The Andersons reports profitable Q4 for ethanol group

By Erin Voegele | February 14, 2019

The Andersons Inc. has released fourth quarter 2018 financial results, reporting that its ethanol group was profitable during the quarter despite the low margin environment. Results for the group, however, were down year-over-year.

The Andersons ethanol group earned $5.1 million of pretax income for the quarter, down from $6.4 million during the same period of 2017.

During an investor call, Pat Bowe, president and CEO of The Andersons, said the ethanol group performed well despite weak margins and the current market environment. Despite industry margin headwinds, he said the group was profitable during the last three months of 2018. He credited timely hedging and continuing production efficiencies with the group’s profitable performance.

Bowe said the ethanol group’s near-term outlook will continue to be defined by the margin pressure it experienced throughout 2018. There were few opportunities to hedge forward margins into early 2019, he said, noting that the company anticipates lower year-over-year results for the first half of the year. He stressed, however, that the ethanol group continues to focus on maximizing the margin it can earn on every bushel of corn it grinds.

Bowe, also said the company is making good progress on the construction of its new biorefinery in Colwich, Kansas. That 70 MMGy facility, known as Element LLC, is being developed in partnership with ICM Inc. and will feature ICM’s cutting edge technologies.

During the investor call, Bowe said the new facility will allow the company to introduce some new products later this year. He also said the plant is expected to begin producing conventional lower-carbon ethanol in mid-2019.

Overall, The Andersons reported fourth quarter 2018 net income of $23.8 million, or 84 cents per diluted share, on revenues of $813 million. Adjusted net income attributable to the company was $26 million, or 92 cents per diluted share, compared to 2017 fourth quarter net income of $69.7 million, or $2.47 per diluted share, and adjusted net income of $18.9 million, or 67 cents per diluted share, on revenues of $1 billion. The company’s EBITDA was $60.2 million for the fourth quarter of 2018 and $25 million for the fourth quarter of 2017. Adjusted EBITDA was $63.3 million for the quarter compared to $53 million for the fourth quarter of 2017.

For the full year, the company reported net income attributable to The Andersons of $41.5 million, or $1.46 per diluted share, and adjusted net income attributable to The Andersons of $46.4 million, or $1.63 per diluted share. The adjusted results exclude $6.5 million in pretax charges related to the Lansing acquisition. These amounts compared to net income attributable to The Andersons of $42.5 million, or $1.50 per diluted share, and adjusted net income attributable to The Andersons of $33.7 million, or $1.19 per diluted share, in 2017. The company's EBITDA for 2018 and 2017 was $171.6 million and $87.4 million, respectively. Adjusted EBITDA was $178.1 million for 2018 compared to $157.4 million in 2017.