All Posts from February 5, 2021

Scotts Posts Historic 1Q Income; Ad to Appear During Super Bowl

Earnings, Eastern Cornbelt, Fertilizer Stocks, News, Specialty

Scotts Miracle-Gro Co., Marysville, Ohio, posted a first-quarter profit for the first time in history. The company historically records a loss for its first-quarter.

Scotts income from continuing operations of $25.2 million ($0.43 per diluted share) for the first-quarter ending Jan. 2, 2021, was up 135 percent over the year-ago loss of $71.3 million ($1.28 per share) for the quarter that ended Dec. 28, 2020. However, due to the company’s financial calendar, first-quarter 2021 included five more days than the year-ago quarter.

First-quarter sales were up 105 percent to $748.6 million from the year-ago $365.8 million.

“While we anticipated a strong start to fiscal 2021, both the U.S. Consumer and Hawthorne segments surpassed our expectations and put us on a good trajectory for the balance of the year,” said Jim Hagedorn, Scotts Chairman and CEO.

“In U.S. Consumer, we are working closely with our retail partners as they prepare for the upcoming growing season. And Hawthorne continues to demonstrate its best-in-class performance within its industry, working with retailers and growers to help drive their success,” he said.

U.S. Consumer profits were up 213 percent to $45.3 million from the year-ago loss of $40.1 million, while sales were up 147 percent, to $408.2 million from $165.5 million.

Hawthorne profits were up 223 percent, to $40.4 million from the year-ago $12.5 million, while sales were up 71 percent to $309.4 million from $180.7 million.

The company has boosted overall fiscal year sales growth projections to 1-6 percent from 0-5 percent. “Our strong start gives us renewed confidence in our full-year outlook although we remain sensitive to the challenges in the second half of the fiscal year against historic comparisons,” Hagedorn added.

“We now believe we have enough visibility, however, to raise our full-year sales growth outlook for Hawthorne to a range of 20 to 30 percent, compared with our previous outlook of 15 to 20 percent. Despite the historically strong start in U.S. Consumer, it remains too early in the season to adjust our outlook for that business,” he continued. U.S. Consumer sales guidance remains at 0 to minus 5.

Scotts reaffirmed fiscal year adjusted earnings per share projections of $8.00-$8.40.

Hagedorn said the company continues to strengthen its relationship with gardeners, including plans for its first commercial especially produced for the Super Bowl. It is expected to run during the second half of the Feb. 7 game. “That kind of reach, coupled with our data-driven and highly targeted approach to social media, is key in our efforts to retain the millions of new consumers who have entered our category over the past year.”

“We’ve been engaging with consumers throughout the winter, spending three times more in media last quarter than we have ever at this point in the year,” Hagedorn said in the company earnings call. “Keeping those consumers engaged and motivated is the goal of the Super Bowl initiative, which is part of an eight-week kickoff to the biggest lawn and garden season ever.”

Hagedorn added that first-quarter results were a bit tempered by increased marketing spending, as well as the impact of emerging input costs. However, the company said it is 75 percent locked in for the year with respect to input costs, and it is looking at building inventory over the second half to better fulfill customer needs.

“So as we are looking to build our own inventory, our forecast went up, which will require more urea, resin, and just internal distribution costs that we originally built into the forecast. Those are the areas where we’re seeing some pressure,” said Cory Miller, Vice President of Finance.

Southern Towing Acquires Devall

Featured, News

Southern Towing Co. (STC), Chicago, an affiliate of CC Industries, announced on Feb. 2 that it has acquired Devall Towing, Sulphur, La., from the Devall family. Founded in 1952, Devall is a towboat and barge operator for specialty chemicals along the Gulf Intracoastal Waterway and Lower Mississippi River. It operates a fleet of 36 towboats and 125 liquid tank barges.

STC said the acquisition expands its operations into specialty chemical products, adding that the combination of Devall’s long-standing customer relationships with STC’s upriver capabilities allows Devall and STC to provide integrated marine transportation solutions across the Gulf Intracoastal and U.S. inland waterways.

“The acquisition significantly enhances Southern Towing’s Gulf Coast capabilities,” said STC CEO Ed Grimm. “We look forward to growing our transportation capabilities, while continuing to provide superior service to the customers we are privileged to serve.”

Devall will continue to operate under the Devall brand as a new division of STC. The members of the management team will continue in their current roles.

“The Devall family and team are excited to partner with both Southern Towing and CCI,” said Kenny Devall, Devall Chief Operating Officer, who will continue to lead the company. “We believe that the cross-selling opportunities with Southern Towing are extremely compelling, and that CCI’s extensive experience and resources positions Devall for future growth.”

“Devall shares the same core values and vision that we have at STC and CCI,” said Bill Crown, CCI President and CEO. “We look forward to building on those shared values to further invest in and grow Devall and STC.”

