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/~~09/30/2022


☐			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	ý	Accelerated filer	☐
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 ~~33,860,914~~33,502,914 common shares outstanding at ~~July 22,~~October 21, 2022.

Table of Contents

THE ANDERSONS, INC.

INDEX


			Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations – Three and Si x Nine months ended ~~June~~September 30,, 2022 and 2021			1
Condensed Consolidated Statements of Comprehensive Income – Three and ~~Six~~Nine months ended ~~June~~ 3 0 ,September 30, 2022 and 2021			2
Condensed Consolidated Balance Sheets – ~~June~~ 3 0 ,September 30, 2022, December 31, 2021 and ~~June~~ 3 0 ,September 30, 2021			3
Condensed Consolidated Statements of Cash Flows – ~~Six~~Nine months ended ~~June~~ 3 0 ,September 30, 2022 and 2021			4
Condensed Consolidated Statements of Equity – Three and Si x Nine months ended ~~June~~ 3 0 , September 30, 2022 and 2021			5
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2826
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3836
Item 4. Controls and Procedures			3836
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			3937
Item 1A. Risk Factors			3937
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4038
Item 6. Exhibits			4038

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Sales and merchandising revenues	Sales and merchandising revenues	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524	Sales and merchandising revenues	$	4,219,325	$	2,998,824	$	12,647,896	$	8,829,348
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	4,219,776		3,072,398		8,078,195		5,553,676		Cost of sales and merchandising revenues	4,055,560		2,876,989		12,133,755		8,430,665
Gross profit	Gross profit	230,841		163,407		350,376		276,848		Gross profit	163,765		121,835		514,141		398,683
Operating, administrative and general expenses	Operating, administrative and general expenses	112,559		105,560		214,546		202,558		Operating, administrative and general expenses	115,539		110,275		330,085		312,833

Interest expense, net	Interest expense, net	16,921		10,060		27,780		20,049		Interest expense, net	14,982		8,799		42,762		28,848
Other income, net:	Other income, net:									Other income, net:
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	(6,034)		845		(6,278)		2,639		Equity in earnings (losses) of affiliates, net	681		(250)		(5,597)		2,389
Other income, net	Other income, net	22,826		5,070		26,988		10,938		Other income, net	794		13,806		27,782		24,743
Income before income taxes from continuing operations	Income before income taxes from continuing operations	118,153		53,702		128,760		67,818		Income before income taxes from continuing operations	34,719		16,317		163,479		84,134
Income tax provision from continuing operations	Income tax provision from continuing operations	15,753		9,677		19,856		14,038		Income tax provision from continuing operations	9,839		4,027		29,695		18,065
Net income from continuing operations	Net income from continuing operations	102,400		44,025		108,904		53,780		Net income from continuing operations	24,880		12,290		133,784		66,069
Income (loss) from discontinued operations, net of income taxes		(739)		2,099		(1,294)		5,606
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	19,392		1,846		18,099		7,453
Net income	Net income	101,661		46,124		107,610		59,386		Net income	44,272		14,136		151,883		73,522
Net income attributable to noncontrolling interests		21,856		2,625		22,303		780
Net income (loss) attributable to noncontrolling interests										Net income (loss) attributable to noncontrolling interests	7,524		(1,602)		29,827		(822)
Net income attributable to The Andersons, Inc.	Net income attributable to The Andersons, Inc.	$	79,805	$	43,499	$	85,307	$	58,606	Net income attributable to The Andersons, Inc.	$	36,748	$	15,738	$	122,056	$	74,344

Average number of shares outstanding - basic	Average number of shares outstanding - basic	33,850		33,263		33,795		33,226		Average number of shares outstanding - basic	33,825		33,284		33,805		33,246
Average number of share outstanding - diluted	Average number of share outstanding - diluted	34,416		33,579		34,416		33,617		Average number of share outstanding - diluted	34,407		33,634		34,469		33,670

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:
Basic earnings (loss):
Earnings per share attributable to The Andersons, Inc. common shareholders:										Earnings per share attributable to The Andersons, Inc. common shareholders:
Basic earnings:										Basic earnings:
Continuing operations	Continuing operations	$	2.38	$	1.25	$	2.56	$	1.60	Continuing operations	$	0.51	$	0.42	$	3.08	$	2.01
Discontinued operations	Discontinued operations	(0.02)		0.06		(0.04)		0.16		Discontinued operations	0.57		0.06		0.54		0.22
		$	2.36	$	1.31	$	2.52	$	1.76		$	1.08	$	0.48	$	3.62	$	2.23
Diluted earnings (loss):
Diluted earnings:										Diluted earnings:
Continuing operations	Continuing operations	$	2.34	$	1.23	$	2.52	$	1.58	Continuing operations	$	0.50	$	0.41	$	3.02	$	1.99
Discontinued operations	Discontinued operations	(0.02)		0.07		(0.04)		0.16		Discontinued operations	0.56		0.05		0.53		0.22
		$	2.32	$	1.30	$	2.48	$	1.74		$	1.06	$	0.46	$	3.55	$	2.21

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 1

Table of Contents

The Andersons, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Net income	Net income	$	101,661	$	46,124	$	107,610	$	59,386	Net income	$	44,272	$	14,136	$	151,883	$	73,522
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial loss and prior service cost		517		(234)		358		(337)
Change in unrecognized actuarial gain (loss) and prior service cost										Change in unrecognized actuarial gain (loss) and prior service cost	(131)		(102)		227		(439)
Foreign currency translation adjustments	Foreign currency translation adjustments	(5,679)		1,469		(5,581)		2,693		Foreign currency translation adjustments	(9,828)		(3,004)		(15,409)		(311)
Cash flow hedge activity	Cash flow hedge activity	6,697		(1,858)		19,119		7,883		Cash flow hedge activity	10,719		1,537		29,838		9,420
Other comprehensive income (loss)	Other comprehensive income (loss)	1,535		(623)		13,896		10,239		Other comprehensive income (loss)	760		(1,569)		14,656		8,670
Comprehensive income	Comprehensive income	103,196		45,501		121,506		69,625		Comprehensive income	45,032		12,567		166,539		82,192
Comprehensive income attributable to the noncontrolling interests		21,856		2,625		22,303		780
Comprehensive income (loss) attributable to the noncontrolling interests										Comprehensive income (loss) attributable to the noncontrolling interests	7,524		(1,602)		29,827		(822)
Comprehensive income attributable to The Andersons, Inc.	Comprehensive income attributable to The Andersons, Inc.	$	81,340	$	42,876	$	99,203	$	68,845	Comprehensive income attributable to The Andersons, Inc.	$	37,508	$	14,169	$	136,712	$	83,014

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 2

Table of Contents

The Andersons, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


(In thousands)	(In thousands)	June 30, 2022		December 31, 2021		June 30, 2021		(In thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Assets	Assets							Assets
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	86,035	$	216,444	$	27,538	Cash and cash equivalents	$	140,771	$	216,444	$	216,874
Accounts receivable, net	Accounts receivable, net	1,141,167		835,180		702,869		Accounts receivable, net	990,531		835,180		735,349
Inventories (Note 2)	Inventories (Note 2)	1,618,326		1,814,538		904,924		Inventories (Note 2)	1,556,426		1,814,538		1,017,804
Commodity derivative assets – current (Note 5)	Commodity derivative assets – current (Note 5)	638,357		410,813		507,148		Commodity derivative assets – current (Note 5)	502,097		410,813		409,647
Current assets held-for-sale (Note 14)	Current assets held-for-sale (Note 14)	18,627		20,885		28,555		Current assets held-for-sale (Note 14)	—		20,885		26,561
Other current assets	Other current assets	70,367		74,468		63,266		Other current assets	75,402		74,468		92,159
Total current assets	Total current assets	3,572,879		3,372,328		2,234,300		Total current assets	3,265,227		3,372,328		2,498,394
Other assets:	Other assets:							Other assets:
Goodwill	Goodwill	129,342		129,342		131,542		Goodwill	129,342		129,342		129,342
Other intangible assets, net	Other intangible assets, net	105,222		117,137		125,731		Other intangible assets, net	99,317		117,137		118,690
Right of use assets, net	Right of use assets, net	50,233		52,146		42,330		Right of use assets, net	59,146		52,146		50,270
Other assets held-for-sale (Note 14)	Other assets held-for-sale (Note 14)	24,298		43,169		620,745		Other assets held-for-sale (Note 14)	—		43,169		38,863
Other assets, net	Other assets, net	91,758		69,068		70,879		Other assets, net	99,650		69,068		74,923
Total other assets	Total other assets	400,853		410,862		991,227		Total other assets	387,455		410,862		412,088

Property, plant and equipment, net (Note 3)	Property, plant and equipment, net (Note 3)	763,443		786,029		823,563		Property, plant and equipment, net (Note 3)	765,939		786,029		797,660
Total assets	Total assets	$	4,737,175	$	4,569,219	$	4,049,090	Total assets	$	4,418,621	$	4,569,219	$	3,708,142
Liabilities and equity	Liabilities and equity							Liabilities and equity
Current liabilities:	Current liabilities:							Current liabilities:
Short-term debt (Note 4)	Short-term debt (Note 4)	$	1,161,428	$	501,792	$	757,271	Short-term debt (Note 4)	$	652,947	$	501,792	$	281,199
Trade and other payables	Trade and other payables	772,996		1,199,324		543,503		Trade and other payables	930,027		1,199,324		825,923
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	184,154		358,119		55,943		Customer prepayments and deferred revenue	258,828		358,119		147,225
Commodity derivative liabilities – current (Note 5)	Commodity derivative liabilities – current (Note 5)	185,903		128,911		90,366		Commodity derivative liabilities – current (Note 5)	137,168		128,911		78,702
Current maturities of long-term debt (Note 4)	Current maturities of long-term debt (Note 4)	53,951		32,256		50,069		Current maturities of long-term debt (Note 4)	112,029		32,256		106,255
Accrued taxes								Accrued taxes	23,439		37,668		97,215
Current liabilities held-for-sale (Note 14)	Current liabilities held-for-sale (Note 14)	7,314		13,379		25,185		Current liabilities held-for-sale (Note 14)	—		13,379		13,427
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	211,830		230,148		168,221		Accrued expenses and other current liabilities	206,069		192,480		173,215
Total current liabilities	Total current liabilities	2,577,576		2,463,929		1,690,558		Total current liabilities	2,320,507		2,463,929		1,723,161
Long-term lease liabilities	Long-term lease liabilities	28,929		31,322		27,134		Long-term lease liabilities	34,779		31,322		31,332
Long-term debt, less current maturities (Note 4)	Long-term debt, less current maturities (Note 4)	563,447		600,487		837,609		Long-term debt, less current maturities (Note 4)	497,988		600,487		542,821
Deferred income taxes	Deferred income taxes	63,383		71,127		173,212		Deferred income taxes	59,079		71,127		79,636
Other long-term liabilities held-for-sale (Note 14)	Other long-term liabilities held-for-sale (Note 14)	3,113		16,119		43,993		Other long-term liabilities held-for-sale (Note 14)	—		16,119		13,592
Other long-term liabilities	Other long-term liabilities	83,521		78,531		51,620		Other long-term liabilities	79,727		78,531		81,587
Total liabilities	Total liabilities	3,319,969		3,261,515		2,824,126		Total liabilities	2,992,080		3,261,515		2,472,129
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)	0		0		0		Commitments and contingencies (Note 13)
Shareholders’ equity:	Shareholders’ equity:							Shareholders’ equity:
Common shares, without par value (63,000 shares authorized; 34,064, 33,870 and 33,786 shares issued at 6/30/2022, 12/31/2021 and 6/30/2021, respectively)		142		140		140
Common shares, without par value (63,000 shares authorized; 34,064, 33,870 and 33,786 shares issued at 9/30/2022, 12/31/2021 and 9/30/2021, respectively)								Common shares, without par value (63,000 shares authorized; 34,064, 33,870 and 33,786 shares issued at 9/30/2022, 12/31/2021 and 9/30/2021, respectively)	142		140		140
Preferred shares, without par value (1,000 shares authorized; none issued)	Preferred shares, without par value (1,000 shares authorized; none issued)	—		—		—		Preferred shares, without par value (1,000 shares authorized; none issued)	—		—		—
Additional paid-in-capital	Additional paid-in-capital	378,740		368,595		357,606		Additional paid-in-capital	381,728		368,595		360,159
Treasury shares, at cost (62, 11 and 111 shares at 6/30/2022, 12/31/2021 and 6/30/2021, respectively)		(2,313)		(263)		(2,650)
Treasury shares, at cost (293, 11 and 110 shares at 9/30/2022, 12/31/2021 and 9/30/2021, respectively)								Treasury shares, at cost (293, 11 and 110 shares at 9/30/2022, 12/31/2021 and 9/30/2021, respectively)	(9,991)		(263)		(2,611)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	15,090		1,194		(1,837)		Accumulated other comprehensive income (loss)	15,850		1,194		(3,406)
Retained earnings	Retained earnings	775,495		702,759		669,241		Retained earnings	806,186		702,759		679,154
Total shareholders’ equity of The Andersons, Inc.	Total shareholders’ equity of The Andersons, Inc.	1,167,154		1,072,425		1,022,500		Total shareholders’ equity of The Andersons, Inc.	1,193,915		1,072,425		1,033,436
Noncontrolling interests	Noncontrolling interests	250,052		235,279		202,464		Noncontrolling interests	232,626		235,279		202,577
Total equity	Total equity	1,417,206		1,307,704		1,224,964		Total equity	1,426,541		1,307,704		1,236,013
Total liabilities and equity	Total liabilities and equity	$	4,737,175	$	4,569,219	$	4,049,090	Total liabilities and equity	$	4,418,621	$	4,569,219	$	3,708,142

