Maumee, OH - Aug. 6, 2019 - The Andersons, Inc.(NASDAQ: ANDE) announces financial results for the second quarter ended June 30, 2019.

Second Quarter Highlights:

  • Company reports net income of $29.9 million, or $0.91 per diluted share, and adjusted net income of $32.3 million, or $0.98 per diluted share.
  • Adjusted EBITDA increases year over year by almost 50 percent to $88.6 million.
  • Trade Group reports pretax income of $23.7 million and adjusted pretax income of $27.0 million on strong corn and wheat basis appreciation and cash trading.
  • Ethanol Group records pretax income of $2.6 million in a challenging margin environment.
  • Plant Nutrient Group records pretax income of $15.9 million despite significantly lower primary and specialty nutrient sales volumes.
  • Rail Group earns $3.2 million of pretax income on steady railcar leasing income.

"Extremely wet weather in many of our core grain origination markets benefited our Trade Group but hurt both our Ethanol and Plant Nutrient Groups during the quarter.

"The resulting market conditions illustrated perfectly the value of the more diversified, newly integrated portfolio we now operate in our Trade Group," said President and CEO Pat Bowe.

"We were able to capitalize on merchandising opportunities caused by grain and feed ingredient price volatility.

"However, we're concerned about the implications of a smaller corn crop on the utilization of our eastern grain assets for the remainder of this year and into 2020."

"The Trade Group's adjusted results were strong, as basis appreciation and good merchandising results helped offset weakness in the food and specialty ingredients units," Bowe continued.

"The Ethanol Group remained profitable in a considerably compressed margin environment.

As expected, the Plant Nutrient Group's results were hurt by substantially lower primary and specialty nutrient volumes due to the wet spring, but margins were stronger, resulting in improved year-over-year pretax income.

The Rail Group performed well, primarily due to solid leasing results."

Further Adjustments Related to the Lansing Acquisition

The company continues to refine its purchase price allocation.

While the net adjustments recorded during the quarter were negligible, the group also incurred $0.4 million, or $0.01 per diluted share, of incremental depreciation and amortization expenses based on a revised revaluation of acquired fixed assets and definite-lived intangibles.

The group now expects to incur incremental depreciation and amortization of $2.4 million each quarter through 2021.

As it did in the first quarter, the company has recast second quarter 2018 pretax income for the former Grain Group and the Ethanol Group to conform to segment reporting changes made in conjunction with the acquisition of Lansing Trade Group.

The changes resulted in a reclassification of $1.2 million in pretax income from the Grain Group to the Ethanol Group. The company expects similar adjustments for each quarter of 2018.

Second Quarter Segment Overview

Trade Group Records Excellent Results on Increased Volatility and Strong Merchandising Results; Announces Pending Sale of Ontario Agronomy Business

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 Limited.

The Trade Group recorded pretax income of $23.7 million and adjusted pretax income of $27.0 million for the quarter.

Adjustments include $3.1 million for pretax impairment charges on the Trade Group's remaining Tennessee assets.

As noted above, the group also incurred $0.4 million of incremental depreciation and amortization expenses.

The former Grain Group recorded pretax income of $8.7 million in the second quarter of 2018.

  • Income from merchandising activities was strong due to significant market volatility.
  • Profit from grain originations and the group's assets was up on significant corn and soft red wheat basis appreciation.
  • The integration of Lansing and Thompsons continued to progress well.

Due in large part to the Lansing acquisition, the group's second quarter 2019 EBITDA and adjusted EBITDA were $44.8 million and $48.0 million, respectively, which reflect improvements in both the legacy and acquired businesses.

The group also announced that it has reached an agreement to sell the agronomy assets of Thompsons Limited, a wholly owned subsidiary in Ontario, Canada, to Sylvite Holdings Inc. of Burlington, Ontario.

The sale is expected to close in September 2019. The Andersons will continue to own and operate Thompsons' grain storage and food processing facilities in Ontario.

Ethanol Group Remains Profitable Despite Weak Industry Margins

The Ethanol Group earned pretax income of $2.6 million in the second quarter compared to the $7.3 million of pretax income it earned in the same period in 2018.

  • Margins were extremely weak, but ethanol and corn oil yields continued to improve.
  • The group selectively reduced production in response to the margin environment
  • Third party ethanol trading increased sales volumes and margins.

The group is in the process of commissioning its state-of-the-art bio-refinery in Kansas in partnership with ICM, Inc.

The plant will produce low-carbon ethanol targeted for the higher-margin California market and several higher-value coproducts.

Plant Nutrient Group Income Grows Year Over Year

The Plant Nutrient Group recorded pretax income of $15.9 million in the second quarter compared to pretax income of $15.1 million in the prior year period.

  • For the second consecutive quarter, both primary and specialty nutrient volumes significantly lagged prior year amounts due to unprecedented wet weather across our selling region, reducing planted corn acres.
  • Improved margins per ton driven by cost containment, operational efficiency and product mix offset the impact of the volume shortfall.
  • Inventory carrying costs increased year over year due to delayed and reduced planting.

The group's current quarter EBITDA was $24.9 million, a slight increase over 2018 second quarter results.

Rail Group Results Highlighted by Steady Leasing Income

The Rail Group earned second quarter pretax income of $3.2 million compared to $0.9 million in the same period of the prior year. Prior year results included a $4.7 million impairment charge on railcars the group later scrapped.

  • Railcar leasing income rose year over year on stronger utilization and more cars on lease but was offset in part by increased allowances for doubtful accounts.
  • Income from car sales was negligible.
  • Service and other pretax income fell significantly, largely due to workers compensation and other expenses and lower sales volumes at certain repair facilities.

The group's second quarter 2019 EBITDA of $15.8 million was comparable to second quarter 2018 EBITDA before considering the 2018 impairment charge.

Read the full financial report here.

For more information, please contact John Kraus at 419-891-6544 or investorrelations@andersonsinc.com