The Andersons Inc.
) reported a 49% increase in its second-quarter 2014 earnings to
$1.56 per share, beating the Zacks Consensus Estimate of $1.15 by a
wide margin of 36%. Record operating performance in the Ethanol
Group and improved performance in the Grain Group and Plant
Nutrient Groups led to the growth in earnings, despite a decline in
The Andersons Inc - Earnings Surprise |
Revenues in the reported quarter plunged 16% year over year to
$1.31 billion. Results were way short of the Zacks Consensus
Estimate of $1.38 billion.
Cost of sales fell 19% to $1.19 billion from $1.46 billion in
the year-ago quarter. Gross profit increased 18% year over year to
$121 million. Consequently, gross margin expanded 270 basis points
(bps) to 9.3% in the quarter.
Operating, administrative and general expenses went up 24% year
over year to $76 million. Operating profit went up 8% to $45
million. Thus, operating margin expanded 70 bps to 3.4% in the
The Grain Group: Revenues decreased 26% year over year to $656
million due to lower grain prices, which decreased almost 30%.
Operating income however increased almost five-fold to $10.3
million from $2 million in the year-ago quarter benefitting from
improved space income and the addition of income from the Thompsons
Limited joint venture.
The Ethanol Group: Revenues increased 2% year over year to $226
million. The segment reported record operating income of $33.9
million, a substantial improvement from $10.6 million earned in the
year-ago quarter. The segment realized strong margin in all of its
plants helped by increase in export demand, lower corn prices and
excellent operating metrics. The segment also witnessed record E-85
sales and an increase in distillers dried grains and corn oil
The Plant Nutrient Group: The segment reported revenues of $312
million, down 6%. The segment reported an operating profit of $25
million, up 8% from $23 million in the year-ago quarter.
The Rail Group: Revenues declined 13% year over year to $33
million. Operating income decreased 31% to $6.7 million from $9.8
million in the year-ago quarter.
The Turf & Specialty Group: The segment posted revenues of
$42.9 million, a 1% year-over-year decline. It reported an
operating profit of $2 million, a 9% drop from the year-ago quarter
profit of $2.2 million.
The Retail Group: Revenues in the segment remained flat at $41
million compared with the year-ago quarter. Operating income in the
quarter was $1.6 million, up 6% from $1.5 million in the prior-year
Andersons ended the second quarter with cash and cash
equivalents of $47 million, down substantially from $309 million as
of 2013 end. The long-term debt of the company decreased to $300
million as of Jun 30, 2014 from $375 million as of Dec 31, 2013.
Debt-to-capitalization ratio was at 35% as of Jun 30, 2014 compared
with 37% as of Dec 31, 2013.
Andersons will continue to benefit from acquisitions in the past
year. The acquisition of Blenheim, Ontario-based Thompsons Ltd., a
grain and food-grade bean handler and Mile Rail, LLC, a provider of
agronomy input as well as railcar repair and cleaning equipment,
will be accretive to earnings for full-year 2014.
The Ethanol group has performed well in 2013 and in the first
half of 2014. The momentum is expected to continue in the balance
of 2014. Even though the Plant Nutrient Group was impacted by
adverse weather in the first quarter, volume was up approximately
6% during the first half of the year, regaining all of the first
quarter volume reduction. It is expected to benefit from an
anticipated significant corn crop planting in the second quarter.
As of second-quarter end, the Rail Group's utilization rate was
89.1%, up from 86.1% in the prior year and is expected to increase
in the back half of the year.
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.
Among Andersons' peers, Bunge Limited (
) reported second-quarter adjusted earnings of $1.76 per share, up
138% from 74 cents in the year-ago quarter. Results outperformed
the Zacks Consensus Estimate of $1.41.
Andersons currently carries a short-term Zacks Rank #1 (Strong
Buy). Other stocks worth considering in the sector include Gruma
S.A.B. de CV (
) and Limoneira Company (
). While Gruma S.A.B. de CV sports the same rank as Andersons,
Limoneira carries a Zacks Rank #2 (Buy).
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