Good day, ladies and gentlemen. And welcome to the Andersons' 2017 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen only mode, and later we will conduct a question-and-answer-session and instructions will follow at that time. [Operator Instructions] I would now like to introduce your host for today’s conference, Mr. John Kraus, Director Investor Relations. Sir, you may begin.

Thank you, Amanda, and good morning everyone. Thank you for joining us for the Andersons' fourth quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you're viewing this presentation via our webcast, the slides and commentary will be in sync. This webcast is being recorded, and it and the supporting slides will be made available on the Investors page of our website at andersonsinc.com shortly. Certain information discussed today constitutes forward-looking statements and actual results could differ materially from those presented in the forward-looking statements as a result of many factors, including general economic conditions, weather, 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 prospectuses prepared in connection with the Company's offerings. Today's call includes financial information, which the Company's independent auditors have not completely reviewed. 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 accurate. This presentation and today’s prepared remarks contain non-GAAP financial measures. Reconciliations of the GAAP measures to non-GAAP measures may be found within the financial tables of our earnings release. Adjusted pre-tax income, EBITDA or earnings before interest, taxes, depreciation and amortization and adjusted EBITDA are our primary measures of period-over-period comparisons, and we believe they are meaningful measure for investors to compare our results from period-to-period. We have excluded the impairment charge we took related to our wholesale fertilizer business and our grain business as well as the one-time benefits of recent US federal income tax reform both from adjusted measures, from both adjusted measures, as we believe those charges and benefits are not representative of our ongoing core operations when calculating adjusted pre-tax income, adjusted net income, adjusted earnings per diluted share and adjusted EBITDA. On the call with me today are Pat Bowe, President and Chief Executive Officer; and John Granato, Chief Financial Officer. Pat, John and I will answer your questions after our prepared remarks. Now I'll turn the floor over to Pat for his opening comments.

Thank you John and good morning everyone. Thank you for joining our call this morning to view our fourth quarter 2017 results. I'll start by providing some viewpoints on each of our four business groups and the progress we're making on our strategic initiatives. After John Granato provides the business review, I'll conclude our prepared remarks with some comments about our current outlook for 2018. Our adjusted fourth quarter 2017 results were considerably better than our fourth quarter 2016 results on an adjusted basis. Grain results continued to improve but some of our other groups markets remained challenging and we incurred a number of unusual expenses during the period. We’re happy to see the Grain Group continue to make progress toward a more typical earnings range weaker margins drove the Ethanol Group's results more year over year. The Plant Nutrient Group continued to struggle with persistent oversupply in most fertilizer markets that continued to compress margins. The Rail Group's results were hampered by a lower lease rates and some higher expenses for interest and depreciation year over year. Our grain business results are improving and underlying grain fundamentals are stable with good grain ownership income opportunities. As we expected however large global 2017 corn and soybean harvest have kept world supply in periods into 2018 for corn, soybean and wheat quite large which have kept both prices and market volatility low. That low volatility limits trading opportunities and continued low prices keep the farmer less interested in selling. During the fourth quarter our risk management services business was bolstered by farmers enrolling a record number of bushels in our freedom pricing programs. Our grain affiliates results were significantly better year over year as Lansing Trade Group rebounded from a very difficult 2016. We also announced late yesterday that we agreed…

