UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended March 31, ~~2019~~2020



¨☐	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~~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)~~

(419) 893-5050

(Telephone Number)

~~(Former name, former address and former fiscal year, if changed since last report.)~~



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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ~~(232.405~~(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such ~~files.~~ files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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 approximately ~~32.5~~32.9 million common shares outstanding at April ~~26, 2019.~~24, 2020.

~~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~~

THE ANDERSONS, INC.

INDEX



	Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets – March 31, ~~2019,~~2020, December 31, ~~2018~~2019 and March 31, ~~2018~~2019	3
Condensed Consolidated Statements of Operations – Three months ended March 31, ~~2019~~2020 and ~~2018~~2019	5
Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss – Three months ended March 31, ~~2019~~2020 and ~~2018~~2019	6
Condensed Consolidated Statements of Cash Flows – Three months ended March 31, ~~2019~~2020 and ~~2018~~2019	7
Condensed Consolidated Statements of Equity – Three months ended March 31, ~~2019~~2020 and ~~2018~~2019	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3229
Item 3. Quantitative and Qualitative Disclosures about Market Risk	4136
Item 4. Controls and Procedures	4136
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	4237
Item 1A. Risk Factors	4237
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4237
Item 4. Mine Safety Disclosure	4238
Item 6. Exhibits	4238

Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc. Condensed Consolidated Balance Sheets (Unaudited)(In thousands)	The Andersons, Inc. Condensed Consolidated Balance Sheets (Unaudited)(In thousands)						The Andersons, Inc. Condensed Consolidated Balance Sheets (Unaudited)(In thousands)

	March 31, 2019		December 31, 2018		March 31, 2018		March 31, 2020		December 31, 2019		March 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	29,991	$	22,593	$	31,497
Cash, cash equivalents and restricted cash							$	19,693	$	54,895	$	29,991
Accounts receivable, net	611,290		207,285		216,021		539,671		536,367		611,290
Inventories (Note 2)	1,026,465		690,804		731,629
Commodity derivative assets – current (Note 5)	158,277		51,421		43,810
Inventories (Note 2)							1,028,076		1,170,536		1,026,465
Commodity derivative assets – current (Note 5)							149,070		107,863		158,277
Other current assets	60,222		50,703		57,147		85,372		75,681		60,586
Assets held for sale	364		392		57,775
Total current assets	1,886,609		1,023,198		1,137,879		1,821,882		1,945,342		1,886,609
Other assets:
Commodity derivative assets – noncurrent (Note 5)	3,757		480		1,739
Goodwill	119,641		6,024		6,024		135,360		135,360		119,641
Other intangible assets, net	206,572		99,138		108,855		167,398		175,312		206,572
Right of use assets, net	85,766		—		—		62,182		76,401		85,766
Equity method investments							22,910		23,857		121,781
Other assets, net	26,692		22,341		28,566		24,305		21,753		30,449
Equity method investments	121,781		242,326		224,449
	564,209		370,309		369,633
Rail Group assets leased to others, net (Note 3)	537,629		521,785		462,253
Property, plant and equipment, net (Note 3)	671,805		476,711		393,763
Total other assets							412,155		432,683		564,209
Rail Group assets leased to others, net (Note 3)							597,069		584,298		537,629
Property, plant and equipment, net (Note 3)							921,585		938,418		671,805
Total assets	$	3,660,252	$	2,392,003	$	2,363,528	$	3,752,691	$	3,900,741	$	3,660,252

The Andersons, Inc. Condensed Consolidated Balance Sheets (continued) (Unaudited)(In thousands)	The Andersons, Inc. Condensed Consolidated Balance Sheets (continued) (Unaudited)(In thousands)									The Andersons, Inc. Condensed Consolidated Balance Sheets (continued) (Unaudited)(In thousands)

	March 31, 2019			December 31, 2018			March 31, 2018			March 31, 2020			December 31, 2019			March 31, 2019
Liabilities and equity
Current liabilities:
Short-term debt (Note 4)	$	434,304		$	205,000		$	489,000
Short-term debt (Note 4)										$	392,450		$	147,031		$	434,304
Trade and other payables	590,258			462,535			263,519			553,416			873,081			590,258
Customer prepayments and deferred revenue	148,345			32,533			81,778			121,148			133,585			148,345
Commodity derivative liabilities – current (Note 5)	66,623			32,647			15,424
Commodity derivative liabilities – current (Note 5)										90,491			46,942			66,623
Current maturities of long-term debt (Note 4)										80,758			62,899			55,160
Accrued expenses and other current liabilities	151,648			79,046			60,095			147,225			176,381			151,648
Current maturities of long-term debt (Note 4)	55,160			21,589			14,134
Total current liabilities	1,446,338			833,350			923,950			1,385,488			1,439,919			1,446,338
Long-term lease liabilities	57,451			—			—			43,308			51,091			57,451
Long-term debt, less current maturities (Note 4)										987,526			1,016,248			982,025
Deferred income taxes										156,804			146,155			138,598
Other long-term liabilities	12,262			32,184			31,536			65,703			51,673			37,554
Commodity derivative liabilities – noncurrent (Note 5)	3,821			889			1,414
Employee benefit plan obligations	21,471			22,542			26,310
Long-term debt, less current maturities (Note 4)	982,025			496,187			438,628
Deferred income taxes	138,598			130,087			118,933
Total liabilities	2,661,966			1,515,239			1,540,771			2,638,829			2,705,086			2,661,966
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 13)
Shareholders’ equity:
Common shares, without par value (63,000 shares authorized; 33,357 shares issued at 3/31/2019, 29,430 shares issued at 12/31/2018 and 3/31/2018)	137			96			96
Common shares, without par value (63,000 shares authorized; 33,550 shares issued at 3/31/2020, 12/31/2019 and 3/31/2019)										137			137			137
Preferred shares, without par value (1,000 shares authorized; none issued)	—			—			—			—			—			—
Additional paid-in-capital	324,753			224,396			221,990			341,382			345,359			324,753
Treasury shares, at cost (193, 936 and 955 shares at 3/31/2019, 12/31/2018 and 3/31/2018, respectively)	(7,216		)	(35,300		)	(36,028		)
Treasury shares, at cost (21, 207 and 193 shares at 3/31/2020, 12/31/2019 and 3/31/2019, respectively)										(652		)	(7,342		)	(7,216		)
Accumulated other comprehensive income (loss)	2,474			(6,387		)	(3,988		)	(27,649		)	(7,231		)	2,474
Retained earnings	627,136			647,517			618,572			599,039			642,687			627,136
Total shareholders’ equity of The Andersons, Inc.	947,284			830,322			800,642			912,257			973,610			947,284
Noncontrolling interests	51,002			46,442			22,115			201,605			222,045			51,002
Total equity	998,286			876,764			822,757			1,113,862			1,195,655			998,286
Total liabilities and equity	$	3,660,252		$	2,392,003		$	2,363,528		$	3,752,691		$	3,900,741		$	3,660,252

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Operations

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

Three months ended March 31,
2019 2018
Sales and merchandising revenues $ 1,976,792
$ 635,739
Cost of sales and merchandising revenues 1,867,128
572,034
Gross profit 109,664
63,705
Operating, administrative and general expenses 113,349
64,257
Interest expense 15,910
6,999
Other income:
Equity in earnings (loss) of affiliates, net 1,519
3,573
Other income (loss), net (1,514 ) 1,686
Income (loss) before income taxes (19,590 ) (2,292 )
Income tax provision (benefit) (5,442 ) (310 )
Net income (loss) (14,148 ) (1,982 )
Net income (loss) attributable to the noncontrolling interests (155 ) (282 )
Net income (loss) attributable to The Andersons, Inc. $ (13,993 ) $ (1,700 )
Per common share:
Basic earnings (loss) attributable to The Andersons, Inc. common shareholders $ (0.43 ) $ (0.06 )
Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders $ (0.43 ) $ (0.06 )



	Three months ended March 31,
	2020			2019
Sales and merchandising revenues	$	1,853,105		$	1,976,792
Cost of sales and merchandising revenues	1,789,975			1,867,128
Gross profit	63,130			109,664
Operating, administrative and general expenses	105,060			113,349
Interest expense, net	15,587			15,910
Other income, net:
Equity in earnings of affiliates, net	129			1,519
Other income (loss), net	4,813			(1,514		)
Loss before income taxes	(52,575		)	(19,590		)
Income tax benefit	(1,464		)	(5,442		)
Net loss	(51,111		)	(14,148		)
Net loss attributable to the noncontrolling interests	(13,449		)	(155		)
Net loss attributable to The Andersons, Inc.	$	(37,662	)	$	(13,993	)
Per common share:
Basic loss attributable to The Andersons, Inc. common shareholders	$	(1.15	)	$	(0.43	)
Diluted loss attributable to The Andersons, Inc. common shareholders	$	(1.15	)	$	(0.43	)

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)(In thousands)

Three months ended March 31,
2019 2018
Net income (loss) $ (14,148 ) $ (1,982 )
Other comprehensive income (loss), net of tax:
Change in fair value of convertible preferred securities (net of income tax of $0 and $(87)) —
(87 )
Change in unrecognized actuarial loss and prior service cost (net of income tax of $43 and $15) (126 ) (51 )
Cash flow hedge activity (net of income tax of $1,201 and $0) (3,622 ) —
Foreign currency translation adjustments 12,609
(1,150 )
Other comprehensive income (loss) 8,861
(1,288 )
Comprehensive income (loss) (5,287 ) (3,270 )
Comprehensive income (loss) attributable to the noncontrolling interests (155 ) (282 )
Comprehensive income (loss) attributable to The Andersons, Inc. $ (5,132 ) $ (2,988 )



	Three months ended March 31,
	2020			2019
Net loss	$	(51,111	)	$	(14,148	)
Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial loss and prior service cost (net of income tax of $26 and $43)	(116		)	(126		)
Cash flow hedge activity (net of income tax of $4,519 and $1,201)	(13,663		)	(3,622		)
Foreign currency translation adjustments (net of income tax of $0 for both periods)	(6,639		)	12,609
Other comprehensive income (loss)	(20,418		)	8,861
Comprehensive loss	(71,529		)	(5,287		)
Comprehensive loss attributable to the noncontrolling interests	(13,449		)	(155		)
Comprehensive loss attributable to The Andersons, Inc.	$	(58,080	)	$	(5,132	)

