Ethanol, rail, plant nutrients lead The Andersons earnings report

By Susanne Retka Schill | August 07, 2013

The ethanol group at The Andersons reported recording operating income of $10.6 million in the second quarter on revenues of $222 million.  This compares to an operating loss of $2.1 million during the same period last year on revenues of $168 million.  This income increase was due primarily to significant ethanol margin improvement, which includes the positive impact of coproducts such as corn oil, distillers dried grains, E85, and CO2.  Also, the group had a full quarter of income from its Denison, Iowa, production facility compared to the prior year, as the acquisition occurred in May of 2012.  The group's operating income through June was $13.1 million on revenues of $422 million.  Last year, its first half operating loss was $2 million on revenues of $318 million.  The revenue increase was due to added volume from the Denison plant and an increase in the average price per gallon of ethanol. 

Overall, the diversified agribusiness reported second quarter net income attributable to the company of $29.5 million, or $1.57 per diluted share, on revenues of $1.6 billion.  In the same three month period of 2012, the company reported similar results. During the first six months of 2013, the company earned $42.1 million, or $2.24 per diluted share.  The revenue for the first six months of 2013 and 2012 were $2.8 billion and $2.5 billion, respectively.

The rail group also achieved record operating income of $9.7 million in the second quarter on revenues of $39 million.  In the same three month period of 2012, the group earned $7.2 million and revenues were $32 million.  The group's revenue and operating income benefited from higher lease rates and increased income from railcar financings. The rail fleet has increased to 23,245 cars.

The plant nutrient group had operating income of $23.2 million during the second quarter on revenues of $330 million. The grain group reported operating income of $2.1 million in the second quarter of 2013, compared to $15.3 million in the same three month period last year, as it continued to be impacted by the 2012 drought, which led to significantly reduced space income. The two smallest groups reported much smaller operating income for the second quarter, with the turf and specialty group operating income of $2.2 million on $43 million in revenues and the retail group with an operating income of $1.5 million on $41 million in revenues.

The company and Lansing Trade Group finalized the acquisition of Thompsons Ltd., a grain and food-grade bean handler and agronomy input provider, headquartered in Blenheim, Ontario, and operating 12 locations across Ontario and Minnesota.  Just before the quarterly report, the company announced it will acquire Mile Rail LLC, a railcar repair and cleaning provider headquartered in Kansas City, Mo., with three satellite locations in Nebraska, Kansas and Indiana, and mobile units in the central Midwest.

"We had record quarterly results in both our rail and ethanol groups, and strong results in our plant nutrient group.  The rail group continues to manage its railcar portfolio in a skillful manner.  It is satisfying to see significantly improved margins in the ethanol business; however, we are very aware the ethanol market will continue to be volatile," CEO Mike Anderson stated.  "The 2012 drought continues to have a strong impact on our grain group, as was expected, and the largest impact may be seen in the third quarter.  A projected record corn crop, however, should positively impact the group the last three or four months of 2013," he added.