Press Releases
The Andersons, Inc.
The Grain & Ethanol Group's record operating income of $20.0 million in the second quarter was significantly more than its year earlier result of $12.0 million. The grain business benefited from significantly improved margins on grain sales and the more than doubling of service fee income. The business, however, continues to be impacted by rising costs associated with higher grain prices. Specifically, interest expense increased more than $5.6 million in comparison to the prior period, and contract fair value adjustments were increased due to the increased risk of contract default associated with rising grain prices. Income from the ethanol joint ventures also grew during the most recent quarter. Second quarter income from the group's investment in Lansing Trade Group was $5.1 million higher this year. Total second quarter revenues for the group were $696 million; this compares to total revenues of $324 million for the same period last year. While revenues for the group are higher, such amounts do not serve as good predictors of income or economic performance in a commodity based business. The Grain & Ethanol Group's operating income through the first six months was $22.2 million in both 2008 and 2007. Total revenues through June 2008 and 2007 were $1.2 billion and $568 million, respectively.
The Rail Group's operating income was $4.9 million in the second quarter on revenues of $43 million. Last year, the group reported $6.9 million of income and $42 million of revenues for the same three-month period. The group recognized $1.1 million in gross margin from the sale of railcars and related leases during the quarter; however, in the second quarter last year it recognized gains of $4.1 million for similar sales. Gross profit from the leasing business was higher due to a higher utilization rate and growth in the size of the fleet. The group now has 23,840 cars and locomotives, which is 5 percent more than it had 12 months ago. The average utilization rate (the percentage of the fleet in service) for the quarter was 93.2 percent in comparison to 92.0 percent for the same period last year. The gross profit of the railcar repair business grew slightly during the second quarter due to the addition of a new repair shop in the second half of 2007. The group's first half operating income this year was $11.3 million on $78 million of revenues. In 2007, operating income through June was $9.9 million and revenues were $68 million. Included in these results were gains on sales of railcars and related leases of $3.3 million and $5.0 million, respectively.
The Plant Nutrient Group achieved record operating income of $47.4 million during the second quarter of 2008 on revenues of $274 million. With these results, the group has had quarter income records for six consecutive quarters. The group reported a $17.1 million operating profit on $183 million of revenues in the second quarter of 2007. These exceptional earnings resulted from significant margin increases primarily resulting from inventory value appreciation stemming from its significant storage space and unprecedented escalation in basic nutrient prices. This escalation of plant nutrient prices, lower corn acres, and pre-season buying at the end of 2007 have led to a reduced sales volume when compared to last year. The group's first half operating income this year was $54.9 million on $379 million of revenues. Last year, its operating income through the first six months was $17.5 million on revenues of $249 million. The purchase of Douglass Fertilizer & Chemical Inc. that was completed last quarter has proven to be accretive to earnings, as expected. Yesterday, the group announced the purchase of three pelleted lime facilities in Ohio, Illinois and Nebraska. The acquisition allows the group to expand its value added product offering and further broaden its geographic territory.
The Turf & Specialty Group had operating income of $1.9 million in the second quarter this year on $36 million of revenues. Last year, the group reported $0.7 million of income on $30 million of revenues for the period. Turf products tonnage increased slightly from year to year, and gross profit per ton increased considerably, in spite of record high raw material prices this year, due to a larger percentage of sales coming from proprietary products such as Contec DG. Through the first half of 2008, the group's operating income was $3.9 million on $76 million of revenues. Last year, its operating income was $2.5 million for the same period, and revenues were $67 million. The group, along with several partners, was recently awarded a $5.0 million grant by the state of Ohio for research and development expenses; this will be utilized to further develop technologically advanced and proprietary products.
The Retail Group reported revenues of $53 million for the second quarter of 2008, which is slightly below the $55 million in revenues reported for the same period in 2007. This sales decline is due to the overall decline in consumer spending. For the three-month period, the group earned operating income of $3.4 million. In the comparable period last year, the group's operating income was $3.6 million. Through six months the group has broken even on $86 million of revenues. Last year, operating income through June was $1.3 million and total revenues were $89 million. Margins have been reduced due to competitive sales pressure.
"Our second quarter and first half results are outstanding," said President and Chief Executive Officer Mike Anderson. "Both our Plant Nutrient and Grain & Ethanol Groups contributed significantly to our income during the period. I want to extend special thanks to our Plant Nutrient Group team. The team has worked tirelessly to serve customers and optimize their inventory position, while simultaneously exploring multiple growth opportunities and integrating Douglass Fertilizer into their business. It was truly a team effort and to see their results is rewarding. We are also excited by the addition of the three pelleted lime facilities yesterday, as this acquisition, like Douglass Fertilizer, is consistent with our strategic goal of growing our business to a national footprint.
"Last week we revised our full year guidance to $5.00 - $5.40 per diluted share," Mr. Anderson continued. "Our guidance was heavily influenced by the reported and expected performance of our Plant Nutrient Group. Numerous factors, however, will have a bearing on the full year outcome; basic nutrient prices, grain prices, timing of railcar sales, and the performance of our equity investments, which include the significant contributions of Lansing Trade Group and the ethanol production facilities."
