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The Andersons, Inc. Reports Second Quarter Results

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August 3, 2016 4:07 PM EDT

MAUMEE, Ohio, Aug. 3, 2016 /PRNewswire/ -- The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the second-quarter ended June 30, 2016.

  • Company reports second quarter net income of $14.4 million, $0.51 per diluted share
  • Grain Group pre-tax loss of $13 million, showing improvement over Q1
  • Ethanol Group returned to profitability driven by strong seasonal demand
  • Plant Nutrient Group volumes grew year over year while margins remained soft
  • Rail Group pre-tax income of $6.6 million, down from prior year primarily due to the large lease settlement recorded in second quarter of 2015

The Company reported net income attributable to The Andersons Inc. of $14.4 million, or $0.51 per diluted share on revenues of $1.1 billion for the second quarter of 2016 compared to net income of $31.1 million or $1.09 per diluted share on revenues of $1.2 billion in the second quarter of 2015.

For the first six months of the year, the Company had a net loss of $273,000, or $0.01 per diluted share compared to net income of $35.2 million or $1.23 per diluted share during the same period last year.

"The first half of the year was challenging, in line with our expectations, due to the poor crop last fall in the Eastern Corn Belt," said CEO Pat Bowe. "While challenges in our Grain Group persisted, we did begin to see positive impacts from a good wheat harvest, and are starting to capture benefits from our productivity initiatives.

"We were encouraged to see good volumes of specialty products in our Plant Nutrient business," he continued. "However, margins were disappointing in the face of oversupply of basic nutrients and low grain prices. The industry is starting to see production curtailments in certain products which should help bring supply and demand more into balance."

Second Quarter Segment Overview

Grain Group challenges persisted into the second quarter

The Grain Group reported a pre-tax loss of $13.0 million compared to pre-tax income of $3.1 million in the second quarter of 2015. 

Grain Group Results

Second Quarter

First Six Months

$ in MM

'16

'15

V PY

'16

'15

V PY

   Base Grain

($9.8)

$(4.3)

($5.6)

$(23.1)

$(4.7)

$(18.4)

   Grain Affiliates

($3.2)

$7.4

($10.6)

$(7.3)

$8.6

$(15.9)

Grain Group

($13.0)

$3.1

($16.2)

$(30.4)

$3.9

$(34.3)

 

The Group's Base Grain operations continued to feel the pressure from both low carry and basis appreciation primarily due to the poor crop in the Eastern Corn Belt in 2015. 

Affiliate earnings were lower due to losses in the Lansing Trade Group (LTG) while performance at Thompsons Limited remained steady.  DDGS markets returned towards normal conditions during the quarter for LTG, however they were adversely impacted by trading positions during the quarter.

As previously announced during the quarter, the Company completed the sale of eight grain and agronomy locations in Western Iowa to MaxYield Cooperative of West Bend, Iowa.   This transaction closed on May 1, 2016, and resulted in a nominal gain. 

Ethanol Group rebounded

The Group returned to profitability in the second quarter and for the full first half of the year. Ethanol margins grew in the second quarter on the seasonal increase in demand from the summer driving season and steady export volumes. 

Ethanol pre-tax income for the second quarter came in at $6.2 million, compared to the $9.7 million earned in the same quarter of 2015.  This brings the year to date results back to positive income with the first six months generating $3.5 million compared to $14.9 million in the same period last year.

Factors impacting second quarter performance included:

  • U.S. gasoline demand tracked above five year averages, strengthening as the driving season got into full gear.
  • Margins were volatile during the quarter as corn prices moved lower and fuel prices continued to fluctuate.
  • Industry production levels were at high levels throughout the quarter at times pressuring margins.

The Group's assets continue to perform well, achieving a new high for production versus comparable second quarters in prior years. The Albion, Michigan ethanol facility expansion remains on schedule for startup in the spring of 2017.

Plant Nutrient Group

Pre-tax income for the Group was $23.5 million, up from $18.9 million in same period last year. Nutrient volumes and margins continued to be negatively impacted by depressed grain prices and softening prices. 

