The Andersons, Inc. Reports Fourth Quarter and Full-Year Results

Feb 12, 2020

MAUMEE, Ohio, Feb. 12, 2020 /PRNewswire/ -- The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the fourth quarter ended December 31, 2019.

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

Fourth Quarter Highlights:

  • Company reports net income of $6.6 million, or $0.19 per diluted share, and adjusted net income of $18.4 million, or $0.55 per diluted share. Adjusted EBITDA rose 21 percent year over year to $76.1 million.
  • Trade Group reports a pretax loss of $19.0 million, but adjusted pretax income of $18.5 million, as solid merchandising income was offset by the impacts of an extended, wet harvest in the Eastern Corn Belt.
  • Ethanol Group records pretax income of $41.2 million and adjusted pretax income attributable to the company of $7.2 million, on continued solid merchandising income and appreciation on hedged positions.
  • Plant Nutrient Group records pretax income of $4.6 million and adjusted pretax income of $3.9 million on lower operating and interest expenses.
  • Rail Group earns $4.5 million of pretax income on increased income from car sales.

"The acquisition of Lansing Trade Group continues to perform well, as stronger merchandising results somewhat offset the negative consequences of fewer acres planted and a late, wet harvest in the Trade Group's eastern footprint," said President and CEO Pat Bowe. "I am pleased with our efforts to capture both top-line and expense synergies associated with the Lansing transaction "By the end of the year, we exceeded our original run-rate goal of $10 million in cost savings a year ahead of schedule.

"The Ethanol Group's operating results reflect the favorable impact of hedging activity and continued strong performance by the group's expanded trading team," continued Bowe. "In addition, the fourth quarter results now include the consolidated results of the Ethanol Group's operations from the merger of four separate entities to form The Andersons Marathon Holdings, LLC in early October. The impacts of these Trade and Ethanol Group transactions, along with the new ELEMENT ethanol plant, set us up well for improved company performance in 2020." 

$ in millions, except per share amounts


Q4 2019

Q4 2018

Variance

YTD 2019

YTD 2018

Variance

Pretax Income1

$

21.4


$

30.0


$

(8.6)


$

31.4


$

53.4


$

(22.0)


Adjusted Pretax Income1

23.7


33.1


(9.4)


51.0


59.9


(8.9)


     Trade (Grain) Group

18.5


24.2


(5.7)


40.1


21.7


18.4


     Ethanol Group1

7.2


6.4


0.8


13.4


27.1


(13.7)


     Plant Nutrient Group

3.9


3.8


0.1


8.4


12.0


(3.6)


     Rail Group

4.5


6.7


(2.2)


15.1


17.4


(2.3)


     Other

(10.4)


(8.0)


(2.4)


(26.0)


(18.3)


(7.7)


Net Income1

6.6


23.8


(17.2)


18.3


41.5


(23.2)


Adjusted Net Income1

18.4


26.0


(7.6)


43.0


46.4


(3.4)


EPS

0.19


0.84


(0.70)


0.55


1.46


(0.90)


Adjusted EPS

0.55


0.92


(0.40)


1.30


1.63


(0.30)


EBITDA

82.2


60.1


22.1


234.0


171.3


62.7


Adjusted EBITDA Attributable to the Company

$

76.1


$

63.0


$

13.1


$

246.3


$

177.2


$

69.1


1 Reflects amounts attributable to the company and excludes income (loss) attributable to the noncontrolling interests of $(1.0) in Q4 2019, $(0.1) in Q4 2018, $(3.2) for year-to-date 2019 and $(0.3) for year-to-date 2018. See non-GAAP reconciliations in the accompanying tables.

Fourth Quarter Segment Overview

Trade Group Records Lower Adjusted Results Driven by Smaller Eastern Corn Belt Harvest

With the closing of the Lansing acquisition effective January 1, 2019, Trade Group results include the consolidated results of both Lansing and Thompsons Limited.

The Trade Group recorded a pretax loss of $19.0 million but its adjusted pretax income was $18.5 million for the quarter. The group also recorded $3.0 million of incremental depreciation and amortization expenses related to the Lansing acquisition. The former Grain Group recorded pretax income of $24.2 million in the fourth quarter of 2018.

  • Portfolio breadth gained from the Lansing acquisition again proved its critical value in the face of significant Eastern Corn Belt planting and harvest challenges.
  • Strong merchandising results and improved income from the newer western assets helped offset extremely tough conditions in the East.
  • Robust income from propane distribution was offset by lower sand transloading income, as the frac sand industry experienced a fundamental shift to in-basin sand.