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)(In thousands)


	Three months ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
Operating Activities
Net income (loss)	$	(14,148	)	$	(1,982	)
Net loss							$	(51,111	)	$	(14,148	)
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization	33,760			22,679			46,898			33,760
Bad debt expense (recovery)	318			(531		)
Equity in (earnings) losses of affiliates, net of dividends	(1,465		)	(2,360		)
Gains on sale of Rail Group assets and related leases	(736		)	(2,280		)
Loss (gain) on sale of assets	143			277
Bad debt expense							4,310			318
Equity in earnings of affiliates, net of dividends							(129		)	(1,465		)
Gains on sales of Rail Group assets and related leases							(645		)	(736		)
Stock-based compensation expense	4,799			1,268			2,880			4,799
Deferred federal income tax	(5,640		)	—			16,474			(5,640		)
Inventory write down							10,571			—
Other	4,385			(70		)	4,001			4,528
Changes in operating assets and liabilities:
Accounts receivable	(79,295		)	(30,730		)	(11,737		)	(79,295		)
Inventories	124,741			(85,262		)	122,323			124,741
Commodity derivatives	(9,149		)	(45,775		)	1,231			(9,149		)
Other assets	11,337			1,134			(10,887		)	11,337
Payables and other accrued expenses	(191,095		)	(235,075		)	(362,609		)	(191,095		)
Net cash provided by (used in) operating activities	(122,045		)	(378,707		)
Net cash used in operating activities							(228,430		)	(122,045		)
Investing Activities
Acquisition of business, net of cash acquired	(147,343		)	—			—			(147,343		)
Purchases of Rail Group assets	(15,873		)	(29,516		)	(13,270		)	(15,873		)
Proceeds from sale of Rail Group assets	1,948			14,575			2,405			1,948
Purchases of property, plant and equipment and capitalized software	(44,728		)	(29,414		)	(19,307		)	(44,728		)
Proceeds from sale of assets	400			6			36			400
Purchase of investments	(240		)	—			(280		)	(240		)
Net cash provided by (used in) investing activities	(205,836		)	(44,349		)
Net cash used in investing activities							(30,416		)	(205,836		)
Financing Activities
Net change in short-term borrowings	9,942			467,000			251,712			9,942
Proceeds from issuance of long-term debt	693,761			50,000			90,736			693,761
Payments of long-term debt	(361,067		)	(106,515		)	(104,913		)	(361,067		)
Proceeds from noncontrolling interest owner	4,715			14,700
Contributions by noncontrolling interest owner							3,307			4,715
Distributions to noncontrolling interest owner							(10,298		)	—
Payments of debt issuance costs	(5,788		)	(787		)	(250		)	(5,788		)
Dividends paid	(5,515		)	(4,650		)	(5,723		)	(5,515		)
Other	2			(114		)	(994		)	2
Net cash provided by (used in) financing activities	336,050			419,634
Effect of exchange rates on cash and cash equivalents	(771		)	—
Increase (Decrease) in cash and cash equivalents	7,398			(3,422		)
Cash and cash equivalents at beginning of period	22,593			34,919
Cash and cash equivalents at end of period	$	29,991		$	31,497
Net cash provided by financing activities							223,577			336,050
Effect of exchange rates on cash, cash equivalents and restricted cash							67			(771		)
Increase (Decrease) in cash, cash equivalents and restricted cash							(35,202		)	7,398
Cash, cash equivalents and restricted cash at beginning of period							54,895			22,593
Cash, cash equivalents and restricted cash at end of period							$	19,693		$	29,991

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Equity

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

Common
Shares

Additional
Paid-in
Capital

Treasury
Shares

Accumulated
Other
Comprehensive Income
(Loss)

Retained
Earnings

Noncontrolling
Interests
Total
Balance at December 31, 2017 $ 96
$ 224,622
$ (40,312 ) $ (2,700 ) $ 633,496
$ 7,697
$ 822,899
Net income (loss) (1,700 ) (282 ) (1,982 )
Other comprehensive income (loss) (1,288 ) (1,288 )
Cash received from noncontrolling interest 14,700
14,700
Adoption of accounting standard, net of income tax of $2,869 (8,441 ) (8,441 )
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (105 shares) (2,632 ) 4,164
1,532
Dividends declared ($0.165 per common share) (4,663 ) (4,663 )
Restricted share award dividend equivalents

120
(120 ) —
Balance at March 31, 2018 $ 96
$ 221,990
$ (36,028 ) $ (3,988 ) $ 618,572
$ 22,115
$ 822,757

Balance at December 31, 2018 $ 96
$ 224,396
$ (35,300 ) $ (6,387 ) $ 647,517
$ 46,442
$ 876,764
Net income (loss) (13,993 ) (155 ) (14,148 )
Other comprehensive income (loss) (2,770 ) (2,770 )
Amounts reclassified from accumulated other comprehensive loss

11,631
11,631
Cash received from noncontrolling interest

4,715
4,715
Adoption of accounting standard, net of income tax of ($237) (711 ) (711 )
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (740 shares) (22,756 ) 27,944
5,188
Dividends declared ($0.17 per common share) (5,529 ) (5,529 )
Shares issued for acquisition 41
123,105
123,146
Restricted share award dividend equivalents 8
140
(148 ) —
Balance at March 31, 2019 $ 137
$ 324,753
$ (7,216 ) $ 2,474
$ 627,136
$ 51,002
$ 998,286



	Three Months Ended
	Common Shares		Additional Paid-in Capital			Treasury Shares			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interests			Total
Balance at December 31, 2018	$	96	$	224,396		$	(35,300	)	$	(6,387	)	$	647,517		$	46,442		$	876,764
Net loss												(13,993		)	(155		)	(14,148		)
Other comprehensive loss									(2,770		)							(2,770		)
Amounts reclassified from accumulated other comprehensive loss									11,631									11,631
Contributions received from noncontrolling interest															4,715			4,715
Adoption of accounting standard, net of income tax of ($237)												(711		)				(711		)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (740 shares)			(22,756		)	27,944												5,188
Dividends declared ($0.17 per common share)												(5,529		)				(5,529		)
Shares issued for acquisition	41		123,105															123,146
Restricted share award dividend equivalents			8			140						(148		)				—
Balance at March 31, 2019	$	137	$	324,753		$	(7,216	)	$	2,474		$	627,136		$	51,002		$	998,286

Balance at December 31, 2019	$	137	$	345,359		$	(7,342	)	$	(7,231	)	$	642,687		$	222,045		$	1,195,655
Net loss												(37,662		)	(13,449		)	(51,111		)
Other comprehensive loss									(20,974		)							(20,974		)
Amounts reclassified from accumulated other comprehensive loss									556									556
Contributions from noncontrolling interest															3,307			3,307
Distributions to noncontrolling interest															(10,298		)	(10,298		)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (181 shares)			(3,977		)	6,452												2,475
Dividends declared ($0.175 per common share)												(5,748		)				(5,748		)
Restricted share award dividend equivalents						238						(238		)				—
Balance at March 31, 2020	$	137	$	341,382		$	(652	)	$	(27,649	)	$	599,039		$	201,605		$	1,113,862

See Notes to Condensed Consolidated Financial Statements

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”)., its majority-owned subsidiaries and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. The portion of these entities that is not owned by the Company is presented as non-controlling interest. 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.

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, ~~2019.~~2020. An unaudited Condensed Consolidated Balance Sheet as of March 31, ~~2018~~2019 has been included as the Company operates in several seasonal industries.

The Condensed Consolidated Balance Sheet data at December 31, ~~2018~~2019 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, ~~2018~~2019 (the ~~“2018~~“2019 Form 10-K”).

~~New~~Recently Adopted Accounting ~~Standards~~Guidance

~~Leasing~~Measurement of Credit Losses on Financial Instruments

In ~~February~~June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial ~~Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") (No. 2016-02, Leases (ASC 842)~~Instruments. The FASB issued subsequent amendments to the initial guidance in ~~July~~November 2018, April 2019 and May 2019 with ASU ~~2018-10~~2018-19, ASU 2019-04 and ~~in August 2018 with~~ ASU ~~2018-11. ASC 842 supersedes~~2019-05,respectively. This update changes the ~~current~~ accounting for ~~leases. The new standard, while retaining two distinct types of leases, finance~~credit losses on loans and ~~operating, (i)~~held-to-maturity debt securities and requires ~~lessees~~a current expected credit loss (CECL) approach to ~~record a right of use asset and a related liability~~determine the allowance for the rights and obligations associated with a lease, regardless of lease classification, and recognize lease expense in a manner similar to current accounting, (ii) eliminates current real estate specific lease provisions, (iii) modifies the lease classification criteria and (iv) aligns many of the underlying lessor model principles with those in the new revenue standard. The Companycredit losses. This includes allowances for trade receivables. Effective January 1, 2020, we adopted ~~the standard in the current period~~ASU 2016-13 using the Comparative Under ASC 840 method, which requires lease assets and liabilities to be recognized in the 2019 balance sheet and statement of equity and forgo the comparative reporting requirements under the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. The ~~Company also made an accounting policy election~~amendment requires entities to ~~keep short-term leases less than twelve months off~~consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. The impact of adopting this new standard on the ~~balance sheet for all classes of underlying assets, as well as elected to use the practical expedient that allows the combination of lease and non-leasecontract components in all of its underlying asset categories. See Note 14 for additional information.~~Condensed Consolidated Financial Statements was not material.

~~Other applicable standards~~Cloud Computing Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service ~~Contract.~~Contract. This ASU reduces the complexity of accounting for costs of implementing a cloud computing service arrangement. This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. The guidance is effective for fiscal years beginning after December 15, 2019. The adoption of this standard effective January 1, 2020 on the consolidated financial statements is not material.

