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

Good morning, and welcome to The Andersons Annual Shareholder Meeting. I would now like to introduce the first presenter, Mr. Mike Anderson, Chairman of the Board.

Good morning, and welcome to our 26th annual meeting as a publicly held company. 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 Karl Wagner, who is on the line with us this morning and is representing Broadridge as our Inspector of Elections. Karl 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. Please note that a certified shareholder list and proxy mailing affidavit is available for examination electronically during today's meeting. Please submit a request through the Q&A functionality on the web portal, or contact Mike Hoelter, Vice President, Corporate Controller and Investor Relations, if you would like to examine the list. 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 8, 2020 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 Gary Douglas, President of Nationwide National Partners, who is standing for election for the first time today. Welcome, Gary. All but one of the other current Board members are standing for reelection. Please allow me to introduce them again. Gerry Anderson, Executive Chairman of DTE Energy; Pat Bowe, President and CEO of The Andersons, Inc.; Stephen Dowdle, retired President of Sales of PotashCorp; Pam Hershberger, retired Toledo office managing partner of Ernst & Young; Cathy Kilbane, retired Senior President (sic) [ Vice President ], General Counsel and Secretary of The Sherwin-Williams Company; Bob King, Senior Adviser for FNB Corporation; Ross Manire, retired President and CEO of ExteNet Systems, Inc.; John Stout, Chairman and CEO of Plaza Belmont Management Group LLC, and I, Mike Anderson, am also standing for reelection. One Board member who did not stand for reelection due to having reached our mandatory retirement age is Pat Mullin, retired managing partner of the Northeast Ohio Practice, Deloitte & Touche LLP. Pat has been a member of our Board since 2013. I want to thank Pat for his service to the company and his commitment to our shareholders as well as to our customers, employees and communities. As you know, Deloitte & Touche became the company's independent auditors in 2015. Representing Deloitte is Mark Quarm, Lead Client Service Partner. We welcome Mark. 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. I'd now like to turn the call over to CEO Pat Bowe, who will now make a short presentation about the company's outlook for 2021. 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 few comments about last year, and share a glimpse of what we think 2021 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. In late 2019, we introduced a new vision statement to our employees. We want The Andersons to be the most nimble and innovative North American ag supply chain company. Due in large part to the pandemic, we were able to put this vision statement into practice during 2020 and responded well to the unique challenges we faced. As our business was deemed essential, we were able to keep our operations running, our employees safe, and find new and unique ways to serve our customers. We are pleased with our 2020 results given the negative impacts the pandemic had on our company. As we finished 2020 and entered the new year, we felt a shift in overall economic conditions, specifically in the ag markets. As you know, we released our first quarter earnings earlier this week, and we're very excited about the strong start to the year. All 4 of our business groups saw considerable improvement, and we believe opportunities in the ag supply chain will continue to be strong. Export demand should remain robust and should continue to support world grain trade and domestic ag markets. Our outlook on trade remains bullish as supplies are projected to be tight into the fall harvest. This environment should allow for significant merchandising opportunities. Our ethanol business should continue to benefit with improvements in gasoline demand, both from the pandemic recovery and seasonal-driving increases. Tight supplies are supporting ethanol prices, while strong demand for co-products continue to support our overall margin. High protein feed products and traditional DDG values have continued to rise, keeping pace with increasing commodity prices. We're also benefiting from an uptick in corn oil, [ these values ] driven by an increased demand for renewable diesel. Our Plant Nutrient business experienced a strong start to the spring fertilizer application season, and demand for conventional and specialty agricultural inputs is strong. Demand for our engineered granules and specialty liquids, agriculture and industrial products, should also remain high. In rail, while we believe we're past the low point in railcar demand and sequential lease rates have improved, recovery in this industry remains slow. Continuing strength in scrap prices will allow us to scrap railcars where it makes economic sense. But overall, idled cars have declined in North America, and we expect that the demand picture for railcars and repair services will continue to improve slowly. So in summary, we're excited about the opportunities we see in the current ag market. In last year's shareholder meeting, I said that I believe our company is in a good position to emerge stronger out of the pandemic and difficult operating environment. That is exactly what has happened. We completed a business reorganization, implemented further cost reductions, and are now well positioned for the opportunities we see in 2021. And now I'd like to turn it back over to our Chairman, Mike Anderson.

Thank you, Pat. And now we'd be happy to entertain any questions from the stockholders.

[Operator Instructions] There are no questions at this time. Mr. Anderson, I turn the call back over to you.

That brings our Annual Meeting of Stockholders to a close. Thank you all for joining us, and have a good day.

Thank you. The Andersons Annual Shareholder Meeting has now come to an end. Thank you for attending. You may now disconnect.