The Andersons, Inc. Reports Record Earnings for the Fourth Consecutive Year
Grain & Ethanol and Plant Nutrient Businesses Lead Earnings Growth
Feb 6, 2008
The Andersons, Inc.
The Grain & Ethanol Group's 2007 operating income of $65.9 million was more than double its previous income record of $28.0 million achieved in 2006. Total revenues were $1.5 billion for the year. This included $407 million of grain and ethanol sales made by the group in accordance with origination and marketing agreements between the company and its ethanol joint ventures, for which it receives a fee. The group's 2006 revenues were $791 million. Total revenues in the Grain & Ethanol Group have increased for both the quarter and year due to a considerable increase in both the volume and price of grain sold, and due to an increase in the gallons of ethanol sold. Income from the ethanol investments grew significantly during the year because of the three ethanol plants in operation or under development; the Albion, MI plant began production in August 2006, the Clymers, IN plant began production in April 2007 and the third plant in Greenville, OH is scheduled to begin production within the next week. The group's grain business also benefited from higher space and fee income. Additionally, income from the group's investment in Lansing Trade Group LLC was more than double the prior year. For the fourth quarter, the Grain & Ethanol Group's operating income was $30.1 million, in contrast to $12.3 million earned in the same three month period of 2006. Total revenues for the quarter were $548 million, including $144 million of grain and ethanol sales made by the group in accordance with origination and marketing agreements with the ethanol joint ventures, for which only a fee is received. In comparison, the group's fourth quarter revenues last year were $305 million.
The Rail Group's operating income for 2007 was $19.5 million, which is the same as 2006. Revenues of $130 million for the year were up from $113 million in the prior year. The group grew the rail fleet by more than 8 percent during 2007, and ended the year with more than 22,700 cars and locomotives. The group's average lease rates have remained stable. The average utilization rate (the percentage of the fleet's railcars in service) for 2007 was 92.6 percent, which was down from the 2006 average of 95.2 percent; however the year ended with a utilization rate of 93.4 percent. Including gains from railcar sales and related leases entered into during the year, gross profit in the group's leasing business was slightly higher than year earlier results. The railcar repair and manufacturing businesses experienced declines in gross profit during the year, but saw some improvement in the fourth quarter. The Rail Group generated $3.8 million in operating income in the fourth quarter of 2007 on $28 million of revenues. In 2006, operating income for the same three month period was $3.4 million and revenues amounted to $24 million.
In 2007, the Plant Nutrient Group exceeded income records ending the year with operating income of $27.1 million on $466 million of revenues. This compares to the prior year operating income of $3.3 million on revenues of $265 million. The 2007 income is more than double the group's prior record of $10.4 million, established in 2005. Total nutrient volume for the year increased by more than 40 percent; this was influenced by both an approximate 20 percent increase in corn acreage and market share growth. Margin improvement also contributed significantly to the improved bottom line. For the fourth quarter, the group's operating income was $8.7 million on $140 million of revenues. Last year its operating income was $1.3 million on revenues of $67 million for the same three month period. Sales volume remained high in the fourth quarter as a result of increased wheat acres and stepped up buying in the face of further escalation of nutrient prices and robust demand driven by anticipated strong corn acres in 2008.
The Turf & Specialty Group's full year operating income was $0.1 million on $104 million of revenues. In 2006, the group had operating income of $3.2 million, and total revenues were $111 million. The 2007 shortfall in the lawn business was attributable to reduced sales of insecticide and fungicide products, and the escalation of raw material costs. The cob business had lower earnings during 2007 mainly due to the need to outsource a portion of the cob from competitors, which resulted in a significantly higher cob cost for the year. The group incurred an operating loss of $0.8 million in the fourth quarter on $19 million of revenues. Last year, its operating income was $0.2 million for the same period, and revenues were $18 million.
Total sales for the Retail Group were $180 million in 2007, or 1.9 percent above the 2006 total of $177 million. Same store sales, however, were down approximately 1 percent. The group reported operating income of $0.1 million in 2007 after recording a $1.9 million impairment charge on certain retail assets. In the prior year, the group earned operating income of $3.2 million. The Retail Group's fourth quarter operating loss was $0.6 million on $50 million of revenues, which includes the impairment. Last year, operating income was $1.9 million, and total revenues were $49 million in the same three month period.
"To be reporting record breaking results for the fourth consecutive year is truly gratifying. Our Grain & Ethanol and Plant Nutrient groups achieved phenomenal income growth this year, and the Rail Group maintained solid performance despite some tightening in the rail industry," said President and Chief Executive Officer Mike Anderson. Mr. Anderson added, "To see the results of our strategic growth initiatives is very satisfying. Our investments in the ethanol business and Lansing Trade Group, and continual expansion of the rail business are clearly paying dividends. It was also rewarding to watch the Plant Nutrient Group rebound from the tough market realities of 2006 and end 2007 with record earnings --- what a difference a year can make. My thanks to all our employees whose hard work made our current year performance possible."
