Andersons Inc (ANDE) Q1 2021 Earnings Call Transcript

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Andersons Inc (ANDE 0.55%)
Q1 2021 Earnings Call
May 5, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Thank you for standing by, and welcome to The Andersons 2021 First Quarter Earnings Conference Call. [Operator Instructions]

I would now like to hand the call over to Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please go ahead.

Michael T. Hoelter -- Vice President, Corporate Controller and Investor Relations

Thanks, Michelle. Good morning everyone and thank you for joining us for The Andersons' first quarter 2021 earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation via 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.

Certain information today constitutes forward-looking statements and actual results could differ materially as a result of many factors, including general economic conditions, weather, competitive conditions, conditions in the company's industries, both in the United States and internationally, the COVID-19 pandemic and additional factors that are described in the company's publicly filed documents including its '34 Act filings and the prospectuses prepared in connection with the company's offerings.

This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measures are included within the appendix of this presentation.

On the call with me today are Pat Bowe, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, Pat, Brian and I will be happy to take your questions.

Before Pat makes his opening comments, I want to remind everyone that our Annual Shareholders Meeting is scheduled for Friday, May 7 at 8:00 AM Eastern Daylight Time and will be held in a Virtual Only Meeting format.

I will now turn the call over to Pat.

Patrick E. Bowe -- President & Chief Executive Officer

Thank you, Mike, and good morning everyone. Thank you for joining our call to review our first quarter results. We're pleased with our strong first quarter performance as each of our four business segments had outstanding year-over-year results and the company recorded its best first quarter since 2014. The Trade business had an excellent start to the year, led by merchandising results in several markets. Increased volume, along with strong margins in dynamic grain markets drove the improvement. The current market volatility continues to provide us with significant opportunities.

Our Ethanol business was profitable for the first quarter, a dramatic improvement over last year when driving demand plummeted last March as a result of the pandemic. Board crush margins improved during the quarter as a result of increase in driving demand, combined with lower industry stocks and the cold weather production challenges in certain parts of the country in February. Co-product margins particularly high protein and conventional seeds were strong and we also have excellent Ethanol trading results during the quarter.

The Plant Nutrient business had its best first quarter since 2008. Margins were up in all product lines on tight supplies and strong demand. We anticipate this continuing into the second quarter, which is our primary spring fertilizer application season. Rail reported improved first quarter results due to the scrapping of some railcars given the high price for scrap steel and credit recoveries. We're also benefiting from the cost reductions that were implemented over the last several years, although this was partially offset by larger incentive compensation accruals due to our strong results.

Now I'm going to turn things over to Brian and when he's finished I'll be back to discuss our outlook for the rest of the year. Brian?

Brian A. Valentine -- Executive Vice President & Chief Financial Officer

Thanks, Pat and good morning everyone. We're now turning to our first quarter results on Slide number 5. In the first quarter of 2021, the company reported net income attributable to The Andersons of $15.1 million or $0.45 per diluted share, and adjusted net income of $15.5 million or $0.46 per diluted share on revenues of $2.6 billion. This compares to a net loss attributable to the company of $37.7 million or $1.15 per diluted share and an adjusted net loss of $43.2 million or $1.32 per diluted share on revenues of $1.9 billion in the first quarter of 2020.

Operating, general and administrative expenses declined $5.2 million or 5% year-over-year. Adjusted EBITDA for the first quarter of 2021 was $80.2 million compared to $11.2 million in the first quarter of 2020. Adjusted EBITDA for the quarter was higher for all business segments. Our effective tax rate varies each quarter based on the amount of income or loss attributable to the noncontrolling interests. Our effective tax rate for the quarter was 30% and we are currently forecasting a full year effective tax rate of 29%. The increase from 2020 is related to additional US tax on foreign earnings as well as non-deductible compensation.

Next we'll move to Slide number 6 to discuss cash, liquidity and debt. We generated cash flow from operations before changes in working capital of $89 million during the quarter, up significantly from $12 million in the first quarter of 2020. As we expected our March 31 balance sheet reflects higher working capital usage, which is due to the significant price appreciation in the grain markets. Readily marketable inventory or RMI at the end of the first quarter was $942 million, just below the $983 million balance at year-end and is higher than normal for this time of the year. By definition, RMI is highly liquid and its value exceeds our short-term borrowings. We continue to take a disciplined approach to capital spending which we expect will be in the range of $100 million to $125 million for the full year. We reduced total long-term debt by $35 million since year-end. Long-term debt reduction remains a priority and we expect to make total long-term debt repayments of between $75 million and $100 million in 2021.

