Andersons, Inc. Q1 FY2024 Earnings Call

Good morning, ladies and gentlemen. Welcome to The Andersons 2024 First Quarter Earnings Conference Call. My name is Rocco, and I will be your coordinator for today. As a reminder, this conference is being recorded for replay purposes. I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed.

Thanks, Rocco. Good morning, everyone, and thank you for joining us for The Andersons first quarter earnings call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation from our webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website shortly. Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements. Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance, and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially due to many factors described in the company's reports on file with the SEC. We encourage you to review these factors. This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of GAAP to non-GAAP measures are included within the appendix of this presentation. On the call with me today are Pat Bowe, President and Chief Executive Officer; Brian Valentine, Executive Vice President and Chief Financial Officer; and Bill Krueger, Chief Operating Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Pat.

Thank you, Mike, and good morning, everyone. Thank you for joining our call this morning to discuss our first quarter results and outlook for the remainder of 2024. First quarter results were solid for the company and overall, very comparable to last year. The mix of our results is a bit different with a trade down against last year's record first quarter and renewables in Nutrient and Industrial both generating favorable results against 2023. I want to thank our teams for their hard work in producing these results in transitioning markets with a continuing focus on operating safety. As expected, Trade had a slower start to the year as farmers have been reluctant to engage in forward sales at these lower price levels. Coupled with this is softer global demand for U.S. crops as worldwide supply and demand has become more balanced. These factors impacted both our physical grain assets and our merchandising teams. Our premium food and pet food ingredients business saw a significant year-over-year improvement. This is a smaller but growing portion of our Trade business, and improvement comes from both organic growth and two recent accretive acquisitions. Operating performance in the Renewables business was very strong and driven primarily from our ethanol plants. We had record first quarter production and efficient operations benefiting from lower natural gas prices and solid ethanol yields. The ethanol crush hedges the team executed during the fourth quarter also helped our ethanol margins. We were successful in increasing volume in our renewable diesel feedstock merchandising business, but have been challenged by compressed margins on industry fundamentals. Our feed co-product values were also weaker due to the overall lower commodity price environment. In our Nutrient and Industrial business, we experienced increased margin and volume in our agricultural fertilizer product lines during the seasonally slow quarter. Results were significantly improved from the first quarter of 2023. Brian will now cover some of the key financial data. After that, we'll be back to discuss our outlook for the remainder of 2024.

