The Andersons, Inc.
Total revenues of $283.8 million for the period were up 13.4 percent from the $250.2 million reported for the second quarter of 1997, primarily due to higher grain sales volume.
Net income for the first six months of 1998 jumped to $5.5 million, or $0.70 per share, on revenues of $506.0 million. In the first half of 1997, the company had revenues of $437.0 million and net income of $177,000, or $0.02 per share. The company's EPS on 12-month trailing income stood at $1.18; a year ago it was $0.47.
The company's 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. In the past few months, The Andersons opened a new fertilizer distribution facility in northeast Ohio, acquired four more retail farm centers in northwest Ohio and began operating two additional Toledo-area grain elevators under a previously announced lease agreement with Cargill. Last week the company also announced the proposed acquisition of a wholesale fertilizer and retail farm center business located in Waterloo, Ind.
The Agriculture Group's operating performance in the second quarter was improved from the prior year. In addition to growth in grain sales volume, increased U.S. grain stocks this year enabled the company to earn a higher return on its storage space. Revenue and income were both further enhanced by agricultural fertilizer volume increases achieved during the strong planting season this spring. Year-to-date operating income for the group also reflected solid improvement from the first half of 1997.
Processing & Manufacturing
The processing business produces granular lawn fertilizer products for retailers throughout the country as well as professional lawn-care and golf course markets. It also produces corncob-based chemical and feed ingredient carriers and animal bedding and litter products. The manufacturing business repairs, sells and leases various types of railcars, offers fleet management services to private railcar owners and operates a custom steel fabrication business.
Primarily because of continued lawn fertilizer volume growth, the Processing & Manufacturing Group's operating income in both the second quarter and the first half of 1998 showed growth from the comparable periods in 1997.
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 that includes a deli, bakery, produce, specialty foods and wine.
The company's Retail Group registered a modest same-store sales gain in the second quarter, up two percent from the April - June period of 1997. Gross margins were strong during the period, buoyed by growth in housewares and lawn and garden products. As a result, the group's second-quarter operating income was higher this year. First-half performance also reflected improvement from year-earlier results.
According to Chairman and Chief Executive Officer Dick Anderson, "We're really pleased with the performance achieved by our company so far this year. Looking forward, there are several sizable railcar lease transactions in the pipeline that we expect to close in the second half of 1998, and our relatively high grain inventories should provide good storage income for the year. Overall, I believe we'll see a strong performance in 1998. Longer term, we continue to be optimistic about the growth potential in several of our businesses."
The Andersons, Inc. recently paid a cash dividend of $0.04 per share to shareholders of record as of July 1, the company's third 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 Income (Unaudited) Three Months Ended Six Months Ended (in thousands except for June 30 June 30 per share amounts) 1998 1997 1998 1997 Grain sales and revenues $123,043 $98,721 $250,872 $192,529 Fertilizer, retail and other sales 159,756 150,719 253,148 242,729 Other income 1,040 750 2,008 1,697 Total 283,839 250,190 506,190 436,955 Cost of grain sales 115,078 92,664 235,311 183,864 Cost of fertilizer, retail and other sales 119,999 114,642 188,095 182,891 Total 235,077 207,306 423,306 366,755 Gross profit 48,762 42,884 82,622 70,200 Operating, administrative and general expenses 37,210 33,603 69,938 65,505 Interest expense 1,886 2,273 4,344 4,412 Total 39,096 35,876 74,282 69,917 Income before income taxes 9,666 7,008 8,340 283 Income taxes 3,296 2,749 2,794 106 Net income $6,370 $4,259 $5,546 $177 Per common share: Basic and diluted earnings $0.80 $0.52 $0.70 $0.02 Dividends paid $0.04 $0.03 $0.08 $0.06 Weighted average shares outstanding 7,960 8,230 7,973 8,287 The Andersons, Inc. Consolidated Balance Sheets (Unaudited) June December 31 (in thousands) 1998 1997 Assets Current assets: Cash and cash equivalents $5,885 $8,278 Accounts receivable: Trade accounts and notes receivables (net) 64,035 68,643 Margin deposits 278 771 Total 64,313 69,414 Inventories 121,221 191,467 Deferred income taxes 3,957 1,408 Prepaid expenses 2,525 4,521 Total current assets 197,901 275,088 Other assets: Notes receivable (net) and other assets 6,067 6,333 Investments in and advances to affiliates 1,027 1,026 Total 7,094 7,359 Property, plant and equipment 86,993 85,797 Total $291,988 $368,244 Liabilities and owners' equity Current liabilities: Notes payable $9,500 $15,572 Accounts payable for grain 34,805 121,233 Other accounts payable 70,077 63,309 Accrued expenses 17,242 12,973 Current maturities of long-term debt 7,136 8,406 Total current liabilities 138,760 221,493 Pension and postretirement benefits 2,825 2,799 Long-term debt 66,647 65,709 Deferred income taxes 5,931 5,393 Minority interest 647 649 Shareholders' equity 77,178 72,201 Total $291,988 $368,244
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., 419-891-6417; or Marilyn
Windsor of The Financial Relations Board, Inc., 312-640-6779