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/~~09/30/2023


☐			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 ~~33,752,186~~33,752,321 common shares outstanding at ~~July 21,~~October 27, 2023.

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 ~~and Six~~ Nine months ended ~~June~~ S 30eptember , 30, 2023 and 2022			1
Condensed Consolidated Statements of Comprehensive Income – Three and ~~and Six~~Nine months ended ~~June~~ September 30,, 2023 and 2022			2
Condensed Consolidated Balance Sheets – ~~Jun~~September e 30,, 2023, December 31, 2022 and ~~June~~ September 30,, 2022			3
Condensed Consolidated Statements of Cash Flows – ~~Six~~Nine months ended ~~June~~ 3 0 ,September 30, 2023 and 2022			4
Condensed Consolidated Statements of Equity – Three and ~~Six~~ Nine months ended ~~June~~September 30,, 2023 and 2022			5
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2624
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3735
Item 4. Controls and Procedures			3735
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			3836
Item 1A. Risk Factors			3836
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3836
Item 5. Other Information			3836
Item 6. Exhibits			3937

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,
		2023		2022		2023		2022			2023		2022		2023		2022
Sales and merchandising revenues	Sales and merchandising revenues	$	4,020,183	$	4,450,617	$	7,901,421	$	8,428,571	Sales and merchandising revenues	$	3,635,691	$	4,219,325	$	11,537,112	$	12,647,896
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	3,798,246		4,219,776		7,531,473		8,078,195		Cost of sales and merchandising revenues	3,477,990		4,055,560		11,009,463		12,133,755
Gross profit	Gross profit	221,937		230,841		369,948		350,376		Gross profit	157,701		163,765		527,649		514,141
Operating, administrative and general expenses	Operating, administrative and general expenses	116,007		112,559		233,242		214,546		Operating, administrative and general expenses	126,306		115,539		359,548		330,085
Asset impairment	Asset impairment	—		—		87,156		—		Asset impairment	—		—		87,156		—
Interest expense, net	Interest expense, net	13,953		16,921		30,578		27,780		Interest expense, net	8,188		14,982		38,766		42,762

Other income, net	Other income, net	12,441		16,792		20,445		20,710		Other income, net	15,178		1,475		35,623		22,185
Income before income taxes from continuing operations	Income before income taxes from continuing operations	104,418		118,153		39,417		128,760		Income before income taxes from continuing operations	38,385		34,719		77,802		163,479
Income tax provision from continuing operations	Income tax provision from continuing operations	21,732		15,753		15,848		19,856		Income tax provision from continuing operations	7,862		9,839		23,710		29,695
Net income from continuing operations	Net income from continuing operations	82,686		102,400		23,569		108,904		Net income from continuing operations	30,523		24,880		54,092		133,784
Loss from discontinued operations, net of income taxes		—		(739)		—		(1,294)
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	—		19,392		—		18,099
Net income	Net income	82,686		101,661		23,569		107,610		Net income	30,523		44,272		54,092		151,883
Net income (loss) attributable to noncontrolling interests		27,640		21,856		(16,727)		22,303
Net income attributable to noncontrolling interests										Net income attributable to noncontrolling interests	20,815		7,524		4,088		29,827
Net income attributable to The Andersons, Inc.	Net income attributable to The Andersons, Inc.	$	55,046	$	79,805	$	40,296	$	85,307	Net income attributable to The Andersons, Inc.	$	9,708	$	36,748	$	50,004	$	122,056

Average number of shares outstanding - basic	Average number of shares outstanding - basic	33,744		33,850		33,683		33,795		Average number of shares outstanding - basic	33,752		33,825		33,706		33,805
Average number of share outstanding - diluted	Average number of share outstanding - diluted	34,165		34,416		34,193		34,416		Average number of share outstanding - diluted	34,270		34,407		34,266		34,469

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	$	1.63	$	2.38	$	1.20	$	2.56	Continuing operations	$	0.29	$	0.51	$	1.48	$	3.08
Discontinued operations	Discontinued operations	—		(0.02)		—		(0.04)		Discontinued operations	—		0.57		—		0.54
		$	1.63	$	2.36	$	1.20	$	2.52		$	0.29	$	1.08	$	1.48	$	3.62
Diluted earnings (loss):
Diluted earnings:										Diluted earnings:
Continuing operations	Continuing operations	$	1.61	$	2.34	$	1.18	$	2.52	Continuing operations	$	0.28	$	0.50	$	1.46	$	3.02
Discontinued operations	Discontinued operations	—		(0.02)		—		(0.04)		Discontinued operations	—		0.56		—		0.53
		$	1.61	$	2.32	$	1.18	$	2.48		$	0.28	$	1.06	$	1.46	$	3.55

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2023 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,
		2023		2022		2023		2022			2023		2022		2023		2022
Net income	Net income	$	82,686	$	101,661	$	23,569	$	107,610	Net income	$	30,523	$	44,272	$	54,092	$	151,883
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	Change in unrecognized actuarial loss and prior service cost	(189)		517		(377)		358		Change in unrecognized actuarial loss and prior service cost	(276)		(131)		(653)		227
Foreign currency translation adjustments	Foreign currency translation adjustments	2,669		(5,679)		3,436		(5,581)		Foreign currency translation adjustments	(2,600)		(9,828)		836		(15,409)
Cash flow hedge activity	Cash flow hedge activity	6,735		6,697		1,939		19,119		Cash flow hedge activity	5,973		10,719		7,912		29,838
Other comprehensive income	Other comprehensive income	9,215		1,535		4,998		13,896		Other comprehensive income	3,097		760		8,095		14,656
Comprehensive income	Comprehensive income	91,901		103,196		28,567		121,506		Comprehensive income	33,620		45,032		62,187		166,539
Comprehensive income (loss) attributable to the noncontrolling interests		27,640		21,856		(16,727)		22,303
Comprehensive income attributable to the noncontrolling interests										Comprehensive income attributable to the noncontrolling interests	20,815		7,524		4,088		29,827
Comprehensive income attributable to The Andersons, Inc.	Comprehensive income attributable to The Andersons, Inc.	$	64,261	$	81,340	$	45,294	$	99,203	Comprehensive income attributable to The Andersons, Inc.	$	12,805	$	37,508	$	58,099	$	136,712

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 2

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The Andersons, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


(In thousands)	(In thousands)	June 30, 2023		December 31, 2022		June 30, 2022		(In thousands)	September 30, 2023		December 31, 2022		September 30, 2022
Assets	Assets							Assets
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	96,293	$	115,269	$	86,035	Cash and cash equivalents	$	418,055	$	115,269	$	140,771
Accounts receivable, net	Accounts receivable, net	1,030,271		1,248,878		1,141,167		Accounts receivable, net	816,686		1,248,878		990,531
Inventories (Note 2)	Inventories (Note 2)	990,789		1,731,725		1,618,326		Inventories (Note 2)	985,292		1,731,725		1,556,426
Commodity derivative assets – current (Note 5)	Commodity derivative assets – current (Note 5)	347,684		295,588		638,357		Commodity derivative assets – current (Note 5)	239,595		295,588		502,097
Current assets held-for-sale		—		2,871		18,627
Other current assets	Other current assets	72,228		71,622		70,367		Other current assets	67,471		74,493		75,402
Total current assets	Total current assets	2,537,265		3,465,953		3,572,879		Total current assets	2,527,099		3,465,953		3,265,227
Other assets:	Other assets:							Other assets:
Goodwill	Goodwill	129,342		129,342		129,342		Goodwill	128,542		129,342		129,342
Other intangible assets, net	Other intangible assets, net	89,605		100,907		105,222		Other intangible assets, net	90,768		100,907		99,317
Right of use assets, net	Right of use assets, net	60,003		61,890		50,233		Right of use assets, net	56,919		61,890		59,146
Other assets held-for-sale		—		—		24,298
Other assets, net	Other assets, net	90,390		87,175		91,758		Other assets, net	104,586		87,175		99,650
Total other assets	Total other assets	369,340		379,314		400,853		Total other assets	380,815		379,314		387,455

Property, plant and equipment, net (Note 3)	Property, plant and equipment, net (Note 3)	663,441		762,729		763,443		Property, plant and equipment, net (Note 3)	680,188		762,729		765,939
Total assets	Total assets	$	3,570,046	$	4,607,996	$	4,737,175	Total assets	$	3,588,102	$	4,607,996	$	4,418,621
Liabilities and equity	Liabilities and equity							Liabilities and equity
Current liabilities:	Current liabilities:							Current liabilities:
Short-term debt (Note 4)		$	102,752	$	272,575	$	1,161,428
Short-term debt								Short-term debt	$	14,138	$	272,575	$	652,947
Trade and other payables	Trade and other payables	641,376		1,423,633		772,996		Trade and other payables	822,153		1,423,633		930,027
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	189,947		370,524		184,154		Customer prepayments and deferred revenue	211,867		370,524		258,828
Commodity derivative liabilities – current (Note 5)	Commodity derivative liabilities – current (Note 5)	251,101		98,519		185,903		Commodity derivative liabilities – current (Note 5)	142,511		98,519		137,168
Current maturities of long-term debt (Note 4)		27,511		110,155		53,951
Current maturities of long-term debt								Current maturities of long-term debt	27,535		110,155		112,029

Current liabilities held-for-sale		—		—		7,314
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	180,552		245,916		211,830		Accrued expenses and other current liabilities	189,430		245,916		229,508
Total current liabilities	Total current liabilities	1,393,239		2,521,322		2,577,576		Total current liabilities	1,407,634		2,521,322		2,320,507
Long-term lease liabilities	Long-term lease liabilities	34,435		37,147		28,929		Long-term lease liabilities	32,883		37,147		34,779
Long-term debt, less current maturities (Note 4)		576,489		492,518		563,447
Long-term debt, less current maturities								Long-term debt, less current maturities	569,730		492,518		497,988
Deferred income taxes	Deferred income taxes	57,030		64,080		63,383		Deferred income taxes	58,217		64,080		59,079
Other long-term liabilities held-for-sale		—		—		3,113
Other long-term liabilities	Other long-term liabilities	70,371		63,160		83,521		Other long-term liabilities	70,552		63,160		79,727
Total liabilities	Total liabilities	2,131,564		3,178,227		3,319,969		Total liabilities	2,139,016		3,178,227		2,992,080
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)							Commitments and contingencies (Note 13)
Shareholders’ equity:	Shareholders’ equity:							Shareholders’ equity:
Common shares, without par value (63,000 shares authorized and 34,064 shares issued for all periods presented)	Common shares, without par value (63,000 shares authorized and 34,064 shares issued for all periods presented)	142		142		142		Common shares, without par value (63,000 shares authorized and 34,064 shares issued for all periods presented)	142		142		142
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	380,376		385,248		378,740		Additional paid-in-capital	383,724		385,248		381,728
Treasury shares, at cost (270, 446 and 62 shares at 6/30/2023, 12/31/2022 and 6/30/2022, respectively)		(10,270)		(15,043)		(2,313)
Treasury shares, at cost (270, 446 and 293 shares at 9/30/2023, 12/31/2022 and 9/30/2022, respectively)								Treasury shares, at cost (270, 446 and 293 shares at 9/30/2023, 12/31/2022 and 9/30/2022, respectively)	(10,266)		(15,043)		(9,991)
Accumulated other comprehensive income	Accumulated other comprehensive income	25,482		20,484		15,090		Accumulated other comprehensive income	28,579		20,484		15,850
Retained earnings	Retained earnings	835,256		807,770		775,495		Retained earnings	838,556		807,770		806,186
Total shareholders’ equity of The Andersons, Inc.	Total shareholders’ equity of The Andersons, Inc.	1,230,986		1,198,601		1,167,154		Total shareholders’ equity of The Andersons, Inc.	1,240,735		1,198,601		1,193,915
Noncontrolling interests	Noncontrolling interests	207,496		231,168		250,052		Noncontrolling interests	208,351		231,168		232,626
Total equity	Total equity	1,438,482		1,429,769		1,417,206		Total equity	1,449,086		1,429,769		1,426,541
Total liabilities and equity	Total liabilities and equity	$	3,570,046	$	4,607,996	$	4,737,175	Total liabilities and equity	$	3,588,102	$	4,607,996	$	4,418,621

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


		Six months ended June 30,					Nine months ended September 30,
		2023		2022			2023		2022
Operating Activities	Operating Activities					Operating Activities
Net income from continuing operations	Net income from continuing operations	$	23,569	$	108,904	Net income from continuing operations	$	54,092	$	133,784
Loss from discontinued operations, net of income taxes		—		(1,294)
Income from discontinued operations, net of income taxes						Income from discontinued operations, net of income taxes	—		18,099
Net income	Net income	23,569		107,610		Net income	54,092		151,883
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:					Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	62,585		67,945		Depreciation and amortization	93,800		101,266
Bad debt expense, net		3,720		3,069
Equity in losses of affiliates, net of dividends		231		6,278

Losses (gains) on sales of assets, net		679		(10,305)
Stock-based compensation expense		6,000		4,708
Deferred federal income tax		(7,948)		(13,755)

Gain on sale of business from discontinued operations						Gain on sale of business from discontinued operations	—		(27,091)

