A N N U A L R E P O R T
FINANCIAL HIGHLIGHTS
OPERATING RESULTS (IN THOUSANDS)
Sales and merchandising revenues
Gross profit
Equity in earnings of affiliates
Other income, net
Net income (loss)
Net income (loss) attributable to The Andersons, Inc.
EBITDA1
FINANCIAL POSITION (IN THOUSANDS)
Total assets
Working capital
Long-term debt
Total equity
PER SHARE DATA
Net income (loss)—Basic
Net income (loss)—Diluted
Dividends declared
Year-end market value
RATIOS AND OTHER DATA
Net income (loss) attributable to The Andersons, Inc. return on
beginning equity attributable to The Andersons, Inc.
Adjusted net income attributable to The Andersons, Inc. return on
beginning equity attributable to The Andersons, Inc.1
Funded long-term debt to equity ratio
Weighted average shares outstanding (basic) (in thousands)
Effective tax rate
2O17
$3,686,345
318,799
16,723
23,444
42,609
42,511
87,356
2O16
$3,924,790
345,506
9,721
14,775
14,470
11,594
123,949
2,162,354
2,232,849
260,495
418,339
822,899
258,350
397,065
790,697
1.51
1.50
0.645
31.15
5.5%
4.3%
0.5-to-1
28,126
307.6%
0.41
0.41
0.625
44.70
1.5%
1.5%
0.5-to-1
28,193
32.3%
% Change
(6.1%)
(7.7%)
72.0%
58.7%
194.5%
266.7%
(29.5%)
(3.2%)
0.8%
5.4%
4.1%
268.3%
265.9%
3.2%
(30.3%)
266.7%
186.7%
0.0%
(0.2%)
852.3%
Adjusted Net Income (Loss)
Attributable to The Andersons, Inc.1
(Dollars in Millions)
Adjusted EBITDA1
(Dollars in Millions)
Adjusted Earnings (Loss)
Per Share—Diluted1
(In Dollars)
$109.7
-$10.7
$99.0
$89.9
$255.0 -$17.1
$237.9
$219.9
$3.84
-$0.38
$3.46
$3.18
-$8.8
$42.5
$33.7
$41.2
-$13.1
+$54.3
$11.6
$174.5
$109.7
+$89.3
$157.4
+$70.0
$123.9
$85.2
$87.4
$1.50
-$0.31
$1.19
$1.45
-$0.46
+$1.91
$0.41
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
1
Adjusted net income and adjusted EBITDA for 2017 exclude after-tax and pretax charges, respectively, for goodwill impairments and asset impairments. Adjusted net income for
2017 further excludes income tax benefits resulting from U.S. federal income tax reform. Adjusted net income and adjusted EBITDA for 2015 exclude after-tax and pretax charges,
respectively, for goodwill impairments, pension settlement charges, and one-time acquisition costs. Adjusted net income and adjusted EBITDA for both 2014 and 2015 exclude an
after-tax and pretax gain, respectively, from partial redemptions of our investment in Lansing Trade Group.
DEAR SHAREHOLDERS AND FRIENDS,
We made great progress on a number
of important initiatives during 2017
and exceeded our 2016 results despite
making some hard choices to exit certain
businesses and locations. While the Grain
Group recovered nicely from a tough
2016, our other business groups faced
significant market challenges this past year.
We reported 2017 GAAP net income attributable to the
Company of $42.5 million dollars, or $1.50 per diluted share,
and 2017 adjusted net income of $33.7 million dollars, or
$1.19 per diluted share, which was almost triple our 2016
results. We made adjustments for goodwill impairment
charges in the wholesale fertilizer division of our Plant
Nutrient (PN) Group and impairment charges associated
with our Tennessee grain assets. The adjustments also
included a one-time income tax benefit of $74.2 million,
or $2.62 per diluted share, resulting from the recent U.S.
federal income tax reform. Our 2017 earnings before
interest, taxes, depreciation and amortization (EBITDA)
was $87.4 million. Our adjusted EBITDA was $157.4
million, or a 27 percent increase over 2016 results.
As the Grain Group expected, the two very good
harvests that followed poor Eastern U.S. production in
2015 paved the way for much stronger income from grain
ownership. However, continued abundant world grain
stocks kept prices low, and benign worldwide weather
conditions presented relatively few opportunities to trade
on price volatility. The group enrolled a record number
of bushels in its Freedom® risk management programs.