Thanks, Pat, and good morning everyone. In the fourth quarter of 2017, the Company reported net income attributable to the Andersons of $68.4 million or income of $2.42 per diluted share and adjusted net income of $17.6 million or $0.62 per diluted share on revenue of $1 billion. The adjusted results exclude three items. $74.2 million or $2.62 of benefits from the recent U.S. federal income tax reform legislation, primarily related to deferred income taxes. A pre-tax $17.1 million goodwill impairment in the Plant Nutrient Group and $10.9 million of pre-tax impairment charges associated with the Grain Group's Tennessee facilities. These last two adjustments together equate to $0.82 per diluted share. Earnings before interest, taxes, depreciation and amortization or EBITDA and adjusted EBITDA for the fourth quarter of 2017 were $25 million and $53 million respectively. These amounts compared to fourth quarter 2016 EBITDA of $40.7 million represent a 30% year over year increase. These results were considerably better than those of the fourth quarter of 2016 when our $1.1 billion of revenues generated net income of $10.1 million or $0.36 per diluted share. For the full year 2017 revenue was $3.7 billion about 6% lower than the $3.9 billion in revenue last year and was driven primarily by the shipment of fewer bushels in 2017 than in 2016 and the closure of our retail business. Net income attributable to the Andersons was $41.2 million in 2017 or $1.46 per diluted share. Adjusted net income attributable to the Andersons was $32.3 million or $1.15 per diluted share this compares to recorded net income of $11.6 million incurred in the same period of the prior year or $0.41 per diluted share. Full-year EBITDA and adjusted EBITDA were $87.4 million and $157.4 million. The later number was a 27% increase over full-year…

Thanks John. As we look further into 2018 we expect our overall company results to improve significantly over those of 2017. More specifically we will continue to focus on the strategic objectives we discussed at our Investor Day in December in New York City. Focusing on both growth and greater productivity and efficiency, the Grain Group has now achieved year-over-year improvements in five consecutive quarters on an adjusted basis and while lower grain prices and lower volatility continue to influence farmers selling behavior and trading opportunities we like our ownership positions and anticipate that we will continue to earn solid storage income. We also expect our affiliates and particularly Lansing Trade Group to be set up for a much improved 2018. The group estimates are grower to plant 87 to 90 million acres of corn in 2018. Perhaps slightly below the 90 million acres planted in 2017. Serving plant in acres are expected to be 90 million to 92 million compared to 90 million acres planted last year. Total REIT acres that we're planted have been reported to be approximately 46 million acres into 2017 compared to 50 million acres in 2016, while there are concerns out west with dryness in the hard red wheat belt so our backyard soft red wheat conditions are favorable. Normal weather conditions during corn and soy planting and growing seasons should create a solid storage and merchandizing opportunity in the coming new crop year. The group will continue to work on originating more postures and accreting the income earned from its risk management services and specialty food business. The Ethanol Group continues to work through improved production efficiently. All four of our plants are running well. In the fourth quarter and through January the industry continued to out produce demand despite high export shipments…

[Operator Instructions] And our first question comes from the line of Heather Jones of Vertical Group. Your line is open.

So I think I missed just a quick clarification. Did you say that you think Q1 '18 results will be below Q1 '17 for grain or was that ethanol?

That was for ethanol, good clarification. Those are my last comments about ethanol. For the quarter, we think we'll be below where they were a year ago, close to breakeven.

And then why is, because I mean did you all have good hedges coming into Q1 of…

Good point, we had some coming in, we've had a nice appreciation in DDGs of late which is really helping us that's more on a go forward as you go into the second quarter, that's going to help us a lot, as we mentioned all the vomitoxin issues we had a year ago are behind us, we've seen good fundamentals in the market as we’re looking out, exports look solid, DDGs I said as a percent of local corn volumes have improved. We still have a pretty balanced F&D but we're pretty optimistic about the latter parts of the year.

Okay, and I just wanted to revisit something you've talked about at your Analyst Day, the 300 million plus goal for EBITDA in 2020 and that's a very ambitious good goal and I was just wondering like if you could help us think about the cadence. Because we are obviously in 2018 so it's not that far from now and that would be very nice course between now and then. So I was just wondering if you could help us to think about, how that -- how you are stacking that up in your mind as the cadence?

I think that’s a good qualification, as the last couple of years, we have done a lot of call clean up. As you know we closed the retail stores, we sold some assets in our portfolio that weren’t performing as where we liked. We just announced last night the sale of some assets in Tennessee. So lot of about 16 areas the business needed improvement, of course to reach likely goal like that we have to have growth and growth has become in bigger volumes of our business and we need to do some M&A and build out to get there. Obviously that we would be probably more back end loaded. Some of it will depend on little bit on what the vagaries can be and the agriculture markets that time as you know we have faced a lot of headwinds in the last couple of years. We feel confident in the four businesses we have, each of them can have significant investment and we have dry powder on our balance sheet. So it will be a little bit more backend loaded but we are optimistic about growth as we look ahead.

