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ANDE Andersons

Participants
Pat Bowe President and CEO
Brian Valentine SVP and CFO
Corbett Jorgenson President Grain Group
John Kraus Director, IR
Heather Jones Vertical Group
Ken Zaslow BMO Capital Markets
Eric Larson Buckingham Research
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to The Andersons 2018 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. And as a reminder, this conference call may be recorded. to host like Mr. today’s now would introduce for your conference, I Kraus, Relations. of John Investor Director ahead. go Please

John Kraus

Thanks, Crystal. Earnings everyone, today’s The a Good morning, presentation discussion. Andersons us for slide Third for joining Quarter will XXXX that Call. provided and We’ve enhance thank you

be the and be shortly. If will presented the Certain competitive the of statements, both additional company’s company’s information, company’s in a slides conditions, company’s our Web presentation conditions of documents, filings prepared will not recording forward-looking available and factors, completely connection andersonsinc.com in including this financial includes are webcast on many in in constitutes This viewing could our site prospectuses internationally, and the United statements call webcast, weather, reviewed. and industries, discussed Investors forward-looking States the and factors sync. information you’re at and and with differ slides that is page which filed today made auditors the via the Today’s described commentary materially including in in being have general recorded, publicly as results actual Act from 'XX conditions, independent its result the the those the supporting offerings. economic the

upon adjusted accurate. adjusted net performance income, be better remarks evaluation determined company or believes about company adjusted give accepted income income should to The as by others do EBITDA of no not can generally be and EBITDA it alternatives period-to-period investors before comparability. the pre-tax EBITDA underlying provide information to pre-tax to its as the operations, considered these forward-looking additional the financial will non-GAAP income, principles. allowing and not and based income, presentation accounting EBITDA assumptions taxes, prove and contain Adjusted believes reasonable, an and operating are statements measures. today’s which assurance Although that information that are financial and its This assumptions prepared that and

Valentine, On your Officer. I the our Bowe, our and remarks, Pat with Brian who’s prepared questions. Chief Financial today also available take Officer; address and happy is is questions. and to Jorgenson, Group, Corey me call of After President to Brian with Grain are us will be Chief Executive Pat,

the to Now over I’ll for turn opening floor his comments. Pat

Pat Bowe

about Thank you, morning, Thank XXXX third John, remainder conclude groups. beginning Brian presents review, quarter of comments review outlook providing for joining of call business remarks four I’ll by and into give a what some each you business to his start the the good XXXX. this see for everyone. morning I’ll for year After with our look to our you and viewpoints results. on we’re our our some our prepared brief

on good basis and low Grain recovery. significant results for the a the difficulties reason grain Our driven quarter corn opportunity gradual a the levels. see performed of soybean that quarter results Group caused this at but horizon timing most our our income resulting remain to from during is continues Rail purchase basis has Plant yields. of as by multiyear levels third historically short reset lows. quarter XXXX stocks Group provided comparable ethanol ride very some but to Nutrient basis third harvest Results grain a third for Group Ethanol Rail at soybean grain near-record The corn in difference business, the as and quarter The market and Frankly, abundant basis lower well were shortfall in we by fell. prices declined year-over-year. fell values groups and a

ultimately the in the three the the that next or course market present we a quarter of faced two opportunities As conditions confident result, quarters. we’re third over

and affiliated Trade recorded Group, the ingredients grain the of of was better the management, for results. That year-over-year business, in our companies, parts process we’re especially Lansing other all The which namely acquiring. food case risk

about much Nutrient excited railcar very improved, quarter compressed good market. DDG contract manufacturing Their still the from it down the was steadily two world The results improve, operations, margins, strong than market conditions on values despite its high much and primarily Gross plant to are by our quarter down to specialty Export The continues and to XX%. from uniting gratifying of timely from lines. We’re stocks. the improved success companies. business margins nutrient Plant continued given derived nutrient margins prospect continuing China’s continued group in Ethanol the in by were product industry but by from hedging. lawn challenged was remains production be more product created Primary lower Group’s absence the especially due slowly remains but oversupplied. and volumes profit The the were mix. market and

gradual As lower a rates sequential their result, improvement. expiring lease renewal rates though rates, continue than even are

