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Form 8-K Andersons, Inc. For: Aug 03

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August 3, 2016 5:11 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
Date of Report (Date of Earliest Event Reported):
 
August 3, 2016
The Andersons, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
 
 
 
Ohio
000-20557
34-1562374
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
 
 
 
480 West Dussel Drive, Maumee, Ohio
 
43537
_________________________________
(Address of principal executive offices)
 
___________
(Zip Code)

Registrant’s telephone number, including area code:
 
419-893-5050
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02 Results of Operations and Financial Condition.
The Andersons, Inc. (the "Company") issued a press release today announcing its second quarter 2016 earnings. This press release is attached as exhibit 99.1 to this filing.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
The Andersons, Inc.
 
 
 
 
 
 
 
August 3, 2016
 
By:
 
/s/ John Granato
 
 
 
 
 
 
 
 
 
Name: John Granato
 
 
 
 
Title: Chief Financial Officer
 
 
 
 
(Principal Financial Officer)





Exhibit Index
Exhibit No.
 
Description
 
 
 
99.1
 
Second Quarter 2016 Earnings Release





NEWS RELEASE

The Andersons, Inc. Reports Second Quarter Results
 

Maumee, Ohio, August 3, 2016 -- 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

$ in MM
Q2 ‘16
Q2 ‘15
V PY
1H ‘16
1H ‘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 Half
$ 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

$ in MM
Q2 ‘16
Q2 ‘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.

Investor Relations Contact    
Jim Burmeister    
Phone: 419-891-5848






The Andersons, Inc.
Condensed Consolidated Statements of Operations
(unaudited)

(in thousands, except per share data)
Three months ended June 30,
 
Six months ended June 30,
 
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 (a)
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, net
2,344

 
16,190

 
(4,633
)
 
19,450

  Other income, net
5,682

 
13,772

 
8,928

 
16,880

Income before income taxes
23,109

 
50,367

 
201

 
55,405

Income tax provision
7,668

 
17,969

 
382

 
19,061

Net income
15,441

 
32,398

 
(181
)
 
36,344

  Net income attributable to the noncontrolling interests
1,018

 
1,306

 
92

 
1,155

Net income 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

 
$
0.31

 
$
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 (b)
$
183,728

 
$
193,689

 
$
277,672

  Equity method investments
238,478

 
242,107

 
224,380

 
424,140

 
436,208

 
505,042

Railcar assets leased to others, net
340,136

 
338,111

 
330,832

Property, plant and equipment, net
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

(b) 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

Income (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
$
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

Income (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 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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