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 3

Table of Contents

The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


		Six months ended June 30,					Nine months ended September 30,
		2022		2021			2022		2021
Operating Activities	Operating Activities					Operating Activities
Net income from continuing operations	Net income from continuing operations	$	108,904	$	53,780	Net income from continuing operations	$	133,784	$	66,069
Income (loss) from discontinued operations, net of income taxes		(1,294)		5,606
Income from discontinued operations, net of income taxes						Income from discontinued operations, net of income taxes	18,099		7,453
Net income	Net income	107,610		59,386		Net income	151,883		73,522
Adjustments to reconcile net income to cash used in operating activities:
Adjustments to reconcile net income to cash provided by (used in) operating activities:						Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	67,945		95,154		Depreciation and amortization	101,266		142,137
Bad debt expense, net	Bad debt expense, net	3,069		(1,156)		Bad debt expense, net	5,028		(2,182)
Equity in (earnings) losses of affiliates, net of dividends	Equity in (earnings) losses of affiliates, net of dividends	6,278		(2,639)		Equity in (earnings) losses of affiliates, net of dividends	5,597		(2,389)
Gain on sale of business from continuing operations						Gain on sale of business from continuing operations	—		(14,619)
(Gain) loss on sale of business from discontinued operations						(Gain) loss on sale of business from discontinued operations	(27,091)		1,491
Gain on sales of assets, net	Gain on sales of assets, net	(10,305)		(6,253)		Gain on sales of assets, net	(8,854)		(6,505)
Stock-based compensation expense	Stock-based compensation expense	4,708		4,112		Stock-based compensation expense	7,697		6,727
Deferred federal income tax	Deferred federal income tax	(13,755)		170		Deferred federal income tax	(20,819)		(93,725)

Other	Other	8,549		5,570		Other	10,055		10,404
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(289,196)		(58,338)		Accounts receivable	(140,866)		(89,902)
Inventories	Inventories	186,685		390,506		Inventories	236,854		266,865
Commodity derivatives	Commodity derivatives	(189,090)		(250,691)		Commodity derivatives	(104,901)		(158,741)
Other current and non-current assets	Other current and non-current assets	5,106		35,568		Other current and non-current assets	2,000		(3,357)
Payables and other current and non-current liabilities	Payables and other current and non-current liabilities	(609,403)		(516,883)		Payables and other current and non-current liabilities	(371,219)		(10,659)
Net cash used in operating activities		(721,799)		(245,494)
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(153,370)		119,067
Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant and equipment and capitalized software	Purchases of property, plant and equipment and capitalized software	(43,472)		(34,264)		Purchases of property, plant and equipment and capitalized software	(72,247)		(52,730)
Proceeds from sale of assets	Proceeds from sale of assets	4,672		3,794		Proceeds from sale of assets	4,810		3,999
Purchases of investments	Purchases of investments	(2,105)		(4,701)		Purchases of investments	(2,105)		(5,993)

Proceeds from sale of business from continuing operations						Proceeds from sale of business from continuing operations	5,171		18,130
Proceeds from sale of business from discontinued operations						Proceeds from sale of business from discontinued operations	56,302		543,102
Purchases of Rail assets	Purchases of Rail assets	(27,276)		(4,751)		Purchases of Rail assets	(27,464)		(6,039)
Proceeds from sale of Rail assets	Proceeds from sale of Rail assets	36,341		15,616		Proceeds from sale of Rail assets	36,706		18,705
Other	Other	1,746		832		Other	1,746		349
Net cash used in investing activities		(30,094)		(23,474)
Net cash provided by investing activities						Net cash provided by investing activities	2,919		519,523
Financing Activities	Financing Activities					Financing Activities
Net receipts (payments) under short-term lines of credit	Net receipts (payments) under short-term lines of credit	862,698		(258,157)		Net receipts (payments) under short-term lines of credit	361,318		(324,279)
Proceeds from issuance of short-term debt	Proceeds from issuance of short-term debt	350,000		608,250		Proceeds from issuance of short-term debt	350,000		608,250
Payments of short-term debt	Payments of short-term debt	(550,000)		—		Payments of short-term debt	(550,000)		(408,250)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	—		108,300		Proceeds from issuance of long-term debt	—		186,800
Payments of long-term debt	Payments of long-term debt	(15,077)		(177,586)		Payments of long-term debt	(22,585)		(485,527)
Contributions from noncontrolling interest owner	Contributions from noncontrolling interest owner	2,450		2,940		Contributions from noncontrolling interest owner	2,450		4,655
Distributions to noncontrolling interest owner	Distributions to noncontrolling interest owner	(9,980)		(25)		Distributions to noncontrolling interest owner	(34,930)		(25)
Payments of debt issuance costs	Payments of debt issuance costs	(7,802)		(2,059)		Payments of debt issuance costs	(7,802)		(2,059)
Dividends paid	Dividends paid	(12,245)		(11,677)		Dividends paid	(18,262)		(17,503)
Proceeds from exercises of stock options	Proceeds from exercises of stock options	5,024		—		Proceeds from exercises of stock options	5,024		—
Common stock repurchased						Common stock repurchased	(6,769)		—
Other	Other	(2,955)		(2,436)		Other	(2,955)		(12,709)
Net cash provided by financing activities		622,113		267,550
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	75,489		(450,647)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(629)		(167)		Effect of exchange rates on cash and cash equivalents	(711)		(192)
Decrease in cash and cash equivalents		(130,409)		(1,585)
Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	(75,673)		187,751
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	216,444		29,123		Cash and cash equivalents at beginning of period	216,444		29,123
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	86,035	$	27,538	Cash and cash equivalents at end of period	$	140,771	$	216,874

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Equity (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, 2021		$	140	$	355,961	$	(2,872)	$	(1,214)	$	631,652	$	198,884	$	1,182,551
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	Net income									43,499		2,625		46,124		Net income									15,738		(1,602)		14,136
Other comprehensive loss	Other comprehensive loss							(2,108)						(2,108)		Other comprehensive loss							(3,081)						(3,081)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							1,485						1,485		Amounts reclassified from accumulated other comprehensive income							1,512						1,512
Contributions from noncontrolling interests	Contributions from noncontrolling interests											980		980		Contributions from noncontrolling interests											1,715		1,715
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

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 ($0.1750 per common share)	Dividends declared ($0.1750 per common share)									(5,826)				(5,826)		Dividends declared ($0.1750 per common share)									(5,825)				(5,825)
Restricted share award dividend equivalents						84				(84)				—
Balance at June 30, 2021		$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964

Balance at March 31, 2022		$	142	$	375,794	$	(2,265)	$	13,555	$	701,799	$	228,196	$	1,317,221
Balance at September 30, 2021																Balance at September 30, 2021	$	140	$	360,159	$	(2,611)	$	(3,406)	$	679,154	$	202,577	$	1,236,013

Balance at June 30, 2022																Balance at June 30, 2022	$	142	$	378,740	$	(2,313)	$	15,090	$	775,495	$	250,052	$	1,417,206
Net income	Net income									79,805		21,856		101,661		Net income									36,748		7,524		44,272
Other comprehensive income	Other comprehensive income							750						750		Other comprehensive income							1,198						1,198
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							785						785		Amounts reclassified from accumulated other comprehensive income							(438)						(438)

Distributions to noncontrolling interests																Distributions to noncontrolling interests											(24,950)		(24,950)
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)			2,988		23								3,011
Purchase of treasury shares (232 shares)																Purchase of treasury shares (232 shares)					(7,701)								(7,701)
Dividends declared ($0.180 per common share)																Dividends declared ($0.180 per common share)									(6,057)				(6,057)

Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (1 share)				2,946		(63)								2,883
Dividends declared ($0.180 per common share)										(6,094)				(6,094)
Restricted share award dividend equivalents						15				(15)				—
Balance at June 30, 2022		$	142	$	378,740	$	(2,313)	$	15,090	$	775,495	$	250,052	$	1,417,206
Balance at September 30, 2022																Balance at September 30, 2022	$	142	$	381,728	$	(9,991)	$	15,850	$	806,186	$	232,626	$	1,426,541

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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, 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	Net income									58,606		780		59,386		Net income									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
Cash received from noncontrolling interests, net	Cash received from noncontrolling interests, net											2,940		2,940		Cash received from noncontrolling interests, net											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)				—		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

Balance at December 31, 2021	Balance at December 31, 2021	$	140	$	368,595	$	(263)	$	1,194	$	702,759	$	235,279	$	1,307,704	Balance at December 31, 2021	$	140	$	368,595	$	(263)	$	1,194	$	702,759	$	235,279	$	1,307,704
Net income	Net income									85,307		22,303		107,610		Net income									122,056		29,827		151,883
Other comprehensive income	Other comprehensive income							11,721						11,721		Other comprehensive income							12,919						12,919
Amounts reclassified from Accumulated other comprehensive income	Amounts reclassified from Accumulated other comprehensive income							2,175						2,175		Amounts reclassified from Accumulated other comprehensive income							1,737						1,737
Cash received from noncontrolling interests, net	Cash received from noncontrolling interests, net											2,450		2,450		Cash received from noncontrolling interests, net											2,450		2,450
Distributions to noncontrolling interests	Distributions to noncontrolling interests											(9,980)		(9,980)		Distributions to noncontrolling interests											(34,930)		(34,930)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (51 shares)	Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (51 shares)	2		10,091		(2,385)								7,708		Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (51 shares)	2		13,079		(2,362)								10,719
Dividends declared ($0.360 per common share)										(12,182)				(12,182)
Purchase of treasury shares (232 shares)																Purchase of treasury shares (232 shares)					(7,701)								(7,701)
Dividends declared ($0.540 per common share)																Dividends declared ($0.540 per common share)									(18,240)				(18,240)
Restricted share award dividend equivalents	Restricted share award dividend equivalents			54		335				(389)				—		Restricted share award dividend equivalents			54		335				(389)				—
Balance at June 30, 2022		$	142	$	378,740	$	(2,313)	$	15,090	$	775,495	$	250,052	$	1,417,206
Balance at September 30, 2022																Balance at September 30, 2022	$	142	$	381,728	$	(9,991)	$	15,850	$	806,186	$	232,626	$	1,426,541

See Notes to Condensed Consolidated Financial Statements

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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, which primarily consisted 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 Condensed Consolidated Statements of Operations for all periods presented. Throughout this Quarterly Report on Form 10-Q, with the exception of the Condensed Consolidated 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 Statements 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, 2022. An unaudited Condensed Consolidated Balance Sheet as of ~~June~~September 30, 2021 has been included as the Company operates in several seasonal industries.

The Condensed Consolidated Balance Sheet data at December 31, 2021 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, 2021 (the “2021 Form 10-K”).

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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, 2022		December 31, 2021		June 30, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Grain and other agricultural products (a)	Grain and other agricultural products (a)	$	1,241,933	$	1,427,708	$	636,380	Grain and other agricultural products (a)	$	1,198,790	$	1,427,708	$	732,512
Propane and frac sand (a)	Propane and frac sand (a)	19,483		23,780		11,265		Propane and frac sand (a)	25,797		23,780		18,481
Ethanol and co-products (a)	Ethanol and co-products (a)	179,175		184,354		155,993		Ethanol and co-products (a)	117,310		184,354		105,052
Plant nutrients and cob products	Plant nutrients and cob products	177,735		178,696		101,286		Plant nutrients and cob products	214,529		178,696		161,759
Total Inventories		$	1,618,326	$	1,814,538	$	904,924
Total inventories								Total inventories	$	1,556,426	$	1,814,538	$	1,017,804

(a) Includes RMI of ~~$1,214.4~~$1,167.0 million,, $1,410.9 million and ~~$612.2~~$700.3 million at ~~June~~September 30, 2022, December 31, 2021 and ~~June~~September 30, 2021, respectively.

Inventories do not include ~~1.3~~0.9 million, 3.0 million and ~~1.2~~2.0 million bushels of grain held in storage for others as of ~~June~~September 30, 2022, December 31, 2021 and ~~June~~September 30, 2021, 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.

3. Property, Plant and Equipment

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


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Land	Land	$	38,630	$	39,162	$	39,367	Land	$	38,508	$	39,162	$	39,159
Land improvements and leasehold improvements	Land improvements and leasehold improvements	91,542		91,122		93,166		Land improvements and leasehold improvements	93,026		91,122		89,941
Buildings and storage facilities	Buildings and storage facilities	370,453		368,577		377,946		Buildings and storage facilities	366,453		368,577		368,678
Machinery and equipment	Machinery and equipment	949,142		936,476		921,190		Machinery and equipment	956,471		936,476		920,232
Construction in progress	Construction in progress	31,237		20,676		19,723		Construction in progress	40,599		20,676		24,556
		1,481,004		1,456,013		1,451,392			1,495,057		1,456,013		1,442,566
Less: accumulated depreciation	Less: accumulated depreciation	717,561		669,984		627,829		Less: accumulated depreciation	729,118		669,984		644,906
Property, plant and equipment, net	Property, plant and equipment, net	$	763,443	$	786,029	$	823,563	Property, plant and equipment, net	$	765,939	$	786,029	$	797,660

Depreciation expense on property, plant and equipment used in continuing operations was ~~$55.8~~$83.2 million and ~~$62.5~~$97.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. Additionally, depreciation expense on property, plant and equipment used in continuing operations was ~~$27.5~~$27.3 million and ~~$31.4~~$35.2 million for the three months ended ~~June~~September 30, 2022 and 2021, respectively.

