Andersons Inc Q1 2009 Earnings Conference Call Transcript

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

Question: Farha Aslam - Stephens Inc. - Analyst : Hi. Good morning.

Question: Farha Aslam - Stephens Inc. - Analyst : Some color around your ethanol business? It's really performing far above our expectations. Could you give us some color on any contracts that you might have locked in?

Question: Farha Aslam - Stephens Inc. - Analyst : Great. And so when you look at the Greenville plant, right now it's still up and running. If you had to look at the cash flow, how bad would the ethanol market need to get for you to consider closing that Greenville facility?

Question: Farha Aslam - Stephens Inc. - Analyst : Not there yet? And so for the foreseeable future you anticipate that facility to continue to operate?

Question: Farha Aslam - Stephens Inc. - Analyst : Okay. And then when you look at your Plant Nutrient in the quarter, what was the total volume? You've given us ex- acquisitions. What would be that number including acquisitions?

Question: Farha Aslam - Stephens Inc. - Analyst : Yes.

Question: Farha Aslam - Stephens Inc. - Analyst : And then if you look at the acquisition you've just made, and which will close in July, how much on an annual basis will that add to your volume? 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: Farha Aslam - Stephens Inc. - Analyst : Okay. And my final question is on rail lease rates. Could you just give us some color around those lease rates? How much--what percentage they're up and down? And what a standard railcar is going for today?

Question: Farha Aslam - Stephens Inc. - Analyst : Okay. Thank you very much for your comments.

Question: Heather Jones - BB&T Capital Markets - Analyst : Good morning.

Question: Heather Jones - BB&T Capital Markets - Analyst : Just a follow-up real quick on the rail question and your commentary in the release about utilizations could go lower. I believe you, and I may have missed this, but I believe you said you thought lease rates could go 5% lower? How was lower to you think utilization rates could go?

Question: Heather Jones - BB&T Capital Markets - Analyst : I'm sure you could.

Question: Heather Jones - BB&T Capital Markets - Analyst : So does this per diem represent roughly 10% of your rail assets?

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. So I would assume there's meaningful weakness there and then of the remainder, roughly 20% comes up for renewal every year. And it sounds as if you're also having a fair amount of those not get renewed as well?

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. 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 : So do you get a feel that things are worsening, or do they seem to be not improving but you're sort of bumping along the bottom?

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. That actually is good news.

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. Now moving on to other segments. Going to your ethanol business, first on the Greenville plant, is that still running at less efficient rates as your Albion and Clymers plants?

Question: Heather Jones - BB&T Capital Markets - Analyst : So you have closed that gap some? 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 : Okay. And given that you only lost $1 million in the quarter, given the corn prices, ethanol prices, etc., is it fair to assume that a lot of the loss from the plant was offset with those risk activities you do through TAEI?

Question: Heather Jones - BB&T Capital Markets - Analyst : Yes, it was a big help last year.

Question: Heather Jones - BB&T Capital Markets - Analyst : Okay. And what's your view on that business for the rest of the year? Do you believe--do you anticipate may be still, sort of like the rail issue? Sort of still negative, not good, but better than Q1?

Question: Heather Jones - BB&T Capital Markets - Analyst : I have two more questions. One on Plant Nutrient. That was a surprisingly good quarter. Just wondering, I know you mentioned, your commentary said normal margins for the rest of the year as compared to '08. But going to these deferred sales contracts that benefited the quarter, the prepay contracts, how many more of those to you have left to realize during '09?

Question: Heather Jones - BB&T Capital Markets - Analyst : And finally on the grain business. You had a pretty easy comp, but even with that said, it was still a really good quarter. Your comparisons aren't as easy going forward, but still how we're looking at the basis spreads, it looks like you still could have -- it could be a good business for you the rest of the year. But I was just wanting to get your take on the outlook as far as the space income? 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 : Okay.

Question: Heather Jones - BB&T Capital Markets - Analyst : No, understood. Okay, thank you again.

Question: Michael Cox - Piper Jaffray - Analyst : Thank you very much and congratulations in the quarter guys.

