MAUMEE, Ohio, May 3, 2017 /PRNewswire/ -- The Andersons,
Inc. (NASDAQ: ANDE) announces financial results for the first
quarter ended March 31, 2017.
Company reports net loss of $3.1
million or $0.11 per diluted
share; results include $7.8 million
in pretax costs associated with exiting the Retail business and a
$4.7 million pretax gain on the sale
of the Florida farm
centers.
- Grain Group records a $12.3
million pretax year-over-year improvement, but incurs a
pretax loss of $5.1 million
- Ethanol Group delivers $1.7
million of pretax income on better margins despite
continuing distillers dried grains (DDGs) margin pressure
- Plant Nutrient Group earns pretax income of $6.7 million, including the gain on the sale of
its Florida farm centers
- Rail Group earns $6.1 million
of pretax income in a continuing soft market
- Retail Group records $6.8
million pretax loss, including exit costs
The Company reported a first quarter 2017 net loss attributable
to The Andersons of $3.1 million, or
$0.11 per diluted share, on revenues
of $852 million. This result included
pretax costs of $7.8 million related
to closing the Company's retail stores, which is scheduled to be
completed by the end of the second quarter. This result also
represents an $11.6 million or
$0.41 per diluted share improvement
over the net loss of $14.7 million,
or $0.52 per diluted share, on
revenues of $888 million recorded in
the same period of 2016.
"Three of our four businesses posted better year-over-year
results," said CEO Pat Bowe. "While
we are not satisfied with our overall results, we continue to work
hard to improve execution, sharpen our cost focus, and position the
Company for profitable growth. We are closing our Retail business
and sold underperforming Plant Nutrient Group assets in
Florida. We also acquired a small
specialty grain handling and milling business that further expands
our food ingredient capabilities."
Bowe continued, "For the second quarter in a row, our Grain
Group improved year-over-year results in its base business by
approximately $10 million as it
registered improved space income that was partially offset by lower
than expected basis appreciation in the quarter. In addition,
post-harvest farmer selling has been slow. Grain's affiliates also
improved their performance year over year. Ethanol benefitted
some from margin hedging but is still fighting both
vomitoxin-related discounts and lower DDG values relative to corn.
Plant Nutrient value added product margins continued to be
compressed by oversupply during the quarter, although volumes are
up year over year. Rail continued to profitably operate through
what we believe are the later stages of a cyclical market downturn.
Overall, we remain confident in our ability to deliver long-term
value and growth to our shareholders."
First Quarter Highlights
- The Grain Group's pretax income improved by $12.3 million over the first quarter of 2016,
mostly as a result of improved space income. Our base grain
business drove almost 80% of the improvement, with the group's
affiliates accounting for the rest.
- Ethanol margins were better year over year, in large part
because the group had hedged about half of its production coming
into the quarter. DDG values have been negatively impacted by low
demand from China and discounts
due to vomitoxin in the Eastern Corn Belt. The group's Albion expansion came on line late in the
quarter, ahead of schedule, on budget and safely.
- The Plant Nutrient Group's volume and margins were comparable
to first quarter 2016 levels. The Group recorded a $4.7 million pretax gain on the sale of its
Florida farm centers in March.
- Rail Group pretax income was down $3.3
million as fleet utilization dropped and maintenance and
storage expenses increased.
- The Retail Group recorded $7.8
million in pretax costs associated with closing the
business. Almost all of the charges were for employee separation
expenses. Gross profit generated in the early stages of inventory
liquidation helped soften the impact of those charges.
First Quarter Segment Overview
Grain Group continues on its road to recovery
The Grain Group incurred a pretax loss of $5.1 million in the quarter, a $12.3 million improvement over the $17.4 million pretax loss the group incurred in
the same period last year. The table below separates the results of
Base Grain, which comprises grain facilities that the Company
operates, from the earnings from investments in our grain
affiliates, which include Lansing Trade Group (LTG) and Thompsons
Limited.
