The Andersons, Inc. (ANDE) Earnings Call Transcript & Summary

Good day, and welcome to The Andersons Annual Meeting of Stockholders. I would now like to turn the conference over to Mike Anderson. Please go ahead.

Thank you. Good morning, and welcome to our 25th annual meeting as a publicly held company and our first one held in a virtual format. I'm Mike Anderson, Chairman of the Board. We welcome all shareholders, those who have been with us for many years and those who are new to the company. We appreciate your interest in The Andersons, Inc. If you are a shareholder and have a question, I would encourage you to share it on the web portal as soon as possible. We will get to as many of your questions as time allows after we conclude the formal meeting. I want to welcome [ Carl Wegner ], who is on the line with us this morning and is representing Broadridge as our inspector of elections. [ Carl ] has advised us that we have met the requirements for a quorum, so I will convene today's meeting. The polls are now open for voting and will remain so until after I introduce our directors and auditors. If you have not already cast your proxy ballot or if you wish to revoke your proxy, you can do either electronically while the polls remain open. Since our last annual meeting, we have lost one of our company's founders and seminal leaders. My uncle, Dick Anderson, who became the company's third CEO in 1984, preceded me as Chairman beginning in 1999 and was later named Chairman Emeritus, died on March 1 at age 90 after devoting his entire adult lifetime to the company and his community. Dick was integral to so much of the development and growth of the company from its beginning in 1947, including leading our evolution from a private limited partnership to a publicly listed corporation in 1996. He is already sorely missed. Now I'd like to review the agenda for this morning's meeting. We will ask for approval of the minutes of the last meeting. Next, I'll introduce the directors standing for reelection and representatives of our audit firm, Deloitte & Touche. After a brief pause to allow for any final voting, the polls will then be closed. I will then announce the voting results and adjourn the formal meeting. I will next turn to Pat Bowe, our CEO, for a brief business review. We will conclude by answering any questions you may have prior to the conclusion of the meeting. Our first order of business is to approve the minutes of the May 10, 2019, meeting. Are there any additions or corrections to the minutes? Being aware of none, they will stand approved as submitted. Next, I'd like to introduce you to our current Board members. First, I'd like to introduce Pam Hershberger, retired Toledo office Managing Partner at Ernst & Young, who joined the Board in December and is standing for election for the first time today. Welcome, Pam. All but one of the other current Board members are standing for reelection. Please allow me to introduce them again. Gerry Anderson, Chairman of DTE Energy; Pat Bowe, President and CEO of The Andersons, Inc.; Cathy Kilbane, retired Senior Vice President, General Counsel and Secretary of The Sherwin-Williams Company; Bob King, Senior Adviser of F.N.B. Corporation; Ross Manire, retired President and CEO of ExteNet Systems, Inc; Pat Mullin, retired Managing Partner of Northeast Ohio practice, Deloitte & Touche LLP; John Stout, Chairman, CEO of Plaza Belmont Group LLC; and Stephen Dowdle, retired manager of PotashCorp. I, Mike Anderson, am standing for reelection. One member of our Board who did not stand for reelection due to having reached our mandatory retirement age is Jackie Woods, retired President of AT&T Ohio. Jackie has been a member of the Board since 1999. I want to thank Jackie for her long service to the company and her commitment to our shareholders as well as to our customers, employees and communities. As you know, Deloitte & Touche became the senior -- is the company's independent auditors in 2015. Representing Deloitte is Mark Quarm, the new lead audit partner on our engagement. We welcome Mark. He succeeds Craig Donnan who recently left our engagement team after completing 5 years as lead audit partner. We want to thank Craig for his service to the company. The polls are now closed for voting. Consistent with the practice of many companies, our legal documents provide that any business to be voted upon, including any nominations for director, must be submitted in a timely manner in advance of the annual meeting. No items of business were received, and no nominations were received other than for the 10 directors who were previously introduced. And now the preliminary results of the voting, which are subject to final tabulation from the just-closed polling session are: all 10 nominees have been elected; the company's executive compensation plan presented in the proxy has been approved; Deloitte & Touche LLP has received a vote of approval; the proposal for the ratification of the company's independent auditors passes. Please note that a certified shareholder list and proxy mailing affidavit is available by contacting John Kraus, our Director of Investor Relations. I'd now like to turn the call over to CEO, Pat Bowe, who will now make a short presentation about the company's response to COVID-19, its outlook for 2020. Pat?

