Andersons, Inc. (ANDE)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 EPS of $0.23 ($0.24 adjusted) materially missed consensus, while revenue of $3.14B beat; segment profitability declined YoY due to oversupplied grain markets, lower ethanol crush, higher corn basis and natural gas costs .
• The Andersons acquired the remaining 49.9% of TAMH for $425M (net $385M), immediately accretive to EPS and aligning reported earnings with Renewables’ full EBITDA; unrestricted access to TAMH cash flows enhances capital allocation flexibility .
• Management raised full-year adjusted effective tax rate guidance to ~22–25% (from 18–22% in Q1) and framed a 2026 run-rate EPS target ($4.3 per share equivalent to prior $475M EBITDA target) .
• Liquidity remained solid ($351M cash); Q2 capex increased to $49M on long-term growth projects (Houston port expansion), and Skyland FY25 EBITDA outlook trimmed to $25–30M given western grain weakness — setting up for 2H improvement with large harvest and carry markets .
• Stock narrative catalysts: TAMH consolidation, 45Z tax credits, carbon sequestration permit progress at Clymers IN, Houston soymeal export capacity by mid-2026; execution and regulatory clarity should drive estimate revisions and multiple support .

What Went Well and What Went Wrong

• What Went Well

  • Renewables delivered efficient operations with record yields; management expects stronger margins into late 2025 on demand and post-harvest corn cost relief (“recent uptick in board crush occurred in July… expected reduction in corn costs post-harvest”) .
  • Strategic TAMH acquisition doubles financial ownership in ethanol, is immediately EPS accretive, with limited execution risk because ANDE already operates the plants (“we currently operate the four plants with Andersons employees”) .
  • Strong liquidity and leverage below target; Q2 cash from ops before WC changes of $43M, long-term debt/EBITDA ~1.9x vs <2.5x target .
  • Quote: “This transaction should be immediately accretive to EPS and will better align our reported EPS and EBITDA” — CEO Bill Krueger .

• What Went Wrong

  • EPS fell sharply YoY; adjusted EBITDA declined to $65M (vs $98M YoY) on oversupplied western grain markets, lower board crush, higher eastern corn basis and natural gas costs; Renewables EBITDA fell to $30M (vs $52M) .
  • Agribusiness profitability down YoY; merchandising and assets impacted by surplus grain and weak customer demand; adjusted pretax income fell to $16.8M (vs $32.6M) .
  • Elevated OpEx with Skyland integration and investments; Q2 OAG rose to $135M (vs $117M YoY) .
  • Analyst concern: Skyland FY25 EBITDA trimmed to $25–30M from the low end of $30–40M prior guidance due to western grain headwinds .

Financial Results

Non-GAAP adjustments (Q2 2025): Loss on investments $7.2M, transaction-related comp $1.8M, severance $1.2M, insured inventory/property recoveries ($7.8M), gain on sale ($3.2M); net effect added ~$0.01 to EPS (adjusted $0.24 vs reported $0.23) .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic acquisition: “This transaction doubles our financial ownership in the ethanol industry… we expect immediate accretion in earnings per share” — CEO Bill Krueger .
• Capital deployment and balance sheet: “We remain below our long-term debt to EBITDA target of less than 2.5 times” — CFO Brian Valentine .
• Outlook: “Recent uptick in board crush… expected to remain through the summer… and expected reduction in corn costs post-harvest” .
• 2026 target conversion: “We are now converting our existing EBITDA target into an EPS measure… approximately $4.3 per share” — CEO Bill Krueger .
• Strategic fit of TAMH: “Very little integration risk… all the employees are Anderson employees… more financial opportunity” — CEO Bill Krueger .

Q&A Highlights

• Regulatory tailwinds and capacity: Management indicated regulatory changes did not drive TAMH timing; potential expansions at Clymers and Albion subject to Class VI approvals and corn supply dynamics .
• Agribusiness exits and impact: ~$7M adjustments from minority investments; facility sale in Idaho; closures in contract manufacturing; net modest gains and portfolio cleanup .
• Merchandising vs storage mix: Expect elevated space income alongside merchandising improvement given large crop outlook .
• TAMH EPS uplift: Pro forma incremental EPS historically ~$0.70–$0.75 annually, >$1 in peak years (2023), supporting EPS focus over EBITDA going forward .
• Skyland update: Revenue ~$200M per quarter; FY25 EBITDA now ~$25–30M due to western grain headwinds and domestic feed demand softness .
• Houston soymeal export economics: Export parity drives movement irrespective of flat price; oversupply increases competitiveness .

Estimates Context

• Q2 2025: EPS miss vs S&P Global consensus, while revenue beat; implies margin pressure and mix despite top-line strength.
• Q1 2025: EPS beat vs negative consensus and revenue slight miss.
• Values retrieved from S&P Global.*

Key Takeaways for Investors

• TAMH consolidation is a structural positive: immediate EPS accretion, full cash flow control, and simplified reporting; supports multiple expansion as Renewables’ earnings align with EBITDA .
• Near-term fundamental setup improves into 2H: larger harvest should reduce eastern corn basis and improve storage/merchandising economics; ethanol board crush uptick and export demand supportive .
• Estimates likely to adjust: EPS shortfall vs Q2 consensus and higher tax rate guidance (22–25%) suggest downward EPS revisions near term, offset by TAMH accretion and prospective 45Z credits .
• Balance sheet and liquidity provide dry powder: leverage 1.9x LT debt/EBITDA, $351M cash, enabling disciplined capex ($200M FY25 ex acquisitions) and pursuit of additional Renewables projects/M&A .
• Western grain remains a watch item: Skyland FY25 EBITDA reduced; monitor carry, export parity for soymeal, and cattle-on-feed trends for rebound .
• Strategic milestones to track: Class VI permit progress (Clymers), 45Z monetization timeline, Houston port project execution toward mid-2026 completion .
• Trading lens: In the near term, TAMH EPS accretion and board crush improvement are positive catalysts; valuation sensitivity to tax rate and Renewables margin trajectory remains key.

All data points are sourced from ANDE’s Q2 2025 8-K and press release, Q2 2025 earnings call transcript, and prior quarter filings as cited.