NEWS RELEASE
Contact: Gary L. Smith VP, Finance & Treasurer | Date: | August 5, 2009 |
Phone: 419-891-6417
E-mail:gary—smith@andersonsinc.com
THE ANDERSONS, INC. REPORTS SECOND QUARTER RESULTS
Earnings Of $0.87 Per Diluted Share
MAUMEE, OHIO, August 5, 2009—The Andersons, Inc. (Nasdaq: ANDE), today announced second quarter net income attributable to the company of $15.9 million, or $0.87 per diluted share, on revenues of $811 million. In the same three month period of 2008, the company reported record results of $45.6 million, or $2.48 per diluted share, on $1.1 billion of revenues. For the first six months of 2009, the company earned $20.9 million, or $1.14 per diluted share, on revenues of $1.5 billion. In the first half of 2008, The Andersons reported record results of $53.4 million, or $2.90 per diluted share, on revenues of $1.8 billion. It should be noted that the earnings from the prior year included unprecedented margins in our Plant Nutrient Group that accounted for nearly two-thirds of the income.
The Grain & Ethanol Group’s operating income of $8.9 million in the second quarter was significantly less than its year earlier result of $20.0 million. The grain business had its third best second quarter as it benefited from good space income. The ethanol business was profitable during the second quarter of 2009. When compared to the prior year; however, income from the ethanol business was down considerably in the second quarter as last year the business benefited from margins being locked in before the ethanol industry decline. Second quarter 2009 income from the group’s investment in Lansing Trade Group was also significantly lower than last year, primarily due to declines in its trading business. Total second quarter revenues for the group were $500 million; this includes $188 million of grain and ethanol sales made by the group in accordance with origination and marketing agreements between the company and its ethanol joint ventures. In the second quarter of 2008, the group’s total revenues were $696 million and included $226 million of the aforementioned sales. While revenues for the group are lower, due to substantially lower commodity prices, 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 $14.7 million in 2009 and $22.2 million in 2008. Total revenues through June 2009 and 2008 were $1.0 billion and $1.2 billion, respectively.
The Rail Group’s operating income was $0.6 million in the second quarter of 2009, which is down significantly from the $4.9 million earned during the same three month period a year ago. The group continues to be impacted by the double digit declines in rail traffic. The group recognized $0.8 million in gross margin from the sale of railcars and related leases during the quarter, whereas last year $1.1 million was recognized. Gross profit from the leasing business was significantly less due to lower utilization rates, the corresponding increase in storage expense from idle assets, increased maintenance expense per car, and decreased leasing rates. The group now has approximately 23,800 cars and locomotives. The average utilization rate (the percentage of the fleet in service) for the quarter was 80.6 percent in comparison to 93.3 percent for the same period last year. The gross profit of both the railcar repair and manufacturing businesses declined considerably this quarter due to reduced activity resulting from the overall economic decline. Revenues of $24 million for the second quarter were down significantly from the $43 million reported in 2008, due mainly to a $14 million reduction in car sales. The group’s first half operating income this year was $1.5 million on $51 million of revenues. In 2008, operating income through June was $11.3 million and revenues were $78 million. These results included gains on sales of railcars and related leases of $1.1 million and $3.3 million, respectively.
The Plant Nutrient Group had an operating income of $10.3 million during the second quarter of 2009, on revenues of $198 million. In the same three month period of 2008, the group achieved record operating income of $47.4 million, on revenues of $274 million. Margins were down significantly from the prior year. Margins were significantly lower as basic nutrient prices deflated in 2009, whereas in 2008 margins greatly increased as nutrient prices inflated. Retailers reducing their nutrient inventory holdings, and lower application rates of basic nutrients (potash, potassium and to a lesser degree nitrogen), led to reduced sales volume this quarter. The group’s first half operating income this year was $12.4 million on $309 million of revenues. Last year, its operating income through the first six months was a record $54.9 million on revenues of $379 million. The group acquired Hartung Brothers Inc’s. Fertilizer Division (HBI) on August 1st. HBI is a regional wholesale supplier of liquid fertilizers with five locations in Wisconsin and one in southeastern Minnesota. This acquisition will allow the group to expand its value added product offering, grow its wholesale customer base, and broaden its geographic territory.
