FULL YEAR: THE ANDERSONS RETURNS TO REPORTING A PROFIT
Feb. 16, 2017
Source: The Andersons news release
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The Andersons, Inc. (NASDAQ: ANDE) announces financial results for the fourth quarter and full year ended December 31, 2016.
*Company reports net income of $11.6 million or $0.41 per diluted share for 2016.
*Rail Group leads the way with $32.4 million of pretax income for the year
*Ethanol Group delivers $24.7 million of pretax income
*Grain Group continued its rebound with pretax income of $12.9 million in the quarter after a good harvest in the Eastern Corn Belt, but loses $15.7 million for the year
*Plant Nutrient Group ends the year higher, with pretax income of $14.2 million including charges related to shutting down a cob facility
*Retail Group records a pretax $6.5 million asset impairment charge after Company announces its intent to exit the business, driving a full-year pretax loss of $8.8 million
The Company reported fourth quarter 2016 net income attributable to The Andersons of $10.1 million, or $0.36 per diluted share. This represents a $5.1 million improvement over the adjusted net income of $5.0 million, or $0.18 per diluted share, in the same period of the prior year.
For the full year, the Company reported net income attributable to The Andersons of $11.6 million or $0.41 per diluted share compared to a net loss attributable to The Andersons of $13.1 million or $0.46 per diluted share in 2015. The 2016 results included pretax impairment charges of $9.1 million, including $6.5 million in the Retail Group and $2.3 million in the Plant Nutrient Group, which equated to $0.20 per diluted share. Adjusted Net Income attributable to the Company for 2015 was $41.2 million, or $1.45 per diluted share. (See table provided on page 9 of this release for a reconciliation from net income to adjusted net income.)
"While we are disappointed with 2016's overall results, we took several steps throughout the year, and especially during the fourth quarter, to improve future earnings opportunities. We addressed underperforming assets in our portfolio by selling underperforming Grain Group locations, closing a cob processing facility to optimize our supply chain and manufacturing footprint, and recently announcing the closure of our Retail Group," said CEO Pat Bowe.
"Moreover, we have already exceeded our initial cost reduction target and identified more than $10 million in run-rate cost savings and other performance improvement opportunities earlier than previously announced. We have implemented many of these reductions and continue to aggressively pursue other opportunities to further streamline our business operations."
Bowe went on to say, "We are pleased with the results turned in by our Rail and Ethanol groups. Our Grain Group is showing signs of rebounding after an improved harvest in the Eastern Corn Belt. With fertilizer prices stabilizing, we have begun to see signs of recovery as farmers get positioned for spring application and planting. We remain confident in our ability to grow our business and deliver improved results in 2017."
Fourth Quarter Highlights
The Rail Group delivered another solid performance even as utilization rates dropped throughout the period.
Ethanol margins were strong during the quarter, though they have fallen off sharply in recent weeks. The Group had a strong finish to a good year. DDG prices were negatively impacted by Chinese tariffs and quality discounts due to vomitoxin in the Eastern Corn Belt.
The Grain Group increased pretax income by $3.1 million or 32 percent over adjusted fourth quarter 2015 results as crop production improved in the Eastern Corn Belt. Overall group performance improved, even as Grain Group affiliates underperformed.
Growers remained hesitant to buy ahead of the 2017 spring planting season as the market searched for a stable floor on nutrient prices, causing a reduction in sales volumes in the fourth quarter.
The Retail Group recorded a $6.5 million pretax asset impairment charge when the Company announced in January that it will be exiting the business in mid-2017.
Fourth Quarter and Full Year Segment Overview
Rail Group Delivered a Solid Year in Spite of Weakening Market
North American rail traffic volume declined year over year for both the quarter and for the full year. Class I railroad velocities remain high, continuing to pressure railcar utilization.