Good day, ladies and gentlemen, and welcome to The Andersons, Inc. 2011 Fourth Quarter and Year End Conference Call. My name is Ian. I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I'd like to hand the call over to Mr. Nick Conrad. He's Vice President, Finance and Treasurer. Please proceed, sir.

Good morning, everyone, and thank you for joining us on The Andersons, Inc. 2011 fourth quarter and year end conference call. As you know, certain information that will be discussed today constitutes forward-looking statements. Actual results could differ materially from those presented in the forward-looking statements as a result of many factors, including general economic conditions, weather and competitive conditions, conditions in the company's industries both in the United States and internationally, and additional factors that are described in the company's publicly filed documents including its ‘34 Act filings and the prospectus as prepared in connection with the company's offerings. It also includes financial information of which as of date of this call, the company's independent auditors have not completed their review. Although the company believes that the assumptions upon which the financial information and its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be. This conference call is being recorded and can be accessed on our website. Hal Reed, Chief Operating Officer, will be on the call with me today. Mike Anderson, Chairman and Chief Executive Officer will provide closing remarks and will join Hal and me for questions at the end of the call. Hal?

Thanks, Nick, and good morning, everyone. As we announced yesterday in the press release our fourth quarter net income was $21.7 million or $1.17 per diluted share on revenues of $1.3 billion. This compares to the same 3-month period last year in which the company reported net income of $25.8 million or $1.39 per diluted share on revenues of $1.2 billion. Our 2011 net income was a record $95.1 million or $5.09 per diluted share on revenues of $4.6 billion. In 2010, the company reported net income of $64.7 million or $3.48 per diluted share on revenues of $3.4 billion. The vast majority of the full year revenue increase relates to rising prices in our agricultural business. As we have mentioned before revenues in commodity-based businesses may not serve as good indicators of income or economic performance. To fully understand the total company results, let's take a look at each of our 6 business groups. Let's start with the Grain Group, which had an outstanding quarter and year. The group achieved operating income of $27.3 million in the fourth quarter on revenues of $876 million. For the same period of the prior year, $35.6 million were earned on $785 million in revenue. The Grain business benefited from considerable space income during the quarter as well as an increase in put-through income related to the wet harvest, which was seen in the company's production areas. There was $3.2 million in income received from a reversal of a bad debt reserve and it should be noted, however, that similar income of $5.5 million was recorded in the same period of the prior year. Lansing Trade Group had a solid performance again this quarter. The Grain Group's full year was exceptional. Its operating income was a record $87.3 million in 2011 on revenues…

Thanks, Hal. Turning to taxes, for the fourth quarter 2011, the company's effective tax rate was 32.7%, down 3.6% from the fourth quarter 2010 rate of 36.3%. The decrease in the effective tax rate was due primarily to foreign tax credits, increased tax deductions related to domestic production activities and lower state and local income taxes. The company's 2011 effective tax rate was 34.5%, down 3.2% from the 2010 rate of 37.7%. The higher effective rate for 2010 was due primarily to an increase in tax expense as a result of the Patient Protection and Affordable Care Act, which was signed into law in the first quarter of 2010. The 2011 effective tax rate also benefited from increased deductions related to domestic production activities. We are projecting our 2012 tax rate to be 36.1%. Next, as to interest. Interest expense for the fourth quarter 2011 totaled $4.6 million, down $1.3 million from the same period in 2010. As of December 31, year-to-date interest expense was $25.3 million, up $5.4 million compared to 2010. This increase in interest expense for 2011 is due to higher short-term debt levels driven primarily by higher first half 2011 grain prices and an increase for the full year in wheat bushels owned. Our average short-term borrowings for fourth quarter 2011 were $55.8 million versus $215.2 million for the fourth quarter 2010. For 2011, short-term average borrowings were $306.6 million, up $242.7 million compared to 2010. The company's average short-term borrowing rates for the fourth quarter were 2.7%, a decrease of approximately 1% from the same period 2010. For the full year 2011 average short-term borrowing rates were also down 1% from 2010. During the fourth quarter the company also was an investor of excess funds with short-term investments averaging $25.6 million, a $3.5 million increase…

