Andersons Inc (ANDE) 2016 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the The Andersons, Inc. 2016 fourth quarter and year end conference call. At this time, all participants are in a listen-only mode to prevent back ground noise. (Operator Instructions). And now I would like to turn the call to the Vice President of Finance and Treasure Mr. James Burmeister. Please, go ahead.

Good morning every one 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 web cast, the slides and audio will be in sync. This web cast is being recorded and it and it's supporting slides will be made available on the Investor Relations page of our website at AndersonsInc.com.

Certain information discussed today constitutes forward-looking statements, and the 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 '34 Act filings and the prospectuses prepared in conjunction 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 contains 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 and reconciliations of the 2015 non-GAAP to GAAP measures may 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 the prepared remarks. Now, I'll 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 the year with significant challenges in many of our markets but also a year in which we made great progress in addressing under performing 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 manage our portfolio. In the second quarter we exited under performing grain assets in Iowa. In the forth quarter we closed two facilities 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 towards the productivity culture.

Second, we made great strides towards the productivity culture. We have streamlined the organization and improved operational efficiency to drive a leaner operating model. Earlier in the year we reduced senior corporate leadership positions and throughout the year we have 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 the year we communicated a goal to reduce our run rate costs by $10 million by the end of 2017. I'm pleased to report that we have 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 target investments in our core businesses. Expansion 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 a new headquarters building in September. This had provided a much needed improvement to help make our employees to be more productive as well as to attract and retain strong talent for 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 $1.45 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 graphs that's 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 groups. The decline in retail group results was driven by a $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 groups results included about $3.3 million of cost to close two processing facilities as we are consolidating operations for the product line to improve performance.

Our full year results are reflective of the significant challenges we experienced primarily in our grain business earlier in the year. For the year, grain showed a $29.6 million decline in pretax income versus adjusted pretax income for 2015. The year over year decline in our rail groups pretax income was primarily due to the gains on early lease termination settlement. The Rail group finished with a solid performance generating $9.7 million of pretax income in the fourth quarter compared to $6.8 million last year.

Full year pretax results were $32.4 million, compared to 2015's $50.7 million. As noted previously 2015 included unusually large early lease termination settlements of nearly $11 million which did not re-occur this year. Average lease rates were steady year over year. Utilization rate averaged 87.8% for the year, compared to 92.4% in 2015. Improved performance in our repair and fabrication businesses helped raise service and other pretax income by $2.3 million compared to last year. Which was offset by $2.3 million of lower pretax income from rail car sales.

The ethanol group performed well in an improving market environment. Ethanol margins improved as the year progressed. In part due to lower corn prices and other input costs. Late in the year cost to acquire corn at our eastern facility were higher due to localized incidence of vomitoxin in the eastern corn belt. Chinese tariffs and the impact of vomitoxin in distillers dried grain led to lower pricing during the fourth quarter.

Despite these challenges, the group turned in good results with fourth quarter pretax income reaching $11.7 million. More than 50% improvement over the $7.7 million the group earned in the fourth quarter of 2015. Full year pretax income was $24.7 million a little below the $28.5 million the group earned in 2015.

Our grain group continued to improve year over year in the fourth quarter delivering pretax income of $12.9 million. Up from adjusted pretax income of $9.8 million earned in the same period of 2015. Fourth quarter performance was not enough to offset the large losses incurred in the first half of the year resulting in a full year pretax loss of $15.7 million. By comparison the group earned adjusted pretax income of $13.9 million for the full year 2015. Crop production in our core markets was substantially better than the prior year. As a result, our base grain operations were able to purchase grain at more normal basis levels.

Base grain earned pretax income of $15.9 million in the fourth quarter but had a pretax loss of $5.7 million for the full year. For comparison, base grained earned pretax income of $6.2 million for the fourth quarter, and $600,000 for the fully year in 2015. Grains affiliates Lansing Trade Group and Thompsons Ltd. incurred a combined pretax loss of $3 million in the fourth quarter and $10 million for the year. Compared to pretax earnings of $3.6 million and $13.3 million for the same period in the prior year.

