The Andersons, Inc. Reports 3rd Quarter Results; $0.6 Million Loss vs. $1.0 Million Income in Same Period Last Year
Company Reaffirms EPS Guidance of $2.20 to $2.50 For 2005
Nov 2, 2005
The Andersons, Inc.
The Agriculture Group incurred an operating loss of $3.3 million in the third quarter. Last year it reported an operating income of $0.3 million for the period. Revenues of $206 million for the third quarter this year were $39 million above last year primarily due to increased grain sales volume. Average grain margins were lower during the quarter, and some grain inventory and quality adjustments were incurred. The group's plant nutrient business matched its 2004 results for the third quarter. Nutrient sales volume was down slightly, and commodity prices were significantly higher than they were in 2004, but margins remained strong, and application acreage growth improved service revenues. Through the first three quarters of 2005, the Agriculture Group had operating income of $6.6 million on revenues of $623 million. In the first nine months of last year, the group had revenues of $617 million and operating income of $9.7 million. The company is a 44 percent equity investor in The Andersons Albion Ethanol LLC which began construction of a 55 million gallon-per-year ethanol production facility during the third quarter. The new plant will be situated next to The Andersons' Albion, Michigan grain elevator. The company is also exploring the construction of a 110 million gallon ethanol plant adjacent to its Clymers, Indiana grain facility and anticipates some level of outside investment in this project as well. In July, a grain elevator located in Toledo, Ohio, which The Andersons operates, was severely damaged by an explosion and fire. Although negatively impacting its current year income, the company believes that the accident will not have a material impact on the two-year (2005-06) total once the insurance claim process is completed sometime next year.
The Rail Group's operating income of $5.8 million in the third quarter this year was $0.9 million above the $4.9 million it earned in the same three- month period a year ago. Revenues of $23.2 million for the quarter were $3.8 million higher than the $19.4 generated in the third quarter of 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 third quarter operating results included income from the sale of some railcars, although this was less than the income it realized on a larger sale of railcars during the third quarter of last year. The group's railcar repair shops' revenues and operating income for the period were down slightly from a year ago, but the steel fabrication business, including the fluid filtration product lines that the group acquired during the quarter, contributed to the overall revenue and income growth. Through nine months, the Rail Group had operating income of $13.3 million on revenues of $58.6 million and had added more than 3,000 railcars to its fleet, increasing its total to approximately 18,000 railcars. Last year the group reported September year-to-date revenues of $43.6 million and operating income of $8.2 million.
The Processing Group's $3.0 million operating loss in the third quarter was $1.1 million higher than the $1.9 million operating loss it incurred a year ago. Revenues of $19.2 million for the quarter were $1.6 million below the $20.8 million it registered in the third quarter of last year. Turf-care product volumes were lower this year, primarily with industrial accounts, and cob product gross margins declined due to increased raw material costs. Cob operating expenses were also higher in the third quarter this year. Through nine months, the Processing Group had $100.6 million of revenues and an operating loss of $1.6 million. In the first three quarters of 2004, the group reported revenues of $106.1 million and operating income of $2.4 million. Recently, the group announced a restructuring of its turf products business to focus on the professional market and certain areas of the consumer and industrial markets.
The Retail Group reported revenues of $40.5 million for the most recent quarter, a 1.4 percent decrease in same-store sales from the third quarter of 2004. The group's third-quarter operating loss was $0.8 million this year, $0.6 million wider than last year's result. While sales in food categories were higher than last year, and their margins remained strong, sales in other product categories were down. Operating expenses were somewhat higher during the quarter in part due to increased health-care and other employee benefit costs. The group's September year-to-date revenues were $130 million this year, just slightly lower than last year. Operating income for the first nine months of 2005 was $0.9 million, about $0.3 million below the $1.2 million it generated in the first three quarters of 2004.
