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| 8-K - Q3 2014 EARNINGS RELEASE - Andersons, Inc. | a8kq32014earningsrelease.htm |
NEWS RELEASETHE 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
MAUMEE, OHIO, NOVEMBER 5, 2014 The Andersons, Inc. (Nasdaq: ANDE) today announces financial results for the third quarter ended September 30, 2014.
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
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 September 30, | Nine months ended September 30, | |||||||||||||
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, net | 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 (expense), 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 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 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 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).