Thank you, Nick. Let me just start by saying how proud I am to see record earnings this year from both our Grain and Plant Nutrient Groups and second best ever results from our Ethanol Group. Clearly our full year earnings demonstrate that the investments we made in our agricultural businesses over the last several years, along with our expertise and reputation in the industry have allowed us to benefit from the current agricultural cycle. After a record year in 2011, you all may be wondering what does 2012 hold for the company. First, I expect our Grain Group to continue to do well. Although we expect operating income to be lower in 2012 due to anticipated drops in space income. I am optimistic about our Ethanol Group however it's somewhat hard to predict exactly where full year margins will do, but our outlook is positive. I also see our Plant Nutrient Group having a good year as the demand for nutrients is high and acres planted are expected to increase further based on current commodity prices and the need for more corn. The volume increase we are expecting in PNG however will likely be more than offset by lower margins, gross profit per ton, as we are not anticipating the same inventory appreciation as seen in 2011. I see our Rail Group continuing to benefit from the gradual climb they've seen in their utilization and lease rates and the car value improvement seen. This, along with other factors, are expected to lead to a considerable income improvement for this group in 2012. Further I believe our Turf and Specialty Group's proprietary product and expanded product line strategy both in this lawn and cob business will likely lead to improved earnings in this group. I'd like to highlight some of…

[Operator Instructions] And that first question is from the line of Farha Aslam from Stephens Inc.

Three quarters in a row you've announced results that exceed expectations and 3 quarters in a row you're stock is down that day. I think it's because people just keep thinking and that you've just hit peak earnings and you're going to just fall off a cliff on the other side. And you keep proving us wrong. Where you're producing really solid earnings. So maybe we should get a better read on kind of what mid-cycle, normalized, everyday run rate is for your businesses, with all the puts and takes. And so if you look at the Grain Group, you had a great fourth quarter and clearly next year you won't have the same amount of wheat income as you did this year. But could you try and tell us what mid-cycle, kind of normal business pretax earnings we could get.

Well, Farha. I'm the designated hitter on this one. It's interesting. I'm going to take your term mid-cycle and translate it into my kind of speak and I guess I hear that and I think you're asking for what's a base run rate for these different businesses. And I want to put that in the context both of the variability of the general agri business space in terms of weather and outside events and all the things that can happen in the space of any given year or over any multiyear cycle. So we've got these outside contingencies that can happen at any time and I want to frame that against the concept of what is a normal or base run expectation. And I also want to frame up that we have not been in the habit of late of giving guidance. And you're question is really kind of leaning in that direction. But I will if you don't mind indulging me a little bit frame this up in kind of the context of how Mike and I and Hal have been talking about this last 6 or 7 months and that is that if you look at our results over the last 5 or 6 years, clearly there's an upward slope to the channel of our earnings. If you plot the last 5 or 6 years, there's a couple of years are maybe below the mean. There's a couple of years that are clearly above the mean but the slope of the line in general is upward in direction. And we feel that’s driven both by the expansion of the operating capacity of the company and our hitting the ball well and being in a good space. All those are things that you all have heard from me before. I guess if I was to look out and talk a little bit about 2012 and going forward we continue to think the channel's going to be sloped upward, which you've heard us say before. Higher highs and higher lows. Maybe for this year we'd say that compared to the last year looking across the number of different comments from a number of different analysts maybe people if you think about 2011 versus 2012, 2012 may not be as robust in Grain and Plant Nutrient but Rail will be stronger. So on balance we feel pretty good about the company directionally based on our past and our commitment to the future. Long-winded answer. I apologize.

Okay. No, that's helpful but when we think about your grain business do you think like year in year out, is there a range we can expect that -- what that business can earn?

Farha, A for effort for asking the question. You're always -- and I appreciate the candor and kind of the message you're delivering to us here with the question. But we have not provided that in the past and probably don't feel comfortable doing that on today's call. We certainly log that as a question that many folks would like us to answer. Doesn't mean we're going to answer it. But we continue to mull those kind of things over.

Okay. So then when you look at the current grain basis that's existed in the fourth quarter, does that give you -- it's been exceptionally tight, as the farmers have been very well capitalized. How is that positioning your grain elevators going into the first half of the year?