$ in
millions
|
First Quarter
|
|
Pretax
Income
|
2017
|
2016
|
Vs
|
Base Grain
|
$(3.6)
|
$(13.3)
|
$9.7
|
Grain
Affiliates
|
$(1.5)
|
$(4.1)
|
$2.6
|
Total Grain
Group
|
$(5.1)
|
$(17.4)
|
$12.3
|
|
|
|
|
|
|
Base grain pretax income improved by $9.7
million in the first quarter of 2017 compared to first
quarter 2016 results. Space income improved by more than
$9 million, and the sale of
Iowa assets in the second quarter
of 2016 eliminated the recurrence of about $1.4 million in losses. While the group's
merchandising margins improved over 2016 results, low prices kept
growers largely sidelined and end users have not been motivated to
pay carries to secure ownership later in the year. The result is
that some normal first quarter activity has been pushed into the
second and third quarters.
The group is aligned with current USDA forecasts of 90 million
acres of corn and 89.5 million acres of soybeans. Acres could shift
from corn to beans if the current cool and wet conditions continue.
Current high grain stocks are expected to cause more corn to move
by harvest time, which could create opportunity for the Grain
Group.
Ethanol Group improves performance and new Albion capacity brought on line; DDG issues
continue
The Ethanol Group earned pretax income of $1.7 million in the first quarter, a $4.4 million improvement over the $2.7 million pretax loss it incurred in the same
period in 2016, primarily on higher year over year margins. Hedging
decisions and slightly lower corn costs helped deliver those
results despite robust industry production and stocks.
The new assets at the expanded ethanol production facility in
Albion, Michigan became
operational and the project was substantially completed in March,
on time and on budget. This expansion has more than doubled the
capacity of the plant that previously produced approximately 65
million gallons per year.
The group continued to realize discounts on DDGs during the
quarter due to persistent problems with vomitoxin in the vicinities
of the group's three eastern facilities. Lower international demand
for DDGs, particularly as a result of Chinese tariffs, put pressure
on pricing and margins.
The four ethanol plants combined for a first quarter production
record of more than 98 million gallons, about 4 percent over the
comparable period, in part because the new Albion capacity was on line for part of the
quarter. The group also successfully executed maintenance shutdowns
at two of the four plants during the quarter.
Plant Nutrient Group earns pretax income of $6.7 million, including a $4.7 million pretax gain on the sale of
Florida farm centers
The Plant Nutrient Group recorded pretax income of $6.7 million in the first quarter compared to
pretax income of $1.7 million in the
prior year period. The 2017 results included a $4.7 million pretax gain on the sale of its
Florida farm centers in March.
The group continues to see lower margins in all segments except
in base nutrients and in its lawn fertilizer business. The quarter
was characterized by low prices, oversupply and choppy markets,
leading the farm gate to delay buying decisions. Given these
conditions, the group managed its inventory ownership positions
conservatively.
Volumes of base nutrients (NPK) were down about 9 percent year
over year, while higher-margin value added nutrient tons (low salt
starter fertilizers, micro nutrients) were up 9 percent. Volumes of
products in the group's other businesses (Farm Centers, Lawn and
Cob) were flat. Those margin and volume changes combined to reduce
gross profit by almost $1 million.
The Group's productivity and efficiency efforts more than offset
that reduction.
Early second quarter weather conditions have been wet and cool
across the farm belt and have resulted in a slow start to the
planting season in some areas. Continued unfavorable planting
conditions could prove detrimental by shortening the growers'
fertilizer application window, pressuring margins as dealers and
wholesalers with long positions try to sell out of them. As the
season progresses, farmers may shift their planting intentions from
corn to soybeans.
Rail Group registers solid results in spite of a continued
weak market
The Rail Group earned first quarter pretax income of
$6.1 million compared to $9.4 million in the same period of the prior
year.
