The Andersons, Inc.
Total revenues of $230.8 million for the period were up 42.5 percent from the $161.9 million reported for the third quarter of 1997, primarily due to higher grain volume and railcar sales.
Net income for the first nine months of 1998 was $4.6 million, or $0.57 per share, on revenues of $736.8 million. In the first nine months of 1997, the company had revenues of $598.9 million and a net loss of $1.4 million, or $0.16 per share. The company's EPS on 12-month trailing income rose to $1.25; a year ago it was $0.51.
The Agriculture Group operates grain elevators, wholesale fertilizer distribution facilities and retail farm centers in four eastern corn belt states. Collectively these facilities handle about 180 million bushels of grain and more than 1 million tons of dry and liquid agricultural fertilizer annually. This year, the company opened a new fertilizer distribution facility in northeast Ohio, acquired four more retail farm centers in northwest Ohio, and leased two Toledo-area grain elevators from Cargill. It also announced the proposed acquisition of a wholesale/retail fertilizer distribution center located in Waterloo, Ind.
The grain business continued to achieve top- and bottom-line improvement in the third quarter of 1998. Sales volume was up significantly from the prior year, and with increasing U.S. grain stocks, the company earned a higher return on its storage space. According to President and Chief Operating Officer Mike Anderson, "We're optimistic about the earnings prospects for our grain business. However, the unusually dry crops being harvested in our region this fall will cause our grain drying income to be lower in the fourth quarter."
Wholesale fertilizer sales were somewhat soft during the third quarter, primarily as a result of the cautious reaction of farmers and dealers to low grain prices. With additional locations this year, the retail farm centers achieved increases in revenues, fertilizer tons and application acres in the July - September period, but acquisition-related expenses dampened bottom-line results. September year-to-date revenues and operating income for the Agriculture Group continue to reflect solid improvement from 1997.
Processing & Manufacturing
The processing business produces granular lawn care products for retailers, professional lawn-care operators and golf courses. It also produces corncob-based chemical and feed ingredient carriers, animal bedding and litter products. With continued lawn fertilizer volume growth, this division's top- and bottom-line performance in the third quarter and the first nine months of 1998 was significantly improved from the comparable periods in 1997.
The group's growing manufacturing business repairs and markets various types of railcars and operates a custom steel fabrication business. During the third quarter of this year, several railcar sales transactions were completed, which resulted in continued significant year-to-year revenue and income growth.
This group operates six large retail stores in Ohio. The company characterizes its retail concept as "a complete home store" -- a traditional home center with plumbing, electrical and building supplies, etc. -- but also indoor and outdoor garden centers, extensive lines of housewares and domestics, pet supplies, automotive supplies, sporting goods and a unique offering in food.
The company's Retail Group registered a modest same-store sales gain in the third quarter, up 0.4 percent from the July - September period of 1997. Gross margins were strong during the period, buoyed by continued growth in housewares. As a result, the group's third-quarter and year-to-date operating results both showed improvement from the year-earlier performance.
According to Chairman and Chief Executive Officer Dick Anderson, "We're really pleased with the performance achieved by our company so far this year, especially having all three operating groups showing bottom-line improvement. With our elevators filling up as a result of the excellent grain harvest, we expect to see good storage income in the coming months as well. Despite the near-term reduction we expect in grain drying income, I believe our earnings per share for the full year 1998 could be double or more the amount earned in 1997 and will continue to show solid improvement next year and beyond."
The Andersons, Inc. recently paid a cash dividend of $0.04 per share to shareholders of record as of October 1, the company's fourth such $0.04 quarterly dividend. In 1997, the quarterly dividend was $0.03. The company has repurchased shares on the open market from time to time.
The Andersons, Inc. is a respected leader and dominant regional player in the grain industry. This strong position in its basic business has allowed the company to diversify into other agribusiness operations, several processing and manufacturing businesses, and general merchandise retailing. The company has been in operation since 1947.
This release contains forward-looking statements, including statements with respect to anticipated revenue growth, adequacy of cash flows and profitability. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, economic and weather conditions in agriculture, economic conditions and competition in its retail stores' markets, risks associated with acquisitions, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission.
For further information regarding The Andersons free of charge via fax dial 1-800-PRO-INFO and enter company code "ANDE."
The Andersons, Inc. Consolidated Statements of Operation (Unaudited) Three Months Ended Nine Months Ended (in thousands, except for September 30 September 30 per share amounts) 1998 1997 1998 1997 Grain sales and revenues $123,602 $80,133 $374,474 $272,662 Fertilizer, retail and other sales 105,614 79,778 358,762 322,507 Other income 1,576 2,018 3,584 3,715 Total 230,792 161,929 736,820 598,884 Cost of grain sales 113,975 72,083 349,285 255,948 Cost of fertilizer, retail and other sales 79,900 59,049 267,996 241,939 Total 193,875 131,132 617,281 497,887 Gross profit 36,917 30,797 119,539 100,997 Operating, administrative and general expenses 36,225 31,337 106,163 96,842 Interest expense 2,153 1,905 6,497 6,318 Total 38,378 33,242 112,660 103,160 Income (loss) before income taxes (1,461) (2,445) 6,879 (2,163) Income taxes (489) (916) 2,305 (811) Net income (loss) $(489) $(1,529) $4,574 $(1,352) Per common share: Basic and diluted earnings (loss) $(0.12) $(0.09) $0.57 $(0.16) Dividends paid $0.04 $0.03 $0.12 $0.09 Weighted average shares outstanding 8,145 8,124 8,033 8,232 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) September 30 December 31 (in thousands) 1998 1997 Assets Current assets: Cash and cash equivalents $4,257 $8,278 Accounts receivable: Trade accounts and notes receivables (net) 59,906 68,643 Margin deposits 3,752 771 Total 63,658 69,414 Inventories 165,173 191,467 Deferred income taxes 3,270 1,408 Prepaid expenses 2,902 4,521 Total current assets 239,260 275,088 Other assets: Notes receivable (net) and other assets 6,332 6,333 Investments in and advances to affiliates 1,100 1,026 Total 7,432 7,359 Property, plant and equipment (net) 87,935 85,797 Total $334,627 $368,244 Liabilities and owners' equity Current liabilities: Notes payable $55,000 $15,572 Accounts payable for grain 32,778 121,233 Other accounts payable 72,489 63,309 Accrued expenses 13,246 12,973 Current maturities of long-term debt 6,882 8,406 Total current liabilities 180,395 221,493 Pension and postretirement benefits 2,663 2,799 Long-term debt 65,731 65,709 Deferred income taxes 6,983 5,393 Minority interest 671 649 Owners' equity 78,184 72,201 Total $334,627 $368,244
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., 419-891-6417; or Marilyn
Windsor, 312-640-6692, or Lisa Fortuna, 312-640-6779, both of The Financial