Agrium reports first quarter earnings.CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , ALBERTA--(BUSINESS WIRE)--April 25, 1996--Agrium Inc. announced Thursday Thursday: see week. that its unaudited net earnings for the first quarter were $6.3 million ($0.09 per common share), compared with $8.2 million ($0.12 per common share) reported for 1995. Earnings per common share reflect the company's recent three for one stock split. Cash provided by operations, before changes in non-cash working capital, was $20.0 million ($0.30 per common share) for the first quarter of 1996 compared with $17.7 million ($0.26 per common share) in 1995. "For the second consecutive year we have achieved first quarter results which were considerably better than historical norms," said John M. Van Brunt brunt n. 1. The main impact or force, as of an attack. 2. The main burden: bore the brunt of the household chores. , Agrium Agrium Inc. NYSE: AGU TSX: AGU engages in the production, marketing, and distribution of agricultural products and services, and nutrients for agricultural and industrial markets in the United States and Argentina. President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "However, in the biggest portion of our trading areas, spring planting activity typically does not commence until the second quarter. Accordingly, first half results are more indicative of corporate performance. Indications are that sales volumes, revenues and earnings will all meet our expectations for the first half of 1996." "Severely depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d world grain stocks, record prices for coarse grains coarse grain - granularity and anticipated increases this year in planted acreage in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. are very positive for our business," added Van Brunt. "We believe several years of increased grain production will be required to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. world stocks. Consequently, we continue to forecast increases in sales and earnings for a number of years." RESULTS OF OPERATIONS The corporation's results of operations for the three months ended March 31 were as follows:
1996 1995
---------------------- ----------------------
Net Gross Net Gross
Sales Profit EBIT(x) Sales Profit EBIT(x)
---------------------- ----------------------
Wholesale $107.9 $48.3 $29.6 $80.7 $39.7 $28.4
Retail 108.9 28.9 (15.0) 102.3 25.8 (12.6)
Eliminations
and other (7.5) 0.3 (0.2) (6.4) 0.1 (0.8)
----------------------- ----------------------
$209.3 $77.5 $14.4 $176.6 $65.6 $15.0
----------------------- ----------------------
----------------------- ----------------------
(x) Earnings before Interest and Income Taxes Since the majority of fertilizer fertilizer, organic or inorganic material containing one or more of the nutrients—mainly nitrogen, phosphorus, and potassium, and other essential elements required for plant growth. application in North America occurs in the spring and fall, fertilizer industry earnings at both the wholesale and retail level are traditionally low during the first quarter. Increased wholesale sales, gross profit and earnings in first quarter 1996 are primarily due to the acquisition in the fourth quarter of 1995 of Nu-West Industries Inc. ("Nu-West"), a full line supplier of phosphate phosphate, salt or ester of phosphoric acid, H3PO4. Because phosphoric acid is tribasic (having three replaceable hydrogen atoms), it forms monophosphate, diphosphate, and triphosphate salts in which one, two, or three of the hydrogens of the fertilizers, and to a lesser extent improved returns on urea. First quarter retail sales and gross profit were higher than 1995 due to earlier fertilizer and agricultural chemical applications in our California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). markets as well as favourable farm commodity prices. Retail losses in the quarter were greater than 1995 due to increased selling, general and administrative expenses as a result of the addition of twelve retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → in late 1995, and early 1996, discretionary incentive payments and increased expenditures due to earlier scheduling of equipment repairs to take advantage of available downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. . WHOLESALE Selected production and wholesale sales volumes in thousands of tonnes:
1996 1995
------------------ ------------------
Production Sales Production Sales
------------------ ------------------
Nitrogen 427 361 416 337
Potash 348 278 370 329
Liquid Phosphate (1) 34 33 - -
Dry Phosphate (2) 63 33 - -
------------------ ------------------
872 705 786 666
------------------ ------------------
------------------ ------------------
(1) P2O5 equivalent (2) Cargo weight Sales and gross profit in millions of U.S. dollars provided by product line:
1996 1995
--------------- ---------------
Net Gross Net Gross
Sales Profit Sales Profit
--------------- ---------------
Nitrogen $59.9 $32.6 $51.3 $25.9
Potash 16.7 8.4 21.6 12.4
Phosphate 21.1 6.9 - -
Other Products 10.2 0.4 7.8 1.4
--------------- ---------------
$107.9 $48.3 $80.7 $39.7
---------------- ---------------
---------------- ---------------