Asset impairment	Asset impairment	87,156		—		Asset impairment	87,156		—

Other	Other	(1,730)		8,549		Other	1,347		(1,296)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	207,867		(289,196)		Accounts receivable	406,263		(140,866)
Inventories	Inventories	734,855		186,685		Inventories	748,118		236,854
Commodity derivatives	Commodity derivatives	102,753		(189,090)		Commodity derivatives	99,479		(104,901)
Other current and non-current assets	Other current and non-current assets	(1,247)		5,106		Other current and non-current assets	2,048		2,000
Payables and other current and non-current liabilities	Payables and other current and non-current liabilities	(1,011,086)		(609,403)		Payables and other current and non-current liabilities	(796,216)		(371,219)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	207,404		(721,799)		Net cash provided by (used in) operating activities	696,087		(153,370)
Investing Activities	Investing Activities					Investing Activities
Acquisition of businesses, net of cash acquired						Acquisition of businesses, net of cash acquired	(24,385)		—
Purchases of property, plant and equipment and capitalized software	Purchases of property, plant and equipment and capitalized software	(74,991)		(43,472)		Purchases of property, plant and equipment and capitalized software	(108,718)		(72,247)
Proceeds from sale of assets	Proceeds from sale of assets	1,192		4,672		Proceeds from sale of assets	3,082		4,810
Purchases of investments		(544)		(2,105)

Proceeds from sale of business from continuing operations						Proceeds from sale of business from continuing operations	10,318		5,171
Proceeds from sale of business from discontinued operations						Proceeds from sale of business from discontinued operations	—		56,302
Purchases of Rail assets	Purchases of Rail assets	—		(27,276)		Purchases of Rail assets	—		(27,464)
Proceeds from sale of Rail assets	Proceeds from sale of Rail assets	2,871		36,341		Proceeds from sale of Rail assets	2,871		36,706
Other	Other	(201)		1,746		Other	(431)		(359)
Net cash used in investing activities		(71,673)		(30,094)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(117,263)		2,919
Financing Activities	Financing Activities					Financing Activities
Net receipts (payments) under short-term lines of credit	Net receipts (payments) under short-term lines of credit	(173,384)		862,698		Net receipts (payments) under short-term lines of credit	(261,152)		361,318
Proceeds from issuance of short-term debt	Proceeds from issuance of short-term debt	—		350,000		Proceeds from issuance of short-term debt	—		350,000
Payments of short-term debt	Payments of short-term debt	—		(550,000)		Payments of short-term debt	—		(550,000)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	100,000		—		Proceeds from issuance of long-term debt	100,000		—
Payments of long-term debt	Payments of long-term debt	(35,861)		(15,077)		Payments of long-term debt	(42,734)		(22,585)
Contributions from noncontrolling interest owner	Contributions from noncontrolling interest owner	—		2,450		Contributions from noncontrolling interest owner	—		2,450
Distributions to noncontrolling interest owner	Distributions to noncontrolling interest owner	(24,344)		(9,980)		Distributions to noncontrolling interest owner	(44,304)		(34,930)
Payments of debt issuance costs	Payments of debt issuance costs	(767)		(7,802)		Payments of debt issuance costs	(769)		(7,802)
Dividends paid	Dividends paid	(12,527)		(12,245)		Dividends paid	(18,771)		(18,262)
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	(1,747)		—		Common stock repurchased	(1,747)		(6,769)
Value of shares withheld for taxes	Value of shares withheld for taxes	(6,616)		(3,349)		Value of shares withheld for taxes	(6,627)		(3,349)
Other	Other	259		394		Other	258		394
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(154,987)		622,113		Net cash (used in) provided by financing activities	(275,846)		75,489
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	280		(629)		Effect of exchange rates on cash and cash equivalents	(192)		(711)
Decrease in cash and cash equivalents		(18,976)		(130,409)
Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	302,786		(75,673)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	115,269		216,444		Cash and cash equivalents at beginning of period	115,269		216,444
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	96,293	$	86,035	Cash and cash equivalents at end of period	$	418,055	$	140,771

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		Retained Earnings		Noncontrolling Interests		Total			Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income		Retained Earnings		Noncontrolling Interests		Total
Balance at March 31, 2022		$	142	$	375,794	$	(2,265)	$	13,555	$	701,799	$	228,196	$	1,317,221
Net income										79,805		21,856		101,661
Other comprehensive income								750						750
Amounts reclassified from accumulated other comprehensive income								785						785

Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (1 shares)				2,946		(63)								2,883
Dividends declared ($0.1800 per common share)										(6,094)				(6,094)
Restricted share award dividend equivalents						15				(15)				—
Balance at June 30, 2022	Balance at June 30, 2022	$	142	$	378,740	$	(2,313)	$	15,090	$	775,495	$	250,052	$	1,417,206	Balance at June 30, 2022	$	142	$	378,740	$	(2,313)	$	15,090	$	775,495	$	250,052	$	1,417,206

Balance at March 31, 2023		$	142	$	377,768	$	(11,006)	$	16,267	$	786,420	$	176,821	1,346,412
Net income	Net income									55,046		27,640		82,686		Net income									36,748		7,524		44,272
Other comprehensive income	Other comprehensive income							11,957						11,957		Other comprehensive income							1,198						1,198
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							(2,742)						(2,742)		Amounts reclassified from accumulated other comprehensive income							(438)						(438)

Distributions to noncontrolling interests	Distributions to noncontrolling interests											(14,364)		(14,364)		Distributions to noncontrolling interests											(24,950)		(24,950)
Deconsolidation of joint venture												17,399		17,399
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (21 shares)				2,593		812								3,405
Purchase of treasury shares (2 shares)						(76)								(76)
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 ($0.18 per common share)																Dividends declared ($0.18 per common share)									(6,057)				(6,057)
Restricted share award dividend equivalents																Restricted share award dividend equivalents													—
Balance at September 30, 2022																Balance at September 30, 2022	$	142	$	381,728	$	(9,991)	$	15,850	$	806,186	$	232,626	$	1,426,541

Balance at June 30, 2023																Balance at June 30, 2023	$	142	$	380,376	$	(10,270)	$	25,482	$	835,256	$	207,496	$	1,438,482
Net income																Net income									9,708		20,815		30,523
Other comprehensive income																Other comprehensive income							6,060						6,060
Amounts reclassified from accumulated other comprehensive income																Amounts reclassified from accumulated other comprehensive income							(2,963)						(2,963)

Distributions to noncontrolling interests																Distributions to noncontrolling interests											(19,960)		(19,960)

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)			3,348		4								3,352

Dividends declared ($0.185 per common share)	Dividends declared ($0.185 per common share)									(6,245)				(6,245)		Dividends declared ($0.185 per common share)									(6,243)				(6,243)
Restricted share award dividend equivalents	Restricted share award dividend equivalents			15						35				50		Restricted share award dividend equivalents									(165)				(165)
Balance at June 30, 2023		$	142	$	380,376	$	(10,270)	$	25,482	$	835,256	$	207,496	$	1,438,482
Balance at September 30, 2023																Balance at September 30, 2023	$	142	$	383,724	$	(10,266)	$	28,579	$	838,556	$	208,351	$	1,449,086

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		Six Months Ended															Nine Months Ended
		Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income		Retained Earnings		Noncontrolling Interests		Total			Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income		Retained Earnings		Noncontrolling Interests		Total
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 ($0.54 per common share)																Dividends declared ($0.54 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

Balance at December 31, 2022	Balance at December 31, 2022	$	142	$	385,248	$	(15,043)	$	20,484	$	807,770	$	231,168	$	1,429,769	Balance at December 31, 2022	$	142	$	385,248	$	(15,043)	$	20,484	$	807,770	$	231,168	$	1,429,769
Net income (loss)										40,296		(16,727)		23,569
Net income																Net income									50,004		4,088		54,092
Other comprehensive income	Other comprehensive income							10,073						10,073		Other comprehensive income							16,133						16,133
Amounts reclassified from Accumulated other comprehensive income	Amounts reclassified from Accumulated other comprehensive income							(5,075)						(5,075)		Amounts reclassified from Accumulated other comprehensive income							(8,038)						(8,038)

Distributions to noncontrolling interests	Distributions to noncontrolling interests											(24,344)		(24,344)		Distributions to noncontrolling interests											(44,304)		(44,304)
Deconsolidation of joint venture	Deconsolidation of joint venture											17,399		17,399		Deconsolidation of joint venture											17,399		17,399
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (222 shares)	Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (222 shares)			(5,494)		6,355								861		Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (222 shares)			(2,146)		6,359								4,213
Purchase of treasury shares (51 shares)	Purchase of treasury shares (51 shares)					(1,747)								(1,747)		Purchase of treasury shares (51 shares)					(1,747)								(1,747)
Dividends declared ($0.370 per common share)										(12,485)				(12,485)
Dividends declared ($0.555 per common share)																Dividends declared ($0.555 per common share)									(18,728)				(18,728)
Restricted share award dividend equivalents	Restricted share award dividend equivalents			622		165				(325)				462		Restricted share award dividend equivalents			622		165				(490)				297
Balance at June 30, 2023		$	142	$	380,376	$	(10,270)	$	25,482	$	835,256	$	207,496	$	1,438,482
Balance at September 30, 2023																Balance at September 30, 2023	$	142	$	383,724	$	(10,266)	$	28,579	$	838,556	$	208,351	$	1,449,086

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 6

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The Andersons, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Consolidation

These Condensed Consolidated Financial Statements include the accounts of The Andersons, Inc. and its wholly owned and controlled subsidiaries (the “Company”). Controlled subsidiaries include majority-owned subsidiaries and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. ~~Following~~As discussed further in Note 15, ELEMENT, LLC ("ELEMENT"), a joint venture ethanol plant within the ~~deconsolidation of ELEMENT~~Renewables segment, was deconsolidated from the Company's Condensed Consolidated Financial Statements in the second ~~quarter of 2023, as discussed in Note 15, TAMH~~quarter. The Andersons Marathon Holdings LLC ("TAMH") is the Company’s only remaining VIE. 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 segment were classified as held-for-sale in the accompanying Condensed Consolidated Balance Sheets as the Company executed a definitive agreement to sell the Rail Leasing business and announced its intent to sell the remaining Rail Repair business, which was subsequently sold in 2022. 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, Condensed Consolidated Statements of Equity and unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

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, 2023. An unaudited Condensed Consolidated Balance Sheet as of ~~June~~September 30, 2022 has been included as the Company operates in several seasonal industries.

The Condensed Consolidated Balance Sheet data at December 31, 2022 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, 2022 (the “2022 Form 10-K”).

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 7~~

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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 market information, 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, 2023		December 31, 2022		June 30, 2022		(in thousands)	September 30, 2023		December 31, 2022		September 30, 2022
Grain and other agricultural products (a)	Grain and other agricultural products (a)	$	707,980	$	1,326,531	$	1,241,933	Grain and other agricultural products (a)	$	718,290	$	1,326,531	$	1,198,790
Energy inventories (a)	Energy inventories (a)	19,564		21,084		19,483		Energy inventories (a)	18,939		21,084		25,797
Ethanol and co-products (a)	Ethanol and co-products (a)	142,978		156,341		179,175		Ethanol and co-products (a)	94,375		156,341		117,310
Plant nutrients and cob products	Plant nutrients and cob products	120,267		227,769		177,735		Plant nutrients and cob products	153,688		227,769		214,529
Total inventories	Total inventories	$	990,789	$	1,731,725	$	1,618,326	Total inventories	$	985,292	$	1,731,725	$	1,556,426

(a) Includes RMI of ~~$691.7~~$708.2 million, $1,308.8 million and ~~$1,214.4~~$1,167.0 million at ~~June~~September 30, 2023, December 31, 2022 and ~~June~~September 30, 2022, respectively.

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3. Property, Plant and Equipment

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


(in thousands)	(in thousands)	June 30, 2023		December 31, 2022		June 30, 2022		(in thousands)	September 30, 2023		December 31, 2022		September 30, 2022
Land	Land	$	31,838	$	38,689	$	38,630	Land	$	30,872	$	38,689	$	38,508
Land improvements and leasehold improvements	Land improvements and leasehold improvements	81,470		92,084		91,542		Land improvements and leasehold improvements	79,829		92,084		93,026
Buildings and storage facilities	Buildings and storage facilities	349,773		364,721		370,453		Buildings and storage facilities	360,234		364,721		366,453
Machinery and equipment	Machinery and equipment	891,368		980,159		949,142		Machinery and equipment	916,552		980,159		956,471
Construction in progress	Construction in progress	56,578		41,429		31,237		Construction in progress	44,420		41,429		40,599
		1,411,027		1,517,082		1,481,004			1,431,907		1,517,082		1,495,057
Less: accumulated depreciation	Less: accumulated depreciation	747,586		754,353		717,561		Less: accumulated depreciation	751,719		754,353		729,118
Property, plant and equipment, net	Property, plant and equipment, net	$	663,441	$	762,729	$	763,443	Property, plant and equipment, net	$	680,188	$	762,729	$	765,939

Depreciation expense on property, plant, and equipment used in continuing operations was ~~$24.4~~$24.9 million and ~~$27.5~~$27.3 million for three months ended ~~June~~September 30, 2023 and 2022, respectively. Additionally, depreciation expense on property, plant and equipment used in continuing operations was ~~$50.5~~$75.5 million and ~~$55.8~~$83.2 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

In the first quarter of 2023, the Company recorded a $87.2 million impairment charge related to ~~ELEMENT, LLC ("ELEMENT"), the Company's joint venture ethanol plant within the Renewables segment.~~ELEMENT. The plant ~~has~~ faced operational and market-based challenges which were exacerbated by a shift in the California Low Carbon Fuel Standard credit markets and high western corn basis. At the time of the impairment, the Company owned 51% of ELEMENT and it was a consolidated entity, soas such, 49% of the impairment charge was represented in Net income (loss) attributable to noncontrolling interests in the Company's Condensed Consolidated Statements of Operations.