Thanks, Pat, and good morning, everyone. We're now turning to our first quarter results on Slide #5. In the first quarter of 2024, the company reported net income attributable to The Andersons of $6 million or $0.16 per diluted share. This compares to a net loss of $15 million or $0.44 per diluted share and adjusted net income of $7 million or $0.20 per diluted share in the first quarter of 2023. Adjusted pretax earnings were $7 million for the quarter, which was comparable to the $8 million in 2023, with Renewables and Nutrient and Industrial both showing improvement, offset by a year-over-year decline in Trade. Adjusted EBITDA for the first quarter was $51 million compared to adjusted EBITDA of $55 million in the first quarter of 2023. Trailing 12 months adjusted EBITDA totaled $401 million. Our effective tax rate varies each quarter based primarily on the amount of income or loss attributable to noncontrolling interests. We recorded taxes for the quarter at a 9% effective tax rate. We now expect a full year adjusted effective tax rate between 18% and 22%. Next, we'll move to Slide 6 to discuss cash, liquidity and debt. We generated cash flows from operations before changes in working capital of $48 million in the first quarter of 2024, demonstrating our ability to consistently generate strong operating cash flows in changing markets. Our cash flow generation, combined with lower commodity prices and delayed farmer engagement, resulted in negligible short-term borrowings at the end of the quarter. Next, we'll take a look at capital spending and long-term debt on Slide 7. We continue to take a disciplined, responsible approach to capital spending and investments, which we expect will be approximately $150 million to $175 million for the year, roughly half of which is typically related to maintenance capital. Our long-term debt to EBITDA is currently less than 1.5x, which is well below our stated target of less than 2.5x. We have a balance sheet with significant capacity to support growth investments that meet our strategic and financial criteria. We continue to evaluate growth projects in our pipeline, including additional M&A opportunities. Our project pipeline has been increasingly active over the past few months, and we are excited about potential opportunities to execute on additional growth projects, including the recently announced acquisition of Reed and Perrine, a bolt-on acquisition expanding our geographic reach in our turf business. Now we'll move on to a review of each of our businesses, beginning with Trade on Slide 8. Trade reported first quarter pretax income of $6 million and adjusted pretax income of $9 million, compared to $24 million in the same period of 2023. We had mixed operating results in our Trade business portfolio when compared to our record 2023 first quarter. As Pat mentioned, aggregate results of our merchandising businesses were solid, but down in a backdrop of a less dynamic U.S. grain market with lower commodity prices and less volatility. In addition, given recent geopolitical unrest, we have intentionally and prudently pulled back on activity in certain regions. The financial results for our grain assets were relatively consistent year-over-year as domestic producers are still hesitant to forward sell due to lower commodity prices, combined with limited basis appreciation to start the year. Our assets are well positioned once the grains are brought to market. Investments in growth projects, including acquisitions and additional food corn capacity, led to improved results in our premium food and pet food ingredient businesses. Trade's adjusted EBITDA for the quarter was $24 million compared to $44 million in the first quarter of 2023. Moving to Slide 9. Renewables had a very strong first quarter, generating pretax income attributable to the company of $16 million and $13 million on an adjusted basis compared to $6 million in the first quarter of 2023. Our current quarter earnings doubled year-over-year due to stronger ethanol margins and favorable ethanol crush margin hedges executed during the fourth quarter. Production facilities continued to operate efficiently with record first quarter production and lower natural gas prices. Renewable diesel feedstock volumes continue to grow, but we are seeing margin compression on industry fundamentals. Feed ingredient demand is also strong, but at a lower value as it is tied to the price of corn. Renewables had EBITDA of $35 million and adjusted EBITDA of $32 million in the first quarter, compared to $22 million in the first quarter of last year. Turning to Slide 10. The Nutrient and Industrial business reported a first quarter pretax loss of $2 million compared to a loss of $10 million in 2023. Overall, fertilizer prices stabilized in the seasonally slow quarter. The improvement year-over-year was driven by increased volumes and margins in core agricultural product lines. Nutrient and Industrial had EBITDA of $7 million for the quarter compared to an EBITDA loss of $1 million in the first quarter of 2023. And with that, I'll turn things back over to Pat for some comments about our outlook for the remainder of 2024.

Thanks, Brian. We remain positive about our 2024 outlook against a changing market environment. While the last few years brought us volatile demand-driven markets, a global balance of supply and demand will allow us to demonstrate our ability to deliver good results in carry markets with more focus on the value of our grain assets. We continue to expect a sizable U.S. harvest, but acknowledge pockets of weather-related planting and fertilizer application delays due to wet weather, which is typical in this spring season. Our Trade business outlook remains solid, although strong levels of global supply and reduced prices have caused both farmers and end users to reduce their forward contracting. Markets have recently begun to move higher, which could bring more volatility into the mix. At this time, we continue to expect a normal growing season. In February, we talked about our lowered expectations for wheat storage income with the large purchases from China during the fourth quarter. Subsequent cancellations of a significant portion of those wheat purchases from China have resulted in a return of carry to the wheat markets, leading to a more positive outlook. We're also very pleased with the growth in our premium food and feed ingredient products and look for that to continue to both grow organically and through acquisitions. Our Renewables segment looks to build on their outstanding first quarter, our second best Q1 ever. The Renewables business is an important part of our growth strategy, and we continue to make progress toward lowering the carbon intensity of our ethanol. This includes enhancements at our production facilities as well as supportive farmer programs that should position us to acquire lower carbon corn as a feedstock in the future. The outlook for this business remains strong. Improving and maintaining our four production facilities for optimal efficiency is crucial to us. After the quarter end, we completed all four maintenance shutdowns and successfully returned to full production. Our renewable diesel feedstock merchandising business is also an important growth engine for the company. And while we increased volume in the quarter, margin compression reduced the year-over-year result. We believe that with additional renewable diesel refinery demand expected in 2024, volumes and margins will stabilize. The Nutrient and Industrial business outlook also remains positive as we anticipate solid demand for the ag fertilizers and specialty liquids that we supply. The spring planting season is critical to this business and it is typical we have pockets of our geography that have experienced wet weather. We're also ready to support our customers with both input supply and application services when needed. We continue to work on operational improvements in our turf business and recently closed on the acquisition of Reed and Perrine, a turf fertilizer manufacturer located in New Jersey that expands our geographic reach to the East Coast. So with our strong balance sheet position and a desire for growth, we're excited about significant opportunities in each of our three segments. We have a number of organic growth initiatives as well as a pipeline that is very robust. With changes in the ag markets, we're also focusing on organic and acquisition opportunities that should help us achieve our 2025 run rate EBITDA target of $475 million. We'll continue to maintain and maximize our response and our decisions that benefit our customers and maximize shareholder value as we execute on growth opportunities within our stated strategy. With that, I'll turn things back over to Rocco, and we'll take your questions.

