NEWS RELEASETHE ANDERSONS, INC. REPORTS FOURTH QUARTER & FULL YEAR RESULTS
Record Full-Year Earnings of $3.84 per Diluted Share
Fourth Quarter Earnings of $0.89 per Diluted Share
Ethanol Group Leads Earnings Results
MAUMEE, OHIO, FEBRUARY 10, 2015 The Andersons, Inc. (Nasdaq: ANDE) today announces financial results for the fourth quarter and full year ended December 31, 2014.
Highlights
• | Record full-year earnings of $3.84 per diluted share, unadjusted. |
• | The Ethanol Group delivered full-year operating income of $92.3 million, far exceeding its prior best year of $50.6 million in 2013. |
• | Continued growth in the fourth quarter highlighted by the acquisition of Auburn Bean & Grain. |
“We are pleased with our results in 2014. The company’s earnings this year have clearly been led by the exceptionally strong performance of our ethanol business in a very supportive market,” said CEO Mike Anderson. “After excluding the one-time pre-tax gain of $17.1 million from the partial redemption of our investment in Lansing Trade Group, our full year adjusted results of $3.46 per share were the highest in the company’s history. The company will begin to report adjusted earnings in the future, as we do for the first time below.
“During the quarter we continued to grow. This is highlighted by the purchase of Auburn Bean & Grain (AB&G), which added six grain and four agronomy locations throughout central Michigan and serves as a nice geographic fit between our other Michigan assets and our Thompsons joint venture in Ontario,” added Mr. Anderson. “The integration of AB&G is proceeding well, and its locations were additive to income in the fourth quarter. AB&G added grain storage capacity of about 18.1 million bushels, and 16,000 tons of dry and 3.7 million gallons of liquid nutrient capacity.”
Financial and Operating Highlights
Net income for 2014 attributable to the company was a record $109.7 million, or $3.84 per diluted share, on revenues of $4.5 billion. Last year earnings were $89.9 million, or $3.18 per diluted share on revenues of $5.6 billion. Full-year 2014 adjusted earnings were $99.1 million, or $3.46 per diluted share, when the Lansing Trade Group gain was excluded. (See the Reconciliation to Adjusted Net Income Table for a discussion and reconciliation of income and adjusted income.)
The company earned $25.9 million in the fourth quarter of 2014, or $0.89 per diluted share, on revenues of $1.3 billion. In the same three month period of 2013, the company reported net income of $30.7 million, or $1.08 per diluted share, on revenues of $1.6 billion.
• | Revenues were down this year within the company’s agricultural businesses due to lower commodity prices. The majority of the decrease was within the Grain Group where the |
average price per bushel sold decreased by 28 percent, which more than offset the slight increase in bushels sold.
• | The harvest was protracted in a number of states in which the company does business, primarily due to weather conditions. |
• | The ethanol plants benefitted from operational improvements made the past three years, with records being achieved for ethanol production, ethanol yields, and corn oil yields. |
• | The Ethanol Group realized solid margins in 2014, however, fourth quarter margins were lower than the same period of the prior year. |
• | The Andersons received $89.5 million in net cash distributions from its non-consolidated ethanol investments in 2014. |
• | The distillers dried grain market, which was negatively impacted by a decline in the Chinese import market in the third quarter, rebounded late in the fourth quarter and it is again selling at levels significantly above 100 percent of corn value. |
• | Fourth quarter volume for the Plant Nutrient Group was down approximately 19 percent due to a late harvest and poor weather conditions. |
• | The Rail Group’s income was down in 2014 due primarily to gains on railcar sales declining by $3.6 million, one-time gains in 2013 of $4.3 million from legal settlements, and an increase in freight and maintenance expense to move idle railcars into service, the benefits of which will be seen in future periods. |
• | The Rail Group’s utilization rate has increased for eight consecutive quarters and ended the year at 91.0 percent. |
2015 Outlook
There are solid fundamentals supporting the company’s core businesses going into 2015, although results will likely be below 2014 records, in part because the $17.1 million dollar pre-tax gain on the partial sale of Lansing Trade Group will not be repeated.