As a reminder the group's 2015 GAAP pretax income included a $46.4 million charge in the fourth quarter for the impairment of good will which was offset in part by a $23.1 million gain in the partial redemption and delusion of the Company's ownership in Lansing Trade Group. We adjusted pre (inaudible) income for both of these items in 2015 results for purposes of comparability. In 2016, the plant nutrient group incurred a pretax loss of $3.8 million in the fourth quarter compared to fourth quarter 2015 adjusted pretax income of $2.1 million. The lower performance in 2016 was driven by compressed margins and lower volume year over year.

For the full year plant nutrient achieved similar results on an adjusted basis. Registering adjusted pretax income of $14.8 million in 2015 and $14.2 million in 2016. Both the fourth quarter and full year 2016 results included $3.3 million of expenses related to the closure of two cobs facilities as we consolidated operations to improve the performance of that product line.

Performance of our base nutrients and specialty product line both struggled in 2016 due to an environment of market over supply, falling prices and lower net farm income. On the positive side our lawn business within the other products line had a record year earning $8.9 million in pretax income.

The group's 2015 GAAP pretax income included good will impairment charges of $7.8 million in the fourth quarter and $9.8 million for the full year. And one time Nutra Flo acquisition cost of $2.4 million in the fourth quarter and $4.9 million for the full year. We adjusted pretax income for both of these items in 2015 results for purposes of comparability. As we announced last month, the Company has decided to close its remaining four retail stores and exit the retail business in the second quarter of 2017.

As a result, the retail group reported a pretax asset impairment charge of $6.5 million writing down its long lived assets to bare value. Including that charge the group posted a fourth quarter pretax loss of $6.2 million compared to pretax income of $1 million in the fourth quarter of 2015. For the full year retails results were a pretax loss of $8.8 million in 2016 compared to a 2015 loss of $500,000. Both the fourth quarter and full year 2016 figures included $1.4 million of expenses associated with closing the Sylvania food store during the fourth quarter.

As we announced earlier, we expect to record pretax charges of between $9 million and $14 million in 2017 related to the closing process. Pat earlier referred to the great progress we have made on our cost savings and productivity initiatives. We have built good momentum and are continuously working towards a leaner and more scalable infrastructure. We reduced our full and part-time head count during 2016 by more than 400 positions.

Some of those reductions were related to assets that we sold or closed during the year. The majority were the result of productivity initiatives. The $10 million of pretax savings to date have come from a broad mix of categories with about half derived from operating general and administrative expenses and the other half from reductions in cost of sales.

A large portion of these savings were achieved on our grain and plant nutrient groups and we continue to make good traction in the ethanol and rail groups as well as corporate services. Savings delivered this year more than offset wage inflation. We also reinvested some of the savings back into our businesses and infrastructure needed to make the Company more productive and competitive in the future.

Cost incurred in 2016 to achieve these reductions including an increase of (inaudible) in severance expense compared to 2015. I will now turn the call back over to Pat for a few comments on our 2017 outlook.

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, we will continue our focus on operating efficiency by lowering our cost to serve 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 continues to feel the impact from lower rail traffic in 2016. So far in 2017 car load movements and railroad efficiency data suggests 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 rail car fleet is highly diversified in terms of equipment types, customer base, commodities carried and the lease term expirations. And as such, is well positioned for solid performance over the rail cycle. Ethanol's 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 year. The strong margins seen in the fourth quarter have fallen off in the new year.

Gasoline demand has been near five year lows but has started to rebound somewhat in February. As we entered the quarter, the group has hedged a little more than half of it's first quarter production before margins began to decline. Today we are 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 allow the group to perform well in 2017. The group continues to focus on driving operational efficiencies, achieve higher yields and lower costs. We expect that we will complete the project to double the Albion annual capacity in Michigan up to 130 million gallons and will be running at full capacity by the end of the second quarter. We have built strong relationships with local corn suppliers and regional ethanol customers which will help this investment.

The grain group is poised for a much better year in 2017 after completing one of the most difficult years that the group has experienced. A return to more normal grain production last fall in the eastern corn belt has established higher ending stocks than in the prior year which should be a positive contributor to 2017's space income. We estimate that US farmer will plant 90 to 93 million acres of corn in 2017 which will be below the 94 million acres planted in 2016. This still is a strong number.

