MAUMEE, Ohio, Nov. 7, 2016
/PRNewswire/ -- The Andersons, Inc. (NASDAQ: ANDE) announces
financial results for the third quarter ended September 30, 2016.
- Company reports third quarter net income of $1.7 million, or $0.06 per diluted share
- Grain Group turns in $1.9
million of pre-tax income after shedding underperforming
assets and positioning itself to take advantage of improved crop
conditions at harvest
- Ethanol Group reports pre-tax earnings of $9.5 million, up from $5.9
million in the third quarter of 2015 on record production
and a good margin environment
- Plant Nutrient Group reduces pre-tax loss to $7.2 million as the Group navigates a difficult
environment in the industry
- Rail Group earns $6.8 million
of pre-tax income as utilization rates soften
The Company reported net income attributable to The Andersons of
$1.7 million for the third quarter of
2016, or $0.06 per diluted share, on
revenues of $860 million. This
represents a $2.9 million improvement
compared to the net loss of $1.2
million in the same period in 2015, or ($0.04) per diluted share, on revenues of
$909 million.
Year to date, the Company has produced net income attributable
to The Andersons of $1.4 million or
$0.05 per diluted share compared to
the prior year when it generated $34.0
million, or $1.19 per diluted
share.
"Conditions are improving for our Grain Group and margins are
strong for the Ethanol Group, but challenges persist with our Plant
Nutrient Group facing weak margins and our Rail Group continuing to
experience softening in utilization," said CEO Pat Bowe. "In this mixed environment, the
team is making good progress on our $10
million cost reduction initiative and continuing to take
action on the items within our control to combat uncertainty in
some of our markets."
Third Quarter Segment Overview
Start of the turnaround for the Grain Group
In the third quarter, the Grain Group benefited from having shed
its underperforming Iowa assets
earlier this year and positioned itself to take advantage of
improving crop conditions in the Eastern Corn Belt. Overall, grain
production in the Eastern Corn Belt has rebounded from last
year. Bean yields were strong and corn did well in most
markets with some pockets of weaker yields.
The table below breaks out the pre-tax income of the Group's
Base Grain operations from that of its non-consolidated affiliates
(Lansing Trade Group and Thompsons Limited).
$ in MM
|
Third
Quarter
|
Year to
Date
|
Pre-Tax
Income
|
2016
|
2015
|
Vs
|
2016
|
2015
|
Vs
|
Base Grain
|
$1.6
|
($0.9)
|
$2.5
|
($21.5)
|
($5.6)
|
($15.9)
|
Grain
Affiliates
|
$0.3
|
$1.0
|
($0.7)
|
($7.1)
|
$9.6
|
($16.7)
|
Grain
Group
|
$1.9
|
$0.1
|
$1.8
|
($28.6)
|
$4.0
|
($32.6)
|
|
|
|
|
|
|
|
|
Third quarter pre-tax income for the Grain Group was
$1.9 million, a $1.8 million increase over the same period last
year. Base Grain operations were up $2.5
million year over year, driven by the elimination of losses
generated by the Group's assets in Iowa last year. Grain's affiliates
continued to lag year over year, but have improved from the losses
incurred in the first half of the year.
Year to date results for the Group were a pre-tax loss of
$28.6 million, a drop of $32.6 million from the $4.0 million in pre-tax income realized in the
same period last year.
Harvest is well underway in most of our markets and
substantially done in some. Factors we are seeing that will impact
the Group's results in the fourth quarter and first half of 2017
include:
- Though there are some localized areas of weaker production in
Michigan and Ohio, the majority of the Group's draw areas
has enjoyed significantly better production than last year,
allowing them to purchase grain at good levels.
- Wheat storage rates should be stronger year over year as
carries in the wheat market were supported by increased Variable
Storage Rates (VSR) that went into effect in third quarter. The
market is currently supporting a little over half of the full carry
benefit of the VSR increases.
- Performance of the added elevator capacity in Tennessee was muted during the third quarter
by stronger than normal export demand and cheaper barge freight on
the Mississippi River, which increased local competition during
their harvest.
