The Andersons, Inc. Reports Record Quarterly Earnings
2nd Qtr. Net Income Of $10.1 Million Up 29% From Last Year
Raises Full-Year Earnings Guidance
Aug 4, 2004
The Andersons, Inc.
The Agriculture Group achieved an operating income of $10.9 million for the quarter. In the second quarter of 2003, the group earned $7.9 million. Revenues of $268 million in this year's second quarter were $60 million higher than a year ago. Second quarter revenues and gross profit in the group's grain business were higher this year due to higher average grain prices, increased storage income and a greater number of bushels sold. The recently acquired elevator in Oakville, Indiana and increased investment in Lansing Grain LLC also contributed to the grain income improvement. The number of tons sold during the second quarter by the group's plant nutrient business increased from the prior year. Total revenues also increased due to higher raw material costs. However, average gross margins were somewhat lower, and plant nutrient income was down slightly from the second quarter of last year. The Agriculture Group's operating income for the first six months of 2004 amounted to $9.4 million, an increase of $2.5 million from the first half of 2003. Total revenues of $452 million for the six-month period were $95 million higher than a year ago. At this point in the agricultural growing season, the outlook for this year's corn crop is very good. In fact, the USDA is predicting that U.S. farms will see record yields this fall.
The Rail Group's second quarter income again outpaced its prior year performance. Operating income of $2.1 million in the second quarter this year was $0.7 million higher than the same three-month period of 2003. Total revenues of $13.1 million were $0.5 million higher than last year. The large acquisition of rail equipment, related leases and management contracts that the group announced midway through the first quarter contributed to the strong second quarter performance. Through the first six months of 2004, the group has achieved operating income of $3.3 million on revenues of $24.2 million. In the first half of last year, income was $1.7 million on revenues of $17.1 million.
The Processing Group generated revenues of $40.0 million in the second quarter of 2004 and operating income of $1.0 million. In 2003, the group incurred a slight operating loss during the period on revenues of $37.1 million. The strongest sales period for lawn products manufacturers typically occurs in the first calendar quarter each year. The second quarter then consists primarily of refill orders from retailers and distributors. This year the Processing Group's lawn business, which had experienced a weather- related decline in its first quarter results, more than recouped this income shortfall during the second quarter. Increased volumes in some markets and mix-related gains in average gross margins fueled this improvement. Through the first six months of 2004, the group has achieved operating income of $4.2 million on $85.3 million of revenues. First half income last year was $3.7 million, and revenues amounted to $89.6 million. Noting recent escalation in some energy-related raw material costs, the company indicated that the Processing Group may not duplicate last year's better than normal second half performance.
The Retail Group's sales of $54.5 million in the second quarter matched the same three-month period in 2003. Both the number of customers served and the average amount of each customer's purchase were almost identical to the levels experienced last year. Average margins were impacted, however, by weak lawn and garden sales, the result of unusually cool and wet weather throughout most of the spring. Lawn and garden is typically a major product category in the group's stores during the spring season. Through the first half of this year, the group has earned operating income of $1.4 million, or $0.3 million less than it did during the first six months of 2003. Total revenues to-date through June were $89.1 million, 3 percent above last year.
"Achieving our best-ever quarterly performance has really been gratifying," said President and Chief Executive Officer Mike Anderson. "It's an accomplishment made possible by the dedication, hard work and infectious enthusiasm demonstrated by employees throughout the company. Despite worrisome energy costs, rising interest rates and continued escalation in health care expenses, conditions in several of our businesses are generally improving, and I now believe that our earnings per share for the year could exceed the upper end of the range we had projected at the end of the first quarter. While forecasting future results in our diverse businesses is not precise, I now believe that the company's 2004 full-year earnings could be within the range of $1.65 to $1.90 per share."
The company will host a webcast on Thursday, August 5, 2004 at 11:00 A.M. EDT, to discuss its second quarter performance and full-year outlook. This can be accessed under the heading "Financial Information" on its website at www.andersonsinc.com or at www.firstcallevents.com/service/ajwz409023204gf12.html .
