Press Releases
The Andersons, Inc.
The nine-month net income increase was achieved despite a 13.7 percent decrease in revenues to $636 million from $737 million during the comparable period in 1998. In the third quarter, revenues of $175 million were 24.3 percent less than last year's $231 million. A significant portion of the company's revenues are generated by its grain business and are heavily influenced by grain prices. Because operating income in a commodity-based business does not correlate directly with grain prices or revenue, changes in The Andersons' total revenues are not necessarily indicative of net income trends.
Agriculture
The company's Agriculture Group operates grain elevators and wholesale fertilizer distribution facilities in four eastern corn belt states. Collectively these facilities handle about 150 million bushels of grain and one million tons of dry and liquid agricultural fertilizer products annually. The group also operates 14 farm centers in the region.
The group's operating performance in the third quarter was comparable to the 1998 period. Expense increases associated with additional fertilizer facilities and volume-related wholesale fertilizer gross-profit reductions this year were mostly offset by lower operating costs at the group's grain elevators. Despite weakness in parts of U.S. agriculture, the grain elevator segment was quite strong due to the need to store sizable carryover grain stocks. Fertilizer revenues declined because farmers reduced their fertilizer use as a result of lower grain prices. Also, the disruption in rail traffic since the Conrail divestiture is impacting the flow of grain between the group's farmers and end-users.
Manufacturing
The Manufacturing Group repairs, sells and leases various types of railcars and operates a custom steel fabrication business. This business has achieved dramatic revenue and income growth in the past few years and now controls a fleet of about 3,800 railcars.
Railcar lease rates in several industries are somewhat weak at the present time, and railcar market values are experiencing a cyclical downturn. As a result, the group's 1999 third-quarter revenues and operating income, though strong, were lower than the year-earlier period.
Processing
The Processing Group produces granular lawn fertilizer products for major retailers throughout the country as well as professional lawn-care and golf course markets. It also produces ice-melt products, corncob-based chemical and feed-ingredient carriers and animal bedding and litter products.
The group's lawn-products segment continued to achieve volume and revenue growth in the 1999 third quarter versus the comparable period in 1998. Operating income declined somewhat, however, because of the significant investment being made to increase productivity at the company's Maumee, Ohio, plant, and start-up costs associated with the addition of manufacturing and distribution facilities in eastern Pennsylvania and Alabama.
Retail
This group operates six large retail stores in Ohio. The company characterizes its retail concept as "More For Your Home." A traditional home center with plumbing, electrical and building supplies, etc., it also features indoor and outdoor garden centers, extensive lines of housewares and domestics, pet supplies, automotive supplies, sporting goods, and a unique specialty food offering.
In the third quarter of 1999, the Retail Group's same-store sales and gross margins were virtually equivalent to year-earlier levels. Profitability was slightly impacted by increased wages resulting from the tight labor market.
Company
According to President and Chief Executive Officer Mike Anderson, "The third quarter is always a soft period for us. While virtually all of our third-quarter decline from a year earlier occurred in our Manufacturing and Processing businesses, we continue to remain excited about both of these units. Although Manufacturing's results are down, we believe this is a growth sector, and we continue to add to our fleet of railcars. In our Processing Group, the drop in income was purposeful and represents an essential down payment on our ability to support the growth we are experiencing. We're still cautious about earnings expectations for the balance of the year since we will continue to experience these one-time costs and will be handling a slightly smaller and dryer than normal grain crop."
The Andersons, Inc. paid quarterly cash dividends of $0.05 per share in the first three quarters of this year. In 1998, the quarterly dividend was $0.04. The company continues to repurchase shares on the open market from time to time.
The Andersons, Inc. is a respected leader and dominant regional player in grain merchandising. Its strong position in this basic business has allowed the company to diversify into other agribusiness operations, processing and railcar leasing businesses, and general merchandise retailing. The company has been in operation since 1947.
This release contains forward-looking statements, including statements with respect to anticipated revenues, adequacy of cash flows and profitability. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, 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.
For further information regarding The Andersons free of charge via fax dial1-800-PRO-INFO and enter company code "ANDE."
The Andersons, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months ended Nine Months ended
September 30 September 30
(in thousands, except for
per share amounts) 1999 1998 1999 1998
Sales and merchandising
revenues $173,911 $229,216 $633,123 $733,236
Other income 763 1,576 2,631 3,584
Total 174,674 230,792 635,754 736,820
Cost of sales and
merchandising revenues 139,984 193,875 510,417 617,281
Gross profit 34,690 36,917 125,337 119,539
Operating, administrative
and general expenses 35,866 36,225 111,202 106,163
Interest expense 2,567 2,153 6,685 6,497
Total 38,433 38,378 117,887 112,660
Income (loss) before
income taxes (3,743) (1,461) 7,450 6,879
Income taxes (1,231) (489) 2,458 2,305
Net income (loss) $(2,512) $(972) $4,992 $4,574
Per common share:
Basic earnings (loss) $(0.32) $(0.12) $0.62 $0.57
Diluted earnings
(loss) $(0.32) $(0.12) $0.61 $0.57
Dividends paid $0.05 $0.04 $0.15 $0.12
Weighted average shares
outstanding-basic 7,968 8,145 8,066 8,033
Weighted average shares
outstanding-diluted 7,968 8,145 8,205 8,078
The Andersons, Inc.
Consolidated Balance Sheets
(in thousands) September 30 December 31
1999 1998
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $5,026 $3,253
Accounts receivable:
Trade accounts and notes receivable (net) 44,409 62,647
Margin deposits 5,062 248
Total 49,471 62,895
Inventories 212,065 184,990
Deferred income taxes 2,629 4,634
Prepaid expenses 2,996 5,502
Total current assets 272,187 261,274
Other assets:
Notes receivable (net) and other assets 6,652 8,435
Investments in and advances to affiliates 1,004 1,057
Total 7,656 9,492
Property, plant and equipment (net) 93,882 90,057
Total $373,725 $360,823
Liabilities and owners' equity
Current liabilities:
Notes payable $95,000 $7,700
Accounts payable for grain 33,308 88,978
Other accounts payable 62,846 75,301
Accrued expenses 12,012 17,079
Current maturities of long-term debt 5,407 6,318
Total current liabilities 208,573 195,376
Pension and postretirement benefits 2,705 3,113
Long-term debt 70,027 71,565
Deferred income taxes 7,333 7,330
Minority interest 1,205 705
Owners' equity 83,882 82,734
Total $373,725 $360,823
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., 419-891-6417; or Marilyn
Windsor, 312-640-6692, or Lisa Fortuna, 312-640-6779, both of the Financial
Relations Board
Website: http://www.andersonsinc.com/