Farha, this is Hal. Thanks for the question. Yes, we have seen relatively high basis levels in both wheat and corn as the year ended. And with farmers being tight holders of stocks, it may tend to slow down the amount of grain that comes to the market at the beginning of the year. But these are the same farmers that are going to look to plant 94 million acres of corn this spring. And so the marketing programs may just be held off a bit. So I don’t think we really see a whole lot of difference over the course of the first half of the year from a normal year's progression. So, just maybe a little bit slower in time.

Okay. And then Plant Nutrients, do you anticipate having to take any more write-downs based on your current inventory, current market prices and the volume you expect to sell?

Yes. This is Mike. Hal just coming into the job, he'll field the grain/ethanol questions this time and I'll field the other operating groups. At this time, no. And that's the answer -- the short answer is no. Obviously, when you've got an inventory situation where it's not in a hedged situation it's something you monitor all the time. And if there were any change to that prior to the filing of our 10-K of course we would deal with that. Fertilizer prices appear to have stabilized reasonably well. We're in a good position so if something changes we'll let you know, but the answer right now is no.

Okay. That’s great. My final question is in terms of Rail, that peak earning number was like $20 million pretax. If you had to look out in the calendar do you think that's achievable in 2013, 2014?

Yes.

We have another question for you. This one's from the line of Heather Jones at BB&T Capital Markets.

As a follow-on of Farha's, do you think that rail number is achievable in 2012?

It's possible.

Wow. Okay. So I'm going to give this another shot. It's very understandable why you foresee grain and fertilizer down but given the fact that you're saying it's possible that rail could double year-on-year, I mean, is it in the realm of possibilities that as a whole company you may not be down on 2012?

I’ll answer that and again we're not giving guidance but I'd say the outlook -- you'll have to do the -- and you have. You've all done a good job I think of calculating your estimates of the impact on wheat basis appreciation on our space income in the last couple of years as you've I think gotten a lot, just a lot more crisp on that. And that's a significant item and I would say you add the high likelihood of a significant drop there -- the likeliness of a drop in PNG. That would probably or likely offset the potential in rail. And this is just -- 2011's just been a fantastic year and I appreciate Farha's direction trying to get in that normalized situation but in the PNG and the Grain side I'd say pre-acquisition, that's kind of a top end channel stuff.

Okay. And thinking about 2011 you benefited from higher storage rates on wheat, wheat basis, corn basis. If we had to look at so for 2011 it looks like you did just for your space income $60-plus million versus -- basically up $15 million or so year-on-year. That strong of an improvement -- could you give us a sense of how much of that was driven by the basis appreciation we saw in corn versus wheat?

Yes, Heather. I think the actual space income increase from the previous year was more than what you represented and it's almost entirely, the increase was due to the kind of the one-time event in wheat that we mentioned back in the second quarter. That plus higher than what we'll call normal space income in wheat so the overage from 2010 to 2011, again, greater than what you commented on there and almost entirely due to wheat.

Okay. Okay. So how many bushels did you all have in storage at the end of Q4?

Total bushels in storage Nick.

Nick's looking for it right now.

Total in storage at the end of 2011?

Right.

Are you talking about total inventories, not bushels stored. Total inventories?

No bushels in storage. The number y'all give us in the Qs and you tell us how much is held for others versus for yourselves.

Yes. The bushels held for others was a very low number in storage. It was less than 500,000 bushels. The majority of the inventories were owned by us.

Okay. Do you know what the -- last year the end of Q4 last year, it was 76 million. Was it down?

Okay. Now that's total inventory. This year it was about 77.5 million total as opposed to the 76 million number last year. So we had a bit more inventory and as we noted, we added some space at existing facilities and in Nebraska too. So that increased it about 1.5 million bushels.

Okay. And I know you're adding that train loading facility I want to say down in Nebraska, what's a good estimate of where -- how much bushel capacity growth we should see this year in your elevators?

The difficult with the bushel growth is that the expectations for fall harvest versus this fall harvest will be dramatically different. So it's hard for me to give you a good number and it's hard for me to give you a range because it really depends on whether we plant 85, 90, 95 million bushels of corn this spring and harvest it this fall. Obviously, if we can plant the 94 to 95 million that our expected volumes will be up substantially this fall. It could be a little lower first quarter.

