UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~06/~~09/30/2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 000-20557

THE ANDERSONS, INC.

(Exact name of the registrant as specified in its charter)


Ohio		34-1562374
(State of incorporation or organization)		(I.R.S. Employer Identification No.)

1947 Briarfield Boulevard
Maumee	Ohio	43537
(Address of principal executive offices)		(Zip Code)

(419) 893-5050

(Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol

Name of each exchange on which registered:

Common stock, $0.00 par value, $0.01 stated value

ANDE

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	ý
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ý

The registrant had ~~33,282,749~~33,286,202 common shares outstanding at ~~July 23,~~October 22, 2021.

Table of Contents

THE ANDERSONS, INC.

INDEX


			Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated ~~Balance Sheets~~Statements of Operations – ~~June~~Three and Nine months ended September 30, 2021 ~~December 31, 2020~~ and ~~June 30,~~ 2020			1
Condensed Consolidated Statements of ~~Operations~~Comprehensive Income (Loss) – Three and ~~Six~~Nine months ended ~~June~~September 30, 2021 and 2020			2
Condensed Consolidated ~~Statements of Comprehensive Income (Loss)~~Balance Sheets – ~~Three and Six months ended June~~September 30, 2021, December 31, 2020 and September 30, 2020			3
Condensed Consolidated Statements of Cash Flows – ~~Six~~Nine months ended ~~June~~September 30, 2021 and 2020			4
Condensed Consolidated Statements of Equity – Three and ~~Six~~Nine months ended ~~June~~September 30, 2021 and 2020			5
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2325
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3134
Item 4. Controls and Procedures			3234
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			3335
Item 1A. Risk Factors			3335
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3335
Item 4. Mine Safety Disclosure			3335
Item 6. Exhibits			3436

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 2~~

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc.

Condensed Consolidated ~~Balance Sheets~~Statements of Operations (Unaudited)

~~(Unaudited)~~(In ~~thousands)~~thousands, except per share data)

June 30,
2021 December 31,
2020 June 30,
2020
Assets
Current assets:
Cash and cash equivalents $ 27,538 $ 29,123 $ 30,011
Accounts receivable, net 721,575 659,834 537,011
Inventories (Note 2)
912,299 1,300,693 616,323
Commodity derivative assets – current (Note 5)
507,148 320,706 112,089
Other current assets 65,740 106,053 102,755
Total current assets 2,234,300 2,416,409 1,398,189
Other assets:
Goodwill 135,709 135,709 135,709
Other intangible assets, net 127,756 142,940 160,180
Right of use assets, net 61,299 56,031 62,838
Other assets, net 73,678 49,907 48,235
Total other assets 398,442 384,587 406,962
Rail assets leased to others, net (Note 3)
574,585 591,946 592,821
Property, plant and equipment, net (Note 3)
841,762 879,179 906,017
Total assets $ 4,049,089 $ 4,272,121 $ 3,303,989
Liabilities and equity
Current liabilities:
Short-term debt (Note 4)
$ 757,271 $ 403,703 $ 96,071
Trade and other payables 547,169 957,683 503,892
Customer prepayments and deferred revenue 58,155 180,160 45,734
Commodity derivative liabilities – current (Note 5)
90,366 146,990 65,186
Current maturities of long-term debt (Note 4)
56,582 75,475 68,477
Accrued expenses and other current liabilities 181,015 167,671 147,422
Total current liabilities 1,690,558 1,931,682 926,782
Long-term lease liabilities 41,852 37,177 41,061
Long-term debt, less current maturities (Note 4)
866,454 916,540 975,973
Deferred income taxes 173,212 170,147 162,475
Other long-term liabilities 52,049 55,915 65,615
Total liabilities 2,824,125 3,111,461 2,171,906
Commitments and contingencies (Note 13)
0 0 0
Shareholders’ equity:
Common shares, without par value (63,000 shares authorized; 33,786, 33,599 and 33,599 shares issued at 6/30/2021, 12/31/2020 and 6/30/2020, respectively) 140 138 138
Preferred shares, without par value (1,000 shares authorized; NaN issued) 0 0 0
Additional paid-in-capital 357,606 348,714 343,730
Treasury shares, at cost (111, 45 and 40 shares at 6/30/2021, 12/31/2020 and 6/30/2020, respectively) (2,650) (966) (953)
Accumulated other comprehensive loss (1,837) (12,076) (26,245)
Retained earnings 669,241 626,081 622,718
Total shareholders’ equity of The Andersons, Inc. 1,022,500 961,891 939,388
Noncontrolling interests 202,464 198,769 192,695
Total equity 1,224,964 1,160,660 1,132,083
Total liabilities and equity $ 4,049,089 $ 4,272,121 $ 3,303,989


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Sales and merchandising revenues (Note 6)	$	2,998,824	$	1,885,586	$	8,829,348	$	5,556,317
Cost of sales and merchandising revenues	2,876,989		1,792,349		8,430,665		5,314,101
Gross profit	121,835		93,237		398,683		242,216
Operating, administrative and general expenses	110,275		92,610		312,833		277,363
Interest expense, net	8,799		6,853		28,848		25,951
Other income, net:
Equity in earnings (losses) of affiliates, net	(250)		20		2,389		228
Other income, net	13,806		3,846		24,743		10,154
Income (loss) before income taxes from continuing operations	16,317		(2,360)		84,134		(50,716)
Income tax provision (benefit) from continuing operations	4,027		(4,148)		18,065		(18,628)
Net income (loss) from continuing operations	12,290		1,788		66,069		(32,088)
Income from discontinued operations, net of income taxes	1,846		427		7,453		3,224
Net income (loss)	14,136		2,215		73,522		(28,864)
Net income (loss) attributable to noncontrolling interests	(1,602)		3,273		(822)		(20,583)
Net income (loss) attributable to The Andersons, Inc.	$	15,738	$	(1,058)	$	74,344	$	(8,281)

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders: (Note 9)
Basic earnings (loss):
Continuing operations	$	0.42	$	(0.04)	$	2.01	$	(0.35)
Discontinued operations	0.06		0.01		0.22		0.10
	$	0.48	$	(0.03)	$	2.23	$	(0.25)
Diluted earnings (loss):
Continuing operations	$	0.41	$	(0.04)	$	1.99	$	(0.35)
Discontinued operations	0.05		0.01		0.22		0.10
	$	0.46	$	(0.03)	$	2.21	$	(0.25)

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of ~~Operations~~Comprehensive Income (Loss) (Unaudited)

~~(Unaudited)~~(In ~~thousands, except per share data)~~thousands)

Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Sales and merchandising revenues (Note 6)
$ 3,273,726 $ 1,890,180 $ 5,909,455 $ 3,743,286
Cost of sales and merchandising revenues 3,099,682 1,783,914 5,612,699 3,573,890
Gross profit 174,044 106,266 296,756 169,396
Operating, administrative and general expenses 109,976 90,136 209,848 195,196
Interest expense, net 13,454 11,827 26,623 27,414
Other income, net:
Equity in earnings of affiliates, net 845 79 2,639 209
Other income, net 5,307 3,450 12,849 8,263
Income (loss) before income taxes 56,766 7,832 75,773 (44,742)
Income tax provision (benefit) 10,642 (12,200) 16,387 (13,664)
Net income (loss) 46,124 20,032 59,386 (31,078)
Net income (loss) attributable to noncontrolling interests 2,625 (10,407) 780 (23,856)
Net income (loss) attributable to The Andersons, Inc. $ 43,499 $ 30,439 $ 58,606 $ (7,222)
Per common share:
Basic earnings (loss) attributable to The Andersons, Inc. common shareholders (Note 9)
$ 1.31 $ 0.92 $ 1.76 $ (0.22)
Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders (Note 9)
$ 1.30 $ 0.92 $ 1.74 $ (0.22)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	14,136	$	2,215	$	73,522	$	(28,864)
Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial loss and prior service cost	(102)		(119)		(439)		(220)
Foreign currency translation adjustments	(3,004)		2,351		(311)		(1,039)
Cash flow hedge activity	1,537		1,783		9,420		(13,740)
Other comprehensive income (loss)	(1,569)		4,015		8,670		(14,999)
Comprehensive income (loss)	12,567		6,230		82,192		(43,863)
Comprehensive income (loss) attributable to the noncontrolling interests	(1,602)		3,273		(822)		(20,583)
Comprehensive income (loss) attributable to The Andersons, Inc.	$	14,169	$	2,957	$	83,014	$	(23,280)

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 2

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Balance The Andersons, Inc.

Condensed Consolidated ~~Statements of Comprehensive Income (Loss)~~Balance Sheets (Unaudited)

~~(Unaudited)(In thousands)~~

Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Net income (loss) $ 46,124 $ 20,032 $ 59,386 $ (31,078)
Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial gain (loss) and prior service cost (234) 15 (337) (101)
Foreign currency translation adjustments 1,469 3,249 2,693 (3,390)
Cash flow hedge activity (1,858) (1,860) 7,883 (15,523)
Other comprehensive income (loss) (623) 1,404 10,239 (19,014)
Comprehensive income (loss) 45,501 21,436 69,625 (50,092)
Comprehensive income (loss) attributable to the noncontrolling interests 2,625 (10,407) 780 (23,856)
Comprehensive income (loss) attributable to The Andersons, Inc. $ 42,876 $ 31,843 $ 68,845 $ (26,236)


(In thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	216,874	$	29,123	$	13,693
Accounts receivable, net	735,349		641,326		509,964
Inventories (Note 2)	1,017,804		1,293,066		747,588
Commodity derivative assets – current (Note 5)	409,647		320,706		140,065
Current assets held-for-sale (Note 14)	26,561		32,659		45,132
Other current assets	92,159		99,529		83,807
Total current assets	2,498,394		2,416,409		1,540,249
Other assets:
Goodwill	129,342		131,542		131,542
Other intangible assets, net	118,690		140,084		148,846
Right of use assets, net	50,270		33,387		33,547
Other assets held-for-sale (Note 14)	38,863		643,474		642,538
Other assets, net	74,923		46,914		44,738
Total other assets	412,088		995,401		1,001,211

Property, plant and equipment, net (Note 3)	797,660		860,311		870,151
Total assets	$	3,708,142	$	4,272,121	$	3,411,611
Liabilities and equity
Current liabilities:
Short-term debt (Note 4)	$	281,199	$	403,703	$	100,405
Trade and other payables	825,923		954,809		635,206
Customer prepayments and deferred revenue	147,225		178,226		47,906
Commodity derivative liabilities – current (Note 5)	78,702		146,990		79,159
Current maturities of long-term debt (Note 4)	106,255		69,366		62,499
Accrued taxes	97,215		17,465		15,178
Current liabilities held-for-sale (Note 14)	13,427		25,277		27,996
Accrued expenses and other current liabilities	173,215		135,846		128,187
Total current liabilities	1,723,161		1,931,682		1,096,536
Long-term lease liabilities	31,332		19,835		19,216
Long-term debt, less current maturities (Note 4)	542,821		886,453		717,198
Deferred income taxes	79,636		170,147		163,454
Other long-term liabilities held-for-sale (Note 14)	13,592		48,096		221,334
Other long-term liabilities	81,587		55,248		56,646
Total liabilities	2,472,129		3,111,461		2,274,384
Commitments and contingencies (Note 13)	0		0		0
Shareholders’ equity:
Common shares, without par value (63,000 shares authorized; 33,786, 33,599 and 33,599 shares issued at 9/30/2021, 12/31/2020 and 9/30/2020, respectively)	140		138		138
Preferred shares, without par value (1,000 shares authorized; none issued)	—		—		—
Additional paid-in-capital	360,159		348,714		346,280
Treasury shares, at cost (110, 45 and 41 shares at 9/30/2021, 12/31/2020 and 9/30/2020, respectively)	(2,611)		(966)		(879)
Accumulated other comprehensive loss	(3,406)		(12,076)		(22,230)
Retained earnings	679,154		626,081		615,890
Total shareholders’ equity of The Andersons, Inc.	1,033,436		961,891		939,199
Noncontrolling interests	202,577		198,769		198,028
Total equity	1,236,013		1,160,660		1,137,227
Total liabilities and equity	$	3,708,142	$	4,272,121	$	3,411,611

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

~~(Unaudited)~~(In thousands)


		Six months ended June 30,					Nine months ended September 30,
		2021		2020			2021		2020
Operating Activities	Operating Activities					Operating Activities
Net income (loss) from continuing operations						Net income (loss) from continuing operations	$	66,069	$	(32,088)
Income from discontinued operations, net of income taxes						Income from discontinued operations, net of income taxes	7,453		3,224
Net income (loss)	Net income (loss)	$	59,386	$	(31,078)	Net income (loss)	73,522		(28,864)
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:	Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:					Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	95,154		93,898		Depreciation and amortization	142,137		141,167
Bad debt (recovery) expense, net	Bad debt (recovery) expense, net	(1,156)		6,290		Bad debt (recovery) expense, net	(2,182)		8,049
Equity in earnings of affiliates, net of dividends	Equity in earnings of affiliates, net of dividends	(2,639)		(209)		Equity in earnings of affiliates, net of dividends	(2,389)		(228)
Gain on sales of Rail assets and related leases, net		(4,987)		(569)
(Gain) loss on sales of assets, net		(1,266)		341
Gain on sale of business from continuing operations						Gain on sale of business from continuing operations	(14,619)		—
Loss on sale of business from discontinued operations						Loss on sale of business from discontinued operations	1,491		—
Gain on sales of assets, net						Gain on sales of assets, net	(6,505)		(1,037)
Stock-based compensation expense	Stock-based compensation expense	4,112		5,016		Stock-based compensation expense	6,727		7,742
Deferred federal income tax	Deferred federal income tax	170		21,761		Deferred federal income tax	(93,725)		21,917
Inventory write down	Inventory write down	2,599		10,922		Inventory write down	3,399		10,933
Other	Other	2,971		2,797		Other	7,005		4,141
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(58,338)		(9,181)		Accounts receivable	(89,902)		(1,952)
Inventories	Inventories	390,506		536,951		Inventories	266,865		400,262
Commodity derivatives	Commodity derivatives	(250,691)		14,980		Commodity derivatives	(158,741)		(2,574)
Other assets	Other assets	35,568		(24,784)		Other assets	(3,357)		(34,343)
Payables and other accrued expenses	Payables and other accrued expenses	(516,883)		(481,624)		Payables and other accrued expenses	(10,659)		(329,422)
Net cash (used in) provided by operating activities		(245,494)		145,511
Net cash provided by operating activities						Net cash provided by operating activities	119,067		195,791
Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant and equipment and capitalized software						Purchases of property, plant and equipment and capitalized software	(52,730)		(59,414)
Proceeds from sale of assets						Proceeds from sale of assets	3,999		8,121
Purchases of investments						Purchases of investments	(5,993)		(2,849)
Proceeds from sale of business from continuing operations						Proceeds from sale of business from continuing operations	18,130		2,467
Proceeds from sale of business from discontinued operations						Proceeds from sale of business from discontinued operations	543,102		—
Purchases of Rail assets	Purchases of Rail assets	(4,751)		(24,649)		Purchases of Rail assets	(6,039)		(26,258)
Proceeds from sale of Rail assets	Proceeds from sale of Rail assets	15,616		4,637		Proceeds from sale of Rail assets	18,705		7,774
Purchases of property, plant and equipment and capitalized software		(34,264)		(44,644)
Proceeds from sale of assets		3,794		1,503
Purchase of investments		(4,701)		(2,849)
Other	Other	832		0		Other	349		—
Net cash used in investing activities		(23,474)		(66,002)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	519,523		(70,159)
Financing Activities	Financing Activities					Financing Activities
Net borrowings (payments) under lines of credit		(258,157)		(47,564)
Net payments under lines of credit						Net payments under lines of credit	(324,279)		(44,183)
Proceeds from issuance of short-term debt	Proceeds from issuance of short-term debt	608,250		0		Proceeds from issuance of short-term debt	608,250		—
Payments of short-term debt						Payments of short-term debt	(408,250)		—
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	108,300		165,975		Proceeds from issuance of long-term debt	186,800		213,906
Payments of long-term debt	Payments of long-term debt	(177,586)		(203,835)		Payments of long-term debt	(485,527)		(310,694)
Contributions from noncontrolling interest owner	Contributions from noncontrolling interest owner	2,940		4,409		Contributions from noncontrolling interest owner	4,655		6,493
Distributions to noncontrolling interest owner	Distributions to noncontrolling interest owner	(25)		(10,298)		Distributions to noncontrolling interest owner	(25)		(10,322)
Payments of debt issuance costs	Payments of debt issuance costs	(2,059)		(250)		Payments of debt issuance costs	(2,059)		(250)
Dividends paid	Dividends paid	(11,677)		(11,469)		Dividends paid	(17,503)		(17,234)
Other	Other	(2,436)		(2,036)		Other	(12,709)		(4,143)
Net cash provided by (used in) financing activities		267,550		(105,068)
Net cash used in financing activities						Net cash used in financing activities	(450,647)		(166,427)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(167)		675		Effect of exchange rates on cash and cash equivalents	(192)		(407)
Decrease in cash and cash equivalents		(1,585)		(24,884)

Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	187,751		(41,202)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	29,123		54,895		Cash and cash equivalents at beginning of period	29,123		54,895
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	27,538	$	30,011	Cash and cash equivalents at end of period	$	216,874	$	13,693

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Equity (Unaudited)

~~(Unaudited)~~(In thousands, except per share data)


		Three Months Ended															Three Months Ended
		Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total			Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total
Balance at March 31, 2020		$	137	$	341,382	$	(652)	$	(27,649)	$	599,039	$	201,605	$	1,113,862
Balance at June 30, 2020																Balance at June 30, 2020	$	138	$	343,730	$	(953)	$	(26,245)	$	622,718	$	192,695	$	1,132,083
Net income (loss)																Net income (loss)									(1,058)		3,273		2,215
Other comprehensive income																Other comprehensive income							1,868						1,868
Amounts reclassified from accumulated other comprehensive income																Amounts reclassified from accumulated other comprehensive income							2,147						2,147
Contributions from noncontrolling interests																Contributions from noncontrolling interests											2,083		2,083
Distributions to noncontrolling interests																Distributions to noncontrolling interests											(23)		(23)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (0 shares)																Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (0 shares)	0		2,550		74				0				2,624
Dividends declared ($0.175 per common share)																Dividends declared ($0.175 per common share)									(5,770)				(5,770)

Balance at September 30, 2020																Balance at September 30, 2020	$	138	$	346,280	$	(879)	$	(22,230)	$	615,890	$	198,028	$	1,137,227

Balance at June 30, 2021																Balance at June 30, 2021	$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964
Net income (loss)	Net income (loss)									30,439		(10,407)		20,032		Net income (loss)									15,738		(1,602)		14,136
Other comprehensive loss	Other comprehensive loss							(234)						(234)		Other comprehensive loss							(3,081)						(3,081)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							1,638						1,638		Amounts reclassified from accumulated other comprehensive income							1,512						1,512
Contributions from noncontrolling interests	Contributions from noncontrolling interests											1,102		1,102		Contributions from noncontrolling interests											1,715		1,715
Noncontrolling interests recognized in connection with business combination				(459)								395		(64)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (20 shares)		1		2,807		(454)				(843)				1,511

Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (2 shares)																Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (2 shares)			2,553		39								2,592
Dividends declared ($0.175 per common share)	Dividends declared ($0.175 per common share)									(5,764)				(5,764)		Dividends declared ($0.175 per common share)									(5,825)				(5,825)
Restricted share award dividend equivalents						153				(153)				0
Balance at June 30, 2020		$	138	$	343,730	$	(953)	$	(26,245)	$	622,718	$	192,695	$	1,132,083

Balance at March 31, 2021		$	140	$	355,961	$	(2,872)	$	(1,214)	$	631,652	$	198,884	$	1,182,551
Net income (loss)										43,499		2,625		46,124
Other comprehensive loss								(2,108)						(2,108)
Amounts reclassified from accumulated other comprehensive income								1,485						1,485
Contributions from noncontrolling interests												980		980
Distributions to noncontrolling interests												(25)		(25)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (11 shares)				1,645		138								1,783
Dividends declared ($0.175 per common share)										(5,826)				(5,826)
Restricted share award dividend equivalents						84				(84)				0
Balance at June 30, 2021		$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964
Balance at September 30, 2021																Balance at September 30, 2021	$	140	$	360,159	$	(2,611)	$	(3,406)	$	679,154	$	202,577	$	1,236,013

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 5

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		Six Months Ended															Nine Months Ended
		Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total			Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total
Balance at December 31, 2019	Balance at December 31, 2019	$	137	$	345,359	$	(7,342)	$	(7,231)	$	642,687	$	222,045	$	1,195,655	Balance at December 31, 2019	$	137	$	345,359	$	(7,342)	$	(7,231)	$	642,687	$	222,045	$	1,195,655
Net income (loss)	Net income (loss)									(7,222)		(23,856)		(31,078)		Net income (loss)									(8,281)		(20,583)		(28,864)
Other comprehensive loss	Other comprehensive loss							(21,208)						(21,208)		Other comprehensive loss							(19,340)						(19,340)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							2,194						2,194		Amounts reclassified from accumulated other comprehensive income							4,341						4,341
Contributions from noncontrolling interests	Contributions from noncontrolling interests											4,409		4,409		Contributions from noncontrolling interests											6,493		6,493
Distributions to noncontrolling interests	Distributions to noncontrolling interests											(10,298)		(10,298)		Distributions to noncontrolling interests											(10,322)		(10,322)
Noncontrolling interests recognized in connection with business combination	Noncontrolling interests recognized in connection with business combination			(459)								395		(64)		Noncontrolling interests recognized in connection with business combination			(459)								395		(64)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (167 shares)	Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (167 shares)	1		(1,170)		5,998				(843)				3,986		Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (167 shares)	1		1,380		6,072				(843)				6,610
Dividends declared ($0.350 per common share)										(11,513)				(11,513)
Dividends declared ($0.525 per common share)																Dividends declared ($0.525 per common share)									(17,282)				(17,282)
Restricted share award dividend equivalents	Restricted share award dividend equivalents					391				(391)				0		Restricted share award dividend equivalents					391				(391)				—
Balance at June 30, 2020		$	138	$	343,730	$	(953)	$	(26,245)	$	622,718	$	192,695	$	1,132,083
Balance at September 30, 2020																Balance at September 30, 2020	$	138	$	346,280	$	(879)	$	(22,230)	$	615,890	$	198,028	$	1,137,227

Balance at December 31, 2020	Balance at December 31, 2020	$	138	$	348,714	$	(966)	$	(12,076)	$	626,081	$	198,769	$	1,160,660	Balance at December 31, 2020	$	138	$	348,714	$	(966)	$	(12,076)	$	626,081	$	198,769	$	1,160,660
Net income (loss)	Net income (loss)									58,606		780		59,386		Net income (loss)									74,344		(822)		73,522
Other comprehensive income	Other comprehensive income							7,311						7,311		Other comprehensive income							4,230						4,230
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							2,928						2,928		Amounts reclassified from accumulated other comprehensive income							4,440						4,440
Contributions from noncontrolling interests	Contributions from noncontrolling interests											2,940		2,940		Contributions from noncontrolling interests											4,655		4,655
Distributions to noncontrolling interests	Distributions to noncontrolling interests											(25)		(25)		Distributions to noncontrolling interests											(25)		(25)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (67 shares)		2		8,892		(2,016)				(3,480)				3,398
Dividends declared ($0.350 per common share)										(11,634)				(11,634)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (65 shares)																Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (65 shares)	2		11,445		(1,977)				(3,479)				5,991
Dividends declared ($0.525 per common share)																Dividends declared ($0.525 per common share)									(17,460)				(17,460)
Restricted share award dividend equivalents	Restricted share award dividend equivalents					332				(332)				0		Restricted share award dividend equivalents					332				(332)				—
Balance at June 30, 2021		$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964
Balance at September 30, 2021																Balance at September 30, 2021	$	140	$	360,159	$	(2,611)	$	(3,406)	$	679,154	$	202,577	$	1,236,013

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 6

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The Andersons, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Consolidation

These Condensed Consolidated Financial Statements include the accounts of The Andersons, Inc. and its wholly owned and controlled subsidiaries (the “Company”). Controlled subsidiaries include majority-owned subsidiaries and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. The portion of these entities that is not owned by the Company is presented as noncontrolling interests. All intercompany accounts and transactions are eliminated in consolidation.

Investments in unconsolidated entities in which the Company has significant influence, but not control, are accounted for using the equity method of accounting.

During the third quarter of 2021, substantially all of the assets and liabilities of the Rail business were classified as held-for-sale in the accompanying Condensed Consolidated Balance Sheets. As discussed further in Note 14, the Company executed a definitive agreement to sell the Rail Leasing business. In conjunction with the sale of the Rail Leasing business, the Company announced its intent to divest the remainder of the Rail business, primarily consistent of the Rail Repair business. These transactions effectively constitute the entirety of what has historically been included in the Rail reportable segment. Therefore, the associated operating results, net of income tax, have been classified as discontinued operations in the accompanying consolidated statements of operations for all periods presented. Throughout this Quarterly Report on Form 10-Q, with the exception of the statements of cash flows and unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

Certain reclassifications have been made to the prior year financial statements to conform to current year classifications. The reclassification relates to the Condensed Consolidated Balance Sheet presentation of assets and liabilities as held for sale and Condensed Consolidated Statement of Operations presentation of results classified as discontinued operations in relation to the Rail business transactions noted above.

In the opinion of management, all adjustments consisting of normal and recurring items considered necessary for the fair presentation of the results of operations, financial position, and cash flows for the periods indicated have been made. The results in these Condensed Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. An unaudited Condensed Consolidated Balance Sheet as of ~~June~~September 30, 2020 has been included as the Company operates in several seasonal industries.

The Condensed Consolidated Balance Sheet data at December 31, 2020 was derived from the audited Consolidated Financial Statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in The Andersons, Inc. Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”).

Recently Adopted Accounting Pronouncements

Simplified Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12. The new standard simplifies accounting for income taxes, including guidance relating to the approach for calculating income taxes in an interim period, intraperiod tax allocation, and the recognition of deferred tax liabilities among other items. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The new standard ~~does~~did not have a material impact to the company’s financial statements or disclosures.

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2. Inventories

Major classes of inventories are presented below. Readily Marketable Inventories ("RMI") are agricultural commodity inventories such as corn, soybeans, wheat, and ethanol co-products, among others, carried at net realizable value which approximates fair value based on their commodity characteristics, widely available markets, and pricing mechanisms. The net realizable value of RMI is calculated as the fair value (spot price of the commodity in an exchange), less cost of disposal and transportation based on the local market. All other inventories are held at lower of cost or net realizable value.


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Grain and other agricultural products (a)	Grain and other agricultural products (a)	$	636,380	$	1,025,809	$	452,339	Grain and other agricultural products (a)	$	732,512	$	1,025,809	$	557,808
Frac sand and propane (a)	Frac sand and propane (a)	11,265		12,477		6,498		Frac sand and propane (a)	18,481		12,477		10,064
Ethanol and co-products (a)	Ethanol and co-products (a)	155,993		114,895		63,195		Ethanol and co-products (a)	105,052		114,895		59,543
Plant nutrients and cob products	Plant nutrients and cob products	101,286		139,885		87,346		Plant nutrients and cob products	161,759		139,885		120,173
Railcar repair parts		7,375		7,627		6,945
Total Inventories	Total Inventories	$	912,299	$	1,300,693	$	616,323	Total Inventories	$	1,017,804	$	1,293,066	$	747,588

(a) Includes RMI of $~~612.2~~700.3 million, $983.2 million and ~~$418.0~~$523.3 million at ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020, respectively.

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Inventories do not include ~~1.2~~2.0 million, 3.0 million and ~~1.7~~2.3 million bushels of grain held in storage for others as of ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020, respectively. The Company does not have title to the grain and is only liable for any deficiencies in grade or shortage of quantity that may arise during the storage period. Management has not experienced historical losses on any deficiencies and does not anticipate material losses in the future.

Lower of cost or net realizable value charges were ~~$2.6~~$3.4 million and $10.9 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and ~~June~~September 30, 2020, respectively. The current year charge primarily relates to certain fertilizer values decreasing after the spring application season. The charge in the prior year was a result of lower ethanol market prices and decreased demand as a result of the COVID-19 pandemic.

3. Property, Plant and Equipment

The components of Property, plant and equipment, net are as follows:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Land	Land	$	39,884	$	40,222	$	40,188	Land	$	39,159	$	39,704	$	39,705
Land improvements and leasehold improvements	Land improvements and leasehold improvements	97,454		96,700		96,028		Land improvements and leasehold improvements	89,941		92,455		92,138
Buildings and storage facilities	Buildings and storage facilities	386,832		387,992		377,652		Buildings and storage facilities	368,678		379,195		375,715
Machinery and equipment	Machinery and equipment	948,517		925,074		881,144		Machinery and equipment	920,232		898,557		881,617
Construction in progress	Construction in progress	19,987		19,725		35,982		Construction in progress	24,556		19,473		20,936
		1,492,674		1,469,713		1,430,994			1,442,566		1,429,384		1,410,111
Less: accumulated depreciation	Less: accumulated depreciation	650,912		590,534		524,977		Less: accumulated depreciation	644,906		569,073		539,960
Property, plant and equipment, net	Property, plant and equipment, net	$	841,762	$	879,179	$	906,017	Property, plant and equipment, net	$	797,660	$	860,311	$	870,151

Depreciation expense on property, plant and equipment used in continuing operations was ~~$64.2~~$97.7 million and ~~$62.3~~$91.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. Additionally, depreciation expense on property, plant and equipment used in continuing operations was ~~$32.3~~$35.2 million and ~~$31.2~~$30.8 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively.

~~Rail Assets~~

~~The components of Rail assets leased to others are as follows:~~

(in thousands) June 30,
2021 December 31,
2020 June 30,
2020
Rail assets leased to others $ 735,255 $ 750,473 $ 742,107
Less: accumulated depreciation 160,670 158,527 149,286
Rail assets, net $ 574,585 $ 591,946 $ 592,821

~~Depreciation expense on Rail assets leased to others amounted to $15.3 million and $15.4 million for~~During the ~~six months~~quarter ended ~~June~~September 30, 2021, ~~and 2020, respectively. Additionally, depreciation expense on Rail~~the Company sold its grain assets ~~leased to others amounted to $7.6~~in Champaign, Illinois plus working capital for $23.3 million ~~and $7.7~~which resulted in a $14.6 million ~~for the three months ended June 30, 2021 and 2020, respectively.~~gain.

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4. Debt

Short-term and long-term debt at ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020 consisted of the following:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Short-term debt – non-recourse	Short-term debt – non-recourse	$	120,020	$	93,192	$	43,284	Short-term debt – non-recourse	$	81,494	$	93,192	$	40,985
Short-term debt – recourse	Short-term debt – recourse	637,251		310,511		52,787		Short-term debt – recourse	199,705		310,511		59,420
Total short-term debt	Total short-term debt	$	757,271	$	403,703	$	96,071	Total short-term debt	$	281,199	$	403,703	$	100,405

Current maturities of long-term debt – non-recourse	Current maturities of long-term debt – non-recourse	$	9,078	$	6,438	$	4,845	Current maturities of long-term debt – non-recourse	$	69,932	$	678	$	211
Current maturities of long-term debt – recourse	Current maturities of long-term debt – recourse	47,504		69,037		63,632		Current maturities of long-term debt – recourse	36,323		68,688		62,288
Total current maturities of long-term debt	Total current maturities of long-term debt	$	56,582	$	75,475	$	68,477	Total current maturities of long-term debt	$	106,255	$	69,366	$	62,499

Long-term debt, less: current maturities – non-recourse	Long-term debt, less: current maturities – non-recourse	$	116,219	$	143,406	$	325,819	Long-term debt, less: current maturities – non-recourse	$	—	$	127,192	$	89,419
Long-term debt, less: current maturities – recourse	Long-term debt, less: current maturities – recourse	750,235		773,134		650,154		Long-term debt, less: current maturities – recourse	542,821		759,261		627,779
Total long-term debt, less: current maturities	Total long-term debt, less: current maturities	$	866,454	$	916,540	$	975,973	Total long-term debt, less: current maturities	$	542,821	$	886,453	$	717,198

On February 4, 2021, the Company completed the second amendment to its credit agreement dated January 11, 2019. The amendment, which replaced an underwritten bridge loan received on January 21, 2021, provided for a short-term $250 million term note in which the entire stated principal is due on December 31, 2021. The ~~term note bears interest at variable rates, which are based on LIBOR plus an applicable spread.~~entire principal balance was repaid as of September 30, 2021.

