The Andersons, Inc. Reports Record 2nd Qtr. Earnings EPS $1.17 Vs. $0.99 Last Year
Improvement in Processing, Rail & Retail Segments
Jul 24, 2002
The Andersons, Inc.
Net income for six months was $10.4 million, or $1.39 per diluted share, with revenues of $516 million. In comparison, net income for the first half of 2001 totaled $6.5 million, or $0.88 per diluted share, on revenues of $491 million. Earnings for the quarter and the first half of the year both established new records for the company. The Andersons has four operating groups: Agriculture, Processing, Rail and Retail.
The Agriculture Group's grain business experienced an operating income decline during the second quarter due to lower earnings generated by the storage of wheat. In recent months, increased sales of soft red wheat to foreign and domestic flour millers have reduced the amount of wheat in the company's elevators. For the past two years, these inventories have been unusually high. The group's agricultural fertilizer businesses had mixed results for this three-month period. With volume and margin growth, its distribution terminals had an excellent quarter and achieved higher operating income. However, lengthy planting delays experienced by farmers in the region caused a reduction in operating income at the company's farm centers. The group's total operating income declined from 2001 results, both for the second quarter and the first six months.
In related news, the Agriculture Group also announced that on September 1, 2002, its Wholesale Fertilizer Division will be renamed the Plant Nutrient Division. According to Division President Denny Addis, the new name was selected to more accurately reflect the full range of products offered by the division.
The Processing Group continued to achieve improved results during the second quarter. Lawn fertilizer volumes were up from last year's second quarter levels, and gross margins improved due to lower ingredient costs. In addition, intensive efforts throughout the past two years to improve operating efficiency resulted in lower expenses for the latest quarter. The group's second quarter and first-half results both reflect a significant turnaround from last year's disappointing bottom line.
Reporting a modest operating income for the latest three-month period, the Rail Group continued to achieve bottom-line growth, overcoming the year- earlier second quarter loss. Contributing to this improvement was an increase in the group's fleet utilization rate and growth in the size of its railcar fleet. Although railcar values and monthly lease rates are still quite depressed from historical averages, the group has a growing number of cars in active lease service and a declining number of idle cars in its fleet. The group's operating income for the first half of 2002 also reflected improvement from its year-earlier performance.
The Retail Group achieved a one percent increase in same-store sales compared to the second quarter of 2001. In addition, average gross margins improved due to a strong lawn and garden business in June. As a result, the group's operating income in the second quarter and the first half both reflected improvement from 2001 results.
"I'm really pleased with our strong performance so far this year, establishing new records for the company's net income and earnings per share," said President and Chief Executive Officer Mike Anderson. "Our year-to-date EBITDA of $27.2 million was also strong, up $3.9 million from the first half of 2001.
"Looking forward, we expect to continue to see positive results from these improvements. However, the unprecedented earnings we've enjoyed for the past year or two from the storage of grain probably cannot be sustained. In fact, we've seen declines from this source in both quarters this year. It also appears that corn and soybean production in our region will likely fall below average this year because of the drought we've experienced so far this growing season."
The company will host a webcast on Thursday, July 25, 2002 at 11:00 A.M. EDT, to discuss its second quarter performance and full-year outlook. The webcast can be accessed under "Financial Information" on its website at http://www.andersonsinc.com/ or at http://www.firstcallevents.com/service/ajwz362313281gf12.html .
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 agricultural fertilizer distribution, lawn fertilizer production, railcar marketing, and general merchandise retailing. The Andersons has been in operation since 1947.
