The Andersons, Inc. Reports First Quarter Results
Record First Quarter Earnings of $0.66 per Diluted Share The Grain & Ethanol Group Leads Earning Results
May 3, 2010
The Andersons, Inc.
The Grain & Ethanol Group reported a record first quarter operating income of $20.7 million, which was considerably higher than its year earlier result of $5.7 million. This was the result of all three businesses having improved results. The grain business had a record quarter as it benefited from higher space income due in part to the late harvest in 2009. The ethanol business had high earnings despite the decline in ethanol industry margins during the first quarter, as a large percentage of the ethanol had been contracted in advance. The Lansing Trade Group quarterly results were significantly higher than last year. Total first quarter revenues for the Grain & Ethanol Group were $521 million; this includes $210 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 2009, the group's total revenues were $481 million and included $206 million of the aforementioned sales. On April 30, the company finalized the previously announced acquisition of the assets of O'Malley Grain, Inc.'s two grain cleaning and storage facilities in Mansfield, IL and Fairmont, NE. This acquisition will allow the group to expand further into the production value chain.
The Rail Group's operating income was $1.0 million in the first quarter of 2010, which is comparable to the $0.9 million earned during the same three month period a year ago. Revenues were $27 million for the quarter in both 2010 and 2009. This quarter, the group recognized $2.6 million in gross margin from the scrapping and sale of railcars, whereas last year $0.3 million was recorded. Gross profit from the leasing business was significantly less due primarily to lower utilization rates, and the corresponding carrying costs of idle assets. The group now has approximately 23,400 cars and locomotives, which is down slightly from the prior year. The average utilization rate (the percentage of the fleet in service) for the quarter was 70.0 percent in comparison to 86.8 percent for the same period last year. As of the end of March, utilization had increased to 70.9 percent. Nationwide a significant portion of the total US rail fleet remains idle, however, rail traffic has recently posted moderate improvement. Both the railcar repair and manufacturing businesses continue to be negatively impacted by the overall economic decline.
The Plant Nutrient Group had operating income of $0.7 million during the first quarter of 2010. In the same three month period of 2009, the group reported a $2.0 million operating profit. Revenues for the first quarter of 2010 and 2009 were $103 million and $112 million, respectively. Even though tons sold increased by almost 10 percent, revenues declined in 2010 due to a decrease in the average selling price. Overall margins were down this quarter in comparison to the prior year because early 2009 margins were favorably impacted by high margins on deferred sales and prepay contracts from 2008. Margins have now returned to more normal levels and are meeting the company's expectations.
The Turf & Specialty Group achieved operating income of $2.7 million on $42 million of revenues during the first quarter. Last year, the group reported $3.1 million of income on $45 million of revenues for the period. Turf products tonnage was down slightly from the prior year, however, gross profit per ton increased this quarter due to product mix. The group continues to experience positive results from its focus on proprietary products and expanded product lines.
The Retail Group had an operating loss of $2.8 million during the first quarter of 2010 on revenues of $30 million. During the same period of the prior year the group had an operating loss of $2.7 million, and total same store revenues were $31 million. Customer counts decreased during the quarter in comparison to the prior year. The group continues to be impacted by the weakness in the overall economy; however, margins are remaining relatively stable.
The company recorded a one time adjustment to increase income tax expense by $1.5 million, as a result of the Patient Protection and Affordable Care Act, signed into law during the first quarter.
"We are pleased to be able to report record earnings," CEO Mike Anderson stated. "The Grain & Ethanol Group led our results with strong performance in all three areas - grain, ethanol and the Lansing Trade Group investment. As I review these results, I am again reminded that our strategy of purposeful diversification allows us to remain a strong and profitable company even when one or more of our business units is continuing to feel the after effect of last year's recession," added Mr. Anderson.
The company will host a webcast on Tuesday, May 4, 2010 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 across the United States, in Puerto Rico, and has 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) 2010 2009 ---- ---- Sales and merchandising revenues $721,998 $697,392 Cost of sales and merchandising revenues 663,448 636,018 ------- ------- Gross profit 58,550 61,374 Operating, administrative and general expenses 45,403 46,530 Interest expense 4,635 5,690 Other income / gains: Equity in earnings (loss) of affiliates 9,905 (3,674) Other income, net 3,654 1,239 ----- ----- Income before income taxes 22,071 6,719 Income taxes 9,415 2,806 ----- ----- Net income 12,656 3,913 Net (income) loss attributable to the noncontrolling interest (391) 1,039 ---- ----- Net income attributable to The Andersons, Inc. $12,265 $4,952 ======= ====== Per common share: Basic earnings $0.67 $0.27 ===== ===== Diluted earnings $0.66 $0.27 ===== ===== Dividends paid $0.0875 $0.0850 ======= ======= The Andersons, Inc. Consolidated Balance Sheets (Unaudited) March 31 December 31 March 31 (in thousands) 2010 2009 2009 ---- ---- ---- Assets Current assets: Cash and cash equivalents $74,459 $145,929 $42,285 Restricted cash 3,336 3,123 7,342 Accounts receivable, net 142,617 137,195 154,528 Margin deposits, net 32,255 27,012 11,883 Inventories 374,893 407,845 381,306 Commodity derivative assets - current 25,942 24,255 58,804 Other current assets 55,049 41,464 78,943 ------ ------ ------ Total current assets 708,551 786,823 735,091 Investments and other assets 192,993 182,989 149,285 Commodity derivative assets 158 3,137 2,110 Railcar assets leased to others (net) 175,219 179,154 174,849 Property, plant and equipment (net) 132,661 132,288 120,561 $1,209,582 $1,284,391 $1,181,896 ========== ========== ========== Liabilities and shareholders' equity Current liabilities: Short-term line of credit $- $- $25,200 Commodity derivative liabilities -current 62,636 24,871 39,345 Other current liabilities 344,400 454,250 344,355 ------- ------- ------- Total current liabilities 407,036 479,121 408,900 Deferred items and other long-term liabilities 91,840 90,138 84,304 Commodity derivative liabilities 3,190 830 1,754 Long-term debt non-recourse 15,316 19,270 32,552 Long-term debt 272,535 288,756 284,827 Shareholders' equity 419,665 406,276 369,559 $1,209,582 $1,284,391 $1,181,896 ========== ========== ========== Segment Data Grain & Plant Turf & Ethanol Rail Nutrient Specialty ------- ---- -------- --------- Quarter ended March 31, 2010 Revenues from external customers $520,889 $26,690 $103,158 $41,633 Gross Profit 25,933 4,002 11,996 8,440 Equity in earnings of affiliates 9,903 - 2 - Other income, net 673 1,809 331 417 Income before income taxes 21,107 1,026 719 2,664 (Income) loss attributable to the noncontrolling interest (391) - - - Operating income (loss) (a) 20,716 1,026 719 2,664 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 Retail Other Total ------ ----- ----- Quarter ended March 31, 2010 Revenues from external customers $29,628 $- $721,998 Gross Profit 8,179 - 58,550 Equity in earnings of affiliates - - 9,905 Other income, net 119 305 3,654 Income before income taxes (2,827) (618) 22,071 (Income) loss attributable to the noncontrolling interest - - (391) Operating income (loss) (a) (2,827) (618) 21,680 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 (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.
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SOURCE: The Andersons, Inc.
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Web Site: http://www.andersonsinc.com/