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 8~~

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4. Debt

~~Short-term and long-term debt at June 30, 2023, December 31, 2022 and June 30, 2022 consisted of the following:~~

(in thousands) June 30,
2023 December 31,
2022 June 30,
2022
Short-term debt – non-recourse $ 33,555 $ 81,475 $ 97,668
Short-term debt – recourse 69,197 191,100 1,063,760
Total short-term debt $ 102,752 $ 272,575 $ 1,161,428
Current maturities of long-term debt – non-recourse $ 62 $ 63,815 $ 7,707
Current maturities of long-term debt – recourse 27,449 46,340 46,244
Total current maturities of long-term debt $ 27,511 $ 110,155 $ 53,951
Long-term debt, less: current maturities – non-recourse $ — $ 414 $ 60,396
Long-term debt, less: current maturities – recourse 576,489 492,104 503,051
Total long-term debt, less: current maturities $ 576,489 $ 492,518 $ 563,447

The total borrowing capacity of the Company's lines of credit at June 30, 2023, was $1,869.1 million of which the Company had a total of $1,740.7 million available for borrowing. The Company's borrowing capacity is reduced by a combination of outstanding borrowings and letters of credit.

As of June 30, 2023, December 31, 2022 and June 30, 2022, the estimated fair value of long-term debt, including the current portion, was $597.6 million, $595.7 million and $617.5 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.

On April 3, 2023, the Company entered into a $100 million 8-year term loan with approximately half of the proceeds used to repay current maturities of long-term debt. The remainder of the proceeds ~~will be~~were used to pay down a portion of outstanding line of credit borrowings. Payment of principal and interest ~~will be~~is made on a quarterly basis. The loan ~~will bear~~bears interest at variable rates.

On April 18, 2023, ELEMENT was placed into receivership. As the receiver took control of ELEMENT, ~~within the quarter,~~ under the VIE consolidation model, the Company was deemed to have lost control of the entity and therefore deconsolidated ELEMENT from its Condensed Consolidated Financial Statements. As a result of the deconsolidation, the $62.8 million of non-recourse debt associated with ELEMENT was removed from Current maturities of long-term debt asin the second quarter of ~~June~~2023.

The total borrowing capacity of the Company's lines of credit at September 30, ~~2023.~~2023, was $1,858.5 million, of which, the Company had a total of $1,841.4 million available for borrowing. The Company's borrowing capacity is reduced by a combination of outstanding borrowings and letters of credit.

As of September 30, 2023, December 31, 2022 and September 30, 2022, the estimated fair value of long-term debt, including the current portion, was $585.2 million, $595.7 million and $602.2 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.

The Company is in compliance with all financial covenants as of ~~June~~September 30, 2023.

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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 30, 2023, December 31, 2022 and June 30, 2022,~~ 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:~~Sheets in Commodity derivative assets (liabilities) - current or if long-term in nature, Other assets, net or Other long-term liabilities:


(in thousands)	(in thousands)	June 30, 2023		December 31, 2022		June 30, 2022		(in thousands)	September 30, 2023		December 31, 2022		September 30, 2022
Cash collateral (received) paid		$	(15,290)	$	64,530	$	70,442
Cash collateral paid								Cash collateral paid	$	16,121	$	64,530	$	152,603
Fair value of derivatives	Fair value of derivatives	85,123		(10,014)		165,223		Fair value of derivatives	38,203		(10,014)		(42,578)
Net derivative asset position	Net derivative asset position	$	69,833	$	54,516	$	235,665	Net derivative asset position	$	54,324	$	54,516	$	110,025

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


		June 30, 2023											September 30, 2023
(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	$	438,227	$	3,959	$	26,312	$	59	$	468,557	Commodity derivative assets	$	301,990	$	4,730	$	12,733	$	101	$	319,554
Commodity derivative liabilities	Commodity derivative liabilities	(75,253)		(1,029)		(277,413)		(4,215)		(357,910)		Commodity derivative liabilities	(78,516)		(396)		(155,244)		(1,669)		(235,825)
Cash collateral (received) paid		(15,290)		—		—		—		(15,290)
Cash collateral paid												Cash collateral paid	16,121		—		—		—		16,121
Balance sheet line item totals	Balance sheet line item totals	$	347,684	$	2,930	$	(251,101)	$	(4,156)	$	95,357	Balance sheet line item totals	$	239,595	$	4,334	$	(142,511)	$	(1,568)	$	99,850


		December 31, 2022											December 31, 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	$	325,762	$	1,796	$	18,426	$	686	$	346,670	Commodity derivative assets	$	325,762	$	1,796	$	18,426	$	686	$	346,670
Commodity derivative liabilities	Commodity derivative liabilities	(94,704)		(149)		(116,945)		(1,484)		(213,282)		Commodity derivative liabilities	(94,704)		(149)		(116,945)		(1,484)		(213,282)
Cash collateral (received) paid		64,530		—		—		—		64,530
Cash collateral paid												Cash collateral paid	64,530		—		—		—		64,530
Balance sheet line item totals	Balance sheet line item totals	$	295,588	$	1,647	$	(98,519)	$	(798)	$	197,918	Balance sheet line item totals	$	295,588	$	1,647	$	(98,519)	$	(798)	$	197,918


		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 (received) paid		69,442		—		1,000		—		70,442
Cash collateral paid												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

The net pretax gains and losses on commodity derivatives not designated as hedging instruments included in the Company’s Condensed Consolidated Statements of Operations and the line items in which they are located ~~for the three and six months ended June 30, 2023 and 2022~~ 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)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
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	$	4,827	$	230,188	$	(22,741)	$	264,186	Gains (losses) on commodity derivatives included in Cost of sales and merchandising revenues	$	(26,918)	$	(169,478)	$	(49,659)	$	94,708

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 10

Table of Contents

The Company's volumes of commodity derivative contracts outstanding (on a gross basis) are as follows:


	September 30, 2023
(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:
Corn	546,004	—	—
Soybeans	66,884	—	—
Wheat	114,195	—	—
Oats	24,712	—	—
Ethanol	—	217,092	—
Dried distillers grain	—	—	669
Soybean meal	—	—	686
Other	9,734	26,632	2,295
Subtotal	761,529	243,724	3,650
Exchange traded:
Corn	158,900	—	—
Soybeans	36,135	—	—
Wheat	106,068	—	—
Oats	1,865	—	—
Ethanol	—	121,002	—
Propane	—	108,990	—
Other	—	672	779
Subtotal	302,968	230,664	779
Total	1,064,497	474,388	4,429


	December 31, 2022
(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:
Corn	567,405	—	—
Soybeans	56,608	—	—
Wheat	102,716	—	—
Oats	24,710	—	—
Ethanol	—	178,935	—
Dried distillers grain	—	—	449
Soybean meal	—	—	570
Other	10,054	44,547	2,029
Subtotal	761,493	223,482	3,048
Exchange traded:
Corn	170,280	—	—
Soybeans	46,380	—	—
Wheat	111,567	—	—
Oats	365	—	—
Ethanol	—	94,206	—
Propane	—	47,208	—
Other	—	588	581
Subtotal	328,592	142,002	581
Total	1,090,085	365,484	3,629

The Andersons, Inc. | Q3 2023 Form 10-Q | 11

Table of Contents

~~The Company had the following volume of commodity derivative contracts outstanding (on a gross basis) at June 30, 2023, December 31, 2022 and June 30, 2022:~~

June 30, 2023
(in thousands) Number of Bushels Number of Gallons Number of Tons
Non-exchange traded:
Corn 547,805 — —
Soybeans 42,273 — —
Wheat 236,316 — —
Oats 27,824 — —
Ethanol — 208,251 —
Dried distillers grain — — 479
Soybean meal — — 290
Other 11,064 33,819 2,704
Subtotal 865,282 242,070 3,473
Exchange traded:
Corn 177,425 — —
Soybeans 27,555 — —
Wheat 59,262 — —
Oats 960 — —
Ethanol — 74,760 —
Propane — 63,630 —
Other — 1,008 393
Subtotal 265,202 139,398 393
Total 1,130,484 381,468 3,866

December 31, 2022
(in thousands) Number of Bushels Number of Gallons Number of Tons
Non-exchange traded:
Corn 567,405 — —
Soybeans 56,608 — —
Wheat 102,716 — —
Oats 24,710 — —
Ethanol — 178,935 —
Dried distillers grain — — 449
Soybean meal — — 570
Other 10,054 44,547 2,029
Subtotal 761,493 223,482 3,048
Exchange traded:
Corn 170,280 — —
Soybeans 46,380 — —
Wheat 111,567 — —
Oats 365 — —
Ethanol — 94,206 —
Propane — 47,208 —
Other — 588 581
Subtotal 328,592 142,002 581
Total 1,090,085 365,484 3,629

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 12~~

~~Table of Contents~~


		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

~~The Andersons, Inc. | Q2 2023 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.

The Company had recorded the following amounts for the fair value of the ~~Company's~~ other derivatives:
(in thousands) June 30, 2023 December 31, 2022 June 30, 2022
Derivatives not designated as hedging instruments
Foreign currency contracts included in Other current assets (liabilities) $ 852 $ (3,124) $ (1,749)
Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets $ 11,107 $ 8,759 $ 3,276
Interest rate contracts included in Other assets 22,881 22,641 15,047


(in thousands)	September 30, 2023		December 31, 2022		September 30, 2022
Derivatives not designated as hedging instruments


Foreign currency contracts included in Other current assets (liabilities)	$	(1,714)	$	(3,124)	$	(5,685)
Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets	$	12,026	$	8,759	$	6,925
Interest rate contracts included in Other assets	29,952		22,641		25,669

The Andersons, Inc. | Q3 2023 Form 10-Q | 12

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The recording of ~~derivatives~~ gains and losses on other derivatives 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)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022

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)		$	8,996	$	8,923	$	2,590	$	25,464
Interest rate derivative gains included in Other comprehensive income										Interest rate derivative gains included in Other comprehensive income	$	7,981	$	14,282	$	10,571	$	39,746
Interest rate derivative gains (losses) included in Interest expense, net	Interest rate derivative gains (losses) included in Interest expense, net	2,515		(1,013)		4,619		(2,631)		Interest rate derivative gains (losses) included in Interest expense, net	2,734		210		7,354		(2,420)

Outstanding interest rate derivatives, as of ~~June~~September 30, 2023, 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	$	96.9	Interest rate component of debt - accounted for as a hedge	2.3%	Swap	2019	2025	$	95.3	Interest rate component of debt - accounted for as a hedge	2.3%
Swap	Swap	2019	2025	$	48.4	Interest rate component of debt - accounted for as a hedge	2.4%	Swap	2019	2025	$	47.7	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	Swap	2019	2025	$	48.4	Interest rate component of debt - accounted for as a hedge	2.4%	Swap	2019	2025	$	47.7	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%	Swap	2022	2029	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	Swap	2023	2024	$	50.0	Interest rate component of debt - accounted for as a hedge	3.7%	Swap	2023	2024	$	50.0	Interest rate component of debt - accounted for as a hedge	3.7%
Swap	Swap	2023	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	3.7%	Swap	2023	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	3.7%
Swap	Swap	2023	2031	$	50.0	Interest rate component of debt - accounted for as a hedge	2.9%	Swap	2023	2031	$	50.0	Interest rate component of debt - accounted for as a hedge	2.9%

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 14~~

~~Table of Contents~~

6. Revenue

Many of the Company’s sales and merchandising revenues are generated from contracts that are outside the scope of ASC 606, Revenue from Contracts with Customers. Specifically, many of the Company's Trade and Renewables sales contracts are derivatives under ASC 815, Derivatives and Hedging. The breakdown of revenues between ASC 606 and ASC 815 is 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)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
Revenues under ASC 606	Revenues under ASC 606	$	975,269	$	956,013	$	1,714,247	$	1,633,869	Revenues under ASC 606	$	688,111	$	635,445	$	2,402,358	$	2,269,314
Revenues under ASC 815	Revenues under ASC 815	3,044,914		3,494,604		6,187,174		6,794,702		Revenues under ASC 815	2,947,580		3,583,880		9,134,754		10,378,582
Total revenues	Total revenues	$	4,020,183	$	4,450,617	$	7,901,421	$	8,428,571	Total revenues	$	3,635,691	$	4,219,325	$	11,537,112	$	12,647,896

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

The Andersons, Inc. | Q3 2023 Form 10-Q | 13

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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 months ended June 30, 2023 and 2022, respectively:~~line:



	Three months ended September 30, 2023
(in thousands)	Trade		Renewables		Nutrient & Industrial		Total
Specialty nutrients	$	—	$	—	$	27,651	$	27,651
Primary nutrients	—		—		74,565		74,565
Products and co-products	114,962		399,643		—		514,605
Propane	29,572		—		—		29,572
Other	13,455		1,946		26,317		41,718
Total	$	157,989	$	401,589	$	128,533	$	688,111



	Three months ended September 30, 2022
(in thousands)	Trade		Renewables		Nutrient & Industrial		Total
Specialty nutrients	$	—	$	—	$	44,957	$	44,957
Primary nutrients	—		—		92,071		92,071
Products and co-products	88,201		323,676		—		411,877
Propane	47,867		—		—		47,867
Other	10,179		1,646		26,848		38,673
Total	$	146,247	$	325,322	$	163,876	$	635,445


