Press Releases
The Andersons, Inc.
Total revenues of $260.3 million for the period were down 8.3 percent from the $283.8 million realized in the second quarter of 1998, primarily due to lower grain prices.
Net income for the first six months of 1999 rose to $7.5 million, or $0.91 per diluted share, on revenues of $461.1 million. In the first half of 1998, the company had revenues of $506.0 million and net income of $5.5 million, or $0.70 per diluted share.
Agriculture
The company's Agriculture Group operates grain elevators and wholesale fertilizer distribution facilities in four eastern corn belt states. Collectively these facilities handle about 150 million bushels of grain and one million tons of dry and liquid agricultural fertilizer products annually. In addition, the group operates farm centers in the region.
The group's operating performance in the second quarter this year improved slightly from the 1998 period because of increased earnings on the company's grain storage space and farm center fertilizer volume and service growth. Despite weakness in parts of the U.S. agricultural industry, the grain elevator segment is presently quite strong due to the need to store sizable carryover grain stocks. Because of low grain prices this year, farmers have reduced their fertilizer usage. As a result, The Andersons' wholesale fertilizer business experienced declines in volume, revenue and income from the year-earlier second quarter. The group's farm center division reported increases in revenue and income mainly due to additional outlets acquired during the past 12 months. The wholesale fertilizer and farm center divisions generally earn most of their income in the second quarter.
Manufacturing
The Manufacturing Group repairs, sells and leases various types of railcars and operates a custom steel fabrication business. This business has achieved dramatic revenue and income growth in the past few years. While railcar lease rates in several industries are soft at the present time, the group's 1999 second-quarter revenues and operating income were higher than the year-earlier period due to the larger fleet and increased sales of railcars.
Processing
The Processing Group produces granular lawn fertilizer products for major retailers throughout the country as well as professional lawn-care and golf- course markets. It also produces ice-melt products, corncob-based chemical and feed-ingredient carriers and animal bedding and litter products. The group's lawn-products segment recorded volume and revenue growth in the second quarter of 1999 versus the comparable period in 1998. Operating income declined somewhat, however, because of changes in the mix of products sold and increased costs associated with production requirements in excess of rated capacity. In this rapidly consolidating industry, The Andersons added manufacturing and distribution capacity in eastern Pennsylvania earlier this year and is in the process of converting an Alabama facility it acquired during the quarter for lawn-products manufacturing and distribution.
Retail
This group operates six large retail stores in Ohio. The company characterizes its retail concept as "More for Your Home." A traditional home center with plumbing, electrical and building supplies, it also features indoor and outdoor garden centers, extensive lines of housewares and domestics, pet supplies, automotive supplies, sporting goods and a unique specialty food offering.
In the second quarter of 1999, the Retail Group achieved a same-store sales increase of about six percent, strong margins and a corresponding bottom-line improvement. Contributing to this year-over-year improvement was the strong demand for lawn and garden, nursery and home improvement merchandise.
Company
According to President and Chief Executive Officer Mike Anderson, "The spring season is usually a good period for our company, and this year's was no exception. Our overall earnings continued to grow, and the operating income of all four groups was substantial. We are pleased the Retail Group recorded the fifth consecutive quarter of same-store sales growth and improved operating results. However, we're cautious about expectations for the remainder of the year, due to reduced demand for agricultural fertilizer, costs of adding new lawn fertilizer manufacturing capacity and softening of rail car demand." The Andersons, Inc. paid its third five-cent per share quarterly cash dividend on July 21. In 1998, the quarterly dividend was four cents. The company continues to repurchase shares on the open market from time to time.
The Andersons, Inc. is a respected leader and dominant regional player in grain merchandising. 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, 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.
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) 1999 1998 1999 1998
Sales and merchandising
revenues $259,247 $282,799 $459,212 $504,020
Other income 1,078 1,040 1,868 2,008
Total 260,325 283,839 461,080 506,028
Cost of sales and
merchandising revenues 208,544 235,077 370,433 423,406
Gross profit 51,781 48,762 90,647 82,622
Operating, administrative
and general expenses 38,602 37,210 75,336 69,938
Interest expense 2,052 1,886 4,118 4,344
Total 40,654 39,096 79,454 74,282
Income before income taxes 11,127 9,666 11,193 8,340
Income taxes 3,668 3,296 3,690 2,794
Net income $7,459 $6,370 $7,503 $5,546
Per common share:
Basic earnings $0.92 $0.80 $0.92 $0.70
Diluted earnings $0.90 $0.80 $0.91 $0.70
Dividends paid $0.05 $0.04 $0.10 $0.08
Weighted average shares
outstanding-basic 8,075 7,960 8,116 7,973
Weighted average shares
outstanding-diluted 8,243 8,012 8,273 7,979
The Andersons, Inc.
Consolidated Balance Sheets
(Unaudited)
June 30 December 31
(in thousands) 1999 1998
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $6,652 $3,253
Accounts receivable:
Trade accounts and notes receivables (net) 59,047 62,647
Margin deposits 148 248
Total 59,195 62,895
Inventories 143,224 184,900
Deferred income taxes 3,844 5,502
Prepaid expenses 4,690 4,521
Total current assets 217,605 261,274
Other assets:
Notes receivable (net) and other assets 6,726 8,435
Investments in and advances to affiliates 1,042 1,057
Total 7,768 9,492
Property, plant and equipment 91,952 90,057
Total $317,325 $360,823
Liabilities and owners' equity
Current liabilities:
Notes payable $35,000 $7,700
Accounts payable for grain 28,466 88,978
Other accounts payable 64,906 75,301
Accrued expenses 15,940 17,079
Current maturities of long-term debt 5,426 6,318
Total current liabilities 149,738 221,493
Pension and postretirement benefits 2,640 3,113
Long-term debt 68,371 71,565
Deferred income taxes 7,635 7,330
Minority interest 1,167 705
Shareholders' equity 87,774 82,734
Total $317,325 $360,823
SOURCE: The Andersons, Inc.
Contact: Gary Smith of The Andersons, Inc., 419-891-6417; or Marilyn
Windsor, 312-640-6779, or Lisa Fortuna, 312-640-6692, both of The Financial
Relations Board, Inc.
Website: http://www.andersonsinc.com/