Now we'll move on to a review of each of our core businesses, beginning with Trade on Slide number 7. Trade reported adjusted pre-tax income of $14.3 million compared to an adjusted pre-tax loss of $8.7 million in the same period of 2020. Income from merchandising grains was strong compared to the first quarter of 2020, due to higher demand and increased market volatility. Specific areas of improvement were through our Houston export terminal as well as in certain regional truck markets. Propane merchandising was also strong as a result of increased volume due to colder than normal winter temperatures. Synergy capture and other cost-cutting efforts led to a decrease in operating expenses of more than $11 million year-over-year. Trade's adjusted EBITDA for the quarter was $32.5 million compared to adjusted EBITDA of $9.9 million in the first quarter of 2020.

Moving to Slide number 8. Ethanol's first quarter pre-tax income attributable to the company of $2.9 million was up significantly from the first quarter 2020 loss. Co-product values were significant source of improvement in Ethanol's profitability during the quarter. This was driven by higher feed values, resulting primarily from the increase in corn prices, coupled with our new high protein feed products. Ethanol board crush margins also improved steadily during the quarter, due to increases in driving demand and tightness in Ethanol stocks. Third-party Ethanol in vegetable oil trading results were also higher year-over-year. Lastly, our non-cash mark-to-market loss of $1.1 million was significantly lower than in the first quarter of 2020. Ethanol recorded EBITDA of $22 million in the first quarter of 2021, up from a loss of $17.5 million in the first quarter of last year.

Turning to Slide number 9. The Plant Nutrient business recorded pre-tax income of $8.5 million in the first quarter, which was its best first quarter result since 2008 and an improvement of nearly $10 million from the first quarter of 2020. This solid performance was the result of having well positioned inventory in a period of strong demand. Margins per ton were significantly higher and volumes increased approximately 18%. Each of our product lines had year-over-year gross profit improvement. Plant Nutrient's EBITDA for the quarter was $16 million, an increase of over $9 million from the first quarter of 2020.

Turning to Slide number 10. The Rail business recorded pre-tax earnings of $4.9 million in the first quarter of 2021, compared with pre-tax earnings of $1 million in the first quarter of last year. The year-over-year change was primarily driven by gains from scrapping older railcars at high scrap values as well as some credit recoveries. Lease renewal rates improved sequentially, but are still below long term averages. Rail had $17 million of EBITDA for the quarter compared with EBITDA of $14.4 million for the first quarter of 2020.

And with that, I'd now like to turn things back over to Pat for some thoughts about the remainder of 2021.

Patrick E. Bowe -- President & Chief Executive Officer

Thanks, Brian. We're proud of our strong start to the year and we're optimistic about our prospects for the rest of 2021. We believe opportunities will continue to be strong in the near term, particularly in the ag sector. Export demand has been robust, especially from China. USDA is projecting this crop years Chinese imports of feed grains to exceed the previous record in the crop year 2014-'15. This demand continues to support more grain trade and elevation margins remained strong. We also anticipate that the continued price rally will encourage plan an acreage in excess of current USDA estimates. As a result of these conditions, our current outlook for the Trade business is positive and supplies are projected to be tight into the fall harvest and beyond. Large harvest will reduce, but not eliminate the impact of strong worldwide demand with a broad trade portfolio that profits both on providing storage of grain stocks as well as merchandising grains and grain products for consumptive demand, we see additional opportunities throughout the year. While these volatile conditions create opportunities, we're very focused on managing risks within the positions we hold and also continue to closely monitor the impact of planting progress in growing conditions.

With the improvement in gasoline demand, both from the pandemic recovery and seasonal driving increases, we expect continued strength in Ethanol margins. Tight supplies are supporting Ethanol prices and strong demand for co-products is beneficial to our business results. We continue to produce and sell new high protein feed products for both Colwich, Kansas and Denison, Iowa plants at good margins. We've completed spring maintenance shutdowns for our four plants owned jointly with Marathon Petroleum and the ELEMENT maintenance shutdown is scheduled for mid-May. We are well positioned to capitalize on these improving margins in our efficient plant network.

