The Andersons, Inc. Reports 3rd Qtr. Results
Revenues up 5.7%, Operating Loss Narrows
Oct 24, 2001
EPS (26) cents vs. (30) cents in Same Period Last Year
MAUMEE, Ohio, Oct. 24 /PRNewswire/ -- The Andersons, Inc.
Net income for the first nine months of the year was $4.6 million, or $0.62 per diluted share, with revenues of $684.3 million. Net income for the same period in 2000 amounted to $5.7 million, or $0.75 per diluted share, on revenues of $646.3 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 $4.5 million, or $0.61 a share, this year, compared to $5.1 million, or $0.67 a share, in 2000.
The company has four operating groups: Agriculture, Rail, Processing and Retail.
The 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. In the most recent quarter, continued strong earnings from the storage of grain enabled the group to achieve revenue growth and an improved bottom line. Through nine months, group revenues were up 7.0% from year- earlier levels, and operating income more than doubled.
The Rail Group controls a fleet of 5,400 railcars and 51 locomotives that are leased to shippers, railroads and fleet owners in a wide range of industries in the U.S. and Canada. During the past twelve months, this fleet has increased by 600 railcars and 21 locomotives. The group also repairs railcars and operates a custom steel fabrication business. Because of a cyclical downturn in the railcar industry during the past two years, the group continued to focus primarily on short-term leasing opportunities rather than car sales or long-term leasing commitments. Despite significant third quarter and nine-month revenue increases attributed to continued growth in the size of its fleet, the group incurred operating losses during these periods because of the writedown of some rail equipment to reflect current values.
The Processing Group manufactures turf and ornamental plant fertilizer and control products. It also produces chemical and feed-ingredient carriers, animal bedding, cat litter and ice-melter products. During the third quarter, the group's total revenue and net operating loss were relatively unchanged from year-earlier levels. Nine-month results were markedly different from 2000 results, however. While total revenues were higher because of the acquisition of a pro turf business in May of last year, the operating loss was significantly worse this year because of higher expenses due to that acquisition, increased ingredient costs and lower fertilizer consumption this season in consumer and golf course markets. In response to these factors, the group has begun taking steps to significantly reduce the breakeven volume level in this business and to evaluate its overall strategy in this consolidating industry.
The Retail Group operates six large stores in Ohio. With a theme of More For Your Home™, these stores offer traditional home center merchandise but also feature 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 down 1.5% in the third quarter and first nine months this year compared to the same periods in 2000. With increased labor costs and lower margins due in part to the impact of this summer's drought conditions on garden center business, the group's third quarter operating loss widened somewhat, and year-to-date income declined.
According to President and Chief Executive Officer Mike Anderson, "Given the seasonal patterns of several of our businesses, we expect to incur a loss in the July through September months. Overall, this year's third quarter results were fairly typical, but the component pieces that make up this performance were not necessarily so. While our ag business is experiencing a terrific year, performance in our rail and retail units is somewhat soft, and our processing business is really struggling. During the second and third quarters this year, we have incurred charges that total $2.6 million for severance costs and rail inventory write-downs, giving the company a lower cost position to better address competitive challenges in the marketplace.
"The September 11 attacks have not noticeably affected our ag businesses, but their negative influence on general economic conditions in the country is impacting our rail, processing and retail units. These same forces are expected to continue through the fourth quarter. In addition, agriculture will probably begin to feel the impact of lower carryover stocks of corn and soft red wheat in the U.S. Year-to-year comparisons for the fourth quarter will also be influenced by a sizable insurance gain realized last year.
"The Company's balance sheet continues to be strong -- our capital spending program is much lower this year, earnings before interest, taxes, depreciation and amortization ("EBITDA") are similar to last year's nine- months to-date figure of $26 million, and our working capital is significantly higher than twelve months ago."
The company will host a webcast on Thursday, October 25, 2001 at 11:00 A.M. EST, to discuss its year-to-date performance and full-year earnings outlook. The webcast can be accessed under the heading "Financial Information" on its website http://www.andersonsinc.com/ or at http://www.videonewswire.com/event.asp?id=1404.
