The Andersons, Inc. Reports Record Revenues and Income EPS of $2.19 for Year vs. $1.69 in 2005
2006 Net Income of $36.3 Million Up 39%
Feb 8, 2007
The Andersons, Inc.
The Grain and Ethanol Group's full-year operating income of $27.9 million in 2006 established a new record, $15.3 million higher than the $12.6 million it achieved in 2005, the group's previous best full-year performance. Operating income of $12.3 million in the fourth quarter of 2006 was below the $14.8 million the group generated a year earlier. The number of grain bushels delivered to The Andersons' elevators increased slightly this year. Total grain gross profit and operating income also improved for the year, despite reduced earnings from grain storage attributable in part to higher interest costs. The group's emerging ethanol business continued to register income growth during the most recent quarter. The group's Albion, Michigan ethanol plant, in which The Andersons, Inc. is a significant investor, began production during the third quarter and shipped ethanol and distillers dried grain to customers throughout the fourth quarter of 2006. Construction of its Clymers, Indiana plant, in which the company also is a significant investor, is progressing well and is scheduled to start producing ethanol early in the second quarter of 2007. Recently construction also began on a Greenville, Ohio plant, which is expected to begin operations in early 2008. The group's investment in Lansing Trade Group, LLC exceeded its 2005 fourth-quarter income in the most recent three-month period and achieved significant income growth for the full year.
The Rail Group's 2006 revenues of $113 million exceeded 2005 by $21 million. Full-year operating income in 2006 was $19.5 million. In 2005, the group had operating income of $22.8 million on $92 million of revenues. Income from the rail leasing business was lower this year because gains from the sale of railcars were down since fewer cars were liquidated in 2006, and maintenance costs were higher. The group's railcar fleet continued to grow in 2006, and the utilization rate of the fleet remained high. Revenues and income from the group's railcar repair and manufacturing businesses also continued to increase this year. In the fourth quarter of 2005, the group generated total revenues of $33 million and $9.5 million of operating income, including a significant amount from the liquidation of some railcars. Without a similar sale during the fourth quarter this year, the group's fourth-quarter 2006 revenues of $24 million and operating income of $3.4 million were below its 2005 results.
The Plant Nutrient Group's revenues were $265 million in 2006, and its operating income was $3.3 million. In 2005, its revenues amounted to $271 million and operating income was $10.4 million. The company believes that farmers reduced the amount of nutrients applied to their fields in response to significantly higher energy and nutrient input costs during the important 2006 planting and growing seasons. This resulted in lower wholesale and retail demand for plant nutrients including a deferral of fall season purchasing, and a reduction in the group's gross profit and operating income. In the fourth- quarter of 2006, the group had operating income of $1.3 million on $67 million of revenues. In 2005, fourth-quarter revenues were $60 million, and operating income was $1.7 million.
The Turf and Specialty Group's full-year operating income was $3.2 million in 2006, on $111 million of revenues. In 2005, the group incurred an operating loss of $3.0 million, on revenues of $123 million. The year-to-year improvement resulted from a change in the group's business model which realigned staffing and assets in both the turf and cob products businesses. In the fourth quarter, the group typically incurs an operating loss due to the seasonal nature of its businesses. This year it achieved a slight operating profit for the quarter on revenues of $18 million. During the same three-month period in 2005, the group incurred an operating loss of $1.5 million, with revenues of $22 million.
The Retail Group achieved an operating income of $3.2 million in 2006. This was $0.3 million higher than its 2005 performance. Revenues amounted to $177 million in 2006, down 3.0 percent from 2005. Improved average gross margins were partially offset by lower average sales per transaction and increased operating expenses. The group's fourth-quarter operating income of $1.9 million was slightly below its year-earlier result. During the quarter, the group began construction of a smaller-format food-only store in Sylvania, Ohio. The new "Andersons Market" is scheduled to open in the spring of 2007.
"We've been making a lot of changes throughout the company during the past two years, and they're showing some very positive results," said President and Chief Executive Officer Mike Anderson. "Our strategic decision to enter the ethanol business is definitely having an impact, as is our continued growth in Rail, our investment in Lansing Trade Group, restructuring in Turf and Specialty, and other process improvements throughout the company. As a result, in spite of the really tough market realities encountered by our Plant Nutrient Group this year, we beat our previous net income record by 39 percent. This successful growth benefits all of our constituents - our customers, our employees, our communities, and of course, our shareholders. With the Clymers, Indiana ethanol plant scheduled to begin production two months from now, and continued growth in our rail business, we look forward to continued positive progress in the coming year."
The company will host a webcast on Friday, February 9, 2007 at 11:00 A.M. ET, to discuss its fourth quarter and full-year performance. This can be accessed under the heading "Investor Relations" on its website at www.andersonsinc.com.
