SEPTEMBER 24, 2013 THE ANDERSONS, INC.

Transcription

1 SEPTEMBER 24, 2013 THE ANDERSONS, INC. We are well-positioned to capitalize on macro trends such as expanding world population, escalating global demand for protein and increasing North American crop production that 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. By leveraging our deep operational experience, we are focused on serving these needs. Scotiabank Agriculture & Fertilizers Conference 2013: Growing the Market

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. 2

3 At a Glance Six Months Full-Year 6/30/ /31/2012 Revenues: $2.8 billion $5.3 billion EBITDA: $108.1 million $195.2 million Diluted EPS: $2.24 $4.23 Employees: 3,200 Facilities: 90+ States: 18 Recent Price: $ Week Range: $ $69.73 Market cap: $1.29 billion Institutional ownership: 73% Avg. daily trading volume: 136,600 Analyst Coverage: 6 Sell-side Analysts Now ranked 472 as of 9/17/ th consecutive dividend payment 3

4 WHO WE ARE WHAT WE DO WHY WE DO IT WELL-POSITIONED FOR THE FUTURE

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.

6 And these enduring relationships began, are, and will always be centered first and foremost around our Grain Group END USER / PROCESSOR GRAIN GROUP SHIPPERS RECEIVERS PRODUCER And have lead to our finding these value added opportunities Ethanol Group Rail Group Plant Nutrient Group 6

7 Strategy Partner of Choice... for current and new target customers Growth in North America... centered primarily on agribusiness and transportation Leverage Core Capabilities... to create growth Business Development - significant and purposeful growth - identify, select, pursue and integrate opportunities - efficient use of available resources 7

8 Thompsons Limited 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

9 Established in 1924 Thompsons Limited 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 Full-year revenue of $540 million CAD More than 275 experienced customer-service oriented team members 9

10 Mile Rail, LLC Acquired Mile Rail, LLC, a railcar repair and cleaning provider headquartered in Kansas City, Missouri. Mile Rail repairs and cleans virtually all types of railcars containing a comprehensive range of non-hazardous and food-grade products and wastes from locations at its headquarters in Kansas City, along with locations in Nebraska and Indiana. They also maintain a central Midwest footprint with its mobile units. 10

11 2012 & 2013 Growth Rail Repair Facility (2013) 7 Grain Elevators in NW Iowa 55 million gallon Ethanol Plant in Central Iowa Grain Elevator in Anselmo, Nebraska 5 Grain Elevators in NW Tennessee Rail Repair Facility (2013) 11 Headquarters Added 39 million bushel capacity Added Iowa and Tennessee Doubled cob milling capacity Acquired New Eezy Gro

12 WHAT WE DO 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.

13 Grain Group Storage capacity of more than 141 million bushels in: Ohio / Michigan / Indiana / Illinois / Nebraska / Iowa / Tennessee Provide customers with unique grain marketing and risk management services Grain Bushels Shipped (in millions) Six Months Ended June 30, Twelve Months Ended December 31, 13

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 Ontario 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 14

15 Plant Nutrient Group Nutrient facilities and farm centers in: Ohio / Michigan / Indiana / Illinois / Florida / Iowa / Minnesota / Wisconsin Formulate, store and distribute approximately 2.1 million tons of dry and liquid agricultural nutrients Gets the right product to the right place at the right time Record operating income in 2012 Sales and Service Volume (in thousands) Twelve Months Ended December 31, Six Months Ended June 30, 15

16 Rail Group Repair, sell, manage and lease a fleet of nearly 23,300 various types of railcars and locomotives Railcar repair facilities across the country in: Ohio / California / Mississippi / South Carolina / Nevada Iowa / Utah / New York / Alabama Meets customers specialized railcar needs Record operating income in 2012 and Q Six Months Ended June 30, Railcar Fleet Includes 95 Locomotives Includes 123 Locomotives Six Months Ended June 30, Average Utilization Rate 16

17 Ethanol Group Collectively produces 330 million gallons annually in four plants: Ohio / Michigan / Iowa / Indiana 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 in Q Co-Products Shipped (in thousands) Full-Year Six Months Ended Ethanol (in gallons) 275, , , ,445 E-85 (in gallons) 17,019 11,859 10,347 9,241 DDGS (in tons) 1,211 1, Corn Oil (in pounds) 59,012 12,482 38,856 23,556 17

18 Turf & Specialty Group Three Months Ended June 30, In Millions Three Months Ended June 30, In Millions Solid year-to-date earnings Same store sales increased Change Revenue $43.1 $43.8 ($0.7) Operating Income $2.2 $2.8 ($0.6) Revenue $41.3 $44.5 ($3.2) Operating Income $1.5 $1.4 $ Retail Group Six Months Ended June 30, In Millions Six Months Ended June 30, Change Revenue $90.3 $89.0 $1.3 Operating Income $6.2 $5.0 $ Change In Millions Change Revenue $72.0 $74.7 ($2.7) Operating loss ($1.6) ($1.3) ($0.3) 18

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.

