The Andersons, Inc. Reports Higher 2nd Qtr. Earnings Revenues Up 4.6%; Net Income Up 8.3% EPS 99 cents vs. 89 cents Last Year
Jul 25, 2001
The Andersons, Inc.
Net income for the first six months of the year was $6.5 million, or $0.88 per diluted share, with revenues at $495.5 million. Net income for the first half of 2000 amounted to $7.9 million, or $1.04 per diluted share, on revenues of $467.7 million. Excluding non-recurring items that occurred in the first quarter of each year and an accounting change that was described in the company's first quarter 2001 earnings release, year-to-date net income was $6.4 million, or $0.87 a share, this year, compared to $7.3 million, or $0.96 a share, in 2000.
The Andersons, Inc. is a respected leader and prominent regional player in grain merchandising. Its strong position in this basic business has enabled the company to diversify into other agribusiness operations, railcar leasing, turf care product manufacturing and general merchandise retailing. The company has been in business since 1947.
The company's Agriculture Group operates grain elevators, fertilizer distribution terminals and farm centers in Ohio, Michigan, Indiana and Illinois. Collectively, these facilities handle more than 150 million bushels of grain and 1.3 million tons of dry and liquid agricultural fertilizer products annually.
The group's grain, wholesale fertilizer and farm center businesses all achieved higher operating income in the second quarter and the first six months of 2001 vs. the comparable periods last year. Volume and margin increases were achieved by all three businesses, and income generated by the group's grain storage facilities remained strong.
The Rail Group leases and markets railroad cars and locomotives. It also repairs railcars and operates a custom steel fabrication business. The group's railcar marketing segment has grown significantly in the past few years and now controls a fleet of 4,940 railcars and 30 locomotives that are leased to shippers, railroads and fleet owners in a wide range of industries in the U.S. and Canada.
Because of a slowdown in demand for many types of rail equipment throughout the past two years, this group continues to focus primarily on short-term leasing opportunities rather than car sales or long-term leasing commitments. While there are indications that the cyclical downturn may be easing, the group incurred a loss for both the quarter and first half of 2001. Included in the second quarter result was a $1 million non-cash charge to recognize the lower value of certain assets.
The Processing Group manufactures turf and ornamental plant fertilizer and control products. With a national production and logistics infrastructure, it serves major retailers throughout the country and is the industry leader in premium fertilizer products for golf courses and other professional turf care markets. The group also produces chemical and feed-ingredient carriers, animal bedding, cat litter and ice-melter products.
Revenues were higher during the period because of an acquisition made last year. However, the group's operating results for the quarter and first six months were down. The consumer lawn industry was influenced negatively this year by several factors -- higher raw material prices, general economic uncertainty and unusual weather patterns in several regions of the U.S. this spring that curtailed homeowners' lawn care activities. At the same time, a downturn in the number of golf rounds played has caused golf course owners to reduce their costs wherever possible, including purchases of fertilizer and other turf care products. In response to these factors, the group has begun taking steps to significantly reduce the breakeven volume level in this business.
The Retail Group operates six large stores in Ohio. With a theme of More For Your Home™, these stores offer traditional home center merchandise including hardware, plumbing, electrical and building supplies, but also feature indoor and outdoor garden centers, extensive lines of housewares and domestics, automotive supplies, pet supplies, sporting goods, wine and a unique specialty food offering.
Same store sales were 2.6% higher in the second quarter this year compared to the same three-month period of 2000. Because of labor and other store operating cost increases, however, the group's second quarter operating income declined slightly. Given the softness experienced during the first quarter of 2001, the group's first half revenues and operating income both still trail last year's performance.
According to President and Chief Executive Officer Mike Anderson, "Several of our businesses have a strong seasonal orientation that makes the second quarter a key period for The Andersons. Frequently, the lion's share of our full-year income is generated during these three months. Our agriculture business is really on a roll, achieving excellent top and bottom-line growth. However, two other units are not having the same degree of success at the present time. Our rail business continues to work through the cyclical downturn we've described for some time, although there are indications that this business is beginning to rebound. Our biggest challenge is the double whammy the lawn business is experiencing this year with extremely tough economic circumstances in both the professional and consumer industry segments. The earnings growth we achieved overall for the second quarter once again demonstrates the benefit of our business diversification."
Recently, The Andersons paid a quarterly cash dividend of 6.5 cents per share to shareholders of record as of July 2, 2001. The company is authorized by its board of directors to continue to repurchase shares from time to time.
