PR Newswire | Feb 16, 2021 04:06PM EST

02/16 15:05 CST

The Andersons, Inc. Reports Fourth Quarter Results MAUMEE, Ohio, Feb. 16, 2021

MAUMEE, Ohio, Feb. 16, 2021 /PRNewswire/ -- The Andersons, Inc. (Nasdaq: ANDE) announces financial results for the fourth quarter ended December 31, 2020.

Fourth Quarter Highlights:

* Company reported net income attributable to The Andersons of $16.0 million, or $0.48 per diluted share, and adjusted net income of $19.4 million, or $0.59 per diluted share. * Trade reported pretax income of $28.3 million and adjusted pretax income of $29.3 million on improved merchandising results. * Ethanol reported a pretax loss attributable to the company of $3.5 million that included a $6.6 million non-cash mark-to-market charge. * Plant Nutrient completed its best year since 2014 as it recorded pretax income of $3.2 million for the quarter. * Adjusted EBITDA for the quarter of $85.0 million was comparable year over year despite significant pandemic impacts.

"I am very excited about the recent strong, demand-driven rally in grain and fertilizer markets and what it means for U.S. agriculture and The Andersons," said President and CEO Pat Bowe. "We have already participated in multi-year highs in grain elevation margins, and have benefited from strong export demand. Fertilizer demand was strong throughout the fourth quarter. With more planted corn acres in the forecast, it looks like strong fertilizer demand will continue."

"We improved our fourth quarter results modestly year over year, and our outlook for 2021 has improved," continued Bowe. "Our Trade income was up substantially on strong merchandising results from our diverse commodity portfolio, and Plant Nutrient's full-year results nearly doubled. Our Ethanol business benefited from the launch of our new high-protein feed products. Finally, Rail remained profitable despite weak railcar demand.

"We continue to benefit greatly from the complementary trading business we acquired in early 2019 and have since successfully integrated. We continue to focus on creating a leaner cost structure, having taken approximately $40 million of cost out of the business in the last two years. In addition to opportunities in the Trade and Plant Nutrient segments, a recovery in the ethanol and rail markets should lead to significant year-over-year increases in EBITDA. In short, we are pleased to see the strength in ag markets and look forward to better financial performance ahead."

$ in millions, except per share amounts

Q4 2020Q4 2019VarianceYTD 2020YTD 2019Variance

Pretax Income (Loss) Attributable to$24.1$21.4$2.7 $(2.5)$31.4 $(33.9)the Company^1

Adjusted Pretax Income (Loss) 28.4 23.7 4.7 10.6 51.0 (40.4) Attributable to the Company^1,2

Trade^2 29.3 17.6 11.7 28.9 37.6 (8.7)

Ethanol^1,2 (3.5) 8.1 (11.6) (25.4) 15.9 (41.3)

Plant Nutrient^2 3.2 3.9 (0.7) 16.0 8.4 7.6

Rail^2 2.0 4.5 (2.5) 5.5 15.1 (9.6)

Other^2 (2.6) (10.4)7.8 (14.4) (26.0) 11.6

Net Income Attributable to the 16.0 6.6 9.4 7.7 18.3 (10.6) Company^1

Adjusted Net Income Attributable to 19.4 18.4 1.0 2.9 43.0 (40.1) the Company^1,2

Diluted EPS 0.48 0.19 0.29 0.23 0.55 (0.32)

Adjusted Diluted EPS^2 0.59 0.55 0.04 0.09 1.30 (1.21)

EBITDA^2 83.5 82.2 1.3 215.4 234.0 (18.6)

Adjusted EBITDA^2 $85.0$84.5$0.5 $225.7$253.6$(27.9)

Reflects amounts attributable to the company and excludes losses attributable to the noncontrolling interests of $1.3 million in Q4 2020,^1 $1.0 million in Q4 2019, $21.9 million for the full year 2020 and $3.2 million for the full year 2019. See appendix for non-GAAP explanations and reconciliations.

^2 Non-GAAP financial measures; see appendix for explanations and reconciliations.

Cash, Liquidity and Long-Term Debt Management

"We continued to generate strong operating cash flows and remained disciplined in our capital spending during the fourth quarter," said Executive Vice President and CFO Brian Valentine. "We were well-prepared for the need for short-term working capital funding as commodity prices spiked during the quarter and into early 2021. We were pleased with the progress we made in 2020 to reduce long-term debt, which remains a priority."