$ in
millions
|
First Quarter
|
|
Pretax
Income
|
2017
|
2016
|
Vs
|
Lease
Income
|
$0.7
|
$4.4
|
$(3.7)
|
Utilization
Rate
|
83.6%
|
91.5%
|
(7.9%)
|
Car
Sales
|
$3.6
|
$2.4
|
$1.2
|
Services
and Other
|
$1.8
|
$2.6
|
$(0.8)
|
Total Rail
Group
|
$6.1
|
$9.4
|
$(3.3)
|
|
|
|
|
|
|
Base leasing operations earned $0.7
million, down $3.7 million
year over year, on nearly 8 percent lower utilization. Utilization
averaged 83.6 percent during the quarter compared to 84.8 percent
sequentially and 91.5 percent during the same period last year.
Average lease rates were flat, and maintenance and storage costs
were higher than in the year-ago period.
Railcar sales generated $3.6
million of pretax income in the quarter compared to
$2.4 million in the first quarter of
2016. While these transactions are part of the normal portfolio
management process, they vary in size from quarter to quarter and
year to year depending on rail market and financing conditions.
Rail's service and other pretax income was $1.8 million in the quarter, down from
$2.6 million in the same period of
2016. The prior year result included $1.1
million from the redemption of the group's investment in a
short line railroad. The group's repair and fabrication facilities
set all-time quarterly records for sales and pretax income during
the quarter.
North American rail traffic began to improve year over year
during the quarter against weak comparative 2016 volumes. In
addition, Class I railroad efficiency declined from the previous
quarter. However, railroad shipping volumes remain historically
weak. Although the group continues to be well-positioned for this
slower rail cycle, it expects modestly improved utilization rates
to be coupled over the near term with leases of shorter duration
with lower lease rates.
Company begins exiting the retail business
The Company began the process of closing its remaining four
retail stores and shutting down the business during the quarter.
The group's net pretax loss of $6.8
million included closing costs of $7.8 million, most of which were employee
separation expenses. The group managed the beginning stages of
inventory liquidation well, allowing it to post better sales, gross
profit and pretax income numbers than in 2016 without considering
these unusual costs.
Corporate expenses continue to decrease
Unallocated Company level expenses for the first quarter of 2017
were $8.2 million, down $2.7 million from the $10.9 million incurred in the comparable 2016
period.
Conference Call
The Company will host a webcast on Thursday, May 4, 2017 at
11:00 A.M. ET, to discuss its
performance and provide its updated outlook for 2017. To dial-in to
the call, please dial 866-439-8514 or 678-509-7568 (participant
passcode is 59598749). 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/4857u2rj. 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
"Investors" 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. 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)
|
2017
|
|
2016
|
Sales and
merchandising revenues
|
$
|
852,016
|
|
$
|
887,879
|
Cost of sales and
merchandising revenues
|
|
775,558
|
|
|
820,124
|
Gross
profit
|
|
76,458
|
|
|
67,755
|
Operating,
administrative and general expenses
|
|
81,947
|
|
|
79,881
|
Interest
expense
|
|
6,100
|
|
|
7,051
|
Other income
(loss):
|
|
|
|
Equity in earnings
(losses) of affiliates, net
|
|
(1,878)
|
|
|
(6,977)
|
Other income,
net
|
|
7,897
|
|
|
3,246
|
Income (loss) before
income taxes
|
|
(5,570)
|
|
|
(22,908)
|
Income tax provision
(benefit)
|
|
(2,535)
|
|
|
(7,286)
|
Net income
(loss)
|
|
(3,035)
|
|
|
(15,622)
|
Net income (loss)
attributable to the noncontrolling interests
|
|
54
|
|
|
(926)
|
Net income (loss)
attributable to The Andersons, Inc.