During the second quarter of 2022, the Company closed on the sale of the remaining assets of the Company's Frac Sand business for total consideration of $8.4 million resulting in a pre-tax gain of $3.7 million.

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4. Debt

Short-term and long-term debt at ~~June~~September 30, 2022, December 31, 2021 and ~~June~~September 30, 2021 consisted of the following:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Short-term debt – non-recourse	Short-term debt – non-recourse	$	97,668	$	65,485	$	120,020	Short-term debt – non-recourse	$	77,564	$	65,485	$	81,494
Short-term debt – recourse	Short-term debt – recourse	1,063,760		436,307		637,251		Short-term debt – recourse	575,383		436,307		199,705
Total short-term debt	Total short-term debt	$	1,161,428	$	501,792	$	757,271	Total short-term debt	$	652,947	$	501,792	$	281,199

Current maturities of long-term debt – non-recourse	Current maturities of long-term debt – non-recourse	$	7,707	$	7,601	$	3,691	Current maturities of long-term debt – non-recourse	$	65,738	$	7,601	$	69,932
Current maturities of long-term debt – recourse	Current maturities of long-term debt – recourse	46,244		24,655		46,378		Current maturities of long-term debt – recourse	46,291		24,655		36,323
Total current maturities of long-term debt	Total current maturities of long-term debt	$	53,951	$	32,256	$	50,069	Total current maturities of long-term debt	$	112,029	$	32,256	$	106,255

Long-term debt, less: current maturities – non-recourse	Long-term debt, less: current maturities – non-recourse	$	60,396	$	64,972	$	100,876	Long-term debt, less: current maturities – non-recourse	$	404	$	64,972	$	—
Long-term debt, less: current maturities – recourse	Long-term debt, less: current maturities – recourse	503,051		535,515		736,733		Long-term debt, less: current maturities – recourse	497,584		535,515		542,821
Total long-term debt, less: current maturities	Total long-term debt, less: current maturities	$	563,447	$	600,487	$	837,609	Total long-term debt, less: current maturities	$	497,988	$	600,487	$	542,821

On March 2, 2022, the Company completed an incremental term loan amendment to its credit agreement dated January 11, 2019. The amendment provided for a short-term note of $250.0 million in which the entire stated principal was due on May 31, 2022 (subsequently extended to August 31, 2022 as described below). On March 9, 2022, the Company completed an additional term loan amendment that expanded the short-term note capacity from $250.0 million to $450.0 million. On May 27, 2022, the Company completed an additional amendment to convert the $350.0 million then outstanding balance from the $450.0 million incremental term loan amendment to a revolving credit agreement with a capacity of up to $450.0 million. The entire amount outstanding ~~will be~~was due on August 31, ~~2022. The revolving credit agreement will bear interest at variable rates, which are based on SOFR plus an applicable spread. As~~2022 and was fully repaid during the third quarter of ~~June 30, 2022, the Company had drawn $250.0 million on the revolving credit agreement.~~2022.

On March 28, 2022, the Company amended its credit agreement dated January 11, 2019. The amendment increased borrowing capacity on the revolver from $900.0 million to $1,550.0 million and extended the maturity dates of the $140.6 million and $209.4 million long-term notes originally due in 2026 to March 26, 2027 and March 28, 2029, respectively. The amendment also transitions the reference rate in the credit agreement from LIBOR to SOFR. The revolver and term notes will bear interest at variable rates, which are based on SOFR plus an applicable spread.

During the first quarter of 2022, the Company repaid the remaining $200.0 million balance that was outstanding as of December 31, 2021 on a short-term note that was classified as recourse debt to the Company.

The total borrowing capacity of the Company's lines of credit at ~~June~~September 30, 2022 was ~~$2,501.7~~$1,978.6 million of which the Company had a total of ~~$1,315.2~~$1,302.6 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, 2022, December 31, 2021 and ~~June~~September 30, 2021, the estimated fair value of long-term debt, including the current portion, was ~~$617.5~~$602.2 million, $650.7 million and ~~$910.5~~$667.9 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 ELEMENT's non-recourse debt was out of compliance regarding the minimum working capital covenant as of August 31, 2022, and is virtually certain to be out of compliance for an owner's equity ratio covenant within the next 12 months. If ELEMENT does not cure or obtain a waiver for the covenants, it would result in an event of default, which could result in the lender accelerating the maturity of 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. As ELEMENT was out of compliance and has not yet cured or obtained a waiver, the $65.2 million of non-recourse debt associated with ELEMENT has been classified as current maturity of long-term debt as of September 30, 2022.

The Company is in compliance with all other financial covenants as of ~~June~~September 30, 2022.

The Andersons, Inc. | Q2Q3 2022 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 Renewables 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 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.

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, 2022, December 31, 2021 and ~~June~~September 30, 2021, 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, 2022		December 31, 2021		June 30, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Cash collateral paid	Cash collateral paid	$	70,442	$	165,250	$	219,469	Cash collateral paid	$	152,603	$	165,250	$	136,977
Fair value of derivatives	Fair value of derivatives	165,223		(36,843)		(180,842)		Fair value of derivatives	(42,578)		(36,843)		(14,100)
Net derivative asset position	Net derivative asset position	$	235,665	$	128,407	$	38,627	Net derivative asset position	$	110,025	$	128,407	$	122,877

The Andersons, Inc. | Q2Q3 2022 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, 2022											September 30, 2022
(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	$	707,542	$	14,257	$	29,223	$	1,945	$	752,967	Commodity derivative assets	$	529,456	$	7,743	$	24,143	$	1,488	$	562,830
Commodity derivative liabilities	Commodity derivative liabilities	(138,627)		(2,132)		(216,126)		(12,040)		(368,925)		Commodity derivative liabilities	(179,962)		(1,008)		(161,311)		(5,985)		(348,266)
Cash collateral paid	Cash collateral paid	69,442		—		1,000		—		70,442		Cash collateral paid	152,603		—		—		—		152,603
Balance sheet line item totals	Balance sheet line item totals	$	638,357	$	12,125	$	(185,903)	$	(10,095)	$	454,484	Balance sheet line item totals	$	502,097	$	6,735	$	(137,168)	$	(4,497)	$	367,167


	December 31, 2021
(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	$	339,321	$	4,677	$	23,762	$	1,209	$	368,969
Commodity derivative liabilities	(93,758)		(105)		(152,673)		(2,578)		(249,114)
Cash collateral paid	165,250		—		—		—		165,250
Balance sheet line item totals	$	410,813	$	4,572	$	(128,911)	$	(1,369)	$	285,105


		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		—		—		—		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 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 for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 ~~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)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Gains on commodity derivatives included in Cost of sales and merchandising revenues		$	230,188	$	73,688	$	264,186	$	240,673
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	$	(169,478)	$	(11,353)	$	94,708	$	229,320

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 11

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The Company had the following volume of commodity derivative contracts outstanding (on a gross basis) at ~~June~~September 30, 2022, December 31, 2021 and ~~June~~September 30, 2021:


		June 30, 2022		September 30, 2022
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons		Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	628,471	—		—	Corn	628,346	—	—
Soybeans	Soybeans	116,679	—		—	Soybeans	120,182	—	—
Wheat	Wheat	97,224	—		—	Wheat	60,877	—	—
Oats	Oats	37,355	—		—	Oats	31,147	—	—
Ethanol	Ethanol	—	200,388		—	Ethanol	—	196,660	—
Dried distillers grain	Dried distillers grain	—	—		318	Dried distillers grain	—	—	391
Soybean meal	Soybean meal	—	—		421	Soybean meal	—	—	483
Other	Other	8,549	25,767		3,032	Other	9,449	30,747	3,448
Subtotal	Subtotal	888,278	226,155		3,771	Subtotal	850,001	227,407	4,322
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	219,020	—		—	Corn	206,705	—	—
Soybeans	Soybeans	69,115	—		—	Soybeans	68,520	—	—
Wheat	Wheat	74,418	—		—	Wheat	87,580	—	—
Oats	Oats	650	—		—	Oats	1,450	—	—
Ethanol	Ethanol	—	94,794		—	Ethanol	—	91,770	—
Propane	Propane	—	25,578		—	Propane	—	50,904	—
Other	Other	95	546		360	Other	145	1,638	632
Subtotal	Subtotal	363,298	120,918		360	Subtotal	364,400	144,312	632
Total	Total	1,251,576	347,073		4,131	Total	1,214,401	371,719	4,954


	December 31, 2021
(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:
Corn	685,681	—	—
Soybeans	77,592	—	—
Wheat	109,547	—	—
Oats	31,627	—	—
Ethanol	—	192,447	—
Dried distillers grain	—	—	507
Soybean meal	—	—	544
Other	57,268	16,092	1,854
Subtotal	961,715	208,539	2,905
Exchange traded:
Corn	226,215	—	—
Soybeans	64,730	—	—
Wheat	65,020	—	—
Oats	1,300	—	—
Ethanol	—	100,884	—
Propane	—	31,542	—
Other	75	798	353
Subtotal	357,340	133,224	353
Total	1,319,055	341,763	3,258

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 12

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		June 30, 2021		September 30, 2021
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons		Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	696,674	—		—	Corn	687,177	—	—
Soybeans	Soybeans	75,507	—		—	Soybeans	96,061	—	—
Wheat	Wheat	129,264	—		—	Wheat	94,132	—	—
Oats	Oats	45,810	—		—	Oats	35,460	—	—
Ethanol	Ethanol	—	198,316		—	Ethanol	—	174,381	—
Dried distillers grain	Dried distillers grain	—	—		372	Dried distillers grain	—	—	533
Soybean meal	Soybean meal	—	—		411	Soybean meal	—	—	465
Other	Other	7,803	3,957		1,191	Other	31,086	2,264	1,394
Subtotal	Subtotal	955,058	202,273		1,974	Subtotal	943,916	176,645	2,392
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	243,190	—		—	Corn	236,395	—	—
Soybeans	Soybeans	49,375	—		—	Soybeans	60,660	—	—
Wheat	Wheat	80,004	—		—	Wheat	101,087	—	—
Oats	Oats	1,430	—		—	Oats	1,290	—	—
Ethanol	Ethanol	—	112,812		—	Ethanol	—	96,894	—

Propane	Propane	—	18,480		—	Propane	—	24,402	—
Other	Other	—	5		198	Other	—	8	241
Subtotal	Subtotal	373,999	131,297		198	Subtotal	399,432	121,304	241
Total	Total	1,329,057	333,570		2,172	Total	1,343,348	297,949	2,633

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 13~~

~~Table of Contents~~

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, 2022, December 31, 2021 and ~~June~~September 30, 2021, the Company had recorded the following amounts for the fair value of the Company's other derivatives:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
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	$	—	$	(174)	$	—	Interest rate contracts included in Accrued expenses and other current liabilities	$	—	$	(174)	$	—
Interest rate contracts included in Other long-term liabilities	Interest rate contracts included in Other long-term liabilities	—		—		(309)		Interest rate contracts included in Other long-term liabilities	—		—		(258)
Foreign currency contracts included in Other current (liabilities) assets	Foreign currency contracts included in Other current (liabilities) assets	(1,749)		(1,069)		1,523		Foreign currency contracts included in Other current (liabilities) assets	(5,685)		(1,069)		491
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments							Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets	Interest rate contracts included in Other current assets	$	3,276	$	—	$	—	Interest rate contracts included in Other current assets	$	6,925	$	—	$	—
Interest rate contracts included in Other assets	Interest rate contracts included in Other assets	15,047		4,574		3,849		Interest rate contracts included in Other assets	25,669		4,574		4,431
Interest rate contracts included in Accrued expenses and other current liabilities	Interest rate contracts included in Accrued expenses and other current liabilities	—		(5,206)		(6,944)		Interest rate contracts included in Accrued expenses and other current liabilities	—		(5,206)		(6,892)
Interest rate contracts included in Other long-term liabilities	Interest rate contracts included in Other long-term liabilities	—		(6,555)		(11,506)		Interest rate contracts included in Other long-term liabilities	—		(6,555)		(9,146)

The Andersons, Inc. | Q3 2022 Form 10-Q | 13

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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)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
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 expense, net	Interest rate derivative gains (losses) included in Interest expense, net	$	114	$	355	$	123	$	709	Interest rate derivative gains (losses) included in Interest expense, net	$	—	$	51	$	(123)	$	760

Derivatives designated as hedging instruments	Derivatives designated as hedging instruments									Derivatives designated as hedging instruments
Interest rate derivative gains (losses) included in Other comprehensive income (loss)	Interest rate derivative gains (losses) included in Other comprehensive income (loss)	$	8,923	$	2,471	$	25,464	$	(10,476)	Interest rate derivative gains (losses) included in Other comprehensive income (loss)	$	14,282	$	(2,044)	$	39,746	$	(12,520)
Interest rate derivative gains (losses) included in Interest expense, net	Interest rate derivative gains (losses) included in Interest expense, net	(1,013)		(1,656)		(2,631)		(3,273)		Interest rate derivative gains (losses) included in Interest expense, net	210		(1,746)		(2,420)		(5,020)

