The Andersons, Inc.
) first-quarter 2012 earnings were 98 cents per share, exceeding
the Zacks Consensus Estimate of 90 cents as well as the year-ago
quarter earnings of 93 cents.
Total revenues increased 13.5% to $1.137 billion during the
quarter, driven by higher sales across all segments except for Turf
& Specialty Group and Retail Group. Revenues surpassed the
Zacks Consensus Estimate of $1.107 billion.
Cost and Margin
Cost of sales and merchandising revenues were $1.05 billion, up
13.9% from the year-ago quarter. Gross profit rose 9.1% to $85.9
million. Gross margin, however, declined 30 basis-points (bps) to
Operating, administrative and general expenses increased 11.9%
to $60.1 million. Operating income increased 3.2% to $25.8 million.
Operating margin dropped 20 bps to 2.3%.
The Grain Group:
Total revenues increased 9.7% in the quarter to $700 million.
Improvement stemmed from higher average grain price and bushels
sold. Operating income also increased 28.5% to $19.4 million.
Strong first-quarter 2012 results from investment in Lansing Trade
Group along with strong space income favored the group's operating
The Ethanol Group:
Total revenues increased 13.5% to $151 million attributed to higher
average price per gallon. Operating income decreased to $0.1
million in the quarter from $3.6 million in the year-ago quarter as
a result of lower earnings from ethanol investment affiliates.
The Plant Nutrient Group:
The group reported total revenues of $175 million, up 41.1% from
the year-ago quarter. Higher average selling price and volume
contributed to the growth in revenues. Operating income increased
14% to $5.8 million driven by volumes.
The Rail Group:
Total revenues increased 24.1% to $36 million in the quarter.
Operating income increased at a whopping rate of 126% to $8.0
million. The growth was due to higher utilization and lease
The Turf & Specialty Group:
Total revenues dropped 4.4% to $45 million. Operating income
declined 50% to $2.2 million in the quarter.
The Retail Group:
Revenues in the segment decreased 3.3% to $30 million. Operating
loss remained flat at $2.7 million.
Cash and cash equivalents were $31.9 million as of March 31,
2012, compared with $20.4 million as of December 31, 2011.
Long-term debt, excluding current portion, amounted to $220 million
as of March 31, 2012, compared with $239 million as of December 31,
The company remains cautious about the second-quarter 2012
results as it fears wheat space income in the Grain Group will
decline. It expects lower margins in the Ethanol Group as well as
Plant Nutrient Group. However, the company predicts these negative
impacts will be partially offset by better performance in the Rail
The company undertakes constant efforts to upgrade the business
and strengthen its market position in the face of growing
competition as most of its revenues are derived from the Grain
& Ethanol Group. As part of the process, in the first-quarter
it has completed the purchase of an ethanol facility in Denison,
The new plant will carry out its operations in the west of
Mississippi and be included in the Ethanol Group of The Andersons
Dennison Ethanol, LLC, a subsidiary of Andersons. However, the
impact of the generally weak economy on the company's Retail Group
remains a concern.
We have a long term Neutral recommendation on Anderson. The
stock retains a short-term Zacks #2 Rank (Buy). It competes with
Archer Daniels Midland Company
) and privately-held Cargill, Inc.
ARCHER DANIELS (ADM): Free Stock Analysis
ANDERSONS INC (ANDE): Free Stock Analysis
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