2018
ANNUAL REPORT
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
Long-term debt, non-recourse
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 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
2O18
$3,045,382
302,005
27,141
16,002
41,225
41,484
171,560
2,392,003
189,848
349,834
146,353
876,764
1.47
1.46
0.665
29.89
5.1%
5.7%
0.6-to-1
28,258
22.5%
2O17
$3,686,345
% Change
(17.4%)
318,799
16,723
22,507
42,609
42,511
87,356
2,162,354
260,495
418,339
-
822,899
1.51
1.50
0.645
31.15
5.5%
4.3%
0.5-to-1
28,126
307.6%
(5.3%)
62.3%
(28.9%)
(3.2%)
(2.4%)
96.4%
10.6%
(27.1%)
(16.4%)
N/A
6.5%
(2.6%)
(2.7%)
3.1%
(4.0%)
(7.3%)
30.9%
11.3%
0.5%
(92.7%)
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
$255.0 -$17.1
$237.9
$3.84
-$0.38
$3.46
$46.4
$41.5
+$4.9
$41.2
-$8.8
$42.5
$33.7
+$54.3
$11.6
-$13.1
$178.1
$171.6
+$6.5
$174.5
+$89.3
+$70.0
$157.4
$123.9
$85.2
$87.4
$1.63
$1.46
+$0.17
$1.45
-$0.31
$1.50
$1.19
+$1.91
$0.41
-$0.46
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
1
Adjusted net income and adjusted EBITDA for 2018 exclude after-tax and pretax charges, respectively, for one-time acquisition costs. 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.
Left to right: CFO Brian Valentine, Chairman Mike Anderson and CEO Pat Bowe
DEAR
SHAREHOLDERS
AND FRIENDS,
We think 2018 will prove to be a landmark year in the
company’s history. We announced in March our plans to
build a state-of-the-art bio-refinery called ELEMENT with
a partner in Kansas. We closed the year by putting the
final touches on the purchase of Lansing Trade Group and
Thompsons Limited, the largest acquisition in our history.
The transaction closed effective New Year’s Day, and
we were happy to welcome nearly 800 new associates
working in more than 40 locations. In addition, we achieved
financial results that were considerably better than those
of 2017. Three of our four business groups improved
their performance after considering unusual items.
For 2018, we reported GAAP net income attributable
to the Company of $41.5 million dollars, or $1.46 per
diluted share, and adjusted net income of $46.4 million
dollars, or $1.63 per diluted share. The adjusted numbers
were 35 percent better than our adjusted 2017 results.
Our adjusted 2018 earnings before interest, taxes,
depreciation and amortization (EBITDA) was $178.1
million, 13 percent higher than adjusted 2017 EBITDA.
The Grain Group’s year was highlighted by completing the
agreement to purchase the remaining equity in Lansing,
a business in which we had owned a minority stake since
2003. We have been working diligently to integrate Lansing
with the Grain Group. On an adjusted basis, the group’s base
business results were lower year over year, as the group
earned considerably less income from storing wheat than
it did in 2017. On the other hand, the results of the group’s
growing food ingredients and specialty grains business
were much improved, and the group’s share of income
earned by Lansing and Thompsons more than tripled.
The Ethanol Group performed well with higher income for
the year in the face of difficult market conditions, even
as many other industry players struggled. In fact, the
group raised its pretax income by more than 15 percent
by marketing its products wisely and running its four
plants in a highly efficient manner. The Ethanol team set
several annual production records, primarily due to the
expanded Albion plant operating for a full year. The group
also increased its industry-leading sales of E85 by more
than 25 percent for the second consecutive year. Corn to
ethanol yields and DDG values also improved compared to
2017 results. Despite early rain delays, the construction of
ELEMENT is back on schedule, and the group expects to
begin production in mid-2019. The Ethanol Group remains
focused on maximizing margin per bushel of corn.
The Plant Nutrient (PN) Group also improved its results
despite depressed margins and difficult weather
during the fall application season. In the primary and
specialty fertilizer business, slightly higher volumes
could not overcome significantly lower margins per
ton on specialty nutrients. The group’s lawn and
contract manufacturing business recorded its highest-
ever pretax income. PN also did a nice job controlling
expenses, reducing them by 6 percent year over year.
The Rail Group’s pretax income declined in 2018, but that
result was not unexpected. Income from car sales was
substantially lower for two reasons. New accounting rules
governing revenue recognition eliminated the group’s ability
to record income from certain financing transactions. In
addition, the group decided to take advantage of relatively
high mid-year scrap steel rates to scrap more than 600
idle cars, resulting in a significant book loss. However,
that decision allowed the group to generate cash, lower
carrying costs and increase the average remaining life of
its fleet. The group also bought almost 2,400 cars and
added four repair facilities. Utilization rates and the total
number of cars on lease both increased in 2018 as well.
The company made progress on other initiatives during
the year. We implemented more than $7.5 million of
additional run-rate productivity enhancements and
savings, bringing our three-year total to nearly $30
million. We continued to implement SAP, our enterprise
resource planning system, across PN’s wholesale fertilizer
business. Our safety results were also better for the year.
