Andersons Q4 2024 Earnings Report

Andersons EPS Results

• Actual EPS: $1.36
• Consensus EPS: $1.02
• Beat/Miss: Beat by +$0.34
• One Year Ago EPS: N/A

Andersons Revenue Results

• Actual Revenue: $3.12 billion
• Expected Revenue: $2.72 billion
• Beat/Miss: Beat by +$405.89 million
• YoY Revenue Growth: N/A

Andersons Announcement Details

• Quarter: Q4 2024
• Date: 2/18/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, February 19, 2025
• Conference Call Time: 8:30AM ET

Andersons (NASDAQ:ANDE) operates in trade, renewables, and nutrient and industrial sectors in the United States, Canada, Mexico, Egypt, Switzerland, and internationally. It operates through three segments: Trade, Renewables, and Nutrient & Industrial. The company's Trade segment operates grain elevators; stores commodities; and provides grain marketing, risk management, and origination services, as well as sells commodities, such as corn, soybeans, wheat, oats, ethanol, and corn oil. This segment also engages in the commodity merchandising business, as well as offers logistics for physical commodities, such as whole grains, grain products, feed ingredients, domestic fuel products, and other agricultural commodities. Its Renewables segment produces, purchases, and sells ethanol, and co-products, as well as offers facility operations, risk management, and marketing services to the ethanol plants it invests in and operates. The company's Nutrient & Industrial segment manufactures, distributes, and retails agricultural and related plant nutrients, liquid industrial products, corncob-based products, and pelleted lime and gypsum products, as well as turf fertilizer, pesticide, and herbicide products; and crop nutrients, crop protection chemicals, and seed products, as well as provides application and agronomic services to commercial and family farmers. In addition, this segment produces corncob-based products for laboratory animal bedding and private-label cat litter, as well as absorbents, blast cleaners, carriers, and polishers; professional lawn care products for golf course and turf care markets; fertilizer and weed, and pest control products; dry and liquid agricultural nutrients, pelleted lime, gypsum, and soil amendments; and micronutrients, as well as industrial products comprising nitrogen reagents, calcium nitrate, deicers, and dust abatement products. The Andersons, Inc. was founded in 1947 and is based in Maumee, Ohio.

Andersons Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to the Anderson's twenty twenty four Fourth Quarter Earnings Conference Call. My name is Rocco, and I will be your coordinator for today. At this time, all participants are in listen only mode.

[Operator]

Later, we will facilitate a question and answer session. As a reminder, this conference call is being recorded for replay purposes. I will now hand the presentation to your host for today, Mr. Mike Holter, Vice President, Corporate Controller and Investor Relations. Please proceed.

[Michael Hoelter, VP, Corporate Controller & Investor Relations at The Andersons]

Thanks, Rocco. Good morning, everyone, and thank you for joining us for the Anderson's fourth quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation on our webcast, the slides and commentary will be in sync. This webcast is being recorded and recorded in the supporting slides will be made available on our Investors page at andersonsinc.com shortly.

[Michael Hoelter, VP, Corporate Controller & Investor Relations at The Andersons]

Please direct your attention to the disclosure statement on Slide two of the presentation as well as the disclaimers in the press release related to forward looking statements. Certain information discussed today constitutes forward looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors.

[Michael Hoelter, VP, Corporate Controller & Investor Relations at The Andersons]

This presentation and today's prepared remarks contain non GAAP financial measures. Reconciliations of the non GAAP measures to the most directly comparable GAAP financial measure are included within the appendix of this presentation. On the call with me today are Bill Krueger, President and Chief Executive Officer and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Bill.

[William Krueger, CEO, President & Director at The Andersons]

Thanks, Mike, and good morning, everyone. Thank you for joining our call today to discuss our fourth quarter results and initial outlook for 2025. Record fourth quarter results in our trade group propelled us to another very solid year. Renewables also contributed significantly to the quarter, setting ethanol production records for the quarter and for the full year. Our nutrient and industrial results were also up slightly in the quarter compared to last year.

