Good day, ladies and gentlemen, and thank you for standing by. Welcome to The Andersons 2016 Fourth Quarter and Year End Conference Call. [Operator Instructions] And now we'd like to turn the call to the Vice President, Finance and Treasurer, Mr. James Burmeister. Please go ahead.

Good morning, everyone. And thank you for joining us for The Andersons fourth quarter and full year 2016 conference call. For the purposes of today's discussion, we have provided a slide presentation that will enhance our talking points. If you are viewing the presentation via our webcast, the slides and audio should be in sync. This webcast is being recorded and it's supporting slides will be made available on the Investor page of our website at AndersonsInc.com. Certain information discussed today constitutes forward-looking statements and actual results could differ materially from those presented in those forward-looking statements as a result of many factors, including general economic conditions; weather; competitive conditions; conditions in the Company’s industries, both in the United States and internationally; and additional factors that are discussed in the Company’s publicly filed documents, including its 1934 Act filings and the prospectuses prepared in connection with the Company’s offerings. Today’s call includes financial information for which the Company’s independent auditors have not completed their review. Although the Company believes that the assumptions upon which the financial information and its forward-looking statements are based on are reasonable, it can give no assurance that these assumptions will prove to be accurate. This presentation and today’s prepared remarks contain non-GAAP financial measures related to the 2015 results. We believe that the adjusted pretax income attributable to The Andersons is a meaningful measure for investors to compare our results from period to period, reconciliations of the 2015 non-GAAP to GAAP measures will be found within the financial tables of our earnings release. On the call with me today are Pat Bowe, our Chief Executive Officer; and John Granato, our Chief Financial Officer. Pat, John, and I will answer questions that you may have at the end of our prepared remarks. Now, I will turn the floor over to Pat for his opening comments. Pat?

Thank you, Jim, and good morning, everyone. Thank you for joining our call this morning to review our performance in the fourth quarter and full year of 2016. I’ll also make some comments about our 2017 outlook at the end of our prepared remarks. 2016 was a year with significant challenges in many of our markets but also a year in which we made great progress in addressing underperforming areas and setting the path forward to improve the long-term performance of the company. We focused our attention on three main areas. First, we managed our portfolio. In the second quarter we exited underperforming grain assets in Iowa. In the fourth quarter we closed two cob facilities to consolidate and optimize the performance of that product line. And a few weeks ago, we announced our plans to exit the retail business. These actions are allowing us to focus our time and our capital on higher performing assets in areas with larger long-term opportunities. Second, we made great strides toward the productivity culture. We have streamlined the organization and improved operational efficiency to drive a leaner operating model. Early in the year we reduced senior corporate leadership positions and throughout the year we've been making improvements to our process and structure, as well as leveraging improvements in our IT infrastructure. Over the year, we reduced our workforce by over 400 or 10%. In the beginning of year we communicated a goal to reduce our run rate costs by $10 million by the end of 2017. I am pleased to report that we've surpassed this target a year ahead of schedule achieving over $10 million in run rate savings. Some of these savings are being reinvested in the business and some offset inflation with a balance falling to the bottom line. And third, we continue to make targeted investments in our core businesses. The extension of our ethanol plant in Albion, Michigan has progressed safely on time and on budget. We have started to achieve benefits from our IT investments in the Grain Group and we currently are configuring the Plant Nutrient Group IT Solution with an initial deployment targeted for late 2017. We consolidated our core business and corporate functions by moving into new headquarters building in September. This has provided a much-needed improvement to help make our employees more productive, as well as to attract and retain strong talent for the company. I will speak later in the call about our outlook for 2017 and some of the actions we're taking to improve our performance this year. John will now walk you through a more detailed review of our financial results.

