The Andersons, Inc. Reports Third Quarter Results
MAUMEE, Ohio, Nov. 3, 2020 /PRNewswire/ -- The Andersons, Inc. (Nasdaq: ANDE) announces financial results for the third quarter ended September 30, 2020.
Third Quarter Highlights:
-- Company reported a net loss attributable to The Andersons of $1.1
million, or $0.03 per diluted share, and adjusted net loss of $2.4
million, or $0.07 per diluted share.
-- Adjusted EBITDA attributable to the company was $46.2 million for the
quarter, up 21 percent year over year.
-- Trade reported pretax income of $5.9 million and adjusted pretax income
of $6.9 million on improved merchandising results.
-- Ethanol reported pretax income attributable to the company of $1.1
million as margins improved
"We continued to make good progress during the quarter toward reaching our vision to be the most nimble and innovative ag supply chain company in North America," said President and CEO Pat Bowe. "The integration of Trade and Ethanol is going well and is being modeled after the successful integration of Lansing Trade Group last year. While we will always be vigilant about costs, we are looking forward to placing more emphasis on profitable growth and extraordinary customer service in 2021 and beyond."
"Our results for the third quarter were solid in light of the current economic environment," continued Bowe. "Trade, Ethanol and Plant Nutrient all recorded improved results year over year. Trade led the way with better merchandising income as the fall harvest got off to a good start. Ethanol's results were much improved, notwithstanding large non-cash mark-to-market charges. Plant Nutrient's results improved substantially year over year in a quarter in which that business is usually seasonally weak. Finally, Rail continued to feel the negative impacts of weak railcar demand."
$ in millions, except per share amounts
---
Q3 2020 Q3 2019 Variance YTD 2020 YTD 2019 Variance
Pretax Income
(Loss)
Attributable to
the Company(1) $
(5.8) $
(11.4) $
5.6 $
(26.7) $
10.0 $
(36.7)
---
Adjusted Pretax
Income (Loss)
Attributable to
the Company(1) (1.6) (8.9) 7.3 (17.8) 27.3 (45.1)
---
Trade 6.9 0.4 6.5 (0.4) 20.0 (20.4)
---
Ethanol(1) 1.1 1.1 (22.0) 7.8 (29.8)
---
Plant Nutrient (5.4) (7.4) 2.0 12.8 4.5 8.3
---
Rail (0.1) 3.1 (3.2) 3.5 10.6 (7.1)
---
Other (4.1) (6.1) 2.0 (11.8) (15.6) 3.8
---
Net Income (Loss)
Attributable to
the Company(1) (1.1) (4.2) 3.1 (8.3) 11.7 (20.0)
---
Adjusted Net
Income (Loss)
Attributable to
the Company(1) (2.4) (2.3) (0.1) (16.4) 24.7 (41.1)
---
Diluted EPS (0.03) (0.13) 0.10 (0.25) 0.35 (0.60)
---
Adjusted Diluted
EPS (0.07) (0.07) (0.50) 0.74 (1.24)
---
EBITDA 55.3 35.1 20.2 131.9 151.7 (19.8)
---
Adjusted EBITDA
Attributable to
the Company $
46.2 $
38.2 $
8.0 $
131.6 $
170.2 $
(38.6)
---
(1) Reflects amounts attributable to
the company and excludes income
attributable to the noncontrolling
interests of $3.3 in Q3 2020 and
losses attributable to the
noncontrolling interests of $1.6 in
Q3 2019, $20.6 for year-to-date
2020 and $2.3 for year-to-date
2019. See non-GAAP reconciliations
in the accompanying tables.
Liquidity and Cash Management
"We continued to generate strong operating cash flows and manage capital expenditures during the third quarter," said Executive Vice President and CFO Brian Valentine. "We were able to reduce total long-term debt by more than $60 million. We remain very focused on overall liquidity, including expense and cash management."
In addition to the $30 million in 2020 expense reductions announced in May, about half of which it expects to be permanent, the company also anticipates that the business restructuring announced in August will result in further annual general and administrative cost reductions of approximately $10 million beginning in early 2021.
The company has spent $69 million net of proceeds from asset sales on capital projects through September and still expects to spend approximately $100 million in 2020 after averaging more than $200 million over the last three years. This reduction prudently preserves working capital and supports the company's continued strong financial position.
Third Quarter Segment Overview
Trade Records Higher Results Driven by Improved Merchandising Income
The Trade segment recorded improved pretax income of $5.9 million and adjusted pretax income of $6.9 million for the quarter compared to a pretax loss of $2.1 million and adjusted pretax income of $0.4 million in the third quarter of 2019. The difference in reported and adjusted income in both periods was attributable to stock compensation expense associated with the 2019 acquisition of Lansing Trade Group.