Reference Rate Reform (Topic 848)

In March 2020, the FASB concluded its reference rate reform project and issued ASU 2020-04, Reference Rate Reform (Topic 848). London Interbank Offered Rate (LIBOR) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities. At the end of 2021, banks will no longer be required to report information that is used to determine LIBOR. As a result, LIBOR could be discontinued. Other interest rates used globally could also be discontinued for similar reasons. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The optional amendments are effective for all entities as of March 12, 2020, through December 31, 2022. The Company ~~is still evaluating~~has elected to adopt ASU 2020-04 immediately for all optional expedients provided for contract modification accounting as permissible under the standard. The impact of executing the standard should the need arise will be disclosed, however, at this ~~standard.~~time there has been no impact to our consolidated financial statements.

Recent Accounting Guidance Issued Not Yet Effective

Simplifying the Accounting for Income Taxes

In ~~February 2018,~~December 2019, the FASB issued ASU ~~2018-02,~~ 2019-12, Income ~~Statement-Reporting Comprehensive~~Taxes (Topic 740): Simplifying the Accounting for Income ~~(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,~~Taxes, which allows companies to reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings in their consolidated financial statements. The Company adopted this standard in the current period which did not have a material impact on its financial statements or disclosures.

~~In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The FASB issued subsequent amendments to the initial guidance in November 2018 with ASU 2018-19 and in~~ ~~ASU 2019-04. This update~~

~~changes~~simplify the accounting for ~~credit losses on loans~~income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and ~~held-to-maturity debt securities~~simplify GAAP for other areas of Topic 740 by clarifying and ~~requires a current expected credit loss (CECL) approach to determine the allowance~~amending existing guidance. The provisions of this update are effective for ~~credit losses. This includes allowances for trade receivables. The Company has not historically incurred significant credit losses~~fiscal years, and ~~does not currently anticipate circumstances that would lead to a CECL approach differing from the Company's existing allowance estimates in a material manner. The guidance is effective for~~interim periods within those fiscal years, beginning after December 15, ~~2019 with a cumulative-effect adjustment to retained earnings as~~2020. The impact of ~~the beginning of the year of adoption. Early adoption~~this update on our consolidated financial statements is ~~permitted, but~~currently being assessed. At this time the Company does not plan to ~~do so.~~early adopt the standard.

2. Inventories

Major classes of inventories are as follows:


(in thousands)	March 31, 2019		December 31, 2018		March 31, 2018		March 31, 2020		December 31, 2019		March 31, 2019
Grain and other agricultural products	$	812,361	$	527,471	$	541,272	$	750,281	$	907,482	$	812,361
Frac sand and propane	8,172		—		—		5,723		15,438		8,172
Ethanol and co-products	16,302		11,918		14,320		87,706		95,432		16,302
Plant nutrients and cob products	183,886		145,693		170,748		178,028		146,164		183,886
Railcar repair parts	5,744		5,722		5,289		6,338		6,020		5,744
	$	1,026,465	$	690,804	$	731,629
Total Inventories							$	1,028,076	$	1,170,536	$	1,026,465

Inventories on the Condensed Consolidated Balance Sheets atdo not include 3.9 million, 6.4 million and 1.9 million bushels of grain held in storage for others as of March 31, 2020, December 31, 2019 and March 31, ~~2018, do not include 1.9 million and 0.7 million bushels of grain, respectively, held in storage for others. Grain inventories held in storage for others were de minimis as of December 31, 2018.~~2019, respectively. The Company does not have title to the grain and is only liable for any deficiencies in grade or shortage of quantity that may arise during the storage period. Management has not experienced historical losses on any deficiencies and does not anticipate material losses in the future.

In the first quarter of 2020, the Company recorded a $10.6 million lower of cost or net realizable value charge related to lower ethanol market prices and decreased demand as a result of the COVID-19 pandemic.

3. Property, Plant and Equipment

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


(in thousands)	March 31, 2019		December 31, 2018		March 31, 2018		March 31, 2020		December 31, 2019		March 31, 2019
Land	$	39,552	$	29,739	$	29,915	$	40,336	$	40,442	$	39,552
Land improvements and leasehold improvements	82,681		68,826		69,320		95,327		103,148		82,681
Buildings and storage facilities	337,631		284,998		285,084		381,258		373,961		337,631
Machinery and equipment	481,454		393,640		377,563		861,812		835,156		481,454
Construction in progress	151,895		102,394		15,116		41,824		59,993		151,895
	1,093,213		879,597		776,998		1,420,557		1,412,700		1,093,213
Less: accumulated depreciation	421,408		402,886		383,235		498,972		474,282		421,408
	$	671,805	$	476,711	$	393,763
Property, plant and equipment, net							$	921,585	$	938,418	$	671,805

~~Capitalized interest totaled $1.1 million and $1.7 million for the three months ended March 31, 2019 and year-ended December 31, 2018, respectively.~~

Depreciation expense on property, plant and equipment was ~~$17.9~~$31.0 million and ~~$11.6~~$17.9 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Rail Group Assets

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


(in thousands)	March 31, 2019		December 31, 2018		March 31, 2018		March 31, 2020		December 31, 2019		March 31, 2019
Rail Group assets leased to others	$	660,747	$	640,349	$	577,678	$	740,809	$	723,004	$	660,747
Less: accumulated depreciation	123,118		118,564		115,425		143,740		138,706		123,118
	$	537,629	$	521,785	$	462,253
Rail Group assets, net							$	597,069	$	584,298	$	537,629

Depreciation expense on Rail Group assets leased to others amounted to ~~$6.7~~$7.7 million and ~~$6.2~~$6.7 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

4. Debt

~~On January 11,~~Short-term and long-term debt at March 31, 2020, December 31, 2019 the Company entered into a credit agreement with a syndicate of banks. The agreement provides a credit facility of up to $1,650 million. This amount is comprised of a 5-year revolving credit facility in the amount of $900 million, a 364-day revolving credit facility in the amount of $250 million, a 5-year term loan in the amount of $250 million, and ~~a 7-year term loan in the amount of $250 million. The 5-year revolving credit facility replaced the $800 million revolving line of credit. A portion~~March 31, 2019 consisted of the term loan was used to pay down debt assumed in the LTG acquisition. Interest rates for the term loans are based on LIBOR plus an applicable spread. Payments on the term loans will be made on a quarterly basis. As of March 31, 2019, $3.12 million has been paid down on the 5-year term loan and $3.12 million has been paid down on the 7-year term loan. The Company was in compliance with all financial covenants as of March 31, 2019.following:



(in thousands)	March 31, 2020		December 31, 2019		March 31, 2019
Short-term Debt – Non-Recourse	$	83,791	$	54,029	$	97,304
Short-term Debt – Recourse	308,659		93,002		337,000
Total Short-term Debt	$	392,450	$	147,031	$	434,304

Current Maturities of Long-term Debt – Non-Recourse	$	5,212	$	9,545	$	7,793
Current Maturities of Long-term Debt – Recourse	75,546		53,354		47,367
Total Current Maturities of Long-term Debt	$	80,758	$	62,899	$	55,160

Long-term Debt, Less: Current Maturities – Non-Recourse	$	329,462	$	330,251	$	177,955
Long-term Debt, Less: Current Maturities – Recourse	658,064		685,997		804,070
Total Long-term Debt, Less: Current Maturities	$	987,526	$	1,016,248	$	982,025

~~On January 11, 2019, the Company entered into a credit agreement of $25 million, with a maturity date of January 11, 2020.~~ The ~~interest rate for the line of credit equals the LIBOR Daily Floating Rate plus an applicable spread. As of March 31, 2019, there was no borrowing against the line of credit.~~

~~Total~~total borrowing capacity ~~for~~of the ~~Company under all revolving~~Company's lines of credit ~~including those discussed above, is currently~~ at ~~$1,625 million including $70 million for ELEMENT LLC, $200 million for The Andersons Railcar Leasing Company LLC, and $179.6 million for Thompsons Limited ("Thompsons"). At~~ March 31, ~~2019,~~2020 was $1,684.0 million of which the Company had a total of ~~$1,029~~$1,006.4 million available for borrowing under its lines of credit. The Company's borrowing capacity is reduced by a combination of outstanding borrowings and letters of credit. The Company ~~was~~is in compliance with all financial covenants as of March 31, ~~2019.~~

In conjunction with the recent acquisition, the Company also assumed Thompsons' revolving line of credit and a term loan with a syndicate of banks, which are non-recourse to the Company. The credit agreement provides the Company with a maximum availability of $179.6 million and had $90.9 million available for borrowing on this line of credit as of March 31, 2019. Any borrowings under the line of credit bear interest at variable rates, which are based on LIBOR or Bankers’ Acceptances plus an applicable spread. The maturity date for the revolving line of credit is June 26, 2023. The term loan had a balance of $33.8 million at March 31, 2019. Interest rates for the term loans are based on LIBOR plus an applicable spread. Payments of $0.6 million are made on a quarterly basis.

~~The Company’s short-term and long-term debt at~~ ~~March 31, 2019~~, ~~December 31, 2018~~ ~~and~~ ~~March 31, 2018~~ ~~consisted of the following:~~

(in thousands) March 31,
2019 December 31,
2018 March 31,
2018
Short-term Debt – Non-Recourse $ 97,304
$ —
$ —
Short-term Debt – Recourse 337,000
205,000
489,000
Total Short-term Debt $ 434,304
$ 205,000
$ 489,000

Current Maturities of Long-term Debt – Non-Recourse $ 7,147
$ 4,842
$ 2,922
Current Maturities of Long-term Debt – Recourse 42,006
16,747
11,212
Finance lease liability (a) 6,007
—
—
Total Current Maturities of Long-term Debt $ 55,160
$ 21,589
$ 14,134

Long-term Debt, Less: Current Maturities – Non-Recourse $ 177,233
$ 146,353
$ 72,977
Long-term Debt, Less: Current Maturities – Recourse 781,734
349,834
365,651
Finance lease liability (a) 23,058
—
—
Total Long-term Debt, Less: Current Maturities $ 982,025
$ 496,187
$ 438,628

(a) See Note 14, Leases, for additional information. March 31, 2019 balances include the former build-to-suit lease that was reclassed from other current liabilities and other long-term liabilities as a result of the new lease standard.