	Nine months ended September 30, 2023
(in thousands)	Trade		Renewables		Nutrient & Industrial		Total
Specialty nutrients	$	—	$	—	$	195,982	$	195,982
Primary nutrients	—		—		454,416		454,416
Products and co-products	318,217		1,162,898		—		1,481,115
Propane	136,250		—		—		136,250
Other	40,828		6,098		87,669		134,595
Total	$	495,295	$	1,168,996	$	738,067	$	2,402,358

Three months ended June 30, 2023
(in thousands) Trade Renewables Nutrient & Industrial Total
Specialty nutrients $ — $ — $ 98,335 $ 98,335
Primary nutrients — — 315,101 315,101
Products and co-products 114,289 368,646 — 482,935
Propane 30,155 — — 30,155
Other 14,782 1,804 32,157 48,743
Total $ 159,226 $ 370,450 $ 445,593 $ 975,269
Three months ended June 30, 2022
(in thousands) Trade Renewables Nutrient & Industrial Total
Specialty nutrients $ — $ — $ 104,357 $ 104,357
Primary nutrients — — 336,487 336,487
Products and co-products 101,195 329,224 — 430,419
Propane 41,088 — — 41,088
Other 12,844 1,378 29,440 43,662
Total $ 155,127 $ 330,602 $ 470,284 $ 956,013
Six months ended June 30, 2023
(in thousands) Trade Renewables Nutrient & Industrial Total
Specialty nutrients $ — $ — $ 168,332 $ 168,332
Primary nutrients — — 379,851 379,851
Products and co-products 203,256 763,255 — 966,511
Propane 106,678 — — 106,678
Other 27,372 4,152 61,351 92,875
Total $ 337,306 $ 767,407 $ 609,534 $ 1,714,247

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 15~~

~~Table of Contents~~


		Six months ended June 30, 2022									Nine months ended September 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Nutrient & Industrial		Total		(in thousands)	Trade		Renewables		Nutrient & Industrial		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	Propane	155,591		—		—		155,591		Propane	203,459		—		—		203,459
Other	Other	24,375		2,593		56,332		83,300		Other	34,554		4,239		83,179		121,972
Total	Total	$	389,032	$	564,511	$	680,326	$	1,633,869	Total	$	535,280	$	889,834	$	844,200	$	2,269,314

Substantially all of the Company's revenues accounted for under ASC 606 during the ~~three and six months ended June 30, 2023 and 2022, respectively,~~periods presented in the preceding tables, are recorded at a point in time instead of over time.

The Andersons, Inc. | Q3 2023 Form 10-Q | 14

Table of Contents

Contract balances

The balances of the Company’s contract liabilities were ~~$15.9~~$28.6 million and $55.4 million as of ~~June~~September 30, 2023 and December 31, 2022, respectively. The difference between the opening and closing balances of the Company’s contract liabilities is primarily ~~results from the~~a result of timing ~~difference~~differences between the Company’s performance and the customer’s payment. The main driver of the contract liabilities balance are 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 are built up 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 Nutrient & Industrial segment.

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 16~~

~~Table of Contents~~

7. Income Taxes


	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2023			2022			2023			2022
Income before income taxes from continuing operations	$	38,385		$	34,719		$	77,802		$	163,479
Income tax provision from continuing operations	7,862			9,839			23,710			29,695
Effective tax rate from continuing operations	20.5		%	28.3		%	30.5		%	18.2		%

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 30, 2023, the Company recorded income tax expense from continuing operations of $21.7 million. The Company's effective tax rate was 20.8% on income before income taxes from continuing operations of $104.4 million. The difference between the ~~20.8%~~20.5% effective tax rate and the U.S. federal statutory tax rate of 21.0% for the three months ended September 30, 2023 is primarily attributable to the tax impact of non-controlling interest offset by state and local income taxes, nondeductible compensation, and ~~nondeductible compensation. During the three months ended June 30, 2023,~~other discrete tax ~~expense of $1.4 million was recorded on income before taxes of $6.5 million related to gain on deconsolidation of the ELEMENT joint venture.~~

For the three months ended June 30, 2022, the Company recorded income tax expense from continuing operations of $15.8 million. The Company’s effective tax rate was 13.3% on income before income taxes from continuing operations of $118.2 million. The effective tax rate differs from the U.S. federal statutory rate of 21.0% due 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, 2023, the Company recorded an income tax expense from continuing operations of $15.8 million. The Company's effective tax rate was 40.2% on income before income taxes from continuing operations of $39.4 million.adjustments. The difference between the ~~40.2%~~30.5% effective tax rate and the U.S. federal statutory tax rate of 21.0% for the nine months ended September 30, 2023 is primarily attributable to the tax impact of non-controlling interest, state and local income taxes, nondeductible compensation and ~~nondeductible compensation. During the six months ended June 30, 2023,~~other discrete tax adjustments. Other discrete tax items include a net ~~discrete~~ income tax benefit of $10.6 million ~~was~~ recorded on a net loss before taxes of $88.8 million related to the current year operations, impairment charge, and gain on deconsolidation associated with ELEMENT.

~~For~~ The difference between the ~~six months ended June 30, 2022, the Company recorded income tax expense from continuing operations of $19.9 million. The Company’s~~28.3% effective tax rate ~~was 15.4% on income before income taxes from continuing operations of $128.8 million. The effective tax rate differs from~~and the U.S. federal statutory rate of 21.0% for the three months ended September 30, 2022 is due to the tax impact of non-controlling interest and state and local income taxes. The difference between the 18.2% effective tax rate and the U.S. federal statutory rate of 21.0% for the nine months ended September 30, 2022 is due 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.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 1715

Table of Contents

8. Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated other comprehensive income ("AOCI") attributable to the ~~Company for the three and six months ended June 30, 2023 and 2022:~~Company:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
Currency Translation Adjustment	Currency Translation Adjustment									Currency Translation Adjustment
Beginning balance	Beginning balance	$	(7,436)	$	5,729	$	(8,203)	$	5,631	Beginning balance	$	(4,767)	$	50	$	(8,203)	$	5,631
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	2,669		(5,679)		3,436		(5,581)		Other comprehensive income (loss) before reclassifications	(2,600)		(9,828)		836		(15,409)

Tax effect	Tax effect	—		—		—		—		Tax effect	—		—		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	2,669		(5,679)		3,436		(5,581)		Other comprehensive income (loss), net of tax	(2,600)		(9,828)		836		(15,409)
Ending balance	Ending balance	$	(4,767)	$	50	$	(4,767)	$	50	Ending balance	$	(7,367)	$	(9,778)	$	(7,367)	$	(9,778)
Hedging Adjustment	Hedging Adjustment									Hedging Adjustment
Beginning balance	Beginning balance	$	18,750	$	7,087	$	23,546	$	(5,335)	Beginning balance	$	25,485	$	13,784	$	23,546	$	(5,335)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	11,511		7,910		7,209		22,833		Other comprehensive income (loss) before reclassifications	10,715		14,492		17,924		37,325
Amounts reclassified from AOCI (a)	Amounts reclassified from AOCI (a)	(2,514)		1,013		(4,619)		2,631		Amounts reclassified from AOCI (a)	(2,735)		(210)		(7,354)		2,421
Tax effect	Tax effect	(2,262)		(2,226)		(651)		(6,345)		Tax effect	(2,007)		(3,563)		(2,658)		(9,908)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	6,735		6,697		1,939		19,119		Other comprehensive income (loss), net of tax	5,973		10,719		7,912		29,838
Ending balance	Ending balance	$	25,485	$	13,784	$	25,485	$	13,784	Ending balance	$	31,458	$	24,503	$	31,458	$	24,503
Pension and Other Postretirement Adjustment	Pension and Other Postretirement Adjustment									Pension and Other Postretirement Adjustment
Beginning balance	Beginning balance	$	4,695	$	481	$	4,883	$	640	Beginning balance	$	4,506	$	998	$	4,883	$	640
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(15)		845		(29)		914		Other comprehensive income (loss) before reclassifications	(129)		69		(158)		983
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	54		(100)		108		(100)		Tax effect	81		28		189		(72)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(189)		517		(377)		358		Other comprehensive income (loss), net of tax	(276)		(131)		(653)		227
Ending balance	Ending balance	$	4,506	$	998	$	4,506	$	998	Ending balance	$	4,230	$	867	$	4,230	$	867
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	$	25,482	$	15,090	$	25,482	$	15,090	Total AOCI Ending Balance	$	28,579	$	15,850	$	28,579	$	15,850

(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 2023 Form 10-Q | 1816

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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,
		2023		2022		2023		2022			2023		2022		2023		2022
Numerator:	Numerator:									Numerator:
Net income from continuing operations	Net income from continuing operations	$	82,686	$	102,400	$	23,569	$	108,904	Net income from continuing operations	$	30,523	$	24,880	$	54,092	$	133,784
Net income (loss) attributable to noncontrolling interests (a)		27,640		21,856		(16,727)		22,303
Net income attributable to noncontrolling interests (a)										Net income attributable to noncontrolling interests (a)	20,815		7,524		4,088		29,827
Net income attributable to The Andersons, Inc. common shareholders from continuing operations	Net income attributable to The Andersons, Inc. common shareholders from continuing operations	$	55,046	$	80,544	$	40,296	$	86,601	Net income attributable to The Andersons, Inc. common shareholders from continuing operations	$	9,708	$	17,356	$	50,004	$	103,957

Loss from discontinued operations, net of income taxes		$	—	$	(739)	$	—	$	(1,294)
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	$	—	$	19,392	$	—	$	18,099

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	33,744		33,850		33,683		33,795		Weighted average shares outstanding – basic	33,752		33,825		33,706		33,805
Effect of dilutive awards	Effect of dilutive awards	421		566		510		621		Effect of dilutive awards	518		582		560		664
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	34,165		34,416		34,193		34,416		Weighted average shares outstanding – diluted	34,270		34,407		34,266		34,469

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	$	1.63	$	2.38	$	1.20	$	2.56	Continuing operations	$	0.29	$	0.51	$	1.48	$	3.08
Discontinued operations	Discontinued operations	—		(0.02)		—		(0.04)		Discontinued operations	—		0.57		—		0.54
		$	1.63	$	2.36	$	1.20	$	2.52		$	0.29	$	1.08	$	1.48	$	3.62
Diluted earnings (loss):
Diluted earnings:										Diluted earnings:
Continuing operations	Continuing operations	$	1.61	$	2.34	$	1.18	$	2.52	Continuing operations	$	0.28	$	0.50	$	1.46	$	3.02
Discontinued operations	Discontinued operations	—		(0.02)		—		(0.04)		Discontinued operations	—		0.56		—		0.53
		$	1.61	$	2.32	$	1.18	$	2.48		$	0.28	$	1.06	$	1.46	$	3.55

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

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 19~~

~~Table of Contents~~

10. Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring ~~basis at June 30, 2023, December 31, 2022 and June 30, 2022:~~basis:


(in thousands)	(in thousands)	June 30, 2023								(in thousands)	September 30, 2023
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)	$	69,833	$	25,524	$	—	$	95,357	Commodity derivatives, net (a)	$	54,324	$	45,526	$	—	$	99,850
Provisionally priced contracts (b)	Provisionally priced contracts (b)	(19,061)		(16,529)		—		(35,590)		Provisionally priced contracts (b)	(80,657)		(24,460)		—		(105,117)
Convertible preferred securities (c)	Convertible preferred securities (c)	—		—		15,424		15,424		Convertible preferred securities (c)	—		—		20,628		20,628
Other assets and liabilities (d)	Other assets and liabilities (d)	5,018		33,988		—		39,006		Other assets and liabilities (d)	2,331		41,978		—		44,309
Total	Total	$	55,790	$	42,983	$	15,424	$	114,197	Total	$	(24,002)	$	63,044	$	20,628	$	59,670


(in thousands)	December 31, 2022
Assets (liabilities)	Level 1		Level 2		Level 3		Total

Commodity derivatives, net (a)	$	54,516	$	143,402	$	—	$	197,918
Provisionally priced contracts (b)	(20,960)		(115,377)		—		(136,337)
Convertible preferred securities (c)	—		—		16,278		16,278
Other assets and liabilities (d)	(209)		31,400		—		31,191
Total	$	33,347	$	59,425	$	16,278	$	109,050

(in thousands) June 30, 2022
Assets (liabilities) Level 1 Level 2 Level 3 Total
Commodity derivatives, net (a)
$ 235,665 $ 218,819 $ — $ 454,484
Provisionally priced contracts (b)
38,061 (27,945) — 10,116
Convertible preferred securities (c)
— — 16,803 16,803
Other assets and liabilities (d)
1,097 18,323 — 19,420
Total $ 274,823 $ 209,197 $ 16,803 $ 500,823

The Andersons, Inc. | Q3 2023 Form 10-Q | 17

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(in thousands)	September 30, 2022
Assets (liabilities)	Level 1		Level 2		Level 3		Total


Commodity derivatives, net (a)	$	110,025	$	257,142	$	—	$	367,167
Provisionally priced contracts (b)	19,685		(41,188)		—		(21,503)
Convertible preferred securities (c)	—		—		16,946		16,946
Other assets and liabilities (d)	(3,037)		32,594		—		29,557
Total	$	126,673	$	248,548	$	16,946	$	392,167

(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. | Q2 2023 Form 10-Q | 20~~

~~Table of Contents~~

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.

