The Andersons, Inc. (ANDE) Q2 2024 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Welcome to The Andersons 2024 Second Quarter Earnings Conference Call. My name is Alan and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will facilitate a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. [Operator Instructions] I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed.

Thanks, Alan. Good morning, everyone, and thank you for joining us for The Andersons second quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation from our 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 at andersonsinc.com 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 Pat Bowe, President and Chief Executive Officer; Brian Valentine, Executive Vice President and Chief Financial Officer; and Bill Krueger, Chief Operating Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Pat.

Thanks, Mike and good morning, everyone. Thank you for [Technical Difficulty].

Pardon the interruption, everyone. We are having some technical issues with the phone. Please hold for just a moment.

Can we do a test now? Testing, one, two, three.

Yes sir, I can hear you. Please proceed.

Okay. So, I'll go back to our lineup. First off, this is Pat Bowe giving the introductory comments. Results in trade were up with improvements on wheat space income in our eastern assets, and within our growing premium food and pet food ingredients business. As expected, merchandising opportunities were lower year-over-year in these well-supplied markets. Farmers have been slow to sell grain at prices well below what they experienced in recent years and a high percentage of last year's crop remains in on-farm storage. We expect much of this grain to move off-farm prior to harvest. Operating performance in the Renewables business was very good with continued very strong performance at our ethanol plants. We had record second quarter production in our current operations, benefiting from higher ethanol yields and well-managed costs. Ethanol margins were higher than last year on lower corn basis at our plants. The teams at our facilities executed very well, but overall results continue to be impacted by lower values of feed ingredients, which follow closely to the price of corn. Our renewable diesel feedstock merchandising business continues to grow its volumes but has seen margin compression on industry fundamentals. Our second quarter Nutrient and Industrial business was solid, but negatively impacted by lower fertilizer price volatility and delayed application season that resulted in a decline in both volume and margin. When we look at the first half of 2024 compared to 2023, our volumes are comparable, but at reduced margins in a lower fertilizer price environment this year. Brian will cover some key financial data, and after that, I'll be back to discuss our outlook for the remainder of 2024. Brian?

Thanks, Pat and good morning, everyone. We're now turning to our second quarter results on Slide number 5. In the second quarter of 2024, the company reported net income attributable to The Andersons of $36 million or $1.05 per diluted share, and adjusted net income of $39 million or $1.15 per diluted share. This compares to net income of $55 million or $1.61 per diluted share, and adjusted net income of $52 million, or $1.52 per diluted share, in the second quarter of 2023. Adjusted pretax earnings were $45 million for the quarter compared to $72 million in 2023, with trade showing improvement and the other businesses generating solid results but were unable to match an outsized prior year. Adjusted EBITDA for the second quarter of 2024 was $98 million compared to adjusted EBITDA of $144 million in 2023. Trailing 12 months adjusted EBITDA totaled $355 million. Our effective tax rate varies each quarter based primarily on the amount of income or loss attributable to non-controlling interests. This quarter also was impacted by the reversal of uncertain tax positions relating to research and development and other tax credits. We recorded taxes for the quarter at a 9% effective tax rate. We now expect a full year adjusted effective tax rate between 14% and 18%. Next, we'll move to Slide 6 to discuss cash, liquidity and debt. We generated cash flows from operations before changes in working capital of $89 million in the second quarter of 2024, demonstrating our ability to generate consistent operating cash flows in a less volatile market. This strong cash flow generation, combined with lower commodity prices and delayed farmer engagement resulted in a cash position of more than $500 million and negligible short-term borrowings at the end of the quarter. Next, we’ll take a look at capital spending and long-term debt on Slide 7. We continue to take a disciplined, responsible approach to capital spending and investments, which we expect to be in the range of $150 million to $175 million for the year, roughly half of which is typically related to maintenance capital. Our long-term debt to EBITDA is approximately 1.6x, which is well below our stated target of less than 2.5x. We have a strong balance sheet with significant capacity to support growth investments that meet our strategic and financial criteria. We continue to evaluate growth projects in our pipeline, including several M&A opportunities at various stages of completion. This includes the recently announced intent to acquire an ownership interest in Skyland Grain LLC pending completion of diligence and negotiations. Our project pipeline remains very active and we are excited about additional capital investment and M&A opportunities that align with our growth strategies. Now we’ll move on to a review of each of our businesses beginning with Trade on Slide 8. Trade reported pretax income of $5 million and adjusted pretax income of $9 million, compared to adjusted pretax income of $7 million in the second quarter of 2023. We had a slight improvement in our operating results in our Trade business portfolio when compared to last year. The financial results for our grain assets were up, driven by weak income opportunities, but domestic producers are still hesitant to forward sell due to lower commodity prices combined with limited basis appreciation to start the year. Our assets are well positioned to support the needs of our customers when the grains are brought to market. With the reduction in commodity prices and limited forward selling by producers, financing costs, supporting inventory and forward contracts have also declined. Our premium food and pet food ingredients business has shown growth year-over-year with recent acquisitions and internal growth projects providing positive impacts to these product lines. As Pat mentioned earlier, merchandising businesses are being impacted by an oversupplied grain market with lower commodity prices and less volatility. As expected, we saw a decline in results of these businesses in the current quarter as compared to 2023. Trade’s adjusted EBITDA for the quarter was $24 million, compared to $27 million for the second quarter of 2023. Moving to Slide 9. Renewables had another solid quarter, generating pretax income attributable to the company of $23 million compared to $39 million and $32 million on an adjusted basis in the second quarter of 2023. Ethanol prices remained favorable in the quarter and our operating performance resulted in record production in our four plants. But overall profitability was negatively impacted by the values of co-products, including feed and corn oil. Renewable diesel feedstock volumes continue to grow, but margins are down year-over-year due to overall industry fundamentals. Feed ingredients demand remained strong, but at lower values as prices are tied to the value of corn. Renewables had EBITDA of $52 million in the second quarter compared to $81 million and $74 million on an adjusted basis in the second quarter of last year. Turning to Slide 10. The Nutrient and Industrial business reported pretax income of $23 million compared to an upsized $43 million in 2023. Overall, fertilizer prices declined in the quarter after several years of higher prices and market volatility. In addition, a late and wet spring planting season in much of the core geography that we serve negatively impacted sales volume. This was offset in part by improvements in our manufactured products as we continued to streamline our operation. Nutrient and Industrial had EBITDA of $32 million for the quarter compared to $52 million in 2023. And with that, I’ll turn things back over to Pat for some comments about our outlook for the remainder of 2024.

