Photo courtesy of The Andersons.
In the first quarter ended March 31 The Andersons sustained a loss of $3.89 million, which compared to a loss of $24.696 million in the same period of last year. The result included pre-tax costs of $7.8 million related to closing the company's retail stores, which is scheduled to be completed by the end of the second quarter.
Revenue for the quarter was $852.016 million, down slightly from $887.879 million in the first quarter of 2016.
|Pat Bowe, chief executive officer.|
“Three of our four businesses posted better year-over-year results,” said Pat Bowe, chief executive officer, during a call with analysts on May 4. “While we are not satisfied with our overall results, we continue to work hard to improve execution, sharpen our cost focus, and position the company for profitable growth. We are closing our Retail business and sold underperforming Plant Nutrient Group assets in Florida. We also acquired a small specialty grain handling and milling business that further expands our food ingredient capabilities.”
In the first quarter of 2017, the Grain Group sustained a loss of $3.089 million, which compared to a loss of $14.696 million in the same period of last year.
“The Grain Group had another significant year-over-year improvement in the first quarter and remains positioned for better 2017,” Bowe said. “As expected, the return in more normal grain production in the Eastern Corn Belt, with the fall harvest of 2016, has been a positive contributor to 2017’s base income. Last quarter, we estimated corn planting acreage of 90 million to 93 million acres and soybean planting acreage of 87 million to 90 million acres. Our current estimates are now at the low end of the corn range and the high end of the soybean range in line with current USDA estimates.”
The company expects the current high grain stocks to cause more corn to move by harvest time, which could create opportunity for the Grain Group.
The Ethanol Group’s pre-tax income for the first quarter was $1.716 million, which compared to a loss of $2.680 million in the first quarter of 2016.
|John Granato, chief financial officer.|
“The group continues to be negatively impacted by lower DDG margins due to both low demand from China and Eastern Corn Belt vomitoxin issue,” said John Granato, chief financial officer. “The group also was negatively impacted by two shutdowns, which occurred in the first quarter that are usually completed in the second quarter.”
The new assets at the expanded ethanol production facility in Albion, Michigan, U.S., became operational and the project was substantially completed in March, on time and on budget. The expansion has more than doubled the capacity of the plant that previously produced approximately 65 million gallons per year.
The company also said its four ethanol plants combined for a first-quarter production record of more than 98 million gallons, about 4% over the comparable period, in part because the new Albion capacity was on line for part of the quarter.
The Rail Group’s pre-tax income for the quarter was $6.1 million, down from $9.4 million in the first quarter of 2016.
“Average lease rates were flat year-over-year,” Granato said. “Lower utilization, along with higher maintenance, storage and trade expenses, contributed to a base leasing income results of $700,000, down from $4.4 million a year earlier. The group recorded income from car sales of $3.6 million, up about 50% from the $2.4 million of pretax income earned in the first quarter of 2016. Most of the increase was generated from nonrecourse financing transaction. The group also benefited from higher scrap prices. The group’s repair and fabrication businesses continued their strong performance, setting all-time quarterly records for both revenue and pretax income during the quarter. Those results helped to offset the loss of income from an investment in a short line railroad that was redeemed in the first quarter of 2016.”
The company intends to keep pushing for increased productivity and efficiency to drive its performance.
“As we look forward to the rest of 2017, we still expect our overall company results to improve significantly over those of 2016,” Bowe said. “More specifically, we’ll continue our focus on operating efficiency by lowering our costs to serve and thus improve the performance of our businesses. We will also continue to look to improve our portfolio via asset optimization and invest in our core and targeted growth areas.”