No. I meant the capacity.

Our capacity?

Right.

Well the elevators -- the elevator will be a little bit less than 3 million bushels out there. So if we -- that'll be in addition to our space.

Okay. Two final questions. Ethanol, Mike, you said you're optimistic. Clearly you had some overhang from Q4 going into Q1. What causes you to be -- let's just ignore Q1 for right now. What causes you to be optimistic about Q2 through Q4?

I’m going to let Hal answer. And the most -- when I answer that I didn't really give directional thing, but it was more of a statement I feel good about the position that we have. But, Hal, why don't you add some color commentary.

Yes. I think you're right. I think the first quarter maybe the first half of the year could be a little bit tough but we saw -- we kind of went into last year with some similar questions and saw some similar challenges. It's likely that we'll see exports a little lower in 2012. That's I think to be expected. However, once again, we're starting to see a few plants begin to shut down. The industry rationalizes itself pretty quickly. That's already begun. And we expect to see a big corn crop in the fall so the year should have a good close to it if that's the case.

Okay. So my final question is I'm thinking about the course of the year. I would assume Rail should ramp as we go through the year. To your point about Ethanol, that should improve as we go through the year. Your comps in fertilizer and grain are easier in the back half than the first half plus like you said if you get the 94, 95 million acres. So if when I'm thinking about your earnings it sounds like first half could be pretty challenging on a year-on-year basis but you should start having some wind at your backs going into the back half. Am I thinking correctly?

Just -- and Nick, Hal add color commentary. Second quarter last year and we've talked about that a lot and you saw the numbers. The grain number was so unbelievably good from a huge basis appreciation late in the quarter that that comp is one that we'll look at and say, boy. Hard to do anything about. And then in Plant Nutrient, that was second quarter and frankly things were pretty good in the first quarter too but I think focus more on second. In Plant Nutrient we were seeing the benefits -- we had really poor volume in the first half last year with weather. I think we had poor volume in the second half last year. So I would -- if things play out with the acreage planting we're expected to with reasonable weather we should have nice volume numbers. What happens exactly in inventory appreciation and gross profit per ton is yet to be seen but again, second quarter last year was a comp that will be hard to beat because of the significant appreciation. So I'm not going to really focus too much beyond that because we're going to kill the crop as usual 2 or 3 times and get worried and feel good. That'll play out as it plays out.

We have another question. This one's from the line of Christine Healy at Scotiabank.

A couple of questions here. First apologies if you mentioned this but on Ethanol just for Q1 can you talk about -- have you locked in volumes for Q1 like you did Q4?

Our volume is not any different in Q1 than it is in Q4. No, our volume has not changed.

No. Sorry. I mean have you locked in your margins? You were checking yourself well in Q4 but now margins have really fallen since then. So I just want to know how you've protected yourself.

Yes. Margins in Q1 are definitely less than in Q4. And there isn't a lot of opportunity to book margins very far forward right now in Q1. So it is a little bit tighter than we experienced in Q4.

Okay. And then just a question on the CFTC and they're proposing all these changes to swaps and hedges, part of Dodd-Frank. Can you give us just some color on this, what your thoughts are and what impact it could have on your business? It sounds like it's pretty onerous for the grain handling companies if it happens.

Yes. There are -- there is some good work going on in Washington, DC to I think alleviate some of that work from pure grain companies. When it comes to derivatives and swaps with larger counterparties there will be extra paperwork. We do have some of that as you know in some of our business but it's not voluminous and I think what we'll see is that the onerous piece of the grain companies will be eliminated or lessened. And I think we'll be able to manage the other piece. Again, we'll be able to handle it. It won't be too detrimental to the business, just take more time.

Okay. That's helpful. So the way that I guess you're looking at it is it could increase documentation maybe a little bit of extra cost but it won't change how you go about your business and what transactions you take part in.

That’s correct.

Okay. That's really helpful. Thanks. And then just on Canada here, so Viterra Richardson, they've already started buying Western Canadian wheat directly from the farmers. The Canadian Wheat Board is expected to introduce contracts in the next couple of weeks. Just curious what your plans are to maybe grab a piece of the market.

