Andersons (ANDE) Q3 Earnings Miss Estimates, Revenues Down

The Andersons, Inc. (NASDAQ:ANDE) reported earnings of 9 cents per share in third-quarter 2017, up 50% year over year. Earnings, however, missed the Zacks Consensus Estimates of 16 cents.

Operational Update

Revenues in the reported quarter declined 2.7% year over year to $837 million. Difficult market conditions impacted the results. Cost of sales fell 2% to $766.9 million from $782.6 million recorded in the prior-year quarter. Gross profit dropped 9.5% year over year to $69.7 million. Consequently, gross margin contracted 70 basis points to 8.3% in the quarter.

Operating, administrative and general expenses were down 13% year over year to $68.5 million. Andersons posted operating profit of $12.5 million in the third quarter compared with the loss of $17.5 million incurred in the year-earlier quarter.

Segment Performance

The Grain Group: Revenues dipped 9.6% year over year to $497.6 million from $550.2 million generated in the year-earlier quarter. The segment reported an operating income of $2.6 million compared with $1.9 million posted in the comparable quarter last year, driven by continued strong grain storage capacity utilization.

The Ethanol Group: Revenues jumped 37.4% year over year to $191.5 million. The segment reported an operating profit of $6.1 million, considerably down from $9.5 million recorded in the year-ago quarter.

The Plant Nutrient Group: The segment reported revenues of $103.6 million, up 1.8% year over year. It reported an operating loss of $7.9 million compared to a loss of $7.2 million witnessed in third-quarter 2016 due to persistent low prices and margins.

The Rail Group: Revenues at this segment were up 12.8% year over year to $43.1 million. Operating income descended 9.3% to $6.1 million from $6.8 million recorded in the prior-year quarter.

Retail Group: Revenues tanked significantly to $0.74 million from $30 million generated in the year-ago quarter. The segment reported an operating profit of $4.4 million compared with a loss of $1.6 million in the year-earlier quarter.

Financial Performance

Andersons reported cash and cash equivalents of $24.5 million at the end of third-quarter 2017, significantly down from $78.2 million in the prior-year quarter. Long-term debt was $425.3 million as of Sep 30, 2017, compared with $447 million as of Sep 30, 2016.

Share Price Performance

In the last year, Andersons has underperformed its industry with respect to price performance. The stock has gained only 0.2%, while the industry has recorded growth of 15.4% during the same time frame.

Zacks Rank & Stocks to Consider

Andersons currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are BHP Billiton (LON:BLT) plc (NYSE:BBL) , POSCO (NYSE:PKX) and Southern Copper Corp. (NYSE:SCCO) . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP Billiton has an expected long-term growth rate of 5.3%.

POSCO has an expected long-term growth rate of 5%.

Southern Copper has an expected long-term growth rate of 35.1%.

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