Agrium Misses Earnings Estimates in Q3, Hikes Dividend
Agrium Inc. (AGU) posted profit from continuing operations of $91 million or 63 cents per share in the third quarter of 2014, a rise of around 13.8% from $80 million or 54 cents per share registered a year ago.
Agrium recorded a one-time tax benefit of $29 million (20 cents per share) in the quarter. Barring that impact (and treating stock-based payments as a normal item), earnings from continuing operations came in at 43 cents per share, missing the Zacks Consensus Estimate of 50 cents.
Revenues went up roughly 4.4% year over year to $2,920 million in the reported quarter. Sales missed the Zacks Consensus Estimate of $3,034 million. The company posted improved results amid a challenging agriculture market. The performance of its Wholesale unit in the quarter was driven by strength across phosphate and nitrogen businesses.
Separately, Agrium announced its plans to its hike its annual dividend by 4% to $3.12 per share.
Segment Review
Revenues from the Retail segment moved up 9% year over year to $2.3 billion in the reported quarter. Gross profit rose 6.1% year over year to $542 million. The record results were driven by contributions from the acquired Viterra agri-retail operations.
Within the retail business, crop nutrient sales declined 1.2% to $646 million in the quarter on lower global nutrient prices and U.S. volumes, which were down 4% compared with the year-ago quarter mainly due to late harvest.
Retail segment’s EBITDA fell 11.6% year over year to $130 million due to lower demand for crop protection products owing to near perfect growing conditions across the U.S. limiting crop disease and insect pressure as well as reduced planted corn acreage and prices.
Sales from the Wholesale segment were $803 million, up 2.2% year over year. Gross profit was $127 million in the quarter, up from $124 million a year ago. Wholesale adjusted EBITDA rose 18.8% on the back of higher phosphate earnings, which offset the impact of the main host mechanical failure and planned tie-in of the one million ton expansion project at the Vanscoy potash plant.
Nitrogen sales volume jumped 15.6% year over year to 735,000 tons in the quarter due to higher urea sales volumes. Potash sales volume moved down 5.3% to 251,000 tons, as lower volumes of domestic product were available for sale. Phosphate sales volumes increased 36% to 261,000 tons in the quarter as capacity utilization improved at the Redwater facility.
Discontinued Operations
Agrium completed the sale of the Turf and Ornamental portion of the assets held for sale in Jul 2014 for roughly $94 million.
Financial Position
Agrium exited the quarter with cash and cash equivalent of $274 million, a 7.5% year-over-year rise. Long-term debt increased 1.8% year over year to $3,069 million.
Dividend
Agrium announced its plans to its hike its dividend by 4% or 12 cents per share to $3.12 per share on an annualized basis. The increased dividend is expected to be paid in quarterly installments of 78 cents per share and the next installment will be paid on Jan 21, 2015, to shareholders of record as of Dec 31, 2014.
Outlook
Agrium, which is among the prominent players in the fertilizer industry along with Potash Corp. (POT), CF Industries Holdings, Inc. (CF) and Yara International ASA (YARIY), expects earnings per share from continuing operations for the fourth quarter of 2014 to be in the range of $0.45 to $0.75 per share. The guidance excludes net gains or losses on foreign exchange and derivative positions and share-based payments expenses or recoveries.
Agrium currently carries a Zacks Rank #4 (Sell).
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