The company generated $74.6 million and $73.0 million in cash from operations before working capital changes during the fourth quarters of 2020 and 2019, respectively. For the full years 2020 and 2019, the company generated $200.9 million and $192.6 million in cash from operations before working capital changes, respectively.

The company spent $16.6 million net of proceeds from asset sales on capital projects during the fourth quarter and spent $86.8 million net of proceeds from asset sales for the full year 2020, well beneath its self-imposed $100 million ceiling.

Working capital, readily marketable inventory and short-term debt each increased year over year due to the significant increase in commodity prices. While the company has been able to maintain adequate liquidity, it recently increased its short-term borrowing capacity by $250 million to further ensure adequate liquidity and accommodate further volatility and related opportunities in 2021.

Finally, despite all the challenges it faced during 2020, the company reduced long-term debt by approximately $100 million and remains focused on additional reductions of $200 to $250 million by the end of 2023.

Fourth Quarter Segment Overview

Trade Records Higher Results Driven by Continued Strong Merchandising Income

Trade recorded pretax income of $28.3 million and adjusted pretax income of $29.3 million for the quarter, a significant improvement compared to a pretax loss of $19.9 million and adjusted pretax income of $17.6 million in the fourth quarter of 2019. The primary difference between reported and adjusted income in 2019 was attributable to approximately $40 million in asset and investment impairment charges.

Income from commodity merchandising rose by more than one-third year over year, besting an already strong performance in the fourth quarter of 2019. The performance of the segment's asset-based businesses declined, as income from both storing and handling grain decreased.

Trade's fourth quarter adjusted EBITDA was $45.8 million, up approximately 23 percent over fourth quarter 2019 adjusted EBITDA of $37.2 million. Its full year adjusted EBITDA decreased from $123.4 million in 2019 to $95.5 million in 2020, primarily as a result of fewer wheat opportunities and the remaining impact of the poor 2019 harvest in the Eastern Corn Belt.

Ethanol Results Decline on Big Decrease in Crush Margins and Large Mark-to-Market Charge

The Ethanol segment reported a pretax loss attributable to the company of $3.5 million in the fourth quarter compared to adjusted pretax income attributable to the company of $8.1 million in the same period in 2019.

Production volumes in the quarter were flat year over year. The business benefited from execution of its high-protein feed strategy as well as higher DDG and corn oil prices. The ethanol and vegetable oil trading businesses also posted comparatively better results due to improved margins and higher volumes.

Ethanol board crush margins were 25 cents lower year over year and were driven by rising corn prices that were only partially mitigated by higher ethanol prices. Strong operating performance at the plants helped offset the impact of the lower crush margins. The segment also recorded a $6.6 million non-cash, mark-to-market charge during the quarter that is expected to reverse in 2021.

Ethanol recorded adjusted EBITDA of $16.2 million in the fourth quarter of 2020, down from 2019 fourth quarter adjusted EBITDA of $25.9 million.

Plant Nutrient Closes out Strong Year; Rail Records Modest Income

Plant Nutrient recorded adjusted pretax income of $3.2 million in the fourth quarter compared to adjusted pretax income of $3.9 million in the same period of the prior year. Tons sold were up across all major product lines, but especially in Ag Supply Chain. Margin per ton declined moderately, most notably in Engineered Granules. The business continued to benefit from disciplined working capital and expense management.

Plant Nutrient's current quarter adjusted EBITDA was $10.8 million compared to 2019 fourth quarter adjusted EBITDA of $11.5 million. For the full year, Plant Nutrient recorded adjusted EBITDA of $47.2 million in 2020 and $42.3 million in 2019 as planting and harvest conditions were much improved year over year.

Rail recorded adjusted fourth quarter pretax income of $2.0 million compared to $4.5 million of adjusted pretax income in the same period of the prior year. Lower income from railcar sales accounted for the majority of the shortfall.

Rail's fourth quarter 2020 adjusted EBITDA was $13.5 million compared to fourth quarter 2019 adjusted EBITDA of $17.6 million. Full-year 2020 EBITDA was $55.7 million, a 15 percent decrease from 2019 results, primarily due to lower leasing income.