[William Krueger, CEO, President & Director at The Andersons]

We ended 2024 with adjusted pre tax income of $147,000,000 and adjusted EBITDA of $363,000,000 This solid return is notable given the oversupplied ag markets with relatively low prices and limited volatility. We are pleased with the team's tenacity and execution through the market shifts. Trade reported a strong fourth quarter, driven primarily by a strong harvest execution in our Eastern Grain assets and stable elevation margins. Our Premium Ingredients business continued to show earnings growth during the quarter. The merchandising businesses had steady and improved results over last year.

[William Krueger, CEO, President & Director at The Andersons]

Our mid fourth quarter investment in Skyland Grain also contributed positively to trade's bottom line. During the fourth quarter, our renewables business set a production record. Despite this, we could not match last year's record results, but are still pleased with the strong performance driven by improved yields and lower controllable cost per gallon in a period where ethanol board crush was down $0.16 per gallon. Additionally, Renewables merchandising experienced another strong year bolstering the results within our renewables business. Nutrient and industrial results improved slightly over last year on higher manufactured products volume.

[William Krueger, CEO, President & Director at The Andersons]

The agricultural businesses were lower on soft industry fundamentals, including limited grower engagement. Our overall financial performance confirms our portfolio's versatility and resilience in various market conditions. We continue to demonstrate strength in asset management and renewable fuels production combined with commodity merchandising. Our recent geographic expansion with Skyland will further solidify our presence in the North American ag supply chain, connecting grain originations to production, both domestically and in export markets. The company's performance and the efforts of the management team and employees have contributed to these outcomes.

[William Krueger, CEO, President & Director at The Andersons]

I'm now going to turn things over to Brian to cover some key financial data. When he's finished, I'll be back to discuss our early outlook for 2025.

[Brian Valentine, Executive VP & CFO at The Andersons]

Thanks Bill and good morning everyone. We're now turning to our fourth quarter results on Slide number five. In the fourth quarter of twenty twenty four, the company reported net income attributable to the Andersons of $45,000,000 or $1.31 per diluted share and adjusted net income of $47,000,000 or $1.36 per diluted share. This compares to adjusted net income of $55,000,000 or $1.59 per diluted share in the fourth quarter of twenty twenty three. Overall, fourth quarter gross profit of $213,000,000 was just below the $218,000,000 of gross profit we recognized in 2023.

[Brian Valentine, Executive VP & CFO at The Andersons]

Trade and Nutrient and Industrial showed increases offset by a $30,000,000 reduction in renewables arising primarily from lower board crush margins. For the full year, gross profit of six ninety four million dollars decreased 7% from $745,000,000 in 2023, also primarily due to lower ethanol margins. Adjusted EBITDA for the fourth quarter was $117,000,000 compared to $135,000,000 in the fourth quarter of twenty twenty three. Full year adjusted EBITDA was $363,000,000 compared to $4.00 $5,000,000 in 2023. We recorded taxes for the quarter at a 20% effective tax rate and for the full year at 15%.

[Brian Valentine, Executive VP & CFO at The Andersons]

Our effective tax rate varies each quarter based primarily on the amount of income attributable to non controlling interests. In addition, in 2024, we received the benefit of federal tax credits, a significant portion of which related to the production of cellulosic ethanol. Now we'll move to Slide six to review our cash flows and liquidity. We generated fourth quarter cash flow from operations before changes in working capital of $100,000,000 in 2024 compared to $122,000,000 in 2023. Full year cash flow was $323,000,000 compared to $330,000,000 in 2023.

[Brian Valentine, Executive VP & CFO at The Andersons]

This strong cash flow generation and our continued focus on working capital management combined with lower commodity prices resulted in a year end cash position of $562,000,000 Our short term debt reflects a modest increase due to the consolidation of Skyland Grain on our balance sheet. Next, let's turn to Slide seven to review capital spending and long term debt. We continue to take a disciplined and practical approach to capital spending and investments, which were in line with our expectations at January for the year. Our long term debt to EBITDA ratio is 1.8 times, still well below our stated target of less than 2.5 times even with the addition of long term debt held by Skyland Grain. We continue to evaluate various acquisitions and internal growth projects and have a strong balance sheet that will support investments that meet our strategic and financial criteria.

