The Andersons, Inc. Reports First Quarter 2019 Results
MAUMEE, Ohio, May 6, 2019 /CNW/ -- The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the first quarter ended March 31, 2019.
First Quarter Highlights:
- Company reports a net loss of $14.0 million or $0.43 per diluted share and an adjusted net loss of $5.3 million, or $0.16 per diluted share. Adjustments include $8.7 million, or $0.27 per diluted share, of expenses related to the Lansing Trade Group acquisition, which closed in early January. Integration is progressing well.
- Adjusted EBITDA increases by 45 percent to $40.2 million.
- Trade Group reports pretax loss of $17.5 million and adjusted pretax loss of $5.9 million in a continuing difficult grain margin environment.
- Ethanol Group remains profitable in a weak margin environment, recording $2.6 million of pretax income on continued improved plant efficiency.
- Plant Nutrient Group records pretax loss of $3.9 million on delayed primary and specialty nutrient sales and lower lawn and contract manufacturing results.
- Rail Group earns $4.3 million of pretax income on better railcar leasing and repair income.
"We closed our acquisition of Lansing Trade Group successfully in early January, and our work to integrate it with our former Grain Group is on schedule," said President and CEO Pat Bowe. "I am very pleased with how well the new Trade Group team is functioning. However, our overall results were hampered by markets that continue to be negatively impacted by trade disruptions and poor weather that are affecting multiple business units significantly."
$ in millions, except per share amounts |
|||
Q1 2019 |
Q1 2018 |
Variance |
|
Pretax Income (Loss) Attributable to the Company1 |
($19.4) |
($2.0) |
($17.4) |
Adjusted Pretax Income (Loss) |
($7.9) |
($2.0) |
($5.9) |
Trade (Grain) Group |
($5.9) |
($1.2) |
($4.7) |
Ethanol Group |
$2.6 |
$3.1 |
($0.5) |
Plant Nutrient Group |
($3.9) |
$1.1 |
($5.0) |
Rail Group |
$4.3 |
$4.0 |
$0.3 |
Other |
($4.9) |
($8.9) |
$4.0 |
Net Income (Loss) |
($14.0) |
($1.7) |
($12.3) |
Adjusted Net Income (Loss) |
($5.3) |
($1.7) |
($3.6) |
EPS |
($0.43) |
($0.06) |
($0.37) |
Adjusted EPS |
($0.16) |
($0.06) |
($0.10) |
EBITDA |
$28.7 |
$27.7 |
$1.0 |
Adjusted EBITDA |
$40.2 |
$27.7 |
$12.5 |
1 Excludes net income (loss) attributable to the noncontrolling interests of ($0.2) in Q1 2019 and ($0.3) in Q1 2018. |
"The Trade Group's adjusted results were mixed, as weak markets and foreign trade uncertainty limited grain margin opportunities, and the group also incurred some insured property losses at one Nebraska facility due to heavy rains," Bowe continued. "The Ethanol Group's results were encouraging, as the group remained profitable by continuing its excellent plant efficiency and hedging its production well. The Plant Nutrient Group continues to struggle, as its results were hurt by lower volume, primarily in agriculture and lawn fertilizer, and higher operating expenses. Rail's results improved on better leasing and repair results, even while it reduced car sale income by electing to sell fewer cars."
Adjustments Related to the Lansing Acquisition
The company made significant purchase price accounting adjustments and incurred other expenses during the period due to the Lansing acquisition. The company adjusted the Trade Group's results for several one-time, largely noncash expenses totaling $8.2 million, or $0.19 per diluted share, and for noncash stock compensation expenses totaling $3.4 million, or $0.08 per diluted share, that were associated with the acquisition.
While not included in the adjustments above, the group also incurred an incremental $4.4 million, or $0.10 per diluted share, of depreciation and amortization expenses due to the revaluation of Lansing and Thompsons Limited fixed assets and the valuation of its definite-lived intangibles. The group expects to incur similar amounts each quarter through 2021.
In addition, the company has recast first quarter 2018 pretax income for the Grain and Ethanol Groups to conform to segment reporting changes made in conjunction with the Lansing acquisition. The changes, which related to service agreements for DDG marketing and a lease of grain storage assets in Denison, resulted in a shift of $1.2 million in pretax income from the Grain Group to the Ethanol Group. The Company expects similar shifts for each of the remaining three quarters of 2018.
