HomeFoodThe Andersons executes among volatile markets | 2021-08-05

The Andersons executes among volatile markets | 2021-08-05

MAUMEE, OHIO — All 4 of The Andersons enterprise segments noticed vital earnings progress within the second quarter of 2021, boosting the corporate to its greatest second-quarter earnings since 2014.

Net revenue at The Andersons totaled $43.5 million within the second quarter ended June 30, 2021, equal to $1.30 per share on the frequent inventory, up 43% from $30.4 million within the second quarter of 2020.

“I’m very pleased that each of our four businesses delivered outstanding, year-over-year improvement with good execution in volatile markets,” mentioned Patrick E. Bowe, president, chief govt officer and director of The Andersons. “I’m proud of our team; they anticipated market opportunities and executed well. These market conditions play into our strengths of commodity trading, logistics, and position management. We expect that North American demand will remain strong and currently anticipate large harvests in our key draw areas this fall, which should drive strong performance into 2022.”

The Trade phase recorded an adjusted pretax revenue of $14.1 million for the quarter in comparison with an adjusted pretax revenue of $1.4 million within the second quarter of 2020. The distinction in reported and adjusted revenue in each durations was attributable to inventory compensation expense related to the 2019 acquisition of Lansing Trade Group.

“The Trade Group had another solid quarter, executing well in dynamic grain markets where tightening grain stocks have provided excellent merchandising and elevation opportunities,” Mr. Bowe mentioned throughout an Aug. 4 convention name with analysts. “Corn and soybean growing conditions in our key draw areas are outstanding, and we anticipate good buying opportunities into harvest. Winter wheat harvest volume was better-than-expected in our draw area, and we’re seeing some carry return to the corn and wheat markets.”

Looking forward for the Trade phase, Mr. Bowe mentioned he believes alternatives within the firm’s ag portfolio will stay robust.

“While export demand has seasonally slowed, we expect high global demand for US crops into 2022,” he mentioned. “This demand continues to support world grain trade and prices higher than historical averages. Crops in our draw areas are in great shape, while some other parts of the country are seeing dry conditions. We’re optimistic about an abundant harvest that will provide us additional merchandising and elevation opportunities. Given these conditions, we remain positive in our outlook for our Trade segment.”

The Ethanol phase had a pretax revenue of $23.5 million within the second quarter, up from $900,000 in the identical interval in 2020. The Andersons attributed the enhance in ethanol earnings to robust co-product margins on the 5 ethanol vegetation and worthwhile third-party buying and selling of ethanol, feed elements and vegetable oil.

“In our Ethanol segment, they recorded one of its — the best quarters ever with income generated from strong co-product values and third-party trading results, combined with the reversal of unrealized mark-to-market losses resulting from our hedging programs,” Mr. Bowe mentioned.

Even with demand for gas returning to pre-pandemic ranges Mr. Bowe expects challenges within the third quarter for the Ethanol phase.

“Gasoline demand is up dramatically from the pandemic slowdown, and it’s expected to continue,” he mentioned. “Tight old crop corn supplies and plant maintenance shutdowns are expected to slow industry production through the third quarter. The strong demand for co-products continues to support our overall margin. We continue to produce and sell our new high-protein feed products from both our Colwich, Kan., and our Denison, Iowa, plants at good margins. Our low CI efficient plants are well positioned to capitalize on higher co-product values and improved ethanol margins.”

The Andersons remains to be ready on carb approval to shipments from its Colwich plant to California and expects to obtain approval for it by the tip of the third quarter.

The Plant Nutrient phase recorded a pretax revenue of $24 million, which in contrast with $19.4 million in the identical interval of 2020.

“The Plant Nutrient Group also had a strong second quarter,” Mr. Bowe mentioned. “Its best since 2014. As anticipated, margins were up in all product lines on tight supplies and strong demand. Fertilizer prices remain high and orders for the fall are being placed.”

The firm expects to see continued, rising demand in its Plant Nutrient phase.

“We expect our Plant Nutrient business to continue to perform well,” Mr. Bowe mentioned. “Without the typical summer price reset and continued tight stocks, fall demand looks to be solid. Demand for our engineered granules and specialty liquids agricultural and industrial products has also been strong, and we expect that to trend on into the next year.”

The Rail phase benefited from excessive scrap metal costs, pushing its pretax revenue for the second quarter of 2021 to $3.1 million, which in contrast with $2.6 million in the identical interval a 12 months in the past.

“Rail reported slightly improved second-quarter results primarily on opportunistic scrapping of out of favor and end of economic life railcars for higher-than-normal scrap prices,” Mr. Bowe mentioned.

Mr. Bowe indicated that the Rail phase is doubtlessly rebounding within the trade.

“Use rail carloads are up significantly from a year ago, but still lower than 2019 volumes,” Mr. Bowe mentioned. “Rates for lease renewals have sequentially increased but are lower than long-term lease rates. We continue to see a slow recovery in this industry. We have and will continue to opportunistically scrap idle and out of favor railcars when it makes good economic sense to do so.”

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