The group adjusted its reported pretax income by $37.5 million; adjustments included the following items:

  • Asset impairment charges of $40.4 million, including $34.8 million on certain frac sand transloading and processing assets acquired as part of the Lansing acquisition.
  • A gain on the sale of Ontario agronomy assets of $5.7 million.

The group's fourth quarter adjusted EBITDA rose 24 percent to $38.1 million, while its full year adjusted EBITDA increased from $49.6 million in 2018 to $126.3 million in 2019.

Ethanol Group Remains Profitable; Merger Completed

The Ethanol Group earned pretax income and adjusted pretax income of $41.2 million and $6.2 million, respectively, attributable to the company in the fourth quarter, compared to the $6.3 million of pretax income it earned in the same period in 2018. The fourth quarter 2019 results included the consolidated results of all five ethanol plants due to The Andersons Marathon Holdings, LLC (TAMH) merger and the continued ramp-up of operations of the ELEMENT plant.

  • The group recorded significant appreciation on its hedged positions and increased sales volumes and margins by third-party production.
  • Crush margins were favorable early in the quarter but degraded quickly in November and December; comparatively higher corn basis continued to compress margins.
  • The group brought more new technologies and products online at ELEMENT, including new-to-the-market cellulosic ethanol technology and new feed products.  

The group recorded adjustments that increased reported pretax income by $35.0 million, including a $36.3 million gain on the remeasurement of its pre-existing investments in the Albion, Clymers and Greenville entities in conjunction with the TAMH merger. The resulting increase in fixed asset basis led to incremental depreciation of $2.5 million.

The group recorded adjusted EBITDA attributable to the company of $16.6 million in the fourth quarter of 2019 compared to 2018 fourth quarter adjusted EBITDA attributable to the company of $6.9 million. This result excludes the EBITDA allocable to the noncontrolling interests.

Plant Nutrient Group Records Comparable Year-Over-Year Results

The Plant Nutrient Group recorded pretax income of $4.6 million and adjusted pretax income of $3.9 million in the fourth quarter, compared to pretax income of $3.8 million in the prior year period.

  • Volumes were up in primary nutrients, but down in both specialty nutrients and lawn fertilizer.
  • Primary nutrient margin per ton was lower due to product mix.  
  • Working capital carrying costs decreased year over year due to heightened management focus.

The group adjusted reported income for a $2.9 million gain on the sale of the Auburn, Michigan farm center and impairment charges of $2.2 million associated with intangible assets related to the specialty nutrients business.

The group's current quarter adjusted EBITDA was $11.5 million, a slight decrease compared to 2018 fourth quarter EBITDA of $12.5 million. For the full year, the group recorded adjusted EBITDA of $42.3 million and $45.4 million in 2019 and 2018, respectively, in the face of significant unplanted acres in our key markets in 2019.

Rail Group Results Down on Lower Service and Other Income

The Rail Group earned fourth quarter pretax income of $4.5 million compared to $6.7 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 $2.4 million for the quarter compared to $1.2 million in the fourth quarter of 2018.  
  • Service and other pretax income fell by $3.1 million to $1.0 million; however, 2018 results included income of $2.4 million on the sale of several barges.

The group's fourth quarter 2019 EBITDA of $17.6 million was comparable to fourth quarter 2018 EBITDA. Full-year EBITDA was $65.7 million, an improvement of 13% over 2018 results.

Provision for Income Taxes Includes Charge Related to Lansing Acquisition, Research and Development Tax Credits

The company's fourth quarter income tax provision included tax expense of approximately $8.0 million, or $0.24 per diluted share, related to nondeductible Canadian losses on the company's investment in Thompsons Limited. As with other transaction-related amounts, the company has excluded this charge from its adjusted net income. In addition, the company's fourth quarter income tax provision included a tax benefit of approximately $2.7 million, or $0.08 per diluted share, for federal research and development income tax credits primarily related to the construction and ramp-up of the ELEMENT biorefinery.

Other Adjustments Related to the Lansing Acquisition

As it did in the first three quarters, the company has recast fourth quarter 2018 information 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.

Conference Call and Upcoming Investor Day

The company will host a webcast on Thursday, February 13, 2020, at 11 a.m. Eastern Standard Time, to discuss its performance and provide its updated outlook for 2020. To access the call, please dial 866-439-8514 or 678-509-7568 (participant passcode is 7479245). 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/saat5p3z. 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.

