FOR IMMEDIATE RELEASE AT THE COMPANY: Gary Smith (419) 891 — 6417 WEDNESDAY, NOVEMBER 2, 2005
THE ANDERSONS, INC. REPORTS 3RD QUARTER RESULTS $0.6 MILLION LOSS VS. $1.0 MILLION INCOME IN SAME PERIOD LAST YEAR Company Reaffirms EPS Guidance of $2.20 to $2.50 For 2005
MAUMEE, OHIO, NOVEMBER 2, 2005—The Andersons, Inc. (Nasdaq: ANDE), today announced a net loss of $0.6 million for the third quarter. In the same three-month period last year, the company reported a net income of $1.0 million. Earnings per diluted share for the third quarter this year were a loss of nine cents. In 2004, the company earned fourteen cents per diluted share during the third quarter. Total revenues were $289 million for the third quarter this year, 16 percent above its third-quarter 2004 total of $248 million. For the first nine months of 2005, the company’s net income was $10.8 million, or $1.40 per diluted share, on revenues of $912 million. Last year, The Andersons earned $10.9 million, or $1.45 per diluted share, in the first nine months, on revenues of $897 million.
The Agriculture Group incurred an operating loss of $3.3 million in the third quarter. Last year it reported an operating income of $0.3 million for the period. Revenues of $206 million for the third quarter this year were $39 million above last year primarily due to increased grain sales volume. Average grain margins were lower during the quarter, and some grain inventory and quality adjustments were incurred. The group’s plant nutrient business matched its 2004 results for the third quarter. Nutrient sales volume was down slightly, and commodity prices were significantly higher than they were in 2004, but margins remained strong, and application acreage growth improved service revenues. Through the first three quarters of 2005, the Agriculture Group had operating income of $6.6 million on revenues of $623 million. In the first nine months of last year, the group had revenues of $617 million and operating income of $9.7 million. The company is a 44 percent equity investor in The Andersons Albion Ethanol LLC which began construction of a 55 million gallon-per-year ethanol production facility during the third quarter. The new plant will be situated next to The Andersons’ Albion, Michigan grain elevator. The company is also exploring the construction of a 110 million gallon ethanol plant adjacent to its Clymers, Indiana grain facility and anticipates some level of outside investment in this project as well. In July, a grain elevator located in Toledo, Ohio, which The Andersons operates, was severely damaged by an explosion and fire. Although negatively impacting its current year income, the company believes that the accident will not have a material impact on the two-year (2005-06) total once the insurance claim process is completed sometime next year.
The Rail Group’s operating income of $5.8 million in the third quarter this year was $0.9 million above the $4.9 million it earned in the same three-month period a year ago. Revenues of $23.2 million for the quarter were $3.8 million higher than the $19.4 generated in the third quarter of 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 third quarter operating results included income from the sale of some railcars, although this was less than the income it realized on a larger sale of railcars during the third quarter of last year. The group’s railcar repair shops’ revenues and operating income for the period were down slightly from a year ago, but the steel fabrication business, including the fluid filtration product lines that the group acquired during the quarter, contributed to the overall revenue and income growth. Through nine months, the Rail Group had operating income of $13.3 million on revenues of $58.6 million and had added more than 3,000 railcars to its fleet, increasing its total to approximately 18,000 railcars. Last year the group reported September year-to-date revenues of $43.6 million and operating income of $8.2 million.
The Processing Group’s $3.0 million operating loss in the third quarter was $1.1 million higher than the $1.9 million operating loss it incurred a year ago. Revenues of $19.2 million for the quarter were $1.6 million below the $20.8 million it registered in the third quarter of last year. Turf-care product volumes were lower this year, primarily with industrial accounts, and cob product gross margins declined due to increased raw material costs. Cob operating expenses were also higher in the third quarter this year. Through nine months, the Processing Group had $100.6 million of revenues and an operating loss of $1.6 million. In the first three quarters of 2004, the group reported revenues of $106.1 million and operating income of $2.4 million. Recently, the group announced a restructuring of its turf products business to focus on the professional market and certain areas of the consumer and industrial markets.
The Retail Group reported revenues of $40.5 million for the most recent quarter, a 1.4 percent decrease in same-store sales from the third quarter of 2004. The group’s third-quarter operating loss was $0.8 million this year, $0.6 million wider than last year’s result. While sales in food categories were higher than last year, and their margins remained strong, sales in other product categories were down. Operating expenses were somewhat higher during the quarter in part due to increased health-care and other employee benefit costs. The group’s September year-to-date revenues were $130 million this year, just slightly lower than last year. Operating income for the first nine months of 2005 was $0.9 million, about $0.3 million below the $1.2 million it generated in the first three quarters of 2004.