locations. scrapping its the began solid the again, in lease. a rose As its the business It group began that we second program expected repair and nearly in the of number reaching the We performance since cars rate our continued operating in utilization quarter. of level ago, on the quarter increased also began completed second and quarter we four new the XXXX highest also second quarter repair

rate still savings We’re we progress and run million achieve the to goal the $X.X expect year for good this our of end making year. it on additional by

to We’ll promote call provide doubled a now of our review in without Almost last our thoughts will We up. more of how safety more and also safety for have of facilities through the this of our you on results. observations culture. to harm Brian of the XXXX. outlook a zero is XXXX time financial remainder operated I’ll vigorously shaping injury our XX% year-to-date number behavioral-based recordable speak some walk than our also the about detailed compared year. continued later has

Brian Valentine

Thanks, Pat, everyone. morning, and good

basis levels million. million that have market $XXX to the net reported of were results XXXX, grain of or $XXX of declining per per These attributable revenues million taxes, also short third generated $X.X those amortization, quarter the shown $XX diluted million. XXXX The results Earnings $X.XX million and third the cause signs to depreciation on and results conditions of diluted a of finish quarter share $X.X impact on of our to Slide include company net of grain our our were impacts large helped loss atypically now before or interest, We’re or of Andersons X. $X.XX In EBITDA, of inventories income revenues share. when reversing. The

million. quarter EBITDA Third $XX was XXXX

XXXX are the recorded, rules certain sales been tax this third income. no has This Grain reduction the transactions particularly way have XX% recognition XXXX As in changed effect under we’ve XXXX or XX.X%. rate new the third effective Group. the beginning of $XXX the quarter revenue Total in raised in million to quarters, earlier revenue noted pre-tax higher the former revenue at for year recognition grain company’s XXXX on items comparable tax sales than quarter discrete effective rules. would Several of the

of capital venture included the of million continue million items. or the $X.X our in million Ventures, between XX% XXXX per one quarter from increase sale year share including effective investment rate $X.X our $X.XX $X.X another. of million $X.X unusual and arm, the Maumee recorded to net from expect the in income Corporate We from value full pre-tax and unallocated tax that of XX%. some expenses We will be

in per million with the associated also of acquire Group. Lansing or We agreement $X.XX remaining $X.X expenses to incurred share transaction equity the Trade

$XX facility. increased to debt have use long-term we asset-backed rail Our as million credit year-over-year begun our nonrecourse

to X. at debt-to-equity X.XX ratio slightly up only is our However,

announced Our recently, ratio so capacity target have is for acquisition. to to be as we’ll using that Trade capacity Group X.X portion fund our debt a And X, we of we growth. Lansing

for million quarter XXXX declined. third $XX.X income income quarter especially months Grain affiliates the Next, for and reported value Group’s during basis In adjusted first the our We we of of income as third the levels Trade and results the present corn that XXXX from the quarter, grain Lansing soybean pre-tax bridge graphs results and the compare year. despite ownership the improved fell reduced Group. nine our by pre-tax to pre-tax

was hedging for better historically values. result. by than the headlined wheat last lower In addition, results Ethanol’s significantly and $X income million, DDG higher timely period volumes, improved by strong year’s sales

expense. $X.X XXXX quarter included unusual Third million an results

the in Moving quarter basis values that soybean results from by activity primarily Plant down $X.X sales, car lower, change a relates income were results the $X.X of than impairment second due a $XX.X timely of on $X assets up million from to are a of on corn in Group’s Nutrient from more a has business. former declining results nine-month DDG results decrease million gain earnings to charge on the XXXX, comes Tennessee other sale by program. the since sold. million Florida are $X.X $X.X sales, Rail year-to-date Grain and centers. our income, been million retail Two-thirds and Slide and from X. farm to million values. to segment lower better of Group’s XXXX higher Ethanol’s hedging the the scrapping on due improvement loss wheat Two-thirds primarily $X.X the XXXX the million announced including previously loss million

the this by loss early business reported Group a results move Base be with of million the in significant XXXX. beginning Group $XX.X Group’s of income the million in Grain levels. earning XXXX. period in income the most compared Grain from The of with recovered margin to of X. third temporarily quarter the third set $X.X a we’ll decrease Group of our Grain $X.X of four the recorded were pre-tax the declining of basis of on pre-tax million a on each remainder fourth units, in quarter a pre-tax pre-tax quarter, Slide believe We to Now XXXX. the review grain recover The in million, to will loss in $X.X back same

