The Andersons, Inc. Reports Strong 4th-Quarter Net Income; '98 Full Year EPS of $1.20 vs. $0.50 in '97
Expects To Show Solid Earnings Growth In 1999
Sep 15, 2000
The Andersons, Inc.
Net income for 1998 was $9.8 million, or $1.20 per diluted share, on revenues of $1.104 billion. In 1997, the company had revenues of $998.8 million and net income of $4.1 million, or $0.50 per diluted share. Pretax income in 1998 more than doubled from the prior year, and the company also experienced a lower effective tax rate.
The Agriculture Group operates grain elevators, wholesale fertilizer distribution facilities and retail farm centers in four eastern corn belt states. Collectively these facilities handle about 160 million bushels of grain and more than 1 million tons of dry and liquid agricultural fertilizer annually. This year, the company leased two Toledo-area grain elevators from Cargill, opened a new fertilizer distribution facility in northeast Ohio, acquired four more retail farm centers in northwest Ohio and acquired a wholesale/retail fertilizer distribution center located in Waterloo, Ind.
The Agriculture Group experienced good grain sales and revenue. Corn and soybean yields in the region were excellent although somewhat dryer than normal. Operating income for the period was lower than in the fourth quarter of 1997 because of grain-sales timing and reduced drying income. For the full year, however, grain income was up substantially as a result of increased demand for, and utilization of, the company's storage space. Its elevators have a total storage capacity of 80 million bushels.
Wholesale fertilizer sales were somewhat soft during the fourth quarter, primarily as a result of the continued cautious reaction of farmers and dealers to low grain prices. Full-year operating income increased due to improved margins and higher overall shipments during 1998. With additional locations this year, the retail farm centers achieved fourth-quarter and full- year increases in revenues, fertilizer tons and application acres, but acquisition-related expenses impacted bottom-line results.
Processing & Manufacturing
The processing division produces granular lawn care products for retailers, professional lawn-care operators and golf courses. It also produces corncob-based chemical and feed ingredient carriers, animal bedding and litter products. With lawn fertilizer volume growth and the continuing shift of cob products to higher value-added applications, this division's top- and bottom- line performances improved slightly in the fourth quarter and were significantly higher for the full year.
The group's growing and very profitable manufacturing division repairs and markets various types of railcars and operates a custom steel fabrication business. Although fourth-quarter operating income was slightly lower than in the 1997 period, the division increased its railcar fleet and achieved substantial revenue and operating income growth for the third consecutive year.
This group operates six large retail stores in Ohio and characterizes its retail concept as "The Complete Home Store" -- "with more for your home than any other store." The product offering consists of traditional home center merchandise -- plumbing, electrical, building supplies, etc. -- and includes lawn and garden products, extensive lines of housewares and domestics, pet supplies, automotive supplies, sporting goods and a unique offering in food.
Supported by heavy customer traffic late in the Christmas season, the group registered a 2.7 percent same-store sales gain for the fourth quarter. For the full year, same-store sales grew by a more modest 0.3 percent. Average gross margins were higher than 1997 levels, for both the quarter and the full year. As a result, the group's fourth-quarter and 12-month operating income showed improvement from the year-earlier performance.
According to President and Chief Executive Officer Mike Anderson, "We're really pleased with the performance achieved by our company this year. While our overall results tend to fluctuate, all three of our operating groups achieved solid income growth in 1998. As a result both net income and earnings per share more than doubled. We're very optimistic about 1999 as well. With large quantities of grain in our elevators at the present time, the outlook for storage income is very good, and the hesitancy by farmers to make late- 1998 purchases of their spring fertilizer requirements bodes well for our wholesale and retail fertilizer operations. As always, we will be watching very closely the spring planting and growing conditions in our region. We're increasing production and distribution capacity to support growth of our lawn fertilizer products, and our railcar fleet continues to expand. In retail, our stores have experienced double-digit percentage increases in same-store sales in the first several weeks of 1999. For these reasons, we expect to show solid earnings improvement in 1999."
The Andersons, Inc. recently paid a cash dividend of $0.05 per share to shareholders of record as of January 4, 1999. In 1998, the quarterly dividend was $0.04. The company has repurchased shares on the open market from time to time.
The Andersons, Inc. is a respected leader and dominant regional player in the grain industry. This strong position in its basic business has allowed the company to diversify into other agribusiness operations, several processing and manufacturing businesses, and general merchandise retailing. The company has been in operation since 1947.
This release contains forward-looking statements, including statements with respect to anticipated revenue growth, adequacy of cash flows and profitability. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, economic and weather conditions in agriculture, economic conditions and competition in its retail stores' markets, risks associated with acquisitions, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission.
For further information regarding The Andersons free of charge via fax dial 1-800-PRO-INFO and enter company code "ANDE."
The Andersons, Inc. Consolidated Statements of Income (Unaudited) Three Months Ended Year Ended December 31 December 31 (in thousands, except for per share amounts) 1998 1997 1998 1997 (unaudited) (unaudited) (unaudited) (unaudited) Sales and merchandising revenues $365,486 $398,576 $1,098,722 $993,746 Other income 1,828 1,385 5,412 5,099 Total 367,314 399,961 1,104,134 998,845 Cost of sales and merchandising revenues 320,212 353,271 937,493 851,157 Gross profit 47,102 46,690 166,641 147,688 Operating, administrative and general expenses 38,518 34,976 144,681 131,818 Asset impairment charge -- 1,121 -- 1,121 Interest expense 2,457 2,176 8,954 8,494 Total 40,975 38,273 153,635 141,433 Income before income taxes 6,127 8,417 13,006 6,255 Income taxes 949 2,991 3,254 2,181 Net income $5,178 $5,426 $752 $4,074 Per common share: Basic earnings $0.64 $0.68 $1.21 $0.50 Basic earnings before asset impairment -- $0.77 -- $0.59 Diluted earnings $.63 $0.68 $1.20 $0.50 Dividends paid $0.04 $0.03 $0.16 $0.12 Weighted average shares outstanding - basic 8,142 7,945 8,059 8,160 Weighted average shares outstanding - diluted 8,235 7,957 8,118 8,167 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) December 31 December 31 (in thousands) 1998 1997 Assets Current assets: Cash and cash equivalents $3,253 $8,278 Accounts receivable: Trade accounts and notes receivables (net) 62,647 68,643 Margin deposits 248 771 Total 62,895 69,414 Inventories 184,990 191,467 Deferred income taxes 4,634 1,408 Prepaid expenses 5,502 4,521 Total current assets 261,274 275,088 Other assets: Notes receivable (net) and other assets 8,435 6,333 Investments in and advances to affiliates 1,057 1,026 Total 9,492 7,359 Property, plant and equipment (net) 90,057 85,797 Total $360,823 $368,244 Liabilities and owners' equity Current liabilities: Notes payable $7,700 $15,572 Accounts payable for grain 88,978 121,233 Other accounts payable 75,301 63,309 Accrued expenses 17,079 12,973 Current maturities of long-term debt 6,318 8,406 Total current liabilities 195,376 221,493 Pension and postretirement benefits 3,113 2,799 Long-term debt 71,565 65,709 Deferred income taxes 7,330 5,393 Minority interest 705 649 Owners' equity 82,734 72,201 Total $360,823 $368,244
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., 419-891-6417; or Marilyn
Windsor of The Financial Relations Board, 312-640-6692