Press Releases
MAUMEE, Ohio, Aug. 6, 2019 /PRNewswire/ -- The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the second quarter ended June 30, 2019.
Second Quarter Highlights:
- Company reports net income of $29.9 million, or $0.91 per diluted share, and adjusted net income of $32.3 million, or $0.98 per diluted share.
- Adjusted EBITDA increases year over year by almost 50 percent to $88.6 million.
- Trade Group reports pretax income of $23.7 million and adjusted pretax income of $27.0 million on strong corn and wheat basis appreciation and cash trading.
- Ethanol Group records pretax income of $2.6 million in a challenging margin environment.
- Plant Nutrient Group records pretax income of $15.9 million despite significantly lower primary and specialty nutrient sales volumes.
- Rail Group earns $3.2 million of pretax income on steady railcar leasing income.
"Extremely wet weather in many of our core grain origination markets benefited our Trade Group but hurt both our Ethanol and Plant Nutrient Groups during the quarter. The resulting market conditions illustrated perfectly the value of the more diversified, newly integrated portfolio we now operate in our Trade Group," said President and CEO Pat Bowe. "We were able to capitalize on merchandising opportunities caused by grain and feed ingredient price volatility. However, we're concerned about the implications of a smaller corn crop on the utilization of our eastern grain assets for the remainder of this year and into 2020."
$ in millions, except per share amounts | ||||||
Q2 2019 | Q2 2018 | Variance | YTD 2019 | YTD 2018 | Variance | |
Pretax Income (Loss) Attributable to the Company1 | $40.9 | $29.3 | $11.6 | $21.5 | $27.3 | ($5.8) |
Adjusted Pretax Income (Loss)1 | $44.1 | $29.3 | $14.8 | $36.3 | $27.3 | $9.0 |
Trade (Grain) Group | $27.0 | $8.7 | $18.3 | $21.1 | $7.5 | $13.6 |
Ethanol Group | $2.6 | $7.3 | ($4.7) | $5.2 | $10.4 | ($5.2) |
Plant Nutrient Group | $15.9 | $15.1 | $0.8 | $12.0 | $16.2 | ($4.2) |
Rail Group | $3.2 | $0.9 | $2.3 | $7.5 | $4.9 | $2.6 |
Other | ($4.6) | ($2.8) | ($1.8) | ($9.5) | ($11.7) | $2.2 |
Net Income (Loss)1 | $29.9 | $21.5 | $8.4 | $15.9 | $19.8 | ($3.9) |
Adjusted Net Income (Loss)1 | $32.3 | $21.5 | $10.8 | $27.0 | $19.8 | $7.2 |
Diluted EPS | $0.91 | $0.76 | $0.15 | $0.48 | $0.70 | ($0.22) |
Adjusted Diluted EPS | $0.98 | $0.76 | $0.22 | $0.82 | $0.70 | $0.12 |
EBITDA | $85.4 | $59.7 | $25.7 | $114.0 | $87.3 | $26.7 |
Adjusted EBITDA | $88.6 | $59.7 | $28.9 | $128.9 | $87.3 | $41.6 |
1 Excludes net income (loss) attributable to the noncontrolling interests of ($0.5) in Q2 2019, ($0.1) in Q2 2018, ($0.6) for year-to-date 2019 and ($0.4) for year-to-date 2018. |
"The Trade Group's adjusted results were strong, as basis appreciation and good merchandising results helped offset weakness in the food and specialty ingredients units," Bowe continued. "The Ethanol Group remained profitable in a considerably compressed margin environment. As expected, the Plant Nutrient Group's results were hurt by substantially lower primary and specialty nutrient volumes due to the wet spring, but margins were stronger, resulting in improved year-over-year pretax income. The Rail Group performed well, primarily due to solid leasing results."
Further Adjustments Related to the Lansing Acquisition
The company continues to refine its purchase price allocation. While the net adjustments recorded during the quarter were negligible, the group also incurred $0.4 million, or $0.01 per diluted share, of incremental depreciation and amortization expenses based on a revised revaluation of acquired fixed assets and definite-lived intangibles. The group now expects to incur incremental depreciation and amortization of $2.4 million each quarter through 2021.
As it did in the first quarter, the company has recast second quarter 2018 pretax income for the former Grain Group and the Ethanol Group to conform to segment reporting changes made in conjunction with the acquisition of Lansing Trade Group. The changes resulted in a reclassification of $1.2 million in pretax income from the Grain Group to the Ethanol Group. The company expects similar adjustments for each quarter of 2018.
