The Andersons, Inc. Reports Record Income
EPS of $1.40 for Second Quarter
Grain & Ethanol and Plant Nutrient Businesses Lead Earnings Growth
Aug 1, 2007
The Andersons, Inc.
The company's Grain & Ethanol Group achieved operating income of $12.0 million in the most recent quarter, significantly above the $1.9 million it earned in the second quarter of 2006. Total revenues were $324 million for the period. This included $57 million of ethanol sales made by the group in accordance with marketing agreements between the company and its ethanol joint ventures. In the second quarter of 2006, the group's total revenues were $149 million. Grain benefited from improved storage income and fee income for originating corn for ethanol companies, including those in which it is a significant investor. Ethanol also achieved income growth during the most recent quarter. The Albion, Michigan plant, which commenced production of ethanol during the second half of last year, was in operation throughout the second quarter this year, and the plant in Clymers, Indiana began production of ethanol this spring. Second-quarter income from the group's investment in the Lansing Trade Group LLC was lower this year. Through the first six months of 2007, the Grain & Ethanol Group's operating income was $22.2 million, or $18.5 million higher than the first half of 2006. Total year-to-date revenues this year were $568 million. In 2006, the group's first half revenues were $277 million.
The Rail Group's operating income of $6.9 million in the second quarter of 2007 was $1.9 million more than it achieved in the same three-month period a year ago. Revenues of $42 million for the quarter were up $14 million. The group's railcar fleet increased by about 16 percent from its June 2006 total. However, its utilization rate (the percentage of the fleet's railcars in service at the end of the period) decreased somewhat from a year ago. Including some gains from railcar sales made during the second quarter, operating income in the group's leasing business was higher than its year- earlier results, but its railcar repair and manufacturing businesses experienced lower operating income in total for the quarter. The group's first half operating income this year was $9.9 million on $68 million of revenues. In 2006, operating income through the first six months was $11.2 million and revenues amounted to $62 million.
The Plant Nutrient Group achieved operating income of $17.1 million in the second quarter of 2007 on $183 million of revenues. The application of nutrients in conjunction with the planting of agricultural crops throughout the U.S. each spring makes the second quarter the key selling season for this group. This was especially true this year. A large increase in U.S. corn acreage this spring helped the group achieve by far its best-ever quarterly operating income. In 2006, the group's operating income was $5.0 million for the quarter, on $113 million of revenues. The group's first half operating income this year was $17.5 million on $249 million of revenues. Last year, its operating income through the first six months was $3.8 million and revenues amounted to $159 million.
The Turf & Specialty Group had operating income of $0.7 million in the second quarter this year on $30 million of revenues. Last year, it reported $1.3 million of income and $33 million of revenues for the period. Turf products tonnage was lower in the second quarter this year due to relatively dry weather throughout much of the country which curtailed sales of some formulated products. While raw material prices remained high by historical standards, average lawn products gross margins increased slightly as a result of several new value-added products. Through the first half of 2007, the group's operating income was $2.5 million on $67 million of revenues. Last year, its operating income was $3.5 million for the same period, and revenues amounted to $73 million.
The Retail Group reported total revenues of $55 million for the most recent quarter. Same-store sales were down 2.9 percent for the period. Sales of some lawn & garden products were clearly impacted by the dry weather this spring. For this three-month period, the group achieved operating income of $3.6 million. In the comparable period last year, the group's operating income was $4.2 million with revenues of $55 million. The group's six-months to-date operating income this year was $1.3 million on $89 million of revenues. Last year, operating income through June was $1.7 million, and total revenues stood at $87 million.
"Our second-quarter and first-half results are gratifying," said President and Chief Executive Officer Mike Anderson. "The entire Plant Nutrient team did an excellent job in responding to unprecedented market demand this spring, our Grain & Ethanol businesses continued to achieve significant income growth, and we were again able to expand our railcar fleet."
Mr. Anderson also stated, "In mid-June it became apparent that the spring season in our agriculture-related businesses was stronger than we had expected, and we had also begun production of ethanol at the Clymers, Indiana plant which had been under construction for the past year. As a result, we announced that our full-year earnings outlook had improved. While there are still a couple of months left in the growing season this year, and it has been drier than normal in parts of our eastern corn belt region, we now believe that our 2007 full-year earnings will be within a range from $2.90 to $3.15 per diluted share."
