THE ANDERSONS, INC. REPORTS RECORD REVENUES AND INCOME EPS OF $2.19 FOR YEAR VS. $1.69 IN 2005 2006 Net Income of $36.3 Million Up 39%
MAUMEE, OHIO, FEBRUARY 8, 2007—The Andersons, Inc. (Nasdaq: ANDE), today announced its 2006 results, with full-year net income at $36.3 million, or $2.19 per diluted share, on $1.5 billion of revenues. In 2005, the company’s full-year net income was $26.1 million, or $1.69 per diluted share, and total revenues were $1.3 billion. Fourth-quarter net income in 2006 was $13.8 million, or $0.76 per diluted share, and total revenues were $463 million. In the same three-month period of 2005, the company reported net income of $15.3 million, or $0.99 per diluted share, on $384 million of revenues.
The Grain and Ethanol Group’s full-year operating income of $27.9 million in 2006 established a new record, $15.3 million higher than the $12.6 million it achieved in 2005, the group’s previous best full-year performance. Operating income of $12.3 million in the fourth quarter of 2006 was below the $14.8 million the group generated a year earlier. The number of grain bushels delivered to The Andersons’ elevators increased slightly this year. Total grain gross profit and operating income also improved for the year, despite reduced earnings from grain storage attributable in part to higher interest costs. The group’s emerging ethanol business continued to register income growth during the most recent quarter. The group’s Albion, Michigan ethanol plant, in which The Andersons, Inc. is a significant investor, began production during the third quarter and shipped ethanol and distillers dried grain to customers throughout the fourth quarter of 2006. Construction of its Clymers, Indiana plant, in which the company also is a significant investor, is progressing well and is scheduled to start producing ethanol early in the second quarter of 2007. Recently construction also began on a Greenville, Ohio plant, which is expected to begin operations in early 2008. The group’s investment in Lansing Trade Group, LLC exceeded its 2005 fourth-quarter income in the most recent three-month period and achieved significant income growth for the full year.
The Rail Group’s 2006 revenues of $113 million exceeded 2005 by $21 million. Full-year operating income in 2006 was $19.5 million. In 2005, the group had operating income of $22.8 million on $92 million of revenues. Income from the rail leasing business was lower this year because gains from the sale of railcars were down since fewer cars were liquidated in 2006, and maintenance costs were higher. The group’s railcar fleet continued to grow in 2006, and the utilization rate of the fleet remained high. Revenues and income from the group’s railcar repair and manufacturing businesses also continued to increase this year. In the fourth quarter of 2005, the group generated total revenues of $33 million and $9.5 million of operating income, including a significant amount from the liquidation of some railcars. Without a similar sale during the fourth quarter this year, the group’s fourth-quarter 2006 revenues of $24 million and operating income of $3.4 million were below its 2005 results.
The Plant Nutrient Group’s revenues were $265 million in 2006, and its operating income was $3.3 million. In 2005, its revenues amounted to $271 million and operating income was $10.4 million. The company believes that farmers reduced the amount of nutrients applied to their fields in response to significantly higher energy and nutrient input costs during the important 2006 planting and growing seasons. This resulted in lower wholesale and retail demand for plant nutrients including a deferral of fall season purchasing, and a reduction in the group’s gross profit and operating income. In the fourth-quarter of 2006, the group had operating income of $1.3 million on $67 million of revenues. In 2005, fourth-quarter revenues were $60 million, and operating income was $1.7 million.
The Turf and Specialty Group’s full-year operating income was $3.2 million in 2006, on $111 million of revenues. In 2005, the group incurred an operating loss of $3.0 million, on revenues of $123 million. The year-to-year improvement resulted from a change in the group’s business model which realigned staffing and assets in both the turf and cob products businesses. In the fourth quarter, the group typically incurs an operating loss due to the seasonal nature of its businesses. This year it achieved a slight operating profit for the quarter on revenues of $18 million. During the same three-month period in 2005, the group incurred an operating loss of $1.5 million, with revenues of $22 million.
The Retail Group achieved an operating income of $3.2 million in 2006. This was $0.3 million higher than its 2005 performance. Revenues amounted to $177 million in 2006, down 3.0 percent from 2005. Improved average gross margins were partially offset by lower average sales per transaction and increased operating expenses. The group’s fourth-quarter operating income of $1.9 million was slightly below its year-earlier result. During the quarter, the group began construction of a smaller-format food-only store in Sylvania, Ohio. The new “Andersons Market” is scheduled to open in the spring of 2007.