We continue to look at the market in Canada. We have one initiative that we're currently working on in that regard. Nothing else I can be at all specific about. But we do believe that the movement of grain across the border and in various different commodities will certainly pick up with Canada. So we like our position here on the Great Lakes and adjacent to the market in Windsor and the Ontario market. So we're hopeful that it helps us out on the volume side.

So we should expect you to take part in this fairly soon then it sounds like.

Yes. I would say we'd be a small player in that market. But we continue to look at it.

Okay. And just one last question probably for Nick, so it's kind of taking off of the other analyst questions here. Maybe you can talk about what plans you guys have going forward to improve your disclosure. My opinion is that Andersons provides less disclosure in the financials than some of its peers so maybe you could talk about what initiatives you guys are looking at putting in place.

I don't want to over commit, especially in such a public setting. But as I think each of you know individually I have been trying to gather your concerns and we have met internally several times and we will continue to review and try to move forward in a way that’s kind in keeping with who we are and at the same time meet your needs as well. So I don't want to over promise something or get real specific but I do want you to know that Mike personally hears what you're saying. Hal personally hears what you're saying. I personally hear what you're saying. We’re absorbing it and we will respond as we can going forward.

I would add thing on that. When we transition from disclosure of what's occurred to what might happen in the future those are 2 different things. And so the conversations that are forward-looking you all know that no matter what our disclosures are historically we also have had significant volatility. And we would expect to continue to have volatility, which doesn't make your job easier in trying to predict the next quarter or the next year. So I just wanted to distinguish what Nick's saying on disclosure of data versus forward…

Forward, yes.

Absolutely. Absolutely. I think what I'm talking about, sorry I should have been a bit specific is like actual results. Like one of the things that would be very helpful is tons for some of the different segments. How many tons have you sold, processed, handled, whatever? Because in agriculture you really need to look at the data on a per ton basis, margins per ton, cost per ton. So from my point of view that’s something that I personally would find very, very helpful.

That's helpful and that -- you put that input in and has others and that's part of what we're processing as Nick talked about it.

We have another question for you. This one's from the line of Brent Rystrom from Feltl and Company.

Quick question on the -- really a 3 part question looking at the corn crop for 2012. You guys had mentioned the heavy acres and possibility that we could have a big yield. So I'm wondering from the perspective of your grain and ethanol groups, I would assume and frankly the fertilizers, I would assume on the grain side when you look at the possibility of a big grain crop, statistically when you look back at previous years where we've had robust grain crops you tend to have relatively good margins in the back half of the year in the grain trading business. Any particular thoughts if we do have a 13.5, 14 billion bushel corn crop, how that might impact second half margins?

Well, typically what happens with a large crop obviously is there's -- we are the beneficiaries of the volume so to speak. But it also tends to help us out in a margin perspective and an overall margin perspective and carry in the marketplace, which are both good for us. So, yes, that kind of a crop as you mention would be beneficial to all 3 of those businesses.

Would there be a reason that if it was a robust crop like that, which...

Brent? Could you speak up. We're barely hearing you.

Would there be a reason if there's a robust crop of that size, which would be similar to what we had back in 2009 would there be a reason that margins now are permanently different than kind of the margins you saw in 2009 in a similar situation where you had a surprisingly good crop come through?

Yes. Well, I guess let me separate the margin or the gross profit into 2 pieces. The typical margin piece and then our space piece that we discuss. Again, I don't think that the normal margins are much different on a put through basis for a bushel of grain than they have been in the past. Prices are up a little bit. Volatility is up a little bit. So if anything they may lean a little higher than years ago. But they're not dramatically different. The impact of a big crop is that it adds carry to the market and typically adds space. Again, the difference being that we did have a big wheat space income number and obviously we've talked about that being a one-time event. And that wouldn't really have a lot of -- be impacted a lot by this large corn crop that you're discussing. So on a corn basis the margins should be as good or slightly better and hopefully more carry in the corn market.

And for Plant Nutrient Group, seen a lot of discussion about corn acreage shifting to your states because of the lack of corn that got planted in the eastern corn belt last year. I would assume that has favorable application implications for PNG. You're going to see more fertilizer going into the region just because some of it didn't get fertilized last year and then more of its going to be planted this year.