The Turf & Specialty Group had a record operating income of $3.0 million in the second quarter this year on $40 million of revenues. Last year, the group reported $1.9 million of income on $36 million of revenues for the period. Turf products tonnage increased by over 20 percent year to year, but gross profit per ton decreased due to a product mix that included a higher percentage of consumer and industrial products. Through the first half of 2009, the group’s operating income was a record $6.1 million on $84 million of revenues. Last year, its operating income was $3.9 million for the same period, and revenues were $76 million. The group continues to experience positive results from its focus on proprietary products and expanded product lines.
The Retail Group reported revenues of $49 million for the second quarter of 2009, which is below the $53 million in revenues reported for the same period in 2008. The group earned operating income of $2.9 million in the second quarter of 2009. In the comparable period last year, the group’s operating income was $3.4 million. Through six months, the group earned $0.2 million and total revenues were $83 million. Last year through June the group broke even on total revenues of $86 million. Both the group’s margins and customer counts have improved slightly; however, this was offset by a decline in the average sale per customer.
“Although we would have liked better results this quarter, it is important to remember that last year’s second quarter results included unprecedented margins in our Plant Nutrient Group. We are pleased with the results of our grain and ethanol businesses. The grain business performance was strong, and our ethanol business returned to profitability, which is an accomplishment in the current ethanol environment. Conversely, we continue to be disappointed with the Lansing Trade Group results this year. The Plant Nutrient Group has returned to solid financial performance, and we believe the lower of cost or market issues are behind us. The Turf & Specialty Group set an earning’s record as the value added and proprietary product strategy being pursued continues to be successful. Our Rail Group, and to a lesser extent our Retail Group, however, continue to be impacted by the overall economic decline,” said Chairman and Chief Executive Officer Mike Anderson. “These results continue to demonstrate that our purposeful diversification allows us to remain a strong and profitable company, even when some businesses are underperforming.”
The company will host a webcast on Thursday, August 6, 2009 at 11:00 A.M. ET, to discuss its performance. 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 14 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 . . .
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| 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) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Sales and merchandising revenues | $ | 810,954 | $ | 1,100,700 | $ | 1,508,346 | $ | 1,813,701 | ||||||||
| Cost of sales and merchandising revenues | 737,620 | 980,363 | 1,373,638 | 1,641,123 | ||||||||||||
| Gross profit | 73,334 | 120,337 | 134,708 | 172,578 | ||||||||||||
| Operating, administrative and general expenses | 46,723 | 49,973 | 93,253 | 91,264 | ||||||||||||
| Interest expense | 5,161 | 8,521 | 10,851 | 17,643 | ||||||||||||
| Other income (loss): | ||||||||||||||||