This release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially. Without limitation, these risks include 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 http://www.andersonsinc.com/ . The Andersons, Inc. Consolidated Statements of Income Three Months ended Six Months ended June 30 June 30 (in thousands, except for per share amounts) 2002 2001 2002 2001 Sales and merchandising revenues $301,098 $273,064 $515,929 $491,072 Cost of sales and merchandising revenues 252,015 224,804 430,826 407,697 Gross profit 49,083 48,260 85,103 83,375 Operating, administrative and general expenses 34,761 35,473 66,548 68,825 Interest expense 2,573 2,867 5,286 6,481 Other income/Gains: Other income 838 792 1,630 1,377 Gain on involuntary conversion - - - 338 Income before income taxes and cumulative effect of accounting change 12,587 10,712 14,899 9,784 Income taxes 3,827 3,438 4,530 3,140 Income before cumulative effect of accounting change 8,760 7,274 10,369 6,644 Cumulative effect of accounting change, net of income tax benefit - - - (185) Net income $8,760 $7,274 $10,369 $6,459 Per common share: Basic earnings $1.20 $1.00 $1.42 $0.88 Diluted earnings $1.17 $0.99 $1.39 $0.88 Dividends paid $0.065 $0.065 $0.130 $0.130 Weighted average shares outstanding-basic 7,299 7,305 7,294 7,338 Weighted average shares outstanding-diluted 7,509 7,319 7,445 7,351 Depreciation and amortization $7,041 $7,169 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) June 30 December 31 June 30 (in thousands) 2002 2001 2001 Assets Current assets: Cash and cash equivalents $7,072 $5,697 $9,255 Accounts receivable (net) and margin deposits 67,537 54,836 56,234 Inventories 149,582 238,291 147,932 Other current assets 17,058 27,849 18,313 Total current assets 241,249 326,673 231,734 Other assets 6,160 6,300 7,312 Railcar assets leased to others (net) 31,577 26,102 23,448 Property, plant and equipment (net) 94,537 95,001 96,058 $373,523 $454,076 $358,552 Liabilities and shareholders' equity Current liabilities: Notes payable $41,800 $82,600 $50,300 Other current liabilities 126,799 169,068 119,767 Total current liabilities 168,599 251,668 170,067 Deferred items, long-term liabilities and minority interest 14,830 16,158 15,874 Long-term debt 85,617 91,316 79,370 Shareholders' equity 104,477 94,934 93,241 $373,523 $454,076 $358,552 Segment Data Quarter ended June 30, 2002 Agriculture Processing Rail Revenues from external customers $209,197 $32,283 $4,056 Other income 220 166 30 $209,417 $32,449 $4,086 Operating income (loss) $9,522 $(113) $140 Quarter ended June 30, 2001 Revenues from external customers $177,262 $33,537 $7,256 Other income 310 80 (25) $177,572 $33,617 $7,231 Operating income (loss) $10,186 $(1,783) $(628) Six months ended June 30, 2002 Revenues from external customers $344,037 $73,264 $8,216 Other income 487 289 33 $344,524 $73,553 $8,249 Operating income (loss) $12,046 $2,305 $520 Six months ended June 30, 2001 Revenues from external customers $314,774 $75,783 $13,003 Other income 498 176 (14) Gain on involuntary conversion 338 - - $315,610 $75,959 $12,989 Operating income (loss) $13,515 $(2,026) $(923) Segment Data Quarter ended June 30, 2002 Retail Other Total Revenues from external customers $55,562 $- $301,098 Other income 255 167 838 $55,817 $167 $301,936 Operating income (loss) $4,307 $(1,269) $12,587 Quarter ended June 30, 2001 Revenues from external customers $55,009 $- $273,064 Other income 199 228 792 $55,208 $228 $273,856 Operating income (loss) $3,785 $(848) $10,712 Six months ended June 30, 2002 Revenues from external customers $90,412 $- $515,929 Other income 374 447 1,630 $90,786 $447 $517,559 Operating income (loss) $2,568 $(2,540) $14,899 Six months ended June 30, 2001 Revenues from external customers $87,512 $- $491,072 Other income 334 383 1,377 Gain on involuntary conversion - - 338 $87,846 $383 $492,787 Operating income (loss) $792 $(1,574) $9,784
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/