"Our Rail Group and Agriculture's plant nutrient business are achieving excellent income growth this year," said President and Chief Executive Officer Mike Anderson. "In spite of the impact of insurance deductibles and business interruptions in our grain and cob operations this quarter, and severance costs we incurred in the restructuring of our lawn business, our overall performance in the third quarter leaves us right on track toward achieving the $2.20 to $2.50 earnings per share for the year that we've been projecting throughout the year. More importantly, we're encouraged by our ability to continue to grow our very profitable Rail business and to expand into the promising ethanol industry."
The company will host a webcast on Thursday, November 3, 2005 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 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 products 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 Nine Months ended September 30 September 30 (in thousands, except for per share amounts) 2005 2004 2005 2004 Sales and merchandising revenues $288,708 $248,124 $912,481 $896,970 Cost of sales and merchandising revenues 252,162 207,384 782,958 764,100 Gross profit 36,546 40,740 129,523 132,870 Operating, administrative and general expenses 36,654 38,801 109,410 111,680 Interest expense 2,830 2,470 8,971 7,874 Other income, net 1,056 1,251 3,565 3,159 Equity in earnings of affiliates 877 641 1,337 963 Income (loss) before income taxes (1,005) 1,361 16,044 17,438 Income taxes (369) 313 5,293 6,574 Net Income (loss) $(636) $1,048 $10,751 $10,864 Per common share: Basic earnings (loss) $(0.09) $0.14 $1.45 $1.50 Diluted earnings (loss) $(0.09) $0.14 $1.40 $1.45 Dividends paid $0.085 $0.075 $0.245 $0.225 Weighted average shares outstanding-basic 7,445 7,240 7,406 7,231 Weighted average shares outstanding-diluted 7,445 7,473 7,691 7,474 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) September 30 December 31 September 30 (in thousands) 2005 2004 2004 Assets Current assets: Cash and cash equivalents $9,592 $8,439 $8,138 Restricted cash 1,367 1,532 1,730 Accounts receivable (net) and margin deposits 78,845 66,235 63,520 Inventories 184,247 251,428 204,485 Other current assets 28,537 30,659 21,404 Total current assets 302,588 358,293 299,277 Other assets 33,732 21,437 21,472 Railcar assets leased to others (net) 112,882 101,358 100,259 Property, plant and equipment (net) 92,098 92,510 93,933 $541,300 $573,598 $514,941 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $42,900 $12,100 $10,600 Other current liabilities 174,473 240,447 191,046 Total current liabilities 217,373 252,547 201,646 Deferred items and other long-term liabilities 33,979 33,029 31,717 Long-term debt non-recourse 59,164 64,343 67,121 Long-term debt 87,128 89,803 88,877 Shareholders' equity 143,656 133,876 125,580 $541,300 $573,598 $514,941 Segment Data Agriculture Rail Processing Retail Other Total Quarter ended September 30, 2005 Revenues from external customers $205,814 $23,176 $19,227 $40,491 $- $288,708 Gross Profit 10,659 11,232 3,398 11,257 - 36,546 Other income / Equity in earnings of affiliates 1,339 (5) 238 140 221 1,933 Operating income (loss) (3,312) 5,841 (3,047) (827) 340 (1,005) Quarter ended September 30, 2004 Revenues from external customers 166,837 19,385 20,819 41,083 - 248,124 Gross Profit 15,448 9,464 4,162 11,666 - 40,740 Other income / Equity in earnings of affiliates 1,114 183 314 131 150 1,892 Operating income (loss) 269 4,866 (1,859) (232) (1,683) 1,361 Nine months ended September 30, 2005 Revenues from external customers 623,384 58,554 100,582 129,961 - 912,481 Gross Profit 49,377 28,336 14,079 37,731 - 129,523 Other income / Equity in earnings of affiliates 2,676 536 545 517 628 4,902 Operating income (loss) 6,553 13,280 (1,558) 918 (3,149) 16,044 Nine months ended September 30, 2004 Revenues from external customers 617,135 43,598 106,076 130,161 - 896,970 Gross Profit 56,355 21,398 17,527 37,590 - 132,870 Other income / Equity in earnings of affiliates 2,411 336 453 541 381 4,122 Operating income (loss) 9,680 8,207 2,371 1,157 (3,977) 17,438
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/