Second Quarter Segment Overview
Trade Group Records Excellent Results on Increased Volatility and Strong Merchandising Results; Announces Pending Sale of Ontario Agronomy Business
With the closing of the Lansing acquisition effective January 1, 2019, Trade Group results now include the consolidated operating results of both Lansing and Thompsons Limited.
The Trade Group recorded pretax income of $23.7 million and adjusted pretax income of $27.0 million for the quarter. Adjustments include $3.1 million for pretax impairment charges on the Trade Group's remaining Tennessee assets. As noted above, the group also incurred $0.4 million of incremental depreciation and amortization expenses. The former Grain Group recorded pretax income of $8.7 million in the second quarter of 2018.
- Income from merchandising activities was strong due to significant market volatility.
- Profit from grain originations and the group's assets was up on significant corn and soft red wheat basis appreciation.
- The integration of Lansing and Thompsons continued to progress well.
Due in large part to the Lansing acquisition, the group's second quarter 2019 EBITDA and adjusted EBITDA were $44.8 million and $48.0 million, respectively, which reflect improvements in both the legacy and acquired businesses.
The group also announced that it has reached an agreement to sell the agronomy assets of Thompsons Limited, a wholly owned subsidiary in Ontario, Canada, to Sylvite Holdings Inc. of Burlington, Ontario. The sale is expected to close in September 2019. The Andersons will continue to own and operate Thompsons' grain storage and food processing facilities in Ontario.
Ethanol Group Remains Profitable Despite Weak Industry Margins
The Ethanol Group earned pretax income of $2.6 million in the second quarter compared to the $7.3 million of pretax income it earned in the same period in 2018.
- Margins were extremely weak, but ethanol and corn oil yields continued to improve.
- The group selectively reduced production in response to the margin environment
- Third party ethanol trading increased sales volumes and margins.
The group is in the process of commissioning its state-of-the-art bio-refinery in Kansas in partnership with ICM, Inc. The plant will produce low-carbon ethanol targeted for the higher-margin California market and several higher-value coproducts.
Plant Nutrient Group Income Grows Year Over Year
The Plant Nutrient Group recorded pretax income of $15.9 million in the second quarter compared to pretax income of $15.1 million in the prior year period.
- For the second consecutive quarter, both primary and specialty nutrient volumes significantly lagged prior year amounts due to unprecedented wet weather across our selling region, reducing planted corn acres.
- Improved margins per ton driven by cost containment, operational efficiency and product mix offset the impact of the volume shortfall.
- Inventory carrying costs increased year over year due to delayed and reduced planting.
The group's current quarter EBITDA was $24.9 million, a slight increase over 2018 second quarter results.
Rail Group Results Highlighted by Steady Leasing Income
The Rail Group earned second quarter pretax income of $3.2 million compared to $0.9 million in the same period of the prior year. Prior year results included a $4.7 million impairment charge on railcars the group later scrapped.
- Railcar leasing income rose year over year on stronger utilization and more cars on lease but was offset in part by increased allowances for doubtful accounts.
- Income from car sales was negligible.
- Service and other pretax income fell significantly, largely due to workers compensation and other expenses and lower sales volumes at certain repair facilities.
The group's second quarter 2019 EBITDA of $15.8 million was comparable to second quarter 2018 EBITDA before considering the 2018 impairment charge.
Conference Call
The company will host a webcast on Wednesday, August 7, 2019, at 11 a.m. Eastern Daylight Time, to discuss its performance and provide its updated outlook for 2019. To access the call, please dial 866-439-8514 or 678-509-7568 (participant passcode is 9055829). It is recommended that you call 10 minutes before the conference call begins.
To access the webcast, click on the link: https://edge.media-server.com/mmc/p/izr35eyr. Complete the four fields as directed and click Submit. A replay of the call can also be accessed under the heading "Investors" on the company's website: 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.
Non-GAAP Measures
This release contains non-GAAP financial measures. The company believes adjusted pretax income, adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and better period-to-period comparability. Adjusted pretax income, adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA do not and should not be considered as alternatives to pretax income, net income or net income per share as determined by generally accepted accounting principles. Reconciliations of the GAAP to non-GAAP measures may be found within the financial tables provided in the release.