This past fall our tonnage was down and it wasn't down because of lack of desire to put nutrients down. It was down because of a late wet harvest and wet conditions. So we have some just based pent up demand even without increased acres. If you add the increased acres to it assuming that we have weather conditions that are better than last year's weather conditions, even with last year -- last year's May was an ugly May in our region. So we would expect to have nice volume increases in the end of this quarter and second quarter based on what you just described.

Any particularly thoughts -- did the Lansing Trade Group have any exposure to the volatility in orange juice trading here the last couple of weeks?

No. Orange juice is not anything that we trade. We are pretty much oriented towards ag as you know I think.

The base ag.

The base ag.

All right. And then just quickly, Hal, just given your experience any gut feel on what we're seeing as far as the winter wheat freeze out in eastern Europe and parts of Europe. France yesterday or 2 days ago coming out with their down grade. Any particular feel on how that might play out for wheat?

Yes. They've clearly had some extreme weather over there as we've seen. The good thing about wheat is it's pretty hearty. We really probably won't know until the spring break. The other good thing about wheat is, is that we grow a wheat crop about every 3 to 6 months around the world and we can react to problems around the world more quickly than any other crop. But we're watching it. It would be nice to have it come out of the spring in good shape but it's hard to tell today.

All right. Thanks, guys.

We have another question. This one's from the line of Eric Larson [ph] at E.J. Larson Research Group.

Just a quick question and maybe it's for Hal or Mike or whomever wants to answer it. Obviously last fall your basis was tight. You didn't get a chance to buy a lot of cheap grain. And in a lot of markets that we're seeing in the western corn belt is your cash prices are still above board. Are you seeing that in your areas as well?

Yes. Basis is at a premium to the futures. Yes.

And, Hal, normally we do see -- we do get -- I think every year that I've been in the grain business we always have a time when you get a chance to get a positive basis. Are you expecting that some time this spring yet? How would you look at when you might get a break on that?

The timing of that's hard to say. I agree with your comment that in general the market works in such a way that you do gain that, you do get that in the basis at a point in time. So it’s a combination of how the futures work and the local cash markets but I would agree with you, that's normally how it works.

Yes. Well, it's good to be a farmer right now but if we plant 94, 95 million acres it isn't going to be so great. There'll be a lot of corn out there. It'll change the basis structure for you.

That's true. And for you.

And we have another question. This one's from the line of Ian Horowitz at Topeka Capital.

Nick, can you give us any discussion on CapEx plans?

Well, we tend to be fairly circumspect about that. We are as Mike said in his concluding remarks always looking for and reviewing opportunities. But that's no different in 2012 than it is in 2011 than it is in 2010. I think that’s about as much as I would say.

I'll add one color comment. We are on the front end after a couple of years of study of launching a company-wide SAP implementation and that will -- we have not made all the commitments for the full blown thing but that is somewhat of a unique outlay of capital that would be part of our spending in the next couple of years. But the rest of it is we want to grow. M&A is part of our growth objective. And we have allocations that we go through as to where we want to focus to put the capital but we're not going to go close on something for the sake of closing on it. And sometimes you get close to the alter, they fall apart, and sometimes something pops up that shows up and as long as it's within what we feel we're able to handle, we'll move forward on it. As long as -- especially with the Board's approving it.

Could you give us -- Mike, could you give us any kind of color on maybe assets that you might be looking at?

We're primarily, our primary focus on assets are in our grain business. In our plant nutrient business. And our rail business primarily railcars although we have some shop expansion. And in ethanol we've said for some time if we -- it looks like there won't be new ethanol -- conventional corn ethanol plants built for a while. You have the RFS in place. Depending on if we could find something that fits our profile that’s something that would have some interest to is. And in all cases we're also looking at all those areas not just M&A but also investment in existing facility to be able to leverage capabilities and either enhance kind of the existing earnings or diversify the earnings. And example in ethanol would be corn oil at all of our plants, which we're now in that position at this point in time.

The last corn oil facility is up and running, is that correct?

Yes it is. All 3 are running.

Okay. And while we're on ethanol, can you talk a little bit about you mentioned your thoughts about the industry closing in some capacity here for a while and kind of rationalizing supplies. Any thoughts or comments on what you guys might possibly be doing internally?