- While results in Grain's affiliates have improved compared to
the first two quarters of this year, Lansing Trade Group is behind
expectations largely attributed to compressed margins at its
grain facilities and lower DDG flows to China given recently imposed import
duties.
Ethanol Group benefits from continued strong demand and
improved margin conditions
The Ethanol Group delivered another quarterly production volume
record, producing a third quarter best of 95.4 million gallons
compared to the 93.5 million gallons in the same period of the
prior year.
The Group generated pre-tax income of $9.5 million during the third quarter compared to
the $5.9 million generated in the
same quarter last year.
Ethanol margins rose throughout the quarter as corn prices
remained modest and gasoline prices began to return to prior year
levels after holding at five year lows for most of the year.
Renewable Identification Number (RIN) prices held at strong levels
through the quarter, near the $0.90
level, which supports demand for higher blends such as E-85. A
portion of the quarters margins were hedged early in the quarter to
lock in at attractive levels.
The expansion of the ethanol production facility in Albion, Michigan continues to proceed safely,
on schedule and on budget. The project will double the joint
venture's annual capacity to about 130 million gallons. The
Group expects the added capacity to come on line in the first half
of 2017.
Industry dynamics in the quarter were supportive, with record
production levels and historically high levels of gasoline demand
driven by low fuel prices. The Group continues to see softness in
distiller's dried grain (DDG) prices. Chinese sanctions and higher
vomitoxin levels near some of our facilities have had some negative
impact on DDG.
Oversupply and falling prices continue to challenge Plant
Nutrient volumes and margins
The Plant Nutrient Group incurred a pre-tax loss of $7.2 million in the third quarter compared to the
$11.1 million pre-tax loss in 2015's
third quarter. The slightly better performance was derived from
expense reductions resulting from integration of the Kay-Flo
business and savings generated as part of the Company's
productivity initiative. Prior year results also included one-time
acquisition related costs. These year-over-year improvements were
largely offset by a continuing weak margin environment for
nutrients due to oversupply and falling prices in the market.
Year to date, the Group has generated $18.0 million of pre-tax income compared to
$8.1 million in the first nine months
of 2015.
tons in thousands; $
in MM
|
Third
Quarter
|
Year to
Date
|
Volumes
|
2016
|
2015
|
Vs
|
2016
|
2015
|
Vs
|
Basic Nutrients NPK
|
219
|
240
|
(21)
|
980
|
957
|
23
|
Specialty Nutrients
|
78
|
78
|
-
|
405
|
295
|
110
|
Other
|
73
|
80
|
(7)
|
397
|
443
|
(46)
|
Total Group
Tons
|
370
|
398
|
(28)
|
1,782
|
1,695
|
87
|
Pre-Tax
Income
|
$(7.2)
|
$(11.1)
|
$3.9
|
$18.0
|
$8.1
|
$9.9
|
During the third quarter basic nutrient volumes fell in part due
to producer and dealer reluctance to buy in a sustained falling
price environment. The Group also saw lower advance purchase
activity during the quarter. These market forces are expected to
persist through the fourth quarter.
Industry margin pressures and lower crop prices have weakened
near-term Group performance in both the legacy basic nutrients and
the more recently acquired specialty products businesses. The
Group remains committed of the soundness of its long term strategy
to grow its specialty nutrients products that support precision
agriculture. However, performance and market conditions have been
disappointing this year. At this point the Group expects that the
Kay-Flo acquisition will be near breakeven this year.
Rail Group performance falls on softer market conditions and
timing of car sales income
North American rail traffic volume continues to fall year over
year and Class I railroad velocities remain high, placing pressure
on lease renewal rates and railcar utilization levels.
$ in
millions
|
Third
Quarter
|
Year to
Date
|
Pre-Tax
Income
|
2016
|
2015
|
Vs
|
2016
|
2015
|
Vs
|
Lease
Income
|
$3.4
|
$6.5
|
$(3.1)
|
$10.4
|
$27.4
|
$(17.0)
|
Car
Sales
|
$1.6
|
$3.2
|
$(1.6)
|
$6.4
|
$12.4
|
$(6.0)
|
Repair
& Other
|
$1.8
|
$2.2
|
$(0.4)
|
$5.9
|
$4.1
|
$1.8
|
Total Rail
Group
|
$6.8
|
$11.9
|
$(5.1)
|
$22.7
|
$43.9
|
$(21.2)
|
|
|
|
|
|
|
|
|
The Rail Group earned $6.8 million
of pre-tax income in the quarter compared to $11.9 million in the same quarter last year. The
reduced performance was primarily driven by lower utilization rates
that averaged 86.2 percent in the quarter, down from 91.6 percent
in the third quarter of 2015.
