MAUMEE, Ohio, May 4, 2016 /CNW/ -- The Andersons, Inc.
(NASDAQ: ANDE) announces financial results for the
first-quarter ended March 31,
2016.
- Company reports a net loss of $14.7
million for the first quarter or $0.52 per diluted share
- Rail Group delivers pre-tax earnings of $9.4 million, sustaining utilization levels in
softening market and validating strategy of customer and industry
diversification
- Plant Nutrient Group improves pre-tax income to $1.7 million on stronger sales of nutrient and
lawn products. Poised for planting season with richer mix of
specialty products
- Ethanol Group performs well, remaining cash positive in
margin environment challenged by low oil prices and coupled with
seasonally lower first quarter demand
- Grain Group reports a pre-tax loss of $17.4 million as impact of poor 2015 crop
persists; takes action on underperforming assets, selling locations
in Northwest Iowa
- Company announces initiative to reduce ongoing costs by more
than $10 million
The Company reported a net loss attributable to The Andersons of
$14.7 million, or $0.52 per diluted share, on revenues of
$887.9 million for the first quarter
of 2016 compared to net income of $4.1
million or $0.14 per diluted
share on revenues of $918.2 million
in the first quarter of 2015.
"We are understandably disappointed with these results," said
CEO Pat Bowe. "Market conditions in
the first quarter prevented our Grain Group from realizing
meaningful basis appreciation following last year's poor harvest in
the Eastern Corn Belt. Additionally, our affiliates
experienced losses resulting from limited trading opportunities,
including compressed margins at both the producer and processor
ends of the supply chain and significant reductions in distillers
dried grain shipments to China.
"We are aggressively moving forward to deliver improved
operating results by addressing costs," he continued. "We see
a stronger outlook for the remainder of the year as nutrient sales
are trending favorably and ethanol margins are expected to improve
with summer driving demand.
Grain performance will continue to be challenged until the fall
harvest which should produce opportunities to return to normal
levels of profitability."
First Quarter Segment Overview
Good start to the year for Rail Group
The Rail Group achieved pre-tax income of $9.4 million compared to $10.3 million in the first quarter of 2015. The
Group's strategy of maintaining a highly diversified portfolio of
equipment, leases and customer industries sustained a good level of
asset utilization as we started the year.
Results were also supported by growth and improved profitability
in the railcar repair business.
Rail Group
Results
|
|
|
|
|
|
|
$ in MM
|
Q1
'16
|
Q1
'15
|
V
PY
|
FY
2015
|
FY
2014
|
Base Lease Income
|
$4.4
|
$5.0
|
($0.6)
|
$31.5
|
$13.6
|
Fleet Utilization Rate
|
91.5%
|
91.8%
|
(0.3%)
|
92.4%
|
89.5%
|
Car Sale Income
|
$2.4
|
$4.5
|
($2.0)
|
$13.3
|
$15.8
|
Rail Services & Other
|
$2.6
|
$0.8
|
$1.8
|
$5.9
|
$2.0
|
Rail Group Pre-Tax
Income
|
$9.4
|
$10.3
|
($0.9)
|
$50.7
|
$31.4
|
Equipment utilization rates averaged 91.5 percent in the first
quarter compared to 91.8 percent in the first quarter of last
year. Average lease rates were flat compared to the same
period of 2015, while costs of sales were slightly higher due to
increased depreciation. This generated pre-tax income from base
leasing operations of $4.4 million in
the first quarter, down slightly from the $5.0 million achieved in the same period last
year.
Railcar sales generated $2.4
million of pre-tax income in the first quarter compared to
$4.5 million in the first quarter of
2015. The timing of these transactions normally vary quarter to
quarter and year to year depending on rail market and financing
conditions.
Services and Other pre-tax income for Rail was $2.6 million in the first quarter, up from
$789,000 in the same quarter in 2015,
led by revenue growth and improved performance in the repair
business.
In early March the Company redeemed its stake in Iowa Northern
Railway (IANR) after nearly six years of investment in the short
line. In 2015 the IANR investment contributed approximately
$2.5 million to the full year Group
results. The Andersons will continue to have an ongoing
relationship with the railway, providing repair services.
2016 is off to a good start despite lower railroad shipping
volumes, particularly in the energy sector. Lower traffic,
increased velocity and decreased dwell times result in better
railcar cycle times for shippers, which negatively affects car
demand. While market conditions will raise challenges to asset
utilization and renewal rates the Rail Group is well positioned for
the slowing rail shipping cycle with currently high utilization
rates, even spread of lease renewal activity and a diverse lease
customer base.