Today's first question comes from Ben Bienvenu with Stephens.

If I think about, Pat, kind of all the puts and takes that you laid out in the Trade business, the risks from geopolitical uncertainty and maybe the pullback associated with that, a more balanced, less volatile backdrop. But now a weak carry in the market, large crop here in the U.S. Help us think through net of all of those factors, how you're thinking about for the remainder of the year, maybe a year-over-year comparison of kind of Trade contribution of pretax earnings to the business?

Sure. A very good question, Ben. I'll get it started and then turn it over to Bill who knows it better than I do. I think the interesting thing to think about us is we talk about the balance of our portfolio. So the good news for us is the carry is coming back to the wheat market. As you know, historically, we're very well positioned for storage of soft wheat inventories in our eastern assets, and that's going to be a nice income source for us, a traditional way of earning carry income at our elevators. But some of the volatility that we had a year ago with really tight inverse markets, we took advantage of that with some of our point-to-point trading that's not there this year, which asks us to do something quite different. So we just haven't had a lot of farmer engagement selling at lower prices or even customers wanting to book ahead forward. But that will change as we go through the crop year. I think the farmers see what's coming. With their planting, they have a little more confident position. And if we have a little pop like we've seen recently, we'll have better farmer engagement. And we'll just be able to work through these merchandising throughout the course of the year in a different fashion. I'll turn it over to Bill, who can elaborate further.

Ben, the only thing I'd add to what Pat had commented there is, in Q1, you had kind of a combination of items, right? You had lower prices than the producers had been used for. The end users were being rewarded by waiting. So we just saw a lot fewer transactions occurring. Now that we're getting into our corn planting and we've had this recent rally, we're seeing a lot more activity pick up. And as we've talked about before, your end users currently, at least in the U.S., are doing very, very well. So we don't anticipate any changes there. And assuming we end up with the expected fall crops, we actually feel like we're positioned really well. We're going to see less volatility likely in 2024 as we look forward today, which will not benefit our merchandising businesses. But at the same time, we have a lot of capacity that we're able to accumulate on a cheap harvest basis and be able to trade that into the marketplace as the market dictates.

And maybe just add one more thing to that. I know you know this well, Ben. But as primarily domestic suppliers, we are not so much tilted just towards exports; our big export pool which we don't have right now. We really focused on those beef, swine, poultry customers as well as ethanol, flour millers, and other food and pet food businesses. So the diversification we've done over the last several years, especially in the food and pet food area diversifies our portfolio domestically, and we work closely with those customers, and we expect that to be a nice support for us.

Okay. Very good. Thinking strategically about capital allocation and kind of positioning of the business, you guys have sort of been swimming upstream, I suppose, in accumulating U.S. domestic grain assets. Some of the larger competitors of yours have been selling or leaning out of asset exposure. Why does it make sense for you guys to allocate capital to those businesses? How are you doing it differently? And why is it attractive to you in a backdrop where some of your competitors are moving away from that business?

I'll take that, Ben. If you look back over the last five years, in fact, we've actually trimmed our asset portfolio and have been able to utilize our remaining assets very positively. The other difference that we have versus some of our competitors, as you mentioned, is we believe that we have the connection from the producer, all the way through to the end user with our ability to manage logistics, manage risk and be able to be a good supplier to those customers. So we see value in having the assets that we do have, in being able to work with the producers. We'll talk later on some of the regenerative ag products that we've been working on the last couple of years. And so we see our fit in that ag supply chain across North America.

