THE ANDERSONS, INC. REPORTS THIRD QUARTER RESULTS Record Earnings Of $0.70 Per Diluted Share
MAUMEE, OHIO, NOVEMBER 4, 2008—The Andersons, Inc. (Nasdaq: ANDE), today announced third quarter net income of $12.8 million, or $0.70 per diluted share, on revenues of $906 million. In the same three month period in 2007, the company reported net income of $10.6 million, or $0.58 per diluted share, on $554 million of revenues. For the first nine months of 2008, the company’s net income was $66.3 million, or $3.60 per diluted share, on revenues of $2.7 billion. In the first nine months of 2007, The Andersons earned $45.3 million, or $2.48 per diluted share, on revenues of $1.6 billion.
The Grain & Ethanol Group’s operating income was $9.4 million in the third quarter, which was below its year earlier result of $13.7 million. The grain business benefited from significantly improved basis income, with the company recovering most of the basis losses incurred earlier in the year. Income from the ethanol business declined $8.8 million during the most recent quarter to a loss of $2.0 million due primarily to the combined performance of the company’s investments in three ethanol limited liability companies. Third quarter income from the group’s investment in Lansing Trade Group was $2.6 million, which is $1.0 million lower than last year. Total third quarter revenues for the group were $651 million; this compares to total revenues of $383 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. During the quarter, the group purchased a grain storage facility, and leased two others. This increased the company’s storage capacity by 7.6 million bushels. The Grain & Ethanol Group’s operating income through the first nine months was $31.7 million in 2008. In 2007, operating income through September was $35.9 million. Total revenues through September 2008 and 2007 were $1.8 billion and $950 million, respectively.
The Rail Group’s operating income was $5.2 million in the third quarter on revenues of $28 million. Last year, the group reported $5.8 million of income and $34 million of revenues for the same three month period. The group recognized $0.7 million in gross margin from the sale of railcars and related leases during the quarter, which is $2.1 million less than similar sales for the same period last year. Gross profit from the leasing business was higher due to wider relet spreads, a higher utilization rate, and growth in the size of the fleet. The fleet has increased 6 percent to 24,007 cars and locomotives. The average utilization rate (the percentage of the fleet in service) for the quarter was 93.2 percent in comparison to 92.5 percent for the same period last year. The gross profit of the railcar repair and manufacturing businesses also grew during the third quarter. The group’s first nine months operating income this year was $16.5 million on $106 million of revenues. In 2007, operating income through September was $15.7 million and revenues were $102 million. Included in these results were gains on sales of railcars and related leases of $4.0 million and $7.9 million, for 2008 and 2007, respectively. A seventh railcar repair shop was opened in Ogden, Utah in September, and the group continues to explore additional railcar repair shop opportunities.
The Plant Nutrient Group had a record operating income of $7.2 million during the third quarter of 2008 on revenues of $162 million. The group reported an $0.8 million operating profit on $77 million of revenues in the third quarter of 2007. The current quarter earnings were impacted both positively and negatively by fluctuating fertilizer prices. During the quarter significant margin increases were recognized on sales made due to the inventory appreciation that occurred as a result of rising prices. Certain inventory values, however, declined sharply late in the third quarter and into the fourth quarter resulting in $13.1 million in adjustments due to adverse purchase commitments and lower of cost or market adjustments. Sales volume during the quarter was slightly above the prior year. The group’s operating income through September this year was $62.1 million on $541 million of revenues. Last year, its operating income through the first nine months was $18.4 million on revenues of $326 million.
The Turf & Specialty Group had an operating loss of $0.5 million in the third quarter this year on $23 million of revenues. Last year, the group reported a loss of $1.6 million on $18 million of revenues. Turf products tonnage increased slightly from year to year, and gross profit per ton increased considerably, due to a larger percentage of sales coming from proprietary products such as Contec DG. The group continues to see proprietary products as a growth area. Through the first nine months of 2008, the group’s operating income was $3.4 million on $99 million of revenues. Last year, its operating income was $0.9 million for the same period, and revenues were $85 million.
The Retail Group reported revenues of $41 million for the third quarter of 2008, which is slightly below the $42 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’s operating loss was $0.2 million, which is an improvement over the $0.6 million operating loss in the prior year. Through nine months the group has lost $0.2 million on $127 million of revenues. Last year, the operating income through September was $0.8 million and total revenues were $131 million. Margins improved during the third quarter, which has led to year to date margins being consistent with the prior year.
Total company interest expense for the quarter and year to date are $3.3 million and $11.8 million higher than the prior year, respectively.
“Our third quarter and nine month results are both records, however, we were disappointed by the sudden turn of events in the fertilizer markets,” said President and Chief Executive Officer Mike Anderson. “The Plant Nutrient Group contributed significantly to our income during the period, however, our expectations for the group were even higher before the recent sharp decline in global fertilizer prices that led to material inventory adjustment.”
“Our current guidance is $3.50 — $4.00 per diluted share,” Mr. Anderson continued. “As we noted in the second quarter press release our former guidance was heavily influenced by the reported and expected performance of our Plant Nutrient Group. This is again true of our current guidance, which is primarily attributed to the aforementioned decline in global fertilizer prices. The current guidance is also partially attributable to the economics in the ethanol industry. Numerous other factors will also have a bearing on the full year outcome, such as; grain prices, timing of railcar sales, and the performance of our equity investments, which include Lansing Trade Group and the ethanol production facilities.”