We expect our Plant Nutrient business to continue its strong performance as they complete this year's spring fertilizer application season. The increased farmer income, demand for conventional and specialty ag inputs is strong. Demand for engineered granules and Specialty Liquids in ag and industrial products as also been solid and we expect that to continue through the next year. While we believe we past the low point in railcar demand and sequential lease rates have improved, recovery in the industry remains slow. Continuing strength in scrap steel prices, while [Phonetic] the scrap railcars where it makes economic sense. But overall, idle [Phonetic] cars have declined in North America and we expect that the demand picture for railcars and repair services will continue to improve slowly.

So in closing, with a significant improvement in ag fundamentals, we're very excited about our growth prospects this year and beyond. We're well positioned to support our customers while paying close attention to risk as well as operating safely and efficiently.

With that I'd like to hand the call back to Michelle, and we'll be happy to entertain your questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Ken Zaslow with Bank of Montreal. Your line is open.

Ken Zaslow -- Bank of Montreal -- Analyst

Hey, good morning everyone.

Patrick E. Bowe -- President & Chief Executive Officer

Good morning, Ken.

Ken Zaslow -- Bank of Montreal -- Analyst

So I just have a couple of questions just to start off with. One is, on the Ethanol side, it seems like you broke the tie between one company saying that it wasn't that strong and another company saying it is very strong, but you think that the recovery will be significant or do you think it's going to be just a slow build? And what do you think the key contingencies are for production to stay in check?

Patrick E. Bowe -- President & Chief Executive Officer

Good question, Ken. I think I'd go with a slow build because, we really had a spike in grain markets rallied our co-products and really helped us with our corn oil. A lot of the corn oil also benefiting from renewable diesel, but our feed credits been really strong. So that moved earlier in the year. Demand coming off the February where we had the cold snap for some plants in the industry caused a little bit of shortage, so stocks were shorter. But now the outlook for driving in spring-summer driving season looks to be good. So we're optimistic for Ethanol demand in the near term, even with some new capacity coming back online. So I think what we always figured is get our plants in very good shape, so we finished our spring shutdowns and just with ELEMENT to go here in a week and we're going to be in really good shape to capture those opportunities.

Ken Zaslow -- Bank of Montreal -- Analyst

Can we just go a little bit further on the Ethanol business. In terms of the corn oil, what is the relative magnitude of how much you -- how do we think about how corn oil prices impact your Ethanol margin structure. That's the first part. And then the second part is, can you discuss your protein technology? Where you've been selling it to? How much is sold? Can you just give us some parameters to the protein side of it?

Patrick E. Bowe -- President & Chief Executive Officer

Sure. First on corn oil, dry mill corn oil, the market has moved dramatically. Just for example, I believe from July to March the market moved from $0.20 to $0.55. So for us every $0.10 move adds $13 million to our bottom line for our -- that's for our enterprise shared with Marathon, so it's a significant improvement from where we had been historically. And that's fair for the whole industry. We also set up a virtual trading desk over a year ago and we look to optimize our trade flows on corn oil and that's worked out well so far.

Brian A. Valentine -- Executive Vice President & Chief Financial Officer

And just to clarify that number, the $13million Pat said is for the -- call it 100% share of Ethanol as Pat said was shared with Marathon.

Patrick E. Bowe -- President & Chief Executive Officer

And then Ken, on the high protein feed technologies, we've installed that in Denison, Iowa and that was in start from the beginning in our Colwich Kansas plant. We went from original trials with feedlots and university tests and trials to be fully commercial there and are getting the soybean meal equivalent value for our ANDE feed products and so we're very confident about that. We have several steps put in place to be able to do that at our other locations, but don't have the full high protein feed profile there yet, and we hope to be able to invest to make that happen later. But I think the key thing for us now, all our early results and with commercial feedback from the customers have been very good and the values have held. So we're feeling pretty confident about high protein feed and its future.

Ken Zaslow -- Bank of Montreal -- Analyst

Can you give a relative idea of the -- how it works in your earnings as well as the same sort of sensitivity that you gave on the corn oil side? How we think about it as you move further through this process, the incremental profitability in Denison and how it's going to work through the next facility? Just some parameters to that so we can kind of think about as you move through this -- the sustainability of this beyond the Ethanol margin?

Patrick E. Bowe -- President & Chief Executive Officer

Sure. It's a really good question and the answer is, I don't know the answer. Exactly how much dollars per ton on feed credit over above what we had from the normal feed market. And we can get back to you on that Ken. I just don't have it right at head. Our team has that of course. So we are happy to give that information to you.