A large majority of the year-over-year improvement came from commodity merchandising, which earned pretax income that was more than 80 percent higher year over year. The performance of the segment's assets improved due to strong corn and soybean sales despite earning less income from wheat. The business also continued to benefit from the successful integration of Lansing and Thompsons Limited, portfolio optimization and other cost-cutting efforts.
Trade's third quarter adjusted EBITDA was $22.3 million, up approximately 8 percent over third quarter 2019 adjusted EBITDA of $20.7 million.
While merchandising opportunities continue to be good, the resulting income will not likely fully offset the lack of carry in the corn and soybean markets into 2021 due to the significant increase in futures prices and narrowing spreads since early August.
Ethanol Remains Profitable on Improved Margins Despite Mark-to-Market Charge
The Ethanol segment reported pretax income attributable to the company of $1.1 million in the third quarter compared to the similar amount it earned in the same period in 2019.
Improved crush margins were the primary driver of significantly improved performance by the group's five plants. However, the segment recorded a non-cash mark-to-market charge of $6.2 million due to increases in corn and DDG prices late in the quarter.
Production volumes in the quarter were higher year over year due to higher yields at The Andersons Marathon Holdings (TAMH) plants and ELEMENT(TM) operating for the entire quarter. Board crush margins were roughly 12 cents higher than in the third quarter of 2019. The third-party ethanol trading business also posted comparatively better results due to improved margins and higher volumes.
Ethanol recorded EBITDA attributable to the company of $11.1 million in the third quarter of 2020, up from 2019 third quarter EBITDA attributable to the company of $3.9 million. The results of three of the five ethanol plants were not consolidated in 2019.
Plant Nutrient Results Improve; Rail Breaks Even
The Plant Nutrient segment improved its results year over year, recording a pretax loss of $5.4 million in the third quarter compared to a pretax loss of $7.4 million in the same period of the prior year. This was the sixth consecutive quarter that the segment posted improved year-over-year results. Plant Nutrient's current quarter EBITDA was $2.2 million compared to 2019 third quarter EBITDA of $0.9 million. While tons sold were unchanged, the improvement was driven by slightly better margin per ton and continued disciplined working capital and expense management.
Rail recorded a third quarter pretax loss of $0.1 million compared to $3.1 million of pretax income in the same period of the prior year. Its third quarter 2020 EBITDA was $12.5 million compared to its third quarter 2019 EBITDA of $16.1 million. The leasing business accounted for the majority of the shortfall due to lower lease rates and fleet utilization year over year; repair revenues and margins also fell.
Provision for Income Taxes Includes CARES Act Benefits
The company's income tax provision included additional CARES Act tax benefits of approximately $4.5 million, or $0.14 per diluted share in the current quarter and now totals benefits of approximately $14.8 million, or $0.45 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 half 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 $8 million, bringing the total expected CARES Act refunds to approximately $39 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.
Conference Call
The company will host a webcast on Wednesday, November 4, 2020, at 11 a.m. Eastern Standard Time, to discuss its performance and provide its updated outlook for 2020 and its preliminary views for 2021. To access the call, please dial 866-439-8514 or 678-509-7568 (participant passcode is 6386433). It is recommended that you call 10 minutes before the conference call begins.
To access the webcast, click on the link: https://edge.media-server.com/mmc/p/yn8hngoo. Complete the four fields as directed and click Submit. A replay of the call can also be accessed under the heading "Investors" on the company's website at www.andersonsinc.com.
Investor Day
The company will hold its investor day on the morning of Tuesday, December 8, 2020 and present it in a virtual format.
Sustainability Review
The company has recently published a 2020 sustainability review. It can also be accessed under the heading "Investors" on the company's 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, the COVID-19 pandemic 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.
Non-GAAP Measures
This release contains non-GAAP financial measures. The company believes that pretax income attributable to The Andersons, adjusted pretax income attributable to the company, net income attributable to the company, adjusted net income attributable to the company, adjusted diluted earnings per share, EBITDA and adjusted EBITDA attributable to the company provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and better period-to-period comparability. The above measures are not and should not be considered as alternatives to pretax income, net income or net income per share as determined by generally accepted accounting principles. Reconciliations of the GAAP to non-GAAP measures may be found within this press release and the financial tables provided herein.
Company Description
Founded in 1947 in Maumee, Ohio, The Andersons, Inc. (Nasdaq: ANDE) is a diversified company rooted in agriculture that conducts business in the commodity trading, ethanol, plant nutrient and rail sectors. Guided by its Statement of Principles, The Andersons strives to provide extraordinary service to its customers, help its employees improve, support its communities and increase the value of the company. For more information, please visit www.andersonsinc.com.