The group’s food ingredients and specialty grains (FISG)
business expanded again with the May acquisition of Purity
Foods, a Michigan specialty grains milling company.
The Ethanol Group’s 2017 highlight was the successful
expansion of its Albion, Michigan, plant. The project was
completed in the spring on time, under budget and with
no recordable injuries. The plant’s capacity has more
than doubled, leading to 16 percent higher full-year
ethanol production for the group. The group’s pretax
income was about 25 percent lower than its 2016 results.
Comparatively lower margins beginning in the second
quarter were driven by higher industry production and
stocks, in spite of healthy driving demand and rising
exports. Values for distillers dried grains were lower than
in 2016 until late in the year due to lower international
demand and discounts taken due to pervasive vomitoxin
in the corn available to our three eastern plants.
The PN Group had a difficult year. Excluding the
goodwill impairment charges noted above and the
gain on the sale of the group’s Florida farm centers,
and considering the expenses we recorded in 2016 to
consolidate the group’s cob operations, 2017 pretax
income was about half that of 2016. Nutrient markets
overall were characterized by oversupply that hurt PN’s
base and specialty nutrient margins. Its farm centers were
challenged by a wet, cool spring and low grain prices
that caused many farmers to buy nutrients sparingly
and just-in-time. Its cob business transitioned from two
production facilities to one and was hampered by a large
amount of high cost inventory. On the bright side, the
lawn business continued to provide excellent results.
The Rail Group’s 2017 pretax income was also down
compared to 2016. The group navigated a railcar market
that was oversupplied in many railcar types throughout
the year. That oversupply put pressure on railcar utilization
and lease rates, leading to leasing income that was about
one-third lower than in 2016. Income from car sales was
flat year-over-year, and while railcar repair sales were up
slightly, pretax income was lower on higher operating costs.
The group grew and improved its railcar portfolio, buying
almost 2,800 cars and reducing the overall age of the fleet.
•
The Rail Group anticipates steady but modest
improvement in the railcar market. It faces an unusually
high number of costly tank car recertifications and
a change in accounting rules that together will likely
lower group income by about 15 to 20 percent in
2018. The group is focused on profitably growing its
railcar fleet and expanding its railcar repair network.
• We will continue to focus on safety...zero harm IS possible.
On a corporate level, our balance sheet
remains very strong, giving us the capacity
to make bolt-on and strategic acquisitions
when and where they make sense. In
January we increased our quarterly dividend
by three percent to $0.165. The new tax
law should reduce our full-year effective
tax rate to between 23 and 25 percent.
We are enthused as we begin 2018 and have
challenged ourselves and all of our ANDE associates
to be “All In” this year. We look forward to sharing
better news with you a year from now.
Pat Bowe,
President & CEO
Mike Anderson,
Chairman
As we shared with you last year, in early 2017 we decided
to close our retail stores. We completed this process
in early June and sold three of our four retail store
properties. The gains on those sales offset much of the
closing costs, which we incurred largely to fairly treat
more than 1,000 loyal employees who were displaced.
We also made progress on other fronts during the year.
We significantly improved Company safety performance
for the second consecutive year. We implemented a new
purchasing system that will help us “spend smarter” for
years to come. And we made more progress toward our
goal of implementing at least $20 million of productivity
efficiencies and cost savings by the end of 2018.
Late in the year, Pat announced two transitions in our
senior leadership team. Jeff Blair succeeded Bill Wolf,
who retired in December, as president of the Plant
Nutrient Group. Joe McNeely became president of the
Rail Group in late December, succeeding Rash Shah, who
will retire in July after spending more than 20 years of
his 40-year Company career leading the Rail Group.
Better things are ahead for us in 2018:
•
•
•
In the Grain Group, we began the year with strong
grain ownership positions that should produce solid
income throughout 2018. The group will concentrate
on increasing the bushels it buys, selling more risk
management services, and expanding its FISG business.
In early March, we announced that the Ethanol
Group will partner with ICM, Inc. to build the most
technologically advanced and environmentally
friendly ethanol plant in the world. The Kansas
plant will take a year to build and should be open
next spring. In the meantime, we think business
conditions for the group will be better than in 2017
and should improve as the year progresses.
