Andersons, Inc. Aktie

Good morning, ladies and gentlemen. Welcome to the Andersons 2026 Second Quarter Earnings Conference Call. My name is Allison, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I will now hand the presentation over to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed.

Good morning, everyone, and thank you for joining us for The Andersons Second Quarter Earnings Call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation via the webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website shortly. Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements.

Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors. This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of the GAAP to non-GAAP measures are included within the appendix of this presentation.

On the call with me today are Bill Krueger, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Bill.

Thanks, Mike. Good morning, everyone, and thank you for joining our call to discuss our second quarter results and outlook. I'd like to start off by thanking our entire team for their hard work and focus during an unpredictable first half of 2026. We are proud of the results our teams are generating for our shareholders and their commitment to delivering for our customers during a time of rapid change.

Our second quarter results were led by record earnings in renewables. Agribusiness had year-over-year improvement as our fertilizer business performed above expectations. Adjusted earnings per share of $2.15 and adjusted EBITDA of $140 million for the quarter compares favorably to some of our best historical quarters and reflects our commitment to the strategy we presented at our Investor Day to deliver long-term shareholder value. As an industry, we need to continue to build North American demand for grains, grain products and oilseeds. With the RVO finalized earlier in the year and the recent release of the updated 45ZCF GREET model, substantial progress has been made to increase domestic demand for U.S. corn and soybeans. These actions support the U.S. farmer and enhance both of our business segments moving forward.

Renewables quarterly results were driven by record ethanol production and higher margins. Our renewables trading desks also improved significantly across all products that we merchandise due to the increased demand. With some volatility back in the grain markets, we have established a larger forward book of purchases versus last year. Our fertilizer results came from improved operating efficiency, continued integration into the Agribusiness segment and focused risk management during their primary application season.

Our current long-term growth capital remain on track. And later during the outlook, I will discuss them in a little more detail. With that overview, I'll turn the call over to Brian to discuss our financial results. I will be back to discuss the outlook for the rest of 2026 after his update.

Thanks, Bill, and good morning, everyone. We're now turning to our second quarter results on Slide #5. In the second quarter of 2026, the company reported net income attributable to -- The Andersons of $57 million or $1.65 per diluted share and adjusted net income of $74 million or $2.15 per diluted share. This compares to adjusted net income of $8 million or $0.24 per diluted share in the second quarter of 2025.

Gross profit increased over 40% as fundamentals in both groups were improved over the second quarter of 2025. Adjusted pretax earnings were $93 million compared to $15 million in 2025, with most of the improvement coming from renewables. Adjusted EBITDA for the second quarter was $140 million compared to $65 million in 2025. Our effective tax rate varies each quarter based primarily on tax credits earned and the amount of income or loss attributable to noncontrolling interests. We recorded taxes at an effective rate of 20% for the second quarter and expect our full year adjusted effective tax rate to be in the range of 14% to 18%.

Next, we'll move to Slide 6 to discuss cash, liquidity and debt. We generated cash flow from operations before changes in working capital of $113 million in the second quarter of 2026 compared to $43 million in 2025, with the increase being driven by our strong earnings this quarter. Our short-term borrowings are up compared to the prior year as we have seen increased market volatility in 2026. Our readily marketable grain inventories continue to be well in excess of our short-term debt, which is consistently the case throughout the ag cycle.

Next, we'll take a look at capital spending and long-term debt on Slide 7. Second quarter capital spending totaled $76 million compared to $49 million in 2025, which includes the funding of previously announced long-term growth projects as well as normal maintenance capital. We continue to take a disciplined, responsible approach to capital spending, which we expect will be approximately $225 million for the year, excluding acquisitions.

Our long-term debt-to-EBITDA is 1.3x, which remains well below our stated target of less than 2.5x. We continue to evaluate various acquisitions and organic growth projects and have a strong balance sheet that will support investments that meet our strategic and financial criteria.

Now we'll move on to a review of each of our business segments, beginning with Agribusiness on Slide 8. The Agribusiness segment reported adjusted pretax income attributable of $20 million compared to $17 million in the second quarter of 2025.

Our fertilizer business had a strong application season with improved margins and operational efficiencies. We saw higher commodity prices and volatility during the quarter, which provided more opportunities for our merchandising businesses. However, in these market conditions, our asset footprint experienced limited space income. Our premium ingredients business continues to operate well. Agribusiness had adjusted EBITDA of $53 million for the second quarter compared to $46 million last year.

Moving to Slide 9. Renewables had another outstanding quarter, generating adjusted pretax income of $88 million compared to pretax income attributable of $10 million in the second quarter of 2025. Our ethanol plants continue to perform well with efficient operations resulting in record second quarter production. Ethanol margins were up significantly year-over-year on strong domestic and export demand as well as higher co-product values.

We recorded $24 million of 45Z tax credits in the quarter. Our merchandising businesses performed well as corn oil prices and volumes improved over the prior year. Renewables had adjusted EBITDA of $103 million in the second quarter compared to $30 million last year. And with that, I'll turn things back over to Bill for some comments about our outlook.

Thanks, Brian. As we look forward to the remainder of 2026, the market has more variables than usual when combining geopolitical tension, biofuels and farm bill policy and weather events. Our diversified portfolio should support our base business and the current environment should provide more merchandising potential. We are evaluating several opportunities for long-term growth focused on increasing shareholder value. At the same time, we are making investments to increase productivity and efficiency across the enterprise while also ensuring that we keep our employees safe. In Agribusiness, we are just finishing wheat harvest. And while the overall crop was smaller, we are pleased with the ownership we accumulated.

We expect increased demand later in the year for our ownership due to the geographic dispersion of harvested bushels for both hard and soft wheat. Current corn and soybean crop conditions are generally comparable to last year in our key regions. We are currently in a weather market as the U.S. is experiencing above normal temperatures with reduced rainfall across much of the Western corn belt.

Our investments in premium ingredients, including those used in food and pet food manufacturing continue to deliver profitable growth. While significant corn acreage should support demand for all fertilizer applications, farm gate pricing may have an impact on purchasing decisions. We will continue to monitor global fertilizer supply issues. And while we were well positioned for spring planting, ongoing tensions in the Middle East will continue to influence Agribusiness dynamics. In renewables, we expect increased production to continue throughout the biofuels industry.

Ethanol exports are expected to remain strong, but we have seen some recent competition from Brazil. Elevated global fuel prices continue to enhance ethanol's appeal. We remain hopeful that year-round E15 will be passed this year. However, voluntary blend rate increases are already occurring based on the comparative economics of ethanol versus gasoline. Our renewables merchandising teams expect to see continued opportunities with increases in bio-based diesel production.

Our 4 ethanol plants are all operating well, and our recent capital expenditures are providing increased efficiency and higher volumes. We are closely monitoring board crush margins with increased volatility in corn futures and U.S. ethanol currently priced near parity with Brazil. Switching to growth. We have initiated several projects aimed at reducing the carbon intensity of the ethanol we produce and increasing production levels. As previously stated, all our plants are benefiting from higher tax credits this year.

The Class VI well permit for our Clymers, Indiana facility continues to progress through regulatory review. And once approved and operational, this initiative will further reduce the carbon intensity score of our ethanol, enabling additional tax credit generation. We are evaluating several projects for each of our plants with the same goals. We have completed the grain elevator upgrades at Houston, leaving only our soybean meal export portion of this Agribusiness project to be completed. We expect this to be fully operational in the fourth quarter.

Other recent growth investments within Agribusiness have come online as we continue to optimize performance levels. We remain focused on achieving our long-range run rate EPS target of $7 per share by the end of 2028. Recent favorable market conditions and strong execution demonstrate our ability to exceed $6 per share for the trailing 12 months. The successful completion of remaining key growth projects, solid market conditions and sustained operational excellence should position us to achieve this target. We remain aligned and focused on providing extraordinary service to our customers and increasing the value of -- The Andersons. We are happy to take your questions at this time.

[Operator Instructions] Our first question today will come from Ben Klieve of -- The Benchmark Company.

First, I want to isolate the fertilizer business here with a couple of questions. One, I'm wondering if you can discuss the relative seasonality in the first half of the year between the first quarter and the second quarter. Was it kind of in line with expectations and consistent year-over-year? Or did it skew one way or the other? And then second, wondering if you guys can give us a sense of the degree to which the elevated pricing in the fertilizer complex drove excess profitability within the second quarter, especially?

Ben I may need a little clarity on the second question. But to your first question, how applications went this year, we were skewed a little bit more towards the first quarter than the second quarter. And as I'm sure you're well aware of, we did see a drop of fertilizer prices domestically towards the end of the second quarter. But all in all, it was pretty much as expected coming into the year for fertilizer results. And if you could help me out with the second question again, just to make sure I give you the right answer.

Yes, Bill. So just trying to understand the degree to which the variable and elevated pricing throughout the fertilizer complex drove excess profitability within the second quarter for the fertilizer product specifically?

Okay. Yes, I would tell you, it was probably twofold on that. The first one was the efficiencies that we were able to realize really throughout the first half of the year, combined with solid management, continued integration into the Agribusiness really drove a little bit higher margin and execution. And then the other item that we really saw was the ability to be able to place the amount of volumes that we needed and had planned for at each of our locations. The team did a very good job on that.

Great. That's very helpful. I want to turn to within the Agribusiness segment, the results out of the Western belt and kind of the Skyland assets specifically. It looks like there's some kind of moving pieces here. Wondering if you can just kind of level set us with expectations for that business here for this year and kind of talk about the puts and takes that you guys are seeing right now versus expectations going into the year?

Sure. The Skyland region is one of the driest regions in the Western Corn Belt. It really did minimize the volume of hard wheat produced. If you look at Kansas as an overall state is one of the lowest years we've had in recent history. The Skyland assets were not immune to that. we do need some rain in really most of the Western Corn Belt, and that will really make the determination.

In terms of execution and efficiency, Skyland was one of the areas where we were able to grow our forward book, as I mentioned in my opening comments. So we're really proud of that factor and indicates that some of the improved management that we've put into the organization is really executing. In order to talk about the balance of the year, it's really going to be weather-driven. Now as you remember, when we talked about Skyland early on, one of the real benefits that we see is the understanding of that asset footprint combined with our merchandising opportunities. So if we continue to see dryness and potentially a smaller feed grains crop in the West, that should provide us with more merchandising opportunities than we've been able to see over the last couple of years, specifically in the Western Corn Belt.

Your next question today will come from Derrick Whitfield of Texas Capital.

Starting first with your comments on supportive ethanol fundamentals. With the tightness in product markets that both the majors and the largest U.S. refiners are highlighting, where do you see U.S. and global ethanol blend rates headed given that product tightness will likely carry well into 2027 even if we return to normal trade in 3Q?

Derrick, this is Bill. Today, it feels like our blending rates are going to continue to trend higher. From 2024 to 2025, our blend rate gained 14 basis points, finishing 2025 at a 10.51%. As we look at the market today, domestically, our expectations are that, that will be the same type of increase, if not slightly more. So we feel like we're going to continue to increase the blend rates at kind of the same rates that we've seen over the last couple of years with likely an increasing rate, as I mentioned in my comments, through the voluntary blending.

Great. And then as my follow-up, Bill, in your outlook remarks, you noted that you're evaluating other CI reducing projects at your other plants outside of Clymers. Could you perhaps elaborate on some of the projects you're contemplating?

Yes. Derrick, but publicly, until we announce them, we're not going to talk about other projects that we're considering until we actually execute on them.

Fair enough. Maybe just one on Clymers because you did comment on that. With that CO2 injection well permit progressing, are you definitely in a parallel fashion evaluating or building a third-party market for incremental volumes?

Yes. We believe that the demand for -- I assume when you say third-party markets, you're talking about the additional ethanol that we will produce.

Correct.

Yes. We believe that the demand base for really all 3 of our Eastern plants will allow us to grow -- continue to grow our production as we have the last several years. And specifically to Clymers, we believe that, that market can take even more than what we've announced that we're going to produce.

The next question today will come from Ben Mayhew of BMO.

Congratulations, guys on hitting the $6 run rate mark. My first question has to do with ethanol. So I'm just wondering, as we carry over from the really just very strong performance in 2Q to 3Q, paper margins have shown some sequential weakness. But I'd imagine you would be capturing more 45Z in 3Q versus 2Q given some of your maintenance that you went through in 2Q. So I was just hoping if you could touch on the durability of ethanol margins sequentially? And just how you're thinking about the cadence from 2Q to 3Q on a pretax income basis?

Yes. I'll let Brian address the 45Z comment or question that you had. As a reminder, Q3, we did have 2 of the months, we had 100% ownership in 2025.

So I'll let Brian address the exact numbers there. But in terms of how Q3 is laying out versus Q2, you are correct that we have seen a little bit of a drop in board crush -- we also believe that there might be a potential for increased corn prices, which will drive the value of our DDG co-products up, along with continued opportunities for our DCO pricing to increase along with the demand that we're seeing in renewable diesel. So from our perspective, there's a lot of variables still to play out, but we feel very confident in Q3 as a comparative to potentially Q2 and even looking back at Q3 of 2025, which was a very strong quarter for us.

And I think, Ben, to your question on the 45Z, I mean, you're correct, we had our spring maintenance. In reality, though, we likely will have some fall maintenance right toward the end of the third quarter. So the 45Z, we still expect to be in that $90 million to $100 million range for the year. You saw it was $24 million in the second quarter. That number shouldn't move by more than a couple of million dollars per quarter with probably Q2 and Q3 being just slightly lower and then Q1 and Q4 being a little bit higher.

Great. That's very helpful. Sticking to ethanol or just biofuels in general, there's been a lot of talk over the past week or 2 about the small refinery exemptions and the risk that they might have depending on the size of the final approved amount, the risk that they might have on the overall RVO. Just wondering if you have any thoughts around that? And do you think this is a real material risk? Or is it just something the administration is looking to do to make everyone happy and whole as much as they can?

I don't think it's prudent for us to speculate on what the EPA or the administration is currently thinking on SREs. As The Andersons, we've stated previously that we think small refineries should only have exemptions granted when they can demonstrate that the RFS is creating economic stress on their company. How the EPA chooses to do that is their decision. I do applaud them for their announcement yesterday. And the continued expediting of this entire process, I think the EPA is doing a very good job.

From our perspective, as we look at it today, we do not see the end result being material to The Andersons and our ability to generate the types of numbers that we've talked about historically.

Our next question today will come from Pooran Sharma of Stephens.

This is Jack Hardin on for Pooran. Just on the outlook, Agribusiness was modestly better than expected, but the larger upside came from renewables. Over the next 12 months to 18 months, where do you see the greater incremental earnings opportunity, a broader recovery in grain asset earnings or sustained strength in the renewable platform?

Let's start on the renewable side of the question that you asked. We believe that we have a very focused strategy in continuing to invest in our plants. We have projects that are underway that we haven't discussed publicly. We have the ability to continue to look at additional opportunities. We've been very clear over the last 2 years that we do have a desire as long as the price is correct, that we would like to add more gallons to our fleet. That being said, there's a lot of dynamics right now in Agribusiness that are really going to set the table for the next 12 months to 18 months, as you asked. We have a large corn crop that's being produced right now. We have some weather challenges.

We have more weather challenges in the Western Corn Belt. We have a larger footprint in the Eastern Corn Belt when you include all of our grain assets and our ethanol plants, which are a lot of our origination. So to look out forward, you're going to have to talk about the geopolitical tensions, how they're going to play out and then both North America and South American production. As we've stated, we do believe, again, knowing what we know today that the trough for the ag market was likely set in 2025. That can change for a lot of reasons. But as we look forward, we think the increase in North American demand that I talked about in my opening comments are going to drive a little bit of a rebound.

The question is just how far and how fast will that rebound occur. So we feel pretty confident in both of our business segments today over the next 12 months to 18 months with both the tailwinds that we have in renewables and our focus on efficiency and running our assets to the best of their abilities, along with being able to grab merchandising opportunities when they arise.

[Operator Instructions] And our next question will come from Jason Miner of Bloomberg.

Just a little bigger picture. If oil were to get much cheaper for some reason, what are the different puts and takes across the whole portfolio that you might see? I mean I think we could all guess that blending economics might be more challenged, but you still have the feedstock treating business we haven't talked too much about. And I think there might be some other effects hidden in there.

The oil complex is one that often, people may think that it has a more material value on The Andersons than it really does. But from our perspective, let's talk with fuel surcharges. Our Agribusiness improved year-over-year with substantial fuel surcharges that we incurred. So likely, if fuel were to drop substantially, as you suggested, I would envision fuel surcharges going away. We do believe that there is a potential that natural gas prices could be reduced in the second half of the year. We do understand that the gasoline price would go down with oil. But the blending economics today with where corn is at and where ethanol is priced is still very attractive.

And not just in the U.S., but as we look globally, we continue to see countries continue to drive towards higher blend rates, which will support U.S. exports. So from The Andersons overall, I don't see it being a material effect. The size and condition and geographic dispersion of the corn and soybean crop will be substantially more, including the ability for us now to bring cattle back in from Mexico to rebuild our feed lots -- that to us is a much larger variable than the crude market going back into the 60s or whatever you would define as a substantial drop.

That's very helpful. One other one then. So you have some capacity coming on in the fourth quarter, which looks pretty well timed. Meal demand growth has been very good. Just wondering how you feel about the outlook for meal demand growth in some of the target markets for that new export capacity.

We are very excited about the Houston project. We got delayed slightly due to mother nature and the heavy rains in Houston that we witnessed. But the team down there has done a great job of working through it. We believe that the opportunity to increase our overall Agribusiness results, utilizing Houston as both a grain and a soybean meal export terminal will pay us dividends. Where we're going to go with that soybean meal today, we would rather not disclose publicly. But I can assure you that we have been working for the better part of 9 months with destination consumers of soybean meal and feel very confident that we will have the size of book we need to execute in Houston.

This will conclude our question-and-answer session. And at this time, I'd like to turn the conference back over to Mike Hoelter for any closing remarks.

Thanks, Allison. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, November 4, 2026, at 8:30 a.m. Eastern Time when we will review our third quarter results. As always, thank you for your interest in -- The Andersons, and we look forward to speaking with you again soon.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Andersons 2026 First Quarter Earnings Conference Call. My name is Joe, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I will now hand the presentation to your host for today, Mr. Mike [ Hoelter ], Vice President, Corporate Controller and Investor Relations. Please proceed.

Good morning, everyone, and thank you for joining us for -- the Andersons First Quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation via the webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website shortly. Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements. Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors. This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of the GAAP to non-GAAP measures are included within the appendix of this presentation. On the call with me today are Bill Krueger, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Bill.

Thanks, Mike, and good morning, everyone. Thank you for joining the call to discuss our first quarter 2026, results and outlook. I am pleased to report that we delivered our strongest first quarter ever, achieving record net income and earnings per share. These results reflect the strength of our diversified portfolio, improved market conditions and above all, the dedication of our teams who continue to execute in an increasingly dynamic environment. From an industry standpoint, the quarter included a significant positive development with the finalization of the largest ever renewable volume obligations for 2026 and 2027. The RVO will support domestic demand for U.S. corn and soybeans, along with providing greater regulatory clarity for our Agribusiness and renewables platforms. In Agribusiness, fertilizer margins improved year-over-year due to strong product positioning amid supply disruptions. Increased volatility and better premium ingredients results drove merchandising performance. Our grain asset inventory basis appreciation was delayed this quarter, and we anticipate positive changes in the next quarter. We continue to pursue organic growth through strategic investments to enhance customer service and respond to changes in demand trends. Construction at our Port of Houston facility is progressing with full operations expected in the third quarter. Our Carlsbad Mineral plant is now operational and the upgrades to increase clean corn capacity at our Mansfield, Illinois facility are underway. In renewables, we are making strategic investments in our large high-efficiency ethanol plants, including preparations for the previously announced debottlenecking project in Clymers, Indiana, which is expected to be completed by late 2027. We continue to assess further opportunities to expand production and lower the carbon intensity of ethanol at all of our plants. Production volumes within renewables have consistently surpassed those of previous periods, driven by efficient operations and robust demand. Although market fundamentals remain favorable in the quarter, increased corn basis and natural gas prices reduced our improved margins. Despite ongoing global uncertainty, we believe the trough of the grain cycle occurred in 2025 and underlying conditions continue to improve. With that overview, I will turn the call over to Brian to discuss our financial results.