Ken Zaslow -- Bank of Montreal -- Analyst

Well, fortunately, we have our conference coming up. So I'll ask you then as well. How's that?

Patrick E. Bowe -- President & Chief Executive Officer

Exactly. There you go.

Ken Zaslow -- Bank of Montreal -- Analyst

And then just, sorry just continue on the Nutri business. Can you talk about the sustainability of that beyond this year? Is this an aberrational year? Is this something that, given the strength of the commodities and say it's a multi-year strength, is this something that you're going to continue to keep and again it almost seems like you could actually approach your 2024 numbers a little bit earlier. Is that the way to think about it?

Patrick E. Bowe -- President & Chief Executive Officer

Yes, I think it isn't a short-term blip, then of course, ag market pricing and thus the impact of the farmers having a sounder balance sheet helps, also the demand for grain from exports particularly China driving up and tightening the US balance sheet for grain helps. People want to put -- get better yields. So we've seen a big recovery in our volume and margin on the fertilizer side. Lot of our products are sold out for the spring. This is not a positioning gain. We didn't make a lot of money in this quarter by being more on one commodity or another, this was really a back-to-back shipping and supplying to our customers fundamental business. We've had consecutive sequential improvements quarter-over-quarter in that business, have improved a lot of our product lines, which includes our lawn and garden products and other specialty products. So overall it's been a very robust segment for us and I think that's going to continue. We see the outlook for fertilizer demand to be solid, probably for next crop year given the outlook for the supply and demand to be pretty tight and prices high. So we feel very good about our positioning of our Plant Nutrient business and how it will continue to grow. So the answer your question is, yes, it feels good and improving over time.

Ken Zaslow -- Bank of Montreal -- Analyst

And the channel inventories of the -- is it similar to historical averages?

Patrick E. Bowe -- President & Chief Executive Officer

It's higher. I think it's tighter. I don't have the exact number for you, but I mean if you had to buy something spot today, I don't know if you could get it. So, we have contracted early our key suppliers. We've had long-term relations with our big suppliers and we supplied all our customers for the spring season. So we're in very good position for that. I think if you had to go out and put on additional tonnage, it'd be very hard to do so, because the markets are tight right now.

Ken Zaslow -- Bank of Montreal -- Analyst

Okay. And then my last part of this and then I'll let it go, is the fur prices, seasonality to the fur prices, but the planting intentions will ramp down. Does that affect your total profitability for the year or the pricing overcomes that. Again pardon my ignorance, but help me understand that dynamic between the two, the prices and the volumes? And I'll leave it there.

Patrick E. Bowe -- President & Chief Executive Officer

Yes, sure, Ken. And as you know, our planning season drives our Plant Nutrient business. So it's made really right now. So planting progress has picked up dramatically in the last couple of weeks. So US planting is at 46% and that's ahead of the 36% five-year average in our area, in our fertilizer sales area, it's been off to a good start. We have a little bit of a rain coming in here this week in the next 10 days, which is actually good and actually may be slow things a little bit, but that's actually OK, but those farmers get a breath and they can get back at it. So I think the answer to your question is, we were [Indecipherable] some volume forward, our margin forward in the first quarter, because we had good sales. It may be a little bit. But it feels like second quarter is even stronger and we're going to have really full second quarter normal spring planting rush for our fertilizer products. So I think it will be more in line with historical trend on time, but our volume and margins are just stronger, flat out. And then that season completes and then in your third and fourth quarter goes quieter, but there might be bigger fall applications this year as farmers push to get more production in fertilizer crops as much as they can for yield.

Ken Zaslow -- Bank of Montreal -- Analyst

Thank you very much. Be well.

Patrick E. Bowe -- President & Chief Executive Officer

Thank you.

Operator

Our next question comes from Ben Bienvenu with Stephens. Your line is open.

Ben Bienvenu -- Stephens -- Analyst

Thanks, good morning everybody.

Patrick E. Bowe -- President & Chief Executive Officer

Good morning Ben.

Ben Bienvenu -- Stephens -- Analyst

I want to follow up on Ken's question on the ICM high protein. What is the level of appetite that you guys have to expand that technology and I'd be curious, one of the governoring factor -- governing factors to determine whether or not you do that, is it market receptivity to kind of moving up to higher protein values for the protein sell or is it a balance sheet decision, Brian, is the priority to pay down long-term debt and get through this period of higher RMI. Just help me think about the decision tree that you guys have there?