First Quarter Segment Overview
Trade Group Results Muted by Difficult Margin Environment
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.
The Trade Group recorded a pretax loss of $17.5 million and an adjusted pretax loss of $5.9 million for the quarter. As noted above, the group also incurred $4.4 million of incremental depreciation and amortization expenses. The former Grain Group posted a loss of $1.2 million in the first quarter of 2018.
- Income from merchandising activities was muted by limited market volatility.
- Income derived from grain originations and the group's assets was down slightly on limited farmer selling and diminished income from storing wheat; those results also included a $2.2 million insured loss due to property damage caused by heavy rains in Nebraska.
- Food ingredient and specialty grains business results were down.
Due in large part to the Lansing acquisition, the group's first quarter 2019 EBITDA and adjusted EBITDA were $7.0 million and $18.6 million, respectively, which compare favorably to the Grain Group's $5.7 million EBITDA in the first quarter of 2018.
Ethanol Group Performance Down Slightly on Weak Margins
The Ethanol Group earned pretax income of $2.6 million in the first quarter, somewhat less than the $3.1 million of pretax income it earned in the same period in 2018.
- Industry margins were weak, but improved late in the quarter.
- The group continued to improve plant efficiency, which led to higher product yields.
- E85 sales were well below those of the prior year, but began rebounding as gasoline prices rose.
Construction is nearly complete on the state-of-the-art bio-refinery in Kansas that the group is building in partnership with ICM, Inc. The company expects the facility to begin operating early in the third quarter.
Plant Nutrient Group Records Pretax Loss of $3.9 Million as All Product Lines Struggle
The Plant Nutrient Group recorded a pretax loss of $3.9 million in the first quarter compared to pretax income of $1.1 million in the prior year period.
- Both primary and specialty nutrient volumes significantly lagged the prior year due to extended cold and wet weather.
- Lawn and contract manufacturing got off to a decent start, but volumes were down even more than expected.
The group's current quarter EBITDA was $5.0 million, a $4.3 million decrease from 2018 first quarter results.
Rail Group Registers Improved Quarter on Stronger Leasing and Repair Results
The Rail Group earned first quarter pretax income of $4.3 million compared to $4.0 million in the same period of the prior year.
- The group's income from railcar leasing increased by $1.2 million year over year on record utilization, more cars on lease and slightly higher average lease rates.
- Income from car sales declined $1.7 million year over year.
- Service and other pretax income improved by $0.9 million on higher volume and better margins in the repair business.
The group's first quarter 2019 EBITDA was $16.3 million, up 20 percent from the $13.5 million in the comparable 2018 period.
Adjusted Net Corporate Expenses Decline Year over Year
Unallocated net company-level expenses were $4.9 million, down considerably from the $8.9 million net expenses incurred in the comparable 2018 period. The year-over-year decrease was due in part due to the absence of severance expenses, which were $1.4 million in the prior period, and lower expenses associated with SAP implementation.
Conference Call
The company will host a webcast on Tuesday, May 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 9681589). 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/m6/p/aec8j4o7. 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 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 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 March 31, |
|||
(in thousands, except per share data) |
2019 |
2018 |