The Andersons, Inc. is a regional grain merchandiser with diversified businesses in agriculture, the formulation and distribution of agricultural plant nutrients and industrial materials, railcar marketing, turf products production and general merchandise retailing that generate revenues of approximately $1.2 billion per year. Founded in 1947, the company operates grain and production facilities throughout the Midwest and six retail stores in northern and central Ohio. The Andersons' corporate headquarters is located in Maumee, Ohio. Additional information is available online at http://www.andersonsinc.com/ .
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 (Unaudited) Three Months ended Six months ended June 30 June 30 (in thousands, except for per share amounts) 2004 2003 2004 2003 Sales and merchandising revenues $375,899 $312,150 $650,949 $550,801 Cost of sales and merchandising revenues 319,831 264,421 558,819 470,189 Gross profit 56,068 47,729 92,130 80,612 Operating, administrative and general expenses 38,135 34,869 72,879 67,307 Interest expense 2,738 2,213 5,404 4,516 Other income 1,277 1,168 2,230 2,297 Income before income taxes 16,472 11,815 16,077 11,086 Income taxes 6,410 4,022 6,261 3,774 Net income $10,062 $7,793 $9,816 $7,312 Per common share: Basic earnings $1.39 $1.09 $1.36 $1.02 Diluted earnings $1.35 $1.07 $1.31 $1.00 Dividends paid $0.075 $0.070 $0.15 $0.14 Weighted average shares outstanding-basic 7,235 7,130 7,227 7,155 Weighted average shares outstanding-diluted 7,472 7,290 7,475 7,318 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) June 30 December 31 June 30 (in thousands) 2004 2003 2003 Assets Current assets: Cash and cash equivalents $8,768 $6,444 $14,573 Restricted cash 1,777 - - Accounts receivable (net) and margin deposits 75,343 68,546 62,780 Inventories 152,865 259,755 170,450 Other current assets 20,987 22,234 12,199 Total current assets 259,740 356,979 260,002 Other assets 21,507 13,702 14,369 Railcar assets leased to others (net) 103,214 29,489 29,695 Property, plant and equipment (net) 94,360 92,449 91,653 $478,821 $492,619 $395,719 Liabilities and shareholders' equity Current liabilities: Notes payable $15,000 $48,000 $60,000 Other current liabilities 152,158 219,447 115,576 Total current liabilities 167,158 267,447 175,576 Deferred items and other long-term liabilities 28,651 27,254 24,068 Long-term debt non-recourse 74,216 - - Long-term debt 83,578 82,127 84,752 Shareholders' equity 125,218 115,791 111,323 $478,821 $492,619 $395,719 The Andersons, Inc. Segment Data Agriculture Rail Processing Quarter ended June 30, 2004 Revenues from external customers $268,208 $13,133 $40,031 Gross Profit 27,189 6,865 5,506 Other income 767 56 88 Operating income (loss) 10,940 2,050 1,018 Quarter ended June 30, 2003 Revenues from external customers 207,762 12,681 37,130 Gross Profit 22,972 3,358 5,158 Other income 487 35 115 Operating income (loss) 7,894 1,376 (33) Six months ended June 30, 2004 Revenues from external customers 452,401 24,213 85,257 Gross Profit 40,907 11,934 13,365 Other income 1,297 153 139 Operating income (loss) 9,411 3,341 4,230 Six months ended June 30, 2003 Revenues from external customers 357,667 17,063 89,550 Gross Profit 36,725 5,500 13,640 Other income 1,058 85 318 Operating income (loss) 6,862 1,680 3,706 The Andersons, Inc. Segment Data Retail Other Total Quarter ended June 30, 2004 Revenues from external customers $54,527 $- $375,899 Gross Profit 16,508 - 56,068 Other income 254 112 1,277 Operating income (loss) 3,706 (1,242) 16,472 Quarter ended June 30, 2003 Revenues from external customers 54,577 - 312,150 Gross Profit 16,241 - 47,729 Other income 395 136 1,168 Operating income (loss) 4,262 (1,684) 11,815 Six months ended June 30, 2004 Revenues from external customers 89,078 - 650,949 Gross Profit 25,924 - 92,130 Other income 410 231 2,230 Operating income (loss) 1,389 (2,294) 16,077 Six months ended June 30, 2003 Revenues from external customers 86,521 - 550,801 Gross Profit 24,747 - 80,612 Other income 533 303 2,297 Operating income (loss) 1,639 (2,801) 11,086
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417