And then on Lansing that was great to see for the quarter. Can you give us a better sense of like what drove that? And do they reach an inflection point or I mean -- how should we be thinking about Lansing?

I think we have seen a nice improvement at Lansing. They had a really poor previous year, so year-over-year it's quite of improvement. It will be interesting to watch the wheat story that’s starting to happen. They have been very active hard wheat traders historically, so that can play well to them. As you know they have had a frac sand business as part of their portfolio that has really turned around nicely for them. And probably more importantly a year ago, they just had some losers and some deals that didn’t worked out quite well for them that they didn’t have this year. And John you want to add any color on it.

You covered most of it, yes.

Our next question is from the line of Farha Aslam of Stephens. Your line is open.

Question on your Tennessee elevators, I thought that was an area you were interested in growing in because there was expanding corn production in Tennessee. So I was really surprised to see that you decided to divest it and write it down?

Thanks for the clarification there. So, we acquired these elevators in 2010 that was kind of the peak of the ag cycle, we felt good like you said about growing acres. What happened in Tennessee especially going to corn and beans away from cotton and other crops, one of the things we're probably looking back now there was underestimated at the time was the impact of cheap barge freight on the river and the fight for those bushels that go to the river to get pull for export. So in those elevators, so six elevators we struggled to meet our expectation level of performance. And then most important thing here is recently Tyson just pronounced the building of 300 million chicken production complex in Humboldt and that will require significant amount of corn to produce for seed. And we felt that this was the right time and situation to sell those assets to Tyson, so correctly we reevaluated our position in Tennessee in fact this was a proper decision to make.

And then when you look at your Rail Group, you guys highlighted that all that changes in accounting for the rail car sales. Was that bumped up the level of lease income that you'll recognize, you've be kind of post the adjustments in the current year?

It won't have a material impact on the lease income we recognize.

Farha, this is John. You may see -- you will see a revenue bump, but not a gross profit bump.

So, you used to recognize that as income, so now that income stream just goes away with the new accounting rules or does it kind of factor in into different?

We still make the spread that we did, but you don't get -- the gains essentially moves from the front end to the back end. So that when you -- you don't really realize the full gain until you actually divest the car fully, and so that's essentially what happens, it's the shifting in timing.

And so the timing is now pushed back all the way, so would you get rid of the car which might be 30 years, because I don’t know how long you hold your cars?

Farah, it's a little of both, it's John again. It's a little of both, the trade off if you will between the lease expense or the actually cost of sales that we record for payments to the bank are being replaced by interest and depreciation, which more often than not are lower than the payment to the bank. So the payment to the bank is going to be considered an interest payment and a principle payment, the interest goes to the P&L, the other to the balance sheet. And so we're going to recognize some of that spread over time as well.

So some of it is recognized in income book?

Yes.

And then my final question is on Plant Nutrients, your outlook for next year remains subdued. Could you give us sort of a longer term picture of how you expect that business to progress and what we should expect from that business?

Yes, I am going to start and John can chime in. I think there's some pros and cons as we look forward, Farah. So on the pro side we've seen some stability in some of the fertilizer ingredients with some of the miners and producers kind of creating maybe a -- I hate to call but try to stabilize prices in the market, so it's not done as freefalling as it was maybe in the last couple of years. So, it feels like there's some bottoming and some uptick occurring in some key ingredients, that's a stability we talked about. Farmers have been engaging with us. We've had good discussions with farmers and getting product on the books, as we saw it last year, our volume is pretty good, the concern side is really on margins, on the wholesale side, with low corn prices continue, just so happens on February insurance number -- the number for corn price was almost exactly the same as last year's price. So, we haven't seen any appreciation on corn price and acreage thus could slide a little bit, we mentioned it could be lower than the 99 acres planted last year, lower corn acres would hurt that on the numbers side, there's also some credit risk out there in the farmer community, so those are some of the negative things. Having said that we feel good especially about our specialty business and the productivity, they give farmers, and some of the solutions they provide, we're out aggressively marketing those products that we produce ourselves, and so in the long term we're optimistic about this business we like the Plant Nutrient business, we see growth potential in it, we did a robust farm economy to kind of help that out though.

