The Andersons reports record fourth-quarter results
MAUMEE – The Andersons, Inc. announced financial results for the fourth quarter ended Dec. 31, 2023.
Fourth quarter highlights in the Feb. 20 announcement:
– The company reported net income from continuing operations attributable to The Andersons of $51 million, or $1.49 per diluted share, and $55 million, or $1.59 per diluted share, on an adjusted basis
EBITDA was $131 million for the quarter, and adjusted EBITDA was $135 million
– Trade reported pretax income of $44 million and adjusted pretax income of $47 million
– Renewables reported record pretax income of $60 million and pretax income attributable to the company of $33 million on efficient plant performance and good merchandising results
– Strong balance sheet; healthy cash flows result in a cash balance of $644 million at December 31, 2023.
“Renewables had an excellent fourth quarter with record ethanol production and strong corn to ethanol yields at our four ethanol plants,” Andersons President and CEO Pat Bowe said in a news release statement.
“We continued to have great operating performance and also benefited from strong board crush margins,” he said.
“In trade, our eastern grain assets had good results from improving basis after a later harvest coupled
with income from drying wet corn. In Nutrient & Industrial, we had a mixed quarter with year-over-year improvement from our ag supply chain product lines,” Bowe said.
“With these results, we are reporting a 30% yearover-year improvement in adjusted EBITDA for the quarter, leading to a full year adjusted EBITDA of $405 million, just behind last year’s record of $412 million, and well above our previously disclosed range of $350-$375 million,” Bowe said.
Looking forward, the company acknowledges a shift in fundamentals of the commodity markets with increased global stocks, he said.
“Our mix of North American storage and ethanol production assets and combined with strength in merchandising positions us well to benefit from these market shifts,” Bowe added. “We have seen good results from our recent investments in ingredients supplied for pet and human consumption.”
The Andersons is also actively pursuing opportunities for growth in the renewables area, including carbon reduction plans and increased renewable diesel feedstock merchandising, the release said.
“Across our businesses, we have a robust pipeline of opportunities that include both investment in our facilities and M&A with a strong balance sheet to support this
growth,” Bowe said.
Trade strong, driven by grain assets
Trade recorded pretax income of $44 million and adjusted pretax income of $47 million for the quarter, compared to pretax income of $27 million and record adjusted pretax income of $52 million in the fourth quarter of the prior year.
Strong elevation margins in core grain assets through harvest drove the results with strong basis appreciation and drying income from a wet corn crop. The merchandising businesses realized solid results but down from last year, primarily on weakness in the Middle East and North Africa region. Our premium ingredients business experienced significant improvements
from the prior year, as recent acquisitions and other growth capital investments provided strong returns.
Ag fundamentals are shifting due to increased global supply. Our mix of assets and merchandising businesses provide a solid foundation for us to benefit from large crops and carry markets. With lower commodity prices, domestic producers are hesitant to forward sell, but our assets are well-positioned for the grains to flow in due course. With continuing global unrest, volatility exists in key international shipping lanes which could provide ongoing merchandising opportunities.
Trade’s fourth quarter adjusted EBITDA was $62 million, compared to fourth quarter 2022 adjusted EBITDA of $72 million. Full year adjusted EBITDA decreased from a record $199 million in 2022 to $155 million in 2023.
Cash, liquidity, and longterm debt management
“Strong operating cash flows continued into the fourth quarter. Our significant cash position and minimal short-term borrowings resulted in cash in excess of total debt at year-end,” Executive Vice President and CFO Brian Valentine said in the announcement. “Our long-term debt to adjusted EBITDA ratio of 1.5 times is well below our stated target of 2.5 times. With a strong balance sheet, we are well-positioned to fund good growth projects with appropriate returns.”
The company generated $251 million and $440 million in cash from operating activities for the fourth quarters of 2023 and 2022, respectively, and generated $122 million and $90 million in cash from operations before working capital changes for the same periods, respectively.
For the full years of 2023 and 2022, the company generated $947 million and $287 million in cash from operating activities, respectively. Cash from operations before working capital changes for the same years was $330 million and $315 million, leading to a December 31, 2023, cash balance of $644 million.