Maybe to add on to that, too, Ben, just to echo what Bill said, we did modify our portfolio. We sold Champaign, Illinois, which is one of our biggest assets. And previous to that, we sold assets we had in Tennessee and Iowa. So we had kind of shrunk our footprint a little bit in grain assets. A lot of the bolt-on acquisitions that we've done have been in pet food and investments we made into food-grade corn. So we're kind of working on those parts of the portfolio or niches where we could differentiate. And Bill mentioned, now we're trying to position ourselves well with regenerative ag and working around our ethanol plants, how we can be a low-carbon provider and working with growers on that. So it's kind of just grain assets for grain assets' sakes isn't our focus. It's really about how do we broaden our portfolio that give us higher margins.

Okay. Very good. Very helpful. My last question, if I could ask one more just on the ethanol business. You had kind of inkling of a positive outlook a little bit there. Can you talk about kind of what your expectations are as we enter the summer driving season with respect to where we see days of inventory, export demand and kind of production across the industry?

Yes, I will start with that one also, Ben. If you look at Q1 exports up 25-plus percent year-on-year, we believe that calendar 2024 ethanol exports will see an increase over 2023. We expect that to continue. As everyone knows, we did get the waiver passed on E15. So we'll see that continued demand. And we really view our ethanol plants as some of the best-in-class and are able to continue to manage really strong results through production capabilities, our risk management and kind of more importantly, being able to really target the opportunities that we see towards the end of this year. And so we do feel pretty positive about the renewables section. Pat hit on our renewable diesel feedstock business continues to grow in volume. Our customers there have seen margin compression due to the slow uptake or ability for some of the RD plants to come online and run at full capacity. But we continue to see our value in that part of the supply chain, continuing to bring this growth in volume.

And maybe over the long run, I think as we've seen in the news, the recent announcements in the government regarding regenerative ag and the outlook for programs for sustainable aviation fuel down the road. Our big focus for us is positioning our ethanol plants to be low carbon intensity, big scale, high-volume quality assets that can be important assets to supply the sustainable aviation fuel market. And maybe, Bill, you want to add some more to that?

We have been working diligently for over 18 months to ensure we have a pathway to achieve 45Z. Our geological footprint in the East is strong, and the pipeline is located very close to our Denison, Iowa plant. We believe we have a viable path for all our ethanol plants. Some are further along than others, but we are selectively choosing the pace at which we want to advance and focusing on the plants that will provide the greatest value in the shortest time. We are optimistic about the opportunities ahead.

And our next question comes from Ben Klieve at Lake Street Capital Markets.

I'd like to continue this conversation a little bit here with the ethanol to jet opportunity. It's interesting that there's a lot of different takes on this opportunity, it seems very wide ranging. And I'm curious, you talked about your kind of enthusiasm for the news out of the administration last week regarding regenerative ag practices supporting the ethanol to jet opportunity. I've also heard a lot of thought that this isn't really going to be practically implementable for some time. Do you really get the sense that your farmers within the footprint of your existing ethanol facilities are going to be implementing all the various initiatives that are encouraged over the next few years? Or is that something that they're pretty indifferent or just not going to participate in?

Well, I think all producers will be focused on what they can do to enhance their profitability. The negative comments that you have likely heard from the administration's policies are primarily related around bundling, which means that you have to use all three practices of enhanced efficiency fertilizer, cover crop, or no-till agriculture. We hope that will be unbundled in the 45Z initiative. And geographically, whether you talk about the practices will have different impacts in each of our regions regarding which of the three the producers can use. But where they're able to apply those three optionalities, I believe that they are going to utilize them, and they're also going to continue to look at other practices and risk management that we've been pretty good at providing over the last several years. So in general, bundling is going to be a challenge if it's not decoupled in the 45Z, but our belief today is that it likely will be.