20 Grain Demand 20

21 Corn Stocks Considering the low yields in 2012 and, ending stocks at low levels should equate to increased corn acres in 2013 and beyond. 21

22 Nutrient Demand N P K Nitrogen Phosphorus Potassium Data on the slide is accurate as of 11/1/2012 of the presentation and is subject to change 22

23 Rail Demand 23

24 Ethanol Demand Ethanol decreases U.S. dependence on imported oil, addresses environmental concerns, supports agriculture and rural economy 1 ton of corn =~ 96.4 gallons of ethanol 1 ton of corn in the ethanol process also produces: =~ 643 lbs of distillers dried grain for livestock feed =~ 18 lbs of corn oil =~ 643 lbs of CO 2 Ethanol facts Energy Act of 2007 Renewable Fuels Standard billion gallons billion gallons billion gallons billion gallons 24

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

26 Grain Growth Invested $221million during past 3 years 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 enhances ability to provide relevant value-added services Bushels Storage Capacity In millions of bushels 26

27 Grain Capacity Impact Recently asked question: What would be a normalized earnings base? EBT (less equity in earnings of affiliates, such as Lansing Trade Group LLC) / average annual bushel capacity Outlier due to one-time wheat basis Normalized 5 year range (capacity data on page 49) Capacity 142 million, adjusted for Anselmo, Nebraska (stub year, open Q4) Tennessee/Iowa (stub year, December) Decrease in 2012 related to Francesville, IN Last year s drought has and will continue to impact

28 Plant Nutrient Growth Invested $57 million during past 3 years in acquisitions and existing infrastructure Geographical footprint growth extends participation in core markets throughout the Midwest and Southeast Expanding markets and enlarging range of products and services for customers 867 total tons Fertilizer Storage Capacity 870 total tons 833 total tons 837 total tons 852 total tons In thousands of tons 28

29 Corn Condition The Andersons facilities Rated Good-to-Excellent 47% 56% 68% 51% 52% 66% 40% 54% 44% 45% 69% 80% 59% 72% 88% 87% 89% 79% 18 states planted 92% of 2012 corn acreage Nationwide, 59% of corn crop is rated good-to-excellent. 8/25/2012 was rated 22% Source as of 8/25/ % was rated good-to-excellent as of 8/19/

30 Soybeans Condition The Andersons facilities Rated Good-to-Excellent 38% 54% 62% 72% 60% 54% 45% 58% 74% 60% 67% 45% 85% 83% 53% 53% 18 states planted 95% of 2012 bean acreage Nationwide, 58% is rated good-toexcellent. 8/25/12, was 30% 73% 77% 62% was rated good-to-excellent 8/19/13 Source as of 8/25/

31 Rail Growth Invested $194 million gross during past 3 years in railcar purchases, net after proceeds from sale of railcars is $52 million; in addition invested $6 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 sq.-foot paint facility New state-of-the-art paint facility Railcar Fleet by Car Type as of 6/30/

32 Ethanol Growth Invested $79 million during past 3 years 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 32

33 FINANCIAL HIGHLIGHTS

34 2013 Diluted Earnings Per Share $4.23 Net Income $79.5 Full-Year 2012 In millions, except EPS Revenue EBT $5,272.0 $120.1 $5,272.0 $120.1 In millions CORE GROUPS Turf & Specialty Group Revenue Operating Income Grain Group Ethanol Group Plant Nutrient Rail Group Group Revenue Operating Income $3,293.6 $63.6 Revenue Operating (Loss) Revenue Operating Income Revenue Operating Income $742.9 ($3.7) $797.0 $39.3 $156.4 $42.8 $131.0 $2.2 Retail Group Revenue Operating (Loss) $151.0 ($4.0) 34

35 2013 Diluted Earnings Per Share $2.24 Net Income $42.1 Six Months Ended 6/30/13 In millions, except EPS Revenue EBT $5,272.0 $120.1 $2,839.0 $69.6 In millions CORE GROUPS Turf & Specialty Group Revenue Operating Income Grain Group Ethanol Group Plant Nutrient Rail Group Group Revenue Operating Income $1,727.8 $10.4 Revenue Operating Income Revenue Operating Income Revenue Operating Income $421.5 $13.1 $442.2 $22.7 $85.0 $24.3 $90.3 $6.2 Retail Group Revenue Operating (Loss) $72.0 ($1.6) 35