[Brian Valentine, Executive VP & CFO at The Andersons]

Now we'll move on to review of each of our segments beginning with Trade on Slide number eight. Trade reported record fourth quarter pre tax income and adjusted pre tax income of $54,000,000 compared to adjusted pretax income of $47,000,000 in 2023. Our Eastern grain assets had a good fourth quarter with strong elevation margins and space income after an early and robust harvest. Because of the good quality of the grain we received, we weren't able to benefit as much from mixing and blending. The premium ingredients business where we have invested recently had a solid quarter with increased year over year.

[Brian Valentine, Executive VP & CFO at The Andersons]

Our merchandising portfolio also delivered improved performance despite limited volatility in the grain markets. From a growth perspective, we completed the 65% investment in Skyland mid quarter and integration activities are progressing well. Trades adjusted EBITDA for the quarter was $76,000,000 compared to adjusted EBITDA of $62,000,000 in the fourth quarter of twenty twenty three. Adjusted EBITDA for the full year was $161,000,000 in 2024 compared to $155,000,000 in 2023. Moving to Slide nine, renewables generated fourth quarter pretax income attributable to the company of $16,000,000 compared to $33,000,000 in 2023.

[Brian Valentine, Executive VP & CFO at The Andersons]

Outstanding operating performance in our four ethanol plants resulted in another quarter of record ethanol production. However, the impact of lower market values of ethanol and co products resulted in lower earnings. Volumes of co products merchandised increased for both the quarter and full year, but could not offset the lower values. Renewables had EBITDA of $40,000,000 in the fourth quarter of twenty twenty four compared to $73,000,000 in the fourth quarter of twenty twenty three. For the full year, Renewables generated adjusted EBITDA of $189,000,000 in 2024 compared to $230,000,000 in 2023.

[Brian Valentine, Executive VP & CFO at The Andersons]

Turning to Slide 10, the Nutrient and Industrial business reported fourth quarter adjusted pretax income of $3,000,000 which was a slight increase from the fourth quarter of twenty twenty three. Manufactured Products volume and margin increased in the quarter, while Agricultural Product sales volumes declined due to limited farmer engagement. Nutrient and Industrials adjusted EBITDA for the quarter was $13,000,000 just above the fourth quarter of twenty twenty three. For the full year, Nutrient and Industrial recorded EBITDA of $57,000,000 compared to adjusted EBITDA of $62,000,000 in 2023. Next, we'll look at what our 2024 results would have been under our new segment reporting format that we will use beginning in 2025.

[Brian Valentine, Executive VP & CFO at The Andersons]

In early December, we announced a change in the way we are organized and have shifted to two operating and reporting segments. This move was designed to streamline operational efficiency, enhance cross functional collaboration and further align the businesses to achieve growth. This structure will support the company's focus on unlocking value across the trade and nutrient businesses in a new agribusiness segment. The Renewables segment will continue to substantially operate as currently reported with an enhanced focus on growth. We will begin reporting our results under this new structure starting in the first quarter of this year.

[Brian Valentine, Executive VP & CFO at The Andersons]

As a preview to these changes, Slide 11 provides pro form a results as if that structure had been in place for the full year of 2024. And with that, I'll turn things back over to Bill for some comments about our early twenty twenty five outlook.

[William Krueger, CEO, President & Director at The Andersons]

Thanks, Brian. As 2024 proved to be another strong year, we are strategically prepared for the potential challenges that 2025 may bring. We remain committed to safe and reliable operations, including enhancing operational efficiencies and seizing new opportunities by consolidating our farmer facing entities into the new agribusiness segment. Furthermore, we intend to integrate the Skyland operations more thoroughly to optimize outcomes for all stakeholders. We will also continue to assess and refine businesses within our portfolio that have not aligned with our internal benchmarks.

