Ag Services of America, Inc. (NYSE:ASV) yesterday announced that net revenues for the three months ended August 31, 2001 increased to $110.3 million compared to $103.5 million one year ago. Net earnings for the quarter was $2.0 million, or $0.37 per diluted share compared to $2.7 million, or $0.50 per diluted share for the same period last year. Decreased interest rates reduced earnings on invested capital and negatively affected an interest rate swap agreement for the second quarter of Fiscal 2002. Net revenues for the six months ended August 31, 2001 increased 6% to $274.5 million from $259.3 million one year ago. Net income for the first six months of Fiscal 2002 was $3.9 million, or $0.70 per diluted share, compared to $5.9 million, or $1.06 per diluted share for the first six months of Fiscal 2001. These results were slightly better than the Company initially indicated.
“Fiscal 2002 results have been impacted significantly by changes in crops planted by our customers and reduced interest rates,” stated Brad Schlotfeldt, Senior Executive Officer. “Cool, wet weather delayed crop planting 4 to 5 weeks compared to last year throughout much of our primary market area which caused many customers to switch plans on crops to be planted and to leave a number of acres unplanted. This decreased a portion of our seed, chemical and fertilizer sales. In addition, the decline in the prime lending rate significantly reduced earnings on our invested capital and negatively affected an interest rate swap agreement on our $30 million term note put in place in July of 2000.”
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In the first six months of Fiscal 2002, revenues attributable to Powerfarm increased in excess of 300% to approximately $3.3 million compared to $0.7 million for the same period last year. The impact on earnings per share for the first six months of Fiscal 2002 was a loss of $0.05 per diluted share compared to a loss of $0.08 per diluted share one year ago.
The Company is currently in the process of planning for the 2002 crop year. District sales managers have been added to increase Ag Services’ presence in Missouri, North Carolina and Ohio. The Company is also having discussions with various suppliers about expanding their Seed and Chemical Financing Programs as well as supporting the growth of Agri-Flex Credit®. Management is confident in the opportunities to resume Ag Services’ growth in the future.
Ag Services of America, Inc., which operates Powerfarm.com, is based in Cedar Falls, Iowa, and is a leading supplier of input financing and agricultural inputs, including seed, chemicals, fertilizer and cash advances to primarily corn and soybean growers in the U.S. The Company’s one-stop shopping business model includes competitive and flexible financing packages through its AgriFlex Credit® program combined with the most comprehensive offering of agricultural inputs from national sources such as Asgrow, Aventis, BASF, Dekalb, Dow AgroSciences, DuPont, Garst, Monsanto, Pioneer Hi-Bred, and Syngenta. The Company also provides ancillary services such as crop insurance and grain marketing.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The factors that could cause actual results to differ materially, include the following: general economic conditions within the agricultural industry; competitive factors and pricing pressures; changes in product mix; changes in the seasonality of demand patterns; changes in weather conditions; changes in agricultural regulations; unknown risks; the amount and availability under its asset backed securitization program; and the risks described from time to time in the Company’s SEC reports.
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By GlobalDataAgriFlex Credit, Powerfarm.com and Powerfarm Credit are registered trademarks of Ag Services of America, Inc. All other trademarks or product names are the property of their respective owners. For more information visit www.agservices.com or www.powerfarm.com.
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
——————— ———————
August 31, August 31, August 31, August 31,
2001 2000 2001 2000
——————— ———————
Net revenues:
Farm inputs $ 101,600 $ 92,866 $ 259,501 $ 242,616
Financing 8,710 10,664 14,969 16,716
———- ———- ———- ———-
Net revenues $ 110,310 $ 103,530 $ 274,470 $ 259,332
———- ———- ———- ———-
Cost of revenues:
Farm inputs $ 97,258 $ 88,731 $ 248,681 $ 230,854
Financing 4,517 5,491 7,907 8,329
Provision for doubtful
notes 1,924 1,823 4,952 4,584
———- ———- ———- ———-
Net cost of revenues $ 103,699 $ 96,045 $ 261,540 $ 243,767
———- ———- ———- ———-
Gross Profit:
Farm inputs $ 4,342 $ 4,135 $ 10,820 $ 11,762
Financing 4,193 5,173 7,062 8,387
Provision for doubtful
notes (1,924) (1,823) (4,952) (4,584)
———- ———- ———- ———-
Gross margin $ 6,611 $ 7,485 $ 12,930 $ 15,565
Operating expenses 3,172 3,082 6,522 6,192
———- ———- ———- ———-
Income before income
taxes $ 3,439 $ 4,403 $ 6,408 $ 9,373
Federal and state income
taxes 1,415 1,670 2,549 3,515
———- ———- ———- ———-
Net income $ 2,024 $ 2,733 $ 3,859 $ 5,858
========== ========== ========== ==========
Earnings per share
Basic $ 0.37 $ 0.52 $ 0.72 $ 1.11
Diluted $ 0.37 $ 0.50 $ 0.70 $ 1.06
Weighted average shares:
Basic 5,451,250 5,268,664 5,368,834 5,265,269
Diluted 5,504,140 5,475,886 5,487,861 5,521,270