And maybe, Ben, this is Pat. It's a first goal here, right? So for the first time, carbon modeling schemes are being recognized by the administration, and farming technologies to reduce carbon intensity are part of the program. So it's good to have that out there in writing. And the use of the GREET Model, again, there are several of those, but having the GREET Model used for federal tax policy, it's the first time we've seen that. We feel that's a good step, right? And industry associations and grower associations will be working with the government trying to get the next bill to go around this to maybe be more friendly to applications at the grower level. I think the simple strategy for a company like The Andersons, we really like our three eastern plants, how they're positioned, and we like the geology that they have to do potential for carbon capture and utilization at our sites, and we want to take advantage of that. So those who have the biggest, most efficient, modern ethanol plants with the lowest carbon intensity scores will be the winners, and that's our focus. And so this isn't an overnight thing that all of a sudden everyone is going to be producing ethanol to jet tomorrow; it's going to be a journey. You got to take the steps one at a time to be positioned for success. And that's where we're positioning ourselves.

Got it. Very helpful. And Pat, you touched on kind of my follow-up question regarding the carbon sequestration out of your three eastern plants. Do you have any material CapEx included in that $150 million to $175 million number associated with that type of initiative?

Yes. So we mentioned before, and Brian can chime in here. So we said about 50-50 of our capital expenditures would be on base spending versus M&A, and we project that to be the same. That includes some plans for carbon capture and utilization at our ethanol plants.

Yes. I believe some of that will happen this year, and I can also see it continuing into 2025 and even further.

And that's part of the point. These things don't happen overnight, right? These involve permitting and working with neighbors, and then you got to buy the equipment, then you got to get it installed. So we're working through that process with some really good advisers, and we'll be confident to be able to announce something when we have those really firm plans in place.

Got it. No, that makes sense. Yes, nothing is easy, and we'll look forward to updates here in the coming quarters on all those initiatives. Turning to the quarter, I have a specific question about the Trade group. I'm wondering if you can isolate the impact of the international business that you phased out for geopolitical reasons. Can you discuss the magnitude of the EBITDA contributions from that business last year and the outlook for reentering those markets later this year?

Yes, I'll take that one. The change year-on-year is somewhere in that $5 million to $10 million EBITDA range. And our focus is on making sure that there is ample U.S. dollar liquidity in the markets that we're supplying. And so we feel like it's in the best interest of the company and the shareholders to wait until some of that liquidity comes back before pursuing more opportunities. We have an ongoing business. The business is operating well today. We're just being very focused on the risks that we're willing to take.

And maybe I could add to that, Ben. I think it's about just a shift of focus within geographies, right? So our operations have been very successful. We set up operations in Romania that have gone very well for us from an origin standpoint. Just with the challenges in the Black Sea and Red Sea, we kind of want to go slow. As you know, last year, we mentioned we had some currency struggles with Egypt, so we want to get that back under control. So we'd rather just be very prudent with our approach to risk there, but we still think that is an opportunity for growth, especially long-term growth for us.

Got it. No, that makes sense. Very good. And then lastly, curious if you can elaborate a bit on your outlook here for kind of first half results out of the N&I segment. Last year, I know there was kind of a big seasonality shift from Q1 into Q2. Can you kind of frame the kind of first half expectations for that segment from last year to this year?

Yes, Ben, I can do that, certainly. I think as you said, right now is kind of peak season for that business. Second quarter is really tends to be the strongest quarter for our Nutrient and Industrial business. And so when we look at the entire first half year-over-year, I would probably expect it to be flat year-over-year to maybe down slightly. I think as we speak, we're probably seeing a little bit lower volumes, but higher margins year-on-year.

Just want to follow up a little bit on the Nutrient side. We've covered, obviously, the Renewables, but just kind of the investments or CapEx that you're looking on in the Nutrient and Industrial side. And are you looking to kind of continue to expand the pet food niche that you've built out nicely from that standpoint?

Yes. Again, Scott, welcome to the call. Thank you for being on with us today. Yes, we mentioned we added a small bolt-on acquisition in our turf business on the East Coast, Reed and Perrine in New Jersey. That's a geography in the East Coast and Mid-Atlantic we hadn't addressed before. So that's a nice geographic move for us. We'll look at those opportunities. It's really geography by geography. And I think the overall market of M&A, and I can't speak to all industries, but it feels like things are a little bit better. We're seeing more things pop up coming from bankers and in the pipeline in general. I don't know if that's a higher interest rate environment or whatever, but I think there's going to be some opportunities for us to deploy capital wisely. We want those to be within our strategies and fit right within our core business. One of those plays, as you mentioned, was pet food and specialty food ingredients that we've been able to grow the last couple of years. Again, those have been more small to mid-sized bolt-on acquisitions. And those tend to work well for us. We've been doing some additions of technology and equipment in our plants to support customers. That's a real plus as well as investments we're going to be making in carbon sequestration we talked about in ethanol. So there's a good opportunity for growth that fits within our strategy.