WHOLESALE PRODUCT GROSS PROFIT CONTINUES TO REFLECT ROBUST MARGINS Wholesale sales revenues, net of distribution costs distribution costs distribute npl → Vertriebskosten pl , increased by $27.2 million or 34 percent in 1996 when compared with 1995. Related gross profit increased $8.6 million or 22 percent and EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). increased $1.2 million or 4 percent. The increase in revenues and gross profit resulted primarily from the addition of the Nu-West phosphate the operations, which contributed $21.1 million of sales and $6.9 million of gross profit to our business and to a lesser extent from higher sales volumes of nitrogen nitrogen (nī`trəjən), gaseous chemical element; symbol N; at. no. 7; at. wt. 14.0067; m.p. −209.86°C;; b.p. −195.8°C;; density 1.25 grams per liter at STP; valence principally −3, +3, or +5. products and higher sales prices for nitrogen products, other than ammonia ammonia, chemical compound, NH3, colorless gas that is about one half as dense as air at ordinary temperatures and pressures. It has a characteristic pungent, penetrating odor. . Potash potash: see potassium carbonate. potash Name used for various inorganic compounds of potassium, chiefly the carbonate (K2CO3), a white crystalline material formerly obtained from wood ashes. sales volumes to offshore and North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. markets were lower than in the first quarter of 1995. Depreciation and amortization was $6.1 million in 1996 compared with $3.0 million in the first quarter of 1995, largely reflecting increased depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. assets from the acquisition of Nu-West and expansion of nitrogen production facilities. Nitrogen gross profit for the first quarter of 1996 amounted to $32.6 million, an increase of $6.7 million or 26 percent over 1995. The increase resulted principally from higher urea prices and an increase in sales volume of 16 thousand tonnes, and to a lesser extent from an increase in ammonia sales volume of 6 thousand tonnes which was partially offset by marginally lower prices. The average unit cost of nitrogen product in the first quarter of 1996 increased slightly from the first quarter of 1995 mainly due to unplanned mechanical problems at the Carseland Urea Operation which have been corrected. As a result of gas purchases at hedged prices that were below first quarter market prices, average natural gas costs at Agrium's nitrogen plants in the quarter were comparable with those in 1995. This was achieved in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite significant increases in natural gas prices on NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). and to a lesser extent in both Texas and Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. . The spread between Alberta and NYMEX natural gas prices has widened considerably in the past year. This has increased the cost advantage of the company's Alberta facilities, which produce approximately two-thirds of Agrium's nitrogen based nitrogen base or nitrogenous base n. A basic compound that contains nitrogen, such as a purine or pyrimidine. nitrogen base fertilizers. Potash gross profit for the first quarter was $8.4 million, a decrease of $4.0 million or 32 percent over 1995. The decrease was due to lower sales volumes of 51 thousand tonnes or 16 percent and lower selling prices in the U.S. markets. Anticipating that sales through Canpotex Limited, the marketing company jointly owned by the Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. based potash producers, will be lower in 1996 than 1995, production levels of standard grade product were reduced by 22 thousand tonnes compared with first quarter 1995 which resulted in unit production costs being somewhat higher for the previous year. First quarter phosphate gross profit was $6.9 million on net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $21.1 million. While sales volumes were below expectations as a result of the delayed season, prices for phosphate fertilizers were strong throughout the first quarter. RETAIL RETAIL SALES INCREASE IN THE FIRST QUARTER Retail sales for the first quarter of 1996 were $108.9 million and generated gross profit of $28.9 million. This compares with sales of $102.3 million and gross profit of $25.8 million during the same period in 1995. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. have increased slightly in 1996 due to increased prices in fertilizers and application chemicals. The increase in sales reflects a greater number of retail outlets and earlier starts in field preparation in the California and Arizona markets where weather patterns have been favourable. Sales in the Pacific Northwest For names and places containing the slightly longer word 'northwestern' (or variants), see . Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. and Eastern market regions were lower in 1996 than 1995 due to the late spring conditions. Selling, general and administrative expense for the first quarter of 1996 was $38.2 million compared with $33.0 million for 1995. The increase is primarily attributed to the acquisition of 12 additional outlets in late 1995 and early 1996, discretionary incentive payments of $2.3 million to employees, and earlier scheduling of repairs on field equipment to take advantage of available downtime. Depreciation and amortization was $5.2 million compared with $4.5 million for 1995, reflecting increased depreciable assets. FINANCIAL AND OTHER INFORMATION Working capital at March 31, 1996 was $160.7 million, an increase of $12.7 million from the prior year. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was $185.8 million or 32 percent of combined long-term debt and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . Selling, general and administrative expenses increased by $8.1 million or 20 percent due to the increase in the number of retail outlets in the U.S., discretionary retail incentives, the addition of the retail business in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. and the acquisition of Nu-West. The percentage increase in the first quarter is not indicative of anticipated 1996 expenses. Interest expense in the first quarter of 1996 increased by $1.9 million compared with 1995 mainly from increased debt levels resulting from the purchase of Nu-West in October October: see month. 1995. The increase in research and development costs of $0.8 million reflects expanded activities in new product development. The Corporation has recorded in other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. $32 million of estimated costs of environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a associated with its acquisitions of North American retail facilities. Indemnities for an equal amount, obtained from prior owners, have been recorded as a receivable and are included in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . In the first quarter of 1996, Agrium completed its share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program initiated in April 1995. A total of 3.3 million, or approximately 5 percent, of the outstanding common shares were repurchased at an average price of $12.10 per share. On Feb. 20, 1996 all outstanding Series C preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. were converted to 3,539,550 common shares. The Corporation also purchased 62,822 Class A preferred shares of Nu-West. OUTLOOK AND OTHER For the spring planting season in North America, the outlook is for strong demand for all products with prices, except for ammonia, expected to be higher than those of a year ago. Sales volumes of ammonia in the second quarter are expected to exceed 1995 levels, but at moderately lower prices. As noted earlier, sales in the North American potash market have been somewhat delayed due to cool spring weather in the Corn Belt Corn Belt, major agricultural region of the U.S. Midwest where corn acreage once exceeded that of any other crop. It is now commonly called the Feed Grains and Livestock Belt. . However, early second quarter sales data indicate a strong recovery in sales to prime markets in the U.S. Sales volumes in the second quarter are anticipated to be higher than 1995 due to increased plantings, with prices remaining the same or moderately higher than 1995. Offshore, China's decision not to exercise its entire purchase option with Canpotex is likely to reduce 1996 export volumes, compared with the previous year. The impact to Agrium will not be significant. China is expected to return to the market in the second half of the year. On the positive side, export prices are forecast to be higher than 1995. Driven by record grain prices, early indications are that application rates of fertilizers and other inputs will increase over last year. Combined with anticipated second quarter production, inventories of nitrogen and phosphate products at quarter end are sufficient to support the expected increased sales volumes in the second quarter compared with the record levels experienced in 1995. Our retail operations are also expecting increased sales and improved margins for the balance of this spring season. The addition of twelve farm centres will further expand our sales base and increase profitability. On March 26, 1996, Agrium purchased the assets of Henry Fertilizer Company, a producer of specialty fertilizers and micro-nutrients for agriculture and specialty markets. This $2.6 million acquisition positions the company well to serve the large Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians market with high value specialty products. During the first quarter, the company started construction of two new farm centres in Argentina with a scheduled start-up Start-up The earliest stage of a new business venture. date of May, 1996. This will bring the total to six farm centres, the first of their kind in this rapidly expanding market. A feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. for an import fertilizer terminal at Nechochea, Argentina, is nearing completion. Continuing its study of the feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. of building a world-scale nitrogen complex in Argentina, the company is currently investigating site and financing options. Agrium Inc., one of North America's largest integrated and diversified diversified (di·verˑ·s fertilizer companies, has been a leader in the industry since 1931.
