The Andersons, Inc. Reports Strong 2nd Quarter, Six Month Results; EPS Of $0.89 For Quarter, 1% Below $0.90 Last Year
Jul 26, 2000
The Andersons, Inc.
Earnings per diluted share reached $1.04 for the first six months this year, 14 percent higher than $0.91 generated in the comparable period of 1999. First-half net income rose to $7.9 million, second highest in the company's history, on revenues of $458.1 million. In the first half of 1999, the company had revenues of $461.1 million and net income of $7.5 million. The company has repurchased shares on the open market from time to time and presently has about 7.5 million shares outstanding.
The company's Agriculture Group operates grain elevators, fertilizer distribution terminals and farm centers in four eastern corn belt states. Collectively, these facilities annually handle in excess of 150 million bushels of grain and about 1.2 million tons of dry and liquid agricultural fertilizer products.
The group's second-quarter operating income improved slightly from prior year levels, and first-half income remained well ahead of last year. With U.S. grain and oilseed supplies presently quite high, the group's grain business achieved second-quarter operating income growth for the fourth consecutive year. Wholesale fertilizer sales volume and income for the quarter, typically the busiest season for this business, were comparable to 1999. Following the unusually strong early planting business experienced in the first quarter this year, wholesale fertilizer first half income was substantially ahead of prior year performance. Circumstances were not as favorable for the group's farm centers, located in the northern third of the group's region. Encountering extended rainfall, some locations were only able to get into farm fields about 30 percent of the historical average number of days, which curtailed fertilizer sales and application income. While projections of total U.S. grain production this year remain high, the weather anomaly experienced around the southern Great Lakes this spring hurt the group's farm center business.
The Manufacturing Group repairs and markets railroad cars and locomotives. It also operates a custom steel fabrication business. The group's railcar marketing segment has grown dramatically in the past few years and now has more than 4,400 railcars and 30 locomotives in its lease portfolio.
Growth in the size of the fleet enabled the group to achieve modest revenue increases for both the quarter and the first six months of 2000. Because of softness in lease rates and car values, however, particularly with grain covered hopper cars, operating income declined. The group remains solidly profitable and has been able to acquire cars for its fleet at attractive prices during this cyclical downturn in the industry.
The Processing Group produces granular lawn fertilizer products for major retailers throughout the country as well as for golf course and professional lawn-care markets. At the end of May, the company completed the acquisition of the professional turf business of The Scotts Co., a purchase that positions The Andersons as the industry leader in premium fertilizer products for golf courses and other professional turf markets in the U.S. The group also produces corncob-based chemical and feed-ingredient carriers, animal bedding, cat litter and ice-melter products.
With the expanded business, revenues continued to grow during the second quarter and were 12 percent above the first six months of 1999. Operating income declined, however, both for the second quarter and the first six months. Some of the decline, attributable to acquisition-related expenses, was anticipated. The balance, however, was due to the wet spring that hurt volume and average margins and growing pains associated with the expansion of manufacturing and distribution capacity in Ohio, Pennsylvania and Alabama.
This group operates six large stores in Ohio, characterizing its retail concept as "More For Your Home." A traditional home center with hardware, plumbing, electrical and building supplies, it also features indoor and outdoor garden centers, extensive lines of housewares and domestics, automotive supplies, pet supplies, sporting goods and a unique specialty food offering. The group also operates a lawn and garden equipment sales and service center.
April, May and June are traditionally very profitable months for this business. Primarily because of the frequent rains, same-store sales this year declined by 4 percent for the second quarter. The group's operating income was relatively unchanged from year-earlier performance, both for the second quarter and six months to-date.
According to President and Chief Executive Officer Mike Anderson, "We're encouraged by the strong results posted by the company for the past three months, especially in view of the impact of unusual spring weather on our farm center, lawn and retail businesses. While second quarter net income and earnings per share were down slightly from 1999, the past three months represented the third best quarter in our company's history, and our first half performance this year was exceeded only once - in 1994. We're also enthusiastic about the company's future, especially considering the substantial investments we've been making in our lawn products and railcar marketing businesses."
The Andersons recently paid a quarterly cash dividend of $0.06 per share. The company also indicated that it is authorized by its board of directors to continue to repurchase shares from time to time.
The Andersons, Inc. is a respected leader and dominant regional player in grain merchandising. Its strong position in this basic business has allowed the company to diversify into other agribusiness operations, railcar leasing, turf care product manufacturing and distribution, general merchandise retailing and other businesses. The company has been in operation since 1947.