income results compared compared $XXX,XXX quarter Lansing Group year-over-year pre-tax impact wheat this quarter The In loss income more and to Trade for third Group corn considerably less to addition in Trade for third of on quarter the improvement. and comparatively the basis XXXX of a Thompsons significantly each $X.X in of the million of the than current the year. better its did appreciated XXXX. combining same for the Grain’s the it than recorded year, last period of Group market two-thirds earned of to pre-tax levels, bean more Lansing decreasing Limited of accounted affiliates, positions.

the continued income hedging DDG The effectively. period be group comparatively for by inventories, last industry ethanol more higher relatively by year. but EXX to X. benefited prevailed production also conditions. the stressed million, Slide the The and $X.X performed $X.X $X the Group third in quarter market despite million pre-tax very income Ethanol company The the Group in well earned pre-tax quarter which to was than third Moving and difficult better selling to Group Margins and of million same higher attributable ethanol values. from

Slide Turning pre-tax Group the to a XX. XXXX of was quarter, Plant $X flat with loss in third essentially million third recorded results. The Nutrient which quarter

lease operating and third lower results year-over-year. Rail Group these interest legal generated an quarter quarter XX.X% fertilizer associated negatively million of average a million third us last volumes older better XXXX back These quarter has of income the averaged XX.X% idle more cars. wholesale basis, margins, as another more increased some income million, call $X.X from on than Despite which $X.X business selling up hurt last the margin have lower operates and low weaker was rates, rate higher expense. the $X million from the efforts Despite products $X on new compared four quarter, the few third XXXX compression The by million utilization XX quarter $X.X for despite were of end car life locations. well The XXX above comparatively income profit income its of led $X of recorded nutrients for sale Pat impacted were sales was for result. and lease However, cars. by specialty lease of Group’s continued this cars nutrient quarter expense Rail our $X.X but million third XX% I’ll quarter Group XXXX on group improve scrapped performance. recorded results gross purchased to in the comparatively to so pre-tax of pre-tax Its repair in almost year expenses The loss now fleet. by the Lawn contract primary incurring the the last in X,XXX million, decreased in to leasing the enjoyed compared income X.X% $X.X were locations. lower turn The remaining which stable quarter manufacturing year. mostly margin allowed down pre-tax settlement Total about of XXXX. improvements, also average X%. cars year’s than a outlook now The The the far over $X.X early million more opening good our with on of to rest of XXXX. XXXX to Group thoughts Group scrapping comments and than X,XXX when last up or about while from million.

Pat Bowe

Thanks, Brian.

harvest into is with year well positioned a business that finish should the fall We’re that well strongly. grain the

XXXX moving Plant performance While Ethanol strong earnings in Grain and doing to of and some harvest Group begin our Nutrient the to gradually advantage XXXX. for us our Group’s the Groups markets, near-term XXXX. we The we its as fourth of take prospects Rail into confidence improving consider are best gives for concerns have through quarter at

earnings to heading XXXX well grain pre-tax have and strong on bushels factors Major XXXX merchandizing XXXX. as into we for base adjusted wider and income as full soybean corn basis year be expect We handle. its will our margins include stronger momentum similar potential business should the the

While all grains. three wheat favorable, from ownership still earnings potential grain historically balanced has earnings more become among is

the food think build to from also Thompsons and beat those XXXX. of fourth meet ingredients or risk will and Lansing management continue performance We momentum. quarter each and their improve results

has can the quite Lansing, integration news ramped and pre-close positive. by and work employees reaction I our acquisition very this and customers pending of going report is Speaking been well. of planning has that The to up

couple balance demand, the view going XXXX have declined did environment into line to to the us the Group January. concerned past quarter of change the into in year. of note delay expect months into and other Despite be a anytime going good performed expect for don’t the our Grain specifically, Group Group the Bottom progress it of results XX-day production we the and quarter Ethanol than of soon. quarter. third margins transaction the to Ethanol in high fourth The entering in somewhat has quarter last in but we comparatively that XXXX The One than and lower as is XXXX. Group. about More at fourth very its the improving fourth very the delay change the start site will was margins operating driving construction Kansas. caused We and of signs the we’re delay moderating of quarter, not plant may for rising export building by well near-record in rainfall is up, it the should with ICM had its demand, hedged less but show seasonal materially Group’s impact close third The in which of XXXX project the cost margins the the of results. this our