• | Corn acres to be planted in 2015 are estimated to be 88 to 89 million acres, which is down 2 to 3 percent from 2014. Bean acres to be planted are estimated to be roughly 85 million acres, which is very similar to or slightly higher than 2014. Assuming trend yields, this should create a good base for the company’s grain business in 2015. Further, continued strong performance from the Grain Group’s equity investments is anticipated. |
• | Early 2015 ethanol margins are well below 2014 margins, and are expected to average lower for the full year. Factors impacting current margins include lower crude price, greater ethanol production and marginally rising ethanol stocks. On a positive note, higher gasoline demand, improved demand and prices for distillers dried grains in relation to corn price, an ample corn supply, and the potential for improved export demand as the year progresses could contribute to improved ethanol margins later in the year. |
• | The anticipated acres to be planted creates a good environment for the Plant Nutrient Group to participate in as well. Additionally, if there is normal spring weather some of the volume lost in the fourth quarter of 2014 is expected to be regained in the first half of 2015. |
• | The Rail Group is expected to have improved financial results as it will benefit from increased lease and utilization rates. |
Conference Call
The company will host a webcast on Wednesday, February 11, 2015 at 11:00 A.M. ET, to discuss its performance. To dial-in to the call, the number is 866-825-3209 (participant passcode is 28990476). 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/m/p/dwpegcgm/lan/en. Log on. Click on the phone icon at the bottom of the “webcast window” on the left side of the screen. Then, you will be provided with the conference call number and passcode. Click the gear set icon (left of the telephone icon) and select ‘Live Phone’ to synchronize the presentation with the audio on your phone. A replay of the call can also be accessed under the heading “Investor” 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.
Company Description
The Andersons, Inc. is a diversified company rooted in agriculture. Founded in Maumee, Ohio, in 1947, the company conducts business across North America in the grain, ethanol, and plant nutrient sectors, railcar leasing, turf and cob products, and consumer retailing. The Andersons, Inc. is located on the Internet at www.andersonsinc.com.
Investor Relations Contact
Jim Burmeister
Phone: 419-891-5848
E-mail: Jim_Burmeister@andersonsinc.com
The Andersons, Inc.
Condensed Consolidated Statements of Income (unaudited)
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
(in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Sales and merchandising revenues | $ | 1,271,768 | $ | 1,584,266 | $ | 4,540,071 | $ | 5,604,574 | |||||||
Cost of sales and merchandising revenues | 1,157,817 | 1,474,689 | 4,142,932 | 5,239,349 | |||||||||||
Gross profit | 113,951 | 109,577 | 397,139 | 365,225 | |||||||||||
Operating, administrative and general expenses | 94,884 | 85,768 | 318,881 | 278,433 | |||||||||||
Interest expense | 5,359 | 4,253 | 21,760 | 20,860 | |||||||||||
Other income: | |||||||||||||||
Equity in earnings of affiliates | 19,892 | 28,714 | 96,523 | 68,705 | |||||||||||
Other income, net | 6,031 | 3,253 | 31,125 | 14,876 | |||||||||||
Income before income taxes | 39,631 | 51,523 | 184,146 | 149,513 | |||||||||||
Income tax provision | 11,664 | 16,904 | 61,501 | 53,811 | |||||||||||
Net income | 27,967 | 34,619 | 122,645 | 95,702 | |||||||||||
Net income (loss) attributable to the noncontrolling interests | 2,075 | 3,958 | 12,919 | 5,763 | |||||||||||
Net income attributable to The Andersons, Inc. | $ | 25,892 | $ | 30,661 | $ | 109,726 | $ | 89,939 | |||||||
Per common share: | |||||||||||||||
Basic earnings attributable to The Andersons, Inc. common shareholders | $ | 0.89 | $ | 1.09 | $ | 3.85 | $ | 3.20 | |||||||
Diluted earnings attributable to The Andersons, Inc. common shareholders | $ | 0.89 | $ | 1.08 | $ | 3.84 | $ | 3.18 | |||||||
Dividends paid | $ | 0.14 | $ | 0.11 | $ | 0.47 | $ | 0.43 | |||||||
The Andersons, Inc.
