The Andersons, Inc. Reports Second Quarter Results

Second Quarter Earnings of $1.09 per Diluted Share

MAUMEE, Ohio, Aug. 5, 2015 /CNW/ -- The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the second quarter ended June 30, 2015.

Highlights

  • Rail Group has continued strong performance
  • Ethanol Group earnings improve significantly from the first quarter
  • Plant Nutrient Group acquires the nutrient business of Kay Flo Industries
  • Unusually wet weather negatively impacts the Plant Nutrient Group

"The Rail Group's focus on asset management and operational performance helped produce a great quarter.  The Ethanol Group had strong results as well, due primarily to an improvement in margins.  The ethanol team also continued to benefit from investments made in technology and process improvement," said CEO Mike Anderson.  "The weather, however, did not cooperate in some of our markets, which led to decreased profitability in our Plant Nutrient Group.  Extremely wet weather the last half of the second quarter impaired the normal application of crop nutrients in the Eastern corn-belt.  We expect to return to normal nutrient volumes in the fall.  Our results this quarter once again demonstrate the value of having a diversified portfolio of businesses.  The most recent addition to our portfolio, Kay Flo, has already added new markets, customers and product lines to the Company.  Additionally, significant cross selling opportunities and synergies have been identified that will pay dividends in 2016 and beyond."

Key Highlights

Net income for the second quarter of 2015 attributable to the Company was $31.1 million, or $1.09 per diluted share.  Last year second quarter net income was $44.3 million, or $1.56 per diluted share.  Net income through June this year was $35.2 million, or $1.23 per diluted share.  When excluding the partial redemption of our investment in Lansing Trade Group last year, adjusted net income through June of 2014 was $56.4 million, or $1.98 per diluted share.  (See the Reconciliation to Adjusted Net Income Table for a discussion and reconciliation of income and adjusted income.)  Second quarter 2015 revenues were $1.2 billion compared to $1.3 billion in revenues the same period last year.

  • The Rail Group achieved pre-tax income of $21.7 million this quarter.  The group continues to have strong base leasing business results and the rail repair business had a $0.7 million year over year improvement.  The group also had income of $10.6 million related to a lease settlement during the quarter.
  • The Rail Group's utilization rate increased for the tenth consecutive quarter and averaged 93.5 percent this quarter.
  • The Ethanol Group executed well operationally and achieved record second quarter ethanol production volumes.  Strong results from the sale of co-products were also seen.
  • Wet weather reduced nutrient application in a number of areas in which the Plant Nutrient Group does business.  This led to reduced margins and volume for the wholesale nutrient business, and prevented the group from regaining the volume shortfall seen in the prior two quarters.  Further, there was a $3.0 million negative impact to income this quarter related to the Kay Flo acquisition.
  • The Grain Group's results were impacted by lower margins and volume, which resulted primarily from lower than expected movement of grain off farm, and lower forward contracting activity.  

Outlook

  • The Rail Group is expected to deliver another great year.    
  • The demand for ethanol is expected to remain strong as lower gasoline prices support base demand for gasoline.  The Ethanol Group believes export demand will support margins into the fall when domestic gasoline demand falls off.
  • Barring further unusual weather the Plant Nutrient Group should have a typical second half of the year.  Significant volume improvement should be seen in 2016, as farmers address their soil nutrient demands created by an abnormally wet spring.  The benefits from the Kay Flo acquisition should also begin to be seen in 2016.
  • The wet weather slightly reduced the likely size of fall crops of corn and beans, and degraded wheat quality in some of our draw territory.  We will continue to look for other income opportunities resulting from market volatility to somewhat offset this lower volume. 

Conference Call

The Company will host a webcast on Thursday, August 6, 2015 at 11:00 A.M. ET, to discuss its performance.  To dial-in to the call, the number is 866-439-8514 (participant passcode is 83166883). 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/nsm3rp8b.  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 Income







(Unaudited)

















Three months ended June 30,


Six months ended June 30,

(in thousands, except per share data)

2015


2014


2015


2014

Sales and merchandising revenues

$              1,208,492


$                 1,312,082


$              2,158,581


$                 2,315,376

Cost of sales and merchandising revenues

1,100,319


1,190,587


1,967,097


2,117,106

Gross profit

108,173


121,495


191,484


198,270

Operating, administrative and general expenses

83,743


76,275


162,346


147,260

Interest expense

4,025


6,146


10,063


12,148

Other income:








Equity in earnings of affiliates

16,190


32,213


19,450


52,714

Other income, net

13,772


3,797


16,880


23,409

Income before income taxes

50,367


75,084


55,405


114,985

Income tax provision

17,969


25,714


19,061


39,586

Net income

32,398


49,370


36,344


75,399

Net income attributable to the noncontrolling interests

1,306


5,069


1,155


8,390

Net income attributable to The Andersons, Inc.

$                    31,092


$                      44,301


$                    35,189


$                      67,009









Per common share:








Basic earnings attributable to The Andersons, Inc. common shareholders

$                        1.09


$                          1.56


$                        1.23


$                          2.36

Diluted earnings attributable to The Andersons, Inc. common shareholders

$                        1.09


$                          1.56


$                        1.23


$                          2.36

Dividends paid

$                    0.1400


$                      0.1100


$                    0.2800


$                      0.2200









 

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)

2015


2014


2015


2014

Net income attributable to The Andersons, Inc.

$                   31,092


$                     44,301


$                   35,189


$                     67,009

Items impacting other income, net:








Partial redemption of investment in Lansing Trade Group

-


-


-


(10,656)

Total adjusting items

-


-


-


(10,656)

Adjusted net income attributable to The Andersons, Inc.