This only thing I would add as we did see a pick-up albeit not on the margin side, but on the volume side this year and that's a good sign because we think as famer start to adapt the value add for all the reasons, we've talked about as you can see environmental impact, we believe and hope that will continue to stick as margins improve and as we've talked about we do get much better margin on the specialty side in the base in the NPK space.

Can we expect the value added side to continue to outpace the growth in the base as you execute your marketing programs and does that put right growth in the business?

I think that is a good assumption. That's our goal and that's our focus and while we're really working with our sales people on farmer engagement.

Our next question comes from the line of Eric Larson of Buckingham Research Group.

I'd like to go back actually to the grain business a little bit. Pat and John obviously in the fourth quarter you could get some pretty decent basis of depreciation you had some good ownership that was a nice positive in the quarter. We're seeing a little bit of life in the grain markets right now, so can you just talk about are you starting to see buyers starting to build little more brook on year end is it becoming a better merchandizing environment for you right now I think we're seeing it from other places I'm assuming that it is. Could you talk a little bit about that Pat?

I think you are really going to go interrupt by commodities so let's talk first in weather in Argentina which has been the story of late we've had this growing dryness in the pumpers growing region in Argentina and we're seeing soybean crop to drop as much as 5 million tons from 55 million metric tons down to 50. There are even some analysts and it could be in the 40s and you are seeing soybean meal markets really take off here in the last couple of weeks. Now U.S. has plenty of stocks 530 million that have been carryout to take care of any demand for that, but at least it's getting some action in the marketplace as you said little bit of volatility coming back in. At the same time which is getting some actions in the bean market corns has been quitter with our big U.S. stocks and kind of a more quite corns story, but the wheat market is starting to get little more interesting with this dryness in the western hard red wheat belt and that could be creating an interesting protein market trading opportunity this year. So it's something we're watching very closely. We like our stretch positions we have in each of our products and I think having the little bit of volatility coming back in the market would be really good for the industry.

Yes, and then back on to so we thank you and I think that's good overview. When you look at the wheat market I think you are still kind of running just a little bit over that 50% carry I think we still have two takes in the market maybe as down to one now. Are you…

We do that two ticks in Chicago and softer wheat market one tick in hard. We think we will continue to that but that could be a little bit under the bubble depending what happens here with carrying charges later in the year but we will likely carry one tick going forward.

And then the final question it's more strategic Pat. When you look -- you should mention this goes back little bit to Heather's question you know the 300 million EBITDA goal, and I think you answered it very well that you need to get some growth you need to redeploy some capital and do some M&A etc. So when you look at the market today we're sort of at the bottom of the cycle. There's places I think in the grain market for you to grow more of the specialty grains, which I think you do very well at, and we've thought you top off that in the past with a very depressed plant nutrient cycle. Is there a way to maybe you know at really attractive prices today consolidate some more of the fertilizer? And on the specialty end, where would you look to put what's the most attractive use of that capital right now in which areas that you would look at?

Right, as I mentioned we haven't had a high level we see investment opportunities in all four businesses, in ethanol in plant nutrient in grain and rail. As we talked about it, rail we've been making our fleet younger and more diversified and we'll continue to grow our rail fleet. In PN specifically, we've said at the investor day and more recently too we like the specialties space, we like that over our manufacturer part of that. We will look at wholesale nutrient you know facilities as they fit with us but we really like to have specialty space and are constantly looking for opportunities to grow their both green fielding at our own sites are bolt-ons as well as new products or even you're looking at M&A in that space.

