ANDE

The Andersons is a cyclical agricultural merchandiser whose headline revenue (FY2025 $1.53B, +9.1%) is largely noise — management says so explicitly in the MD&A: in a commodity passthrough business, sales move with commodity prices and 'greater emphasis should be placed on changes in gross profit.' On that more honest measure the year was soft: gross profit rose only +2.8% to $714M while net income fell -16.1% to $95.7M, the lowest of the last five years ($104M/$131M/$101M/$114M/$95.7M from FY2021–FY2025). The Agribusiness segment was the drag, hit by an 'oversupplied market, low commodity prices, and muted volatility' that compressed merchandising margins, plus a grain-terminal incident at Sunray, Texas and closures of underperforming locations that cut storage capacity from 291M to 271M bushels.

The offset is Renewables, which had a genuinely strong year: record ethanol gallons produced, the late-July buy-in to 100% ownership of the ethanol plants that added ~$40M of incremental pre-tax plant income in just the back half, and $35M of Section 45Z clean-fuel credits. Management points to favorable 2026 biofuels policy, robust proposed Renewable Volume Obligations, and summer gasoline demand as supports — a credible forward catalyst that should annualize the ethanol contribution. Balance sheet is adequate for the model: equity $1.24B, liabilities/equity 1.95x (normal for grain working capital), long-term debt down -7.9% to $560M, current ratio ~1.4x, and a dividend paid consecutively since 1996 (raised to $0.20/qtr, $26.8M, comfortably covered).