The company will also host an investor day on Wednesday, April 1, 2020 in New York City. A webcast of the event, along with the associated presentation, will be available on the company's website.

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
December 31,


Twelve months ended
December 31,

(in thousands, except per share data)

2019


2018


2019


2018

Sales and merchandising revenues

$

1,885,603



$

812,662



$

8,170,191



$

3,045,382


Cost of sales and merchandising revenues

1,747,244



718,700



7,652,299



2,743,377


Gross profit

138,359



93,962



517,892



302,005


Operating, administrative and general expenses

109,457



67,776



436,842



257,872


Asset impairment

38,131





41,212



6,272


Interest expense

14,078



7,848



59,691



27,848


Other income:








  Equity in earnings (losses) of affiliates

(4,992)



6,540



(7,359)



27,141


Net gain from remeasurement of equity method
investments

36,287





35,214




  Other income, net

12,387



5,053



20,109



16,002


Income before income taxes

20,375



29,931



28,111



53,156


Income tax provision

14,708



6,263



13,051



11,931


Net income

5,667



23,668



15,060



41,225


  Net income (loss) attributable to the noncontrolling 
interests

(982)



(85)



(3,247)



(259)


Net income attributable to The Andersons, Inc.

$

6,649



$

23,753



$

18,307



$

41,484










Per common share:








Basic earnings attributable to The Andersons, Inc. common
shareholders

$

0.20



$

0.84



$

0.56



$

1.47


Diluted earnings attributable to The Andersons, Inc. common
shareholders

$

0.19



$

0.84



$

0.55



$

1.46


















 

 

The Andersons, Inc.

Reconciliation to Adjusted Net Income (unaudited)


(in thousands, except per share data)

Three months ended
December 31,


Twelve months ended
December 31,


2019


2018


2019


2018

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

$

6,649



$

23,752



$

18,307



$

41,484


Items adjusted for certain gains and charges:








Acquisition costs

2,158



3,051



8,007



6,514


Transaction related stock compensation

1,998





9,337




Asset impairment

43,097





46,178




(Gain) loss from remeasurement of equity method
investments

(36,287)





(35,214)




(Gain) loss on sales of assets

(8,646)





(8,646)




Income tax impact of adjustments

9,386



(762)



5,051



(1,628)


Total adjustments

11,706



2,289



24,713



4,886


Adjusted net income attributable to The Andersons, Inc.

$

18,355



$

26,041



$

43,020



$

46,370










Diluted earnings attributable to The Andersons, Inc. common
shareholders

$

0.19



$

0.84



$

0.55



$

1.46










Impact on diluted earnings per share

0.36



0.08



0.75



0.17


Adjusted diluted earnings per share

$

0.55



$

0.92



$

1.30



$

1.63


 

 

The Andersons, Inc.

Condensed Consolidated Balance Sheets (unaudited)


(in thousands)

2019


2018

Assets




Current assets:




  Cash, cash equivalents and restricted cash

$

54,895



$

22,593


  Accounts receivable, net

536,367



207,285


  Inventories

1,170,536



690,804


  Commodity derivative assets - current

107,863



51,421


  Other current assets

92,280



51,095


Total current assets

1,961,941



1,023,198






Other assets:




Commodity derivative assets – noncurrent

949



480


Goodwill

137,781



6,024


Other intangible assets, net

175,312



99,138


Right of use assets, net

76,401




Equity method investments

23,857



242,326


Other assets, net

20,803



22,341


Total Other Assets

435,103



370,309


Rail Group assets leased to others, net

584,298



521,785


Property, plant and equipment, net

938,418



476,711


Total assets

$

3,919,760



$

2,392,003






Liabilities and equity




Current liabilities:




  Short-term debt

147,031



205,000


  Trade and other payables

873,081



462,535


  Customer prepayments and deferred revenue

133,585



32,533


  Commodity derivative liabilities – current

46,942



32,647


  Accrued expenses and other current liabilities

190,637



79,046


  Current maturities of long-term debt

62,899



21,589


Total current liabilities

1,454,175



833,350






Long-term lease liabilities

51,091




Commodity derivative liabilities – noncurrent

505



889


Employee benefit plan obligations

25,359



22,542


Long-term debt, less current maturities

1,016,248



496,187


Deferred income taxes

149,389



130,087


Other long-term liabilities

22,176



32,184


Total liabilities

2,718,943



1,515,239


Total equity

$

1,200,817



$

876,764


Total liabilities and equity

$

3,919,760



$

2,392,003


 

 

The Andersons, Inc.