Thanks, Bill, and good morning, everyone. We're now turning to our first quarter results on Slide #5. In the first quarter of 2026, the company reported net income attributable to -- the Andersons of $33 million or $0.97 per diluted share and adjusted net income of $38 million or $1.12 per diluted share.

This compares to adjusted net income of $4 million or $0.12 per diluted share in the first quarter of 2025. Gross profit increased as ag fundamentals were improved compared to the difficult market conditions in the first quarter of 2025. Operating expenses were down slightly year-over-year. Adjusted pretax earnings were $44 million compared to $3 million in 2025, with improvements realized across both agribusiness and renewables, including the recognition of 45Z producer tax credits in 2026. Adjusted EBITDA for the quarter was $91 million compared to $57 million in 2025.

Our effective tax rate varies each quarter based primarily on tax credits earned and the amount of income or loss attributable to noncontrolling interests. We recorded taxes at an effective tax rate of 14% for the first quarter and expect our full year adjusted tax rate to be in the range of 14% to 18%. Next, we'll move to Slide 6 to discuss cash, liquidity and debt. We generated cash flow from operations before changes in working capital of $68 million in the first quarter of 2026 compared to $57 million in 2025. This continues to demonstrate our ability to generate strong cash flows in various market conditions. Our short-term borrowings are up compared to the prior year as we funded the purchase of our partner's share of the ethanol plants last summer, and we have seen a recent increase in market volatility.

However, our readily marketable grain inventories continue to be well in excess of our short-term debt, which is consistently the case throughout the ag cycle. Next, we'll take a look at capital spending and long-term debt on Slide 7. First quarter capital spending was $52 million compared to $47 million in 2025, which includes the funding of previously announced long-term growth projects as well as normal maintenance capital.

We continue to take a disciplined, responsible approach to capital spending, which we expect will be approximately $225 million for the year, excluding acquisitions. Our long-term debt-to-EBITDA is 1.6x, which remains well below our stated target of less than 2.5x. We continue to evaluate various acquisitions and internal growth projects and have a strong balance sheet that will support investments that meet our strategic and financial criteria. Now we'll move on to a review of each of our segments, beginning with Agribusiness on Slide #8. The Agribusiness segment reported adjusted pretax income attributable of $18 million compared to breakeven results in the first quarter of 2025. Agribusiness saw considerable improvement year-over-year as volatility returned to the ag markets. As prices rallied, old crop bushels still on farm came to market, which provided more opportunities for our merchandising businesses. However, with the shifting market dynamics, our asset footprint saw limited basis appreciation.

Our premium ingredients business had improved earnings as we continue to focus on serving our CPG customers, including through recent investments in our corn and wheat cleaning capabilities. Our fertilizer assets were well positioned, and we were able to capture higher margins leading up to the spring application season. Agribusiness had adjusted EBITDA of $49 million compared to $31 million in the first quarter of 2025. Moving to Slide 9. Renewables had another strong quarter, generating pretax income of $40 million compared to pretax income attributable of $15 million in the first quarter of 2025. Our ethanol plants continue to perform well with efficient operations resulting in record first quarter production. Ethanol crush margins were up significantly year-over-year on continued strong demand. We did have some of the first quarter margins hedged at historically favorable levels, which limited a portion of the upside as margins started to run early in the quarter. Ethanol margins were also challenged with higher Eastern corn basis and natural gas costs. As expected, we qualified for the next tier of 45Z tax credits in 2026, recording $26 million of these credits in the first quarter. Our merchandising businesses also performed well as corn oil prices and volumes improved compared to the prior year. Renewables had EBITDA of $54 million compared to $37 million in the first quarter of 2025. And with that, I'll turn things back over to Bill for some comments about our outlook.

Thanks, Brian. We remain optimistic about 2026, supported by a favorable outlook for our agribusiness portfolio and reduced uncertainty regarding renewable fuels regulations. Recent initiatives have concentrated on enhancing the efficiency of enterprise support functions as well as reinforcing our commitment to safe operations within production facilities. In agribusiness, we anticipate a year-over-year shift from corn to soybeans, although corn plantings are expected to remain above the 5-year average. On-farm storage levels are substantial and should enter the market following spring planting. The positive RVO and rising ethanol blend rates are projected to drive domestic demand for both corn and soybeans, thereby improving farm gate economics for the U.S. farmer. Our investments in premium ingredients, specifically those for human consumption and pet food manufacturing continue to deliver profitable growth.

Global fertilizer supply issues will continue due to the Iran conflict. And while we were well positioned for spring planting, ongoing tensions in the Middle East will continue to influence agribusiness dynamics. In the Renewables segment, the finalization of the RVO has had industry-wide impacts, supporting renewable diesel and ethanol production. Ethanol exports remain strong with several countries increasing blend rates. Elevated crude prices, especially in nations dependent on Middle Eastern supply have further enhanced ethanol's appeal as a gasoline additive. We would like to see the enactment of year-round E15 this year. However, voluntary blend rate increases are already occurring based on the comparative economics of ethanol versus gasoline. Our renewable diesel feedstock merchandising business has experienced increased activity this year, which is expected to continue. Spring maintenance shutdowns were completed in April, and our plants are operating well above nameplate capacity. We are actively pursuing projects aimed at improving production processes and reducing the carbon intensity of ethanol. As previously stated, our facilities are benefiting from higher tax credits this year under the current guidelines. Additionally, preparations are underway for carbon sequestration at our [ Clymers ], Indiana site. The Class 6 well permit continues to progress through regulatory review. And if approved and operational, this initiative will further reduce the carbon intensity score of our ethanol, enabling additional tax credit generation.

We are evaluating investment opportunities for the cash generated from operations and available tax credits in our renewables business. Given our strong balance sheet and growth ambitions, we will continue to assess potential investments within our existing infrastructure as well as acquisitions aligned with our financial and strategic objectives. We reaffirm our long-range EPS target of $7 per share by the end of 2028. Achieving this milestone will require successful completion of key projects and sustained operational excellence. I am grateful for the dedication and focus demonstrated by our team in pursuit of these goals. We will now take your questions.[Operator Instructions]

At this time, we will take our first question, which will come from Ben Mayhew with BMO.

Congratulations on the strong performance out of the gate here in 2026. And my first question actually has to do with the first quarter and kind of where it stands in your usual cadence of annual earnings. So first quarter tends to usually be your weakest earnings quarter of the year. So I was wondering if you could frame up and maybe extrapolate what first quarter '26 might signal about the rest of your year? And what is your level of confidence in the sustainability and potential acceleration of current market fundamentals as the year progresses?

Thanks, Ben. This is Brian. Yes, good question. What I would say is you're right, the first quarter for us does tend to be a slower start out of the gate. But as we think about the cadence to the year, I would say it's the typical cadence that you've seen from us in the past, where usually for us, I would say our fourth quarter tends to be really our strongest quarter. And then obviously, in the second quarter, we're usually see stronger fertilizer performance depending on the spring planting season. But so from our perspective, the overall cadence is really expected to be relatively the same. One exception I would note is certainly 45Z tax credits are something that would be earned ratably throughout the year with ethanol production.

Got it. And then you mentioned you had some hedges on your ethanol margins in the first quarter, which might have prevented some upside especially at the beginning of the quarter when margins started to run. are you still utilizing hedges in the second quarter? Like how should we think about that? Because when you look at the paper margins, they look very strong. Some of your peers have reported very strong ethanol operating results. I think the expectation is things are still going to be really good and likely accelerate. So could you just touch on the ethanol trajectory and what you're seeing maybe Q2 to date and your level of confidence in things looking pretty attractive there?

Ben, this is Bill. Yes. Your analysis is pretty much spot on. So I'll take them in 2 different parts. If you look back historically over the last 3 years, Q1 board crush has been just below breakeven. So I think it's[ $0.005 ] under for the last 3 years. We were able to put on hedges in the first quarter that were well above that. And as we look back, we felt like it was a good decision. We do not have any hedges on -- we did not have any hedges on past Q1, which we traditionally don't hedge any production other than Q1, and we only do that when it gets close to double digits over board crush. So hopefully, that answered that question. In terms of looking forward, you can do the math. Board crush looks good for Q2 and Q3 today. You do have to keep in mind that natural gas prices are slightly elevated for everyone. And corn basis in the East will ebb and flow. And so when you put it all together, I would characterize our ethanol results in Q1 as very good also. So I think we're no different than our peers in terms of your comment there.

Okay. Great. And then if I could just sneak in one more quick question about -- on the capital investment side, can you remind us why the Port of Houston soybean meal investment is so important for the Andersons? Like outside of the obvious, like what does it get you? What is it now? Where does it position you in the world of soybean crush? I know you're not going to be crushing soybeans, but it does get you into that flow, right? And so I just want you to talk about that and remind the investment community why this is such an important growth investment.

That's a great question. And you are correct, it will not get us into the soybean crush industry. But with the RVOs coming out for '26 and '27, we know there's going to be substantially more demand for soybean oil. 80% of the soybean that gets crushed goes out in meal. So we will have a continued increase in soybean meal produced in the United States. We've seen nice growth on domestic consumption of soybean meal recently, but the domestic growth is not going to be able to keep up with the increased supply. And so from our perspective, our timing is about perfect to have another outlet for soybean meal to be able to export -- to be able to be exported into the global market. So it's just another step down a traditional path where we tend to look out into the future and find opportunities that we think are going to deliver value to our shareholders. And we continue to be very optimistic on the potential results for the soybean meal export program coming out of Houston.

And our next question will come from Pooran Sharma with Stephens.

Congrats on the strong results.

I wanted to start off maybe just asking about ethanol demand, both domestic and export, has been very robust since the start of the year, kind of against expectations. Have you seen any incremental strength from the war? Does it make ethanol more appealing domestically? And just to tag on to that, do you see a situation where ethanol remains favorable for a longer period of time in terms of blending?

I think we've seen a substantial uplift in demand for ethanol. And as I mentioned in my outlook, you have crude trading at or around $100 a barrel, at least last night, I've not looked at it this morning. And the biggest piece that we've seen in the U.S. is ethanol was trading at as much as[ $1.30, $1.35 ] a gallon recently. I think this morning, it's at $1.25 a gallon under ARBOB. So the blending economics and the ability to drive the overall cost of gasoline, which I think I read this morning is over $4.45 a gallon nationally, really will drive demand for ethanol in the U.S. and Canada, which is our largest export partner for ethanol. And then as you look globally, there are a whole host of countries that are increasing their blend rate of ethanol, which is going to continue to drive global demand outside of North America. And so yes, as I look forward, Pooran, I think there's going to be substantial demand for ethanol just as a gasoline additive in order to reduce the overall cost.

Appreciate the color, Bill. Maybe just shifting to agribusiness and on the outlook on some of your prepared comments, you mentioned maybe getting that basis appreciation in the coming quarter. But I just wanted to get a better sense of how to frame this up. If we get another spike in grain prices, does that again push out your basis appreciation opportunity?

Great question. And it leads right back to the story we've been talking about for the last several years. The Andersons over the last 5 or 6 years has diversified its portfolio. So let's go right to your example. You can't predict the future, but as corn prices, wheat prices rally, your basis tends to break, okay? So in your scenario, yes, that would push out potential basis appreciation in our assets. However, the offset to that is the volatility that price spikes bring to the Andersons collectively as a whole, allowing our merchandising group to take advantage. And we saw that very clearly in Q1. And so that's what we really like about the portfolio that we have today is under most market conditions, we're able to take advantage of the opportunities that the market presents. But -- the short answer is, yes, if we see a rally in corn, we would expect the basis at our grain assets to lag. But simultaneously, we would expect merchandising results to perform.

Great. Appreciate the color there. And just on my last question, really just kind of follow-up here. On the tax rate, 14% to 18%, can you remind me, is that because we should be flowing 45Z tax credits through and basically taxing everything else at a higher tax rate? Is that higher tax rate, should we assume that to be like 25%?

Yes, Pooran, I think that's fair. I mean, the 45Z tax credits are recorded above the line in other income, and those are nontaxable tax credits. So I think the way that you're thinking about it is the right way. The only -- the other impact, but it's pretty small, is noncontrolling interest. But the vast majority of it is exactly what you cited.

And our next question will come from Ben Klieve with Benchmark.

Congratulations on a really great first quarter. First, I wanted to ask about the merchandising business, specifically within the agribusiness sector. I'm wondering if you can help us understand the degree to which this improvement that you cited was relative to kind of a stale macro backdrop last year? Or has that business kind of returned to kind of more -- well beyond that to more kind of historic levels? That's my first question.

Ben, this is Bill. I think it's a combination of the 2. 2025 was, in your words, stale. -- low volatility, burdensome balance sheet. And so the opportunities just simply didn't present themselves. And as we mentioned, I do believe that the trough of the cycle was likely set in 2025. How fast we come out, and as I think you and I have talked about before, the slope is obviously to be determined. But yes, when you have market disruptors like the war in Iran, it's going to generate additional volatility. Overall, we're still looking at very ample global supplies of corn and soybeans. But we do have to get the 2026 crop planted and obviously harvested. But we do see an underlying increase in domestic demand, obviously coming from corn to ethanol, beans to soy crush, but we also are seeing it in the poultry market and other end users where we are feeling a little bit more of a shot in the arm for increased demand that was a little unexpected. And then lastly, if you look at our corn export program out of the U.S., it is very strong, even if you consider the years that we had big Chinese programs. So yes, I think a combination of those are creating a better outlook for our merchandising businesses in agribusiness.

Got it. Great. Good to hear that there's some broad-based drivers there, and it's not specific to the outbreak of the war of Iran. Okay. Very good. And then you cited a doubling of the ingredient business. And I know this is a small part of the agribusiness sector, but I'm wondering if you can elaborate on that a bit. I mean that's doubling is -- that's pretty significant. So can you talk about kind of the drivers behind this, the degree to which there's any kind of lumpy items within that? Or is that kind of a growth rate something that we can expect here in coming quarters? And then what the drivers were behind that, et cetera?

To answer your question in terms of doubling, I think that was I think you're referencing Q1 over Q1, '26 over '25 premium ingredients financial results, Doug?

Yes. Yes, that's correct.

Okay. So we've talked to the investing community and analysts for well over 18 months about our desire to continue to grow our premium ingredients. Those investments take a while to get completed. And as we've talked through the recent calls, those investments are all coming online, and we are now working on a new one in Mansfield, Illinois. But yes, we have a very strong opinion that the way our premium ingredients business is set up, structured and operates, we have quite a long runway for us to continue to build out that business, working with anywhere from the largest CPG companies in the U.S. at least down to private companies that manufacture our products. So will we be able to double it over time? Yes, we will. It will take some investment, and it is a smaller part of our business today, but that doesn't mean that we're not focused on improving it because, in general, those returns are higher.

Congratulations.......

[Operator Instructions]

Our next question will come from Derrick Whitfield with Texas Capital.

I have a couple of policy and macro questions for you. First, given the importance of 45Z to your ethanol business, I wanted to ask for your latest expectations on the finalization of 45Z policy, which is expected to include positive revisions for CSA in the provisional emission rate process.

Eric, this is Bill. Great question. And any opinion that we will provide on timing is simply a guess. The public comments are being held at the end of this month, I believe it's May 28. So if you use kind of our historical path in terms of finalization, our best guess would be late summer, early fall. And that is simply that a guess. But it does feel like the IRS is listening and there's been a lot of public comments. We are participating in the public comment period, working both directly with legislators or the IRS and more importantly, through organizations like Growth Energy. So we feel like our voice is getting heard. In terms of CSA and PER, the PER, which is the provisional emission rates for feedstocks that do not currently have a pathway -- those results are important to the industry, but not to the Andersons. We use corn as our primary feedstock at all 4 of our ethanol plants. And so although we are paying attention to them, for the Andersons, it will have a limited effect on those finalized rulings. In terms of CSA, that's a great question. And we are already working on CSA type programs with CPG companies. So we have the platform set up. We have the desire to help the farmer be able to generate more value for -- so that is kind of a wait and see. The one thing that you do need to realize is the farmer only plants corn once a year. And so today, we need to have those rulings in order to be able to help the producer prepare for the 2027 planting season.

Great color. And maybe that was fantastic. And shifting over to macro more broadly and the impacts of the conflict in the Middle East. I wanted to ask if you could elaborate on any changes in corn crop yields or allocations to corn you'd expect as you look a little further out on the curve resulting from the lack of fertilizer or hog prices here in the U.S.

That is a good question. And I honestly thought I'd be getting asked several questions around fertilizer today. So let's start with the '26 crop that's going into the ground today. It varies among different geographies inside the U.S. But well over the majority and in some parts of our area, up to 85% of our farmers had their fertilizer prices locked in prior to February 28 and the start of the war. So our producer base, we feel like there will be a shift. There will be a shift in terms of, as we mentioned in the comments, a slight shift from corn to soybeans still north of the 5-year average. What we have started to focus on is what does fall applications in 2026 look like? And the U.S. as compared to our global partners and competitors for production are in a much better space for nitrogen because nitrogen is really the fertilizer or the input that's getting affected the most over the conflict in Iran. The U.S. produces more or a higher percentage, excuse me, fertilizer than some of our competitors. So we do think it is a concern. We do believe it will affect the U.S. farmer less than some other countries globally. That's the best answer I can give you today as we're looking forward, but I do think that's a very good question and a very real issue that we're already looking towards Q4 for -- the Andersons.

Great update and congrats on your quarter today.

And this concludes our question-and-answer session.

I'd like to turn the conference back over to Mike Holter for any closing remarks.

Thanks, Joe. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Tuesday, August 4, 2026, at 8:30 a.m. Eastern Time when we will review our second quarter results. As always, thank you for your interest in -- the Andersons, and we look forward to speaking with you again soon.

Good morning, ladies and gentlemen. Welcome to The Andersons 2025 Fourth Quarter Earnings Conference Call. My name is Dave, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for playback purposes. I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed.

Good morning, everyone, and thank you for joining us for The Andersons Fourth Quarter Earnings Call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation via the webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website shortly. .

Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements. Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors.

This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of the non-GAAP to GAAP measures are included within the appendix of this presentation. On the call with me today are Bill Krueger, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions.

I will now turn the call over to Bill.

Thanks, Mike, and good morning, everyone. Thank you for joining the call today to discuss our fourth quarter results and initial outlook for 2026. I would like to start off by thanking the entire Andy team for their hard work and strategic focus over the past several quarters. This effort allowed us to deliver a record fourth quarter EPS, confirming our portfolio's versatility and resilience in various market conditions. .

The fall harvest produced larger-than-expected volumes of grain in the Western green belt and we were able to accumulate significant corn and sorghum at favorable basis values. This increased production added to space income at our assets, but limited our merchandising opportunities. Exports for wheat and sorghum from our Western assets saw sizable increases in the fourth quarter compared to the first 3 quarters of the year.

In the Eastern green belt, harvest results were more variable. Our team focused on sourcing corn for a record export program and strong ethanol demand, achieving higher seasonal elevation margins. Production at our ethanol plants resulted in another year of record volume and above-average yields. Ethanol exports again reached a record level, which helped to support improved ethanol board crush. However, our eastern ethanol plants were also impacted by higher corn basis and natural gas costs. Our plants continue to run well.

In the fourth quarter, we continued to execute our stated strategy. Although our capital allocation may vary from year-to-year, we are committed to profitable growth in both Agribusiness and renewables. In renewables, after acquiring full ownership of our 4 ethanol plants last year, we recently announced an additional investment in our claimers Indiana facility, which is expected to add 30 million gallons of incremental annual production in 2027.

In the first quarter, we plan to begin operations at a renewable feedstock storage and blending facility in Ulysses, Kansas, where we will add capacity for low CI feedstocks to supply the bio-based diesel and feed markets. Agribusiness growth initiatives include continued improvements in our Sky land asset footprint, and we are pleased with their improved performance this quarter. Work continues with the Port of Houston expansion project, we expect completion of our upgrades to the grain elevator in Q2 of 2026. And the soybean meal export capacity should be online in late Q3 of 2026.

