Andersons (ANDE) Q2 FY26 earnings call: guidance and Q&A

How did fertilizer seasonality compare to expectations, and what drove the elevated profitability in Q2?

Seasonality skewed slightly more to Q1, in line with expectations. Profitability was driven by improved operating efficiencies, solid management, and effective risk management, combined with the ability to place planned volumes.

“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.”

asked by Ben Klieve · answered by William Krueger

What are the expectations for the Skyland business this year, given current conditions, and what are the puts and takes?

The Skyland region experienced dryness, minimizing hard wheat volume, and needs rain. However, the team successfully grew its forward book. If dryness continues, it could lead to more merchandising opportunities, which is a benefit of the asset footprint.

“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.”

asked by Ben Klieve · answered by William Krueger

Given product market tightness, where do U.S. and global ethanol blend rates appear to be headed?

Blend rates are expected to continue trending higher. The U.S. blend rate gained 14 basis points from 2024 to 2025, finishing at 10.51%. Expectations are for similar or slightly higher increases, driven by voluntary blending.

“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.”

asked by Derrick Whitfield · answered by William Krueger

Can management elaborate on other CI-reducing projects being contemplated beyond Clymers?

Management declined to elaborate on specific projects until they are publicly announced or executed.

“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.”

asked by Derrick Whitfield · answered by William Krueger

How durable are ethanol margins sequentially from Q2 to Q3, considering sequential weakness in paper margins but potential for more 45Z credits in Q3?

While board crush margins have dropped, potential for increased corn prices could drive up DDG co-product values and DCO pricing. 45Z credits are expected to be $90 million-$100 million for the year, with Q2 and Q3 slightly lower than Q1 and Q4 due to maintenance schedules. Management is confident in Q3 performance.

“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.”

asked by Benjamin Mayhew · answered by Brian Valentine

Over the next 12-18 months, where is the greater incremental earnings opportunity: a broader recovery in grain asset earnings or sustained strength in the renewable platform?

Both segments offer opportunities. Renewables has a focused strategy of continued investment and potential fleet expansion. Agribusiness is poised for a rebound, with the trough likely set in 2025, driven by increased North American demand, though geopolitical tensions and crop production remain variables. Management is confident in both segments.

“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.”

asked by Jack Hardin · answered by Brian Valentine

What would be the puts and takes across the portfolio if oil prices were to drop significantly?

A substantial drop in oil would likely eliminate fuel surcharges, which impacted Agribusiness. Natural gas prices could also reduce. However, blending economics for ethanol remain attractive globally, supporting U.S. exports. The size and geographic dispersion of corn/soybean crops and cattle rebuilding are considered much larger variables than crude oil prices.

“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.”

asked by Jason Miner · answered by William Krueger