The Andersons, Inc. Reports Record Earnings
Full-Year Net Income up 50% EPS of $1.79 vs. $1.21 in 2001
Feb 5, 2003
The Andersons, Inc.
Net income for the fourth quarter was $3.0 million, or $0.41 per diluted share, on revenues of $355 million. During the same three-month period of 2001, revenues were $307 million, and net income amounted to $4.3 million, or $0.59 per diluted share.
The company's Agriculture Group achieved an operating income of $19 million for the year, trailing its best year ever, 2001, by $0.8 million. With a drought affecting grain production in the region this past summer, fewer bushels were delivered to the group's elevators this year, and earnings from storing grain were lower than they were during 2001. Margins on grain sales remained strong, however, and the group continued to benefit from a marketing agreement that covers certain of the company's grain facilities. Plant nutrient and industrial volume increased in 2002 with gross margins comparable to the previous year. The group's farm centers applied fertilizer and other crop production inputs on more acres than in 2001 and again achieved a modest operating profit. Early in January of 2003, the group completed a previously-announced transaction with Lansing Grain, a grain trading company, to form a new limited liability company that will serve as a platform from which to launch future growth initiatives.
The Processing Group achieved a $6.3 million bottom-line improvement in 2002, reducing the $7.6 million operating loss it experienced in 2001 to $1.3 million this year. Although volumes in the lawn fertilizer industry were negatively impacted by the unusually dry summer throughout much of the country, The Andersons' lawn business achieved a 6 percent volume increase for the year. Average gross margins also increased due to lower ingredient costs and a shift toward higher-margin control products as a result of the drought conditions. The group's other businesses, the manufacture of cob-based chemical and feed ingredient carriers, animal bedding and litter products, also achieved modest bottom-line improvements in 2002.
Although sales of railcars by the company's Rail Group declined in 2002, its marketing unit continued to acquire railcars during the year, improved the utilization rate of its railcar fleet, and increased its operating income. The operating income generated by the group's railcar repair and fabrication businesses was comparable to their 2001 performance. In total, the group reported income of $1.6 million for the year, overcoming the previous year's loss of $0.3 million. The 2001 operating loss included an impairment charge of $1.5 million.
The Retail Group achieved a 1.8 percent increase in same-store sales for the year. While the number of customers shopping in The Andersons' stores was virtually unchanged from 2001, the average amount purchased by each customer increased. The group's average gross margins were also higher while expenses remained relatively flat. As a result, its operating income more than doubled for the year, increasing from $1.9 million in 2001 to $4.0 million in 2002.
"I'm really pleased with our performance in 2002," said President and Chief Executive Officer Mike Anderson. "Although the reduction in grain storage income that we foresaw did materialize, the Agriculture Group still had a fantastic year, and our Processing, Rail and Retail groups all achieved remarkable improvement from their prior-year results. In spite of healthcare, retirement and insurance cost increases, our total operating, administrative and general expenses were no higher than they were a year ago." Anderson added that the company's 2002 net income and earnings per share represented new records for the firm.
Anderson also referenced an earlier statement issued by the company. "In early December, I indicated that we expected earnings per share of $1.50 to $1.65 for the year. Finishing the year at $1.79 per diluted share is an accomplishment for which all of our employees should be both proud and commended. In the December announcement, I also stated that the company anticipates earnings in the range of $1.15 to $1.30 for the coming year, more in line with historical averages. Although some fourth quarter grain and lawn fertilizer sales were responding to market demand that would normally occur early in the following year, it appears that the strong finish we achieved in 2002 will not materially impair our ability to achieve the projected 2003 earnings."
"The company's cash flow was very good," added Vice President Finance & Treasurer Gary Smith. "Our strong earnings this year resulted in an EBITDA of $44.0 million, $6.2 million better than 2001. Excluding interest associated with carrying grain inventories, EBITDA amounted to $40.6 million, up $6.9 million from the prior year, an improvement of 20 percent. Working capital grew by $5.6 million, the current ratio improved, spending on plant and equipment was relatively modest, and long-term debt was reduced. In short, the company's balance sheet became even stronger."
The company will host a webcast on Thursday, February 6, 2003 at 11:00 A.M. EST, to discuss its 2002 performance and 2003 outlook. The webcast can be accessed under "Financial Information" on its website at www.andersonsinc.com or at www.firstcallevents.com/service/ajwz372929469gf12.html .
The Andersons, Inc. is a respected leader and dominant regional player in grain merchandising and agricultural fertilizer distribution. Its strong position in these businesses has allowed the company to diversify into lawn fertilizer production, rail equipment leasing, and general merchandise retailing. The company 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 www.andersonsinc.com The Andersons, Inc. Consolidated Statements of Income Three Months ended Year ended December 31 December 31 (in thousands, except for per share amounts) 2002 2001 2002 2001 Sales and merchandising revenues $355,183 $307,038 $1,075,834 $984,627 Cost of sales and merchandising revenues 309,385 262,382 910,458 825,282 Gross profit 45,798 44,656 165,376 159,345 Operating, administrative and general expenses 39,095 37,816 139,471 139,685 Interest expense 2,484 2,626 9,812 11,570 Other income/Gains: Other income 1,075 1,314 3,439 3,503 Gain on involuntary conversion 302 - 302 338 Income before income taxes and cumulative effect of accounting change 5,596 5,528 19,834 11,931 Income taxes 2,562 1,225 6,515 2,889 Income before cumulative effect of accounting change 3,034 4,303 13,319 9,042 Cumulative effect of accounting change, net of income tax benefit - - - (185) Net income $3,034 $4,303 $13,319 $8,857 Per common share: Basic earnings $0.42 $0.60 $1.83 $1.22 Diluted earnings $0.41 $0.59 $1.79 $1.21 Dividends paid $0.065 $0.065 $0.260 $0.260 Weighted average shares outstanding-basic 7,227 7,227 7,283 7,281 Weighted average shares outstanding-diluted 7,434 7,321 7,429 7,316 EBITDA Income before income taxes $19,834 $11,931 Depreciation and amortization 14,314 14,264 Interest 9,812 11,570 EBITDA 43,960 37,765 Interest to carry grain inventories (3,398) (4,065) EBITDA (net of interest to carry grain inventories) $40,562 $33,700 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) December 31 December 31 (in thousands) 2002 2001 Assets Current assets: Cash and cash equivalents $6,095 $5,697 Accounts receivable (net) and margin deposits 59,800 54,836 Inventories 256,275 238,291 Other current assets 15,716 27,849 Total current assets 337,886 326,673 Other assets 6,763 6,300 Railcar assets leased to others (net) 26,399 26,102 Property, plant and equipment (net) 92,939 95,001 $463,987 $454,076 Liabilities and shareholders' equity Current liabilities: Notes payable $70,000 $82,600 Other current liabilities 187,056 168,845 Total current liabilities 257,056 251,445 Deferred items, long-term liabilities and minority interest 17,819 16,381 Long-term debt 84,272 91,316 Shareholders' equity 104,840 94,934 $463,987 $454,076 Segment Data Quarter ended December 31, 2002 Agriculture Processing Rail Revenues from external customers $279,153 $20,585 $5,412 Other income/expense 513 149 (16) Gain on involuntary conversion $279,666 $20,734 $5,396 Operating income (loss) $5,696 $(2,269) $310 Quarter ended December 31, 2001 Revenues from external customers $232,217 $14,699 $10,199 Other income 364 27 235 $232,581 $14,726 $10,434 Operating income (loss) $6,380 $(3,444) $856 Year ended December 31, 2002 Revenues from external customers $761,575 $114,315 $18,747 Other income 1,340 501 41 Gain on involuntary conversion $762,915 $114,816 $18,788 Operating income (loss) $18,986 $(1,322) $1,563 Year ended December 31, 2001 Revenues from external customers $662,790 $112,827 $31,061 Other income 1,196 300 248 Gain on involuntary conversion 338 - - $664,324 $113,127 $31,309 Operating income (loss) $19,765 $(7,654) $(349) Segment Data Quarter ended December 31, 2002 Retail Other Total Revenues from external customers $50,033 $- $355,183 Other income/expense 138 291 1,075 Gain on involuntary conversion 302 302 $50,171 $593 $356,560 Operating income (loss) $1,495 $364 $5,596 Quarter ended December 31, 2001 Revenues from external customers $49,923 $- $307,038 Other income 153 535 1,314 $50,076 $535 $308,352 Operating income (loss) $1,782 $(46) $5,528 Year ended December 31, 2002 Revenues from external customers $181,197 $- $1,075,834 Other income 685 872 3,439 Gain on involuntary conversion 302 302 $181,882 $1,174 $1,079,575 Operating income (loss) $4,003 $(3,396) $19,834 Year ended December 31, 2001 Revenues from external customers $177,949 $- $984,627 Other income 618 1,141 3,503 Gain on involuntary conversion - - 338 $178,567 $1,141 $988,468 Operating income (loss) $1,868 $(1,699) $11,931
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/