| Equity in earnings (loss) of affiliates | 784 | 7,781 | (2,890 | ) | 16,420 | |||||||||||
| Other income, net | 2,724 | 2,155 | 3,963 | 5,039 | ||||||||||||
| Income before income taxes | 24,958 | 71,779 | 31,677 | 85,130 | ||||||||||||
| Income taxes | 9,312 | 26,835 | 12,118 | 31,428 | ||||||||||||
| Net income | 15,646 | 44,944 | 19,559 | 53,702 | ||||||||||||
| Net (income) loss attributable to the noncontrolling interest | 272 | 682 | 1,311 | (253 | ) | |||||||||||
| Net income attributable to The Andersons, Inc. | $ | 15,918 | $ | 45,626 | $ | 20,870 | $ | 53,449 | ||||||||
| Per common share: | ||||||||||||||||
| Basic earnings | $ | 0.87 | $ | 2.52 | $ | 1.15 | $ | 2.95 | ||||||||
| Diluted earnings | $ | 0.87 | $ | 2.48 | $ | 1.14 | $ | 2.90 | ||||||||
| Dividends paid | $ | 0.0875 | $ | 0.0775 | $ | 0.1725 | $ | 0.0155 | ||||||||
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| The Andersons, Inc. | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| (Unaudited) | ||||||||||||
| June 30 | December 31 | June 30 | ||||||||||
| (in thousands) | 2009 | 2008 | 2008 | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 179,752 | $ | 81,682 | $ | 33,379 | ||||||
| Restricted cash | 4,243 | 3,927 | 3,664 | |||||||||
| Accounts receivable, net | 130,824 | 126,255 | 187,184 | |||||||||
| Margin deposits, net | 38,009 | 13,094 | 79,017 | |||||||||
| Inventories | 205,084 | 436,920 | 406,839 | |||||||||
| Commodity derivative assets — current | 48,635 | 84,919 | 493,571 | |||||||||
| Other current assets | 40,564 | 109,165 | 47,489 | |||||||||
| Total current assets | 647,111 | 855,962 | 1,251,143 | |||||||||
| Investments and other assets | 153,281 | 153,488 | 156,005 | |||||||||
| Commodity derivative assets | 1,354 | 3,662 | 84,297 | |||||||||
| Railcar assets leased to others (net) | 176,656 | 174,132 | 152,879 | |||||||||
| Property, plant and equipment (net) | 120,535 | 121,529 | 110,146 | |||||||||
| $ | 1,098,937 | $ | 1,308,773 | $ | 1,754,470 | |||||||
| Liabilities and shareholders’ equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term line of credit | $ | - | $ | - | $ | 432,500 | ||||||
| Commodity derivative liabilities — current | 66,698 | 67,055 | 160,611 | |||||||||
| Other current liabilities | 243,056 | 458,208 | 350,795 | |||||||||
| Total current liabilities | 309,754 | 525,263 | 943,906 | |||||||||
| Deferred items and other long-term liabilities | 85,772 | 80,687 | 53,058 | |||||||||
| Commodity derivative liabilities | 4,555 | 3,706 | 19,923 | |||||||||
| Long-term debt non-recourse | 28,938 | 40,055 | 47,934 | |||||||||
| Long-term debt | 285,619 | 293,955 | 281,496 | |||||||||
| Shareholders’ equity | 384,299 | 365,107 | 408,153 | |||||||||
| $ | 1,098,937 | $ | 1,308,773 | $ | 1,754,470 | |||||||
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| Segment Data | ||||||||||||||||||||||||||||
| Grain & | Plant | Turf & | ||||||||||||||||||||||||||
| Ethanol | Rail | Nutrient | Specialty | Retail | Other | Total | ||||||||||||||||||||||
Quarter ended June 30, 2009 | ||||||||||||||||||||||||||||
| Revenues from external customers | $ | 500,401 | $ | 23,762 | $ | 197,638 | $ | 39,752 | $ | 49,401 | $ | — | $ | 810,954 | ||||||||||||||
| Gross Profit | 23,325 | 4,815 | 22,106 | 7,614 | 15,474 | — | 73,334 | |||||||||||||||||||||
| Equity in earnings (loss) of affiliates | 781 | — | 3 | — | — | — | 784 | |||||||||||||||||||||