2020.

5. Derivatives

The Company’s operating results are affected by changes to commodity prices. The Trade and Ethanol businesses have established “unhedged” position limits (the amount of a commodity, either owned or contracted for, that does not have an offsetting derivative contract to lock in the price). 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 grain 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 March 31, ~~2019,~~2020, December 31, ~~2018~~2019 and March 31, ~~2018,~~2019, 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 noncurrent commodity derivative assets (or liabilities) on the Condensed Consolidated Balance Sheets:


	March 31, 2019				December 31, 2018				March 31, 2018					March 31, 2020				December 31, 2019					March 31, 2019
(in thousands)	Net derivative asset position		Net derivative liability position		Net derivative asset position		Net derivative liability position		Net derivative asset position			Net derivative liability position		Net derivative asset position		Net derivative liability position		Net derivative asset position			Net derivative liability position		Net derivative asset position		Net derivative liability position
Collateral paid (received)	$	21,751	$	—	$	14,944	$	—	$	54,762		$	—
Cash collateral paid														$	22,855	$	—	$	56,005		$	—	$	21,751	$	—
Fair value of derivatives	38,580		—		22,285		—		(18,874		)	—		20,977		—		(10,323		)	—		38,580		—
Balance at end of period	$	60,331	$	—	$	37,229	$	—	$	35,888		$	—	$	43,832	$	—	$	45,682		$	—	$	60,331	$	—

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


	March 31, 2019															March 31, 2020
(in thousands)	Commodity Derivative Assets - Current			Commodity Derivative Assets - Noncurrent			Commodity Derivative Liabilities - Current			Commodity Derivative Liabilities - Noncurrent			Total			Commodity Derivative Assets - Current			Commodity Derivative Assets - Noncurrent			Commodity Derivative Liabilities - Current			Commodity Derivative Liabilities - Noncurrent			Total
Commodity derivative assets	$	142,262		$	3,781		$	665		$	93		$	146,801		$	164,700		$	3,240		$	9,648		$	142		$	177,730
Commodity derivative liabilities	(5,736		)	(24		)	(67,288		)	(3,914		)	(76,962		)	(38,485		)	(119		)	(100,139		)	(2,667		)	(141,410		)
Cash collateral paid (received)	21,751			—			—			—			21,751
Cash collateral paid																22,855			—			—			—			22,855
Balance sheet line item totals	$	158,277		$	3,757		$	(66,623	)	$	(3,821	)	$	91,590		$	149,070		$	3,121		$	(90,491	)	$	(2,525	)	$	59,175


	December 31, 2018															December 31, 2019
(in thousands)	Commodity Derivative Assets - Current			Commodity Derivative Assets - Noncurrent			Commodity Derivative Liabilities - Current			Commodity Derivative Liabilities - Noncurrent			Total			Commodity Derivative Assets - Current			Commodity Derivative Assets - Noncurrent			Commodity Derivative Liabilities - Current			Commodity Derivative Liabilities - Noncurrent			Total
Commodity derivative assets	$	43,463		$	484		$	706		$	5		$	44,658		$	92,429		$	1,045		$	7,439		$	18		$	100,931
Commodity derivative liabilities	(6,986		)	(4		)	(33,353		)	(894		)	(41,237		)	(40,571		)	(96		)	(54,381		)	(523		)	(95,571		)
Cash collateral	14,944			—			—			—			14,944
Cash collateral paid																56,005			—			—			—			56,005
Balance sheet line item totals	$	51,421		$	480		$	(32,647	)	$	(889	)	$	18,365		$	107,863		$	949		$	(46,942	)	$	(505	)	$	61,365


	March 31, 2018															March 31, 2019
(in thousands)	Commodity Derivative Assets - Current			Commodity Derivative Assets - Noncurrent			Commodity Derivative Liabilities - Current			Commodity Derivative Liabilities - Noncurrent			Total			Commodity Derivative Assets - Current			Commodity Derivative Assets - Noncurrent			Commodity Derivative Liabilities - Current			Commodity Derivative Liabilities - Noncurrent			Total
Commodity derivative assets	$	29,861		$	1,851		$	3,115		$	47		$	34,874		$	142,262		$	3,781		$	665		$	93		$	146,801
Commodity derivative liabilities	(40,813		)	(112		)	(18,539		)	(1,461		)	(60,925		)	(5,736		)	(24		)	(67,288		)	(3,914		)	(76,962		)
Cash collateral	54,762			—			—			—			54,762
Cash collateral paid																21,751			—			—			—			21,751
Balance sheet line item totals	$	43,810		$	1,739		$	(15,424	)	$	(1,414	)	$	28,711		$	158,277		$	3,757		$	(66,623	)	$	(3,821	)	$	91,590

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 item in which they are located for the three and three months ended March 31, ~~2019~~2020 and ~~2018~~2019 are as follows:


	Three months ended March 31,					Three months ended March 31,
(in thousands)	2019		2018			2020		2019
Gains (losses) on commodity derivatives included in cost of sales and merchandising revenues	$	66,419	$	(25,236	)
Gains on commodity derivatives included in cost of sales and merchandising revenues						$	30,960	$	66,419

The Company had the following volume of commodity derivative contracts outstanding (on a gross basis) at March 31, ~~2019,~~2020, December 31, ~~2018~~2019 and March 31, ~~2018:~~2019:


	March 31, 2019				March 31, 2020
Commodity (in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons
Non-exchange traded:
Corn	624,612	—	—	—	555,782	—	—	—
Soybeans	42,859	—	—	—	33,950	—	—	—
Wheat	118,909	—	—	—	92,374	—	—	—
Oats	26,361	—	—	—	56,582	—	—	—
Ethanol	—	233,420		—	—	103,252	—	—
Corn oil	—	—	6,733	—	—	—	6,275	—
Other	5,574	2,032	6	2,508	18,734	1,500	296	2,010
Subtotal	818,315	235,452	6,739	2,508	757,422	104,752	6,571	2,010
Exchange traded:
Corn	197,210	—	—	—	165,295	—	—	—
Soybeans	47,860	—	—	—	37,875	—	—	—
Wheat	103,955	—	—		59,135	—	—	—
Oats	770	—	—	—	1,490	—	—	—
Ethanol	—	110,758	—	—	—	44,440	—	—
Gasoline	—	12,936	—	—
Propane	—	14,784	—	—	—	11,760	—	—
Other	2	—	—	205	—	11,970	—	213
Subtotal	349,797	138,478	—	205	263,795	68,170	—	213
Total	1,168,112	373,930	6,739	2,713	1,021,217	172,922	6,571	2,223


	December 31, 2018				December 31, 2019
Commodity (in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons
Non-exchange traded:
Corn	250,408			—	552,359	—	—	—
Soybeans	22,463	—	—	—	34,912	—	—	—
Wheat	14,017	—	—	—	100,996	—	—	—
Oats	26,230	—	—	—	24,700	—	—	—
Ethanol	—	244,863	—	—	—	116,448	—	—
Corn oil	—	—	2,920	—	—	—	14,568	—
Other	494	2,000	—	66	11,363	4,000	305	2,263
Subtotal	313,612	246,863	2,920	66	724,330	120,448	14,873	2,263
Exchange traded:
Corn	130,585	—	—	—	221,740	—	—	—
Soybeans	26,985	—	—	—	39,145	—	—	—
Wheat	33,760	—	—	—	68,171	—	—	—
Oats	1,475	—	—	—	2,090	—	—	—
Ethanol	—	77,112	—	—	—	175,353	—	—
Propane					—	5,166	—	—
Other					—	15	—	232
Subtotal	192,805	77,112	—	—	331,146	180,534	—	232
Total	506,417	323,975	2,920	66	1,055,476	300,982	14,873	2,495


	March 31, 2018				March 31, 2019
Commodity (in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons
Non-exchange traded:
Corn	335,887	—	—	—	624,612	—	—	—
Soybeans	48,003	—	—	—	42,859	—	—	—
Wheat	16,639	—	—	—	118,909	—	—	—
Oats	40,555	—	—	—	26,361	—	—	—
Ethanol	—	280,243		—	—	233,420	—	—
Corn oil	—	—	5,048	—	—	—	6,733	—
Other	27	4,500		90	5,574	2,032	6	2,508
Subtotal	441,111	284,743	5,048	90	818,315	235,452	6,739	2,508
Exchange traded:
Corn	146,505	—	—	—	197,210	—	—	—
Soybeans	52,460	—	—	—	47,860	—	—	—
Wheat	74,805	—	—	—	103,955	—	—	—
Oats	2,290	—	—	—	770	—	—	—
Ethanol	—	108,108	—	—	—	110,758	—	—
Gasoline					—	12,936	—	—
Propane					—	14,784	—	—
Other					2	—	—	205
Subtotal	276,060	108,108	—	—	349,797	138,478	—	205
Total	717,171	392,851	5,048	90	1,168,112	373,930	6,739	2,713

Interest Rate and Other Derivatives

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

At March 31, ~~2019,~~2020, December 31, ~~2018~~2019 and March 31, ~~2018,~~2019, the Company had recorded the following amounts for the fair value of the Company's other derivatives:


(in thousands)	March 31, 2019			December 31, 2018			March 31, 2018			March 31, 2020			December 31, 2019			March 31, 2019
Derivatives not designated as hedging instruments
Interest rate contracts included in Other long-term assets (Other long-term liabilities)	$	(4,494	)	$	(353	)	$	(453	)
Interest rate contracts included in Other long-term liabilities										$	(1,913	)	$	(1,007	)	$	(4,494	)
Foreign currency contracts included in Other current assets (Accrued expenses and other current liabilities)	$	(344	)	$	(1,122	)	$	(695	)	$	440		$	2,742		$	(344	)
Derivatives designated as hedging instruments
Interest rate contract included in Other assets (Other long-term liabilities)	$	(4,552	)	$	(168	)	$	—
Interest rate contracts included in Accrued expenses and other current liabilities										$	(8,081	)	$	(3,118	)	$	—
Interest rate contracts included in Other long-term assets (Other long-term liabilities)										$	(22,620	)	$	(9,382	)	$	(4,552	)