After completing the first phase of the mineral processing facility in Carlsbad, New Mexico, we are adding processing capabilities in a second phase, scheduled to be complete in the second quarter. We continue the buildout of our corn and wheat late processing capabilities strategically located within our asset footprint to support key CPG customers.

I'm now going to turn things over to Brian to cover some key financial data. When he's finished, I'll be back to discuss our early outlook for 2026.

Thanks, Bill, and good morning, everyone. We're now turning to our fourth quarter results on Slide #5. In the fourth quarter of 2025, the company reported net income attributable to The Andersons of $67 million or $1.97 per diluted share and adjusted net income of $70 million or $2.04 per diluted share. This compares to adjusted net income of $47 million or $1.36 per diluted share in the fourth quarter of 2024. Overall, fourth quarter gross profit of $231 million increased 8% year-over-year, primarily due to higher volume and margins in renewables, as well as the addition of Skyland Green in November of 2024.

For the full year, gross profit of $714 million increased 3%, primarily due to the Skyland investment. Adjusted EBITDA for the fourth quarter was $137 million compared to $117 million in 2024 with an increase in renewables, partially offset by a year-over-year decline in the agribusiness. Full year adjusted EBITDA was $337 million compared to $363 million in 2024. Our effective tax rate for the fourth quarter was 19%. And for the full year, it was 16%. Our effective tax rate varies each quarter based on the amount of income attributable to noncontrolling interests as well as the recognition of nontaxable biofuels credits.

Now let's move to Slide 6 to review our cash flows and liquidity. We generated fourth quarter cash flow from operations before changes in working capital of $110 million in 2025 compared to $100 million in 2024. Full year cash flow was $278 million compared to $323 million in 2024 with the reduction due to challenging ag market conditions in the first half of the year.

This strong cash flow generation shows consistency and stability throughout the ag cycle, supporting our ability to fund growth projects and reinvest in our asset footprint. Our year-end cash balance is down and short-term debt reflects a modest increase, both of which are a result of the acquisition of our partner share of the ethanol plants completed in the third quarter of 2025.

Next, let's turn to Slide 7 to review capital spending and long-term debt. We continue to take a disciplined and practical approach to capital spending and investments. but intentionally increased our level of strategic investment in 2025. This includes the handful of larger growth projects in both segments that Bill mentioned earlier, together with the full year impact of Sky land capital spending.

Long-term debt to EBITDA at year-end was 1.8x, which remains well below our stated target of less than 2.5x. We continue to evaluate various acquisitions and internal growth projects and have a strong balance sheet that will support investments that meet our strategic and financial criteria.

Now we'll move on to a review of each of our segments, beginning with Agribusiness on Slide 8. Agro business reported fourth quarter pretax income of $46 million and adjusted pretax income attributable of $45 million compared to $56 million in 2024. The large harvest provided significant quantities for our assets to handle particularly in our Western footprint, where we were able to acquire grain at favorable values and realize good basis appreciation.

We also made considerable sorghum export sales in December, supporting our Skyland and Port of Houston assets. Our Eastern grain assets also had a solid fourth quarter with strong elevation margins and a significant portion of the corn acquired moving into the export markets. Our merchandising portfolio remained challenged as grain markets were well supplied at relatively low prices. Our premium ingredients business had solid results, and our Skyland investment also saw improved results in the quarter. Agribusiness had adjusted EBITDA for the fourth quarter of $80 million compared to $88 million in 2024. Adjusted EBITDA for the full year was $187 million compared to $218 million in 2024.

Moving to Slide 9. Renewables generated fourth quarter pretax income attributable to the company of $54 million, a significant increase when compared to $17 million in 2024. This increase reflects the full ownership of the 4 ethanol plants following the acquisition of our partner share in the third quarter of 2025. Strong operations in our ethanol plants resulted in another quarter of record production.

Ethanol board crush margins were up $0.15 per gallon year-over-year. However, this was partially offset by higher natural gas costs and firmer Eastern Corn basis. The impact of 45Z tax incentives was $15 million for the quarter and $35 million for the full year. These credits reflect our full ownership since August and relative share of the gallons produced for the first 7 months of 2025.

Renewables had EBITDA of $69 million in the fourth quarter of 2025 compared to $41 million in the fourth quarter of 2024. For the full year, renewables generated adjusted EBITDA of $203 million compared to $189 million in 2024. We -- and with that, I'll turn things back over to Bill for some comments about our early 2026 outlook.

Our 2025 results once again proved the resilience of our business model and creates optimism for 2026. Although we had external factors challenging our agri business during the year, our team stayed committed and finished the year with a solid fourth quarter. Conversely, there were several favorable external market factors that the renewables team quickly identified diligently research and then executed to drive bottom line results.

We expect that 2026 will bring better financial results in agribusiness with more certainty in our global grain markets, while we believe demand for ethanol and related products will remain strong. We are focused on continuous improvement in our safety culture and in our enterprise business support organization. Our agribusiness outlook remains focused on connecting supply to end users and export demand. With the large fall harvest, our Western footprint should see basis appreciation into 2026 and sorghum exports have continued into the new year.

Our Eastern assets should benefit from higher elevation margins on corn export programs that may not see the same basis appreciation as our Western footprint. The current farm gate environment is faced with challenging economics. Domestic demand for production is critical to the U.S. farmer. The passage of year-round E15 and finalization of increased RVOs as proposed, would provide significant support for ongoing domestic demand. as a significant amount of grain remains stored on farm and will need to be marketed, we are ready to act as a conduit to finding consumptive demand and supporting our farmers with disciplined risk management tools. While off prior year highs, we are forecasting higher-than-normal planted acres in 2026.

This combined with higher acres during the 2025 harvest would necessitate additional nutrient applications, primarily nitrogen. These factors should benefit our fertilizer business but volumes are dependent on farmer decisions and could be challenged by their current economics. We believe that we are well positioned to serve our customers with crop inputs during spring applications and with our specialty liquid fertilizers during the growing season. I mentioned we expect to have several of our larger capital projects completed in 2026.

Finalizing these projects will allow us to operate more efficiently, along with handling increased volumes of products like soybean meal, cleaned, corn and wheat. We continue to assess internal growth projects and acquisition opportunities that support our growth strategy. We expect that the challenging 2025 market may bring us additional acquisition opportunities to evaluate. In renewables, we expect that ongoing domestic and global demand will continue to support ethanol prices and volume. We also expect to see clarification of biofuels policies such as the renewable volume obligations and small refiners exemption reallocation.

We are optimistic that year-round E15 legislation will eventually get congressional support as this would provide great benefits to the domestic ag economy. We recently received the proposed regulations around the 45Z tax credit and are pleased with the clarifications that were provided. As usual, maintenance shutdowns in the industry and summer driving increases could positively influence ethanol demand and crush margins beginning in the second quarter.

We continue to invest in our plants and consider our assets to be among the best in the industry. The recently announced investment in additional production at our Clymers plant is the latest example of this commitment. We have additional investments planned to improve efficiency and save operations in our plants and increase both the quality and yield of distillers corn oil.

As we mentioned at our Investor Day in December, we expect our 45Z tax credits to increase in 2026 and with the removal of the indirect land use change penalty. The Class 6 well permit for claimers continues to move through the required review process. We are actively pursuing investments aimed at reducing the carbon intensity of our ethanol production through alternative energy sources and the previously mentioned sequestration.

Lastly, we remain interested in the acquisition of additional ethanol production facilities that align with our criteria. In 2025, we demonstrated our capability to generate positive returns and cash flow during the lower range of the ag cycle. We anticipate generating ongoing cash from operations that will support our stated strategy.

Our balance sheet is well positioned to support future growth. We will maintain responsible decision-making to benefit our customers and optimize shareholder value. We expect to exit 2026 with run rate EPS, more than our prior target of $4.30 and recently updated our long-range target of $7 as we exit 2028. And now we are happy to take your questions.

[Operator Instructions] Our first question comes from Ben Klieve with [ StoneX ].

Congratulations on a really great end of the year here. First, I think the biggest surprise to me in the quarter was really the strength of the legacy Skyland business. I'm wondering if you can elaborate on a couple of things. First of all, was that performance something that kind of surprised you guys? Or did that fall in line with your expectations throughout the quarter?

And then second, with 1 -- with a full year now of Skyland integrated, can you break down the EBITDA contribution of that business within 2025?

Ben, this is Bill. I'll take the first part of it. I do not think that it was surprising when you consider the backdrop of the large fall harvest. Being new to the business, I don't have access to all of their records for volume handled -- but compared to any numbers that we had considered, the fall harvest in Southwest Kansas and the Panhandle of Texas allowed us to acquire more harvest bushels than we were planning on going into the year.

And Ben, with regard to the EBITDA contribution, I think when we originally talked about that transaction, we said we expected it to be kind of a run rate of $30 million to -- $30 million to $40 million per year. And then last year, we said we thought it would be more about half of that range. It finished the year just shy of $20 million. So it was right in that range.

Okay. Very good. One other one for me. You guys talked about the kind of outlook for fertilizer application this year. I'm wondering, kind of given the kind of big variables that you outlined, how you're positioning that business here going into the spring application season. Has kind of the relative uncertainty here kind of change your kind of inventory build thus far in the season? Or are you really -- is really the strategy in '26 unchanged relative to the historic years despite the relative uncertainty that I think is in this space.

Ben, I'll take that question. This is Bill. So let's maybe. Rewind just a little bit and talk about fall applications that will give us a little bit better vantage point looking forward into 2026. So if you start in the Western U.S., we actually saw substantial applications of ammonia, just due to the nearly perfect application season, and obviously, as you know, with ammonia going down and [ hydrocone ] going down, that is only going to be used for corn acres. So that's what drives our belief that corn acres will be higher than normal, but less than 2025 acres.

As you move to the east, where we had a little less favorable application weather, we believe that we're going to be well poised for stronger-than-normal applications in Q1 and obviously, with the recent bean rally versus the corn futures, there is some concern that we'll have bean acres potentially taking away some corn acres. But at the end of the day, we still believe across even the Eastern Corn Belt, it's getting kind of late to be switching from corn to beans. So we feel like we'll have slightly higher than normal applications for Q1 and early Q2 in the Eastern Corn Belt.

The next question comes from Ben Mayhew with BMO Capital Markets.

And yes, congrats on a really strong finish to the year here. So my first question is around the agribusiness segment outlook for 2026. And I'm just wondering if you can highlight the biggest potential profit opportunities for the Agribusiness segment and '26 versus '25. And kind of like what needs to fundamentally happen to make these realization?

That's a good question, Ben. And I'm going to I'm going to start with the assumption that we'll have a normal growing season. But as we look back and try to compare the first half of '25 to the potential first half of 2026, it feels today like we're going to have more certainty around policy on exports. So with that assumption, we should see trade free up both domestically and for exports. First half of 26 versus first half of '25. That's the #1 area that I think will give us a little bit more stable earnings.

As I just commented around fertilizer with the large harvested acres in 2025, we are going to need to apply more nitrogen across the board for the '26 acres that we are expecting. Again, the economic conditions at the farm gate will drive a little bit of that, but we feel that will be pretty consistent on our PN outlook for 2026.

And then probably the last area that will should benefit agribusiness is the continued biofuels policy. And as mentioned, with the assumption that we'll see the RVOs come out as proposed. That should give us a little bit of an uplift for the underlying grain and soybean trade domestically.

SP1 Great. And then my next question would be about the strength in the fourth quarter earnings was very apparent. And I'm just wondering about momentum in the first quarter, '26, particularly with the ethanol business. So I was hoping you could just update us on year-to-date kind of where we are with the board crush and with -- before we head into maintenance season, it seems like the inventory levels have maybe picked up a little bit.

So if you could just kind of reconcile the ethanol segment and where we're at right now and where you expect to be throughout the year profit-wise.

Well, as you know, we don't provide guidance by segment. but we can talk to the transition from Q4 to Q1. I'll talk about the fundamentals and if Brian has anything to add on the financial aspect, I'll let him do that. .

As we entered Q1, which is traditionally a lower board crush at the time of the year and has been over the last several years. we actually had slightly stronger board crush than I think the industry had expected. There are parts of our area where we did see a little bit higher corn basis and nat gas costs continue to roll into Q1. But the fundamentals of ethanol, both export and domestic continue to feel very strong on Q1.

And we don't have any reason as we look into the future to assume there's going to be a drastic change on '26 versus '25 from the fundamentals. We also believe that the opportunity to continue to drive efficiency at our plants exists. And with the current biofuels policy should provide support for those capital investments.

With that, I'll let Brian hit on some financials.

Yes. And then just with regard -- I mean, you know Q1 is always kind of seasonally low, but we should see -- we expect export demand to remain high again this year. We expect the seasonal uplift with summer driving season. And then what I would say is the other 2 things to factor in would be the full year impact of the full plant ownership -- and then we talked about 45 for the full year of $90 million to $100 million, and that's kind of still the range that we would expect. .

Our next question comes from Pooran Sharma with Stephens.

Thanks for the question. I will be the third to say, congratulations on the strong results. Wanted to start off with Skylands. I understand you said it finished the year with just shy of $20 million, but it does sound like you're off to a strong start. You did quote you did note of strong basis appreciation opportunity for your Western assets.

And so I just wanted to maybe ask about Skylands contribution for 2026. Do you think that this business will be able to achieve the $30 million to $40 million that you had initially targeted just given the stronger start to 2026?

This is Bill. I will let Brian address the financial question. The one thing I do think is important to discuss here. When we talk about our Western footprint on assets, there are more assets than just Skyland. We have a nice setup in Nebraska we have continued to have a facility footprint in Idaho and Delhi, Louisiana. So just when we talk towards our western asset footprint, it is larger than just Sky land so that -- to maybe clarify.

So then I'll let Brian talk about question -- you're right. I mean we -- what I would say is for 2026, our expectation . For 2026, our expectation is probably somewhere in the $25 million to $35 million range for EBITDA. So we do expect it to normalize into that $30 million to $40 million range that we originally talked about over time, assuming that the conditions get back to kind of a mid-cycle type market.

Okay. Great. Appreciate the color there and appreciate the clarification as well, Bill. On my follow-up, wanted to understand a little bit about farmer selling dynamics. Now you said on the prepared comments, there's still a lot of crops on -- in storage. And I wanted to get your sense on what do you think drives more selling here? Is it more clarity in the RVO? And do you have a sense as to kind of timing when that occurs, when farmers would be willing to be more commercial. It's a good question. What I would tell you is the easy answer is higher prices. And that's really what the farmer is looking for today. it's pretty widely documented on the economics at the farm gate. And so the farmer is going to hold off as long as they can. The payments that they are receiving this month will help them be able to go longer before generating cash flow.

So as we look at it, it's not as important to us when the timing is for most or nearly all farmers, they will have to move a substantial portion prior to next year's harvest. If a farmer has grain in store today and we don't see a sizable rally, they're going to want to make sure that the corn and beans that they're going to plant this spring are in the ground and have a good start to the growing season before we're going to see a substantial amount of selling in our opinion. Again, a large rally in the price similar to what we've seen in soybeans lately can change that forecast.

This concludes our question-and-answer session. I would like to turn the conference back over to Mike Hoelter for any closing remarks.

Thanks, Dave. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, May 6, 2026 at 8:30 a.m. Eastern Time when we will review our first quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, everyone. Thank you for joining us for today for The Andersons 2025 Investor Day. We're excited to have you here, whether in person or virtually. For those of you that don't know me, I'm Mike Hoelter, Vice President, Corporate Controller and Investor Relations. And I've been with The Andersons for about 12 years, holding several financial roles within company.

Today is an opportunity for us to share our strategy, provide deeper insight into our business and discuss how we're positioning ourselves for long-term growth and value creation.

Before we begin, I'd like to draw your attention to the safe harbor statement on the screen. This contains important information regarding forward-looking statements. Please review it carefully as our remarks today may include projections and expectations that involve risks and uncertainties. Actual results may differ materially from those discussed, and we encourage you to review our SEC filings for a full discussion of risk factors. Our website also contains a copy of today's presentation slides.

Let me quickly walk you through what you can expect to hear today. We'll start with an overview of our company vision and long-term strategy led by our President and CEO, Bill Krueger. Next, you'll hear from Weston Heide, EVP of Agri business who will discuss how we are driving growth and value across the ag supply chain and strengthening our competitive position. Then you'll hear from Mark Simmons, EVP of Renewables who will provide an update on how we are scaling our renewables platform for sustained profitable growth and expanding our participation in growing end markets.

After these presentations, we'll break for a brief Q&A session followed by a short break. When we return, Sarah Zibbel, our CHRO, will share how we are building an execution-focused culture, supported by high-performing talent a critical enabler of our long-term success. Finally, Brian Valentine, our CFO, will bring all the pieces together by walking through our financial performance, margin expansion trajectory, long-term algorithm and capital allocation priorities. After hearing closing remarks from Bill, we will open it up for a final Q&A session with all the presenters where we look forward to addressing your questions.

For those of you in the room, please join us afterwards for a luncheon with our leadership team, where we welcome you to ask any further questions. So let's get started with a short video before we welcome our President and CEO, Bill Krueger, to the stage. Thank you.

[Presentation]

Thank you, Mike. And I'd like to welcome everyone to The Andersons 2025 Investor Day. I'm Bill Krueger, President and CEO of The Andersons. I've been with the organization for 6 years. Prior to that, I was the President and CEO of Lansing Trade Group which The Andersons acquired in 2019. As we go through the day, I want everyone to understand how proud I am of leading the organization that you're going to get to hear from today. And with that, I'm going to move into the 4 key messages that I really want everyone both in the audience and online to take away. And we're going to dive into all 4 of these as we go through the morning.

First, we are a materially stronger company led by a seasoned team with deep expertise in ag, renewable, fuels, operational excellence and poised for profitable growth. The Andersons has a balanced diversified portfolio that's been resilient through the cycles, is deeply rooted in North American ag and renewable supply chain. We have a strong renewables growth engine anchored by our ethanol assets. That's been one of our higher returning businesses for more than a decade with continued investment opportunities. And finally, our disciplined capital allocation strategy, leveraging our balance sheet, consistent cash flows and execution to drive long-term value for our shareholders.

We're going to first dive into the first bullet point that I talked about, a materially stronger company and I'm going to walk through the sequence of why I believe that, starting with the integration of the purchase of Lansing Trade Group.

The Andersons, a more traditional Eastern Corn Belt Company with minority investments in 4 ethanol plants and a network fertilizer assets acquired Lansing Trade Group, a more asset-light merchant company with a smaller group of assets in the Western Corn Belt. Through that integration, we're able to truly take the both best of both companies, put them together with both operational excellence, a merchandising mindset and create a leader in the industry. From that, we have built a mindset of continuous improvement, consistent execution and a focus on maximizing free cash flow.

We do have a willingness to liquidate nonstrategic and nonperforming businesses that we've created over the last 6 years. An example of that is the sale of our railcar leasing business in 2021, which was highly capital intensive with lower return potential. We've been able to reduce our long-term debt to EBITDA by over 2.5 turns since 2020, while still deploying $1 billion of capital. We've built the fourth largest grain network in the United States. And in '22 and '23, at the peak of the ag cycle, we were able to demonstrate the earnings power of our agribusiness. We acquired the majority ownership in Skyland Grain in November of '24. And we've continued to deploy capital, both organic and with smaller M&A opportunities over the last several years. So we feel very confident in our Agribusiness segment moving forward.

Next, we have truly built a strong renewables growth engine. The most recent action was the $425 million acquisition to acquire 100% of our ethanol plants, doubling our financial exposure and opportunity to the ethanol space. We're also with this growth engine, able to take advantage of the current bipartisan biofuels policy that the U.S. has implemented. As a result, our shareholders now have less exposure to the regional grain ag cycles and by being patient investors of our capital, we believe we can now look at material -- materially larger transactions moving forward.

Now I want to move into who we are and what we do. As you can see, this is a snapshot of our Q3 2025 numbers. You can see on the slide the numbers, but I'd like to draw your attention to a few specific items. Our adjusted EPS exiting Q3 of 2025 was $2.56 a share. We remain fully committed to our publicly stated target of $4.30 per share exiting 2026. As you can see, our split is pretty even between agribusiness and renewables. However, macro factors and investment strategies over time may alter that split.

Finally, our competitive advantages. The broad geographic footprint that we have allow us to reach from the producer to the consumer. With the acquisition of Lansing and the more recent acquisition of Skyland Grain in our Agribusiness segment, with a vast array of network of transload and aggregation centers that you'll see in our renewable sector, we truly have become a company that compete with our largest major competitors in the U.S. We believe that we are integral to the North American ag and renewables supply chain, connecting production to demand and finally and most importantly, we have created deep relationships with our customers, ranging from the start with the farmer all the way to the largest consumer product goods companies globally by addressing their problems and creating solutions.

Now I'd like to talk about the 2 business segments. They're both integrated and complementary to each other. Weston Heide and Mark Simmons will discuss their respective businesses in more detail later. But what I'd like to talk about is this format allows us not only with the optimal cost structure, but it also allows us to generate more gross margin opportunities. I want to talk a little bit about 3 different areas where we're able to demonstrate this on a daily basis. We'll talk about an example that we call horizontal integration between the 2 business segments.

Our Agribusiness segment trades over 800 million bushels of corn annually. Our renewables group buys 165 million bushels of corn annually to supply our ethanol plants. Most ethanol companies only buy the amount of corn they need to operate. Through the utilization of our agribusiness, we are able to buy over 80% of our corn for our ethanol plants directly from local producers. This drives our cost lower for the single largest input for our ethanol plants, generating a competitive advantage.

Next is an example of vertical integration, where inside our renewables group, we produce 140 million pounds of distillers corn oil. That flows into our renewable feedstocks merchandising business, which trades 1.6 billion pounds. This allows us to extract a premium price for our distillers corn oil. And finally, our fertilizer business supplies crop nutrients to 2 million acres of production agriculture annually. This provides the entire company with the understanding of the farm gate trends, planting intentions early in the year and then as we progress throughout the crop year, potential yield results. These are just a few examples of the synergies that we expect to achieve through our One ANDE approach.

Now I'd like to go into the part of this what we do. This slide illustrates a simplified summary of our business model. We often get asked by investors and analysts to better describe our business model. I hope the next 5 slides will do just that for you. The highlighted blue boxes are where The Andersons are a recognized leader. I'm going to start with the categories of end users that we list here. We have thousands of customers on the sales side. But for the purposes of this presentation, I want to break it down into 4 categories.

Our feed supply chain is the pet food industry, the pork industry, the beef industry, the dairy industry as examples. For The Andersons, we have a number of food supply chain customers, but those would be companies like flower milling, specialty crops processing, consumer packaged goods companies. The third area that we have our customers broken down into is the full fuel supply chain. For The Andersons, that is primarily the ethanol buyers, renewable diesel and bio-based -- or excuse me, biodiesel customers. Finally, our international customers are a wide array of customers that procure grains and feed ingredients across the globe.

The Andersons has a unique position to connect production to domestic and global demand for food, feed and fuel. Now we're going to start with the fertilizer part of our Agribusiness segment first. The Andersons participates in the entire production cycle of grains, starting with fertilizer, ending with the end users. Our wholesale distribution is a network of 17 warehouses that distributes bulk fertilizer for multinational mining companies. This is a low-risk consignment business. The larger portion of our wholesale distribution is a merchant business that buys and sells bulk fertilizer using our network of assets and logistics expertise.

Our specialty liquids group is a collection of 6 manufacturing facilities that use core fertilizers as raw materials to produce specialty liquids for retail outlets, we also utilize those same assets to support our industrial markets with products like de-icer for airports and products that go into concrete production. And finally, we have 20 farm centers that provide agronomy consulting, fertilizer sales and application services to our farmers. The normalized EBITDA for our fertilizer business is 25% to 30% of our Agribusiness segment.

Next, we're going to move into our grain handling and storage assets. As you can see on here, the grain elevators and export terminals are what we're going to address. They start though with the well over 100 grain originators that we have across the organization that buy grain from over 25,000 farmers and small regional co-ops and grain companies. These originations flow into a network of 175 grain elevators that handle several hundred million bushels of grain supplying domestic feed and food consumptive demand along with the export markets. Our export terminals in Houston, Texas and Toledo, Ohio originate a higher percentage of their grain from larger cooperative systems and grain companies with a smaller percentage coming from the farmer.

Now in this area, we have margins that are comprised of 4 areas. One is the fees we receive for our risk management tools that we provide to the farmers. Our elevation margins which are the price spread between the purchase price and the sales price, space income, which is the appreciation of grain while it's in our facilities, along with the drying, mixing and blending of the grain to improve the quality. And finally, our processing fees that we receive from sophisticated customers that request us to do things like color sorting, super cleaning and basic processing in return for paying us a premium price. The normalized EBITDA contribution from our grain assets is 30% to 35% of the agribusiness total.

Finally, in agribusiness, our merchandising businesses, which are the buying and selling of grain products that do not go through our owned assets. We refer to this as our asset-light model. In general, this business produces higher return on invested capital. And as you look at the slide here, you'll notice that all the boxes are gray. The arrows are blue. That's where The Andersons merchandising expertise comes into play. There are hundreds of boxes in the real world for us, but the blue arrows all are the same, taking advantage of the opportunities. And I'm going to give you some of those. It's much more than just the difference between the purchase price and the sales price.

We utilize our macro expertise, fundamental market analysis and logistics execution to generate arbitrage. We always try to buy as close to the origin and sell as close to the destination. We call that freight arbitrage. And as a company, we manage a freight book that has truck, rail, containers, barges and vessels. We pay between $800 million to $900 million a year in total freight costs. For The Andersons, that equals opportunity. We are able to take advantage of understanding our freight books through our logistics expertise to generate additional margin.

The next is what we call calendar and geographic arbitrage. And the easiest way for me to explain this is just to give you an example. We just concluded corn harvest. Let's say, during corn harvest, we choose to buy some corn for January shipment in Nebraska. The merchant or a group of merchants decides selling corn for August delivery into the Southeast poultry market is the best sale that day. As we come into January and it's time to take shipment, we will take the corn that we bought in Nebraska and potentially sell it to a local ethanol plant. Then the decision becomes what do we buy in? Do we buy in the August shipment period? And in this instance, let's say that we decide to go to Illinois, we buy in the August corn to ship to the Southeast feed demand market. And in that scenario, we've taken advantage of the time spread between January and August.

We've taken advantage of the geographic spreads because it's a lot cheaper to ship corn to the Southeast than it is for Nebraska. That sounds simple. And in reality, when I tell investors what we do is simple. We just do this thousands of times per week. And so that really is the best way to think about our merchandising business when you're getting asked. The merchandising business also generates between 35% to 40% of the normalized EBITDA for Agribusiness.

Next, I'm going to move into the Renewables segment. I'm going to talk about our ethanol production and our plants. Again, you heard me talk about the complementary nature of corn procurement, and you're going to hear it at least 2 more times today because we believe it is that critical of a competitive advantage for The Andersons from different angles.

For those of you who are not quite as familiar with the ethanol industry, 85% of the ethanol that is produced in the United States gets consumed. It's actually slightly over 85% gets consumed domestically. A little less than 15% of the ethanol that gets produced is exported, and that number is growing. You'll hear from Mark on that later. One key thing to remember is 1/3 of that ethanol goes to Canada.

Now everyone understands the value of an ethanol plant producing ethanol. The one thing that some investors and analysts don't always connect the dots on is the co-products that come out of our ethanol plants. the dry distillers grains, the corn oil and the CO2 and this excludes sequestration around CO2, generates 20% to 25% of the revenue. So having the understanding and the expertise to maximize co-product values is what separates many ethanol companies apart.

Distillers grains goes primarily into the animal feed supply chain. 35% of the distillers grains that are produced in the U.S. get exported. Distillers corn oil, which I mentioned earlier, 80% of that goes into the fuel and 20% goes into the feed industry. Mark is going to drill down on operational excellence, but a key stat that I want to share with this group. Our 4 ethanol plants as built and expanded, have a nameplate capacity of 393 million gallons. We are operating those plants well north of 500 million gallons. So we're substantially past 100% utilization of our plants. And the final point is The Andersons truly believes it is driving value to rural America through increasing domestic demand for U.S. corn at our ethanol plants.

Our plants generate an EBITDA contribution of roughly 85% to 90% of our Renewables segment. And finally, the renewables merchandising businesses. This is really a mirror of the agribusiness merchandising that I described earlier. I just want to add a few more comments around the renewables merchandising businesses. We will transact with more than 4 non-ANDE-owned third-party ethanol plants in our dry distillers grains merchandising and our third-party ethanol businesses.

Our renewable feedstocks merchandising business is one of the areas of greatest potential. And for those of you who've been around the name for a couple of years, you've heard me say this several times. Why do I still believe that today? The biofuels policy and the proposed RVOs could increase demand for renewable, low CI feedstocks by 30% from 2025 to 2027. This group originates its product from ethanol plants, soybean crush plants, fats, oils and grease production facilities, such as waste collection sites and packing and rendering facilities.

For this group of businesses, the merchandising is not only profit generating, but with the ever-moving and fluid biofuels policy today, it collects market intelligence and enhances our market fundamentals, providing valuable information to the rest of the organization. Our normalized EBITDA contribution is 10% to 15% of our renewables business.

Now we're going to address one of the newest variables in the Renewables segment. 45Z clean fuel production credits. These 45Z credits as they are often referenced, are performance-based tax credits for clean fuels production starting in 2025. It promotes the production of low-carbon transportation fuels and it supports reinvestment to increase domestic ag and low CI feedstock demand. The OBBB made a couple of modifications to the original Inflation Reduction Act. That's by extending the credit time line through 2029 and removing the indirect land use change penalty starting in 2026. This will reduce the carbon intensity score by 5.5 to 6 points.

Now the tax credits are based on the GREET CI modeling. It's listed on the bottom of the screen for those of you who are interested in understanding more about the GREET model. But in summary, what's important to understand is before you can qualify for any 45Z tax credits, you have to have a CI score below 47.5 or lower. Once you achieve 47.5, there is no more increased 45Z tax credits until you get below 42.5, this tiered scale is something that was introduced in 2025, and it is important to understand.

Now as you continue to go lower down the scale in 5-point increment it will increase by up to $0.10 a gallon each 5 points you go down with a maximum of $1 per gallon credit. Now The Andersons are looking at reducing our CI score. You're going to hear a lot about that today through plant efficiency projects, lowering our natural gas and electricity usage and looking for the potential of carbon sequestration. Much more on tax credits later.

Next, I want to move into why The Andersons are poised to capture market opportunity with a clear growth strategy. We believe that The Andersons are well poised for the favorable macro trends that are both bipartisan and support both energy and agriculture markets. Mark and Weston are going to go through these 5 macro trends in detail, but I just wanted to put them up there for everyone to see as we keep moving throughout the morning. We have built a long-term strategic framework for profitable growth. You heard me say that earlier. Question may be how. Okay. Each of the groups behind me will dive into it, but I want to give you my opinion on why this is going to work.

Organic growth is generally the highest returns and can be accelerated through leveraging strong customer relationships and expanding our high-performing businesses into adjacent opportunities. Second, we have a core belief as a company that we can always get better through optimization. This is driving a culture of continuous improvement and unlocking cost savings and efficiencies through better integration. Our disciplined approach to deploying capital allows us to deliver profitable growth, utilizing the strength of our balance sheet, which you're going to hear about later, and evaluating strategic investments that enhance both our scale and our capabilities.

Now how do we take this long-term framework and apply it on a daily basis? Sarah Zibbel is going to walk through our operating model for the group. But from my perspective, it's pretty simple. The Andersons are here to serve and utilizing our core values, our strengths and our results-driven mentality, we're able to tie our statement of principles to the 4 stakeholders that we believe we have, customers, employees, the communities in which we operate and our shareholders.

Our senior leadership team, which is pictured here, has a good mix of ANDE tenure, industry experience in both public and private leadership roles. You'll get to hear from Weston, Mark, Sarah and Brian and Emmanuel is in attendance to answer questions later. What is equally important to understand is that each of these 5 leaders has equally strong teams assisting them in running their business segments or enterprise functions. We have a strong belief in empowering our employees to perform at the highest levels and are willing to reward them for success.

And I will conclude the opening session here with the execution of our strategy generates us the capability of establishing a new publicly stated target of a run rate EPS exiting 2028 of $7 per share. Brian will dive deeper into this later in his presentation. But what I want the investors and public to understand is we view our responsibility of leading The Andersons as an obligation to our customers, our employees and our shareholders. We expect both our current and future shareholders to be rewarded by investing in our company.

And with that, I'll hand it over to Weston Heide.

Thank you, Bill, and good morning. My name is Weston Heide. I've worked with the company for 17 years, first as part of Lansing Trade Group and then with The Andersons following the acquisition in 2019. I've held a variety of roles within the company, including finance, business development, operations and commercial roles across grain, feed and premium ingredients. And today, I serve as the Executive Vice President of our Agribusiness segment.

I'll spend the next several minutes providing a review of our Agribusiness segment and describing how we provide value and drive growth across the ag supply chain. There are 4 key messages that define our strategic direction and long-term value proposition. First, our Agribusiness segment is well positioned for long-term profitable growth. Our deep understanding of agricultural markets locally, regionally and globally, complemented with our logistics expertise, enhances our ability to serve markets and importantly, gives us a competitive edge.

Second, we create value across the entire ag supply chain from farmers to end users. The ag supply chain is complex and covers many touch points from fertilizer producers to farmers to end users, as Bill described in his diagrams earlier. Our focused and value-added approach ensures that we're not just participating in the market, but we're making a meaningful impact in each step of the supply chain. We think about making that meaningful impact at each step where we can deliver value for our customers and that translates into value for us.

Third, we are strategically expanding. Our growth strategy is deliberate. We're growing through targeted investments and complementary acquisitions that align with our core strengths and our long-term strategy and direction. And Fourth, we are delivering stable, diversified growth. Our balanced mix of geographies, ag products and revenue streams provide stability and resilience. This diversification allows us to perform well across ag market cycles.

As we look at our business at a glance, here are a few highlights of our platform. We operate with an integrated model, a full-service approach from crop inputs to grain handling and commodity merchandising, serving producers, processors and end-use customers across the value chain. Our footprint spans over 175 facilities from grain elevators to storage assets, agronomy centers and fertilizer warehouses as well as transloading sites. This scale enables flexibility and market reach. Through our assets and our merchandising, we trade over 33 million metric tons of grains and feed ingredients on an annual basis. Primarily, this is corn at about 60% of our volume, followed by wheat and soybeans.

We also sell 1.9 million tons of fertilizer products across our wholesale, specialty liquid and through our farm centers. And we serve nearly 2 million acres with agronomy services through our farm center and agronomy service businesses across the key grain belts. With 275 million bushels of storage capacity, we command relevance in a fragmented market. Our share of the U.S. commercial grain space is only about 3%, leaving significant room for continued growth.

And finally, from a financial perspective, our assets and our volumes combine to drive performance. Over the trailing 12 months, we have delivered $554 million of gross profit, $195 million of earnings before taxes, interest, depreciation and amortization and $76 million of pretax income, clear evidence of our scale translating into results.

Now our asset network covers key North American grain regions and facilitates our ability to store, source and transport agricultural products efficiently and enhances our ability to leverage local and regional market knowledge. We have strong presence in the Eastern Grain Belt, primarily in the states of Indiana, Ohio and Michigan. Our presence in the Western Grain Belt spans from Nebraska to Kansas, Colorado and into the Panhandle of Texas. And we complement this with other pockets of assets that provide unique value to our network, such as our locations in Northeast Louisiana, where we see some of the earliest harvest bushels for corn and soybeans each year.

This really ties to Bill's comment earlier on leveraging market intelligence, where we can capitalize on specific market information provided from our network and gathered through our assets. Our footprint expansions, they align with our strategy to increase our capacity, broaden our geography and strengthen the connectivity of our network. As an example, last November, we acquired Skyland Grain assets in Southwest Kansas, Colorado and Texas. This group of assets enhanced our Western Grain Belt presence and complemented our merchandising capabilities.

For many years, we've had a very strong presence in that geography. We were buying grain from producers and commercials and selling it to end users such as feedlots and ethanol plants. And we did all of this without any owned physical grain assets in the region. The Skyland acquisition added over 40 facilities and over 100 million bushels of additional storage capacity to our network that we can now pair with our merchandising businesses and drive additional value by trading around those assets and adding depth to our market strategies. We're also investing in export infrastructure. Our Port of Houston project is one that I'll describe in a little bit more detail in a later slide.

Now this is a reference slide. You may refer to it later and it has a lot of details. But the main theme is that The Anderson serves our producer customers throughout the year, supporting farmers with grain merchandising, fertilizer inputs, logistics and advice. And while I'm not going to cover everything on this slide, of course, let me give you one quick example relevant to this time of year. We have now wrapped up the fall harvest and farmers are turning their attention to post-harvest fertilizer applications to prepare for next year's planting intentions.

Generally, this will be phosphates and potash being applied to the soil to replenish those nutrients in their farm ground. Our agronomy teams are working with those producers right now to work on pricing and application approaches, part of our continuous service model that enhances and fosters a trusted relationship with those producers. At a high level, agribusiness spans 3 core areas, assets and merchandising, premium ingredients and fertilizers, each playing a distinct role in connecting production to demand.

Our primary area is assets and merchandising. We leverage grain elevators, multimodal logistics and deep market expertise to manage grain flows and mitigate risk. Merchandising is all about connecting producers to end users, creating arbitrage across geographies, time and qualities. Paired with strong asset operations, we maximize margins in grain handling and storage. And these capabilities drive value across grains as well as feed ingredients. Our premium ingredients area is focused on merchandising and light processing for higher-value commodities and specialty ingredients.

Often, this segment services our consumer packaged goods or CPG customers in the food and companion animal spaces. Our expertise in food safety and quality assurance, combined with our deep understanding of customers' procurement strategies positions us as a trusted partner. Premium ingredients includes our pet food inputs, our specialty crops business such as pulses, peas, lentils and chickpeas, food corn as well as organic ingredients.

And the third area where we play is in the fertilizer markets. Our wholesale distribution network aligns with our grain geographies and links to our farm centers for the retail channel. We provide specialty liquid fertilizers that enhance yields and protect crops along with application services provided through our agronomy centers. Our wholesale businesses sell about 15% of their volume to our farm centers, and our farm centers purchase about 100% of their volume from our wholesale and specialty liquid groups. This allows us to deliver an integrated approach that strengthens our customer relationships and understanding. And across all of these areas, our strength lies in our ability to connect production to demand across time and geography, ensuring efficient movement and transformation of agricultural inputs and outputs.

Our Agribusiness segment is well positioned to capitalize on long-term tailwinds driven by an increased emphasis on domestic demand, excess soybean meal supply and evolving consumer and stakeholder requirements. Bill touched on these earlier at a high level. Let me provide a little bit more detail to connect our strategy to these factors. First, the increased emphasis on domestic ag consumption is being driven by policy. When you combine this with an industry that is continually driving for efficiency and productivity through crop yields, it really sets the stage for us.

As noted before, we have well-positioned grain handling capacity and lots of it. And the value of that space generally increases with larger crop sizes. Our ability to complement our assets with our merchandising expertise positions us favorably for the increased demand brought by these policies. Second, our proactive investment at the Port of Houston positions us to benefit from excess soybean meal supply. Soybean crush has increased significantly over the last several years, largely in part to biofuels policies, crushing the soybeans to create oil used for the renewable diesel industry, which Mark will touch on later in his presentation.

As a reminder, of the 4.3 billion bushel soybean crop, about 55% to 60% of that goes to soybean crush. And of the soybean itself, about 80% turns into meal and 20% turns into oil. Our Houston facility with Class I railroad service is uniquely positioned to participate in the increased exports and the increased exports are because the domestic supply exceeds the domestic demand. It connects especially well with the Western soybean meal crush plants.

Third, consumer and stakeholder requirements are evolving, and we're positioned to serve them. Our capability is strong with our CPG customers, especially for procurement, food safety and quality assurance. Examples include our value-added services that we provide for food and pet food ingredients. We also recognize that for many of our customers, sustainability and traceability remain important. We are partnering with our customers and with our farmer producer customers to develop sustainability programs, regenerative farming practices that provide mutual value for our customers and for our partners.

