The Andersons, Inc. BMO Capital Markets 2014 Farm to Market Conference. We are well-positioned to capitalize on macro trends such as

Transcription

1 We are well-positioned to capitalize on macro trends such as Expanding world population Escalating global demand for protein Increasing North American crop production which continues to drive strong demand for our products and services At the end of the day, people need to eat and products need to move. By leveraging our deep operational experience, we are focused on serving these needs. The Andersons, Inc. BMO Capital Markets 2014 Farm to Market Conference May 21 st - 22 nd, 2014

2 FORWARD LOOKING STATEMENTS As you know, certain information that will be discussed today constitutes forward-looking statements. Actual results could differ materially from those presented in the forward-looking statements as a result of many factors, including general economic conditions, weather, and competitive conditions, conditions in the Company s industries, both in the U.S. and internationally, and additional factors that are described in the Company s publicly-filed documents, including its 34 act filings and the prospectuses prepared in connection with the Company s offerings.

3 AT A GLANCE AS OF 5/9/2014 3/31/2014 3/31/2013» Employees: 3,200 Revenues: $1.0 billion $1.3 billion EBITDA: $56.4 million $42.9 million Diluted EPS: $0.80 $0.45» Locations: 90+» States: 20 Recent Price: $ Week Range: $ $65.28 Market Cap: Institutional Ownership: 73% $1.45 billion Now Ranked 472 Average Daily Trading Volume: 412,066 Analyst Coverage: 8 Sell-side Analyst 70 th consecutive dividend payment 2

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5 WHO WE ARE The Andersons grows enduring relationships through extraordinary service, a deep knowledge of the market and a knack for finding new ways to add value as we have done for more than 60 years. 4

6 And these enduring relationships began, are, and will always be centered first and foremost around our Grain Group 5

7 STRATEGY 6

8 CAPITAL INVESTMENTS Capital investments of more than $399 million from 1/1/2011 to 12/31/2013» Allocation of capital is best reflected in last three years net investment *after excluding depreciation on railcars and amortization of intangibles 7

9 THOMPSONS LIMITED The Andersons, Inc. along with Lansing Trade Group, LLC have established joint ventures that acquired the shares of Thompsons Limited, a grain and food-grade bean handler and agronomy input provider, headquartered in Blenheim, Ontario. Each company owns 50% of the investment, which continues to operate as Thompsons Limited. Acquired a substantial platform of assets that leverage both The Andersons and Lansing Trade Group s expertise in grains, edible beans, and food ingredients and agronomy» Focuses on field grains (corn, soybeans, wheat, edible/identity preserved beans)» Builds on core competencies: commodity merchandising expertise, commodity bulk handling, risk management, and long-term customer relationships» Expands North American footprint, continues to broaden geographic & climate diversification 8

10 THOMPSONS LIMITED» Established in 1924» Provides agricultural supplies and services, including seed, fertilizer and crop protectants to farmers throughout Ontario» Bean processing services in Ontario, Minnesota and North Dakota» Exports products to food processors in over 30 countries worldwide.» More than 275 experienced customer-service oriented team members 9

11 GEOGRAPHICAL GROWTH

12 WHAT WE DO The Andersons, Inc. is a diversified company rooted in agriculture. Founded in Maumee, Ohio, in 1947, the company conducts business across North America focusing primarily in the grain, ethanol, plant nutrient sectors, and railcar services. 11

13 GRAIN GROUP» Storage capacity of more than 139 million bushels in: Ohio / Michigan / Indiana / Illinois / Nebraska / Iowa / Tennessee» Provides customers with unique grain marketing and risk management services Grain Inventories (in millions of bushels) as of 3/ Bushels Owned Bushels Stored for others Total Bushels in Inventory

14 THOMPSONS FOOTPRINT Thompsons owns and operated 12 grain elevators which are integrated with agronomy farm centers, seed processing, bean processing and wheat processing. Thompsons has a combined owned and leased grain storage capacity of 20 million bushels and 30,000 metric tons of nutrient capacity. Facility Locations Black Lane (1) Blenheim (1)(2)(3) Coatsworth (1) Granton (1) Hensall (1)(2)(3) Kent Bridge (1)(3) Mitchell (1)(3) Norwich (1)(4) Pain Court (1) Pontypool (1) Port Albert (1) Minnesota East Grand Forks (3) (1) farm center (2) seed processing (3) bean processing (4) wheat processing T United States Facility East Grand Forks, MN 13