the adjusted our last from account. expect XXXX Plant taking XXXX into We sale similar will after Group’s to results results year’s Nutrient be gain of farm the centers Florida

more we The is loadings lately, is rebounded There to Rail have railcar rate to are that continue cars Group on the a number results Industry-wide, time than prices margins some increasing commodity recover. fertilizer take fully think signs will our all-time improve. near increase. the of should utilization high. steadily lease in and turnaround While wholesale few

XX% expense, certification we However, now from higher lease a combination XXXX from rule still lower business replacing. profitably, quarter XX% car scrapping than rates results renewal to the changes, revenue including view. by improvement that grow rates tank XXXX, and our expiring cars accounting slight than lower a the The earlier impacted our is will second be repair are of losses to in continued they’re estimate

rate $X.X savings we’ll that year. and XXXX exceed run of productivity million the the our by goal confident end cost meet or We’re additional

million existing planning million early including total about transactions optimistic integrating In magnified prospect we’re in $X Group by expenses, of our the in $X XXXX. that is business that integration about Lansing a and the ahead and year We expect Trade of fourth to of quarter. in incur closing, grain excitement Lansing the very for

After Lansing the by and market $XXX grow over of happy in achieving take to for year back reducing assets, We in big to signs our growth will Combining With Group Plant generating see mode. some towards next excited given results Nutrient business trimming substantially of EBITDA that, of forward but like your Group’s three of Group, will step the improving our I’d in and with cautious, to improved Rail Grain another Group, be the we’re income will is million the the Trade underperforming think be Crystal, Group last our specialty recover. to improvement view goal Our the with gross be profit, is productivity, questions. the pre-tax we’ll those time of entertain this We costs hand years XXXX. ethanol margins revenues, ELEMENT XXXX. call pressures. EBITDA. spending acquisition to Ethanol Along project and the near-term

Operator

Thank you. Instructions]. [Operator

from question Our Vertical first comes from Jones Heather Group.

Your line is open.

Heather Jones

the Good taking for questions. morning. Thanks

Pat Bowe

morning, Good Heather.

Heather Jones

correctly? So guess, you I’m I QX And I it have lower have between of I say number start saying thought 'XX only somewhere But a with lower. X than ethanol first. lower? 'XX and you Did somewhat million ethanol. made QX million X you showing be you’re would I would for – in understand When somewhat much questions.

Pat Bowe

Yes, Heather. that’s correct,

So QX the quarter XX% at the had about QX of we and already XX% the hedged – next time entering the into of we year. of entered quarter about

in running We or complete stead have week to coming so good more the be a at of two, time. one we’ll plants up shutdown our here in four

know. tough, still are Now all spot as you very margins

think Argo, down we’re from opus that’s gallon I XX% so XXXX. about at about $X.XX in a

numbers. at weren’t great So that we hedge numbers, help. a into but going bit indicated, have of little as decent at Those will I quarter the

lower. So huge numbers the off, we see but drop be a will don’t

Heather Jones

unlikely think breakeven highly or loss it’s you’re you making? that So

Pat Bowe

Yes.

Heather Jones

had environment of likelihood 'XX et going just are what in that market likelihood assuming hedges, on front, basis, current about timely views the we spot think market you clearly that months? seeing from resolution about your your improving so on for what spot the what last – all it market couple when And the the comparison. cetera, ethanol, been continuing, I China of But no about come this if back some versus we’ve fundamentals in to impact Okay. 'XX there’s think that’s versus doesn’t a are spot thoughts

Pat Bowe

the strong. is is which and gallons, the been export outlook, because without has year think Yes, China. you complex good, X.X bit just the we’ll a billion over market said, as little that’s finish We

have ethanol Of are coming end to course, octane up really the any well prices on still the in and booster and China as positive on oxygenate of we great DDGs. the Summit news – Aires soybeans historically really an and an The it’s cheap as and ethanol low at global GXX Buenos as the be value the trade would grain month and outlook these for value is market. helpful

think that, level an ethanol So we the lot you’d market excited increase price. that’s have right Having this price. about downside than there’s getting more from in upside on a nothing said now

