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| 8-K - Q2 2014 EARNINGS RELEASE - Andersons, Inc. | a8kq22014earningsrelease.htm |
NEWS RELEASETHE ANDERSONS, INC. REPORTS SECOND QUARTER RESULTS
Second Quarter Earnings of $1.56 per Diluted Share
Ethanol and Plant Nutrient Groups Lead Earning Results
MAUMEE, OHIO, AUGUST 6, 2014 The Andersons, Inc. (Nasdaq: ANDE) today announced financial results for the second quarter ended June 30, 2014.
Highlights
• | Record operating income of $33.9 million for the Ethanol Group |
• | Second quarter diluted EPS up almost 50 percent from same period last year |
• | Plant Nutrient Group had operating income of $25.0 million |
“We’re pleased with our first half performance for 2014, which is a record,” said CEO Mike Anderson. “Both our Ethanol and Plant Nutrient groups had strong results this quarter. In fact, our Ethanol Group had the best quarter in its history. In addition, our Grain Group’s operating income benefitted from improved space income in our grain operations, and the addition of income from the Thompsons Limited joint venture.”
All financial and operating highlights below are quarterly data compared to the same period of the prior year, unless otherwise noted.
Financial Highlights
Second quarter net income attributable to the company was $44.3 million, or $1.56 per diluted share, on revenues of $1.3 billion. In the same three month period of 2013, the company reported results of $29.5 million, or $1.05 per diluted share, on revenues of $1.6 billion.
• | The Ethanol Group realized excellent margins at all plants. These margins were supported primarily by ongoing increases in export demand, lower corn prices, and excellent operating metrics. The Ethanol Group had record E-85 sales and an increase in distillers dried grains and corn oil sales. |
• | The Plant Nutrient Group exceeded its prior year six-month earnings performance. |
• | The Rail Group recognized $2.5 million in pre-tax gains on sales of railcars and related leases and non-recourse transactions during the quarter, which is approximately $2.4 million less than the prior year. |
Operating Highlights
The following highlights have impacted reported results, or may impact future results:
• | Crop conditions in the majority of our territories are ideal. Continued good weather provides the potential for record corn and soybean yields. |
• | The Ethanol Group had record ethanol production. |
• | At this time, we have approximately 75 percent of the third quarter and 33 percent of the fourth quarter ethanol futures risk hedged. The majority of those hedges were placed in the first quarter, consistent with our strategy to lock-in reasonable forward returns when available in the market. Other hedges were added in the second quarter, consistent with our risk management strategy. We currently are managing margins in the spot market for the rest of our production. |
• | Volume for the Plant Nutrient Group was up approximately six percent during the first half of the year, regaining all of the first quarter volume reduction. Further, gross profit per ton increased slightly. |
• | At the end of June, the Rail Group’s utilization rate was 89.1 percent, up from 86.1 percent the prior year. Further, the utilization rate is expected to increase as the year progresses. |
Conference Call
The company will host a webcast on Thursday, August 7, 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
Investor Relations Contact
Nick Conrad
Phone: 419-891-6415
E-mail: nick_conrad@andersonsinc.com
The Andersons, Inc.
Condensed Consolidated Statements of Income
(unaudited)
(in thousands, except per share data) | Three months ended June 30, | Six months ended June 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales and merchandising revenues | $ | 1,312,082 | $ | 1,566,964 | $ | 2,315,376 | $ | 2,838,934 | |||||||
