Document

"Once again, our Trade business led the way for the quarter. The team continues to execute well and we are seeing positive results from our base business, as well as, recent growth investments. The Renewables team was faced with lower ethanol crush margins to start the quarter but showed improvement over 2022 on an adjusted basis. The Nutrient & Industrial business was faced with declining fertilizer prices and deferred customer purchasing in the quarter. In April, customers have engaged and prices have firmed a bit as fieldwork began in our service geography. While some of the typical first quarter business will shift into Q2, we do not expect that all the business will be recovered," said President and CEO Pat Bowe.


$ in millions, except per share amounts
	Q1 2023		Q1 2022		Variance
Pretax Income (Loss) from Continuing Operations	$	(65.0)	$	10.6	$	(75.6)
Pretax Income (Loss) from Continuing Operations Attributable to the Company1	(20.6)		10.2		(30.8)
Adjusted Pretax Income (Loss) from Continuing Operations Attributable to the Company1	8.1		10.2		(2.1)
Trade1	23.6		3.7		19.9
Renewables1	6.3		5.5		0.8
Nutrient & Industrial	(10.4)		10.7		(21.1)
Other	(11.4)		(9.8)		(1.6)
Net Income (Loss) from Continuing Operations Attributable to the Company	(14.8)		6.1		(20.9)
Adjusted Net Income from Continuing Operations Attributable to the Company1	6.8		6.1		0.7
Diluted Earnings (Loss) Per Share from Continuing Operations (EPS)	(0.44)		0.18		(0.62)
Adjusted Diluted Earnings Per Share from Continuing Operations1	0.20		0.18		0.02
EBITDA from Continuing Operations1	(16.2)		55.8		(72.0)
Adjusted EBITDA from Continuing Operations1	$	55.3	$	55.8	$	(0.5)
1 Non-GAAP financial measures; see appendix for explanations and reconciliations.

"Our businesses continue to generate strong operating cash flows and we remain disciplined in our approach to capital spending. We continue to be well below our long-term debt to EBITDA target of less than 2.5 times," said Executive Vice President and CFO Brian Valentine. "In light of the current, high interest rate environment, we are strategically managing working capital usage. Our short-term debt funding working capital at the end of the first quarter of 2023 totaled $638 million, less than half of the $1,450 million we borrowed a year ago."

Spring planting is just getting started in the Midwest. Commodity prices have moderated from the highs of last spring, but stocks remain relatively low. With the mix of assets and merchandising capabilities across key geographies, Trade is well-positioned for an expected large 2023 harvest. Unfavorable weather conditions could result in production shortfalls and continuing global supply and demand imbalances, which would allow for continued merchandising opportunities and strong elevation margins.

Ethanol crush margins were weak starting the quarter but rebounded later in the period during the start of the spring maintenance season. Driving demand has also picked up and corn prices have moderated. The merchandising businesses including renewable diesel feedstocks continue to deliver solid results, but were impacted by lower values, partially due to delays in renewable diesel plant startups. Our eastern corn belt production facilities remain well-positioned for corn supply and ethanol margins have strengthened further after the close of the quarter.

This release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially. Without limitation, these risks include economic, weather and regulatory conditions, competition, the ongoing economic impacts from the war in Ukraine, and the risk factors set forth from time to time in the company’s filings with the Securities and Exchange Commission. Although the company believes that the assumptions upon which the financial information and its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct.

This release contains non-GAAP financial measures. The company believes that pretax income (loss) from continuing operations attributable to the company; adjusted pretax income (loss) from continuing operations attributable to the company; adjusted pretax income (loss) from continuing operations; adjusted net income from continuing operations attributable to the company; adjusted diluted earnings per share from continuing operations; earnings before interest, taxes, depreciation, and amortization (or EBITDA); EBITDA from continuing operations; adjusted EBITDA; adjusted EBITDA from continuing operations; and cash from operations before working capital changes provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and liquidity and better period-to-period comparability. The above measures are not and should not be considered as alternatives to net income from continuing operations, pretax income from continuing operations or income (loss) before income taxes from continuing operations, diluted earnings (loss) per share attributable to The Andersons, Inc. common shareholders from continuing operations and cash provided by (used in) operating activities as determined by generally accepted accounting principles. Reconciliations of the GAAP to non-GAAP measures may be found within this press release and the financial tables provided herein.

The Andersons, Inc., named to Forbes list of America's Best Small Companies for 2023 and one of America's Greatest Workplaces for Diversity 2023 by Newsweek®, is a diversified company rooted in agriculture that conducts business in the commodity merchandising, renewables, and nutrient and industrial sectors. Guided by its Statement of Principles, The Andersons is committed to providing extraordinary service to its customers, helping its employees improve, supporting its communities, and increasing the value of the company. For more information, please visit www.andersonsinc.com.


