income Earnings Per Share - Diluted In millions 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 EBITDA Adjusted for 3-for-2 stock split Return on Equity In millions 2009 2010 2011 2012 2013 2009 2009 2010 2011 2011 2012 2012 2013 2013
Q1 12 Q1 14 $16.8 Million