The Andersons, Inc. ( ANDE) recently hiked its quarterly dividend by a cent (7%) to 16 cents, to boost shareholder value. The increased dividend will be paid on January 23, 2013, to stockholders of record as of January 2, 2013.
Andersons has been paying cash dividends since 1996, when it started trading on the NASDAQ and has paid dividends for 65 straight quarters. The current dividend hike comes exactly after a year. The last dividend hike of 4 cents or 36% from 11 cents was announced on December 16, 2011.
The company has been increasing its dividend every year since 2002. Starting from 3 cents in 1996, the quarterly dividend payout has now increased more than fivefold to the current level of 16 cents. The most substantial increase came in 2007 when the company had hiked its dividend by 63% to 7.75 cents. Based on an approximate 18.6 million common shares outstanding, the total dividend payout will be to the tune of $3 million.
The news of the dividend hike is on the heels of Andersons’ strong third quarter results. Earnings per share of 90 cents breezed past the Zacks Consensus Estimate of 28 cents and were 53% higher than 59 cents earned in the year-ago quarter. Total revenue improved 21% to $1.138 billion during the quarter and was ahead of the Zacks Consensus Estimate of $988 million. The outperformance was mainly driven by sound performance at the Rail Group.
Cash and cash equivalents were $80.4 million as of September 30, 2012, up substantially from $23.9 million as of June 30, 2012. Long-term debt, excluding current portion, amounted to $312.4 million as of September 30, 2012, compared with $317.6 million as of June 30, 2012. As of the end of the third quarter, debt to capital ratio was a manageable 34.15%.
Andersons has been active on the acquisition front lately. The company recently completed the purchase of a majority of the grain and agronomy locations of Green Plains Grain Company to significantly diversify its grain and agronomy businesses. The purchase of seven facilities in Iowa and five in Tennessee, with a combined grain storage capacity of about 32 million bushels, will increases Andersons’ Grain Group’s storage capacity by nearly 30%. Two Iowa locations also have 30,000 tons of combined fertilizer storage.
In October, Andersons purchased all assets of Mt. Pulaski Products, LLC, which makes products from corn cobs. With this acquisition, Andersons became the owner of multiple corn cob product mills. As a result, the new facilities together with the company’s facility at Delphi, Indiana, will position it as the sole leader of cob processor as well as product manufacturer.
Moreover, Andersons’ raw corn cob supply will be doubled as the mills are best positioned around the seed corn production areas in Illinois. Therefore, the company will reap the benefits of an enhanced cob product portfolio and will be able to provide more improved services to a wider client base. The decision to buy the assets fits in well with The Andersons’ strategy to expand its geographic footprint into potential new markets and enhance product portfolio, which will boost its revenues. Earlier, in May 2012, the company completed the acquisition of an ethanol facility in Denison, Iowa.
However, drought condition in the U.S. will continue to impact its grain and ethanol businesses through the first half of 2013.
Based in Maumee, Ohio, The Andersons, which has a Zacks #1 Rank (Strong 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) and CHS Inc. ( CHSCP).
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