Thanks, Brian. Overall, we remain optimistic about our 2024 outlook. Our Trade business outlook remains solid with the expectation of sizable grain volume to handle in the upcoming harvest. We completed a smaller but good quality wheat harvest in July in the eastern assets and we expect to continue to earn space income on the grain we’ve accumulated. We’re also very pleased with the growth in our premium food and feed ingredient products and anticipate continued growth, both organically and through acquisitions. Merchandising opportunities remain but we expect that they will continue to be muted compared to results in times of higher commodity prices and market volatility. Our Renewables segment continues to expect strong ethanol prices on good demand from a growing export market. We expect values of our feed ingredient co-products to remain soft as they follow lower corn prices. Our production volumes have remained very strong and we believe this should continue. We remain focused on improving and maintaining our four production facilities for optimal efficiency. Third-party merchandising of ethanol feed, ingredients and renewable diesel feedstock will also continue to be an important component of the business and we expect continued volume growth in renewable diesel feedstocks. Renewables business is an important part of our longer-term growth strategy, and we continue to make progress on plans to lower the carbon intensity of our assets. This includes enhancements at our production facilities as well as developing supportive farmer programs, which should position us to acquire lower CI corn as a feedstock in the future. The outlook for this business remains strong. The Nutrient and Industrial business near-term outlook is mixed with continued relatively low grain prices and reduced farmer income. The timing of harvest and market fundamentals will influence post-harvest fertilizer applications. We’re also focused on continued operational enhancements in our manufactured products facilities. With our strong balance sheet position and a desire for continued growth, we’re excited about the significant opportunities in each of our three segments. I already mentioned renewables opportunities that are longer term in implementation. We continue to work on the Skyland Grain LLC opportunity, which could significantly expand geographic reach of our grain business and increase the size of our farm center fertilizer business within Nutrient and Industrial. We’re also evaluating a number of organic growth initiatives, and the pipeline remains robust. We’re focusing on organic and acquisition opportunities within four businesses of commodities, premium ingredients, ethanol, renewable diesel feedstocks and nutrients. We’ll continue to make responsible decisions that benefit our customers and maximize shareholder value as we execute on growth opportunities within our stated strategy. With that, I’ll turn it back over to our operator where we can take your questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ben Klieve of Lake Street Capital Markets. Please go ahead.

