Good day, ladies and gentlemen, and welcome to The Andersons Second Quarter Earnings Conference Call. [Operator Instructions], As a reminder this conference call is being recorded. I would now like to introduce the host for today’s conference, Mr. John Kraus, Director of Investor Relations. You may begin.

Thanks Catherine. Good morning, everyone, and thank you for joining us for The Andersons Second Quarter 2019 Earnings Call. We have provided a slide presentation that will enhance our talking points. If you're viewing this presentation via our webcast, the slides and audio will be in sync. This webcast is being recorded and the recording and the supporting slides will be made available shortly 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 1934 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. The company believes that adjusted pretax income, adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA provide additional information to investors and others about its operations, allowing an evaluation of underlying operation, operating performance and better period-to-period comparability. Adjusted pretax income, adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA do not and should not be considered as alternatives to net income or income before income taxes as determined by generally accepted accounting principles On the call with me today are Pat Bowe, President and Chief Executive Officer; and Brian Valentine, Senior Vice President and Chief Financial Officer. We 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 review our second quarter 2019 performance. I'll begin by providing some color on each of our four operating units. After Brian provides a business review, I'll conclude our prepared remarks with some comments about our outlook for the balance of 2019 and then we will be happy to address your questions. Our second quarter adjusted results were considerably better than our reported second quarter 2018 results, even in the phase of unprecedented bad weather in much of our Eastern ag footprint. Given those difficult conditions, we are very pleased with our results. The Trade Group posted much stronger numbers than the Grain Group did last year, but it does not have the full benefit of the addition of Lansing Trade Group. These results show why our conviction is as strong as ever on our acquisition and integration of Lansing with our legacy grain business. The group's merchandising and physical handling margins were excellent as far as execution, as the market inputs created basis in futures volatility. Our new, larger trading and merchandising team did a very good job capturing opportunities in that more volatile environment. The Ethanol Group's results were lower year-over-year, but the group remain profitable despite challenging low margin conditions. The group focused on reducing costs, improving yields, maximizing co-product sales and selectively limiting production. The Plant Nutrient Group performed better than it did last year, even though persistent rain hurt nutrient volume significantly for the second consecutive quarter. The group was able to more than offset that shortfall with improved product margins that resulted from containing production costs, operating efficiently and maintaining a pricing discipline. The Rail Group's leasing income remains steady, while car sales income was negligible as planned. Fleet utilization and the number of cars on lease were both significantly higher year-over-year. The group’s repair business results were lower. I'll speak later in the call about our outlook for the remainder of 2019. Now Brian will walk you through a more detailed review of our financial results.

Thanks Pat, and good morning everyone. We're now on Slide number 5. In the second quarter of 2019 the company reported net income attributable to The Andersons of $29.9 million or $0.91 per diluted share, and revenues of $2.3 billion. And adjusted net income attributable to The Andersons of $32.3 million or $0.98 per diluted share. The adjusted results include a $3.1 million non-cash impairment charge on our remaining Tennessee grain assets. Our adjusted results were better than those of the second quarter of 2018 when our revenues of $911 million generated reported net income attributable to The Andersons of $21.5 million or $0.76 per diluted share. The company's effective tax rate for the second quarter of 2019 was 27.2% which was up slightly from the second quarter 2018 rate of 26.6%. We continue to expect that our 2019 full year effective tax rate will be between 24% and 26%. Total company adjusted EBITDA increased by nearly $30 million or almost 50% to $88.6 million compared to second quarter 2018 EBITDA of $59.7 million. Slide 6, shows the changes from reported pretax income to adjusted pretax income by segment for the same two periods. Total adjusted second quarter pretext income attributable to the company rose by $14.8 million compared to the second quarter of 2018. Our adjusted Trade Group results significantly exceeded last year second quarter Grain Group results, in large part because we now own 100% of the former Lansing and Thompson's businesses. The Ethanol Group remained profitable, but its results decreased significantly in the phase of a very poor margin environment. The Rail Group's results were better than those of the second quarter of 2018, when the group recorded $5.2 million of charges related to the scrapping of rail cars. Now we'll move to the bridge graph for…

Thanks, Brian. When we last spoke in May, we told you that we expected our overall 2019 company results to be better on an operating basis than those of 2018 when we earned an adjusted $1.63 per share. While we are pleased with our solid second quarter results earned under difficult conditions, the ongoing impacts of the unprecedented first half weather and the world trade difficulties now lead us to believe that our operating results will be down slightly for the full year. The Trade Group performed remarkably well last quarter in unusual conditions and the Lansing acquisition is making a strong contribution to our results. While we anticipate continued trading opportunities in what we think will be a volatile market well into the fourth quarter, it's also apparent that the corn and soybean volumes available to us this year in portions of our Eastern asset footprint will be substantially lower than normal. What isn't clear is how the late planting will impact yields, particularly in our Northwest Ohio, Southeast Michigan and Northeast Indiana dry areas. On a more positive note, the integration of the Lansing and Thompsons businesses continues to go well, and we believe we will meet or exceed our synergy estimates. The Ethanol Group continues to make the best of an extremely unfavorable margin environment, low or negative crush margins prevented the Group from locking in any forward margins for the third quarter. Given the current margin environment, the Group plans to run its plant to optimize yield and profitability, which will reduce costs and could lower some volumes. The Group continues to make progress on its strategic initiatives. The Denison, Iowa plant has achieved a low carbon intensity score and the new Element plant in Kansas will soon begin to produce low-carbon ethanol. Both plants will…

Thank you. [Operator Instructions] And our first question comes from Eric Larson with Buckingham Research. Your line is open.

Yes, good morning everyone.

Good morning, Eric.

Yes, it was a tough – it was a good performance in a tough quarter. So I'm just a couple questions. Did you have any marks at all in the quarter?