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 14~~

~~Table of Contents~~

Outstanding interest rate derivatives, as of ~~June~~September 30, 2022, 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	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.3%	Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.3%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	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	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	Swap	2022	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.6%	Swap	2022	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.6%
Swap	Swap	2022	2029	$	100.0	Interest rate component of debt - accounted for as a hedge	2.0%	Swap	2022	2029	$	100.0	Interest rate component of debt - accounted for as a hedge	2.0%
Swap								Swap	2022	2029	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 15~~

~~Table of Contents~~

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 Renewables sales contracts are derivatives under ASC 815, Derivatives and Hedging. The breakdown of revenues between the two 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)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Revenues under ASC 606	Revenues under ASC 606	$	956,013	$	623,813	$	1,633,869	$	1,110,908	Revenues under ASC 606	$	635,445	$	457,621	$	2,269,314	$	1,568,529
Revenues under ASC 815	Revenues under ASC 815	3,494,604		2,611,992		6,794,702		4,719,616		Revenues under ASC 815	3,583,880		2,541,203		10,378,582		7,260,819
Total revenues	Total revenues	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524	Total revenues	$	4,219,325	$	2,998,824	$	12,647,896	$	8,829,348

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

The Andersons, Inc. | Q3 2022 Form 10-Q | 14

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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, 2022 and 2021, respectively:


		Three months ended June 30, 2022									Three months ended September 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	—	$	—	$	104,357	$	104,357	Specialty nutrients	$	—	$	—	$	44,957	$	44,957
Primary nutrients	Primary nutrients	—		—		336,487		336,487		Primary nutrients	—		—		92,071		92,071
Products and co-products	Products and co-products	101,195		329,224		—		430,419		Products and co-products	88,201		323,676		—		411,877
Propane and frac sand	Propane and frac sand	46,935		—		—		46,935		Propane and frac sand	53,962		—		—		53,962
Other	Other	6,997		1,378		29,440		37,815		Other	4,084		1,646		26,848		32,578
Total	Total	$	155,127	$	330,602	$	470,284	$	956,013	Total	$	146,247	$	325,322	$	163,876	$	635,445


		Three months ended June 30, 2021									Three months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	—	$	—	$	84,915	$	84,915	Specialty nutrients	$	—	$	—	$	49,249	$	49,249
Primary nutrients	Primary nutrients	—		—		213,604		213,604		Primary nutrients	—		—		69,835		69,835
Products and co-products	Products and co-products	74,948		184,263		—		259,211		Products and co-products	70,924		183,225		—		254,149
Propane and frac sand	Propane and frac sand	36,649		—		—		36,649		Propane and frac sand	49,379		—		—		49,379
Other	Other	6,151		394		22,889		29,434		Other	10,991		1,046		22,972		35,009
Total	Total	$	117,748	$	184,657	$	321,408	$	623,813	Total	$	131,294	$	184,271	$	142,056	$	457,621


		Six months ended June 30, 2022									Nine months ended September 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	—	$	—	$	197,625	$	197,625	Specialty nutrients	$	—	$	—	$	242,582	$	242,582
Primary nutrients	Primary nutrients	—		—		426,369		426,369		Primary nutrients	—		—		518,439		518,439
Products and co-products	Products and co-products	209,066		561,918		—		770,984		Products and co-products	297,267		885,595		—		1,182,862
Propane and frac sand	Propane and frac sand	166,727		—		—		166,727		Propane and frac sand	220,690		—		—		220,690
Other	Other	13,239		2,593		56,332		72,164		Other	17,323		4,239		83,179		104,741
Total	Total	$	389,032	$	564,511	$	680,326	$	1,633,869	Total	$	535,280	$	889,834	$	844,200	$	2,269,314

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 16~~

~~Table of Contents~~


		Six months ended June 30, 2021									Nine months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	—	$	—	$	161,721	$	161,721	Specialty nutrients	$	—	$	—	$	210,971	$	210,971
Primary nutrients	Primary nutrients	—		—		285,263		285,263		Primary nutrients	—		—		355,098		355,098
Products and co-products	Products and co-products	146,936		329,907		—		476,843		Products and co-products	217,859		513,132		—		730,991
Propane and frac sand	Propane and frac sand	128,714		—		—		128,714		Propane and frac sand	178,094		—		—		178,094
Other	Other	10,538		4,153		43,676		58,367		Other	21,528		5,199		66,648		93,375
Total	Total	$	286,188	$	334,060	$	490,660	$	1,110,908	Total	$	417,481	$	518,331	$	632,717	$	1,568,529

Substantially all of the Company's revenues accounted for under ASC 606 during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, are recorded at a point in time instead of over time.

The Andersons, Inc. | Q3 2022 Form 10-Q | 15

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Contract balances

The balances of the Company’s contract liabilities were ~~$21.7~~$32.4 million and $100.8 million as of ~~June~~September 30, 2022 and December 31, 2021, 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 as of December 31, 2021, 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 and through the first quarter in preparation for the spring application season. As expected, the revenue recognized in the ~~current period~~second and third quarters satisfied the contract liabilities throughout the spring application season for ~~our~~the Plant Nutrient segment.

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 three months ended ~~June~~September 30, 2022, the Company recorded income tax expense from continuing operations of ~~$15.8~~$9.8 million. The Company's effective tax rate was ~~13.3%~~28.3% on income before taxes from continuing operations of ~~$118.2~~$34.7 million. The difference between the ~~13.3%~~28.3% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact of non-controlling interest and state and local income taxes.

For the three months ended September 30, 2021, the Company recorded income tax expense from continuing operations of $4.0 million. The Company’s effective tax rate was 24.7% on income from continuing operations of $16.3 million. The effective tax rate differs from the U.S. federal statutory tax rate of 21.0% due to the tax impact of certain discrete derivatives and hedging activities, state and local taxes, and nondeductible compensation offset by the tax impact of non-controlling interest.

For the nine months ended September 30, 2022, the Company recorded income tax expense from continuing operations of $29.7 million. The Company's effective tax rate was 18.2% on income before taxes from continuing operations of $163.5 million. The difference between the 18.2% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

For the ~~three~~nine months ended ~~June~~September 30, 2021, the Company recorded income tax expense from continuing operations of ~~$9.7~~$18.1 million. The Company’s effective tax rate was ~~18.0%~~21.5% on income from continuing operations of ~~$53.7~~$84.1 million. The effective tax rate differs from the U.S. federal statutory tax rate of 21.0% due to the tax impact of ~~certain discrete derivatives and hedging activities offset by~~ state and local taxes and nondeductible ~~compensation.~~

For the six months ended June 30, 2022, the Company recorded income tax expense from continuing operations of $19.9 million. The Company's effective tax rate was 15.4% on income before taxes from continuing operations of $128.8 million. The difference between the 15.4% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact ofcompensation offset by non-controlling interest ~~as well as~~and certain discrete derivatives and hedging ~~activities offset by state and local income taxes and nondeductible compensation.~~activities.

For the six months ended June 30, 2021, the Company recorded income tax expense from continuing operations of $14.0 million. The Company’s effective tax rate was 20.7% on income from continuing operations of $67.8 million. The effective tax rate differs from the U.S. federal statutory tax rate of 21.0% due to the tax impact of certain discrete derivatives and hedging activities offset by state and local taxes and nondeductible compensation.

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 1716

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8. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) ("AOCI") attributable to the Company for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Currency Translation Adjustment	Currency Translation Adjustment									Currency Translation Adjustment
Beginning balance	Beginning balance	$	5,729	$	6,963	$	5,631	$	5,739	Beginning balance	$	50	$	8,432	$	5,631	$	5,739
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(5,679)		1,469		(5,581)		2,693		Other comprehensive income (loss) before reclassifications	(9,828)		(3,004)		(15,409)		(311)

Tax effect	Tax effect	—		—		—		—		Tax effect	—		—		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(5,679)		1,469		(5,581)		2,693		Other comprehensive income (loss), net of tax	(9,828)		(3,004)		(15,409)		(311)
Ending balance	Ending balance	$	50	$	8,432	$	50	$	8,432	Ending balance	$	(9,778)	$	5,428	$	(9,778)	$	5,428
Hedging Adjustment	Hedging Adjustment									Hedging Adjustment
Beginning balance	Beginning balance	$	7,087	$	(8,365)	$	(5,335)	$	(18,106)	Beginning balance	$	13,784	$	(10,223)	$	(5,335)	$	(18,106)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	7,910		(3,514)		22,833		4,613		Other comprehensive income (loss) before reclassifications	14,492		(146)		37,325		4,467
Amounts reclassified from AOCI (a)	Amounts reclassified from AOCI (a)	1,013		2,208		2,631		4,360		Amounts reclassified from AOCI (a)	(210)		2,244		2,421		6,604
Tax effect	Tax effect	(2,226)		(552)		(6,345)		(1,090)		Tax effect	(3,563)		(561)		(9,908)		(1,651)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	6,697		(1,858)		19,119		7,883		Other comprehensive income (loss), net of tax	10,719		1,537		29,838		9,420
Ending balance	Ending balance	$	13,784	$	(10,223)	$	13,784	$	(10,223)	Ending balance	$	24,503	$	(8,686)	$	24,503	$	(8,686)
Pension and Other Postretirement Adjustment	Pension and Other Postretirement Adjustment									Pension and Other Postretirement Adjustment
Beginning balance	Beginning balance	$	481	$	(70)	$	640	$	33	Beginning balance	$	998	$	(304)	$	640	$	33
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	845		(63)		914		5		Other comprehensive income (loss) before reclassifications	69		69		983		74
Amounts reclassified from AOCI (b)	Amounts reclassified from AOCI (b)	(228)		(228)		(456)		(456)		Amounts reclassified from AOCI (b)	(228)		(228)		(684)		(684)
Tax effect	Tax effect	(100)		57		(100)		114		Tax effect	28		57		(72)		171
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	517		(234)		358		(337)		Other comprehensive income (loss), net of tax	(131)		(102)		227		(439)
Ending balance	Ending balance	$	998	$	(304)	$	998	$	(304)	Ending balance	$	867	$	(406)	$	867	$	(406)
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	—		—		—		—		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	$	15,090	$	(1,837)	$	15,090	$	(1,837)	Total AOCI Ending Balance	$	15,850	$	(3,406)	$	15,850	$	(3,406)

(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.

(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 2022 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,
		2022		2021		2022		2021			2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Net income from continuing operations	Net income from continuing operations	$	102,400	$	44,025	$	108,904	$	53,780	Net income from continuing operations	$	24,880	$	12,290	$	133,784	$	66,069
Net income attributable to noncontrolling interests(a)		21,856		2,625		22,303		780
Net income (loss) attributable to noncontrolling interests(a)										Net income (loss) attributable to noncontrolling interests(a)	7,524		(1,602)		29,827		(822)
Net income attributable to The Andersons Inc. common shareholders from continuing operations	Net income attributable to The Andersons Inc. common shareholders from continuing operations	$	80,544	$	41,400	$	86,601	$	53,000	Net income attributable to The Andersons Inc. common shareholders from continuing operations	$	17,356	$	13,892	$	103,957	$	66,891

Income (loss) from discontinued operations, net of income taxes		$	(739)	$	2,099	$	(1,294)	$	5,606
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	$	19,392	$	1,846	$	18,099	$	7,453

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	33,850		33,263		33,795		33,226		Weighted average shares outstanding – basic	33,825		33,284		33,805		33,246
Effect of dilutive awards	Effect of dilutive awards	566		316		621		391		Effect of dilutive awards	582		350		664		424
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	34,416		33,579		34,416		33,617		Weighted average shares outstanding – diluted	34,407		33,634		34,469		33,670

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:
Basic earnings (loss):
Earnings per share attributable to The Andersons, Inc. common shareholders:										Earnings per share attributable to The Andersons, Inc. common shareholders:
Basic earnings:										Basic earnings:
Continuing operations	Continuing operations	$	2.38	$	1.25	$	2.56	$	1.60	Continuing operations	$	0.51	$	0.42	$	3.08	$	2.01
Discontinued operations	Discontinued operations	(0.02)		0.06		(0.04)		0.16		Discontinued operations	0.57		0.06		0.54		0.22
		$	2.36	$	1.31	$	2.52	$	1.76		$	1.08	$	0.48	$	3.62	$	2.23
Diluted earnings (loss):
Diluted earnings:										Diluted earnings:
Continuing operations	Continuing operations	$	2.34	$	1.23	$	2.52	$	1.58	Continuing operations	$	0.50	$	0.41	$	3.02	$	1.99
Discontinued operations	Discontinued operations	(0.02)		0.07		(0.04)		0.16		Discontinued operations	0.56		0.05		0.53		0.22
		$	2.32	$	1.30	$	2.48	$	1.74		$	1.06	$	0.46	$	3.55	$	2.21

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

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 1918

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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, 2022, December 31, 2021 and ~~June~~September 30, 2021:


(in thousands)	(in thousands)	June 30, 2022								(in thousands)	September 30, 2022
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)	$	235,665	$	218,819	$	—	$	454,484	Commodity derivatives, net (a)	$	110,025	$	257,142	$	—	$	367,167
Provisionally priced contracts (b)	Provisionally priced contracts (b)	38,061		(27,945)		—		10,116		Provisionally priced contracts (b)	19,685		(41,188)		—		(21,503)
Convertible preferred securities (c)	Convertible preferred securities (c)	—		—		16,803		16,803		Convertible preferred securities (c)	—		—		16,946		16,946
Other assets and liabilities (d)	Other assets and liabilities (d)	1,097		18,323		—		19,420		Other assets and liabilities (d)	(3,037)		32,594		—		29,557
Total	Total	$	274,823	$	209,197	$	16,803	$	500,823	Total	$	126,673	$	248,548	$	16,946	$	392,167


(in thousands)	December 31, 2021
Assets (liabilities)	Level 1		Level 2		Level 3		Total

Commodity derivatives, net (a)	$	128,407	$	156,698	$	—	$	285,105
Provisionally priced contracts (b)	43,944		(89,797)		—		(45,853)
Convertible preferred securities (c)	—		—		11,618		11,618
Other assets and liabilities (d)	2,784		(7,361)		—		(4,577)
Total	$	175,135	$	59,540	$	11,618	$	246,293


(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	$	—	$	428,938	Commodity derivatives, net (a)	$	122,877	$	212,218	$	—	$	335,095
Provisionally priced contracts (b)	Provisionally priced contracts (b)	32,710		(25,210)		—		7,500		Provisionally priced contracts (b)	28,469		(25,134)		—		3,335
Convertible preferred securities (c)	Convertible preferred securities (c)	—		—		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)		—		(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

(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).