The company will host a webcast on Thursday, August 2, 2007 at 11:00 A.M. ET, to discuss its performance and full year outlook. 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 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 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 (Unaudited) Three Months ended Six Months ended June 30 June 30 (in thousands, except for per share amounts) 2007 2006 2007 2006 Sales and merchandising revenues $634,214 $378,109 $1,040,717 $658,767 Cost of sales and merchandising revenues 559,601 323,342 920,083 563,729 Gross profit 74,613 54,767 120,634 95,038 Operating, administrative and general expenses 42,477 38,581 82,097 75,273 Interest expense 4,190 4,501 9,212 8,695 Other income / gains: Equity in earnings of affiliates 3,916 2,209 6,748 5,762 Other income, net 7,068 2,352 16,941 5,411 Minority interest in net loss / (income) of subsidiary 433 - 516 - Income before income taxes 39,363 16,246 53,530 22,243 Income taxes 13,875 5,899 18,803 8,061 Net income $25,488 $10,347 $34,727 $14,182 Per common share: Basic earnings $1.43 $0.68 $1.96 $0.94 Diluted earnings $1.40 $0.66 $1.90 $0.90 Dividends paid $0.0475 $0.045 $0.0950 $0.0875 Weighted average shares outstanding-basic 17,792 15,220 17,761 15,155 Weighted average shares outstanding-diluted 18,245 15,776 18,260 15,728 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) June 30 December 31 June 30 (in thousands) 2007 2006 2006 Assets Current assets: Cash and cash equivalents $28,945 $23,398 $15,474 Restricted cash 3,756 3,801 3,836 Accounts receivable (net) 138,451 87,698 87,152 Margin deposits (net) 27,139 15,273 7,133 Inventories 215,925 296,457 174,310 Commodity derivative assets - current 47,634 85,338 5,686 Other current assets 26,307 33,325 24,623 Total current assets 488,157 545,290 318,214 Investments and other assets 106,477 72,335 64,344 Commodity derivative assets 27,169 20,862 11,192 Railcar assets leased to others (net) 146,567 145,059 136,271 Property, plant and equipment (net) 99,117 95,502 91,355 $867,487 $879,048 $621,376 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $77,000 $75,000 $51,600 Commodity derivative liabilities - current 39,481 43,173 9,562 Other current liabilities 215,196 265,040 169,723 Total current liabilities 331,677 383,213 230,885 Deferred items and other long-term liabilities 40,147 41,267 33,683 Commodity derivative liability 26,002 26,531 11,066 Long-term debt non-recourse 64,382 71,624 82,529 Long-term debt 87,150 86,238 88,862 Minority interest 13,120 - - Shareholders' equity 305,009 270,175 174,351 $867,487 $879,048 $621,376 Segment Data Grain & Plant Turf & Ethanol Rail Nutrient Specialty Quarter ended June 30, 2007 Revenues from external customers $323,580 $42,445 $182,908 $30,394 Gross Profit 16,161 12,771 23,391 5,167 Other income / Equity in earnings of affiliates 7,454 431 300 133 Operating income (loss) 11,981 6,902 17,117 706 Quarter ended June 30, 2006 Revenues from external customers $148,763 $27,836 $113,308 $33,428 Gross Profit 10,304 11,883 10,110 5,628 Other income / Equity in earnings of affiliates 2,363 195 332 155 Operating income (loss) 1,923 4,999 5,041 1,344 Six months ended June 30, 2007 Revenues from external customers $567,523 $68,361 $249,468 $66,698 Gross Profit 31,581 22,036 28,816 11,238 Other income / Equity in earnings of affiliates 16,268 522 456 195 Operating income (loss) 22,151 9,910 17,548 2,506 Six months ended June 30, 2006 Revenues from external customers $277,388 $62,219 $159,341 $72,933 Gross Profit 17,249 24,761 14,243 12,263 Other income / Equity in earnings of affiliates 8,004 315 433 518 Operating income (loss) 3,703 11,217 3,806 3,493 Segment Data Retail Other Total Quarter ended June 30, 2007 Revenues from external customers $54,887 $- $634,214 Gross Profit 17,123 - 74,613 Other income / Equity in earnings of affiliates 158 2,508 10,984 Operating income (loss) 3,616 (959) 39,363 Quarter ended June 30, 2006 Revenues from external customers $54,774 $- $378,109 Gross Profit 16,842 - 54,767 Other income / Equity in earnings of affiliates 268 1,248 4,561 Operating income (loss) 4,155 (1,216) 16,246 Six months ended June 30, 2007 Revenues from external customers $88,667 $- $1,040,717 Gross Profit 26,963 - 120,634 Other income / Equity in earnings of affiliates 318 5,930 23,689 Operating income (loss) 1,329 86 53,530 Six months ended June 30, 2006 Revenues from external customers $86,886 $- $658,767 Gross Profit 26,522 - 95,038 Other income / Equity in earnings of affiliates 432 1,471 11,173 Operating income (loss) 1,714 (1,690) 22,243
First Call Analyst:
FCMN Contact: [email protected]
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/