Andersons Inc Q4 2008 Earnings Conference Call Transcript

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

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

Question: Farha Aslam - Stephens Inc. - Analyst : First of all, just a detailed question on your equity earnings, Mike. In the quarter, you reported an $11.8 million decline and if Lansing was only $5 million to $6 million of it and ethanol was only $2 million, what was the remainder ?

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

Question: Farha Aslam - Stephens Inc. - Analyst : Okay, so maybe we'll follow up on that one offline. My second question is about the plant nutrients group. Mike, you noted that you anticipate plant nutrients to be profitable in 2009. But could you provide more color on how you see volumes flowing throughout the year in that group? And kind of what level of profits? I mean, that group's varied from $3 million in pretax income all the way up to $27 million.

Question: Farha Aslam - Stephens Inc. - Analyst : Okay. And when you look at your ethanol business, just the ethanol plants themselves, do you anticipate them turning positive in earnings at any quarter in the year?

Question: Farha Aslam - Stephens Inc. - Analyst : Okay, my final question, I'll pass it on. When you look at basis trading opportunities and grain storage, income opportunities, could you share with us your outlook for '09 versus '08?

Question: Farha Aslam - Stephens Inc. - Analyst : Okay. Thank you for your answers.

Question: Brett Hundley - BB&T Capital Markets - Analyst : Hey guys, good morning. This is Brett Hundley speaking on behalf of Heather. How are you?

Question: Brett Hundley - BB&T Capital Markets - Analyst : No, no. Anyway, thanks for taking my questions. My first one was -- it certainly sounds like you expect fertilizer prices to recover here from current levels and we could agree with you. Due to this perceived floor that we are kind of talking about, the stability in the market, I was just wondering if you could give any comments, in your opinion, kind of when pricing comes back and maybe the magnitude of that pricing?

Question: Brett Hundley - BB&T Capital Markets - Analyst : Yes.

Question: Brett Hundley - BB&T Capital Markets - Analyst : That's really helpful. I appreciate it. Also looking at rail. You kind of talked a little bit about your outlook for rail, the economic weakness that's been continuing there and you spoke about utilization rates. Kind of, if I understand correctly, just continuing to slide a little bit. I'm just curious if you could put a little bit more color to that? Do you think utilization rates are in danger of falling substantially more? Or just continuing to slide somewhat?

Question: Brett Hundley - BB&T Capital Markets - Analyst : Yes, that actually helps me think about that better. I appreciate it. My last question and then I'll jump back in. Kind of a two part question on Lansing. You mentioned they were adequately -- you believed they were adequately reserved at the end of the year. Do you think this is just a one-time event, or do you expect further writedowns here? And then B, are these reserves based on events that have happened the interim, or are they based on anticipation of default so that these would eventually reverse and positively be a benefit to you down the line?

Question: Brett Hundley - BB&T Capital Markets - Analyst : Okay. I understand. Well thanks for your time, guys.

Question: Michael Cox - Piper Jaffray - Analyst : Good morning. Thank you for taking my questions.

Question: Michael Cox - Piper Jaffray - Analyst : My first question is on the plant nutrient side. It seems from what we have been hearing is a bit of a disconnect between wholesale pricing and then pricing to the farmer because of inventory levels within the channel. I believe you guys would see, really, the whole gamut of that. I'm curious if you have seen the same? What your thoughts are on channel wide inventory levels and the possibility of further price declines to the farmer to really spur that demand as we get closer to the planting season?

Question: Michael Cox - Piper Jaffray - Analyst : Okay.

Question: Michael Cox - Piper Jaffray - Analyst : Okay, that's helpful. And looking bigger picture, I know that you have elected to move away from giving formal earnings guidance. But I was hoping maybe you could help us piece some of this together because it seems that on the plant nutrient side, expecting to swing back to a profit, the commentary around rail seems a little cautious. Ethanol losses on your equity ownerships seems likely to continue, at least if the situation doesn't change materially. So adding all this together, it seems like maybe the biggest delta is on the plant nutrient side swinging back to a profit. So should we expect earnings both in 2009 or is it still very difficult to make that claim?

Question: Michael Cox - Piper Jaffray - Analyst : Okay, okay. I guess absent that, anything in terms of preliminary thoughts on how the different components will add up as you consolidate them together and relative to the '08 performance?

Question: Michael Cox - Piper Jaffray - Analyst : Well, given that directionally it seems that certain components are expected to show improvement in '09 whereas others are not. Maybe just give a sense of order of magnitude as to will the positive outweigh the negatives and lead to growth in '09? Is that the current thinking?

Question: Michael Cox - Piper Jaffray - Analyst : That's very helpful. Thank you very much.

Question: Joseph Gomes - Oppenheimer & Co. - Analyst : Good morning.

Question: Joseph Gomes - Oppenheimer & Co. - Analyst : I want to go back on the fertilizers for a second. You guys mentioned that you were at this point in time with the big carry out in corn, maybe corn acres are a little bit softer than they were last year and given that, would that not suggest that maybe the nitrogen volumes in prices will be soft going forward this year?

Question: Joseph Gomes - Oppenheimer & Co. - 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: Joseph Gomes - Oppenheimer & Co. - Analyst : Okay, and on the ethanol business, given that you are seeing -- you're talking about maybe a year, two years of flat to possibly even negative performance, are you guys and are your partners still committed to this industry? And if you are committed to it, would the fact that there is so many distressed assets out there be of interest to you?

Question: Joseph Gomes - Oppenheimer & Co. - Analyst : Right

Question: Joseph Gomes - Oppenheimer & Co. - Analyst : Okay. And kind of an add on to that. You guys ended the quarter with a fair amount of cash on the balance sheet. Assuming nothing happens on the ethanol side and given the current stock price, do you guys see your own stock as a potential investment at this point?

Question: Joseph Gomes - Oppenheimer & Co. - Analyst : Okay, great. Thanks .

Question: Farha Aslam - Stephens Inc. - Analyst : Thank you for taking the follow up. Your rail car numbers were down in the fourth quarter versus the third quarter. Mike, did you sell rail cars in the fourth quarter?

Question: Farha Aslam - Stephens Inc. - Analyst : Yes. And then as a follow on to that rail business, what's your appetite for new rail cars? And what are the opportunities in terms of M&A you are seeing in the market right now?

Question: Farha Aslam - Stephens Inc. - Analyst : No used, I think --

Question: Farha Aslam - Stephens Inc. - Analyst : Alright, thank you very much.