On May 6, 2021, the Company completed the third amendment to its credit agreement dated January 11, 2019. The amendment provides for a ~~short term~~short-term note of approximately $358 million in which the entire stated principal is due on March 31, 2022. The term note will bear interest at variable rates, which are based on LIBOR plus an applicable spread. As of September 30, 2021 $200 million of principal remains outstanding.

The total borrowing capacity of the Company's lines of credit at ~~June~~September 30, 2021 was ~~$1,404.6~~$1,297.5 million of which the Company had a total of ~~$1,173.5~~$1,169.9 million available for borrowing under its lines of credit. The Company's borrowing capacity is reduced by a combination of outstanding borrowings and letters of credit.

As of ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020, the estimated fair value of long-term debt, including the current portion, was ~~$946.8~~$667.9 million, ~~$1,026.8~~$1,003.1 million and ~~$1,090.1~~$831.3 million, respectively. The Company estimates the fair value of its long-term debt based upon the Company’s credit standing and current interest rates offered to the Company on similar bonds and rates currently available to the Company for long-term borrowings with similar terms and remaining maturities.

As part of the Company's ongoing covenant monitoring process, the Company determined that it was virtually certain that ELEMENT will be out of compliance with its debt service coverage ratio covenant of no less than 1.4 to be initially measured on December 31, 2021. If ELEMENT is not in compliance with the debt service coverage ratio at December 31, 2021, it would result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of the ELEMENT’s indebtedness or preventing access to additional funds under the line of credit agreement, or requiring prepayment of outstanding indebtedness under the loan agreement or the line of credit agreement. Because it was determined that it was virtually certain that ELEMENT would violate this covenant in the future and has not yet received a waiver, the $70 million of non-recourse debt associated with ELEMENT has been classified as current maturity of long-term debt.

The Company is in compliance with all other financial covenants as of ~~June~~September 30, 2021.

The Andersons, Inc. | Q3 2021 Form 10-Q | 9

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5. Derivatives

The Company’s operating results are affected by changes to commodity prices. The Trade and Ethanol businesses have established “unhedged” futures position limits (the amount of a commodity, either owned or contracted for, that does not have an offsetting derivative ~~contract to lock in the price)~~contract). To reduce the exposure to market price risk on commodities owned and forward purchase and sale contracts, the Company enters into exchange traded commodity futures and options contracts and over-the-counter forward and option contracts with various counterparties. These contracts are primarily traded via regulated commodity exchanges. The Company’s forward purchase and sales contracts are for physical delivery of the commodity in a future period. Contracts to purchase commodities from producers generally relate to the current or future crop years for delivery periods quoted by regulated commodity exchanges. Most contracts for the sale of commodities to processors or other commercial consumers generally do not extend beyond one year.

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Most of these contracts meet the definition of derivatives. While the Company considers its commodity contracts to be effective economic hedges, the Company does not designate or account for its commodity contracts as hedges as defined under current accounting standards. The Company primarily accounts for its commodity derivatives at estimated fair value. The estimated fair value of the commodity derivative contracts that require the receipt or posting of cash collateral is recorded on a net basis (offset against cash collateral posted or received, also known as margin deposits) within commodity derivative assets or liabilities. Management determines fair value based on exchange-quoted prices and in the case of its forward purchase and sale contracts, estimated fair value is adjusted for differences in local markets and non-performance risk. For contracts for which physical delivery occurs, balance sheet classification is based on estimated delivery date. For futures, options and over-the-counter contracts in which physical delivery is not expected to occur but, rather, the contract is expected to be net settled, the Company classifies these contracts as current or noncurrent assets or liabilities, as appropriate, based on the Company’s expectations as to when such contracts will be settled.

Realized and unrealized gains and losses in the value of commodity contracts (whether due to changes in commodity prices, changes in performance or credit risk, or due to sale, maturity or extinguishment of the commodity contract) and commodity inventories are included in cost of sales and merchandising revenues.

Generally accepted accounting principles permit a party to a master netting arrangement to offset fair value amounts recognized for derivative instruments against the right to reclaim cash collateral or obligation to return cash collateral under the same master netting arrangement. The Company has master netting arrangements for its exchange traded futures and options contracts and certain over-the-counter contracts. When the Company enters into a future, option or an over-the-counter contract, an initial margin deposit may be required by the counterparty. The amount of the margin deposit varies by commodity. If the market price of a future, option or an over-the-counter contract moves in a direction that is adverse to the Company’s position, an additional margin deposit, called a maintenance margin, is required. The margin deposit assets and liabilities are included in short-term commodity derivative assets or liabilities, as appropriate, in the Condensed Consolidated Balance Sheets.

The following table presents at ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020, a summary of the estimated fair value of the Company’s commodity derivative instruments that require cash collateral and the associated cash posted/received as collateral. The net asset or liability positions of these derivatives (net of their cash collateral) are determined on a counterparty-by-counterparty basis and are included within current or non-current commodity derivative assets (or liabilities) on the Condensed Consolidated Balance Sheets:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Cash collateral paid	Cash collateral paid	$	219,469	$	208,670	$	799	Cash collateral paid	$	136,977	$	208,670	$	70,446
Fair value of derivatives	Fair value of derivatives	(180,842)		(157,301)		21,363		Fair value of derivatives	(14,100)		(157,301)		(58,495)
Net derivative asset position	Net derivative asset position	$	38,627	$	51,369	$	22,162	Net derivative asset position	$	122,877	$	51,369	$	11,951

The Andersons, Inc. | Q3 2021 Form 10-Q | 10

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The following table presents, on a gross basis, current and non-current commodity derivative assets and liabilities:


		June 30, 2021											September 30, 2021
(in thousands)	(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total		(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	Commodity derivative assets	$	547,186	$	16,480	$	34,327	$	423	$	598,416	Commodity derivative assets	$	380,391	$	11,704	$	27,035	$	461	$	419,591
Commodity derivative liabilities	Commodity derivative liabilities	(259,507)		(873)		(124,693)		(3,874)		(388,947)		Commodity derivative liabilities	(107,721)		(370)		(105,737)		(7,645)		(221,473)
Cash collateral paid	Cash collateral paid	219,469		0		0		0		219,469		Cash collateral paid	136,977		—		—		—		136,977
Balance sheet line item totals	Balance sheet line item totals	$	507,148	$	15,607	$	(90,366)	$	(3,451)	$	428,938	Balance sheet line item totals	$	409,647	$	11,334	$	(78,702)	$	(7,184)	$	335,095

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 10~~

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		December 31, 2020											December 31, 2020
(in thousands)	(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total		(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	Commodity derivative assets	$	304,533	$	4,328	$	19,386	$	14	$	328,261	Commodity derivative assets	$	304,533	$	4,328	$	19,386	$	14	$	328,261
Commodity derivative liabilities	Commodity derivative liabilities	(192,023)		(348)		(166,850)		(243)		(359,464)		Commodity derivative liabilities	(192,023)		(348)		(166,850)		(243)		(359,464)
Cash collateral paid	Cash collateral paid	208,196		0		474		0		208,670		Cash collateral paid	208,196		—		474		—		208,670
Balance sheet line item totals	Balance sheet line item totals	$	320,706	$	3,980	$	(146,990)	$	(229)	$	177,467	Balance sheet line item totals	$	320,706	$	3,980	$	(146,990)	$	(229)	$	177,467


		June 30, 2020											September 30, 2020
(in thousands)	(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total		(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	Commodity derivative assets	$	142,110	$	2,916	$	5,511	$	124	$	150,661	Commodity derivative assets	$	159,553	$	3,565	$	7,323	$	42	$	170,483
Commodity derivative liabilities	Commodity derivative liabilities	(30,820)		(214)		(70,697)		(3,813)		(105,544)		Commodity derivative liabilities	(89,933)		(508)		(86,482)		(490)		(177,413)
Cash collateral paid	Cash collateral paid	799		0		0		0		799		Cash collateral paid	70,446		—		—		—		70,446
Balance sheet line item totals	Balance sheet line item totals	$	112,089	$	2,702	$	(65,186)	$	(3,689)	$	45,916	Balance sheet line item totals	$	140,066	$	3,057	$	(79,159)	$	(448)	$	63,516

The net pre-tax gains and losses on commodity derivatives not designated as hedging instruments are included in the Company’s Condensed Consolidated Statements of Operations ~~and the line item in which they are located~~ for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 are as follows:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2021		2020		2021		2020
Gains on commodity derivatives included in cost of sales and merchandising revenues		$	73,688	$	8,797	$	240,673	$	39,757
Gains (losses) on commodity derivatives included in cost of sales and merchandising revenues										Gains (losses) on commodity derivatives included in cost of sales and merchandising revenues	$	(11,353)	$	(52,047)	$	229,320	$	(12,290)

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The Company had the following volume of commodity derivative contracts outstanding (on a gross basis) at ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020:


		June 30, 2021					September 30, 2021
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	696,674	0	0	0	Corn	687,177	—	—	—
Soybeans	Soybeans	75,507	0	0	0	Soybeans	96,061	—	—	—
Wheat	Wheat	129,264	0	0	0	Wheat	94,132	—	—	—
Oats	Oats	45,810	0	0	0	Oats	35,460	—	—	—
Ethanol	Ethanol	0	198,316	0	0	Ethanol	—	174,381	—	—
Corn oil	Corn oil	0	0	70,637	0	Corn oil	—	—	92,709	—
Soybean Oil	Soybean Oil	0	0	23,952	0	Soybean Oil	—	—	41,322	—
Other	Other	7,803	3,957	2,757	1,925	Other	31,086	2,264	1,959	2,324
Subtotal	Subtotal	955,058	202,273	97,346	1,925	Subtotal	943,916	176,645	135,990	2,324
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	243,190	0	0	0	Corn	236,395	—	—	—
Soybeans	Soybeans	49,375	0	0	0	Soybeans	60,660	—	—	—
Wheat	Wheat	80,004	0	0	0	Wheat	101,087	—	—	—
Oats	Oats	1,430	0	0	0	Oats	1,290	—	—	—
Ethanol	Ethanol	0	112,812	0	0	Ethanol	—	96,894	—	—
Propane	Propane	0	18,480	0	0	Propane	—	24,402	—	—
Other	Other	0	5	2,351	197	Other	—	8	1,890	240
Subtotal	Subtotal	373,999	131,297	2,351	197	Subtotal	399,432	121,304	1,890	240
Total	Total	1,329,057	333,570	99,697	2,122	Total	1,343,348	297,949	137,880	2,564


		December 31, 2020				December 31, 2020
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons		(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons
Non-exchange traded:	Non-exchange traded:						Non-exchange traded:
Corn	Corn	684,654	0	0	0		Corn	684,654	—	—	—
Soybeans	Soybeans	73,521	0	0	0		Soybeans	73,521	—	—	—
Wheat	Wheat	109,661	0	0	0		Wheat	109,661	—	—	—
Oats	Oats	27,482	0	0	0		Oats	27,482	—	—	—
Ethanol	Ethanol	0	124,795	0	0		Ethanol	—	124,795	—	—
Corn oil	Corn oil	0	0	36,015	0		Corn oil	—	—	36,015	—
Soybean oil	Soybean oil	0	0	26,510	0		Soybean oil	—	—	26,510	—
Other	Other	4,371	2,058	740	1,859		Other	4,371	2,058	740	1,859
Subtotal	Subtotal	899,689	126,853	63,265	1,859		Subtotal	899,689	126,853	63,265	1,859
Exchange traded:	Exchange traded:						Exchange traded:
Corn	Corn	267,792	0	0	0		Corn	267,792	—	—	—
Soybeans	Soybeans	53,730	0	0	0		Soybeans	53,730	—	—	—
Wheat	Wheat	80,733	0	0	0		Wheat	80,733	—	—	—
Oats	Oats	1,800	0	0	0		Oats	1,800	—	—	—
Ethanol	Ethanol	0	73,584	0	0		Ethanol	—	73,584	—	—
Propane	Propane	0	17,094	0	0		Propane	—	17,094	—	—
Other	Other	0	2,898	14	149		Other	—	2,898	14	149
Subtotal	Subtotal	404,055	93,576	14	149		Subtotal	404,055	93,576	14	149
Total	Total	1,303,744	220,429	63,279	2,008		Total	1,303,744	220,429	63,279	2,008

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June 30, 2020
(in thousands) Number of Bushels Number of Gallons Number of Pounds Number of Tons
Non-exchange traded:
Corn 437,275 0 0 0
Soybeans 50,012 0 0 0
Wheat 95,133 0 0 0
Oats 49,053 0 0 0
Ethanol 0 141,549 0 0
Corn oil 0 0 8,098 0
Other 25,005 5,000 415 2,370
Subtotal 656,478 146,549 8,513 2,370
Exchange traded:
Corn 287,840 0 0 0
Soybeans 36,970 0 0 0
Wheat 67,040 0 0 0
Oats 685 0 0 0
Ethanol 0 27,300 0 0
Propane 0 28,602 0 0
Other 0 13,650 340 208
Subtotal 392,535 69,552 340 208
Total 1,049,013 216,101 8,853 2,578


	September 30, 2020
(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons
Non-exchange traded:
Corn	527,924	—	—	—
Soybeans	121,248	—	—	—
Wheat	80,546	—	—	—
Oats	40,004	—	—	—
Ethanol	—	96,470	—	—
Corn oil	—	—	45,144	—
Soybean oil	—	—	17,262	—
Other	42,235	3,655	350	2,237
Subtotal	811,957	100,125	62,756	2,237
Exchange traded:
Corn	250,445	—	—	—
Soybeans	62,785	—	—	—
Wheat	108,805	—	—	—
Oats	715	—	—	—
Ethanol	—	19,488	—	—

Propane	—	31,962	—	—
Other	—	7,140	16	183
Subtotal	422,750	58,590	16	183
Total	1,234,707	158,715	62,772	2,420

Interest Rate and Other Derivatives

The Company’s objectives for using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The gains or losses on the derivatives designated as hedging instruments are recorded in Other Comprehensive Income (Loss) and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

At ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020, the Company had recorded the following amounts for the fair value of the Company's other derivatives:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments							Derivatives not designated as hedging instruments
Interest rate contracts included in Accrued expenses and other current liabilities	Interest rate contracts included in Accrued expenses and other current liabilities	$	0	$	(589)	$	(1,174)	Interest rate contracts included in Accrued expenses and other current liabilities	$	—	$	(589)	$	(879)
Interest rate contracts included in Other long-term liabilities	Interest rate contracts included in Other long-term liabilities	(309)		(430)		(553)		Interest rate contracts included in Other long-term liabilities	(258)		(430)		(491)
Foreign currency contracts included in Other current assets		1,523		2,753		791
Foreign currency contracts included in Other assets								Foreign currency contracts included in Other assets	491		2,753		326
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments							Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets		$	3,849	$	164	$	0
Interest rate contracts included in Other assets								Interest rate contracts included in Other assets	$	4,431	$	164	$	—
Interest rate contracts included in Accrued expenses and other current liabilities	Interest rate contracts included in Accrued expenses and other current liabilities	(6,944)		(6,664)		(8,806)		Interest rate contracts included in Accrued expenses and other current liabilities	(6,892)		(6,664)		(8,431)
Interest rate contracts included in Other long-term liabilities	Interest rate contracts included in Other long-term liabilities	(11,506)		(18,539)		(24,388)		Interest rate contracts included in Other long-term liabilities	(9,146)		(18,539)		(22,409)