Patrick E. Bowe -- President & Chief Executive Officer

Yes, I think the decision tree is a strategic one. So we started on this path five years ago and you have to do several precursors in each of our facilities to get to the point where you can do the separations and create the counter-products you want to. So we've done a lot of that base fundamentals at some of the plants. We put the finished product in Denison most recently, because we thought that was a better cattle market and we have better opportunities for margin capture and we started with element from the get go on it. So we've proven out the market and made sure that receptivity was there as well as just the technical part of running the product etc. So now it's just a question of timing and investments and we've taken a progressively moving month-by-month step to produce at the technology chain at our plants and our plan is to continue to do it on that pace, no reason to go crazy and rush to do that. But also there is nothing that's told us to slow down, because we see the values are there and we feel we can pay down debt, keep a very good balance sheet and still make those investments for higher protein feed products at our other facilities.

Brian A. Valentine -- Executive Vice President & Chief Financial Officer

And Ben, just add to that with regard to kind of how we'll prioritize it. We'll look at the relative returns on a risk adjusted basis, and we'll look at how that compares to our rack and so we certainly feel like we have the financing capacity to move forward with these projects. You're absolutely right. We're in a period of higher working capital usage in RMI but we sort of look at that as a separate item, because the short-term debt is really for that working capital and effectively cash equivalents with the grain inventory in the margin calls. So yes, long-term debt reduction remains a priority. But we certainly have adequate capacity to fund these types of projects.

Ben Bienvenu -- Stephens -- Analyst

Okay, great. Switching gears to corn oil production. A very desirable veg oil within the complex, particularly relative to its low CI score within the basket of central feedstocks renewable diesel production. I've got two questions there. One, how do you think about maximizing the value of the production of that product, potentially beyond just selling it in the open market at the clearing price. Are there any strategic partnerships that makes sense potentially, what would it take to make that determination? And then within your overall ethanol production, what opportunities do you see to take your CI scores lower?

Patrick E. Bowe -- President & Chief Executive Officer

Just had a question. So, I mean we're super optimistic and excited about what's happening with the development of renewable diesel. One of the more amazing market disruptors have happened to the oil complex in a long, long time. So it's expected to consume up to about 33 billion additional pounds. I mean this is a significant impact of the balance sheet to everyone in veg oils. So this call it 25 billion, a new demand over and above the conventional diesel we had before. So I think the exciting part about this is why we set up the trading desk, we've been working not only with our own corn oil, but setting up other veg oil producers to be able to buy that product and be a key supplier and source to these large refineries. Of course, we have our partnership in our Ethanol business with Marathon Petroleum. They've been a great partner in this and very -- large company that is very much committed to renewables, and we see potential to do more with Marathon. We're excited about that partnership. But more importantly, we think there is opportunities across the veg oil space with terminaling and shipping and being able to be a provider. Now, we're not a soybean crusher nor are we building a renewable diesel plant, but there's lots of opportunity in the middle to merchandise and provide services to that supply chain, given the newness of it. So I think that's a very good place for a company like The Andersons to fill a need there. So that's what we're doing now and that's just continuing to grow. And we are interested in other potential partnerships and having discussions there, but nothing that we could announce at this time.

Ben Bienvenu -- Stephens -- Analyst

[Speech Overlap] Go ahead. I'm sorry.

Patrick E. Bowe -- President & Chief Executive Officer

You also asked about lower CI score. Just go back to ELEMENT, so we ran our 90-day trial for California to submit for CARB to get approval of our lower CI score that's, we ran the test and now we are writing process of submitting it. We assume in the third quarter we will be shipping to California with approval, pending final approval from California and then we'll be able to capture that low CI position that we had at our ELEMENT plant.

Now we also have done -- we're working all the time to improve our carbon footprint at all of our plants and make them lower CI scores and excited about that, and we continue recapture CO2 at all our plants, sell them over the fence in our three eastern plants to CO2 producers. And we're also working on other aspects of feed and energy at each of our plants to continue our pursuit of low CI and also optimizing corn oil yields that was the other thing you talked about was that, I mean you want to squeeze out every pound you can of your corn oil yield possible. So kind of working on all of those at the same time. The position is super strong, low-cost producer also with low CI scores.

Ben Bienvenu -- Stephens -- Analyst

Okay. Revisiting again Ken's question on ethanol outlook. You had touched on the domestic backdrop. It looks favorable given the recovery and driving miles. What do you think about the export market? I know we just saw numbers yesterday, China numbers look pretty encouraging, but maybe some of the -- some left to be desired from other major export partners. What do you think about the export opportunity and does that present an opportunity to be contributed to the favorable SMB for Ethanol?