The Andersons, Inc.
Condensed Consolidated Statements of Operations (unaudited)
Three months ended Nine months ended
September 30, September 30,
---
(in thousands, except per share data) 2020 2019 2020 2019
---
Sales and merchandising revenues $
1,922,233 $
1,982,755 $
5,665,519 $
6,284,588
Cost of sales and merchandising revenues 1,820,398 1,873,614 5,394,288 5,905,055
Gross profit 101,835 109,141 271,231 379,533
Operating, administrative and general expenses 98,219 107,118 293,415 327,385
Asset impairment - 3,081
Interest expense, net 10,569 13,975 37,983 45,613
Other income, net:
Equity in earnings (loss) of affiliates, net 20 (3,728) 228 (2,367)
Other income, net 4,434 2,598 12,697 6,649
Income (loss) before income taxes (2,499) (13,082) (47,242) 7,736
Income tax benefit (4,714) (7,212) (18,378) (1,657)
Net income (loss) 2,215 (5,870) (28,864) 9,393
Net income (loss) attributable to the noncontrolling interests 3,273 (1,633) (20,583) (2,265)
Net income (loss) attributable to The Andersons, Inc. $
(1,058) $
(4,237) $
(8,281) $
11,658
Per common share:
Basic earnings (loss) attributable to The Andersons, Inc. common shareholders $
(0.03) $
(0.13) $
(0.25) $
0.36
Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders $
(0.03) $
(0.13) $
(0.25) $
0.35
The Andersons, Inc.
Reconciliation to Adjusted Net Income (unaudited)
Three months ended Nine months ended
September 30, September 30,
---
(in thousands, except per share data) 2020 2019 2020 2019
---
Net income (loss) attributable to The Andersons, Inc. $
(1,058) $
(4,237) $
(8,281) $
11,658
Items impacting other income, net of tax:
One time acquisition costs - (23) 5,849
Transaction related stock compensation 912 2,577 3,260 7,339
Asset impairment - 3,081
Loss from remeasurement of equity method investments - 1,073
Severance costs 3,222 5,563
Income tax impact of adjustments (a) (5,511) (638) (16,962) (4,335)
Total adjusting items, net of tax (1,377) 1,916 (8,139) 13,007
Adjusted net income (loss) attributable to The Andersons, Inc. $
(2,435) $
(2,321) $
(16,420) $
24,665
Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders $
(0.03) $
(0.13) $
(0.25) $
0.35
Impact on diluted earnings (loss) per share $
(0.04) $
0.06 $
(0.25) $
0.39
Adjusted diluted earnings (loss) per share $
(0.07) $
(0.07) $
(0.50) $
0.74
(a) Income tax adjustments
include $(4.5) million and
$(14.8) million due to CARES
Act benefits and certain
discrete items in the current
quarter and year to date.
The Andersons, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands) September 30, December 31, September 30,
2020 2019 2019
---
Assets
Current assets:
Cash, cash equivalents and restricted cash $
13,693 $
54,895 $
21,299
Accounts receivable, net 529,584 536,367 523,110
Inventories 754,604 1,170,536 741,086
Commodity derivative assets - current 140,066 107,863 120,510
Other current assets 102,302 75,681 82,770
Total current assets 1,540,249 1,945,342 1,488,775
Other assets:
Goodwill 135,709 135,360 135,872
Other intangible assets, net 152,214 175,312 181,100
Right of use assets, net 58,108 76,401 70,773
Equity method investments 25,368 23,857 117,348
Other assets, net 23,601 21,753 21,442
Total other assets 395,000 432,683 526,535
Rail Group assets leased to others, net 587,851 584,298 565,746
Property, plant and equipment, net 888,511 938,418 703,396
Total assets $
3,411,611 $
3,900,741 $
3,284,452
Liabilities and equity
Current liabilities:
Short-term debt 100,405 147,031 138,249
Trade and other payables 641,812 873,081 594,708
Customer prepayments and deferred revenue 49,573 133,585 35,274
Commodity derivative liabilities - current 79,159 46,942 67,606
Current maturities of long-term debt 67,786 62,899 66,899
Accrued expenses and other current liabilities 157,801 176,381 162,749
Total current liabilities 1,096,536 1,439,919 1,065,485
Long-term lease liabilities 38,232 51,091 47,299
Long-term debt, less current maturities 916,087 1,016,248 968,117
Deferred income taxes 163,454 146,155 128,003
Other long-term liabilities 60,075 51,673 64,198
Total liabilities 2,274,384 2,705,086 2,273,102
Total equity 1,137,227 1,195,655 1,011,350
Total liabilities and equity $
3,411,611 $
3,900,741 $
3,284,452
The Andersons, Inc.