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The recording of derivatives gains and losses and the financial statement line in which they are located are as follows:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2021		2020		2021		2020
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Interest rate derivative gains (losses) included in Interest income (expense), net	Interest rate derivative gains (losses) included in Interest income (expense), net	$	355	$	186	$	709	$	(720)	Interest rate derivative gains (losses) included in Interest income (expense), net	$	51	$	357	$	760	$	(363)

Derivatives designated as hedging instruments	Derivatives designated as hedging instruments									Derivatives designated as hedging instruments
Interest rate derivative losses included in Other comprehensive income (loss)	Interest rate derivative losses included in Other comprehensive income (loss)	2,471		(2,475)		$	(10,476)	$	(20,657)	Interest rate derivative losses included in Other comprehensive income (loss)	$	(2,044)	$	2,373	$	(12,520)	$	(18,284)
Interest rate derivatives losses included in Interest income (expense), net	Interest rate derivatives losses included in Interest income (expense), net	$	(1,656)	$	(1,917)	(3,273)		(2,700)		Interest rate derivatives losses included in Interest income (expense), net	(1,746)		(2,345)		(5,020)		(5,045)

Outstanding interest rate derivatives, as of ~~June~~September 30, 2021, are as follows:


Interest Rate Hedging Instrument	Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate	Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate
Long-term	Long-term							Long-term
Swap	Swap	2014	2023	$	23.0	Interest rate component of debt - not accounted for as a hedge	1.9%	Swap	2014	2023	$	23.0	Interest rate component of debt - not accounted for as a hedge	1.9%
Swap	Swap	2017	2022	$	20.0	Interest rate component of debt - accounted for as a hedge	1.8%	Swap	2017	2022	$	20.0	Interest rate component of debt - accounted for as a hedge	1.8%
Swap	Swap	2018	2023	$	10.0	Interest rate component of debt - accounted for as a hedge	2.6%	Swap	2018	2023	$	10.0	Interest rate component of debt - accounted for as a hedge	2.6%
Swap	Swap	2018	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.7%	Swap	2018	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.7%
Swap	Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.5%	Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	Swap	2020	2023	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap	Swap	2020	2023	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.7%	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap		2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap		2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%

6. Revenue

Many of the Company’s revenues are generated from contracts that are outside the scope of Accounting Standard Codification ("ASC") 606 and thus are accounted for under other accounting standards. Specifically, many of the Company's Trade and Ethanol sales contracts are derivatives under ASC 815, Derivatives and Hedging and the Rail leasing revenue is accounted for under ASC 842, Leases. The breakdown of revenues between ASC 606 and other standards are as follows:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2021		2020		2021		2020
Revenues under ASC 606	Revenues under ASC 606	$	640,083	$	459,105	$	1,146,551	$	806,607	Revenues under ASC 606	$	457,621	$	282,258	$	1,568,529	$	1,066,620
Revenues under ASC 815	Revenues under ASC 815	2,611,981		1,406,307		4,719,603		2,886,360		Revenues under ASC 815	2,541,203		1,603,328		7,260,819		4,489,697
Revenues under ASC 842		21,662		24,768		43,301		50,319
Total revenues	Total revenues	$	3,273,726	$	1,890,180	$	5,909,455	$	3,743,286	Total revenues	$	2,998,824	$	1,885,586	$	8,829,348	$	5,556,317

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~~The Company's revenues under ASC 842 are as follows:~~

Three months ended June 30, Six months ended June 30,
(in thousands) 2021 2020 2021 2020
Operating lease revenue $ 20,458 $ 23,276 $ 41,308 $ 47,332
Sales-type lease revenue 101 232 202 334
Variable lease revenue 1,103 1,260 1,791 2,653
Total revenues $ 21,662 $ 24,768 $ 43,301 $ 50,319

The remainder of this note applies only to those revenues that are accounted for under ASC 606.

Disaggregation of revenue

The following tables disaggregate revenues under ASC 606 by major product/service line for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively:


		Three months ended June 30, 2021											Three months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Ethanol		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	84,915	$	0	$	84,915	Specialty nutrients	$	—	$	—	$	49,249	$	49,249
Primary nutrients	Primary nutrients	0		0		213,604		0		213,604		Primary nutrients	—		—		69,835		69,835
Services	Services	2,114		0		3,869		9,233		15,216		Services	8,828		—		2,233		11,061
Products and co-products	Products and co-products	74,948		184,263		0		0		259,211		Products and co-products	70,924		183,225		—		254,149
Frac sand and propane	Frac sand and propane	36,649		0		0		0		36,649		Frac sand and propane	49,379		—		—		49,379
Other	Other	4,037		394		19,020		7,037		30,488		Other	2,163		1,046		20,739		23,948
Total	Total	$	117,748	$	184,657	$	321,408	$	16,270	$	640,083	Total	$	131,294	$	184,271	$	142,056	$	457,621


		Three months ended June 30, 2020											Three months ended September 30, 2020
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Ethanol		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	82,634	$	0	$	82,634	Specialty nutrients	$	—	$	—	$	31,835	$	31,835
Primary nutrients	Primary nutrients	0		0		188,463		0		188,463		Primary nutrients	—		—		62,094		62,094
Service	Service	2,357		0		2,596		8,658		13,611		Service	2,010		—		975		2,985
Products and co-products	Products and co-products	63,344		75,773		0		0		139,117		Products and co-products	55,235		97,703		—		152,938
Frac sand and propane	Frac sand and propane	21,439		0		0		0		21,439		Frac sand and propane	21,676		—		—		21,676
Other	Other	5,330		352		6,132		2,027		13,841		Other	2,414		513		7,803		10,730
Total	Total	$	92,470	$	76,125	$	279,825	$	10,685	$	459,105	Total	$	81,335	$	98,216	$	102,707	$	282,258


		Six months ended June 30, 2021											Nine months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Ethanol		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	161,721	$	0	$	161,721	Specialty nutrients	$	—	$	—	$	210,971	$	210,971
Primary nutrients	Primary nutrients	0		0		285,263		0		285,263		Primary nutrients	—		—		355,098		355,098
Service	Service	3,568		0		5,158		19,177		27,903		Service	12,396		—		7,391		19,787
Products and co-products	Products and co-products	146,936		329,907		0		0		476,843		Products and co-products	217,859		513,132		—		730,991
Frac sand and propane	Frac sand and propane	128,714		0		0		0		128,714		Frac sand and propane	178,094		—		—		178,094
Other	Other	6,969		4,153		38,518		16,467		66,107		Other	9,132		5,199		59,257		73,588
Total	Total	$	286,187	$	334,060	$	490,660	$	35,644	$	1,146,551	Total	$	417,481	$	518,331	$	632,717	$	1,568,529


	Nine months ended September 30, 2020
(in thousands)	Trade		Ethanol		Plant Nutrient		Total
Specialty nutrients	$	—	$	—	$	187,700	$	187,700
Primary nutrients	—		—		296,247		296,247
Service	6,053		—		3,753		9,806
Products and co-products	171,744		275,175		—		446,919
Frac sand and propane	92,990		—		—		92,990
Other	11,732		1,481		19,745		32,958
Total	$	282,519	$	276,656	$	507,445	$	1,066,620

Substantially all of the Company's revenues accounted for under ASC 606 during both three and nine months periods ended September 30, 2021 and 2020, respectively, are recorded at a point in time instead of over time.

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 15

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Six months ended June 30, 2020
(in thousands) Trade Ethanol Plant Nutrient Rail Total
Specialty nutrients $ 0 $ 0 $ 155,865 $ 0 $ 155,865
Primary nutrients 0 0 234,153 0 234,153
Service 4,043 0 2,778 17,394 24,215
Products and co-products 116,509 177,472 0 0 293,981
Frac sand and propane 71,314 0 0 0 71,314
Other 9,318 968 11,942 4,851 27,079
Total $ 201,184 $ 178,440 $ 404,738 $ 22,245 $ 806,607

Approximately 3% of revenues accounted for under ASC 606 during both three and six months periods ended June 30, 2021 and 2020, respectively, are recorded over time which primarily relates to service revenues noted above.

Contract balances

The balances of the Company’s contract liabilities were ~~$17.0~~$31.2 million and $45.6 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The main driver of the contract liabilities balance is payments for primary and specialty nutrients received in advance of fulfilling our performance obligations under our customer contracts. Due to seasonality of this business, contract liabilities were built up at year-end in preparation for the spring application season. As expected, the revenue recognized inthrough the ~~current period~~first nine months of 2021 satisfied the contract liabilities throughout the ~~spring~~ application season.

7. Income Taxes

On a quarterly basis, the Company estimates the effective tax rate expected to be applicable for the full year and makes changes, if necessary, based on new information or events. The estimated annual effective tax rate is forecasted based on actual historical information and forward-looking estimates and is used to provide for income taxes in interim reporting periods. The Company also recognizes the tax impact of certain unusual or infrequently occurring items, such as the effects of changes in tax laws or rates and impacts from settlements with tax authorities, discretely in the quarter in which they occur.

For the ~~six~~nine months ended ~~June~~September 30, 2021, the Company estimated its annual effective tax rate utilizing the annualized effective tax rate method under ASC 740, Income Taxes, to calculate its interim income tax provision. For the ~~six~~nine months ended ~~June~~September 30, 2020, the Company utilized the discrete effective tax rate method, as allowed under ASC 740, to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. At the time, it was not possible to reliably estimate the annual effective tax rate for the year due to uncertainty created by the COVID-19 pandemic. As a result, relatively small changes in the provision for income taxes in 2020 caused disproportionate changes in the effective tax rate, as compared to 2021.

For the three months ended ~~June~~September 30, 2021, the Company recorded income tax expense from continuing operations of ~~$10.6~~$4.0 million at an effective income tax rate of ~~18.7%~~24.7%. The ~~annual~~ effective tax rate differs from the statutory U.S. Federal tax rate of 21% due to the impacts of state and local taxes, ~~and~~ non-deductible compensation ~~offset by benefits related to~~and the treatment of mark-to-market activity on certain contracts in the Ethanol segment. The rate impacts were further offset by the portion of income owned by noncontrolling interests that do not result in a tax expense. The change in effective tax rate for the three months ended ~~June~~September 30, 2021 as compared to the same period last year was primarily attributed to ~~the favorable impact of the mark-to-market activity on certain contracts in the Ethanol segment, coupled with~~ additional tax benefits from net operating loss carry backs as a result of the CARES Act in the prior ~~year.~~year, offset by the portion of income owned by noncontrolling interests that do not result in a tax expense. For the three months ended ~~June~~September 30, 2020, using the discrete effective tax rate method to calculate the interim tax provision, the Company recorded an income tax benefit from continuing operations of ~~$12.2~~$4.1 million at an effective income tax rate of ~~155.8%~~175.8%.

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 16~~

~~Table of Contents~~

For the ~~six~~nine months ended ~~June~~September 30, 2021, the Company recorded an income tax expense from continuing operations of ~~$16.4~~$18.1 million at an effective income tax rate of ~~21.6%~~21.5%. The ~~annual~~ effective tax rate differs from the statutory U.S. Federal tax rate of 21% due to the impacts of state and local taxes and non-deductible ~~compensation,~~compensation. The rate impacts were further offset by benefits related to the treatment of mark-to-market activity on certain contracts in the Ethanol ~~segment.~~segment and the portion of income owned by noncontrolling interests that do not result in a tax expense. The change in effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the same period last year was primarily attributed to additional tax benefits from net operating loss carry backs as a result of the CARES Act in the prior year, offset by the favorable impact of the mark-to-market activity on the contracts within the ethanol ~~segment.~~segment and the portion of income owned by noncontrolling interests that do not result in a tax expense. For the ~~six~~nine months ended ~~June~~September 30, 2020, using the discrete effective tax rate method to calculate the interim tax provision, the Company recorded an income tax benefit from continuing operations of ~~$13.7~~$18.6 million at an effective income tax rate of ~~30.5%~~36.7%.

The 2021 effective tax rate can be affected by variances in the estimates and amounts of taxable income among the various states, entities and activity types, realization of tax credits, adjustments from resolution of tax matters under review, valuation allowances and the Company’s assessment of its liability for uncertain tax positions. The amount of unrecognized tax benefits for uncertain tax positions was $44.4 million and $24.7 million as of June 30, 2021 and June 30, 2020, respectively. The unrecognized tax benefits of $44.4 million include $40.6 million recorded as a reduction of the deferred tax asset and refundable credits associated with the Federal Research and Development Credits.

The Andersons, Inc. | Q3 2021 Form 10-Q | 16

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8. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) attributable to the Company for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2021		2020		2021		2020
Currency Translation Adjustment	Currency Translation Adjustment									Currency Translation Adjustment
Beginning balance	Beginning balance	$	6,963	$	(5,574)	$	5,739	$	1,065	Beginning balance	$	8,432	$	(2,325)	$	5,739	$	1,065
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	1,469		3,249		2,693		(3,390)		Other comprehensive income (loss) before reclassifications	(3,004)		2,351		(311)		(1,039)

Tax effect	Tax effect	0		0		0		0		Tax effect	—		—		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	1,469		3,249		2,693		(3,390)		Other comprehensive income (loss), net of tax	(3,004)		2,351		(311)		(1,039)
Ending balance	Ending balance	$	8,432	$	(2,325)	$	8,432	$	(2,325)	Ending balance	$	5,428	$	26	$	5,428	$	26
Hedging Adjustment	Hedging Adjustment									Hedging Adjustment
Beginning balance	Beginning balance	$	(8,365)	$	(23,106)	$	(18,106)	$	(9,443)	Beginning balance	$	(10,223)	$	(24,966)	$	(18,106)	$	(9,443)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(3,514)		(3,669)		4,613		(18,059)		Other comprehensive income (loss) before reclassifications	(146)		(535)		4,467		(18,594)
Amounts reclassified from accumulated other comprehensive income (loss)(a)	Amounts reclassified from accumulated other comprehensive income (loss)(a)	2,208		2,412		4,360		3,381		Amounts reclassified from accumulated other comprehensive income (loss)(a)	2,244		3,090		6,604		6,471
Tax effect	Tax effect	(552)		(603)		(1,090)		(845)		Tax effect	(561)		(772)		(1,651)		(1,617)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(1,858)		(1,860)		7,883		(15,523)		Other comprehensive income (loss), net of tax	1,537		1,783		9,420		(13,740)
Ending balance	Ending balance	$	(10,223)	$	(24,966)	$	(10,223)	$	(24,966)	Ending balance	$	(8,686)	$	(23,183)	$	(8,686)	$	(23,183)
Pension and Other Postretirement Adjustment	Pension and Other Postretirement Adjustment									Pension and Other Postretirement Adjustment
Beginning balance	Beginning balance	$	(70)	$	773	$	33	$	889	Beginning balance	$	(304)	$	788	$	33	$	889
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(63)		186		5		241		Other comprehensive income (loss) before reclassifications	69		52		74		293
Amounts reclassified from accumulated other comprehensive income (loss)(b)	Amounts reclassified from accumulated other comprehensive income (loss)(b)	(228)		(228)		(456)		(456)		Amounts reclassified from accumulated other comprehensive income (loss)(b)	(228)		(228)		(684)		(684)
Tax effect	Tax effect	57		57		114		114		Tax effect	57		57		171		171
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(234)		15		(337)		(101)		Other comprehensive income (loss), net of tax	(102)		(119)		(439)		(220)
Ending balance	Ending balance	$	(304)	$	788	$	(304)	$	788	Ending balance	$	(406)	$	669	$	(406)	$	669
Investments in Convertible Preferred Securities Adjustment	Investments in Convertible Preferred Securities Adjustment									Investments in Convertible Preferred Securities Adjustment
Beginning balance	Beginning balance	$	258	$	258	$	258	$	258	Beginning balance	$	258	$	258	$	258	$	258

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	0		0		0		0		Other comprehensive income (loss), net of tax	—		—		—		—
Ending balance	Ending balance	$	258	$	258	$	258	$	258	Ending balance	$	258	$	258	$	258	$	258

Total AOCI Ending Balance	Total AOCI Ending Balance	$	(1,837)	$	(26,245)	$	(1,837)	$	(26,245)	Total AOCI Ending Balance	$	(3,406)	$	(22,230)	$	(3,406)	$	(22,230)

(a) Amounts reclassified from gain (loss) on cash flow hedges are reclassified from AOCI to income when the hedged item affects earnings and is recognized in Interest expense, net. See Note 5 for additional information.