Reconciliation to Adjusted Net Income (unaudited)
(in thousands, except per share data) | Three months ended December 31, | Twelve months ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income attributable to The Andersons, Inc. | $ | 25,892 | $ | 30,661 | $ | 109,726 | $ | 89,939 | |||||||
Items impacting other income, net: | |||||||||||||||
Partial redemption of investment in Lansing Trade Group | — | — | (10,656 | ) | — | ||||||||||
Total adjusting items | — | — | (10,656 | ) | — | ||||||||||
Adjusted net income attributable to The Andersons, Inc. | $ | 25,892 | $ | 30,661 | $ | 99,070 | $ | 89,939 | |||||||
Diluted earnings attributable to The Andersons, Inc. common shareholders | $ | 0.89 | $ | 1.08 | $ | 3.84 | $ | 3.18 | |||||||
Impact on diluted earnings per share | — | — | (0.38 | ) | — | ||||||||||
Adjusted diluted earnings per share | $ | 0.89 | $ | 1.08 | $ | 3.46 | $ | 3.18 | |||||||
The Andersons, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands) | December 31, 2014 | December 31, 2013 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 114,704 | $ | 309,085 | |||
Restricted cash | 429 | 408 | |||||
Accounts receivable, net | 183,059 | 173,930 | |||||
Inventories | 795,655 | 614,923 | |||||
Commodity derivative assets - current | 92,771 | 71,319 | |||||
Deferred income taxes | 7,337 | 4,931 | |||||
Other current assets | 60,492 | 47,188 | |||||
Total current assets | 1,254,447 | 1,221,784 | |||||
Other assets: | |||||||
Commodity derivative assets - noncurrent | 507 | 246 | |||||
Other assets, net | 131,527 | 118,010 | |||||
Pension assets | — | 14,328 | |||||
Equity method investments | 232,513 | 291,109 | |||||
364,547 | 423,693 | ||||||
Rail Group assets leased to others, net | 297,747 | 240,621 | |||||
Property, plant and equipment, net | 453,607 | 387,458 | |||||
Total assets | $ | 2,370,348 | $ | 2,273,556 | |||
Liabilities and equity | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 2,166 | $ | — | |||
Accounts payable for grain | 535,974 | 592,183 | |||||
Other accounts payable | 170,849 | 154,599 | |||||
Customer prepayments and deferred revenue | 99,617 | 59,304 | |||||
Commodity derivative liabilities – current | 64,075 | 63,954 | |||||
Accrued expenses and other current liabilities | 78,610 | 70,295 | |||||
Current maturities of long-term debt | 76,415 | 51,998 | |||||
Total current liabilities | 1,027,706 | 992,333 | |||||
Other long-term liabilities | 15,507 | 15,386 | |||||
Commodity derivative liabilities – noncurrent | 3,318 | 6,644 | |||||
Employee benefit plan obligations | 59,308 | 39,477 | |||||
Long-term debt, less current maturities | 298,638 | 375,213 | |||||
Deferred income taxes | 137,113 | 120,082 | |||||
Total liabilities | 1,541,590 | 1,549,135 | |||||
Total equity | 828,758 | 724,421 | |||||
Total liabilities and equity | $ | 2,370,348 | $ | 2,273,556 | |||
The Andersons, Inc.
Segment Data (unaudited)
Grain | Ethanol | Plant Nutrient | Rail | Turf & Specialty | Retail | Other | Total | ||||||||||||||||||||||||
Three months ended December 31, 2014 | |||||||||||||||||||||||||||||||
Revenues from external customers | $ | 867,521 | $ | 171,326 | $ | 137,790 | $ | 31,221 | $ | 24,940 | $ | 38,970 | $ | — | $ | 1,271,768 | |||||||||||||||
Gross profit | 53,464 | 9,284 | 18,877 | 13,193 | 7,734 | 11,399 | — | 113,951 | |||||||||||||||||||||||
Equity in earnings of affiliates | 7,102 | 12,790 | — | — | — | — | — | 19,892 | |||||||||||||||||||||||