|
$
|
(3,089)
|
|
$
|
(14,696)
|
|
|
|
|
Per common
share:
|
|
|
|
Basic earnings
(losses) attributable to The Andersons, Inc. common
shareholders
|
$
|
(0.11)
|
|
$
|
(0.52)
|
Diluted earnings
(losses) attributable to The Andersons, Inc. common
shareholders
|
$
|
(0.11)
|
|
$
|
(0.52)
|
Dividends
declared
|
$
|
0.160
|
|
$
|
0.155
|
The Andersons,
Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
29,645
|
|
$
62,630
|
|
$
46,301
|
Restricted
cash
|
752
|
|
471
|
|
718
|
Accounts receivable,
net
|
190,628
|
|
194,698
|
|
207,740
|
Inventories
|
641,294
|
|
682,747
|
|
703,452
|
Commodity derivative
assets – current
|
48,049
|
|
45,447
|
|
61,316
|
Other current
assets
|
83,623
|
|
72,133
|
|
76,575
|
Total current
assets
|
993,991
|
|
1,058,126
|
|
1,096,102
|
Other
assets:
|
|
|
|
|
|
Commodity derivative
assets – noncurrent
|
339
|
|
100
|
|
371
|
Other assets,
net
|
175,099
|
|
180,445
|
|
186,760
|
Equity method
investments
|
208,993
|
|
216,931
|
|
236,083
|
|
384,431
|
|
397,476
|
|
423,214
|
Rail Group assets
leased to others, net
|
342,936
|
|
327,195
|
|
337,661
|
Property, plant and
equipment, net
|
440,395
|
|
450,052
|
|
462,661
|
Total
assets
|
$
2,161,753
|
|
$
2,232,849
|
|
$
2,319,638
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Short-term
debt
|
$
255,000
|
|
$
29,000
|
|
$
274,002
|
Trade and other
payables
|
276,834
|
|
581,826
|
|
367,338
|
Customer prepayments
and deferred revenue
|
81,628
|
|
48,590
|
|
100,384
|
Commodity derivative
liabilities – current
|
29,914
|
|
23,167
|
|
33,394
|
Accrued expenses and
other current liabilities
|
65,952
|
|
69,648
|
|
65,129
|
Current maturities of
long-term debt
|
56,144
|
|
47,545
|
|
54,044
|
Total current
liabilities
|
765,472
|
|
799,776
|
|
894,291
|
|
|
|
|
|
|
Other long-term
liabilities
|
36,125
|
|
27,833
|
|
27,463
|
Commodity derivative
liabilities – noncurrent
|
450
|
|
339
|
|
874
|
Employee benefit plan
obligations
|
34,832
|
|
35,026
|
|
46,151
|
Long-term debt, less
current maturities
|
365,971
|
|
397,065
|
|
402,360
|
Deferred income
taxes
|
181,541
|
|
182,113
|
|
179,780
|
Total
liabilities
|
1,384,391
|
|
1,442,152
|
|
1,550,919
|
Total
equity
|
777,362
|
|
790,697
|
|
768,719
|
Total liabilities and
equity
|
$
2,161,753
|
|
$
2,232,849
|
|
$
2,319,638
|
The Andersons,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Grain
|
|
Ethanol
|
|
Plant
Nutrient
|
|
Rail
|
|
Retail
|
|
Other
|
|
Total
|
Three months ended
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
external customers
|
$
478,528
|
|
$
154,153
|
|
$
146,587
|
|
$
40,390
|
|
$
32,358
|
|
$—
|
|
$
852,016
|
Gross
profit
|
23,649
|
|
5,540
|
|
25,808
|
|
12,308
|
|
9,153
|
|
—
|
|
76,458
|
Equity in earnings
(losses) of affiliates
|
(1,345)
|
|
(533)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,878)
|
Other income,
net
|
646
|
|
7
|
|
5,564
|
|
1,079
|
|
130
|
|
471
|
|
7,897
|
Income (loss) before
income taxes
|
(5,073)
|
|
1,770
|
|
6,672
|
|
6,078
|
|
(6,846)
|
|
(8,171)
|
|
(5,570)
|
Income (loss)
attributable to the noncontrolling interests
|
—
|
|
54
|
|
—
|
|
—
|
|
—
|
|
—
|
|
54
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
(5,073)
|
|
$
1,716
|
|
$
6,672
|
|
$
6,078
|
|
$
(6,846)
|
|
$
(8,171)
|
|
(5,624)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
(losses) 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)
|
Income (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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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).
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/the-andersons-inc-reports-first-quarter-results-300450937.html
SOURCE The Andersons, Inc.