I of half first latter the but of slow, year we as into some the we the year. part be will So nice – get in the think the increases see could

Heather Jones

actually to Like help seems fertilizer, like understand manufacturing? It further. when do wholesale a the what that stabilize And you in contract and going us while grow? we then you it specialty will deteriorated drove see margins lower that Okay. take business Like to mentioned why? recover. mix margin Can for

Pat Bowe

– have to it good segments, and for three pointing out. It’s you that we into thank divide a

As a bit. prices rebounded you know, wholesale quite have NPK

of looks was bit on here. weather. with higher. their in volume fall impacted segments that application some be the a announced were You’ve our But little Prices of were wholesale miners here of seen wet overall, stronger. earnings to We Basically, by late. our early down the some who

more want recovered orders. products on in We’ve retailers contract in It’s additional low Completely margins lawn of products, to specialty manufacturing. orders will those put like margin that we been manufacturing, orders. very get grain with In and off. prices seen pressure had Our when of specialty those so wholesale. to to lot other But those contract business we we the haven’t keeps products sometimes seasonal and really we’ve our who make orders. doing moves from produce manufacturing our the And kind on contract shelves, get for farmers have additional well a we’ve lawn separate in those peak fallen specialty. competition with

last late. So really had run a good fallen that of the couple some of here years has volume of we and here off

have We areas. up that in fill to plans other how

really recover have little different down, in So that’s SKU slow specialty contract that’s a on bit manufacturing and that’s Plant a and a then recovering, and market we Nutrient, stories wholesale to three market volume. up depending

Heather Jones

on is question grain the final business. my And

and and XX you I I don’t to? similar million adjusted the to that 'XX when call of there. adjusted mentioned So you’re I’m all comparison 'XX it include in referring showing know, roughly, Is Lansing

Pat Bowe

Yes, I the think that’s correct number.

Heather Jones

Okay.

'XX because already into it 'XX, have still spot there prices wheat appreciation. sounds have some, And bean so on that prices front. that end And there’s driving on like of going price go further to go bean though – appreciated prices Is into going the what’s to but even is in your further 'XX? QX, since you appreciated nicely think

Pat Bowe

Yes, it’s good question. a

broad we’re doing particularly to I flat as trying basis. think between what price differentiate on we’re appreciation and opposed to

beans. soybeans year. there’s still tributary quite bushels low have a we about where of and But ways some go been this areas. corn nationally and still of in have corn and So XX% Michigan almost with basis bit levels accumulated a done particularly our historically done on XX% to low, harvest on We harvest

has basis pretty We here ahead. rebound in see really happen months grain So in sharply to been the coming a weak.

Group Grain call maybe add on ownership. good So color for President you. he and Jorgenson, about some additional the can our our basis we feel is that Corey of

Corbett Jorgenson

just places wheat are said just will which at soybeans make all this is space, are what got futures experienced carries to with and for are market Hi, what want in comment what beans to. the Heather. It’s one they that appreciation the we’ve which today not carries is seeking levels competing and basis sense? forward. you corn, Does look basis I Pat drive as income Those to the to that add harvest for really opportunity. wide go

Heather Jones

does. besides just guess confidence doesn’t levels and that drives than trade your that appreciation other what China assume over appreciate your is assuming resolved, to the front? on you the resolution basis me drives And let’s – understand It next again, that in confidence six get will basis help those to I can – just what three no months beans, there of

Corbett Jorgenson

will in that. But and Again, I expect the answer again, just or futures basis. else, might differentiate anybody between have we, with carries to market happen the what

from where levels demand have global So accumulated still here, the And low we’ve coming harvest historically in very crush you have and good U.S. margins at really supply. you

While get you stocks soybean to you’re global to know today. where supply the bases coming and different has sure changing not supply distorted for and supply. some, as the in it total their demand demand you we’ve have market as are shifted But we’re building and seen,

lot at a it not inefficiency, created a but demand material it’s total so in changed And least in of hasn’t way.

