The Andersons reports increased E85 sales

By Erin Voegele | February 16, 2018

The Andersons Inc. has released fourth quarter financial results, reporting net income of $68.4 million, or $2.42 per diluted share, for the three-month period, up from $10.1 million, or 36 cents per share, during the fourth quarter of 2016.

For the full year, the company reports net income of $41.2 million, or $1.46 per diluted share, and adjusted net income of $32.3 million, or $1.15 per diluted share, compared to $11.6 million, or 41 cents per share, in 2016.

The Ethanol Group generated pretax income of $6.4 million during the fourth quarter, down approximately 45 percent when compared to the $11.7 million pretax income reported for the same period of 2016.

"As we anticipated three months ago, ethanol margins in the quarter were lower again year over year in spite of continued strong U.S. exports,” said Pat Bowe, president and CEO of The Andersons. “Margins continue to be lower than last year at this time."

The Andersons cited continued robust industry production and high ethanol stocks as the main contributors to the weaker margin environment, even as the export market continued to strengthen. The average sales price of ethanol was off about 4 percent, the company said, with natural gas costs up 2.5 percent year-over-year and corn costs flat.

The Ethanol Group’s E85 sales increased 39 percent year-over-year, accounting for 11 percent of the group’s production during the fourth quarter, up from 9 percent during the same period of 2016. The group expects to continue to aggressively grow E85 sales.

The Andersons also reported that values for distillers dried grains (DDGs) improved markedly during the fourth quarter, as the Ethanol Group worked through the last of the 2016 corn crop’s vomitoxin issues. Better international demand for DDGs also improved pricing and margins. The Andersons cited these two conditions as driving DDGs values more than 10 percent higher than the third quarter, put not quite up to the values achieved during the fourth quarter of 2016.

The company reported that is four ethanol plants ran well, setting new records for the fourth quarter and the month of December.

For the full year, the Ethanol Group earned pretax income of $18.9 million, down from $24.7 million in 2016 on lower margins. Whiles the sales price of ethanol was relatively flat and the cost of corn was down 3 percent, the company said DDG values were down by 27 percent and the cost for natural gas was up 15 percent. E85 gallons sold were up 26 percent for the full year.

During an investor call, Bowe said The Andersons’ Ethanol Group is continuing to work to improve production efficiency. He said all four of the company’s ethanol plants are running well. “In the fourth quarter, and through January, the industry continued to out produce demand,” Bowe said. “Despite high exports shipments, historically high production levels and typically lower winter driving miles have stressed margins in the first quarter. Specifically, we expect our first quarter results to be lower than last year’s results and near break-even. Our longer-term outlook for 2018 is positive.”