The Andersons, Inc. Reports Third Quarter Results

Third Quarter Earnings of $0.59 per Diluted Share

Ethanol Group Leads Earning Results

Board Approves $50.0 Million Share Repurchase

Nov 5, 2014

MAUMEE, Ohio, Nov. 5, 2014 /PRNewswire/ -- The Andersons, Inc. (Nasdaq: ANDE) today announces financial results for the third quarter ended September 30, 2014.

The Andersons, Inc. logo

Highlights

  • Year-to-date earnings of $2.95 per diluted share set a new record.
  • Record third quarter operating income of $21.3 million for the Ethanol Group.

"We're pleased with our results through September, which set a record. Our earnings this year clearly have been led by the outstanding results of our Ethanol Group," said CEO Mike Anderson. "I want to mention, however, that current ethanol market indications for 2015 show margins declining from the levels we have seen this year.

"We continue to grow, both organically and by acquisition, including the purchase of Auburn Bean and Grain in October, which added grain and agronomy locations throughout north central Michigan," added Mr. Anderson. "This is an area of strategic significance to the company as it connects our existing locations to our Thompsons joint venture in Ontario.  This acquisition increased our grain storage capacity by 13 percent, and our nutrient storage by four percent." 

All financial and operating highlights below are quarterly data compared to the same period of the prior year, unless otherwise noted.

Financial Highlights

Third quarter net income attributable to the company was $16.8 million, or $0.59 per diluted share, on revenues of $1.0 billion.  In the same three month period of 2013, the company reported results of $17.2 million, or $0.61 per diluted share, on revenues of $1.2 billion

  • Revenues were down in the Grain and Ethanol groups due to lower commodity prices. The majority of the decrease was within the Grain Group where the average price per bushel sold decreased by 36 percent, which more than offset the 11 percent increase in bushels sold.
  • The Ethanol Group realized solid margins at all plants. These margins were primarily supported by strong export demand, lower corn prices, and solid operating metrics. The Ethanol Group had record E-85 sales.
  • Volume for the Plant Nutrient Group was up almost 25 percent during the third quarter; however, this was partially offset by lower gross profit per ton.
  • The Rail Group's income was down this quarter due in part to the group recognizing $4.3 million in income from the settlement of two non-performing leases last year, and a significant increase in freight expense to move idle cars into service.

Operating Highlights

The following highlights have impacted reported results, or may impact future results:

  • Crop conditions were good to excellent in the majority of the company's territories during the growing season, which has led to record yields. The harvest, however, had a slow start due to wet weather conditions.
  • It should be noted that poor railroad service could impact the company in the fourth quarter. Both the Grain and Ethanol groups rely on outbound rail service to turn their inventory, which enables them to effectively serve their customers. Further, the Plant Nutrient Group relies on inbound rail to ensure nutrients are available to meet customer needs.
  • Integration of the Auburn Bean and Grain (AB&G), United Grain, LLC and Keller Grain, Inc. acquisitions is underway. AB&G added grain storage capacity of about 18.1 million bushels, and 16,000 tons of dry and 3.7 million gallons of liquid nutrient capacity.
  • All four ethanol plants had scheduled maintenance shut-downs during the third quarter. These went well, and new daily production records have been set since the maintenance was performed.
  • At this time, approximately 85 percent of the fourth quarter and almost half of the January ethanol margin risk is hedged. These hedges were placed at different times during the year in accordance with the group's risk management strategy.
  • At the end of September, the Rail Group's utilization rate was 90.1 percent, up from 86.3 percent the prior year. The utilization rate is expected to increase further as the year progresses.

Share Repurchase - Authorization

The Andersons also announces that its Board of Directors has authorized the repurchase of up to an aggregate $50.0 million of the company's common stock.  The primary objective of the limited share repurchase program is to offset dilution related to the company's recent share issuance in connection with its acquisition of Auburn Bean and Grain.  The program will also enable the company to acquire shares used for its employee long-term incentive plans in order to offset dilution.  