I’ll see with have and So up. if you a that follow stop

Pat Bowe

storing in couple you mentioned just – and ways. carry a like charges. from before, clarify, and Heather, make money couple merchandise as of last grain had the We One to carrying And it’s grain years. wheat to we how making of a we’ve in can income nice is

potential Corey both in there’s Now, as on an and corn, carry beans. mentioned, earning wheat

just we those go that most harvest importantly, good year, in we as then a acquire levels like you So forward. ownership. levels pretty basis have this can it. opportunity a we And feel about creates have at to basis discounted when merchandize really that We of that part

Heather Jones

That’s very helpful. Thank you so much.

Pat Bowe

you. Thank bet. You

Operator

Thank you.

Zaslow question of Ken from from Montreal. Our Bank next comes

is open. Your line

Ken Zaslow

morning. Hi, guys. Good

Pat Bowe

Ken. morning, Good

Ken Zaslow

of a Just questions. couple

how get much you quarter? the a First of simple really in did all, question. Just I get didn’t mark-to-market

Pat Bowe

for the versus year versus is difference year. exact Is number correct? last last that That’s this million year mark-to-market the XX.X between

Ken Zaslow

two back over coming the what’s That’s next quarters?

Pat Bowe

third to first the versus into appreciation and quarter half recover and for year of through – the quarter last we second the first into this that year. quarter. Yes, here expect And a fourth next basis year,

won’t we – quarter, in that the the in of first So Ken. get all fourth quarter

of Jan, premiums. Feb, April, some see on May, and to expect into We leak that June March,

Ken Zaslow

about basically I almost Okay. coming. undervalued this if like the think got line and at like that’s happen. it? And carry you’re It’s come Is commodity the like value? on basis, going just sure profit way of it’s tightens the And in almost of basis you’ve ahead an up understand that the kind up it, pent make what’s to capturing betting that to

Pat Bowe

Exactly.

it got You on. right

So future.” you’d maybe “investment historically, in for and then buy can if – that a buy a a buying you have X,XXX, would it harvest going discount we thing, hope load export market, to be poultry good it when you dime is and it be players, you the the to additional for turnaround And going out get ethanol X,XXX to trains It feed could market going the could be Southeast. could to or the the market.

demand ownership of big is position. harvest, we like and it this hands year, our still the kind of playing right because is and So expect looks the – there like that we into

Ken Zaslow

averages at right, better, think XXXX for that the So way you your your for setting more not should in able at for that be be historical not imply are to all up least that least if reach the to This is margin? in about would agribusiness. that it? terms your with Is of things to profitability and midpoint, margin line structure

Pat Bowe

And in back it. normal margins. way context That’s experienced to the we’ve merchandizing then getting this quarter taking more think to mark-to-market and had the the about impact

Ken Zaslow

margins, it? how play that into the Okay. elevation And about what does then

Pat Bowe

I’m talking what exactly That’s about.

elevation same that’s or buy our margin all elevation and margin a or then around Where the margin sell the “merchandising merchandising it you So grain is later, thing. we margin.” and you turn

Ken Zaslow

I it Is going to drivers? get stronger? that the elevation expand point, get – but are And what’s what make is going What just the key the margin? because the to basis

Pat Bowe

looks right half just on biggest demand, see on is We fronts, grain exports. all The to crush driver sold. on very be right. buying on ethanol, consistent is Buying it it still on margin, milling, flour

So Feeding there. steady. real all out demand looks demand is still

those they player as into those So markets, domestic will look like solid. a be

Ken Zaslow

railcar. on is And my question last

going you of said up low up that? Is it’s in mid-single parameters substantially? to You some Is double to just digits, which XXXX. digits, it it – about be sort up think

Pat Bowe

gradually, Just Ken.

scrapping news up so and did utilization the we So real is cars, well. good the rates the our are we’re positioned

to Our leases rail bubble on that those one, three years through put ladders of the have ago were But we those that work higher still and fine. levels. booked shops are two we at leases have doing to of get

a doesn’t But we to rail. nice skyrocket. get of around good. of recovery. little and steady It’s But turn it’s recovery. outlook takes the that feels So bit one businesses It that those time like a of

Ken Zaslow

Great. Thank you.

Pat Bowe

Thanks.

Operator

Thank next Research. Larson you. from comes our Eric [Operator Instructions]. And from question Buckingham

line open. Your is

Eric Larson

for Good questions. taking my Thanks morning, everyone.

Pat Bowe

Good morning, Eric.