The company will host a webcast on Thursday, February 7, 2008 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 eight 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 Year ended December 31 December 31 (in thousands, except for per share amounts) 2007 2006 2007 2006 Sales and merchandising revenues $784,634 $463,415 $2,379,059 $1,458,053 Cost of sales and merchandising revenues 709,957 404,449 2,139,347 1,258,813 Gross profit 74,677 58,966 239,712 199,240 Operating, administrative and general expenses 51,664 41,301 169,753 150,576 Interest expense 5,662 3,786 19,048 16,299 Other income / gains: Equity in earnings of affiliates 14,689 2,911 31,863 8,190 Other income, net 2,591 2,151 21,731 13,914 Minority interest in net loss / (income) of subsidiary 291 - 1,356 - Income before income taxes 34,922 18,941 105,861 54,469 Income taxes 11,430 5,163 37,077 18,122 Net income $23,492 $13,778 $68,784 $36,347 Per common share: Basic earnings $1.31 $0.78 $3.86 $2.27 Diluted earnings $1.28 $0.76 $3.75 $2.19 Dividends paid $0.078 $0.045 $0.220 $0.178 Weighted average shares outstanding-basic 17,928 17,611 17,833 16,007 Weighted average shares outstanding-diluted 18,320 18,122 18,326 16,566 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) December 31 December 31 (in thousands) 2007 2006 Assets Current assets: Cash and cash equivalents $22,300 $23,398 Restricted cash 3,726 3,801 Accounts receivable (net) 106,257 87,698 Margin deposits (net) 30,467 15,273 Inventories 502,904 296,457 Commodity derivative assets - current 205,956 85,338 Other current assets 43,281 33,325 Total current assets 914,891 545,290 Investments and other assets 137,518 72,335 Commodity derivative assets 29,458 20,862 Railcar assets leased to others (net) 153,235 145,059 Property, plant and equipment (net) 99,886 95,502 $1,334,988 $879,048 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $245,500 $75,000 Commodity derivative liabilities - current 122,488 43,173 Other current liabilities 369,224 265,040 Total current liabilities 737,212 383,213 Deferred items and other long-term liabilities 49,631 41,267 Commodity derivative liability 2,090 26,531 Long-term debt non-recourse 56,277 71,624 Long-term debt 133,195 86,238 Minority interest 12,219 - Shareholders' equity 344,364 270,175 $1,334,988 $879,048 Segment Data Grain & Plant Turf & Ethanol Rail Nutrient Specialty Quarter ended December 31, 2007 Revenues from external customers $548,222 $27,681 $140,258 $18,921 Gross Profit 32,399 8,142 15,328 4,747 Other income / Equity in earnings of affiliates 16,190 273 103 58 Operating income (loss) 30,077 3,803 8,692 (785) Quarter ended December 31, 2006 Revenues from external customers $305,279 $23,768 $67,117 $17,955 Gross Profit 25,059 7,736 6,257 5,327 Other income / Equity in earnings of affiliates 3,799 69 234 28 Operating income (loss) 12,302 3,428 1,349 173 Year ended December 31, 2007 Revenues from external customers $1,498,652 $129,932 $466,458 $103,530 Gross Profit 79,367 37,040 50,602 19,738 Other income / Equity in earnings of affiliates 43,591 1,038 909 438 Operating income (loss) 65,934 19,505 27,055 95 Year ended December 31, 2006 Revenues from external customers $791,207 $113,326 $265,038 $111,284 Gross Profit 62,809 37,817 24,123 21,728 Other income / Equity in earnings of affiliates 15,867 511 1,015 1,115 Operating income (loss) 27,955 19,543 3,287 3,246 Segment Data Retail Other Total Quarter ended December 31, 2007 Revenues from external customers $49,552 $- $784,634 Gross Profit 14,061 - 74,677 Other income / Equity in earnings of affiliates 373 283 17,280 Operating income (loss) (636) (6,229) 34,922 Quarter ended December 31, 2006 Revenues from external customers $49,296 $- $463,415 Gross Profit 14,587 - 58,966 Other income / Equity in earnings of affiliates 168 764 5,062 Operating income (loss) 1,856 (167) 18,941 Year ended December 31, 2007 Revenues from external customers $180,487 $- $2,379,059 Gross Profit 52,965 - 239,712 Other income / Equity in earnings of affiliates 840 6,778 53,594 Operating income (loss) 139 (6,867) 105,861 Year ended December 31, 2006 Revenues from external customers $177,198 $- $1,458,053 Gross Profit 52,763 - 199,240 Other income / Equity in earnings of affiliates 865 2,731 22,104 Operating income (loss) 3,152 (2,714) 54,469
First Call Analyst:
SOURCE: The Andersons, Inc.
CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417
Web site: http://www.andersonsinc.com/