Maumee / OH. (tagg) The Andersons Inc. announces financial results for the second quarter ended June 30, 2022. Highlights:
- Company reported net income from continuing operations attributable to The Andersons of USD 80.5 million, or USD 2.34 per diluted share, and adjusted net income of USD 82.2 million or USD 2.39 per diluted share
- Adjusted Ebitda from continuing operations was USD 169.3 million for the quarter
- Trailing twelve months adjusted Ebitda is USD 412.0 million
- Renewables produced record pretax income attributable to The Andersons of USD 45.9 million
- Plant Nutrient had its second-best quarter ever, generating pretax income of USD 38.3 million
- Trade reported strong adjusted pretax income of USD 24.4 million
«I’m thrilled with the outstanding performance in this second quarter. The Renewables team nearly doubled last year’s already strong performance, showing good yields and higher crush margins in our ethanol plants. Within Plant Nutrient, good inventory position management and high fertilizer prices led to higher margins and strong profitability,» said President and CEO Pat Bowe. «In Trade, we entered the quarter with good basis ownership positions and as expected, we benefited from basis improvement during the quarter. In addition, we had very strong feed ingredients merchandising results in several of our locations. Global ag markets remain volatile, creating opportunities; our teams continue to execute well and remain focused on customer needs and operational excellence.»
Cash, Liquidity and Long-Term Debt Management
«Our businesses continue to generate strong operating cash flows and we remain disciplined in our approach to capital spending decisions,» said Executive Vice President and CFO Brian Valentine. «We are well below our goal of long-term debt to Ebitda of less than 2.5 times, ending the quarter at 1.5 times, and are well-positioned to fund strategic growth projects with appropriate returns.»
The company generated USD 134.6 million and USD 93.1 million in cash from operations before working capital changes during the second quarters of 2022 and 2021, respectively. Working capital remains high, primarily due to high commodity prices that impact the value of inventory and accounts receivable.
Second Quarter Segment Overview
Trade Results Improve Significantly; Year-to-Date Results Comparable to 2021
The Trade segment recorded pretax income and adjusted pretax income of USD 23.7 million and USD 24.4 million, respectively, for the quarter compared to adjusted pretax income of USD 14.1 million in the second quarter of 2021. With some reduction in commodity prices from Q1 highs, the segment benefited from basis appreciation and good selling margins for many of its products.
Despite initial delays in planting, crops in key draw areas are better than current USDA national ratings for corn and soybeans. Wheat ownership in our grain elevator assets is again earning space income. Continued merchandising opportunities and strong elevation margins are also expected to continue as global stocks are not projected to recover quickly from the recent global supply disruptions.
Trade’s second quarter adjusted Ebitda was USD 46.6 million, compared to second quarter 2021 adjusted Ebitda of USD 32.7 million.
Renewables Generates Record Q2 Earnings of USD 45.9 million on Strong Margins
The Renewables segment reported pretax income attributable to the company of USD 45.9 million in the second quarter compared to pretax income attributable to the company of USD 23.5 million realized in the same period in 2021. Included in pretax income attributable to The Andersons is USD 8.9 million of USDA Biofuels Producer COVID relief funds. Also included in pretax income in the quarter is USD 24.4 million of positive mark-to-market impact, nearly USD 18 million of which are reversals of prior mark-to-market losses. This compared to positive mark-to-market impacts of USD 13.5 million in the second quarter of 2021.
The operating improvement was driven by strong overall production margins. Seasonal demand has been impacted by high gasoline prices, but higher exports have firmed ethanol prices. High corn costs for ethanol production in the western U.S. may negatively impact ethanol production there, while our eastern corn belt production facilities are well-positioned for corn supply.
Renewables had record second quarter Ebitda of USD 85.7 million in 2022, up USD 38.5 million from 2021 second quarter Ebitda of USD 47.2 million.
Plant Nutrient Posts Strong Second Quarter Results
The Plant Nutrient segment posted pretax income of USD 38.3 million, compared to 2021’s pretax income of USD 24.0 million. As expected, well-positioned inventory and an overall favorable spring planting season led to strong margins that more than offset a volume decrease for our agricultural fertilizers, particularly within our wholesale nutrients, farm centers, and specialty liquids low-salt starters products.
Plant Nutrient’s second quarter Ebitda was USD 46.8 million compared to 2021 second quarter Ebitda of USD 31.6 million.
Income Taxes; Corporate
The company recorded income taxes from continuing operations at an effective rate of 13.3 percent for the quarter due to the tax treatment of derivatives, hedging activities, and non-controlling interests. We now anticipate a full-year effective rate of approximately 18 percent-21 percent.