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 17~~

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(b) This accumulated other comprehensive loss component is included in the computation of net periodic benefit cost recorded in Operating, administrative and general expenses.

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 1817

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9. Earnings Per Share


(in thousands, except per common share data)	(in thousands, except per common share data)	Three months ended June 30,				Six months ended June 30,				(in thousands, except per common share data)	Three months ended September 30,				Nine months ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Numerator:	Numerator:									Numerator:
Net income (loss) available to The Andersons Inc. common shareholders		$	43,499	$	30,439	$	58,606	$	(7,222)
Net income (loss) from continuing operations										Net income (loss) from continuing operations	$	12,290	$	1,788	$	66,069	$	(32,088)
Net income (loss) attributable to noncontrolling interests(a)										Net income (loss) attributable to noncontrolling interests(a)	(1,602)		3,273		(822)		(20,583)
Net income (loss) available to The Andersons Inc. common shareholders from continuing operations										Net income (loss) available to The Andersons Inc. common shareholders from continuing operations	$	13,892	$	(1,485)	$	66,891	$	(11,505)

Income (loss) from discontinued operations, net of income taxes										Income (loss) from discontinued operations, net of income taxes	$	1,846	$	427	$	7,453	$	3,224

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	33,263		32,932		33,226		32,876		Weighted average shares outstanding – basic	33,284		32,962		33,246		32,905
Effect of dilutive awards	Effect of dilutive awards	316		77		391		0		Effect of dilutive awards	350		—		424		—
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	33,579		33,009		33,617		32,876		Weighted average shares outstanding – diluted	33,634		32,962		33,670		32,905
Earnings (loss) per share
Basic		$	1.31	$	0.92	$	1.76	$	(0.22)
Diluted		$	1.30	$	0.92	$	1.74	$	(0.22)

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:										Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:
Basic earnings (loss):										Basic earnings (loss):
Continuing operations										Continuing operations	$	0.42	$	(0.04)	$	2.01	$	(0.35)
Discontinued operations										Discontinued operations	0.06		0.01		0.22		0.10
											$	0.48	$	(0.03)	$	2.23	$	(0.25)
Diluted earnings (loss):										Diluted earnings (loss):
Continuing operations										Continuing operations	$	0.41	$	(0.04)	$	1.99	$	(0.35)
Discontinued operations										Discontinued operations	0.05		0.01		0.22		0.10
											$	0.46	$	(0.03)	$	2.21	$	(0.25)

(a) All net income (loss) attributable to noncontrolling interests is within the continuing operations of the Company.

There were ~~57 thousand and 471 thousand antidilutive awards for the three months ended June 30, 2021 and June 30, 2020, respectively. There were 82~~80 thousand antidilutive share awards outstanding for both the ~~six~~three and nine months ended ~~June~~September 30, ~~2021.~~

2021, respectively. All awards were antidilutive for the ~~six~~three and nine months ended ~~June~~September 30, 2020 as the Company incurred a net ~~loss.~~loss in both periods.

10. Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020:


(in thousands)	(in thousands)	June 30, 2021								(in thousands)	September 30, 2021
Assets (liabilities)	Assets (liabilities)	Level 1		Level 2		Level 3		Total		Assets (liabilities)	Level 1		Level 2		Level 3		Total
Commodity derivatives, net (a)	Commodity derivatives, net (a)	$	38,627	$	390,311	$	0	$	428,938	Commodity derivatives, net (a)	$	122,877	$	212,218	$	—	$	335,095
Provisionally priced contracts (b)	Provisionally priced contracts (b)	32,710		(25,210)		0		7,500		Provisionally priced contracts (b)	28,469		(25,134)		—		3,335
Convertible preferred securities (c)	Convertible preferred securities (c)	0		0		13,550		13,550		Convertible preferred securities (c)	—		—		11,066		11,066
Other assets and liabilities (d)	Other assets and liabilities (d)	5,373		(14,909)		0		(9,536)		Other assets and liabilities (d)	4,171		(11,865)		—		(7,694)
Total	Total	$	76,710	$	350,192	$	13,550	$	440,452	Total	$	155,517	$	175,219	$	11,066	$	341,802

(in thousands) December 31, 2020
Assets (liabilities) Level 1 Level 2 Level 3 Total
Commodity derivatives, net (a)
$ 51,369 $ 126,098 $ 0 $ 177,467
Provisionally priced contracts (b)
19,793 (48,818) 0 (29,025)
Convertible preferred securities (c)
0 0 8,849 8,849
Other assets and liabilities (d)
7,972 (26,058) 0 (18,086)
Total $ 79,134 $ 51,222 $ 8,849 $ 139,205

The Andersons, Inc. | Q3 2021 Form 10-Q | 18

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(in thousands)	(in thousands)	June 30, 2020								(in thousands)	December 31, 2020
Assets (liabilities)	Assets (liabilities)	Level 1		Level 2		Level 3		Total		Assets (liabilities)	Level 1		Level 2		Level 3		Total

Commodity derivatives, net (a)	Commodity derivatives, net (a)	$	22,162	$	23,754	$	0	$	45,916	Commodity derivatives, net (a)	$	51,369	$	126,098	$	—	$	177,467
Provisionally priced contracts (b)	Provisionally priced contracts (b)	(15,139)		(41,897)		0		(57,036)		Provisionally priced contracts (b)	19,793		(48,818)		—		(29,025)
Convertible preferred securities (c)	Convertible preferred securities (c)	0		0		8,654		8,654		Convertible preferred securities (c)	—		—		8,849		8,849
Other assets and liabilities (d)	Other assets and liabilities (d)	4,102		(34,922)		0		(30,820)		Other assets and liabilities (d)	7,972		(26,058)		—		(18,086)
Total	Total	$	11,125	$	(53,065)	$	8,654	$	(33,286)	Total	$	79,134	$	51,222	$	8,849	$	139,205


(in thousands)	September 30, 2020
Assets (liabilities)	Level 1		Level 2		Level 3		Total


Commodity derivatives, net (a)	$	11,951	$	51,565	$	—	$	63,516
Provisionally priced contracts (b)	(5,190)		(22,541)		—		(27,731)
Convertible preferred securities (c)	—		—		8,654		8,654
Other assets and liabilities (d)	4,998		(32,210)		—		(27,212)
Total	$	11,759	$	(3,186)	$	8,654	$	17,227

(a)Includes associated cash posted/received as collateral

(b)Included in "Provisionally priced contracts" are those instruments based only on underlying futures values (Level 1) and delayed price contracts (Level 2)

(c)Recorded in “Other assets, net” on the Company’s Condensed Consolidated Balance Sheets related to certain available for sale securities.

(d)Included in other assets and liabilities are assets held by the Company to fund deferred compensation plans and foreign exchange derivative contracts (Level 1), as well as interest rate derivatives (Level 2).

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 19~~

~~Table of Contents~~

Level 1 commodity derivatives reflect the fair value of the exchanged-traded futures and options contracts that the Company holds, net of the cash collateral, that the Company has in its margin account.

The majority of the Company’s assets and liabilities measured at fair value are based on the market approach valuation technique. With the market approach, fair value is derived using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The Company’s net commodity derivatives primarily consist of futures or options contracts via regulated exchanges and contracts with producers or customers under which the future settlement date and bushels (or gallons in the case of ethanol contracts) of commodities to be delivered (primarily wheat, corn, soybeans and ethanol) are fixed and under which the price may or may not be fixed. Depending on the specifics of the individual contracts, the fair value is derived from the futures or options prices quoted on various exchanges for similar commodities and delivery dates as well as observable quotes for local basis adjustments (the difference, which is attributable to local market conditions, between the quoted futures price and the local cash price). Because “basis” for a particular commodity and location typically has multiple quoted prices from other agribusinesses in the same geographical vicinity and is used as a common pricing mechanism in the agribusiness industry, the Company has concluded that “basis” is typically a Level 2 fair value input for purposes of the fair value disclosure requirements related to our commodity derivatives, depending on the specific commodity. Although nonperformance risk, both of the Company and the counterparty, is present in each of these commodity contracts and is a component of the estimated fair values, based on the Company’s historical experience with its producers and customers and the Company’s knowledge of their businesses, the Company does not view nonperformance risk to be a significant input to fair value for these commodity contracts.

These fair value disclosures exclude RMI which consists of agricultural commodity inventories measured at net realizable value. The net realizable value used to measure the Company’s agricultural commodity inventories is the fair value (spot price of the commodity in an exchange), less cost of disposal and transportation based on the local market. This valuation would generally be considered Level 2. The amount of RMI is disclosed in Note 2. Changes in the net realizable value of commodity inventories are recognized as a component of cost of sales and merchandising revenues.

Provisionally priced contract liabilities are those for which the Company has taken ownership and possession of grain, but the final purchase price has not been established. In the case of payables where the unpriced portion of the contract is limited to the futures price of the underlying commodity or the Company has delivered provisionally priced grain and a subsequent payable or receivable is set up for any future changes in the grain price, quoted exchange prices are used and the liability is deemed to be Level 1 in the fair value hierarchy. For all other unpriced contracts which include variable futures and basis components, the amounts recorded for delayed price contracts are determined on the basis of local grain market prices at the balance sheet date and, as such, are deemed to be Level 2 in the fair value hierarchy.

The Andersons, Inc. | Q3 2021 Form 10-Q | 19

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The convertible preferred securities are interests in several early-stage enterprises that may be in various forms, such as convertible debt or preferred equity securities.

A reconciliation of beginning and ending balances for the Company’s fair value measurements using Level 3 inputs is as follows:

Convertible Preferred Securities
(in thousands) 2021 2020
Assets at January 1, $ 8,849 $ 8,404
Additional investments 2,800 250
Assets at March 31, $ 11,649 $ 8,654
Additional Investments 1,901 0
Assets at June 30, $ 13,550 $ 8,654

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 20~~

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	Convertible Preferred Securities
(in thousands)	2021		2020
Assets at January 1,	$	8,849	$	8,404
Additional investments	2,800		250

Assets at March 31,	$	11,649	$	8,654
Additional Investments	1,901		—

Assets at June 30,	$	13,550	$	8,654
Additional investments	300		—
Losses included in earnings	(2,784)		—
Assets at September 30,	$	11,066	$	8,654

The following tables summarize quantitative information about the Company's Level 3 fair value measurements as of ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020:

Quantitative Information about Recurring Level 3 Fair Value Measurements

Fair Value as of

(in thousands)

June 30, 2021

December 31, 2020

June 30, 2020

Valuation Method

Unobservable Input

Weighted Average

(in thousands)

September 30, 2021

December 31, 2020

September 30, 2020

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

13,550

8,849

8,654

Implied based on market prices

N/A

Convertible preferred securities (a)

11,066

8,849

8,654

Implied based on market prices

N/A

(a) The Company considers observable price changes and other additional market data available to estimate fair value, including additional capital raising, internal valuation models, progress towards key business milestones, and other relevant market data points.

There were no non-recurring fair value measurements as of ~~June~~September 30, 2021, December 31, 2020 and ~~June~~September 30, 2020.

The fair value of the Company’s cash equivalents, accounts receivable and accounts payable approximate their carrying value as they are close to maturity.

11. Related Parties

In the ordinary course of business, and on an arm's length basis, the Company will enter into related party transactions with the minority shareholders of the Company's ethanol operations and several equity method investments that the Company holds, along with other related parties.

The following table sets forth the related party transactions entered into for the time periods presented:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2021		2020		2021		2020
Sales revenues	Sales revenues	$	85,294	$	29,659	$	151,940	$	84,353	Sales revenues	$	77,577	$	44,789	$	229,517	$	129,143
Purchases of product and capital assets	Purchases of product and capital assets	8,662		6,419		20,336		21,996		Purchases of product and capital assets	9,715		16,641		30,051		38,637


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Accounts receivable (a)	Accounts receivable (a)	$	11,835	$	5,623	$	7,332	Accounts receivable (a)	$	13,523	$	5,623	$	7,184
Accounts payable (b)	Accounts payable (b)	2,287		5,251		2,598		Accounts payable (b)	2,514		5,251		3,058

(a) Accounts receivable represents amounts due from related parties for the sale of ethanol and other various items.

(b) Accounts payable represents amounts due to related parties for purchases of ethanol equipment and other various items.

The Andersons, Inc. | Q3 2021 Form 10-Q | 20

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12. Segment Information

~~The~~As of the third quarter of 2021, the Company’s operations include 43 reportable business segments that are distinguished primarily on the basis of products and services offered as well as the structure of management. The Trade business includes commodity merchandising and the operation of terminal grain elevator facilities. The Ethanol business produces ethanol and co-products through its five co-owned and fully consolidated ethanol production facilities as well as purchases and sells ethanol and ethanol co-products. The Plant Nutrient business manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers, along with turf care and corncob-based products. ~~Rail operations include the leasing, marketing and fleet management of railcars and other assets, railcar repair and metal fabrication.~~ The Other category includes other corporate level costs not attributable to an operating segment and intercompany eliminations between the segments. See Note 14 for details of the divestiture of the Rail segment.

The segment information below includes the allocation of expenses shared by one or more operating segments. Although management believes such allocations are reasonable, the operating information does not necessarily reflect how such data might appear if the segments were operated as separate businesses. The Company does not have any customers who represent 10 percent or more of total revenues from external customers.


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2021		2020		2021		2020
Revenues from external customers
Trade	$	2,242,131	$	1,432,922	$	6,522,508	$	4,162,130
Ethanol	614,637		349,957		1,674,123		886,742
Plant Nutrient	142,056		102,707		632,717		507,445
Total	$	2,998,824	$	1,885,586	$	8,829,348	$	5,556,317


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2021		2020		2021		2020
Income (loss) before income taxes attributable to the Company from continuing operations
Trade	$	41,999	$	5,941	$	69,631	$	(3,650)
Ethanol	(3,636)		1,148		22,821		(21,960)
Plant Nutrient	(5,832)		(5,387)		26,686		12,828
Other	(14,612)		(7,335)		(34,182)		(17,351)
Income (loss) before income taxes attributable to the Company from continuing operations	17,919		(5,633)		84,956		(30,133)
Income (loss) attributable to noncontrolling interests	(1,602)		3,273		(822)		(20,583)
Income (loss) before income taxes from continuing operations	$	16,317	$	(2,360)	$	84,134	$	(50,716)


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Identifiable assets
Trade	$	2,313,417	$	2,486,412	$	1,642,219
Ethanol	679,687		666,839		625,587
Plant Nutrient	409,112		374,653		343,121
Other	240,502		68,084		113,014
Total assets of continuing operations	3,642,718		3,595,988		2,723,941
Assets of discontinued operations	65,424		676,133		687,670
Total assets	$	3,708,142	$	4,272,121	$	3,411,611

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 21

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Three months ended June 30, Six months ended June 30,
(in thousands) 2021 2020 2021 2020
Revenues from external customers
Trade $ 2,297,869 $ 1,351,168 $ 4,280,377 $ 2,729,209
Ethanol 616,527 223,745 1,059,486 536,784
Plant Nutrient 321,409 279,825 490,661 404,738
Rail 37,921 35,442 78,931 72,555
Total $ 3,273,726 $ 1,890,180 $ 5,909,455 $ 3,743,286

Three months ended June 30, Six months ended June 30,
(in thousands) 2021 2020 2021 2020
Income (loss) before income taxes attributable to the Company
Trade $ 13,777 $ 393 $ 27,632 $ (9,591)
Ethanol 23,531 868 26,457 (23,108)
Plant Nutrient 23,995 19,407 32,518 18,215
Rail 3,064 2,606 7,955 3,613
Other (10,226) (5,035) (19,569) (10,015)
Income (loss) before income taxes attributable to the Company 54,141 18,239 74,993 (20,886)
Income (loss) attributable to noncontrolling interests 2,625 (10,407) 780 (23,856)
Income (loss) before income taxes $ 56,766 $ 7,832 $ 75,773 $ (44,742)

13. Commitments and Contingencies

Litigation activities

The Company is party to litigation, or threats thereof, both as defendant and plaintiff with some regularity, although individual cases that are material in size occur infrequently. As a defendant, the Company establishes reserves for claimed amounts that are considered probable and capable of estimation. If those cases are resolved for lesser amounts, the excess reserves are taken into income and, conversely, if those cases are resolved for larger than the amount the Company has accrued, the Company records additional expense. The Company believes it is unlikely that the results of its current legal proceedings for which it is the defendant, even if unfavorable, will be material. As a plaintiff, amounts that are collected can also result in sudden, non-recurring income.