Thanks Pat, and good morning everyone. In the fourth quarter of 2016, the company generated net income attributable to The Andersons of $10.1 million or $0.36 per diluted share on revenues of $1.1 billion. This compares to the reported fourth quarter of 2015 when our revenues of $1.2 billion generated a net loss of $47 million or $1.68 per diluted share. Adjusted 2015 fourth quarter net income was $5 million or $0.18 per diluted share. For the full year 2016 revenue was $3.9 billion about 7% lower than the $4.2 billion in revenue last year and was driven by lower commodity prices. Net income attributable to The Andersons was $11.6 million in 2016 or $0.41 per diluted share. This compares to the reported net loss of $13.1 million incurred in the same period of the prior-year or $0.46 per diluted share into the adjusted net income of $41.2 million in 2015 or $0.145 per diluted share. We have provided a slide in the appendix of this presentation that shows a walk from 2015 reported pretax income to adjusted pretax income. We next present bridge graph that compared 2015 adjusted pretax income to 2016 reported pretax income year-over-year for the fourth quarter and the full year. In the fourth quarter we saw improved year-over-year pretax income from the Grain Ethanol and Rail Group's. The decline in Retail Group results was driven by $6.5 million asset impairment charge related to the announced plans to close our four remaining stores, as well as $1.4 million of expense incurred to close the Sylvania, Ohio, store in the fourth quarter. Finally the Plant Nutrient Group's results included about $3.3 million of cost to close two comp processing facilities as we are consolidating operations for the product line to improve performance. Our full-year results are reflective…

Thanks John. As we look forward to our 2017 year, we expect our overall company results to improve significantly over those of 2016. More specifically will continue our focus on operating efficiency by lower our cost to server and thus improve the performance of our core businesses. We’ll continue to look to improve our portfolio via asset optimization and investment in our core and targeted growth areas. Rail continued to feel the impact from lower rail traffic in 2016. So far in 2017 carload movements and railroad efficiency data suggested that we may be seeing the bottom of this downturn. We expect our utilization rates to continue to feel the impact of last year's lower traffic through mid-2017 after which we expect conditions to improve. Our railcar fleet is highly diversified in terms of equipment types, customer base, commodities carried and the lease term expiration and as such is well-positioned for solid performance over the rail cycle. Ethanol 2017 is off to a better start than a year ago. However Q1 margins are off substantially from Q4 as is typical for this time of the year. The strong margins seen in the fourth quarter have fallen off in the New Year. Gasoline demand has been near five-year lows in January. It has started to rebound somewhat here in February. As we entered the quarter the group has head to a little more than half of its first quarter production before margins began to decline. Today we're experiencing weak spot margins and continue to face challenges from vomitoxin issues around our Eastern plants which reduces the value of distillers dried grains. Overall we believe our ethanol facilities are well-positioned geographically with efficient technology which allows the group to perform well 2017. The group continues to focus on driving operational efficiencies, achieve…

[Operator Instructions] And our first question is from the line of Farha Aslam with Stephens.

Hi, good morning. Could you talk about the vomitoxin issue in the fourth quarter and kind of how much that cost you, and how long it will take the ethanol group to work through it and how we should think about it for 2017?

Sure, did you address that to John or to me for I didn’t wasn’t clear, but either way we’ll get started but - one of the challenges we faced this fall in vomitoxin and in some of the Eastern states where our plant - three plants are in the East as you know really hurts our DDG returns because not only it impacts the corn inbound as we have to kind of shuffle around to get the right corn in position for our ethanol plants, but also it resides in the finished product in DDGs and thus creates a discount. I don’t think we want to give a specific number, but as for the DDG net returns of percent of corn as maybe you’d see in the Western corn-belt so and it’s something that stays with you for a while. Because that's what was growing in that region its body it’s in every single grower, nor every single state, but it has impacted our three Eastern plants this year.

That's helpful. And then, if we look at ethanol in broader context. Could you share your thoughts on the recovery of ethanol as we progress through the year and your thoughts on exports?

