Andersons, Inc.

Andersons, Inc. Annual Report: A Closer Look for Investors

Andersons, Inc. (NASDAQ: ANDE) stands as a diversified agribusiness powerhouse, deeply embedded in two vital sectors: Agribusiness (encompassing grain origination, merchandising, and plant nutrients) and Renewables (focused on ethanol production). This summary distills their latest annual report, offering retail investors a clear, comprehensive view of the company's financial health, operational performance, and strategic direction.

Business Overview Andersons operates at the heart of the agricultural supply chain. Its Agribusiness segment buys, sells, stores, and handles grains, and also manufactures and distributes plant nutrients. The Renewables segment produces and markets ethanol and its co-products, such as distillers dried grains (DDGS) and corn oil. Through these integrated operations, Andersons serves a broad customer base, including agricultural producers, food processors, and industrial clients.

Overall Performance & Financial Highlights (Fiscal Year 2025)

Andersons demonstrated resilience and strategic execution in a dynamic 2025 market. The company reported total sales of $14.08 billion, a modest 0.13% increase from $14.06 billion in 2024. This sales stabilization followed a significant 12.67% decline in 2024 from 2023's $16.10 billion. Despite the modest sales growth, Andersons significantly improved its profitability.

• Net Income: Net income substantially increased, reaching $155.0 million in 2025, a significant jump from $110.5 million in 2024. This translated to Diluted Earnings Per Share (EPS) of $4.50 in 2025, up from $3.20 in 2024, reflecting enhanced operational efficiency and margin management.
• Gross Profit: Gross profit rose a healthy 4.71% to $636.0 million in 2025 from $607.4 million in 2024, building on a strong 19.33% increase in 2024. This indicates effective cost control and a potential shift towards higher-margin products or services.
• Operating Income: Operating income also saw robust growth, climbing to $217.8 million in 2025, a 17.6% increase from $185.2 million in 2024, showcasing improved core business profitability.
• Cash Flow from Operations: The company generated strong cash flow from operations, reaching $320.0 million in 2025, up from $285.0 million in 2024. This provides ample liquidity for investments and debt reduction.

Segment Performance:

• Agribusiness Segment: Sales for this segment increased by 1.00% to $10.72 billion in 2025, marking a positive rebound after an 18.25% decrease in 2024. Improved grain merchandising margins and increased demand for plant nutrients primarily drove this growth.
• Renewables Segment: Sales experienced a slight 2.56% decrease to $3.36 billion in 2025, following strong 10.59% growth in 2024. Fluctuating ethanol prices and a slight reduction in production volumes due to maintenance caused this dip.

Management Discussion (MD&A Highlights)

Andersons spent the past year optimizing its portfolio and strengthening its market position. The company's improved net income and operating income in 2025, despite modest sales growth, highlight the successful execution of cost management strategies and favorable market conditions for grain merchandising.

Strategic initiatives, including recent acquisitions and joint ventures, aim to enhance long-term profitability and market reach. Management actively manages its capital structure, as evidenced by debt reduction and strong cash flow generation, which provides flexibility for future investments and shareholder returns. Andersons continues to closely monitor global agricultural and energy markets, adapting its strategies to navigate commodity price volatility and evolving regulatory landscapes.

Strategic Developments & Key Initiatives:

• Acquisition of Skyland Grain, LLC: In late 2024, Andersons acquired Skyland Grain, LLC, a major grain and agronomy retailer in the central U.S. This strategic move significantly expanded their Agribusiness footprint, adding 20 grain origination and agronomy locations and enhancing supply chain capabilities.
• The Andersons Marathon Holdings LLC: Mid-2025 saw Andersons form The Andersons Marathon Holdings LLC, a joint venture with Marathon Petroleum. This partnership aims to optimize ethanol logistics and marketing, leveraging Marathon's extensive distribution network to enhance the Renewables segment's efficiency and market reach.
• Sustainability Focus: The company continued investing in sustainable agricultural practices and renewable energy solutions, aligning with growing market demand for environmentally responsible products. This includes initiatives to reduce carbon intensity in ethanol production and promote nutrient stewardship in agriculture.

Financial Health & Liquidity

Andersons maintains a solid financial position, prioritizing debt management and efficient capital allocation.

• Debt Reduction: Total debt decreased by 2.60% from $821.6 million in 2024 to $800.2 million in 2025, reflecting a commitment to strengthening the balance sheet. The debt-to-equity ratio improved to 0.85 in 2025 from 0.92 in 2024.
• Inventory Management: Readily marketable inventory decreased slightly by 2.77% to $1.03 billion in 2025, indicating efficient inventory turnover and reduced carrying costs.
• Cash Position: Cash and cash equivalents stood at $125.0 million at year-end 2025, providing a healthy buffer.
• Derivatives: The company actively uses commodity and interest rate derivatives to hedge against price volatility in agricultural commodities (corn, soybeans, wheat, ethanol) and mitigate interest rate risk on its variable-rate debt. This demonstrates a proactive approach to risk management.

Competitive Position

Andersons operates in highly competitive markets. In Agribusiness, the company competes with large agricultural cooperatives and multinational corporations. It differentiates itself through integrated supply chains, strong customer relationships, and a focus on value-added services. Its extensive network of grain origination facilities and plant nutrient distribution points provides a significant competitive advantage.

In Renewables, Andersons is a key player in the U.S. ethanol market. It leverages strategic partnerships and operational efficiencies to maintain competitiveness against other producers. Recent acquisitions and joint ventures aim to further consolidate its market position and expand its reach by enhancing logistical capabilities and market access.

Key Risks to Consider

Investors should be aware of several inherent risks to Andersons' business:

• Commodity Price Volatility: Fluctuations in prices for agricultural commodities (corn, wheat, soybeans) and ethanol can significantly impact revenues and profitability, despite hedging strategies.
• Weather and Crop Conditions: Adverse weather events (droughts, floods) can affect crop yields, impacting grain origination volumes and prices, and potentially affecting demand for plant nutrients.
• Regulatory Changes: Shifts in government policies related to biofuels (e.g., Renewable Fuel Standard), agricultural subsidies, and environmental regulations could affect both segments, impacting demand, production costs, and market access.
• Interest Rate Risk: While hedged, significant increases in interest rates could still impact borrowing costs and profitability, particularly on variable-rate debt.
• Supply Chain Disruptions: Global events, geopolitical tensions, or logistical challenges (e.g., transportation issues, labor shortages) could disrupt the movement of goods, affecting operations, costs, and the ability to meet customer demand.
• Competition: Intense competition in both Agribusiness and Renewables segments could pressure margins and market share.

Future Outlook

Management expressed cautious optimism for 2026, anticipating continued strong demand for agricultural products and biofuels. They project modest revenue growth, driven by the full-year impact of the Skyland acquisition and improved operational efficiencies in the Renewables segment, particularly benefiting from the Marathon joint venture.

Andersons plans to continue investing in strategic growth initiatives, including further expansion of its Agribusiness footprint and optimization of its ethanol production facilities to enhance sustainability and efficiency. The company aims to maintain its focus on enhancing shareholder value through disciplined capital allocation, debt reduction, and a commitment to sustainable practices. Management expects diluted EPS for 2026 to range from $4.60 to $5.00, reflecting confidence in their strategic direction and operational improvements.