Patrick E. Bowe -- President & Chief Executive Officer

Yeah. Given the explosive nature of Ag shipments in the export market this past year. I want to think that there will be good potential on Ethanol exports, so we finished 2020 at 1.437 billion gallons I believe, which was up from '19, but not as high as a 1.5 billion we had done in '18. So the pace so far were a little behind, kind of, that's I think a little bit COVID related with Canada and Mexico. But there is opportunities to Asia. As you know we had Chinese buy early this year, haven't returned back in a big way, but it's good potential we think for exports to be higher. Now, I doubt it's going to be a runaway number, but we could see a return to a one for kind of number, which would be very supportive to the Ethanol complex to soft a little bit of a slow start, it appears.

Ben Bienvenu -- Stephens -- Analyst

All right. Can we talk a little bit about crop demand and supply set up and your view there. What's the ideal environment for you from here. And what are the risks that you guys are cognizant of on your dashboard as you think about navigating through the next several quarters?

Patrick E. Bowe -- President & Chief Executive Officer

Sure. The setup that's played out for ourselves and then also just say for the grain industry as a whole, driven by big Chinese demand and increased exports is a rising tide lifts all boats, no fun intended there. So elevation margins have dramatically increased across the sector. Not just at export ports, but backing up into the interior more than offsetting any decline in storage income. So we think that will continue. And the big question is, how many acres are going to be planted? As you know, the USDA said 91.1 million acre in their last report for corn and a lot of people think that number is too low. We felt that way all along. We probably use a 93 million acre planting and with the progress we've seen so far, some good rains that have come in and good planting conditions.

I mean we should see a very solid planting season, which is really going to be beneficial, just to add more bushels to handle as we get into new crop. We are the largest new crop book on of farmers purchases -- our purchases from farmers than we've seen for many years. And they pretty sold pretty aggressively for old crop. So the farmer has been selling into this rally which is a good thing. And the other challenges for the grain industry have to pay those margin calls on the higher prices that have happened to the Board of Trade, thus driving up our RMI like everyone else, but it's great position to have. We like owning the grain positions we have through the balance of this season and into new crop and are buying those at good levels that we could merchandise and make good margins on. Brian do you want to add anything to that.

Brian A. Valentine -- Executive Vice President & Chief Financial Officer

Ben you'd asked about some of the risk factors I think. Obviously there is increased credit risk in this environment. There is -- there can be farmer delivery risk depending on where they locked-in, I think we have a, what we believe to be a pretty robust risk management process and team and committee that meets regularly. And so it's something that we try to monitor and manage very closely, but those are always additional risk factors in that environment.

Michael T. Hoelter -- Vice President, Corporate Controller and Investor Relations

I mean, could be some noise in it historically sometimes China for making big purchases might cancel some purchases or they come back and buy bigger for next year as they try to stock up for their strategic reserve. So I think there might be some timing that happens with export sales will be interesting to watch. Big thing that the market is focused on now is really crop conditions. Finishing up Brazil that's been dry and then see how the US gets planted and gets a good start in the year. So far so good on the US side.

Ben Bienvenu -- Stephens -- Analyst

That's very helpful. My last question is on the rail business. So you see -- seeing some signs of improvement. At what point should we begin to see lease rates improve for you guys in particular?

Patrick E. Bowe -- President & Chief Executive Officer

And as we've mentioned in there, so some of our results this quarter were bolstered by some credit actually [Phonetic] made as also we scrap on a favorite cars because of higher scrap prices. I mean, really high scrap prices for scrap steel. So that was a smart play for us. The lease rates sequentially are improving, but it still depends on suffered like coming off three years ago that were much higher. So it kind of depends where you're at in the cycle. The answer to your question, as we see it, it's a slow recovery with the major infrastructure bill and see in the US economy continue to step up that helps the rail markets overall, but it's a much slower recovery. Obviously our fertilizer and grain car portion is good right now, but there is other segments that are a little bit slower to recover. So I think the answer to your question is we feel it's a slow, steady recovery and a lot of that, probably more back-end weighted toward Q4.

Ben Bienvenu -- Stephens -- Analyst

Okay. Congrats on the first quarter and good luck this summer.

Patrick E. Bowe -- President & Chief Executive Officer

Thank you, Ben. So it's fun to see really positive results for the quarter.