The Andersons, Inc. | Q3 2023 Form 10-Q | 18

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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)	2023		2022		(in thousands)	2023		2022
Assets at January 1,	Assets at January 1,	$	16,278	$	11,618	Assets at January 1,	$	16,278	$	11,618
Purchases of additional investments	Purchases of additional investments	—		3,883		Purchases of additional investments	—		3,883
Gains included in Other income, net	Gains included in Other income, net	802		404		Gains included in Other income, net	802		404
Proceeds from investments	Proceeds from investments	(1,670)		—		Proceeds from investments	(1,670)		—
Assets at March 31,	Assets at March 31,	$	15,410	$	15,905	Assets at March 31,	$	15,410	$	15,905
Purchases of additional investments	Purchases of additional investments	235		772		Purchases of additional investments	235		772
Gains (losses) included in Other income, net	Gains (losses) included in Other income, net	(221)		126		Gains (losses) included in Other income, net	(221)		126

Assets at June 30,	Assets at June 30,	$	15,424	$	16,803	Assets at June 30,	$	15,424	$	16,803

Additional investments						Additional investments	1,107		—
Gains included in Other income, net						Gains included in Other income, net	4,919		143
Reclassification to a receivable in Other assets, net						Reclassification to a receivable in Other assets, net	(822)		—
Assets at September 30,						Assets at September 30,	$	20,628	$	16,946

The following tables summarize quantitative information about the Company's Level 3 fair value ~~measurements as of June 30, 2023, December 31, 2022 and June 30, 2022:~~measurements:

Quantitative Information about Recurring Level 3 Fair Value Measurements

Fair Value as of

(in thousands)

June 30, 2023

December 31, 2022

June 30, 2022

Valuation Method

Unobservable Input

Weighted Average

(in thousands)

September 30, 2023

December 31, 2022

September 30, 2022

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

15,424

16,278

16,803

Implied based on market prices

N/A

Convertible preferred securities (a)

20,628

16,278

16,946

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

Fair Value as of

(in thousands)

~~June~~September 30, 2023

December 31, 2022

~~June~~September 30, 2022

Valuation Method

Unobservable Input

Weighted Average

Grain Assets (a)

—

9,000

—

Third party appraisal

Various

N/A

~~Equity method investment~~ ~~(b)~~

—

~~11,538~~

~~Discounted cash flow analysis~~

~~Various~~

~~N/A~~

(a) The Company recognized impairment charges on a Nebraska grain asset. The fair value of the asset was determined using third-party appraisals. These measures are considered Level 3 inputs on a nonrecurring basis.

~~(b) 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.~~

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. | Q2Q3 2023 Form 10-Q | 2119

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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~~shareholder of the Company's Renewables operations and ~~several~~certain 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)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
Sales of products	Sales of products	$	97,099	$	103,106	$	172,050	$	189,255	Sales of products	$	98,062	$	102,565	$	270,112	$	291,820
Purchases of products	Purchases of products	14,524		11,983		30,226		38,409		Purchases of products	9,061		13,405		39,286		51,814


(in thousands)	(in thousands)	June 30, 2023		December 31, 2022		June 30, 2022		(in thousands)	September 30, 2023		December 31, 2022		September 30, 2022
Accounts receivable	Accounts receivable	$	15,218	$	12,272	$	17,560	Accounts receivable	$	13,706	$	12,272	$	12,016
Accounts payable	Accounts payable	2,503		7,070		3,060		Accounts payable	4,697		7,070		4,226

12. Segment Information

The Company’s operations include three 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 four co-owned and fully consolidated ethanol production facilities as well as purchases and sells ethanol and ethanol co-products. The Nutrient & Industrial (formerly Plant Nutrient) business manufactures and distributes plant nutrient products such as agricultural inputs, primarily fertilizers and turf care products along with industrial products such as deicers, dust abatement solutions and corncob-based products. The segment was rebranded in 2023 to reflect the portfolio of market offerings in the segment. The Other category includes other corporate level costs not attributable to an operating segment and intercompany eliminations between the segments.

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)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
Revenues from external customers	Revenues from external customers									Revenues from external customers
Trade	Trade	$	2,696,810	$	3,097,767	$	5,574,590	$	6,182,448	Trade	$	2,639,059	$	3,240,526	$	8,213,649	$	9,422,974
Renewables	Renewables	877,781		882,567		1,717,297		1,565,798		Renewables	868,099		814,923		2,585,396		2,380,721
Nutrient & Industrial	Nutrient & Industrial	445,592		470,283		609,534		680,325		Nutrient & Industrial	128,533		163,876		738,067		844,201
Total	Total	$	4,020,183	$	4,450,617	$	7,901,421	$	8,428,571	Total	$	3,635,691	$	4,219,325	$	11,537,112	$	12,647,896


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
Income before income taxes from continuing operations
Income (loss) before income taxes from continuing operations										Income (loss) before income taxes from continuing operations
Trade	Trade	$	4,990	$	23,666	$	44,354	$	27,335	Trade	$	8,073	$	40,658	$	52,427	$	67,993
Renewables (a)	Renewables (a)	66,604		67,776		(15,909)		73,738		Renewables (a)	47,096		15,901		31,187		89,639
Nutrient & Industrial	Nutrient & Industrial	42,565		38,311		32,127		49,054		Nutrient & Industrial	(8,452)		(11,609)		23,675		37,445
Other	Other	(9,741)		(11,600)		(21,155)		(21,367)		Other	(8,332)		(10,231)		(29,487)		(31,598)
Total	Total	$	104,418	$	118,153	$	39,417	$	128,760	Total	$	38,385	$	34,719	$	77,802	$	163,479

(a) Includes income ~~(loss)~~ attributable to noncontrolling interests of ~~$27.6~~$20.8 million and ~~$21.9~~$7.5 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$(16.7)~~$4.1 million and ~~$22.3~~$29.8 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 2220

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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.

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

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 23~~

~~Table of Contents~~

14. Other Income

The following table sets forth the items in Other income, net within the Condensed Consolidated Statements of ~~Operations for the periods presented below:~~Operations:


		Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
(in thousands)	(in thousands)	2023		2022		2023		2022		(in thousands)	2023		2022		2023		2022
Gain on deconsolidation of joint venture	Gain on deconsolidation of joint venture	$	6,544	$	—	$	6,544	$	—	Gain on deconsolidation of joint venture	$	—	$	—	$	6,544	$	—
Property insurance recoveries	Property insurance recoveries	2,180		1,851		3,183		3,106		Property insurance recoveries	—		—		3,183		3,106
Interest income	Interest income	1,708		819		3,175		1,293		Interest income	3,296		544		6,471		1,837
Patronage income	Patronage income	78		936		2,094		2,399		Patronage income	951		29		3,046		2,428
Gain on sale of frac sand assets		—		3,979		—		3,979
Gain on sale of assets and businesses										Gain on sale of assets and businesses	6,515		—		5,836		3,979
Biofuel Producer Program funds	Biofuel Producer Program funds	—		17,643		—		17,643		Biofuel Producer Program funds	2,190		—		2,190		17,643
Equity earnings (losses) in affiliates	Equity earnings (losses) in affiliates	(417)		(6,034)		(231)		(6,278)		Equity earnings (losses) in affiliates	(1,375)		681		(1,606)		(5,597)
Gain on investments										Gain on investments	4,798		91		5,144		91
Other	Other	2,348		(2,402)		5,680		(1,432)		Other	(1,197)		130		4,815		(1,302)
Total	Total	$	12,441	$	16,792	$	20,445	$	20,710	Total	$	15,178	$	1,475	$	35,623	$	22,185

Individually significant items included in the table above are:

Gain on deconsolidation of joint venture - On April 18, 2023, ELEMENT was placed into receivership. As the receiver took control of ELEMENT, ~~within the quarter,~~ under the VIE consolidation model, the Company was deemed to have lost control of the entity and therefore deconsolidated ELEMENT from its Condensed Consolidated Financial Statements. As a result of these activities, the Company recognized a gain on deconsolidation. See footnote 15 for additional information.

Property insurance recoveries - In 2023, property insurance recoveries consisted of proceeds of ~~$2.2~~$1.5 million relating to a conveyor collapse at a Louisiana grain asset in ~~Delhi, Louisiana~~the prior year and proceeds of $1.0 million relating to a fire at a Michigan grain asset in the prior year, the remaining proceeds consists of several individually insignificant amounts in the ordinary course of business. In 2022, property insurance recoveries consisted of ~~proceeds of~~ approximately $3.0 million relating to a prior period incident at the Company’s ~~Galena Park, Texas~~port facility ~~the~~in Texas. The remaining proceeds consists of ~~several~~ individually insignificant amounts in the ordinary course of business.

The Andersons, Inc. | Q3 2023 Form 10-Q | 21

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Interest income - ~~The~~In 2023, the Company ~~earns~~earned $5.0 million in interest income on cash and cash equivalents ~~held in money market accounts at TAMH along~~ with an additional $1.5 million earned from an inventory financing ~~programs provided by the Company. For the six months ended June 30, 2023, the money market account at TAMH earned $1.0 million and the inventory financing~~ program, ~~earned $1.1 million ,~~ the remaining interest income consists of several individually insignificant amounts in the ordinary course of business. ~~Interest~~In 2022, an inventory financing program earned $1.1 million, the remaining interest income ~~for the year ended June 30, 2022~~ consisted of individually insignificant amounts in the ordinary course of business.

Patronage income - As a part of the Company’s normal operations it relies heavily on short-term lines of credit in order to support working capital needs in addition to long-term debt presented on the balance sheet. As part of these programs the Company receives patronage income ~~annually~~ from its lenders.

Gain on sale of ~~frac sand~~ assets and businesses - ~~Gains on~~In 2023, the vast majority of the gain was from the sale of ~~frac sand assets for~~a Nebraska grain facility of $5.6 million, with the ~~year ended June 30,~~remaining amounts consisting of several individually insignificant amounts in the ordinary course of business. In 2022, ~~consisted of gains~~the gain on the sale of assets and businesses consisted of the Company’s remaining frac sand facilities ~~and assets~~ in Oklahoma ~~City, Oklahoma~~ and ~~North Branch,~~ Minnesota, of $4.0 million.

Biofuel Producer Program funds - ~~In 2022, the~~The USDA as a part of the Biofuel Producer Program, created under the CARES Act, provided funding to support biofuel producers who faced unexpected market losses due to the COVID-19 pandemic. ~~Under~~In 2023, the Company received proceeds of $2.2 million under this program, of which, $1.7 million was attributable to TAMH. In 2022, TAMH and ELEMENT received proceeds of $13.3 million and $4.3 million, respectively. Of these proceeds ~~$8.9~~$8.7 million was ~~attributable to the Company and the remaining $8.7 million~~ attributable to the noncontrolling interest.

Equity earnings (losses) in affiliates - In 2023 and 2022, the Company recorded an impairment charge on ~~a Canadian~~ equity method ~~investment~~investments for $1.0 million and $4.5 million, respectively. The remaining activity consists of routine earnings and losses in equity method investments through the ordinary course of business.

Gain on investments - In 2023, the gain on investments consisted of a $4.8 million revaluation gain of an investment within the Company's corporate venture fund. The remaining ~~equity earnings (losses) in affiliates~~gains consists of individually insignificant activity in the ordinary course of business.

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15. ELEMENT

ELEMENT was structured as a limited liability company established for the primary purpose of producing ethanol and additional co-products such as distiller’s dried grain and corn oil. The facility located in Colwich, Kansas, was designed to produce 70 million gallons of ethanol per year and began operations in August 2019.

The Company holds 51% of the membership units and ICM Holdings, Inc. (“ICM”) owns the remaining 49% of the membership units. The Company acted as the manager of the facility, responsibilities which were assumed per the Management Services Agreement dated January 1, ~~2021, and it~~2021. ELEMENT was concluded to be a variable interest entity (“VIE”) and consolidated ~~ELEMENT~~ within the Company’s Consolidated Financial Statements.

~~The plant has faced operational and market-based challenges. These challenges have been exacerbated by a shift in the California Low Carbon Fuel Standard credit markets and high western corn basis.~~ In early 2023, ELEMENT was unable to make its scheduled debt payments and was placed into default. The default led to an impairment triggering event, concluding in an $87.2 million impairment charge in the first quarter.

On April 18, 2023, ELEMENT was placed into receivership and was appointed a receiver, which took possession and control of the rights and interests of ELEMENT. ~~The facility is being marketed for sale.~~ With this appointment, while retaining its investment in ELEMENT, the Company ceased to have a controlling financial interest and was no longer deemed to be the primary beneficiary in the subsidiary. Accordingly, the Company deconsolidated ELEMENT at that time and began accounting for the subsidiary as an equity method investment which resulted in a pretax gain of $18.1 million. Additionally, the Company had a $9.6 million balance in raw material and fee receivables as well as $2.0 million in loans and interest due from ELEMENT that were previously eliminated in consolidation. Upon deconsolidation, the fair values of these receivables and loans from ELEMENT to the Company were ascertained to have no value and were fully reserved for resulting in a pretax loss of $11.6 million. The combination of this activity triggered by the ELEMENT deconsolidation resulted in a cumulative net pretax gain of $6.5 million which was recorded in Other income, net in the Condensed Consolidated Statements of Operations.