Plant Nutrient Group anticipating strong planting
season
Basic nutrient demand started slowly in the first quarter as
farmers held off buying decisions in a falling price environment,
limiting early season sales in the Group's wholesale and farm
center locations. Though volumes eventually surpassed the prior
year, margins were dampened by high inventory levels in the supply
chain.
Adjusted Plant
Nutrient Group Results
|
|
|
|
|
|
|
$ in MM, Tons in
000's
|
Q1
'16
|
Q1
'15
|
V
PY
|
FY
'15
|
FY
'14
|
Basic
Nutrients (Tons)
|
212
|
179
|
33
|
1,234
|
1,267
|
Specialty Nutrients (Tons)
|
119
|
88
|
31
|
398
|
359
|
Other (Farm Centers, Lawn, Cob)
|
129
|
126
|
3
|
603
|
615
|
Total
volume
|
460
|
393
|
67
|
2,236
|
2,242
|
Plant Nutrient
Group Pre-Tax Income
|
$1.7
|
$0.4
|
$1.3
|
$14.8
|
$24.5
|
- Basic nutrients (NPK) tons were up 18 percent year over year in
the first quarter, partially driven by the added basic business
from former Nutra-Flo locations.
- Specialty nutrients tons (low salt starter fertilizers, micro
nutrients) were up 35 percent driven by the integration of the
acquired Nutra-Flo products into The Andersons manufacturing and
distribution network. Nutra-Flo has been successfully
integrated into Plant Nutrient's product lines and manufacturing
network.
- Other products (Lawn, Cob and Farm Center) were up on strong
volumes of Lawn products, partially offset by continued weakness in
Cob driven by the fall off in domestic oil drilling.
Conditions early in the second quarter have been good across the
farm belt with April showing continued strength in basic and
specialty nutrients. Assuming favorable weather conditions prevail,
the second quarter should yield good results for the Group.
Ethanol Group remains cash positive despite weak industry
margins
The Ethanol Group produced 95.0 million gallons in the first
quarter compared to 93.5 million gallons in first quarter of 2015.
Margins were at or below our five-year lows for comparable weeks
for much of the first quarter, returning to levels above the low
end of the five-year range as second quarter began.
Key factors affecting first quarter margins included:
- Higher corn basis in Eastern Corn Belt put pressure on the
Group's performance compared to the broader industry, which has a
greater concentration of western facilities where basis was
comparatively lower.
- Industry production held at seasonally high levels through the
first quarter despite low industry demand and margins.
Industry production slowed as the second quarter began and many
players started their spring maintenance cycles.
- Margin contribution from co-products remained under pressure in
the first quarter as softer international demand, particularly in
China, weakened distillers dried
grain pricing.
The Ethanol Group reported a pre-tax loss of $2.7 million in the first quarter compared to the
$5.3 million pre-tax income generated
in the same period last year. Prior year results were bolstered by
hedge positions initiated in the fall of 2014. Market conditions in
the fall of 2015 did not offer similar opportunities to lock in
margins. The facilities did selectively run to maximize yield
versus volume during weeks of peak industry inventory, and continue
to optimize their performance.
The outlook entering the stronger spring and summer driving
months, is positive though mixed. U.S. national average
gasoline prices are running below five-year lows, supported by high
stocks of crude and low oil prices. Demand from higher gasoline
consumption should provide some offset to margin pressures from
current gasoline prices.
Grain Group continues to feel impact of poor 2015 crop in
Eastern Corn Belt
The Grain Group reported a pre-tax loss of $17.4 million compared to pre-tax income of
$743,000 in the same quarter of 2015.
Although the Group anticipated a difficult first half, some basis
appreciation was expected. This did not materialize, negatively
impacting profits.
Through the first quarter the market provided little carry or
basis appreciation as global supplies and a strong dollar weighed
on inventory movement. This resulted in losses in both the base
grain business and the grain affiliates. Base grain saw almost no
appreciation in basis or spreads, driving $9.7 million of the $12.8
million drop in performance versus the first quarter of
2015.
Adjusted Grain
Group Results
|
|
|
|
|
|
|
$ in MM
|
Q1
'16
|
Q1
'15
|
V
PY
|
FY
2015
|
FY
2014
|
Base
Grain
|
($13.3)
|
$(0.5)
|
($12.8)
|
$0.6
|
$14.9
|
Grain
Affiliates
|
($4.1)
|
$1.2
|
($5.3)
|
$13.3
|
$26.1
|
Grain
Group
|
($17.4)
|
$0.7
|
($18.1)
|
$13.9
|
$41.0
|
The Group's affiliates were also impacted by the weak basis and
spreads which limited space income. Lansing Trade Group (LTG) was
negatively impacted by the initiation of anti-dumping and
countervailing duties investigation of U.S. distillers dried grains
(DDGS) by the Chinese government in January. This, along with weak
margins across the supply chain from producers to processors
limited margins in trading and drove them to a loss for the
quarter.
