The Andersons, Inc.

Good day, ladies and gentlemen, and welcome to the Anderson's 2018 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require operator assistance during the conference, please press star, then zero on your telephone keypad. As a reminder, today's call may be recorded. I would now like to turn the call over to John Krause, Director of Investor Relations. Sir, please begin.

Good morning, everyone, and thank you for joining us for the Andersons' fourth quarter 2018 earnings call. We've 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. The slides are available on our website now. This webcast is being recorded, and it 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. The company believes adjusted pre-tax income, adjusted net income, 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, adjusted net 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. Reconciliations of the GAAP to non-GAAP measures may be found within the financial tables of our earnings release. On the call with me today are Pat Bowe, President and Chief Executive Officer, and Brian Valentine, Senior Vice President, and Chief Financial Officer. Pat, Brian, and I will answer your questions after our prepared remarks. Now, I'll turn the floor over to Pat for his opening comments.

Thanks, John, and good morning, everyone. Thank you for joining our call this morning to review our fourth quarter 2018 results. I'll start by providing some viewpoints on each of our four business groups. After Brian Valentine, our CFO, provides a business review, I will conclude our prepared remarks with some comments about our early views on 2019. And then we'll take your questions. Adjusted fourth quarter and full year 2018 results were better than those of the comparable 2017 periods. Grain and plant nutrient results, in particular, were much improved. We also successfully closed our acquisition of Lansing Trade Group just after year end, and we're excited about our early integration momentum. We had our best fourth quarter in the grain business since 2011. Weaker margins drove the ethanol group's results lower year over year, but they operated well given the market backdrop. The plant nutrient group improved results and each of its product lines accept specialty nutrients. And the rail group's results were on par with those of the fourth quarter of 2017. The grain group rebounded from a tough third quarter as corn and soybean basis values improved largely as we expected. However, wheat spreads contracted sharply during the quarter, leading to a full year decrease in base income per bushel. Large U.S. carryouts in corn and soybeans limited trading opportunities while increasing storage income. Lansing had a strong quarter on an operating basis. As I mentioned earlier, we successfully closed on the Lansing acquisition at the beginning of 2019. This transaction aligned very well with our overall growth strategy as it supports growth in grain originations, merchandising, and specialty food and feed ingredients. It broadens our portfolio of products and services and it expands our geographic reach. Despite industry margin headwinds, the ethanol group was profitable during the fourth quarter. The group's achievements were driven by timely hedging and continuing production efficiency despite higher industry stocks and seasonally low demand. The plant nutrient group posted better results compared to those of late 2017. Wholesale nutrient results improved year over year on stronger primary nutrient margins, but specialty nutrient margins suffered further even though volumes were up. The lawn business put a strong finish on a record year. The group did a nice job managing expenses, reducing them by about 10%. The rail car market continues to steadily improve. While lease rates are rising for most car types, in many cases, renewal rates are still lower than the rates they're replacing. Our utilization rate rose again sequentially to its highest level in recent history at 94%. And we continue to buy cars in the secondary market. We continue to gain efficiencies across the company by improving productivity. We achieved our $10 million run rate cost savings in each of 2016 and 2017 and also reached our goal of $7.5 million in 2018. That brings our three-year cost takeout total to nearly $30 million. This year, while we'll still have our eyes on similar opportunities across the company, our primary focus will be on achieving $10 million in run rate cost synergies from the Lansing acquisition. I'll be back after Brian's remarks to discuss our early thoughts about 2019. Brian will now walk you through a more detailed review of our fourth quarter financial results.