All right. Thanks for taking my questions and congratulations, nice quarter here in the face of some suboptimal conditions in the market. So congratulations on the quarter here.

Thanks.

Handful of questions. First, on this dynamic you all discussed on the elevated level of inventories throughout the grain complex. I’m wondering if, first of all, if you can – if you have an expectation that this is going to work its way through truly by harvest time or if there’s a risk of elevated inventory levels and old crops staying in bins, even after the new harvest comes in. And then second, as that unwinds, do you guys expect to see some – kind of an increase in volatility? Or is this kind of stale state something that you’re expecting for the foreseeable future?

I’ll get started, Ben, and turn it over to Bill. But, I think the shift in the markets actually has done some good things for us. And mainly in the East, we had not as big a wheat harvest as we had in past years, but very good quality one. So we were able to purchase a lot of soft wheat at harvest and have that in storage, where we’re earning share [indiscernible]. So that’s a good thing. And as farmers have moved into the corn market, that’s a good thing for elevator operators like ourselves. We think that farmers will need to come to market because we have very high on-farm storage right now. And as they see their current crops, which, by the way, look really good. These Midwest rains are way better and a really nice boost to the crop this year. I think we’re going to see a big harvest this year, and thus farmers will be needing to move grain to market here before we get to full harvest. Maybe Bill could comment more on this.

Yes. Good morning, Ben. I would agree with Pat. We have a near record on-farm stocks for corn and we’re looking at potentially a record-breaking corn yield. So, I think it’d be very hard to make the assumption that the producer is not going to move their corn that’s on farm before harvest.

Got it. Okay. That’s very helpful from you both. And then I guess as a follow-up to this, in the last quarter call, you guys noted an expectation that the Trade Group is going to see some seasonality shift to later in the year. I guess, has this shift been slower than you maybe anticipated a few weeks, excuse me, few months ago? And then, on a full year basis, can you kind of comment on your expectations for the Trade Group, especially in the merchandising side of the business for 2024 versus 2023?

Yes, I’ll take that one. No, but I think that our expectations at the end of Q1 are playing out like we thought they would. At that time, we weren’t nearly as confident in the upcoming corn crop. So, I do think that we are going to remain in these lower price environment. But I do believe that we should have an opportunity to handle even more fall harvest crops as the crop does continue to look good in early August. The other thing is, we have to really pay attention to the value of the wheat, U.S. wheat compared to competitors around the globe. And I think that’s going to provide some opportunity for us also. And to your last question, we do think that the last half of 2024 will be more challenging than the last half of 2023 was, just because we’re in a lower price environment and volatility is a little lower.

Got it. Okay, that’s very helpful. Thanks, Bill. On the Renewable side question, on the renewable diesel initiative, you noted that volumes were up, margins were down. Can you comment on overall earnings from that initiative? Did the volume growth more than offset the margin declines or was the opposite true?

I would tell you that the volume growth was not offset, it did not offset the reduction in overall margins produced on the renewable diesel feedstock.

Okay. Very good. And then last, oh, sorry, go ahead, Pat.

I’m just going to comment on that, as our new plans came online, we still continue to see robust demand. We like the diversity of our portfolio, and we see this as a business opportunity just to continue to be important within The Andersons, like all commodity markets, since they have its ups and downs and balances of supply and demand, that plays right into our merchandising capabilities. So, it’s a business we’re committed to continue to grow.

Got it. And last one for me. You guys talked about considering a few different M&A opportunities at kind of various stages of the diligence process. The Skyland Grain acquisition seems to be a sizable one. But I’m wondering if you can characterize these opportunities that you’re in diligence for from the perspective of, are these – do you have multiple acquisitions in your pipeline that are really advancing your – towards your 2025 EBITDA target? Or are the other things you’re considering beyond Skyland, kind of more tuck-in in nature?

Sure. Ben, this is Brian. I’ll start, and then maybe Bill could add some color. I would say our pipeline does remain pretty robust. We’ve seen it be even more active this year. We’re seeing more deal flow, probably in part due to the higher interest rate environment over the past year or two. And so, I would say they’re at various stages of completion, and I would probably characterize more of them, as – we’ve talked about singles in the past. I would call more of these doubles, triples, as we think about some of the growth projects, both internal growth as well as some of the M&A growth. We’re going to continue to be disciplined, and I know with regard to the $475 million run rate target that’s out there. We’ve talked about in these sort of changing and dynamic ag markets over the past several quarters. It’ll require more M&A to get there, but we’re going to continue to be disciplined and responsible and make sure that we’re going to generate appropriate returns for our shareholders. And, Bill, maybe you want to comment about some of the deal flow as well.