As of ~~June~~September 30, 2023, ELEMENT has continued to incur losses and there have been no payments on the outstanding receivables or loan mentioned previously. No equity method losses related to ELEMENT have been recorded since deconsolidation as the investment is in a negative position as of ~~June~~September 30, 2023.

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16. ~~Subsequent Events~~Goodwill

~~On July 10, 2023, the Company closed on the purchase of the assets of ACJ International LLC ("ACJ"), an ingredient, logistics, and supply chain management company~~The changes in the ~~pet food industry, headquartered in St. Louis, Missouri. The Company purchased ACJ~~carrying amount of goodwill by reportable segment for ~~$41.4 million,~~the nine months ended September 30, 2023 are as follows:


(in thousands)	Trade		Renewables		Nutrient & Industrial		Total
Balance at December 31, 2022	$	119,867	$	8,789	$	686	$	129,342
Divestitures (a)	(800)		—		—		(800)
Balance at September 30, 2023	$	119,067	$	8,789	$	686	$	128,542

(a) Removal of ~~which, $24.4 million was paid at closing and~~allocated goodwill due to the ~~remaining estimated amount will be paid over three years based on certain earn-out provisions.~~sale of a Nebraska grain facility.

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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 of economic, weather and agricultural conditions, regulatory conditions, competition globally and in the markets the Company serves, ~~the ongoing economic impacts from the war in Ukraine,~~geopolitical risk, fluctuations in cost and availability of commodities, the effectiveness of the Company's 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 2022 Form 10-K. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Critical Accounting Policies and Estimates

Our critical accounting policies and critical accounting estimates, as described in our 2022 Form 10-K, have not materially changed through the ~~second~~third quarter of 2023.

Executive Overview

Our operations are organized, managed and classified into three reportable business segments: Trade, Renewables and Nutrient & Industrial. Each of these segments is generally based on the nature of products and services offered and aligns with the management structure.

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.

Trade

The Trade segment’s ~~second~~third quarter operating results, ~~were mixed as overall gross profit declined despite~~although significantly lower than the prior year, nonetheless reflect solid underlying merchandising and grain asset fundamentals with aggregate results for most of the Trade product lines comparable to the strong ~~earnings from certain well-positioned merchandising businesses. Throughput of agricultural inventories declined from the second~~third quarter of 2022. ~~When combined with~~The asset-based business benefited from another solid Louisiana harvest and good space income after a large soft wheat harvest. Underlying merchandising fundamentals were also solid during the ~~strong first~~ quarter ~~income before income taxes~~but were negatively impacted by a currency loss in Egypt. While the company typically transacts in U.S. dollars, given the unusual currency liquidity challenges being experienced by customers in Egypt, the Company accepted a lower exchange rate for product that had been delivered and ~~gross profit remain ahead~~related receivables were revalued. In the premium ingredient businesses, volumes increased because of 2022 even without $16.1 million of inventory insurance recoveries recorded thus far in 2023. The first half of 2022 included certain margin impacts from the Russian invasion of Ukraine that were not repeated in the first half of 2023. Recentrecent growth investments ~~in food~~ and ~~pet food ingredients also contributed to earnings in the quarter. Winter wheat volume accumulated from the just-completed harvest was higher than expected and at good qualities in our core geography.~~acquisitions.

The majority of the Trade business remains focused on domestic grain flows and is less impacted by slowdowns in U.S. exports. With the large and ongoing U.S. harvest, our assets are well-positioned to accumulate, condition and store large quantities of grain. In this harvest, we expect drying income due to receipts of higher moisture corn. We are also receiving increased storage rates including variable storage rates in wheat. With increased domestic supply, the merchandising focus will continue to be on serving customers and opportunistic arbitrage.

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Agricultural inventories on hand were ~~74.5~~91.4 million and ~~107.0~~103.1 million bushels at ~~June~~September 30, 2023 and ~~June~~September 30, 2022, 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 ~~175~~169 million bushels at ~~June~~September 30, 2023, which ~~was comparable to~~slightly lower than the 185 million bushels of capacity in the prior ~~year.~~

~~With~~year after the ~~strong South American harvest, combined with improving U.S. crop conditions,~~divestiture of certain grain assets in the outlook for global grain stocks has improved. With the mix of assets and merchandising capabilities across key geographies, Trade is well-positioned. While there continues to be geopolitical risks in areas in which we do business, including certain countries that have controlled currencies, the unrest surrounding Black Sea grain shipments could result in continued volatility in commodity markets.

current year.

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Renewables

The Renewables segment's ~~second~~third quarter operating results were ~~good on rallying crush margins and strong co-product values. While the results decreased year over year,~~significantly higher than the prior year ~~results included approximately $24.4 million~~with the continued rally in ~~additional mark-to-market gains~~ethanol crush margins, co-product values and $17.6 million of proceeds received as a part of the USDA Biofuel Producer Program enacted as a part of the CARES Act, of which $8.9 million was attributable to the Company. When the impact of these items is removedlower operating costs from ~~prior year results, the current year operating results are well ahead of~~ the prior year. ~~Ethanol crush margins strengthened over~~Results from the quarter and the current margin outlook, despite volatility, remains strong. Production facilities operated efficiently in the quarter with improved ethanol and corn oil yield and lower costs than the comparable quarter in 2022. The merchandising businesses, including renewable diesel feedstocks, ~~continue to deliver solid earnings on higher volumes and strong co-product values, and~~ exceeded ~~our second~~third quarter 2022 ~~results. Our~~results by nearly $5 million. Three of the Company's four ethanol plants completed their semi-annual maintenance shutdowns in the third quarter and the fourth plant was completed shortly thereafter. Board crush values remain historically high into the fourth quarter. Corn harvest in the eastern corn belt ethanol production ~~facilities remain well-positioned for corn supply.~~draw areas is somewhat delayed but not expected to impact ethanol operations.

Ethanol and related co-products volumes ~~for the three and six months ended June 30, 2023 and 2022~~ 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)	2023	2022	2023	2022	(in thousands)	2023	2022	2023	2022
Ethanol (gallons shipped)	Ethanol (gallons shipped)	198,633	196,536	385,200	391,547	Ethanol (gallons shipped)	190,368	184,845	575,567	576,392
E-85 (gallons shipped)	E-85 (gallons shipped)	9,562	10,600	19,081	17,315	E-85 (gallons shipped)	11,786	11,624	30,867	28,938
Vegetable oils (pounds shipped) (a)	Vegetable oils (pounds shipped) (a)	303,701	184,644	565,357	348,564	Vegetable oils (pounds shipped) (a)	343,619	207,509	908,976	556,073
DDG (tons shipped) (b)	DDG (tons shipped) (b)	508	450	1,031	950	DDG (tons shipped) (b)	497	386	1,534	1,336

(a) Includes corn oil, soybean oil, and other fats, oils, and greases.

(b) DDG tons shipped converts wet tons to a dry ton equivalent amount.

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Nutrient & Industrial

The Nutrient & Industrial segment's ~~second~~third quarter operating results improved from the prior year. ~~After a~~During this seasonally slow ~~first quarter~~period, the segment experienced an increase in margins that were partially offset by the decrease in volumes of ~~2023 when reduced sales reflected delayed purchasing in a falling price environment, customers returned during the 2023 spring application season driving increased tons sold~~6% from the ~~second quarter~~prior year. A specialty liquid plant was adversely impacted by a rail line outage which was the main contributing factor of ~~2022.~~the volume shortfall when compared to the prior year. Gross profit improved by $4 million and reflects these higher ~~volumes~~margins partially offset by ~~margin compression~~the volume decrease from ~~overall market price declines. Strong corn prices are expected to drive demand on specialty liquid products with fall conditions and market dynamics influencing second half volumes as we transition to~~ the ~~off season.~~same period of the prior year.

Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately ~~448~~457 thousand tons for dry nutrients and approximately ~~510~~512 thousand tons for liquid nutrients at ~~June~~September 30, 2023, which is similar to the prior year.

Tons of product sold ~~for the three and six months ended June 30, 2023 and 2022~~ 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)	2023	2022	2023	2022	(in thousands)	2023	2022	2023	2022
Ag Supply Chain	Ag Supply Chain	674	525	844	709	Ag Supply Chain	209	195	1,053	904
Specialty Liquids	Specialty Liquids	141	129	222	238	Specialty Liquids	59	84	282	322
Engineered Granules	Engineered Granules	46	56	109	120	Engineered Granules	25	33	134	153
Total tons	Total tons	861	710	1,175	1,067	Total tons	293	312	1,469	1,379

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. Prior year volumes have been reclassified for the three and ~~six~~nine months ended ~~June~~September 30, 2022, to conform with current year presentation as the product mix in certain facilities has evolved.

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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, 2023, with the three months ended ~~June~~September 30, 2022, including a reconciliation of GAAP to non-GAAP measures:


		Three months ended June 30, 2023											Three months ended September 30, 2023
(in thousands)	(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total		(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	2,696,810	$	877,781	$	445,592	$	—	$	4,020,183	Sales and merchandising revenues	$	2,639,059	$	868,099	$	128,533	$	—	$	3,635,691
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	2,616,099		809,489		372,658		—		3,798,246		Cost of sales and merchandising revenues	2,553,062		815,054		109,874		—		3,477,990
Gross profit	Gross profit	80,711		68,292		72,934		—		221,937		Gross profit	85,997		53,045		18,659		—		157,701
Operating, administrative and general expenses	Operating, administrative and general expenses	69,146		7,568		28,886		10,407		116,007		Operating, administrative and general expenses	79,247		8,332		26,233		12,494		126,306

Interest expense (income), net	Interest expense (income), net	10,903		1,588		1,983		(521)		13,953		Interest expense (income), net	6,515		963		1,484		(774)		8,188

Other income, net	Other income, net	4,328		7,468		500		145		12,441		Other income, net	7,838		3,346		606		3,388		15,178
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations	$	4,990	$	66,604	$	42,565	$	(9,741)	$	104,418	Income (loss) before income taxes from continuing operations	$	8,073	$	47,096	$	(8,452)	$	(8,332)	$	38,385
Income before income taxes attributable to the noncontrolling interests	Income before income taxes attributable to the noncontrolling interests	—		27,640		—		—		27,640		Income before income taxes attributable to the noncontrolling interests	—		20,815		—		—		20,815
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	$	4,990	$	38,964	$	42,565	$	(9,741)	$	76,778	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	8,073	$	26,281	$	(8,452)	$	(8,332)	$	17,570


		Three months ended June 30, 2022											Three months ended September 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total		(in thousands)	Trade		Renewables		Nutrient & Industrial		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
Other income (expense), net	Other income (expense), net	(2,051)		18,490		866		(513)		16,792		Other income (expense), net	419		832		1,018		(794)		1,475
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 before income taxes attributable to the noncontrolling interests	Income before income taxes attributable to the noncontrolling interests	—		21,856		—		—		21,856		Income 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

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~~as 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~~measure reported under GAAP.

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Trade

Operating results for the Trade segment decreased by ~~$18.7~~$32.6 million from the same period of the prior year. Sales and merchandising revenues decreased by ~~$401.0~~$601.5 million and cost of sales and merchandising revenues decreased by ~~$379.7~~$563.1 million that resulted in decreased gross profit of ~~$21.3~~$38.4 million. The vast majority of the decrease in sales and merchandising revenues and cost of sales and merchandising revenues is attributable to sharp commodity price decreases from the prior year as the war in Ukraine created uncertainty around global supply which drove commodity prices higher in 2022. The main driver of the decrease in gross profit was ~~a result of a $13.1~~from the international merchandising business in the Middle East and North Africa as results came in $31.6 million ~~decline~~lower than the prior year from ~~lower elevation margins in our asset-based business~~fewer merchandising opportunities and a ~~$10.2~~currency loss, both related to the currency liquidity issues in Egypt. While the Company's practice is to transact in U.S. dollars, given the unusual currency liquidity issues facing our customers in Egypt, the Company accepted a lower exchange rate for product that had been delivered, which resulted in $19.2 million ~~decline in~~of foreign currency losses during the ~~premium ingredients business, as the exceptional prior year results benefited from the significant rise in commodity prices.~~quarter.

Operating, administrative and general expenses increased by ~~$6.2~~$5.9 million. The increase from the prior year is ~~primarily~~ related to an additional $4.4 million of costs from new merchandising locations and $3.3 million ~~in additional bad debt expense, $1.7 million in additional clean-up costs from a prior year fire at a Michigan grain asset and $1.1 million in additional~~of incremental insurance ~~expenses.~~expenses, partially offset by lower incentive compensation.

Interest expense decreased by ~~$2.4~~$4.3 million due to reduced short-term borrowings from lower commodity prices in addition to the business managing working capital usage in the higher interest rate environment in 2023.

Other income, net increased by ~~$6.4~~$7.4 million from the same quarter of 2022. This increase was a result of ~~an impairment~~a $5.6 million gain on the sale of ~~one~~a Nebraska grain asset in combination with $2.2 million of ~~the Company's equity method investments of approximately $4.5 million in the prior year in addition~~additional interest income related to ~~$2.0 million from insurance recoveries~~increased cash on hand in the current year.

