On this page of StockholderLetter.com we present the 3/28/2024 shareholder letter from Andersons, Inc. — ticker symbol ANDE. Reading current and past ANDE letters to shareholders can bring important insights into the investment thesis.
2023 ANNUAL REPORT
FINANCIAL HIGHLIGHTS OPERATING RESULTS (IN MILLIONS) 2O23 2O22 $14,750 $17,325 Gross profit 745 684 Operating, administrative, and general expenses 492 458 Income before income taxes from continuing operations 170 195 Sales and merchandising revenues 101 119 Earnings before interest, taxes, depreciation, and amortization from continuing operations (EBITDA) 342 386 Cash provided by operating activities 947 287 Net income from continuing operations attributable to The Andersons, Inc. FINANCIAL POSITION (IN MILLIONS) $3,855 $4,608 Working capital 1,171 945 Readily marketable inventories 863 1,309 Total assets Short-term debt Long-term debt, including current maturities of long-term debt Total equity 43 273 591 603 1,516 1,430 $2.94 $3.46 PER SHARE DATA Diluted earnings from continuing operations attributable to The Andersons, Inc. (EPS) 3.44 4.05 Dividends declared 0.745 0.725 Year-end market value 57.54 34.99 1.46 1.46 34,382 34,422 21.8 % 20.4 % Adjusted EPS1 RATIOS AND OTHER DATA Long-term debt, including current maturities to Adjusted EBITDA2 Diluted weighted-average shares outstanding (in thousands) Effective tax rate from continuing operations Adjusted EPS1 Cash from Operations Before Working Capital Changes3 Adjusted EBITDA2 (In Millions) (In Millions) $412 $4.05 $353 $3.44 $405 $2.89 $188 $170 2019 2020 $193 $201 2019 2020 $322 $315 $330 2021 2022 2023 $0.96 2019 ($0.04) 2020 2021 2022 2023 2021 2022 2023 1 Adjusted EPS is a non-GAAP financial measure. The measure excludes after-tax charges for asset impairments (including equity method investments), transaction related compensation, goodwill impairment and after-tax gains on a cost method investment, asset sales, deconsolidation of a joint venture, and insured inventory recoveries for 2023; after-tax charges for asset impairments (including equity method investments), insured inventory expenses, and after-tax gains on asset sales for 2022; after-tax charges for transaction related compensation, asset impairments, loss on a cost method investment and an after-tax gain of the sale of a business for 2021; after-tax charges for severance and transaction related compensation, as well as income tax benefits resulting from the Coronavirus Aid, Relief, and Economic Security (CARES) Act for 2020; and after-tax charges for acquisition costs, transaction related compensation, asset impairments (including equity method investments) and after-tax gains on asset sales (including equity method investments) for 2019. 2 EBITDA and Adjusted EBITDA are both non-GAAP financial measures. EBITDA is calculated as interest expense, tax expense, depreciation and amortization added back to net income (loss) from continuing operations. Reconciliations of EBITDA and Adjusted EBITDA to net income from continuing operations can be found in our fourth quarter earnings release and investor presentation posted to the Investor Relations webpage at https://investors.andersonsinc.com/presentations. 3 Cash from operations before working capital changes is a non-GAAP financial measure. This measure is calculated by adding back changes in working capital to cash provided by (used in) operating activities as stated in the audited statement of cash flows. Reconciliations of cash from operations before working capital changes to cash provided by (used in) operating activities can be found in our fourth quarter earnings release and investor presentation posted to the Investor Relations webpage at https://investors.andersonsinc.com/presentations.