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.

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 2019

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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 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					Convertible Preferred Securities
(in thousands)	(in thousands)	2022		2021		(in thousands)	2022		2021
Assets at January 1,	Assets at January 1,	$	11,618	$	8,849	Assets at January 1,	$	11,618	$	8,849
Additional investments	Additional investments	3,883		2,800		Additional investments	3,883		2,800
Gains included in Other income, net	Gains included in Other income, net	404		—		Gains included in Other income, net	404		—
Assets at March 31,	Assets at March 31,	$	15,905	$	11,649	Assets at March 31,	$	15,905	$	11,649
Additional Investments	Additional Investments	772		1,901		Additional Investments	772		1,901
Gains included in Other income, net	Gains included in Other income, net	126		—		Gains included in Other income, net	126		—
Assets at June 30,	Assets at June 30,	$	16,803	$	13,550	Assets at June 30,	$	16,803	$	13,550

Additional investments						Additional investments	—		300
Gains (losses) included in Other income, net						Gains (losses) included in Other income, net	143		(2,784)
Assets at September 30,						Assets at September 30,	$	16,946	$	11,066

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 21~~

~~Table of Contents~~

The following tables summarize quantitative information about the Company's Level 3 fair value measurements as of ~~June~~September 30, 2022, December 31, 2021 and ~~June~~September 30, 2021:

Quantitative Information about Recurring Level 3 Fair Value Measurements

Fair Value as of

(in thousands)

June 30, 2022

December 31, 2021

June 30, 2021

Valuation Method

Unobservable Input

Weighted Average

(in thousands)

September 30, 2022

December 31, 2021

September 30, 2021

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

16,803

11,618

13,550

Implied based on market prices

N/A

Convertible preferred securities (a)

16,946

11,618

11,066

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.

~~Quantitative Information about Non-Recurring Level 3 Fair Value Measurements~~

~~(in thousands)~~

~~Fair Value as of 6/30/2022~~

~~Valuation Method~~

~~Unobservable Input~~

~~Weighted Average~~

~~Equity method investment (a)~~

~~11,538~~

~~Discounted cash flow analysis~~

~~Various~~

~~N/A~~

~~(a) The Company recorded an other-than-temporary impairment charge on an existing equity method investment. The fair value of the investment was determined using a discounted cash flow analysis.~~

Quantitative Information about Non-Recurring Level 3 Fair Value Measurements

(in thousands)

Fair Value as of 12/31/2021

Valuation Method

Unobservable Input

Weighted Average

Frac sand assets (b)

2,946

Third party appraisal

Various

N/A

Real property (c)

700

Market approach

Various

N/A

(b) The Company recognized impairment charges on long lived assets related to its frac sand business. The fair value of the assets were determined using prior transactions and third-party appraisals. These measures are considered Level 3 inputs on a nonrecurring basis.

(c) The Company recognized impairment charges on certain Trade assets and measured the fair value using Level 3 inputs on a nonrecurring basis. The fair value of the assets was determined using prior transactions in the local market and a recent sale of comparable Trade group assets held by the Company.

There were no non-recurring fair value measurements as of ~~June~~September 30, 2022 and September 30, 2021.

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

The Andersons, Inc. | Q3 2022 Form 10-Q | 20

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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 Renewables 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)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Sales revenues	Sales revenues	$	103,106	$	85,294	$	189,255	$	151,940	Sales revenues	$	102,565	$	77,577	$	291,820	$	229,517
Purchases of product and capital assets	Purchases of product and capital assets	11,983		8,662		38,409		20,336		Purchases of product and capital assets	13,405		9,715		51,814		30,051


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Accounts receivable	Accounts receivable	$	17,560	$	9,984	$	11,835	Accounts receivable	$	12,016	$	9,984	$	13,523
Accounts payable	Accounts payable	3,060		6,034		2,287		Accounts payable	4,226		6,034		2,514

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 22~~

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12. Segment Information

The Company’s operations include 3three 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 Renewables 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. 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.


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Revenues from external customers	Revenues from external customers									Revenues from external customers
Trade	Trade	$	3,097,767	$	2,297,869	$	6,182,448	$	4,280,377	Trade	$	3,240,526	$	2,242,131	$	9,422,974	$	6,522,508
Renewables	Renewables	882,567		616,527		1,565,798		1,059,486		Renewables	814,923		614,637		2,380,721		1,674,123
Plant Nutrient	Plant Nutrient	470,283		321,409		680,325		490,661		Plant Nutrient	163,876		142,056		844,201		632,717
Total	Total	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524	Total	$	4,219,325	$	2,998,824	$	12,647,896	$	8,829,348


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations									Income (loss) before income taxes from continuing operations
Trade	Trade	$	23,666	$	13,777	$	27,335	$	27,632	Trade	$	40,658	$	41,999	$	67,993	$	69,631
Renewables1	Renewables1	67,776		26,156		73,738		27,237		Renewables1	15,901		(5,238)		89,639		21,999
Plant Nutrient	Plant Nutrient	38,311		23,995		49,054		32,518		Plant Nutrient	(11,609)		(5,832)		37,445		26,686
Other	Other	(11,600)		(10,226)		(21,367)		(19,569)		Other	(10,231)		(14,612)		(31,598)		(34,182)
Income before income taxes from continuing operations	Income before income taxes from continuing operations	$	118,153	$	53,702	$	128,760	$	67,818	Income before income taxes from continuing operations	$	34,719	$	16,317	$	163,479	$	84,134

1 Includes income (loss) attributable to noncontrolling interests of ~~$21.9~~$7.5 million and ~~$2.6~~$(1.6) million for the three months ended ~~June~~September 30, 2022 and 2021, respectively, and ~~$22.3~~$29.8 million and ~~$0.8~~$(0.8) million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 2321

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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 status of the claim, the Company does not believe the excess, net of the acquisition-related indemnity, is material.

The Andersons Marathon Holdings LLC ("TAMH") received a Pre-Filing Negotiation Offer from the United States Environmental Protection Agency ("U.S. EPA") regarding the ethanol facilities owned by TAMH. The Company owns 50.1% of TAMH, which is a consolidated subsidiary of the Company. The U.S. EPA investigated alleged recordkeeping and reporting violations under the Emergency Planning and Community Right-to-Know Act. The Company settled this matter with the U.S. EPA for approximately $1.7 million in the second quarter of 2022.

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

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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.

In the ~~second~~third quarter of 2022, the Company ~~entered into an~~finalized the definitive agreement to sell the Rail Repair business and divested substantially all of the remaining leases under the Rail Leasing business. The sale of the Rail Repair business for a purchase price of approximately $56.3 million, resulted in a pre-tax gain of approximately $27.1 million that was recorded in Other income, net in the table below.

~~Starting~~As a result of the sale of the Rail Leasing business and the intent to divest the Rail Repair business in the third quarter of 2021, substantially all of the assets and liabilities of ~~our~~the former Rail ~~business were~~segment was classified as ~~discontinued operations~~held for sale in the accompanying Condensed Consolidated Balance Sheets.

As a part of the Rail Repair agreement, the Company retained the working capital from the Rail Repair business along with an immaterial group of right of use assets and lease liabilities from the Rail Leasing business that were not sold. The Company no longer has the intent to sell these remaining Rail items and has included these balances in continuing operations within the Condensed Consolidated Balance Sheet as of September 30, 2022.

The table below summarizes the results of the Rail Leasing business and the Rail Repair business for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 which are reflected in the Consolidated Statements of Operations as discontinued ~~operations.~~operations:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2022		2021		2022		2021
Sales and merchandising revenues	$	513	$	25,018	$	25,704	$	103,950
Cost of sales and merchandising revenues	1,932		19,065		25,880		78,089
Gross profit (loss)	(1,419)		5,953		(176)		25,861
Operating, administrative and general expenses	333		3,415		6,146		10,705
Interest expense, net	—		2,139		—		8,714
Other income (loss), net	26,970		(1,330)		33,590		583
Income (loss) from discontinued operations before income taxes	25,218		(931)		27,268		7,025
Income tax provision	5,826		(2,777)		9,169		(428)
Income (loss) from discontinued operations, net of income taxes	$	19,392	$	1,846	$	18,099	$	7,453

Three months ended June 30, Six months ended June 30,
(in thousands) 2022 2021 2022 2021
Sales and merchandising revenues $ 12,076 $ 37,921 $ 25,191 $ 78,931
Cost of sales and merchandising revenues 12,877 27,284 23,948 59,023
Gross profit (loss) (801) 10,637 1,243 19,908
Operating, administrative and general expenses 4,434 4,416 5,813 7,290
Interest expense, net — 3,394 — 6,574
Other income, net 6,547 237 6,620 1,911
Income from discontinued operations before income taxes 1,312 3,064 2,050 7,955
Income tax provision 2,051 965 3,344 2,349
Income (loss) from discontinued operations, net of income taxes $ (739) $ 2,099 $ (1,294) $ 5,606

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The following table summarizes the assets and liabilities which are classified as discontinued operations at ~~June~~September 30, 2022, December 31, 2021 and ~~June~~September 30, ~~2021.~~2021:

(in thousands) June 30,
2022 December 31,
2021 June 30,
2021
Assets
Current assets:
Accounts receivable, net $ 11,998 $ 12,643 $ 18,707
Inventories 6,318 6,739 7,375
Other current assets 311 1,503 2,473
Current assets held-for-sale 18,627 20,885 28,555
Other assets:
Rail assets leased to others, net 427 458 574,585
Property, plant and equipment, net 17,370 17,280 18,199
Goodwill 4,167 4,167 4,167
Other intangible assets, net — 24 2,025
Right of use assets, net 2,322 20,999 18,969
Other assets, net 12 241 2,800
Total non-current assets held-for-sale 24,298 43,169 620,745
Total assets held-for-sale $ 42,925 $ 64,054 $ 649,300
Liabilities
Current liabilities:
Trade and other payables $ 1,883 $ 2,546 $ 3,666
Customer prepayments and deferred revenue — — 2,211
Current maturities of long-term debt — — 6,513
Current operating lease liabilities 2,112 4,672 6,023
Accrued expenses and other current liabilities 3,319 6,161 6,772
Total current liabilities held-for-sale 7,314 13,379 25,185
Long-term lease liabilities 3,113 16,119 14,718
Long-term debt, less current maturities — — 28,845
Other long-term liabilities — — 430
Non-current liabilities held-for-sale 3,113 16,119 43,993
Total liabilities held-for-sale $ 10,427 $ 29,498 $ 69,178

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(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Assets
Current assets:

Accounts receivable, net	$	—	$	12,643	$	18,389
Inventories	—		6,739		6,803
Other current assets	—		1,503		1,369
Current assets held-for-sale	—		20,885		26,561
Other assets:
Property, plant and equipment, net	—		17,280		17,439
Goodwill	—		4,167		4,167
Right of use assets, net	—		20,999		16,521
Other assets, net	—		723		736
Total non-current assets held-for-sale	—		43,169		38,863
Total assets held-for-sale	$	—	$	64,054	$	65,424
Liabilities
Current liabilities:
Trade and other payables	$	—	$	2,546	$	4,223
Current operating lease liabilities	—		4,672		4,262
Accrued expenses and other current liabilities	—		6,161		4,942
Total current liabilities held-for-sale	—		13,379		13,427
Long-term lease liabilities	—		16,119		13,592
Total liabilities held-for-sale	$	—	$	29,498	$	27,019

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The following table summarizes cash flow data relating to discontinued operations for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:

Six months ended June 30,
(in thousands) 2022 2021
Depreciation and amortization $ — $ 17,588
Capital expenditures (27,276) (5,703)
Proceeds from sale of assets 36,341 15,616
Non-cash operating activities - Gain on sale of railcars (6,176) (4,987)
Non-cash operating activities - fixed asset impairment 2,818 234
Non-cash investing activities - capital expenditures, consisting of unpaid capital expenditure liabilities at period end — (113)


	Nine months ended September 30,
(in thousands)	2022		2021
Depreciation and amortization	$	—	$	21,786
Capital expenditures	(27,464)		(8,368)
Proceeds from sale of assets	36,706		18,705
(Gain) loss on sale of discontinued operations	(27,091)		1,491
Non-cash operating activities - gain on sale of railcars	(6,030)		(5,603)
Non-cash operating activities - asset impairment	2,818		626

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15. Subsequent Events

On ~~July 8,~~November 1, 2022, the Company closed on the ~~sale~~purchase of Bridge Agri Partners Inc., a pulses and pet food ingredients company headquartered in Lethbridge, Alberta. The Company purchased Bridge Agri Partners Inc. for $20.0 million Canadian dollars, of which, $10.0 million was due at closing and the remaining ~~assets and certain liabilities of the Company's Rail Repair business for $55.1~~$10.0 million ~~resulting in an estimated pre-tax gain of approximately $30 million.~~will be paid over a two year period.