	Three months ended March 31,
(in thousands, except per share data)		2023		2022
Sales and merchandising revenues		$	3,881,238	$	3,977,954
Cost of sales and merchandising revenues		3,733,227		3,858,419
Gross profit		148,011		119,535
Operating, administrative and general expenses		117,235		101,987
Asset impairment		87,156		—
Interest expense, net		16,625		10,859
Other income, net		8,004		3,918
Income (loss) before income taxes from continuing operations		(65,001)		10,607
Income tax provision (benefit) from continuing operations		(5,884)		4,103
Net income (loss) from continuing operations		(59,117)		6,504
Loss from discontinued operations, net of income taxes		—		(554)
Net income (loss)		(59,117)		5,950
Net income (loss) attributable to noncontrolling interests		(44,367)		447
Net income (loss) attributable to The Andersons, Inc.		$	(14,750)	$	5,503

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:
Basic earnings (loss):
Continuing operations		$	(0.44)	$	0.18
Discontinued operations		—		(0.02)
		$	(0.44)	$	0.16
Diluted earnings (loss):
Continuing operations		$	(0.44)	$	0.18
Discontinued operations		—		(0.02)
		$	(0.44)	$	0.16


(in thousands)	March 31, 2023		December 31, 2022		March 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	70,853	$	115,269	$	36,381
Accounts receivable, net	1,125,071		1,248,878		1,050,259
Inventories	1,551,101		1,731,725		1,950,303
Commodity derivative assets – current	222,036		295,588		769,916
Current assets held-for-sale	—		2,871		20,255
Other current assets	81,407		71,622		113,589
Total current assets	3,050,468		3,465,953		3,940,703
Other assets:
Goodwill	129,342		129,342		129,342
Other intangible assets, net	95,134		100,907		111,055
Right of use assets, net	59,209		61,890		51,821
Other assets held-for-sale	—		—		45,264
Other assets, net	89,174		87,175		92,506
Total other assets	372,859		379,314		429,988
Property, plant and equipment, net	678,717		762,729		772,245
Total assets	$	4,102,044	$	4,607,996	$	5,142,936

Liabilities and equity
Current liabilities:
Short-term debt	$	638,210	$	272,575	$	1,449,768
Trade and other payables	768,872		1,423,633		741,124
Customer prepayments and deferred revenue	309,546		370,524		384,723
Commodity derivative liabilities – current	107,983		98,519		216,836
Current maturities of long-term debt	85,567		110,155		54,158
Current liabilities held-for-sale	—		—		10,200
Accrued expenses and other current liabilities	202,133		245,916		205,958
Total current liabilities	2,112,311		2,521,322		3,062,767
Long-term lease liabilities	35,727		37,147		31,419
Long-term debt, less current maturities	486,892		492,518		571,181
Deferred income taxes	54,391		64,080		68,437
Other long-term liabilities held-for-sale	—		—		14,738
Other long-term liabilities	66,311		63,160		77,173
Total liabilities	2,755,632		3,178,227		3,825,715
Total equity	1,346,412		1,429,769		1,317,221
Total liabilities and equity	$	4,102,044	$	4,607,996	$	5,142,936


	Three months ended March 31,
(in thousands)	2023		2022
Operating Activities
Net income (loss) from continuing operations	$	(59,117)	$	6,504
Loss from discontinued operations, net of income taxes	—		(554)
Net income (loss)	(59,117)		5,950
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization	32,220		34,377
Bad debt expense, net	—		1,255



Stock-based compensation expense	2,596		1,818
Deferred federal income tax	(8,051)		(6,947)

Asset impairment	87,156		—
Other	3,225		3,048
Changes in operating assets and liabilities:
Accounts receivable	125,113		(215,012)
Inventories	178,010		(136,820)
Commodity derivatives	83,148		(277,761)
Other current and non-current assets	(17,543)		(38,810)
Payables and other current and non-current liabilities	(760,292)		(446,096)
Net cash used in operating activities	(333,535)		(1,074,998)
Investing Activities
Purchases of property, plant and equipment and capitalized software	(25,470)		(20,722)

Purchases of investments	—		(1,333)

Purchases of Rail assets	—		(3,186)
Proceeds from sale of Rail assets	2,871		248
Other	2,792		72
Net cash used in investing activities	(19,807)		(24,921)
Financing Activities
Net receipts under short-term lines of credit	363,619		796,209
Proceeds from issuance of short-term debt	—		350,000
Payments of short-term debt	—		(200,000)

