Weather Weighs on The Andersons Fertilizer Results; Company “Challenged” to Catch Up

The Andersons Inc.’s Plant Nutrient Group (PNG) reported a first-quarter pretax loss of $3.9 million on revenues of $128.5 million, versus the positive year-ago $1.1 million on revenues of $135.6 million. The company cited delayed primary and specialty nutrient sales and lower lawn and contract manufacturing results due to extended cold and wet weather.

Primary nutrient ton volumes were 178,000 st, down from 202,000 st. Specialty were 165,000 st, down from 186,000 st. Other tons were level at 16,000 st. PNG said while primary nutrient margins improved, specialty margins were somewhat lower. While the company said lawn and contract got off to a decent start, volumes were down even more than expected. PNG’s EBITDA was $5 million, down from the year-ago $9.3 million.

The Andersons said PNG full-year results are highly dependent on the critical planting season, and will likely finish at or below those of 2018. The company said it will be challenged to make up the significant lost tonnage from the first quarter in the remainder of the year. The company noted that as of May 6, the percentage of corn planted was at only 23 percent, versus the five-year average of 46 percent.

“Quite simply, as the wet weather persists across much of our market area, we are concerned that farmers may not have time or an inclination to use as much fertilizer as we anticipated in the face of continuing low grain prices,” the company told analysts. “We still expect a good year from our lawn and contract manufacturing business, though it will not repeat the record 2018 performance.”

Company-wide, the Maumee, Ohio-based The Andersons reported a first-quarter loss attributable to the company of $14 million ($0.43 per diluted share) on sales of $2.08 billion, up from the year-ago loss of $1.7 million ($0.06 per share) and $635.7 million. Adjusted EBITDA was $40.2 million, up from $27.7 million.

“We closed our acquisition of Lansing Trade Group (LTG) successfully in early January (GM Jan. 18, p. 1), and our work to integrate it with our former Grain Group is on schedule,” said The Andersons President and CEO Pat Bowe. “I am very pleased with how well the new Trade Group team is functioning. However, our overall results were hampered by markets that continue to be negatively impacted by trade disruptions and poor weather that are affecting multiple business units significantly.

“The Trade Group’s adjusted results were mixed, as weak markets and foreign trade uncertainty limited grain margin opportunities, and the group also incurred some insured property losses at one Nebraska facility due to heavy rains,” he continued. “The Ethanol Group’s results were encouraging, as the group remained profitable by continuing its excellent plant efficiency and hedging its production well.

“The Plant Nutrient Group continues to struggle, as its results were hurt by lower volume, primarily in agriculture and lawn fertilizer, and higher operating expenses,” added Bowe. “Rail’s results improved on better leasing and repair results, even while it reduced car sale income by electing to sell fewer cars.”

Much of the first-quarter loss was due to the LTG acquisition. Adjustments included $8.7 million ($0.27 per share) of expenses related to LTG. In addition, it incurred $4.4 million ($0.10 per share) of depreciation and amortization expenses due to the revaluation of LTG and Thompsons Ltd. (GM Aug. 5, 2013) fixed assets and the valuation of its definite-lived intangibles. It expects to incur similar amounts each quarter through 2021.

First-quarter revenues were up due to the acquisitions of both LTG and Thompsons Ltd. The Andersons now owns 100 percent of each company, whereas it used to own minority stakes in each.

Company-wide, The Andersons told analysts that it expects 2019 results to improve significantly over those of 2018 on an operating basis, even considering the slow start.