The Andersons Posts Weaker Q1 Because of Disappointing Grain Division Results

After the market closed, The Andersons, Inc. (ANDE:US) delivered first quarter EPS of $0.14, lower than the Street at $0.34 and our forecast of $0.40. ANDE missed our estimate mainly because of poorer results in the Grain division, as well as the Plant Nutrient (lower fertilizer sales volume) and Rail (lower surges on railcar sales) segments.

Net income for the first quarter of 2015 attributable to the Company was $4.1 million, or $0.14 per diluted share.  Last year net income was $22.7 million, or $0.80 per diluted share. When excluding the partial redemption of our investment in Lansing Trade Group last year, adjusted net income was $12.1 million, or $0.42 per diluted share.  (See the Reconciliation to Adjusted Net Income Table for a discussion and reconciliation of income and adjusted income.) First quarter 2015 revenues were $950 million compared to $1.0 billion in revenues the same time last year.

  • The Ethanol Group achieved record first quarter ethanol production volumes and saw E-85 sales progress to a first quarter record as well.
  • The Rail Group’s utilization rate has increased for nine consecutive quarters and averaged 91.8 percent during the quarter.
  • The Rail Group’s lower pre-tax income was due to gains on railcar sales being down $6.3 million this quarter versus the same time last year.
  • The Plant Nutrient Group experienced lower volumes than expected this quarter due to poor weather conditions at the start of the planting season.
  • This quarter, the Company has merged the former Turf & Specialty and Plant Nutrient groups. Going forward the group will be known as the Plant Nutrient Group.
  • The Company repurchased 631,000 of The Andersons’ common shares during the quarter which offsets the shares issued as part of the acquisition of Auburn Bean & Grain.

Outlook

  • Solid fundamentals supporting the Company’s core businesses continue into 2015.
  • Corn acres to be planted in 2015 are estimated to be approximately 89 million acres, which is down slightly from 2014. Bean acres to be planted are estimated to be roughly 85 million acres, which is up slightly from 2014.
  • The anticipated corn acres creates a good environment for all three of the Company’s agricultural businesses.
  • Lower volume experienced by the Plant Nutrient Group during the past two quarters is expected to be substantially regained in the second quarter provided the weather is cooperative.
  • Relative to the first quarter, ethanol margins have improved which provides optimism for the Ethanol Group’s performance going forward.
  • The Rail Group is expected to have strong results as it continues to benefit from increased lease and utilization rates.
About

Michael Jones, Post graduate in Finance, is equity analyst and focuses Services, Technology and Energy & Utilities sectors. Prior joining Equities Mogul, Michael Jones worked with JMP Securities. If you have a great story idea for Michael Jones, you can write at [michael.jones@equitiesmogul.com ].

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