The Andersons, Inc. Reports Record 2nd Qtr. Net Income of $10.4 Million
EPS of $1.48 for First Half up $0.17 from 2004
Six-Month Net Income Up 16 Percent
Aug 2, 2005
The Andersons, Inc.
The Agriculture Group's second-quarter operating income of $8.9 million was $2.0 million below the $10.9 million it earned in the same period last year. Revenues of $253 million for the second quarter this year were $14 million below last year primarily due to lower average corn and soybean prices. Average grain margins were relatively unchanged during the quarter, but space income declined and some grain inventory shrink and quality adjustments were incurred. The group's plant nutrient business achieved operating income growth in the second quarter in spite of significantly higher commodity prices compared to 2004. Tonnage shipments were relatively unchanged, but operating income per ton was higher, and the group's farm centers also improved. Through the first six months of 2005, the Agriculture Group had operating income of $9.9 million on revenues of $418 million. In the first half of last year, the group had revenues of $450 million and operating income of $9.4 million. The group expects to begin construction of a 55 million gallon-per-year ethanol production facility adjacent to its Albion, Michigan grain facility soon. While preliminary site work has begun, completion of the project is contingent upon several final items, including state and local economic incentives. The company is also exploring the construction of a 110 million gallon ethanol plant adjacent to its Clymers, Indiana grain facility. No decision has yet been made about construction on this site. The Company anticipates some level of outside investment on each of these projects. In July, a grain elevator located in Toledo, Ohio, which The Andersons operates, was severely damaged by an explosion and fire. The company indicated that the necessary repairs will extend into next year. As a result, 2005 income will be reduced, but this will be mostly offset next year when the insurance claim process is completed. Total income for the two years should not be impacted materially by the accident.
The Rail Group's operating income of $3.8 million in the second quarter this year was $1.7 million above the $2.1 million it earned in the same three- month period a year ago. Revenues of $17.7 million for the quarter were $4.6 million higher than the $13.1 generated in the second quarter 2004. The rail leasing business continued to achieve excellent revenue and operating income growth during the most recent three-month period. Car values and lease rates continued to be strong, and the utilization rate of the group's railcar fleet was again higher than year-earlier levels. The group's railcar repair shops and its steel fabrication business also achieved revenue and operating income growth in the second quarter. For the first half of 2005, the Rail Group had operating income of $7.4 million on revenues of $35.4 million. Last year the group reported first-half revenues of $24.2 million and operating income of $3.3 million. During the second quarter, the group purchased 2,000 railcars, increasing its total fleet to approximately 18,000 railcars. In July, the company announced the purchase of two product lines of fluid filtration equipment that will be manufactured and marketed by the group's steel fabrication business.
The Processing Group's operating income of $0.4 million in the second quarter of 2005 was $0.6 million lower than a year ago. Revenues of $40.5 million for the quarter were $0.5 million higher than the $40.0 million it registered in the second quarter of last year. Turf-care product volumes were lower this year, primarily with industrial accounts, and expenses in the cob products business increased. Through six months this year, the Processing Group had $81.4 million of revenues and $1.5 million of operating income. In the first half of 2004, the group's revenues were $85.3 million and operating income was $4.2 million. While reaffirming its commitment to the professional sector of the lawn products industry, the group is reassessing its strategic position in that industry's consumer and industrial sectors.
The Retail Group reported revenues of $54.4 million for the second quarter of 2005, a 0.2 percent decrease in same-store sales compared to the same three-month period in 2004. The average sale per customer and average gross margin both improved somewhat, and the group's operating income of $3.8 million for the period was $0.1 million better than its 2004 performance. Sales of lawn and garden products were strong this spring, recovering from the rather poor spring season experienced last year. The group's June year-to-date revenues were $89.5 million this year, 0.4 percent higher than last year. First half operating income this year was $1.7 million, $0.3 million above the $1.4 million of operating income it generated in 2004.
"The second quarter is always a very strong period for several of our seasonal businesses, and this year was no exception. Our net income of $10.4 million for the three-month period was a record," said President and Chief Executive Officer Mike Anderson. "Agriculture's plant nutrient business, Rail and Retail all achieved operating income growth during the second quarter of 2005, and these same businesses are also ahead of last year through six months. In total, the Company's earnings are seventeen cents a share ahead of last year, and the strong cash flow generated by our operating businesses continues to enable us to pursue promising new growth opportunities."
