Maumee, OH - Aug. 4, 2020 - The Andersons, Inc. (Nasdaq: ANDE) announces financial results for the second quarter ended June 30, 2020 and business structure and organizational changes.
Second Quarter Highlights:
"I am proud of what we were able to accomplish in the second quarter, as all four of our business groups were profitable," said President and CEO Pat Bowe.
"We are focused on transforming The Andersons into a more cost-efficient company positioned for scalable growth.
"Our vision is to be the most nimble and innovative North American ag supply chain company.
"The steps we are taking to transform the organization should ensure that we have the right vision at the right time to continue to serve our customers."
"Our Plant Nutrient Group's income was up more than 20 percent due to an excellent spring planting season," continued Bowe.
"Our Ethanol Group's navigation of the unprecedented decrease in demand due to the COVID-19 crisis helped produce good results under those difficult conditions.
"The Trade Group continued to feel the effects of a small 2019 corn crop in the East. Both the Trade Group and the Rail Group both felt the persistent negative impact of the pandemic on customer demand. Both groups were profitable for the quarter."
"I want to again thank our employees, particularly those working in our plants and operations, for continuing to demonstrate their commitment to the company and to our customers and communities by keeping our businesses running safely and effectively during this time.
"We have maintained as our top priority, the health and safety of our employees, who have performed admirably in these difficult circumstances.
"We also extend our thanks to the health and safety personnel in our communities who have helped respond to the pandemic."
Company Continues to Actively Manage COVID-19 Pandemic
The company's executive-level response team has continued to closely monitor the crisis, share information and best practices across the company's operations and manage its coordinated response.
It has also implemented policies for remote work and supplemental sick time for those employees who have been impacted by the virus.
Employees continue to practice appropriate social distancing and follow protocols for sanitation and good hygiene developed in conjunction with the pandemic.
Strategic Business Structure and Senior Leadership Changes Announced
The company announced strategic business structure and senior leadership changes. Among the changes were the following:
"This new structure will enable us to focus on increasing gross profit and enhancing service to our customers, while also managing our cost structure," said Bowe.
"The combination of the Trade and Ethanol Groups will allow for greater strategic alignment, risk management and integrated service to our customers.
"This restructuring of our business will also result in a leaner cost environment."
Liquidity and Cash Management
"We generated strong operating cash flows and continued to manage capital expenditures during the second quarter," said Executive Vice President and CFO Brian Valentine.
"As the pandemic persists, we remain very focused on overall liquidity, including expense and cash management."
In May, the company announced that it was targeting total expense reductions of $30 million in 2020, with approximately half of those savings expected to be permanent in nature.
The company anticipates further general and administrative cost reductions that will be realized beginning in early 2021.
The company still expects to spend approximately $100 million on capital projects in 2020 after averaging more than $200 million over the last three years.
This reduction prudently preserves working capital and supports our continued strong financial position.
Second Quarter Segment Overview
Trade Group Records Lower Adjusted Results Driven by Low Income from Storage Assets
The Trade Group recorded pretax income of $0.4 million and adjusted pretax income of $1.4 million for the quarter compared to pretax income of $22.6 million and adjusted pretax income of $25.8 million in the second quarter of 2019.
The 2019 results were positively impacted by corn and wheat basis appreciation caused by the poor 2019 planting season and concerns about adequate grain supplies.
The group adjusted its reported pretax income by $1.0 million for stock compensation expense associated with the 2019 acquisition of Lansing Trade Group.
The group's second quarter adjusted EBITDA was $17.5 million compared to second quarter 2019 adjusted EBITDA of $46.8 million.
The group anticipates a large corn harvest, which should improve profitability during the latter part of the year and into 2021.
Ethanol Group Records a Profit Due to Timely Maintenance Shutdowns and Improving Margins
The Ethanol Group reported pretax income attributable to the company of $0.9 million in the second quarter compared to the $3.7 million of pretax income attributable to the company it earned in the same period in 2019.
The group recorded adjusted EBITDA attributable to the company of $11.0 million in the second quarter of 2020 compared to 2019 second quarter adjusted EBITDA attributable to the company of $4.5 million.
Plant Nutrient Group Pretax Income Increases 22 Percent Driven by a Strong Planting Season
The Plant Nutrient Group improved its results year over year, recording pretax income of $19.4 million compared to pretax income of $15.9 million in the same period of the prior year.
This was the fifth consecutive quarter that the group posted improved year-over-year results.
The group's current quarter EBITDA was $27.2 million compared to 2019 second quarter EBITDA of $24.9 million.
The group's near-term outlook is guarded, as low corn prices and COVID-related demand decreases in the industrial sector may offset the positive impacts of continuing cost reductions, which have improved results over the last several quarters, and new business opportunities in Engineered Granules.
Rail Group Results Down Slightly on Lower Car Sale Income
The Rail Group earned second quarter pretax income of $2.6 million compared to $3.2 million in the same period of the prior year.
The group's second quarter 2020 EBITDA of $15.3 million was comparable to its second quarter 2019 EBITDA.
The COVID-19 pandemic has caused the idling of nearly one-third of the North American railcar fleet and has driven year-to-date railcar loadings 16 percent lower year over year through June.
These conditions are expected to continue until the general economy returns to normal levels, and will continue to negatively impact lease renewals, lease rates and demand for railcar repairs.
Provision for Income Taxes Includes CARES Act Benefits
The company's second quarter income tax provision included additional CARES Act tax benefits of approximately $3.7 million, or $0.11 per diluted share in the current quarter and approximately $10.3 million, or $0.31 per diluted share year to date.
As with the impacts of the Tax Cuts and Jobs Act of 2017 and CARES Act benefits recognized in the first quarter of 2020, the company has excluded the current quarter benefits from its adjusted net income.
This quarter's additional benefits are expected to result in cash refunds of nearly $14 million, bringing the total expected CARES Act refunds in 2020 to approximately $32 million.
In addition, the company's reported effective income tax rate is substantially impacted by the income or loss earned by the noncontrolling interests and may result in highly variable effective tax rates in future periods.
For more information, please contact John Kraus at 419-891-6544 or firstname.lastname@example.org