Other income, net | 4,483 | 22 | 69 | 805 | 92 | 235 | 325 | 6,031 | |||||||||||||||||||||||
Income (loss) before income taxes | 24,024 | 19,353 | 381 | 5,556 | 181 | 1,046 | (10,910 | ) | 39,631 | ||||||||||||||||||||||
Income (loss) attributable to the noncontrolling interests | (2 | ) | 2,077 | — | — | — | — | — | 2,075 | ||||||||||||||||||||||
Operating income (loss) (a) | $ | 24,026 | $ | 17,276 | $ | 381 | $ | 5,556 | $ | 181 | $ | 1,046 | $ | (10,910 | ) | $ | 37,556 | ||||||||||||||
Three months ended December 31, 2013 | |||||||||||||||||||||||||||||||
Revenues from external customers | $ | 1,124,265 | $ | 197,032 | $ | 170,732 | $ | 32,306 | $ | 22,557 | $ | 37,374 | $ | — | $ | 1,584,266 | |||||||||||||||
Gross profit | 44,570 | 13,323 | 21,979 | 12,328 | 6,542 | 10,835 | — | 109,577 | |||||||||||||||||||||||
Equity in earnings of affiliates | 8,182 | 20,532 | — | — | — | — | — | 28,714 | |||||||||||||||||||||||
Other income (expense), net | 682 | (66 | ) | 634 | 987 | 105 | 185 | 726 | 3,253 | ||||||||||||||||||||||
Income (loss) before income taxes | 22,127 | 30,577 | 6,240 | 6,171 | (1,369 | ) | (3,861 | ) | (8,362 | ) | 51,523 | ||||||||||||||||||||
Income (loss) attributable to the noncontrolling interest | (3 | ) | 3,961 | — | — | — | — | — | 3,958 | ||||||||||||||||||||||
Operating income (loss) (a) | $ | 22,130 | $ | 26,616 | $ | 6,240 | $ | 6,171 | $ | (1,369 | ) | $ | (3,861 | ) | $ | (8,362 | ) | $ | 47,565 | ||||||||||||
Twelve months ended December 31, 2014 | |||||||||||||||||||||||||||||||
Revenues from external customers | $ | 2,682,038 | $ | 765,939 | $ | 668,124 | $ | 148,954 | $ | 134,209 | $ | 140,807 | $ | — | $ | 4,540,071 | |||||||||||||||
Gross profit | 131,129 | 48,057 | 87,619 | 59,762 | 29,320 | 41,252 | — | 397,139 | |||||||||||||||||||||||
Equity in earnings of affiliates | 27,643 | 68,880 | — | — | — | — | — | 96,523 | |||||||||||||||||||||||
Other income, net | 21,450 | 223 | 3,262 | 3,094 | 1,110 | 955 | 1,031 | 31,125 | |||||||||||||||||||||||
Income (loss) before income taxes | 58,126 | 105,186 | 23,845 | 31,445 | 669 | (620 | ) | (34,505 | ) | 184,146 | |||||||||||||||||||||
Income (loss) attributable to the noncontrolling interests | (10 | ) | 12,929 | — | — | — | — | — | 12,919 | ||||||||||||||||||||||
Operating income (loss) (a) | $ | 58,136 | $ | 92,257 | $ | 23,845 | $ | 31,445 | $ | 669 | $ | (620 | ) | $ | (34,505 | ) | $ | 171,227 | |||||||||||||
Twelve months ended December 31, 2013 | |||||||||||||||||||||||||||||||
Revenues from external customers | $ | 3,617,943 | $ | 831,965 | $ | 708,654 | $ | 164,794 | $ | 140,512 | $ | 140,706 | $ | — | $ | 5,604,574 | |||||||||||||||
Gross profit | 118,517 | 32,512 | 86,682 | 58,864 | 29,289 | 39,361 | — | 365,225 | |||||||||||||||||||||||
Equity in earnings of affiliates | 33,122 | 35,583 | — | — | — | — | — | 68,705 | |||||||||||||||||||||||
Other income, net | 2,120 | 399 | 1,093 | 7,666 | 690 | 501 | 2,407 | 14,876 | |||||||||||||||||||||||
Income (loss) before income taxes | 46,794 | 56,374 | 27,275 | 42,785 | 4,744 | (7,534 | ) | (20,925 | ) | 149,513 | |||||||||||||||||||||
Income (loss) attributable to the noncontrolling interest | (11 | ) | 5,774 | — | — | — | — | — | 5,763 | ||||||||||||||||||||||
Operating income (loss) (a) | $ | 46,805 | $ | 50,600 | $ | 27,275 | $ | 42,785 | $ | 4,744 | $ | (7,534 | ) | $ | (20,925 | ) | $ | 143,750 | |||||||||||||
(a) Operating income (loss) 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.