The company will host a webcast on July 26, 2001 at 11:00 A.M. EST, to discuss these second quarter results and the full-year earnings outlook. The webcast can be accessed at the company's website http://www.andersonsinc.com/ under the heading "Financial Information" or at http://www.videonewswire.com/event.asp?id=177 .
This release contains forward-looking statements. 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. Consolidated Balance Sheets (Unaudited) June 30 December 31 June 30 (in thousands) 2001 2000 2000 Assets Cash and cash equivalents $9,255 $13,138 $5,332 Accounts receivable (net) and margin deposits 56,234 55,475 58,513 Inventories 147,932 209,706 131,812 Other current assets 18,313 24,505 20,683 Total current assets 231,734 302,824 216,340 Other assets 7,312 10,020 11,111 Railcar assets leased to others (net) 23,448 22,281 20,767 Property, plant and equipment (net) 96,058 98,071 95,414 Total $358,552 $433,196 $343,632 Liabilities and owners' equity Current liabilities: Notes payable $50,300 $71,300 $52,200 Other current liabilities 119,767 176,264 117,531 Total current liabilities 170,067 247,564 169,731 Deferred items, long-term liabilities and minority interest 15,874 15,637 12,441 Long-term debt 79,370 80,159 71,836 Shareholders' equity 93,241 89,836 89,624 Total $358,552 $433,196 $343,632 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) 2001 2000 2001 2000 Sales and merchandising revenues $275,248 $263,105 $495,480 $467,712 Cost of sales and merchandising revenues 226,988 218,247 412,105 387,800 Gross profit 48,260 44,858 83,375 79,912 Operating, administrative and general expenses 35,473 33,269 68,825 65,726 Interest expense 2,867 2,594 6,481 5,270 Other income/gains: Other income 792 1,112 1,377 2,122 Gain on insurance settlement - - 338 - Gain on sale of business - - - 907 Income before income taxes and cumulative effect of accounting change 10,712 10,107 9,784 11,945 Income taxes 3,438 3,389 3,140 4,005 Net income before cumulative effect of accounting change 7,274 6,718 6,644 7,940 Cumulative effect of accounting change, net of income tax benefit - - (185) - Net income $7,274 $6,718 $6,459 $7,940 Per common share: Basic earnings $1.00 $0.89 $0.88 $1.05 Diluted earnings $0.99 $0.89 $0.88 $1.04 Dividends paid $0.065 $0.060 $0.13 $0.12 Weighted average shares outstanding-basic 7,305 7,524 7,338 7,597 Weighted average shares outstanding-diluted 7,319 7,533 7,351 7,605 Segment Data (In thousands) Quarter ended June 30, 2001 Agriculture Processing Rail Revenues from external customers $177,262 $33,537 $9,440 Other income 310 80 (25) Total $177,572 $33,617 $9,415 Operating income (loss) $10,186 $(1,783) $(628) Quarter ended June 30, 2000 Revenues from external customers $169,132 $31,259 $9,078 Other income 308 100 17 Total $169,440 $31,359 $9,095 Operating income (loss) $6,210 $80 $358 Six Months ended June 30, 2001 Revenues from external customers $314,774 $75,783 $17,411 Other income 498 176 (14) Gain on insurance settlement 338 - - Total $315,272 $75,959 $17,397 Operating income (loss) $13,515 $(2,026) $(923) Six Months ended June 30, 2000 Revenues from external customers $294,178 $66,668 $15,552 Other income 574 192 153 Gain on sale of business - - - Total $294,752 $66,860 $15,705 Operating income (loss) $7,625 $1,780 $839 Segment Data (In thousands) Quarter ended June 30, 2001 Retail Other Total Revenues from external customers $55,009 $ - $275,248 Other income 199 228 792 Total $55,208 $228 $276,040 Operating income (loss) $3,785 $(848) $10,712 Quarter ended June 30, 2000 Revenues from external customers $53,636 $ - $263,105 Other income 211 476 1,112 Total $53,847 $476 $264,217 Operating income (loss) $3,864 $(405) $10,107 Six Months ended June 30, 2001 Revenues from external customers $87,512 $ - $495,480 Other income 334 383 1,377 Gain on insurance settlement - - 338 Total $87,846 $383 $496,857 Operating income (loss) $792 $(1,574) $9,784 Six Months ended June 30, 2000 Revenues from external customers $88,825 $2,489 $467,712 Other income 317 886 2,122 Gain on sale of business - 907 907 Total $89,142 $3,375 $469,834 Operating income (loss) $1,695 $6 $11,945
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., +1-419-891-6417