The Andersons report lower Q1 earnings at 14 cents per share

By Susanne Retka Schill | May 06, 2015

Net income was down substantially, but still in the black for Ohio-based The Andersons Inc. Its ethanol group achieved record first quarter ethanol production volumes and saw E85 sales progress to a first quarter record as well. The ethanol group reported pretax income of $5.3 million on $138 million in revenues for the first quarter, the lowest EBIT of all five segments in the diversified agribusiness, compared to $19.8 million EBIT on $189 million in revenues in the same quarter a year ago.

"As expected we experienced a soft start to 2015, yet conditions in the markets we serve give us optimism for the full year. During the first quarter we delivered year-over-year improvements in our core grain and rail leasing businesses. Additionally, our ethanol group remained profitable despite reduced industry margins during the seasonally weak first quarter," said CEO Mike Anderson. "Also, we are successfully integrating our 2014 acquisitions which contributed more than $1 million in pretax income for the quarter."

Overall net income for Q1 2015 was $4.1 million, or 14 cents per diluted share.  Last year net income was $22.7 million, or 80 cents per diluted share. When excluding the partial redemption of the investment in Lansing Trade Group last year, adjusted net income was $12.1 million, or 42 cents per diluted share. First quarter 2015 revenues were $950 million compared to $1 billion in revenues the same time last year for the five segments, including grain, ethanol, plant nutrients, rail and retail.

In the investor presentation, Hal Reed, chief operating officer, said the company expects ethanol margins to recover, based on lower corn prices and increased driving demand. The company has 45 percent of May and June hedged, he added, and less than 10 percent of Q3 production also hedged. The company’s four ethanol plants achieved record ethanol production volumes in Q1 2015 of 93.2 million gallons, compared to 90.8 million gallons in Q1 2014 and 86.5 in Q1 2013.

In the discussion in the question period following the executive presentations few questions were directed at the ethanol segment, though many relevant questions were asked. While many have speculated low corn prices would result in farmers using less fertilizer this year, Anderson said, “we have not seen a notable decline in nutrient amounts.” Corn planting is progressing at a record pace across the Corn Belt, and while dry conditions are raising concerns further west, the east is not dry, Anderson said.