The Andersons, Inc. Reports Record 3rd Qtr. Earnings
Cites Growth in Rail and Agriculture Businesses
EPS of $0.14 for quarter beats last year by $0.47
Nov 3, 2004
The Andersons, Inc.
The Agriculture Group achieved an operating income of $0.3 million for the quarter. In the third quarter of 2003, the group incurred an operating loss of $2.8 million. Revenues of $169 million in this year's third quarter were $9 million lower than a year ago. Third quarter revenues in the group's grain business were lower this year because of fewer bushels sold during the period. However, increased bushel receipts and higher average gross margins fueled gross profit growth and income improvement. The group's plant nutrient business also achieved gross profit and operating income improvement in the third quarter with increased fertilizer shipments and higher average gross margins. The Agriculture Group's operating income for the first nine months of 2004 amounted to $9.7 million, an increase of $5.6 million from the same period in 2003. Total revenues of $622 million for the nine-month period were $86 million higher than a year ago. At this time, the fall harvest is in full swing, and the USDA is predicting that U.S. farmers will realize record corn and soybean yields and production totals. The company also indicated that it is evaluating the possibility of investing in an ethanol production facility at one of several possible locations in its region.
The Rail Group's July - September 2004 performance far outpaced its prior year results. Operating income of $4.9 million in the third quarter this year was $4.2 million higher than the same three-month period of 2003. Total revenues of $19.4 million were $10.1 million higher than last year. Continued improvement in lease rates during the period contributed to this strong performance as did a $2.5 million year-to-year increase in gross profit on car sales. Through the first nine months of 2004, the group has achieved operating income of $8.2 million on revenues of $43.6 million. In the same period last year, income was $2.4 million on $26.3 million of revenues.
The Processing Group incurred an operating loss of $1.9 million in the third quarter this year. This was $0.7 million higher than the operating loss experienced in the same three-month period of 2003. Total revenues of $20.8 million were $2.7 million below last year. The third quarter is typically a loss period for this group's highly seasonal lawn fertilizer business. Through the first nine months of 2004, the group has achieved operating income of $2.4 million on $106 million of revenues. In the first nine months last year, the group had earned $2.6 million, and revenues amounted to $113 million. Although average gross margins have improved this year due to product mix improvements, volumes declined somewhat because of unfavorable weather patterns during the important lawn and garden season this spring. Noting recent escalation in some energy-related raw material costs, the company indicated that the Processing Group may also fall short of last year's better than normal fourth quarter volume and profitability levels.
The Retail Group's sales of $41.1 million in the third quarter were 1.9 percent below the same three-month period in 2003. Food-related product categories continued to achieve growth vs. prior-year levels, but home center products, especially lawn and garden categories, were down. In addition, labor and utility costs were higher than a year ago. As a result, the group's operating loss widened from $0.1 million in 2003, to $0.2 million in the third quarter this year. Through the first nine months of the year, the group has earned operating income of $1.2 million, or $0.4 million less than it did during the same period of 2003. Total revenues for the Retail Group year-to- date through September are $130 million, 1.4 percent above last year.
"The third quarter has traditionally been a loss period because of the seasonality in several of our businesses, so achieving net income in excess of a million dollars in the third quarter this year is gratifying," said President and Chief Executive Officer Mike Anderson. "During the quarter, when we saw that the Rail and Agriculture businesses were exceeding our performance expectations, we revised our full-year earnings per diluted share guidance upward. Now in the first week of November, the harvest is progressing well, fall fertilizer sales look promising, and the rail business remains strong. Although lawn fertilizer raw material costs have escalated and retail sales remain soft, I believe that the $1.80 to $2.05 full-year earnings guidance we issued in September is still appropriate."
The company will host a webcast on Thursday, November 4, 2004 at 11:00 A.M. EST, to discuss its third quarter performance and full-year outlook. This can be accessed under the heading "Financial Information" on its website at http://www.andersonsinc.com/ or at http://www.firstcallevents.com/service/ajwz410288278gf12.html .