Segment Data (unaudited)


(in thousands)

Trade


Ethanol


Plant
Nutrient


Rail


Other


Total

Three months ended December 31, 2019












Revenues from external customers

$

1,443,261



$

260,750



$

138,182



$

43,410



$



$

1,885,603


Gross profit

88,638



11,608



23,521



14,592





138,359


Equity in earnings of affiliates

(4,992)











(4,992)


Other income, net

8,364



36,504



3,256



191



359



48,674


Income (loss) before income taxes

(19,048)



41,208



4,625



4,461



(10,871)



20,375


Income (loss) attributable to the noncontrolling
interests



(982)









(982)


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

(19,048)



42,190



4,625



4,461



(10,871)



21,357


Adjustments to income (loss) before income taxes (b)

37,549



(34,962)



(769)





502



2,320


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

$

18,501



$

7,228



$

3,856



$

4,461



$

(10,369)



$

23,677


Three months ended December 31, 2018












Revenues from external customers

$

449,923



$

175,919



$

147,625



$

39,195



$



$

812,662


Gross profit

51,636



4,386



23,955



13,985





93,962


Equity in earnings of affiliates

3,023



3,517









6,540


Other income, net

228



1,025



595



2,605



600



5,053


Income (loss) before income taxes

24,168



6,289



3,791



6,734



(11,051)



29,931


Income (loss) attributable to the noncontrolling interests



(85)









(85)


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

24,168



6,374



3,791



6,734



(11,051)



30,016


Adjustments to income (loss) before income taxes (b)









3,051



3,051


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

$

24,168



$

6,374



$

3,791



$

6,734



$

(8,000)



$

33,067


(a) Income (loss) before income taxes attributable to The Andersons, Inc. for each operating segment 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.

(b) Additional information on the individual adjustments that are included in the adjustments to income (loss) before income taxes can be found in the Reconciliation to EBITDA and Adjusted EBITDA table.






(in thousands)

Trade


Ethanol


Plant
Nutrient


Rail


Other


Total

Twelve months ended December 31, 2019












Revenues from external customers

$

6,387,744



$

968,779



$

646,730



$

166,938



$



$

8,170,191


Gross profit

335,225



26,438



99,104



57,125





517,892


Equity in earnings of affiliates

(6,835)



(524)









(7,359)


Other income, net

10,070



37,199



4,903



1,583



1,568



55,323


Income (loss) before income taxes

(14,780)



45,112



9,159



15,090



(26,470)



28,111


Income (loss) attributable to the noncontrolling
interests



(3,247)









(3,247)


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

(14,780)



48,359



9,159



15,090



(26,470)



31,358


Adjustments to income (loss) before income taxes (b)

54,891



(34,962)



(769)





502



19,662


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

$

40,111



$

13,397



$

8,390



$

15,090



$

(25,968)



$

51,020


Twelve months ended December 31, 2018












Revenues from external customers

$

1,433,660



$

747,009



$

690,536



$

174,177



$



$

3,045,382


Gross profit

126,539



21,720



98,901



54,845





302,005


Equity in earnings of affiliates

12,932



14,209









27,141


Other income, net

843



2,766



2,495



3,516



6,382



16,002


Income (loss) before income taxes

21,715



26,817



12,030



17,379



(24,785)



53,156


Income (loss) attributable to the noncontrolling
interests



(259)









(259)


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

21,715



27,076



12,030



17,379



(24,785)



53,415


Adjustments to income (loss) before income taxes (b)









6,514



6,514


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

$

21,715



$

27,076



$

12,030



$

17,379



$

(18,271)



$

59,929


(a) Income (loss) before income taxes attributable to The Andersons, Inc. for each operating segment 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.

(b) Additional information on the individual adjustments that are included in the adjustments to income (loss) before income taxes can be found in the Reconciliation to EBITDA and Adjusted EBITDA table.

 

 

The Andersons, Inc.