Full-Year Provision for Income Taxes Includes CARES Act Benefits

The company's full-year income tax provision included additional CARES Act tax benefits of approximately $14.8 million, or $0.44 per diluted share. The company has excluded these benefits from its adjusted net income. At year-end, the company had received $1.7 million of an anticipated total of $39.3 million in CARES Act refunds. The company expects to receive the remaining $37.6 million in 2021, and has removed that amount from cash from operations before working capital changes.

The company's reported effective income tax rate continued to be substantially impacted by the income or loss earned by the noncontrolling interests, which may result in highly variable effective tax rates in future periods.

Fourth quarter and full-year 2019 income tax provisions included tax expense of approximately $8.0 million, or $0.24 per diluted share, related to nondeductible Canadian losses on the company's investment in Thompsons Limited that it excluded from its adjusted net income. In addition, the company's fourth quarter 2019 income tax provision included a tax benefit of approximately $2.7 million, or $0.08 per diluted share, for federal research and development income tax credits.

Conference Call

The company will host a webcast on Wednesday, February 17, 2021, at 11 a.m. Eastern Standard Time, to discuss its performance and provide its updated outlook for 2021. To access the call, please dial 866-439-8514 or 678-509-7568 (participant passcode is 9267363). It is recommended that you call 10 minutes before the conference call begins.

To access the webcast, click on the link: https://edge.media-server.com/mmc/p/cintwfki. Complete the four fields as directed and click Submit. A replay of the call will be available at www.andersonsinc.com under the heading "Investors."

Forward-Looking Statements

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 COVID-19 pandemic 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.

Non-GAAP Measures

This release contains non-GAAP financial measures. The company believes that pretax income attributable to The Andersons, adjusted pretax income attributable to the company, net income attributable to the company, adjusted net income attributable to the company, adjusted diluted earnings per share, EBITDA, adjusted EBITDA 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 better period-to-period comparability. The above measures are not and should not be considered as alternatives to pretax income, net income, net income per share 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.

Company Description

Founded in 1947 in Maumee, Ohio, The Andersons, Inc. (Nasdaq: ANDE) is a diversified company rooted in agriculture that conducts business in the commodity trading, ethanol, plant nutrient and rail sectors. Guided by its Statement of Principles, The Andersons strives to provide extraordinary service to its customers, help its employees improve, support its communities and increase the value of the company. For more information, please visit www.andersonsinc.com.

The Andersons, Inc. Condensed Consolidated Statements of Operations (unaudited)



Three months ended Twelve months ended December 31, December 31,

(in thousands, except per share data) 2020 2019 2020 2019

Sales and merchandising revenues $2,542,917$1,885,603$8,208,436$8,170,191

Cost of sales and merchandising revenues 2,409,226 1,747,244 7,803,514 7,652,299

Gross profit 133,691 138,359 404,922 517,892

Operating, administrative and general expenses 105,792 109,457 399,207 436,842

Asset impairment - 38,131 - 41,212

Interest expense, net 13,292 14,078 51,275 59,691

Other income, net:

Equity in earnings (loss) of affiliates, net 410 (4,992) 638 (7,359)

Gain from remeasurement of equity method investments, net- 36,287 - 35,214

Other income, net 7,751 12,387 20,448 20,109

Income (loss) before income taxes 22,768 20,375 (24,474) 28,111

Income tax expense (benefit) 8,119 14,708 (10,259) 13,051

Net income (loss) 14,649 5,667 (14,215) 15,060

Net loss attributable to the noncontrolling interests (1,342) (982) (21,925) (3,247)

Net income attributable to The Andersons, Inc. $15,991 $6,649 $7,710 $18,307



Per common share:

Basic earnings attributable to The Andersons, Inc. $0.48 $0.20 $0.23 $0.56 common shareholders

Diluted earnings attributable to The Andersons, Inc. $0.48 $0.19 $0.23 $0.55 common shareholders

The Andersons, Inc. Condensed Consolidated Balance Sheets (unaudited)



(in thousands) December 31, 2020December 31, 2019

Assets

Current assets:

Cash, cash equivalents and restricted cash $29,123 $54,895

Accounts receivable, net 659,834 536,367

Inventories 1,300,693 1,170,536

Commodity derivative assets - current 320,706 107,863

Other current assets 106,053 75,681

Total current assets 2,416,409 1,945,342

Other assets:

Goodwill 135,709 135,360

Other intangible assets, net 142,940 175,312

Right of use assets, net 56,031 76,401

Other assets, net 49,907 45,610

Total other assets 384,587 432,683

Rail assets leased to others, net 591,946 584,298

Property, plant and equipment, net 879,179 938,418

Total assets $4,272,121 $3,900,741



Liabilities and equity

Current liabilities:

Short-term debt $403,703 $147,031

Trade and other payables 957,683 873,081

Customer prepayments and deferred revenue 180,160 133,585

Commodity derivative liabilities - current 146,990 46,942

Current maturities of long-term debt 75,475 62,899

Accrued expenses and other current liabilities167,671 176,381

Total current liabilities 1,931,682 1,439,919

Long-term lease liabilities 37,177 51,091

Long-term debt, less current maturities 916,540 1,016,248

Deferred income taxes 170,147 146,155

Other long-term liabilities 55,915 51,673

Total liabilities 3,111,461 2,705,086

Total equity 1,160,660 1,195,655

Total liabilities and equity $4,272,121 $3,900,741

The Andersons, Inc. Consolidated Statements of Cash Flows (unaudited)



Three months ended Twelve months ended December 31, December 31,

2020 2019 2020 2019

Operating Activities

Net income (loss) $ 14,649$ 5,667 $(14,215)$ 15,060

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

Depreciation and amortization 47,471 47,770 188,638 146,166

Bad debt expense (1,007) 392 7,042 4,007

Equity in (earnings) losses of affiliates, net of dividends (410) 4,777 (638) 7,671

Loss (gain) on sales of assets, net 825 (7,164) (37) (7,063)

Gains on sales of Rail assets and related leases, net (474) (2,607) (649) (4,122)

Stock based compensation expense 2,441 4,592 10,183 16,229

Deferred income tax 4,469 16,785 26,386 5,114

Inventory write-down 743 - 11,676 -

Asset impairment - 38,131 - 41,212

Gain from remeasurement of equity method investments, net - (35,214) - (35,214)

Other 5,931 (97) 10,072 3,540

Changes in operating assets and liabilities:

Accounts receivable (126,550)(3,392) (128,502) 1,487

Inventories (539,761)(407,198)(139,499) (1,578)

Commodity derivatives (112,596)(8,228) (115,170) 21,714

Other assets (18,865) 11,715 (53,208) 30,497

Payables and other accrued expenses 452,911 363,008 123,489 103,842

Net cash provided by (used in) operating activities (270,223)28,937 (74,432) 348,562

Investing Activities

Acquisition of businesses, net of cash acquired - 47,042 - (102,580)

Purchases of Rail assets (1,481) (36,813) (27,739) (105,254)

Proceeds from sale of Rail assets 2,303 8,908 10,077 18,090

Purchases of property, plant and equipment and capitalized software (17,733) (39,872) (77,147) (165,223)

Proceeds from sale of assets and businesses 524 29,766 11,112 30,617

Purchase of investments (210) - (3,059) (1,490)

Other - 808 - 808

Net cash (used in) provided by investing activities (16,597) 9,839 (86,756) (325,032)

Financing Activities

Net change in short-term borrowings 299,154 7,638 254,971 (278,824)

Proceeds from issuance of long-term debt 258,000 110,896 471,906 922,594

Payments of long-term debt (249,017)(114,597)(559,711) (608,483)

Proceeds from noncontrolling interest owner 2,082 - 8,575 4,714

Distributions to noncontrolling interest owner - - (10,322) -

Payments of debt issuance costs (648) (912) (898) (6,561)

Dividends paid (5,770) (5,547) (23,004) (22,118)

Other (1,078) (1,028) (5,221) (2,615)

Net cash (used in) provided by financing activities 302,723 (3,550) 136,296 8,707

Effect of exchange rates on cash, cash equivalents and restricted cash (473) (1,630) (880) 65

Increase (decrease) in cash, cash equivalents and restricted cash 15,430 33,596 (25,772) 32,302

Cash, cash equivalents and restricted cash at beginning of period 13,693 21,299 54,895 22,593

