MAUMEE, Ohio, Nov. 5, 2019 /PRNewswire/ — The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the third quarter ended September 30, 2019.

The Andersons, Inc. logo. (PRNewsFoto/The Andersons, Inc.)

Third Quarter Highlights:

  • Company reports a net loss of $4.2 million or $0.13 per diluted share and an adjusted net loss of $2.3 million, or $0.07 per diluted share.
  • Trade Group reports improved results, recording a pretax loss of $2.0 million and adjusted pretax income of $0.6 million, as stronger merchandising income was offset by the impact of reduced planting and a delayed harvest in the Eastern corn belt.
  • Ethanol Group records pretax income of $0.9 million in a challenging margin environment.
  • Plant Nutrient Group records a smaller pretax loss of $7.4 million due to increased field activity in the quarter.
  • Rail Group earns $3.1 million of pretax income on stable railcar leasing income.

«The Trade Group’s adjusted results were much improved year over year on stronger merchandising, though grain originations lagged due to limited farmer selling,» said President and CEO Pat Bowe. «We continue to see the benefits of our larger and more diversified Trade Group, whose results were substantially better than they would have been without the Lansing acquisition.»

«I’m also particularly pleased that our Ethanol Group remained profitable despite difficult market conditions, outpacing many in its sector,» continued Bowe. «In August, we began production at ELEMENT, our state-of-the-art biorefinery in Kansas, from which we ultimately expect industry-leading results. We also announced in October the merger of what had been four separate ethanol plant entities, three of which were jointly owned with Marathon Petroleum Corporation, into a single entity jointly owned with Marathon just after quarter-end.» 

 $ in millions, except per share amounts     

Q3
2019

Q3
2018

Variance

YTD
2019

YTD
2018

Variance

Pretax Income (Loss) Attributable to the Company1 

($11.4)

($3.9)

($7.5)

$10.0

$23.4

($13.4)

Adjusted Pretax Income (Loss)1

($8.9)

($0.4)

($8.5)

$27.3

$26.9

$0.4

     Trade (Grain) Group

$0.6

($9.9)

$10.5

$21.6

($2.5)

$24.1

     Ethanol Group

$0.9

$10.4

($9.5)

$6.2

$20.7

($14.5)

     Plant Nutrient Group

($7.4)

($8.0)

$0.6

$4.5

$8.2

($3.7)

     Rail Group

$3.1

$5.7

($2.6)

$10.6

$10.6

$   –

     Other

($6.1)

$1.4

($7.5)

($15.6)

($10.3)

($5.3)

Net Income (Loss)1

($4.2)

($2.1)

($2.1)

$11.7

$17.7

($6.0)

Adjusted Net Income (Loss)1

($2.3)

$0.5

($2.8)

$24.7

$20.3

$4.4

EPS

($0.13)

($0.07)

($0.06)

$0.35

$0.62

($0.27)

Adjusted EPS

($0.07)

$0.02

($0.09)

$0.75

$0.71

$0.04

EBITDA

$40.0

$24.0

$16.0

$154.0

$111.4

$42.6

Adjusted EBITDA

$42.5

$27.5

$15.0

$171.4

$114.8

$56.6

1 Excludes income (loss) attributable to the noncontrolling interests of ($1.6) in Q3 2019, $0.2 in Q3 2018, ($2.3) for year-to-date 2019 and ($0.2) for year-to-date 2018.

Third Quarter Segment Overview

Trade Group Records Improved Year-Over-Year Results Despite Weak Origination Activity

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 a pretax loss of $2.0 million and adjusted pretax income of $0.6 million for the quarter. The group also incurred $2.4 million of incremental depreciation and amortization expenses related to the Lansing acquisition. The former Grain Group recorded a pretax loss of $9.9 million in the third quarter of 2018.

  • Performance improved across most of the group’s operations, but especially in merchandising.
  • The newly integrated group has already identified and partially implemented changes that will result in more than $10 million in run-rate savings.
  • The group absorbed the reduction in planted acres around its Eastern Corn Belt assets by finding additional opportunities in the West.