Anderson also stated "The corn and soybean crops in our region were definitely impacted by the hot and dry weather we experienced in June and early July. Recent rains have helped, but the proportion of Illinois crops rated "good" or "excellent" in weekly USDA surveys remains way below recent years' experience. Although we expect that our Agriculture Group's second half grain income will be closer to multi-year averages rather than last year's record performance, the strong results achieved by our plant nutrient, rail and retail businesses suggest that our previously-announced full-year earnings projection of $2.20 to 2.50 per share is still appropriate."
The company will host a webcast on Wednesday, August 3, 2005 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 http://www.andersonsinc.com/.
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.
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. Although the Company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct.
The Andersons, Inc. is located on the Internet at 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) 2005 2004 2005 2004 Sales and merchandising revenues $365,116 $374,510 $623,773 $648,846 Cost of sales and merchandising revenues 312,098 318,442 530,796 556,716 Gross profit 53,018 56,068 92,977 92,130 Operating, administrative and general expenses 35,855 38,135 72,756 72,879 Interest expense 3,191 2,738 6,141 5,404 Other income, net 1,430 1,117 2,509 1,908 Equity in earnings of affiliates 14 160 460 322 Income (loss) before income taxes 15,416 16,472 17,049 16,077 Income taxes 5,063 6,410 5,662 6,261 Net Income (loss) $10,353 $10,062 $11,387 $9,816 Per common share: Basic earnings (loss) $1.40 $1.39 $1.54 $1.36 Diluted earnings (loss) $1.35 $1.35 $1.48 $1.31 Dividends paid $0.080 $0.075 $0.160 $0.150 Weighted average shares outstanding-basic 7,399 7,235 7,386 7,227 Weighted average shares outstanding-diluted 7,688 7,472 7,670 7,475 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) June 30 December 31 June 30 (in thousands) 2005 2004 2004 Assets Current assets: Cash and cash equivalents $7,864 $8,439 $8,768 Restricted cash 1,435 1,532 1,777 Accounts receivable (net) and margin deposits 91,025 66,235 75,343 Inventories 182,405 251,428 152,865 Other current assets 16,177 30,659 20,987 Total current assets 298,906 358,293 259,740 Other assets 18,928 21,437 22,179 Railcar assets leased to others (net) 134,450 101,358 103,214 Property, plant and equipment (net) 91,678 92,510 94,360 $543,962 $573,598 $479,493 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $69,900 $12,100 $15,000 Other current liabilities 148,032 240,447 152,158 Total current liabilities 217,932 252,547 167,158 Deferred items and other long-term liabilities 33,085 33,029 29,323 Long-term debt non-recourse 59,333 64,343 74,216 Long-term debt 89,105 89,803 83,578 Shareholders' equity 144,507 133,876 125,218 $543,962 $573,598 $479,493 Segment Data Agriculture Rail Processing Retail Other Total Quarter ended June 30, 2005 Revenues from external customers $252,561 $17,673 $40,464 $54,418 $- $365,116 Gross Profit 22,937 8,589 4,823 16,669 - 53,018 Other income / Equity in earnings of affiliates 429 356 139 245 275 1,444 Operating income (loss) 8,914 3,799 412 3,843 (1,552) 15,416 Quarter ended June 30, 2004 Revenues from external customers 266,819 13,133 40,031 54,527 - 374,510 Gross Profit 27,189 6,865 5,506 16,508 - 56,068 Other income / Equity in earnings of affiliates 767 56 88 254 112 1,277 Operating income (loss) 10,940 2,050 1,018 3,706 (1,242) 16,472 Six months ended June 30, 2005 Revenues from external customers 417,570 35,378 81,355 89,470 - 623,773 Gross Profit 38,718 17,104 10,681 26,474 - 92,977 Other income / Equity in earnings of affiliates 1,337 541 307 377 407 2,969 Operating income (loss) 9,865 7,439 1,489 1,745 (3,489) 17,049 Six months ended June 30, 2004 Revenues from external customers 450,298 24,213 85,257 89,078 - 648,846 Gross Profit 40,907 11,934 13,365 25,924 - 92,130 Other income / Equity in earnings of affiliates 1,297 153 139 410 231 2,230 Operating income (loss) 9,411 3,341 4,230 1,389 (2,294) 16,077
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/