Net income for the third quarter ended Sept. 30 totaled $2.5 million, equal to 9¢ per share on the common stock, up from $1.722 million, or 6¢ per share, in the same period a year ago.
|Pat Bowe, president and chief executive officer|
Revenue for the third quarter fell to $836 million from $860 million in the same period a year ago.
“The Grain Group again recorded better year-over-year results driven by good margins on corn and soybean sales and strong space margins for wheat,” Bowe said.
The Grain Group generated a pretax income of $2.6 million in the quarter, up $0.7 million over its third quarter 2016 results. Revenue for the quarter fell to $497.613 million from $550.189 million.
“Our Grain business results and underlying grain fundamentals are continuing to improve,” Bowe said. “We remain comfortable with our grain ownership positions and continue to enjoy wide carrying charges in wheat. So far, it looks like a good 2017 corn and soybean harvest and it will only exacerbate world supply and carry out into 2018, which have kept both prices and market volatility low. Our grain affiliates results were little worse year-over-year due to challenging conditions in Ontario, Canada, for Thompsons.”
Photo courtesy of The Andersons.
“Ethanol margins were lower year-over-year for the quarter in spite of strong U.S. exports,” Bowe said. “Current margins are disappointing. Forward curve margins into the first quarter of 2018 are below last year’s levels as well.”
Bowe noted the business was profitable and was driven by higher industry production stocks.
“Weak international DDG demand in the last of our significant vomitoxin issues, both continue to deflate our DDG values,” Bowe said. “We continue to aggressively look for opportunities to produce higher value co-products, but we took a write-off when we canceled such an opportunity during the quarter.”
The Andersons Plant Nutrient Group sustained a loss of $7.9 million in the third quarter, which compared with a loss of $7.2 million in the third quarter of 2016. Revenue for the third quarter was $103.620 million, up from $101.770 million in the same period a year ago.
“The Plant Nutrient business was slow in the third quarter, which is typical and it’s a typical quite season for the group,” Bowe said. “Wholesale nutrients volume was up 7%, but margin per ton was down 28%. Low grain prices also continue to suppress farmer demand for value-added nutrients. Notwithstanding these difficulties, third quarter performance would have improved year-over-year, if not for a legal settlement charge.”
“The railcar market seems to be slowly recovering, but continues to be over-supplied, pressuring lease rates,” Bowe said. “As we expected a quarter ago, our utilization rates rose again sequentially and it approached the third quarter 2016 rates. We continue to buy cars in the secondary market. We also scraped some mostly older underutilized cars and sold some others as solid profit. After several consecutive quarters of growth, repair business experienced to sales setback and incurred some expenses related to a tragic fatality in one of our rail repair facilities. We’ve also opened another rail repair facility during the quarter and have several others we are potentially looking to add.”
The company recorded pretax income of $4.4 million during the quarter from its closed retail business. This result was driven by the sale of two of four retail properties for a combined gain of $5.7 million. Unallocated net company-level expenses for the third quarter of 2017 were $6.4 million, slightly lower than the $6.5 million incurred in the third quarter of 2016.