Our soy bean forecast is positive. We think 87 to 90 million acres will be planted which would be a 5% higher than last year's 83 million acres. Wheat planted acres have been reported at 50 million acres. (inaudible) at approximately 5 million acres from last year as a result of high 2016 endings stocks.

Weather conditions and crop deals that are comparable to those of 2016 should provide good opportunities for the grain group to sustain it's recovery. We're looking forward to 2017 in our plant nutrient group based on early signs of improved market conditions. The solid planting forecast bodes well for nutrient sales in the spring planting season and our order book is improved compared to the same time last year.

We anticipate better results from higher margins specialty nutrient products as we approach the peak sale season in the second quarter. Specialty nutrients are key elements supporting precision and sustainable agriculture in the US. The Andersons bring a broad line of value added products to support our farming customers.

As we move forward in our productive initiatives we are targeting an additional $10 million of pretax run rate savings by the end of 2018. We harvested much of the lower hanging fruit in 2016 and the next level of productivity will take extra efforts. We're hard at work on programs that will continue to help optimize the performance of our business with a focus on improved procurement and back office practices. While 2016 was a disappointing first year as CEO, we have laid the foundation for improved performance and I'm optimistic about our business going forward.

Now, I'll hand it back to our Operator so we can take any of your questions.

(Operator Instructions). Our first question from the line of Farha Aslam, with Stephens.

Hello?

Your line is open.

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, Farha? I wasn't clear. Either way we'll get started. One of the challenges we faced this fall in vomitoxin and some of the eastern states were our three plants are in the east really hurts or DDG returns because not only it impacts the corn inbound as we have to shuffle around to get the right corn in position for ethanol plants, but also it resides in the finished product in DDG's and thus creates a discount. I don't think we want to give a specific number. But it has hurt our DDG net returns as a percent of corn as maybe you'd see in the western corn belt. And it's something that stays with you for a while because that's what was growing in that region. It's spotty. It isn't 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 a $1.2 billion in US exports. We hope we continue to see good free trade in ethanol. We'll be positioned well from a corn cost and plants across the country to be able to supply in an active export market. We had a very strong finish in the fourth quarter that's tailed off as I mentioned here in January quite dramatically. A 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 good utilization rates for ethanol as we get to the spring and summer driving season. 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're pointing out, Farha, is that we had a good harvest in our area and probably wouldn't be as big a bumper crop as you saw in some of the 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 stronger flow of beans at harvest time with farmers selling beans at harvest. Corn has been a little bit more quiet. We haven't seen quite the up take in basis from the fall here to early winter. But storage rates are good and there is some carries back on the market which bodes well for us, for the long term. And we do see in the traditional states like we mentioned this 90 to 93 million acres planted in the corn states with a 257 corn/bean ratio and a $4.00 new crop corn right now, we think corn will still be planted in good fashion across the corn belt.

We could see spring wheat be reduced in the states that are on the fringe. See more switching to soy beans with a good cash bean soy bean price. I think the point is we want to stay really focused on our operations in grain and look for opportunities to elevate and make margins later this year.

And the carry in wheat? Are we still going to be have that extra -- (multiple speakers).

We still have VSR. You know we talked about that at length on previous calls. We're still in the position with Variable Storage Rate income for wheat. We still continue globally to have ample wheat stocks around the world and wheat's a little bit in a glut situation. So we think we'll be able to still earn storage income on wheat throughout the year.

That's helpful. Thank you.

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 (inaudible) 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?

Hey, Sandy it's John. I would tell you that our order book is better this year 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, the demand and 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?

Sandy, good question, and I said 1 to 1.2, so the range there. China would be the question mark, right? So they had been a good importer to the grid. I guess you could look at it on a positive side, Sandy, if gallons were restrained from shipping to China and that went from Brazil origins, maybe the US would then plug into another place that maybe Brazil was satisfying. That would 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.

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. 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 will 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 turn down we go the other way and we go for a cheaper production route which maybe you don't get as much efficiency in production. So, I think the market responds to S&D, somewhat, which is probably a good thing overall for the industry. There has been investment in new technologies and optimizing the assets that are in the industry.