Shares will be repurchased from time to time in open market transactions.  When, and if, shares are purchased will depend on stock price, market conditions and other factors.  The authorization for this plan will be in effect for two years.    

Conference Call

The company will host a webcast on Thursday, November 6, 2014 at 11:00 A.M. ET, to discuss its performance.  This can be accessed under the heading "Investor" on its 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

The Andersons, Inc. is a diversified company rooted in agriculture.  Founded in Maumee, Ohio, in 1947, the company conducts business across North America in the grain, ethanol, and plant nutrient sectors, railcar leasing, turf and cob products, and consumer retailing. The Andersons, Inc. is located on the Internet at www.andersonsinc.com

 

The Andersons, Inc.

Condensed Consolidated Statements of Income

(Unaudited)































Three months ended September 30,


Nine months ended September 30,

(in thousands, except per share data)

2014


2013


2014


2013









Sales and merchandising revenues

$ 952,927


$ 1,181,374


$ 3,268,303


$ 4,020,308

Cost of sales and merchandising revenues

868,009


1,108,228


2,985,115


3,764,660

Gross profit

84,918


73,146


283,188


255,648

Operating, administrative and general expenses

76,737


69,193


223,997


192,665

Interest expense

4,253


5,348


16,401


16,607

Other income:








Equity in earnings of affiliates

23,917


22,177


76,631


39,991

Other income, net

1,685


7,605


25,094


11,623

Income before income taxes

29,530


28,387


144,515


97,990

Income tax provision

10,251


10,348


49,837


36,907

Net income

19,279


18,039


94,678


61,083

Net income attributable to the noncontrolling interests

2,454


878


10,844


1,805

Net income attributable to The Andersons, Inc.

$ 16,825


$ 17,161


$ 83,834


$ 59,278









Per common share:








Basic earnings attributable to The Andersons, Inc.

common shareholders

$ 0.59


$ 0.61


$ 2.95


$ 2.11

Diluted earnings attributable to The Andersons, Inc.

common shareholders

$ 0.59


$ 0.61


$ 2.95


$ 2.10

Dividends paid

$ 0.1100


$ 0.1067


$ 0.3300


$ 0.3200









 

 

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



















(in thousands)

September 30, 2014


December 31, 2013


September 30, 2013

Assets






Current assets:






Cash and cash equivalents

$                 326,946


$                   309,085


$                    134,441

Restricted cash

173


408


164

Accounts receivable, net

162,270


173,930


178,970

Inventories

396,464


614,923


429,017

Commodity derivative assets – current

126,396


71,319


105,390

Deferred income taxes

148


4,931


5,254

Other current assets

36,518


47,188


42,278

Total current assets

1,048,915


1,221,784


895,514

Other assets:






Commodity derivative assets – noncurrent

2,383


246


5

Other assets, net

113,141


118,010


110,731

Pension asset

13,738


14,328


-

Equity method investments

257,166


291,109


262,643


386,428


423,693


373,379

Railcar assets leased to others, net

245,849


240,621


233,024

Property, plant and equipment, net

401,800


387,458


380,374

Total assets

$              2,082,992


$                2,273,556


$                 1,882,291







Liabilities and equity






Current liabilities:






Short-term debt

$                         451


$                             -


$                              -

Accounts payable for grain

222,178


592,183


241,575

Other accounts payable

165,133


154,599


200,664

Customer prepayments and deferred revenue

27,246


59,304


23,974

Commodity derivative liabilities – current

229,265


63,954


88,234

Accrued expenses and other current liabilities

70,598


70,295


63,900

Current maturities of long-term debt

76,757


51,998


44,232

Total current liabilities

791,628


992,333


662,579







Other long-term liabilities

13,902


15,386


17,129

Commodity derivative liabilities – noncurrent

26,203


6,644


9,636

Employee benefit plan obligations

39,606


39,477


49,768

Long-term debt, less current maturities

289,448


375,213


381,018

Deferred income taxes

120,628


120,082


91,869

Total liabilities

1,281,415


1,549,135


1,211,999

Total equity

801,577


724,421


670,292

Total liabilities and equity

$              2,082,992


$                2,273,556


$                 1,882,291

 

 

 

The Andersons, Inc.

