Grainnet

Maumee, OH—The Andersons, Inc. (Nasdaq: ANDE) announced Nov. 4 third quarter net income attributable to the company of $1.3 million, or $0.07 per diluted share, on revenues of $601 million.

In the third quarter of 2008, the company reported results of $12.8 million, or $0.70 per diluted share, on revenues of $906 million.

Full Andersons, Inc. Report

For the first nine months of 2009, the company earned $22.1 million, or $1.20 per diluted share, on revenues of $2.1 billion.

In the same period of 2008, The Andersons reported results of $66.3 million, or $3.59 per diluted share, on $2.7 billion of revenues.

Prior year earnings included unprecedented margins in our Plant Nutrient Group, which accounted for nearly two-thirds of the income for the same period, but which were not sustainable for all of 2008.

The Grain & Ethanol Group's operating income of $8.9 million in the third quarter was comparable to its year earlier result of $9.4 million.

The grain business income was down significantly in comparison to the prior year as space income and margin on grain sales returned to more traditional levels.

In addition, bad debt reserves were increased.

During the third quarter the ethanol business benefited from greatly improved margins and from the finalization of The Andersons Albion Ethanol LLC business interruption claim.

Third quarter 2009 income from the group's investment in Lansing Trade Group was down slightly from the prior year.

Total third quarter revenues for the Grain & Ethanol Group were $451 million; this includes $176 million of grain and ethanol sales made in accordance with origination and marketing agreements between the company and its ethanol joint ventures.

In the third quarter of 2008, the group's total revenues were $651 million and included $232 million of the previously mentioned sales.

While revenues for the group are lower, due to substantially lower commodity prices, such amounts do not serve as good indicators of income or economic performance in a commodity based business.

The Grain & Ethanol Group's operating income through the first nine months was $23.5 million in 2009 and $31.7 million in 2008.

Income through September for the grain division in comparison to the prior year is up considerably.

Conversely, year to date income for both the ethanol division and Lansing Trade Group is down significantly.

Total revenues through September 2009 and 2008 were $1.4 billion and $1.8 billion, respectively.

The Rail Group had an operating loss of $1.1 million in the third quarter of 2009, which is down significantly from the $5.2 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.

Gross profit from the leasing business was significantly less due mainly to lower utilization rates and the corresponding increase in storage expense from idle assets.

The group now has approximately 24,000 cars and locomotives.

The average utilization rate (the percentage of the fleet in service) for the quarter was 74.4 percent in comparison to 93.3 percent for the same period last year.

The gross profit of both the railcar repair and manufacturing businesses continued to be down significantly this quarter due to reduced activity resulting from overall economic conditions.

Revenues of $21 million for the third quarter were down from the $28 million reported in 2008. The group's first nine month's operating income this year was $0.4 million on $72 million of revenues.

In 2008, operating income through September was $16.5 million and revenues were $106 million.

These year to date results included gains on sales of railcars and related leases of $1.6 million and $4.0 million in 2009 and 2008, respectively.

The Plant Nutrient Group had an operating loss of $2.8 million during the third quarter of 2009 on revenues of $70 million.

In the same three month period of 2008, the group achieved operating income of $7.2 million on revenues of $162 million.

Margins were down significantly from the prior year, as third quarter 2008 benefited from unprecedented inventory appreciation, whereas third quarter 2009 margins returned to normal levels.

Retailers continue to maintain lower inventory holdings that led to reduced sales volume during the third quarter in comparison to the prior year.

The group's first nine month's operating income this year was $9.6 million on $380 million of revenues.

Last year, its operating income through the first nine months was a record $62.1 million on revenues of $541 million, as the group benefited from unprecedented earnings from inventory appreciation, before the significant decline in inventory values, which occurred in the fourth quarter of 2008.

The integration of the Hartung Brothers Inc's. Fertilizer Division, which was acquired on August 1, is proceeding well.

This acquisition is allowing the group to expand its value added product offering, grow its wholesale customer base, and broaden its geographic territory.

The Turf & Specialty Group had an operating loss of $0.3 million in the third quarter this year on $21 million of revenues.

Last year, the group reported a $0.5 million loss on $23 million of revenues for the period.

Turf products tonnage increased year to year, but gross profit per ton decreased due primarily to product mix.

Through the first nine months of 2009, the group's operating income was a record $5.8 million on $106 million of revenues.

Last year, its operating income was $3.4 million for the same period, and revenues were $99 million.

The group continues to experience positive results from its focus on proprietary products and expanded product lines; however, there has been some softness in the professional product market lately.

The Retail Group had an operating loss of $2.3 million in the third quarter of 2009; this was partially due to the recording of costs associated with the upcoming closing of the Lima store.

In the comparable period last year, the group's operating loss was $0.2 million.

The group reported revenues of $37 million for the third quarter of 2009, which is below the $41 million in revenues reported for the same period in 2008.

Through nine months, the group recorded a loss of $2.1 million and total revenues of $120 million.

Last year through September the group lost $0.2 million on total revenues of $127 million.

The group continues to be impacted by the overall economic down turn, which has resulted in a decline of both customer counts and average sale per customer.

Margins, however, have remained consistent with the prior year.

CEO Comments

"We are disappointed overall with this quarter's results, which we would characterize as a mix of areas of continued concern, and some positive developments," said Chairman and Chief Executive Officer Mike Anderson.

"Most significantly, our Rail Group continued to be seriously impacted by the overall weak economy.

"To a lesser extent our Retail Group was also impacted by the economic decline.

"Conversely, while our Grain & Ethanol Group's results for the quarter were lower than that of the prior year it was nice to see decent margins return to the ethanol business and Lansing Trade Group return to profitability.

"Within the grain business, while our quarterly results were well below the prior year, our year to date result is a record, which reflects our solid position in the grain business.

"And, the current ethanol trading environment, which allowed the third quarter results for the ethanol business to be markedly improved over recent quarters, has allowed us to lock in profitable margins for a significant portion of the fourth quarter sales and for some of the sales during the first half of 2010.

"Both our Plant Nutrient and Turf & Specialty groups had losses for the quarter, which is a typical third quarter result for these seasonal businesses, and for Plant Nutrient, a return to normal patterns following an extraordinary 2008.

"Finally, we recognized a one-time $4.1 million gain arising from the freezing of the Company's defined benefit pension plan effective July 1, 2010."

For more information, call 419-891-6415.

See Related Websites/Articles:

• The Andersons, Inc.
• Full Andersons, Inc. Report

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