Cost of sales and merchandising revenues | 1,190,587 | 1,463,735 | 2,117,106 | 2,656,432 | |||||||||||
Gross profit | 121,495 | 103,229 | 198,270 | 182,502 | |||||||||||
Operating, administrative and general expenses | 76,275 | 61,464 | 147,260 | 123,472 | |||||||||||
Interest expense | 6,146 | 4,855 | 12,148 | 11,259 | |||||||||||
Other income: | |||||||||||||||
Equity in earnings of affiliates, net | 32,213 | 10,010 | 52,714 | 17,814 | |||||||||||
Other income, net | 3,797 | 1,292 | 23,409 | 4,018 | |||||||||||
Income before income taxes | 75,084 | 48,212 | 114,985 | 69,603 | |||||||||||
Income tax provision | 25,714 | 17,480 | 39,586 | 26,559 | |||||||||||
Net income | 49,370 | 30,732 | 75,399 | 43,044 | |||||||||||
Net income attributable to the noncontrolling interests | 5,069 | 1,193 | 8,390 | 927 | |||||||||||
Net income attributable to The Andersons, Inc. | $ | 44,301 | $ | 29,539 | $ | 67,009 | $ | 42,117 | |||||||
Per common share: | |||||||||||||||
Basic earnings attributable to The Andersons, Inc. common shareholders | $ | 1.56 | $ | 1.05 | $ | 2.36 | $ | 1.50 | |||||||
Diluted earnings attributable to The Andersons, Inc. common shareholders | $ | 1.56 | $ | 1.05 | $ | 2.36 | $ | 1.49 | |||||||
Dividends paid | $ | 0.1100 | $ | 0.1067 | $ | 0.2200 | $ | 0.2133 | |||||||
The Andersons, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands) | June 30, 2014 | December 31, 2013 | June 30, 2013 | ||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 47,190 | $ | 309,085 | $ | 75,920 | |||||
Restricted cash | 895 | 408 | 872 | ||||||||
Accounts receivable, net | 189,646 | 173,930 | 216,432 | ||||||||
Inventories | 432,996 | 614,923 | 444,523 | ||||||||
Commodity derivative assets - current | 162,427 | 71,319 | 121,789 | ||||||||
Deferred income taxes | 7,443 | 4,931 | 2,797 | ||||||||
Other current assets | 24,596 | 47,188 | 44,936 | ||||||||
Total current assets | 865,193 | 1,221,784 | 907,269 | ||||||||
Other assets: | |||||||||||
Commodity derivative assets - noncurrent | 312 | 246 | 87 | ||||||||
Other assets, net | 116,985 | 118,010 | 103,781 | ||||||||
Pension asset | 13,023 | 14,328 | — | ||||||||
Equity method investments | 264,381 | 291,109 | 195,241 | ||||||||
394,701 | 423,693 | 299,109 | |||||||||
Railcar assets leased to others, net | 242,147 | 240,621 | 242,887 | ||||||||
Property, plant and equipment, net | 390,587 | 387,458 | 371,716 | ||||||||
Total assets | $ | 1,892,628 | $ | 2,273,556 | $ | 1,820,981 | |||||
Liabilities and equity | |||||||||||
Current liabilities: | |||||||||||
Borrowings under short-term line of credit | $ | 27,000 | $ | — | $ | 50,000 | |||||
Accounts payable for grain | 164,230 | 592,183 | 178,017 | ||||||||
Other accounts payable | 143,535 | 154,599 | 183,971 | ||||||||
Customer prepayments and deferred revenue | 21,670 | 59,304 | 25,621 | ||||||||
Commodity derivative liabilities – current | 86,134 | 63,954 | 58,183 | ||||||||
Accrued expenses and other current liabilities | 81,260 | 70,295 | 57,456 | ||||||||
Current maturities of long-term debt | 89,387 | 51,998 | 45,096 | ||||||||
Total current liabilities | 613,216 | 992,333 | 598,344 | ||||||||
Other long-term liabilities | 15,032 | 15,386 | 15,634 | ||||||||
Commodity derivative liabilities – noncurrent | 7,444 | 6,644 | 5,863 | ||||||||
Employee benefit plan obligations | 39,178 | 39,477 | 50,754 | ||||||||
Long-term debt, less current maturities | 300,220 | 375,213 | 409,020 | ||||||||
Deferred income taxes | 126,258 | 120,082 | 87,486 | ||||||||
Total liabilities | 1,101,348 | 1,549,135 | 1,167,101 | ||||||||
Total equity | 791,280 | 724,421 | 653,880 | ||||||||
Total liabilities and equity | $ | 1,892,628 | $ | 2,273,556 | $ | 1,820,981 | |||||
The Andersons, Inc.