I'm sorry, I don't fully understand what you're asking about remarks?

MTMs?

Sure. Yes, so when we talked about basis levels, so that was the appreciation in the basis levels as part of our gains on especially wheat and corn, not – we didn't see that so much in beans. So we had some nice markups and premiums for both corn and soft wheat.

Okay. So will you be giving any of that back up in the third and fourth quarters?

No, I don't think it's given a back-up. I think the question is, did we pull anything forward, right? So…

Right, it’s a better way to describe it.

I think Eric, and you know the grain business very well. Historically, we were making storage income on soft wheat. And those carrying charges have changed, so a year or two ago when we were making steady income of wheat storage. We don't have that situation today, but we were positioned very well in our bases positions across the country, a lot of this attributable to the new merchandising from Lansing that we enhanced margins during the quarter. The question will be, what's it going to look like in third and fourth quarter? We still think that it's going to be good trading opportunities with volatility. As you know, Monday will be – the wise people will be out and there's never been a wider spread on estimates of yield. So there is quite a bit of uncertainty still in the US grain markets, let alone with China trade et cetera. So there's going to be quite a bit of volatility, we move from a 10 on the volatility scale up to 30 here, recently. That's good for grain merchandising.

Yes, it's actually nice to have some volatility back, it's been several years since we've actually had the ability to do any of this. So really quickly on fertilizer, I know that in the quarter, the Mississippi wasn't shipping for I think like six weeks. So you weren't able to get fertilizer coming up from [indiscernible]. And I believe that probably was what gave you – the internal fertilizer margins coming in the upper – in the Midwest was probably pretty good. Is that what explains the margin improvement that overcame your volume shortfall?

I think that's part of it, Eric, because we are – rail delivery points may come from Canada and up from Florida. So we're not dependent on both barged deliveries for the most part. But that didn't cause a lot of competitive pressure on margins, as you pointed out. But I think more of it was, we just had rain, rain, rain, especially in a lot of our Ohio, Michigan, Indiana locations, that just has really hurt us on volume. The worst we've seen for many, many years. But margins held in there pretty good. And we should see a pretty good fall application. But we just couldn't make up for that lost volume with the amount of acres that didn't get planted with present plant, another switch to beans.

Got it. Okay. So then the – and that makes sense. So, I mean, I've got a lot of questions, I don't want to hog the call here. But when we look at your guidance for 2019, one of the questions that I have – I make my own adjustments for some of that. I want to make sure that we're – I understand where your $1.64 – excuse me $1.63 is coming from next year. But in the base for this for 2019, are you using $0.43 loss in your first quarter or have – when you think about the year that we should be modeling, should we be using a $0.06 loss that adjust the way some of those one-time items? I'm just trying to make sure that we're all dealing from the same actual earnings from the first half?

Yes. So, Eric this is Brian. We're using the $0.06 loss, if you will, for the first.

You are using the $0.06. Okay. That is what I am using. So I just...

Go ahead.

No. Go ahead. I just want to make sure that we're all on the same page with this. That's all.

Yes. So we're adjusting for, call it transaction related items, specifically the stock comp and transaction stuff. But we are not formally adjusting for the depreciation and amortization. Go ahead John.

Eric, this is John. What I would say is that, when we use the term operating basis, we are adjusting for the depreciation and amortization even though we're not formally doing so for reporting purposes. Does that makes sense to you?

Yes. Got it. Yes. That makes sense. I just – again, I just want to make sure that we're kind of all dealing from the same earnings base, particularly now in the first half, so that we can make sure that we can get to where Pat is trying to lead us for the full year.

I was going to say – I'm just going to say, Eric, we hope that the slide that we put in the deck will help you with the third and fourth quarters as well.

Yes. I'm sure that will. Again, I just want to make sure that we are kind of all coming from the same base of earnings.

Yes.

So then the final question here. And Pat, obviously, this has been a very unusual planting year, we all know. This year is making 1995 kind of look like a picnic. So the Eastern Corn Belt has been hit very severely, probably more so than the rest of the country. Your internal interpretations here with the spreads, where do you think some of the – where do you think the production for corn and beans comes out this year? I mean, obviously, we're not going to hold that to you, but what's your best guess on it?

Yes, and that's what's really interesting, like I said – Monday that the trade guesses are all over the map. And I think it's really regional and could even be county-by-county. With the acquisition of Lansing, our footprint broadened considerably with assets as far west as Idaho and as far south as Louisiana, let alone in Kansas, Nebraska, et cetera. We have many parts of the country that have outstanding looking corn crops. Right here in our traditional backyard, in North West Ohio was one of the worst parts of the country with corn getting in late. The interesting thing is, I was just talking to someone in Central Illinois, being temperatures have been not too hot, we had all that early moisture that, we're getting really good growth in the plant, the question is what will the field look like and ultimately what will yields be? I think, we got to give a lot of credit to American farmer, who is very adaptive and really has done a great job producing huge crops. I think we'll have pretty strong production. And in the demand side just isn't getting any better. And the China talk and the potential with African swine fever may be leaking into other Southeast Asian countries or there's a concern more about demand. So we're really focused on our domestic trading and how we merchandise between the millers and crushers and the ethanol plants in U.S. We think there’s going to be lots of opportunities this year to optimize around that.

Okay, I'll pass it on. And congratulations to Corey for a great second quarter here for you guys.

Thank you.

Thank you. [Operator Instructions] And I'm showing no further questions at this time. I'd like to turn the call back to Mr. John Kraus for any closing remarks.

Thanks again, Catherine. 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 Wednesday, November 6, 2019 at 11:00 AM Eastern Time, when we will review our third quarter 2019 results. We hope you can join us again in that time, and until then be well.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.