Income from railcar sales transactions was lower during the
quarter as these transaction tend to vary quarter to quarter.
Railcar repair business continued to perform well, setting its
third consecutive record earnings quarter on improved productivity
and strong demand. Other pre-tax income was lower due to the exit
of the Group's investment in a short line railroad late last
year.
Year-to-date, the Group has earned $22.7
million of pre-tax income compared to $43.9 million of pre-tax income generated in the
same period last year. Roughly half of this variance is due to the
$10.6 million gain that the group
recorded in the second quarter of 2015 due to a large lease
termination settlement. Year to date utilization has averaged 88.8
percent, down from the 92.3 percent average in the first nine
months of 2015.
Retail Group performance slips on lower same store sales;
Group closes underperforming asset
The Retail Group had a pre-tax loss of $1.6 million for the third quarter compared to a
pre-tax loss of $800,000 in the third
quarter last year. Comparable store sales were down 6.1 percent
year over year, driving gross margins down $900,000 from the prior year. The Group was able
to partially mitigate the loss by instituting labor savings
initiatives.
On a year to date basis, the Group had a pre-tax loss of
$2.6 million compared to a
$1.5 million loss for the same period
last year.
On October 10, the Company
announced its intent to close the specialty foods store in
Sylvania, Ohio. The site will
close by mid-November. The Group continues to operate two stores in
each of the Toledo, Ohio and
Columbus, Ohio markets.
Corporate
Undistributed corporate expenses were lower in the quarter by
$2.2 million, primarily as a result
of beginning to capitalize professional services related to the
next wave of IT infrastructure deployments and favorable interest
expenses as a result of mark to market gains on certain interest
rate hedges contracts compared to mark to market losses recognized
in the third quarter of 2015. These gains were partially offset by
other slightly higher corporate costs.
Conference Call
The Company will host a webcast on Tuesday, November 8, 2016 at 11:00 A.M. ET, to discuss its performance and
provide its outlook for the remainder of 2016. To dial in to
the call, please dial 866-439-8514 or 678-509-7568 (participant
passcode is 97764895). You are encouraged to call ten minutes
before the conference call begins.
To access the webcast: Click on the link:
http://edge.media-server.com/m/p/46z3jodz/lan/en Log on. Click
on the phone icon at the bottom of the "webcast window" on the left
side of the screen. 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
September 30,
|
|
Nine months ended
September 30,
|
(in thousands, except
per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Sales and
merchandising revenues (a)
|
$
859,612
|
|
$
909,093
|
|
$
2,811,735
|
|
$
3,015,022
|
Cost of sales and
merchandising revenues
|
782,597
|
|
823,903
|
|
2,569,923
|
|
2,738,348
|
Gross
profit
|
77,015
|
|
85,190
|
|
241,812
|
|
276,674
|
Operating,
administrative and general expenses
|
78,767
|
|
88,698
|
|
234,053
|
|
251,044
|
Interest
expense
|
4,441
|
|
6,147
|
|
18,046
|
|
16,210
|
Other
income:
|
|
|
|
|
|
|
|
Equity in earnings of
affiliates
|
8,422
|
|
3,845
|
|
3,789
|
|
23,295
|
Other income,
net
|
2,216
|
|
3,355
|
|
11,144
|
|
20,235
|
Income (loss) before
income taxes
|
4,445
|
|
(2,455)
|
|
4,646
|
|
52,950
|
Income tax provision
(benefit)
|
1,104
|
|
(1,505)
|
|
1,486
|
|
17,556
|
Net income
(loss)
|
3,341
|
|
(950)
|
|
3,160
|
|
35,394
|
Net income
attributable to the noncontrolling interests
|
1,619
|
|
277
|
|
1,711
|
|
1,433
|
Net income (loss)
attributable to The Andersons, Inc.