Thanks, Mike. I want to welcome you all and thank you for investing in our company. Today, I want to provide you with a brief overview of our response to the COVID-19 pandemic and share a glimpse of what we think 2020 will bring for the company. As a reminder, we provided a safe harbor statement on the screen regarding any forward-looking comments I may make here today. Thank you for your understanding. I'd like to start by telling you all more about how our company is responding to the COVID-19 pandemic and what we think it might mean for us in the coming months. I also want to spend a few moments reflecting on the experience over the last couple of months. We have operated for more than 70 years with a mission-driven focus on serving our customers, employees, shareholders and communities. It is a noble purpose. These fundamental principles serve us well in a time of crisis like this. We are an important part of a critical infrastructure industry. We've continued our efforts to provide extraordinary service to our customers by operating our more than 130 facilities because they are essential to the North American agriculture supply chain. We've been closely monitoring the crisis and formed an executive-level task force to actively manage our response early on. We've communicated with employees frequently and have made sure that we all practice physical distancing and good health hygiene. We've helped our community leaders identify the most pressing needs and helped fund them through both our related private foundations and by matching employee gifts. We've also promoted no-contact volunteer opportunities as a way for employees and their families to serve their communities. Finally, we are relentlessly focused on managing our expenses and conserving cash wherever possible. I'm very proud of our response to the pandemic so far. We've been able to stay responsive to our customers and suppliers. Our employees have shifted seamlessly to the "new normal," whether it be working from home or in our plants. I'd like to offer my heartfelt thanks to our operational workers who show up every day in support of the American ag food supply chain and to all our employees who've kept our businesses running smoothly. And finally, I'd like to express our deepest sympathies for all of the families and communities who've been affected by COVID-19. When we last spoke on February 13, we said that the coronavirus epidemic had not yet had a direct material impact on the company. We also thought the implementation time line for the Phase 1 trade agreement with China would be a positive business driver for our Trade & Ethanol Groups in 2020. While we continue to learn more each day about the potential economic implications of these unusual times, much more remains unknown than known. We will continue to control what is in our power to control. We are part of the essential U.S. ag food supply chain, which has operated throughout the crisis. We remain focused on the health and safety of our employees in providing exceptional service to our customers. We have a strong start to the spring planting season, which should continue to be positive for our Plant Nutrient Group. A large corn crop should be beneficial for the Trade Group beginning with the 2020 fall harvest and well into 2021. We expect ethanol demand to improve as the U.S. economy opens. We operate highly efficient plants and are well positioned to benefit from that when it happens. For the Rail Group, the year-over-year decrease in North American railcar loadings has widened even further over the past 12 weeks, which would suggest that both leasing and repair income will trend lower in 2020 than we originally thought. On last quarter's call, we shared that we thought we could remain on pace to hit our $300 million run rate adjusted EBITDA target by the end of this year with a move towards more normal market conditions. Unfortunately, as a result of the coronavirus pandemic, we do not have "normal market conditions," so we do not expect to reach that goal this year. In summary, I'm immensely proud of our whole team for its efforts to work together effectively under difficult circumstances and provide great service to our customers during this unprecedented time. While economic challenges may continue for some time, our company is in good position to emerge stronger from this difficult period. We believe in the future of American agriculture, and our long-term role in it is strong. With that, we'd be happy to address any of your questions as time permits. Thank you.

As Pat said, we'd be happy to entertain your questions from our shareholders. There are no questions that have been put up for us to answer. So I would like to indicate that this brings us to the close of our annual meeting. Thank you all for joining us.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.