The Andersons reports profitable Q3 for renewables segment

By Erin Voegele | November 02, 2022

The Andersons Inc. on Nov. 1 reported a profitable third quarter for its renewables segment despite declining ethanol margins and planned maintenance shutdowns. Further margin declines, however, are expected during the fourth quarter.

The renewables segment reported pretax income of $15.9 million and pretax income attributable to the company of $8.4 million in the third quarter compared to a pretax loss of $5.2 million and a pretax loss attributable to the company of $3.6 million realized in the same period in 2021. Renewables had record third quarter EBITDA of $34.0 million in 2022, up $14.8 million from 2021 third quarter EBITDA of $19.2 million.

The Andersons attributed the improved earnings to better margins in its ethanol plants, particularly the company’s eastern plants where corn basis was lower ahead of an expected good harvest.

During a third quarter earnings call held Nov. 2, The Andersons President and CEO Pat Bowe said the positive third quarter results for renewables were achieved despite declining ethanol prices and higher natural gas and production costs. The company’s Kansas plant was impacted by high corn prices related to the ongoing drought in the region.

The Andersons indicated that third quarter performance in the renewables segment was also supported by high coproduct values. Brian Valentine, executive vice president and chief financial officer at The Andersons, said corn oil values in particular remained high during the quarter, adding to plant profitability. Renewable diesel feedstock merchandizing activities continue to expand, he added, which also contributed to the positive quarterly results.

Moving into the fourth quarter, expected ethanol margin declines are expected to negatively impact earnings when compared to the fourth quarter of 2021, when industry margins reached record highs.

Overall, The Andersons reported pretax income from continuing operations of $34.7 million for the quarter, up from $16.3 million reported for the same period of last year. Pretax income from continuing operations attributable to the company reached $27.2 million, up from $17.9 million. Net income from continuing operations attributable to the company reached $17.4 million, up from $13.9 million. EBITDA from continuing operations was at $83 million for the third quarter, up from $67.9 million reported for the same period of 2021. Diluted earnings per share from continuing operations was 50 cents, up from 41 cents.