The Plant Nutrient Group began 2018 amid a continued
supply/demand imbalance, but results should improve.
In the meantime, the group is concentrating on growing
its position as a premier manufacturer of value added
specialty nutrients and lawn fertilizers and improving
its sales approach. It will also continue to develop
products that help farmers adopt sustainable practices
that increase yield in an environmentally sensitive way.
CORPORATE
INFORMATION
BOARD OF DIRECTORS
Gerard M. Anderson(3)
Chairman & Chief Executive Officer
DTE Energy
Donald L. Mennel(1)(4)
Chairman
The Mennel Milling Company
Michael J. Anderson
Chairman
The Andersons, Inc.
Patrick S. Mullin(1)(4)
Retired Managing Partner
Northeast Ohio Practice
Deloitte & Touche LLP
Patrick E. Bowe
President & Chief Executive Officer
The Andersons, Inc.
John T. Stout, Jr.(2)(3)
Chairman & Chief Executive Officer
Plaza Belmont Management Group, LLC
Catherine M. Kilbane (2)(4)(5)
Retired Senior Vice President,
General Counsel & Secretary
The Sherwin-Williams Company
Jacqueline F. Woods(1)(2)
Retired President
AT&T Ohio
Robert J. King, Jr.(2)(3)
Senior Advisor
F.N.B. Corporation
Ross W. Manire(1)(3)
Chairman & Chief Executive Officer
ExteNet Systems, Inc.
( 1) Audit Committee
(2) Compensation/Leadership
Development Committee
(3) Finance Committee
(4) Governance/Nominating Committee
(5) Lead Independent Director
CORPORATE OFFICERS
Jeff Blair
President, Plant Nutrient Group
Mike Irmen
President, Ethanol Group
Val Blanchett
Vice President, Human Resources
Corey Jorgenson
President, Grain Group
Pat Bowe
President & Chief Executive Officer
Anne Rex
Vice President, Corporate Controller
& Interim Chief Financial Officer
Naran Burchinow
Senior Vice President,
General Counsel & Secretary
Tony Lombardi
Chief Information Officer
Srikanth Dasari
Vice President, Finance & Treasurer
Joe McNeely
President, Rail Group
Tamara Goetz
Vice President, Financial Planning
& Analysis
Rasesh Shah
Senior Director, Rail Group
INVESTOR INFORMATION
Corporate Offices
The Andersons, Inc.
1947 Briarfield Boulevard
Maumee, OH 43537
419-893-5050
www.andersonsinc.com
NASDAQ Symbol
The Andersons, Inc. common shares are
traded on the Nasdaq National Market tier
of The Nasdaq Stock Market under the
symbol ANDE.
Common Stock
28.1 million shares outstanding as of
December 31, 2017.
Direct Stock Purchase and
Dividend Reinvestment
Computershare CIP, which is a direct
stock purchase and dividend reinvestment
plan sponsored and administered by
Computershare Trust Company, N.A. and
not by The Andersons, Inc., provides an
alternative to traditional methods of buying
and selling shares in The Andersons, Inc.
Through Computershare CIP, you can
purchase and sell The Andersons, Inc. shares
directly, rather than dealing with a broker.
For more information on Computershare
CIP, please go to www.computershare.com/
investor or call toll-free at 877-373-6374.
Transfer Agent & Registrar
Computershare Investor Services, LLC
P.O. Box 43078
Providence, RI 02940-3078
312-360-5260
Toll-free within the U.S. & Canada:
877-373-6374
Investor CentreTM portal:
www.computershare.com/investor
Form 10-K
Additional copies of The Andersons’ 2017
Form 10-K, filed on February 26, 2018, with
the SEC, are available to shareholders and
interested individuals without charge by
writing or calling Investor Relations.
Investor Relations
John Kraus | Director, Investor Relations
419-891-6544 | john_kraus@andersonsinc.com
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Cleveland, OH
Annual Meeting
The annual shareholders’ meeting of
The Andersons, Inc. will be held at The
Andersons’ headquarters,
1947 Briarfield Boulevard
Maumee, OH 43537
at 8:00 a.m. on May 11, 2018.
G R A I N
E T H A N O L
P L A N T N U T R I E N T
R A I L
The Andersons, Inc.
1947 Briarfield Boulevard
Maumee, Ohio 43537
www.andersonsinc.com