The Andersons, Inc. Reports First Quarter Results
Earnings Of $0.27 Per Diluted Share
May 6, 2009
The Andersons, Inc.
The Grain & Ethanol Group's first quarter operating income of $5.7 million was higher than its year earlier result of $2.2 million. This was the result of the grain business having a record quarter. The grain business benefited from significantly higher space income. In contrast, last year, the grain business suffered a significant basis loss during the quarter. The ethanol business lost less than $1.0 million in the first quarter due mainly to the combined performance of the company's equity investments in three ethanol limited liability companies. The ethanol business last year benefited from margins being locked in before the market decline, and earning $1.3 million in development fee income. The Lansing Trade Group quarterly results were significantly lower than last year, primarily due to declines in its trading business. Total first quarter revenues for the group were $481 million; this includes $206 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. In the first quarter of 2008, the group's total revenues were $499 million and included $186 million of the aforementioned sales.
The Rail Group's operating income was $0.9 million in the first quarter of 2009, which is down considerably from the $6.4 million earned during the same three month period a year ago. The group has been impacted by the continued double digit declines in rail traffic that began in late 2008. Revenues of $27 million for the quarter were down from the $35 million reported in 2008. This quarter, the group recognized $0.3 million in gross margin from the sale of railcars and related leases, whereas last year $2.2 million was recorded. Gross profit from the leasing business was significantly less due to lower utilization rates, the corresponding increase in storage expense from idle assets, increased maintenance expense, and decreased leasing rates. The group now has approximately 23,700 cars and locomotives, which is 2 percent more than it had twelve months ago. The average utilization rate (the percentage of the fleet in service) for the quarter was 86.8 percent in comparison to 93.4 percent for the same period last year. Nationwide a significant portion of the total US rail fleet is idle, which suggests a further decline in the Rail Group's utilization rate is possible. The gross profit of both the railcar repair and manufacturing businesses declined significantly in the first quarter due to reduced sales resulting from the overall economic decline.
The Plant Nutrient Group earned an operating income of $2.0 million during the first quarter of 2009, on revenues of $112 million. In the same three month period of 2008, the group reported a $7.5 million operating profit on $105 million of revenues. Overall margins were down this quarter in comparison to the prior year. Margins were positively impacted by a favorable product mix and the recognition of high gross margin profit on deferred sales and prepay contracts from 2008. Margins, however, were negatively impacted by a $2.9 million lower of cost or market inventory adjustment the group recorded this quarter. Total volume increased due to the eight additional fertilizer and lime facilities acquired after the first quarter of 2008. Excluding the newly acquired businesses, volume was down approximately 15 percent due primarily to de-stocking of the retail dealer inventory and weather related spring field work delays. As was recently announced, the group has entered into a definitive agreement to acquire the Hartung Brothers Inc. Fertilizer Division (HBI). HBI is a regional wholesale supplier of liquid fertilizers with five locations in Wisconsin and one in southeastern Minnesota. This acquisition will allow the group to grow its value added product offering, expand its wholesale customer base, and broaden its geographic territory.
The Turf & Specialty Group achieved operating income of $3.1 million on $45 million of revenues during the first quarter. Last year, the group reported $2.0 million of income on $40 million of revenues for the period. Turf products tonnage increased 13 percent from year to year. Gross profit per ton also increased this quarter. The group continues to experience positive results from its focus on proprietary products and expanded product lines.
The Retail Group reported revenues of $34 million for the first quarter of both 2008 and 2009. Customer counts for the year increased slightly; however, this was offset by a slight decline in the average sale per customer. The group continues to be impacted by the weakness in the overall economy; however, successful pricing and marketing strategies led gross profit to increase by more than 3 percent this quarter. For the three month period, the Retail Group incurred an operating loss of $2.7 million, compared to a $3.4 million loss in the first quarter of 2008.
"Considering the state of the economy we feel good about our overall performance so far this year. Our Grain & Ethanol Group had mixed results; with the record performance of the grain business being offset by the results of the ethanol business and Lansing Trade Group. The Plant Nutrient Group was profitable in a quarter that in the past has often been a loss quarter; however, they were again affected by lower of cost or market adjustments. The Turf & Specialty Group is performing well as the value added and propriety product strategy they have pursued continues to be successful. Our Rail Group, and our Retail Group to a lesser extent; however, have been impacted by the overall economic decline," said President and Chief Executive Officer Mike Anderson. "We are especially thankful for the diversity of our business units, as this purposeful diversification has positioned us to remain a strong and profitable company during uncertain economic times," added Mr. Anderson.
Mr. Anderson also stated, "In the past we provided an earnings range with our first quarter release, with updates as deemed necessary. After much consideration, however, we have decided to discontinue our practice of giving earnings guidance at this time. In addition to the impact of the unprecedented pressures facing the overall economy, numerous other factors will have a bearing on our full year outcome: weather patterns during the agricultural planting and growing season within our region, volatility of nutrient and energy prices, timing of railcar sales, and the performance of our equity investments, which include the ethanol production plants and Lansing Trade Group."