DEAR SHAREHOLDERS AND FRIENDS, We are pleased to report strong earnings for 2023, our secondbest adjusted full year results. We had a record fourth quarter and our Renewables segment achieved record full-year adjusted operating results. Our teams continue to focus on meeting the needs of our customers and we remain grateful for the support from our suppliers and for the dedication of our team. We embrace our position in the North American ag supply chain and will continue to identify new opportunities to profitably grow our company while earning appropriate shareholder returns and providing outstanding service to our customers. We were also proud to receive several awards in 2023, including being named one of The Americas Fastest Growing Companies by the Financial Times , one of America s Greatest Workplaces by Newsweek , and one of America s Best Small Companies by Forbes . After several years of tight global supplies and volatility, 2023 ended with a replenished global supply of grain. These changing ag fundamentals will create new opportunities for our well-positioned assets and require shifts by our commodity merchandising teams. We anticipate leveraging our balanced portfolio of assets and product line merchandising as additional supply finds its way to storage. In addition, the changes in market dynamics should bring more growth opportunities as business owners reconsider their ownership positions in a changing ag market. Our 2023 net income from continuing operations attributable to the company was $101 million, or $2.94 per diluted share. Adjusted net income was $118 million, or $3.44 per diluted share. Our 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations of $405 million was just shy of the record adjusted EBITDA from continuing operations of $412 million generated in 2022. We continue to make steady progress on executing our growth strategy, including M&A, capital projects, and expansion of our merchandising businesses. After three years of very strong earnings combined with disciplined working capital management and capital spending, we ended the year with $644 million in cash, exceeding our total debt. Our long-term debt to EBITDA ratio was 1.5 times, well below our target of 2.5 times. We have capacity for growth but will continue to exercise discipline in our approach. We have a robust pipeline of M&A and organic growth projects that includes several exciting opportunities. The TRADE segment started 2023 strong with good elevation margins in our assets and an inverse futures market. Good demand supported these assets and allowed our merchandising teams to capitalize on market dislocations and volatility resulting from the then-current global supply shortfalls. When the large South American harvest was complete, the global supply began to return to more normal levels, reducing the volatility in our markets. This was followed by a good, but later than normal, North American harvest where we were able to earn drying income on the wet grain we accumulated. For a portion of 2023, we also earned variable storage rate income on wheat deliveries. We experienced an unusual loss in Egypt when we accepted a lower exchange rate on customer payments due to currency liquidity issues. We remain supportive of our international business as it focuses on supply to
areas of population growth that require imported grains for food. Lastly, we grew our premium ingredients business with the third quarter acquisition of ACJ International, a supplier of pet food ingredients, as well as from adding capacity in our food-grade corn business. We continue to look for opportunities in this space. Trade recorded adjusted pretax earnings of $83 million and adjusted EBITDA of $155, following a record year in 2022. The RENEWABLES segment had an outstanding year. Ethanol pricing for much of 2023 remained historically strong, after a slow start, and our four plants produced same-store record gallons and best-ever yields. Renewable diesel (RD) feedstock, ethanol, and feed product merchandising results continued to grow. In 2023, we sold 1.3 billion pounds of low carbon intensive feedstock, a 60% increase from 2022. We merchandise our own corn oil production as well as third-party vegetable oils and fats to supply the expanding North American RD production. Early in the year, the ELEMENT joint venture plant was placed in receivership due to operational and market challenges and recorded an impairment charge in the first quarter; the plant was ultimately sold in early 2024. Renewables recorded adjusted pretax earnings attributable to The Andersons of $98 million and adjusted EBITDA of $230 million. Ethanol crush margins have softened to begin the year, as is typical, but we expect to see improvement with industry maintenance shutdowns and expected fuel demand increases in the spring. We have invested in our ethanol production facilities to maintain their performance and will continue to do so. We are also making investments to increase the value of the co-products produced by these plants. The demand for RD feedstocks should continue to increase as more RD production facilities become operational. We plan to continue to grow this business, with a goal of merchandising two billion pounds of low carbon intensive feedstock by 2025, up from 1.3 billion last year. We acknowledge a decline in farmer income based on the lower grain prices and higher interest rates but expect the fertilizers and specialty nutrients that we produce will continue to be a necessity for growers to maximize their yields. We anticipate further improvement in our manufactured product lines, particularly our turf products. As stated previously, we expect to grow through M&A and capital investments but will remain disciplined in capital allocation