Litigation results depend upon a variety of factors, including the availability of evidence, the credibility of witnesses, the performance of counsel, the state of the law, and the impressions of judges and jurors, any of which can be critical in importance, yet difficult, if not impossible, to predict. Consequently, cases currently pending, or future matters, may result in unexpected, and non-recurring losses, or income, from time to time. Finally, litigation results are often subject to judicial reconsideration, appeal and further negotiation by the parties, and as a result, the final impact of a particular judicial decision may be unknown for some time or may result in continued reserves to account for the potential of such post-verdict actions.

Specifically, the Company is party to a non-regulatory litigation claim, which is in response to penalties and fines paid to regulatory entities by a previously unconsolidated subsidiary in 2018 for the settlement of matters which focused on certain trading activity. While the Company believes it has meritorious defenses against the suit, the ultimate resolution of the matter could result in a loss in excess of the amount accrued. Given the ~~preliminary~~ status of the claim, the Company does not believe the excess, net of the acquisition-related indemnity, is ~~determinable.~~material.

The estimated losses for all other outstanding claims that are considered reasonably possible are not material.

14. Discontinued Operations

On August 16, 2021, the Company entered into a definitive agreement under which the Company sold the assets of the Company’s Rail Leasing business for a cash purchase price of approximately $543.1 million. In conjunction with the sale of the Rail Leasing business, the Company announced its intent to divest the remaining pieces of the Rail Leasing business and the Rail Repair business.

During the third quarter of 2021, substantially all of the assets and liabilities of our Rail business were classified as discontinued operations in the accompanying Condensed Consolidated Balance Sheets.

The table below summarizes the results of the Rail Leasing business and the Rail Repair business for the three and nine months ended September 30, 2021 and 2020 which are reflected in the consolidated statements of operations as discontinued operations.


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2021		2020		2021		2020
Sales and merchandising revenues	$	25,018	$	36,647	$	103,950	$	109,202
Cost of sales and merchandising revenues	19,065		28,049		78,089		80,187
Gross profit	5,953		8,598		25,861		29,015
Operating, administrative and general expenses	3,415		5,609		10,705		16,052
Interest expense, net	2,139		3,716		8,714		12,032
Other income, net:

Other income (loss), net	(1,330)		588		583		2,543
Income (loss) from discontinued operations before income taxes	(931)		(139)		7,025		3,474
Income tax provision (benefit)	(2,777)		(566)		(428)		250
Income (loss) from discontinued operations, net of income taxes	$	1,846	$	427	$	7,453	$	3,224

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The following table summarizes the assets and liabilities which are classified as discontinued operations at September 30, 2021, December 31, 2020 and September 30, 2020.


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	—
Accounts receivable, net	18,389		18,508		19,620
Inventories	6,803		7,627		7,016
Other current assets	1,369		6,524		18,496
Current assets held-for-sale	26,561		32,659		45,132
Other assets:
Rail assets leased to others, net	458		591,946		587,848
Property, plant and equipment, net	17,439		18,868		18,360
Goodwill	4,167		4,167		4,167
Other intangible assets, net	24		2,855		3,369
Right of use assets, net	16,521		22,644		24,561
Other assets, net	254		2,994		4,233
Total non-current assets held-for-sale	38,863		643,474		642,538
Total assets held-for-sale	$	65,424	$	676,133	$	687,670
Liabilities
Current liabilities:
Trade and other payables	$	4,223	$	2,874	$	6,607
Customer prepayments and deferred revenue	128		1,934		1,667
Current maturities of long-term debt	—		6,109		5,286
Accrued expenses and other current liabilities	9,076		14,360		14,436
Total current liabilities held-for-sale	13,427		25,277		27,996
Long-term lease liabilities	13,592		17,342		19,016
Long-term debt, less current maturities	—		30,087		198,889
Other long-term liabilities	—		667		3,429
Non-current liabilities held-for-sale	13,592		48,096		221,334
Total liabilities held-for-sale	$	27,019	$	73,373	$	249,330

The following table summarizes cash flow data relating to discontinued operations for the nine months ended September 30, 2021 and 2020:


	Nine months ended September 30,
(in thousands)	2021		2020
Depreciation and amortization	$	21,786	$	26,670
Capital expenditures	(8,368)		(29,460)
Proceeds from sale of assets	18,705		7,774
Loss on sale of discontinued operations	1,491		—
Non-cash operating activities - Gain on sale of railcars	(5,603)		(175)
Non-cash operating activities - fixed asset impairment	626		—
Non-cash investing activities - capital expenditures, consisting of unpaid capital expenditure liabilities at period end	—		1,081

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15. Goodwill

The changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2021 are as follows:


(in thousands)	Trade		Ethanol		Plant Nutrient		Total
Balance at December 31, 2020	$	122,067	$	8,789	$	686	$	131,542
Divestitures (a)	(2,200)		—		—		(2,200)
Balance at September 30, 2021	$	119,867	$	8,789	$	686	$	129,342

(a) Removal of allocated goodwill due to the sale of the grain asset location in Champaign, IL.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Such factors include, but are not limited to, the effects on our business from the COVID-19 pandemic and the pace of recovery from the pandemic, economic and political conditions, globally and in the markets we serve, fluctuations in cost and availability of commodities, weather and agricultural conditions, governmental regulations, the effectiveness of our internal control over financial reporting and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors. The reader is urged to carefully consider these risks and others, including those risk factors listed under Item 1A of ~~our Annual Report on Form 10-K for~~ the ~~year ended December 31, 2020 (“~~2020 Form ~~10-K”).~~10-K. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Critical Accounting Policies and Estimates

Our critical accounting policies and critical accounting estimates, as described in our 2020 Form 10-K, have not materially changed through the ~~second~~third quarter of 2021.

Executive Overview

Our operations are organized, managed and classified into ~~four~~three reportable business segments: Trade, Ethanol and Plant ~~Nutrient, and Rail.~~Nutrient. Each of these segments is generally based on the nature of products and services offered and aligns with the management structure. Due to the Rail Group segment being presented as discontinued operations, the Company has excluded it from the following discussions of financial condition and results of operations.

The agricultural commodity-based business is one in which changes in selling prices generally move in relationship to changes in purchase prices. Therefore, increases or decreases in prices of the agricultural commodities that the business deals in will have a relatively equal impact on sales and cost of sales and a much less significant impact on gross profit. As a result, changes in sales between periods may not necessarily be indicative of the overall performance of the business and more focus should be placed on changes in gross profit.

The Company has considered the potential impact of the book value of the Company’s total ~~shareholders’~~shareholders' equity exceeding the Company’s market capitalization at various points during the year for impairment indicators. The Company ~~continues to believe~~believes that the share price isat those points were not an accurate reflection of its current value. The long-term outlook remains positive for agricultural commodities due to market volatility driven by scarcity of supply and strong demand. Management believes that the market’s impact on the Company’s equity value does not accurately reflect the impact of these external factors on the Company. As a result of prior period tests, reviews of current operating results and other relevant market factors, management ultimately concluded that, while the Company's shareholders equity exceeded the market capitalization for certain portions of the period, that no impairment trigger existed as of ~~June~~September 30, 2021. However, adverse market conditions or alternative management decisions on operations may result in future impairment considerations.

Trade

The Trade Group’s ~~second~~third quarter results improved substantially over the prior year as the Group ~~saw~~continues to benefit from the ~~benefits of a~~ demand-driven agriculture rally. Commodity price volatility and market dislocations created merchandising opportunities for the Group to be well positioned ~~and execute on many commodities in both the domestic and export markets.~~across our broad portfolio of commodities. This demand driven rally ~~has~~ created an inversion in the futures market for the majority of the agricultural commodities stored by the Group's asset ~~business. However,~~business, resulting in strong elevation margins earlier in the year and less traditional ~~space income through the old crop carryout has been accelerated and exceeded~~storage income. The Group also benefited by strong elevation margins in our early harvest draw areas while starting to see storage income opportunities return to the wheat and merchandising results. The Group’s propane business added significant volume both through a new terminal location and displacement opportunities. Finally, the business continued to benefit from prior year reorganization synergies and other cost-cutting efforts.corn markets.

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Agricultural inventories on hand at ~~June~~September 30, 2021 were ~~85.8~~84.1 million bushels, of which ~~1.2~~2.0 million bushels were stored for others. These amounts compare to ~~74.4~~82.3 million bushels on hand at ~~June~~September 30, 2020, of which ~~1.7~~2.3 million bushels were stored for others. Total Trade storage space capacity, including temporary pile storage, was approximately ~~202~~186 million bushels at ~~June~~September 30, 2021 compared to ~~201~~200 million bushels at ~~June~~September 30, 2020.

We expect continued merchandising opportunities into harvest as scarcity of supply is impacting overall prices. Crop conditions in the majority of the Group's draw area are excellent and the business is ~~preparing for~~expecting to benefit from a large harvest. As the volume of grain in store is expected to remain at levels below recent years for some time, high prices and strong elevation margins are expected to continue into 2022.

Ethanol

The Ethanol Group's ~~second~~third quarter ~~results~~income from operations were ~~profitable, and a substantial improvement~~down despite higher revenues as compared to the prior ~~year. The Group's prior~~ year ~~results were significantly impacted~~largely driven by ~~COVID-19 as negative crush margins and weak demand plagued the ethanol industry.~~higher corn basis levels. The 2021 results reflect ~~a considerable~~ improvement in crush margins, overall ethanol demand and higher ethanol trading results. The Group also benefited from increased co-product ~~values, including high protein and traditional DDG products, as well as corn and other vegetable oils.~~values.

Spot ethanol crush margins have continued to improve from the prior year as gasoline demand has returned to pre-pandemic levels and ~~higher corn and soybean meal prices~~overall industry stocks remain low. Co-product values continue to support ~~feed product~~our overall margins as new renewable diesel demand continues to drive high corn oil values. While there is a level of uncertainty that persists regarding a tighter corn balance sheet and how quickly the ethanol industry as a whole will recover from COVID-19, the group has observed rebounding driving demand, strong coproduct margins and continued trading opportunities.

Ethanol and related co-products volumes for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 were as follows:


		Three months ended June 30,		Six months ended June 30,			Three months ended September 30,		Nine months ended September 30,
(in thousands)	(in thousands)	2021	2020	2021	2020	(in thousands)	2021	2020	2021	2020
Ethanol (gallons shipped)	Ethanol (gallons shipped)	186,396	119,528	358,608	266,873	Ethanol (gallons shipped)	184,655	169,409	538,955	436,282
E-85 (gallons shipped)	E-85 (gallons shipped)	11,914	4,396	19,805	13,489	E-85 (gallons shipped)	12,977	7,455	32,781	20,955
Corn oil (pounds shipped)	Corn oil (pounds shipped)	56,760	20,968	104,708	50,262	Corn oil (pounds shipped)	79,756	33,257	188,974	83,519
DDG (tons shipped)*	DDG (tons shipped)*	454	334	931	964	DDG (tons shipped)*	570	536	1,544	1,384

* DDG tons shipped converts wet tons to a dry ton equivalent amount.

Plant Nutrient

The Plant Nutrient Group's ~~second~~third quarter results were ~~considerably improved compared~~relatively comparable to the prior year period. ~~The improvement was largely driven~~Tons sold across the Group's product lines were down slightly period over period, however, the lower volumes were offset by improved margins in the Ag Supply Chain and Specialty Liquids product ~~lines and~~lines. The improved margins reflect demand from ~~favorable spring weather,~~ strong grower income and well-positioned fertilizer inventory. Engineered Granules maintained strong demand but contended against rising input costs and a tight labor market. ~~The group's outlook is positive, anticipating~~We expect demand to remain strong across all product lines which, along with ongoing tight supplies, should provide continued ~~higher fertilizer prices and strong demand into~~opportunities for the ~~fall application season.~~group.

Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately ~~463~~450 thousand tons for dry nutrients and approximately 509 thousand tons for liquid nutrients at ~~June~~September 30, 2021, compared to approximately ~~481~~477 thousand tons for dry nutrients and approximately ~~510~~509 thousand tons for liquid nutrients at ~~June~~September 30, 2020.

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Tons of product sold for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 were as follows:


		Three months ended June 30,		Six months ended June 30,			Three months ended September 30,		Nine months ended September 30,
(in thousands)	(in thousands)	2021	2020	2021	2020	(in thousands)	2021	2020	2021	2020
Ag Supply Chain	Ag Supply Chain	661	690	1,008	904	Ag Supply Chain	253	273	1,261	1,178
Specialty Liquids	Specialty Liquids	133	121	233	196	Specialty Liquids	71	64	304	257
Engineered Granules	Engineered Granules	165	151	323	273	Engineered Granules	60	59	383	331
Total tons	Total tons	959	962	1,564	1,373	Total tons	384	396	1,948	1,766

In the table above, Ag Supply Chain represents facilities principally engaged in the wholesale distribution and retail sale and application of primary agricultural nutrients such as bulk nitrogen, phosphorus, and potassium. Specialty Liquid locations produce and sell a variety of low-salt liquid starter fertilizers, micronutrients for agricultural use, and specialty products for use in various industrial processes. Engineered Granules include a variety of corncob-based products and facilities that primarily manufacture granulated dry products for use in specialty turf and agricultural ~~applications and a variety of corncob-based products.~~

~~Rail~~

Rail results increased driven by the opportunistic sale of older railcars due to favorable scrap prices. The leasing business improved due to lower maintenance expenses and bad debt recoveries despite slightly decreased average lease rates. Average utilization rates increased from 88.3 percent in the second quarter of 2020 to 89.7 percent in the second quarter of 2021. Rail assets under management (owned, leased or managed for financial institutions in non-recourse arrangements) at June 30, 2021 were 21.8 thousand compared to 24.0 thousand at June 30, 2020.

~~While the North American railcar industry is showing signs of a slow recovery, lease rates are expected to stay relatively flat for much of the year.~~applications.

Other

Our “Other” activities include corporate income and expense and cost for functions that provide support and services to the operating segments. The results include expenses and benefits not allocated to the operating segments and other elimination and consolidation adjustments.

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Operating Results

The following discussion focuses on the operating results as shown in the Condensed Consolidated Statements of Operations and includes a separate discussion by segment. Additional segment information is included herein in Note 12, Segment Information.