Yes. I would second Brian’s comment there around it. We’ll take maybe more M&A than we’d originally expected to achieve the $475 million. But we are seeing the opportunities that both tie directly into our core business. Skyland is a very good example of that, where geographically and product mix, it fits right at the center of our core. We’re also taking a look at where the industry is going to be at in two to three years’ time and trying to get in front of those opportunities, which would also be larger in size compared to what we’ve done in the last three years.

Got it. Got it. Very good. All right. Well, I appreciate you guys taking my questions, and I’ll get back in queue.

Our next question comes from Scott Fortune of ROTH Capital Partners. Please go ahead.

Yes. Good morning, afternoon, and thanks for the questions. Just want to follow up a little bit on the scale and your focus on kind of the northern portion of the USA, and just probably provide a little more color strategically on the footprint with the Skyland kind of more in the Midwest. Just kind of a little more color on the focus of those assets, and as they become integrated within your footprint from expanding footprint. Just kind of – take us through that a little bit more, and that’d be great.

Sure, Scott. This is Pat. I think, as you know, that Andersons’ original footprint was an eastern grain belt footprint here [indiscernible] Michigan, Indiana and Illinois, so Eastern grain belt. And with the acquisition of Lansing in 2019, we moved quite a bit sizably into the western corn belt, as far up as Idaho and down South into Louisiana. But we don’t have a big physical presence with assets in the Texas and Southeast Kansas and those are the hard wheat state Milo [ph] country and into the Panhandle, where we have a big growing demand for dairy and feedlot demand for grains. So, it’s a very active part of the country and for us to expand geographically to that region would be attractive. As Bill mentioned earlier, we think a perfect fit with our overall portfolio. We can’t really comment more on it, with little due diligence, but strategically from our direction of the company and geographically, it’s a really nice fit for the Andersons.

Perfect. And then just kind of switching to the opportunity, kind of update on the ethanol business, kind of the turn a little bit and crush margins there. But outlook on ethanol as we head into fall and inventory levels there and production across the industry versus demand? And then just to follow-up, just kind of an update on ethanol jet fuel opportunity. Your sense of the farmers starting to kind of implement various initiatives towards the opportunity? Just kind of a sense of that timing overall as we focus on the ethanol side.

Before I let Bill get started, there is something else, before I go, a correction on what I just said. This wasn’t [ph] California which I was taking about, I said Southeast Kansas and I should have said Southwest Kansas, and I apologize about that. The Texas panel on Southwest Kansas. So, I want to get my geography correct on what I said a few minutes ago. At a high level, I think I’m understanding your line of thought here, Scott, is that we mentioned in our script, our commitment to the future of our four ethanol plants, and it’s not just only about carbon intensity, which is a big part of it and looking at sequestration projects on the life and working with growers, renewable ag. But we have been really working on efficiency, both how we run our combined heat and power of our plants, how we get better yields and more productivity. And those investments that we continue to make in those plans have put us in the top quartile [indiscernible] of the industry. And I think if you look at our continued production performance and yield performance and profitability in ethanol plants, you can see we’re one of the leaders in the industry here. We want to continue to do that. So, we’re going to continue to invest in those plants to make them as low CI [ph] as well as most modern, efficient and large scale as we can. So that’s a focus of bolt-on capital projects and continue doing in our ethanol plants. I’m going to let Bill comment a little bit more about the other parts of ethanol you’re brining out.

Yes. Thanks, Scott, for the question. First, I’d like to start with, we believe alcohol to jet is a few years down the road. And from the Andersons’ perspective, I think we demonstrated over the last several quarters that we’re able to operate in the renewable space, specifically our ethanol plants, very efficiently and profitably. We’re not going to wait until we have more clarity around SAF from ethanol. We really want to grow in this space now. And so we’re looking at opportunities from growing our current footprint to acquisitions and other opportunities to take advantage of an area that we feel is really core to our company. And that comes from not just running the ethanol plants, it’s the understanding of originating corn, selling DCO, selling DDGs and selling the ethanol. So, we see opportunities there before we get to a SAF product from ethanol and really want to take advantage of it sooner than that.

