Published on 11 Jul 2022 on Zacks via Yahoo Finance
Andersons (ANDE) Exits From the Railcar Repair Business
The Andersons, Inc. ANDE recently completed the divestment of its railcar repair business to leading freight rail services and transportation company Cathcart Rail. The strategic move supports the company’s final exit from the rail segment, enabling it to focus on and invest in its core farming verticals of grain and fertilizer. ANDE entered into this sell agreement on May 3.Andersons’ railcar repair network aligns well with Cathcart Rail's goal of expanding its rail services across a national footprint. Cathcart Rail currently operates the largest railcar services network, comprising 18 repair facilities and more than 75 field services locations, with an additional rail services division.Andersons will utilize the sale proceeds for reducing debts while enhancing the financial position for investment in future growth scopes. The deal strengthens ANDE’s position as North Americas most agile and innovative agricultural supply chain company. Last August, Andersons sold its railcar leasing business to American Industrial Transport, Inc. (AITX) for cash proceeds of $550 million.In May, the company reported first-quarter 2022 results. Anderson witnessed supply tightness in global fertilizer with rising commodity prices on the back of the Ukraine war. ANDE’s agricultural business outlook remains robust, with crop demand expected to stay high into 2023 and beyond.The company’s Trade segment includes commodity merchandising and the operation of terminal grain elevator facilities. In the March-end quarter, the segment results were impacted by the decline in corn and soybean basis size due to the extreme run-up in futures prices resulting from the conflict in Ukraine. However, growth in its international supply chain business contributed to the segment’s results. Continued merchandising opportunities and strong elevation margins are expected through the remainder of the year.Anderson’s Renewables segment produces ethanol and co-products through its five co-owned and fully consolidated ethanol production facilities and purchases and sells ethanol and ethanol co-products. The segment is benefiting from improved margins at all ethanol plants, driving feed and corn oil values.The Plant Nutrient segment manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers along with turf care and corncob-based products. The segment gained from higher inventory levels and strong margins in the first quarter, offsetting a volume decrease for most of its agricultural fertilizers, particularly within specialty liquids, low-salt starters and wholesale nutrients. With high grain prices and a tight fertilizer supply, the segment will continue to perform well into the second quarter.
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