Company Description
Founded in 1947 in Maumee, Ohio, The Andersons, Inc. (Nasdaq: ANDE) is a diversified company rooted in agriculture that conducts business in the commodity trading, ethanol, plant nutrient and rail sectors. Guided by its Statement of Principles, The Andersons strives to provide extraordinary service to its customers, help its employees improve, support its communities and increase the value of the company. For more information, please visit 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) | 2019 | 2018 | 2019 | 2018 | |||
Sales and merchandising revenues | $ 2,325,041 | $ 911,402 | $ 4,301,833 | $ 1,547,141 | |||
Cost of sales and merchandising revenues | 2,164,313 | 820,928 | 4,031,441 | 1,392,962 | |||
Gross profit | 160,728 | 90,474 | 270,392 | 154,179 | |||
Operating, administrative and general expenses | 106,918 | 59,853 | 220,267 | 124,110 | |||
Asset impairment | 3,081 | 6,272 | 3,081 | 6,272 | |||
Interest expense | 15,727 | 7,825 | 31,637 | 14,824 | |||
Other income: | |||||||
Equity in earnings (loss) of affiliates | (157) | 9,803 | 1,362 | 13,376 | |||
Other income, net | 5,563 | 2,828 | 4,049 | 4,514 | |||
Income (loss) before income taxes | 40,408 | 29,155 | 20,818 | 26,863 | |||
Income tax provision (benefit) | 10,997 | 7,742 | 5,555 | 7,432 | |||
Net income (loss) | 29,411 | 21,413 | 15,263 | 19,431 | |||
Net income attributable to the noncontrolling interests | (477) | (116) | (632) | (398) | |||
Net income (loss) attributable to The Andersons, Inc. | $ 29,888 | $ 21,529 | $ 15,895 | $ 19,829 | |||
Per common share: | |||||||
Basic earnings (loss) attributable to The Andersons, Inc. | $ 0.92 | $ 0.76 | $ 0.49 | $ 0.70 | |||
Diluted earnings (loss) attributable to The Andersons, Inc. | $ 0.91 | $ 0.76 | $ 0.48 | $ 0.70 | |||
The Andersons, Inc. | |||||||
Reconciliation to Adjusted Net Income | |||||||
(Unaudited) | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||
(in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||
Net income (loss) attributable to The Andersons, Inc. | $ 29,888 | $ 21,529 | $ 15,895 | $ 19,829 | |||
Items impacting other income, net of tax: | |||||||
One time acquisition costs | (907) | - | 5,209 | - | |||
Transaction related stock compensation | 1,010 | - | 3,572 | - | |||
Asset impairment | 2,311 | - | 2,311 | - | |||
Total adjusting items | 2,414 | - | 11,092 | - | |||
Adjusted net income (loss) attributable to The Andersons, Inc. | $ 32,302 | $ 21,529 | $ 26,987 | $ 19,829 | |||
Diluted earnings attributable to The Andersons, Inc. | $ 0.91 | $ 0.76 | $ 0.48 | $ 0.70 | |||
Impact on diluted earnings per share | 0.07 | - | 0.34 | - | |||
Adjusted diluted earnings (loss) per share | $ 0.98 | $ 0.76 | $ 0.82 | $ 0.70 | |||
The Andersons, Inc. | |||||
(in thousands) | June 30, 2019 | December 31, 2018 | June 30, 2018 | ||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ 11,087 | $ 22,593 | $ 58,611 | ||
Accounts receivable, net | 712,294 | 207,285 | 218,476 | ||
Inventories | 753,641 | 690,804 | 495,611 | ||
Commodity derivative assets – current | 233,015 | 51,421 | 54,259 | ||
Other current assets | 58,439 | 50,703 | 42,648 | ||
Assets held for sale | 151 | 392 | 9,816 | ||
Total current assets | 1,768,627 | 1,023,198 | 879,421 | ||
Other assets: | |||||
Commodity derivative assets – noncurrent | 6,161 | 480 | 1,008 | ||
Other assets, net | 346,531 | 127,503 | 138,201 | ||
Right of use asset, net | 74,073 | - | - | ||
Equity method investments | 120,929 | 242,326 | 232,159 | ||
547,694 | 370,309 | 371,368 | |||
Rail Group assets leased to others, net | 559,711 | 521,785 | 458,424 | ||
Property, plant and equipment, net | 695,827 | 476,711 | 408,575 | ||
Total assets | $ 3,571,859 | $ 2,392,003 | $ 2,117,788 | ||
Liabilities and equity | |||||
Current liabilities: | |||||