As you know we had a very good export year last year and signs are pointing for that to continue to be $1 billion up to $1.2 billion in U.S. exports. We hope we continue to see good free trade in ethanol we’re going to be positioned well from a corn cost and plants across the country to be able to supply in active export market. We had a very strong finished in the fourth quarter that’s tailed off as I mentioned here in January quite dramatically but little bit lower driving than we had seen historically which was disappointing. But gasoline prices are relatively low and we should see a return to a good utilization rates for ethanol as we get to the spring and summer driving season. So that gives us some optimism.

That's helpful. My final question has to do with the Grain Group. In terms of the recovery and earnings for 2017, how should we think about the harvest in your area and the extra carry on wheat as we model the Grain Group?

I think what you were pointing that for us - we had a good harvest in our area that’s probably wouldn't be as bigger bumper crop as we saw in some other Western states but this was a big recovery in Michigan, Ohio, Indiana areas tributary to us. We had a very good harvest, a tremendous bean yields and we took in a much a stronger flow of beans at harvest time with farmers selling beans at harvest. Corns has been a little more quiet we haven't seen quite the uptake in basis from the fall here to early winter, but storage rates are good and there is some carries back in the market which bodes well for us for the long-term. And we do see in the traditional states like we mentioned there is 90 million to 93 million acres planted in the corn states with a 257 corn bean ratio and a $4 new crop corn right now. We think corn will still be planted in good fashion across a corn belt. We could see spring wheat be reduced in the states that are on the fringe to see more switching to soybeans with a good cash soybean price. So I think that the point is we want to stay really focused on our operations in grain and look for opportunities to elevate and make margin later in this year.

And the carry in wheat, are we still going to have that extra?

Wheat will still be a surge we talked about that length on previous calls, so we’re still in the position with various storage rate income for wheat. We still continue globally to have ample wheat stocks around the world and wheat’s a little bit on the glut situation. So we think will be able to still earn storage income on wheat throughout the year.

That’s helpful. Thank you.

And our next question comes from the line of Sandy Klugman with Vertical Research. Please go ahead.

Thank you. Good morning. In Plant Nutrients could you discuss the composition of your forward order book as it relates to the demands split between your specialty and commodity of fertilizers. And then, with the stabilization we're seeing in the commodity fertilizer space are you seeing better margin opportunities for Kay Flo and more willingness on the part of dealers and growers to lock in at an earlier point in time?

Sandy, it’s John. I would tell you that our order book is a better this year than it has - than it was last year at this time and we are starting to - and continue to see farmer interest. As you know particularly with the Kay-Flo products and the low-salt liquid fertilizers and the demand in the peak season is Q2, we have seen some demand for those products but I think that the story will really be told here over the next six weeks.

Okay, great, thank you and then on ethanol, the 1.2 billion gallon export projection that you have, how much, or is there anything assumptions you're making around Chinese demand for ethanol in 2017?

Yes it's a good question and I said 1 billion to 1.2 billion so the range there. China would be the question mark right so there had been a good importer to the grid. I guess you could look at it on a positive side saying if gallons were restrained from shipping into China and that went to from Brazil origins maybe the U.S. would then plug-in to another place and may be Brazil will satisfying that will be the cup half full answer. If we had a complete blockade on ethanol shipments to China obviously that would hurt the export numbers some.

Great. Thank you very much.

And our next question comes from the line of Ken Zaslow with Bank of Montreal.

Good morning, everyone. Just a couple of questions. One is, what is your view on the production side of ethanol and why do you think it's increased as much as it has? Second part in terms of ethanol is, what's your view on E15 and acceptance of that through the system?

Ken I think a lot of people have done what we have had, we all focus very much on efficiency and how we can get the right gallons produced and you’ll see when margins are good we’ll really focus on production you can kind of shape your production with enzyme use and how much you want to optimize production. You’ve also seen when prices turned down we go the other way and we go for a cheaper production route which maybe we don't get as much efficiency and production. So I think the market responds to SMD somewhat which is probably a good thing overall for the industry. But there has been investment in new technologies and optimizing the assets that are in the industry.