Overall, we're not just reacting to industry changes, we're ahead of them with the infrastructure, the relationships and the expertise to thrive in this evolving and dynamic agriculture environment. So turning from macro factors to specifics on why we win in the market. The Andersons is one of the largest grain companies in North America. This provides us with excellent scale and reach to drive value across the areas discussed, assets and merchandising, premium ingredients and fertilizers. A key factor of our success is our merchandising volumes, which are a multiple of our storage capacity. This allows us to amplify our market impact well beyond our baseline asset capacity.

We strategically align our assets with our merchandising. Our proximity to producers allows us to deliver a service model with localized market expertise and connects with our network of assets such as our ethanol plants. We serve nearly 25,000 producers across grain and fertilizer businesses. We connect those growers via logistics to access end markets both domestically and across the globe. And even with a commodity-based business, a hyper focus on customers is a key to our success.

We bring a proven ability to deliver tailored and high-value solutions, areas such as premium ingredients, where we work with cereal companies to develop custom origination programs for their inputs or where we're working with farmers to identify ideal varieties for food corn applications to other areas such as specialty liquids, where we sell yield-enhancing starter fertilizers that can be applied in for at the same time as planting, thereby driving efficiency for our farmer customers. And some of those products can increase the yields by 5 up to 10 bushels per acre, providing clear value for our customers and for us.

And the other area marking why we win really dovetails on one of Bill's slides earlier, talking about the integration between agribusiness and renewables. Recall that we trade 5x the value -- the volume of corn that our ethanol plants grind on an annual basis. The company's unified approach across grain, fertilizer and ethanol markets enables a full value chain delivery, optimizing our corn sourcing and enhancing our commercial coordination across agribusiness and renewables.

So with the background of what our Agribusiness segment is, where we play and how we win in the market, let's now turn our attention to our strategy and how we are executing on that strategy. Earlier today, Bill introduced our long-term approach to driving profitable growth through these 3 interconnected pillars: accelerating, optimizing and delivering. I will cover the first 2 with respect to agribusiness in the next couple of slides, and Brian will cover the latter of the 3 in his presentation later. Under the accelerating pillar, we are scaling our growth through strategic investments in acquisitions and capital projects that expand our reach, enhance our capabilities and deliver greater value to our customers.

As I mentioned earlier today, we closed on the Skyland investment last November. And while that was just about 1 year ago today, it remains an important part of our growth strategy and provides a good example of how we view growth through our core competencies. Skyland substantially increased our geographic footprint in the Western Grain Belt, expanded our storage capacity and strongly complemented our merchandising capabilities in that geography. In addition to being right down the fairway in terms of our core capabilities, we also gained access to over 7,000 new to us farmer customers with whom we can foster that same value and trusted relationship across grain and fertilizer to deliver mutual benefits.

Connecting to our discussion on macro factors and trends, our significant capital investment into our export terminal at the Port of Houston is a key part of our growth. Not only are we able to efficiently export Western Grains such as wheat and Milo from this terminal. With our project, we will now be able to also export soybean meal. Drawing from rail connected soybean crushers via our -- to our facility via the Class 1 railroads positions us extremely well to benefit from excess soybean meal, which will need to clear the markets through export channels. And this project is also a great example of how we create the connection between North American ag and global ag markets.

In addition to these 2 projects, we have a robust pipeline of organic growth projects. Across many of our businesses, we deploy a stage-gate methodology to identify, assess and execute on growth projects. And many of the most successful of these are closely tied to our customer-centric strategy. In addition, in our accelerating pillar, we add complementary acquisitions. We are expanding our capacity, broadening our geographic reach and aligning with our customer demand through these acquisitions.

Moving on to the optimizing pillar. We have a dual focus on commercial and operational excellence. Commercial excellence centers on embedding a customer-first culture across all commercial activities. Let me provide a brief example to bring this to life just a bit. One of our pet food customers came to us with a problem related to their corn supply. We researched and proposed a solution that went well beyond the traditional methods of dealing with this issue, a solution that leveraged our expertise in our food corn business as well as our food safety and quality assurance.

Ultimately, we deployed capital across 4 sites in North America, and we are now serving the majority of their demand. Their quality has increased. Their customer complaints have decreased and this provides great satisfaction to our team. And at a personal level, when I buy food for my own dog from the local pet supply store, I buy this product. I know which facility it is made in and I know that our work at The Andersons contributes directly to what's in that bag. Talk about a great feeling, and it all starts with a customer-first mindset.

Another aspect of commercial excellence, especially with a merchandising business like ours, is our talent pipeline. We are continuously strengthening workforce capabilities via targeted training and talent development. We have a dedicated training program designed specifically for early in career merchants. This program has been in place for over a dozen years and focuses on building the foundational skills in merchandising, risk management and market strategies. We recruit talent from targeted universities and provide structured development that prepares them for leadership roles as their careers advance. And when deploying our talent, we do so in the local market areas.

Our merchants and originators out in our field locations complement our merchandising teams in our headquarter offices. They enhance our overall market expertise by drawing together that local, regional and global perspective. Now operational excellence. This focuses on strategic deployment of our assets across key growing and merchandising regions. Examples include our assets that are tributary to our ethanol plants. unique assets such as those I described in Louisiana earlier, where we have access to rail and barge markets on the Mississippi River or assets like Skyland, which strongly complement a presence of merchandising in that geography. Increasing our specialty fertilizer production is another way that we drive operational excellence through scale. And we are also using data-driven tools and dashboards to monitor our performance and fuel ongoing improvements.

As I wrap up, I want to leave you with 4 key takeaways that define our strategy and our position in the market. The Andersons Agribusiness segment is well equipped for sustained profitable growth, leveraging deep market knowledge and logistics capabilities. By serving farmers -- by serving stakeholders from farmers to end users, we deliver differentiated value through focused and value-add approach across the entire ag supply chain. And we are expanding with a portfolio of strategic acquisitions, capital investments and organic growth projects that ensure scalability and relevance in evolving ag markets. And we are delivering diversified and resilient growth through a balanced mix of ag products, geographies and revenue streams that perform across varied ag market cycles.

Thank you. And with this, I will turn it to my colleague, Mark Simmons, to discuss our Renewables segment.

Hello. My name is Mark Simmons, and I'm the Executive Vice President of the Renewables Group at The Andersons. I've been with the company since 2019. And prior to that, I was part of the Lansing transaction. I've been in various commodity trading roles in ag and energy for more than 25 years and I couldn't be more excited to lead the Renewables Group because of the long-standing history of success and the long runway of opportunities that we have before us, scaling for sustained profitable growth.

Here are our key messages. Number one, operational excellence and execution. We're staying disciplined in how we operate our plants and there's significant runway ahead for continued value creation. We have a seasoned team with a proven track record of delivering value and driving efficiencies. Number two, accelerating growth through M&A. We transacted on the minority share of the ethanol plants, and we continue to look for growth opportunities that meet our criteria of being large scale, efficient, having good geography and the potential to lower the carbon intensity of our ethanol.

And third is our low carbon intensity strategy. We continue to look for ways to lower the CI to capitalize on the 45Z tax credit in low carbon fuel standard markets. And last is our competitive advantage. Our integrated capabilities with agribusiness and strong market knowledge give us a strategic edge against the competition. As Bill and Weston mentioned previously, we merchandise or handle significantly more corn as a company than the 165 million bushels that we grind at our ethanol plants, giving us superior market-based knowledge in the space and allowing us to buy grain more efficiently, which improves the overall netback to the ethanol plant.

I call this out because this is something that is very important and sets us apart from other producers in the market that may only have a single buyer of corn in their area, in their market, buying grain for that plant, where we have a team of merchandisers covering the entire U.S. and international and understand market flows, arbitrage and quality differences from one market to another. Corn makes up a significant portion of the input cost at an ethanol plant, which is why this is so important. Our renewable scale -- our Renewables segment is a scaled, agile platform positioned to succeed through market cycles. We're focused on the production and distribution of renewable fuels and feedstocks with a strong emphasis on ethanol and its co-products. By optimizing the end-to-end supply chain, we drive efficiency and shareholder value.

Operationally, we have significant scale. We produce well over 500 million gallons of ethanol across the 4 facilities. In addition to what we produce, we merchandise or trade an additional 335 million gallons of third-party ethanol, which gives us broad market knowledge across the entire U.S., benefiting the plants by increasing their overall netback. We merchandise 1.6 billion pounds of renewable feedstocks, which is more than 10x what we produce as distillers corn oil from the ethanol plants.

We handle more than 2.5 million tons of feed products with roughly 1/4 of what we produce and merchandise getting exported. Not only for just dried distillers grains, but we are in the top 5 of all shippers of ag products in containers. This breadth gives us flexibility and resilience in a dynamic market and gives us the visibility to the global trade. Financially, the segment is delivering strong results.

One thing to call out is the adjusted pretax income, you can see the overall financial impact attributable to ANDE and you can see what the impact of the minority share transaction has and what it means to have 100% of the earnings. These numbers underscore the strength of our integrated model and disciplined execution. Looking ahead, our strategy remains clear leverage scale, optimize operations and capitalize on the growing demand for renewable fuels.

Our Eastern footprint provides a strong competitive advantage in North America. The strategic location of our ethanol plants drives sourcing efficiency and ensures proximity to feedstock, which translates into cost savings and operational reliability. We have access to all active North American low-carbon fuel standard markets, positioning us to capture premium opportunities as demand for low-carbon solutions accelerates. A key differentiator that I want to point out is our supply chain strength. The majority of our corn is sourced directly from farmers, giving us superior cost control and visibility. This direct relationship enhances our ability to manage volatility and maintain quality.

Our complementary and efficient distribution network includes ethanol plants, ethanol transloads, renewable feedstocks terminals and this infrastructure connects growers and end users seamlessly, reinforcing our ability to deliver value across the value chain. In short, our footprint and integrated network positions us to capitalize on market growth while maintaining cost control, leadership and operational flexibility. The main takeaway here is we're so much more than an ethanol producer with 4 plants. Our footprint and reach extends much further both upstream and down across a broad commodity slate.

Our Renewables segment is built on 3 core capabilities. Ethanol production, co-product sales and merchandising. Now let's break each of them down. First, ethanol production. We own and operate 4 ethanol plants that produce fuel-grade ethanol from corn primarily used for blending with gasoline to reduce emissions. We're also investing in carbon intensity reduction, plant efficiencies and carbon capture technologies to enhance our profitability. Second is co-product sales. Ethanol production generates valuable co-products like dried distillers grains for animal feed and distillers corn oil for the bio-based diesel market and also animal feed. And we also capture CO2 for use in food, beverage and industrial applications, creating additional revenue streams.

Third is merchandising. We merchandise third-party ethanol through strategic partnerships and supply renewable feedstocks to the bio-based diesel markets. We're a major supplier and exporter of DDGs, which positions us well in the global feed markets. Finally, our collaboration with agribusiness ensures supply reliability, price risk management and logistics for moving corn to the ethanol plants. We also provide co-product export logistics and offer comprehensive market analysis to support our operations.

And to highlight a specific example of how renewables is working with Agribusiness, we're in the final stages of building out additional tankage for our renewable feedstocks business by leveraging the capabilities of one of our Skyland assets in Ulysses, Kansas. This integrated model allows us to maximize value across the supply chain while meeting growing demand for renewable fuels and feedstocks.

Next, we want to show you a simplified breakdown of what drives our results in renewables. The left side is educational, but the right shows the breakdown of where the revenue from the ethanol plants come from. One kernel of corn delivers significant value through multiple outputs. From each kernel, you can see the breakdown of what becomes ethanol and the various co-products. These co-products are critical to our integrated model. And when we look at revenue contribution, ethanol accounts for about 77% of the average plant revenues, while the co-products make up the rest. This diversified revenue stream strengthens our resilience and profitability.

Every kernel we process generates multiple revenue streams and creates additional value beyond the ethanol production. It's not just the ethanol and the corn price that determines plant profitability. It's also the co-products and 23% of the revenue comes from the coproducts from the plants, which has a meaningful impact on our results. Bill introduced you to these in his macro trend slides, but I'm going to do a deeper dive. The fundamentals behind ethanol are supportive, and we're well positioned to capitalize on the favorable long-term tailwinds. We're seeing increased domestic consumption through E15 and higher blend rates globally, fueling export growth.

Biofuels policy, including a favorable RVO -- favorable proposed RVO and 45Z is creating momentum, and we have strategic alignment with the renewables tailwinds. With the global push to decarbonize, we're well positioned as a low CI producer with scalable capacity. Our flexibility across ethanol, renewable feedstocks and CO2 utilization gives us a unique edge. And in an evolving biofuels policy landscape, we're built to thrive regardless of the policy scenario because we are in the top tier of all ethanol producers, which allows us to manage through market fluctuations that many of our competitors cannot.

We continue to stay active with industry groups in shaping policy in Washington, D.C., and we're active members of one of the major biofuels policy groups and hold a seat on the Board of Directors. With the increasing demand for low CI solutions, we feel we're well positioned for growth and our deep customer relationships support multi-commodity sales and recurring demand. An example of this would be our supply chain value with a large refiner where they are a consistent customer of ethanol sales from our third-party trading business and also our ethanol plants. They're also one of the larger offtakers of our low CI feedstocks for the renewable diesel plants.

Consolidation and scaling in renewables, we operate large-scale efficient assets that stand out in a consolidating industry and our vertical integration and strong market knowledge differentiate us from our peers. We are the fifth largest ethanol producer in the U.S., and we win in renewables because of 3 key strengths. Scale, location and integration.

First, scale. As a top 5 ethanol producer, we focus on the continuous improvement and operational excellence. Our deep relationships across the supply chain allow us to merchandise ethanol and co-products effectively, leveraging our production assets and providing superior service. We also have expertise in supplying corn oil and other renewable feedstocks to the bio-based diesel markets.

Second is our location. Our ethanol plants are geographically advantaged, close to corn production with most corn purchased directly from farmers, which lowers our costs. We have strategic access to end users through logistical expertise and third-party terminals. And our plant locations position us well for future carbon capture opportunities. For example, we're advancing with our project to sequester carbon at our Clymers, Indiana facility and we're in the early stages of similar projects for sequestration and utilization at the other plants in our network.

Third is integration. We operate across the entire value chain from farm gate to tank, enabling control and efficiency. Our direct grower relationships ensure feedstock quality and security of supply. We also leverage unique synergies with our Agribusiness segment. Integrating grain sourcing and logistics to enhance margin and agility. We're one of the few companies in the space that is vertically integrated. We have proven ability to monetize sustainability programs, including traceability, LCFS credits and carbon value streams. These advantages make us a leader in renewables, positioned to deliver strong results and capitalize on the growing demand for low-carbon solutions.

As Bill laid out earlier in his presentation, we have 3 pillars: Accelerating, optimizing and delivering. Similar to Weston, I'm just going to cover the first 2. On accelerating growth. We're expanding at our established plants and businesses. We're building on what works and scaling it. And we're optimizing margins. We're focused on commercial and operational excellence to improve profitability and efficiency. And precision and execution are key to unlocking margin improvements. Under the accelerating pillar, we are well positioned to unlock growth through low CI opportunities in renewable feedstocks. Our strategy is built on scalable platforms, policy tailwinds, disciplined growth and innovation, all driving long-term value creation.

Starting with our strategic growth levers. We have policy-driven momentum. The 45Z tax credit provides scalable financial uplift by lowering the carbon intensity across our operations. E15 adoption and a strong RVO proposal are expanding market access for ethanol and renewable feedstocks. We're actively growing in North American LCFS markets, unlocking new revenue streams. And we're disciplined in M&A execution. We acquired the full ownership of our ethanol plants and we're enhancing operational control and increasing margin potential.

Future acquisitions are evaluated rigorously based on geography, scale and strategic fit, ensuring every move drives shareholder value. Driving through growth through renewable feedstock innovation and expansion. We're aggregating and blending low CI feedstocks to unlock profitable growth. I gave you the Ulysses example, but we're also leveraging the more than 25 transloading and blending locations to grow that business. Plant expansions and improved corn oil yields are boosting performance. We have and continue to implement projects at our plants to improve on corn oil and ethanol yields.

And our merchandising capabilities are expanding. We're creating new commercial opportunities. We continue to lean into our renewable feedstocks group to help grow that business. An example of this organic growth has come via the handling of all classes of fats, oils and greases. It gives us insight into bio-based diesel demand, RIN generation and the collective insight into the entire feedstocks balance sheet. This knowledge allows us to leverage multi-commodity RINs and biofuels positions, making us truly unique in the biofuel space.

Next, we're unlocking value through the 45Z tax credit and carbon projects. We're optimizing the 45Z tax credit. And today, all of our plants are qualifying for the 45Z credit in 2025. And with the removal of the indirect land use change or ILEC penalty in 2026, all of our plants are going to be in an even better position to capitalize on the benefits. Efficiency projects like corn oil skimmers and increased fermentation are also generating additional uplift. In carbon capture and sequestration, I mentioned it earlier, but this next point is really important. And through our stage gate process, we're advancing with our Class 6 well permit at our Clymers, Indiana facility. And we're also evaluating other sequestration and utilization opportunities across our network.

Our integrated strategy, combining policy alignment, operational excellence and innovation positions us to lead in the renewable space. We're not just adapting to change, we're shaping it and delivering sustainable, profitable growth for our investors. Next, we're focused on margin optimization through a dual approach, strategic commercial leverage and operational excellence. This disciplined execution is driving stronger financial performance and positioning us for scalable growth. Beginning with our commercial leverage.

On our merchandising efficiencies, we're enhancing margins by leveraging complementary volumes of ethanol, co-products and renewable feedstocks. As I mentioned before, the amount of feedstocks, ethanol and co-products that we merchandise and trade over and above what we grind or produce enhances our margins by having superior market knowledge and it enables us to better position ourselves. In addition, our logistical expertise allows us to control product flows to destination, maximizing plant level profitability. And we're strengthening our commercial capabilities. We're investing in systems and talent and our cross-functional collaboration between commercial and operational teams is driving smarter decisions and stronger market presence.

Operational excellence at the plant level. We're improving our efficiency and our output. We're increasing production through targeted projects and added capacity. Through technology and experienced teams, we're improving efficiency and lowering our carbon intensity scores. Consistent production and minimal downtime are key to maximizing profitability. This point is very important to understand. But for every down day at one of our Eastern plants, it's equivalent to $1 million in lost revenue. So you can see how important it is to minimize the amount of downtime at the plants. And through all this, we're managing our controllable costs. We're extracting more value from vertically integrated corn originations and focused cost discipline is embedded into our operations.

Our strategy is clear, optimize margins through commercial and operational excellence. And with disciplined execution, enhanced capabilities and a strong asset base, we're delivering higher returns and unlocking long-term value. As a wrap-up, we're executing with discipline, scaling with purpose and innovating with intent. Our advantaged assets, strategic M&A and alignment with low-carbon trends positions us to lead in a rapidly evolving renewables landscape. With favorable policy tailwinds and a clear growth strategy, we're unlocking long-term value, not just for our business but for our investors. The opportunity ahead is significant, and we're ready to capitalize. Now I'll kick it over to...

Okay. Before we jump into Q&A, let me take a quick moment to outline the process. We will have a team member circulating some microphones. So if you'd like to ask a question, please raise your hand and we'll bring a microphone over to you. Before asking your question, please state your name and your firm. And for those who joined virtually, you can submit questions online. We'll be monitoring them throughout the session. And as a reminder, if we don't get to your question during this Q&A session, we'll have another session at the end, and our leadership team will be available during the lunch as well. So let's get Bill, Weston and Mark on the stage and get ready, so we can take the first question.

Pooran Sharma with Stephens. First, I wanted to say thanks for putting the presentation together. A lot of great information here. Maybe I wanted to start out by understanding a little bit more about the resegmentation. And you guys had originally talked about getting synergies commercially and also maybe cost-wise. And I think you detailed it here a little bit about how you're able to kind of connect from the farmer to kind of the end user in a better kind of fashion under the new segment. So maybe just to start off, could you maybe let us know where you are kind of in this journey? How much room you have left to go? Like what inning are you in, so to speak?

