MAUMEE, Ohio, Nov. 3, 2020 /CNW/ -- 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 Company1
$
(5.8)
$
(11.4)
$
5.6
$
(26.7)
$
10.0
$
(36.7)
Adjusted Pretax Income (Loss) Attributable to the Company1
(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)
Ethanol1
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 Company1
(1.1)
(4.2)
3.1
(8.3)
11.7
(20.0)
Adjusted Net Income (Loss) Attributable to the Company1
(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 ELEMENTTM 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 September 30,
Nine months ended 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 September 30,
Nine months ended 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, 2020
December 31, 2019
September 30, 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 Nutrient
Rail
Other
Total
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 Andersons, Inc. (a)
$
5,941
$
1,148
$
(5,387)
$
(139)
$
(7,335)
$
(5,772)
Adjustments to income (loss) before income taxes (b)
912
—
—
—
3,222
4,134
Adjusted income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
6,853
$
1,148
$
(5,387)
$
(139)
$
(4,113)
$
(1,638)
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 Andersons, Inc. (a)
$
(2,122)
$
1,070
$
(7,440)
$
3,137
$
(6,094)
$
(11,449)
Adjustments to income (loss) before income taxes (b)
2,554
—
—
—
—
2,554
Adjusted income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
432
$
1,070
$
(7,440)
$
3,137
$
(6,094)
$
(8,895)
(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 Nutrient
Rail
Other
Total
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 Andersons, Inc. (a)
$
(3,650)
$
(21,960)
$
12,828
$
3,474
$
(17,351)
$
(26,659)
Adjustments to income (loss) before income taxes (b)
3,260
—
—
—
5,563
8,823
Adjusted income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
(390)
$
(21,960)
$
12,828
$
3,474
$
(11,788)
$
(17,836)
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 Andersons, Inc. (a)
$
2,610
$
7,827
$
4,534
$
10,629
$
(15,599)
$
10,001
Adjustments to income (loss) before income taxes (b)
17,342
—
—
—
—
17,342
Adjusted income (loss) before income taxes attributable to The Andersons, Inc. (a)
$
19,952
$
7,827
$
4,534
$
10,629
$
(15,599)
$
27,343
(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 Nutrient
Rail
Other
Total
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 (EBITDA)
21,400
24,354
2,216
12,459
(5,090)
55,339
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 (EBITDA)
18,153
3,444
876
16,061
(3,391)
35,143
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 Nutrient
Rail
Other
Total
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 (EBITDA)
46,452
17,151
36,384
42,176
(10,255)
131,908
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 (EBITDA)
68,873
11,424
30,790
48,077
(7,419)
151,745
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.
Canada
Deutschland
España
France
Italia
Schweiz (DE)
United Kingdom
Report
