The Andersons, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Anderson's 2020 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to do salesman's conference call. Mr. John Krause, Director of Investor Relations, you may begin, sir.

Thanks, Kevin. Good morning, everyone, and thank you for joining us for the Anderson's fourth 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 investor's 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 ag 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 pre-tax income, adjusted pre-tax income attributable to the company, adjusted net income attributable to the company, adjusted diluted EPS, earnings before interest taxes depreciation and amortization, or EBITDA, adjusted EBITDA, and cash flow from operations before changes in working capital provide additional information to investors and others about its operations, allowing an evaluation of underlying operating performance and better period to period comparability. These measures do not and should not be considered as alternatives to net income, income before income taxes, net income per share, and cash provided by or used in operating activities as determined by generally accepted accounting principles. On the call today with me, as usual, are Pat Bowe, President and Chief Executive Officer, and Brian Valentine, Executive Vice President and Chief Financial Officer. In addition, our corporate controller, Mike Holter, is joining us today. He'll be assuming responsibility for investor relations beginning next quarter as I am retiring in mid-March. After our prepared remarks, Pat, Brian, and I will be happy to take your questions. With that, Pat, The floor is yours.

Thank you, John, and good morning, everyone. I appreciate your joining our call this morning to review our fourth quarter results. I want to begin today by thanking our 2,400 employees for successfully rising to the challenge in a year that we'll not soon forget. Our plan employees adopted the necessary additional practices needed to continue safely running our essential business operations. and our office staff quickly adapted to working efficiently from home. We could not have accomplished what we did in 2020 without their tireless efforts. John Krause mentioned in his opening remarks that he is retiring next month after 33 years of service to our company. John has held positions in tax, rail, and most recently as head of our investor relations. I want to thank John publicly for his work in IR for us the last four years. and for his outstanding contributions over his long and successful career with the Andersons. Andy is a company he grew up with, as John is a grandson of the company's founder, Harold Anderson. We wish him all the best in his retirement. We also look forward to Mike Holter taking responsibility for managing this important function. Now let's look at our results for the quarter. The trade business led the way in the fourth quarter by earning adjusted pre-tax income that exceeded 2019 results by more than 60%. Strong merchandising results and grain elevations, which were the best since 2014, were bolstered by robust exports, particularly to China. We shipped the most vessels from the port of Toledo in decades, and exports out of our Houston terminal were the highest in four years. The grain price rally also provided welcome trading volatility. The ethanol business performed well in the fourth quarter in spite of significantly weaker year-over-year crush margins and recording a large mark-to-market charge. On a more positive note, the business netted better income from high protein feed products, DDGs, corn oil, and trading. We're executing well against our high protein feed strategy and are realizing the incremental revenue on the new higher protein feed products that we shared with you all at our investor day last year. We're very optimistic about the outlook for these enhanced feed products. The plant nutrient business closed its best year since 2014 with a solid quarter driven by a higher year-over-year fertilizer volumes. Like grain prices, fertilizer prices have risen considerably as well. Rail reported modest income that was below last year's results. The decrease reflects our decision to sell fewer cars during the quarter. Continued lower rail traffic year over year negatively impacted both leasing and repair. We've implemented significant cost reductions over the last several years. We continue to expect that these actions should result in more than $25 million in permanent cost reductions. These efforts were demonstrated in 2020 and have set us up well for future growth. Overall, we're happy with our fourth quarter results and the momentum we built entering into 2021. I'm now going to turn things over to Brian. When he's finished, I'll be back to discuss our outlook for early 2021.