THE ANDERSONS, INC. FORM 10-Q
The Andersons, Inc. filed its quarterly report for the period ended March 31, 2025, reporting a net loss of $[amount] and a comprehensive loss of $[amount]. The company’s revenue decreased by [percentage] to $[amount], primarily due to lower sales in its grain and ethanol segments. The company’s operating expenses increased by [percentage] to $[amount], driven by higher costs in its grain and ethanol segments. As of March 31, 2025, the company had cash and cash equivalents of $[amount] and a debt-to-equity ratio of [percentage]. The company’s management’s discussion and analysis of financial condition and results of operations is included in the report, which provides an overview of the company’s financial performance and outlook.
The Andersons, Inc. Q1 2025 Financial Performance
The Andersons, Inc., a diversified company focused on agriculture and renewable energy, has released its financial results for the first quarter of 2025. In this article, we will provide an overview of the company’s performance, analyze key trends, and discuss the outlook for the future.
Overview of Financial Performance
For the three months ended March 31, 2025, The Andersons reported the following key financial metrics:
| Metric | Q1 2025 | Q1 2024 | Variance |
|---|---|---|---|
| Sales and Merchandising Revenues | $2,659,098,000 | $2,718,217,000 | -2.2% |
| Cost of Sales and Merchandising Revenues | $2,506,226,000 | $2,589,897,000 | -3.2% |
| Gross Profit | $152,872,000 | $128,320,000 | +19.1% |
| Income (Loss) Before Income Taxes | $3,213,000 | $13,968,000 | -77.0% |
| Income (Loss) Before Income Taxes Attributable to the Company | $(1,834,000) | $6,884,000 | -126.6% |
The company’s overall financial performance was mixed, with a decrease in sales and merchandising revenues but an increase in gross profit. However, income before income taxes and income before income taxes attributable to the company both declined significantly compared to the prior year.
Segment Performance
The Andersons operates in two main business segments: Agribusiness and Renewables.
Agribusiness Segment The Agribusiness segment’s first-quarter operating results fell behind the prior year. Key highlights include:
- Sales and merchandising revenues decreased by $68.2 million, while cost of sales and merchandising revenues decreased by $87.2 million, resulting in an increased gross profit impact of $19.1 million.
- The decrease in sales and merchandising revenues and cost of sales and merchandising revenues was due to reduced commodity prices and a decision to pull back on certain international trade volumes.
- The acquisition of Skyland in the fourth quarter of 2024 added approximately $165 million in sales and merchandising revenues and $147 million in cost of sales and merchandising revenues.
- Gross profit increased by $19.1 million, with $17.2 million of the increase attributable to the Skyland acquisition.
- Operating, administrative, and general expenses increased by $27.6 million, primarily due to the Skyland acquisition.
- Interest expense increased by $6.2 million due to increased borrowings in the acquired Skyland business.
- Other income, net increased by $2.5 million due to increased patronage income in the Skyland business.
Renewables Segment The Renewables segment’s operating results were slightly improved compared to the prior year. Key highlights include:
- Sales and merchandising revenues increased by $9.0 million, and cost of sales and merchandising revenues increased by $3.6 million, resulting in a $5.5 million increase in gross profit.
- The increase in sales and merchandising revenues and cost of sales and merchandising revenues was due to slight increases in both volumes and prices in ethanol, partially offset by weakening DDG and renewable diesel feedstocks values.
- Substantially all of the $5.5 million increase in gross profit can be attributed to improved results in the ethanol plants from firmer crush margins and mark-to-market gains in the quarter, partially offset by lower DDG values.
- Other income, net decreased by $3.7 million as the company recorded an additional $3.1 million gain in the prior year from the deconsolidation of the ELEMENT ethanol plant.
Income Taxes For the three months ended March 31, 2025, the company recorded an income tax benefit of $2.1 million, with an effective tax rate of (65.9)%. This was primarily due to a discrete adjustment of unrecognized tax benefits related to prior-period U.S. federal research and development tax credits.
In the prior year, the company recorded an income tax expense of $1.3 million, with an effective tax rate of 9.3%. The difference between the effective tax rate and the U.S. federal statutory rate of 21.0% was mainly attributable to the tax impact of noncontrolling interest, stock-based compensation, and federal tax credits, offset by state and local income taxes, nondeductible compensation, and other discrete tax items.
Liquidity and Capital Resources
At March 31, 2025, the company had working capital of $1,094.4 million, a decrease of $36.2 million from the prior year. This decrease was primarily due to changes in the following components:
- Current assets increased by $314.8 million, with $311.3 million of the increase attributable to the Skyland acquisition.
- Current liabilities increased by $351.0 million, with $258.2 million of the increase due to the Skyland acquisition.
The company’s sources and uses of cash for the three months ended March 31, 2025, and 2024, are as follows:
| Cash Flows | Q1 2025 | Q1 2024 |
|---|---|---|
| Net cash used in operating activities | $(350,020,000) | $(239,627,000) |
| Net cash used in investing activities | $(43,831,000) | $(22,052,000) |
| Net cash provided by (used in) financing activities | $50,445,000 | $(98,280,000) |
The increase in cash used in operating activities was mainly due to an unfavorable change of $119.0 million in operating assets and liabilities through the normal course of business. The increase in cash used in investing activities was primarily due to increased capital spending in the current year.
The company’s financing activities provided cash of $50.4 million in the current year, compared to using cash of $98.3 million in the prior year. This change was due to additional cash proceeds from the company’s short-term credit facilities, a distribution to the noncontrolling interest in the prior year, and the issuance of long-term debt in the current year.
Strengths and Weaknesses
Strengths:
- Diversified business model with exposure to both agriculture and renewable energy sectors
- Successful acquisition of Skyland, which has added scale and capabilities to the Agribusiness segment
- Improved gross profit performance, particularly in the Renewables segment
- Strong liquidity position with available borrowing capacity
Weaknesses:
- Decline in income before income taxes and income before income taxes attributable to the company
- Increased operating expenses, particularly in the Agribusiness segment, due to the Skyland acquisition
- Reliance on volatile agricultural commodity prices and market conditions
Outlook and Future Considerations
The Andersons’ management remains cautiously optimistic about the company’s future prospects. The Agribusiness segment is expected to benefit from sizeable corn planting intentions, which should lead to higher nutrient volumes and opportunities for storage and handling at harvest. Additionally, lower corn stocks entering the year should allow for merchandising opportunities and good early harvest margins in the last half of 2025.
In the Renewables segment, ethanol demand is expected to strengthen into the summer, although concerns remain about the cost of inputs. The values of feed ingredient co-products are expected to remain challenged.
The company’s liquidity position remains strong, with available borrowing capacity to support its operations and future growth initiatives. However, the company’s profitability remains sensitive to fluctuations in commodity prices and market conditions, which could impact its financial performance going forward.
Overall, The Andersons’ diversified business model and recent strategic initiatives, such as the Skyland acquisition, provide a solid foundation for the company to navigate the challenges and capitalize on the opportunities in the agriculture and renewable energy sectors. Investors and stakeholders will be closely monitoring the company’s ability to maintain its operational efficiency, manage its costs, and adapt to the evolving market dynamics in the coming quarters.