During the quarter, the Company announced that it signed an
agreement to sell eight grain and agronomy assets in western
Iowa to MaxYield Cooperative of
West Bend, Iowa. While the Company
was able to generate improved results in these assets during 2015,
it was determined that another party would be a better owner of the
assets. The Andersons acquired the grain and agronomy locations as
part of a larger transaction with Green Plains Grain Company in
2012. The Tennessee assets
acquired during that same transaction will remain a part of The
Andersons. The transaction does not involve the Denison ethanol facility nor the
recently-acquired Nutra-Flo facilities in Iowa. This
transaction closed on May 1,
2016. The sale will result in a small gain in the second
quarter.
Negative industry fundamentals persist for commercial grain
handlers including high global inventory levels and moderate
movement. These will limit opportunities for improvement for the
Grain Group in the near term. Many factors do point to
opportunities in the fourth quarter and on into 2017. The
combination of the high levels of residual inventory in the
industry and the recently published planting acreage estimates
point to higher space utilization levels during this year's harvest
providing opportunities for the Company to purchase grain at more
normal discounts and achieve desired profits from space.
Retail showed incremental improvements
The Retail Group had a pre-tax loss of $2.1 million for the first quarter compared to a
$2.2 million pre-tax loss in the same
period last year. The seasonality of the Retail Group is such that
the first quarter is normally the most difficult and historically
generates losses. This year's first quarter performance improvement
was primarily due to the timing of Easter which occurred in March
rather than April, partially offset by slow sales in outerwear and
snow removal products during the mild Midwest winter.
Corporate
Unallocated Company level expenses for the first quarter of 2016
were $10.9 million compared to
$9.4 million in the first quarter of
2015. Corporate expense was higher primarily due to $2.5 million in severance associated with actions
taken to reduce cost. The Company strives to maintain a lean
organization and will continue work on cost reduction measures
commensurate with the current market cycle and economic
environment.
The Company has announced an initiative to reduce annual run
rate costs by at least $10 million
across its business groups and corporate functions during the next
two years. Projects include synergies from the IT infrastructure
refresh project, flattening the organization, spending cuts and
cost reductions in both direct and indirect materials from sourcing
projects.
Conference Call
The Company will host a webcast on Thursday, May 5, 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 92115873). It is recommended that you call 10
minutes before the conference call begins.
To access the webcast: Click on the link:
http://edge.media-server.com/m/p/qvoboc24 Log on. 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. 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
March 31,
|
(in thousands, except
per share data)
|
2016
|
|
2015
|
Sales and
merchandising revenues (a)
|
$
887,879
|
|
$
918,225
|
Cost of sales and
merchandising revenues
|
820,124
|
|
834,912
|
Gross
profit
|
67,755
|
|
83,313
|
Operating,
administrative and general expenses
|
79,881
|
|
78,604
|
Interest
expense
|
7,051
|
|
6,039
|
Other
income:
|
|
|
|
Equity in earnings of
affiliates
|
(6,977)
|
|
3,261
|
Other income,
net
|
3,246
|
|
3,107
|
Income (loss) before
income taxes
|
(22,908)
|
|
5,038
|
Income tax provision
(benefit)
|
(7,286)
|
|
1,093
|
Net income
(loss)
|
(15,622)
|
|
3,945
|
Net loss attributable
to the noncontrolling interests
|
(926)
|
|
(152)
|
Net income (loss)
attributable to The Andersons, Inc.
|
$
(14,696)
|
|
$
4,097
|
|
|
|
|
Per common
share:
|
|
|
|
Basic earnings
attributable to The Andersons, Inc. common shareholders
|
$
(0.52)
|
|
$
0.14
|
Diluted earnings
attributable to The Andersons, Inc. common shareholders
|
$
(0.52)
|
|
$
0.14
|
Dividends
declared
|
$
0.155
|
|
$
0.14
|
|
|
|
|
(a) 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.