Yes. Scott, this is Brian. Just to clarify a little bit. I know you had asked specifically about Nutrient and Industrial. That business, if I think about our growth capital, that business will probably allocate, call it, $10 million to $15 million of growth capital to that segment this year. Pat mentioned, a lot of those projects get into automation and improvements in our plants, things that maybe didn't pencil a few years ago that now do make good sense. And just to clarify that the pet food ingredient business is also a place that we're allocating capital. That actually rolls up under our Trade segment. And we have done a couple of acquisitions in that space with ACJ and Bridge over the past 12 to 18 months. So just wanted to clarify that as well.

Got it. That's helpful. Just as a follow-up, you're committed to achieving your long-term target of $475 million by 2025. The growth is expected to come from internal investments and expansion through mergers and acquisitions. It sounds like, Pat, you believe the merger and acquisition side may improve in the upcoming environment, so could you walk us through how you plan to bridge to that target? You mentioned many initiatives, but could you outline the priorities of those initiatives to meet those targets?

Yes, I'll start with that, and then Pat and Bill can add their thoughts. To reach the $475 million EBITDA run rate target by the end of 2025, we will definitely need to pursue M&A. We've indicated before that we believe it will be a roughly equal mix. There's a noticeable increase in M&A activity in our pipeline, and we are closely evaluating these opportunities. The positive takeaway is that these opportunities span all segments that align with our core business. We've seen strong activity, and we hope valuations will align so we can meet our return expectations. Overall, I would allocate a larger portion to renewables, followed by trade, and then fertilizers as a way to frame the larger picture. Pat, do you want to add anything?

No, that makes sense. And like we said, Scott, we can't achieve that number by organic alone. We'll need to do some. We've passed on several deals over the last three years that were just a little too pricey. I think maybe that will change somewhat in this environment. We have a strong balance sheet, and so we're well positioned to move on that. And especially ones that fit in our core competency that we can integrate, maybe capture synergies. So those are the areas we're focused on.

Great. I have one final question regarding the agricultural cycle. You've mentioned it before, but we've noticed some fluctuations in commodity prices with a slight increase recently. Overall, farmers' income remains strong. Are you experiencing any additional pressure related to the agricultural cycle, or do you feel well positioned in the eastern plants and the renewable sector, particularly in ethanol? I’d like to hear your perspective on the current state of the agricultural cycle as we look ahead to the next few years.

I'll start and then Bill can add more. We're moving past the peak we saw at the beginning of the Ukraine war when commodity prices surged. There has been a significant production response in South America, and we’ve had favorable crop conditions in the U.S. for the past couple of years. This seems to be a typical cyclical adjustment following high pricing. It's beneficial for our ethanol business that we are now seeing some pressure on feed values as corn prices drop. It appears that we've reached a low point and have seen a slight rebound recently. The domestic demand across all sectors is quite promising, although exports are lagging behind. As Bill mentioned earlier, the outlook for ethanol this year is really strong, which gives us optimism. Overall, this doesn't feel like a market crash after a spike; rather, it seems like a return to normalcy. Growers, while not enjoying the peak income from two years ago, are still financially stable. Therefore, the overall outlook for U.S. agriculture is positive.

Yes. The only thing I would add to that is the ag cycle is going to be tied a lot more to the global ag market's supply and demand. And so we still have very strong corn and bean carryouts. Wheat's a little tighter, but we've been able to understand that over the last two or three cycles and how that's going to work. But I do think that the one opportunity here for the producers is going to be tied to their ability to generate incremental farm income from whichever programs they choose to participate in. And I think that will help soften the landing over the next 12 to 18 months.

Thank you. This concludes your question-and-answer session. I'd like to turn the conference back over to Mike Hoelter for closing remarks.

Thanks, Rocco. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, August 7, 2024 at 11 a.m. Eastern Time when we will review our second quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.