Plant Nutrient Group Results

Second Quarter

First Six Months

$ in MM, Tons in 000's

'16

'15

V PY

'16

'15

V PY

  Basic Nutrients (Tons)

549

537

12

2%

761

716

45

6%

  Specialty Nutrients (Tons)

208

129

79

62%

327

216

110

51%

  Other (Tons)

185

237

(52)

(22%)

314

363

(50)

(14%)

  Total volume

942

903

39

4%

1,401

1,296

105

8%

Pre-Tax Income

$23.5

$18.9

$4.3

23%

$25.2

$19.3

$5.9

31%

 

Basic nutrient volumes were up modestly in the second quarter with the increase from acquired locations partially offset by intensified competitive pressures fueled by oversupply throughout the channel.  Specialty nutrient volumes were up 62 percent year over year, driven by added sales of Nutra-Flo products.  Volumes in the other category continued to track lower compared to prior year.

Rail Group

The Rail Group earned $6.6 million in the quarter, down from the prior year primarily due to an unusually large, $10.6 million pre-tax, gain on the settlement of an early lease termination in the prior year.

Rail Group Results

Second Quarter

First Six Months

$ in MM

'16

'15

V PY

1H '16

1H '15

V PY

    Base Lease Income

$2.7

$15.6

$(12.9)

$7.0

$20.6

$(13.6)

          Fleet Utilization Rate

88.6%

93.5%

(4.9%)

90.0%

92.7%

(2.7%)

    Car Sale Income

$2.3

$4.7

$(2.4)

$4.7

$9.2

$(4.5)

    Rail Services & Other

$1.6

$1.4

$0.2

$4.2

$2.2

$2.0

Rail Group Pre-Tax Income

$6.6

$21.7

$(15.1)

$15.9

$32.0

$(16.1)

 

Equipment utilization rates averaged 88.6 percent in the second quarter compared to 93.5 percent in the second quarter of last year.  Average lease rates were slightly down compared to the same period of 2015, while costs of sales were higher due to increased storage cost partially offset by lower maintenance expenses year over year.

Railcar sales generated $2.3 million of pre-tax income in the second quarter compared to $4.7 million in the second quarter of 2015. While part of the normal portfolio management process, the timing of these transactions normally vary quarter to quarter and year to year depending on rail market and financing conditions.

Rail Services and Other pre-tax income was $1.6 million in the second quarter, up from $1.4 million in the same quarter in 2015, driven by improved performance in the railcar repair business partially offset by the elimination of income from an investment in a short line railroad which was redeemed earlier this year.

Retail

The Retail Group had pre-tax income of $1.0 million for the second quarter compared to income of $1.5 million in the same period last year.  Performance in the second quarter was lower compared to the same period of 2015 due to the timing of Easter which occurred in March rather than April, and lower same store sales through the quarter. 

Corporate

Unallocated Corporate level expenses for the second quarter of 2016 were $2.2 million compared to expenses of $5.8 million in the second quarter of 2015. Corporate expense was lower primarily due to lower incentive compensation accruals and the impact of cost reduction measures.

Conference Call

The Company will host a webcast on Thursday, August 4, 2016 at 11:00 A.M. ET, to discuss its performance and provide outlook for 2016.  To dial-in to the call, the number is 866-439-8514 or 678-509-7568 (participant passcode is 49515341).  It is recommended that you call 10 minutes before the conference call begins. 

To access the webcast:

a. Click on the link: http://edge.media-server.com/m/p/by3ndtra b. Log on.   c. Click on the phone icon at the bottom of the "webcast window" on the left side of the screen. Then, you will be provided with the conference call number and passcode.  d. Click the gear set icon (left of the telephone icon) and select 'Live Phone' to synchronize the presentation with the audio on your phone. 

A replay of the call can also be accessed under the heading "Investor" on the Company website at www.andersonsinc.com.  