I would just add on you know low corn prices have helped contribute to that and people are running but I think the key is what Pat has said people have made these marginal investments that increase yield at the facilities and production levels.

And you saw that this year we made another record production over last year and that comes from debottlenecking and optimizing our asset. So we will be expanding as you know the Albion facility we mentioned so that will come online at the end of the second quarter.

As far as the second part of your question around E15 uptake I think to see that we’re really going to need more infrastructure build out, but as the older cars come off the road and the potential liabilities associated with ethanol related to older cars diminish the economic should take over and we should see E15 get built out we’re already seeing pretty good uptake from E85 we think it's going to take time for that infrastructure to get though.

So what’s your general view on the supply demand dynamic do you think we’re going to be in state of oversupply you think we’re going to be balanced by when and what’s the drivers?

Yes, let me right now we’re in a state of oversupply I mean every winter it's a very difficult time in January no one wants to shutdown a plant driving miles or down, they were down harder than we thought for January so that was disappointing. But I think as we get into the spring season we said we should see a more balanced supply and demand picture. And hopefully we can continue to see these stable exports, which is a nice short in the arm for the industry.

And then my last question is, in terms of Lansing can you talk about when that will actually turn and what the outlook for that is?

Ken obviously they had a pretty challenged year and we do expect Lansing to improve starting now in 2017. So we typically don't give a ton of detail on Lansing but we are expecting improved results in 2017 from Lansing.

And driven by what though just making sure I mean I’m not?

A couple things for Lansing they took some pretty good shots last year they were one of the bigger DDG exporters out of the country particularly targeting to China. So that they took some pretty tough shots on that in the middle of last year so that hasn’t helped them. They also have a segment of their business there is fracking sand and elevates frac sand and that business was tough some of that has come back especially in the Permian so they have seen better performance there. And they’re like us or others in the Midwest grain business where some of the margins were squeezed and so if we see some recovery in elevations and storage that should help them in the Western grain belt.

And if I could just add that relative to both frac sand and DDG situation they adjusted their operating model to account for those and those issues we believe should be behind them in 2017.

Great, appreciate it. Thank you.

Thank you. And our last question is from the line of Heather Jones with Vertical Group. Please go ahead.

Good morning. Sticking with the Lansing question, you're saying that because we've not only had China essentially disappear from the market but also Vietnam. So you're saying they've adjusted their model so they could perform better in 2017 despite the absence of those countries from our export volumes?

Exactly so and they've obviously would hurt them around the year was when China did some walking techniques on the DDG exports and that hurt them at the time. They won't take that same shot this year and have had to react and move their export channels to different markets maybe the total volume would be quite as good. So overall we expect them not have the kind of negative shocks that they had a year ago.

Okay. And then going to the vomitoxin issue. So, it sounds like you clearly said it was a negative but have you all not been able to get a lower price on the corn you're buying to offset the reduced realization on the DDG's?

Obviously you have the more important thing is getting corn supply to your plants which is the first thing. So we have to adjust and take it from would be nearby tributary corn suppliers may be we’ve take it from a further out location. So the first negative Heather is that, it impacts the corn price we buy so that's why we mentioned that. Also there is a discounts involved in vomitoxin across the industry, the bigger issue is though the discounts to DDGs and that does impact our net income at those three Eastern plants and that will be with us for some time. So that - overall DDG markets if you took national averages are down from where they were a year ago mainly related to China. Our Eastern plants are further impacted somewhat again it’s not every single low but it's impacted by the vomitoxin that is present in that market.

So, sounds as if you're saying demand for corn is strong enough that you're not able to get the price discount on that vomitoxin's impact of corn to offset the DDG's?