The Andersons, Inc. is a diversified company with interests in the grain and plant nutrient sectors of U.S. agriculture, as well as in railcar marketing, industrial materials formulation, turf products production, and general merchandise retailing. Founded in Maumee, Ohio, in 1947, the company presently has operations in seven U.S. states plus rail equipment leasing interests in Canada and Mexico. Total revenues in 2003 exceeded $1.2 billion.
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 (Unaudited) Three Months ended Nine months ended (in thousands, except for per September 30 September 30 share amounts) 2004 2003 2004 2003 Sales and merchandising revenues $250,682 $253,027 $901,631 $803,828 Cost of sales and merchandising revenues 209,942 222,789 768,761 692,978 Gross profit 40,740 30,238 132,870 110,850 Operating, administrative and general expenses 38,801 33,748 111,680 101,055 Interest expense 2,470 1,603 7,874 6,119 Other income 1,892 1,519 4,122 3,816 Income before income taxes 1,361 (3,594) 17,438 7,492 Income taxes 313 (1,246) 6,574 2,528 Net income $1,048 $(2,348) $10,864 $4,964 Per common share: Basic earnings $0.14 $(0.33) $1.50 $0.70 Diluted earnings $0.14 $(0.33) $1.45 $0.68 Dividends paid $0.075 $0.075 $0.23 $0.225 Weighted average shares outstanding-basic 7,240 7,106 7,231 7,139 Weighted average shares outstanding-diluted 7,473 7,106 7,474 7,311 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) September 30 December 31 September 30 (in thousands) 2004 2003 2003 Assets Current assets: Cash and cash equivalents $8,138 $6,444 $3,964 Restricted cash 1,730 - - Accounts receivable (net) and margin deposits 63,520 68,546 71,092 Inventories 204,485 259,755 184,049 Other current assets 21,404 22,234 16,794 Total current assets 299,277 356,979 275,899 Other assets 20,662 13,702 14,915 Railcar assets leased to others (net) 100,259 29,489 26,979 Property, plant and equipment (net) 93,933 92,449 91,716 $514,131 $492,619 $409,509 Liabilities and shareholders' equity Current liabilities: Notes payable $10,600 $48,000 $80,000 Other current liabilities 191,046 219,447 113,273 Total current liabilities 201,646 267,447 193,273 Deferred items and other long-term liabilities 30,907 27,254 24,105 Long-term debt non-recourse 67,121 - - Long-term debt 88,877 82,127 83,241 Shareholders' equity 125,580 115,791 108,890 $514,131 $492,619 $409,509 Segment Data Agriculture Rail Processing Quarter ended September 30, 2004 Revenues from external customers $169,395 $19,385 $20,819 Gross Profit 15,719 9,464 4,162 Other income 1,114 183 314 Operating income (loss) 269 4,866 (1,859) Quarter ended September 30, 2003 Revenues from external customers 178,377 9,252 23,522 Gross Profit 11,413 3,087 4,411 Other income 647 128 464 Operating income (loss) (2,828) 693 (1,139) Nine months ended September 30, 2004 Revenues from external customers 621,796 43,598 106,076 Gross Profit 56,626 21,398 17,527 Other income 2,411 336 453 Operating income (loss) 9,680 8,207 2,371 Nine months ended September 30, 2003 Revenues from external customers 536,044 26,315 113,072 Gross Profit 48,138 8,587 18,051 Other income 1,705 213 782 Operating income (loss) 4,034 2,373 2,567 Segment Data Retail Other Total Quarter ended September 30, 2004 Revenues from external customers $41,083 $- $250,682 Gross Profit 11,666 - 41,011 Other income 131 150 1,892 Operating income (loss) (232) (1,683) 1,361 Quarter ended September 30, 2003 Revenues from external customers 41,876 - 253,027 Gross Profit 11,327 - 30,238 Other income 156 124 1,519 Operating income (loss) (65) (255) (3,594) Nine months ended September 30, 2004 Revenues from external customers 130,161 - 901,631 Gross Profit 37,590 - 133,141 Other income 541 381 4,122 Operating income (loss) 1,157 (3,977) 17,438 Nine months ended September 30, 2003 Revenues from external customers 128,397 - 803,828 Gross Profit 36,074 - 110,850 Other income 689 427 3,816 Operating income (loss) 1,574 (3,056) 7,492
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417