EX-99.1 2 ex-99pressreleaseq22019.htm EXHIBIT 99.1 Exhibit


logoa04a14.gif NEWS RELEASE
        
The Andersons, Inc. Reports Second Quarter 2019 Results
 
Maumee, Ohio, August 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.”

 
 
 
 
$ in millions, except per share amounts
Q2 2019
Q2 2018
Variance
YTD 2019
YTD 2018
Variance
Pretax Income (Loss) Attributable to the Company1
$40.9
$29.3
$11.6
$21.5
$27.3
$(5.8)
Adjusted Pretax Income (Loss)1
$44.1
$29.3
$14.8
$36.3
$27.3
$9.0
     Trade (Grain) Group
$27.0
$8.7
$18.3
$21.1
$7.5
$13.6
     Ethanol Group
$2.6
$7.3
$(4.7)
$5.2
$10.4
$(5.2)
     Plant Nutrient Group
$15.9
$15.1
$0.8
$12.0
$16.2
$(4.2)
     Rail Group
$3.2
$0.9
$2.3
$7.5
$4.9
$2.6
     Other
$(4.6)
$(2.8)
$(1.8)
$(9.5)
$(11.7)
$2.2
Net Income (Loss)1
$29.9
$21.5
$8.4
$15.9
$19.8
$(3.9)
Adjusted Net Income (Loss)1
$32.3
$21.5
$10.8
$27.0
$19.8
$7.2
Diluted EPS
$0.91
$0.76
$0.15
$0.48
$0.70
$(0.22)
Adjusted Diluted EPS
$0.98
$0.76
$0.22
$0.82
$0.70
$0.12
EBITDA
$85.4
$59.7
$25.7
$114.0
$87.3
$26.7
Adjusted EBITDA
$88.6
$59.7
$28.9
$128.9
$87.3
$41.6
1 Excludes net income (loss) attributable to the noncontrolling interests of ($0.5) in Q2 2019, ($0.1) in Q2 2018, ($0.6) for year-to-date 2019 and ($0.4) for year-to-date 2018.

“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.

Conference Call

The company will host a webcast on Wednesday, August 7, 2019, at 11 a.m. Eastern Daylight Time, to discuss its performance and provide its updated outlook for 2019. To access the call, please dial 866-439-8514 or 678-509-7568 (participant passcode is 9055829). It is recommended that you call 10 minutes before the conference call begins.

To access the webcast, click on the link: http://edge.media-server.com/mmc/p/izr35eyr . 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 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.

Non-GAAP Measures

This release contains non-GAAP financial measures. The company believes adjusted pretax income, adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and better period-to-period comparability. Adjusted pretax income, adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA do 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 the financial tables provided in the release.

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.

Investor Relations Contact    
John Kraus    
Director, Investor Relations
Phone: 419-891-6544
E-mail: investorrelations@andersonsinc.com








The Andersons, Inc.
Condensed Consolidated Statements of Operations (unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Sales and merchandising revenues
$
2,325,041

 
$
911,402

 
$
4,301,833

 
$
1,547,141

Cost of sales and merchandising revenues
2,164,313

 
820,928

 
4,031,441

 
1,392,962

Gross profit
160,728

 
90,474

 
270,392

 
154,179

Operating, administrative and general expenses
106,918

 
59,853

 
220,267

 
124,110

Asset impairment
3,081

 
6,272

 
3,081

 
6,272

Interest expense
15,727

 
7,825

 
31,637

 
14,824

Other income:
 
 
 
 
 
 
 
  Equity in earnings (loss) of affiliates
(157
)
 
9,803

 
1,362

 
13,376

  Other income, net
5,563

 
2,828

 
4,049

 
4,514

Income (loss) before income taxes
40,408

 
29,155

 
20,818

 
26,863

Income tax provision (benefit)
10,997

 
7,742

 
5,555

 
7,432

Net income (loss)
29,411

 
21,413

 
15,263

 
19,431

Net income (loss) attributable to the noncontrolling interests
(477
)
 