Forward Looking Statements

This release contains forward-looking statements.  These statements involve risks and uncertainties that could cause actual results to differ materially.  Without limitation, these risks include economic, weather and regulatory conditions, competition, and the risk factors set forth from time to time in the Company's filings with the Securities and Exchange Commission.  Although the Company believes that the assumptions upon which the financial information and its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct.

Company Description

Founded in Maumee, Ohio, in 1947, The Andersons is a diversified Company rooted in agriculture conducting business across North America in the grain, ethanol, plant nutrient and rail sectors. The Company also has a consumer retailing presence. For more information, visit The Andersons online at www.andersonsinc.com.

 

The Andersons, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three months ended June 30,

Six months ended June 30,

(in thousands, except per share data)

2016

2015

2016

2015

Sales and merchandising revenues (a)

$              1,064,244

$                 1,187,704

$              1,952,123

$                 2,105,929

Cost of sales and merchandising revenues

967,202

1,079,531

1,787,326

1,914,445

Gross profit

97,042

108,173

164,797

191,484

Operating, administrative and general expenses

75,405

83,743

155,286

162,346

Interest expense

6,554

4,025

13,605

10,063

Other income:

Equity in earnings of affiliates

2,344

16,190

(4,633)

19,450

Other income, net

5,682

13,772

8,928

16,880

Income (loss) before income taxes

23,109

50,367

201

55,405

Income tax provision (benefit)

7,668

17,969

382

19,061

Net income (loss)

15,441

32,398

(181)

36,344

Net loss attributable to the noncontrolling interests

1,018

1,306

92

1,155

Net income (loss) attributable to The Andersons, Inc.

$                    14,423

$                      31,092

$                        (273)

$                      35,189

Per common share:

Basic earnings attributable to The Andersons, Inc. common shareholders

$                        0.51

$                          1.09

$                       (0.01)

$                          1.23

Diluted earnings attributable to The Andersons, Inc. common shareholders

$                        0.51

$                          1.09

$                       (0.01)

$                          1.23

Dividends declared

$                      0.155

$                          0.14

$                      0.310

$                          0.28

 

(a)  Revenue and cost of sales in the interim periods of 2015 have been recast to reflect a change in policy related to the classification of gains and losses on derivative contracts as disclosed in the 2015 10-K.

 

The Andersons, Inc.Condensed Consolidated Balance Sheets(Unaudited)

(in thousands)

June 30, 2016

December 31, 2015

June 30, 2015

Assets

Current assets:

Cash and cash equivalents

$                    31,383

$                     63,750

$                      40,773

Restricted cash

987

451

941

Accounts receivable, net

212,588

170,912

238,601

Inventories

486,236

747,399

508,408

Commodity derivative assets – current

115,924

49,826

39,860

Deferred income taxes

-

6,772

6,069

Other current assets

48,754

90,412

44,765

Total current assets

895,872

1,129,522

879,417

Other assets:

Commodity derivative assets – noncurrent

1,934

412

2,990

Other assets, net (a)

183,728

193,689

277,672

Equity method investments

238,478

242,107

224,380

424,140

436,208

505,042

Rail Group assets leased to others, net

340,136

338,111

330,832

Property, plant and equipment, net (a)

447,267

455,260

437,074

Total assets

$              2,107,415

$                2,359,101

$                 2,152,365

Liabilities and equity

Current liabilities:

Short-term debt

$                 179,404

$                     16,990

$                    141,250

Trade and other payables

302,413

668,788

358,190

Customer prepayments and deferred revenue

18,252

66,762

25,927

Commodity derivative liabilities – current

43,183

37,387

42,622

Accrued expenses and other current liabilities

71,169

70,324

72,034

Current maturities of long-term debt

53,720

27,786

27,188

Total current liabilities

668,141

888,037

667,211

Other long-term liabilities

30,430

18,176

14,934

Commodity derivative liabilities – noncurrent

2,182

1,063

2,177

Employee benefit plan obligations

44,902

45,805

57,686

Long-term debt, less current maturities

398,746

436,208

417,279

Deferred income taxes

179,911

186,073

171,163

Total liabilities

1,324,312

1,575,362

1,330,450

Total equity

783,103

783,739

821,915

Total liabilities and equity

$              2,107,415

$                2,359,101

$                 2,152,365

 

(a) For the period ended June 30, 2015 Other assets, net and Property, plant and equipment, net have been recast to reflect the change in accounting policy which reclassified software and accumulated amortization.  Additional detail is available in the 2015 10-K.