The group’s third quarter 2019 EBITDA and adjusted EBITDA were $18.4 million and $20.9 million, respectively.

Ethanol Group Turns a Profit Despite Challenging Industry Margins

The Ethanol Group earned pretax income of $0.9 million in the third quarter compared to the $10.4 million of pretax income it earned in the same period in 2018.  

  • Higher corn basis compressed margins, especially at the three eastern plants.
  • The group continues to upgrade its production technology to gain additional efficiency.
  • Third party ethanol trading again increased sales volumes and margins.

The group began producing ethanol, DDGs and corn oil from ELEMENT in August. Production continues to ramp up, with additional higher margin products being introduced in mid-2020.

The merger of the Albion, Clymers, Greenville and Denison plant entities into The Andersons Marathon Holdings LLC was completed on October 1. The merger will result in consolidation reporting of the group’s entire operations and a sizable one-time gain in the fourth quarter.  ELEMENT remains a separate consolidated joint venture of The Andersons, Inc. with ICM, Inc.

Plant Nutrient Group Loss Narrows Year Over Year

The Plant Nutrient Group recorded a pretax loss of $7.4 million in the third quarter, a modest improvement on the pretax loss of $8.0 million in the prior year period.

  • Volumes were up, largely on primary nutrients and at the farm centers, which was reflective of the delayed planting season.
  • Margins per ton were somewhat lower due to product mix.
  • Inventory carrying costs increased year over year due to reduced spring planting.

The group’s current quarter EBITDA was $0.9 million, a $0.8 million increase over 2018 third quarter results.

The group also sold its Auburn, Michigan, farm center in early October and expects to record a small gain on the sale in the fourth quarter.

Rail Group Results Highlighted by Steady Leasing Income

The Rail Group earned third quarter pretax income of $3.1 million compared to $5.7 million in the same period of the prior year.

  • Railcar leasing income fell on continuing headwinds in the sand and ethanol markets.
  • Income from car sales was significantly lower due to fewer direct and scrap car sales and lower scrap rates.
  • Service and other pretax income fell somewhat due increased labor and benefits expenses.

The group’s third quarter 2019 EBITDA of $16.1 million was comparable to third quarter 2018 EBITDA.

Other Net Company-Level Expenses Higher Due to 2018 Nonrecurring Gains

Third quarter 2019 unallocated net company-level expenses were higher compared to adjusted third quarter 2018 results due to some nonrecurring gains recognized in 2018. Specifically, the company recorded pretax gains of $5.1 million, or $0.14 per diluted share, from several Maumee Ventures investments.

Provision for Income Taxes Includes Sizable Research and Development Tax Credits

The company’s third quarter income tax provision includes a tax benefit of approximately $3.9 million, or $0.12 per diluted share, for federal research and development income tax credits that were mostly related to the construction of the ELEMENT biorefinery. 

Adjustments Related to the Lansing Acquisition

The company will finalize its purchase price allocation by year end. The Trade Group adjusted its current quarter pretax results by $2.6 million, or $0.06 per diluted share, for stock compensation expense and the company adjusted the third quarter 2018 pretax results by $3.5 million, or $0.09 per share, for expenses associated with the acquisition. As noted above, the Trade Group’s current quarter pretax results are also impacted by $2.4 million, or $0.06 per diluted share, of incremental depreciation and amortization expense.

As it did in the first two quarters, the company has recast third quarter 2018 pretax income for the former Grain Group and the Ethanol Group to conform to segment reporting changes made in conjunction with the Lansing acquisition. The changes resulted in a reclassification of $1.3 million in pretax income from the Grain Group to the Ethanol Group. The company expects to make similar adjustments for the fourth quarter of 2018.