Sure, Pooran. I'll start with that and hand it over to Weston. It's a good question. And we're in the early innings. The concept of bringing the basically, the fertilizer and trade business together has proven in its first year to be the right decision. We're seeing a lot more cooperation, consolidation, idea generating. We have seen some synergy cost savings, which we expected early on, but that's not really why we did it. It's continuing to link that farm gate to the ultimate end consumer. And we all understand you only grow one crop per year. So the opportunities exist for each crop here. And we've seen a noticeable step-up in that interaction in the first year and think that it's going to continue to grow kind of on a multiplying effect as we move forward. Weston?

Yes. I would just add to that. There's a couple of pieces that I think are really intriguing as we've gone through this for the first year effectively. One of the most important ones is our internal communication and coordination across the groups. And by having this kind of unified approach to how we serve our customers with that integrated model, the risk management services that we provide, fertilizer inputs, grain merchandising, the collective of those and how we are having from a commercial perspective, our teams think about not just their one particular segment of that, but the overall segment of that really helps us to drive that mindset.

And I really think that mindset is that same customer-first mindset that I mentioned earlier. It helps to fuel what we're trying to deliver value for. The other piece, and I think Bill is exactly right, early innings. Are there some things that we look at from an integration standpoint? Absolutely, and we're driving on those across our processes and our systems.

Ben Mayhew from BMO Capital Markets. I was hoping you could just touch on where your CI score is right now, your plans to invest in lower CI score over time and just kind of how that time line -- how you think about that time line? And ultimately, where can you get these plans? How low can they go?

That's a good question, Ben. In terms of where our CI scores are currently, I think that was the first part of your question, correct. All 4 plants achieved 45Z tax credit. So as we went through the presentation, they're all below 47.5; today. The opportunities, again, as we mentioned, and I'll let Mark give you some specific examples. But carbon sequestration is obviously the #1 goal. There's also carbon utilization opportunities that we're looking towards. Those are long term. And from our perspective, it's more about the longevity of the projects than just sprinting to capitalize on 45Z. There's 45Q that can fall in behind that. We have no idea on an extension of 45Z.

But, so with that, there are a number of efficiency projects that we're working on that I hope you'll understand from a competitive nature, we don't feel compelled to share those today. But I'll let Mark address some of the more broad scale ones.

Yes. You covered it well, Bill. As Bill said, we're qualifying for the 45Z today. As I mentioned in the presentation, with the removal of the ILEC penalty, we'll able to further be able to capitalize on the benefits from the tax credit. And then as Bill touched on, the biggest lever that we're focused on that we'll be able to lean into in the future is our sequestration opportunity at Clymers, Indiana. And we're also evaluating other opportunities for utilization and sequestration across the other plants. In addition to that, again, there's efficiency projects and ways to leverage lowering the CI. This is not something that's new to The Andersons. I mean we've been doing it with our Denison, Iowa plant and evaluating ways to lower our carbon intensity in California and the other LCFS markets. So we'll continue to leverage our in-house expertise there and look for ways to get below the next tier of the credit.

Kristen Owen from Oppenheimer. When I look at the priorities that you've outlined between growth and optimization and the bridge from 2026 to 2028 that you've given us a preliminary look at. How much of that bridge is dependent on some of the growth initiatives, whether that's organic or inorganic? And how much of that should we think about coming from the optimization of the current footprint that you have?

It's a good question. The optimization and the growth opportunities are going to be kind of hand in hand, right? We always want to be the most efficient, lowest cost producer, whether it's in the Agribusiness segment or in the Renewables segment. I would tell you the bridge to 2028, that capital is deployed. That 2028 number does not include the need for substantial M&A activity. As I mentioned, and Brian is going to hit on it, so maybe we can come back to your question later, is we've deployed a lot of capital over the last 4 years. And we are now in a position over the next 3 years to really take advantage of that. So the majority of it is going to come from the execution of the capital we've deployed along with that optimization piece of always trying to be better than our competitors at what we do.

Ben Klieve with The Benchmark StoneX. Great presentation so far. Weston, I had a question for you, specifically on the Port of Houston initiative. I'm wondering if you can elaborate a bit on, first of all, the kind of status of that expansion. Everything seems to be on track, but just like to hear that reiterated. And then talk about kind of the level of investment that's gone in. And then also the expectations that you guys have embedded within your forward outlook for that project around the excess supply of soy meal and kind of your assumptions for the durability of your profit margin coming out of that facility given the abundant supply throughout the country.

Yes. Great question. Thank you for that. So our project is on track. We should be complete with that in the third and fourth quarters of 2026. This is a substantial project at our terminal there. So that's from a time line perspective. From a capital expenditure standpoint, I think Brian has mentioned this previously, but it's in that $85 million range -- I'm sorry, about $80 million range for that project. And from the durability of our margin profile, one of the things that's really important for us is to connect our domestic soybean meal business with our Port of Houston and the opportunities for merchandising and marketing that soybean meal globally as it will have to clear through exports.

So that's really the interconnected nature of our domestic teams, our terminal team as well as our international destination marketing teams. So we believe that there'll be a substantial excess supply based on the SNDs for soybean meal, and we think that we'll have very durable returns going forward.

Weston, I think we've articulated with about a $70 million project.

Thanks for the clarification.

Pooran Sharma with Stephens again. Just wanted to ask about renewables. And I know you said the bridge to 2028 would require little M&A. But just wondering, as you're looking out there, what is the price you guys are kind of looking for? And I ask this because when you guys took in the assets from Marathon, I think you paid about $1.54 per gallon, but those are your own plants, you're familiar with them. Maybe you could argue that there could be a premium there.

At the same token, we've seen some plants sell for as high as $3.23 a gallon. So just wondering if you can maybe update us on the landscape, what you're seeing out there? And maybe if you could give us maybe like a target range in terms of what kind of purchase price works for you guys in regards to ethanol.

I'll start with that. The Andersons didn't pay $3 a gallon or do I think we will anytime soon? The -- it's a really good question because at what value do you put on 45Z opportunities through today is through 2029. What value do you put on the sequestration? So a plant that has a clear path to sequestration is geographically benefited, as Mark was talking about quality of corn, quantity of corn, the ability to be the right technology and a large plant. That plant has substantial more value in a cents per gallon or dollars per gallon than a 55 million gallon destination plant.

So I think it's very difficult to say here's a range on numbers. But we feel very confident, and you are correct on the price that we paid to buy our partner out for TMH. And we feel very comfortable in saying we would do that again. So if that wants to be your low bar, I think I started with the high bar, and I know that's a wide range. But plant values today have significant value if they check all the boxes. If they don't, unfortunately, that slope is very steep for the declining value. So hopefully, I answered that question. I know we'll have a lot more renewable questions around this after Brian gets done with the financial presentation. But that would be the short answer to your question.

Bill, maybe we'll take one online question before we take our break to stay on time. Under your strategic pillars, you referenced adjacent opportunities. What adjacencies do you find most compelling? And what is expected timing for expansion into those areas?

So the easiest way for me to answer this is to rewind back to 2006 and '07. The Andersons had no understanding of producing ethanol. They knew how to buy corn. The Andersons didn't know how to sell DDGs or distilled corn oils at the time. The Andersons today has such a breadth. As you look at those 2, and I'm guessing there were people in the room that were surprised, the size of the company that we have built and the breadth and depth of it. I think that potential adjacencies that are tied to our core competency.

And I tried to -- people may ask, why is the CEO explaining what they do? It's to this question is our core competencies around commodity risk management, logistics expertise, customer service. If we can find investments in adjacent markets that allow us to continue to develop those, we have a lot of confidence. Timing is a good question. We've looked at opportunities over the last 3 years, one of them very seriously. And we decided it wasn't the best use of our capital.

Again, our focus is on agribusiness and renewables. But if the opportunity comes, as we showed that pie up there today, having a third slice of that pie, there's nothing wrong with it if it's adjacent to us and allows us to utilize our core competencies.

Okay. In the essence of time, we'll conclude our first Q&A session. We're going to take a short break and reconvene right at 11:00. Thanks.

[Break]

All right. Good morning, everyone. I met some of you walking in. If you haven't met me yet, my name is Sarah Zibbel. I am the Chief Human Resources Officer for The Andersons. And I'm fortunate to lead the people and culture agenda for the organization. What I'm going to spend time on today is really what I feel differentiates us in the marketplace, and that comes down to our people and culture, ultimately, our capabilities. My background is actually in glass manufacturing. I spent the last 20-plus years at companies like Owens Corning, Owens-Illinois and most recently, the CHRO for Libbey Glass.

And so when this opportunity presented itself, I was a little nervous to leave an industry that was well known, but I was so excited about the growth potential of this organization, underpinned by such a strong base of talent and culture to work from.

So what a great opportunity for somebody like myself. Three things I plan to cover over the next few minutes. So first is how we really spend time aligning our people, process and systems to relentlessly focus on operational excellence to unlock our strategic growth.

I'll also share some details on how we continue to differentiate through our high-performing talent and execution-focused culture. Importantly, we are maintaining strong focus on attracting, developing and retaining top talent.

So let's start with a little bit of a snapshot on our people. We have strong stability in our talent of 2,600 employees. While the market is experiencing what we're hearing to be this promotion recession, we're seeing something very different at The Andersons. In fact, people are being promoted at higher rates. Just in this last year, we had 40% of our employees receive promotions into higher leadership responsibilities.

This, combined with very strong tenure and turnover allows us to ensure a strong, stable foundation of talent to build from as we think about acquiring new talent or even new organizations through M&A. Grounded in our statement of principles, it's our talent that differentiates us, bringing better performance and better outcomes for our customers and our business.

As Bill touched on earlier, we've established an operating model that brings transparency and alignment to the core elements of our strategic and cultural commitments as an organization. This is a tool that allows us to sharpen our focus across people, process and system priorities.

So if you look at the model, it's really a blueprint that aligns all key stakeholder needs, leveraging our strong core, enabling scale and agility as we continue to strategically grow. There are different layers of focus in the model. That's intended to build from the center core values to the middle strengths and ultimately to our strategic commitments as we know that is what drives our long-term value.

So if we work from the inside out, the model is rooted in a purpose that's unwavering to our commitment to service to all of our key stakeholders. So we remain true to our core statement of principles and service to our customers, our employees, the communities where we work and live and of course, our shareholders.

If we move to the center circle, these are our shared commitments. They provide clear expectations on our values, behavioral norms as well as our operating principles. These norms activate and accelerate our mission, our values as well as our strategic priorities.

When we align these commitments with clear initiatives and leadership, we create clarity for the organization, allowing us to speed up things like M&A integration as well as providing that anchor during times of uncertainty. Our strengths are what differentiate us in the marketplace. These are recognized capabilities that drive long-standing relationships as well as providing a strong foundation for future partnerships.

Our strengths remain focused on being that customer-focused first, believing in our core expertise, having a willingness to be nimble while allowing our employees to be entrepreneurial to better serve our customers.

So taking you to the perimeter of the model. This aligns our talent to the marketplace, driving that outside-in mentality across the organization, ensuring we're always proactive in evaluating what's ahead while remaining laser-focused on our results and financial targets that Brian will elaborate on later.

And as part of our annual strategic planning process, we are diligent in assessing our incentive programs to ensure we are aligned for success. In addition to market competitive base pay and benefits, all 2,600 of our employees have a direct connection to business performance through our annual incentive programs.

Both hourly and salaried participate in short-term incentive programs focused on operational excellence across the enterprise as well as their business unit. Our industry-leading commercial talent are incentivized to drive growth and profitability within their business units.

This drives that strong entrepreneurial spirit and sense of ownership that has proven to be a key differentiator in the attraction and retention of commercial talent. And our top 85 level leaders also participate in a long-term incentive program that helps drive that deep commitment to share appreciation.

We're always thinking about the best ways to preserve, to protect and to grow what we know differentiates us in the marketplace. To do this, we've established programs that enable us to be intentional in preparing our talent for the future with a continuous improvement mindset. We have several leadership programs that enable us to build strengths and skills across the executive teams through cohort-based programs, cross-functional networks that also help increase accountability and accelerate the development of our leaders.

West and Mark both touched on this. We are diligent in fueling that pipeline of talent. We're fueling the entry-level feeder roles across commercial operations as well as enterprise functions. This has enabled us to create internal networks that build strong collaboration for information sharing, peer-to-peer coaching as well as strengthening our culture overall.

Since 1947, it's been our people that has established a strong culture of performance, which is rooted in an ownership mentality across the company. We're proud to say that 100% of our employees in the U.S. own Andersons' stock, driving a vested interest in the value creation across our workforce.

We also see best-in-class engagement survey participation. We leverage this program as well as many others like our employee resource groups, CEO luncheons and other feedback mechanisms to ensure that we're meeting the workplace where they are and providing an environment where they can truly thrive. Overall, we take pride in our ability to serve our customers and help feed the world, and we love what we do.

In closing, I hope I was able to shed some light on what truly differentiates us, and that's our high-performing talent and purpose-driven culture. To further reinforce our culture, we remain committed to attracting, retaining and developing our top talent pipeline for the future. Importantly, we continue to leverage that operating model to strategically align our priorities and capabilities.

And with that said, I'm going to hand things over to my colleague, Brian Valentine, our Chief Financial Officer. Thank you.

Thanks, Sarah, and good morning, everyone. As Sarah mentioned, I'm Brian Valentine and serve as Chief Financial Officer at The Andersons. I've been with the company since 2018, so it's been about 7.5 years now. Prior to that time, I spent 20 years with The Lubrizol Corporation, which is a specialty chemicals company based in Cleveland, Ohio.

The company was a stand-alone publicly traded company until 2011 when it was acquired by Warren Buffett and Berkshire Hathaway. I served in a variety of finance and accounting roles over the years. I was Treasurer when the company was acquired and then became CFO and served in that role for 6, 7 years before joining The Andersons.

So now that the team has provided some insight about the company, our business group strategies, and we talked a little bit about talent, we wanted to provide a financial overview, including some history, talk a little bit about our key focus areas and then share our thoughts about capital allocation going forward.

So beginning with some of our key messages. First, The Andersons has transitioned into a North American ag and renewable fuels company over the past several years. We've taken steps to diversify our portfolio with a complementary mix of assets, which really should enable us to deliver better, more resilient performance through various market conditions.

Second, our balanced portfolio enables us to generate strong operating cash flows even though we operate in cyclical businesses. And we expect this to continue to be the case going forward and in fact, increase as we execute on the strategy and projects that you heard Weston and Mark speak about today and also take steps to optimize across the organization.

Lastly, we're focused on driving long-term shareholder value by utilizing our strong balance sheet to fund growth in a disciplined and responsible manner and also rewarding shareholders. Now this next slide provides an overview of our historical financial performance. The last 5 years have been solid for the company. It included record performance in 2022 and 2023 at the peak of the ag cycle with strong demand, high commodity prices and volatility.

Now over the last 18 to 24 months, we've seen U.S. ag markets shift into oversupplied carry markets. But throughout this time, our teams have continued to execute well, and our diversified portfolio has enabled us to offset some of these market headwinds, proving that the strategic combination of The Andersons and Lansing Trade Group made us a stronger and more well-balanced company with a complementary mix of grain assets and merchandising profit centers, while at the same time demonstrating that efficient and well-run ethanol operations can be profitable in various market conditions.

Now on the left-hand portion of this slide, you can see that our trailing 12 months gross profit was about $700 million, which was just above the 5-year average. Moving across to the right, you see that our trailing 12 months adjusted pretax income is below the 5-year average given the weaker ag environment.

Now you may be wondering why earnings are down when gross profit is, in fact, up. This really relates to the fact that a larger portion of our earnings over the past year or 2 have been driven by our ethanol plants. Now both Bill and Mark spoke about our recent acquisition of our partner share of these plants. Prior to that transaction, we did have a controlling interest in that joint venture. So we consolidated it into our results, which meant we had 100% of the gross profit, but from an earnings before tax perspective, that was only our 51% share of those earnings.

Now going forward, we will have access to 100% of the earnings and cash flow of these ethanol plants, which is just one more reason why this was such an attractive opportunity for us. Turning then to our balance sheet and cash flows. This slide summarizes some of our key balance sheet and cash flow metrics as of September 30.

The first 3 lines on the left reflect our cash, readily marketable inventories and short-term debt. Now our working capital and the related short-term borrowings can move around significantly given the seasonal nature of our businesses. This is particularly true in the grain markets when you think about the timing of the harvest, but it's also true in our fertilizer business when you think about the timing of the planting and fertilizer application seasons.

There can also be sizable impacts due to changes in commodity prices through the ag cycle. So it's also important to note, though, that a significant portion of our working capital represents readily marketable inventory. And basically, these are grain inventories that are easily convertible to cash. This inventory is mark-to-market and can bring volatility in both our borrowing needs and our reporting.

Now as you could see, as of September 30, our readily marketable inventory was about $630 million, which is almost $0.5 billion more than our short-term debt of $140 million. And it is consistently the case that readily marketable inventory is significantly higher than our short-term debt.

As a result, a key metric for us is cash flow from operations before changes in working capital. We believe this is a much better cash generation measure for our business. This is shown in the upper right-hand portion of the slide. Now similar to earnings, you could see that the trailing 12-month number is below the 5-year average, again, given the ag market backdrop and trade policies. But this number is consistently in the range of $300 million plus. As you could see, the 5-year average is about $310 million, $312 million, and we expect this to increase going forward.

Now shifting to the lower left-hand portion of the slide, you can see we have plenty of available liquidity. We have about $2 billion in available credit. We have a strong supportive bank group that includes several large commercial banks as well as the farm credit system. We have long-term debt of about $630 million currently, and our long-term debt-to-EBITDA is roughly 2x.

And when we think about our capital structure and the related leverage, we tend to focus on long-term debt to EBITDA. As I mentioned, our short-term debt can be more cyclical and seasonal in nature as we fund readily marketable inventories and margin calls. And so long-term debt-to-EBITDA is a much better measure. We have a stated target of long-term debt-to-EBITDA below 2.5x.

And the chart in the lower right-hand portion of the slide shows some history. Now back in 2019, we levered up at the time of the completion of the Lansing acquisition. And at that time, our long-term debt-to-EBITDA was north of 4.5x. But then through a strong focus on cash flows as well as working capital management, combined with the proceeds of the sale of the rail business, enabled us to achieve our stated target by the end of 2021.

And since that time, you could see that we've been consistently below that level. And as I mentioned, we're currently at about 2x. We have a balance sheet that is well positioned to support additional growth, both from a capital and an M&A perspective.

So then let's talk a little bit about capital allocation. This slide provides a breakdown of the capital deployed over the last 3 years. Now as you can see in the center, it shows the total of about $1.1 billion with roughly 45% being allocated to capital expenditures, another 45% utilized for acquisitions and the remaining 10% return to shareholders.

Now going forward, our key focus areas are expected to be similar. From a capital expenditure perspective, we're focused on organic growth projects that are close to our core and should help us accelerate growth. And you heard Weston and Mark both provide examples today across the Agribusiness and Renewables segments.

Our 3-year average capital expenditures have been about $170 million with roughly half of that being growth and the remainder being maintenance. Now this year, we do expect total capital expenditures to be closer to $200 million. And over the next few years, we expect capital expenditures will be in the range of $200 million to $225 million per year, again, including a mix of growth and maintenance.

From an M&A perspective, the largest acquisition we've completed during the last 3 years was the purchase of our partner share of the ethanol plants. M&A also included, though, our investment in Skyland Grain as well as some other smaller bolt-on transactions.

We continue to evaluate projects in our growth pipeline, and we are focused on finding the right deals at attractive valuations that align closely with our strategy. With regard to returning cash to shareholders, we've consistently paid a dividend with modest growth over time, and we expect this to continue to be the case going forward.

We do also have a $100 million share repurchase authorization in place. We tend to take an opportunistic approach, and we've repurchased roughly $15 million in shares this year.

Next, let's talk a little bit about our approach to investments. We do utilize a stage-gate process to ensure that there's a thorough review of capital expenditures and investments. It's a process that we refer to internally as The Andersons growth process. And it includes a number of stages, including the development of detailed business cases, financial modeling, project approvals and then, of course, execution and integration.