“Our Rail Group and Agriculture’s plant nutrient business are achieving excellent income growth this year,” said President and Chief Executive Officer Mike Anderson. “In spite of the impact of insurance deductibles and business interruptions in our grain and cob operations this quarter, and severance costs we incurred in the restructuring of our lawn business, our overall performance in the third quarter leaves us right on track toward achieving the $2.20 to $2.50 earnings per share for the year that we’ve been projecting throughout the year. More importantly, we’re encouraged by our ability to continue to grow our very profitable Rail business and to expand into the promising ethanol industry.”
The company will host a webcast on Thursday, November 3, 2005 at 11:00 A.M. EST, to discuss its third 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 products 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
Nine Months ended
September 30
September 30
(in thousands, except for per share amounts)
2005
2004
2005
2004
Sales and merchandising revenues
$
288,708
$
248,124
$
912,481
$
896,970
Cost of sales and merchandising revenues
252,162
207,384
782,958
764,100
Gross profit
36,546
40,740
129,523
132,870
Operating, administrative and general expenses
36,654
38,801
109,410
111,680
Interest expense
2,830
2,470
8,971
7,874
Other income, net
1,056
1,251
3,565
3,159
Equity in earnings of affiliates
877
641
1,337
963
Income (loss) before income taxes
(1,005
)
1,361
16,044
17,438
Income taxes
(369
)
313
5,293
6,574
Net Income (loss)
$
(636
)
$
1,048
$
10,751
$
10,864
Per common share:
Basic earnings (loss)
$
(0.09
)
$
0.14
$
1.45
$
1.50
Diluted earnings (loss)
$
(0.09
)
$
0.14
$
1.40
$
1.45
Dividends paid
$
0.085
$
0.075
$
0.245
$
0.225
Weighted average shares outstanding-basic
7,445
7,240
7,406
7,231
Weighted average shares outstanding-diluted
7,445
7,473
7,691
7,474
The Andersons, Inc.
Consolidated Balance Sheets
(Unaudited)
September 30
December 31
September 30
(in thousands)
2005
2004
2004
Assets
Current assets:
Cash and cash equivalents
$
9,592
$
8,439
$
8,138
Restricted cash
1,367
1,532
1,730
Accounts receivable (net) and margin deposits
78,845
66,235
63,520
Inventories
184,247
251,428
204,485
Other current assets
28,537
30,659
21,404
Total current assets
302,588
358,293
299,277
Other assets
33,732
21,437
21,472
Railcar assets leased to others (net)
112,882
101,358
100,259
Property, plant and equipment (net)
92,098
92,510
93,933
$
541,300
$
573,598
$
514,941
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings
$
42,900
$
12,100
$
10,600
Other current liabilities
174,473
240,447
191,046
Total current liabilities
217,373
252,547
201,646
Deferred items and other long-term liabilities
33,979
33,029
31,717
Long-term debt non-recourse
59,164
64,343
67,121
Long-term debt
87,128
89,803
88,877
Shareholders’ equity
143,656
133,876
125,580
$
541,300
$
573,598
$
514,941
Segment Data
Agriculture
Rail
Processing
Retail
Other
Total
Quarter ended September 30, 2005
Revenues from external customers
$
205,814
$
23,176
$
19,227
$
40,491
$
—
$
288,708
Gross Profit
10,659
11,232
3,398
11,257
—
36,546
Other income / Equity in earnings of affiliates
1,339
(5
)
238
140
221
1,933
Operating income (loss)
(3,312
)
5,841
(3,047
)
(827
)
340
(1,005
)
Quarter ended September 30, 2004
Revenues from external customers
166,837
19,385
20,819
41,083
—
248,124
Gross Profit
15,448
9,464
4,162
11,666
—
40,740
Other income / Equity in earnings of affiliates
1,114
183
314
131
150
1,892
Operating income (loss)
269
4,866
(1,859
)
(232
)
(1,683
)
1,361
Nine months ended September 30, 2005
Revenues from external customers
623,384
58,554
100,582
129,961
—
912,481
Gross Profit
49,377
28,336
14,079
37,731
—
129,523
Other income / Equity in earnings of affiliates
2,676
536
545
517
628
4,902
Operating income (loss)
6,553
13,280
(1,558
)
918
(3,149
)
16,044
Nine months ended September 30, 2004
Revenues from external customers
617,135
43,598
106,076
130,161
—
896,970
Gross Profit
56,355
21,398
17,527
37,590
—
132,870
Other income / Equity in earnings of affiliates
2,411
336
453
541
381
4,122
Operating income (loss)
9,680
8,207
2,371
1,157
(3,977
)
17,438
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