Eric Larson

good well kind have question on is my to next this morning It’s this. Corey because as of

weak an in low basis, think extremely almost the beans. Just it’s historical I

You Is you’ve probably probably at I what bean than think to The you? that had more Andersons. market’s that time with can presented of fair that at have any exposure a assumption

Pat Bowe

No, not particularly.

I think we’re balanced. pretty

bit lot Bean but I corn As basis, very discounted. wheat you pretty stored don’t more by though, a at so have is crop know, of a Obviously, and much it’s said, exactly historically we quite bushels of historic like numbers, point, you balanced. nature and being we harvest corn the this just know bean is corn of bigger. handle

So that’s in a lot upside of see the basis. potential we where

Corbett Jorgenson

just I’ll I comment. is if can Eric, This add a Corey.

tuck normal what incentive we of course got – more Pat’s away I year. normal of than exactly fairly are you’re comments beans that do a is out right. we part to in this have We’ve think year – maybe pointing

out that on What best That opportunity but is to you’re what do part not normal. may did So yes. in been beans than normal. do pointing have of we dramatically risk that, is of we different the front and truth, us have our and than different

Pat Bowe

to exact number wheat. back Ken’s your and question, Ken Eric, about because this million, the you, million to the relates question I year interject in it’s half $XX to to had Eric. want and going $XX half of was in and too, other for soybeans corn total mark-to-market that of which The on change that

exact what So that’s the numbers are.

million. think $XX $XX and million, said between million but it’s $XX I I

Eric Larson

have may and lot would’ve been thanks didn’t on something. I was clarification more like No, because number thought. than it your million frankly, actually thought X I the bigger for or And what MTM a that that was know we

of means that your So quarter better was too. quality the

that That day you can the you right now interesting cash enormous. them soybeans below It’s just been the it’s least and long opportunity in go thanks And helpful. for $X at buy information. -- because So is board. all market really soybeans can has buy

So I can of some why see you captured that.

Pat Bowe

we and pretty the period. impact wheat I to carry while of make wanted the narrowing this think a point had we in beans, is significant the half And corn the also of during –

that half make about And why $XX million. $XX I that so million to of wanted point. to It’s that’s

Corbett Jorgenson

That’s correct.

Eric Larson

way, for et of helpful. intentions And on are, beans, And I for at on that helps. early. just those make early just total million level know, at out way, Pat, you look too I million again saw kind next on million on next XX number as it’s acres at Obviously, but then, is me out year. know really But I corn, million of I it any like that? farm November X% two returns. look Good, doesn’t they because crops, at what way be put too thought low, could down But looked pretty sense the out acreage, something too level. any acreage It’s XX.X thoughts X% and a you surprise versus crops see acres the – XXX farmer bit early. I and Does XXX the very year came million that’s you – just there’s know planted the cetera. the initial given way, way makes their of of way, number when returns which return that the total That’s And maybe about know it’s kind planting XX Are this? this was there thoughts But corn And really no the little USDA between low. sense? and total two that think initial that X. to put you’ll

Pat Bowe

there ratio low switch a and exports, think might outlook kind the X.X some be on the soybean cetera. to I corn/bean today et about X at of economic because

don’t there that While good fertilizer acres see I incremental love we’d go are be usage. farmers for acreage crush margins because would think may Frankly, go be it’s that corn year. going be in. some be let but what to to more very might corn it’s next into idle. wheat that It’s matter net go of we’ve There a to acres seen, question just going a into. incremental going good, some

Eric Larson

with agree I No, Yes. that.

Okay. Thanks, guys.

Operator

Thank you. back call And for Kraus this conference. the will question-and-answer session remarks. to John for any today’s conclude turn the I’d like closing now over to

John Kraus

also want our andersonsinc.com. additional site available this us all information slides and you want that mention on morning. to I this with Investors Web joining the supporting We of at for page to again are thank presentation Crystal. Thanks,

conference you next XXXX, earnings will us quarter time. fourth full results. call for review can Our We when a.m. our Eastern again Until then, hope and XX, XX.XX year join that well. February Thursday, at scheduled Time is at XXXX be we

Operator

you does Everyone, thank gentlemen, have all and wonderful conclude may for and you today’s Ladies a participating day. the disconnect. conference. program, This in