Question: Michael Cox - Piper Jaffray - Analyst : In terms of your outlook on the Plant Nutrient side, I'd be curious what your thoughts are on volumes, excluding the acquisitions as you look to the balance of the year? Is down 15% where you think you'll be as you look at the full year? 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: Michael Cox - Piper Jaffray - Analyst : Sure. That's helpful. And in terms of the inventory adjustment you're looking at potentially here in the second quarter, could you size that up relative to the $2.9 million that you took in Q1?

Question: Michael Cox - Piper Jaffray - Analyst : Okay that's helpful. So I'm clear on this, it sounds like perhaps the deferred sale and presale and if we were to match that up against the inventory adjustments that that's approximately a wash? Is that fair to assume?

Question: Michael Cox - Piper Jaffray - Analyst : Okay and on the acquisition of the Hartung Brothers Fertilizer Group, could you talk a little bit about their inventory position and the comfort level you have with making an acquisition in these types of conditions?

Question: Michael Cox - Piper Jaffray - Analyst : Okay, that's helpful. And then my last question is on the Lansing Trading Group, and I was wondering if you could maybe provide a little more color of what the either income contribution or loss was Q1 from Lansing specifically and then what your thoughts are on that contribution for the balance of the year?

Question: Michael Cox - Piper Jaffray - Analyst : Great. Thank you very much.

Question: Charlie Rentschler - Wall Street Access - Analyst : Thank you. Good morning.

Question: Charlie Rentschler - Wall Street Access - Analyst : On the short side of the balance sheet there was considerable deleveraging in the first quarter. I wonder if you could talk about, Gary went through some of those numbers pretty quickly, but what was driving that? What were you doing with all that?

Question: Charlie Rentschler - Wall Street Access - Analyst : So you like the position you're at right now?

Question: Charlie Rentschler - Wall Street Access - Analyst : Mike, I wondered if you could get into the head of Farmer Brown out there in the corn belt. What do you think is going through his head in terms of looking at planting corn versus beans or vice versa and his thoughts about expenses, in your case of course particularly fertilizers? Do you think he's trying to pull back here and there? What's your thoughts on that?

Question: Charlie Rentschler - Wall Street Access - Analyst : Thank you for that very interesting appraisal. Last question about Lansing Grain. Are you happy with where you're at or do you think you're going to continue to buy more of that?

Question: Charlie Rentschler - Wall Street Access - Analyst : Okay. Thank you.

Question: Ian Horowitz - Soleil Securities - Analyst : Good morning guys.

Question: Ian Horowitz - Soleil Securities - Analyst : Can I go through just a mechanical question on capacity -- volume capacity for Plant Nutrient? For the second quarter on a year-over-year basis capacity mind you, we should be flat, and then when we come into the third quarter due to the Hartung Brothers acquisition than we'll start to see the increase in volume capacity? Is that right?

Question: Ian Horowitz - Soleil Securities - Analyst : Okay. And then talk about some of your thoughts on M&A in this space. From what we understand there's a lot of wholesale retail operators that are in pretty challenging positions right now. Do you see yourselves continuing to kind of take advantage of this moment, be increasing your capacity?

Question: Ian Horowitz - Soleil Securities - Analyst : And the remainder of the Hartung Brothers is going to stay back with them and they're going to operate their seed business and other retail operations, is that correct?

Question: Ian Horowitz - Soleil Securities - Analyst : And then can we, quick question on grain. When we look at the recent grain stocks report, a significant amount of--there's been a significant change in the amount of grain being held on farm versus downstream. What's your comments on this? How do you feel this? How is this impacting your utilization rates in this business? And then on top of that, if planting progress is continuing to be as you guys said, a challenge, how are you modeling utilization rates in the grain business over the next growing season if we continue to see kind of an underperformance? 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: Ian Horowitz - Soleil Securities - Analyst : What's the impact of corn and beans switching away from the normal rotation to your grain business?

Question: Ian Horowitz - Soleil Securities - Analyst : But it doesn't seem like you guys have said you're running these different scenarios, yet it's still too early to tilt in one direction or the other? 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: Ian Horowitz - Soleil Securities - Analyst : Great. Thank you very much.