Short-term debt | $ 426,125 | $ 205,000 | $ 185,000 | ||
Trade and other payables | 527,250 | 462,535 | 282,221 | ||
Customer prepayments and deferred revenue | 49,761 | 32,533 | 16,103 | ||
Commodity derivative liabilities – current | 69,369 | 32,647 | 85,160 | ||
Accrued expenses and other current liabilities | 165,383 | 79,046 | 74,512 | ||
Current maturities of long-term debt | 66,678 | 21,589 | 13,700 | ||
Total current liabilities | 1,304,566 | 833,350 | 656,696 | ||
Right of use liability | 48,401 | - | - | ||
Other long-term liabilities | 18,398 | 32,184 | 30,325 | ||
Commodity derivative liabilities – noncurrent | 3,985 | 889 | 3,202 | ||
Employee benefit plan obligations | 22,019 | 22,542 | 26,131 | ||
Long-term debt, less current maturities | 1,007,012 | 496,187 | 435,580 | ||
Deferred income taxes | 146,839 | 130,087 | 118,864 | ||
Total liabilities | 2,551,220 | 1,515,239 | 1,270,798 | ||
Total equity | 1,020,639 | 876,764 | 846,990 | ||
Total liabilities and equity | $ 3,571,859 | $ 2,392,003 | $ 2,117,788 | ||
The Andersons, Inc. | |||||||||||
Segment Data | |||||||||||
(Unaudited) | |||||||||||
(in thousands) | Trade | Ethanol | Plant Nutrient | Rail | Other | Total | |||||
Three months ended June 30, 2019 | |||||||||||
Revenues from external customers | $ 1,766,305 | $ 245,143 | $ 270,577 | $ 43,016 | $ - | $ 2,325,041 | |||||
Gross profit | 102,846 | 4,312 | 38,798 | 14,772 | - | 160,728 | |||||
Equity in earnings of affiliates | (1,614) | 1,457 | - | - | - | (157) | |||||
Other income, net | 3,818 | 194 | 570 | 329 | 652 | 5,563 | |||||
Income (loss) before income taxes | 23,731 | 2,172 | 15,903 | 3,180 | (4,578) | 40,408 | |||||
Income (loss) attributable to the noncontrolling interests | - | (477) | - | - | - | (477) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. (a) | $ 23,731 | $ 2,649 | $ 15,903 | $ 3,180 | $ (4,578) | $ 40,885 | |||||
Three months ended June 30, 2018 | |||||||||||
Revenues from external customers | $ 365,100 | $ 201,758 | $ 303,106 | $ 41,438 | $ - | $ 911,402 | |||||
Gross profit | 33,887 | 5,862 | 37,167 | 13,558 | - | 90,474 | |||||
Equity in earnings of affiliates | 5,510 | 4,293 | - | - | - | 9,803 | |||||
Other income, net | 1,248 | (476) | 622 | 675 | 759 | 2,828 | |||||
Income (loss) before income taxes | 8,707 | 7,179 | 15,124 | 944 | (2,799) | 29,155 | |||||
Income (loss) attributable to the noncontrolling interests | - | (116) | - | - | - | (116) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. (a) | $ 8,707 | $ 7,295 | $ 15,124 | $ 944 | $ (2,799) | $ 29,271 | |||||
Six months ended June 30, 2019 | |||||||||||
Revenues from external customers | $ 3,364,326 | $ 453,974 | $ 399,102 | $ 84,431 | $ - | $ 4,301,833 | |||||
Gross profit | 171,835 | 8,120 | 59,732 | 30,705 | - | 270,392 | |||||
Equity in earnings of affiliates | (1,745) | 3,107 | - | - | - | 1,362 | |||||
Other income, net | 828 | 278 | 1,137 | 538 | 1,268 | 4,049 | |||||
Income (loss) before income taxes | 6,268 | 4,589 | 11,974 | 7,492 | (9,505) | 20,818 | |||||
Income (loss) attributable to the noncontrolling interests | - | (632) | - | - | - | (632) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. (a) | $ 6,268 | $ 5,221 | $ 11,974 | $ 7,492 | $ (9,505) | $ 21,450 | |||||
Six months ended June 30, 2018 | |||||||||||
Revenues from external customers | $ 641,126 | $ 375,422 | $ 438,723 | $ 91,870 | $ - | $ 1,547,141 | |||||
Gross profit | 59,111 | 9,554 | 59,404 | 26,110 | - | 154,179 | |||||
Equity in earnings of affiliates | 7,497 | 5,879 | - | - | - | 13,376 | |||||
Other income, net | 1,573 | 138 | 1,274 | 691 | 838 | 4,514 | |||||
Income (loss) before income taxes | 7,460 | 9,953 | 16,215 | 4,913 | (11,678) | 26,863 | |||||
