The Andersons

The Andersons is generally thought to be a Farm Products Company but it has grown into so much more than that since its beginnings in the 1940s. It's a company that started out as a single grain elevator but it has turned into a diverse conglomerate made up of five different groups - Grains, Plant Nutrients, Ethanol, Rails and Retail. 

The Grains Group includes the following:

1. Operations. The company owns grain terminals in eight states including Ohio, Michigan, Indiana, Illinois, Nebraska, Iowa, Tennessee and Texas with grain storage capacity of more than 140 million bushels at more than 45 grain storage facilities. Their grain facilities accept corn, soybean and wheat commodities.
2. AgVantage Crop Insurance. When crop prices become volatile due to unpredictable weather patterns, the company helps manage farmer's risk with crop insurance.
3. Freedom Pricing Tools. The company provides a full line of solutions, designed to help farmers manage their risk through pricing diversification.
4. Farm2Market. With their Farm2Market program, the company can pick up grain from the farm or it can be delivered to many of the large number of Andersons or non-Andersons locations and the company will handle all the details. This allows farmers to spend less time running their grain to market and more time running their farm business.
5. Grain Market Commentary. Grain market commentary videos are created exclusively by the experts at The Andersons to provide daily morning and closing market comments, as well as crop progress and USDA report video commentary.
6. Products The company provides their customers with high quality Dried Distiller Graing and Solubles and feed. Their DDG merchants will work with each of their customers on feed needs, quality requirements, freight needs and more. When customers need feed the company will find a solution that best fits the customer's feed requirements whether they need need DDGs, Hominy, Corn Screenings, Corn Gluten Pellets, Wheat Midds, Oats or Barley.

The Plant Nutrients Group includes the following:

1. Wholesale. The company's wholesale facilities formulate, store, and distribute approximately two million tons of dry and liquid agricultural nutrients through their extensive dealer network. 
2. Professional Turf and Horticulture. The company's experience offering specialty nutrients and formulations to the professional turf and horticulture markets, combined with next generation technologies, make them an industry leader.
3. Mineral Processing. The company's pelletized products, manufactured from high quality, natural sources, are leading the way in the limestone and gypsum business in both the agriculture and turf markets nationwide.
4. Southern Region. Their Southern Region is a leading producer, dealer, and applicator of liquid fertilizer and crop protection products in the southeastern United States. They are also a major producer and marketer of dust abatement and water treatment products.
5. Contract Manufacturing. The company's facilities provide manufacturing services to some of the largest branded marketing and chemical companies in the world. These services range from bagging to custom formulation development. Research and development, regulatory, and marketing teams also assist in moving projects from concept to market.
6. Laboratory Animal Bedding. The company's corncob based products are sold into the laboratory animal bedding market as part of a complete bedding, nesting and enrichment product offering. Product and packaging services are also provided, including irradiation and sterility testing, and autoclavable and bulk bags.
7. Industrial Corncob Products. The company's corncob based products are sold into industrial markets for use as blast cleaners, polishers, absorbents and carriers. These products are also sold into oil and gas industry for solidification, stabilization and remediation purposes.
8. Industrial Products. The company's facilities manufacture, package, distribute, and inventory a broad range of dry and liquid industrial products. They products, including nitrogen reagents, deicers, and anti-icers are distributed in bulk and packaged containers.
9. Farm Centers. The company's Farm Centers offer an extensive selection of products and services that are vital for successful crop production. Their agricutural advisors’ expertise, combined with modern technology, provides growers with solutions for maximizing crop production and income.

The Ethanol Group includes the following:

1. Operations. The company operates four ethanol plants in Indiana, Michigan, Ohio and Iowa that are collectively capable of producing 330 million gallons of ethanol.
2. Products. The company's plants produce ethanol that can be shipped by rail or truck to customers along with E-85 that is automatically blended to ensure consistency and quality. They also produce Corn Oil for industrial, feed, biodiesel and renewable diesel applications. The plants in Michigan and Ohio have a supply agreement with a major liquified CO² and dry ice provider that turns the CO² into liquid CO² for beverages as well as dry ice for food (frozen food, catering, etc.) and cleaning (ice blasting) applications.
3. Services. The company's investment in ethanol is an extension to their core competencies in grain operations, corn originations and commodity processing. In addition, the company also provides services that include ethanol marketing and risk management.

