Andersons Inc Q1 2006 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : Mike, you just said that with regards to the Rail Group that continued growth is definitely in our forward plan. I guess the uppermost question on my mind is would you make the same comment about ethanol and might you also give us some more color on Dunkirk in terms -- I don't think it's been announced what the size of that plant would be, for example, and what the capacity would be?

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : But is this to say that you might not build any additional plants beyond Dunkirk?

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : One more question and I don't want to hog the time, but related to that are you a bit concerned about the size of your borrowings now short- and long-term? And might an equity offering be possible here at some point soon?

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : Okay, call me from closing. Thank you very much. I'll get back in line. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Heather Jones - BB&T Capital Markets - Analyst : Good morning, great quarter. Also just wanted to tell you I appreciate the more specificity there was in the press release, it was good. I wanted to go back to ethanol first. As far as this air permit, I mean how dirty or not dirty are these plants? Are these difficult to receive? What are the issues with the locality giving you an air permit?

Question: Heather Jones - BB&T Capital Markets - Analyst : I guess as a follow-up to Charlie's question, as we look to the second half of '07 and you've got Clymers up, you've got Albion up, is it likely that you will have announced intentions to have gone ahead with another facility or are you seriously considering at this point not doing any more facilities and just sticking to the management consulting side?

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. And from our perspective, with the exception of an ADM and possibly a Cargill, you all look like you are the best positioned to be in ethanol production, given the proximity of your rail logistics, proximity to grain elevators, experience in the business. And I'm just wondering if you could speak to that, if I may be missing something?

Question: Heather Jones - BB&T Capital Markets - Analyst : I just have two more questions. I was wondering if you could provide some detail as to the tax incentives you received. I want to say you receive those in Clymers, and I think maybe Albion as well.

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. And finally, I was just looking at your guidance and even assuming no further rail car sales, the kind of pricing you're getting and I would assume the nice margin leverage that brings with it as well as the improvement you're seeing in processing -- and given that you'll have a full quarter or almost a full quarter of ethanol production, I was just wondering, your guidance seemed a little conservative and I was just wondering if you're assuming a substantial decline in your core grain business this year or in plant nutrient? Just was wondering if you could give us some further detail about what you're assuming.

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay, thank you.

Question: Tim Creden - Neuberger Berman - Analyst : What is the capacity of the two plants where you've started construction at Albion and Clymers?

Question: Tim Creden - Neuberger Berman - Analyst : And the Michigan one comes on in 3Q. What about the Indiana plant?

Question: Tim Creden - Neuberger Berman - Analyst : Okay. And then also just wondering, are you guys selling ethanol on forward contracts yet in terms of for those plants that are coming on in the third quarter. Have you started selling that yet?

Question: Tim Creden - Neuberger Berman - Analyst : Okay. And then I guess the last question. What would cause any delay in the ethanol plant? I know a lot of people are out there trying to get kind of similar equipment, but if you could give us some color on what would be the biggest risk to a delay?

Question: Tim Creden - Neuberger Berman - Analyst : Okay, thanks a lot.

Question: Jane Meady - Seal Capital - Analyst : Good morning. Just a couple of questions. It looks like the operating income as a percentage of the revenue in the rail business was down compared to last year and certainly last quarter. I didn't catch what had caused that.

Question: Jane Meady - Seal Capital - Analyst : Okay. Obviously leased spreads has a lower margin, I presume. Or higher margin actually.

Question: Jane Meady - Seal Capital - Analyst : Okay. If I can ask another question and if something comes up let me know. If you look at the capacity of Clymers in Albion, I know you've been marketing that capacity and trying to sell its ahead a time, how far are you in that process?

Question: Jane Meady - Seal Capital - Analyst : Okay.

Question: Jane Meady - Seal Capital - Analyst : Okay. And then the other thing that I wanted to get is in total how much have you invested in Clymers, Albion and (indiscernible)? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jane Meady - Seal Capital - Analyst : And 44% of the equity in Albion?

Question: Jane Meady - Seal Capital - Analyst : And then my last question, the fee that you got from I believe Clymers is all reflected in the equity line and earnings of affiliates line?

Question: Jane Meady - Seal Capital - Analyst : Yes.

Question: Jane Meady - Seal Capital - Analyst : Right. And I guess my question is what's the difference between what you're recognizing in the revenue line and what you're recognizing in the equity and earnings affiliates?

Question: Jane Meady - Seal Capital - Analyst : Great, thanks.

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : Mike and Gary, when I was visiting you last and we were talking about ethanol you explained to me as the industry rolled out across the corn belt that it was very important to site locations and obviously to grab locations early on and I wondered if you could expand on that a little bit. And I noticed the other day, for example, that I think it was (indiscernible) or one of these outfits that announced that they were going to put in a refinery in Montpelier, Indiana which I don't think is all that far from Dunkirk. And can you kind of talk about that in terms of your strategy going forward?

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : I feel like a bird dog.

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : Okay. As a follow-up, going back to your legacy agra business -- Mike, can you give us your thoughts on how you think the U.S. farmer is positioned this brain? What's his mood?

Question: Charlie Rentschler - Foresight Research Solutions - Analyst : Thank you.

Question: Jane Meady - Seal Capital - Analyst : I just did some rough numbers on what Clymers and Albion could be capitalized at. And it looks like Clymers is valued much higher than Albion. Is there a reason for this?

Question: Jane Meady - Seal Capital - Analyst : No, that's good. And how long in general does it take to put a facility up?

Question: Jane Meady - Seal Capital - Analyst : Thanks.