15 PLANT NUTRIENT GROUP» Nutrient facilities and farm centers in: Ohio / Michigan / Indiana / Illinois / Nebraska / Iowa / Tennessee / Wisconsin» Formulate, store and distribute approximately 2.0 million tons of dry and liquid agricultural nutrients» Gets the right product to the right place at the right time Sales and Service Volume (in thousands of tons) Three Months Ended Mar. 31, 14

16 RAIL GROUP» Repair, sell, manage and lease a fleet of nearly 22,200 various types of railcars and locomotives» 20 Railcar repair facilities across the country in: Ohio / California / Mississippi / South Carolina / Nevada / Indiana Iowa / Utah / New York / Alabama / Missouri / Oregon» Meets customers specialized railcar needs Record operating income Q Full year 2013 nearly matched record of 2012 Railcar Fleet Average Utilization Rate As of Mar. 31, Includes Locomotives As of Mar. 31, 15

17 ETHANOL GROUP» Investor in four plants: Michigan / Indiana / Ohio / Iowa» Services include facility operations, risk management, corn origination, ethanol and distiller dried grains (DDG) marketing» Provides customers a diverse suite of offerings Record operating income for both Q and full year 2013 Ethanol Produced (in millions of gallons) Co-Products Shipped (In thousands) E-85 (in gallons) 4,147 3,721 5,568 DDGS (in tons) Corn Oil (in pounds) 9,054 17,247 20,363 Three Months Ended Mar. 31, Three Months Ended Mar. 31, 16

18 TURF & SPECIALTY GROUP RETAIL GROUP» Acquired Cycle Group, Inc. in December, 2013, granulation plant in North Carolina Revenue Operating Income Revenue Operating Income In Millions In Millions In Millions In Millions $47.2 $43.7 $4.0 $30.7 $27.7 $1.4 Q113 Q114 Q Q113 Q1 Q114 Q113 ($3.2) Q1 14 ($2.3) $3.5 million $2.6 million $3.0 million $0.9 million 17

19 WHY WE DO IT Escalating global demand for protein and increasing U.S. crop production continue to drive strong demand for the types of products and services we provide. At the end of the day, people need to eat and products need to move. 18

20 GRAIN DEMAND 19

21 WORLD CORN STOCKS Forecasted rebound in ending stocks by 2014 Forecast suggests return of basis opportunities 20

22 U.S. CORN STOCKS In Millions of Bushels 21

23 U.S. STORAGE CAPACITY Top 10 U.S. Commercial (off-farm) storage capacity (in thousands) Total Off-Farm 10,430 Total On-Farm 13, Off-Farm storage capacity (in millions) New England Sates Unallocated 4 22

24 U.S. STORAGE CAPACITY Storage Capacity vs. Total Corn, Soybeans, and Wheat Supply Less Imports In Millions of Bushels 23

25 NUTRIENT DEMAND Crop Nutrient (N,P,K) use is highest for Corn N P K Data on the slide is accurate as of 11/1/2012 of the presentation and is subject to change 24

26 RAIL DEMAND 25

27 ETHANOL DEMAND» Ethanol decreases U.S. dependence on imported oil, addresses environmental concerns, supports agriculture and rural economy» Global supply and demand charts are relevant Ethanol Facts: Energy Act of 2007» 1 ton of corn =~ 96.4 gallons of ethanol Renewable Fuels Standard» 2012: 13.2 billion gallons» 1 ton of corn in the ethanol process also» 2013: 13.8 billion gallons produces:» 2014: 14.4 billion gallons =~ 643 lbs of distillers dried grain for» 2015: 15.0 billion gallons livestock feed =~ 18 lbs of corn oil =~ 643 lbs of CO 2 26

28 WELL-POSITIONED FOR THE FUTURE We are expanding and increasing capabilities, improving efficiency and quality, developing product offering and enhancing customer service. 27