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


	Three months ended March 31,						Three months ended March 31,
(in thousands)	2019			2018			2020			2019
Derivatives not designated as hedging instruments
Interest rate derivative gains (losses) included in Interest income (expense)	$	(990	)	$	1,408
Foreign currency derivative gains (losses) included in Other income, net	$	(1,467	)	$	(1,122	)
Interest rate derivative gains (losses) included in Interest income (expense), net							$	(784	)	$	(990	)
Foreign currency derivative gains (losses) included in Other income (loss), net							$	—		$	(1,467	)
Derivatives designated as hedging instruments
Interest rate derivative gains (losses) included in Other Comprehensive Income (Loss)	$	(4,991	)	$	—		$	(18,182	)	$	(4,991	)
Interest rate derivatives gains (losses) included in Interest income (expense)	$	165		$	—
Interest rate derivatives gains (losses) included in Interest income (expense), net							$	(1,290	)	$	165

Outstanding interest rate derivatives, as of March 31, ~~2019,~~2020, are as follows:



Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate
Long-term
Swap	2014	2023	$	23.0	Interest rate component of debt - not accounted for as a hedge	1.9%
Collar	2016	2021	$	40.0	Interest rate component of debt - not accounted for as a hedge	3.5% to 4.8%
Swap	2017	2022	$	20.0	Interest rate component of debt - accounted for as a hedge	1.8%
Swap	2018	2023	$	10.0	Interest rate component of debt - accounted for as a hedge	2.6%
Swap	2018	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.7%
Swap	2018	2021	$	40.0	Interest rate component of debt - accounted for as a hedge	2.6%
Swap	2019	2021	$	25.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	2019	2021	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%
Swap	2020	2023	$	50.0	Interest rate component of debt - accounted for as a hedge	0.8%
Swap	2020	2023	$	50.0	Interest rate component of debt - accounted for as a hedge	0.7%
Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%

Interest Rate Hedging Instrument Year Entered Year of Maturity
Initial Notional Amount
(in millions)
Description

Interest Rate
Long-term
Collar 2014 2023 $ 23.0
Interest rate component of debt - not accounted for as a hedge 1.9%
Swap 2016 2021 $ 40.0
Interest rate component of debt - not accounted for as a hedge 3.5% to 4.8%
Swap * 2016 2019 $ 50.0
Interest rate component of debt - not accounted for as a hedge 1.2%
Swap * 2017 2022 $ 20.0
Interest rate component of debt - accounted for as a hedge 1.8%
Swap * 2018 2023 $ 10.0
Interest rate component of debt - accounted for as a hedge 2.6%
Swap * 2018 2025 $ 20.0
Interest rate component of debt - accounted for as a hedge 2.7%
Swap 2018 2021 $ 40.0
Interest rate component of debt - accounted for as a hedge 2.6%
Swap 2019 2021 $ 25.0
Interest rate component of debt - accounted for as a hedge 2.5%
Swap 2019 2021 $ 50.0
Interest rate component of debt - accounted for as a hedge 2.5%
Swap 2019 2025 $ 100.0
Interest rate component of debt - accounted for as a hedge 2.5%
Swap 2019 2025 $ 50.0
Interest rate component of debt - accounted for as a hedge 2.5%
Swap 2019 2025 $ 50.0
Interest rate component of debt - accounted for as a hedge 2.5%

* Acquired on 1/1/2019 in the acquisition of LTG.

6. ~~Employee Benefit Plans~~

~~The following are components of the net periodic benefit cost for the pension and postretirement benefit plans maintained by the Company for the three months ended March 31, 2019 and 2018:~~

Pension Benefits
(in thousands) Three months ended March 31,
2019 2018
Interest cost $ 29
$ 33
Recognized net actuarial loss 58
61
Benefit cost $ 87
$ 94

Postretirement Benefits
(in thousands) Three months ended March 31,
2019 2018
Service cost $ 73
$ 87
Interest cost 206
187
Amortization of prior service cost (228 ) (228 )
Benefit cost $ 51
$ 46

7. Revenue

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


	Three months ended March 31,				Three months ended March 31,
(in thousands)	2019		2018		2020		2019
Revenues under ASC 606	$	315,172	$	193,650	$	347,502	$	315,172
Revenues under ASC 842	28,868		26,029		25,551		28,868
Revenues under ASC 815	1,632,752		416,060		1,480,052		1,632,752
Total Revenues	$	1,976,792	$	635,739	$	1,853,105	$	1,976,792

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

Disaggregation of revenue

The following tables disaggregate revenues under ASC 606 by major product/service line for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively:


	Three months ended March 31, 2019										Three months ended March 31, 2020
(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		Trade		Ethanol		Plant Nutrient		Rail		Total
Specialty nutrients	$	3,938	$	—	$	68,400	$	—	$	72,338	$	—	$	—	$	73,231	$	—	$	73,231
Primary nutrients	427		—		53,089		—		53,516		—		—		45,690		—		45,690
Services	825		3,436		162		9,947		14,370		1,686		—		182		8,736		10,604
Products and co-products	62,758		21,472		—		—		84,230
Ethanol products and co-products											53,165		101,698		—		—		154,863
Frac sand and propane	80,463		—		—		—		80,463		49,875		—		—		—		49,875
Other	1,157				6,874		2,224		10,255		3,989		616		5,810		2,824		13,239
Total	$	149,568	$	24,908	$	128,525	$	12,171	$	315,172	$	108,715	$	102,314	$	124,913	$	11,560	$	347,502



	Three months ended March 31, 2019
(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total
Specialty nutrients	$	3,938	$	—	$	68,400	$	—	$	72,338
Primary nutrients	427		—		53,089		—		53,516
Service	825		3,436		162		9,947		14,370
Ethanol products and co-products	62,758		21,472		—		—		84,230
Frac sand and propane	80,463		—		—		—		80,463
Other	1,157		—		6,874		2,224		10,255
Total	$	149,568	$	24,908	$	128,525	$	12,171	$	315,172

Three months ended March 31, 2018
(in thousands) Trade Ethanol Plant Nutrient Rail Total
Specialty nutrients $ —
$ —
$ 75,078
$ —
$ 75,078
Primary nutrients —
—
53,219
—
53,219
Service 4,418
2,545
209
8,117
15,289
Co-products —
26,646
—
—
26,646
Other 210
—
7,111
16,097
23,418
Total $ 4,628
$ 29,191
$ 135,617
$ 24,214
$ 193,650

Approximately 5%3% and 8%5% of revenues accounted for under ASC 606 during the three months ended March 31, 2020 and 2019, respectively, and ~~2018, respectively,~~ are recorded over time which primarily relates to service revenues noted above.

~~Specialty and primary nutrients~~

The Company sells several different types of specialty nutrient products, including: low-salt liquid starter fertilizers, micro-nutrients and other specialty lawn products. These products are sold through the wholesale distribution channels as well as directly to end users at the farm center locations. Similarly, the Company sells several different types of primary nutrient products, including nitrogen, phosphorus and potassium. These products may be purchased and re-sold as is or sold as finished goods resulting from a blending and manufacturing process. The contracts associated with specialty and primary nutrients generally have just a single performance obligation, as the Company has elected the accounting policy to consider shipping and handling costs as fulfillment costs. Revenue is recognized when control of the product has passed to the customer. Payment terms generally range from 0 - 30 days.

~~Services~~

Service revenues primarily relate to the railcar repair business and Trade Group. The Company owns several railcar repair shops which repair railcars through specific contracts with customers or by operating as an agent for a particular railroad to repair cars that are on its rail line per Association of American Railroads (“AAR”) standards. These contracts contain a single performance obligation which is to complete the requested and/or required repairs on the railcars. As the customer simultaneously receives and consumes the benefit of the repair work we perform, revenue for these contracts is recognized over time. The Company uses an input-based measure of progress using costs incurred to total expected costs as that is the measure that most faithfully depicts our progress towards satisfying our performance obligation. Upon completion of the work, the invoice is sent to the customer, with payment terms that generally range from 0 - 30 days.

~~Products and co-products~~

In addition to the feed ingredients sales contracts that are considered derivative instruments, the feed ingredients and specialty products business is a merchandiser of various feed ingredients, pulses and pelleted ingredients around the world. The Group provides these products through a single revenue stream of wholesale commodities. Revenue is recognized when control of the product has passed to the customer which follows shipping terms on the contract. Payment terms generally range from 30 - 45 days.

In addition to the ethanol sales contracts that are considered derivative instruments, the Ethanol Group sells several other co-products that remain subject to ASC 606, including E-85, DDGs, syrups and renewable identification numbers (“RINs”). RINs are credits for compliance with the Environmental Protection Agency's Renewable Fuel Standard program and are created by renewable fuel producers. Contracts for these co-products generally have a single performance obligation, as the Company has elected the accounting policy to consider shipping and handling costs as fulfillment costs. Revenue is recognized when control of the product has passed to the customer which follows shipping terms on the contract. Payment terms generally range from 5 - 15 days.

~~Frac sand and propane~~

The Trade Group has an integrated business involved in numerous frac sand related activities, including the processing, merchandising and transloading of frac sand. Frac sand is often purchased, sometimes after processing, and shipped via rail car to Company-owned facilities or third-party storage locations. Product is then typically loaded into customers’ trucks at which time title transfers and revenue is recognized. Payment terms generally range from 30-45 days. Additionally, the Company provides transloading and storage services to customers of frac sand inventory. Revenue is recognized when control of frac sand has passed to the customer which follows shipping terms on the contract. Payment terms generally range from 0 - 30 days.

Additionally, the Trade Group merchandises propane, butane and natural gasoline. Under sales contracts, physical goods are delivered to the customer using truck, rail and pipeline transportation. The Company's performance obligation is the delivery of one unit of the quantity on the invoice and recognizes revenue at that point. Shipping charges are included in the price of the commodity. Payment terms generally range from 10 - 15 days.

