Andersons Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ben Klieve - Lake Street Capital Markets - Analyst : All right, thanks for taking my questions. Congrats all on a really nice quarter here. And Bill, congratulations on assuming the CEO role. First question, kind of a high level question on the conditions in the third quarter. Brian, you noted that farmers were carrying a lot of grain inventories going into the fall harvest and then with great conditions, a really strong harvest. And I was wondering one, if you can talk about kind of if there's precedent for this condition in prior years and then also talk about how this condition really ¡ if at all, this condition drove outsized results in Q3 and any kind of impact you see from that environment in Q4 or beyond. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, ANDE.OQ - Q3 2024 Andersons Inc Earnings Call

Question: Ben Klieve - Lake Street Capital Markets - Analyst : Okay, very helpful. Thanks, Bill. On the Skyland acquisition looks to be very accretive on an EBITDA basis. I am wondering, given the challenges that that business had historically, what, if anything, you guys need to do to clean it up, either just kind of from a strategic perspective or if there is any kind of real material investments that need to go into that business here in 2025?

Question: Ben Klieve - Lake Street Capital Markets - Analyst : Okay. Great. Thank you. And then one other just kind of high level, kind of educational question, you noted that the investments going into the port of Houston facility to take advantage of the soy meal market, that's not a business that, that you guys have really ever talked too much about. Can you talk about the overall contributions that the meal market has in your business overall today? And then given the ¡ and then what really gives you a sense of optimism regarding that port and the need to ¡ and the decision to invest there, given the rise of crush facilities domestically, it seems that there's going to be just an awful lot of meal throughout the space. And wondering what really gives you so much encouragement about that business.

Question: Ben Klieve - Lake Street Capital Markets - Analyst : Okay, very good. That's helpful. There's plenty more to talk about, but it's a good place to leave it. Congratulations again on a nice quarter and I'll get back in queue.

Question: Pooran Sharma - Stephens - Analyst : Hey, congrats on the quarter and thanks for taking my question, guys. I was just wondering if maybe we could just talk about some of the ¡ I know you went through some of the strength on the call in ethanol, but if you could kind of just go through the puts and takes to the quarter, maybe just reiterate what you had said. And then also what gives you kind of confidence on the outlook on the go forward? We've seen ethanol prices kind of come in on 4Q but we have seen kind of ending stocks low on decent amount of production. So that's indicating that it's being taken off domestically and internationally. But if you could just speak to the trade down in ethanol prices in this quarter recently and then your go forward outlook and what gives you confidence in ethanol fundamentals?

Question: Pooran Sharma - Stephens - Analyst : Okay. No, that makes sense. And I can certainly appreciate the corn basis aspect of it as well. I don't think I was kind of factoring that in, but in light of kind of you talking about -- lowering your CI score here and 45Z rolling around the corner, I was wondering if you're able to talk about if you're kind of trying to position yourself to capture any carbon credits, and maybe you could speak to how you think the initiative will play out on perhaps your corn oil business or any other benefits that you kind of see as we roll into the New Year.

Question: Pooran Sharma - Stephens - Analyst : Great. And I just had just one more quick question. You guys have had a nice kind of acquisition strategy. You've been able to kind of put in a lot of successful businesses into your portfolio. Now you mentioned on the call, there's opportunities out there. I was wondering if you were able to share with a bit more detail into any potential opportunities that you may see on the horizon.

Question: Pooran Sharma - Stephens - Analyst : Great. Appreciate the color. I will pass it off. Congrats again on the quarter.

Question: Craig Irwin - ROTH - Analyst : Good morning and thanks for taking my questions. So I was hoping you could give us a little bit more of an update on your capital investments, your growth investments that you're making this year in the existing platform. $150 million is a good level of investment. Can you maybe run through some of the details of projects that should be completed over the course of the next year and expected returns around those individual projects?

Question: Craig Irwin - ROTH - Analyst : Understood. So actually, my second question dovetails nicely to that. You guys have been actually very conservative in the way you've deployed capital over the last many years. Most of the time, it's actually worked out in your favor. And a consequence of that is that you're under leveraged today, as you outlined in your prepared remarks, having at least a full turn in debt capacity on existing EBITDA. Can you maybe talk a little bit about your buyback authorization, whether or not their market conditions that could allow you to be more active than the $15 million you bought back over the last few years? And then is there something that might catalyze a more active M&A environment for you guys? You did just complete a material acquisition, but I think there's potentially more capacity to do more. But would this be an environment that could be achievable or is this something where you're going to patiently look and wait for things that meet your return thresholds?

Question: Craig Irwin - ROTH - Analyst : Okay. And then last question, I guess is a policy question. Do you have any strong views on sustainable aviation fuel and your ability to participate there in the future? It kind of seems that, if we have a Harris administration, hopefully treasury gets its act in gear and gives us clearer language in how people can actually pull down the related credits. And many people believe it's unlikely a Trump administration would pick a renegade from Oklahoma with no biofuels exposure history to run EPA. So we're unlikely to see the damage repeated that he did back in the day. So it's actually a pretty favorable setup for SAF. How do you see the situation? How do you see the Andersons potentially participating over the next few years?

Question: Craig Irwin - ROTH - Analyst : Excellent. I like that. So congratulations on the historic margins, the historic crush, and I'll hop back in the queue.

Question: Ben Mayhew - BMO Capital Markets - Analyst : Hey, guys. Congratulations, Bill. My question ¡ my first question has to do with the merchandising environment and I'm just wondering, it sounds like you guys loaded up on some low basis corn. Sounds like elevation margins are pretty solid. So I mean, what is your general outlook for 2025. It seems like the industry isn't too excited about the lack of volatility. But if there are any, like, if there's any framework you could put around it and the potential catalysts for more bullish action on commodity prices that would be great? And maybe just also like, where are the bright spots on the demand side, both domestically and internationally? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, ANDE.OQ - Q3 2024 Andersons Inc Earnings Call

Question: Ben Mayhew - BMO Capital Markets - Analyst : Got it. And then did I hear you earlier say, or Brian say that you would potentially look at acquiring another ethanol plant? I know in the past you've kind of talked about just improving your own assets and you guys clearly run top notch ethanol plants. I guess what given kind of crush margins have come in and they've been volatile ¡ they've always been volatile. But is the market attractive enough right now, valuation wise, where you could add another ethanol plant or is that just something that you're not interested in? And I guess just kind of generally how you think about ethanol crush assets moving forward into the new world of policy that we find ourselves in?

Question: Ben Mayhew - BMO Capital Markets - Analyst : Thanks. And just one final question having to do with soy crush, so I think there's a general concern out there right now that new policy is going to disincentivize soybean oil use and biofuels, at least in the US. But at the same time soybean meal demand seems to be stronger than ever, both domestically and internationally. Can you just speak to the current environment where we have increasing capacity and the ability for demand to absorb that capacity and what's kind of the breakdown between domestic and international? And I'll leave it there. Thanks, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, ANDE.OQ - Q3 2024 Andersons Inc Earnings Call

Question: Ben Mayhew - BMO Capital Markets - Analyst : Great. Thanks guys, and congrats on the quarter.