Ethanol Export Outlook and Skyland Performance: Key Contradictions in The Andersons' Q2 2025 Earnings Call

Ethanol export and demand outlook, Skyland revenue and EBITDA performance, ethanol plant acquisition strategy, ethanol production and carbon intensity reduction, agribusiness segment strategy are the key contradictions discussed in The Andersons' latest 2025Q2 earnings call.



Ethanol Acquisition and Strategic Growth:
- The Andersons, Inc. purchased approximately 250 million gallons of ethanol production capacity for $1.54 per gallon before considering working capital, making the transaction immediately accretive to EPS.
- The acquisition was driven by strategic considerations, including large and efficient production, favorable geographic locations, and the capability to produce low carbon intensity ethanol, positioning the company for future growth in the ethanol space.

Capital Expenditure and Long-term Projects:
- Second quarter capital spending was $49 million, reflecting an increase of 70% compared to the previous year, with the rise in spending attributed to long-term growth projects and normal maintenance capital.
- The increase in capital expenditure is primarily due to significant long-term construction projects, such as the Port of Houston expansion and a project for a major energy company, which are expected to contribute to financial results starting in mid-2026.

Agribusiness Segment Performance:
- The Agribusiness segment reported adjusted pretax income of $17 million, down from $33 million in the second quarter of 2024.
- The decline was primarily due to oversupplies of grain and weak demand in the Western grain belt, impacting merchandising businesses, while Nutrient business benefited from strong demand due to high corn plantings.

Renewables Segment Results:
- The Renewables segment generated pretax income of $10 million, down from $23 million in the second quarter of 2024.
- The decrease was driven by lower ethanol board crush and increased input costs, including higher Eastern corn basis and natural gas costs, despite favorable ethanol margins and record production yields.

Port of Houston Expansion Project:
- The company is proceeding with a project to improve grain facilities and expand soybean meal export capabilities at the Port of Houston, with completion expected by mid-2026.
- The project's strategic value is enhanced by the regulatory support for biomass-based diesel production, which should drive increased domestic soybean crush, creating a favorable market environment for the expanded export of soybean meal.