Contract balances

The ~~opening and closing~~ balances of the Company’s contract liabilities ~~are~~were $65.8 million and $28.5 million as ~~follows:~~

(in thousands) 2019 2018
Balance at January 1, $ 28,858
$ 25,520
Balance at March 31, 146,824
67,715

~~Exclusive~~ of ~~acquisition related impacts, the residual~~March 31, 2020 and December 31, 2019, respectively. The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The main driver of the contract liabilities ~~have two main drivers including Trade prepayments by counter parties and~~balance is payments for primary and specialty nutrients received in advance of fulfilling our performance obligations under our customer contracts. The primary and specialty business records contract liabilities for payments received in advance of fulfilling our performance obligations under our customer contracts. Further, due to seasonality of this business, ~~the amount of revenue recognized~~contract liabilities were built up in the ~~current period related to the beginning~~first quarter of the ~~year contract liability is not material.~~

~~Contract costs~~

The Company has elected to apply the practical expedient and accordingly recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in Operating, administrative and general expenses.

~~Significant judgments~~

In making its determination of standalone selling price, the Company maximizes its use of observable inputs. Standalone selling price, once established, is then used to allocate total consideration proportionally to the various performance obligations, if applicable, within a contract.

To estimate variable consideration, the Company applies both the “expected value” method and “most likely amount” method based on the form of variable consideration, according to which method would provide the best prediction. The expected value method involves a probability-weighted determination of the expected amount, whereas the most likely amount method identifies the single most likely outcome in a range of possible amounts. However, once a method has been applied to one form of variable consideration, it is applied consistently throughout the contract term.

The primary types of variable consideration present in the Company’s contracts are product returns, volume rebates and the CPI index. The overall impact of this variable consideration is not material.year.

7. Income Taxes

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

For the three months ended March 31, 2020, the Company recorded an income tax benefit of $1.5 million at an effective income tax rate of 2.8%. The annual effective tax rate differs from the statutory U.S. Federal tax rate as the tax benefit from consolidated pre-tax losses is completely offset by the portion of losses owned by non-controlling interests that do not provide for a tax benefit. The decrease in effective tax rate for the three months ended March 31, 2020 as compared to the same period last year was primarily attributed to the tax expense generated from the current period loss before taxes at the estimated annual effective tax rate, offset by tax benefits from anticipated net operating loss carrybacks as result of the Coronavirus Aid, Relief, and. Economic Security Act ("CARES") Act. For the three months ended March 31, 2019, the Company recorded an income tax benefit of $5.4 million at an effective income tax rate of 27.8%.

The ~~annual~~2020 effective tax rate ~~differs~~can be affected by variances in the estimates and amounts of taxable income among the various states, entities and activity types, realization of tax credits, adjustments from resolution of tax matters under review, valuation allowances and the ~~statutory U.S. Federal~~company’s assessment of its liability for uncertain tax ~~rate due to the impact~~positions. The amount of ~~state income taxes, nondeductible compensation,~~unrecognized tax benefits for uncertain tax positions was $25.4 million as of March 31, 2020, and ~~noncontrolling interests. The effective tax rate~~$0.6 million for the ~~three-month~~ period ended March 31, ~~2019 also includes~~2019. The unrecognized tax benefits ~~from foreign~~of $25.4 million include $21.7 million recorded as a reduction of the deferred tax asset and ~~general business~~refundable credits associated with the R&D Credits.

On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families and businesses affected by the Coronavirus (“COVID-19”) pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax ~~credits. The increase in effective~~credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax ~~rate for the three months ended March 31, 2019 as compared~~credit refunds, modifications to the ~~same period last year was primarily attributed~~net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the ~~impacts~~CARES Act, (i) for taxable years beginning before 2021, net operating loss carryforwards and carrybacks may offset 100% of ~~discrete activity~~taxable income, (ii) NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund and (iii) for taxable years beginning in 2019 and 2020, the base for interest deductibility is increased from 30% to 50% of EBITDA. The Company has analyzed the impact of the CARES Act to determine the estimated impact on 2019 filing positions that could be carried back to prior ~~period for~~tax years, and recorded a ~~statutory merger that did not recur in the current period. For the three months ended March 31, 2018, the Company recorded an income tax~~financial statement benefit of ~~$0.3 million at~~$6.6 million. On April 17, 2020, the Internal Revenue Service issued Revenue Procedure 2020-25, allowing for companies to revoke an ~~effective income tax rate~~election out of ~~13.5%.~~ bonus depreciation. The Company is currently evaluating the impact of this additional guidance.

9.8. Accumulated Other Comprehensive Income (Loss)

The following tables summarize the after-tax components of accumulated other comprehensive income (loss) attributable to the Company for the three months ended March 31, ~~2019~~2020 and ~~2018:~~2019:


		Changes in Accumulated Other Comprehensive Income (Loss) by Component (a)															Changes in Accumulated Other Comprehensive Income (Loss) by Component (a)
		Three months ended March 31, 2019															Three months ended March 31, 2020
(in thousands)	(in thousands)	Cash Flow Hedges			Foreign Currency Translation Adjustment			Investment in Convertible Preferred Securities		Defined Benefit Plan Items			Total			(in thousands)	Cash Flow Hedges			Foreign Currency Translation Adjustment			Investment in Convertible Preferred Securities		Defined Benefit Plan Items			Total
Beginning Balance	Beginning Balance	$	(126	)	$	(11,550	)	$	258	$	5,031		$	(6,387	)	Beginning Balance	$	(9,443	)	$	1,065		$	258	$	889		$	(7,231	)
	Other comprehensive income (loss) before reclassifications	(3,758		)	943			—		45			$	(2,770	)	Other comprehensive loss before reclassifications	(14,390		)	(6,639		)	—		55			$	(20,974	)
	Amounts reclassified from accumulated other comprehensive loss (income) (b)	136			11,666			—		(171		)	$	11,631		Amounts reclassified from accumulated other comprehensive income (loss)	727			—			—		(171		)	$	556
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	(3,622		)	12,609			—		(126		)	8,861			Net current-period other comprehensive income (loss)	(13,663		)	(6,639		)	—		(116		)	(20,418		)
Ending balance	Ending balance	$	(3,748	)	$	1,059		$	258	$	4,905		$	2,474		Ending balance	$	(23,106	)	$	(5,574	)	$	258	$	773		$	(27,649	)

(a) All amounts are net of tax. Amounts in parentheses indicate ~~debits~~debits.



		Changes in Accumulated Other Comprehensive Income (Loss) by Component (a)
		Three months ended March 31, 2019
(in thousands)		Cash Flow Hedges			Foreign Currency Translation Adjustment			Investment in Convertible Preferred Securities		Defined Benefit Plan Items			Total
Beginning Balance		$	(126	)	$	(11,550	)	$	258	$	5,031		$	(6,387	)
	Other comprehensive loss before reclassifications	(3,758		)	943			—		45			$	(2,770	)
	Amounts reclassified from accumulated other comprehensive income (loss) (b)	136			11,666			—		(171		)	$	11,631
Net current-period other comprehensive income (loss)		(3,622		)	12,609			—		(126		)	8,861
Ending balance		$	(3,748	)	$	1,059		$	258	$	4,905		$	2,474

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

(b) Reflects foreign currency translation adjustments attributable to the consolidation of Thompsons ~~Limited as summarized in Note 17.~~Limited.

Changes in Accumulated Other Comprehensive Income (Loss) by Component (a)
Three months ended March 31, 2018
(in thousands) Foreign Currency Translation Adjustment Investment in Convertible Preferred Securities Defined Benefit Plan Items Total
Beginning Balance $ (7,716 ) $ 344
$ 4,672
$ (2,700 )
Other comprehensive income (loss) before reclassifications (1,150 ) (87 ) 117
(1,120 )
Amounts reclassified from accumulated other comprehensive loss —
—
(168 ) (168 )
Net current-period other comprehensive income (loss) (1,150 ) (87 ) (51 ) (1,288 )
Ending balance $ (8,866 ) $ 257
$ 4,621
$ (3,988 )

~~(a) All amounts are net of tax. Amounts in parentheses indicate debits~~

Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (a)
(in thousands) Three months ended March 31, 2019
Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Statement Where Net Income Is Presented
Defined Benefit Plan Items
     Amortization of prior-service cost (228 ) (b)
(228 ) Total before tax
57
Income tax provision
$ (171 ) Net of tax

Cash Flow Hedges
     Interest payments 182
Interest expense
182
Total before tax
(46 ) Income tax provision
$ 136
Net of tax

Foreign Currency Translation Adjustment
     Realized loss on pre-existing investment 11,666
Other income, net
11,666
Total before tax
—
Income tax provision
$ 11,666
Net of tax

Total reclassifications for the period $ 11,631
Net of tax


		Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (a)				Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (a)
(in thousands)	(in thousands)	Three months ended March 31, 2018				Three months ended March 31, 2020
Details about Accumulated Other Comprehensive Income (Loss) Components		Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement Where Net Income Is Presented	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement Where Net Income Is Presented
Defined Benefit Plan Items
Amortization of prior-service cost		(228		)	(b)	$	(228	)	(b)
		(228		)	Total before tax	(228		)	Total before tax
		60			Income tax provision	57			Income tax provision (benefit)
		$	(168	)	Net of tax	$	(171	)	Net of tax

Cash Flow Hedges
Interest payments						$	969		Interest expense
						969			Total before tax
						(242		)	Income tax provision
						$	727		Net of tax

Total reclassifications for the period		$	(168	)	Net of tax	$	556		Net of tax

(a) Amounts in parentheses indicate credits to profit/~~loss~~loss.

(b) This accumulated other comprehensive loss component is included in the computation of net periodic benefit ~~cost (see Note 6).~~cost.



	Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (a)
(in thousands)	Three months ended March 31, 2019
Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Statement Where Net Income Is Presented
Defined Benefit Plan Items
Amortization of prior-service cost	$	(228	)	(b)
	(228		)	Total before tax
	57			Income tax provision (benefit)
	$	(171	)	Net of tax

Cash Flow Hedges
Interest payments	$	182		Interest expense
	182			Total before tax
	(46		)	Income tax provision
	$	136		Net of tax

Foreign Currency Translation Adjustment
Realized loss on pre-existing investment	$	11,666		Other income, net
	11,666			Total before tax
	—			Income tax provision
	$	11,666		Net of tax

Total reclassifications for the period	$	11,631		Net of tax

(a) Amounts in parentheses indicate credits to profit/loss.

(b) This accumulated other comprehensive loss component is included in the computation of net periodic benefit cost.

~~10.~~9. Earnings Per Share

The Company’s non-vested restricted stock that was granted prior to March 2015 is considered a participating security since the share-based awards contain a non-forfeitable right to dividends irrespective of whether the awards ultimately vest. Unvested share-based payment awards that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings.


(in thousands, except per common share data)	Three months ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
Net income (loss) attributable to The Andersons, Inc.	$	(13,993	)	$	(1,700	)
Less: Distributed and undistributed earnings allocated to nonvested restricted stock	—			—
Earnings (losses) available to common shareholders	$	(13,993	)	$	(1,700	)
Net loss attributable to The Andersons, Inc.							$	(37,662	)	$	(13,993	)
Earnings per share – basic:
Weighted average shares outstanding – basic	32,501			28,237			32,821			32,501
Earnings (losses) per common share – basic	$	(0.43	)	$	(0.06	)
Earnings per common share – basic							$	(1.15	)	$	(0.43	)
Earnings per share – diluted:
Weighted average shares outstanding – basic	32,501			28,237			32,821			32,501
Effect of dilutive awards	—			—			—			—
Weighted average shares outstanding – diluted	32,501			28,237			32,821			32,501
Earnings (losses) per common share – diluted	$	(0.43	)	$	(0.06	)
Earnings per common share – diluted							$	(1.15	)	$	(0.43	)

All outstanding share awards were antidilutive for the three months ended March 31, ~~2019~~2020 and March 31, ~~2018~~2019 as the Company incurred a net loss ~~for the period.~~

in both periods.

~~11.~~

10. Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, ~~2019~~2020, December 31, ~~2018~~2019 and March 31, ~~2018~~2019:


(in thousands)	March 31, 2019											March 31, 2020
Assets (liabilities)	Level 1			Level 2			Level 3		Total			Level 1			Level 2			Level 3		Total
Commodity derivatives, net (a)	$	60,331		$	31,259		$	—	$	91,590		$	43,832		$	15,343		$	—	$	59,175
Provisionally priced contracts (b)	(48,430		)	(49,393		)	—		$	(97,823	)	(94,834		)	(51,061		)	—		(145,895		)
Convertible preferred securities (c)	—			—			7,404		$	7,404		—			—			8,654		8,654
Other assets and liabilities (d)	5,772			(4,494		)	—		$	1,278		5,373			(32,614		)	—		(27,241		)
Total	$	17,673		$	(22,628	)	$	7,404	$	2,449		$	(45,629	)	$	(68,332	)	$	8,654	$	(105,307	)



(in thousands)	December 31, 2019
Assets (liabilities)	Level 1			Level 2			Level 3		Total
Commodity derivatives, net (a)	$	45,682		$	15,683		$	—	$	61,365
Provisionally priced contracts (b)	(118,414		)	(68,237		)	—		(186,651		)
Convertible preferred securities (c)	—			—			8,404		8,404
Other assets and liabilities (d)	9,469			(13,507		)	—		(4,038		)
Total	$	(63,263	)	$	(66,061	)	$	8,404	$	(120,920	)

(in thousands) December 31, 2018
Assets (liabilities) Level 1 Level 2 Level 3 Total
Commodity derivatives, net (a) 37,229
(18,864 ) —
18,365
Provisionally priced contracts (b) (76,175 ) (58,566 ) —
(134,741 )
Convertible preferred securities (c) —
—
7,154
7,154
Other assets and liabilities (d) 5,186
(353 ) —
4,833
Total $ (33,760 ) $ (77,783 ) $ 7,154
$ (104,389 )


(in thousands)	March 31, 2018											March 31, 2019
Assets (liabilities)	Level 1			Level 2			Level 3		Total			Level 1			Level 2			Level 3		Total
Commodity derivatives, net (a)	35,888			(7,177		)	—		28,711			$	60,331		$	31,259		$	—	$	91,590
Provisionally priced contracts (b)	(48,478		)	(31,847		)	—		(80,325		)	(48,430		)	(49,393		)	—		(97,823		)
Convertible preferred securities (c)	—			—			7,388		7,388			—			—			7,404		7,404
Other assets and liabilities (d)	8,947			(454		)	—		8,493			5,772			(4,494		)	—		1,278
Total	$	(3,643	)	$	(39,478	)	$	7,388	$	(35,733	)	$	17,673		$	(22,628	)	$	7,404	$	2,449


(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 ~~noncurrent assets”~~assets, net” on the Company’s ~~Condensed~~ Consolidated Balance ~~Sheets.~~Sheets related to certain available for sale securities.


(d)	Included in other assets and liabilities are assets held ~~in rabbi trusts~~by the Company to fund deferred compensation plans, ethanol risk management contracts, and foreign exchange derivative contracts (Level 1), and 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, we have concluded that “basis” is typically a Level 2 fair value input for purposes of the fair value disclosure requirements related to our commodity derivatives, depending on the specific commodity. Although nonperformance risk, both of the Company and the counterparty, is present in each of these commodity contracts and is a component of the estimated fair values, based on the Company’s historical experience with its producers and customers and the Company’s knowledge of their businesses, the Company does not view nonperformance risk to be a significant input to fair value for these commodity contracts.

These fair value disclosures exclude physical grain 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 is disclosed in Note 2 Inventories. 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 we have 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 risk management contract liability allows related ethanol customers to effectively unprice the futures component of their inventory for a period of time, subjecting the bushels to market fluctuations. The Company records an asset or liability for the market value changes of the commodities over the life of the contracts based on quoted exchange prices and as such, the balance is deemed to be Level 1 in the fair value hierarchy.

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

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


	Convertible Preferred Securities				Convertible Preferred Securities
(in thousands)	2019		2018		2020		2019
Assets (liabilities) at January 1,	$	7,154	$	7,388	$	8,404	$	7,154
Additional Investments	250		—		250		250
Assets (liabilities) at March 31,	$	7,404	$	7,388	$	8,654	$	7,404

The following tables summarize quantitative information about the Company's Level 3 fair value measurements as of March 31, ~~2019,~~2020, December 31, ~~2018~~2019 and March 31, ~~2018:~~2019:

Quantitative Information about Level 3 Fair Value Measurements

Quantitative Information about Recurring Level 3 Fair Value Measurements

(in thousands)

Fair Value as of March 31, 2019

Valuation Method

Unobservable Input

Weighted Average

Fair Value as of March 31, 2020

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

7,404

Implied based on market prices

N/A

8,654

Implied based on market prices

N/A

(in thousands)

Fair Value as of December 31, 2018

Valuation Method

Unobservable Input

Weighted Average

Fair Value as of December 31, 2019

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

7,154

Implied based on market prices

N/A

8,404

Implied based on market prices

N/A

(in thousands)

Fair Value as of March 31, 2018

Valuation Method

Unobservable Input

Weighted Average

Fair Value as of March 31, 2019

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

7,388

Implied based on market prices

N/A

7,404

Implied based on market prices

N/A

Real property (b)

29,347

Third Party Appraisal

N/A

(a) ~~Due to early stages of business and timing of investments, implied value based on market price was deemed to approximate fair value. As the underlying enterprises have matured,~~The Company considers observable price changes and other additional market data is available ~~to consider in order~~ to estimate fair value, including additional capital raising, internal valuation models, progress towards key business milestones, and other relevant market data points.



	Quantitative Information about Non-recurring Level 3 Fair Value Measurements
(in thousands)	Fair Value as of December 31, 2019		Valuation Method	Unobservable Input	Weighted Average
Frac sand assets (a)	$	16,546	Third party appraisal	Various	N/A
Real property (b)	608		Market approach	Various	N/A
Equity method investment (c)	12,424		Discounted cash flow analysis	Various	N/A

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

(b) The Company recognized impairment charges on certain Trade assets and measured the fair value using Level 3 inputs on a nonrecurring basis. The fair value of the assets ~~was~~were determined using prior transactions ~~third-party appraisals~~in the local market and a ~~pending~~recent sale of ~~trade~~comparable Trade group assets held by the Company.

(c) 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.

There were no non-recurring fair value measurements as of March 31, 2020 and March 31, 2019.

Fair Value of Financial Instruments

The fair value of the Company’s long-term debt is estimated using quoted market prices or discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. As such, the Company has concluded that the fair value of long-term debt is considered Level 2 in the fair value hierarchy.


(in thousands)	March 31, 2019		December 31, 2018		March 31, 2018		March 31, 2020		December 31, 2019		March 31, 2019
Fair value of long-term debt, including current maturities	$	1,043,503	$	517,998	$	448,346	$	1,113,042	$	1,096,010	$	1,043,503
Fair value in excess of carrying value (a)	2,318		5,813		8,241		36,461		8,257		2,318

(a) Carrying value used for this purpose excludes unamortized debt issuance ~~costs and financing lease liabilities.~~costs.

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

~~12.~~

11. Related ~~Party Transactions~~

~~Equity Method Investments~~

The Company, directly or indirectly, holds investments in companies that are accounted for under the equity method. The Company’s equity in these entities is presented at cost plus its accumulated proportional share of income or loss, less any distributions it has received.

~~The following table presents the Company’s investment balance in each of its equity method investees by entity:~~

(in thousands) March 31, 2019 December 31, 2018 March 31, 2018
The Andersons Albion Ethanol LLC $ 50,641
$ 50,382
$ 46,145
The Andersons Clymers Ethanol LLC 24,823
24,242
20,339
The Andersons Marathon Ethanol LLC 15,650
14,841
12,615
Lansing Trade Group, LLC (a) —
101,715
94,483
Thompsons Limited (a) —
48,987
48,362
Providence Grain 19,258
—
—
Other 11,409
2,159
2,505
Total $ 121,781
$ 242,326
$ 224,449

(a) The Company previously owned approximately 32.5% of LTG. Effective January 1, 2019, the Company purchased the remaining equity of LTG. The transaction results in the consolidation of Thompsons Limited of Ontario, Canada and related entities, which LTG and the Company had equally owned.