Payments of long-term debt	(30,251)		(7,566)
Contributions from noncontrolling interest owner	—		2,450
Distributions to noncontrolling interest owner	(9,980)		(9,980)
Payments of debt issuance costs	(5)		(7,310)
Dividends paid	(6,279)		(6,144)
Proceeds from exercises of stock options	—		5,024
Common stock repurchased	(1,671)		—
Value of shares withheld for taxes	(6,616)		(3,319)
Other	—		393
Net cash provided by financing activities	308,817		919,757
Effect of exchange rates on cash and cash equivalents	109		99
Decrease in cash and cash equivalents	(44,416)		(180,063)
Cash and cash equivalents at beginning of period	115,269		216,444
Cash and cash equivalents at end of period	$	70,853	$	36,381


	Three months ended March 31,
(in thousands, except per share data)		2023		2022
Net income (loss) from continuing operations		$	(59,117)	$	6,504
Net income (loss) attributable to noncontrolling interests		(44,367)		447
Net income (loss) from continuing operations attributable to The Andersons, Inc.		(14,750)		6,057
Adjustments:


Transaction related compensation		1,668		—
Asset Impairment		44,450		—
Insurance proceeds and receivables		(17,390)		—
Income tax impact of adjustments1		(7,182)		—
Total adjusting items, net of tax		21,546		—
Adjusted net income from continuing operations attributable to The Andersons, Inc.		$	6,796	$	6,057

Diluted earnings (loss) per share from continuing operations attributable to The Andersons, Inc. common shareholders		$	(0.44)	$	0.18

Impact on diluted earnings (loss) per share from continuing operations		$	0.64	$	—
Adjusted diluted earnings per share from continuing operations		$	0.20	$	0.18

Adjusted net income (loss) from continuing operations attributable to The Andersons, Inc. reflects reported net income (loss) from continuing operations available to The Andersons, Inc. common shareholders after the removal of specified items described above. Adjusted diluted earnings (loss) from continuing operations per share reflects the fully diluted EPS of The Andersons, Inc. after removal of the effect on EPS as reported of specified items described above. Management believes that Adjusted net income (loss) from continuing operations attributable to The Andersons, Inc. and Adjusted diluted earnings (loss) from continuing operations per share are useful measures of The Andersons, Inc. performance as they provide investors additional information about the operations of the company allowing better evaluation of underlying business performance and better comparability to previous periods. These non-GAAP financial measures are not intended to replace or be alternatives to Net income from continuing operations attributable to The Andersons, Inc. and Diluted earnings per share from continuing operations attributable to The Andersons, Inc. common shareholders as reported, the most directly comparable GAAP financial measures, or any other measures of operating results under GAAP. Earnings amounts described above have been divided by the company’s average number of diluted shares outstanding for each respective period in order to arrive at an adjusted diluted earnings (loss) from continuing operations per share amount for each specified item.



(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total
Three months ended March 31, 2023
Sales and merchandising revenues	$	2,877,780	$	839,516	$	163,942	$	—	$	3,881,238
Gross profit	117,178		15,803		15,030		—		148,011
Operating, administrative and general expenses	71,980		8,904		24,132		12,219		117,235
Other income, net	5,983		841		846		334		8,004
Income (loss) before income taxes from continuing operations	39,364		(82,513)		(10,438)		(11,414)		(65,001)
Loss attributable to noncontrolling interests	—		(44,367)		—		—		(44,367)
Income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1	$	39,364	$	(38,146)	$	(10,438)	$	(11,414)	$	(20,634)
Adjustments to income (loss) before income taxes from continuing operations2	(15,722)		44,450		—		—		28,728
Adjusted income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1	$	23,642	$	6,304	$	(10,438)	$	(11,414)	$	8,094

Three months ended March 31, 2022
Sales and merchandising revenues	$	3,084,681	$	683,231	$	210,042	$	—	$	3,977,954
Gross profit	67,619		15,191		36,725		—		119,535
Operating, administrative and general expenses	59,543		7,890		25,325		9,229		101,987
Other income (loss), net	3,780		428		804		(1,094)		3,918
Income (loss) before income taxes from continuing operations	3,669		5,962		10,743		(9,767)		10,607
Income attributable to noncontrolling interests	—		447		—		—		447
Income (loss) before income taxes from continuing operations attributable to The Andersons, Inc.1	$	3,669	$	5,515	$	10,743	$	(9,767)	$	10,160


1 Income (loss) from continuing operations before income taxes attributable to The Andersons, Inc. for each operating segment is defined as net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets and is reported net of the noncontrolling interest share of income. 2 Additional information on the individual adjustments that are included in the adjustments to income (loss) from continuing operations before income taxes can be found in the Reconciliation to EBITDA and Adjusted EBITDA table.


