The Andersons report profitable Q2 for ethanol group

By Erin Voegele | August 07, 2019

The Andersons Inc. released second quarter financial results Aug. 7, reporting that its ethanol group remained profitable during the three-month period. Ethanol earnings, however, were down significantly due to the poor margin environment.

During an earnings call, Pat Bowe, said that the ethanol group’s results were lower year-over-year, but remained profitable despite challenging margin conditions. “The group focused on reducing costs, improving yields, maximizing coproduct sales and selectively limiting production,” he said.

According to Brian Valentine, chief financial officer of The Andersons, ethanol margins during the quarter continued to be impacted by industry oversupply, weak exports given the lack of a trade agreement with China, and corn supply concerns in the eastern Corn Belt.

Bowe noted the ethanol group continues to make the best of an extremely unfavorable margin environment and indicated the company to operate its plants in a manner to optimize yield and profitability, which will reduce costs and could lower some volumes.

He said the company’s ethanol plant in Denison, Iowa, has achieved a low carbon intensity score and the new Element plant in Kansas will soon begin to produce low-carbon ethanol. Both plants will target the higher-margin California market, he added. In addition, The Anderson’s ethanol group has several capital projects underway that will further improve plant efficiencies and generate new, higher-value coproducts.

The ethanol group reported $2.6 million in adjusted pretax income for the quarter, down from $7.3 million during the same period of last year. For the first half of the year, the group reported $5.2 million in adjusted pretax income, down from $10.4 million for the first half of last year.

Overall, The Andersons reported $29.9 million in net income for the quarter, up from $21.5 million for the second quarter of last year. Adjusted net income was $32.3 million, up from $21.5 million. Diluted earnings per share reached 91 cents, up from 76 cents for the second quarter of 2018. Adjusted diluted earnings per share reached 98 cents, up from 76 cents. EBITDA was $85.4 million, up from $59.7 million. Adjusted EBITDA was $88.6 million for the second quarter, up from $59.7 million for the same quarter of 2018.