Segment Data
(in thousands) | Grain | Ethanol | Plant Nutrient | Rail | Turf & Specialty | Retail | Other | Total | ||||||||||||||||
Three months ended June 30, 2014 | ||||||||||||||||||||||||
Revenues from external customers | $ | 656,004 | $ | 226,388 | $ | 311,895 | $ | 33,409 | $ | 42,913 | $ | 41,473 | $ | — | $ | 1,312,082 | ||||||||
Gross profit | 27,909 | 18,638 | 40,733 | 13,863 | 7,805 | 12,547 | — | 121,495 | ||||||||||||||||
Equity in earnings of affiliates | 8,467 | 23,746 | — | — | — | — | — | 32,213 | ||||||||||||||||
Other income, net | 975 | 356 | 391 | 787 | 467 | 190 | 631 | 3,797 | ||||||||||||||||
Income (loss) before income taxes | 10,352 | 38,976 | 25,004 | 6,684 | 1,998 | 1,637 | (9,567 | ) | 75,084 | |||||||||||||||
Income (loss) attributable to the noncontrolling interests | (3 | ) | 5,072 | — | — | — | — | — | 5,069 | |||||||||||||||
Operating income (loss) (a) | $ | 10,355 | $ | 33,904 | $ | 25,004 | $ | 6,684 | $ | 1,998 | $ | 1,637 | $ | (9,567 | ) | $ | 70,015 | |||||||
Three months ended June 30, 2013 | ||||||||||||||||||||||||
Revenues from external customers | $ | 891,350 | $ | 222,240 | $ | 330,339 | $ | 38,601 | $ | 43,144 | $ | 41,290 | $ | — | $ | 1,566,964 | ||||||||
Gross profit | 22,092 | 9,649 | 37,201 | 14,557 | 7,321 | 12,409 | — | 103,229 | ||||||||||||||||
Equity in earnings of affiliates | 5,027 | 4,983 | — | — | — | — | — | 10,010 | ||||||||||||||||
Other income (expense), net | (349 | ) | 199 | 164 | 702 | 175 | 100 | 301 | 1,292 | |||||||||||||||
Income (loss) before income taxes | 2,053 | 11,794 | 23,240 | 9,680 | 2,195 | 1,539 | (2,289 | ) | 48,212 | |||||||||||||||
Income attributable to the noncontrolling interest | — | 1,193 | — | — | — | — | — | 1,193 | ||||||||||||||||
Operating income (loss) (a) | $ | 2,053 | $ | 10,601 | $ | 23,240 | $ | 9,680 | $ | 2,195 | $ | 1,539 | $ | (2,289 | ) | $ | 47,019 | |||||||
Grain | Ethanol | Plant Nutrient | Rail | Turf & Specialty | Retail | Other | Total | |||||||||||||||||
Six months ended June 30, 2014 | ||||||||||||||||||||||||
Revenues from external customers | $ | 1,239,163 | $ | 415,208 | $ | 419,525 | $ | 85,711 | $ | 86,638 | $ | 69,131 | $ | — | $ | 2,315,376 | ||||||||
Gross profit | 44,917 | 26,003 | 54,808 | 35,728 | 16,280 | 20,534 | — | 198,270 | ||||||||||||||||
Equity in earnings of affiliates | 10,351 | 42,363 | — | — | — | — | — | 52,714 | ||||||||||||||||
Other income, net | 19,321 | 130 | 576 | 1,497 | 774 | 302 | 809 | 23,409 | ||||||||||||||||
Income (loss) before income taxes | 21,655 | 62,124 | 23,593 | 21,729 | 3,373 | (698 | ) | (16,791 | ) | 114,985 | ||||||||||||||
Income (loss) attributable to the noncontrolling interests | (6 | ) | 8,396 | — | — | — | — | — | 8,390 | |||||||||||||||
Operating income (loss) (a) | $ | 21,661 | $ | 53,728 | $ | 23,593 | $ | 21,729 | $ | 3,373 | $ | (698 | ) | $ | (16,791 | ) | $ | 106,595 | ||||||
Six months ended June 30, 2013 | ||||||||||||||||||||||||
Revenues from external customers | $ | 1,727,845 | $ | 421,549 | $ | 442,241 | $ | 84,965 | $ | 90,331 | $ | 72,003 | $ | — | $ | 2,838,934 | ||||||||
Gross profit | 46,942 | 14,454 | 51,150 | 33,536 | 16,339 | 20,081 | — | 182,502 | ||||||||||||||||
Equity in earnings of affiliates | 12,937 | 4,877 | — | — | — | — | — | 17,814 | ||||||||||||||||
Other income, net | 222 | 430 | 139 | 1,648 | 450 | 214 | 915 | 4,018 | ||||||||||||||||
Income (loss) before income taxes | 10,352 | 14,007 | 22,678 | 24,254 | 6,196 | (1,630 | ) | (6,254 | ) | 69,603 | ||||||||||||||
Income attributable to the noncontrolling interest | — | 927 | — | — | — | — | — | 927 | ||||||||||||||||
Operating income (loss) (a) | $ | 10,352 | $ | 13,080 | $ | 22,678 | $ | 24,254 | $ | 6,196 | $ | (1,630 | ) | $ | (6,254 | ) | $ | 68,676 | ||||||
(a) Operating income (loss) 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 (loss).