Comparison of the three months ended ~~June~~September 30, 2021 with the three months ended ~~June~~September 30, 2020 including a reconciliation of GAAP to non-GAAP measures:


		Three months ended June 30, 2021													Three months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Other		Total		(in thousands)	Trade		Ethanol		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	2,297,869	$	616,527	$	321,409	$	37,921	$	—	$	3,273,726	Sales and merchandising revenues	$	2,242,131	$	614,637	$	142,056	$	—	$	2,998,824
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	2,220,038		581,811		270,549		27,284		—		3,099,682		Cost of sales and merchandising revenues	2,143,935		608,886		124,168		—		2,876,989
Gross profit	Gross profit	77,831		34,716		50,860		10,637		—		174,044		Gross profit	98,196		5,751		17,888		—		121,835
Operating, administrative and general expenses	Operating, administrative and general expenses	61,514		6,577		26,568		4,416		10,901		109,976		Operating, administrative and general expenses	67,590		10,014		22,883		9,788		110,275
Interest expense (income), net	Interest expense (income), net	7,452		2,021		1,146		3,394		(559)		13,454		Interest expense (income), net	5,243		1,658		1,146		752		8,799
Equity in earnings of affiliates, net		845		—		—		—		—		845
Equity in earnings (losses) of affiliates, net														Equity in earnings (losses) of affiliates, net	(250)		—		—		—		(250)
Other income, net	Other income, net	4,067		38		849		237		116		5,307		Other income, net	16,886		683		309		(4,072)		13,806
Income (loss) before income taxes		$	13,777	$	26,156	$	23,995	$	3,064	$	(10,226)	$	56,766
Income (loss) before income taxes from continuing operations														Income (loss) before income taxes from continuing operations	$	41,999	$	(5,238)	$	(5,832)	$	(14,612)	$	16,317
Income (loss) before income taxes attributable to the noncontrolling interests	Income (loss) before income taxes attributable to the noncontrolling interests	—		2,625		—		—		—		2,625		Income (loss) before income taxes attributable to the noncontrolling interests	—		(1,602)		—		—		(1,602)
Non-GAAP Income (loss) before income taxes attributable to the Company		$	13,777	$	23,531	$	23,995	$	3,064	$	(10,226)	$	54,141
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations														Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	41,999	$	(3,636)	$	(5,832)	$	(14,612)	$	17,919


		Three months ended June 30, 2020													Three months ended September 30, 2020
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Other		Total		(in thousands)	Trade		Ethanol		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	1,351,168	$	223,745	$	279,825	$	35,442	$	—	$	1,890,180	Sales and merchandising revenues	$	1,432,922	$	349,957	$	102,707	$	—	$	1,885,586
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	1,291,786		226,344		241,060		24,724		—		1,783,914		Cost of sales and merchandising revenues	1,367,350		338,788		86,211		—		1,792,349
Gross profit	Gross profit	59,382		(2,599)		38,765		10,718		—		106,266		Gross profit	65,572		11,169		16,496		—		93,237
Operating, administrative and general expenses	Operating, administrative and general expenses	54,998		5,506		18,281		5,184		6,167		90,136		Operating, administrative and general expenses	58,385		5,650		21,175		7,400		92,610
Interest expense (income), net	Interest expense (income), net	5,056		1,900		1,463		3,833		(425)		11,827		Interest expense (income), net	4,380		1,651		1,287		(465)		6,853
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	79		—		—		—		—		79		Equity in earnings (losses) of affiliates, net	20		—		—		—		20
Other income (expense), net	Other income (expense), net	986		466		386		905		707		3,450		Other income (expense), net	3,114		553		579		(400)		3,846
Income (loss) before income taxes		$	393	$	(9,539)	$	19,407	$	2,606	$	(5,035)	$	7,832
Income (loss) before income taxes from continuing operations														Income (loss) before income taxes from continuing operations	$	5,941	$	4,421	$	(5,387)	$	(7,335)	$	(2,360)
Income (loss) before income taxes attributable to the noncontrolling interests	Income (loss) before income taxes attributable to the noncontrolling interests	—		(10,407)		—		—		—		(10,407)		Income (loss) before income taxes attributable to the noncontrolling interests	—		3,273		—		—		3,273
Non-GAAP Income (loss) before income taxes attributable to the Company		$	393	$	868	$	19,407	$	2,606	$	(5,035)	$	18,239
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations														Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	5,941	$	1,148	$	(5,387)	$	(7,335)	$	(5,633)

The Company uses Income (loss) before income taxes attributable to the Company from continuing operations, a non-GAAP financial measure as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance. This performance measure is not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures. Management believes that Income (loss) before income taxes attributable to the Company from continuing operations is a useful measure of the Company’s performance because it provides investors additional information about the Company's operations allowing evaluation of underlying business performance and period-to-period comparability. This measure is not intended to replace or be alternatives to Income (loss) before income taxes from continuing operations, the most directly comparable amounts reported under GAAP.

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Trade

Operating results for the Trade Group increased by ~~$13.4~~$36.1 million compared to the results of the same period last year. Sales and merchandising revenues increased by ~~$946.7~~$809.2 million and cost of sales and merchandising revenues increased by ~~$928.3~~$776.6 million for a favorable net gross profit impact of ~~$18.4~~$32.6 million. Most of the increase to sales and cost of sales is the result of increased commodity prices. The net increase in gross profit was ~~primarily~~ driven by our traditional asset locations which were significantly better than the prior year due to strong elevation margins in our early harvest draw areas. The group also had improved merchandising results as ~~weather and export demand~~geographic dislocations created volatility that allowed traders to identify arbitrage opportunities from geographical dislocations. This increase was partially offset by a decrease in the Group's traditional assets, however, as inverted futures markets in several commodities provided less space income, replacing and accelerating the income with merchandising opportunities noted above.opportunities.

Operating, administrative and general expenses increased by ~~$6.5~~$9.2 million. The increase from the prior year is primarily related to higher incentive compensation costs from improved operating results and other professional service fees.

Interest expense increased by ~~$2.4~~$0.9 million due to higher group borrowings on the Company's short-term line of credit compared to the prior year.

Other income increased by ~~$3.1~~$13.8 million from prior year largely driven by a gain on the sale of a grain asset location in the current year.

Ethanol

Operating results for the Ethanol Group ~~increased~~declined by ~~$22.7~~$4.8 million from the same period last year. Sales and merchandising revenues increased by ~~$392.8~~$264.7 million and cost of sales and merchandising revenues increased by ~~$355.5~~$270.1 million compared to prior year results. As a result gross profit ~~increased~~decreased by ~~$37.3~~$5.4 million compared to 2020 results. Most of the increase to sales and cost of sales is the result of increased corn and ethanol commodity prices. The ~~net increase~~decrease to gross profit in the current period results reflect ~~improved ethanol margins,~~ higher ~~coproduct~~corn basis levels offset in part by higher co-product sales ~~from DDGs~~ and ~~corn oil and strong merchandising~~third-party trading revenues. ~~The prior year results were significantly impacted by COVID-19.~~

Operating, administrative and general expenses increased by ~~$1.1~~$4.4 million from the increase in labor and incentive compensation costs from increased production and improved full year operating results, respectively.

Plant Nutrient

Operating results for the Plant Nutrient Group ~~increased~~declined by ~~$4.6~~$0.4 million compared to the same period in the prior year. Sales and merchandising revenues increased by ~~$41.6~~$39.3 million and cost of sales and merchandising revenues increased by ~~$29.5~~$38.0 million resulting in a ~~$12.1~~$1.3 million increase in gross profit. The increase in gross profit was driven by improved margins across the Ag Supply Chain and Specialty Liquids product lines ~~and reflects higher spring demand,~~due to strong grower income and well positioned fertilizer ~~inventory.~~inventory despite slightly lower volumes sold. Partially offsetting this increase were lower results in our Engineered Granules business from rising input costs and a tight labor market.

Operating, administrative and general expenses increased by ~~$8.3~~$1.7 million due to higher incentive compensation costs ~~from and improved operating results.~~

~~Interest expense decreased by $0.3 million due to lower interest rates.~~

~~Rail~~

Operating results increased by $0.5 million from the same period last year. Sales and merchandising revenues increased by $2.5 million from prior year. This was driven by a $4.9 million increase in car sale revenues and a $0.6 million increase in repair revenues that was partially offset by a $3.0 million decrease in leasing revenue. Cost of sales and merchandising revenues increased by $2.6 million compared to the prior year due to increased car sale revenues from the prior year. As a result, gross profit decreased by $0.1 million compared to the same period last year.

~~Operating, administrative and general expenses decreased by $0.8 million due to a decrease in bad debt expense as compared to the prior year. This was partially offset by higher incentive compensation~~ from improved operating results.

Interest expense decreased by ~~$0.4~~$0.1 million due to lower interest ~~rates.~~

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 27~~

~~Table of Contents~~

rates and reduced borrowings.

Other

Operating results for the ~~second~~third quarter declined by ~~$5.2~~$7.3 million compared to the same period in 2020. The increase in operating losses was primarily driven by higher operating, administrative and general expenses due to increased variable incentive-based compensation as a result of improved company-wide performance year over year ~~and higher professional services expenses.~~as well as stranded costs from the sale of our Rail Leasing business.

The Andersons, Inc. | Q3 2021 Form 10-Q | 29

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Income Taxes

For the three months ended ~~June~~September 30, 2021, the Company recorded an income tax expense from continuing operations of ~~$10.6~~$4.0 million at an effective rate of ~~18.7%~~24.7%. For the three months ended ~~June~~September 30, 2020, the Company recorded an income tax benefit from continuing operations of ~~$12.2~~$4.1 million at an effective tax rate of ~~155.8%~~175.8%. The change in effective tax rate for the three months ended ~~June~~September 30, 2021 as compared to the same period last year was primarily attributed to ~~the treatment of mark-to-market activity on certain contracts in the Ethanol segment. The prior year also reflects the benefit of~~additional tax benefits from net operating loss ~~carryback tax savings opportunities~~carry backs as ~~provided~~a result of the CARES Act in the prior year, offset by the ~~CARES Act.~~portion of income owned by noncontrolling interests that do not result in a tax expense.

Comparison of the ~~six~~nine months ended ~~June~~September 30, 2021 with the ~~six~~nine months ended ~~June~~September 30, 2020 including a reconciliation of GAAP to non-GAAP measures:


		Six months ended June 30, 2021													Nine months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Other		Total		(in thousands)	Trade		Ethanol		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	4,280,377	$	1,059,486	$	490,661	$	78,931	$	—	$	5,909,455	Sales and merchandising revenues	$	6,522,508	$	1,674,123	$	632,717	$	—	$	8,829,348
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	4,129,989		1,016,287		407,400		59,023		—		5,612,699		Cost of sales and merchandising revenues	6,273,924		1,625,173		531,568		—		8,430,665
Gross profit	Gross profit	150,388		43,199		83,261		19,908		—		296,756		Gross profit	248,584		48,950		101,149		—		398,683
Operating, administrative and general expenses	Operating, administrative and general expenses	118,445		13,233		49,967		7,290		20,913		209,848		Operating, administrative and general expenses	186,035		23,247		72,850		30,701		312,833
Interest expense (income), net	Interest expense (income), net	14,503		4,094		2,212		6,574		(760)		26,623		Interest expense (income), net	19,746		5,752		3,358		(8)		28,848
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	2,639		—		—		—		—		2,639		Equity in earnings (losses) of affiliates, net	2,389		—		—		—		2,389
Other income (expense), net	Other income (expense), net	7,553		1,365		1,436		1,911		584		12,849		Other income (expense), net	24,439		2,048		1,745		(3,489)		24,743
Income (loss) before income taxes		$	27,632	$	27,237	$	32,518	$	7,955	$	(19,569)	$	75,773
Income (loss) before income taxes from continuing operations														Income (loss) before income taxes from continuing operations	$	69,631	$	21,999	$	26,686	$	(34,182)	$	84,134
Income (loss) before income taxes attributable to the noncontrolling interests	Income (loss) before income taxes attributable to the noncontrolling interests	—		780		—		—		—		780		Income (loss) before income taxes attributable to the noncontrolling interests	—		(822)		—		—		(822)
Non-GAAP Income (loss) before income taxes attributable to the Company		$	27,632	$	26,457	$	32,518	$	7,955	$	(19,569)	$	74,993
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations														Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	69,631	$	22,821	$	26,686	$	(34,182)	$	84,956

Six months ended June 30, 2020
(in thousands) Trade Ethanol Plant Nutrient Rail Other Total
Sales and merchandising revenues $ 2,729,209 $ 536,784 $ 404,738 $ 72,555 $ — $ 3,743,286
Cost of sales and merchandising revenues 2,607,361 568,782 345,609 52,138 — 3,573,890
Gross profit 121,848 (31,998) 59,129 20,417 — 169,396
Operating, administrative and general expenses 123,153 11,621 38,022 10,443 11,957 195,196
Interest expense (income), net 12,245 4,257 3,248 8,316 (652) 27,414
Equity in earnings (losses) of affiliates, net 209 — — — — 209
Other income (expense), net 3,750 912 356 1,955 1,290 8,263
Income (loss) before income taxes $ (9,591) $ (46,964) $ 18,215 $ 3,613 $ (10,015) $ (44,742)
Income (loss) before income taxes attributable to the noncontrolling interests — (23,856) — — — (23,856)
Non-GAAP Income (loss) before income taxes attributable to the Company $ (9,591) $ (23,108) $ 18,215 $ 3,613 $ (10,015) $ (20,886)

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 28~~

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	Nine months ended September 30, 2020
(in thousands)	Trade		Ethanol		Plant Nutrient		Other		Total
Sales and merchandising revenues	$	4,162,130	$	886,742	$	507,445	$	—	$	5,556,317
Cost of sales and merchandising revenues	3,974,710		907,571		431,820		—		5,314,101
Gross profit	187,420		(20,829)		75,625		—		242,216
Operating, administrative and general expenses	181,539		17,271		59,197		19,356		277,363
Interest expense (income), net	16,624		5,908		4,535		(1,116)		25,951
Equity in earnings (losses) of affiliates, net	228		—		—		—		228
Other income (expense), net	6,865		1,465		935		889		10,154
Income (loss) before income taxes from continuing operations	$	(3,650)	$	(42,543)	$	12,828	$	(17,351)	$	(50,716)
Income (loss) before income taxes attributable to the noncontrolling interests	—		(20,583)		—		—		(20,583)
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	(3,650)	$	(21,960)	$	12,828	$	(17,351)	$	(30,133)

Trade

Operating results for the Trade Group increased by ~~$37.2~~$73.3 million compared to the results of the same period last year. Sales and merchandising revenues increased by ~~$1,551.2~~$2,360.4 million and cost of sales and merchandising revenues increased by ~~$1,522.6~~$2,299.2 million for an increased gross profit impact of ~~$28.5~~$61.2 million. Most of the increase to sales and cost of sales is the result of increased commodity prices. The net increase in gross profit was ~~primarily~~ driven by improved merchandising results as ~~weather and export demand~~geographic dislocations created volatility that allowed traders to identify arbitrage ~~opportunities from geographical dislocations. This increase was partially offset by a decrease~~opportunities. Additionally, our traditional asset locations which were significantly better than the prior year due to strong elevation margins in the Group's traditional assets, however, as inverted futures markets in several commodities provided less space income, replacing and accelerating the income with merchandising opportunities noted above.our early harvest draw areas.

The Andersons, Inc. | Q3 2021 Form 10-Q | 30

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Operating, administrative and general expenses ~~decreased~~increased by ~~$4.7~~$4.5 million. The ~~decrease~~increase from the prior year is primarily related to higher incentive compensation costs from improved operating results. Despite the ~~Company's~~expense increase, the Company continues to benefit from cost saving initiatives, much of which is headcount reduction, both from acquisition integration and in response to the COVID-19 pandemic. ~~The decrease was partially offset by higher incentive compensation costs from improved operating results.~~

Interest expense increased by ~~$2.3~~$3.1 million due to higher group borrowings on the Company's short-term line of credit compared to the prior year.

The increase in other income is largely driven by a gain on the sale of a grain asset location in the current year.