Segment Data

(Unaudited)


































(in thousands)

Grain

Ethanol

Plant Nutrient

Rail

Turf & Specialty

Retail

Other

Total

Three months ended September 30, 2014









Revenues from external customers

$ 575,354

$ 179,405

$ 110,809

$ 32,022

$ 22,631

$ 32,706

$

$ 952,927










Gross profit

32,748

12,770

13,934

10,841

5,306

9,319

84,918










Equity in earnings of affiliates

10,190

13,727

23,917










Other income (expense), net

(2,354)

71

2,617

792

244

418

(103)

1,685










Income (loss) before income taxes

12,447

23,709

(129)

4,160

(2,885)

(968)

(6,804)

29,530










Income (loss) attributable to the noncontrolling interests

(2)

2,456

2,454










Operating income (loss) (a)

$ 12,449

$ 21,253

$ (129)

$ 4,160

$ (2,885)

$ (968)

$

(6,804)

$ 27,076










Three months ended September 30, 2013









Revenues from external customers

$ 765,833

$ 213,384

$ 95,681

$ 47,523

$ 27,624

$ 31,329

$

$ 1,181,374










Gross profit

27,005

4,735

13,553

13,000

6,408

8,445

73,146










Equity in earnings of affiliates

12,003

10,174

22,177










Other income, net

1,216

35

320

5,031

135

102

766

7,605










Income (loss) before income taxes

14,315

11,790

(1,643)

12,360

(83)

(2,043)

(6,309)

28,387










Income (loss) attributable to the noncontrolling interest

(8)

886

878










Operating income (loss) (a)

$ 14,323

$ 10,904

$ (1,643)

$ 12,360

$ (83)

$ (2,043)

$

(6,309)

$ 27,509











Grain

Ethanol

Plant Nutrient

Rail

Turf & Specialty

Retail

Other

Total

Nine months ended September 30, 2014









Revenues from external customers

$ 1,814,517

$ 594,613

$ 530,334

$ 117,733

$ 109,269

$ 101,837

$

$ 3,268,303










Gross profit

77,665

38,773

68,742

46,569

21,586

29,853

283,188










Equity in earnings of affiliates

20,541

56,090

76,631










Other income, net

16,967

201

3,193

2,289

1,018

720

706

25,094










Income (loss) before income taxes

34,102

85,833

23,464

25,889

488

(1,666)

(23,595)

144,515










Income (loss) attributable to the noncontrolling interests

(8)

10,852

10,844










Operating income (loss) (a)

$ 34,110

$ 74,981

$ 23,464

$ 25,889

$ 488

$ (1,666)

$

(23,595)

$ 133,671










Nine months ended September 30, 2013









Revenues from external customers

$ 2,493,678

$ 634,933

$ 537,922

$ 132,488

$ 117,955

$ 103,332

$

$ 4,020,308










Gross profit

73,947

19,189

64,703

46,536

22,747

28,526

255,648










Equity in earnings of affiliates

24,940

15,051

39,991










Other income, net

1,438

465

459

6,679

585

316

1,681

11,623










Income (loss) before income taxes

24,667

25,797

21,035

36,614

6,113

(3,673)

(12,563)

97,990










Income (loss) attributable to the noncontrolling interest

(8)

1,813

1,805










Operating income (loss) (a)

$ 24,675

$ 23,984

$ 21,035

$ 36,614

$ 6,113

$ (3,673)

$

(12,563)

$ 96,185










(a) Operating income (loss) 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.

For further information: Investor Relations Contact - Nick Conrad, Phone: 419-891-6415, E-mail: [email protected]


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