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Operator: 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.

Michael Hoelter: 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.

William Krueger: 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.

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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.

Brian Valentine: 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.

William Krueger: 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.

Benjamin Mayhew: 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?

Brian Valentine: 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.

Benjamin Mayhew: 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?

William Krueger: 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.

Benjamin Mayhew: 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.

William Krueger: 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.

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

Pooran Sharma: 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?

William Krueger: 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.

Pooran Sharma: 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?

William Krueger: 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.

Pooran Sharma: 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%?

Brian Valentine: 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.

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

Benjamin Klieve: 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.

William Krueger: 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.

Benjamin Klieve: 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?

William Krueger: 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?

Benjamin Klieve: Yes. Yes, that’s correct.

William Krueger: 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.

Benjamin Klieve: Congratulations…….

Operator: [Operator Instructions] Our next question will come from Derrick Whitfield with Texas Capital.

Unknown Analyst: 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.

William Krueger: 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.

Unknown Analyst: 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.

William Krueger: 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.

Unknown Analyst: Great update and congrats on your quarter today.

Operator: And this concludes our question-and-answer session. I’d like to turn the conference back over to Mike Holter for any closing remarks.

Michael Hoelter: 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.

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