The Andersons, Inc.
) is acquiring Kansas City, Miss.-based railcar repair and
cleaning provider Mile Rail, LLC. The terms were not disclosed
and the acquisition is expected to be finalized in the third
quarter, pursuant to customary closing conditions.
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Operating from its rail headquarters as well as its satellite
locations in Nebraska, Kansas and Indiana, Mile Rail repairs and
cleans all types of railcars containing a comprehensive range of
non-hazardous, hazardous and food grade products and wastes. From
its environmental headquarters in Indianapolis, Mile Rail offers
industrial maintenance, environmental and waste management
services including high pressure water blasting, industrial
cleaning, hazardous and non-hazardous waste disposal, product
destruction, lab packing, universal waste handling, metal
recycling, waste transfer, waste bulking and storage, as well as
The acquisition is a strategic fit with Andersons' Rail Group.
The Rail group includes the leasing, marketing and fleet
management of railcars and locomotives, railcar repair and metal
fabrication. The Group mainly operates in the used car market by
purchasing used cars and repairing and refurbishing them for
specific markets and customers. The segment contributed for
approximately 3% of the company's sales in 2012 and 4% in the
first quarter of 2013.
The acquisition will enhance Andersons' current railcar repair
network by expanding its geographical footprint and business mix.
The acquisition will enhance Anderson's tank car repair
capability and the company can capitalize on the demand for
additional capacity in the industry.
The Rail Group delivered significantly higher earnings in 2012,
driven by increased financing opportunities, higher average
railcar lease rates, larger railcar fleet and expansion in the
railcar repair business. Operating income was a record $42.8
million in 2012 compared with $9.8 million in the prior year and
it more than doubled from its prior full-year record operating
The momentum continued in the first quarter of 2013 with
the segment reporting revenues of $46 million, up 28% year over
year. Operating income increased nearly two-fold to $14.6
million. The increase was attributable to higher lease rates and
increased income from car financings.
The Rail Group is expected to continue to perform well in 2013 as
well, based on above-average financing opportunities, strong
recovery in lease rates, and expected continued improvement in
the repair business. Furthermore, the Mile Rail acquisition is
expected to increase Andersons' railcar repair revenues by 25%.
Apart from leasing railcars, Maumee, Ohio-based Andersons is a
diversified company operating in five other different business
segments ranging from buying, selling and storing grain to
running retail stores catering to the latest home hardware needs.
It belongs to the agricultural products industry along with
Archer Daniels Midland Co.
). Andersons carries a Zacks Rank #2 (Buy).