Cash, cash equivalents and restricted cash at end of period $ 29,123$ 54,895$29,123 $ 54,895

The Andersons, Inc. Adjusted Net Income Attributable to The Andersons, Inc. A non-GAAP financial measure (unaudited)



Three months ended Twelve months ended December 31, December 31,

(in thousands, except per share data) 2020 2019 2020 2019

Net income attributable to The Andersons, Inc. $15,991$6,649 $7,710 $18,307

Items impacting other income, net of tax:

Transaction related stock compensation 946 1,998 4,206 9,337

Severance costs 528 - 6,091 -

Termination of interest rate derivatives and debt fees 2,849 - 2,849 -

One time acquisition costs - 2,158 - 8,007

Asset impairment including equity method investments - 43,097 - 46,178

Gain from remeasurement of equity method investments, net - (36,287)- (35,214)

Gain on sales of assets - (8,646) - (8,646)

Income tax impact of adjustments (a) (962) 9,386 (17,924)5,051

Total adjusting items, net of tax 3,361 11,706 (4,778) 24,713

Adjusted net income (loss) attributable to The Andersons, Inc.$19,352$18,355$2,932 $43,020



Diluted earnings (loss) attributable to The Andersons, Inc. $0.48 $0.19 $0.23 $0.55 common shareholders



Impact on diluted earnings (loss) per share $0.11 $0.36 $(0.14)$0.75

Adjusted diluted earnings (loss) per share $0.59 $0.55 $0.09 $1.30

Income tax adjustments include $(14.8) million due to CARES Act benefits and(a) certain discrete items in 2020 year to date. Quarter to date income tax adjustments due to CARES Act benefits were de minimus.

Adjusted net income (loss) attributable to the Andersons, Inc. reflectsreported net income (loss) available to The Andersons, Inc. common shareholdersafter the removal of specified items described above. Adjusted diluted earnings(loss) per share reflects the fully diluted EPS of The Andersons, Inc. afterremoval of the effect on EPS as reported of specified items described above.Management believes that Adjusted net income (loss) attributable to TheAndersons, Inc. and Adjusted diluted earnings (loss) per share are usefulmeasures of The Andersons, Inc. performance as they provide investorsadditional information about the operations of the company allowing betterevaluation of underlying business performance and better comparability toprevious periods. These non-GAAP financial measures are not intended to replaceor be alternatives to Net income attributable to The Andersons, Inc. andDiluted earnings attributable to The Andersons, Inc. common shareholders asreported, the most directly comparable GAAP financial measures, or any othermeasures of operating results under GAAP. Earnings amounts described above havebeen divided by the company's average number of diluted shares outstanding foreach respective period in order to arrive at an adjusted diluted earnings(loss) per share amount for each specified item.

The Andersons, Inc. Adjusted Earnings Before Taxes, Interest, and Depreciation and Amortization (EBITDA) A non-GAAP financial measure (unaudited)



(in thousands) Trade Ethanol Plant Rail Other Total Nutrient

Three months ended December 31, 2020

Net income (loss) $28,337 $(4,795)$3,187 $(867) $(11,213)$14,649

Interest expense (income) 5,350 1,553 1,270 5,459 (340) 13,292

Tax provision - - - - 8,119 8,119

Depreciation and amortization 11,149 19,438 6,386 8,903 1,595 47,471

EBITDA 44,836 16,196 10,843 13,495 (1,839) 83,531

Adjusting items impacting EBITDA:

Transaction related stock compensation 946 - - - - 946

Severance Costs - - - - 528 528

Total adjusting items 946 - - - 528 1,474

Adjusted EBITDA $45,782 $16,196 $10,843$13,495$(1,311) $85,005



Three months ended December 31, 2019

Net income (loss) $(19,938)$42,098 $4,625 $4,461 $(25,579)$5,667

Interest expense (income) 6,103 2,175 1,476 4,415 (91) 14,078

Tax provision - - - - 14,708 14,708

Depreciation and amortization 13,450 16,633 6,207 8,745 2,735 47,770

EBITDA (385) 60,906 12,308 17,621 (8,227) 82,223

Adjusting items impacting EBITDA:

Acquisition costs 833 1,325 - - - 2,158

Transaction related stock compensation 1,998 - - - - 1,998

Asset impairments including equity method investments 40,420 - 2,175 - 502 43,097

Gain from remeasurement of equity method investments, net- (36,287) - - - (36,287)

Gain on sales of assets (5,702) - (2,944) - - (8,646)

Total adjusting items 37,549 (34,962) (769) - 502 2,320

Adjusted EBITDA $37,164 $25,944 $11,539$17,621$(7,725) $84,543





(in thousands) Trade Ethanol Plant Rail Other Total Nutrient

Twelve months ended December 31, 2020

Net income (loss) $24,687 $(47,338) $16,015 $2,607 $(10,186) $(14,215)

Interest expense (income) 21,974 7,461 5,805 17,491 (1,456) 51,275

Tax benefit - - - - (10,259) (10,259)

Depreciation and amortization 44,627 73,224 25,407 35,573 9,807 188,638

EBITDA 91,288 33,347 47,227 55,671 (12,094) 215,439

Adjusting items impacting EBITDA:

Transaction related stock compensation 4,206 - - - - 4,206

Severance Costs - - - - 6,091 6,091

Total adjusting items 4,206 - - - 6,091 10,297

Adjusted EBITDA $95,494 $33,347 $47,227 $55,671$(6,003) $225,736



Twelve months ended December 31, 2019

Net income (loss) $(17,328) $47,660 $9,159 $15,090$(39,521) $15,060

Interest expense (income) 34,843 943 7,954 16,486 (535) 59,691

Tax provision - - - - 13,051 13,051

Depreciation and amortization 50,973 23,727 25,985 34,122 11,359 146,166

EBITDA 68,488 72,330 43,098 65,698 (15,646) 233,968

Adjusting items impacting EBITDA:

Acquisition costs 6,682 1,325 - - - 8,007

Transaction related stock compensation 9,337 - - - - 9,337

Asset impairments including equity method investments 43,501 - 2,175 - 502 46,178

Gain from remeasurement of equity method investments, net1,073 (36,287) - - - (35,214)

Gain on sales of assets (5,702) - (2,944) - - (8,646)

Total adjusting items 54,891 (34,962) (769) - 502 19,662

Adjusted EBITDA $123,379 $37,368 $42,329 $65,698$(15,144) $253,630



Adjusted EBITDA is defined as earnings before taxes, interest, 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.

The Andersons, Inc. Segment Data (unaudited)



(in thousands) Trade Ethanol Plant Rail Other Total Nutrient

Three months ended December 31, 2020

Sales and merchandising revenues $1,979,272$373,517$155,514$34,614$- $2,542,917

Gross profit 90,796 2,562 30,623 9,710 - 133,691

Equity in earnings of affiliates, net 410 - - - - 410

Other income, net 5,089 1,330 339 342 651 7,751

Income (loss) before income taxes 28,337 (4,795) 3,187 (867) (3,094) 22,768

Loss attributable to the noncontrolling interests- (1,342) - - - (1,342)

Income (loss) before income taxes attributable $28,337 $(3,453)$3,187 $(867) $(3,094) $24,110 to The Andersons, Inc. (a)

Adjustments to income (loss) before income 946 - - 2,849 528 4,323 taxes (b)

Adjusted income (loss) before income taxes $29,283 $(3,453)$3,187 $1,982 $(2,566) $28,433 attributable to The Andersons, Inc. (a)



Three months ended December 31, 2019

Sales and merchandising revenues $1,391,151$312,860$138,182$43,410$- $1,885,603

Gross profit 87,652 12,594 23,521 14,592 - 138,359

Equity in losses of affiliates, net (4,992) - - - - (4,992)

Other income, net (c) 8,365 36,503 3,256 191 359 48,674

Income (loss) before income taxes (19,938) 42,098 4,625 4,461 (10,871) 20,375

Loss attributable to the noncontrolling interests- (982) - - - (982)

Income (loss) before income taxes $(19,938) $43,080 $4,625 $4,461 $(10,871)$21,357 attributable to The Andersons, Inc. (a)

Adjustments to income (loss) before income 37,549 (34,962) (769) - 502 2,320 taxes (b)

Adjusted income (loss) before income taxes $17,611 $8,118 $3,856 $4,461 $(10,369)$23,677 attributable to The Andersons, Inc. (a)

Income (loss) before income taxes attributable to The Andersons, Inc. for each operating segment is defined as net sales and merchandising(a) 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.