$                   31,092


$                     44,301


$                   35,189


$                     56,353

















Diluted earnings attributable to The Andersons, Inc. common shareholders

$                       1.09


$                         1.56


$                       1.23


$                         2.36









Impact on diluted earnings per share

-


-


-


(0.38)

Adjusted diluted earnings per share

$                       1.09


$                         1.56


$                       1.23


$                         1.98









 

The Andersons, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

























(in thousands)

June 30, 2015


December 31, 2014


June 30, 2014

Assets






Current assets:






Cash and cash equivalents

$                    40,773


$                   114,704


$                      47,190

Restricted cash

941


429


895

Accounts receivable, net

238,601


183,059


189,646

Inventories

508,408


795,655


432,996

Commodity derivative assets – current

39,860


92,771


162,427

Deferred income taxes

6,069


7,337


7,443

Other current assets

44,765


60,492


24,596

Total current assets

879,417


1,254,447


865,193

Other assets:






Commodity derivative assets – noncurrent

2,990


507


312

Other assets, net

225,601


131,527


116,985

Pension asset

-


-


13,023

Equity method investments

224,380


226,857


264,381


452,971


358,891


394,701

Rail Group assets leased to others, net

330,832


297,747


242,147

Property, plant and equipment, net

489,145


453,607


390,587

Total assets

$              2,152,365


$                2,364,692


$                 1,892,628







Liabilities and equity






Current liabilities:






Short-term debt

$                 141,250


$                       2,166


$                      27,000

Trade and other payables

358,190


706,823


307,765

Customer prepayments and deferred revenue

25,927


99,617


21,670

Commodity derivative liabilities – current

42,622


64,075


86,134

Accrued expenses and other current liabilities

72,034


78,610


81,260

Current maturities of long-term debt

27,188


76,415


89,387

Total current liabilities

667,211


1,027,706


613,216







Other long-term liabilities

14,934


15,507


15,032

Commodity derivative liabilities – noncurrent

2,177


3,318


7,444

Employee benefit plan obligations

57,686


59,308


39,178

Long-term debt, less current maturities

417,279


298,638


300,220

Deferred income taxes

171,163


136,166


126,258

Total liabilities

1,330,450


1,540,643


1,101,348

Total equity

821,915


824,049


791,280

Total liabilities and equity

$              2,152,365


$                2,364,692


$                 1,892,628







 

The Andersons, Inc.











Segment Data











(Unaudited)

























(in thousands)

Grain


Ethanol


Plant Nutrient


Rail


Retail


Other


Total

Three months ended June 30, 2015














Revenues from external customers

$                   625,316


$            139,432


$          357,186


$              45,523


$              41,035


$—


$           1,208,492

Gross profit

25,005


5,843


46,698


18,249


12,378



108,173

Equity in earnings of affiliates

7,875


8,315






16,190

Other income, net

1,231


6


459


11,834


93


149


13,772

Income (loss) before income taxes

3,147


10,975


18,873


21,689


1,469


(5,786)


50,367

Income (loss) attributable to the noncontrolling interests

(2)


1,308






1,306

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

$                       3,149


$                9,667


$              18,873


$              21,689


$                1,469


$              (5,786)


$                 49,061














-

Three months ended June 30, 2014













-

Revenues from external customers

$                   656,004


$            226,388


$            354,808


$              33,409


$              41,473


$—


$              1,312,082

Gross profit

27,909


18,638


48,538


13,863


12,547



121,495

Equity in earnings of affiliates

8,467


23,746






32,213

Other income (expense), net

975


356


858


787


190


631


3,797

Income (loss) before income taxes

10,352


38,976


27,002


6,684


1,637


(9,567)


75,084

Income (loss) attributable to the noncontrolling interests

(3)


5,072






5,069

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

$                     10,355


$              33,904


$              27,002


$                6,684


$                1,637


$               (9,567)


$                   70,015
















Grain


Ethanol


Plant Nutrient


Rail


Retail


Other


Total

Six months ended June 30, 2015














Revenues from external customers

$                1,210,478


$            277,612


$            511,137


$              89,739


$              69,615


$—


$           2,158,581

Gross profit

54,730


12,129


68,664


35,571


20,390



191,484

Equity in earnings of affiliates

9,423


10,027






19,450

Other income, net

2,064


48


1,494


12,673


192


409


16,880

Income (loss) before income taxes

3,887


16,106


19,297


32,002


(714)


(15,173)


55,405

Income (loss) attributable to the noncontrolling interests

(5)


1,160






1,155

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

$                       3,892


$              14,946


$              19,297


$              32,002


$                  (714)


$           (15,173)


$                 54,250














-

Six months ended June 30, 2014













-

Revenues from external customers

$                1,239,163


$            415,208


$            506,163


$              85,711


$              69,131


$—


$              2,315,376

Gross profit

44,917


26,003


71,088


35,728


20,534



198,270

Equity in earnings of affiliates

10,351


42,363






52,714

Other income, net

19,321


130


1,350


1,497


302


809


23,409

Income (loss) before income taxes

21,655


62,124


26,966


21,729


(698)


(16,791)


114,985

Income (loss) attributable to the noncontrolling interests

(6)


8,396






8,390

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

21,661


53,728


26,966


21,729


(698)


(16,791)


106,595















(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).

 

Logo - http://photos.prnewswire.com/prnh/20081104/CLTU081LOGO

SOURCE The Andersons, Inc.

For further information: Investor Relations Contact, Jim Burmeister, Phone: 419-891-5848, E-mail: Jim_Burmeister@andersonsinc.com, http://www.andersonsinc.com


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