Renewables

Operating results for the Renewables segment ~~declined~~increased by ~~$7.0~~$17.9 million from the same period last year. Sales and merchandising revenues ~~decreased~~increased by ~~$4.8~~$53.2 million and cost of sales and merchandising revenues ~~decreased~~increased by ~~$13.2~~$24.8 million compared to prior year results. As a result, gross profit increased by ~~$8.4~~$28.4 million compared to 2022 results. The ~~deconsolidation of ELEMENT~~increase in ~~the second quarter resulted in a reduction of~~ both sales and merchandising revenues and cost of sales and merchandising revenues ~~of approximately $60 million. The reduction of~~can be attributed to increased third-party trading volumes mainly in renewable diesel feedstocks as the merchandising businesses continue to grow along with increased production from the TAMH plants. Partially offsetting the increase in both sales and merchandising revenues and cost of sales and merchandising revenues ~~were partially offset by increased third-party trading volumes mainly~~was the ELEMENT deconsolidation in the ~~renewable diesel feedstocks merchandising business.~~second quarter, as the current year has no activity and the prior year included approximately $60 million in each caption. The increase to gross profit in the current period results reflect a ~~$27.7~~$22.7 million margin improvement at the ethanol plants, primarily from improved ethanol margins and ~~increased~~decreased natural gas prices along with a $6.3 million improvement in the Company's ethanol and co-product ~~values which was partially offset by unfavorable unrealized mark-to-market adjustments of $21.8 million when compared to the prior year.~~merchandising businesses.

Operating, administrative and general expenses ~~decreased~~increased by ~~$1.0~~$1.3 million from the prior year, of which, the majority was due to higher professional services fees.

Interest expense decreased by $1.6 million from the ~~deconsolidation~~prior year due to lower working capital levels as a result of the ELEMENT ~~operations early in the second quarter.~~deconsolidation.

Other income, net ~~decreased~~increased from the prior year by ~~$11.0~~$2.5 million primarily due to ~~$17.6~~$2.2 million in USDA Biofuel Producer Program proceeds received in the ~~prior year as a part~~third quarter of ~~the USDA Biofuel Producer Program. In 2023, the Company recorded a $6.5 million gain on the deconsolidation of the ELEMENT joint venture.~~2023.

Nutrient & Industrial

Operating results for the Nutrient & Industrial segment increased by ~~$4.3~~$3.2 million compared to the same period in the prior year. Sales and merchandising revenues decreased by ~~$24.7~~$35.3 million and cost of sales and merchandising revenues decreased by ~~$28.7~~$39.3 million resulting in an ~~$4.0~~$3.9 million increase in gross profit. The decrease in sales and merchandising revenues and cost of sales and merchandising revenues was due to fertilizer prices decreasing approximately ~~50% from the prior year. This decrease in fertilizer prices~~40% from the prior year ~~was partially offset by increased demand~~ as volumes ~~sold increased by approximately 21% in the second quarter~~decreased modestly from same period of ~~the current~~prior year. The increase in gross profit was mainly driven by a ~~$12.4~~$4.6 million ~~favorable impact from the increased volumes sold which was partially~~increase in margins, primarily on core agriculture products, offset by ~~an $8.4 million~~the small decrease in ~~sales margins from the prior year.~~volumes.

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Other

Results for the quarter improved by $1.9 million compared to the same period in the prior year. The improvement in results was primarily driven by a ~~$1.0~~$4.8 million ~~reduction~~revaluation gain of ~~incentive compensation expense when compared to~~a cost method investment which was partially offset by higher benefits claims in the ~~same quarter of prior~~current year.

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Income Taxes

For the three months ended ~~June~~September 30, 2023, the Company recorded income tax expense from continuing operations of ~~$21.7~~$7.9 million. The Company's effective tax rate was ~~20.8%~~20.5% on income before taxes from continuing operations of ~~$104.4~~$38.4 million. The difference between the ~~20.8%~~20.5% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest offset by state and local income taxes, nondeductible compensation and ~~nondeductible compensation. During the three months ended June 30, 2023,~~other discrete tax ~~expense of $1.4 million was recorded on income before taxes of $6.5 million related to a gain on the deconsolidation of a joint venture.~~adjustments.

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 from continuing operations of ~~$118.2~~$34.7 million. The difference between the effective tax rate ~~differs from~~of 28.3% and the U.S. federal statutory tax rate of 21.0% is due to the tax impact of ~~certain discrete derivatives~~non-controlling interest and ~~hedging activities offset by~~ state and local ~~taxes and nondeductible compensation.~~taxes.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3129

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Comparison of the ~~six~~nine months ended ~~June~~September 30, 2023, with the ~~six~~nine months ended ~~June~~September 30, 2022, including a reconciliation of GAAP to non-GAAP measures:


		Six months ended June 30, 2023											Nine months ended September 30, 2023
(in thousands)	(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total		(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	5,574,590	$	1,717,297	$	609,534	$	—	$	7,901,421	Sales and merchandising revenues	$	8,213,649	$	2,585,396	$	738,067	$	—	$	11,537,112
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	5,376,701		1,633,202		521,570		—		7,531,473		Cost of sales and merchandising revenues	7,929,763		2,448,256		631,444		—		11,009,463
Gross profit	Gross profit	197,889		84,095		87,964		—		369,948		Gross profit	283,886		137,140		106,623		—		527,649
Operating, administrative and general expenses	Operating, administrative and general expenses	141,126		16,472		53,018		22,626		233,242		Operating, administrative and general expenses	220,373		24,804		79,251		35,120		359,548
Asset impairment	Asset impairment	—		87,156		—		—		87,156		Asset impairment	—		87,156		—		—		87,156
Interest expense (income), net	Interest expense (income), net	22,720		4,685		4,165		(992)		30,578		Interest expense (income), net	29,235		5,648		5,649		(1,766)		38,766

Other income, net	Other income, net	10,311		8,309		1,346		479		20,445		Other income, net	18,149		11,655		1,952		3,867		35,623
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations	$	44,354	$	(15,909)	$	32,127	$	(21,155)	$	39,417	Income (loss) before income taxes from continuing operations	$	52,427	$	31,187	$	23,675	$	(29,487)	$	77,802
Income (loss) before income taxes attributable to the noncontrolling interests		—		(16,727)		—		—		(16,727)
Income before income taxes attributable to the noncontrolling interests												Income before income taxes attributable to the noncontrolling interests	—		4,088		—		—		4,088
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	$	44,354	$	818	$	32,127	$	(21,155)	$	56,144	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	52,427	$	27,099	$	23,675	$	(29,487)	$	73,714


		Six months ended June 30, 2022											Nine months ended September 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total		(in thousands)	Trade		Renewables		Nutrient & Industrial		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	6,182,448	$	1,565,798	$	680,325	$	—	$	8,428,571	Sales and merchandising revenues	$	9,422,974	$	2,380,721	$	844,201	$	—	$	12,647,896
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	6,012,835		1,490,719		574,641		—		8,078,195		Cost of sales and merchandising revenues	9,128,993		2,280,965		723,797		—		12,133,755
Gross profit	Gross profit	169,613		75,079		105,684		—		350,376		Gross profit	293,981		99,756		120,404		—		514,141
Operating, administrative and general expenses	Operating, administrative and general expenses	122,520		16,480		54,916		20,630		214,546		Operating, administrative and general expenses	195,867		23,533		80,343		30,342		330,085

Interest expense (income), net	Interest expense (income), net	21,487		3,779		3,384		(870)		27,780		Interest expense (income), net	32,269		6,334		5,304		(1,145)		42,762

Other income (expense), net	Other income (expense), net	1,729		18,918		1,670		(1,607)		20,710		Other income (expense), net	2,148		19,750		2,688		(2,401)		22,185
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations	$	27,335	$	73,738	$	49,054	$	(21,367)	$	128,760	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		—		22,303		—		—		22,303
Income before income taxes attributable to the noncontrolling interests												Income 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	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	27,335	$	51,435	$	49,054	$	(21,367)	$	106,457	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	67,993	$	59,812	$	37,445	$	(31,598)	$	133,652

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3230

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Trade

Operating results for the Trade segment ~~increased~~decreased by ~~$17.0~~$15.6 million from the prior year. Sales and merchandising revenues decreased by ~~$607.9~~$1,209.3 million and cost of sales and merchandising revenues decreased by ~~$636.1~~$1,199.2 million for ~~an increased~~a decreased gross profit impact of ~~$28.3~~$10.1 million. The vast majority of the decrease in sales and merchandising revenues and cost of sales and merchandising revenues is attributable to sharp commodity price decreases from the prior year as the war in Ukraine created uncertainty around global supply which drove commodity prices higher in 2022. The ~~$28.3~~main cause of the $10.1 million ~~increase~~decrease in gross profit was ~~mainly~~the merchandising business which is $16.6 million behind the same period of the prior year, with $35.8 million of the decline in the international merchandising business. This decrease is driven from less merchandising opportunities and the currency loss in the third quarter discussed above, both related to ~~the performance of both the assets and merchandising businesses.~~currency liquidity issues in Egypt. The asset-based business ~~contributed approximately $10.4 million to~~partially offset the gross profit shortfall in the segment by approximately $9.3 million as it recorded ~~approximately~~ $16.1 million worth of inventory insurance recoveries, which were partially offset by lower elevation margins when compared to ~~the~~very strong prior year. The merchandising business contributed approximately $19.7 million to gross profit as well-positioned inventories generated strong margins, with a $9.4 million decline in the premium ingredients business that couldn't repeat exceptional prior year results from the significant rise in commodity prices that occurred during that period.

Operating, administrative and general expenses increased by ~~$18.6~~$24.5 million from the same period of prior year. The main drivers of the increase ~~relate to~~include an additional ~~$5.2~~$9.0 million of expense from new merchandising locations, $6.8 million in insurable clean-up costs in the current quarter related to a fire at a Michigan grain asset, ~~$5.0~~$5.3 million ~~from new merchandising locations, $3.3~~of increased insurance expenses and $2.5 million in additional bad debt ~~expense, and $2.0 million in increased insurance expenses.~~expense.

Interest expense ~~increased~~decreased by ~~$1.2~~$3.0 million due to ~~rising interest rates which were partially offset by lower~~reduced short-term borrowings asfrom lower commodity prices in addition to the ~~Company continues to manage~~business managing working ~~capital.~~capital usage in the higher interest rate environment in 2023.

Other income, net increased by ~~$8.6~~$16.0 million from the same period of 2022. The increase was ~~primarily attributable~~due to favorable changes in foreign currency of ~~$5.4~~$8.1 million, ~~when compared to the prior year along with~~improved results from equity method investments of approximately ~~$2.0~~$4.0 million and an additional $2.2 million of ~~property insurance recoveries~~interest income in the current year.

Renewables

Operating results for Renewables decreased by ~~$50.6~~$32.7 million from the same period of prior ~~year, primarily due to the asset impairment charge discussed below.~~year. Sales and merchandising revenues increased by ~~$151.5~~$204.7 million and cost of sales and merchandising revenues increased by ~~$142.5~~$167.3 million compared to prior year. As a result, gross profit increased by ~~$9.0~~$37.4 million to the prior year. The increase in both sales and merchandising revenues and cost of sales and merchandising revenues ~~are mainly due~~can be attributed to increased third-party trading volumes mainly in ~~the~~ renewable diesel feedstocks as ~~that business has grown significantly from~~ the ~~prior year. The~~merchandising businesses continue to grow. This increase ~~in volumes~~ was partially offset from the tapering down of operations at the ELEMENT facility and the ultimate deconsolidation of the entity that occurred in April of 2023 resulting in a reduction ~~from the prior period~~ of ~~approximately $65 million in~~both sales and merchandising revenues and cost of sales and merchandising revenues ~~respectively. The remainder~~from the prior period of ~~the decrease is associated to decreased commodity prices that were partially offset by higher volumes in the third-party trading of renewable diesel feedstocks.~~approximately $120 million. The gross profit associated with the ethanol plants was ~~$23.8~~$46.6 million higher than the prior year from improved ethanol crush margins, lower energy costs and increased co-product values ~~which~~and volumes. This improvement at the plant level was partially offset by ~~unfavorable~~$7.1 million less unrealized mark-to-market ~~adjustments of $14.0 million~~gains when compared to the prior year.

An asset impairment charge of $87.2 million related to the ELEMENT ~~ethanol plant~~joint venture in Colwich, Kansas was recorded in the current year. As ELEMENT was a consolidated subsidiary of the Company at the time, the entire impairment charge is represented in Asset impairment.

Interest expense ~~increased~~decreased by ~~$0.9~~$0.7 million from the prior year due to ~~rising interest rates on~~lower working capital levels as a result of the ~~Company's short-term line of credit compared to the prior year.~~ELEMENT deconsolidation.

Other income, net decreased from the prior year by ~~$10.6~~$8.1 million due to $17.6 million in proceeds received in the prior year as a part of the USDA Biofuel Producer Program that was enacted as a part of the CARES Act. In 2023, the Company recorded a $6.5 million gain on the deconsolidation of the ELEMENT joint ~~venture.~~venture and received an additional $2.2 million from the USDA Biofuel Producer Program.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3331

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Nutrient & Industrial

Operating results for the Nutrient & Industrial segment decreased by ~~$16.9~~$13.8 million when compared to ~~record results through~~ the ~~second quarter~~same period of prior year. Sales and merchandising revenues decreased ~~$70.8~~$106.1 million and cost of sales and merchandising revenues decreased by ~~$53.1~~$92.4 million resulting in decreased gross profit of ~~$17.7~~$13.8 million. The decrease in sales and merchandising revenues and cost of sales and merchandising revenues was mainly due to the reset of record high fertilizer prices ~~from~~in the ~~record high prices resulting from an already~~same period of 2022 that were a result of tight supply market ~~and~~ exaggerated by the war in ~~Ukraine in the first half of 2022. Although fertilizer~~Ukraine. Fertilizer prices decreased approximately ~~50%~~43% from the prior year ~~the Company experienced a significant~~which were partially offset by an increase in ~~volumes in the later stages~~tons sold of 6% when compared to the first ~~half~~nine months of ~~2023 as demand shifted from first quarter to the second which partially offset the impact of decreased fertilizer prices when compared to~~ the prior year. Gross profit decreased from the prior year by approximately ~~$24.8~~$17.9 million ~~due to margin decreases and was~~from lower margins, partially offset by ~~increased sales~~an increase of $4.2 million related to higher volumes ~~of $7.1 million.~~

~~Operating, administrative and general expenses decreased by $1.9 million due to reduced incentive compensation when compared to results~~ in ~~the prior year.~~

~~Interest expense increased by $0.8 million due to rising interest rates on the Company's short-term line of credit compared to the prior year.~~2023.