|
Sales and merchandising revenues |
$ 2,079,391 |
$ 635,739 |
|
Cost of sales and merchandising revenues |
1,969,727 |
572,034 |
|
Gross profit |
109,664 |
63,705 |
|
Operating, administrative and general expenses |
113,349 |
64,257 |
|
Asset impairment |
- |
- |
|
Goodwill impairment |
- |
- |
|
Interest expense |
15,910 |
6,999 |
|
Other income: |
|||
Equity in earnings (loss) of affiliates |
1,519 |
3,573 |
|
Other income, net |
(1,514) |
1,686 |
|
Income (loss) before income taxes |
(19,590) |
(2,292) |
|
Income tax provision (benefit) |
(5,442) |
(310) |
|
Net income (loss) |
(14,148) |
(1,982) |
|
Net income attributable to the noncontrolling interests |
(155) |
(282) |
|
Net income (loss) attributable to The Andersons, Inc. |
$ (13,993) |
$ (1,700) |
|
Per common share: |
|||
Basic earnings (loss) attributable to The Andersons, Inc. common shareholders |
$ (0.43) |
$ (0.06) |
|
Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders |
$ (0.43) |
$ (0.06) |
|
Dividends declared |
$ 0.170 |
$ 0.165 |
|
The Andersons, Inc. |
|||
Reconciliation to Adjusted Net Income |
|||
(Unaudited) |
|||
Three months ended March 31, |
|||
(in thousands, except per share data) |
2019 |
2018 |
|
Net income (loss) attributable to The Andersons, Inc. |
$ (13,993) |
$ (1,700) |
|
Items impacting other income, net of tax: |
|||
One time acquisition costs |
6,116 |
- |
|
Transaction related stock compensation |
2,562 |
- |
|
Total adjusting items |
8,678 |
- |
|
Adjusted net income (loss) attributable to The Andersons, Inc. |
$ (5,316) |
$ (1,700) |
|
Diluted earnings attributable to The Andersons, Inc. common shareholders |
$ (0.43) |
$ (0.06) |
|
Impact on diluted earnings per share |
0.27 |
- |
|
Adjusted diluted earnings (loss) per share |
$ (0.16) |
$ (0.06) |
|
The Andersons, Inc. |
|||||
Condensed Consolidated Balance Sheets |
|||||
(Unaudited) |
|||||
(in thousands) |
March 31, 2019 |
December 31, 2018 |
March 31, 2018 |
||
Assets |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 29,991 |
$ 22,593 |
$ 31,497 |
||
Accounts receivable, net |
611,290 |
207,285 |
216,021 |
||
Inventories |
1,026,465 |
690,804 |
731,629 |
||
Commodity derivative assets – current |
158,277 |
51,421 |
43,810 |
||
Other current assets |
60,222 |
50,703 |
57,147 |
||
Assets held for sale |
364 |
392 |
57,775 |
||
Total current assets |
1,886,609 |
1,023,198 |
1,137,879 |
||
Other assets: |
|||||
Commodity derivative assets – noncurrent |
3,757 |
480 |
1,739 |
||
Other assets, net |
352,905 |
127,503 |
143,445 |
||
Right of use asset, net |
85,766 |
- |
- |
||
Equity method investments |
121,781 |
242,326 |
224,449 |
||
564,209 |
370,309 |
369,633 |
|||
Rail Group assets leased to others, net |
537,629 |
521,785 |
462,253 |
||
Property, plant and equipment, net |
671,805 |
476,711 |
393,763 |
||
Total assets |
$ 3,660,252 |
$ 2,392,003 |
$ 2,363,528 |
||
Liabilities and equity |
|||||
Current liabilities: |
|||||
Short-term debt |
$ 434,304 |
$ 205,000 |
$ 489,000 |
||
Trade and other payables |
590,258 |
462,535 |
263,519 |
||
Customer prepayments and deferred revenue |
148,345 |
32,533 |
81,778 |
||
Commodity derivative liabilities – current |
66,623 |
32,647 |
15,424 |
||
Accrued expenses and other current liabilities |
151,648 |
79,046 |
60,095 |
||
Current maturities of long-term debt |
55,160 |
21,589 |
14,134 |
||
Total current liabilities |
1,446,338 |
833,350 |
923,950 |
||
Right of use liability |
57,451 |
- |
- |
||
Other long-term liabilities |
12,262 |
32,184 |
31,536 |
||
Commodity derivative liabilities – noncurrent |
3,821 |
889 |
1,414 |
||
Employee benefit plan obligations |
21,471 |
22,542 |
26,310 |
||
Long-term debt, less current maturities |
982,025 |
496,187 |
438,628 |
||
Deferred income taxes |
138,598 |
130,087 |
118,933 |
||
Total liabilities |
2,661,966 |
1,515,239 |
1,540,771 |
||
Total equity |
998,286 |