Ben Bienvenu -- Stephens -- Analyst

Yes. It's impressive. Thanks.

Operator

Our next question comes from Eric Larson with Seaport Global. Your line is open.

Eric Larson -- Seaport Global -- Analyst

Yes, good morning everyone. And nice to see such a strong quarter during a typically seasonally weak quarter right?

Patrick E. Bowe -- President & Chief Executive Officer

Thanks, Eric.

Eric Larson -- Seaport Global -- Analyst

So I'm going to drill down a little bit more on Trade. I mean, obviously what we've got some volatility in this market that we haven't had in six or seven years, which is really nice. And it is creating lot on merchandising opportunities, but obviously we have -- we don't have any carry in the forward market here. So what was your storage income number for 2020. And Mike, you have to overcome all of that in order to -- continue to have strong results?

Michael T. Hoelter -- Vice President, Corporate Controller and Investor Relations

Yes, I don't know our exact storage income per se, but I think what the key thing is that while you said spreads have been very narrow and there is been a cash carry on the futures market, there has been a cash carry on the cash grain market where customers want to put on coverage for the spring and summer. And that's a pain as a cash carry to lock in shipments of domestic grain. So it gives you a margin to store it for the next several months, which has been good to see. And we've been able to take advantage of those trades of selling and elevating grain here this spring-summer. So that's been encouraging. And then new crop will have to see how the spreads play out as wheat [Phonetic] crop comes in the summer. And then, and what we see in the fall. So the merchandising margins were making in grain and our grain elevations overall are well in excess of what our storage income was. So the key thing that's we're capturing those margins by selling the grain, which is better than stored at this time.

Eric Larson -- Seaport Global -- Analyst

Yes, that's true. I think that's very true of these cash markets, particularly for this time of the year are extraordinary to be honest with you. So you put about $600 million of debt on short-term debt on your balance sheet to take advantage of these merchandising opportunities obviously it's because of the higher grain prices. Are you going to need to actually take on more debt in order to capture more opportunities or is this a level that you can work with to continue to drive really strong results?

Brian A. Valentine -- Executive Vice President & Chief Financial Officer

Yes. So it's really good question. I think at the end of the quarter, we had about $450 million of additional capacity in our revolver facility, to the extent that where it makes sense, we certainly will utilize that revolver. I think you probably heard us talk in the past our Trade Group uses. We have a little over 45 profit centers that have a very focused process where they have a capital charge and they have -- they are charged for their short-term borrowings. And so they're looking at the economics of all these trades in doing what makes the best sense. And so if I think about even how it would go in a typical year, it usually call it first quarter and then in the second quarter would be sort of where we peak. If you think about, I'm going to flip over to Plant Nutrient, how Plant Nutrient flows, you could see a little bit less working capital usage by the end of the second quarter there, and then by the end of the third quarter is usually where we kind of hit a trough. I think it is more likely to be elevated this year given the trading dynamics and the higher commodity prices.

Patrick E. Bowe -- President & Chief Executive Officer

Maybe just to then pile onto that, Eric, that these short-term debt requirements to fund margin calls for futures is the same for everybody in the industry. I think you well know that, but the margins we're getting have been so outstanding that more than offsets any additional costs for debt or additional debt. And so this is true for others in our segment. This has been a good market. So if you want to capture those margins and have your debt low to make sure you can finance that.

Eric Larson -- Seaport Global -- Analyst

Yeah, sure. Let's just keep [Indecipherable]. So the next question, the Great Lakes are now open are you shipping grain -- exporting grain on the Great Lakes right now?

Patrick E. Bowe -- President & Chief Executive Officer

You are loading a boat today as we speak. So the answer is yes.

Eric Larson -- Seaport Global -- Analyst

Interesting. Okay, good. So the next question, Plant Nutrient. Obviously we're still seeing -- we are literally still seeing fertilizer prices go up, which is astounding. So your margins have got to be good, but if the business now changed such that farmers are going to want to use more of your low self-start, is it helping your other premium liquid fertilizer business revenue here as well. And is that something for the second quarter that we could look forward to, what you really haven't had in a few years in terms of good fundamentals in your liquids?