The pipeline is reviewed on a regular basis with leadership to ensure alignment with all of our goals and objectives. Now when looking at potential investments, we evaluate a number of strategic filters, including the strategic and cultural fit. We also look at our ability to meet customer needs and help customers solve problems. And you heard Weston provide an example in that area today in the pet food space.

We also look at alignment with our geographic footprint. Lansing is a great example. If you think about it, The Andersons was traditionally more Eastern grain belt intensive, more asset-intensive. Lansing was more Western asset footprint, but more of an asset-light and more trading and merchandising.

So very complementary, both from an Eastern and Western perspective as well as trading and merchandising and assets. More recently, Skyland was another good example, where that was the region of the country where we already had a lot of trading and merchandising activities, and this helped round out our asset footprint in that region of the country.

We also look at whether it provides scale, differentiation or the ability to move up the value chain. And an example here is an ethanol where we're vertically integrated, given that we originate the corn, we produce the ethanol and the related co-products and then we market the finished products.

Now from a financial perspective, we target transactions that are immediately accretive to both margins and cash flows and to earnings per share within 2 years. From a return perspective, we target a return on invested capital that is at least 200 basis points above our weighted average cost of capital.

Now the number of projects in our pipeline changes over time. In general, our teams evaluate over 100 different opportunities each year. We really want to ensure that any transactions and investments align closely with our strategy. So we have robust due diligence and integration processes to ensure that we have a greater likelihood of success.

Now a recent example that you've heard both Mark and Bill speak about is the acquisition of our partner share of the ethanol plants. From our perspective, this is a transaction that aligns perfectly with our strategy. It meets all of our stated criteria. And from -- in our view, these were some of the best assets potentially available to us.

These are plants that we know well and in fact, already managed. This transaction should provide a variety of financial benefits. It will be immediately accretive from an earnings per share perspective, and it provides full access to the cash flows of these plants.

So previously, when they were held in the joint venture, the cash would have to be distributed to the partners in the form of dividend distributions. Now we have full access to that cash flow and in fact, are already sweeping it on a daily basis as part of just our normal treasury operations.

There's also a supportive biofuels policy backdrop currently. And as you heard, we do expect to benefit from 45Z tax credits. And so the table on the right-hand portion of this slide shows the potential of these tax credits over the next few years. And at our third quarter earnings call, we spoke about our 2025 expectations for tax credits. All 4 of our plants qualify for the first tier of tax credits in 2025, which results in a benefit of up to $0.10 per gallon.

As we noted at that time, we expect credits this year to be in the range of $30 million to $35 million with $10 million to $15 million of that coming in the fourth quarter. Now starting in 2026, provisions in the recent tax legislation remove the indirect land use change penalty.

As you heard earlier, this is expected to reduce the carbon intensity scores by between 5.5 and 6 points, which would enable us to qualify for the second tier of tax credits, which could result in a benefit of up to $0.20 per gallon.

Now we produce roughly 500 million gallons of ethanol at our plants each year. So as you can see, the value of these tax credits could potentially be in the range of $90 million to $100 million each of the next few years and aggregate more than $300 million over the next few years, providing significant additional cash flows to reinvest in our businesses.

Next, we wanted to spend just a minute on shareholder dividends. We have a track record of more than 25 years of paying dividends through various commodity cycles. Now when we evaluate our dividend, we take into account a number of considerations, including peer group yield comparisons. We look at the portion of our cash flows being allocated to dividends as well as the payout ratio.

As you can see on the slide, we've had a dividend growth rate of 12% over time. We're really proud of our dividend track record. Okay. So before we move on to the longer-term earnings per share targets, we wanted to spend just a minute or 2 discussing how we'll drive long-term value creation.

So if we start with some of the growth enablers, we do have a diversified portfolio that includes a complementary mix of asset and merchandising profit centers, combined with processing assets, the largest of which is in Renewables. We are closely aligned with our customers. As Weston mentioned, we have deep relationships with approximately 25,000 active producers. And we also have strong relationships with end users.

We're focused on executing our strategy in both segments through a variety of growth projects and acquisitions, many of which you've heard about today. With regard to some of our competitive advantages, we do have high-performing ethanol operations that are vertically integrated. And you've heard this theme throughout the day, and Bill talked about it earlier, we -- the corn that we originate into our plants is roughly 165 million bushels that is used for ethanol production.

This compares to total corn traded by our teams across the enterprise of roughly 800 million bushels per year. This provides a lot of benefits for us from a cost perspective and also enables better inventory management because if you think about it, there's also corn being traded and merchandised throughout our system.

So this allows us to run inventory just in time at certain times of the year, knowing that if for some reason there's going to be a short, we can pull it from somewhere else within the system. The teams are also able to leverage their strong market knowledge. We have robust risk management processes. We have a risk management committee that meets on a regular basis that includes an experienced team with the knowledge and expertise to navigate various market conditions.

From a financial perspective, we do generate strong operating cash through the cycle. And as mentioned, going forward, we will have full access to 100% of the ethanol plant cash flows. We have a well-capitalized balance sheet that provides us the flexibility to fund a variety of growth investments. However, it's really important to note, we will remain disciplined in our approach.

We are focused on driving long-term shareholder value, okay? So last, we wanted to provide an update on our longer-term growth assumptions, growth rates and including assumptions. Now as you can see, and Bill mentioned this earlier, we target a run rate earnings per share of $7 per share coming out of 2028.

This would represent a compounded annual growth rate of more than 35% from 2025 to 2028. Now these targets assume a mid-cycle type marketing environment and commodity prices, stable demand for low-carbon intensity fuels and steady export flows. So if we think about this relative to the environment that we've been operating in, in 2025, it would imply some improvement in the operating environment for Agribusiness, but potentially offset by more normalized margins in the Renewables segment.

With regard to the mix of growth, it does include the organic growth projects and all of the other acquisitions, things that we've heard us talk about today, but it does not reflect incremental M&A investments. For the tax credits, it includes the 45Z tax credits that we outlined a few slides ago.

These tax credits will be reported above the line, so they will be included in EBITDA, earnings before tax as well as in earnings per share. And of course, they'll provide us with additional cash flows to redeploy into future growth investments.

With regard to capital allocation, we're assuming somewhere in the range of $200 million to $225 million a year in capital expenditures. We do expect to continue with a modest growth in our dividend. And again, we target long-term debt-to-EBITDA below 2.5x.

Now the bottom portion of the slide provides a summary of some of the key projects. In Agribusiness, we're really focused on the successful completion of the growth projects that you heard about today, plus various integration and optimization efforts. In Renewables, growth takes into consideration the impact of the ethanol plant acquisition, future plant investments as well as the 45Z tax credits that we talked about.

Now many of these are the same factors that give us the confidence in our ability to achieve the $4.30 earnings per share run rate target by the end of next year and then further support our path to $7 by the end of 2028. So then turning to our key takeaways. First, the company has transitioned into a North American ag and renewable fuels company over the past several years. We've taken steps to diversify our portfolio with a complementary mix of assets that really should enable us to better -- deliver better, more resilient performance through various market conditions. Second, our balanced portfolio enables us to generate strong and increasing operating cash flows as we bring strategic growth investments online and also take steps to further optimize across the enterprise.

Last but certainly not least, we're focused on driving long-term shareholder value by utilizing our strong balance sheet to fund growth in a disciplined and responsible way while also rewarding our shareholders. We're really excited about the positioning of our business as well as our growth strategy. So we thank you for your time and your interest in The Andersons.

And with that, I'll turn things back over to Bill for some closing remarks.

Okay. We'll wrap this up with some closing comments. I want to thank everyone for your time today, your interest in the company. It's truly appreciated. Hopefully, you've been able to gain a better understanding about what The Andersons are doing today and what we plan to be doing in the future. The excitement of the management team that you saw today, trust me, it's conveyed throughout the entire organization. I've been in this industry since 1989. And I honestly cannot remember having a company in the position that The Andersons are today.

The strength of our balance sheet, our employee base, our management team and quite honestly, the potential that we have for both Agribusiness and renewables. We have a bipartisan biofuels policy that supports both of our business segments from increased demand for U.S. [ CRNA ] ag products to renewable fuels. And as you've heard today, we are committed to redeploying capital in our successful businesses. And that -- to that end, we would like to announce today that we're going to spend an additional $60 million to expand our Clymers, Indiana production by more than 20% or 30 million gallons, taking that facility to early to mid-2027 up to 170 million gallon production.

As investors, analysts, you can expect more of these announcements as we find both targeted and opportunistic capital projects that fit the strategy that you've heard today, along with the financial criteria that you've heard today because we have a lot of confidence in where we've been and where we're going.

And with that, I'll turn it back over to Mike.

Okay. Thanks again for your engagement today. We'll now bring all the presenters back on stage for our final Q&A session. Format is the same. Please raise your hand. We'll bring a microphone to you. Please state your name and your firm before your questions and keep it to one so we can get to as many as possible. For those joining virtually, feel free to continue submitting questions online. We want to make sure that you leave today with clarity and confidence.

And so with that, let's open it up for questions.

Kristen Owen from Oppenheimer. So the $60 million investment in expanding the Indiana facility, how much of that are you underwriting based on 45Z credits over the next 2 years? How reliant is that on -- or your ROIC objectives? How reliant is that on your well permit going through. Just help us understand, obviously, very aligned with some of the near-term drivers of growth, but the long-term drivers of expanding that ethanol production.

Good question. And if you think through a $60 million capital expansion to debottleneck and achieve 30 million gallons of production at $2 a gallon, and that project stands alone above our hurdle rates without accounting for any 45Z. So good question. And this is a project that we've been analyzing for well over a year, different sizes and scope. So that hopefully, that will answer your question.

Pooran Sharma with Stephens. Just wanted to hone into the -- to the longer-term EPS run rate target. Just understanding it's a run rate. And I was hoping you could help us kind of maybe better understand seasonality quarter-to-quarter and how you kind of exit the year. Would it be fair to kind of look at the company over the past 3 years and kind of from a seasonal perspective, hey, you get a lot of earnings in like 2Q, for example, and just kind of establish percentages based off that? Or how should we be thinking about how the year kind of ends next year as you achieve your $430 million run rate?

Knowing what we know today, the seasonality of our 2 business segments should remain pretty consistent.

Yes. And if we think, I think, to your point, Pooran, you're right, I mean the second quarter tends to be the strongest for the fertilizer business. In general, though, if we think about the fourth quarter tends to be a strong quarter for our business. If you think about some of the projects that we have underway and some of the factors even as we enter into next year, we'll have -- we have now the full ownership of the ethanol plants that happened July 31, August 1 of this year. So we'll have a full year run rate of that as we enter into next year. We also have the Skyland investment that we made about a year ago.

At that time, we said we expect the incremental EBITDA to be roughly $30 million to $40 million per year. Now this year, in 2025, we expect it to be about half that amount, given the weak exports. If you think about sorghum or Milo, those were down significantly, I think, probably 80%, 90% year-over-year. And then when you think about some of these other growth projects coming online, you heard Weston talk about the time line for the $70 million investment in Houston. That's probably an incremental $15 million to $20 million a year of EBITDA, but that's going to get further out into, call it, 2027. And then, of course, you have -- start to have the impact of the incremental 45Z tax credits. And so all of that stuff just continues to build together with additional growth projects.

Ben Klieve with Benchmark StoneX. I'd like to lean into the conversation around carbon sequestration. Wondering if you can talk a bit about, first of all, kind of the process at Clymers, once you get permits successfully approved, the kind of time line for that project beyond that successful permit. And then also the degree to which sequestration initiatives are included within your -- both your CapEx spend and then also the '28 EPS outlook. .

Yes, Ben, thanks for the question. I can start with the process, and we're following a stage gate process. We filed the well permit earlier this year. We've moved into the technical review stage, and we're really encouraged about some of the projects that were ahead of ours starting to get approved. So that's encouraging for us. And as we look at that project after we get approval, which we're estimating, I believe publicly, it was late '27, early '28 is kind of what we're estimating there. Then we'll go through the process of commencing the sequestration on site. But there's a fair amount of things that are going through that process as far as approval and geology and everything in that.

The one thing I would add is, just as a reminder, the test well is already dug. Unlike some applicants don't have the test well dug. We've already completed that.

And Bill or Mark, do you guys want to talk about CapEx and working with a partner and...

Yes. In the CapEx projections that we have alluded to today, we don't have any -- there is no capital expenditures for the CCS nor is there any benefit from that as we move through that project. It's all everything that's been committed to at this point.

Ben Mayhew, BMO Capital Markets. So I was wondering if you could discuss some of the key catalysts you're hoping for that would drive above mid-cycle market environment. So you referred to on the slide, we're kind of in this trough market environment for agribusiness. What are some of the things that you're looking at in the news with all the noise going on with the Trump administration, what should investors be focused on that could really drive a quick shift in the market environment.

Do you want to hit that first.

Yes, I'll start and then hand it over to Weston. I'm not certain that there's a quick switch from oversupply outside of the major weather event. The one thing that we have started to feel is the results of recent trade negotiations. We've had increased sales of wheat, soybeans and Milo to China, which is beneficial. The work that we've done with the EU on growing their imports has been beneficial. But at the end of the day, what we really need is just to come through a normal ag cycle. And I do feel like maybe unlike a year ago, I do feel like we're coming through the trough today and have increased domestic demand is definitely on the horizon, better exports are on the horizon. The USTR Section 301 has been delayed at least for a year. So I do think there's some positive momentum policy-wise, it's just making sure that we work through the amount of corn carryout that $16 billion bushel corn crop produces.

Yes. I think -- and adding to that, that $16 billion is a great marker for us because it really speaks to the overall supply and demand characteristics of the industry. And when we have that oversupply, we will generally have lower prices. Now the good part is we've also had extremely good corn exports this year. So that has bolstered some of our opportunities, marketing opportunities and connecting that with the growers. .

So amidst that backdrop, you also have to kind of look at the entire supply chain that we've discussed today from the producer and the impacts that they have sometimes with lower commodity prices and the challenges that presents to them, and they're striving for greater yields and greater efficiencies, our domestic landscape, but also the global landscape to understand where things are going. Bill alluded to the recent discussions, in particular with China to get the 12 billion -- or 12 million metric tons recently announced and hopefully more to the 25 million metric tons on an annual basis of soybeans to China to get that restarted after a pretty challenging 2025. So those are some of the factors that we're looking at.

Okay. Let's go to an online question here for Sarah, you've emphasized a culture -- that culture is a competitive advantage. As the company grows and integrates new businesses, what are the most important actions you're taking to preserve the entrepreneurial nimble culture that defines The Andersons.

Sure. So it's a good question. One thing that we're really focused on is ensuring that we protect the legacy of The Andersons kind of this deep-rooted purpose-driven organization and culture that takes us back to 1947 to today, while embedding what we know is more aspirational or things that will be required for our future. So if we start with where we're at today, we're leaning into this operating model to really make sure we're setting a consistent set of expectations across the organization, either as a new employee, current employee on what truly to expect as it relates to your accountability.

But we're also ensuring we're always refining our people strategy to secure those differentiating capabilities. So in particular, the commercial space, as I touched on earlier, do we have the right incentive structure in place to really keep that kind of hungry, hunter, entrepreneur at the desk, and it's proving to be of good use to us. But we're not going to take our eye off the ball. That's something we're looking at every quarter, quite frankly, to ensure that we've got the right kind of underpinning mechanisms in place to keep that talent engaged and excited about their work every day regardless of where you sit in the company.

We'll go to another online question. Weston, as you integrate Skyland and continue to optimize your facility network, where do you see the biggest opportunities to drive margin expansion.

Mike, when you think about Skyland and as I described earlier, the strong presence that we had in merchandising in that geography and then pairing together the asset network that we have now with Skyland, one of the most impactful things that we can do is to integrate our market strategy there. The way that we can now with our merchandising teams utilize those assets, utilize the producers in that area, the destination demands for ethanol as well as feedlots but also pull that together in that arbitrage mindset that we talked about earlier, that's where we can really unlock a lot of growth. And this year has been challenging. We talked about some of the reasons for that, kind of macro factors that made it pretty challenging in that market.

Brian even mentioned lack of Milo exports. That's a big milo producing area. So that was impactful for us in this year. But we've really put those teams together well. I've mentioned earlier, we deploy our talent in local places. We've taken some of our merchants out of our Overland Park, Kansas office and placed them into the local areas in Southwest Kansas. So now we have this better connection with our merchandising teams. And that's probably the area that I'm most excited about with Skyland.

Pooran Sharma with Stephens. I wanted to maybe just ask about sorghum since we're on it. I know you just spoke about it, but I think we had 80% to 90% declines in sorghum exports last year. So as we look to the China trade deal and knowing how much they're buying from South America, what does that line up for U.S. sorghum exports potentially? And have you been hearing anything for increased grain -- U.S. grain exports given the amount of oilseeds that China is already buying from South America. Just wanted to get your sense on the potential for sorghum this year.

What I can tell you is this year, I assume you kind of mean the marketing year. We have seen fly sales. China has purchased a handful of vessels here in the last 2 weeks, and that's positive. So trying to estimate the amount of total tons that China will take this crop year, we're probably not in the business of doing that. What we can tell you is that the U.S. has a lot of sorghum that will be available at very competitive prices globally. I don't know if it was a record sorghum crop, but it was big. And when you have the large corn crop like we did, they compete against feed demand. It just -- it's going to be simple that the best price is going to buy the sorghum.

And recently, China has been the better price for the sorghum. So the potential there is pretty good for the U.S. sorghum market. There's also talk about weather in China, the northern region of China. And so trying to understand that demand, I think, is going to unfold here over the next 1 or 2 quarters.

Ben Klieve with Benchmark StoneX again. A question, I think, for Sarah, but whoever wants to jump in is great. Regarding prevailing wages within the -- being one of the mandates embedded within 45Z tax credits. Given how critical of the box that is to check, but also how kind of complicated one it is to be able to ensure that you've satisfied all the conditions. Can you give us an update on kind of your confidence in being able to check that box here along the time line that was talked about for the tax credits in the presentation?

I'll go ahead and take that one. As an organization, we spent a fair amount of time and understanding both internally and externally on prevailing wage. In the effort of competitive information, I don't think it's fair to share publicly where we're at on prevailing wage.

Kristen Owen, I wanted to ask about the agribusiness footprint that you have because we're spending a lot of time talking about growth and optimizing the existing facilities. When I look at this physical geographic footprint, are there any areas where you're seeing perhaps returns that aren't commensurate with your hurdle rates? Are there opportunities to improve the efficiency of your revenue base? And I'm thinking specifically on the agribusiness side.

Yes. I think the thing that we look at across all of our assets, we do look at internal hurdle rates as we look at internal hurdle rates. As we look at each one of the assets, oftentimes, we group our assets into pockets. So if we have 4 or 5 that are in a similar geography close together, we'll look at those as kind of a region or a collective group. We're constantly looking at that. In a portfolio like ours with 175 facilities, there will be some that aren't performing as well, and there will be some that are performing as well.

So what I would tell you is that we're constantly looking at them. And where we have those that are not performing as well, that's when we begin to scrutinize each of their characteristics. I mentioned the dashboards that we look at. That's one of them, so we can understand operating costs across each of those facilities, look for opportunities for improvement. And ultimately, if they aren't meeting our hurdle rates, then we have different strategic decisions that we have to make with those assets.

A little follow-on, and this is before Weston took over the Agribusiness segment. But in 2019, when we brought The Andersons and Lansing together, we actually had just a little over 220 million space. And through the process that Brian and what we've all been talking about, we did bring that number down to 180 million bushels of space prior to the Skyland transaction. So we're always looking at opportunities to either maybe trade out assets or shut down assets that aren't meeting our hurdle rates.

Let's hop back to some online questions. Bill, what part of your investment thesis is least appreciated or most misunderstood by the investment.

It's a wide question. I think that the investing community sometimes becomes overwhelmed or consumed with their perceived inability to model the results. The entire purpose of the 5 slides that I put up there on who we are and what we do was designed to address that. We get asked at nearly every investor conference or one-on-ones that we have is to better define how they can model The Andersons results. And as you can see through those 5 slides, what we do is not that difficult. We just do it over and over and over. So trying to get that cadence, but truly understanding that it's bringing value to all of our customers from the farmer to the ultimate consumer and being able to extract margin out of that is what we've been really good at doing for over 75 years.