AGRIUM INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of U.S. dollars)
(Unaudited)
As at As at
March 31 December 31
--------------------- ------------
1996 1995 1995
Current Assets
Cash and short term
investments $16,602 $84,220 $56,084
Accounts receivable 159,885 106,341 194,291
Inventories 241,845 180,870 169,788
-------------------- -----------
418,332 371,431 420,163
Capital Assets 364,685 240,864 351,643
Goodwill 65,360 1,046 66,678
Other Assets 74,470 16,168 42,688
------------------- ----------
$922,847 $629,509 $881,172
Current Liabilities
Bank indebtedness $ 4,530 $ 26,959 $ 59,530
Accounts payable and
accrued liabilities 248,408 188,492 132,594
Dividends payable 0 435 3,992
Income and other taxes 64 4,168 30,822
Principal repayments
on long term debt 4,620 3,382 4,427
-------------------- ----------
257,622 223,436 231,365
Long Term Debt 185,791 51,311 186,713
Other Liabilities 48,097 7,240 16,018
Deferred Income Taxes 0 23,036 0
Minority Interest 38,380 0 48,174
-------------------- ----------
529,890 305,023 482,270
-------------------- ----------
Shareholders' Equity
Share capital 226,588 235,623 229,079
Retained earnings 147,750 75,346 152,152
Cumulative translation
adjustment 18,619 13,517 17,671
------------------- ----------
392,957 324,486 398,902
------------------- ----------
$922,847 $629,509 $881,172
-------------------- ----------
AGRIUM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of U.S. dollars except per share information)
(Unaudited)
Three months ended
March 31
-------------------------
1996 1995
-------------------------
Net Sales $209,316 $176,583
Cost of product 131,860 110,945
-------------------------
Gross profit 77,456 65,638
-------------------------
Expenses
Selling, general and
administrative 49,396 41,326
Depreciation and amortization 10,797 7,323
Research and development 1,234 398
Royalties, resource and
other taxes 3,160 3,393
Other income, net (1,503) (1,786)
---------------------------
63,084 50,654
---------------------------
Earnings before interest
& income taxes 14,372 14,984
Interest on long term debt 3,454 1,323
Other interest 62 320
Income taxes 4,518 5,131
--------------------------
Net earnings for the period $ 6,338 $ 8,210
--------------------------
Basic earnings per common share $ 0.09 $ 0.12 Average outstanding shares (in thousands) 65,815 66,806 Fully diluted earnings per common share $0.09 $0.12 Average outstanding shares (in thousands) 69,053 71,431
AGRIUM INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Thousands of U.S. dollars)
(Unaudited)
Three months ended
March 31
-------------------------
1996 1995
-------------------------
Operating:
Net earnings for the period $ 6,338 $ 8,210
Items not involving cash
Depreciation and amortization 10,797 7,323
Deferred income taxes 2,507 1,080
Other 341 1,104
-------------------------
Cash provided by operating activities, before
changes in non-cash
working capital 19,983 17,717
Net change in non-cash
working capital (7,598) 21,117
--------------------------
Cash provided by
operating activities 12,385 38,834
--------------------------
Investing:
Acquisition of subsidiaries,
net of cash acquired - (32,126)
Capital assets (24,205) (8,970)
Other assets (774) (1,182)
Proceeds from disposal of assets
and investments 278 393
---------------------------
Cash used in investing
activities (24,701) (41,885)
---------------------------
Financing:
Issue (repurchase) of
common shares (12,584) 464
Issue (repurchase) of
preferred shares (9,612) 31,500
Increase (decrease)
in long term debt (731) (5,114)
Dividends paid on
common shares (3,556) (3,570)
Dividends paid on
preferred shares (683) -
----------------------------
Cash provided by (used in)
financing activities (27,166) 23,280
----------------------------
Increase (decrease)
in cash position (39,482) 20,229
Cash position beginning
of period 56,084 63,991
-----------------------------
Cash position end of period $ 16,602 $ 84,220
-----------------------------
CONTACT: Agrium Inc. Gordon Gordon, river in W Tasmania, Australia, 125 mi (200 km) long. Flowing from mountains to the W coast, its main tributaries are the Franklin and Denison from the N, and Serpentine and Olga to the S. A. Milne, 403/258-4615 or Agrium Inc. Dick Nichols Richard Nichols (born April 29, 1926) is a U.S. Representative from Kansas. Born in Fort Scott, Kansas, Nichols attended public schools. He earned his B.S. from Kansas State University in 1951. He was ensign in the United States Navy from 1944 to 1947. , 403/258-5746 INTERNET: dnichols@agrium.com |
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