This is Pat again here, I want to, Scott, comment, I think you were asking about our outlook for ethanol margin, outlook for the balance of this year. And we're really in good shape as an industry this year. We had some very high margins last year. The reduction of corn has impacted co-product volumes. But overall, ethanol demand has really been strong and that's mostly been boosted by exports. Year-to-date, we're at 963 year-to-date exports. Last year, we finished the year at 1.43 range and our estimates are 1.7 to 1.9 for the year. We think it could be all of 1.9. And with that kind of a boost in exports, ethanol value in the global market, it's very inexpensive for U.S. ethanol. And so we see strong demand and thus bullish upside ethanol margins going into the balance of the year. So, it's been a solid year for ethanol results and we think that will continue through year-end.

Appreciate that color. And then one last one, if possible, just kind of along those lines, kind of update on the trade business and the carry in the market kind of with the large U.S. crops here is just a little more color on the trade contribution as we see in the second half on pretax earnings kind of into the second half 2024. Just kind of more, little bit of expectations there from your guidance?

Sure, I'll take that one. As I mentioned earlier, we see a lot of opportunity coming out of our grain assets, capturing elevation margins and space income going forward. All expectations are we're going to have a large crop, which will benefit us from our assets. And then, when you look at the opportunities in the merchandising, it's going to be a little slower than it has been historically. But the thing that we always consider is the fact that our end users want to buy grain from us. So, we're going to have the opportunity. It's just how much opportunity we create from the volatility. It will be the question in the last half. But I think elevation margins are going to be higher than we assumed and likely offset by some lower opportunities with our merchandise.

Thanks. I'll jump back in the queue. Appreciate the color.

Our next question comes from Ben Mayhew of BMO Capital Markets. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. I was wondering if you could talk about the demand you're seeing from the animal feed side? And can you also talk about the shift between premium and value pet food channels? Just trying to get a sense of what you're seeing in terms of demand? Thanks.

Thank you, Ben. I will start with the animal numbers. Obviously, pork industry has had a little bit of struggles. Beef industry is doing very well. And in our specific areas, let's talk about the western corn belt, we're seeing a definite pickup in demand from the beef kettle dairy markets and expect to see probably in the first half of 2025 on pork. And – so I think we have a real good opportunity there. And what was the second part of your question? Sorry Ben.

Yes. So also, just trying to get a sense of the demand between the premium and value pet food channels. Like, do we see a shift to premium or are we seeing a shift to value, and how does that translate to your business model?

Yes, I apologize for that. Yes, we are definitely seeing a shift from the premium – a continued shift from the premium to the value products. And that actually fits the Andersons special ingredients model better than the premium. We're able to hit some of our feed customers with the products that they need for those value products versus the premium ones.

And I think – Ben, this is Pat again. Just, it kind of accentuates what we do as a company. We're merchandisers of domestic grains, and we've worked for decades with these customers in the swine, beef cattle, poultry as well as ethanol, flour milling or pet food ingredient customers, and whether the prices are high or low on sort of board margin level, but we really focus on that domestic supply for those individual customers, and that kind of demand is very robust and those relationships are very strong. So, that's critical to continue to supply those customers what they need.

Great. And if I could just ask one more. And I believe it was sort of asked before, but I just want to return to it. So, I'm just wondering the various ways that the ag market can sort of correct itself to higher prices. Like, does this just happen? Are we just waiting on an exogenous shock or can the industry – does the industry really have the wherewithal to correct oversupply in corn, for instance?

It's interesting, Ben. I'm being the senior merchant here with over 40 years in this business, and when I started, corn was under $2 in the '80s. And it always has interactions by demand globally. And we've continued to increase demand on a global scale, and we've continually increased production on a global scale. And Mother Nature will always throw us a curveball in one part of the world or another. This last season, though we've had good crops globally, coming off the shock on the Ukraine war and imbalance we saw in some parts of the world where prices skyrocketed, we had a three year period with elevated prices and elevated farmer income, which is great for the U.S. farmer. Now we have abundant stocks and abundant crops. It's in the market address and I think for people like us, our big focus is on merchandising and how we can manage that risk and work with our customers all the time, if it's at a high price or a low price. And I think the market will correct by itself as if no one can do anything to make the market change in that regard. It's going to be where production is, where demand is. It looks as though going into the fall, we're going to have a big corn crop in the Midwest. So, it should keep very muted sense to, especially corn prices going into 2025. So that's the environment we're in right now, more softer overall commodity price.