The Rail Group includes the following:

1. Railcar Leasing. The Andersons Rail Group has a fleet of more than 22,000 various railcars and locomotives that they lease, manage and sell. With their extensive rail market knowledge, railcar repair and railcar component capabilities, they provide smart solutions to meet the demands of business. 
2. Railcar Repair. The company has multiple locations across the US that can provide repair, maintenance and renovation solutions to meet the needs of the fleet. They also provide a range of services with a complete parts inventory from AAR-approved suppliers. Their railcar repair workforce has the capability to perform different types of railcar conversions and railcar modifications including converting large cube covered hoppers to smaller cube sand cars as well as perform extended service life and JIC repairs.
3. Fabrication. The company has a strong industry reputation with more than 50 years of experience in steel fabrication, sandblasting and painting services. The Fabrication Shop specializes in railcar component manufacturing as well as custom design and fabrication of mild steel, aluminum and stainless steel items. 

The Retail Group includes the following:

1. General Stores. The company's four large stores located in Maumee, Toledo and Columbus, Ohio have an assortment of products from home décor (bedding, bath and kitchen wares) to furniture, mattresses and window fashions. The stores also have an assortment of lawn and garden items, as well as pet food and supplies, automotive supplies, casual/work clothing and a unique specialty food offering. 
2. Market. The Andersons Market in Sylvania, Ohio transforms the every day food shopping experience into one that is more exciting.
3. Mower Center. The Andersons is one of northwest Ohio's leaders for outdoor power equipment sales and service. Through their John Deere, Stihl Elite, Toro Master and Honda Power Choice partnerships, the company is able to fulfill the constantly changing needs of residential, commercial lawn and grounds care providers.

The Andersons, Inc. engages in the grain, ethanol, plant nutrient, railcar leasing, turf and cob products, and consumer retailing businesses in the United States and internationally. It operates through six segments: Grain, Ethanol, Rail, Plant Nutrient, Turf & Specialty, and Retail. The Grain segment operates grain elevators; and stores grains, as well as provides marketing, risk management, and corn origination services to its customers. The Ethanol segment purchases and sells ethanol; and offers facility operations, risk management, and ethanol and corn oil marketing services to the ethanol plants. The Rail segment leases, sells, and repairs various types of railcars, locomotives, and barges; provides fleet management services to private railcar owners; and invests in short-line railroad, as well as offers metal fabrication services. The Plant Nutrient segment manufactures, distributes, and retails agricultural and related plant nutrients, and pelleted lime and gypsum products; and crop nutrients, crop protection chemicals, and seed products, as well as provides application and agronomic services to commercial and family farmers. This segment also offers warehousing, packaging, and manufacturing services to nutrient producers and other distributors; and manufactures and distributes various industrial products, including nitrogen reagents for air pollution control systems. The Turf & Specialty segment produces granular fertilizer and control products for the turf and ornamental markets; and private label fertilizer and control products, and various corncob-based products. The Retail segment operates The Andersons retail stores; The Andersons Market, a specialty food store; a distribution center; and a lawn and garden equipment sales and service facility. The Andersons, Inc. was founded in 1947 and is headquartered in Maumee, Ohio. 
(Summary) (Company) (Daily Chart)

9 September 2015
Price $34.63
1yr Target $45.50
Analysts 6
Dividend $0.56
Payout Ratio 20.66%
1yr Cap Gain 31.38%
Yield 1.61%
1yr Tot Return 32.99%

Market Cap $969.64 Mil
1yr EarnGR 20.75%
3yr EarnGR 4.19%
5yr EarnGR 22.71%
1yr DivGR 9.30%
3yr DivGR 13.52%
5yr DivGR 15.36%
Revenues $4.38 Bil
Earnings $77.60 Mil
Profit Margin 1.75%

Beta 1.34
EPS (ttm) $2.71
EPS next yr $3.15
EPS next 5yr 12.00%
P/E 12.78
PEG 1.06
Debt/Equity 0.73
ROA 3.50%
ROE 9.80%
ROI 1.40%

The Company History

1940s

• Harold and Margaret Anderson found The Andersons Truck Terminal in Maumee, Ohio.
• ATT is established as an operating partnership with Harold and Margaret and their six children.
• Grain terminal with nine truck bays is built for rapid turnaround and better service to farmers.
• Rail transfer to ship loading is established on the Maumee River.