36 EBITDA in millions 36

37 Long-Term Debt Long-term Debt-to-Equity = Long-term debt, less current maturities/total equity 37

38 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 38

39 Diluted Earnings Per Share 39 Dividend / EPS Dividends

40 APPENDIX

41 Definitions EBITDA: 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 Operating Income: 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 controlling interest share of income Bushels shipped: Includes shipments from our facilities, farm-to-market and origination services for corn, soybeans, wheat, and oats Bushels owned: Bushels delivered to an Andersons' elevator or storage facility rented by The Andersons, Inc. where title to the grain is transferred to Bushels stored for others: The bushels are stored by for the owner of the bushels for which a storage fee is charged the bushels' owner Volume (fertilizer) Sales is bulk and packaged basic materials and formulated products; service is third party basic bulk and packaged material and formulated products Railcar fleet utilization: Percentage of railcars and locomotives in lease service NM: Not meaningful 41

42 Financial Highlights (in thousands), except per share and debt-to-equity Jun. 30, Dec. 31, Jun. 30, Gross Profit $ 182,504 $ 358,005 $ 188,520 Net Income after Tax $ 42,117 $ 75,565 $ 47,606 Total Long-term Funded Debt-to-Equity Total Equity $ 653,880 $ 611,445 $ 589,193 Working Capital $ 308,925 $ 304,346 $ 256,350 Per Common Share Data Diluted Earnings Per Share $ 2.24 $ 5.09 $ 2.54 Dividend Per Share $ 0.48 $ 0.60 $

43 Operating Income Six Months Ended June 30, 2013 year-over-year $75,203 ($24,360) $15,064 ($11,103) $9,037 $1,241 ($309) $3,903 $68,676 In thousands 43

44 Operating Income Twelve Months Ended December 31, 2012 year-over-year $146,159 ($23,691) ($27,064) $987 $33,063 $216 $(2,431) ($3,191) $124,048 in thousands 44

45 Gross Profit Six Months Ended June 30, 2013 year-over-year $188,520 ($12,099) $9,756 ($11,825) $9,408 $850 ($2,108) $182,502 In thousands 45

46 Gross Profit Twelve Months Ended December 31, 2012 year-over-year $352,852 ($26,433) ($349) $1,058 $31,979 $791 $(1,893) $358,005 in thousands 46

47 Short-term Borrowings in millions in millions Working Capital in millions 47

48 Grain Group Lansing Trade Group, LLC is a commodity merchandising and services business founded in 1931 Initial investment 2003 Current ownership approximately 49% Significant merchandising platform Grain merchandising Feed ingredients Biofuels Proprietary merchandising International Ag Facilities Strong western corn belt presence Record earnings from Lansing Trade Group full-year 2012 and Q

49 The Andersons, How Grain Inc. Makes Money (Appendix) 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 Managemen t Services: Domestic & Export Grain Blend and Resell Logistics Animal Feed (DDG) Food Ingredient / Manufacturer The Consumer Risk Management Programs Not to be Reproduced Without Permission Crop Insurance

50 Grain Capacity Annual average bushel capacity In thousands Capacity 142 million, adjusted for Anselmo, Nebraska (stub year, open Q4) Tennessee/Iowa (stub year, December) Decrease in 2012 related to Francesville, IN 50

51 Ethanol LLCs Location Start Date Nameplate capacity (MMGY) Est. bushels processed (millions) Est. DDGS production (tons) Equity Ownership The Andersons Dension Ethanol LLC May, % The Andersons Marathon Ethanol LLC February, % with 17% Investor The Andersons Clymers Ethanol LLC April, % The Andersons Albion Ethanol LLC August, % Total

52 as of 6/30/2013 Covered Hoppers Detail Cubic Feet Total Capacity Cars , , *PD Hoppers * * * Total 13,551 Tank Cars Detail Gallons Total Capacity Cars ,000-19, ,000-29,999 1,276 30,000-39, Total 2,726 Rail Growth Railcars leased by Industry (as of 6/30/2012) 52

53 Turf & Specialty Group Groups 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 Manufactures corncob-based products for a variety of uses including animal bedding and private-label cat litter products for Arm & Hammer Purchased assets of Mt. Pulaski Products, LLC Retail Group 4 More for Your Home retail concept stores Substantial food offerings 100,000 SKU s 1 Specialty food market Featuring food, fresh, fun concept Extensive meat, wine, and produce selection 1 Outdoor power equipment store 53

54 Timeline 54

55 Thank you for joining us today Our next earnings call is scheduled for Thursday, November 7 th at 11:00 a.m. To learn more about, visit our web-site at