876,764 |
822,757 |
||
Total liabilities and equity |
$ 3,660,252 |
$ 2,392,003 |
$ 2,363,528 |
||
The Andersons, Inc. |
|||||||||||
Reconciliation to EBITDA and Adjusted EBITDA |
|||||||||||
(unaudited) |
|||||||||||
(in thousands) |
Trade |
Ethanol |
Plant Nutrient |
Rail |
Other |
Total |
|||||
Three months ended March 31, 2019 |
|||||||||||
Income (loss) before income taxes |
$ (17,464) |
$ 2,417 |
$ (3,929) |
$ 4,312 |
$ (4,926) |
$ (19,590) |
|||||
Income (loss) attributable to the noncontrolling interests |
- |
(155) |
- |
- |
- |
(155) |
|||||
Income (loss) before income taxes attributable to The Andersons, Inc. |
(17,464) |
2,572 |
(3,929) |
4,312 |
(4,926) |
(19,435) |
|||||
Interest expense |
10,274 |
(824) |
2,261 |
3,679 |
520 |
15,910 |
|||||
Depreciation and amortization |
14,200 |
139 |
6,662 |
8,275 |
2,925 |
32,201 |
|||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) |
$ 7,010 |
$ 1,887 |
$ 4,994 |
$ 16,266 |
$ (1,481) |
$ 28,676 |
|||||
Adjusting items impacting EBITDA: |
|||||||||||
One time acquisition costs |
8,154 |
- |
- |
- |
- |
8,154 |
|||||
Transaction related stock compensation |
3,416 |
- |
- |
- |
- |
3,416 |
|||||
Total adjusting items |
11,570 |
- |
- |
- |
- |
11,570 |
|||||
Adjusted EBITDA |
$ 18,580 |
$ 1,887 |
$ 4,994 |
$ 16,266 |
$ (1,481) |
$ 40,246 |
|||||
Three months ended March 31, 2018 |
|||||||||||
Income (loss) before income taxes |
$ (1,244) |
$ 2,771 |
$ 1,091 |
$ 3,969 |
$ (8,879) |
$ (2,292) |
|||||
Income (loss) attributable to the noncontrolling interests |
- |
(282) |
- |
- |
- |
(282) |
|||||
Income (loss) before income taxes attributable to The Andersons, Inc. |
(1,244) |
3,053 |
1,091 |
3,969 |
(8,879) |
(2,010) |
|||||
Interest expense |
2,959 |
(41) |
1,441 |
2,368 |
272 |
6,999 |
|||||
Depreciation and amortization |
4,017 |
1,509 |
6,727 |
7,169 |
3,257 |
22,679 |
|||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) |
$ 5,732 |
$ 4,521 |
$ 9,259 |
$ 13,506 |
$ (5,350) |
$ 27,668 |
|||||
The Andersons, Inc. |
|||||||||||
Segment Data |
|||||||||||
(Unaudited) |
|||||||||||
(in thousands) |
Trade |
Ethanol |
Plant Nutrient |
Rail |
Other |
Total |
|||||
Three months ended March 31, 2019 |
|||||||||||
Revenues from external customers |
$ 1,700,620 |
$ 208,831 |
$ 128,525 |
$ 41,415 |
- |
$ 2,079,391 |
|||||
Gross profit |
68,989 |
3,808 |
20,934 |
15,933 |
- |
109,664 |
|||||
Equity in earnings of affiliates |
(131) |
1,650 |
- |
- |
- |
1,519 |
|||||
Other income, net |
(2,990) |
84 |
567 |
209 |
616 |
(1,514) |
|||||
Income (loss) before income taxes |
(17,464) |
2,417 |
(3,929) |
4,312 |
(4,926) |
(19,590) |
|||||
Income (loss) attributable to the noncontrolling interests |
- |
(155) |
- |
- |
- |
(155) |
|||||
Income (loss) before income taxes attributable to The |
(17,464) |
2,572 |
(3,929) |
4,312 |
(4,926) |
$ (19,435) |
|||||
Three months ended March 31, 2018 |
|||||||||||
Revenues from external customers |
$ 276,027 |
$ 173,663 |
$ 135,617 |
$ 50,432 |
$ - |
$ 635,739 |
|||||
Gross profit |
25,225 |
3,691 |
22,237 |
12,552 |
- |
63,705 |
|||||
Equity in earnings of affiliates |
1,987 |
1,586 |
- |
- |
- |
3,573 |
|||||
Other income, net |
325 |
614 |
652 |
16 |
79 |
1,686 |
|||||
Income (loss) before income taxes |
(1,244) |
2,771 |
1,091 |
3,969 |
(8,879) |
(2,292) |
|||||
Income (loss) attributable to the noncontrolling interests |
- |
(282) |
- |
- |
- |
(282) |
|||||
Income (loss) before income taxes attributable to The |
$ (1,244) |
$ 3,053 |
$ 1,091 |
$ 3,969 |
$ (8,879) |
$ (2,010) |
|||||
(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). |
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SOURCE The Andersons, Inc.
Investor Relations Contact: John Kraus, Director, Investor Relations, Phone: 419-891-6544, E-mail: [email protected], http://www.andersonsinc.com
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