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 Statements of Income (Unaudited) Three Months ended Nine Months ended September 30 September 30 (in thousands, except for per share amounts) 2001 2000 2001 2000 Sales and merchandising revenues $188,830 $178,622 $684,310 $646,334 Cost of sales and merchandising revenues 157,516 146,583 569,621 534,383 Gross profit 31,314 32,039 114,689 111,951 Operating, administrative and general expenses 33,044 33,351 101,869 99,077 Interest expense 2,463 2,969 8,944 8,239 Other income / gains: Other income 812 918 2,189 3,040 Gain on insurance settlement - - 338 - Gain on sale of business - - - 907 Income before income taxes and cumulative effect of accounting change (3,381) (3,363) 6,403 8,582 Income taxes (1,476) (1,128) 1,664 2,877 Net income before cumulative effect of accounting change (1,905) (2,235) 4,739 5,705 Cumulative effect of accounting change, net of income tax benefit - - (185) - Net income $(1,905) $(2,235) $4,554 $5,705 Per common share: Basic earnings $(0.26) $(0.30) $0.62 $0.76 Diluted earnings $(0.26) $(0.30) $0.62 $0.75 Dividends paid $0.065 $0.060 $0.195 $0.180 Weighted average shares outstanding-basic 7,225 7,463 7,300 7,552 Weighted average shares outstanding-diluted 7,225 7,463 7,324 7,564 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) September 30 December 31 September 30 (in thousands) 2001 2000 2000 Assets Current assets: Cash and cash equivalents $5,088 $13,138 $5,900 Accounts receivable (net) and margin deposits 58,165 55,475 51,348 Inventories 191,535 209,706 165,840 Other current assets 21,228 24,505 14,978 Total current assets 276,016 302,824 238,066 Other assets 6,695 10,020 10,885 Railcar assets leased to others (net) 24,379 22,281 28,500 Property, plant and equipment (net) 95,422 98,071 95,272 Total $402,512 $433,196 $372,723 Liabilities and shareholders' equity Current liabilities: Notes payable $95,100 $71,300 $88,600 Other current liabilities 112,900 176,264 112,283 Total current liabilities 208,000 247,564 200,883 Deferred items, long-term liabilities and minority interest 16,036 15,637 12,911 Long-term debt 87,463 80,159 72,420 Shareholders' equity 91,013 89,836 86,509 Total $402,512 $433,196 $372,723
The September 30, 2000 balance sheet has been restated to conform with the December 31, 2000 and September 30, 2001 presentation.
Segment Data (In thousands) Quarter ended September 30, 2001 Agriculture Processing Rail Revenues from external customers $115,799 $22,345 $10,172 Other income 333 97 27 Total $116,132 $22,442 $10,199 Operating income (loss) $(130) $(2,184) $(282) Quarter ended September 30, 2000 Revenues from external customers $108,218 $22,744 $6,525 Other income 244 101 67 Total $108,462 $22,845 $6,592 Operating income (loss) $(1,196) $(2,256) $331 Nine Months ended September 30, 2001 Revenues from external customers $430,573 $98,128 $27,583 Other income 832 273 13 Gain on insurance settlement 338 - - Total $431,743 $98,401 $27,596 Operating income (loss) $13,385 $(4,210) $(1,205) Nine Months ended September 30, 2000 Revenues from external customers $402,396 $89,412 $22,077 Other income 818 293 220 Gain on sale of business - - - Total $403,214 $89,705 $22,297 Operating income (loss) $6,429 $(476) $1,170 Segment Data (In thousands) Quarter ended September 30, 2001 Retail Other Total Revenues from external customers $40,514 $- $188,830 Other income 131 224 812 Total $40,645 $224 $189,642 Operating income (loss) $(706) $(79) $(3,381) Quarter ended September 30, 2000 Revenues from external customers $41,135 $- $178,622 Other income 144 362 918 Total $41,279 $362 $179,540 Operating income (loss) $(349) $107 $(3,363) Nine Months ended September 30, 2001 Revenues from external customers $128,026 $- $684,310 Other income 465 606 2,189 Gain on insurance settlement - - 338 Total $128,491 $606 $686,837 Operating income (loss) $86 $(1,653) $6,403 Nine Months ended September 30, 2000 Revenues from external customers $129,960 $2,489 $646,334 Other income 461 1,248 3,040 Gain on sale of business - 907 907 Total $130,421 $4,644 $650,281 Operating income (loss) $1,346 $113 $8,582
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., +1-419-891-6417