MAUMEE, OHIO — The Andersons Inc.’s performance in the grain and ethanol segments again was strong in the second quarter, helping offset softer results in the company’s plant nutrient and rail units.
Net income in the second quarter ended June 30 totaled $21,5129,000, equal to 76c per share on the common stock, which compared with a loss of $26,717,000 in the same period a year ago. Revenue fell 8% to $911,402,000, which compared with $993,662,000 in the second quarter of 2017.
In the first six months of fiscal 2018, net income was $19,829,000, or 70c per share, which compared with a loss of $29,742,000 a year ago. Revenues totaled $1,547,141,000, down from $1,845,678,000 a year ago.
Income in the Grain Group totaled $9,877,000 in the second quarter ended June 30, up 43% from $6,929,000 in the same period a year ago.
“Our Grain Group results continue to improve,” Patrick E. Bowe, president and chief executive officer, said during an Aug. 8 conference call with analysts. “We posted our seventh consecutive year-over-year improvement during the second quarter.
“What changed most year-over-year was our merchandising results, which benefited from our ability to capitalize on increased market volatility. In addition, our Grain affiliates, and especially Lansing Trade Group, performed much better than they did last year.”
Mr. Bowe said The Andersons recorded one unusual expense during the quarter — a $1.6 million impairment charge related to the pending third-quarter sales of the company’s location in Como, Tenn.
The Ethanol Group posted income of $6,125,000 in the second quarter, which was up 31% from $4,660,000 in the same period a year ago.
“The Ethanol business also improved on its second-quarter 2017 results,” Mr. Bowe said. “The group was able to operate its four plants in a highly efficient manner, leading to strong production. DDG values were also stronger. We also continued to book strong increases in our sales of E85, which are up by more than 50% for the first half of the year.”
The Plant Nutrient Group recorded income of $15,124,000 in the second quarter, which compared with a loss of $25,828,000 in the same period a year ago.
“On our last call, we warned that the Plant Nutrient Group will remain challenged for the rest of 2018,” Mr. Bowe said. “And now that the prime fertilizer season is behind us, we still feel that way. Especially, Nutrient sales volumes were similar to those of 2017 and our primary Nutrient volumes were up modestly through the first half. However, both wholesale and specialty Nutrient margins remain compressed.
“On a brighter note, the lawn and contract manufacturing business posted excellent results again this quarter.”
Income in the Rail Group totaled $944,000, down sharply from $5,860,000 in the same period of the prior year.
“The overall railcar market is continuing its gradual recovery,” Mr. Bowe noted. “Lease income was comparable to the first quarter but down year-over-year due to higher maintenance expenses as a high number of our take cars are due for requalification this year, as we have discussed on previous calls. Railcars on lease and our utilization rate rose compared to the first quarter and for the fifth consecutive quarter. Most notably, we decided to scrap an additional 600 cars, taking advantage of the recent run up in scrap steel prices. This decision resulted in charges totaling $5.2 million. This created a productivity culture here at The Andersons since last three years and continue to optimize our operation and drive out inefficiencies.
“As we shared last quarter, we achieved our $20 million run rate productivity goal a year early, and we’re making good progress on our newest run rate additional savings goal of $7.5 million this year, which we expect to reach by the end of 2018.”