We also made three changes in our senior leadership
team. Brian Valentine joined us as senior vice president
and CFO in August after a distinguished tenure at The
Lubrizol Corporation in Cleveland, Ohio. Former Lansing
CEO Bill Krueger became president of commodities and
merchandising effective January 1, 2019, joining Corey
Jorgenson, president of assets and originations, as a co-
leader of the new Trade Group. Most recently, we announced
that Jim Pirolli will succeed Mike Irmen, who is retiring from
his role as president of the Ethanol Group. We thank Mike
for his more than forty years of service to the company.
•
•
The Plant Nutrient Group expects its results to
improve over those of 2018. Primary and specialty
fertilizer volumes should get a boost this spring
after less than ideal fall and winter weather. While
PN’s lawn and contract manufacturing business
does not expect to match its 2018 results, that
business should continue to perform well. The
group is taking steps to further reduce cost, use
capital more efficiently and improve productivity.
The Rail Group anticipates continued steady
improvement in the railcar market, which
should translate to better performance in 2019.
It remains focused on maintaining its high
utilization, profitably growing its lease fleet
and expanding its railcar repair network.
We have much on our plate as 2019 continues to unfold:
• We will continue to focus on safety and the road to zero
harm. We are also working to enhance engagement
and productivity among all our employees.
On a corporate level, while we have added more debt and
issued some additional shares to acquire Lansing, we remain
well-positioned to grow. Also, in January we increased our
quarterly dividend by three percent to $0.17 per share.
•
•
In the new Trade Group, we will continue to integrate
Lansing’s businesses with our own. We are progressing
well toward identifying and implementing $10
million in run-rate cost and productivity synergies;
we expect to achieve that goal by the end of 2020.
We are also exploring opportunities to use our
combined knowledge, larger scale and broader
geographic reach to better serve our expanded
customer base and generate more income.
The Ethanol Group began 2019 in a difficult margin
environment characterized by higher year-over-year
production and stocks, and with fewer opportunities
to hedge its production than in recent quarters. In
addition to completing the construction of ELEMENT,
which will be producing some exciting new feed
coproducts by year-end, the group is planning
several capital projects in its other plants that will
further improve efficiency and help them maximize
the value of every bushel of corn they grind.
We are excited about the prospect of
delivering a third straight year of improved
results in 2019, and in making substantial
progress toward our goal of generating
$300 million in adjusted EBITDA by 2020.
We appreciate your continued faith in
us and look forward to sharing news of
more successes in the year to come.
Mike Anderson,
Chairman
Pat Bowe,
President & CEO
Brian Valentine,
Senior VP & CFO
Grain storage facility, Toledo, Ohio
Railcar repair shop, Maumee, Ohio
Fertilizer distribution terminal, Walton, Indiana
ELEMENT construction site, Colwich, Kansas
CORPORATE
INFORMATION
BOARD OF DIRECTORS
Gerard M. Anderson(3)(4)
Chairman & Chief Executive Officer
DTE Energy
Michael J. Anderson
Chairman
The Andersons, Inc.
Patrick E. Bowe
President & Chief Executive Officer
The Andersons, Inc.
Stephen F. Dowdle
Retired President of Sales
PotashCorp
Catherine M. Kilbane (2)(4)(5)
Retired Senior Vice President,
General Counsel & Secretary
The Sherwin-Williams Company
Robert J. King, Jr.(2)(3)
Senior Advisor
FNB Corporation
Ross W. Manire(1)(3)
Retired President &
Chief Executive Officer
ExteNet Systems, Inc.
Patrick S. Mullin(1)(4)
Retired Managing Partner
Northeast Ohio Practice
Deloitte & Touche LLP
John T. Stout, Jr.(2)(3)
Chairman & Chief Executive Officer
Plaza Belmont Management Group, LLC
Jacqueline F. Woods(1)(2)
Retired President
AT&T Ohio
( 1) Audit Committee
(2) Compensation/Leadership
Development Committee
(3) Finance Committee
(4) Governance/Nominating Committee
(5) Lead Independent Director
CORPORATE OFFICERS
Jeffrey C. Blair
President, Plant Nutrient Group
Valerie M. Blanchett
Vice President, Human Resources
Patrick E. Bowe
President & Chief Executive Officer
Naran U. Burchinow
Senior Vice President,
General Counsel & Secretary
Srikanth R. Dasari
Vice President, Treasurer
Michael T. Hoelter
Corporate Controller
Michael S. Irmen
Senior Advisor, ELEMENT, LLC*
Corbett J. Jorgenson
President, Assets & Originations,
Trade Group
William E. Krueger
President, Commodities &
Merchandising, Trade Group
Anthony A. Lombardi
Chief Information Officer
Joseph E. McNeely
President, Rail Group
James J. Pirolli
President, Ethanol Group*
Anne G. Rex
Vice President, Strategy,
Planning & Development
Brian A. Valentine
Senior Vice President &
Chief Financial Officer
*Positions effective April 1, 2019.
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
28.3 million shares outstanding as of
December 31, 2018.
Direct Stock Purchase and
Dividend Reinvestment
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stock purchase and dividend reinvestment
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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.
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purchase and sell The Andersons, Inc. shares
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For more information on Computershare
CIP, please go to www.computershare.com/
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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:
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Form 10-K
Additional copies of The Andersons’ 2018
Form 10-K, filed on February 27, 2019, 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 10, 2019.
The Andersons, Inc.
1947 Briarfield Boulevard
Maumee, Ohio 43537
www.andersonsinc.com