Patrick E. Bowe -- President & Chief Executive Officer

Yes, the answer is yes. And we've been able to get benefits of that already. We see low-salt liquid starters and other specialty fertilizer sales strong. One of the challenges to that business is the raw material costs have gone way up too just like the rest of the fertilizer industry, but we've been able to pass that along through our product margins. Other segments, I mean, our lawn segment has had a really good start and we do co-manufacturing and other engineered granules, all those businesses are running full. Our plants are running full out. So it's a broad across the spectrum left to volume and margins in that business. So it's not just one product right or one particular spike of one particular segment and the key thing is we want to be sold out, right. So you don't want to be long high-priced product when the season restarts when it's over. So we just want to be very close in our supply chain and sell up our inventories as best as we can to the market here this spring.

Eric Larson -- Seaport Global -- Analyst

Okay. So just curious on some of the conversations you're having with your customers. We know soybean supplies near term, old crop is really tight. The way corn prices are acting, it seems like they seem to be even tighter than maybe what the USDA estimates are either that or the farmers of full price at all are ready or are just literally just hanging onto it. Can you give a bit -- give me a little flavor as to how you're looking at the old crop tightness, and is that real tight or is it just farmer saying they want some more income?

Patrick E. Bowe -- President & Chief Executive Officer

No, it's really tight. So we have much higher farmers fall on this year and we recommended our grower customers to make sure they capture this price increase, which I think they were smart in doing so. So we have hired probably one of our higher old crop books of ownership on that we've seen in a long time. So the marketplace is tight, there is good margins for all players in the marketplace and as you know the carry out for soybeans is really tight, corn could be getting tighter depends on how the season finishes off. But the answer is going to be, we're going to have high premiums and a good position here in the rest of the spring and then it's going to be all focused on the Board and the Board's going to be focused on planting and crop conditions. The good news about that, where I think we're going to be a good fertilizer application season. We have good weather, good moisture, so everything's pointing toward a big crop. If we get it all in and we're ahead of schedule. So we feel good about how the crop looks for next year, but it's going to be a tight finish to the year, better than we've seen in some time and we're well positioned for that.

Eric Larson -- Seaport Global -- Analyst

So this is a little bit of more forward-looking question here. So are -- have farmers done pricing any new crop, are commercial buyers trying to price new crop yet or is it just too early for that activity be taking place for your forward book, let's say this fall and into '22?

Patrick E. Bowe -- President & Chief Executive Officer

The answer is yes. They've been selling new crop, farmer has sold into this new crop rally. And we have good long positions of good basis ownership for harvest this next year. I don't think we've seen a lot of early buying for the next crop year from the end consumer or even the exporter. And that's the part that probably still remains, but the farmer has been an active seller.

Eric Larson -- Seaport Global -- Analyst

Okay good, I figured that that was the case. Final question, you didn't mention anything about your forward coverage on your Ethanol business. Have you locked in? If you take an advantage as the market giving up there is a lock-in any of your forward business here?

Patrick E. Bowe -- President & Chief Executive Officer

Yes, as you know, Eric, we're always trading and locking in margins when we can in our Ethanol business. We've been able to do that. Did some of that in the first quarter and a little bit into the second quarter. We're not much farther for the rest of the year, but anytime we get an opportunity to lock down margins that are positive in that business that put us in a good position, we'll do so. So the answer is yes, but I wouldn't say it's significant when you get to third and fourth quarter.

Eric Larson -- Seaport Global -- Analyst

That means you're bullish on the market. Okay. That is all I had. We'll talk a little bit later. Thank you for letting me ask the questions.

Patrick E. Bowe -- President & Chief Executive Officer

Terrific, thank you.

Operator

There are no further questions, I'd like to turn the call back over to Mike Hoelter for any closing remarks.

Michael T. Hoelter -- Vice President, Corporate Controller and Investor Relations

Thanks, Michelle. We want to thank you all for joining us this morning. I also want to mention again that this presentation will be available on the Investors page of our website at andersonsinc.com. Our next earnings conference call is scheduled for Wednesday, August 4 at 11:00 AM Eastern Daylight Time, when we will review our second quarter 2021 results. As always thank you for your interest in The Andersons' and we look forward to speaking with you again soon.

Operator

[Operator Closing Remarks]

Duration: 49 minutes

Call participants:

Michael T. Hoelter -- Vice President, Corporate Controller and Investor Relations

Patrick E. Bowe -- President & Chief Executive Officer

Brian A. Valentine -- Executive Vice President & Chief Financial Officer

Ken Zaslow -- Bank of Montreal -- Analyst

Ben Bienvenu -- Stephens -- Analyst

Eric Larson -- Seaport Global -- Analyst

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