 

The Andersons, Inc.

Segment Data

(Unaudited)

(in thousands)

Grain

Ethanol

Plant Nutrient

Rail

Retail

Other

Total

Three months ended June 30, 2016

Revenues from external customers

$    522,989

$142,520

$        320,036

$40,342

$38,357

$—

$1,064,244

Gross profit

17,551

4,570

49,577

13,602

11,742

—

97,042

Equity in earnings of affiliates

(2,907)

5,251

—

—

—

—

2,344

Other income, net

2,642

3

1,222

185

91

1,539

5,682

Income (loss) before income taxes

(13,037)

7,205

23,535

6,569

1,010

(2,173)

23,109

Loss attributable to the noncontrolling interests

—

1,018

—

—

—

—

1,018

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

$    (13,037)

$     6,187

$          23,535

$   6,569

$   1,010

$              (2,173)

$      22,091

-

Three months ended June 30, 2015

-

Revenues from external customers (b)

$      601,397

$   142,564

$          357,186

$  45,523

$  41,034

$                      —

$   1,187,704

Gross profit

25,005

5,843

46,698

18,249

12,378

—

108,173

Equity in earnings of affiliates

7,875

8,315

—

—

—

—

16,190

Other income, net

1,230

6

459

11,834

94

149

13,772

Income (loss) before income taxes

3,147

10,975

18,873

21,689

1,469

(5,786)

50,367

Loss attributable to the noncontrolling interest

(2)

1,308

—

—

—

—

1,306

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

$          3,149

$       9,667

$            18,873

$  21,689

$    1,469

$               (5,786)

$        49,061

Grain

Ethanol

Plant Nutrient

Rail

Retail

Other

Total

Six months ended June 30, 2016

Revenues from external customers

$1,061,803

$257,213

$        487,027

$79,951

$66,129

$—

$1,952,123

Gross profit

33,751

6,906

76,266

28,162

19,712

—

164,797

Equity in earnings of affiliates

(6,674)

2,041

—

—

—

—

(4,633)

Other income, net

3,310

33

2,017

1,562

180

1,826

8,928

Income (loss) before income taxes

(30,445)

3,602

25,239

15,944

(1,066)

(13,073)

201

Income (loss) attributable to the noncontrolling interests

(3)

95

—

—

—

—

92

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

$    (30,442)

$     3,507

$          25,239

$15,944

$ (1,066)

$           (13,073)

$            109

-

Six months ended June 30, 2015

-

Revenues from external customers

$   1,160,073

$   275,365

$          511,137

$  89,739

$  69,615

$—

$   2,105,929

Gross profit

54,730

12,129

68,664

35,571

20,390

—

191,484

Equity in earnings of affiliates

9,423

10,027

—

—

—

—

19,450

Other income, net

2,064

48

1,494

12,673

191

410

16,880

Income (loss) before income taxes

3,887

16,106

19,297

32,002

(714)

(15,173)

55,405

Income (loss) attributable to the noncontrolling interest

(5)

1,160

—

—

—

—

1,155

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

3,892

14,946

19,297

32,002

(714)

(15,173)

54,250

 

(a) Income (loss) before income taxes attributable to The Andersons, Inc. for each Group is defined as net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets and is reported net of the noncontrolling interest share of income (loss).

(b) Revenue in the interim periods of 2015 has been recast to reflect a change in policy related to the classification of gains and losses on derivative contracts as disclosed in the 2015 10-K.

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/the-andersons-inc-reports-second-quarter-results-300308736.html

SOURCE The Andersons, Inc.


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