29 GRAIN GROUP» From 1/1/2011 to 12/31/2013, invested $183 million in acquisitions, new facilities and existing infrastructure» Reaching into new regions and increasing storage capacity while continuing to stay close to the farm» New regions also offer market intelligence that enhance ability to provide relevant-added services Bushels Storage Capacity (in millions) Bushels Shipped (in millions) As of Mar. 31, Three Months Ended Mar. 31, 28

30 GRAIN CAPACITY/EARNINGS BEFORE TAXES Historic EBT (less equity in earnings of affiliates, such as Lansing Trade Group LLC) / *annual normalized bushel capacity $0.70 $0.60 $0.59 $0.50 $0.47 $0.40 $0.30 $0.25 $0.29 $0.32 $0.20 $0.10 $0.00 $ *Annual normalized bushel capacity calculation is an average of beginning and ending yearly capacity, except 2012, which was adjusted for Anselmo and GPG. 29

31 CORN PLANTING PROGRESS (PERCENTAGE)» 18 states planted 91% of 2013 corn acreage The Andersons Grain facilities The Andersons Plant Nutrient facilities» Nationwide, 59% has been planted as of May 11, 2014 compared to 26% in 2013» 5 year average planted as of May 4 th is 58%

32 PLANT NUTRIENT GROUP» Invested $66 million from 1/1/2011 to 12/31/2013 in acquisitions, new facilities and existing infrastructure» Geographical footprint growth extends participation in core markets throughout the Midwest and Southwest» Expanding markets and enlarging range of products and services for customers Storage Capacity (in thousands of tons) As of Mar. 31, 899 total tons 867 total tons 833 total tons 31

33 RAIL GROUP» Invested $268 million gross from 1/1/2011 to 12/31/2013 in railcar purchases, net after proceeds from sale of railcars is $50 million; in addition invested $17 million in other capital expenditures» Diversified fleet of railcars capable of moving a variety of products across North America» Growing railcar repair network and services garnering a national reputation, opened new 27,000 square-foot paint facility Railcar Fleet by Car Type as of 12/31/2013 New state-of-the-art paint facility 32

34 ETHANOL GROUP» Invested $83 million from 1/1/2011 to 12/31/2013 in acquisitions and existing infrastructure» Developing ancillary products and implementing operational efficiency improvements» Commodity trading proficiency enables effective management of input prices, mitigating market volatility and supporting growth Ethanol Capacity MMGY As of Dec. 31, 33

35 FINANCIAL HIGHLIGHTS 34

36 Q HIGHLIGHTS Three Months Ended Mar. 31, Revenue Net Income* EBITDA In Billions In Millions In Millions * Net income attributable to The Andersons, Inc. 35

37 Net Income Earnings Per Share - Diluted In millions adjusted for 3-for-2 stock split EBITDA Return on Equity In millions RECORD 36

38 The Andersons, The Andersons, Inc. Inc.» Diluted Earnings Per Share $0.80 Net Income $22.7 (attributable to The Andersons, Inc.) Three Months Ended 3/31/14 In millions, except EPS Revenue EBT $5,272.0 $120.1 In millions $1,003.3 $39.9 CORE GROUPS Turf & Specialty Group Revenue Operating Income Grain Group Ethanol Group Plant Nutrient Rail Group Group Revenue Operating Income $583.2 $11.3 Revenue Operating (Loss) Revenue Operating Income Revenue Operating Income $188.8 $19.8 $107.6 ($1.4) $52.3 $15.0 $43.70 $1.4 Retail Group Revenue Operating (Loss) $27.7 ($2.3) 37

39 The Andersons, The Andersons, Inc. Inc.» Diluted Earnings Per Share $3.18 Full-Year 2013 In millions, except EPS Net Income $89.9 (attributable to The Andersons, Inc.) Revenue EBT $5,272.0 $120.1 In millions $5,604.6 $149.5 CORE GROUPS Turf & Specialty Group Revenue Operating Income Grain Group Ethanol Group Plant Nutrient Rail Group Group Revenue Operating Income $3,617.9 $46.8 Revenue Operating Income Revenue Operating Income Revenue Operating Income $832.0 $50.6 $708.7 $27.3 $164.8 $42.8 $140.5 $4.7 Retail Group Revenue Operating (Loss) $140.7 ($7.5) 38

