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Andersons’ (ANDE) Q4 Earnings & Revenues Miss Estimates

Zacks

The Andersons Inc. ANDE reported adjusted earnings of 36 cents per share in fourth-quarter 2016, up 100% from 18 cents per share reported in the prior-year quarter. Earnings, however, fell short of the Zacks Consensus Estimate of 72 cents by a wide margin of 50%.

Including one-time items, the company had posted a loss of $1.68 in the year-ago quarter. The reported quarter did not include any such adjustments.

Operational Update

Revenues in the reported quarter declined 6% year over year to $1,113 million and fell short of the Zacks Consensus Estimate of $1,346 million.

The Andersons, Inc. Price, Consensus and EPS Surprise

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


Cost of sales fell 7% to $1,009 million from $1,084 million in the prior-year quarter. Gross profit increased 4.6% year over year to $103.7 million. Consequently, gross margin expanded 10 basis points to 9% in the quarter.

Operating, administrative and general expenses went down 5% year over year to $84.6 million. Andersons posted adjusted income of $10 million in the quarter, compared with $5 million in the year-earlier quarter.

Segment Performance

The Grain Group: Revenues went down 4.2% year over year to $745 million from $778 million in the year-ago quarter. The segment reported an adjusted operating profit of $12.9 million as against earnings of $9.8 million in the year-ago quarter. Improved crop conditions in the Eastern Corn Belt and shedding of its underperforming Iowa assets helped drive growth.

The Ethanol Group: Revenues increased 3.4% year over year to $147.9 million. The segment reported an operating profit of $11.7 million, a 52% surge from $7.7 million in the comparable quarter in the prior year. The improvement was driven by higher margins compared to the prior year.

The Plant Nutrient Group: The segment reported revenues of $136.4 million, down 27% year over year. The segment reported an operating loss of $3.8 million compared with adjusted pretax income of $2.1 million in the year-ago quarter, hurt by$3.3 million expenses incurred while closing a cob production and storage facility in Mount Pulaski, IL, during the quarter. The group’s performance in the fourth quarter was also hampered by persistent pressure on volumes and margins; each were down compared to fourth-quarter 2015. Declining fertilizer prices as well as lower net farm income also impacted its performance.

The Rail Group: Revenues climbed 25% year over year to $45.5 million. Operating income jumped 43% to $9.7 million from $6.8 million in the prior-year quarter.

Retail Group: Revenues inched up 0.3% year over year to $38 million. The segment reported an operating loss of $6.2 million, compared with a gain of $1 million in the year-ago quarter.

Financial Performance

Andersons reported cash and cash equivalents of $62.6 million at the end of 2016, down from $63.8 million as of Dec 31, 2015. Long-term debt was $397 million as of Dec 31, 2016, compared with $436.2 million as of Dec 31, 2015.

2016 Performance

Andersons posted adjusted earnings of 41 cents per share for 2016, down 71% year over year. Earnings also missed the Zacks Consensus Estimate of 77 cents. On a reported basis, including special items, Andersons’ earnings were 41 cents per share in the year, as against a loss of 46 cents in 2015.

Revenues for full-year 2016 dipped 6.5% year over year to $3.92 billion. In addition, revenues missed the Zacks Consensus Estimate of $4.16 billion

Share Price Performance

In the last one year, Andersons has outperformed the Zacks classified Agriculture/Products sub-industry with respect to price performance. The stock gained around 44.6%, while the industry rose 14.9% over the same time frame.



Zacks Rank

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

Some better-ranked stocks in the sector include Ternium S.A. TX, Methanex Corporation MEOH and IAMGOLD Corporation IAG. 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.

Ternium has an earnings ESP of 11.38% for the trailing four quarters. Methanex Corporation has an average earnings surprise of 28.76% forthe last four quarters, while IAMGOLD Corporation has an average earnings surprise of 49.29% for the past four quarters.

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