The company sustained a loss of $1.7 million in the first quarter ended March 31, which compared with a loss of $3.1 million in the same period a year ago. Revenue fell 25% to $636 million, which compared with $852 million in the first quarter of 2017.
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| Pat Bowe, chief executive officer |
“Our Grain and Ethanol businesses each posted better year-over-year results, and we achieved our $20 million run-rate cost and productivity improvement goal one year early,” said Pat Bowe, chief executive officer, during a May 8 conference call with analysts. “We also entered into an agreement to help build the world’s most technologically-advanced dry mill bio-refinery. However, both Plant Nutrient and Rail posted lower results year-over-year.”
“Our Grain Group improved year-over-year results in its base business in the quarter,” Bowe said. “Grain’s affiliate, Lansing Trade Group, also significantly improved its performance year over year.”
The company said income from grain ownership positions was up slightly, and bushels contracted for sale increased by more than 20%.
“With a strong start in our origination activities, risk management enrollments and food ingredients business and with some price volatility back in the market, we are optimistic about our prospects for an improved year for grain in 2018,” Bowe said.
“The Ethanol Group’s 2018 is off to a solid start,” Bowe said. “We entered the higher-demand spring and summer months with good near-term margins and strong DDG values. As we entered the quarter, the group had hedged about 40% of its second quarter production at reasonably good margins. While the pace of U.S. exports has been strong so far, the outlook for ethanol exports has become somewhat more muted given the political and economic uncertainty associated with the U.S.-China trade relations, which has hampered what might have been a more significant seasonal improvement in margins.”
The four ethanol plants combined for first quarter production of more than 117 million gallons. The group successfully executed maintenance shutdowns at two of the four plants during the quarter, compared to one of four in the first quarter of 2017, the company said.
The Andersons also began construction on a bio-refinery in Kansas, U.S., that the group is building in partnership with ICM, Inc. The company expects the facility to be fully operational by the end of 2019.
The Plant Nutrient Group recorded pretax income of $1.1 million in the first quarter compared with pretax income of $6.7 million in the prior year period. The company said the group’s first quarter 2017 pretax gain of $4.7 million on the sale of its Florida farm centers should be considered when evaluating both sets of results.
“Our Plant Nutrient Group is off to a slow start and will remain challenged through the remainder of 2018,” Bowe said. “We're in the beginning of a turnaround under new leadership with an improved focus on manufacturing excellence and sales execution. One bright note for Plant Nutrient is our lawn and contract manufacturing business, which had a strong showing in the first quarter but will continue through the peak season through the second quarter.”
“Rail’s leasing results improved, but its service and other income fell, and income from car sales was lower, as expected, due to the previously disclosed revenue recognition rule changes,” Bowe said. “The Company also incurred $3 million in severance and certain nonrecurring expenses during the quarter.”
The Andersons move into the second quarter with target on improving productivity.
“I’m very proud of our team, their efforts here and we are hard at work on various fronts to help optimize the performance of our business,” Bowe said. “While our first-quarter results were not as strong as we anticipated and were impacted by some nonrecurring expenses, our year-over-year performance has improved. We continue to focus on productivity and improving execution to drive better results for 2018.”