Great. Thank you for the color. I'm going to hop back in the queue.

The next question comes from Jason Miner of Bloomberg Intelligence. Please go ahead.

Thanks. Good morning, everybody. First, just on the renewable diesel feedstock trading, I know we were sort of on the path to 2 billion pounds. And I'm just wondering about the sort of the give-and-take here. I wonder if we're building up some pent-up activity that could mean a pop later on? Or just your thoughts on the path to sort of 2 billion pounds?

Yes, I'll take that. Thank you for the question. We are as confident today as ever, that we will get to 2 million pounds. The opportunities as we're getting closer to what I'm going to say is max capacity in renewable diesel, now is going to shift to better utilization and having run times increase at those plants. But we continue to see quarter-over-quarter volume increases that would indicate that we are going to be able to achieve that and likely even exceed it.

Great. I'll stick on that for just a second. There's a little bit of investigation, it looks like underway on some possible counterfeit used cooking oil imports. I was wondering if there's some action taken against some of those, would that create opportunities or maybe even hinder some of your feedstock trading or is it just unrelated?

I would tell you it's unrelated. The one net effect, if there is a restriction put into place on UCO, which is what I think you're referencing there, that should drive DCO prices higher and that will benefit us not only with our RD feedstock business, but it'll also help us on our ethanol profitability at the plant level. So, yes, we see whichever way that comes down, we don't think that affects The Andersons RD feedstock business. And if it does come down against the UCO, likely will increase our ethanol results.

And Jason, this is Pat. We're not involved with any importation of any oil under this alleged used cooking oil imports that have come in. So, it's something we don't participate in at all. But we do support our domestic suppliers of UCO and other products that can feed the renewable diesel customers. So, having that get straightened out is probably a good thing overall for the market.

Got it. Thanks for that. Very clear. So just one other one, kind of stepping back. I think you touched on a lot of this already, but when you look at this result, you kind of look at the second half of this year. How are you feeling about the path to the 2025 EBITDA targets? And it sounds like more M&A, I'm hearing you say, but what's moving around, and how do the buckets that get us there look?

Okay. this is Brian, I'll start and then maybe Pat's going to add some color or Bill. I think as mentioned before, we have our early 12 months with about $355 million of EBITDA. So to get to that run rate target goal by the end of next year is going to require more M&A than we originally expected. Our pipeline remains active and robust. And so if two or three of these things are able to come to fruition, we can make really good progress. But at the same time, we're going to be continue to be disciplined and responsible. We have a stage-gate process that we use to review projects. We're going to make sure that they fit strategically and are close to our core and also are going to generate appropriate shareholder returns. And we're actually in the process of doing some strategy refresh update work. You probably recall that three years ago we did a deeper dive that ultimately led to us divesting the rail segment. This is more a refresh update, but there's been a lot of market trends that have changed over the past few years. When you think about all the trends in renewables and you think about EV penetration rates and the Inflation Reduction Act was not in place three years ago. So there's a lot of exciting opportunities in place, but then the timing and sequencing is going to be in a very disciplined, logical manner. So, I don't know, Pat or Bill, if you want to add anything

Yes, it is just that, Jason, as mentioned early, volatility came in our market and with very high commodity prices, that's correctly coming in this year. You've heard that from other companies thereof. There's no surprise to that. Our strategy and where we want to play remains very consistent and we see opportunities in the ag supply chain for us to grow. And now, as Brian commented earlier, this interest rate environment has maybe brought some things to market that could fit for us well. And so, we see this opportunity to deploy the cash that we've generated over the last three years into good investments to grow the company as well as improve the assets we have, talked about ethanol plants earlier. So, we see the North America ag supply chain is a really good opportunity for growth long-term and we want to continue to invest in that and think that we can reach our EBITDA targets by investing against that. So, the $475 million is still our goal that we think we can achieve. We came up over $400 million a year ago. It's dipped somewhat in this lower commodity price environment now, but we're optimistic about the long-term as we're before. So, we're pretty positive about how we can deploy capital and make good returns for that investment.

Great. Looking forward to seeing what materializes. Thanks very much. I'll hop back in queue.

This concludes our question-and-answer session. I would like to turn the call back over to Mike Hoelter for closing remarks.

Thanks, Alan. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Tuesday, November 5, 2024 at 11:00 a.m. Eastern Time when we will review our third quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.