| Other income (loss), net | 590 | 221 | 770 | 236 | 136 | 771 | 2,724 | |||||||||||||||||||||
| Income before income taxes | 8,659 | 619 | 10,345 | 3,042 | 2,864 | (571 | ) | 24,958 | ||||||||||||||||||||
| Loss attributable to the noncontrolling interest | 272 | — | — | — | — | — | 272 | |||||||||||||||||||||
| Operating income (loss) (a) | 8,931 | 619 | 10,345 | 3,042 | 2,864 | (571 | ) | 25,230 | ||||||||||||||||||||
Quarter ended June 30, 2008 | ||||||||||||||||||||||||||||
| Revenues from external customers | $ | 695,787 | $ | 42,941 | $ | 273,501 | $ | 35,915 | $ | 52,556 | $ | — | $ | 1,100,700 | ||||||||||||||
| Gross Profit | 29,195 | 9,100 | 58,396 | 7,266 | 16,380 | — | 120,337 | |||||||||||||||||||||
| Equity in earnings of affiliates | 7,780 | — | 1 | — | — | — | 7,781 | |||||||||||||||||||||
| Other income (loss), net | 1,221 | 340 | 181 | 96 | 161 | 156 | 2,155 | |||||||||||||||||||||
| Income before income taxes | 19,312 | 4,874 | 47,369 | 1,882 | 3,360 | (5,018 | ) | 71,779 | ||||||||||||||||||||
| Loss attributable to the noncontrolling interest | 682 | — | — | — | — | — | 682 | |||||||||||||||||||||
| Operating income (loss) (a) | 19,994 | 4,874 | 47,369 | 1,882 | 3,360 | (5,018 | ) | 72,461 | ||||||||||||||||||||
| Grain & | Plant | Turf & | ||||||||||||||||||||||||||
| Ethanol | Rail | Nutrient | Specialty | Retail | Other | Total | ||||||||||||||||||||||
Six months ended June 30, 2009 | ||||||||||||||||||||||||||||
| Revenues from external customers | $ | 980,922 | $ | 50,532 | $ | 309,400 | $ | 84,455 | $ | 83,037 | $ | — | $ | 1,508,346 | ||||||||||||||
| Gross Profit | 46,624 | 10,546 | 36,628 | 16,033 | 24,877 | — | 134,708 | |||||||||||||||||||||
| Equity in earnings (loss) of affiliates | (2,895 | ) | — | 5 | — | — | — | (2,890 | ) | |||||||||||||||||||
| Other income (loss), net | 1,149 | 187 | 1,258 | 541 | 247 | 581 | 3,963 | |||||||||||||||||||||
| Income before income taxes | 13,355 | 1,501 | 12,392 | 6,139 | 163 | (1,873 | ) | 31,677 | ||||||||||||||||||||
| Loss attributable to the noncontrolling interest | 1,311 | 1,311 | ||||||||||||||||||||||||||
| Operating income (loss) | 14,666 | 1,501 | 12,392 | 6,139 | 163 | (1,873 | ) | 32,988 | ||||||||||||||||||||
Six months ended June 30, 2008 | ||||||||||||||||||||||||||||
| Revenues from external customers | $ | 1,194,910 | $ | 77,952 | $ | 378,970 | $ | 75,576 | $ | 86,293 | $ | — | $ | 1,813,701 | ||||||||||||||
| Gross Profit | 40,574 | 20,251 | 72,074 | 14,192 | 25,487 | — | 172,578 | |||||||||||||||||||||
| Equity in earnings (loss) of affiliates | 16,417 | — | 3 | — | — | — | 16,420 | |||||||||||||||||||||
| Other income (loss), net | 3,758 | 518 | 324 | 189 | 308 | (58 | ) | 5,039 | ||||||||||||||||||||
| Income before income taxes | 22,480 | 11,300 | 54,909 | 3,882 | (17 | ) | (7,424 | ) | 85,130 | |||||||||||||||||||
| (Income) attributable to the noncontrolling interest | (253 | ) | (253 | ) | ||||||||||||||||||||||||
| Operating income (loss) | 22,227 | 11,300 | 54,909 | 3,882 | (17 | ) | (7,424 | ) | 84,877 | |||||||||||||||||||
| (a) Operating income (loss) for each Group is defined as net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets and is reported net of the noncontrolling interest share of (income) loss. | ||||||||||||||||||||||||||||
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