Income (loss) attributable to the noncontrolling interest | - | (398) | - | - | - | (398) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. (a) | $ 7,460 | $ 10,351 | $ 16,215 | $ 4,913 | $ (11,678) | $ 27,261 | |||||
(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). | |||||||||||
The Andersons, Inc. | |||||||||||
Reconciliation to EBITDA and Adjusted EBITDA | |||||||||||
(unaudited) | |||||||||||
(in thousands) | Trade | Ethanol | Plant Nutrient | Rail | Other | Total | |||||
Three months ended June 30, 2019 | |||||||||||
Income (loss) before income taxes | $ 23,731 | $ 2,172 | $ 15,903 | $ 3,180 | $ (4,578) | $ 40,408 | |||||
Income (loss) attributable to the noncontrolling interests | - | (477) | - | - | - | (477) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. | 23,731 | 2,649 | 15,903 | 3,180 | (4,578) | 40,885 | |||||
Interest expense | 10,243 | (906) | 2,386 | 4,181 | (177) | 15,727 | |||||
Depreciation and amortization | 10,837 | 48 | 6,631 | 8,389 | 2,850 | 28,755 | |||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ 44,811 | $ 1,791 | $ 24,920 | $ 15,750 | $ (1,905) | $ 85,367 | |||||
Adjusting items impacting EBITDA: | |||||||||||
One time acquisition costs | (1,209) | - | - | - | - | (1,209) | |||||
Transaction related stock compensation | 1,346 | - | - | - | - | 1,346 | |||||
Asset impairment | 3,081 | - | - | - | - | 3,081 | |||||
Total adjusting items | 3,218 | - | - | - | - | 3,218 | |||||
Adjusted EBITDA | $ 48,029 | $ 1,791 | $ 24,920 | $ 15,750 | $ (1,905) | $ 88,585 | |||||
Three months ended June 30, 2018 | |||||||||||
Income (loss) before income taxes | $ 8,707 | $ 7,179 | $ 15,124 | $ 944 | $ (2,799) | $ 29,155 | |||||
Income (loss) attributable to the noncontrolling interests | - | (116) | - | - | - | (116) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. | 8,707 | 7,295 | 15,124 | 944 | (2,799) | 29,271 | |||||
Interest expense | 3,930 | (271) | 1,642 | 2,718 | (194) | 7,825 | |||||
Depreciation and amortization | 4,126 | 1,517 | 6,769 | 7,119 | 3,022 | 22,553 | |||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ 16,763 | $ 8,541 | $ 23,535 | $ 10,781 | $ 29 | $ 59,649 | |||||
Six months ended June 30, 2019 | |||||||||||
Income (loss) before income taxes | $ 6,268 | $ 4,589 | $ 11,974 | $ 7,492 | $ (9,505) | $ 20,818 | |||||
Income (loss) attributable to the noncontrolling interests | - | (632) | - | - | - | (632) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. | 6,268 | 5,221 | 11,974 | 7,492 | (9,505) | 21,450 | |||||
Interest expense | 21,158 | (1,730) | 4,647 | 7,860 | (298) | 31,637 | |||||
Depreciation and amortization | 25,036 | 187 | 13,294 | 16,664 | 5,775 | 60,956 | |||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ 52,462 | $ 3,678 | $ 29,915 | $ 32,016 | $ (4,028) | $ 114,043 | |||||
Adjusting items impacting EBITDA: | |||||||||||
One time acquisition costs | 6,945 | - | - | - | - | 6,945 | |||||
Transaction related stock compensation | 4,762 | - | - | - | - | 4,762 | |||||
Asset impairment | 3,081 | - | - | - | - | 3,081 | |||||
Total adjusting items | 14,788 | - | - | - | - | 14,788 | |||||
Adjusted EBITDA | $ 67,250 | $ 3,678 | $ 29,915 | $ 32,016 | $ (4,028) | $ 128,831 | |||||
Six months ended June 30, 2018 | |||||||||||
Income (loss) before income taxes | $ 7,460 | $ 9,953 | $ 16,215 | $ 4,913 | $ (11,678) | $ 26,863 | |||||
Income (loss) attributable to the noncontrolling interests | - | (398) | - | - | - | (398) | |||||
Income (loss) before income taxes attributable to The Andersons, Inc. | 7,460 | 10,351 | 16,215 | 4,913 | (11,678) | 27,261 | |||||
Interest expense | 6,889 | (311) | 3,082 | 5,086 | 78 | 14,824 | |||||
Depreciation and amortization | 8,143 | 3,026 | 13,497 | 14,288 | 6,278 | 45,232 | |||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ 22,492 | $ 13,066 | $ 32,794 | $ 24,287 | $ (5,322) | $ 87,317 | |||||
SOURCE The Andersons, Inc.