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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 including the ongoing economic impacts from the conflict in Ukraine, 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 the 2021 Form 10-K and under Item 1A in this report. 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 2021 Form 10-K, have not materially changed through the ~~second~~third quarter of 2022.

Executive Overview

Our operations are organized, managed and classified into three reportable business segments: Trade, Renewables and Plant 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 segment being presented as discontinued operations, the Company has excluded Rail 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 merchandising revenues and Cost of sales and merchandising revenues and a much less significant impact on Gross profit. As a result, changes in Sales and merchandising revenues between periods may not necessarily be indicative of the overall performance of the business and greater emphasis should be placed on changes in Gross profit.

The Company has considered the potential impact that the book value of the Company’s total shareholders’ equity ~~briefly~~ exceeded the Company’s market capitalization during the quarter for impairment indicators. Management ultimately concluded that an impairment triggering event had not occurred. The Company believes that the share price is not an accurate reflection of its current value as conditions are currently strong in the agriculture space with a positive long-term outlook. Management believes that the market’s impact on the Company’s equity value does not actually 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, the Company concluded that no impairment trigger existed as of ~~June~~September 30, 2022.

Management reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of an asset group may no longer be recoverable. This was the case in the third quarter of 2022 for the Company's 51% owned ELEMENT plant located in Colwich, Kansas. The plant faced a combination of high corn basis, increased natural gas prices and a rapid decline in Low Carbon Fuel Standards credit values, that negatively impacted operations. The adverse operating conditions led to a failure of a debt covenant during the third quarter, as well as, a forecasted failure of another covenant within the next 12 months. Accordingly, it was deemed that a triggering event occurred as of September 30, 2022 related to the ELEMENT ethanol plant. Management performed a recoverability test of the ELEMENT plant’s long-lived assets as this is the lowest level of identifiable cash flows. The key assumptions used in the recoverability test included input costs (corn, natural gas, etc.), production days, and co-product premiums. Each of these inputs were given probability weightings based on

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management's assessment regarding the likelihood of the respective forecasts. Using future forecasted cash flows, the ELEMENT asset group passed its recoverability test on an undiscounted cash flow basis by 15% over the carrying value of its assets. Therefore, if there are changes to key assumptions in the analysis it is reasonably possible management's estimate that it will recover the carrying amount of these assets could change, even in the near term.

Trade

The Trade segment’s ~~second~~third quarter operating results improved from the p~~rior~~prior year as the segment ~~entered the quarter with good ownership positions and, as expected,~~ benefited from ~~basis improvements. Wheat ownership in~~strong elevation margins at our grain ~~terminal assets is now earning space income and we had very strong results from our Midwest truck grain merchandising business. Our food and specialty~~assets. In addition, well-positioned feed ingredients ~~business also delivered strong results in the quarter, particularly in our UK subsidiary, Feed Factors.~~

inventory generated good margins.

Agricultural inventories on hand were ~~107.0~~103.1 million and ~~85.8~~84.1 million bushels at ~~June~~September 30, 2022 and ~~June~~September 30, 2021, respectively. These bushels consist of inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory. Total Trade storage space capacity at company-owned or leased facilities, including temporary pile storage, was approximately ~~184~~185 million bushels at ~~June~~September 30, 2022, ~~compared~~which was comparable to ~~202 million bushels at June 30, 2021.~~the prior year.

~~Current crop conditions vary by geography, but despite initial delays~~The majority of our assets are located in ~~planting, crop conditions~~areas expected to experience above-trend yields. Continuing global supply and demand imbalances within the market from production shortfalls and logistical challenges are ~~good in our key draw areas. Continued~~expected to keep prices historically high and should allow for continued merchandising opportunities and strong elevation margins ~~are also expected to continue~~ through the ~~remainder~~end of the ~~year as global stocks are not projected to recover quickly from the recent worldwide production shortfalls.~~year.

Renewables

The Renewables segment's ~~second~~third quarter operating results increased from the prior year due to continued strength in co-product values and higher production margins ~~and yields. Also contributing~~in our ethanol plants. This was particularly evident in our eastern plants where corn basis was lower in anticipation of a strong harvest. The renewable diesel feedstock merchandising business also contributed to the increased results was $24.4 million of positive mark-to-market impact; nearly $18 million of which are reversals of prior losses. This compared to positive mark-to-market impacts of $13.5 million in the second quarter of 2021. The ethanol facilities received $17.6 million of USDA Biofuels Producer COVID relief funds, of which, $8.9 million is included in pre-tax income attributable to the Company.results.

Higher ~~export demand has helped keep ethanol prices firm, despite lower than anticipated seasonal domestic demand being impacted by the overall high gasoline prices. High~~ corn costs for ethanol production in the western USU.S. may negatively impact ethanol production ~~there,~~in that region, while ~~the Company's~~our eastern corn belt production facilities are ~~better positioned~~well-positioned for an affordable corn ~~supply.~~supply in the near future.

Ethanol and related co-products volumes for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 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)	2022	2021	2022	2021	(in thousands)	2022	2021	2022	2021
Ethanol (gallons shipped)	Ethanol (gallons shipped)	196,536	186,396	391,547	358,608	Ethanol (gallons shipped)	184,845	184,655	576,392	538,955
E-85 (gallons shipped)	E-85 (gallons shipped)	10,600	11,914	17,315	19,805	E-85 (gallons shipped)	11,624	12,977	28,938	32,781
Corn oil (pounds shipped)	Corn oil (pounds shipped)	122,223	56,760	232,544	104,708	Corn oil (pounds shipped)	141,313	79,756	373,858	188,974
DDG (tons shipped)*	DDG (tons shipped)*	450	454	950	931	DDG (tons shipped)*	386	570	1,336	1,544

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

Plant Nutrient

The Plant Nutrient segment's ~~second~~third quarter operating results ~~increased~~decreased from the prior period. Tons sold across all product lines were down period over period, however, the lower volumes were more than offset by significant margin increases from well-positioned inventory. The most significant margin improvements came from the Ag Supply Chain and Specialty Liquids product ~~lines.~~lines continued to see strong margins on well-positioned inventory, which more than offset a decline in volumes. The Engineered Granules business recorded some inventory write-offs on lawn products, which negatively impacted our performance. While we have seen ~~some lowering of~~ base nutrient prices level off in the third quarter, continued strong global demand, a tight supply and ~~disruption~~high farmer income should ~~keep prices higher than historical averages. Strong farm income may drive purchasing decisions while overall price levels could cause customers~~continue to ~~delay fertilizer purchases.~~support the fundamentals of this business.

Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately 448 thousand tons for dry nutrients and approximately 511 thousand tons for liquid nutrients at ~~June~~September 30, 2022, which is similar to the prior year.

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Tons of product sold for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 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)	2022	2021	2022	2021	(in thousands)	2022	2021	2022	2021
Ag Supply Chain	Ag Supply Chain	492	661	649	1,008	Ag Supply Chain	191	253	840	1,261
Specialty Liquids	Specialty Liquids	98	133	190	233	Specialty Liquids	70	71	261	304
Engineered Granules	Engineered Granules	121	165	228	323	Engineered Granules	51	60	278	383
Total tons	Total tons	711	959	1,067	1,564	Total tons	312	384	1,379	1,948

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.

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, 2022 with the three months ended ~~June~~September 30, 2021 including a reconciliation of GAAP to non-GAAP measures:


		Three months ended June 30, 2022											Three months ended September 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	3,097,767	$	882,567	$	470,283	$	—	$	4,450,617	Sales and merchandising revenues	$	3,240,526	$	814,923	$	163,876	$	—	$	4,219,325
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	2,995,773		822,679		401,324		—		4,219,776		Cost of sales and merchandising revenues	3,116,158		790,246		149,156		—		4,055,560
Gross profit	Gross profit	101,994		59,888		68,959		—		230,841		Gross profit	124,368		24,677		14,720		—		163,765
Operating, administrative and general expenses	Operating, administrative and general expenses	62,977		8,590		29,591		11,401		112,559		Operating, administrative and general expenses	73,347		7,053		25,427		9,712		115,539

Interest expense (income), net	Interest expense (income), net	13,300		2,012		1,923		(314)		16,921		Interest expense (income), net	10,782		2,555		1,920		(275)		14,982
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	(6,034)		—		—		—		(6,034)		Equity in earnings (losses) of affiliates, net	681		—		—		—		681
Other income (expense), net	Other income (expense), net	3,983		18,490		866		(513)		22,826		Other income (expense), net	(262)		832		1,018		(794)		794
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations	$	23,666	$	67,776	$	38,311	$	(11,600)	$	118,153	Income (loss) before income taxes from continuing operations	$	40,658	$	15,901	$	(11,609)	$	(10,231)	$	34,719
Income (loss) before income taxes attributable to the noncontrolling interests	Income (loss) before income taxes attributable to the noncontrolling interests	—		21,856		—		—		21,856		Income (loss) before income taxes attributable to the noncontrolling interests	—		7,524		—		—		7,524
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	$	23,666	$	45,920	$	38,311	$	(11,600)	$	96,297	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	40,658	$	8,377	$	(11,609)	$	(10,231)	$	27,195


		Three months ended June 30, 2021											Three months ended September 30, 2021
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	2,297,869	$	616,527	$	321,409	$	—	$	3,235,805	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		—		3,072,398		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		—		163,407		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		10,901		105,560		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		(559)		10,060		Interest expense (income), net	5,243		1,658		1,146		752		8,799
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	845		—		—		—		845		Equity in earnings (losses) of affiliates, net	(250)		—		—		—		(250)
Other income (expense), net	Other income (expense), net	4,067		38		849		116		5,070		Other income (expense), net	16,886		683		309		(4,072)		13,806
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations	$	13,777	$	26,156	$	23,995	$	(10,226)	$	53,702	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 from continuing operations	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	13,777	$	23,531	$	23,995	$	(10,226)	$	51,077	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	41,999	$	(3,636)	$	(5,832)	$	(14,612)	$	17,919

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 an alternative to Income (loss) before income taxes from continuing operations, the most directly comparable amounts reported under GAAP.

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Trade

While operating results for the Trade segment were consistent year over year, prior year results include a large one-time gain from the sale of a grain asset that did not reoccur. Sales and merchandising revenues increased by $998.4 million and cost of sales and merchandising revenues increased by $972.2 million for a favorable net gross profit impact of $26.2 million. The increase to sales and merchandising revenues and cost of sales and merchandising revenues is mainly a result of new merchandising locations opened in the second half of 2021 as these new locations are responsible for approximately 65% of the increase from the prior year. The remainder of the increase from the prior year was a result of increased commodity prices and volumes in the existing business. The increase in gross profit was mainly a result of improved margins as they accounted for approximately 80% of the improvement with increases in volumes responsible for the remainder of the increase from the prior year. The improved margins were driven by strong elevation margins, particularly in our early harvest geographies with the volume increases from our new merchandising locations opened in the second half of 2021.

Operating, administrative and general expenses increased by $5.8 million. The increase from the prior year is primarily related to wage inflation from a strong labor market as it resulted in an increase of approximately $4.0 million. The new merchandising locations caused an additional $1.4 million of expense in the third quarter of 2022.

Interest expense increased by $5.5 million due to higher borrowings with the addition of our new merchandising locations and increased commodity prices that are reflected in the short-term debt within the Company's Condensed Consolidated Balance Sheets along with rising interest rates on the Company's short-term line of credit compared to the prior year.

Other income, net decreased by $17.1 million from the same quarter of 2021. The decrease was primarily attributable to the sale of a grain asset in Champaign, Illinois in which the Company recorded a $14.6 million gain in the prior year that did not reoccur in 2022.

Renewables

Operating results for the Renewables segment increased by $12.0 million from the same period last year. Sales and merchandising revenues increased by $200.3 million and cost of sales and merchandising revenues increased by $181.4 million compared to prior year results. As a result, gross profit increased by $18.9 million compared to 2021 results. The vast majority of the increase to sales and merchandising revenues and cost of sales and merchandising revenues is the result of increased ethanol and corn commodity prices as ethanol volumes sold were consistent between the current year and prior year. The increase to gross profit in the current period results reflect a $15.1 million margin improvement at the ethanol plants, primarily from lower corn basis in our eastern footprint.

Operating, administrative and general expenses decreased by $3.0 million from the prior year. The prior year contained $3.7 million worth of accelerated depreciation expense associated with experimental technology at the Company's ethanol plants that did not reoccur in the third quarter of 2022.

Plant Nutrient

Operating results for the Plant Nutrient segment declined by $5.8 million compared to the same period in the prior year. Sales and merchandising revenues increased by $21.8 million and cost of sales and merchandising revenues increased by $25.0 million resulting in an $3.2 million decrease in gross profit. The increase in sales and merchandising revenues and cost of sales and merchandising revenues was due to fertilizer prices increasing approximately 45% from the prior year. This increase in fertilizer prices from the prior year was partially offset by a decrease in demand as volumes sold decreased by approximately 20% in the third quarter of 2022. The decrease in gross profit was mainly driven by a $3.9 million impact from associated inventory write-downs in the Engineered Granules business.