Conference Call

The company will host a webcast on Wednesday, November 6, 2019, at 11 a.m. Eastern Standard Time, to discuss its performance and provide its updated outlook for 2019 and its preliminary views for 2020. To access the call, please dial 866-439-8514 or 678-509-7568 (participant passcode is 5272038). 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/mmc/p/nczp9z2e. 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 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.

Non-GAAP Measures

This release contains non-GAAP financial measures. The company believes adjusted pretax income, adjusted pretax income attributable to The Andersons, 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 pretax income attributable to The Andersons, 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 this press release and the financial tables provided herein.

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 September 30,

Nine Months Ended September 30,

(in thousands, except per share data)

2019

2018

2019

2018

Sales and merchandising revenues 

$        1,982,755

$              685,579

$        6,284,588

$           2,232,720

Cost of sales and merchandising revenues

1,873,614

631,715

5,905,055

2,024,677

Gross profit

109,141

53,864

379,533

208,043

Operating, administrative and general expenses

107,118

65,986

327,385

190,096

Asset impairment

3,081

6,272

Interest expense

13,975

5,176

45,613

20,000

Other income:

Equity in earnings (loss) of affiliates

(3,728)

7,225

(2,367)

20,601

Other income, net

2,598

6,434

6,649

10,949

Income (loss) before income taxes

(13,082)

(3,639)

7,736

23,225

Income tax provision (benefit)

(7,212)

(1,764)

(1,657)

5,668

Net income (loss)

(5,870)

(1,875)

9,393

17,557

Net income (loss) attributable to the noncontrolling interests

(1,633)

223

(2,265)

(175)

Net income (loss) attributable to The Andersons, Inc.

$               (4,237)

$                (2,098)

$              11,658

$                17,732

Per common share:

Basic earnings (loss) attributable to The Andersons, Inc. common
shareholders

$                 (0.13)

$                  (0.07)

$                   0.36

$                    0.63

Diluted earnings (loss) attributable to The Andersons, Inc. common
shareholders

$                 (0.13)

$                  (0.07)

$                   0.35

$                    0.62

 

The Andersons, Inc.

Reconciliation to Adjusted Net Income (Loss) Attributable to The Andersons, Inc.

(Unaudited)

Three months ended September 30,

Nine Months Ended September 30,

(in thousands, except per share data)

2019

2018

2019

2018

Net income (loss) attributable to The Andersons, Inc.

$               (4,237)

$                (2,098)

$              11,658

$                17,732

Items impacting other income, net of tax:

One time acquisition costs

(17)

2,597

5,192

2,597

Transaction related stock compensation

1,933

5,504

Asset impairment

2,311

Total adjusting items, net of tax

1,916

2,597

13,007

2,597

Adjusted net income (loss) attributable to The Andersons, Inc.

$               (2,321)

$                     499

$              24,665

$                20,329

Diluted earnings attributable to The Andersons, Inc. common
shareholders

$                 (0.13)

$                  (0.07)

$                   0.35

$                    0.62

Impact on diluted earnings per share

0.06

0.09

0.40

0.09

Adjusted diluted earnings (loss) per share

$                 (0.07)

$                    0.02

$                   0.75

$                    0.71

 

 

The Andersons, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

September 30, 2019

December 31, 2018

September 30, 2018

Assets

Current assets:

Cash, cash equivalents and restricted cash

$                             21,299

$                               22,593

$                               16,820

Accounts receivable, net

523,110

207,285

206,380

Inventories

741,086

690,804

490,331

Commodity derivative assets – current

120,510

51,421

76,861

Other current assets

82,197

50,703

58,374

Assets held for sale

573

392

29,527

Total current assets

1,488,775

1,023,198

878,293

Other assets:

Commodity derivative assets – noncurrent

1,943

480

766

Other assets, net

336,471

127,503

132,928

Right of use asset, net

70,773

Equity method investments

117,348

242,326

240,350

526,535

370,309

374,044

Rail Group assets leased to others, net

565,746

521,785

464,776

Property, plant and equipment, net

703,396

476,711

434,505

Total assets

$                       3,284,452

$                          2,392,003

$                          2,151,618

Liabilities and equity

Current liabilities:

Short-term debt

$                           138,249

$                             205,000

$                             132,000

Trade and other payables

594,708

462,535

344,406

Customer prepayments and deferred revenue

35,274

32,533

38,242

Commodity derivative liabilities – current

67,606

32,647

91,403

Accrued expenses and other current liabilities

162,749

79,046

68,925

Current maturities of long-term debt

66,899

21,589

15,677

Total current liabilities

1,065,485

833,350

690,653

Right of use liability

47,299

Other long-term liabilities

40,927

32,184

30,615

Commodity derivative liabilities – noncurrent

1,960

889

2,548

Employee benefit plan obligations

21,311

22,542

25,356

Long-term debt, less current maturities

968,117

496,187

437,280

Deferred income taxes

128,003

130,087

122,523

Total liabilities

2,273,102

1,515,239

1,308,975

Total equity

1,011,350

876,764

842,643

Total liabilities and equity

$                       3,284,452

$                          2,392,003

$                          2,151,618

 

 

The Andersons, Inc.

Segment Data

(Unaudited)

(in thousands)

Trade

Ethanol

Plant Nutrient

Rail

Other

Total

Three months ended September 30, 2019

Revenues from external customers

$         1,580,157

$             254,055

$             109,446

$              39,097

$                         –

$          1,982,755

Gross profit

74,752

6,710

15,851

11,828

109,141

Equity in earnings (losses) of affiliates

(98)

(3,630)

(3,728)

Other income (expense), net

876

417

510

854

(59)

2,598

Income (loss) before income taxes

(2,001)

(684)

(7,440)

3,137

(6,094)

(13,082)

Income (loss) attributable to the noncontrolling interests

(1,633)

(1,633)

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

$                (2,001)

$                    949

$                (7,440)

$                  3,137

$                 (6,094)

$              (11,449)

Three months ended September 30, 2018

Revenues from external customers

$              342,610

$              195,669

$              104,188

$                43,112

$                          –

$             685,579

Gross profit

15,791

7,781

15,542

14,750

53,864

Equity in earnings of affiliates

2,412

4,813

7,225

Other income, net

92

553

626

220

4,943

6,434

Income (loss) before income taxes

(9,914)

10,576

(7,976)

5,732

(2,057)

(3,639)

Income (loss) attributable to the noncontrolling interests

223

223

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

$                (9,914)

$                10,353

$                (7,976)

$                  5,732

$                (2,057)

$               (3,862)

Nine months ended September 30, 2019

Revenues from external customers

$          4,944,483

$              708,029

$             508,548

$              123,528

$                         –

$          6,284,588

Gross profit

246,587

14,830

75,583

42,533

379,533

Equity in earnings (losses) of affiliates

(1,843)

(524)

(2,367)

Other income, net

1,706

695

1,647

1,392

1,209

6,649

Income (loss) before income taxes

4,268

3,904

4,534

10,629

(15,599)

7,736

Income (loss) attributable to the noncontrolling interests

(2,265)

(2,265)

Income (loss) before income taxes attributable to The
Andersons, Inc. (a)

$                 4,268

$                 6,169

$                 4,534

$                10,629

$              (15,599)

$               10,001

Nine months ended September 30, 2018

Revenues from external customers

$              983,737

$              571,090

$             542,911

$              134,982

$                         –

$          2,232,720

Gross profit

74,903

17,334

74,946

40,860

208,043

Equity in earnings of affiliates

9,909

10,692

20,601

Other income, net

615

1,741

1,900

911

5,782

10,949

Income (loss) before income taxes

(2,453)

20,528

8,239

10,645

(13,734)

23,225

Income (loss) attributable to the noncontrolling interest

(175)

(175)

Income (loss) before income taxes attributable to The Andersons, Inc. (a)

$                (2,453)

$                20,703

$                  8,239

$                10,645

$              (13,734)

$               23,400

(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 September 30, 2019

Income (loss) before income taxes

$               (2,001)

$                  (684)

$               (7,440)

$                3,137

$               (6,094)

$            (13,082)

Income (loss) attributable to the noncontrolling interests

(1,633)

(1,633)

Income (loss) before income taxes attributable to The Andersons, Inc.