|
$
1,722
|
|
$
(1,227)
|
|
$
1,449
|
|
$
33,961
|
|
|
|
|
|
|
|
|
Per common
share:
|
|
|
|
|
|
|
|
Basic earnings
attributable to The Andersons, Inc. common shareholders
|
$
0.06
|
|
$
(0.04)
|
|
$
0.05
|
|
$
1.19
|
Diluted earnings
attributable to The Andersons, Inc. common shareholders
|
$
0.06
|
|
$
(0.04)
|
|
$
0.05
|
|
$
1.19
|
Dividends
declared
|
$
0.155
|
|
$
0.14
|
|
$
0.465
|
|
$
0.42
|
|
|
|
|
|
|
|
|
(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)
|
September 30,
2016
|
|
December 31,
2015
|
|
September 30,
2015
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
78,158
|
|
$
63,750
|
|
$
40,658
|
|
Restricted
cash
|
190
|
|
451
|
|
181
|
|
Accounts receivable,
net
|
173,593
|
|
170,912
|
|
201,664
|
|
Inventories
|
427,754
|
|
747,399
|
|
527,789
|
|
Commodity derivative
assets – current
|
59,837
|
|
49,826
|
|
60,965
|
|
Deferred income
taxes
|
-
|
|
6,772
|
|
6,735
|
|
Other current
assets
|
43,761
|
|
90,412
|
|
66,411
|
|
Total current
assets
|
783,293
|
|
1,129,522
|
|
904,403
|
|
Other
assets:
|
|
|
|
|
|
|
Commodity derivative
assets – noncurrent
|
1,346
|
|
412
|
|
1,584
|
|
Other assets, net
(a)
|
180,010
|
|
193,689
|
|
273,078
|
|
Equity method
investments
|
225,114
|
|
242,107
|
|
223,207
|
|
|
406,470
|
|
436,208
|
|
497,869
|
|
Rail Group assets
leased to others, net
|
334,401
|
|
338,111
|
|
347,100
|
|
Property, plant and
equipment, net (a)
|
460,247
|
|
455,260
|
|
442,322
|
|
Total
assets
|
$
1,984,411
|
|
$
2,359,101
|
|
$
2,191,694
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Short-term
debt
|
$
-
|
|
$
16,990
|
|
$
82,801
|
|
Trade and other
payables
|
356,931
|
|
668,788
|
|
466,428
|
|
Customer prepayments
and deferred revenue
|
15,725
|
|
66,762
|
|
23,581
|
|
Commodity derivative
liabilities – current
|
59,770
|
|
37,387
|
|
49,911
|
|
Accrued expenses and
other current liabilities
|
68,465
|
|
70,324
|
|
71,593
|
|
Current maturities of
long-term debt
|
51,520
|
|
27,786
|
|
26,989
|
|
Total current
liabilities
|
552,411
|
|
888,037
|
|
721,303
|
|
|
|
|
|
|
|
|
Other long-term
liabilities
|
30,525
|
|
18,176
|
|
16,510
|
|
Commodity derivative
liabilities – noncurrent
|
1,954
|
|
1,063
|
|
2,912
|
|
Employee benefit plan
obligations
|
45,260
|
|
45,805
|
|
58,123
|
|
Long-term debt, less
current maturities
|
395,559
|
|
436,208
|
|
413,561
|
|
Deferred income
taxes
|
178,535
|
|
186,073
|
|
179,591
|
|
Total
liabilities
|
1,204,244
|
|
1,575,362
|
|
1,392,000
|
|
Total
equity
|
780,167
|
|
783,739
|
|
799,694
|
|
Total liabilities and
equity
|
$
1,984,411
|
|
$
2,359,101
|
|
$
2,191,694
|
|
|
|
|
|
|
|
|
(a) For the period
ended September 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
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
external customers
|
$
550,189
|
|
$
139,413
|
|
$
101,770
|
|
$
38,201
|
|
$
30,039
|
|
$
—
|
|
$
859,612
|
Gross
profit
|
30,465
|
|
6,301
|
|
19,387
|
|
12,527
|
|
8,335
|
|
—
|
|
77,015
|
Equity in earnings of
affiliates
|
533
|
|
7,889
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,422
|
Other income,
net
|
361
|
|
6
|
|
711
|
|
451
|
|
83
|
|
604
|
|
2,216
|
Income (loss) before
income taxes
|
1,879
