ADM Archer Daniels Midland Company

The Andersons Inc. (ANDE) reported third quarter EPS of 59 cents, a substantial improvement over the 8 cents reported in the year-ago quarter and way ahead of the Zacks Consensus Estimate of 17 cents. The outperformance was led by the Grain & Ethanol and Plant Nutrient Groups.

Total revenue in the quarter was $938.7 million, up 33% from $706.8 million in the prior-year quarter, missing the Zacks Consensus Estimate of $1 billion. The year-over-year improvement was primarily driven by higher sales across the company’s segments besides price increases in the company's agricultural businesses.

Gross profit increased 22% year over year to $658 million. Operating income soared to $10.5 million from $3 million in the year-ago quarter. Operating margin in the quarter was 1.1% compared with 0.4% a year ago.

Segmental Performance

Grain: Segment sales increased to $539 million from $389 million in the year-earlier quarter driven by higher grain prices. Operating income improved to $8.3 million from $3.2 million in the 2010 quarter due to continued strong space income and record third quarter earnings from its investment in Lansing Trade Group.

Ethanol: The segment reported revenues of $179 million, up from $109 million in the prior-year quarter due to higher ethanol prices. The segment reported an operating income of $4.4 million in contrast with an operating loss of $0.8 million in the year-ago quarter due to an increase in the company's earnings from the investment in three ethanol limited liability company affiliates.

Rail: The segment’s sales increased to $24 million from $22 million in the year-earlier quarter. Operating income increased sharply to $1.1 million from $85,000 in the year-earlier quarter.

Plant Nutrient: Segment sales were $138 million versus $129 million in the prior-year quarter. Operating profit was $6.6 million compared with $1.5 million in the year-ago quarter due to nutrient price appreciation.

Turf & Specialty: Total sales remained flat at $23 million from the year-ago quarter. The segment reported an operating loss of $1.2 million compared with $0.3 million in the year-earlier quarter.

Retail: Sales in the segment improved 5% to $35.8 million and its operating loss declined to $1.2 million from $1.6 million in the year-earlier quarter.

Financial Position

Cash and cash equivalents increased to $38.5 million as of September 30, 2011 from 18.6 million as of June 30, 2011. Long-term debt stood at $235.7 million as of September 30, 2011 compared with $260.6 million as of June 30, 2011.

Based in Maumee, Ohio, The Andersons, which has a Zacks #2 Rank (Buy rating), is a diversified company operating in five different business segments ranging from buying, selling and storing grain to leasing railcars and running retail stores catering to the latest home hardware needs. The company has operations across the U.S. and in Puerto Rico, plus rail equipment leasing interests in Canada and Mexico.

Andersons competes with Archer Daniels Midland Company (ADM), CHS Inc. (CHSCP) and privately held Cargill, Incorporated.

 
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