The company will host a webcast on Wednesday, November 5, 2008 at 11:00 A.M. ET, to discuss its performance and full year outlook. This can be accessed under the heading “Investor” 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 12 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 atwww.andersonsinc.com
FINANCIAL TABLES FOLLOW . . .
1
The Andersons, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months ended
Nine Months ended
September 30
September 30
(in thousands, except for per share amounts)
2008
2007
2008
2007
Sales and merchandising revenues
$
905,712
$
553,708
$
2,719,413
$
1,594,425
Cost of sales and merchandising revenues
832,687
504,894
2,473,810
1,429,390
Gross profit
73,025
48,814
245,603
165,035
Operating, administrative and general expenses
48,239
39,040
136,934
116,987
Allowance for doubtful accounts receivable
333
458
2,902
1,102
Interest expense
7,497
4,174
25,140
13,386
Other income / gains:
Equity in earnings of affiliates
(619
)
9,518
15,801
17,173
Other income, net
1,279
2,200
6,318
19,141
Minority interest in net (income) loss of subsidiary
1,841
549
1,588
1,065
Income before income taxes
19,457
17,409
104,334
70,939
Income taxes
6,617
6,844
38,045
25,647
Net income
$
12,840
$
10,565
$
66,289
$
45,292
Per common share:
Basic earnings
$
0.71
$
0.59
$
3.67
$
2.54
Diluted earnings
$
0.70
$
0.58
$
3.60
$
2.48
Dividends paid
$
0.0850
$
0.0475
$
0.2400
$
0.1425
Weighted average shares outstanding-basic
18,085
17,878
18,059
17,800
Weighted average shares outstanding-diluted
18,380
18,311
18,409
18,282
2
The Andersons, Inc.
Consolidated Balance Sheets
(Unaudited)
September 30
December 31
September 30
(in thousands)
2008
2007
2007
Assets
Current assets:
Cash and cash equivalents
28,541
$
22,300
$
22,357
Restricted cash
3,630
3,726
3,737
Accounts receivable, net
184,566
106,257
127,382
Margin deposits, net
58,077
20,467
28,970
Inventories
382,268
502,904
306,908
Commodity derivative assets — current
113,427
205,956
108,039
Other current assets
71,769
43,281
44,200
Total current assets
842,278
904,891
641,593
Investments and other assets
169,800
137,518
115,597
Commodity derivative assets
19,010
29,458
29,999
Railcar assets leased to others (net)
175,947
153,235
143,251
Property, plant and equipment (net)
118,288
99,886
100,829
$
1,325,323
$
1,324,988
$
1,031,269
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings
$
43,600
$
245,500
$
163,400
Commodity derivative liabilities — current
80,874
122,488
77,617
Other current liabilities
370,430
359,224
244,624
Total current liabilities
494,904
727,212
485,641
Deferred items and other long-term liabilities
65,007
49,631
45,315
Commodity derivative liabilities
6,825
2,090
26,285
Long-term debt non-recourse
43,964
56,277
60,107
Long-term debt
295,207
133,195
85,302
Minority interest
10,936
12,219
12,607
Shareholders’ equity
408,480
344,364
316,012
$
1,325,323
$
1,324,988
$
1,031,269
3
Segment Data
Grain &
Plant
Turf &
Ethanol
Rail
Nutrient
Specialty
Retail
Other
Total
Quarter ended September 30, 2008
Revenues from external customers
$
651,045
$
28,394
$
162,018
$
23,164
$
41,091
$
—
$
905,712
Gross Profit
25,021
9,009
21,731
5,176
12,088
—
73,025
Other income / Equity in earnings of affiliates
392
84
405
76
125
(422
)
660
Operating income (loss)
9,443
5,164
7,223
(497
)
(155
)
(1,721
)
19,457
Quarter ended September 30, 2007
Revenues from external customers
$
382,907
$
33,890
$
76,732
$
17,911
$
42,268
$
—
$
553,708
Gross Profit
16,294
10,367
6,458
3,753
11,942
—
48,814
Other income / Equity in earnings of affiliates
10,226
243
350
185
149
565
11,718
Operating income (loss)
13,706
5,792
815
(1,626
)
(554
)
(724
)
17,409
Grain &
Plant
Turf &
Ethanol
Rail
Nutrient
Specialty
Retail
Other
Total
Nine months ended September 30, 2008
Revenues from external customers
$
1,845,955
$
106,346
$
540,988
$
98,740
$
127,384
$
—
$
2,719,413
Gross Profit
65,595
29,260
93,805
19,368
37,575
—
245,603
Other income / Equity in earnings of affiliates
20,567
602
732
265
433
(480
)
22,119
Operating income (loss)
31,670
16,464
62,132
3,385
(172
)
(9,145
)
104,334
Nine months ended September 30, 2007
Revenues from external customers
$
950,430
$
102,251
$
326,200
$
84,609
$
130,935
$
—
$
1,594,425
Gross Profit
46,968
28,897
35,274
14,991
38,905
—
165,035
Other income / Equity in earnings of affiliates
27,401
765
806
380
467
6,495
36,314
Operating income (loss)
35,857
15,702
18,363
880
775
(638
)
70,939
4
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