And then the final question for John. John the tax bill obviously lower tax rates, how much actual --how much cash does the lower tax rate give to you folks to deploy elsewhere in your business. i.e., what is the impact in your cash tax rate?

You know Eric we're still evaluating, we did talk about the effective rates being between 23 and 25% but we haven't completed our full analysis as we look you know we got to project that across our plan over the next several years and we're still in the process of evaluating that and we'll be happy to give you an idea on the next call.

[Operator Instructions] Our next question comes from the line of Ken Bellow of Montreal. Your line is open.

Couple of questions, one is, with the new management in Plant Nutrient. How will that business be managed differently?

I think that's a very good point, we brought in someone who really a sales background and we think we have much more focus on the value added side and how we train our sales force and push it more aggressively. As we moved with our Nutra-Flo acquisition a couple of years ago and our own build out of the EZ-GRO and other products, our lawn business doing very well. We need to really retool our sales effort with precision ag tools or better online working with farmers so it's kind of making our sales efforts more sophisticated Ken, and I think that's you know what Jeff Blair is bringing and he's out in the field right now working with our teams and that's the key thing.

And I think we're going to work when we talked a little about this investor day on sales and operations planning particularly in that specialty space and I think we can drive some cost out of that process.

We're getting our SAP implementation done in PN this year, that'll help us a lot with data, we're going to be more data driven sales and planning as John mentioned.

Does that change your ability to generate to that 300 million as it’s a vision changes at all? Does that help? Is there any material effect on it financially if I think about it over the next couple of years? How I should know that?

I mean when you look back and when you have very nice periods of growth like we did in the Ag super cycle that’s a main economic driver and that’s a key part of it. But we can do a better job managing our sales and operating planning and maximizing the production rates at our assets but we can do a better job and despite what the market conditions are so we are focused on that right now, that’s one of our productivity initiatives we are underway now. But really pushing as a market is going to need more specialty ingredients going forward and environmentally friendly ingredients we think it’s a good position for us to really blow that specialty business more.

And my next question just on the ethanol side, how do you think about the production levels? Because over the last year I think what most people including at least us by surprised, was the debottlenecking and the production creep. How we ascertain and how much there is the left of that to go? And how you think about that in terms of production levels for 2018 and '19?

The good news is from a relatively balanced domestic market, the good side is exports or traders are predicting 1.7 to 1.8 billion gallons for 2018, so another uptick. And exports can really absorb a lot of that creep, the term you call. I think a lot of the major investments have been made, a lot of companies as well as debottlenecking ourselves included. I think there always going to be an innovation a lot of our innovation efforts are focused on the core product side where we're are working on DDGs, portal as well as just how we want to play it more efficiently. So I think there will be some creep but the good news is experts have been really solid.

And then just follow up on the exports. Could you frame how much you think that you will be how much you think Japan will be how much you think China will be and how much even Ontario could be? How this all developing in? And what is that kind of lead us in '18 and more importantly probably '19?

I don’t have a specific number country by country, but actually we finish the 104 or 5 and specifically without china right. So Brazil was our biggest expert destination, as far as 45 we think it's still upside potential there. Canada has been very solid. India has been increasing as well as the Philippines South Korea other Asian countries. But china is the trump part that’s really adding this year also from some improvement in even in Mexico. So it's pretty well rounded from a demand standpoint. And our corn price and absolute ethanol price still upside, so it was still the no location trace when it comes to ethanol. So we could see broad destination in increase in other products.

Could you earn your cost of capital in these businesses? And I'll leave with that.

Sure, sure.

Thank you and at this time, I'm showing no further questions. I would like to turn the conference back over to John Kraus for closing remarks.

Thanks, Amanda, we want to thank you all for joining us this morning. I also want to mention again that this presentation and slides with additional supporting information will be made available later today on the Investors page of our website at andersonsinc.com. Our next earnings conference call is scheduled for Tuesday, May 8, 2018 at 11 AM Eastern time, when we'll review our first quarter 2018 results. We hope you are able to join us again at that time and until then be well.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, you may now disconnect. Every have a great day.