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Andersons (ANDE) Q2 Earnings Top, Revenues Miss Estimates

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The Andersons, Inc. (ANDE - Free Report) posted earnings of 76 cents per share in second-quarter 2018, up 41% from the adjusted earnings of 54 cents reported in the year-ago quarter. Earnings beat the Zacks Consensus Estimate of 8 cents handily.

Including one-time items, the company reported a loss of 94 cents in the prior-year quarter. The company did not have any adjustment in this quarter.

Operational Update

Revenues in the reported quarter dipped around 8% year over year to $911 million. The reported figure also missed the Zacks Consensus Estimate of $1,346 million. The downside resulted from the adoption of new revenue-recognition rules that changed the treatment of a significant amount of Grain Group's sales transactions.

The Andersons, Inc. Price, Consensus and EPS Surprise

 

The Andersons, Inc. Price, Consensus and EPS Surprise | The Andersons, Inc. Quote

Cost of sales fell 9% to $821 million from $906 million posted in the prior-year quarter. Gross profit improved 3% year over year to $90.5 million. Gross margin expanded 120 basis points to 10% in the quarter.

Operating, administrative and general expenses were down 14% year over year to $60 million. Andersons reported an operating income of $30.6 million in the second quarter compared to $18.3 million recorded in the year-earlier quarter.

Segment Performance

The Grain Group: Revenues declined 25% year over year to $366 million from $488 million generated in the year-ago quarter. The segment reported an operating income of $9.9 million compared with $6.9 million recorded in the comparable quarter last year.

The Ethanol Group: Revenues jumped 7% year over year to $201 million. The segment reported an operating profit of $6.1 million, a 31% year-over-year increase from $4.7 million recorded in the year-ago quarter.

The Plant Nutrient Group: The segment reported revenues of $303 million, up around 14.5% year over year. It reported an operating profit of $15.1 million compared to a loss of $25.8 million in second-quarter 2017.

The Rail Group: Revenues in this segment went up 8.6% year over year to $41.4 million. Operating income declined significantly to $0.9 million from $5.9 million recorded in the prior-year quarter.

Financial Performance

Andersons reported cash and cash equivalents of $58.6 million at the end of the second quarter, up from $18.9 million reported at the end of the prior-year quarter. The company’s long-term debt was $436 million as of Jun 30, 2018, compared with $354 million as of Jun 30, 2017.

Share Price Performance

In the past year, Andersons has outperformed its industry with respect to price performance. The stock has gained around 22%, while the industry has depreciated around 53%.



Zacks Rank & Key Picks

Andersons currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same sector include Celanese Corporation (CE - Free Report) , Huntsman Corporation (HUN - Free Report) and KMG Chemicals, Inc. . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese has a long-term earnings growth rate of 10%. The stock has gained around 20% in a year’s time.

Huntsman Corporation has a long-term earnings growth rate of 8.5%. The company’s shares have been up 28% during the past year.

KMG Chemicals has a long-term earnings growth rate of 28.5%. Its shares have surged 40% in the past year.

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