(116
)
 
(632
)
 
(398
)
Net income (loss) attributable to The Andersons, Inc.
$
29,888

 
$
21,529

 
$
15,895

 
$
19,829

Per common share:
 
 
 
 
 
 
 
Basic earnings (loss) attributable to The Andersons, Inc. common shareholders
$
0.92

 
$
0.76

 
$
0.49

 
$
0.70

Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders
$
0.91

 
$
0.76

 
$
0.48

 
$
0.70









The Andersons, Inc.
Reconciliation to Adjusted Net Income (unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
(in thousands, except per share data)

2019
 
2018
 
2019
 
2018
Net income (loss) attributable to The Andersons, Inc.
$
29,888

 
$
21,529

 
$
15,895

 
$
19,829

Items impacting other income, net of tax:
 
 
 
 
 
 
 
One time acquisition costs
(907
)
 
—

 
5,209

 
—

Transaction related stock compensation
1,010

 
—

 
3,572

 
—

Asset impairment
2,311

 
—

 
2,311

 
—

Total adjusting items
2,414

 
—

 
11,092

 
—

Adjusted net income (loss) attributable to The Andersons, Inc.
$
32,302

 
$
21,529

 
$
26,987

 
$
19,829

 
 
 
 
 
 
 
 
Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders
$
0.91

 
$
0.76

 
$
0.48

 
$
0.70

 
 
 
 
 
 
 
 
Impact on diluted earnings per share
0.07

 
—

 
0.34

 
—

Adjusted diluted earnings (loss) per share
$
0.98

 
$
0.76

 
$
0.82

 
$
0.70






The Andersons, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
June 30, 2019
 
December 31, 2018
 
June 30, 2018
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
  Cash and cash equivalents
$
11,087

 
$
22,593

 
$
58,611

  Accounts receivable, net
712,294

 
207,285

 
218,476

  Inventories
753,641

 
690,804

 
495,611

  Commodity derivative assets – current
233,015

 
51,421

 
54,259

  Other current assets
58,439

 
50,703

 
42,648

  Assets held for sale
151

 
392

 
9,816

Total current assets
1,768,627

 
1,023,198

 
879,421

 
 
 
 
 
 
Other assets:
 
 
 
 
 
  Commodity derivative assets – noncurrent
6,161

 
480

 
1,008

  Other assets, net
346,531

 
127,503

 
138,201

Right of use asset, net
74,073

 
—

 
—

  Equity method investments
120,929

 
242,326

 
232,159

 
547,694

 
370,309

 
371,368

Rail Group assets leased to others, net
559,711

 
521,785

 
458,424

Property, plant and equipment, net
695,827

 
476,711

 
408,575

Total assets
$
3,571,859

 
$
2,392,003

 
$
2,117,788

 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
  Short-term debt
$
426,125

 
$
205,000

 
$
185,000

  Trade and other payables
527,250

 
462,535

 
282,221

  Customer prepayments and deferred revenue
49,761

 
32,533

 
16,103

  Commodity derivative liabilities – current
69,369

 
32,647

 
85,160

  Accrued expenses and other current liabilities
165,383

 
79,046

 
74,512

  Current maturities of long-term debt
66,678

 
21,589

 
13,700

Total current liabilities
1,304,566

 
833,350

 
656,696

 
 
 
 
 
 
Right of use liability
48,401

 
—

 
—

Other long-term liabilities
18,398

 
32,184

 
30,325

Commodity derivative liabilities – noncurrent
3,985

 
889

 
3,202

Employee benefit plan obligations
22,019

 
22,542

 
26,131

Long-term debt, less current maturities
1,007,012

 
496,187

 
435,580

Deferred income taxes
146,839

 
130,087

 
118,864

Total liabilities
2,551,220

 
1,515,239

 
1,270,798

Total equity
1,020,639

 
876,764

 
846,990

Total liabilities and equity
$
3,571,859

 
$
2,392,003

 
$
2,117,788







The Andersons, Inc.
Reconciliation to EBITDA and Adjusted EBITDA (unaudited)
(in thousands)
Trade
 
