Good morning, ladies and gentlemen and welcome to the 2020 First 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 follow at that time. [Operator Instructions]. I would now like to turn the conference over to your host, John Kraus, Director of Investor Relations, you may begin.

Thanks Celine. Good morning everyone and thank you for joining us for The Andersons' First Quarter 2020 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 the recording 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, the COVID-19 pandemic, 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. The company believes adjusted pre-tax income, adjusted pre-tax income attributable to the company, EBITDA, and adjusted EBITDA provide additional information to investors and others about its operations allowing an evaluation of underlying operating performance and better period to period comparability. Adjusted pre-tax income, 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, Executive Vice President and Chief Financial Officer. After our prepared remarks, Pat, Brian and I will be happy to take your questions. Before making his opening comments, I want to reiterate that we were sorry to have to postpone our April 1, 2020 Investor Day. We still intend to host that presentation later this year. We look forward to sharing more details with you about that in the coming weeks. With that Pat, the floor is yours.

Thank you, John and good morning everyone. Thank you for joining our call this morning not only to review our first quarter results, but also so that we can tell you all more about how our company is responding to the COVID-19 pandemic and what we think it might mean for us in the coming months. Before Brian provides the financial details, I want to spend a few moments reflecting on the spreads in the last couple of months. We have operated more than 70 years with the mission-driven focus on serving our customers, employees, shareholders and communities. It is a noble purpose. These fundamental principles serve us well in a time of crisis like this. We are an important part of a critical infrastructure industry. We've continued our efforts to provide extraordinary service to our customers by operating our more than 130 facilities because they are central to the North American agriculture supply chain. We've been closely monitoring the crisis and for the executive level task force that actively manage our response early on. We've communicated with employees often to make sure that we all practice physical distancing and good health hygiene. We've helped our community leaders identify the most pressing needs and help them fund them through both our related private foundations and by matching employee gifts. We've also promoted no contact volunteer opportunities as a way for our employees and their families to serve their communities. Brian will discuss our financial response to the crisis momentarily. I'm very proud of our response to the pandemic thus far. We've been able to stay responsive to customers and suppliers. Our employees have shifted seamlessly to the new normal, whether it'd be working from home or in our plants. I'd like to offer my heartfelt thanks to our operational workers…

Thanks, Pat and good morning everyone. Before we review our first quarter results, I want to spend a moment discussing how we are responding to the financial implications of the pandemic. In short, we're reducing expenses and conserving cash wherever practical. First and foremost, we have adequate liquidity, that assertion is best represented by the approximately $850 million in undrawn capacity from our primary credit agreement as of March 31st. Recent stress testing we have performed shows that we have plenty of headroom with our debt covenants, which are tied primarily to working capital and various debt-to-capital metrics. As it usually does in the first quarter, short-term debt rose as we've built fertilizer inventories in anticipation of planting season. We consider the current short-term debt level to be seasonally normal. Reducing our long-term debt remains a priority. Our long-term debt maturity schedule is laddered well with no significant amounts coming due before August of next year. Since 2016, we've been building a culture of expense management. In the last four years, we've identified more than $40 million in expense reduction opportunities. More recently, we announced an increase in the expected synergies from the Lansing acquisition from $10 million to $15 million and that we plan to reduce other operating expenses by an additional $5 million. However, the current crisis calls for us to do more. As a result, we now intend to reduce expenses in 2020 by $20 million exclusive of the amounts mentioned previously. We began to do that by immediately reducing discretionary spending such as travel, use of outside contractors, professional fees and various other expenses. We are also reducing capital spending. Over the past three years, we've spent an average of more than $200 million per year on maintenance and growth capital spending. In 2020, we intend…