[William Krueger, CEO, President & Director at The Andersons]

We remain dedicated to pursuing growth opportunities within our core agribusiness and renewables segments. Our agribusiness outlook remains optimistic, but will continue to face challenges due to lower relative grain prices and reduced farmer engagement at these price levels. Currently, we anticipate an increase in U. S. Corn planted acres, which is the most significant crop that we merchandise.

[William Krueger, CEO, President & Director at The Andersons]

An increase in corn acreage is expected to benefit our nutrient and agronomy business as well as our extensive North American asset network and merchandising operations. Higher yields during the 2024 harvest are also anticipated to necessitate additional nutrient applications for the 2025 growing season. Our fertilizer and related product offerings are essential for maximizing production for farmers in the regions we serve, including the new area covered by the Skyland investment. We believe that we are well positioned to serve our customers when spring applications commence. We continue to assess various internal growth projects and acquisition opportunities that align with our growth strategy.

[William Krueger, CEO, President & Director at The Andersons]

One of our recently announced long term growth projects, the expansion of our facility at the Port Of Houston to support anticipated increased soybean meal exports is progressing well, although it will limit capacity through that facility for 2025. In renewables, seasonally weak demand has reduced ethanol crush margins as is typical during the first quarter. Industry maintenance shutdowns and spring driving miles could positively influence crush margins beginning in the second quarter. Co product values were negatively impacted in 2024, but recent activity suggests some strengthening in 2025. Ethanol export demand is expected to remain strong, supporting ethanol values and board crush.

[William Krueger, CEO, President & Director at The Andersons]

We continue to invest in our plants and consider our assets to be among the best in the industry, both in operations and geographic location. Potential growth investments include improving efficiency and increasing both the quality and yield of distillers corn oil. We are actively pursuing investments aimed at reducing the carbon intensity of our ethanol production. Although we acknowledge there remains some uncertainty around the regulatory environment. These potential projects include carbon sequestration and utilization, opportunities at our eastern plants where geological conditions are favorable, as well as implementing additional combined heat and power generation to enhance plant efficiency.

[William Krueger, CEO, President & Director at The Andersons]

Furthermore, we continue to assess opportunities to expand our renewable diesel feedstock merchandising through offtake and supply agreements. Lastly, we are diligently evaluating acquisitions of additional ethanol production facilities that align with our criteria. We continue to demonstrate our capacity to generate positive returns and cash flow, even during the lower range of the ag cycle. Our balance sheet remains robust and is well positioned to support future growth. We will maintain responsible decision making to benefit our customers and optimize shareholder value while implementing our growth strategy.

[William Krueger, CEO, President & Director at The Andersons]

And now we are happy to take your questions.

[Operator]

Thank you. Today's first question comes from Ben Klieve with Lake Street Capital Markets. Please go ahead.

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

Thanks for taking my questions and congratulations on a really nice quarter here to end a good year. Bill, I'd like to start with the comments you just made at the end of your prepared remarks regarding the Renewables segment investments into that space around lowering the carbon intensity of those

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

locations. Can you elaborate

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

a bit on kind of how your thought process has evolved over the last several months on those investment opportunities? Kind of how the kind of return profile of those potential investments is changing in your mind? And then also comment on the degree to which those type of investments are included within your CapEx expectations this year?

[William Krueger, CEO, President & Director at The Andersons]

Good morning, Ben. Excellent question. Obviously, we're still waiting. And as I mentioned, we do need to have some more clarity on the regulatory environment and we're watching and trying to understand understand what those decisions are going to be. The one thing that we do feel comfortable is the 45Q has been around for a long time.

[William Krueger, CEO, President & Director at The Andersons]

And we believe that the 45Q will remain intact. We also believe that there's progress being made to where we'll be able to see the 45C at least through 2027. And then in terms of our CapEx spending for 2025, Brian will dive into this a little bit more later, but we are continuing to deploy capital as we need it in order to get ourselves prepared to make final decisions once we have a little bit more clarity around the RA.

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

Got it. Very good. Thank you.

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

And regarding

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

the consolidation of the NNI and Trade Group, those businesses seem to be operating relatively efficiently. So I wouldn't expect there's a lot of expense synergies that are going to come out of this. But can you just comment on a high level regarding kind of the magnitude of of synergies on the expense side or even on the revenue side as you guys see fit?

[William Krueger, CEO, President & Director at The Andersons]

Yes. Really the decision to combine the PN and trade group is twofold. The first is there are some opportunities to consolidate positions inside the company, providing opportunities for us to grow in both areas. And then probably the most important reason that we're looking at doing this is simply as we get the Climate Smart Tag portion tied into the Farm Bill and assuming that that will get or get tied into the Inflation Reduction Act and the CSA program will tie into being able to reduce the carbon intensity of the ethanol that we produce. We feel like having one solution to the producer all the way through the ethanol plant makes a lot more sense for us.

[William Krueger, CEO, President & Director at The Andersons]

And then there's a number of other areas that we think the future may hold around being able to capitalize on controlling the crop inputs through the production cycle.

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

Got it. Got it. That makes plenty of sense. Very good. One more for me and then I'll get back in queue.

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

Within the quarter, the in the ethanol space, margin compression from kind of being in the quarter through the end for several reasons that are entirely out of your control, but you guys posted still a really nice quarter. Can you just comment on kind of what allowed you to still deliver really quite solid results in that back in the context of the macro backdrop and the efficacy of your hedging strategy throughout the quarter?

[William Krueger, CEO, President & Director at The Andersons]

Yes.

[William Krueger, CEO, President & Director at The Andersons]

It's really been more towards what we've been talking about for the last few years. For us, there's a lot more than just the four walls of the ethanol plant. We talk about our operations. We talk about reducing our controllable costs when board crush dropped $0.16 quarter over year over year for the fourth quarter. But really the maximizing of our corn originations, our co product sales and our ethanol marketing, when we put those all together, we feel like we can consistently have a strong performance even if Board Crush is not as strong as it had been the previous year.

[William Krueger, CEO, President & Director at The Andersons]

So I really think it's just the execution of our business model that we've been working on ever since we combined trade and ethanol a number of years ago. And that's really what we hope to see the outcome of bringing ANI and trade together also is to repeat what we did with the ethanol business.

[Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC]

Very good. Well, clearly worked in the period. Congratulations again to all for a great quarter. Thanks for taking my questions and I'll get back in queue.

[Operator]

Thank you. And our next question comes from Paramah Sharma with Stephens. Please go ahead.

[Pooran Sharma, Managing Director at Stephens Inc]

Thank you and congrats on the quarter. I just wanted to get a sense of the potential outcomes that you're thinking about for trade tariffs. I think in the release you mentioned that you face challenges and opportunities. So just from a trade tariff backdrop, just want to get a sense on maybe what are the top outcomes that you're planning for and how this would impact your business?

[William Krueger, CEO, President & Director at The Andersons]

Good morning, Brian. For the Andersons, we are not as susceptible to major swings in our results due to tariffs. Obviously, they will affect different pieces of our business, but being more of a domestic focused company, we should be able to find some opportunities that tariffs may or may not deliver to the market. Obviously, we are very focused on any tariffs between The U. S.

[William Krueger, CEO, President & Director at The Andersons]

And Canada, The U. S. And Mexico. And it's really too early to say what tariffs on imported products from those two countries would entail. Thankfully, they were delayed for a while.

[William Krueger, CEO, President & Director at The Andersons]

But we feel like we have a really good feel on the different aspects of our business and what it could do to those businesses. And when we net everything together today, what we know doesn't feel like it's going to have a material result on our earnings for 2025.

[Pooran Sharma, Managing Director at Stephens Inc]

Okay, great. And I appreciate that color. Just wondering if maybe we could talk about Skyland a little bit more. I know you provided some color in the commentary, but just seeing if we could flush out any more details on the progress of integration, what's left and how has this been versus your expectations? Are you still on track to achieve the I believe it's $30,000,000 to $40,000,000 in EBITDA contribution?

