The Andersons' Q1 2025: Unpacking Contradictions on Ethanol Exports, Skyland Integration, and Renewable Diesel Margins

Ethanol exports and tariff impact, Skyland's performance and integration, ethanol exports and market dynamics, renewable diesel volume and margin growth are the key contradictions discussed in The Andersons' latest 2025Q1 earnings call.



Mixed Performance Across Segments:
- The Andersons, Inc. experienced mixed results in Q1 2025, with a strong performance in Renewables while Agribusiness was weaker than expected.
- Global trade uncertainties resulting from threatened tariffs and port fees disrupted grain flows and impacted commodity values, leading to limited merchandising activity and negatively affecting Agribusiness.

Solid First Quarter for Renewables:
- The Renewables segment generated pretax income of $15 million, compared to adjusted pretax income of $14 million in Q1 2024.
- This was driven by improved yields and solid margins from ethanol production, coupled with contributions from ethanol and renewable diesel feedstock merchandising.

Challenges in Agribusiness:
- The Agribusiness segment reported a pretax loss of $5 million and breakeven adjusted pretax income, compared to adjusted pretax income of $5 million in the same period of 2024.
- Domestic demand challenges and trade flow uncertainties, particularly in the Western Corn Belt, contributed to a decline in grain basis and overall market conditions.

Favorable Ethanol Margins and Demand:
- Ethanol margins remained favorable in Q1 2025 on higher yields and board crush, contributing to the strong performance in the Renewables segment.
- Demand for ethanol and co-products used in renewable diesel production is expected to remain solid, benefiting from anticipated changes in RVO requirements.

Investment in Growth and Strategic Projects:
- The company generated cash flow from operations before changes in working capital of $57 million in Q1 2025, demonstrating strong cash flow generation capabilities.
- The Andersons continue to evaluate capital projects and potential M&A opportunities that align with their growth strategy, focusing on improving efficiency and capacity at existing facilities and supporting key customer contracts.