“We’ve been making a lot of changes throughout the company during the past two years, and they’re showing some very positive results,” said President and Chief Executive Officer Mike Anderson. “Our strategic decision to enter the ethanol business is definitely having an impact, as is our continued growth in Rail, our investment in Lansing Trade Group, restructuring in Turf and Specialty, and other process improvements throughout the company. As a result, in spite of the really tough market realities encountered by our Plant Nutrient Group this year, we beat our previous net income record by 39 percent. This successful growth benefits all of our constituents – our customers, our employees, our communities, and of course, our shareholders. With the Clymers, Indiana ethanol plant scheduled to begin production two months from now, and continued growth in our rail business, we look forward to continued positive progress in the coming year.”
The company will host a webcast on Friday, February 9, 2007 at 11:00 A.M. ET, to discuss its fourth quarter and full-year performance. This can be accessed under the heading “Investor Relations” on its website atwww.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 seven U.S. states plus rail 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. It also includes financial information, of which, as of the date of this press release, the Company’s independent auditors have not completed their audit. 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 atwww.andersonsinc.com
FINANCIAL TABLES FOLLOW . . .
The Andersons, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months ended
Year ended
December 31
December 31
(in thousands, except for per share
amounts)
2006
2005
2006
2005
Sales and merchandising revenues
$
463,415
$
384,421
$
1,458,053
$
1,296,949
Cost of sales and merchandising revenues
402,865
315,548
1,250,921
1,098,506
Gross profit
60,550
68,873
207,132
198,443
Operating, administrative and general expenses
42,885
44,349
158,468
153,759
Interest expense
3,786
3,108
16,299
12,079
Other income, net
2,151
868
13,914
4,386
Equity in earnings of affiliates
2,911
984
8,190
2,321
Income before income taxes
18,941
23,268
54,469
39,312
Income tax provision
5,163
7,932
18,122
13,225
Net income
$
13,778
$
15,336
$
36,347
$
26,087
Per common share:
Basic earnings
$
0.78
$
1.03
$
2.27
$
1.76
Diluted earnings
$
0.76
$
0.99
$
2.19
$
1.69
Dividends paid
$
0.045
$
0.0425
$
0.1775
$
0.1650
Weighted average shares outstanding-basic
17,611
14,930
16,007
14,842
Weighted average shares outstanding-diluted
18,122
15,490
16,566
15,410
1
The Andersons, Inc.
Consolidated Balance Sheets
(Unaudited)
December 31
December 31
(in thousands)
2006
2005
Assets
Current assets:
Cash and cash equivalents
$
23,398
$
13,876
Restricted cash
3,801
3,936
Accounts receivable (net) and margin deposits
136,819
83,291
Inventories
299,105
240,806
Other current assets
33,325
30,632
Total current assets
496,448
372,541
Investments and other assets
72,335
39,008
Railcar assets leased to others (net)
145,059
131,097
Property, plant and equipment (net)
95,502
91,498
$
809,344
$
634,144
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings
$
75,000
$
12,400
Other current liabilities
265,040
263,922
Total current liabilities
340,040
276,322
Deferred items and other long-term liabilities
41,267
30,896
Long-term debt non-recourse
71,624
88,714
Long-term debt
86,238
79,329
Shareholders’ equity
270,175
158,883
$
809,344
$
634,144
2
Segment Data
(Unaudited)
Grain &
Plant
Turf &
Ethanol
Nutrient
Rail
Specialty
Retail
Other
Total
Quarter ended December 31, 2006
Revenues from external customers
$
305,279
$
67,117
$
23,768
$
17,955
$
49,296
$
—
$
463,415
Gross Profit
25,059
6,257
9,320
5,327
14,587
—
60,550
Other income / Equity in earnings of affiliates
3,799
234
69
28
168
764
5,062
Operating income (loss)
12,302
1,349
3,428
173
1,856
(167
)
18,941
Quarter ended December 31, 2005
Revenues from external customers
215,795
60,400
33,455
21,979
52,792
—
384,421
Gross Profit
26,655
7,151
14,945
4,809
15,313
—
68,873
Other income / Equity in earnings of affiliates
1,157
200
106
44
129
216
1,852
Operating income (loss)
14,770
1,651
9,542
(1,486
)
2,003
(3,212
)
23,268
Year ended December 31, 2006
Revenues from external customers
791,207
265,038
113,326
111,284
177,198
—
1,458,053
Gross Profit
62,809
24,123
45,709
21,728
52,763
—
207,132
Other income / Equity in earnings of affiliates
15,867
1,015
511
1,115
865
2,731
22,104
Operating income (loss)
27,955
3,287
19,543
3,246
3,152
(2,714
)
54,469
Year ended December 31, 2005
Revenues from external customers
628,255
271,371
92,009
122,561
182,753
—
1,296,949
Gross Profit
50,456
32,774
43,281
18,888
53,044
—
198,443
Other income / Equity in earnings of affiliates
2,890
1,096
642
589
646
844
6,707
Operating income (loss)
12,623
10,351
22,822
(3,044
)
2,921
(6,361
)
39,312
3
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