FOR IMMEDIATE RELEASE AT THE COMPANY: Gary Smith (419) 891 — 6417 TUESDAY, AUGUST 2, 2005
THE ANDERSONS, INC. REPORTS RECORD 2nd QTR. NET INCOME OF $10.4 MILLION EPS OF $1.48 FOR FIRST HALF UP $0.17 FROM 2004 Six-Month Net Income Up 16 Percent
MAUMEE, OHIO, AUGUST 2, 2005—The Andersons, Inc. (Nasdaq: ANDE), today announced second-quarter 2005 net income of $10.4 million, an improvement of $0.3 million from the second quarter of 2004 when the company earned $10.1 million. Earnings per diluted share for the period were $1.35, unchanged from 2004 results. Total revenues were $365 million for the second quarter this year compared to $375 million a year ago. The reduction in revenues was attributed to lower average grain prices. The company’s second-quarter 2005 results included a favorable tax adjustment of $0.6 million attributed to Ohio tax reform legislation which was enacted on June 30th. For the first half of 2005, the company’s net income was $11.4 million, or $1.48 per diluted share, on revenues of $624 million. Last year, The Andersons earned $9.8 million, or $1.31 per diluted share, in the first half, on revenues of $649 million.
The Agriculture Group’s second-quarter operating income of $8.9 million was $2.0 million below the $10.9 million it earned in the same period last year. Revenues of $253 million for the second quarter this year were $14 million below last year primarily due to lower average corn and soybean prices. Average grain margins were relatively unchanged during the quarter, but space income declined and some grain inventory shrink and quality adjustments were incurred. The group’s plant nutrient business achieved operating income growth in the second quarter in spite of significantly higher commodity prices compared to 2004. Tonnage shipments were relatively unchanged, but operating income per ton was higher, and the group’s farm centers also improved. Through the first six months of 2005, the Agriculture Group had operating income of $9.9 million on revenues of $418 million. In the first half of last year, the group had revenues of $450 million and operating income of $9.4 million. The group expects to begin construction of a 55 million gallon-per-year ethanol production facility adjacent to its Albion, Michigan grain facility soon. While preliminary site work has begun, completion of the project is contingent upon several final items, including state and local economic incentives. The company is also exploring the construction of a 110 million gallon ethanol plant adjacent to its Clymers, Indiana grain facility. No decision has yet been made about construction on this site. The Company anticipates some level of outside investment on each of these projects. In July, a grain elevator located in Toledo, Ohio, which The Andersons operates, was severely damaged by an explosion and fire. The company indicated that the necessary repairs will extend into next year. As a result, 2005 income will be reduced, but this will be mostly offset next year when the insurance claim process is completed. Total income for the two years should not be impacted materially by the accident.
The Rail Group’s operating income of $3.8 million in the second quarter this year was $1.7 million above the $2.1 million it earned in the same three-month period a year ago. Revenues of $17.7 million for the quarter were $4.6 million higher than the $13.1 generated in the second quarter 2004. The rail leasing business continued to achieve excellent revenue and operating income growth during the most recent three-month period. Car values and lease rates continued to be strong, and the utilization rate of the group’s railcar fleet was again higher than year-earlier levels. The group’s railcar repair shops and its steel fabrication business also achieved revenue and operating income growth in the second quarter. For the first half of 2005, the Rail Group had operating income of $7.4 million on revenues of $35.4 million. Last year the group reported first-half revenues of $24.2 million and operating income of $3.3 million. During the second quarter, the group purchased 2,000 railcars, increasing its total fleet to approximately 18,000 railcars. In July, the company announced the purchase of two product lines of fluid filtration equipment that will be manufactured and marketed by the group’s steel fabrication business.
The Processing Group’s operating income of $0.4 million in the second quarter of 2005 was $0.6 million lower than a year ago. Revenues of $40.5 million for the quarter were $0.5 million higher than the $40.0 million it registered in the second quarter of last year. Turf-care product volumes were lower this year, primarily with industrial accounts, and expenses in the cob products business increased. Through six months this year, the Processing Group had $81.4 million of revenues and $1.5 million of operating income. In the first half of 2004, the group’s revenues were $85.3 million and operating income was $4.2 million. While reaffirming its commitment to the professional sector of the lawn products industry, the group is reassessing its strategic position in that industry’s consumer and industrial sectors.
The Retail Group reported revenues of $54.4 million for the second quarter of 2005, a 0.2 percent decrease in same-store sales compared to the same three-month period in 2004. The average sale per customer and average gross margin both improved somewhat, and the group’s operating income of $3.8 million for the period was $0.1 million better than its 2004 performance. Sales of lawn and garden products were strong this spring, recovering from the rather poor spring season experienced last year. The group’s June year-to-date revenues were $89.5 million this year, 0.4 percent higher than last year. First half operating income this year was $1.7 million, $0.3 million above the $1.4 million of operating income it generated in 2004.
“The second quarter is always a very strong period for several of our seasonal businesses, and this year was no exception. Our net income of $10.4 million for the three-month period was a record,” said President and Chief Executive Officer Mike Anderson. “Agriculture’s plant nutrient business, Rail and Retail all achieved operating income growth during the second quarter of 2005, and these same businesses are also ahead of last year through six months. In total, the Company’s earnings are seventeen cents a share ahead of last year, and the strong cash flow generated by our operating businesses continues to enable us to pursue promising new growth opportunities.”
