Renewables Fire on All Cylinders at The Andersons, but the Drought Is Watching
Record ethanol earnings and 45Z credits drive a $2.15 EPS quarter; a parched Western corn belt and a heavier debt load frame the second half.
ANDE · Earnings Call · 2026-08-04
The Quarter That Felt Like a Step-Change
The Andersons delivered a quarter that its own history will mark in bold. Adjusted EPS of $2.15 versus $0.24 a year ago, and adjusted EBITDA of $140 million against $65 million, puts the company squarely inside its long-range ambitions earlier than investors probably expected. The engine was unmistakable: “Our second quarter results were led by record earnings in renewables.” — William Krueger, CEO · 2026-08-04 That wasn't a one-off—it builds on a Q1 that already surprised to the upside, and the market has taken notice even as the stock has pulled back 15.8% from its July peak.
Renewables: The Margin Machine Now Runs on Policy Plus Execution
The Renewables segment generated adjusted pretax income of $88 million versus $10 million in the same quarter last year. Record ethanol production, higher Ethanol margins from strong domestic and export demand, and a $24 million contribution from 45Z tax credits all fed the upswing. The blend rate story is also being written in real time. U.S. blend rates gained 14 basis points from 2024 to 2025, and management sees a similar or slightly better increase ahead. "We feel like we're going to continue to increase the blend rates at kind of the same rates that we've seen over the last couple of years," CEO Bill Krueger said, adding that voluntary blending is accelerating because ethanol's comparative economics versus gasoline remain attractive.
The company is also leaning into the policy tailwind. The 45Z tax credit, which dropped off the company's own momentum league table this quarter (the keyword declined sharply), is now treated as a recurring, though modestly volatile, earnings driver. Full-year guidance holds at $90–$100 million. And while the industry frets over small refinery exemptions, The Andersons is sanguine: “we do not see the end result being material to The Andersons” — William Krueger, CEO · 2026-08-04. That confidence stems from a diversified base and a strategy of investing in carbon-intensity reduction projects—like the Class VI well permit at Clymers—to stretch the value of every gallon.
Agribusiness: Weather Becomes the Swing Factor
Agribusiness improved year-over-year, with adjusted pretax income of $20 million versus $17 million, but the segment's near-term fate rests on a Western corn belt that is drier than usual. "We are currently in a weather market as the U.S. is experiencing above normal temperatures with reduced rainfall across much of the Western corn belt," Krueger noted. The wheat harvest is smaller, though the company has built a larger forward book to capture later demand: “We expect increased demand later in the year for our ownership due to the geographic dispersion of harvested bushels for both hard and soft wheat.” — William Krueger, CEO · 2026-08-04 That dryness, while a risk to the crop, also creates the kind of merchandising opportunity that has historically rewarded The Andersons' diversified asset base.
The fertilizer business was the other positive surprise, beating expectations through better operating efficiency and risk management during spring application. The company's investments in premium ingredients continue to pay off, and the Houston soybean meal export project is finally nearing completion—a move that management has been positioning for over a year. As Krueger reiterated from the prior call: "our timing is about perfect to have another outlet for soybean meal to be able to export into the global market" (May 2026). The project is expected to be fully operational in Q4.
Ramping Growth, and the Balance Sheet It Buys
To fund that expansion, The Andersons is spending. Capital expenditures hit $76 million in Q2, and full-year guidance is around $225 million. That spending, paired with working capital needs in a volatile grain market, has pushed short-term borrowings up, and the balance sheet now shows deeper net debt: effective net cash swung to -$1.2 billion, a 105% deterioration year-over-year. But the company's leverage remains conservative—long-term debt-to-EBITDA is just 1.3x against a stated target of under 2.5x—and management is clear that they're evaluating acquisitions that meet strategic and financial criteria.
The undergirding message is that The Andersons believes it has moved into a different earnings orbit. "We remain focused on achieving our long-range run rate EPS target of $7 per share by the end of 2028," Krueger said, and with the trailing twelve months now above $6, the target feels tangible. The stock, however, has already rallied hard off 2025 lows, and the 15.8% drawdown from its July peak suggests the market wants to see these results sustained through the weather and policy challenges ahead.
Some of those challenges are already on the radar. A rebound in the ag market—the trough of which management believes was set in 2025—depends on North American demand growth, which policy changes (RVO, GREET model) are meant to support. On the Western crop front, as Krueger noted earlier, "we do expect it to normalize into that $30 million to $40 million range" for Skyland (February 2026). That normalization remains weather-dependent.
The Andersons is, in short, a company in the middle of a strategic step-change. The earnings trajectory is real, the policy tailwinds are tangible, and the balance sheet, while stretched, is not at risk. The next milepost is whether the dry Western fields reverse course and whether the Houston ramp delivers the export margins management has promised. If both go right, the $7 target starts to look conservative—and the market's current pullback could become a gift.