This release contains forward-looking statements, including statements with respect to anticipated revenues, adequacy of cash flows and profitability. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, economic, weather and regulatory conditions, competition, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission.
The Andersons, Inc. is located on the Internet at www.andersonsinc.com The Andersons, Inc. Segment Data Quarter ended June 30, 2000 Agriculture Processing Mfg. Retail Other Total Revenues from external customers $164,997 $30,390 $9,078 $53,636 $-- $258,101 Other income 308 100 17 211 476 1,112 Total $165,305 $30,490 $9,095 $53,847 $476 $259,213 Operating income (loss) $6,210 $80 $358 $3,864 $(405) $10,107 Quarter ended June 30, 1999 Revenues from external customers $164,523 $27,646 $8,232 $55,889 $2,957 $259,247 Other income 319 135 37 124 463 1,078 Total $164,842 $27,781 $8,269 $56,013 $3,420 $260,325 Operating income (loss) $5,961 $ 1,012 $1,122 $3,917 $(885) $11,127 Six Months ended June 30, 2000 Revenues from external customers $283,611 $64,572 $15,552 $88,825 $2,489 $455,049 Other income 574 192 153 317 1,793 3,029 Total $284,185 $64,764 $15,705 $89,142 $4,282 $458,078 Operating income (loss) $7,625 $ 1,780 $839 $1,695 $6 $11,945 Six Months ended June 30, 1999 Revenues from external customers $291,124 $57,513 $14,859 $90,239 $5,477 $459,212 Other income 512 212 71 209 864 1,868 Total $291,636 $57,725 $14,930 $90,448 $6,341 $461,080 Operating income (loss) $4,843 $3,590 $1,883 $1,758 $(881) $11,193 Note: Segments were restated to reflect the move of a small, retail lawn & garden equipment reseller to the Retail Group. The results of this operation were previously included in Other. The Andersons, Inc. Consolidated Balance Sheets June 30 December 31 2000 1999 (in thousands) (unaudited) (audited) Assets Current assets: Cash and cash equivalents $5,332 $25,614 Accounts receivable: Trade accounts and notes receivable (net) 60,236 51,812 Margin deposits 106 1,339 Total 60,342 53,151 Inventories 153,981 178,323 Deferred income taxes 3,752 5,641 Prepaid expenses 3,295 5,796 Total current assets 226,702 268,525 Other assets: Notes receivable (net) and other assets 10,123 4,640 Investments in and advances to affiliates 988 954 Total 11,111 5,594 Property, plant and equipment (net) 105,819 102,657 Total $343,632 $376,776 Liabilities and owners' equity Current liabilities: Notes payable $52,200 $45,000 Accounts payable for grain 27,489 68,883 Other accounts payable 66,006 65,079 Accrued expenses 16,027 17,465 Current maturities of long-term debt 8,009 4,159 Total current liabilities 169,731 200,586 Pension and postretirement benefits 3,590 4,026 Deferred income 1,205 3,255 Long-term debt 71,836 74,127 Deferred income taxes 7,415 8,742 Minority interest 231 1,235 Owners' equity 89,624 84,805 Total $343,632 $376,776 The Andersons, Inc. Consolidated Statements of Income (Unaudited) Three Months ended Six Months ended June 30 June 30 (in thousands, except for per share amounts) 2000 1999 2000 1999 Sales and merchandising revenues $258,101 $259,247 $455,049 $459,212 Other income 1,112 1,078 3,029 1,868 Total 259,213 260,325 458,078 461,080 Cost of sales and merchandising revenues 207,108 208,544 361,928 370,433 Gross profit 52,105 51,781 96,150 90,647 Operating, administrative and general expenses 39,404 38,602 78,935 75,336 Interest expense 2,594 2,052 5,270 4,118 Total 41,998 40,654 84,205 79,454 Income before income taxes 10,107 11,127 11,945 11,193 Income taxes 3,389 3,668 4,005 3,690 Net income $6,718 $7,459 $7,940 $7,503 Per common share: Basic earnings $0.89 $0.92 $1.05 $0.92 Diluted earnings $0.89 $0.90 $1.04 $0.91 Dividends paid $0.06 $0.05 $0.12 $0.10 Weighted average shares outstanding-basic 7,524 8,075 7,597 8,116 Weighted average shares outstanding-diluted 7,533 8,243 7,605 8,273
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., 419-891-6417