Operating, administrative and general expenses increased by $2.5 million from the prior year. Most of this increase is due to inflationary pressures, with labor costs being the single biggest driver.

Interest expense increased by $0.8 million due to higher net working capital usage from higher commodity prices along with rising interest rates.

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Other

Results for the quarter improved by $4.4 million compared to the same period in the prior year. The improvement in results was primarily driven by a $2.8 million loss on a cost method investment and approximately $1.0 million of stranded costs from the Rail Leasing sale in the prior year.

Income Taxes

For the three months ended September 30, 2022, the Company recorded income tax expense from continuing operations of $9.8 million. The Company's effective tax rate was 28.3% on income before taxes from continuing operations of $34.7 million. The difference between the 28.3% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest and state and local income taxes.

For the three months ended September 30, 2021, the Company recorded income tax expense from continuing operations of $4.0 million. The Company's effective tax rate was 24.7% on income from continuing operations of $16.3 million. The effective tax rate differs from the U.S. federal statutory tax rate of 21.0% due to the tax impact of certain discrete derivatives and hedging activities, state and local taxes, and nondeductible compensation offset by the tax impact of non-controlling interest.

Comparison of the nine months ended September 30, 2022 with the nine months ended September 30, 2021 including a reconciliation of GAAP to non-GAAP measures:


	Nine months ended September 30, 2022
(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	$	9,422,974	$	2,380,721	$	844,201	$	—	$	12,647,896
Cost of sales and merchandising revenues	9,128,993		2,280,965		723,797		—		12,133,755
Gross profit	293,981		99,756		120,404		—		514,141
Operating, administrative and general expenses	195,867		23,533		80,343		30,342		330,085

Interest expense (income), net	32,269		6,334		5,304		(1,145)		42,762
Equity in earnings (losses) of affiliates, net	(5,597)		—		—		—		(5,597)
Other income (expense), net	7,745		19,750		2,688		(2,401)		27,782
Income (loss) before income taxes from continuing operations	$	67,993	$	89,639	$	37,445	$	(31,598)	$	163,479
Income (loss) before income taxes attributable to the noncontrolling interests	—		29,827		—		—		29,827
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	67,993	$	59,812	$	37,445	$	(31,598)	$	133,652


	Nine months ended September 30, 2021
(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	$	6,522,508	$	1,674,123	$	632,717	$	—	$	8,829,348
Cost of sales and merchandising revenues	6,273,924		1,625,173		531,568		—		8,430,665
Gross profit	248,584		48,950		101,149		—		398,683
Operating, administrative and general expenses	186,035		23,247		72,850		30,701		312,833

Interest expense (income), net	19,746		5,752		3,358		(8)		28,848
Equity in earnings (losses) of affiliates, net	2,389		—		—		—		2,389
Other income (expense), net	24,439		2,048		1,745		(3,489)		24,743
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	—		(822)		—		—		(822)
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	69,631	$	22,821	$	26,686	$	(34,182)	$	84,956

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Trade

~~Operating~~While operating results for the Trade segment ~~increased by $9.9 million compared to~~were consistent year over year, prior year results include a large one-time gain from the ~~results~~sale of ~~the same period last year.~~a grain asset that did not reoccur. Sales and merchandising revenues increased by ~~$799.9~~$2,900.5 million and cost of sales and merchandising revenues increased by ~~$775.7~~$2,855.1 million for ~~a favorable net~~an increased gross profit impact of ~~$24.2~~$45.4 million. The increase to sales and merchandising revenues and cost of sales and merchandising revenues is mainly a result of new merchandising locations opened in the second half of 2021 as these new locations are responsible for approximately 60% of the increase from the prior year with the remainder of the increase a result of increased commodity prices and volumes in the existing business. The $45.4 million increase in gross profit was an even split between increases in both margins and volumes. ~~Much of~~The improved margins were driven by strong elevation margins and well-positioned animal feed ingredients and organic food and specialty inventories with the volume ~~increase is related to the opening of the international~~increases from our new merchandising ~~office~~locations opened in the second half of prior year. The increase in gross profit was driven by a strong performance in our domestic assets, particularly around our core footprint in the eastern grain belt, along with well-positioned inventory in our in our feed ingredients business that led to strong margins.2021.

Operating, administrative and general expenses increased by ~~$1.5~~$9.8 million. The increase from the prior year is primarily related to approximately $12.2 million of higher labor and benefits costs, ~~as a result of new locations opened in the second~~with about half ~~of 2021.~~from business growth and half from wage inflation.

Interest expense increased by ~~$5.8~~$12.5 million due to ~~both~~ higher borrowings with the addition of our new merchandising locations and increased commodity prices that are reflected in the short-term debt within the Company's Condensed Consolidated Balance Sheets along with rising interest rates on the Company's short-term line of credit compared to the prior year.

Equity in earnings of affiliates decreased by ~~$6.9~~$8.0 million mainly ~~as a result of an impairment~~due to the results of one of the Company's equity method investments being $8.4 million more favorable in the prior year. Included in this decrease was an impairment of ~~approximately~~ $4.5 ~~million.~~million in 2022.

Other income, net decreased by $16.7 million from the same period of 2021. The decrease was primarily attributable to the sale of a grain asset in Champaign, Illinois in which the Company recorded a $14.6 million gain in the prior year that did not reoccur in 2022.

Renewables

Operating results for ~~the~~ Renewables ~~segment~~ increased by ~~$22.4~~$37.0 million from the same period last year. Sales and merchandising revenues increased by ~~$266.0~~$706.6 million and cost of sales and merchandising revenues increased by ~~$240.9~~$655.8 million compared to prior ~~year results.~~year. As a result, gross profit increased by ~~$25.2~~$50.8 million compared to ~~2021 results. Most~~prior year. The vast majority of the increase to sales and merchandising revenues and cost of sales and merchandising revenues is the result of increased ethanol and corn commodity prices as ethanol volumes sold were consistent between the current year and ~~ethanol commodity prices. The increase to~~prior year. An improvement of gross profit infrom the ~~current period results reflect stronger production~~ethanol plants of $41.6 million with favorable realized crush margins and ~~yields. Included in pre-tax income in~~higher corn oil volumes being the ~~quarter is $24.4~~main drivers of the increase from the prior year. Also contributing to the increased gross profit was an improvement of unrealized mark-to-market adjustments of approximately $5.8 million of positive mark-to-market impact of which nearly $18 million are reversals of prior mark-to-market losses. This compared to positive mark-to-market impacts of $13.5 million in the second quarter of 2021.

~~Operating, administrative and general expenses increased by $2.0 million primarily due to higher labor and utility costs~~ from the prior year.

Other income increased by ~~$18.5~~$17.7 million and almost all of the increase from the prior year was a result of ~~the~~$17.6 million in proceeds received as a part of the USDA Biofuel Producer Relief Program that was enacted as a part of the CARES Act, of which approximately ~~half~~$8.8 million of these proceeds were attributable to the noncontrolling interest.

Plant Nutrient

Operating results for the Plant Nutrient segment increased by ~~$14.3~~$10.8 million compared to the same period in the prior year. Sales and merchandising revenues increased ~~by $148.9~~$211.5 million and cost of sales and merchandising revenues increased by ~~$130.8~~$192.2 million resulting in ~~an $18.1~~increased gross profit of $19.3 million. The increase in sales and merchandising revenues and cost of sales and merchandising revenues was due to fertilizer prices more than doubling from the prior year. This increase in fertilizer prices from the same period of prior year was partially offset by a decrease in demand as volumes sold decreased by approximately 30%. Gross profit improved year-over-year due to increased margins on well-positioned inventory from the prior year representing a $46.2 million difference that was partially offset by a $27.3 million decrease in sales volumes. Ag Supply Chain led the way in 2022 with a $16.2 million increase in gross ~~profit. The increase in gross~~ profit ~~was driven by very~~as a result of strong margins ~~across the Ag Supply Chain and Specialty Liquids product lines due to strong grower income and~~from well-positioned ~~fertilizer~~ inventory ~~despite lower volumes sold.~~in a tight supply market.

Operating, administrative and general expenses increased by ~~$3.0~~$7.5 million ~~due to increased labor costs~~ from the prior year.

~~Interest expense increased by $0.8 million~~ Most of this increase is due to ~~higher interest rates and borrowings.~~

~~Other~~

~~Operating results for~~inflationary pressures, with labor costs being the quarter declined by $1.4 million compared to the same period in the prior year. 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.

single biggest driver.

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 32

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Interest expense increased by $1.9 million due to higher net working capital usage from higher commodity prices along with the rising interest rates.

Other

Results improved by $2.6 million from the same period last year. The improvement in results was primarily driven by a $2.8 million loss on a cost method investment in the prior year that did not reoccur.

Income Taxes

For the ~~three~~nine months ended ~~June~~September 30, 2022, the Company recorded income tax expense from continuing operations of ~~$15.8~~$29.7 million. The Company's effective tax rate was ~~13.3%~~18.2% on income before taxes from continuing operations of ~~$118.2~~$163.5 million. The difference between the ~~13.3%~~18.2% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

For the ~~three~~nine months ended ~~June~~September 30, 2021, the Company recorded income tax expense from continuing operations of $9.7 million at an effective tax rate of 18.0%. The difference between the 18.0% effective tax rate and the U.S. federal statutory tax rate of 21% is due to the tax impact of certain discrete derivatives and hedging activities offset by state and local taxes and nondeductible compensation.

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 33~~

~~Table of Contents~~

~~Operating Results~~

~~Comparison of the six months ended June 30, 2022 with the six months ended June 30, 2021 including a reconciliation of GAAP to non-GAAP measures:~~

Six months ended June 30, 2022
(in thousands) Trade Renewables Plant Nutrient Other Total
Sales and merchandising revenues $ 6,182,448 $ 1,565,798 $ 680,325 $ — $ 8,428,571
Cost of sales and merchandising revenues 6,012,835 1,490,719 574,641 — 8,078,195
Gross profit 169,613 75,079 105,684 — 350,376
Operating, administrative and general expenses 122,520 16,480 54,916 20,630 214,546
Interest expense (income), net 21,487 3,779 3,384 (870) 27,780
Equity in earnings (losses) of affiliates, net (6,278) — — — (6,278)
Other income (expense), net 8,007 18,918 1,670 (1,607) 26,988
Income (loss) before income taxes from continuing operations $ 27,335 $ 73,738 $ 49,054 $ (21,367) $ 128,760
Income (loss) before income taxes attributable to the noncontrolling interests — 22,303 — — 22,303
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 27,335 $ 51,435 $ 49,054 $ (21,367) $ 106,457

Six months ended June 30, 2021
(in thousands) Trade Renewables Plant Nutrient Other Total
Sales and merchandising revenues $ 4,280,377 $ 1,059,486 $ 490,661 $ — $ 5,830,524
Cost of sales and merchandising revenues 4,129,989 1,016,287 407,400 — 5,553,676
Gross profit 150,388 43,199 83,261 — 276,848
Operating, administrative and general expenses 118,445 13,233 49,967 20,913 202,558
Interest expense (income), net 14,503 4,094 2,212 (760) 20,049
Equity in earnings (losses) of affiliates, net 2,639 — — — 2,639
Other income (expense), net 7,553 1,365 1,436 584 10,938
Income (loss) before income taxes from continuing operations $ 27,632 $ 27,237 $ 32,518 $ (19,569) $ 67,818
Income (loss) before income taxes attributable to the noncontrolling interests — 780 — — 780
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 27,632 $ 26,457 $ 32,518 $ (19,569) $ 67,038

~~Trade~~

Operating results for the Trade segment were consistent with the same period of prior year. Sales and merchandising revenues increased by $1,902.1 million and cost of sales and merchandising revenues increased by $1,882.8 million for an increased gross profit impact of $19.2 million. Most of the increase to sales and merchandising revenues and cost of sales and merchandising revenues was a result of increased commodity prices and volumes. Much of the volume increase is related to the opening of the international merchandising office in the second half of prior year. The increase in gross profit was driven by a strong elevation margins in our domestic assets, along with well-positioned inventories in our feed ingredients business that led to strong margins. These factors were partially offset by the exceptional propane merchandising results from the unseasonably frigid weather experienced by the central U.S. in the first quarter of the prior year that did not recur in the current period.

Operating, administrative and general expenses increased by $4.1 million. The increase from the prior year is primarily related to higher labor costs as a result of new locations opened in the second half of 2021.

~~Interest expense increased by $7.0 million due to both higher borrowings and interest rates on the Company's short-term line of credit compared to the prior year.~~

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 34~~

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Equity in earnings of affiliates decreased by $8.9 million mainly as a result of an impairment of one of the Company's equity method investments of approximately $4.5 million combined with favorable results from the same equity method investment in the prior year that didn't recur in 2022.

~~Renewables~~

Operating results for Renewables increased by $25.0 million from the same period last year. Sales and merchandising revenues increased by $506.3 million and cost of sales and merchandising revenues increased by $474.4 million compared to prior year. As a result, gross profit increased by $31.9 million compared to prior year. The vast majority of the increase to sales and merchandising revenues and cost of sales and merchandising revenues is the result of increased commodity prices. The net increase to gross profit in the current period results reflect improved board crush margins and yields across the ethanol plants, improved co-product values and strong merchandising margins. Unrealized mark-to-market adjustments improved approximately $3.7 million from the prior year.