Segment Data (unaudited)
(in thousands) Trade Ethanol Plant Rail Other Total
Nutrient
---
Three months ended September 30, 2020
Sales and merchandising revenues $
1,432,922 $
349,957 $
102,707 $
36,647
$ $
1,922,233
Gross profit 65,572 11,169 16,496 8,598 101,835
Equity in earnings (losses) of affiliates, net 20 20
Other income (loss), net 3,114 553 579 588 (400) 4,434
Income (loss) before income taxes 5,941 4,421 (5,387) (139) (7,335) (2,499)
Income attributable to the noncontrolling interests - 3,273 3,273
Income (loss) before income taxes attributable to The $
5,941 $
1,148 $
(5,387) $
(139) $
(7,335) $
(5,772)
Andersons, Inc. (a)
Adjustments to income (loss) before income taxes (b) 912 3,222 4,134
Adjusted income (loss) before income taxes $
6,853 $
1,148 $
(5,387) $
(139) $
(4,113) $
(1,638)
attributable to The Andersons, Inc. (a)
Three months ended September 30, 2019
Sales and merchandising revenues $
1,515,107 $
319,105 $
109,446 $
39,097
$ $
1,982,755
Gross profit 73,379 8,083 15,851 11,828 109,141
Equity in earnings (losses) of affiliates, net (98) (3,630) (3,728)
Other income (loss), net 876 417 510 854 (59) 2,598
Income (loss) before income taxes (2,122) (563) (7,440) 3,137 (6,094) (13,082)
Loss attributable to the noncontrolling interests - (1,633) (1,633)
Income (loss) before income taxes attributable to The $
(2,122) $
1,070 $
(7,440) $
3,137 $
(6,094) $
(11,449)
Andersons, Inc. (a)
Adjustments to income (loss) before income taxes (b) 2,554 2,554
Adjusted income (loss) before income taxes $
432 $
1,070 $
(7,440) $
3,137 $
(6,094) $
(8,895)
attributable to The Andersons, Inc. (a)
(a) Income (loss) before income
taxes attributable to The
Andersons, Inc. 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.
(b) Additional information on the
individual adjustments that are
included in the adjustments to
income (loss) before income taxes
can be found in the Reconciliation
to EBITDA and Adjusted EBITDA
table.
(in thousands) Trade Ethanol Plant Rail Other Total
Nutrient
---
Nine months ended September 30, 2020
Sales and merchandising revenues $
4,162,130 $
886,742 $
507,445 $
109,202
$ $
5,665,519
Gross profit 187,420 (20,829) 75,625 29,015 271,231
Equity in earnings (losses) of affiliates, net 228 228
Other income (loss), net 6,865 1,465 935 2,543 889 12,697
Income (loss) before income taxes (3,650) (42,543) 12,828 3,474 (17,351) (47,242)
Loss attributable to the noncontrolling interests - (20,583) (20,583)
Income (loss) before income taxes attributable to The $
(3,650) $
(21,960) $
12,828 $
3,474 $
(17,351) $
(26,659)
Andersons, Inc. (a)
Adjustments to income (loss) before income taxes (b) 3,260 5,563 8,823
Adjusted income (loss) before income taxes $
(390) $
(21,960) $
12,828 $
3,474 $
(11,788) $
(17,836)
attributable to The Andersons, Inc. (a)
Nine months ended September 30, 2019
Sales and merchandising revenues $
4,753,375 $
899,137 $
508,548 $
123,528
$ $
6,284,588
Gross profit 241,444 19,973 75,583 42,533 379,533
Equity in earnings (losses) of affiliates, net (1,843) (524) (2,367)
Other income (loss), net 1,705 696 1,647 1,392 1,209 6,649
Income (loss) before income taxes 2,610 5,562 4,534 10,629 (15,599) 7,736
Loss attributable to the noncontrolling interests - (2,265) (2,265)
Income (loss) before income taxes attributable to The $
2,610 $
7,827 $
4,534 $
10,629 $
(15,599) $
10,001
Andersons, Inc. (a)
Adjustments to income (loss) before income taxes (b) 17,342 17,342
Adjusted income (loss) before income taxes $
19,952 $
7,827 $
4,534 $
10,629 $
(15,599) $
27,343
attributable to The Andersons, Inc. (a)
(a) Income (loss) before income
taxes attributable to The
Andersons, Inc. 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.