 Ethanol
 
 Plant Nutrient
 
 Rail
 
 Other
 
 Total
Three months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
23,731

 
$
2,172

 
$
15,903

 
$
3,180

 
$
(4,578
)
 
$
40,408

Income (loss) attributable to the noncontrolling interest
—

 
(477
)
 
—

 
—

 
—

 
(477
)
Income (loss) before income taxes attributable to The Andersons, Inc.
23,731


2,649

 
15,903

 
3,180

 
(4,578
)
 
40,885

Interest expense
10,243

 
(906
)
 
2,386

 
4,181

 
(177
)
 
15,727

Depreciation and amortization
10,837

 
48

 
6,631

 
8,389

 
2,850

 
28,755

Earnings before interest, taxes, depreciation and amortization (EBITDA)
$
44,811

 
$
1,791

 
$
24,920

 
$
15,750

 
$
(1,905
)
 
$
85,367

Adjusting items impacting EBITDA:
 
 
 
 
 
 
 
 
 
 
 
One time acquisition costs
(1,209
)
 
—

 
—

 
—

 
—

 
(1,209
)
Transaction related stock compensation
1,346

 
—

 
—

 
—

 
—

 
1,346

Asset impairment
3,081

 
—

 
—

 
—

 
—

 
3,081

Total adjusting items
3,218

 
—

 
—

 
—

 
—

 
3,218

Adjusted EBITDA
$
48,029

 
$
1,791

 
$
24,920

 
$
15,750

 
$
(1,905
)
 
$
88,585

Three months ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
8,707

 
$
7,179

 
$
15,124

 
$
944

 
$
(2,799
)
 
$
29,155

Income (loss) attributable to the noncontrolling interests
—

 
(116
)
 
—

 
—

 
—

 
(116
)
Income (loss) before income taxes attributable to The Andersons, Inc.
8,707

 
7,295

 
15,124

 
944

 
(2,799
)
 
29,271

Interest expense
3,930

 
(271
)
 
1,642

 
2,718

 
(194
)
 
7,825

Depreciation and amortization
4,126

 
1,517

 
6,769

 
7,119

 
3,022

 
22,553

Earnings before interest, taxes, depreciation and amortization (EBITDA)
$
16,763

 
$
8,541

 
$
23,535

 
$
10,781

 
$
29

 
$
59,649

Six months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
6,268

 
$
4,589

 
$
11,974

 
$
7,492

 
$
(9,505
)
 
$
20,818

Income (loss) attributable to the noncontrolling interests
—

 
(632
)
 
—

 
—

 
—

 
(632
)
Income (loss) before income taxes attributable to The Andersons, Inc.
6,268

 
5,221

 
11,974

 
7,492

 
(9,505
)
 
21,450

Interest expense
21,158

 
(1,730
)
 
4,647

 
7,860

 
(298
)
 
31,637

Depreciation and amortization
25,036

 
187

 
13,294

 
16,664

 
5,775

 
60,956

Earnings before interest, taxes, depreciation and amortization (EBITDA)
$
52,462

 
$
3,678

 
$
29,915

 
$
32,016

 
$
(4,028
)
 
$
114,043

Adjusting items impacting EBITDA:
 
 
 
 
 
 
 
 
 
 
 
One time acquisition costs
6,945

 
—

 
—

 
—

 
—

 
6,945

Transaction related stock compensation
4,762

 
—

 
—

 
—

 
—

 
4,762

Asset impairment
3,081

 
—

 
—

 
—

 
—

 
3,081

Total adjusting items
14,788

 
—

 
—

 
—

 
—

 
14,788

Adjusted EBITDA
$
67,250

 
$
3,678

 
$
29,915

 
$
32,016

 
$
(4,028
)
 
$
128,831

Six months ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
7,460

 
$
9,953

 
$
16,215

 
$
4,913

 
$
(11,678
)
 
$
26,863

Income (loss) attributable to the noncontrolling interests
—

 
(398
)
 