[William Krueger, CEO, President & Director at The Andersons]

I'll let Brian address the financial aspects of the transaction. But I guess we're one hundred and nineteen days into the transaction. And I will tell you that the commercial aspect of having the Anderson's merchants work with the Skyland originators has went better than expected. The team knew each other pretty well going into the transaction. So you're always kind of curious how that's going to turn out and it's turned out great on the commercial aspect.

[William Krueger, CEO, President & Director at The Andersons]

In terms of the accounting, the finance and working through those aspects of it, I would tell you that we're on track. And we have a little bit of heavy lifting to be completed. But with that, I'll let Brian address the finance and some of the other areas.

[Brian Valentine, Executive VP & CFO at The Andersons]

Yes.

[Brian Valentine, Executive VP & CFO at The Andersons]

I would say, Pran, with regard to some color, I would say that $30,000,000 to $40,000,000 range that we talked about previously remains intact. That would kind of be our expectation for the year in 2025. Kind of orders of magnitude for context. November, December, it was I would say contributed EBITDA in the range of $5,000,000 to $10,000,000 and that's before taking into account any synergies and things like that. So I would say, off to a good start.

[Brian Valentine, Executive VP & CFO at The Andersons]

The teams are working really well together and are energized and getting to know each other and we're excited about it.

[William Krueger, CEO, President & Director at The Andersons]

Yes. Ron, this is Bill again. One other item that it has been really exciting for us to see is and we talked about this in the October call is this is going to be the first time that we've really been able to test bringing our agronomy business and our grain business together at scale. We have a lot of projects or smaller investments where we're able to do this. But doubling the size of our farm centers and being able to do it inside a business where we have the opportunities for trade, specifically the grain and feed ingredients is really something we're looking forward to over the next sixty days.

[Pooran Sharma, Managing Director at Stephens Inc]

I appreciate the color there. And no, it sounds like it's progressing well. I guess on that, if I could just squeeze one more in before I jump back in the queue. But just on the Nutrient and Industrial side of the business, I think you mentioned an increase in corn acres and how that could potentially result in increased volumes. Could you remind us which crop kind of requires more inputs and if you can maybe just give us a sense either qualitatively or quantitatively the magnitude difference in input requirements between, let's say, like corn and soybeans?

[William Krueger, CEO, President & Director at The Andersons]

Yes. Corn requires substantially more nutrient input. And so we feel like our margin coming out of the corn is quite a bit higher than any of the other crops really that we provide nutrients or other products to. So it can be pretty substantial in terms of what we see for the agronomy and plant nutrient group, both wholesale and retail with the number of corn acres that we're expecting to see, right? We still have a ways to go, but it's substantial.

[Pooran Sharma, Managing Director at Stephens Inc]

Great. I appreciate the color and again congrats on the quarter.

[William Krueger, CEO, President & Director at The Andersons]

Thank you.

[Operator]

Thank you. And our next question comes from Ben Mayhew of BMO Capital Markets. Please go ahead.

[Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets]

Hey guys, good morning. My first question is just around the momentum you're seeing in the renewable diesel feedstock trading since 45Z guidelines were finalized. Do you think transacting is back to more normal levels or is the market still cautious to transact with the Trump risk out there? Thank you.

[William Krueger, CEO, President & Director at The Andersons]

That's an excellent question. I will tell you that it started with some hesitancy by the trade on where to add and what to go and what transactions to enter into. The market has freed up over the past few weeks, but there's still that concern of what are we going to be using the blenders tax credit? Are we going to be using the producers tax credit? There were articles out as late as yesterday, trying to decipher that.

[William Krueger, CEO, President & Director at The Andersons]

So there's still quite a bit of caution by the plants, especially what I would say is that the smaller plants that are more restricted by the need of the tax credit, which we all know that the blenders tax credit is traditionally going to be better than the producers tax credit. So yes, I think you're seeing a little bit more activity, but not back to what it was pre concerns after the election.

[Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets]

That makes sense. And my second question is around, I mean, also has to do with 45Z, but it's around ethanol. And I'm just wondering, does the market environment for acquiring ethanol plants, has that become more attractive now that 45z guidelines are in place? And like what are some of the characteristics that would make certain ethanol plants more valuable than others? Thanks.

[William Krueger, CEO, President & Director at The Andersons]

Good question. So the second part of that question is substantially easier to answer for us. On the and I'll take that first and then kind of slide over into the 45 feet questions. The criteria for the Andersons likely is different than it is for other ethanol producers. We believe that larger scale plants with good technology in geographic locations that we have a competitive advantage in originating corn and selling the co products is what we are looking for.

[William Krueger, CEO, President & Director at The Andersons]

And there has been opportunities to invest or buy plants outside of that criteria. And we've just committed to the discipline of staying with what we're good at. Now obviously, you add Skyland into the equation. Well, now we've added a large geographic region where we have even stronger origination capabilities. So hopefully that answered your question, but we have a we're very strict on the criteria that we're going to use in order to make an investment in plants, especially to your point.

[William Krueger, CEO, President & Director at The Andersons]

The first point is the price, the cost of plants has elevated for plants that have access to carbon sequestration or utilization. And naturally those are going to be the plants that we're going to tend to look at the most. And with that, we want to be even more focused and disciplined on the criteria that we quite honestly believe has made us successful.

[Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets]

Thank you. That's great. And then I'm just going to sneak one more in here. And this is more of just a general question about The U. S.

[Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets]

Farmer and how they're approaching twenty twenty five. I mean, certainly, there's a lot of just unknowns there are a lot of unknowns out there. But it would seem like with just corn, just looking at corn, the price appreciation is kind of lending to some optimism or some building optimism at least. So like how do you think about the merchandising environment for corn in 2025, is the outlook generally better? I mean, that's my perception.

[Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets]

And what are like what are the farmers thinking? Like put us in the mind of The U. S. Farmer. And what is their kind of game plan for this year?

[Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets]

And I'll leave it there. Thanks.

[William Krueger, CEO, President & Director at The Andersons]

That's a pretty complex question, Ben. But you are correct. And the rally the recent rally that we've seen since mid January has been very beneficial to The U. S. Farmer.

[William Krueger, CEO, President & Director at The Andersons]

Now The U. S. Farmer also has had a little bit of a San Fu and selling earlier when they were expecting a much larger carryout. So I would tell you that not all farmers are created equal in their marketing capabilities. And quite honestly, some producers probably sold their current crop a little early into this rally.

[William Krueger, CEO, President & Director at The Andersons]

But if you think about the payments that were just distributed, you look at for the most part, The U. S. Is in really good planning conditions. I know it's only February, but we've had a lot of moisture where it's been dry. So I think that The U.

[William Krueger, CEO, President & Director at The Andersons]

S. Farmer as a whole is pretty optimistic. And you start to think through what will the farm bill look like? How will Climate Smart Ag tie into the ability to reduce the CI scores of corn, the potential of other opportunities? Obviously, we've added a lot of crush capacity for the soybean farmer.

[William Krueger, CEO, President & Director at The Andersons]

And so, yes, I think compared to where the farmer was a year ago, and I think any of the surveys that you read optimism is quite a bit higher than it was a year

[Operator]

Thank you. And ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Mike Holter for closing remarks.

[Michael Hoelter, VP, Corporate Controller & Investor Relations at The Andersons]

Thanks, Rocco. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, 05/07/2025 at 08:30AM Eastern Time when we will review our first quarter results. As always, thank you for your interest in The Andersons and we look forward to speaking with you again soon.

[Operator]

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Participants

Executives

• Michael Hoelter, VP, Corporate Controller & Investor Relations
• William Krueger, CEO, President & Director
• Brian Valentine, Executive VP & CFO

Analysts

• Ben Klieve, Senior Research Analyst at Lake Street Capital Markets, LLC
• Pooran Sharma, Managing Director at Stephens Inc
• Benjamin Mayhew, Vice President - Equity Research at BMO Capital Markets