|
|
11,160
|
|
(7,231)
|
|
6,754
|
|
(1,578)
|
|
(6,539)
|
|
4,445
|
Income (loss)
attributable to the noncontrolling interests
|
—
|
|
1,619
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,619
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
1,879
|
|
$
9,541
|
|
$
(7,231)
|
|
$
6,754
|
|
$
(1,578)
|
|
$
(6,539)
|
|
$
2,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Three months ended
September 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Revenues from
external customers (b)
|
$
545,320
|
|
$
137,765
|
|
$
149,303
|
|
$
44,758
|
|
$
31,947
|
|
$
—
|
|
$
909,093
|
Gross
profit
|
29,926
|
|
6,265
|
|
22,320
|
|
17,491
|
|
9,188
|
|
—
|
|
85,190
|
Equity in earnings of
affiliates
|
1,340
|
|
2,505
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,845
|
Other income (loss),
net
|
618
|
|
36
|
|
947
|
|
2,093
|
|
92
|
|
(431)
|
|
3,355
|
Income (loss) before
income taxes
|
129
|
|
6,167
|
|
(11,114)
|
|
11,913
|
|
(769)
|
|
(8,781)
|
|
(2,455)
|
Income (loss)
attributable to the noncontrolling interest
|
(2)
|
|
279
|
|
—
|
|
—
|
|
—
|
|
—
|
|
277
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
131
|
|
$
5,888
|
|
$
(11,114)
|
|
$
11,913
|
|
$
(769)
|
|
$
(8,781)
|
|
$
(2,732)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grain
|
|
Ethanol
|
|
Plant
Nutrient
|
|
Rail
|
|
Retail
|
|
Other
|
|
Total
|
Nine months ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
external customers
|
$
1,611,992
|
|
$
396,626
|
|
$
588,797
|
|
$
118,152
|
|
$
96,168
|
|
$
—
|
|
$
2,811,735
|
Gross
profit
|
64,216
|
|
13,207
|
|
95,653
|
|
40,689
|
|
28,047
|
|
—
|
|
241,812
|
Equity in earnings
(loss) of affiliates
|
(6,141)
|
|
9,930
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,789
|
Other income,
net
|
3,671
|
|
39
|
|
2,728
|
|
2,013
|
|
263
|
|
2,430
|
|
11,144
|
Income (loss) before
income taxes
|
(28,566)
|
|
14,762
|
|
18,008
|
|
22,698
|
|
(2,644)
|
|
(19,612)
|
|
4,646
|
Income (loss)
attributable to the noncontrolling interests
|
(3)
|
|
1,714
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,711
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
(28,563)
|
|
$
13,048
|
|
$
18,008
|
|
$
22,698
|
|
$
(2,644)
|
|
$
(19,612)
|
|
$
2,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Nine months ended
September 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Revenues from
external customers
|
$
1,705,393
|
|
$
413,130
|
|
$
660,440
|
|
$
134,497
|
|
$ 101,562
|
|
$
—
|
|
$
3,015,022
|
Gross
profit
|
84,656
|
|
18,394
|
|
90,984
|
|
53,062
|
|
29,578
|
|
—
|
|
276,674
|
Equity in earnings of
affiliates
|
10,764
|
|
12,531
|
|
—
|
|
—
|
|
—
|
|
—
|
|
23,295
|
Other income (loss),
net
|
2,682
|
|
83
|
|
2,441
|
|
14,766
|
|
284
|
|
(21)
|
|
20,235
|
Income (loss) before
income taxes
|
4,016
|
|
22,274
|
|
8,183
|
|
43,915
|
|
(1,483)
|
|
(23,955)
|
|
52,950
|
Income (loss)
attributable to the noncontrolling interest
|
(8)
|
|
1,441
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,433
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
4,024
|
|
20,833
|
|
8,183
|
|
43,915
|
|
(1,483)
|
|
(23,955)
|
|
51,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.