(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total
Three months ended March 31, 2023
Net income (loss)1	$	39,364	$	(82,513)	$	(10,438)	$	(5,530)	$	(59,117)
Interest expense (income)	11,817		3,097		2,182		(471)		16,625
Tax benefit	—		—		—		(5,884)		(5,884)
Depreciation and amortization	8,645		14,472		6,957		2,146		32,220
EBITDA1	59,826		(64,944)		(1,299)		(9,739)		(16,156)
Adjusting items impacting EBITDA:
Transaction related compensation	1,668		—		—		—		1,668
Insurance proceeds & receivables	(17,390)		—		—		—		(17,390)


Asset Impairment	—		87,156		—		—		87,156
Total adjusting items	(15,722)		87,156		—		—		71,434
Adjusted EBITDA1	$	44,104	$	22,212	$	(1,299)	$	(9,739)	$	55,278

Three months ended March 31, 2022
Net income (loss) from continuing operations	$	3,669	$	5,962	$	10,743	$	(13,870)	$	6,504
Interest expense (income)	8,187		1,767		1,461		(556)		10,859
Tax provision	—		—		—		4,103		4,103
Depreciation and amortization	8,974		16,639		6,579		2,185		34,377
EBITDA from continuing operations	$	20,830	$	24,368	$	18,783	$	(8,138)	$	55,843

Adjusted EBITDA is defined as earnings before interest, taxes and depreciation and amortization, adjusted for specified items. The company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense, tax expense and depreciation and amortization to net income (loss). Management believes that adjusted EBITDA is a useful measure of the company’s performance as it provides investors additional information about the company’s operations allowing better evaluation of underlying business performance and improved comparability to prior periods. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace or be an alternative to net income (loss), the most directly comparable GAAP financial measure.


	Three Months Ended,								Twelve months ended March 31, 2023
(in thousands)	June 30, 2022		September 30, 2022		December 31, 2022		March 31, 2023
Net income (loss) from continuing operations	$	102,400	$	24,880	$	21,170	$	(59,117)	$	89,333
Interest expense	16,921		14,982		14,087		16,625		62,615
Tax provision (benefit)	15,753		9,839		9,933		(5,884)		29,641
Depreciation and amortization	33,567		33,322		33,476		32,220		132,585
EBITDA from continuing operations	168,641		83,023		78,666		(16,156)		314,174
Adjusting items impacting EBITDA from continuing operations:
Transaction related compensation expense	—		—		—		1,668		1,668
Inventory damage (related insurance recoveries)	—		—		15,993		(17,390)		(1,397)


Asset impairment including equity method investments	4,455		—		9,000		87,156		100,611
Gain on sale of frac sand assets	(3,762)		—		—		—		(3,762)
Total adjusting items	693		—		24,993		71,434		97,120
Adjusted EBITDA from continuing operations	$	169,334	$	83,023	$	103,659	$	55,278	$	411,294

	Three Months Ended,								Twelve months ended March 31, 2022
	June 30, 2021		September 30, 2021		December 31, 2021		March 31, 2022
Net income from continuing operations	$	44,024	$	12,290	$	65,473	$	6,504	$	128,291
Interest expense	10,060		8,799		8,444		10,859		38,162
Tax provision	9,677		4,027		11,163		4,103		28,970
Depreciation and amortization	38,949		42,811		36,797		34,377		152,934
EBITDA from continuing operations	102,710		67,927		121,877		55,843		348,357
Adjusting items impacting EBITDA from continuing operations:
Transaction related compensation expense	274		243		274		—		791
Gain on sale of a business	—		(14,619)		—		—		(14,619)

Loss from cost method investment	—		2,784		—		—		2,784

Asset impairments	—		—		8,321		—		8,321
Total adjusting items	274		(11,592)		8,595		—		(2,723)
Adjusted EBITDA from continuing operations	$	102,984	$	56,335	$	130,472	$	55,843	$	345,634


	Three months ended March 31,
(in thousands)		2023		2022
Cash used in operating activities		$	(333,535)	$	(1,074,998)
Changes in operating assets and liabilities
Accounts receivable		125,113		(215,012)
Inventories		178,010		(136,820)
Commodity derivatives		83,148		(277,761)
Other current and non-current assets		(17,543)		(38,810)
Payables and other current and non-current liabilities		(760,292)		(446,096)
Total changes in operating assets and liabilities		(391,564)		(1,114,499)
Adjusting items impacting cash from operations before working capital changes:
Less: Damaged inventory insurance proceeds and receivables		(17,390)		—

Cash from operations before working capital changes		$	40,639	$	39,501

Cash from operations before working capital changes is defined as cash provided by (used in) operating activities before the impact of changes in working capital within the statement of cash flows. The Company calculates cash from operations by eliminating the effect of changes in accounts receivable, inventories, commodity derivatives, other assets, and payables and accrued expenses from the cash provided by (used in) operating activities. Management believes that cash from operations before working capital changes is a useful measure of the company’s performance as it provides investors additional information about the company’s operations allowing better evaluation of underlying business performance and improved comparability to prior periods. Cash from operations before working capital changes is a non-GAAP financial measure and is not intended to replace or be an alternative to cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.