MAUMEE, OHIO, US — The Andersons, Inc. sold its railcar leasing business to American Industrial Transport, Inc. for $550 million cash, as part of its strategic plan to focus on its agricultural segments.
The company also is looking to sell within the next 12 months its remaining railcar repair business, which includes 29 facilities throughout the United States.
Cash from the sale will be used to pay down debt, while maintaining a disciplined approach to future growth investments and returning cash to shareholders, The Andersons said.
The Andersons has been in the railcar leasing business for more than 30 years and has more than 22,000 railcars, making it a top 10 railcar leasing company in the United States, said Pat Bowe, president and chief executive officer, during a conference call.
“This railcar leasing business has been a successful and consistent cash flow generator for The Andersons,” Bowe said. “The current environment made this an opportune time to divest. We received a valuation of over 10 times the trailing 12 months EBITDA.”
In the second quarter of 2021, the Rail segment had pretax income of $3.1 million, up from $2.6 million in the same period a year earlier. Overall, The Andersons posted net income of $43.5 million, for its best second-quarter earnings since 2014.
AITX provides solutions to the freight shipping industry across railcar leasing, repair, and data. The company is an affiliate of ITE Management LP, an asset manager targeting transportation and industrial assets and companies and related industries and services.
“We are incredibly pleased to expand the breadth and depth of our railcar leasing platform and the services AITX can provide,” said Jason Koenig, managing partner at ITE and member of the AITX board of directors. “AITX expects to hire a majority of The Andersons employees in the railcar leasing business, and we are pleased to welcome aboard our new team members. With our more diversified fleet offering and best-in-class repair network, AITX customers now have greater flexibility to meet their rail shipping, servicing, and data needs.”
Bowe said AITX expects to hire a majority of the current employees.
The Andersons vision is to become the most nimble and innovative North American ag supply chain, from farm to fork and field to fuel, Bowe said. Key drivers of growth going forward will be the company’s ability to innovate in key drivers of agriculture, including sustainability, traceability, organics, renewable diesel feedstocks, and plant-based protein feedstocks.
“The increasing global demand in our industries will provide the opportunity to grow our core grain and fertilizer business,” Bowe said during the call.
With the sale, The Andersons updated its EBITDA growth estimates to $350 million to $375 million by 2032 and $375 million to $400 million by 2025.