Cedar Falls, Iowa-based Ag Services of America has reported net revenues for the Q1 2003 up 29% to US$212m from US$164.2m year on year.
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Net income for the Q1 2003 was US$2.2m, or US$0.39 per diluted share, which was an 18% increase over prior year Q1 earnings of US$1.8m, or US$0.34 per diluted share.
Q1 2003 results were influenced largely by strong demand for the company’s AgriFlex Credit programme and an excellent spring planting season in its primary market area. Gross margin on farm input sales increased 28% while margin on financing income remained almost flat with the same period one year ago due to a 300 basis point reduction in the prime lending rate. Also contributing to the strong Q1 was the reduction in operating expenses as a percent of net revenues from 2% last year, to 1.7% this year. Considering the significant negative impact on earnings resulting from the reduction in the prime lending rate, management said that it is very pleased with the Q1 results.
The company recently completed a US$30m increase to its commercial paper securitisation programme to a total facility size of US$375m. In conjunction with the increase in commercial paper, Ag Services increased it Senior Subordinated debt facility by US$35m to US$80m. With these increased credit facilities, the company anticipates these resources will meet its financing needs for the current crop year.
Looking forward, due to the strong demand for the AgriFlex Credit and Crop Input Financing programmes, management anticipates that FY 2003 revenue and earnings will increase 18% to 23% over prior year levels. The company is also currently evaluating alternatives to increase and replace its current credit facility. The new credit facility will likely include a commercial paper securitisation programme similar to the one currently in place.
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