I would just add, 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 bottle necking and optimizing our assets. 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 up take, 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 it to older cars diminish, the economics should take over and we should see E15 get built out. We're already seeing pretty good up take from E85. We think it's going to take time for that infrastructure to get it though.

So what's your general view on the supply/demand dynamic. Do you think we'll be in a state of over supply or balanced and by when and what's the drivers?

Right now we're in a state of over supply. Every winter it's a very difficult time in January. No one wants to shut down a plant, driving miles are 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 shot in the arm for the industry.

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 details on Lansing but we are expecting improved results in 2017 from Lansing.

Driven by what though? Just making sure because I'm not --

Couple of 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 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 that is fracking sand and elevates frack sand and that business was tough. Some of that has come back especially in the Permian, so they're seeing 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.

If I could just add that relative to both frack sand and the 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. Our last question is from the line of Heather Jones, with Vertical Group. Please, go ahead.

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. What hurt them during the year was when China did some blocking techniques on the DDG exports and that hurt them at a time. They won't take the same shot this year. And have had to react and move their export channels to different markets. Maybe the total volume wouldn't be quite as good. Overall, we expect them not to have the 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?

The more important thing is getting corn supplied to your plants which is the first thing. So we have to adjust and take it from the would be nearby tributary corn suppliers, maybe have to take it from a further out locations. The first negative, Heather, is that we -- it impacts the corn price we buy. That's why we mentioned that. Obviously there is discounts involved in vomitoxin across the industry. The bigger issue is, though, the discount to DDG's and that does impact our net income at those 3 eastern plants and that will be with us for some time. Overall DDG markets if you took national averages are down from where they were a year ago and mainly related to China. Our eastern plants are further impacted. Somewhat. Again, it's every single load but it's impacted by the vomitoxin that's 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?

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 to our ethanol facilities. And despite that, we're still having and are buying 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. 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 the hoop there. The important thing to look at is the spreads, right? We've continued to keep reasonable carry in the market for wheat. Mainly, as I said, a glut of wheat. The bad side of that is there hasn't been a big demand for wheat so we haven't seen an appreciation on premiums to really drive elevation's to make some margin on wheat shipments here domestically. The whole market is working through a glut of supply. That's not bad when it comes to making carry but doesn't allow you to make basis depreciation. So, it's a 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, (inaudible) better than last year? Because it seemed like it was to me but maybe I'm misinterpreting something.

I think it's early to tell, quite frankly. It's been quite quiet. So, let's just stay tuned on that until 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 that's a good point. Just to clarify, we're exiting retail. We've announced it and we'll be closing it out through into the second quarter of this year. The Iowa assets have been sold. We're looking at all aspect of our business. I'd like to maybe talk about your productivity initiative and something I brought to the Company when we got here and use one simple example. We focus a lot on safety and maybe this isn't something that's financial analysts pay a lot of attention to.

But a safe company is a more efficient company and a more profitable company. And it reduced for whole Company 42% in lost time injuries last year. At 32% reduction in reportable injuries. We've had a major improvement in safety and we're implementing a behavioral based safety program across the whole Company. I'm saying that as 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. We hit a year early.

They come in various ways. For example, our SAP people productivity in grain was almost $1 million by taking 20 people out of processing back office for grain. We do it in plants. Like in Plant Nutrient. We use flex labor between grain sharing with Plant Nutrient. Got a half a million dollars. Saved $700,000 on chemical processing changes and standardization in the plants. We've 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 cost and creating efficiency and a whole productive culture that makes the whole machine hum 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't get it fixed, it doesn't fit in our portfolio, we would like to sell it. We feel pretty good about where we're at right now. 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 mouth full but I hope that puts it in context for you.

That was very helpful. Thank you so much.

Ladies and gentlemen, this concludes our Q&A session for today. I will turn the call back to Jim Burmeister for final remarks.

Thank you all for joining us this morning. I also wanted to mention that the presentation and slides with additional supporting information will be made available later today on the Investor page of our website at andersonsinc.com. Our next earnings conference call is schedule for Thursday, May 4th, at 11AM Eastern 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.