Ethanol

Operating results for the Ethanol Group increased by ~~$49.6~~$44.8 million from the same period last year. Sales and merchandising revenues increased by ~~$522.7~~$787.4 million and cost of sales and merchandising revenues increased by ~~$447.5~~$717.6 million compared to prior year. As a result, gross profit increased by ~~$75.2~~$69.8 million compared to prior year. Most of the increase to sales and cost of sales is the result of increased commodity prices. The net increase to gross profit in the current period results reflect significantly improved crush margins, higher ~~coproduct~~co-product sales from traditional and high-protein DDGs and corn oil and strong merchandising revenues. The prior year results were significantly impacted by COVID-19, resulting in a lack of demand and ~~the group recorded~~also included a $10.9 million inventory write ~~down and a $9.6 million mark to market loss.~~down.

Operating, administrative and general expenses increased by ~~$1.6~~$6.0 million primarily due to higher labor and incentive compensation costs from increased production and improved operating results, respectively.

Plant Nutrient

Operating results for the Plant Nutrient Group increased by ~~$14.3~~$13.9 million compared to the same period in the prior year. Sales and merchandising revenues increased ~~$85.9~~$125.3 million and cost of sales and merchandising revenues increased by ~~$61.8~~$99.7 million resulting in increased gross profit of ~~$24.1~~$25.5 million. Gross profit improved year over year due to increases in volumes and margins across the breadth of product lines and reflects higher demand, strong grower income and ~~well positioned~~well-positioned fertilizer inventory.

Operating, administrative and general expenses increased by ~~$11.9~~$13.7 million due to increased incentive compensation from improved operating results, and other variable expenses supporting additional volume in the current year.

Interest expense decreased by ~~$1.0~~$1.2 million from lower interest rates compared to the prior year.

~~Rail~~

Operating results increased by $4.3 million from the same period last year. Sales and merchandising revenues increased by $6.4 million. This was driven by a $11.5 million increase in car sale revenues and a $1.8 million increase in repair revenues that was partially offset by a $6.9 million decrease in leasing revenue. Cost of sales and merchandising increased by $6.9 million compared to the prior year driven by the book value of cars that were sold in the quarter. As a result, gross profit decreased by $0.5 million compared to the same period last year.

~~Operating, administrative and general expenses decreased by $3.2 million driven by a $1.6 million recovery of previously written off bad debt and overall lower expenses in the period.~~

~~Interest expense decreased by $1.7 million from lower borrowings and interest rates compared to the prior year.~~

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 29~~

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Other

Operating results declined by ~~$9.6~~$16.8 million from the same period last year. The increase in operating losses was primarily driven by increased variable incentive-based compensation in operating, administrative and general expenses due to improved company-wide performance year over year, ~~and higher professional services expenses.~~as well as stranded costs from the sale of our Rail Leasing business.

Income Taxes

For the ~~six~~nine months ended ~~June~~September 30, 2021, the Company recorded an income tax expense from continuing operations of ~~$16.4~~$18.1 million at an effective rate of ~~21.6%~~21.5%. For the ~~six~~nine months ended ~~June~~September 30, 2020, the Company recorded an income tax benefit from continuing operations of ~~$13.7~~$18.6 million at an effective tax rate of ~~30.5%~~36.7%. The change in effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2021 as compared to the same period last year primarily attributed ~~improved~~to additional tax benefits from net operating ~~results~~loss carry backs as a result of the CARES Act in the ~~current~~prior year, ~~including additional nondeductible compensation and increased foreign tax expense, as well as~~offset by the ~~treatment~~favorable impact of the mark-to-market activity on ~~certain~~the contracts within the ethanol segment and the portion of income owned by noncontrolling interests that do not result in ~~the Ethanol segment.~~a tax expense.

The Andersons, Inc. | Q3 2021 Form 10-Q | 31

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Liquidity and Capital Resources

Working Capital

At ~~June~~September 30, 2021, the Company had working capital related to its continuing operation of ~~$543.7~~$762.1 million. The following table presents changes in the components of current assets and current liabilities:


(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		Variance		(in thousands)	September 30, 2021		September 30, 2020		Variance
Current Assets:
Current Assets from Continuing Operations:								Current Assets from Continuing Operations:
Cash and cash equivalents	Cash and cash equivalents	$	27,538	$	30,011	$	(2,473)	Cash and cash equivalents	$	216,874	$	13,693	$	203,181
Accounts receivable, net	Accounts receivable, net	721,575		537,011		184,564		Accounts receivable, net	735,349		509,964		225,385
Inventories	Inventories	912,299		616,323		295,976		Inventories	1,017,804		747,588		270,216
Commodity derivative assets – current	Commodity derivative assets – current	507,148		112,089		395,059		Commodity derivative assets – current	409,647		140,065		269,582
Other current assets	Other current assets	65,740		102,755		(37,015)		Other current assets	92,159		83,807		8,352
Total current assets		$	2,234,300	$	1,398,189	$	836,111
Current Liabilities:
Total current assets from continuing operations								Total current assets from continuing operations	$	2,471,833	$	1,495,117	$	976,716
Current Liabilities from Continuing Operations:								Current Liabilities from Continuing Operations:
Short-term debt	Short-term debt	757,271		96,071		661,200		Short-term debt	281,199		100,405		180,794
Trade and other payables	Trade and other payables	547,169		503,892		43,277		Trade and other payables	825,923		635,206		190,717
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	58,155		45,734		12,421		Customer prepayments and deferred revenue	147,225		47,906		99,319
Commodity derivative liabilities – current	Commodity derivative liabilities – current	90,366		65,186		25,180		Commodity derivative liabilities – current	78,702		79,159		(457)
Current maturities of long-term debt	Current maturities of long-term debt	56,582		68,477		(11,895)		Current maturities of long-term debt	106,255		62,499		43,756
Accrued taxes								Accrued taxes	97,215		15,178		82,037
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	181,015		147,422		33,593		Accrued expenses and other current liabilities	173,215		128,187		45,028
Total current liabilities		$	1,690,558	$	926,782	$	763,776
Working Capital		$	543,742	$	471,407	$	72,335
Total current liabilities from continuing operations								Total current liabilities from continuing operations	$	1,709,734	$	1,068,540	$	641,194
Working Capital from Continuing Operations								Working Capital from Continuing Operations	$	762,099	$	426,577	$	335,522

Current assets from continuing operations as of ~~June~~September 30, 2021 increased ~~$836.1~~$976.7 million in comparison to those as of ~~June~~September 30, 2020. This increase was noted in all ~~areas except for cash and cash equivalents and other current assets.~~working capital asset accounts. The increases in accounts receivable, current commodity derivative assets and inventory balances can largely be attributable to the significant increases in the prices of agricultural commodities, including fertilizer, that the Company transacts in the ordinary course of business. The ~~decrease~~significant increase in ~~other current assets~~cash and cash equivalents is ~~attributable~~largely due to proceeds received during the ~~receipt of federal income tax refunds as a result~~third quarter of the ~~CARES Act in 2020.~~current year from the Rail Leasing business sale. See also the discussion below on additional sources and uses of cash for an understanding of the increase in cash from prior year.

Current liabilities from continuing operations increased ~~$763.8~~$641.2 million compared to the prior year primarily due to increases in short-term debt and trade and other payables. The increase in short-term debt is the result of higher working capital needs and driven by significant increases in the prices of agricultural commodities. The increase in trade and other payables is also the result of increasing agricultural commodity prices. Short-term borrowings, while typically at a seasonal high in the spring, are further supporting an unusual price run-up in our core commodities. As we liquidate these commodities in advance of harvest, we expect a reduction to the level of short-term borrowing. The increase in accrued expenses is largely driven by the income tax payable associated with the significant taxable gain realized in conjunction with the Rail Leasing business sale in the current ~~liabilities was slightly offset by reductions~~year. The increase in current maturities of long-term ~~debt.~~debt is due to the shift of ELEMENT debt as it was determined that it was virtually certain that a covenant violation would occur in the future.

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 3032

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Sources and Uses of Cash

Six Months Ended
(in thousands) June 30, 2021 June 30, 2020
Net cash (used in) provided by operating activities $ (245,494) $ 145,511
Net cash used in investing activities (23,474) (66,002)
Net cash provided by (used in) financing activities 267,550 (105,068)


	Nine Months Ended
(in thousands)	September 30, 2021		September 30, 2020
Net cash provided by operating activities	$	119,067	$	195,791
Net cash provided by (used in) investing activities	519,523		(70,159)
Net cash used in financing activities	(450,647)		(166,427)

Operating Activities

Our operating activities ~~used cash of $245.5 million and~~ provided cash of ~~$145.5~~$119.1 million and $195.8 million in the first ~~six~~nine months of 2021 and 2020, respectively. The ~~increase~~decrease in cash ~~used~~provided was primarily due to a result in the change of working capital, as discussed above, driven by significant increases in agricultural commodity prices. However, when you remove the impact from changes in working capital, cash provided by operating activities was much stronger than the prior period due to favorable operating results.

Investing Activities

Investing activities ~~used~~provided cash of ~~$23.5~~$519.5 million through the first ~~six~~nine months of 2021 compared to cash used of ~~$66.0~~$70.2 million in the prior year. The ~~decrease~~significant increase from the prior year was a result of proceeds received for the sale of the Rail Leasing business as well as a grain asset location within the Trade segment. Additional contributing factors to the increase were higher proceeds from sales of assets and railcars in the normal course of business, fewer purchased railcars and the continued strategic use of capital spending to enhance overall liquidity and cash management.

We expect to invest approximately ~~$100~~$85 million in property, plant and equipment in ~~2021; approximately 60% of which will be~~2021 related to ~~maintain facilities.~~continuing operations.

Financing Activities

Financing activities ~~provided~~used cash of ~~$267.6~~$450.6 million and ~~$105.1~~$166.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. This change from the prior year was largely due to ~~a significant increase in short term borrowings~~the Company's continued strategic effort to ~~cover working capital needs as~~pay down debt which was accelerated with proceeds from the ~~prices of agricultural commodities continue to rise.~~Rail Leasing sale.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of ~~$1,404.6~~$1,297.5 million in borrowings. Of the total capacity, ~~$404.6~~$397.5 million is non-recourse to the Company. As of ~~June~~September 30, 2021, the Company had ~~$1,173.5~~$1,169.9 million available for borrowing with ~~$237.2~~$160.1 million of that total being non-recourse to the Company.

The Company paid ~~$11.7~~$17.5 million in dividends in the first ~~six~~nine months of 2021 compared to ~~$11.5~~$17.2 million in the prior year. The Company paid $0.175 per common share for the dividends paid in January, April and ~~April~~July of 2021 and 2020. On ~~June 25,~~August 20, 2021, the Company declared a cash dividend of $0.175 per common share payable on ~~July~~October 22, 2021 to shareholders of record on ~~July 6,~~October 1, 2021.

Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of equity and limitations on additional debt. The Company has concluded that in relation to the $70 million non-recourse credit agreement associated with the ELEMENT operations, is virtually certain to violate a debt service coverage ratio covenant at December 31, 2021, if it does not otherwise obtain a waiver. ELEMENT plans to work with the lending party to do so, however, in the meantime has classified this debt as a current maturity of long-term debt as of September 30, 2021. The Company is in compliance with all ~~such~~other covenants as of ~~June~~September 30, 2021. In addition, certain of our long-term borrowings are collateralized by first mortgages on various ~~facilities or are collateralized by railcar assets.~~facilities. Our non-recourse long-term debt is collateralized by ethanol plant ~~assets and railcar~~ assets.

Because the Company is a significant borrower of short-term debt in peak seasons and the majority of this is variable rate debt, increases in interest rates could have a significant impact on our profitability. In addition, periods of high grain prices and/or unfavorable market conditions could require us to make additional margin deposits on our exchange traded futures contracts. Conversely, in periods of declining prices, the Company could receive a return of cash.

Management believes our sources of liquidity will be adequate to fund our operations, capital expenditures and service our indebtedness.

At ~~June~~September 30, 2021, the Company had standby letters of credit outstanding of ~~$25.5~~$26.0 million.

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 3133

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2020. There were no material changes in market risk, specifically commodity and interest rate risk during the ~~six~~nine months ended ~~June~~September 30, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of ~~June~~September 30, 2021 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the ~~second~~third quarter of 2021, identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 3234

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Part II. Other Information

Item 1. Legal Proceedings

The Company is subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. Except as described in Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 13, “Commitments and Contingencies,” in the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.

The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.

Item 1A. Risk Factors

The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the 2020 Form 10-K under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. There have been no material changes to the Company’s risk factors since the 2020 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period
Total Number of Shares Purchased (1)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 2021 12,760 $ 27.38 — —
May 2021 — — — —
June 2021 177 30.86 — —
Total 12,937 $ 27.43 — —


Periods	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)






July 2021	—	$	—	—	$	—
August 2021	—	—		—	—
September 2021	1,305	28.40		—	—
Total	1,305	$	28.40	—	$	100,000,000

(1) ~~During the three months ended June 30,~~As of August 20, 2021, the Company ~~acquired shares~~was authorized to purchase up to $100 million of the Company’s common stock ~~held by employees who tendered owned~~(the "Repurchase Plan") on or before August 20, 2024. As of September 30, 2021, none of the $100 million available to repurchase shares had been utilized. The Repurchase Plan does not obligate the Company to ~~satisfy tax withholding obligations.~~

~~(2) No~~acquire any specific number of shares. Under the Repurchase Plan, shares ~~were purchased as part of publicly announced~~may be repurchased in privately negotiated and/or open market transactions, including under plans ~~or programs.~~complying with Rule 10b5-1 under the Exchange Act.

Item 4. Mine Safety Disclosure

The Company is committed to protecting the occupational health and well-being of each of our employees. Safety is one of our core values and as an organization strive to ensure that safety is the first priority for all employees. Our internal objective is to achieve zero injuries and incidents across the Company by focusing on proactively identifying needed prevention activities, establishing standards and evaluating performance to mitigate any potential loss to people, equipment, production and the environment. The Company has implemented employee training that is geared toward maintaining a high level of awareness and knowledge of safety and health issues in the work environment. Management believes that through these policies the Company has developed an effective safety management system.

Under the Dodd-Frank Act, each operator of a coal or other mine is required to include certain mine safety results within its periodic reports filed with the SEC. As required by the reporting requirements included in §1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K, the required mine safety results regarding certain mining safety and health matters for each of our mine locations that are covered under the scope of the Dodd-Frank Act are included in Exhibit 95.1 of Item 6. Exhibits of this Quarterly Report on Form 10-Q.

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Item 6. Exhibits



Exhibit Number						Description

~~10.1~~2.1						~~Third Amendment to Credit~~Asset Purchase Agreement dated August 16, 2021

31.1*						Certification of the Chief Executive Officer under Rule 13(a)-14(a)/15d-14(a)

31.2*						Certification of the Chief Financial Officer under Rule 13(a)-14(a)/15d-14(a)

32.1**						Certifications Pursuant to 18 U.S.C. Section 1350

95.1*						Mine Safety Disclosure

101**						Inline XBRL Document Set for the Condensed Consolidated Financial Statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

104**						Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

* Filed herewith
** Furnished herewith

Items 3 and 5 are not applicable and have been omitted

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



						THE ANDERSONS, INC.

Date: ~~August~~November 4, 2021						/s/ Patrick E. Bowe
						Patrick E. Bowe
						President and Chief Executive Officer

Date: ~~August~~November 4, 2021						/s/ Brian A. Valentine
						Brian A. Valentine
						Executive Vice President and Chief Financial Officer

The Andersons, Inc. | Q2Q3 2021 Form 10-Q | 3537


	Six months ended June 30, 2020
(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total
Specialty nutrients	$	0	$	0	$	155,865	$	0	$	155,865
Primary nutrients	0		0		234,153		0		234,153
Service	4,043		0		2,778		17,394		24,215
Products and co-products	116,509		177,472		0		0		293,981
Frac sand and propane	71,314		0		0		0		71,314
Other	9,318		968		11,942		4,851		27,079
Total	$	201,184	$	178,440	$	404,738	$	22,245	$	806,607


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs



April 2021	12,760	$	27.38	—	—
May 2021	—	—		—	—
June 2021	177	30.86		—	—



Total	12,937	$	27.43	—	—