~~Operating, administrative and general expenses increased by $3.2 million primarily due to higher labor and utility costs from the prior year.~~

Other income increased by $17.6 million and almost all of the increase from the prior year was a result of the proceeds received as a part of the USDA Biofuel Producer Relief Program that was enacted as a part of the CARES Act, of which approximately half of these proceeds were attributable to the noncontrolling interest.

~~Plant Nutrient~~

Operating results for the Plant Nutrient segment increased by $16.5 million compared to the same period in the prior year. Sales and merchandising revenues increased $189.7 million and cost of sales and merchandising revenues increased by $167.2 million resulting in increased gross profit of $22.4 million. Both sales and merchandising revenues and cost of sales and merchandising revenues were higher due to higher fertilizer prices from the prior year. Gross profit improved year-over-year due to strong margins from well-positioned inventory in a tight supply market. The most significant margin improvements came from Ag Supply Chain and Specialty Liquids product lines.

~~Operating, administrative and general expenses increased by $4.9 million due to increased labor costs from the prior year.~~

~~Interest expense increased by $1.2 million due to higher interest rates and borrowings.~~

~~Other~~

Operating results declined by $1.8 million from the same period last year. The decrease in other income, net from the prior year was due to interest received on a tax refund as a result of the CARES Act that did not recur in current year.

~~Income Taxes~~

~~For the six months ended June 30, 2022, the Company recorded income tax expense from continuing operations of $19.9~~$18.1 million. The Company's effective tax rate was ~~15.4%~~21.5% on income ~~before taxes~~ from continuing operations of ~~$128.8~~$84.1 million. The ~~difference between the 15.4%~~ effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

~~For the six months ended June 30, 2021, the Company recorded income tax expense~~differs from ~~continuing operations of $14.0 million at an effective tax rate of 20.7%. The difference between the 20.7% effective tax rate and~~ the U.S. federal statutory tax rate of 21% due to the tax impact of ~~certain discrete derivatives and hedging activities offset by~~ state and local taxes and nondeductible ~~compensation.~~compensation offset by non-controlling interest and certain discrete derivatives and hedging activities.

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 35~~

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Liquidity and Capital Resources

Working Capital

At ~~June~~September 30, 2022, the Company had working capital from continuing operations of ~~$984.0~~$944.7 million, an increase of ~~$443.6~~$182.6 million from the prior year. This increase was attributable to changes in the following components of current assets from continuing operations and current liabilities from continuing operations:


(in thousands)	(in thousands)	June 30, 2022		June 30, 2021		Variance		(in thousands)	September 30, 2022		September 30, 2021		Variance
Current Assets from Continuing Operations:	Current Assets from Continuing Operations:							Current Assets from Continuing Operations:
Cash and cash equivalents	Cash and cash equivalents	$	86,035	$	27,538	$	58,497	Cash and cash equivalents	$	140,771	$	216,874	$	(76,103)
Accounts receivable, net	Accounts receivable, net	1,141,167		702,869		438,298		Accounts receivable, net	990,531		735,349		255,182
Inventories	Inventories	1,618,326		904,924		713,402		Inventories	1,556,426		1,017,804		538,622
Commodity derivative assets – current	Commodity derivative assets – current	638,357		507,148		131,209		Commodity derivative assets – current	502,097		409,647		92,450
Other current assets	Other current assets	70,367		63,266		7,101		Other current assets	75,402		92,159		(16,757)
Total current assets from continuing operations	Total current assets from continuing operations	$	3,554,252	$	2,205,745	$	1,348,507	Total current assets from continuing operations	$	3,265,227	$	2,471,833	$	793,394
Current Liabilities from Continuing Operations:	Current Liabilities from Continuing Operations:							Current Liabilities from Continuing Operations:
Short-term debt	Short-term debt	1,161,428		757,271		404,157		Short-term debt	652,947		281,199		371,748
Trade and other payables	Trade and other payables	772,996		543,503		229,493		Trade and other payables	930,027		825,923		104,104
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	184,154		55,943		128,211		Customer prepayments and deferred revenue	258,828		147,225		111,603
Commodity derivative liabilities – current	Commodity derivative liabilities – current	185,903		90,366		95,537		Commodity derivative liabilities – current	137,168		78,702		58,466
Current maturities of long-term debt	Current maturities of long-term debt	53,951		50,069		3,882		Current maturities of long-term debt	112,029		106,255		5,774
Accrued taxes								Accrued taxes	23,439		97,215		(73,776)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	211,830		168,221		43,609		Accrued expenses and other current liabilities	206,069		173,215		32,854
Total current liabilities from continuing operations	Total current liabilities from continuing operations	$	2,570,262	$	1,665,373	$	904,889	Total current liabilities from continuing operations	$	2,320,507	$	1,709,734	$	610,773
Working Capital from Continuing Operations	Working Capital from Continuing Operations	$	983,990	$	540,372	$	443,618	Working Capital from Continuing Operations	$	944,720	$	762,099	$	182,621

Current assets from continuing operations as of ~~June~~September 30, 2022 increased ~~$1,348.5~~$793.4 million in comparison to those as of ~~June~~September 30, 2021. This increase was noted mainly in ~~mainly~~ accounts receivable, inventories and current commodity derivative assets. The increases in those accounts can largely be attributed to the significant increases in the prices of agricultural commodities, including fertilizer, that the Company transacts in the ordinary course of business from the same period of the

The Andersons, Inc. | Q3 2022 Form 10-Q | 33

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prior year. The Company also opened ~~an international~~new merchandising ~~office~~offices in the ~~third quarter~~second half of the prior year which is contributing to the increase in working capital as there is a substantial volume of commodities held in that business in 2022.

Current liabilities from continuing operations increased ~~$904.9~~$610.8 million across all financial statement line items when compared to the prior year. The increase inwas driven by short-term debt, ~~is the result of higher working capital needs and driven by the significant increase in agricultural commodity prices from the prior year. The increase in~~ trade and other payables, customer prepayments and deferred revenue, and current commodity derivative ~~liabilities are also~~liabilities. These accounts were driven higher from the prior year as a result of ~~increasing~~higher working capital needs from the significant increase in agricultural commodity ~~prices.~~prices and the opening of the new merchandising offices in the second half of prior year.

Sources and Uses of Cash

Six Months Ended
(in thousands) June 30, 2022 June 30, 2021
Net cash used in operating activities $ (721,799) $ (245,494)
Net cash used in investing activities (30,094) (23,474)
Net cash provided by financing activities 622,113 267,550


	Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021
Net cash (used in) provided by operating activities	$	(153,370)	$	119,067
Net cash provided by investing activities	2,919		519,523
Net cash provided by (used in) financing activities	75,489		(450,647)

Operating Activities

Our operating activities used cash of ~~$721.8~~$153.4 million and ~~$245.5~~provided cash of $119.1 million in the first ~~six~~nine months of 2022 and 2021, respectively. The increase in cash used was primarily due to the increased working capital needs, as discussed above, driven by significant increases in agricultural commodity prices and the new ~~international~~ merchandising locations ~~being included~~that were opened in the ~~current year.~~second half of 2021. When the changes in operating assets and liabilities are removed, cash provided by operating activities was slightly lower than prior year due to the timing of tax refunds and credits in the first quarter of 2021.

~~The Andersons, Inc. | Q2 2022 Form 10-Q | 36~~

~~Table of Contents~~

Investing Activities

Investing activities ~~used~~provided cash of ~~$30.1~~$2.9 million through the first ~~six~~nine months of 2022 compared to cash ~~used~~provided of ~~$23.5~~$519.5 million in the prior period. The ~~increase~~decrease from the prior period was a result of ~~a modest increase~~the sale of the Rail Leasing business that provided cash of $543 million in ~~capital spending on continuing operations from~~ the prior year which was partially offset by $56 million in proceeds associated to the sale of the Rail Repair business in the current year. The Company has now sold substantially all of the remaining pieces of its legacy Rail segment.

WePurchases of property, plant and equipment were approximately $20 million higher than the prior year and we expect to invest approximately $100 million in property, plant and equipment in 2022 related to continuing operations.

Financing Activities

Financing activities provided cash of ~~$622.1~~$75.5 million and ~~$267.6~~used cash of $450.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. This increase from the prior year was due to the significant increase in agricultural commodity prices from the prior period and the related need for short-term borrowings. The Company's short-term debt balance of ~~$1,161.4~~$652.9 million is ~~closely aligned~~highly correlated to the balance of readily marketable inventories of ~~$1,214.4~~$1,167.0 million as of ~~June~~September 30, 2022.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of ~~$2,501.7~~$1,978.6 million in borrowing capacity. Of the total capacity, ~~$395.7~~$328.6 million is non-recourse to the Company. As of ~~June~~September 30, 2022, the Company had ~~$1,315.2~~$1,302.6 million available for borrowing with ~~$277.5~~$230.4 million of that total being non-recourse to the Company.

The Company paid ~~$12.2~~$18.3 million in dividends in the first ~~six~~nine months of 2022 compared to ~~$11.7~~$17.5 million in the prior period. The Company paid dividends of $0.180 and $0.175 per common share in January, April and ~~April~~September of 2022 and 2021, respectively. On ~~June 16,~~August 19, 2022, the Company declared a cash dividend of $0.180 per common share payable on ~~July 22,~~October 21, 2022 to shareholders of record on ~~July 1,~~October 3, 2022.

Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of working capital and a minimum ratio of owner's equity. The Company has concluded that in relation to the $65.2 million non-recourse credit agreement associated with the ELEMENT operations, it was out of compliance regarding the minimum working capital covenant as of August 31, 2022, and is virtually certain to be out of compliance for an owner's equity ratio covenant within the next 12 months. As these covenants have yet to be cured or waived, the Company classified the total $65.2 million of non-recourse debt under the ELEMENT credit agreement as a current maturity of long-term debt as of September 30, 2022. The Company is in compliance with all other covenants as of September 30, 2022. In addition, certain of our long-term borrowings

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are collateralized by first mortgages on various facilities. Our non-recourse long-term debt is collateralized by ethanol plant 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, 2022, the Company had standby letters of credit outstanding of ~~$5.1~~$3.4 million.

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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, 2021. There were no material changes in market risk, specifically commodity and interest rate risk during the ~~six~~nine months ended ~~June~~September 30, 2022.

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, 2022 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 2022, 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.

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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 2021 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. The information presented below updates, and should be read in conjunction with, the risk factors in Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Except as presented below, there were no other significant changes in the Company’s risk factors during the quarter ended ~~June~~September 30, 2022.

The Company faces risks related to international conflicts, such as the ongoing conflict between Russia and Ukraine, that may adversely impact the Company's financial condition or results of operations.

In late February of 2022, Russia initiated a military operation in Ukraine. The Black Sea region is a key international grain and fertilizer export market and the conflict between Russia and Ukraine could continue to disrupt supply and logistics, cause volatility in prices, and impact global margins due to increased commodity, energy, and input costs. While the Company does not have any assets or employees located in the Black Sea region, it does engage in business with parties operating in the region, including some grain originations directly from Ukrainian producers. The conflict could negatively affect our ability to secure product in this region and the credit worthiness of agricultural producers with which we do business. The Company currently does not purchase fertilizer directly from this region, however, the impact to the global fertilizer supply could put the Company’s ability to secure product at risk over time.

To the extent the conflict between Russia and Ukraine adversely affects our business, it may also have the effect of heightening other risks disclosed in Part I, “Item 1A. Risk Factors” in the Company's 2021 Annual Report on Form 10-K, any of which could materially and adversely affect the Company's financial condition and results of operations. However, due to the continually evolving nature of the conflict, the potential impact that the conflict could have on such risk factors, and others that cannot yet be identified, remains uncertain. The Company continues to monitor the conflict and assess alternatives to mitigate these risks.

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

Periods
Total Number of Shares Purchased (1)
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 (2)
April 2022 — $ — — $ —
May 2022 588 50.26 — —
June 2022 — — — —
Total 588 $ 50.26 — $ 100,000,000


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 2022	—	$	—	—	$	100,000,000
August 2022	2,595	36.89		2,595	99,904,266
September 2022	228,920	33.22		228,920	92,298,912
Total	231,515	$	33.26	231,515	$	92,298,912

(1) ~~During the three months ended June 30, 2022, the Company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.~~

~~(2)~~ As of August 20, 2021, the Company was authorized to purchase up to $100 million of the Company’s common stock (the "Repurchase Plan") on or before August 20, 2024. As of ~~June~~September 30, 2022, ~~none~~$7.7 million of the $100 million available to repurchase shares had been utilized. The Repurchase Plan does not obligate the Company to acquire any specific number of shares. Under the Repurchase Plan, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

Item 6. Exhibits



Exhibit Number						Description

~~10.1~~						~~Incremental Revolving Loan Amendment to Credit Agreement~~

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

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, 4, 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 8,~~November 3, 2022						/s/ Patrick E. Bowe
						Patrick E. Bowe
						President and Chief Executive Officer

Date: ~~August 8,~~November 3, 2022						/s/ Brian A. Valentine
						Brian A. Valentine
						Executive Vice President and Chief Financial Officer

The Andersons, Inc. | Q2Q3 2022 Form 10-Q | 4139


Periods	Total Number of Shares Purchased (1)	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 (2)






April 2022	—	$	—	—	$	—
May 2022	588	50.26		—	—
June 2022	—	—		—	—
Total	588	$	50.26	—	$	100,000,000