The Andersons report improved ethanol margins

By Erin Voegele | May 15, 2018

The Andersons Inc. recently released first quarter 2018 financial results, reporting improved ethanol margins and providing an update on the construction of Element LLC, a 70 MMgy ethanol plant under development by The Andersons and ICM Inc.

During an investor call, Pat Bowe, CEO of The Andersons, said the ethanol group’s 2018 is off to a solid start. “We enter the higher demand spring and summer months with good near-term margins and strong DDG values,” he said.

While the pace of U.S. exports has been strong so far this year, Bowe said “the outlook for ethanol exports has become somewhat more muted given the political and economic uncertainty associated with U.S.-China trade relations, which has hampered what might have been more significant seasonal improvements in margins.”

According to Bowe, spring shutdowns at The Andersons’ ethanol plants are now complete. He said the four plants are operating well and the company believes its ethanol facilities are ready to run at full capacity through the summer, which should position the ethanol group well for 2018.

He also provided a brief update of the Element plant, noting the project is off to a good start. “Construction has begun and will ramp up in the late spring and early summer,” he said. “We still project that the plant will be fully operational by the end of next year.”

The Andersons’ ethanol group earned pretax income of $1.8 million during the first quarter, up from $1.7 million during the same period of last year. Margins were better than expected, but below last year’s levels. DDG values improved significantly when compared to the first quarter of last year.

The company’s four ethanol plants produced a combined 117 million gallons of ethanol during the first quarter.

Overall, The Andersons reported a net loss of $1.7 million, or 6 cents per diluted share, on revenues of $636 million. The result is a $1.4 million, or 5 cent per diluted share, improvement over the net loss of $3.1 million, or 11 cents per diluted share, on revenues of $852 million recorded for the same period of 2017. EBITDA was $27.7 million, up 29 percent when compared to the $21.5 million reported for the first quarter of last year.