Reconciliation to EBITDA and Adjusted EBITDA

(unaudited)


(in thousands)

Trade


 Ethanol


 Plant
Nutrient


 Rail


 Other


 Total

Three months ended December 31, 2019












Net income (loss)

$

(19,048)



$

41,208



$

4,625



$

4,461



$

(25,579)



$

5,667


Interest expense

6,175



2,104



1,476



4,415



(92)



14,078


Tax provision









14,708



14,708


Depreciation and amortization

13,450



16,633



6,207



8,745



2,735



47,770


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

577



59,945



12,308



17,621



(8,228)



82,223


EBITDA attributable to non-controlling interests



(8,405)









(8,405)


EBITDA attributable to The Andersons, Inc.

577



51,540



12,308



17,621



(8,228)



73,818


Adjusting items impacting EBITDA:












Acquisition costs

833



1,325









2,158


Transaction related stock compensation

1,998











1,998


Asset impairment including equity method investments

40,420





2,175





502



43,097


(Gain) loss on pre-existing equity method investment



(36,287)









(36,287)


(Gain) loss on sales of assets

(5,702)





(2,944)







(8,646)


Total adjusting items

37,549



(34,962)



(769)





502



2,320


Adjusted EBITDA attributable to The Andersons, Inc.

$

38,126



$

16,578



$

11,539



$

17,621



$

(7,726)



$

76,138














Three months ended December 31, 2018












Net income (loss)

$

24,168



$

6,289



$

3,791



$

6,734



$

(17,314)



$

23,668


Interest expense

2,827



(792)



2,102



3,689



22



7,848


Tax provision









6,263



6,263


Depreciation and amortization

3,801



1,577



6,614



7,491



2,854



22,337


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

30,796



7,074



12,507



17,914



(8,175)



60,116


EBITDA attributable to non-controlling interests



(145)









(145)


EBITDA attributable to The Andersons, Inc.

30,796



6,929



12,507



17,914



(8,175)



59,971


Adjusting items impacting EBITDA:












Acquisition costs









3,051



3,051


Total adjusting items









3,051



3,051


Adjusted EBITDA attributable to The Andersons, Inc.

$

30,796



$

6,929



$

12,507



$

17,914



$

(5,124)



$

63,022







(in thousands)

Trade


 Ethanol


 Plant
Nutrient


 Rail


 Other


 Total

Twelve months ended December 31, 2019












Net income (loss)

$

(14,780)



$

45,112



$

9,159



$

15,090



$

(39,521)



$

15,060


Interest expense

35,202



584



7,954



16,486



(535)



59,691


Tax provision









13,051



13,051


Depreciation and amortization

50,973



23,727



25,985



34,122



11,359



146,166


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

71,395



69,423



43,098



65,698



(15,646)



233,968


EBITDA attributable to non-controlling interests



(7,360)









(7,360)


EBITDA attributable to The Andersons, Inc.

71,395



62,063



43,098



65,698



(15,646)



226,608


Adjusting items impacting EBITDA:












Acquisition costs

6,682



1,325









8,007


Transaction related stock compensation

9,337











9,337


Asset impairment including equity method investments

43,501





2,175





502



46,178


(Gain) loss on pre-existing equity method investment

1,073



(36,287)









(35,214)


(Gain) loss on sales of assets

(5,702)





(2,944)







(8,646)


Total adjusting items

54,891



(34,962)



(769)





502



19,662


Adjusted EBITDA attributable to The Andersons, Inc.

$

126,286



$

27,101



$

42,329



$

65,698



$

(15,144)



$

246,270














Twelve months ended December 31, 2018












Net income (loss)

$

21,715



$

26,817



$

12,030



$

17,379



$

(36,716)



$

41,225


Interest expense

11,845



(1,890)



6,499



11,377



17



27,848


Tax provision









11,931



11,931


Depreciation and amortization

16,062



6,136



26,871



29,164



12,064



90,297


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

49,622



31,063



45,400



57,920



(12,704)



171,301


EBITDA attributable to non-controlling interests



(657)









(657)


EBITDA attributable to The Andersons, Inc.

49,622



30,406



45,400



57,920



(12,704)



170,644


Adjusting items impacting EBITDA:












Acquisition costs









6,514



6,514


Total adjusting items









6,514



6,514


Adjusted EBITDA attributable to The Andersons, Inc.

$

49,622



$

30,406



$

45,400



$

57,920



$

(6,190)



$

177,158


 

SOURCE The Andersons, Inc.

For further information: John Kraus, Director, Investor Relations, Phone: 419-891-6544, E-mail: investorrelations@andersonsinc.com


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