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The Andersons
Inc. Reports First-Quarter Net Income of $7.8 Million, Down $1.4 Million
From First-Quarter 2007
Maumee, OH—The
Andersons, Inc. (Nasdaq: ANDE), announced May 7 first
quarter net income of $7.8 million, or $0.42 per diluted share,
on revenues of $713 million.
In the same three month period
of 2007, the company reported net income of $9.2 million, or $0.51 per
diluted share, on $407 million of revenues.
The Grain & Ethanol
Group's first quarter operating income of $2.2 million was
significantly less than its year earlier result of $10.2 million.
The prior year's first quarter
had $4.1 million more in non-recurring development fees associated with
the ethanol plants.
The grain business suffered
a significant basis loss during the quarter as the cash markets for
corn, beans and wheat did not rise at the same pace as the futures market.
In contrast, income from the ethanol joint ventures grew significantly
during the most recent quarter.
The Albion and Clymers ethanol
plants were in operation during the entire quarter and the Greenville
plant opened in February.
This compares to last year,
when only the Albion facility was operating during the first quarter.
In addition, first quarter income from the group's investment in Lansing
Trade Group was significantly higher this year.
The group was also impacted
during the first quarter by rising inventory carrying costs associated
with higher grain prices; specifically, interest expense increased over
$3.0 million in comparison to the prior period.
Total first quarter revenues
for the group were $499 million; this includes $186 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
for which it receives a fee.
In the first quarter of 2007,
the group's total revenues were $244 million, and included $40 million
of the aforementioned ethanol joint venture fee only sales.
While revenues for the group
are higher, such amounts do not serve as good predictors of income or
economic performance in a commodity based business.
The Rail Group's
record operating income of $6.4 million in the first quarter of 2008
was more than double the $3.0 million earned during the same three month
period a year ago.
Revenues of $35 million for
the quarter were $9 million higher than the $26 million reported in
2007.
The group recognized $2.2
million in gross margin from the sale of railcars and related leases
during the quarter. Gross profit from the leasing business was higher
due to lower maintenance costs per car, a higher utilization rate, and
growth in the size of the fleet.
The group now has approximately
23,200 cars and locomotives, which is 10% more than it had twelve months
ago.
The average utilization rate
(the percentage of the fleet in service) for the quarter was 93.4% in
comparison to 92.5% for the same period last year.
The gross profit of the railcar
repair business grew during the first quarter due to the addition of
a new repair shop in the second half of 2007.
The Plant Nutrient
Group achieved record operating income of $7.5 million during
the first quarter of 2008 on revenues of $105 million.
These earnings are unprecedented
in the first quarter, as the first quarter is typically a break-even
or loss period.
In the same three month period
in 2007, the group reported a $0.4 million operating profit on $67 million
of revenues.
These earnings resulted from
significant margin increases primarily resulting from inventory price
appreciation, which began last year and has continued into 2008.
Due to this escalation of
plant nutrient prices, sales volume is slightly down from last year.
As was recently announced,
the group purchased Douglass Fertilizer & Chemical Inc. at the end
of April.
With 2007 sales of $47 million,
Douglass has five facilities in Florida and one in Puerto Rico and is
a specialty liquid nutrient manufacturer and retailer/wholesaler whose
product lines complement the group's existing product lines well.
The Turf & Specialty
Group achieved operating income of $2.0 million on $40 million
of revenues during the first quarter.
Last year, the group reported
$1.8 million of income on $36 million of revenues for the period.
Turf products tonnage increased
slightly from year to year.
Gross profit per ton was
also up slightly, in spite of record high raw material prices this year,
due to a larger percentage of sales coming from proprietary products
such as Contec DG.
The Retail Group
reported revenues of $33.7 million for the first quarter of 2008, which
is similar to the $33.8 million in revenues reported for the same period
in 2007.
This includes sales from
the Sylvania market store, which opened in the second quarter of 2007.
Same store sales decreased
4.9% for the period.
This sales decline is believed
to be due to the overall decline in consumer spending.
For the three month period,
the Retail Group incurred an operating loss of $3.4 million, which compares
to a $2.3 million loss incurred in the first quarter of 2007.
Due to competitive sales
pressure in the markets served, margins have also been reduced.
President/CEO Comments
We feel good about our overall
performance so far this year.
"The Plant Nutrient
and Rail businesses both contributed significantly to our income during
the period.
"Our Grain & Ethanol
Group was impacted in the first quarter by a reduction in basis that
has started to return in April.
"We anticipate regaining
the majority of this back later in the year, since we expect basis levels
to improve.
"We were pleased this
quarter that we were able to adjust both our long and short term debt
to respond to the increasing commodity prices," said President
and Chief Executive Officer Mike Anderson.
"We are excited about
the recent addition of Douglass Fertilizer, as this acquisition is consistent
with our strategic goal of increasing our plant nutrient footprint and
national market share through geographic expansion.
"We are also pleased
that the third ethanol plant and sixth rail repair shop became operational
this year.
"Our team continues
to demonstrate the company's commitment to organic and adjacent growth,"
added Mr. Anderson.
Mr. Anderson also stated
"Looking at our 2008 earnings forecast, numerous factors will have
a bearing on the full year outcome: weather patterns during the agricultural
planting and growing season within our region, the ability of farmers
to make progress on corn planting that is currently quite a bit behind
the five year national average, nutrient and energy prices, timing of
railcar sales, and the performance of our equity investments, which
include the ethanol production plants and Lansing Trade Group.
"Given all of these
variables and the picture we see before us today, we anticipate that
our full year 2008 earnings will be within a range of $3.65 to $4.00
per diluted share."
For The Andersons Full First-Quarter
Report, Click here.
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