The company will host a webcast on Thursday, May 7, 2009 at 11:00 A.M. ET, to discuss its performance. This can be accessed under the heading "Investor" 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 12 U.S. states and Puerto Rico, 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 FINANCIAL TABLES FOLLOW . . . The Andersons, Inc. Consolidated Statements of Income (Unaudited) Three Months ended March 31 (in thousands, except for per share amounts) 2009 2008 ---- ---- Sales and merchandising revenues $697,392 $713,001 Cost of sales and merchandising revenues 636,018 660,760 ------- ------- Gross profit 61,374 52,241 Operating, administrative and general expenses 46,339 39,586 Allowance for doubtful accounts receivable 191 1,705 Interest expense 5,690 9,122 Other income / gains: Equity in earnings (loss) of affiliates (3,674) 8,639 Other income, net 1,239 2,884 ----- ----- Income before income taxes 6,719 13,351 Income taxes 2,806 4,593 ----- ----- Net income 3,913 8,758 Net (income) loss attributable to the noncontrolling interest 1,039 (935) ----- ---- Net income attributable to The Andersons, Inc. $4,952 $7,823 ====== ====== Per common share: Basic earnings $0.27 $0.43 ===== ===== Diluted earnings $0.27 $0.42 ===== ===== Dividends paid $0.0850 $0.0775 ======= ======= The Andersons, Inc. Consolidated Balance Sheets (Unaudited) March 31 December 31 March 31 (in thousands) 2009 2008 2008 ---- ---- ---- Assets Current assets: Cash and cash equivalents $42,285 $81,682 $34,765 Restricted cash 7,342 3,927 3,689 Accounts receivable, net 154,528 126,255 176,225 Margin deposits, net 11,883 13,094 65,932 Inventories 381,306 436,920 558,030 Commodity derivative assets - current 58,804 84,919 283,417 Other current assets 78,943 109,165 59,801 ------ ------- ------ Total current assets 735,091 855,962 1,181,859 Investments and other assets 149,285 153,488 156,521 Commodity derivative assets 2,110 3,662 50,828 Railcar assets leased to others (net) 174,849 174,132 172,142 Property, plant and equipment (net) 120,561 121,529 100,192 ------- ------- ------- $1,181,896 $1,308,773 $1,661,542 ========== ========== ========== Liabilities and shareholders' equity Current liabilities: Short-term line of credit $25,200 $ - $390,000 Commodity derivative liabilities - current 39,345 67,055 153,791 Other current liabilities 344,355 458,208 362,736 ------- ------- ------- Total current liabilities 408,900 525,263 906,527 Deferred items and other long-term liabilities 84,304 80,687 49,419 Commodity derivative liabilities 1,754 3,706 8,734 Long-term debt non-recourse 32,552 40,055 51,667 Long-term debt 284,827 293,955 279,348 Shareholders' equity 369,559 365,107 365,847 ------- ------- ------- $1,181,896 $1,308,773 $1,661,542 ========== ========== ========== Segment Data Grain & Plant Turf & Ethanol Rail Nutrient Specialty ------- ---- -------- --------- Quarter ended March 31, 2009 Revenues from external customers $480,521 $26,770 $111,762 $44,703 Gross Profit 23,299 5,731 14,522 8,419 Equity in earnings (loss) of affiliates (3,676) - 2 - Other income (loss), net 559 (34) 488 305 Income before income taxes 4,696 882 2,047 3,097 (Income) loss attributable to the noncontrolling interest 1,039 - - - Operating income (loss) (a) 5,735 882 2,047 3,097 Quarter ended March 31, 2008 Revenues from external customers $499,123 $35,011 $105,469 $39,661 Gross Profit 11,379 11,151 13,678 6,926 Equity in earnings of affiliates 8,636 - 3 - Other income (loss), net 2,537 178 143 93 Income before income taxes 3,168 6,426 7,540 2,000 (Income) loss attributable to the noncontrolling interest (935) - - - Operating income (loss) (a) 2,233 6,426 7,540 2,000 Retail Other Total ------ ----- ----- Quarter ended March 31, 2009 Revenues from external customers $33,636 $ - $697,392 Gross Profit 9,403 - 61,374 Equity in earnings (loss) of affiliates - - (3,674) Other income (loss), net 111 (190) 1,239 Income before income taxes (2,701) (1,302) 6,719 (Income) loss attributable to the noncontrolling interest - - 1,039 Operating income (loss) (a) (2,701) (1,302) 7,758 Quarter ended March 31, 2008 Revenues from external customers $33,737 $ - $713,001 Gross Profit 9,107 - 52,241 Equity in earnings of affiliates - - 8,639 Other income (loss), net 147 (214) 2,884 Income before income taxes (3,377) (2,406) 13,351 (Income) loss attributable to the noncontrolling interest - - (935) Operating income (loss) (a) (3,377) (2,406) 12,416 (a) Operating income (loss) for each Group is defined as net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets and is reported net of the noncontrolling interest share of (income) loss.
First Call Analyst:
SOURCE: The Andersons, Inc.
CONTACT: Gary L. Smith, VP, Finance & Treasurer of The Andersons, Inc.,
Web Site: http://www.andersonsinc.com/