Thanks, Brian. When we last spoke February 13th, we said that the Corona virus epidemic had not yet had a direct material impact to the company. We also thought that the implementation timeline for the Phase 1 trade agreement with China would be a positive business driver for our trade in Ethanol Groups in 2020. While we continue to learn more each day about the potential economic implications of these unusual times, much more remains unknown than known. We will continue to control what is in our power to control. Though part of the Central U.S. Ag food supply chain, which is operated throughout the crisis, we remain focused on the health and safety of our employees and provide an exceptional service to our customers, with strong start to the spring planting season, which should continue to be a positive for our Plant Nutrient Group. A large corn crop should be beneficial for the Trade Group beginning with the 2020 fall harvest and well into 2021. We expect ethanol demand to improve as the U.S. economy reopens. We operate highly efficient plants and are well positioned to benefit from that when it happens. For the Rail Group, the year-over-year decrease in North American railcar loadings has widened even further over the last 12 weeks, which suggests that both leasing and repair income could trend lower in 2020 than we originally thought. On last quarter's call, we shared that we thought we would remain on pace to hit our $300 million run rate adjusted EBITDA target by the end of this year with the move toward a more normal market condition. Well, unfortunately as a result of the COVID-19 pandemic, we do not have normal market conditions so we do not expect to reach that goal this year. In summary, I'm immensely proud of the whole ANDE team for its efforts to work together effectively under difficult circumstances and provide great service to our customers during this unprecedented time. While economic challenges may continue for a bit longer, our company is in a good position to emerge stronger from this difficult time. We believe in the future of American agriculture and our long-term future in it is strong. With that, I'd like to hand the call back to Celine, the operator and we'll be happy to entertain your questions.

[Operator Instructions]. Your first question comes from the line of Kenneth Zaslow from BMO Capital Markets. Your line is open.

Hey, good morning everyone.

Good morning, Ken.

So, just a couple of questions. Let me start off big picture. Do you think that COVID-19 will change the earnings power, is the business -- are there businesses that you think are structurally impaired or do you think it's just a matter of returning, how do you think about that, that's a longer-term question?

Sure. No, it's a good question, Ken. So we have to look the portfolio so good news is our Plant Nutrient business is having a very strong spring. As you remember, we had a very wet spring last year that hurt our volumes. We are having a really good start to the year so, our Plant Nutrient business is in a very good position and running well. The Rail business has been impacted with the general economic slowdowns due to COVID and we think lease rates and maybe even volume of repairs will slow as we continue in the year, but that's usually a slower decline number, not a big rapid drop off. The grain business we're more optimistic because we see trade out in the future improving. We see a very big corn crop, which could give a return to more normal storage income for us as you know, we had a bad crop in the East and suffered from not having that volume we normally would see, and a return to a bigger corn crop is a good thing for The Andersons. And then the big unknown probably Ken is the ethanol business. Well, we had shut down all five of our plants in the month of March. I think we were early to do so. We got all our maintenance done with our own employees. We didn't want to bring to many contractors to the site at the time of the pandemic, so they are all in great shape to run. We've now brought up two of our plants in Albany, Michigan and also in Denison, Iowa. So we're less than half rate, but the plants are running well. And we took some mark-to-market impacts in ethanol last quarter that we see some of that coming back as the ethanol market returns as gas demand increases. Just today numbers were out on gasoline demand, we went from down 50% to down 40%. We've seen a nice increase on the week. So that's a little bit of optimism on the recovery and gasoline demand, long ways to go at the beginning of this recovery. But I think the key thing is what will economic conditions be for driving miles thus driving demand for ethanol. That's our big question for the company.

Okay. I was surprised by the grain results. Other grain based companies did not have as much on that side of the issue. There was issues obviously in ethanol, what do you -- the weakness there was greater than I would have expected. Can you give a little color of maybe why it was a little bit more than some of your larger peers in terms of just the green operations, not the Ethanol -- just more?

Yeah, that's a very good question, Ken. So, several parts of our business of our Trade Group are doing quite well. So, our feed ingredients pet food, several of our trading business had a very good quarter. Ethanol impacts a lot of our business because we supply a lot of corn to ethanol plants besides our own. So that decline in demand for ethanol and the weakness of the corn basis especially being a company that has a large eastern footprint in corn that really hurt us during the quarter on the corn basis. And that's really the particular part that would typical for us in the first quarter.

Okay. And then my last question is on the ethanol business, how does this end in terms of -- does the industry get restructured, does there get permanent closures, does it just end up as a long, very long view until things get better, like how does this -- how does the picture end?

That's the crystal ball, it is difficult. You outlined three potential plays, right and I think that the key thing that we control is that we have very highly efficient plants so, we want to be the part of the industry that's running and that shows that demand that comes back for gasoline for ethanol additive. I think there will be some plants that could be permanently closed just due to a very tough economic environment. And I think the key thing for us is just to make sure we're in a very smart position on those plants and run them tight and efficient and bring them up at a right time when the market asks for them.

Great. I appreciate it. Thank you.

Thanks, Ken.

Your next question comes from the line of Ben Bienvenu from Stephens. Your line is open.

Hey, good morning everyone.

Good morning, Ben.

I want to follow up on the ethanol business. You said you're running at 50% in April. And when we think about the demand recovery in gasoline, should we think about you are matching that demand in lockstep or are you looking at gasoline demand and saying, you want to see a formal recovery before you really ramp production back up?

Yeah.

How tepid versus aggressive do you want to be in line of how efficient you're plants are?

Understand that first of all, if I said 50% for April I didn’t mean [Technical Difficulty] quarter. We've just up two of our plants Albion and Denison because the economics dictate that at those locations. So, as you know, Ben it's a combination of corn basis ethanol price, all the core products, etc, DDGs have rallied back quite a bit. So that dictates that those plants makes sense to run on a cash basis. So we're watching it to be very smart economically and really just to maximize profitability of each location. That's the way we look at it, we don't want to be early -- we were early bringing the plants down. We don't want to be early leading the volume back up. We want to be smart and stay in tune with the market. I think the question we don't know is how much gasoline demand will be each month as the economy begins to recover. So we'll just stay in tune with that market and react accordingly each plant by at a time.

Okay, great. And I'd love to get your impressions of trade flow outlook. We have good March export numbers and some of the key kind of export categories to China like pork they've been buying soybeans here more recently. Just how you think about the actions that we've seen in the market and what that could mean for later this year in the context of COVID which obviously cast some uncertainty into what would be potential recovery or normalization of trade flows this year in favor of the market that you're seeing?

Yeah, it's nice to see China back for some commodities. They've also bought some hard wheat and sorghum from the U.S. As you know that Brazil, Argentina had a good year and the devaluation of their currencies have made them to be very competitive. We are more optimistic about exports to China in the latter half of the year. So any saber rattling with trade disputes -- welcome by the U.S. farmer or the Ag community because we would like to see some volume of exports. We [Technical Difficulty] in the domestically dairy, chicken, swine and beef all have some different challenges related to the pandemic and early on those markets have to be solid, but I think we'll have to kind of see as those go. Ethanol being the biggest demand decline in corn so going into a big corn crop, I think we'll feel good about right in corn basis and capturing corn carries in the ETG Group.

Okay, and my phone was cutting up out a bit. So I apologize if you talked about this already, but just where in your ethanol business, if at all you're hedged through the rest of the year and what kind of coverage you guys have heading into 2Q, 3Q?

Yeah, we really don't have forward coverage. There hasn’t been an opportunity to do anything that's attractive. Of course, if we do [Technical Difficulty] we will move on that. So, there just hasn't been a forward book opportunity to put on this year.

Okay. Thank you so much.

There are no further question at this time, I will now turn the call back over to John Kraus.

Thanks, Celine. 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 are available on the Investors page of our website at andersonsinc.com. Our next earnings conference call is scheduled for Wednesday, August 5, 2020 at 11 AM Eastern Time when we will review our second quarter 2020 results. We hope you can join us again at that time, until then be well.

This concludes today's teleconference. You may now disconnect.