No I think - what we’re saying is that, as we draw in the areas around the Eastern ethanol facilities we need to screen corn and make sure that we try and limit the vomitoxin that comes in that corn through the door that in and of itself reduces the available clean corn for our ethanol facilities and despite that we’re still having and are buying some vomitoxin, some corn with vomitoxin but net-net it’s not a positive for us because of the reduced availability of what I’ll call vomitoxin free or virtually vomitoxin free corn.

Okay, that makes sense.

Does that make sense?

It does. On the VSR. Let's just say that the numbers that I'm looking at it seems like you've gotten some narrowing basis in the wheat market but yet it hasn't been enough to take you away from the VSR. So you're still getting these two ticks but it seems like you're also getting some appreciation on the basis. Which, am I evaluating the market correctly and if so, should we anticipate wheat to be a meaningful contributor to your grain earnings in 2017?

I think you're right around hook there. The important thing is look at the spreads right, so we’ve continued to keep reasonable carry in the market for wheat, mainly that as I said glut of wheat. The bad side of that is there isn’t been a big demand for wheat so we haven't seen an appreciation on premiums to really drive elevation to makes some margin on wheat shipments here domestically. So we’re kind of the whole market is sort of working through a glut of supply. That’s not bad when it comes to making carry but it doesn’t allow you to make basis appreciation. So it’s little bit of a plus and a minus. In general having wheat in storage we can earn storage income and you can factor that into our earnings. We'd like to see some elevations come around for wheat where we can make some blending margin and shipping margins.

Okay. I mean if basis appreciation is better than last year because it seemed like it was to me but maybe misinterpreting something.

I think it’s early to tell quite frankly it's been quite quiet, so let’s just stay tuned on that to later in the year.

Okay. And my final question is, you made a comment about asset optimization. So you all have exited retail, you divested the Iowa assets. Which areas of your business do you think still needs some optimization?

I think it's a good point. Just to clarify we’re exiting retail, we've announced it and we'll be closing that out through the end of the second quarter of this year. The Iowa assets have been sold and we're looking at all aspects of our business and I like to maybe talk a little bit our productivity initiatives and something I thought it brought to the company when we got here is one simple example. We focus a lot on safety and maybe this isn't something that financial analyst pay a lot of attention to but a safe company is a more efficient company and a more profitable company. We've reduced for the whole company 42% in lost time injuries last year and at 32% reduction in reportable injury. So we've got a major improvement in safety and we're implementing a behavioral based safety program across the whole company. I am saying that an example of how you can show continuous improvement. And on that continuous improvement on the $10 million pretax run rate reduction was our target that we had a year early, they're coming in various ways. For example our SAP people productivity in grain was almost $1 million by taking 20 people out of processing, the back office for grain. We do it in the plants like in Plant Nutrient we use flex labor between grain sharing with Plant Nutrient took out $0.5 million, saved $700,000 on chemical processing changes and standardization in the plants. We got another $550,000 on throughput improvements in our granulation facilities. My point is, we’re looking at opportunities to optimize our facilities by reducing costs and trade efficiency and a whole productivity culture that makes the whole machine a little faster. And so that's a big part of what we’re focused on. There may be opportunities for us to optimize an asset and if an asset doesn't, we can get it fixed that isn't fitting our portfolio we would look to sell it. We feel pretty good about where we’re at right now. So it's really more about fine-tuning and we’re not talking about any major landscape change like we made with the decision of exiting retail. That was a mouthful but I hope that puts it in context for you.

No, it’s very helpful. Thank you so much.

And ladies and gentlemen this concludes our Q&A session for today. I will turn the call back to James Burmeister for final remarks.

We want to thank you all for joining us this morning. I also want to mention that the presentation and slides with additional supporting information will be made available later today on the Investors page of our website at AndersonsInc.com. Our next earnings call is scheduled for Thursday, May 4, at 11 AM Easter Standard Time to review our first quarter 2017 results. We hope you’re able to join us again for that call. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect.