Andersons' (ANDE) Loss Widens in Q3, Revenues Decline Y/Y
The Andersons, Inc. ANDE posted adjusted loss of 12 cents per share in third-quarter 2018 compared to a loss of 9 cents reported in the year-ago quarter. Including one-time items, the company reported a loss of 7 cents in the prior-year quarter, which included a benefit of14 cents per share from its venture capital arm, primarily related to the sale of an investment, and expenses of 9 cents per share associated with the pending Lansing Trade Group acquisition.The company did not have any adjustment in the prior-year quarter.
Revenues in the reported quarter dipped around 18% year over year to $686 million. The year-over-year downside primarily resulted from the company's adoption of new revenue recognition rules at the beginning of 2018 that changed the accounting treatment of a significant amount of the Grain Group's sales transactions.
Cost of sales fell around 18% to $632 million from $767 million posted in the prior-year quarter. Gross profit declined23% year over year to $54 million. Gross margincontracted 40 basis points to 7.9% in the quarter.
The Andersons, Inc. Price, Consensus and EPS Surprise
The Andersons, Inc. Price, Consensus and EPS Surprise | The Andersons, Inc. Quote
Operating, administrative and general expenses were down 3% year over year to $66 million. Andersons reported an operating loss of $12 million in the third quarter, asagainst income of $1.5 million recorded in the year-earlier quarter.
The Grain Group: Revenues plunged 31% year over year to $343 million from $498 million generated in the year-ago quarter. The segment reported an operating loss of $8.6 million against an operating income of $2.6 million recorded in the comparable quarter last year.
The Ethanol Group: Revenues inched up 1.7% year over year to $195 million. The segment reported an operating profit of $9.1 million, a 49% year-over-year jump from $6.1 million recorded in the year-ago quarter.
The Plant Nutrient Group: The segment reported revenues of $104 million, which remained flat year over year. It reported an operating loss of $8 million, which remained flat year over year.
The Rail Group: Revenues in this segment remained flat year over year at $43.1 million. Operating income declined to $5.7 million from $6.1 million recorded in the prior-year quarter.
Andersons reported cash and cash equivalents of $16.8 million at the end of the third quarter, down from $24.5 million reported at the end of the prior-year quarter. The company’s long-term debt was $437 million as of Sep 30, 2018, compared with $371 million as of Sep 30, 2017.
Andersons is expected to benefit from the combination of the Grain Group and Lansing Group, which will provide greater value to customers and shareholders, expand opportunities for employees and increase profitability. Pre-close integration work on the acquisition is well underway. The company expects to close the transaction by the end of January 2019.
Share Price Performance
In the past year, Andersons outperformed its industry with respect to price performance. The stock has gained around 6%, while the industry has depreciated around 49%.
Zacks Rank & Key Picks
Andersons currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same sector include CF Industries Holdings, Inc. CF, Methanex Corporation MEOH and Potash Corporation of Saskatchewan Inc. NTR. While CF Industries and Methanex sport a Zacks Rank #1 (Strong Buy), Potash Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has a long-term earnings growth rate of 6%. The stock has gained around 42% in a year’s time.
Methanex has a long-term earnings growth rate of 15%. The company’s shares have been up 32% during the past year.
Potash Corporation has a long-term earnings growth rate of 14%. Its shares have rallied 20% in the past year.
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