and stay true to investing within or adjacent to our core. Our balance sheet is strong, and we have good capacity for this growth. Our NUTRIENT & INDUSTRIAL segment had a very good planting season in its dry fertilizer agricultural business with an overall 11% increase in fertilizer volume. A continuation of market pricing declines from the record highs of early 2022 reduced margin opportunities in spite of the volume increases. Our specialty liquids business also was lower year-over-year due to both volume and margin declines. In our manufactured products business, we had overall improvements in our operations but continue to be challenged by soft demand. Nutrient & Industrial ended the year with adjusted pretax earnings of $26 million and adjusted EBITDA of $62 million. Our people are energized with the opportunities in front of us and remain the source of our success. We have had several years of strong execution in volatile markets and our teams are well-prepared for the market shifts. We remain focused on operating safely and efficiently, working on growth projects and opportunities, reviewing and refining our longer-term strategy, and becoming a more nimble and innovative company focused primarily on North American agriculture. We look forward to providing extraordinary service to our customers, supporting our suppliers and communities, and rewarding our employees and shareholders for many more years to come. We remain focused on achieving our longer-term growth targets. With the strength of our balance sheet, we have capacity for growth projects that are aligned with our strategy. We have stated a goal of $475 million in run rate EBITDA by the end of 2025, which relies on a combination of organic growth and M&A. We anticipate that our growth will not necessarily be linear as is typical in a commodity business. With our focus on improving value for our shareholders, as well as maintaining sustainable businesses and operations, we will remain disciplined in our plans to acquire and invest at amounts that deliver appropriate returns. Thank you for your continued support, As we share this report in the first quarter of 2024, commodity markets have shifted with lower prices on the increased supply. This has delayed farmers delivery of grain to us. While this may reduce some nearby merchandising opportunities, we have a diverse portfolio of profit centers, and our well-positioned North American assets are ready to handle grain when brought to market. With 2024 planted acres expected to remain high and with a normal growing season, we anticipate strong volumes in our key draw areas. Demand for products that we merchandise is still solid and we will continue to search for opportunistic trades. We also continue to believe that our premium food corn, pet food, and feed ingredient demand will remain strong. Pat Bowe President and Chief Executive Officer Bill Krueger Chief Operating Officer and President, Trade and Processing Brian Valentine Executive Vice President and Chief Financial Officer Left to right: Brian Valentine, Pat Bowe, Bill Krueger
 • shareholder letter icon 3/28/2024 Letter Continued (Full PDF)
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ANDE 3/28/2024 Shareholder/Stockholder Letter Transcript:

2023
ANNUAL
REPORT

FINANCIAL HIGHLIGHTS
OPERATING RESULTS (IN MILLIONS)
2O23
2O22
$14,750
$17,325
Gross profit
745
684
Operating, administrative, and general expenses
492
458
Income before income taxes from continuing operations
170
195
Sales and merchandising revenues
101
119
Earnings before interest, taxes, depreciation, and amortization from continuing operations (EBITDA)
342
386
Cash provided by operating activities
947
287
Net income from continuing operations attributable to The Andersons, Inc.
FINANCIAL POSITION (IN MILLIONS)
$3,855
$4,608
Working capital
1,171
945
Readily marketable inventories
863
1,309
Total assets
Short-term debt
Long-term debt, including current maturities of long-term debt
Total equity
43
273
591
603
1,516
1,430
$2.94
$3.46
PER SHARE DATA
Diluted earnings from continuing operations attributable to The Andersons, Inc. (EPS)
3.44
4.05
Dividends declared
0.745
0.725
Year-end market value
57.54
34.99
1.46
1.46
34,382
34,422
21.8 %
20.4 %
Adjusted EPS1
RATIOS AND OTHER DATA
Long-term debt, including current maturities to Adjusted EBITDA2
Diluted weighted-average shares outstanding (in thousands)
Effective tax rate from continuing operations
Adjusted EPS1
Cash from Operations Before
Working Capital Changes3
Adjusted EBITDA2
(In Millions)
(In Millions)
$412
$4.05
$353
$3.44
$405
$2.89
$188
$170
2019
2020
$193
$201
2019
2020
$322
$315
$330
2021
2022
2023
$0.96
2019
($0.04)
2020
2021
2022
2023
2021
2022
2023
1
Adjusted EPS is a non-GAAP financial measure. The measure excludes after-tax charges for asset impairments (including equity method investments), transaction related compensation, goodwill impairment and after-tax gains on a cost method
investment, asset sales, deconsolidation of a joint venture, and insured inventory recoveries for 2023; after-tax charges for asset impairments (including equity method investments), insured inventory expenses, and after-tax gains on asset sales for 2022;
after-tax charges for transaction related compensation, asset impairments, loss on a cost method investment and an after-tax gain of the sale of a business for 2021; after-tax charges for severance and transaction related compensation, as well as income
tax benefits resulting from the Coronavirus Aid, Relief, and Economic Security (CARES) Act for 2020; and after-tax charges for acquisition costs, transaction related compensation, asset impairments (including equity method investments) and after-tax
gains on asset sales (including equity method investments) for 2019.