1950s

• Additional grain storage is added, known nationally as “The Big Pour.”
• The Andersons Warehouse Market is opened as the first retail store.
• Fertilizer blending begins, initially utilizing a cement mixer.
• Ear corn and cob milling facilities are added.
• St. Lawrence Seaway is opened.

1960s

• The first deep-water grain loading facility on the U.S. side of the Great Lakes is opened by The Andersons.
• Champaign, Illinois opens as the first elevator in the U.S. capable of loading 100-car unit trains destined for the East Coast, the Gulf, and the fast-growing export market.
• The largest steel tank grain storage installation in North America is conducted by The Andersons in Maumee, Ohio.
• Lawn Products business begins.
• John Anderson becomes Managing Partner.

1970s

• Grain receipts almost triple and the river elevator is expanded.
• Unit train fertilizer shipments arrive from western U.S. and Canada.
• Unit train grain shipments head to Gulf ports.
• Grain elevator and cob mill built in Delphi, Indiana.

1980s

• Liquid fertilizer facilities open on the Maumee River.
• Toledo and Columbus retail stores open.
• Dick Anderson becomes Managing Partner.
• The Andersons Management Corporation forms.
• Two "outside" directors are added to the Board of Directors.
• Grain elevators and fertilizer facilities open in Indiana and Michigan.

1990s

• The Andersons is incorporated and is first listed on the NASDAQ on February 20, 1996.
• Railcar repair shop is built in Maumee and the Company enters the rail leasing business.
• Mike Anderson becomes CEO.
• Grain and liquid storage facilities are acquired in Clymers, Walton, Logansport, Seymour, North Manchester and Waterloo, Indiana.
• Sales reach $1 billion.
• The majority of the board is comprised of independent directors.

2000s

• The Andersons enters the ethanol business, overseeing the construction and operation of three ethanol plants.
• Railcar fleet is significantly expanded and additional railcar repair shops are added.
• Earned ISO certifications for all liquid plant nutrient facilities.
• Professional turf products are expanded.
• Additional shares are issued in the form of a 2-for-1 stock split and follow-on offering.
• The Andersons invests in Lansing Trade Group, an independently owned ag-merchandising company that trades wheat, corn, feed ingredients and other grains/oilseeds.

2010s

• The Andersons Denison LLC acquires an ethanol plant in Denison, Iowa.
• Twelve grain and agronomy facilities are purchased in Iowa and Tennessee.
• Opened newly constructed state-of-the-art 27,000 square foot railcar paint facility in Maumee, Ohio.
• The Andersons and Lansing Trade Group, LLC acquire Thompsons Limited, a grain and food-grade bean handler with eleven facilities in southern Ontario and one facility in Minnesota.
• Additional shares are issued in the form of a 3-for-2 stock split.
• Specialty products offering expanded with purchase of New Eezy Gro, Inc.
• Six grain and four agronomy facilities located throughout north central Michigan are purchased.

My Perspective

This great company operates in almost every aspect of food production at the farm level without actually growing the food. But don't let that fool you. This company competes in almost every area that farm products travel in the process between the farm and the dinner table. Those processes can (and do!) often create more value that the farm crops themselves. 

As I look at all the fundamentals listed above I like every one of them except possibly the dividend yield and the profit margin. Each of these could be a little higher and I really wouldn't mind, but that's a small price to pay for such a great company that's currently on sale. 

If you review the company's chart it may concern you a little if you don't think about it for a while. The stock has fallen the last couple of months but an investor has to remember that the entire market has fallen this year. In addition, commodity prices have fallen too affecting the price of this stock. These two things have created an opportunity for smart investors. Today I can buy this great company for a very cheap price because it's being penalized by stock and commodity markets in reverse. And this has nothing to do with the fundamentals of the company itself. 

I plan to take advantage of this situation and open a position in this company in the next few days. As always, I'll open a small position and then add to that position over the next few months as I see the stock price develop. There's a lot of great things occurring with this company, including hiring a new CEO (brought in from Cargill). I expect these to bring new insight and new ideas into the company and result in further expansion of the food business. 

I also expect this to increase the value of my shares as I continue on my life long quest for financial freedom and security.