Other

Other expenses ~~were consistent with the same period last year as higher health insurance claims~~decreased from the ~~Company's self-funded medical insurance plan~~prior period by $2.1 million from a $4.8 million revaluation gain of a cost method investment that was partially offset by higher benefit claims in the current ~~year were largely offset by a modest gain on a cost method investment.~~year.

Income Taxes

For the ~~six~~nine months ended ~~June~~September 30, 2023, the Company recorded an income tax expense from continuing operations of ~~$15.8~~$23.7 million. The Company's effective tax rate was ~~40.2%~~30.5% on income before taxes from continuing operations of ~~$39.4~~$77.8 million. The difference between the ~~40.2%~~30.5% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact of ~~noncontrolling~~non-controlling interest, state and local income taxes, nondeductible compensation and ~~nondeductible compensation. During the six months ended June 30, 2023,~~other discrete tax adjustments. Other discrete tax items include a net ~~discrete~~ income tax benefit of $10.6 million, ~~was~~ recorded on a net loss before taxes of $88.8 million related to the current year operations, impairment charge, and gain on ~~the~~ deconsolidation ~~of a joint venture.~~associated with ELEMENT.

For the ~~six~~nine months ended ~~June~~September 30, 2022, the Company recorded income tax expense from continuing operations of ~~$19.9~~$29.7 million. The Company’s effective tax rate was ~~15.4%~~18.2% on income before income taxes from continuing operations of ~~$128.8~~$163.5 million. The difference between the 18.2% effective tax rate ~~differs from~~and the U.S. federal statutory rate of 21.0% is due 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.

The Company’s subsidiary partnership returns are under federal tax examination by the Internal Revenue Service (“IRS”) for the tax years 2015 through 2018, respectively. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015. The IRS and Mexican tax authorities’ examinations could potentially be resolved within the next 12 months. The resolution of these examinations could change our unrecognized tax benefits and favorably impact income tax expense by a range of $2.9 million to $8.1 million.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3432

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Liquidity and Capital Resources

Working Capital

At ~~June~~September 30, 2023, the Company had working capital from continuing operations of ~~$1,144.0~~$1,119.5 million, an increase of ~~$160.0~~$174.7 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, 2023		June 30, 2022		Variance		(in thousands)	September 30, 2023		September 30, 2022		Variance
Current Assets from Continuing Operations:	Current Assets from Continuing Operations:							Current Assets from Continuing Operations:
Cash and cash equivalents	Cash and cash equivalents	$	96,293	$	86,035	$	10,258	Cash and cash equivalents	$	418,055	$	140,771	$	277,284
Accounts receivable, net	Accounts receivable, net	1,030,271		1,141,167		(110,896)		Accounts receivable, net	816,686		990,531		(173,845)
Inventories	Inventories	990,789		1,618,326		(627,537)		Inventories	985,292		1,556,426		(571,134)
Commodity derivative assets – current	Commodity derivative assets – current	347,684		638,357		(290,673)		Commodity derivative assets – current	239,595		502,097		(262,502)
Other current assets	Other current assets	72,228		70,367		1,861		Other current assets	67,471		75,402		(7,931)
Total current assets from continuing operations	Total current assets from continuing operations	$	2,537,265	$	3,554,252	$	(1,016,987)	Total current assets from continuing operations	$	2,527,099	$	3,265,227	$	(738,128)
Current Liabilities from Continuing Operations:	Current Liabilities from Continuing Operations:							Current Liabilities from Continuing Operations:
Short-term debt	Short-term debt	102,752		1,161,428		(1,058,676)		Short-term debt	14,138		652,947		(638,809)
Trade and other payables	Trade and other payables	641,376		772,996		(131,620)		Trade and other payables	822,153		930,027		(107,874)
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	189,947		184,154		5,793		Customer prepayments and deferred revenue	211,867		258,828		(46,961)
Commodity derivative liabilities – current	Commodity derivative liabilities – current	251,101		185,903		65,198		Commodity derivative liabilities – current	142,511		137,168		5,343
Current maturities of long-term debt	Current maturities of long-term debt	27,511		53,951		(26,440)		Current maturities of long-term debt	27,535		112,029		(84,494)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	180,552		211,830		(31,278)		Accrued expenses and other current liabilities	189,430		229,508		(40,078)
Total current liabilities from continuing operations	Total current liabilities from continuing operations	$	1,393,239	$	2,570,262	$	(1,177,023)	Total current liabilities from continuing operations	$	1,407,634	$	2,320,507	$	(912,873)
Working Capital from Continuing Operations	Working Capital from Continuing Operations	$	1,144,026	$	983,990	$	160,036	Working Capital from Continuing Operations	$	1,119,465	$	944,720	$	174,745

Current assets from continuing operations as of ~~June~~September 30, 2023 decreased ~~$1,017.0~~$738.1 million in comparison to those as of ~~June~~September 30, 2022. This decrease was primarily related to the ~~change in~~reduction of inventories and current commodity derivative ~~assets.~~assets which was partially offset by a sharp increase in cash. The decreases in ~~those accounts~~inventories and derivatives can largely be attributed to the stabilization of agricultural commodity prices in the current year in comparison to the significant increases in the prices of agricultural commodities, including fertilizer, ~~that the Company transacts in the ordinary course of business~~ in the same period of the prior year. The decreases in inventory and derivatives also had a direct impact on cash as the Company was not deploying the cash to hold working capital as it had done in the previous year.

Current liabilities from continuing operations decreased ~~$1,177.0~~$912.9 million from the prior year mainly due to the decreased utilization of the Company's short-term revolving credit line. The decreased use of the short-term revolving credit line is a result of the stabilization of commodity prices in the year compared to the severe increase in commodity prices in the same period of the prior year, as well as a strategic focus on managing the use of short-term debt to fund working capital in light of the rising interest rate environment.

The Andersons, Inc. | Q3 2023 Form 10-Q | 33

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Sources and Uses of Cash


		Six Months Ended					Nine months ended September 30,
(in thousands)	(in thousands)	June 30, 2023		June 30, 2022		(in thousands)	2023		2022
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	207,404	$	(721,799)	Net cash provided by (used in) operating activities	$	696,087	$	(153,370)
Net cash used in investing activities		(71,673)		(30,094)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(117,263)		2,919
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(154,987)		622,113		Net cash (used in) provided by financing activities	(275,846)		75,489

Operating Activities

~~Our operating~~Operating activities provided cash of ~~$207.4~~$696.1 million and used cash of ~~$721.8~~$153.4 million in the first ~~six~~nine months of 2023 and 2022, respectively. The increase in cash provided was primarily due to the decreased working capital needs driven by significant decreases in agricultural commodity prices and bushels on hand when compared to the same period in the prior year. When removing the significant changes in operating assets and liabilities ~~are removed~~ and ~~excluding inventory insurance recoveries,~~$12.1 million of unrealized currency losses in Egypt, cash ~~provided by operating activities~~from operations was ~~slightly lower than~~consistent with the same period of the prior year.

~~The Andersons, Inc. | Q2 2023 Form 10-Q | 35~~

~~Table of Contents~~

Investing Activities

Investing activities used cash of ~~$71.7~~$117.3 million through the first ~~six~~nine months of 2023 compared to ~~$30.1~~providing cash of $2.9 million in the prior period. ~~Spending for~~The increase in spending from the prior year was due to increased purchases of property, plant and equipment ~~increased by~~of approximately ~~$31.5~~$36.5 million ~~from the prior year~~ from increased investments across all ~~segments.~~segments in addition to $24.3 million cash used in a business acquisition. The prior year also ~~includes~~included approximately ~~$6.2~~$62.7 million of additional net proceeds from the Company's exit of the Rail business.

We expect to invest approximately $125 million to $150 million in property, plant and equipment in 2023, with spending split evenly between growth projects and maintenance.

Financing Activities

Financing activities used cash of ~~$155.0~~$275.8 million and provided cash of ~~$622.1~~$75.5 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. This ~~decrease~~increase in cash used from the prior year was due to repayments made in the current year driven by the significant increase in agricultural commodity prices in the prior period and the related need for short-term borrowings. ~~Agricultural~~As agricultural commodity prices have decreased in the current year and the Company is operating in a ~~much~~ more stable pricing environment, ~~in 2023 which requires much~~more repayments and less ~~borrowing~~borrowings occurred on the Company's short-term credit facilities.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of $1,869.1 million in borrowing capacity. Of the total capacity, $265.4 million is non-recourse to the Company. As of June 30, 2023, the Company had $1,740.7 million available for borrowing with $231.1 million of that total being non-recourse to the Company.

The Company paid ~~$12.5~~$18.8 million in dividends in the first ~~six~~nine months of 2023 compared to ~~$12.2~~$18.3 million paid in the prior period. The Company paid dividends of $0.185 and $0.18 per common share in January, April, and ~~April~~July of 2023 and 2022, respectively. On ~~June 23,~~August 17, 2023, the Company declared a cash dividend of $0.185 per common share payable on ~~July 24,~~October 20, 2023, to shareholders of record on ~~July 3,~~October 2, 2023.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of $1,858.5 million in borrowing capacity. As of September 30, 2023, the Company had $1,841.4 million available for borrowing.

Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of working capital and various debt leverage ratios. The Company is in compliance with all covenants as of ~~June~~September 30, 2023. In addition, certain of our long-term borrowings are collateralized by first mortgages on various facilities.

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 the Company's sources of liquidity will be adequate to fund operations, capital expenditures and service indebtedness.

At ~~June~~September 30, 2023, the Company had standby letters of credit outstanding of ~~$25.8~~$3.3 million.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3634

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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, 2022. There were no material changes in market risk, specifically commodity and interest rate risk during the ~~six~~nine months ended ~~June~~September 30, 2023.

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, 2023, 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 2023, identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3735

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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. Refer to 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 2022 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.

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

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 (a)
April 2023 — $ — — $ 85,608,170
May 2023 2,113 35.95 2,113 85,532,211
June 2023 — — — 85,532,211
Total 2,113 $ 35.95 2,113 $ 85,532,211


Periods	Total Number of Shares Purchased (a)	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 (b)






July 2023	234	$	46.15	—	$	85,532,211
August 2023	—	—		—	85,532,211
September 2023	—	—		—	85,532,211
Total	234	$	46.15	—	$	85,532,211

(a) During the three months ended September 30, 2023, the Company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

(b) 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, 2023, $14.5 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 5. Other Information

~~Based on~~During the ~~previously reported voting results at~~three months ended September 30, 2023, none of the Company’s ~~annual meeting~~directors or executive officers adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of ~~shareholders on~~Company securities that was intended to satisfy the ~~advisory proposal on the frequency~~affirmative defense conditions of say-on-pay votes, the Company will continue to include an advisory vote on named executive officer compensation every one (1) year until the next required vote on the frequency of shareholder advisory votes on the compensation of named executive officers.Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

On May 24, 2023, Brian K. Walz, Treasurer, entered into a Rule 105b-1 plan to sell up to 3,414 shares of the Company's common stock, based on certain price parameters, from August 25, 2023, to August 30, 2024.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3836

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Item 6. Exhibits



Exhibit Number						Description

~~10.1~~						TERM LOAN AGREEMENT Dated as of April 3, 2023 among THE ANDERSONS, INC., as the Borrower, FARM CREDIT MID-AMERICA, PCA, as Administrative Agent, and THE LENDERS PARTY HERETO FARM CREDIT MID-AMERICA, PCA, as Sole Lead Arranger and Sole Bookrunner

10.2*						~~CREDIT AGREEMENT DATED AS OF JANUARY 11, 2019 AMONG THE ANDERSONS, INC., THE LENDERS, U.S. BANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT (AMENDED AS OF JUNE 15, 2022)~~

~~10.3~~						~~The Andersons, Inc. 2004 Employee Share Purchase Plan, Restated and Amended January 2023~~

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 and 4 are not applicable and have been omitted.

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 3937

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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 3,~~November 8, 2023						/s/ Patrick E. Bowe
						Patrick E. Bowe
						President and Chief Executive Officer

Date: ~~August 3,~~November 8, 2023						/s/ Brian A. Valentine
						Brian A. Valentine
						Executive Vice President and Chief Financial Officer

The Andersons, Inc. | Q2Q3 2023 Form 10-Q | 4038


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 (a)






April 2023	—	$	—	—	$	85,608,170
May 2023	2,113	35.95		2,113	85,532,211
June 2023	—	—		—	85,532,211
Total	2,113	$	35.95	2,113	$	85,532,211