2
EBITDA and Adjusted EBITDA are both non-GAAP financial measures. EBITDA is calculated as interest expense, tax expense, depreciation and amortization added back to net income (loss) from continuing operations. Reconciliations of EBITDA and Adjusted
EBITDA to net income from continuing operations can be found in our fourth quarter earnings release and investor presentation posted to the Investor Relations webpage at https://investors.andersonsinc.com/presentations.
3
Cash from operations before working capital changes is a non-GAAP financial measure. This measure is calculated by adding back changes in working capital to cash provided by (used in) operating activities as stated in the audited statement of cash
flows. Reconciliations of cash from operations before working capital changes to cash provided by (used in) operating activities can be found in our fourth quarter earnings release and investor presentation posted to the Investor Relations webpage at
https://investors.andersonsinc.com/presentations.

DEAR SHAREHOLDERS
AND FRIENDS,
We are pleased to report strong earnings for 2023, our secondbest adjusted full year results. We had a record fourth quarter
and our Renewables segment achieved record full-year adjusted
operating results. Our teams continue to focus on meeting the
needs of our customers and we remain grateful for the support
from our suppliers and for the dedication of our team. We
embrace our position in the North American ag supply chain and
will continue to identify new opportunities to profitably grow
our company while earning appropriate shareholder returns and
providing outstanding service to our customers. We were also
proud to receive several awards in 2023, including being named
one of The Americas    Fastest Growing Companies by the Financial
Times  , one of America   s Greatest Workplaces by Newsweek  , and
one of America   s Best Small Companies by Forbes  .
After several years of tight global supplies and volatility, 2023
ended with a replenished global supply of grain. These changing ag
fundamentals will create new opportunities for our well-positioned
assets and require shifts by our commodity merchandising teams.
We anticipate leveraging our balanced portfolio of assets and
product line merchandising as additional supply finds its way to
storage. In addition, the changes in market dynamics should bring
more growth opportunities as business owners reconsider their
ownership positions in a changing ag market.
Our 2023 net income from continuing operations attributable
to the company was $101 million, or $2.94 per diluted share.
Adjusted net income was $118 million, or $3.44 per diluted share.
Our 2023 adjusted earnings before interest, taxes, depreciation,
and amortization (EBITDA) from continuing operations of $405
million was just shy of the record adjusted EBITDA from continuing
operations of $412 million generated in 2022.
We continue to make steady progress on executing our growth
strategy, including M&A, capital projects, and expansion of our
merchandising businesses. After three years of very strong
earnings combined with disciplined working capital management
and capital spending, we ended the year with $644 million in cash,
exceeding our total debt. Our long-term debt to EBITDA ratio was
1.5 times, well below our target of 2.5 times. We have capacity for
growth but will continue to exercise discipline in our approach. We
have a robust pipeline of M&A and organic growth projects that
includes several exciting opportunities.
The TRADE segment started 2023 strong with good elevation
margins in our assets and an inverse futures market. Good demand
supported these assets and allowed our merchandising teams
to capitalize on market dislocations and volatility resulting from
the then-current global supply shortfalls. When the large South
American harvest was complete, the global supply began to return
to more normal levels, reducing the volatility in our markets. This
was followed by a good, but later than normal, North American
harvest where we were able to earn drying income on the wet
grain we accumulated. For a portion of 2023, we also earned
variable storage rate income on wheat deliveries. We experienced
an unusual loss in Egypt when we accepted a lower exchange rate
on customer payments due to currency liquidity issues. We remain
supportive of our international business as it focuses on supply to

areas of population growth that require imported grains
for food. Lastly, we grew our premium ingredients business
with the third quarter acquisition of ACJ International, a
supplier of pet food ingredients, as well as from adding
capacity in our food-grade corn business. We continue
to look for opportunities in this space. Trade recorded
adjusted pretax earnings of $83 million and adjusted
EBITDA of $155, following a record year in 2022.