—

 
—

 
—

 
(398
)
Income (loss) before income taxes attributable to The Andersons, Inc.
7,460

 
10,351

 
16,215

 
4,913

 
(11,678
)
 
27,261

Interest expense
6,889

 
(311
)
 
3,082

 
5,086

 
78

 
14,824

Depreciation and amortization
8,143

 
3,026

 
13,497

 
14,288

 
6,278

 
45,232

Earnings before interest, taxes, depreciation and amortization (EBITDA)
$
22,492

 
$
13,066

 
$
32,794

 
$
24,287

 
$
(5,322
)
 
$
87,317






The Andersons, Inc.
Segment Data (unaudited)
(in thousands)
Trade
 
Ethanol
 
Plant Nutrient
 
Rail
 
Other
 
Total
Three months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
$
1,766,305

 
$
245,143

 
$
270,577

 
$
43,016

 
$
—

 
$
2,325,041

Gross profit
102,846

 
4,312

 
38,798

 
14,772

 
—

 
160,728

Equity in earnings (loss) of affiliates
(1,614
)
 
1,457

 
—

 
—

 
—

 
(157
)
Other income, net
3,818

 
194

 
570

 
329

 
652

 
5,563

Income (loss) before income taxes
23,731

 
2,172

 
15,903

 
3,180

 
(4,578
)
 
40,408

Income (loss) attributable to the noncontrolling interests
—

 
(477
)
 
—

 
—

 
—

 
(477
)
Income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
23,731

 
$
2,649

 
$
15,903

 
$
3,180

 
$
(4,578
)
 
$
40,885

Three months ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
$
365,100

 
$
201,758

 
$
303,106

 
$
41,438

 
$
—

 
$
911,402

Gross profit
33,887

 
5,862

 
37,167

 
13,558

 
—

 
90,474

Equity in earnings of affiliates
5,510

 
4,293

 
—

 
—

 
—

 
9,803

Other income, net
1,248

 
(476
)
 
622

 
675

 
759

 
2,828

Income (loss) before income taxes
8,707

 
7,179

 
15,124

 
944

 
(2,799
)
 
29,155

Income (loss) attributable to the noncontrolling interest
—

 
(116
)
 
—

 
—

 
—

 
(116
)
Income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
8,707

 
$
7,295

 
$
15,124

 
$
944

 
$
(2,799
)
 
$
29,271

Six months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
$
3,364,326

 
$
453,974

 
$
399,102

 
$
84,431

 
$
—

 
$
4,301,833

Gross profit
171,835

 
8,120

 
59,732

 
30,705

 
—

 
$
270,392

Equity in earnings of affiliates
(1,745
)
 
3,107

 
—

 
—

 
—

 
$
1,362

Other income, net
828

 
278

 
1,137

 
538

 
1,268

 
$
4,049

Income (loss) before income taxes
6,268

 
4,589

 
11,974

 
7,492

 
(9,505
)
 
$
20,818

Income (loss) attributable to the noncontrolling interests
—

 
(632
)
 
—

 
—

 
—

 
$
(632
)
Income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
6,268

 
$
5,221

 
$
11,974

 
$
7,492

 
$
(9,505
)
 
$
21,450

Six months ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
$
641,126

 
$
375,422

 
$
438,723

 
$
91,870

 
$
—

 
$
1,547,141

Gross profit
59,111

 
9,554

 
59,404

 
26,110

 
—

 
154,179

Equity in earnings of affiliates
7,497

 
5,879

 
—

 
—

 
—

 
13,376

Other income, net
1,573

 
138

 
1,274

 
691

 
838

 
4,514

Income (loss) before income taxes
7,460

 
9,953

 
16,215

 
4,913

 
(11,678
)
 
26,863

Income (loss) attributable to the noncontrolling interest
—

 
(398
)
 
—

 
—

 
—

 
(398
)
Income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
7,460

 
$
10,351

 
$
16,215

 
$
4,913

 
$
(11,678
)
 
$
27,261

(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.