MAUMEE, OHIO, U.S. — The Andersons, Inc. announced on Feb. 10 record net income for 2014 of $109.7 million, or $3.84 per diluted share, on revenues of $4.5 billion.
Last year, earnings were $89.9 million or $3.18 per diluted share on revenues of $5.6 billion. Full-year adjusted earnings were $99.1 million or $3.46 per diluted share when the Lansing Trade Group gain was excluded.
The Ethanol Group delivered full-year operating income of $92.3 million, far exceeding its prior best year of $50.6 million in 2013.
"We are pleased with our results in 2014. The company's earnings this year have clearly been led by the exceptionally strong performance of our ethanol business in a very supportive market," said Chief Executive Officer Mike Anderson. "After excluding the one-time pre-tax gain of $17.1 million from the partial redemption of our investment in Lansing Trade Group, our full year adjusted results of $3.46 per share were the highest in the company's history. The company will begin to report adjusted earnings in the future, as we do for the first time below.
"During the quarter we continued to grow. This is highlighted by the purchase of Auburn Bean & Grain (AB&G), which added six grain and four agronomy locations throughout central Michigan and serves as a nice geographic fit between our other Michigan assets and our Thompsons joint venture in Ontario. The integration of AB&G is proceeding well, and its locations were additive to income in the fourth quarter. AB&G added grain storage capacity of about 18.1 million bushels, and 16,000 tons of dry and 3.7 million gallons of liquid nutrient capacity."
The company earned $25.9 million in the fourth quarter of 2014, or 89¢ per diluted share, on revenues of $1.3 billion. In the same three month period of 2013, the company reported net income of $30.7 million, or $1.08 per diluted share, on revenues of $1.6 billion.
Revenues were down this year within the company's agricultural businesses due to lower commodity prices. The majority of the decrease was within the Grain Group where the average price per bushel sold decreased by 28%, which more than offset the slight increase in bushels sold.
The harvest was protracted in a number of states in which the company does business, primarily due to weather conditions.
The ethanol plants benefitted from operational improvements made the past three years, with records being achieved for ethanol production, ethanol yields and corn oil yields. The Ethanol Group realized solid margins in 2014, however, fourth quarter margins were lower than the same period of the prior year.
The Andersons received $89.5 million in net cash distributions from its non-consolidated ethanol investments in 2014.
The distillers dried grain market, which was negatively impacted by a decline in the Chinese import market in the third quarter, rebounded late in the fourth quarter, and it is again selling at levels significantly above 100% of corn value.
Fourth quarter volume for the Plant Nutrient Group was down approximately 19% due to a late harvest and poor weather conditions.
The Rail Group's income was down in 2014 due primarily to gains on railcar sales declining by $3.6 million, one-time gains in 2013 of $4.3 million from legal settlements, and an increase in freight and maintenance expense to move idle railcars into service, the benefits of which will be seen in future periods.
There are solid fundamentals supporting the company's core businesses going into 2015, although results will likely be below 2014 records, in part because the $17.1 million dollar pre-tax gain on the partial sale of Lansing Trade Group will not be repeated.
Corn acres to be planted in 2015 are estimated to be 88 to 89 million acres, which is down 2% to 3% from 2014. Bean acres to be planted are estimated to be roughly 85 million acres, which is very similar to or slightly higher than 2014. Assuming trend yields, this should create a good base for the company's grain business in 2015. Further, continued strong performance from the Grain Group's equity investments is anticipated.
Early 2015 ethanol margins are well below 2014 margins, and are expected to average lower for the full year. Factors impacting current margins include lower crude price, greater ethanol production and marginally rising ethanol stocks. On a positive note, higher gasoline demand, improved demand and prices for distillers dried grains in relation to corn price, an ample corn supply, and the potential for improved export demand as the year progresses could contribute to improved ethanol margins later in the year.
The anticipated acres to be planted creates a good environment for the Plant Nutrient Group to participate in as well. Additionally, if there is normal spring weather some of the volume lost in the fourth quarter of 2014 is expected to be regained in the first half of 2015.
The Rail Group is expected to have improved financial results as it will benefit from increased lease and utilization rates.