Anderson also stated “The corn and soybean crops in our region were definitely impacted by the hot and dry weather we experienced in June and early July. Recent rains have helped, but the proportion of Illinois crops rated “good” or “excellent” in weekly USDA surveys remains way below recent years’ experience. Although we expect that our Agriculture Group’s second half grain income will be closer to multi-year averages rather than last year’s record performance, the strong results achieved by our plant nutrient, rail and retail businesses suggest that our previously-announced full-year earnings projection of $2.20 to 2.50 per share is still appropriate.”
The company will host a webcast on Wednesday, August 3, 2005 at 11:00 A.M. EDT, to discuss its second quarter performance and full-year outlook. This can be accessed under the heading “Financial Information” on its website atwww.andersonsinc.com.
The Andersons, Inc. is a diversified company with interests in the grain and plant nutrient sectors of U.S. agriculture, as well as in railcar marketing, industrial materials formulation, turf products production, and general merchandise retailing. Founded in Maumee, Ohio, in 1947, the company presently has operations in seven 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 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 atwww.andersonsinc.com
FINANCIAL TABLES FOLLOW . . .
The Andersons, Inc.
Consolidated Statements of Income
Three Months ended
Six Months ended
June 30
June 30
(in thousands, except for per share amounts)
2005
2004
2005
2004
Sales and merchandising revenues
$
365,116
$
374,510
$
623,773
$
648,846
Cost of sales and merchandising revenues
312,098
318,442
530,796
556,716
Gross profit
53,018
56,068
92,977
92,130
Operating, administrative and general expenses
35,855
38,135
72,756
72,879
Interest expense
3,191
2,738
6,141
5,404
Other income, net
1,430
1,117
2,509
1,908
Equity in earnings of affiliates
14
160
460
322
Income (loss) before income taxes
15,416
16,472
17,049
16,077
Income taxes
5,063
6,410
5,662
6,261
Net Income (loss)
$
10,353
$
10,062
$
11,387
$
9,816
Per common share:
Basic earnings (loss)
$
1.40
$
1.39
$
1.54
$
1.36
Diluted earnings (loss)
$
1.35
$
1.35
$
1.48
$
1.31
Dividends paid
$
0.080
$
0.075
$
0.160
$
0.150
Weighted average shares outstanding-basic
7,399
7,235
7,386
7,227
Weighted average shares outstanding-diluted
7,688
7,472
7,670
7,475
The Andersons, Inc. Consolidated Balance Sheets (Unaudited)
June 30
December 31
June 30
2005
2004
2004
Assets Current assets:
Cash and cash equivalents
$
7,864
$
8,439
$
8,768
Restricted cash
1,435
1,532
1,777
Accounts Receivable (net) and margin deposits
91,025
66,235
75,343
Inventories
182,405
251,428
152,865
Other current assets
16,177
30,659
20,987
Total current assets
$
298,906
$
358,293
$
259,740
Other assets
18,928
21,437
22,179
Railcar assets leased to others (net)
134,450
101,358
103,214
Property, plant and equipment (net)
91,678
92,510
94,360
$
543,962
$
573,598
$
479,493
Liabilities and shareholders’ equity Current liabilities:
Short-term borrowings
$
69,900
$
12,100
$
15,000
Other current liabilities
148,032
240,447
152,158
Total current liabilities
217,932
252,547
167,158
Deferred items and other long-term liabilities
33,085
33,029
29,323
Long-term debt non-recourse
59,333
64,343
74,216
Long-term debt
89,105
89,803
83,578
Shareholders’ equity
144,507
133,876
125,218
$
543,962
$
573,598
$
479,493
Segment Data
Agriculture
Rail
Processing
Retail
Other
Total
Quarter ended June 30, 2005
Revenues from external customers
252,561
17,673
40,464
54,418
—
365,116
Gross Profit
22,937
8,589
4,823
16,669
—
53,018
Other income / Equity in earnings of affiliates
429
356
139
245
275
1,444
Operating income (loss)
8,914
3,799
412
3,843
(1,552
)
15,416
Quarter ended June 30, 2004
Revenues from external customers
266,819
13,133
40,031
54,527
—
374,510
Gross Profit
27,189
6,865
5,506
16,508
—
56,068
Other income / Equity in earnings of affiliates
767
56
88
254
112
1,277
Operating income (loss)
10,940
2,050
1,018
3,706
(1,242
)
16,472
Six months ended June 30, 2005
Revenues from external customers
417,570
35,378
81,355
89,470
—
623,773
Gross Profit
38,718
17,104
10,681
26,474
—
92,977
Other income / Equity in earnings of affiliates
1,337
541
307
377
407
2,969
Operating income (loss)
9,865
7,439
1,489
1,745
(3,489
)
17,049
Six months ended June 30, 2004
Revenues from external customers
450,298
24,213
85,257
89,078
—
648,846
Gross Profit
40,907
11,934
13,365
25,924
—
92,130
Other income / Equity in earnings of affiliates
1,297
153
139
410
231
2,230
Operating income (loss)
9,411
3,341
4,230
1,389
(2,294
)
16,077
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