Founded in 1958, STC is a major inland tank barge operator specializing in the transportation of anhydrous ammonia and bulk liquid fertilizer products, including UAN, throughout the Mississippi River System and the Gulf Intracoastal Waterway. It operates the largest fleet of anhydrous ammonia barges in the United States. It also provides towing services for other commodities, including refined petroleum, chemicals, coal, grain, and aggregates.

STC was acquired by CCI in 2019 (GM June 14, 2019) from investment firm Trive Capital, Dallas, and McComb Partners, the investment division of the San Antonio-based McCombs family.

CCI, Chicago, operates within Henry Crown and Co. as a holding company for the Crown family’s privately-held companies, which include Gillig Corp., Great Dane Trailers, J.L. Clark, Miracapo Pizza Co., Provisur Technologies, Riverside Rail, Selig Sealing Products Inc., and Trail King Industries.

Kropz Provides Phosphate Rock Updates

Africa, News, News Briefs, Phosphate

Junior phosphate rock miner Kropz SA (Pty), Century City, South Africa, said on Feb. 2 its Elandsfontein phosphate project in South Africa’s Western Cape Project continues on budget, has made significant progress, and remains on track for achieving the target date for production in fourth-quarter 2021.

Targeted capacity is 1 million mt/y (GM Oct. 25, 2019). Kropz said earthworks are largely complete and civil construction is advancing. Fabrication of structural steel, platework, and piping has commenced, and the first major mechanical equipment has been delivered to site.

On Feb. 4, Kropz gave an update on the Hinda project in the Republic of the Congo. The company said it has appointed Hatch Africa (Pty) Ltd., a global engineering and construction firm, to complete the updated feasibility study on Hinda. This follows the conclusion of the focused logistics study, completed by Hatch in September 2020.

The updated feasibility study will target a phased approach in line with the terms of the mining investment agreement, with initial production of 1 million mt/y of phosphate rock being exported from the existing port facility at Pointe-Noire, which is 50 km from Hinda. A second phase production ramp-up of 2 million mt/y will also be evaluated with export from a new port site, located north of Pointe-Noire. The updated feasibility study will be concluded by the end of September 2021.

Yara 4Q, FY 2020 Results Forecast; Shares Hit 52-Week High

Earnings, News, Scandinavia

Yara International ASA results due out Feb. 9 are expected to be better for the year than the quarter, according to the Bloomberg Consensus, the average estimate made by key analysts as of Feb. 1.

Analysts are projecting the company to have FY20 net income of $626.9 million on revenues of $11.84 billion, up from the year-ago $599 million and $12.94 billion, respectively. However, fourth-quarter net income averaged out at $168.5 million on revenues of $3.06 billion, down from the year-ago $199 million and $3.03 billion, respectively.

In other news last week, Yara shares hit a 52-week high on the OBX Oslo Exchange, trading at 404.80 kroner on Feb. 3. The previous high had been 403.80 kroner on Feb. 2. The stock, which has enjoyed a 14 percent increase year-to-date, had a 52-week low of 263.12 kroner on March 16, 2020.

According to Feb. 4 Bloomberg report, Citi has raised its target for Yara to 460 kroner, up from 420 kroner.

  4Q-19 4Q-20 Est. 2019 2020 Est.
Revenues        3,028 3,064 12,936 11,842
Operating Income 211 235 989 1,227
EBITDA 499 480 2,095 2,220
Adj. EBITDA 525 477 2,165 2,158
Net Income 199 169 599 627

*USD millions

Itafos – Management Brief

Canada, Management Briefs

Itafos, Toronto, on Feb. 2 announced the appointment of David Brush as Chief Strategy Officer, effective Jan. 1, 2021. He has been serving as a consultant since Dec. 1, 2020. He will be responsible for strategy development and implementation, including related capital structuring and corporate development initiatives.

“We are pleased to bolster our management team by adding Dave’s experience and expertise in strategy, finance, and operations,” said Itafos CEO G. David Delaney. “Dave will be instrumental as we look to improve our capital structure and pursue growth opportunities in the agricultural sector.”

Itafos said Brush is a senior executive with over 30 years of experience in all aspects of global business operations, business development and strategic planning, financial management, personnel development, and general management. During his career, he has been involved in taking two companies public, led a significant number of M&A transactions, and managed billion dollar global business segments.

Prior to joining Itafos, he was founder and Managing Partner of Idris Capital, where he advised clients on M&A transactions and restructurings across a variety of sectors, including agriculture, fertilizer, packaging, building products, and consumer products. Previously, he also held senior roles at CPI Card Group Inc., Rexnord Corp., and Pactiv Corp., and began his career as a certified public accountant with PricewaterhouseCoopers. He holds a B.A. in Accounting from the University of Northern Iowa.

Arianne Phosphate – Management Brief

Canada, Management Briefs

Arianne Phosphate, Saguenay, Quebec, a development-stage phosphate mining company advancing the Lac à Paul project in Quebec’s Saguenay-Lac-Saint-Jean region, on Feb. 4 announced that it has appointed Ms. Pier-Elise Hebert-Tremblay as the CFO, effective immediately. She replaces Andrew Malashewsky, who had held the position since January 2019. The company thanked him for his time and efforts in the position.