40 DIVIDEND / DILUTED EPS 39

41 MISSION We firmly believe that our Company is a powerful vehicle through which we channel our time, talent, and energy in pursuit of the fundamental goal of serving God by serving others. Through our collective action we greatly magnify the impact of our individual efforts to: Provide extraordinary service to our customers Help each other improve Support our communities Increase the value of our Company 40

42 APPENDIX 41

43 DEFINITIONS EBITDA Operating income Bushels shipped F2M Bushels owned Bushels stored for others Volume: fertilizer Railcar fleet utilization Earnings before interest, taxes, depreciation, and amortization, is a non-gaap measure. It is one of the measures the company uses to evaluate liquidity and leverage. 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 w orking capital and long-term assets and is reported net of the controlling interest share of income. Includes shipments from our facilities, farm-to-market(f2m) and origination services for corn, soybeans, w heat, and oats. Bushels that The Andersons, I nc. purchases from the farm and are deliv ered directly to an Andersons' customer. The bushels are never delivered to an Andersons' facility. Bushels deliv ered to an Andersons' elev ator or storage facility rented by The Andersons, I nc. where title to the grain is transferred to The Andersons, Inc. The bushels are stored by The Andersons, Inc. for the owner of the bushels for which a storage fee is charged the bushels' owner. Sales is bulk and packaged parkaged basic materials and formulated products; service is third is party third basic party bulk basic and bulk packaged and packaged material material and formulated and formulated products. products. Percentage of railcars and locomotives in lease service 42

44 OPERATING INCOME Three Months Ended March 31, year-over-year, 2014 Operating Income Bridge $21,657 $3,007 $17,345 ($849) $471 ($2,626) $834 ($3,259) $36,580 Q1 Q OTHER (Misc.) In Thousands 43

45 OPERATING INCOME Twelve Months Ended December 31, year-over-year, 2013 Operating Income Bridge $124,048 ($16,792) $54,320 ($11,979) ($56) $2,528 ($3,583) ($4,736) $143,750 In Thousands OTHER (Misc.)

46 BALANCE SHEET Unaudited In thousands March 31, December 31, March 31, Assets Current assets: Cash and cash equivalents 43,693 $ $ 309,085 $ 58,284 Restricted cash Accounts receivable, net 191, , ,842 Inventories 725, , ,378 Commodity derivative assets current 119,330 71, ,079 Deferred income taxes 9,104 4,931 15,482 Other current assets 48,214 47,188 63,350 Total current assets 1,138,549 1,221,784 1,247,050 Other assets: Commodity derivative assets noncurrent 1, Other assets, net 114, , ,535 Pension assets 15,079 14,328 - Equity method investments 232, , , , , ,725 Railcar assets leased to others, net 237, , ,706 Property, plant and equipment, net 386, , ,307 Q1 Q Total assets $ 2,125,583 $ 2,273,556 $ 2,151,788 45

47 BALANCE SHEET(CONT) Unaudited In thousands March 31, December 31, March 31, Liabilities and equity Current liabilities: Borrowings under short-term line of credit $ 226,100 $ - $ 292,100 Accounts payable for grain 183, , ,997 Other accounts payable 177, , ,013 Customer prepayments and deferred revenue 124,981 59, ,191 Commodity derivative liabilities current 32,153 63,954 50,157 Accrued expenses and other current liabilities 56,290 70,295 52,519 Current maturities of long-term debt 90,760 51,998 43,052 Total current liabilities 891, , ,029 Other long-term liabilities 14,749 15,386 16,898 Commodity derivative liabilities noncurrent 734 6,644 3,220 Employee benefit plan obligations 39,989 39,477 52,927 Long-term debt, less current maturities 306, , ,700 Deferred income taxes 128, ,082 77,694 Total liabilities 1,382,254 1,549,135 1,527,468 Total equity 743, , ,320 Q1 Q1 13 $ 2,273,556 $ 14 Total liabilities and equity 2,125,583 $ 2,151,788 46