And with the recent acquisitions and changes that the company has been willing to make, I think we're getting even better at it. So if there's one thing that I encourage investors to ask more questions about is understanding the potential of the business model.

Pooran Sharma from Stephens. Bill, maybe last one for me for you here. You've been in the role for a little over a year. What are kind of the key learnings, key surprises. And you mentioned it in your commentary, how you've never seen the business in a better position. As you look ahead, maybe you could tease us with what you're most excited about.

And the first part of your question is fair. The 14 years' experience that I had, albeit very much smaller, but being CEO of Lansing certainly has helped, having, in my opinion, one of the best leadership teams in the industry. has helped. So I don't know that there's been anything that's surprised me outside of ordinary course policy, certainly nothing like the Russia-Ukraine conflict in '22, but that was a true black swan. So we really haven't had that.

What excites me the most, obviously, the tailwinds for biofuels policy has to be, number one, the ability for both renewables and agribusiness to take advantage of that, though, is what I want investors to understand. We are in a position to either with our assets or with our merchant model to be able to take advantage of that increased domestic demand, which we need increased domestic demand. Look at the U.S. farmers' ability to produce corn, beans and wheat along with a lot of other crops. Those 3 crops alone, we need to focus on increased North American demand, whether it's Canada, Mexico, the U.S., we need to focus on that demand because we are going to be more competitive reaching that demand.

Okay. I think that's a good place to leave it here. So once again, I want to thank you all for joining us for The Andersons 2025 Investor Day. As you heard throughout today's presentation, we are excited about the opportunities ahead of us and our ability to drive sustainable growth, strengthen our competitive position and deliver long-term value for stakeholders. For those joining us via webcast, thank you for tuning in. We appreciate your time and engagement. And for those here in person, thank you for spending your morning with our leadership team.

Your feedback on today's event is always very important to us. In the spirit of continuous improvement, we have engaged Corbin Advisors to help us collect and assess your feedback. So they will be reaching out to many of you via e-mail after the event. We know you're busy, but we really appreciate any time that you can spend to share your thoughts. Our leadership team truly values your engagement, insights and support. If we haven't had a chance to connect yet, we hope you stay for the luncheon, where our teams will be available to answer questions and continue the conversation. So with that, we'll conclude today's formal program. Thank you again for your continued interest and support of The Andersons.

Good morning, ladies and gentlemen, and welcome to The Andersons 2025 Third Quarter Earnings Conference Call. My name is Joe, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed.

Thanks, Joe. Good morning, everyone, and thank you for joining us for The Andersons Third Quarter earnings call. We have provided a slide presentation that will enhance today's discussion. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website shortly.

Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements. Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors.

This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of the GAAP to non-GAAP measures are included within the appendix of this presentation.

On the call with me today are Bill Krueger, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions.

I will now turn the call over to Bill.

Thanks, Mike, and good morning, everyone. Thank you for joining this call to discuss our third quarter results and outlook for the remainder of 2025.

This quarter represents the first reporting period since we completed the purchase of the minority share in our ethanol plants at the end of July, supporting strategic growth in renewable fuels. In the third quarter, we recognized income for 45Z tax credits on our share of gallons produced and sold to date in 2025. As we move into 2026, we are continuing to make investments to further improve plant production efficiency for ethanol and co-products, lower carbon intensity and to grow our renewable feedstocks merchandising, all of which are part of our stated strategy.

In Agribusiness, we are executing on our strategy to selectively invest in facility expansions and improvements to support our customer base. We have talked previously about 2 significant long-term construction projects that we expect to have fully operational in 2026. They include the addition of soybean meal export capacity and other operational improvements at our Port of Houston facility and the addition of a mineral processing plant at our Carlsbad, New Mexico transload facility.

We are also investing additional growth capital in our premium ingredient business at our Mansfield, Illinois location to meet customer demand for cleaned corn being used in the chip, tortilla and pet food markets. Once again, our renewables business had a solid quarter with higher production and yields supported by strong demand. However, corn and production costs were higher than the prior year. We expect to see a reduction in the price of corn as we move through harvest.

In agribusiness, we had improved year-over-year fertilizer results with increased volume and margin. The ag cycle remains in a trough due to abundant domestic supply and uncertainty around trade policy resulting in limited export trade flows for some commodities. We remain focused on supporting our customers in the current environment. We continue to evaluate potential growth opportunities within our strategy and expect that more M&A opportunities may come to market because of the current economic pressures.

Next, Brian will discuss our quarterly results.

Thanks, Bill, and good morning, everyone. We're now turning to our third quarter results on Slide #5. In the third quarter of 2025, the company reported net income attributable to The Andersons of $20 million or $0.59 per diluted share and adjusted net income of $29 million or $0.84 per diluted share. This compares to adjusted net income of $25 million or $0.72 per diluted share in the third quarter of 2024.

Revenues increased slightly with the addition of Skyland despite overall lower commodity prices. Gross profit declined due to challenging ag fundamentals, combined with higher input costs in renewables. Expenses also increased with the majority relating to the addition of Skyland. Adjusted pretax earnings were $31 million for the quarter compared to $35 million in 2024, with the decline coming from agribusiness. This was partially offset by the net company impact of 45Z tax credits of $9 million, which included a cumulative catch-up for various costs to achieve as well as incentives.

Adjusted EBITDA for the third quarter was $78 million compared to $97 million in 2024. Our effective tax rate varies each quarter based primarily on tax credits earned and the amount of income or loss attributable to noncontrolling interests. In addition, in the current quarter, we eliminated certain reserves against uncertain tax positions. We now expect our full year adjusted effective tax rate to be in the range of 15% to 18%.

Next, we'll move to Slide 6 to discuss cash, liquidity and debt. We generated cash flow from operations before changes in working capital of $68 million in the third quarter of 2025 compared to $86 million in the third quarter of 2024. This continues to demonstrate our ability to generate positive cash flows throughout the ag cycle. Our readily marketable grain inventories continue to be well in excess of our short-term debt, and we ended the quarter with a cash balance of $82 million.

Next, we'll take a look at capital spending and long-term debt on Slide #7. Third quarter capital spending was $67 million compared to $38 million in 2024, with the increased attributable to spending on long-term growth projects as well as normal maintenance capital on the addition of the Skyland grain assets. We continue to take a disciplined, responsible approach to capital spending, which we expect will be approximately $200 million for the year, excluding acquisitions.

Our long-term debt-to-EBITDA is approximately 2x, which remains well below our stated target of less than 2.5x. We continue to have a balance sheet with significant capacity to support further growth investments even after the $425 million in cash paid to acquire the full ownership of our ethanol plants during the third quarter. We are evaluating additional capital investments, including projects to improve efficiency and increase capacity at our existing facilities as well as further M&A opportunities that align with our growth strategy.

Next, we'll move on to a review of each of our businesses, beginning with Agribusiness on Slide 8. The Agribusiness segment reported adjusted pretax income attributable to the company of $2 million compared to $19 million in the third quarter of 2024. We completed wheat harvest during the quarter, and we're pleased with the volumes and quality in both the Eastern and Western grain belts. We earned wheat carry income in the third quarter and are positioned for continued space income. However, similar to the first half of the year, oversupplied grain markets and global trade uncertainty negatively impacted our grain asset locations for other commodities.

Farmers remained hesitant to sell at current prices and corn harvest delays resulted in limited inventory builds in the third quarter. In addition, customers continue to make short-term purchasing decisions, reducing our merchandising opportunities. Finally, our fertilizer business benefited from increased margins and volume in this typically quiet quarter as producers focus on grain harvest. We continue to evaluate opportunities to optimize our portfolio and integrate our former Trade and Nutrient business segments as well as Skyland.

During the third quarter, we made the decision to exit a few underperforming businesses that no longer align with our strategy, which led to some additional write-downs. We continue to review our portfolio, which could result in further changes going forward. Agribusiness had adjusted EBITDA of $29 million in the third quarter compared to $45 million in 2024.

Moving to Slide 9. Renewables had another solid quarter, generating adjusted pretax income attributable of $46 million compared to $26 million in the third quarter of 2024. Included in the third quarter segment results are year-to-date 45Z tax credits of $20 million. Our ethanol plants continue to perform well with increased yields for both ethanol and corn oil. Ethanol board crush was similar to last year, but higher Eastern corn basis and natural gas costs impacted profitability. Corn oil prices improved, while feed values remain challenged.

As Bill mentioned, third quarter results include 2 months of our full ownership of the ethanol plants, which added $12 million of pretax earnings, including the value of tax credits relating to August and September. Renewables had adjusted EBITDA of $67 million in the third quarter compared to $63 million last year.

And with that, I'll turn things back over to Bill for some comments about our outlook.

Thanks, Brian. In our Renewables segment, fourth quarter demand has remained consistent with 2025 exports expected to reach record volumes. The recent rally in corn futures has reduced board crush. However, corn basis has retreated to harvest values, and we are filling our space.

With the fall maintenance shutdown safely behind us, our plants are set up well for strong fourth quarter production. We have approved additional capital focused on further increasing yields for both ethanol and corn oil. We will continue to invest in these well-maintained assets, looking for incremental opportunities to improve efficiency, increase capacity and lower the carbon intensity of our ethanol. Our expected Q4 production should enable us to generate additional 45Z tax credits, resulting in $10 million to $15 million of EBITDA after accounting for the incremental qualification expenses.

Looking ahead, the rate at which we generate 45Z tax credits is expected to increase based on the guidelines effective for 2026 through 2029. As we mentioned previously, we are preparing for the opportunity to sequester carbon on site at our Clymers, Indiana production facility. The Class VI well permit filed on our behalf continues to move through regulatory review processes. Once this project is approved and operational, we will further reduce the carbon intensity score of the ethanol, enabling us to generate additional tax credits.

Our Agribusiness segment is focused on wrapping up the harvest for 2025, with soybeans nearly completed, Western U.S. corn harvest at an estimated 80% complete and the Eastern crop an estimated 70% completed, there are pockets of harvest that are behind these levels due to higher-than-normal rainfall. Corn yield expectations are coming down from late summer estimates due to less than ideal finishing conditions in some areas, but we still anticipate record production across the grain belt.

Clarity on trade policy and tariffs will reduce market uncertainties and should provide merchandising and sales opportunities. This, combined with the larger corn and wheat crop providing elevation and space income would allow for better results in the next few quarters. We welcome the positive direction of the trade discussions and we'll closely monitor details, which should emerge over the next few months. Without this clarity, markets are expected to remain challenged through the first half of 2026.

Fertilizer activity in the fourth quarter is expected to be at higher margins, but volumes may be challenged if farmers delay purchases because of continued uncertainty. We remain very focused on integration activities in the Agribusiness segment as well as the completion of our previously announced growth projects. We will continue to invest in our safety practices and culture, particularly around assets newer to our portfolio.

As mentioned earlier, with the near-term macro challenges in U.S. agriculture markets, we will continue to optimize our portfolio of businesses and the enterprise organizations that support them to extract more value for the shareholder. We believe that the current environment is causing others to do the same, and we'll look at opportunities to achieve growth through acquisitions where we might be a better owner.

I want to point out that cash generated through our operations and the variety of tax credits in our renewables business is expected to provide us with additional dry powder for continued reinvestment in both renewables and agribusiness. With the strength of our balance sheet and the desire to grow, we expect to evaluate opportunities within our existing facility footprint as well as acquisitions that fit our financial and strategic criteria.

Last quarter, I shared with you a conversion of our run rate 2026 financial target to EPS of $4.30. We anticipate reaching that target with improved agribusiness results, increased ethanol plant ownership and the impact of tax credits. As I noted in the earnings release, we are hosting an Investor Day on December 9, where we will update our long-term targets through 2028 and provide additional details about our strategy and outlook.

I am proud of our team's resilience in this dynamic and challenging environment. We will continue to make responsible decisions that benefit our customers and maximize shareholder value as we execute our strategy.

And with that, we are happy to answer your questions.

[Operator Instructions] And our first question here will come from Pooran Sharma with Stephens.

Congrats on posting the strong results. Just wanted to maybe focus on 45Z tax credits. You did mention that there's the potential or that we should expect to see an increase in contribution from these credits. And we're just doing some rough math. Do you think that increase gets to like $0.10 per gallon for 4Q? And just wondering if you could maybe provide some details around how that gets monetized. In regards to 2026, do you think that your CI score -- with the CI score adjustments that you could get to around a $0.20 per gallon tax credit in 2026?

Both are -- all 3 of those are really good questions. Let's start with Q4. As I mentioned in the script, we are expecting a $10 million to $15 million EBITDA benefit from 45Z tax credits on a net basis for 2024 -- for 2025 Q4. For 2026, as we mentioned at the -- in our Q2 call and again today, is we will give more guidance on 2026 forward at our Investor Day on December 9.

Great. I appreciate you pointing that out there for me. Maybe just shift into agribusiness and understand that with the policy kind of clarity, trade policy clarity, you can maybe start to see a little more improvement. And just wondering if you do get that and if you do get China to kind of actually start to purchase on that 12 million metric tons this year, even just the 25 million metric tons annually, do you think that -- how quickly do you think you can get back to a more normalized earnings kind of environment for agribusiness if you do get those kind of 2 pieces for that business? And then how quickly can that change in the China trade policy have an impact on the sorghum market?

And sorry, just lastly, just wanted to also understand how Skyland is faring if you could confirm your EBITDA contribution expectations for that business?

I will take the first 2. So for The Andersons, we will benefit more from China purchasing sorghum than soybeans. The opportunity exists as soon as they buy U.S. sorghum and soybeans, we're unable to provide guidance until we actually see them come into the market and purchase product. As we read the summaries of the meeting, the metric tons of soybeans need to be purchased by the end of the year, but don't need to ship by the end of the year. So we'll need to see clarity around those purchases.

On sorghum, it would likely be a strong uplift pretty immediately for us. We -- our asset in Houston, our Western grain assets have seen very robust sorghum harvest. So we look forward to the opportunity to see any export business for sorghum. On the Skyland specific question, I'll let Brian handle that one.

Yes, sure. I mean, Pooran, when we originally talked about Skyland, our original EBITDA estimate was a run rate of about $30 million to $40 million a year. With the headwinds that we've seen this year, we probably will be closer to about half of that number for 2025. But to your point, and just following on Bill's comments, depending on what happens with sorghum exports, we should be able to get back to that run rate if things normalize from that perspective.

And our next question will come from Ben Mayhew with BMO Capital Markets.

First of all, congratulations on the really strong quarter. So my first question has to do with ethanol demand. And just kind of thinking about as we head deeper into fourth quarter, board crush is coming off from third quarter. How are you thinking about just kind of the run rate of margins, the outlook now that we have E15 approval in California, I mean what's the impact of that? Do we -- maybe do we expect lighter export volumes? Or do you expect export volumes to remain strong?

And just trying to get a sense of how we exit the year with ethanol margins, which seem to be overall in a lot better place than historically.

Yes, Ben, good questions. The start -- the first part of -- or I'm going to take the second part first. The approval in California is just that. It's approval, and they have to still work through some minor details with CARB that we think will be completed by year-end. So we do look at the E15 as a very positive move in California. Today, we believe that there's plenty of production capacity to handle the additional California barrels that will be consumed in 2026. We also think that as the U.S. is priced today, that we expect demand in 2026 to be relatively flat on both exports and domestic with the potential of a slight uptick in California once the CARB regulations are finalized.

In terms of the board crush coming off, that's -- you are correct, it has fallen off. But the corn basis levels have come down substantially as we're entering into the final parts of this 2025 harvest. So if you look at a net effect, I'm not so sure that you can just make the broad assumption that overall ethanol margins are down. You should likely want to take into play the various regions and the reduction of corn basis driving the corn values down lower.

Got it. That makes sense. My second question has to do with your comments on your financial position and just kind of getting back into the M&A search, if you will. So it sounds like you think this environment is to the point where things are -- fundamentals are poor enough in certain areas where assets will likely come to sale. So I'm just wondering like what are some examples of these asset types that we could think about? And maybe you can't answer this, maybe this is an Investor Day thing, but when you think about the sheer amount of cash flow you're just going to get from these 45Z tax credits, I mean, assuming it all kind of plays out as we think it's going to in the moment, over time, I mean, how do you think about that cash accumulation and what you want to spend it on? What like -- and so maybe you can't fully go into that until the Investor Day, but can you give us a teaser or a hint as to what you're thinking in the near term?

Yes. You are correct. That is the plan for the Investor Day in just a little over a month. But the one thing I do want to remind everyone is over the last several years, we've been very disciplined with our capital allocation. So we don't plan to deviate from that mindset. We think it's rewarded our shareholders well. And we do believe there will be opportunities. I don't feel that it's appropriate to be commenting on what we're going to be spending the money on today. As I did state in my script, though, we like our core area of operations, and we're going to continue to be focused on our core strengths as a company and looking for opportunities to deploy capital in those areas.

[Operator Instructions] Our next question will come from Jaeson Schmidt with Lake Street.

Just given the current backdrop, do you think the agribusiness margins have troughed here in Q3?

That's an excellent question. As we look towards Q4 with the size of the wheat harvest that got completed and the corn crop that we're finishing up right now, I think it's fair to assume knowing what we know today that Q4 '25 results should be trending back closer to a Q4 2024 results, obviously, stating that we still have a ways to go to get through Q4, but we do feel like the market dynamics are set up as long as we have clarity on trade policy that 2026 should provide more opportunities than 2025. And Jaeson, back to the comment that I made in the script is our assumptions come from increased agribusiness results.

Our fertilizer business is going to have a decent 2025. We need to focus on the grains and grains products side of that business, and that's kind of where we're looking at 2026 today.

Got you. That's really helpful. And then can you remind us what the remaining CapEx requirements are for the 2 large construction projects?

Yes. I would say, look, we expect our full year CapEx this year, we expect to be in the range of $200 million, probably 60%-ish of that is growth capital. And so I would say with regard to those projects, there's probably another $30 million to $50 million.

Okay. Perfect. And then just the last one for me, and I'll jump back into queue. Just going off some of the previous questions, I know you mentioned sort of your discipline with your capital allocation strategy. But just kind of reconciling that with this excess cash flow that will be coming into the tax credits, does that change sort of the size and scope of things you'd look at in the future?

That's a fair question. And I think if you look back, Jaeson, over the last 2 years, our size and scope have altered with the $425 million capital deployment for the ethanol plants, the $75 million for Houston. I really do think that we've looked -- we've started to look at larger opportunities that maybe have more scale. Simultaneously, if we see an easy bolt-on that fits right down the fairway for us, we're likely going to continue to look at those. But I do think that you make a good observation that our expected cash flows in the future will allow us to look at larger M&A projects.

And our next question will be a follow-up from Ben Mayhew with BMO Capital Markets.

I'm back for one more. Just a question on the fertilizer business. And you noted in third quarter, which is typically a weaker quarter for this business, volumes and margins were up. So like what does that indicate to you ahead of the next planting season? And I guess attached to that question is an update on the U.S. farmer. Now versus maybe a month or 2 ago, what are you hearing from the farmers in terms of level of optimism and willingness to kind of spend on inputs for the next marketing year?

I will start with the sentiment portion of that. I don't know that you could have had a much lower farmer sentiment 60 days ago, we have had a nice rally in soybeans, I think, don't quote me on this, but somewhere around 15 month highs. So with the recent rallies in the futures market, the optimism that there will be funds coming out of Washington, D.C. once the government reopens, I think has raised the sentiment of the U.S. producer.

And so in comparing -- in looking at our fertilizer business in a silo, comparing Q4 or excuse me, Q3 of 2025 to Q3 of 2024 is where the uptick was coming. I do think that the producer is going to be cautious. They're making a lot of their fall application decisions as we speak. And you could see, as I mentioned in the script, is if there's uncertainty, they could delay those decisions until the spring. And that's what we are -- we plan to figure out over the next 30 days, just to be quite honest with you.

And with that, we will conclude our question-and-answer session. I'd like to turn the conference back over to Mike Hoelter for any closing remarks.

Thanks, Joe. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, February 18, 2026, at 8:30 a.m. Eastern Time when we will review our fourth quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.