MAUMEE, OHIO, US — With double-digit improvement in all three of its segments, The Andersons posted an all-time record for the second quarter ended June 30.
Adjusted net income for the quarter was $82.2 million, which compared with $41.6 million in the same period a year ago.
“I’m thrilled with the outstanding performance in this second quarter,” said Pat Bowe, president and chief executive officer. “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. 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.”
The Trade segment recorded adjusted pretax income of $24.4 million for the quarter, which compared with adjusted pretax income of $14.1 million in the second quarter of 2021.
“Trade Group results reflect the corn and bean basis appreciation that we expected would occur after the Ukraine war impact on futures prices in the first quarter,” Bowe said in an Aug. 3 earnings call. “Fleet ownership in our grain terminal assets is earnings space income. We had very strong results from our Midwest truck grain merchandising business. Our food and specialty ingredients business lines also delivered strong results in the quarter. Of note was our UK subsidiary feed factors.”
Looking ahead, Bowe said he remains positive for the segment.
“Worldwide supplies are projected to be tight through the 2023 harvest, and we’re pleased with our ownership positions at good values,” he said. “We know it will be challenging to match last year’s outstanding second half results in our Trade Group as we had unusually strong third-quarter elevation margins in certain regions. We are, however, preparing for a good harvest in our dry areas that should bring us good merchandising opportunities.”
The Renewables segment had pretax income attributable to the company of $45.9 million in the second quarter, which compared with pretax income attributable to the company of $23.5 million realized in the same period in 2021. Included in pretax income attributable to The Andersons is $8.9 million of USDA Biofuels Producer COVID relief funds.
The company’s ethanol plants delivered strong results from good overall margins, Bowe said.
Increased ethanol exports are favorably impacting overall margins, and the company’s eastern ethanol plants are located where corn prices are expected to be lower through the fall, he said.
“We continue to see strong demand and good values for coproducts, particularly distillers corn oil, which supports our overall margins,” Bowe said. “In addition, our renewable diesel feedstock merchandising business is performing well and adding to our results.”
Plant Nutrient followed a record first quarter with another very strong quarter. The segment posted pretax income of $38.3 million, which compared with 2021’s pretax income of $24 million.
Looking ahead, Bowe said third-quarter off-season results are usually lower. However, continued strong global demand and disruption likely will keep prices higher than average.
Overall, Bowe said the company is excited about its prospects for growth and the strong agricultural market fundamentals.“We remain committed to adding value for our customers, managing risk and operation safely and efficiently,” he said. “With our strong balance sheet, sustainable cash flows and strategic focus, we expect to be able to grow profitability in these exciting ag markets.”