The RENEWABLES segment had an outstanding year.
Ethanol pricing for much of 2023 remained historically
strong, after a slow start, and our four plants produced
same-store record gallons and best-ever yields. Renewable
diesel (RD) feedstock, ethanol, and feed product
merchandising results continued to grow. In 2023, we sold
1.3 billion pounds of low carbon intensive feedstock, a 60%
increase from 2022. We merchandise our own corn oil
production as well as third-party vegetable oils and fats to
supply the expanding North American RD production. Early
in the year, the ELEMENT joint venture plant was placed in
receivership due to operational and market challenges and
recorded an impairment charge in the first quarter; the plant
was ultimately sold in early 2024. Renewables recorded
adjusted pretax earnings attributable to The Andersons of
$98 million and adjusted EBITDA of $230 million.
Ethanol crush margins have softened to begin the year, as
is typical, but we expect to see improvement with industry
maintenance shutdowns and expected fuel demand
increases in the spring. We have invested in our ethanol
production facilities to maintain their performance and
will continue to do so. We are also making investments to
increase the value of the co-products produced by these
plants. The demand for RD feedstocks should continue
to increase as more RD production facilities become
operational. We plan to continue to grow this business, with
a goal of merchandising two billion pounds of low carbon
intensive feedstock by 2025, up from 1.3 billion last year.
We acknowledge a decline in farmer income based on the
lower grain prices and higher interest rates but expect
the fertilizers and specialty nutrients that we produce
will continue to be a necessity for growers to maximize
their yields. We anticipate further improvement in our
manufactured product lines, particularly our turf products.
As stated previously, we expect to grow through M&A and
capital investments but will remain disciplined in capital
allocation and stay true to investing within or adjacent to
our core. Our balance sheet is strong, and we have good
capacity for this growth.
Our NUTRIENT & INDUSTRIAL segment had a very
good planting season in its dry fertilizer agricultural
business with an overall 11% increase in fertilizer volume.
A continuation of market pricing declines from the record
highs of early 2022 reduced margin opportunities in spite
of the volume increases. Our specialty liquids business also
was lower year-over-year due to both volume and margin
declines. In our manufactured products business, we had
overall improvements in our operations but continue to be
challenged by soft demand. Nutrient & Industrial ended
the year with adjusted pretax earnings of $26 million and
adjusted EBITDA of $62 million.
Our people are energized with the opportunities in front
of us and remain the source of our success. We have
had several years of strong execution in volatile markets
and our teams are well-prepared for the market shifts.
We remain focused on operating safely and efficiently,
working on growth projects and opportunities, reviewing
and refining our longer-term strategy, and becoming a
more nimble and innovative company focused primarily on
North American agriculture. We look forward to providing
extraordinary service to our customers, supporting our
suppliers and communities, and rewarding our employees
and shareholders for many more years to come.
We remain focused on achieving our longer-term growth
targets. With the strength of our balance sheet, we have
capacity for growth projects that are aligned with our
strategy. We have stated a goal of $475 million in run rate
EBITDA by the end of 2025, which relies on a combination of
organic growth and M&A. We anticipate that our growth will
not necessarily be linear as is typical in a commodity business.
With our focus on improving value for our shareholders, as
well as maintaining sustainable businesses and operations,
we will remain disciplined in our plans to acquire and invest at
amounts that deliver appropriate returns.
Thank you for your continued support,
As we share this report in the first quarter of 2024,
commodity markets have shifted with lower prices on
the increased supply. This has delayed farmers    delivery
of grain to us. While this may reduce some nearby
merchandising opportunities, we have a diverse portfolio
of profit centers, and our well-positioned North American
assets are ready to handle grain when brought to market.
With 2024 planted acres expected to remain high and with
a normal growing season, we anticipate strong volumes
in our key draw areas. Demand for products that we
merchandise is still solid and we will continue to search for
opportunistic trades. We also continue to believe that our
premium food corn, pet food, and feed ingredient demand
will remain strong.
Pat Bowe
President and
Chief Executive
Officer
Bill Krueger
Chief Operating
Officer and President,
Trade and Processing
Brian Valentine
Executive Vice
President and
Chief Financial Officer
Left to right: Brian Valentine, Pat Bowe, Bill Krueger



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