THE ANDERSONS INC

The Andersons earns its daily bread on a mix of grains, trains, and corncobs. The agricultural company's main business -- its Grain and Ethanol segments -- consists of the buying, conditioning, and reselling of corn, soybeans, and wheat, which it acquires from US grain farmers and stores. To support the operation, it uses a system of elevators and terminals located in the Midwest. Its Grain and Ethanol units account for more than 75% of annual sales. The Andersons also boasts a Plant Nutrient Group, Retail Group, Rail Group, and Turf & Specialty Group. The agricultural firm operates in the US in 16 states, as well as in Puerto Rico. The company also has rail-leasing interests in Canada and Mexico.

Geographic Reach

Based in Ohio, The Andersons's main agricultural operations are located in Ohio, Indiana, Illinois, and Michigan.

Operations

The diversified company operates through half a dozen business segments: Grain Group (64% of 2013 sales), Plant Nutrient Group (12%), Ethanol Group (15%), Retail Group (3%), Rail Group (3%), and Turf & Specialty Group (3%). The company is combining its Turf & Specialty and Plant Nutrient groups in 2015.

Its Grain Group is a significant investor in Lansing Trade Group, an established commodity trading, grain handling, and merchandising business with operations nationwide and with global trading/merchandising offices. The Andersons holds an 85% interest in The Andersons Denison Ethanol LLC (TADE), a 53% interest in The Andersons Albion Ethanol LLC (TAAE), and a 38% interest in The Andersons Clymers Ethanol LLC (TACE). Also the company has a 50% stake in The Andersons Marathon Ethanol LLC (TAME) through its majority-owned subsidiary The Andersons Ethanol Investment LLC (TAEI). A third party owns 34% of TAEI. 

The Plant Nutrient Group has farm centers located throughout Michigan, Indiana, Ohio, and Florida. The farm centers offer agricultural fertilizer, chemicals, seeds, supplies, and custom fertilizer application. The group also makes liquid anti-icers and deicers for use on roads and runways. The Andersons' Retail Group runs large retail home-center stores that serve the Toledo and Columbus, Ohio, areas. The stores sell home-improvement products, nursery stock, groceries, beverages, and other items.

The company's Rail Group sells, leases, repairs, and reconfigures railcars and locomotives. The group also provides fleet management services and operates a custom steel-fabrication business. The company also owns around a 50% stake in Iowa Northern Railway Company (IANR), a 163-mile short-line railroad, which runs through Iowa from northwest to southeast.

The Turf and Specialty operations of The Andersons purchases, stores, formulates, manufactures and sells dry and liquid fertilizer to dealers and farmers; provides warehousing and services; and distributes seeds and various other farm supplies, such as corncobs that have been shredded into animal bedding, pet litter, and turf materials.

Sales and Marketing

Under the label The Anderson Golf Products, the company sells turf products both directly and through distributors to golf courses and lawn service applicators. As part of its business, the company also makes and sells fertilizer and control products for do-it-yourself application through a variety of channels, including mass merchandisers, small independent retailers, and other lawn fertilizer manufacturers. It also performs contract manufacturing for fertilizer and control products.

In 2013 The Andersons reported advertising expenses of $3.9 million, compared with $4.4 million in 2012.

Financial Performance

The Andersons has seen steady revenue growth since 2010. In 2013 the company's sales increased 6% versus 2012, to $5.6 billion. The increase was driven by a 10% gain in sales by the company's Grain division, which shipped nearly 462 million bushels during the year, an increase of 22% over 2012. The Ethanol Group also performed well in 2013 as a result of favorable margins due primarily to the significant decrease in corn costs caused by the large 2013 corn crop. The company's Rail Group and Turf & Specialty business also posted gains, while The Plant Nutrient Group saw its sales decline 11% due to a decrease in both the average price per ton sold and volume for the year in the wholesale nutrient business. The Retail Group's sales also posted disappointing result, with sales down 7% due to a decline in both the average sale per customer and customer count, as well as closure of the Woodville store in the first quarter of 2013.

Net income increased 13% in 2013 compared with 2012, to $89.9 million, on higher sales and increased income from equity in earnings of affiliates coupled with decreased interest expense, offset by increased general expenses.

Strategy

The Andersons is looking to profit from macro-economic trends, including world population growth, escalating demand for protein, and increasing North American crop production. Its diverse agribusiness and industrial based activities are all exposed to these trends in one way or another, from handling bulk commodities to using its rail cars and logistics assets to move them.

The company has announced plans to combine its Turf & Specialty and Plant Nutrient groups in 2015 to foster growth and enhance profitability. It plans to grow the lawn and cob business by adding new products and technology, and by seeking out opportunities to acquire new businesses. Indeed, acquisitions in existing and new markets are key to The Andersons's growth strategy. In total, the company invested more than $100 million in 2013, mainly to purchase rail cars and on joint ventures.

Mergers and Acquisitions

In October 2014, the company purchased two San Antonio-based food grade corn companies: United Grain, LLC; and Keller Grain, Inc.

In September 2013 the company's Rail Group acquired Kansas City, Missouri-based Mile Rail, LLC, a railcar repair and cleaning company. The purchase expands The Andersons' current railcar repair network both geographically and enables it to repair and clean virtually all types of railcars. In July 2013, The Andersons and partner Lansing Trade Group established a 50:50 joint venture to acquire Thompsons Limited, a grain and food-grade bean handler and agronomy input provider based in Blenheim, Ontario, and operating through a dozen locations across the province and in Minnesota, for $152 million. (The Andersons paid $48 million in cash for its share.) By purchasing Thompsons, it established a foothold in Ontario with a similarly diversified agricultural company adjacent to its eastern corn-belt roots.

Looking to boost its primary business, the company in 2012 acquired 12 grain elevators in northwestern Iowa and western Tennessee from Green Plains Renewable Energy, for more than $133 million. Also, it acquired the assets of Mt. Pulaski Products, adding a pair of mills in Illinois and bolstering its cob supply. The two facilities are operated by The Andersons's Turf & Specialty Group. Additionally, The Andersons in 2012 purchased New Eezy Gro, a manufacturer and wholesale marketer of specialty agricultural nutrients and industrial products with operations in Carey and Sycamore, Ohio.

 

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THE ANDERSONS INC


480 W Dussel Dr
Maumee, OH 43537-1690
Phone: 1 (419) 893-5050
Fax: 1 (419) 8916521
www.andersonsinc.com

STATS


  • Employer Type: Public
  • Stock Symbol: ANDE
  • Stock Exchange: NASDAQ
  • Chairman and CEO: Michael Anderson
  • CFO: John Granato
  • COO: Harold Reed

Major Office Locations

  • Maumee, OH
  • Maumee, OH

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