Agricultural products specialist The Andersons (NASDAQ: ANDE) was trailing the market on Wednesday, down by 9.7% as of 2:20 p.m. ET compared to a fractionally upward move by the S&P 500. That slump erased more than half of the stock's year-to-date gains, yet shares are still beating the market's 7% return so far in 2023.
The decline came as Wall Street reacted to the company's first-quarter earnings update, which showed mixed results across its main business lines.
In the report delivered after the bell on Tuesday, The Andersons revealed that sales declined 2% in Q1 to $3.88 billion. Adjusted earnings declined similarly.
Yet there was a wide disparity in the performances of its main business lines. Sales and margins both grew in The Andersons' core feed division as the spring planting season got started. Declining prices for some commodities, meanwhile, hurt demand from farmers in its industrial agriculture segment. Earnings were also pressured by rising interest rate expenses.
Management highlighted the company's success at improving cash flow trends while reducing short-term borrowing needs. But investors had been hoping for a better bottom-line result than the $0.44 per share net loss that it reported.
Management said that some, but not all, of the Q1 weakness simply reflected a shift in sales driven by plunging fertilizer prices. "We do not expect that all of the business will be recovered," CEO Pat Bowe explained in the press release.
The company's updated outlook calls for a similarly mixed performance for the full year, with strength in some parts of its agricultural portfolio being offset by price-driven challenges elsewhere.
These swings don't threaten The Andersons' long-term growth prospects. But they do imply potentially weaker earnings results this year than many investors had been hoping to see.
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