Well I assume you're talking about relative to the rationalization. If you study the ethanol world you'll notice that there are destination plants that pay a lot more for corn than places in the corn belt. And you'll also notice that there's a vast variability in technology. And it's pretty easy to see that when the industry rationalizes the destination plants without the best technology shut down first. And it's a pretty typical scene and we're not in those categories.

Fair enough, Hal. But we just saw an announcement from a larger ethanol producer kind of shutting in, maybe not right in the grain belt per say, but ...

I think the answer to your question, it was an old, very old plant. Not efficient. And it was the furthest north plant in the United States. So relatively far away. Part of the year a destination plant. So it kind of fits the model.

Okay. And then a question on rail. I think you responded to Heather saying that there certainly is a potential that you could see a peak earnings from this division again in the near future. I guess that would assume that then we would see some pretty strong acquisitions going forward? Or is there going to be just a better combination of assets as well as ...

Ian, when you say acquisitions, are you speaking specifically to rail?

Yes. Yes. So we finally have started to make this turn from the low I think it's 22s ...

Right. Ian, the ups and downs, there's always portfolios that are out there that companies are willing to sell. And we were surprised that in the down part of the market we didn't get the opportunity or we didn't execute on buys that they just seemed to be too high priced. But several continue to go to the market and we'll use our model and if we see something that makes sense to acquire, we will. But the primary driver that we're -- what we see going on now, is a combination of utilization increase and the fact that we're now able to both renew leases and bring back cars out of service and put them into leases. It's substantially higher lease rates running on the average probably in the range of 35% higher plus or minus than a year ago. And I would tell you that between what we brought out of storage and renewal of leases in 2011 we turned over or put back out on lease close to 30% of our fleet at really significantly increased rates. And we finally made the turn where our average lease rate at the end of the year is higher than the average rate of the prior year. Kind of get the lag effect on the average. So the big springboard is getting back into much higher utilization at historically what I'll call the upper third of the range rates as opposed to the bottom third of the range. That's the big driver for getting back on track.

Sure. But, Mike, according to my math you were somewhere around 22,000 cars, roughly 22,000 cars at work in that $20 million timeframe. Do we need to get -- we're now something below 20,000 at work. Do we need to kind of get back to that 22 -- fully back to that 22,000 to see that $20 million? Or is there going to be a number.

Not -- well one, we always had 4% or 5% or 6% that was not in service. Maybe over a period of time 7% not in service, in that range. So no, we don't have to get back to that rate. In addition is the asset book values depreciate on a number of these to the extent we're able to get them back in service we got higher spreads that flow through the bottom line than we had historically. So there's kind of a net impact of not just what we're getting in our lease income per month, but the cost that goes against that. And that's somewhat offset by higher maintenance cost. So no, we wouldn't have to get back all the way to that.

Okay. And last question and I'll get back in queue. As you build ...

Ian, I just do want to make one correction. On the average lease rate if I looked at 2011 versus 2010 for the full year, we were still slightly lower in 2011. However, at the end of the year it was quite a bit higher. So kind of end of year view was like 8% higher average lease rate than the year before.

Okay. All right. Fair enough. And then just one last question and again on the rail segment. As you build the portfolio back do you see yourselves changing the product mix at all? Or are you going to kind of stay in that typical Andersons kind of profile?

We have been -- we've really got a pretty diversified fleet portfolio. Nick's active in -- very active in that so I'm going to let him answer that question around what I'll call car types and diversification.

I think because we've been at this for such a long time, Rosh and his team has been very active and kind of constantly reexamining the mix and adjusting to what's appropriate at the current moment. So I think that's as far as I'd want to take it. I don't want to over commit him in any one direction. I would just tell you he's an active manager. He and his team are active managers and like any portfolio managers they tweak where they need to.

Thank you for your question. There's no further questions in the queue. So at that moment in time I'd now like to turn the call over to you, Mike Anderson, for some closing remarks.

Okay. Thanks. I want to thank you all for joining us this morning. Our next conference call is scheduled for Tuesday, May 8 at 11:00 a.m. Eastern Time to review our first quarter 2012 results. We hope you're able to join us again at that time. Until then, have a great day.

Thank you. And that concludes your call. You may now disconnect. Thank you very much for joining us. Enjoy the rest of your day.