The Andersons, Inc. is a diversified company with interests in the grain, ethanol and plant nutrient sectors of U.S. agriculture, as well as in railcar leasing and repair, turf products production and general merchandise retailing. Founded in Maumee, Ohio, in 1947, the company now has operations in seven U.S. states plus rail 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. It also includes financial information, of which, as of the date of this press release, the Company's independent auditors have not completed their audit. Although the Company believes that the assumptions upon which the financial information and 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 Year ended December 31 December 31 (in thousands, except for per share amounts) 2006 2005 2006 2005 Sales and merchandising revenues $463,415 $384,421 $1,458,053 $1,296,949 Cost of sales and merchandising revenues 402,865 315,548 1,250,921 1,098,506 Gross profit 60,550 68,873 207,132 198,443 Operating, administrative and general expenses 42,885 44,349 158,468 153,759 Interest expense 3,786 3,108 16,299 12,079 Other income, net 2,151 868 13,914 4,386 Equity in earnings of affiliates 2,911 984 8,190 2,321 Income before income taxes 18,941 23,268 54,469 39,312 Income tax provision 5,163 7,932 18,122 13,225 Net income $13,778 $15,336 $36,347 $26,087 Per common share: Basic earnings $0.78 $1.03 $2.27 $1.76 Diluted earnings $0.76 $0.99 $2.19 $1.69 Dividends paid $0.045 $0.0425 $0.1775 $0.1650 Weighted average shares outstanding-basic 17,611 14,930 16,007 14,842 Weighted average shares outstanding-diluted 18,122 15,490 16,566 15,410 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) December 31 December 31 (in thousands) 2006 2005 Assets Current assets: Cash and cash equivalents $23,398 $13,876 Restricted cash 3,801 3,936 Accounts receivable (net) and margin deposits 136,819 83,291 Inventories 299,105 240,806 Other current assets 33,325 30,632 Total current assets 496,448 372,541 Investments and other assets 72,335 39,008 Railcar assets leased to others (net) 145,059 131,097 Property, plant and equipment (net) 95,502 91,498 $809,344 $634,144 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $75,000 $12,400 Other current liabilities 265,040 263,922 Total current liabilities 340,040 276,322 Deferred items and other long-term liabilities 41,267 30,896 Long-term debt non-recourse 71,624 88,714 Long-term debt 86,238 79,329 Shareholders' equity 270,175 158,883 $809,344 $634,144 Segment Data Grain & Plant Turf & Ethanol Nutrient Rail Specialty Quarter ended December 31, 2006 Revenues from external customers $305,279 $67,117 $23,768 $17,955 Gross Profit 25,059 6,257 9,320 5,327 Other income / Equity in earnings of affiliates 3,799 234 69 28 Operating income (loss) 12,302 1,349 3,428 173 Quarter ended December 31, 2005 Revenues from external customers 215,795 60,400 33,455 21,979 Gross Profit 26,655 7,151 14,945 4,809 Other income / Equity in earnings of affiliates 1,157 200 106 44 Operating income (loss) 14,770 1,651 9,542 (1,486) Year ended December 31, 2006 Revenues from external customers 791,207 265,038 113,326 111,284 Gross Profit 62,809 24,123 45,709 21,728 Other income / Equity in earnings of affiliates 15,867 1,015 511 1,115 Operating income (loss) 27,955 3,287 19,543 3,246 Year ended December 31, 2005 Revenues from external customers 628,255 271,371 92,009 122,561 Gross Profit 50,456 32,774 43,281 18,888 Other income / Equity in earnings of affiliates 2,890 1,096 642 589 Operating income (loss) 12,623 10,351 22,822 (3,044) Segment Data Retail Other Total Quarter ended December 31, 2006 Revenues from external customers $49,296 $- $463,415 Gross Profit 14,587 - 60,550 Other income / Equity in earnings of affiliates 168 764 5,062 Operating income (loss) 1,856 (167) 18,941 Quarter ended December 31, 2005 Revenues from external customers 52,792 - 384,421 Gross Profit 15,313 - 68,873 Other income / Equity in earnings of affiliates 129 216 1,852 Operating income (loss) 2,003 (3,212) 23,268 Year ended December 31, 2006 Revenues from external customers 177,198 - 1,458,053 Gross Profit 52,763 - 207,132 Other income / Equity in earnings of affiliates 865 2,731 22,104 Operating income (loss) 3,152 (2,714) 54,469 Year ended December 31, 2005 Revenues from external customers 182,753 - 1,296,949 Gross Profit 53,044 - 198,443 Other income / Equity in earnings of affiliates 646 844 6,707 Operating income (loss) 2,921 (6,361) 39,312
First Call Analyst:
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/