“Pier-Elise has been involved with Arianne almost since its inception and advanced her way through the company, proving herself to be a very valuable member of the team,” said Brian Ostroff, Arianne CEO. “I have had the opportunity to work closely with Pier-Elise since my time as CEO and, as CFO, I have no doubt she will play an integral part in advancing Arianne’s efforts to secure financing and partners as it moves its Lac à Paul project towards development. With the recent significant upturn in the agricultural sector and increased interest in Arianne, the timing couldn’t be better.”

She served as Financial Controller of Arianne since 2010. She has been a member of the Certified Professional Accountants of Quebec and Canada since August 2011 and holds a bachelor’s degree in accounting and an MBA from the University of Quebec at Chicoutimi.

Bayer Reaches Agreement with Roundup Plaintiffs

Germany, News, News Briefs

Germany-based Bayer AG on Feb. 3 reported that it has reached a settlement to pay as much as $2 billion to manage and resolve potential future claims related to Roundup herbicide. Elements of the revised settlement, according to a Bayer statement, include the establishment of a fund to compensate qualified claimants during an initial four-year program; an advisory science panel whose findings would not be preclusive but can be used as evidence in potential future litigation involving class members; and a robust notice program.

“Plaintiffs’ class counsel are filing today a motion for preliminary approval of the class agreement with Judge Vince Chhabria of the U.S. District Court for the Northern District of California, who presides over the Monsanto Roundup™ multidistrict litigation,” the company said. “The class plan is intended to be one part of a holistic solution designed to provide further closure to the Monsanto Roundup™ litigation.”

Bayer said it was also taking additional steps to provide greater transparency and access to glyphosate studies, including seeking permission from the U.S. Environmental Protection Agency (EPA) to add a reference link on the labels for its glyphosate-based products that will provide consumers with access to scientific studies and information that the company has permission to disclose or are in the public domain.

Bayer, which took over Roundup as part of its 2018 acquisition of Monsanto Co. for $63 billion, announced last June that it had agreed to make a payment of $8.8-$9.6 billion to resolve approximately 75 percent of the then current Roundup cases (GM June 26, 2020). The settlement included an allowance expected to cover unresolved claims, and $1.25 billion to support a separate class agreement to address potential future litigation.

Bayer reported last fall (GM Sept. 18, 2020) that it had settled approximately 15,000 more U.S. lawsuits over Roundup, bringing the total number of resolved cases to 47,000 of an estimated 125,000 filed and unfiled Roundup claims.

USDA Freezes $2.3 Billion in CFAP Payments

News, News Briefs, U.S.

The USDA on Jan. 27 posted a notice that $2.3 billion in supplemental Coronavirus Food Assistance Program (CFAP) payments will be temporarily frozen. The previous administration had announced expanded eligibility for the CFAP 1 and 2 programs on Jan. 15, just days before President Joe Biden’s inauguration.

“In accordance with the White House memo, Regulatory Freeze Pending Review, USDA has suspended the processing and payments under the Coronavirus Food Assistance Program – Additional Assistance and has halted implementation until further notice. FSA local offices will continue to accept applications during the evaluation period,” said a notice on the USDA CFAP page.

“In the coming days, USDA and the Biden Administration intend to take additional steps to bring relief and support to all parts of food and agriculture during the coronavirus pandemic, including by ensuring producers have access to the capital, risk management tools, disaster assistance, and other federal resources,” the notice continued.

The program expansion announced by the Trump administration was targeted mostly at contract pork and poultry producers and others previously excluded from the relief payments. USDA said in the notice that it will continue to take applications for the CFAP program, but no checks will be issued while the program is reviewed.

Simplot Fertilizer Facility Under Construction in Oregon

Featured, News, Pacific N.W.

A Simplot Grower Solutions liquid fertilizer storage and distribution facility is under construction in Baker City, Ore., according to the Capital Press. The facility in Baker City’s industrial park is slated to be open for the spring planting season, and will employ seven people initially, with the potential to increase to about a dozen.

Josh Jordan, Simplot’s Senior Manager for Communications and Public Relations, told the Capital Press that the company has operated a temporary Simplot Grower Solutions facility in Baker City, but had longer-term plans to build a permanent facility to meet the needs of area farmers. To reach that goal, the company paid $235,620 to purchase a 14.28-acre parcel in the city’s 64-acre Elkhorn View Industrial Park, he said.

In February 2020, the Baker City Planning Commission approved Simplot’s request for a waiver from the 50-foot height limit in the city’s zoning ordinance to accommodate a 75-foot fertilizer storage tower at the site. Jordan told the Capital Press that the facility will have 2,300 tons of capacity and enhanced fertilizer blending capabilities. The facility will also supply other crop products and services to growers.

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