|
The Andersons,
Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
46,301
|
|
$
63,750
|
|
$
54,461
|
Restricted
cash
|
718
|
|
451
|
|
685
|
Accounts receivable,
net
|
207,740
|
|
170,912
|
|
209,928
|
Inventories
|
703,452
|
|
747,399
|
|
743,957
|
Commodity derivative
assets – current
|
61,316
|
|
49,826
|
|
86,824
|
Deferred income
taxes
|
-
|
|
6,772
|
|
12,878
|
Other current
assets
|
76,575
|
|
90,412
|
|
65,017
|
Total current
assets
|
1,096,102
|
|
1,129,522
|
|
1,173,750
|
Other
assets:
|
|
|
|
|
|
Commodity derivative
assets – noncurrent
|
371
|
|
412
|
|
243
|
Other assets, net
(a)
|
186,760
|
|
193,689
|
|
180,223
|
Equity method
investments
|
236,083
|
|
242,107
|
|
222,082
|
|
423,214
|
|
436,208
|
|
402,548
|
Rail Group assets
leased to others, net
|
337,661
|
|
338,111
|
|
313,095
|
Property, plant and
equipment, net (a)
|
462,661
|
|
455,260
|
|
398,234
|
Total
assets
|
$
2,319,638
|
|
$
2,359,101
|
|
$
2,287,627
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Short-term
debt
|
$
274,002
|
|
$
16,990
|
|
$
311,660
|
Trade and other
payables
|
367,338
|
|
668,788
|
|
370,377
|
Customer prepayments
and deferred revenue
|
100,384
|
|
66,762
|
|
130,254
|
Commodity derivative
liabilities – current
|
33,394
|
|
37,387
|
|
55,401
|
Accrued expenses and
other current liabilities
|
65,129
|
|
70,324
|
|
64,065
|
Current maturities of
long-term debt
|
54,044
|
|
27,786
|
|
19,037
|
Total current
liabilities
|
894,291
|
|
888,037
|
|
950,794
|
|
|
|
|
|
|
Other long-term
liabilities
|
27,463
|
|
18,176
|
|
14,871
|
Commodity derivative
liabilities – noncurrent
|
874
|
|
1,063
|
|
2,084
|
Employee benefit plan
obligations
|
46,151
|
|
45,805
|
|
59,557
|
Long-term debt, less
current maturities
|
402,360
|
|
436,208
|
|
323,258
|
Deferred income
taxes
|
179,780
|
|
186,073
|
|
139,145
|
Total
liabilities
|
1,550,919
|
|
1,575,362
|
|
1,489,709
|
Total
equity
|
768,719
|
|
783,739
|
|
797,918
|
Total liabilities and
equity
|
$
2,319,638
|
|
$
2,359,101
|
|
$
2,287,627
|
|
|
|
|
|
|
(a) For the period
ended March 31, 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
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
external customers
|
$
538,814
|
|
$
114,693
|
|
$
166,991
|
|
$
39,609
|
|
$
27,772
|
|
$—
|
|
$
887,879
|
Gross
profit
|
16,200
|
|
2,336
|
|
26,689
|
|
14,560
|
|
7,970
|
|
—
|
|
67,755
|
Equity in earnings of
affiliates
|
(3,767)
|
|
(3,210)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6,977)
|
Other income,
net
|
668
|
|
30
|
|
795
|
|
1,377
|
|
89
|
|
287
|
|
3,246
|
Income (loss) before
income taxes
|
(17,408)
|
|
(3,603)
|
|
1,704
|
|
9,375
|
|
(2,076)
|
|
(10,900)
|
|
(22,908)
|
Loss attributable to
the noncontrolling interests
|
(3)
|
|
(923)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(926)
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
(17,405)
|
|
$
(2,680)
|
|
$
1,704
|
|
$
9,375
|
|
$
(2,076)
|
|
$
(10,900)
|
|
$
(21,982)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Three months ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Revenues from
external customers (b)
|
$
558,676
|
|
$
132,801
|
|
$
153,951
|
|
$
44,216
|
|
$
28,581
|
|
$
—
|
|
$
918,225
|
Gross
profit
|
29,725
|
|
6,286
|
|
21,966
|
|
17,322
|
|
8,014
|
|
—
|
|
83,313
|
Equity in earnings of
affiliates
|
1,549
|
|
1,712
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,261
|
Other income,
net
|
833
|
|
42
|
|
1,035
|
|
839
|
|
97
|
|
261
|
|
3,107
|
Income (loss) before
income taxes
|
740
|
|
5,131
|
|
424
|
|
10,313
|
|
(2,183)
|
|
(9,387)
|
|
5,038
|
Loss attributable to
the noncontrolling interest
|
(3)
|
|
(149)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(152)
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
743
|
|
$
5,280
|
|
$
424
|
|
$
10,313
|
|
$
(2,183)
|
|
$
(9,387)
|
|
$
5,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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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SOURCE The Andersons, Inc.