48 GROSS PROFIT Three Months Ended March 31, year-over-year, 2014 Operating Income Bridge $79,273 ($7,842) $2,560 $126 $2,886 ($543) $315 $76,775 Q1 Q In Thousands 47

49 GROSS PROFIT Twelve Months Ended December 31, year-over-year, 2013 Gross Profit Bridge $358,005 $1,337 $17,839 ($11,570) $2,135 $2,263 ($4,784) $365, In Thousands 48

50 LONG-TERM FUNDED DEBT & SHORT-TERM BORROWINGS WORKING CAPITAL» Line of credit committed under syndicated facility is $850 million *Long-Term Funded Short-Term Borrowings Working Capital Debt-to-Equity 0.66 In Millions In Millions $ $79.2 Q113 Q114 Q113 Q $184.3 Million *Long-term debt, less current maturities/total equity 49

51 GRAIN GROUP» Lansing Trade Group, LLC is a commodity merchandising and services business founded in 1931 Initial investment 2003 Current ownership approximately 39% Significant merchandising platform Grain merchandising Feed ingredients Proprietary merchandising International Biofuels» Strong western corn belt presence 50

52 The Andersons, How Grain Makes Inc. Money Phase 1: Field Phase 2: Grain Origination Phase 3: Grain Destinations Phase 4: Manufacturing Output Phase 5: Fork Purchase and Sell Grain Procurement for Ethanol Grain Producer Store Grain Capitalize on Basis and Spread Markets Sell Risk Management Services: Domestic & Export Grain Blend and Resell Logistics Animal Feed (DDG) Food Ingredient / Manufacturer The Consumer Risk Management Programs The Andersons, Inc. Not to be Reproduced Without Permission Crop Insurance

53 ETHANOL GROUP Location Start Date Nameplate capacity (MMGY) Est. bushels processed (millions) Est. DDGS production (tons) Equity Ownership The Andersons Dension Ethanol LLC May, % 50% with The Andersons Marathon Ethanol LLC February, % Minority Investor The Andersons Clymers Ethanol LLC April, % The Andersons Albion Ethanol LLC August, % Total

54 RAIL GROUP Cubic Feet Total Capacity Cars , , *PD Hoppers * * * Railcars Leased by Industry Total 13,353 Gallons Total Capacity Cars 10,000-19, ,000-29,999 1,261 30,000-39,999 1,455 Total 3,042 53

55 TURF & SPECIALTY GROUP» Manufactures granular lawn fertilizer, pesticides and ice-melt products for major retailers throughout the U.S. ContacDG, known as NutriDG internationally, is a premium small particle granular fertilizer produced from a combination of premium turf nutrients, patented dispersing granule technology and a special manufacturing process providing exceptional results for the golf course industry» Asset purchase of Cycle Group, Inc., a granular manufacturer in North Carolina» Purchased assets of Mt. Pulaski Products, LLC» Manufactures corncob-based products for a variety of uses including animal bedding and private label cat litter products from Arm & Hammer RETAIL GROUP» 4 More for Your Home retail concepts stores Substantial food offerings 100,000 SKU s» 1 Specialty food market store Featuring food, fresh, fun concept Extensive meat, wine, and produce selection $2.5 million» 1 Outdoor power equipment store 54

56 GRAIN FUTURES MARKET 5/9/

57 CORN PRICE HISTORY (12/1/2013 5/9/2014) 56

58 SOYBEAN PRICE HISTORY (12/1/2013 5/9/2014) 57

59 WHEAT PRICE HISTORY (12/1/2013 5/9/2014) 58

60 U.S. ACRES U.S. is largest producer of corn in the world, 32% of the world s corn crop in the early 2010 s U.S. acres planted (in millions) 59

61 U.S. CORN 60

62 U.S. SOYBEANS 61

63 U.S. WHEAT 62

64 FERTILIZER MARKET 63

65 TIME LINE 64

66 The Andersons, Inc. Thank for joining us. Our next earnings call is scheduled for Thursday, August 7 th at 11:00 a.m. To learn more about The Andersons, Inc., visit our web-site at 65