The company will host a webcast on Thursday, August 7, 2008 at 11:00 A.M. ET, to discuss its performance and full year outlook. This can be accessed under the heading "Investors" 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 11 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
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) 2008 2007 2008 2007
Sales and merchandising
revenues $1,100,700 $634,214 $1,813,701 $1,040,717
Cost of sales and
merchandising revenues 980,363 562,378 1,641,123 924,496
Gross profit 120,337 71,836 172,578 116,221
Operating, administrative
and general expenses 49,109 40,196 88,695 77,947
Allowance for doubtful
accounts receivable 864 411 2,569 644
Interest expense 8,521 4,190 17,643 9,212
Other income / gains:
Equity in earnings
of affiliates 7,781 4,823 16,420 7,655
Other income, net 2,155 7,068 5,039 16,941
Minority interest in net
(income) loss of subsidiary 682 433 (253) 516
Income before income taxes 72,461 39,363 84,877 53,530
Income taxes 26,835 13,875 31,428 18,803
Net income $45,626 $25,488 $53,449 $34,727
Per common share:
Basic earnings $2.53 $1.43 $2.96 $1.96
Diluted earnings $2.48 $1.40 $2.91 $1.90
Dividends paid $0.0775 $0.0475 $0.1550 $0.0950
Weighted average shares
outstanding-basic 18,065 17,792 18,046 17,761
Weighted average shares.
outstanding-diluted 18,380 18,245 18,383 18,260
The Andersons, Inc.
Consolidated Balance Sheets
(Unaudited)
June 30 December 31 June 30
(in thousands) 2008 2007 2007
Assets
Current assets:
Cash and cash equivalents 33,379 $22,300 $ 28,945
Restricted cash 3,664 3,726 3,756
Accounts receivable, net 194,243 106,257 138,451
Margin deposits, net 79,017 20,467 27,139
Inventories 406,839 502,904 215,925
Commodity derivative assets
- current 493,571 205,956 47,634
Other current assets 40,430 43,281 26,307
Total current assets 1,251,143 904,891 488,157
Investments and other assets 156,005 137,518 106,477
Commodity derivative assets 84,297 29,458 27,169
Railcar assets leased to others (net) 152,879 153,235 146,567
Property, plant and equipment (net) 110,146 99,886 99,117
$1,754,470 $1,324,988 $867,487
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $432,500 $ 245,500 $ 77,000
Commodity derivative liabilities
- current 160,611 122,488 39,481
Other current liabilities 350,796 359,224 215,196
Total current liabilities 943,907 727,212 331,677
Deferred items and other long-term
liabilities 53,058 49,631 40,147
Commodity derivative liabilities 19,923 2,090 26,002
Long-term debt non-recourse 47,934 56,277 64,382
Long-term debt 281,496 133,195 87,150
Minority interest 12,471 12,219 13,120
Shareholders' equity 395,681 344,364 305,009
$1,754,470 $1,324,988 $867,487
Segment Data
Grain & Plant Turf &
Ethanol Rail Nutrient Specialty
Quarter ended June 30, 2008
Revenues from external
customers $695,787 $42,941 $273,501 $35,915
Gross Profit 29,195 9,100 58,396 7,266
Other income / Equity in
earnings of affiliates 9,002 340 181 96
Operating income (loss) 19,994 4,874 47,369 1,882
Quarter ended June 30, 2007
Revenues from external
customers $323,580 $42,445 $182,908 $30,394
Gross Profit 15,254 10,901 23,391 5,167
Other income / Equity in
earnings of affiliates 8,361 431 300 133
Operating income (loss) 11,981 6,902 17,117 706
Grain & Plant Turf &
Ethanol Rail Nutrient Specialty
Six months ended June 30, 2008
Revenues from external
customers $1,194,910 $77,952 $378,970 $75,576
Gross Profit 40,574 20,251 72,074 14,192
Other income / Equity in
earnings of affiliates 20,175 518 327 189
Operating income (loss) 22,227 11,300 54,909 3,882
Six months ended June 30, 2007
Revenues from external
customers $567,523 $68,361 $249,468 $66,698
Gross Profit 30,674 18,530 28,816 11,238
Other income / Equity in
earnings of affiliates 17,175 522 456 195
Operating income (loss) 22,151 9,910 17,548 2,506
Segment Data
Retail Other Total
Quarter ended June 30, 2008
Revenues from external customers $52,556 $- $1,100,700
Gross Profit 16,380 - 120,337
Other income / Equity in earnings
of affiliates 161 156 9,936
Operating income (loss) 3,360 (5,018) 72,461
Quarter ended June 30, 2007
Revenues from external customers $54,887 $- $634,214
Gross Profit 17,123 - 71,836
Other income / Equity in earnings
of affiliates 158 2,508 11,891
Operating income (loss) 3,616 (959) 39,363
Retail Other Total
Six months ended June 30, 2008
Revenues from external customers $86,293 $- $1,813,701
Gross Profit 25,487 - 172,578
Other income / Equity in earnings
of affiliates 308 (58) 21,459
Operating income (loss) (17) (7,424) 84,877
Six months ended June 30, 2007
Revenues from external customers $88,667 $- $1,040,717
Gross Profit 26,963 - 116,221
Other income / Equity in earnings
of affiliates 318 5,930 24,596
Operating income (loss) 1,329 86 53,530
First Call Analyst:
FCMN Contact:
SOURCE: The Andersons, Inc.
CONTACT: Gary L. Smith, VP, Finance & Treasurer of The Andersons, Inc.,
+1-419-891-6417,
Web site: http://www.andersonsinc.com/