Ag Services Announces 18% Increase in First Quarter Earnings.Business Editors CEDAR FALLS Cedar Falls, city (1990 pop. 34,298), Black Hawk co., N Iowa, on the Cedar River; inc. 1854. It developed as a milling center in the late 19th-century after the coming of the railroad; its name is derived from the cedar tree. , Iowa--(BUSINESS WIRE)--June 24, 2002 Ag Services of America, Inc. (NYSE NYSE See: New York Stock Exchange :ASV ASV abbr. Bible American Standard Version ASV n abbr (= American Standard Version) → traduction de la Bible ASV n abbr (Bible) (= ) today announced that net revenues for the first quarter of Fiscal 2003 increased 29% to $212.0 million as compared to $164.2 million for the same period one year ago. Net income for the first quarter of Fiscal 2003 was $2.2 million, or $0.39 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which was an 18% increase over prior year first quarter earnings of $1.8 million, or $0.34 per diluted share. Fiscal 2003 first quarter results were influenced largely by strong demand for the Company's AgriFlex Credit(R) program 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 The lowest rate of interest that a financial institution, such as a bank, charges its best customers, usually large corporations, for short-term unsecured loans. The prime lending rate is an economic indicator and is often used as a measuring point for adjusting interest . Also contributing to the strong first quarter was the reduction in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. as a percent of net revenues from 2.0% last year, to 1.7% this year. Considering the significant negative impact on earnings resulting from the reduction in the prime lending rate, management is very pleased with first quarter results. The Company recently completed a $30 million increase to its commercial paper securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. program to a total facility size of $375 million. In conjunction with the increase in commercial paper, Ag Services increased it Senior Subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". facility by $35 million to a total $80 million. With these increased credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement 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 Company's AgriFlex Credit and Crop Input Financing programs, management anticipates that Fiscal 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 securitization program similar to the one currently in place. A conference call on first quarter results will occur at 10:30 a.m. Eastern, 9:30 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. on June 24, 2002. To listen live call (888) 243-0818. A recording of the call will be available for replay until July 8, 2002 at (888) 266-2081 or (703) 925-2533 code #6059893. Ag Services of America, Inc. is based in Cedar Falls, Iowa Cedar Falls is a city in Black Hawk County, Iowa, United States, and it is home to one of Iowa's three public universities, the University of Northern Iowa. The population was 36,145 at the 2000 census. , and is a leading supplier of crop input financing and agricultural inputs, including seed, chemicals and fertilizers to primarily corn and soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been growers in the U.S. The Company's one-stop shopping business model includes competitive and flexible financing packages through its AgriFlex Credit(R) program combined with the most comprehensive offering of agricultural inputs from national sources such as Asgrow, BASF BASF Bar Association of San Francisco (since 1872; San Francisco, California) BASF Badische Anilin und Soda Fabrik (German chemical products company) BASF Builders Association of South Florida , Dekalb, Dow AgroSciences Dow AgroSciences LLC is a wholly owned subsidiary of the Dow Chemical Company specializing in not only agricultural chemicals such as pesticides, but also seeds and biotechnology solutions. The company is based in Indianapolis, Indiana, in the United States. , DuPont, Garst, Monsanto, Syngenta and Pioneer Hi-Bred Pioneer Hi-Bred is one of the largest U.S. companies which produces hybrid seeds for agriculture. History In 1926, farm journal editor and future U.S. Vice President Henry A. Wallace, along with a group of Des Moines, Iowa businessmen, started the "Hi-Bred Corn Company". . The Company also administers additional financing programs for various suppliers, manufacturers and distributors in the agriculture industry and provides ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services such as crop insurance and grain marketing. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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. AgriFlex Credit is a registered trademark 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.
(All amounts presented in thousands, except per share amounts)
Unaudited
Three months ended
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May 31, 2002 May 31, 2001
-------------- --------------
Net revenue:
Farm inputs $205,691 $157,901
Financing 6,316 6,259
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Net revenue $212,007 $164,160
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Cost of revenue:
Farm inputs $197,398 $151,423
Financing 3,382 3,391
Provision for doubtful notes 4,077 3,026
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Net cost of revenue $204,857 $157,841
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Gross Profit:
Farm inputs $8,293 $6,478
Financing 2,934 2,868
Provision for doubtful notes (4,077) (3,026)
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Gross margin $7,150 $6,319
Operating expenses 3,643 3,351
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Income before income taxes $3,507 $2,968
Federal and state income taxes 1,350 1,134
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Net income $2,157 $1,834
============== ==============
Earnings per share
Basic $0.39 $0.35
Diluted $0.39 $0.34
Weighted average shares:
Basic 5,473,288 5,283,773
Diluted 5,513,826 5,471,079
Income Statement Information (Unaudited):
5/31/02 5/31/01
--------------------- --------------------
Farm input revenue
Input only program $14,067 6.8% $5,212 3.3%
Seeds 22,772 11.1% 16,696 10.6%
Chemicals 19,212 9.3% 15,084 9.6%
Fertilizers 23,816 11.6% 20,553 13.0%
Other farm inputs (cash
rents, irrigation, etc.) 123,339 60.0% 98,443 62.3%
Other services (insurance,
fees, etc.) 2,485 1.2% 1,913 1.2%
----------- --------- ----------- --------
Total farm input revenue $205,691 100.0% $157,901 100.0%
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Balance Sheet Information (Unaudited):
5/31/02 5/31/01
-------------- --------------
Notes receivables, net $423,773 $324,656
All other assets 19,222 15,556
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Total assets $442,995 $340,212
============== ==============
Liabilities $369,097 $272,861
Equity 73,898 67,351
-------------- --------------
Total liabilities and equity $442,995 $340,212
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