Additional information on the individual adjustments that are included in the adjustments to income (loss) before income taxes can be found in the(b) Reconciliation to EBITDA and Adjusted EBITDA table. 2020 adjustment to the Rail segment relates to the termination of interest rate derivatives and debt fees which were recorded in Interest expense, net and can be found in the reconciliation to adjusted net income table.

Gain from remeasurement of equity method investment within the Ethanol segment(c) is included in Other income, net for the three months ended December 31, 2019.





(in thousands) Trade Ethanol Plant Rail Other Total Nutrient

Twelve months ended December 31, 2020

Sales and merchandising revenues $6,141,402$1,260,259$662,959$143,816$- $8,208,436

Gross profit 278,216 (18,267) 106,248 38,725 - 404,922

Equity in earnings of affiliates, net 638 - - - - 638

Other income, net 11,954 2,795 1,274 2,885 1,540 20,448

Income (loss) before income taxes 24,687 (47,338) 16,015 2,607 (20,445) (24,474)

Loss attributable to the noncontrolling interests- (21,925) - - - (21,925)

Income (loss) before income taxes $24,687 $(25,413) $16,015 $2,607 $(20,445)$(2,549) attributable to The Andersons, Inc. (a)

Adjustments to income (loss) before income 4,206 - - 2,849 6,091 13,146 taxes (b)

Adjusted income (loss) before income taxes $28,893 $(25,413) $16,015 $5,456 $(14,354)$10,597 attributable to The Andersons, Inc. (a)



Twelve months ended December 31, 2019

Sales and merchandising revenues $6,144,526$1,211,997$646,730$166,938$- $8,170,191

Gross profit 329,096 32,567 99,104 57,125 - 517,892

Equity in losses of affiliates, net (6,835) (524) - - - (7,359)

Other income, net (c) 10,070 37,199 4,903 1,583 1,568 55,323

Income (loss) before income taxes (17,328) 47,660 9,159 15,090 (26,470) 28,111

Loss attributable to the noncontrolling interests- (3,247) - - - (3,247)

Income (loss) before income taxes $(17,328) $50,907 $9,159 $15,090 $(26,470)$31,358 attributable to The Andersons, Inc. (a)

Adjustments to income (loss) before income 54,891 (34,962) (769) - 502 19,662 taxes (b)

Adjusted income (loss) before income taxes $37,563 $15,945 $8,390 $15,090 $(25,968)$51,020 attributable to The Andersons, Inc. (a)

Income (loss) before income taxes attributable to The Andersons, Inc. for each operating segment is defined as net sales and merchandising(a) 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.

Additional information on the individual adjustments that are included in the adjustments to income (loss) before income taxes can be found in the(b) reconciliation to EBITDA and Adjusted EBITDA table. 2020 adjustment to the Rail segment relates to the termination of interest rate derivatives and debt fees which were recorded in Interest expense, net and can be found in the reconciliation to adjusted net income table.

Gains and losses from remeasurements of equity method investments within the(c) Ethanol and Trade segments are included in Other income, net for the twelve months ended December 31, 2019.

The Andersons, Inc. Cash from Operations Before Working Capital Changes A non-GAAP financial measure (unaudited)



Three months ended Twelve months ended December 31, December 31,

(in thousands, except per share data) 2020 2019 2020 2019

Cash provided by (used in) operating activities $(270,223) $28,937 $(74,432) $348,562

Changes in operating assets and liabilities

Accounts receivable (126,550) (3,392) (128,502) 1,487

Inventories (539,761) (407,198) (139,499) (1,578)

Commodity derivatives (112,596) (8,228) (115,170) 21,714

Other assets (18,865) 11,715 (53,208) 30,497

Payables and accrued expenses 452,911 363,008 123,489 103,842

Total changes in operating assets and liabilities (344,861) (44,095) (312,890) 155,962

Less: changes in CARES Act tax refund receivable - - (37,564) -

Cash from operations before working capital changes $74,638 $73,032 $200,894 $192,600



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.

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SOURCE The Andersons, Inc.