(b) Additional information on the
individual adjustments that are
included in the adjustments to
income (loss) before income taxes
can be found in the Reconciliation
to EBITDA and Adjusted EBITDA
table.
The Andersons, Inc.
Reconciliation to EBITDA and Adjusted EBITDA
(unaudited)
(in thousands) Trade Ethanol Plant Rail Other Total
Nutrient
---
Three months ended September 30, 2020
Net income (loss) $
5,941 $
4,421 $
(5,387) $
(139) $
(2,621) $
2,215
Interest expense (income) 4,380 1,651 1,287 3,716 (465) 10,569
Tax provision (benefit) - (4,714) (4,714)
Depreciation and amortization 11,079 18,282 6,316 8,882 2,710 47,269
Earnings before interest, taxes, depreciation and amortization 21,400 24,354 2,216 12,459 (5,090) 55,339
(EBITDA)
EBITDA attributable to non-controlling interests - 13,250 13,250
EBITDA attributable to The Andersons, Inc. 21,400 11,104 2,216 12,459 (5,090) 42,089
Adjusting items impacting EBITDA:
Transaction related stock compensation 912 912
Severance Costs - 3,222 3,222
Total adjusting items 912 3,222 4,134
Adjusted EBITDA attributable to The Andersons, Inc. $
22,312 $
11,104 $
2,216 $
12,459 $
(1,868) $
46,223
Three months ended September 30, 2019
Net income (loss) $
(2,122) $
(563) $
(7,440) $
3,137 $
1,118 $
(5,870)
Interest expense (income) 7,788 291 1,831 4,211 (146) 13,975
Tax provision (benefit) - (7,212) (7,212)
Depreciation and amortization 12,487 3,716 6,485 8,713 2,849 34,250
Earnings before interest, taxes, depreciation and amortization 18,153 3,444 876 16,061 (3,391) 35,143
(EBITDA)
EBITDA attributable to non-controlling interests - (483) (483)
EBITDA attributable to The Andersons, Inc. 18,153 3,927 876 16,061 (3,391) 35,626
Adjusting items impacting EBITDA:
Acquisition costs (23) (23)
Transaction related stock compensation 2,577 2,577
Total adjusting items 2,554 2,554
Adjusted EBITDA attributable to The Andersons, Inc. $
20,707 $
3,927 $
876 $
16,061 $
(3,391) $
38,180
(in thousands) Trade Ethanol Plant Rail Other Total
Nutrient
Nine months ended September 30, 2020
Net income (loss) $
(3,650) $
(42,543) $
12,828 $
3,474 $
1,027 $
(28,864)
Interest expense (income) 16,624 5,908 4,535 12,032 (1,116) 37,983
Tax provision (benefit) (18,378) (18,378)
Depreciation and amortization 33,478 53,786 19,021 26,670 8,212 141,167
Earnings before interest, taxes, depreciation and amortization 46,452 17,151 36,384 42,176 (10,255) 131,908
(EBITDA)
EBITDA attributable to non-controlling interests 9,130 9,130
EBITDA attributable to The Andersons, Inc. 46,452 8,021 36,384 42,176 (10,255) 122,778
Adjusting items impacting EBITDA:
Transaction related stock compensation 3,260 3,260
Severance Costs 5,563 5,563
Total adjusting items 3,260 5,563 8,823
Adjusted EBITDA attributable to The Andersons, Inc. $
49,712 $
8,021 $
36,384 $
42,176 $
(4,692) $
131,601
Nine months ended September 30, 2019
Net income (loss) $
2,610 $
5,562 $
4,534 $
10,629 $
(13,942) $
9,393
Interest expense (income) 28,740 (1,232) 6,478 12,071 (444) 45,613
Tax provision (benefit) (1,657) (1,657)
Depreciation and amortization 37,523 7,094 19,778 25,377 8,624 98,396
Earnings before interest, taxes, depreciation and amortization 68,873 11,424 30,790 48,077 (7,419) 151,745
(EBITDA)
EBITDA attributable to non-controlling interests (1,073) (1,073)
EBITDA attributable to The Andersons, Inc. 68,873 12,497 30,790 48,077 (7,419) 152,818
Adjusting items impacting EBITDA:
Acquisition costs 5,849 5,849
Transaction related stock compensation 7,339 7,339
Asset impairment 3,081 3,081
Loss from remeasurement of equity method investment 1,073 1,073
Total adjusting items 17,342 17,342
Adjusted EBITDA attributable to The Andersons, Inc. $
86,215 $
12,497 $
30,790 $
48,077 $
(7,419) $
170,160
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SOURCE The Andersons, Inc.
