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Andersons (ANDE) Q3 Earnings & Revenues Miss Estimates
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The Andersons Inc. (ANDE - Free Report) reported third-quarter 2016 earnings of 6 cents per share, marking a reversal from the prior-year quarter’s loss of 4 cents per share. Earnings, however, fell short of the Zacks Consensus Estimate of 22 cents by a wide margin of 73%.
While conditions are improving for Grain Group and margins are strong for the Ethanol Group, challenges remain with the Plant Nutrient Group facing weak margins and the Rail Group continuing to experience softening in utilization.
Revenues in the reported quarter declined 5.4% year over year to $859.6 million and fell short of the Zacks Consensus Estimate of $1052 million.
Cost of sales fell 5% to $783 million from $824 million in the year-ago quarter. Gross profit declined 10% year over year to $77 million. Consequently, gross margin contracted 40 basis points to 9% in the quarter.
Operating, administrative and general expenses went down 11% year over year to $78.8 million. Andersons posted a loss of $1.75 million in the quarter, as against loss of $3.5 million in the year-ago quarter.
Segment Performance
The Grain Group: Revenues inched up 1% year over year to $550.2 million from $545 million in the year-ago quarter. The segment reported an operating profit of $1.9 million as against earnings of $0.1 million in the year-ago quarter. In the quarter, the Grain Group benefited from the sale of its underperforming Iowa assets earlier this year. Grain production in the Eastern Corn Belt has rebounded from last year. Bean yields were strong and corn did well in most markets.
The Ethanol Group: Revenues increased 16% year over year to $139 million gaining from record production. The segment reported an operating profit of $9.5 million, a 62% surge from $5.9 million in the year-ago quarter. Ethanol margins improved as corn prices remained modest and gasoline prices began to return to prior-year levels after remaining at five year lows for most of the year.
The Plant Nutrient Group: The segment reported revenues of $102 million, down 32% year over year. Oversupply and falling prices continue to challenge Plant Nutrient volumes. The segment reported an operating loss of $7.2 million compared with a loss of $11.1 million in the prior-year quarter. Benefits from lower expenses resulting from integration of the Kay-Flo business and savings generated as part of the company's productivity initiative were largely offset by a continuing weak margin environment for nutrients due to oversupply and falling prices in the market.
The Rail Group: Revenues dropped 15% year over year to $38.2 million due to weak market conditions and timing of car sales income. Operating income plunged 43% to $6.7 million from $11.9 million in the year-ago quarter due to lower utilization rates.
Retail Group: Revenues decreased 6% year over year to $30 million due to lower same-store sales. The segment reported an operating loss of $1.6 million, compared with a loss of $0.8 million in the year-ago quarter.
Financial Performance
Andersons ended the quarter with cash and cash equivalents of $78.2 million compared with $63.8 million at the end of 2015. Long-term debt was $396 million as of Sep 30, 2016, compared with $436.2 million as of Dec 31, 2015.
Maumee, OH-based Andersons is a diversified company, operating in six different business segments ranging from buying, selling and storing grain to leasing railcars and running retail stores catering to the latest home hardware needs.
Fibria Celulose has an earnings ESP of 24.58% in the last four trailing quarters. Koppers Holdings has an average earnings surprise of 72.99% in the last four quarters while Hecla Mining has an average earnings surprise of 131.25% in the last four quarters.
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Andersons (ANDE) Q3 Earnings & Revenues Miss Estimates
The Andersons Inc. (ANDE - Free Report) reported third-quarter 2016 earnings of 6 cents per share, marking a reversal from the prior-year quarter’s loss of 4 cents per share. Earnings, however, fell short of the Zacks Consensus Estimate of 22 cents by a wide margin of 73%.
While conditions are improving for Grain Group and margins are strong for the Ethanol Group, challenges remain with the Plant Nutrient Group facing weak margins and the Rail Group continuing to experience softening in utilization.
Operational Update
Revenues in the reported quarter declined 5.4% year over year to $859.6 million and fell short of the Zacks Consensus Estimate of $1052 million.
Cost of sales fell 5% to $783 million from $824 million in the year-ago quarter. Gross profit declined 10% year over year to $77 million. Consequently, gross margin contracted 40 basis points to 9% in the quarter.
Operating, administrative and general expenses went down 11% year over year to $78.8 million. Andersons posted a loss of $1.75 million in the quarter, as against loss of $3.5 million in the year-ago quarter.
Segment Performance
The Grain Group: Revenues inched up 1% year over year to $550.2 million from $545 million in the year-ago quarter. The segment reported an operating profit of $1.9 million as against earnings of $0.1 million in the year-ago quarter. In the quarter, the Grain Group benefited from the sale of its underperforming Iowa assets earlier this year. Grain production in the Eastern Corn Belt has rebounded from last year. Bean yields were strong and corn did well in most markets.
The Ethanol Group: Revenues increased 16% year over year to $139 million gaining from record production. The segment reported an operating profit of $9.5 million, a 62% surge from $5.9 million in the year-ago quarter. Ethanol margins improved as corn prices remained modest and gasoline prices began to return to prior-year levels after remaining at five year lows for most of the year.
The Plant Nutrient Group: The segment reported revenues of $102 million, down 32% year over year. Oversupply and falling prices continue to challenge Plant Nutrient volumes. The segment reported an operating loss of $7.2 million compared with a loss of $11.1 million in the prior-year quarter. Benefits from lower expenses resulting from integration of the Kay-Flo business and savings generated as part of the company's productivity initiative were largely offset by a continuing weak margin environment for nutrients due to oversupply and falling prices in the market.
ANDERSONS INC Price, Consensus and EPS Surprise
ANDERSONS INC Price, Consensus and EPS Surprise | ANDERSONS INC Quote
The Rail Group: Revenues dropped 15% year over year to $38.2 million due to weak market conditions and timing of car sales income. Operating income plunged 43% to $6.7 million from $11.9 million in the year-ago quarter due to lower utilization rates.
Retail Group: Revenues decreased 6% year over year to $30 million due to lower same-store sales. The segment reported an operating loss of $1.6 million, compared with a loss of $0.8 million in the year-ago quarter.
Financial Performance
Andersons ended the quarter with cash and cash equivalents of $78.2 million compared with $63.8 million at the end of 2015. Long-term debt was $396 million as of Sep 30, 2016, compared with $436.2 million as of Dec 31, 2015.
Maumee, OH-based Andersons is a diversified company, operating in six different business segments ranging from buying, selling and storing grain to leasing railcars and running retail stores catering to the latest home hardware needs.
Zacks Rank
Andersons currently carries a Zacks Rank #2 (Buy). Some similarly-ranked stocks in the sector include Fibria Celulose S.A. , Koppers Holdings (KOP - Free Report) and Hecla Mining Co. (HL - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fibria Celulose has an earnings ESP of 24.58% in the last four trailing quarters. Koppers Holdings has an average earnings surprise of 72.99% in the last four quarters while Hecla Mining has an average earnings surprise of 131.25% in the last four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>