(2,001)

949

(7,440)

3,137

(6,094)

(11,449)

Interest expense

7,868

210

1,831

4,211

(145)

13,975

Depreciation and amortization

12,487

6,907

6,485

8,713

2,849

37,441

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$              18,354

$                8,066

$                    876

$              16,061

$               (3,390)

$              39,967

Adjusting items impacting EBITDA:

One time acquisition costs

(23)

(23)

Transaction related stock compensation

2,577

2,577

Asset impairment

Total adjusting items

2,554

2,554

Adjusted EBITDA

$               20,908

$                 8,066

$                    876

$              16,061

$               (3,390)

$              42,521

Three months ended September 30, 2018

Income (loss) before income taxes

$                (9,914)

$               10,576

$                (7,976)

$                 5,732

$                (2,057)

$                (3,639)

Income (loss) attributable to the noncontrolling interests

223

223

Income (loss) before income taxes attributable to The Andersons, Inc.

(9,914)

10,353

(7,976)

5,732

(2,057)

(3,862)

Interest expense

2,126

(784)

1,315

2,602

(83)

5,176

Depreciation and amortization

4,118

1,533

6,761

7,385

2,931

22,728

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$                (3,670)

$                11,102

$                     100

$                15,719

$                     791

$                24,042

Adjusting items impacting EBITDA:

One time acquisition costs

3,463

3,463

Transaction related stock compensation

Asset impairment

Total adjusting items

3,463

3,463

Adjusted EBITDA

$                (3,670)

$               11,102

$                    100

$               15,719

$                 4,254

$               27,505

Nine months ended September 30, 2019

Income (loss) before income taxes

$                4,268

$                3,904

$                 4,534

$              10,629

$             (15,599)

$                7,736

Income (loss) attributable to the noncontrolling interests

(2,265)

(2,265)

Income (loss) before income taxes attributable to The Andersons, Inc.

4,268

6,169

4,534

10,629

(15,599)

10,001

Interest expense

29,027

(1,520)

6,478

12,071

(443)

45,613

Depreciation and amortization

37,523

7,094

19,778

25,377

8,624

98,396

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$              70,818

$              11,743

$              30,790

$              48,077

$               (7,418)

$            154,010

Adjusting items impacting EBITDA:

One time acquisition costs

6,922

6,922

Transaction related stock compensation

7,339

7,339

Asset impairment

3,081

3,081

Total adjusting items

17,342

17,342

Adjusted EBITDA

$               88,160

$               11,743

$               30,790

$               48,077

$                (7,418)

$             171,352

Nine months ended September 30, 2018

Income (loss) before income taxes

$                (2,453)

$                20,528

$                  8,239

$                10,645

$              (13,734)

$                23,225

Income (loss) attributable to the noncontrolling interests

(175)

(175)

Income (loss) before income taxes attributable to The Andersons, Inc.

(2,453)

20,703

8,239

10,645

(13,734)

23,400

Interest expense

9,018

(1,098)

4,397

7,688

(5)

20,000

Depreciation and amortization

12,261

4,559

20,257

21,673

9,210

67,960

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$                18,826

$                24,164

$                32,893

$                40,006

$                (4,529)

$              111,360

Adjusting items impacting EBITDA:

One time acquisition costs

3,463

3,463

Transaction related stock compensation

Asset impairment

Total adjusting items

3,463

3,463

Adjusted EBITDA

$                18,826

$                24,164

$                32,893

$                40,006

$                (1,066)

$              114,823

 

 

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SOURCE The Andersons, Inc.