~~The following table summarizes income (loss) earned from the Company’s equity method investments by entity:~~

Three months ended March 31,
(in thousands) % Ownership at March 31, 2019 2019 2018
The Andersons Albion Ethanol LLC 55% $ 259
$ 1,121
The Andersons Clymers Ethanol LLC 39% 581
509
The Andersons Marathon Ethanol LLC 33% 809
(44 )
Lansing Trade Group, LLC (a) 100% (a) —
2,584
Thompsons Limited (a) 100% (a) —
(669 )
Providence Grain 39% (125 ) —
Other 5% - 51% (5 ) 72
Total $ 1,519
$ 3,573

(a) The Company previously owned approximately 32.5% of LTG. Effective January 1, 2019, the company purchased the remaining equity of LTG. The transaction results in the consolidation of Thompsons Limited and related entities, which LTG and the Company had equally owned.

~~The Company received no distributions from unconsolidated affiliates for the three months ended March 31, 2019 and received $1.2 million for the three months ended March 31, 2018.~~

In the first quarter of 2019, the Company did not have significant equity investees. However, in the first quarter of 2018, The Andersons Albion Ethanol LLC, The Andersons Clymers Ethanol LLC, Lansing Trade Group, and Thompsons Limited qualified as significant equity investees of the Company under the income test. The following table presents unaudited summarized financial information for the investees excluding LTG and Thompsons in 2019 as they are now reflected in consolidated results:

(in thousands) Three months ended March 31,
2019 2018
Revenues $ 122,862
$ 1,459,331
Gross profit 4,021
56,096
Income (loss) from continuing operations 1,963
8,908
Net income (loss) 1,963
9,462
Net income (loss) attributable to Companies 1,963
9,462

~~Related Party Transactions~~Parties

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

On March 2, 2018, the Company invested in ELEMENT, LLC. The Company owns 51% of ELEMENT, LLC and ICM, Inc. owns the remaining 49% interest. ELEMENT, LLC is constructing a 70 million-gallon-per-year bio-refinery. As part of the Company’s investment into ELEMENT, LLC, the Company and ICM, Inc. entered into a number of agreements with the entity. Most notably, ICM, Inc. will operate the facility under a management contract and manage the initial construction of the facility, while the Company will provide corn origination, ethanol marketing, and risk management services. The results of operations for ELEMENT, LLC have been included in our consolidated results of operations beginning on March 2, 2018 and are a component of our Ethanol segment. The plant is expected to be operational in the third quarter of 2019.

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


	Three months ended March 31,				Three months ended March 31,
(in thousands)	2019		2018		2020		2019
Sales revenues	$	61,168	$	88,815	$	54,694	$	61,168
Service fee revenues (a)	4,112		5,117		—		4,112
Purchases of product and capital assets	169,229		181,524		15,577		169,229
Lease income (b)	1,014		1,582		147		1,014
Labor and benefits reimbursement (c)	3,857		3,567		—		3,857


(a)	Service fee revenues include management fees, corn origination fees, ethanol and distillers dried grains (DDG) marketing fees, and other commissions. These revenues are now eliminated in consolidation as a result of the TAMH merger.


(b)	Lease income includes certain railcars leased to related parties and the lease of the Company’s Albion, Michigan and Clymers, Indiana grain facilities from the prior period and are now eliminated in consolidation as ~~well as certain railcars to~~a result of the ~~various ethanol LLCs.~~TAMH merger.


(c)	~~The~~Prior to the TAMH merger the Company ~~provides~~provided all ~~operational~~operations labor to the unconsolidated ethanol ~~LLCs.~~ LLCs and charged them an amount equal to the Company's costs of the related services for the prior periods.

(in thousands) March 31, 2019 December 31, 2018 March 31, 2018
Accounts receivable (d) $ 20,134
$ 17,829
$ 27,438
Accounts payable (e) 24,644
28,432
33,184



(in thousands)	March 31, 2020		December 31, 2019		March 31, 2019
Accounts receivable (d)	$	6,586	$	10,603	$	20,134
Accounts payable (e)	6,364		12,303		24,644


(d)	Accounts receivable represents amounts due from related parties for ~~sales~~the sale of ~~corn, leasing revenue~~ethanol and ~~service fees.~~other various items.


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

For the three months ended March 31, 2019 and 2018, revenues recognized for the sale of ethanol and other co-products that the Company purchased from the unconsolidated ethanol LLCs were $144.0 million and $146.2 million, respectively.

From time to time, the Company enters into derivative contracts with certain of its related parties, including the unconsolidated ethanol LLCs, for the purchase and sale of grain and ethanol, for price risk mitigation purposes and on similar terms as the purchase and sale of derivative contracts it enters into with unrelated parties. The fair value of derivative contract assets with related parties as of March 31, 2019, December 31, 2018 and March 31, 2018 was $3.4 million, $1.9 million and $0.6 million, respectively. The fair value of derivative contract liabilities with related parties as of March 31, 2019, December 31, 2018 and March 31, 2018 was $2.2 million, $6.3 million and $2.9 million, respectively.

~~13.~~12. Segment Information

The Company’s operations include ~~four~~4 reportable business segments that are distinguished primarily on the basis of products and services offered. The Trade business includes ~~grain~~commodity merchandising and the operation of terminal grain elevator facilities and, historically, the investments in LTG and Thompsons Limited. In January 2019, the Company acquired the remaining 67.5% of LTG equity that it did not already own. The transaction also resulted in the consolidation of Thompsons Limited of Ontario, Canada and related entities, which LTG and the Company jointly owned. The Company is continuing to evaluate its segment reporting structure as a result of the acquisition. The presentation includes a majority of the acquired business within the legacy Grain Group which has been renamed, Trade Group. The acquired ethanol trading business of LTG is included within the Ethanol Group. This presentation is still preliminary as the reporting structure may further evolve this year. The Company also moved certain commission income and an elevator lease from the legacy Grain Group to the Ethanol Group to better align business segments. Prior year results have been recast to reflect this change.facilities. The Ethanol business produces ethanol through its five co-owned and fully consolidated ethanol production facilities as well as purchases and sells ethanol and ~~provides risk management, origination and management services to~~ ethanol production facilities. These facilities are organized as limited liability companies, two are consolidated and three are investments accounted for under the equity method. The Company performs a combination of these services under various contracts for these investments.co-products. The Plant Nutrient business manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers, along with turf care and corncob-based products. Rail operations include the leasing, marketing and fleet management of railcars and other assets,

railcar repair and metal fabrication. The Other category includes other corporate level costs not attributable to an operating segment.

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. Inter-segment sales are made at prices comparable to normal, unaffiliated customer sales. The Company does not have any customers who represent 10 percent or more of total ~~revenues.~~revenue.



	Three months ended March 31,
(in thousands)	2020		2019
Revenues from external customers
Trade	$	1,378,040	$	1,537,686
Ethanol	313,039		269,166
Plant Nutrient	124,913		128,525
Rail	37,113		41,415
Total	$	1,853,105	$	1,976,792


	Three months ended March 31,				Three months ended March 31,
(in thousands)	2019		2018		2020		2019
Revenues from external customers
Inter-segment sales
Trade	$	1,598,021	$	276,852	$	609	$	181
Ethanol	208,831		172,838
Plant Nutrient	128,525		135,617		887		20
Rail	41,415		50,432		1,605		1,275
Total	$	1,976,792	$	635,739	$	3,101	$	1,476

Three months ended March 31,
(in thousands) 2019 2018
Inter-segment sales
Trade $ 181
$ 531
Plant Nutrient 20
—
Rail 1,275
333
Total $ 1,476
$ 864


	Three months ended March 31,						Three months ended March 31,
(in thousands)	2019			2018			2020			2019
Income (loss) before income taxes
Income (loss) before income taxes, net of noncontrolling interest
Trade	$	(17,464	)	$	(1,244	)	$	(9,983	)	$	(17,903	)
Ethanol	2,572			3,053			(23,976		)	3,011
Plant Nutrient	(3,929		)	1,091			(1,192		)	(3,929		)
Rail	4,312			3,969			1,007			4,312
Other	(4,926		)	(8,879		)	(4,982		)	(4,926		)
Income (loss) before income taxes, net of noncontrolling interest							(39,126		)	(19,435		)
Noncontrolling interests	(155		)	(282		)	(13,449		)	(155		)
Total	$	(19,590	)	$	(2,292	)
Income (loss) before income taxes							$	(52,575	)	$	(19,590	)


(in thousands)	March 31, 2019		December 31, 2018		March 31, 2018		March 31, 2020		December 31, 2019		March 31, 2019
Identifiable assets
Trade	$	2,116,254	$	978,974	$	1,031,150	$	1,878,812	$	2,012,060	$	2,116,254
Ethanol	333,060		295,971		210,169		653,928		690,548		333,060
Plant Nutrient	455,529		403,780		455,148		434,512		383,781		455,529
Rail	642,596		590,407		530,994		658,271		693,931		642,596
Other	112,813		122,871		136,067		127,168		120,421		112,813
Total	$	3,660,252	$	2,392,003	$	2,363,528	$	3,752,691	$	3,900,741	$	3,660,252

~~14. Leases~~

The Company leases certain grain handling and storage facilities, ethanol storage terminals. warehouse space, railcars, locomotives, barges, office space, machinery and equipment, vehicles and information technology equipment under operating leases. Lease expense for these leases is recognized within the Consolidated Statements of Operations on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.

~~The following table summarizes the amounts recognized in our Condensed Consolidated Balance Sheet related to leases:~~

(in thousands) Condensed Consolidated Balance Sheet Classification March 31, 2019
Assets
Operating lease assets Right of use asset, net $ 85,766
Finance lease assets Property, plant and equipment, net 25,379
Finance lease assets Rail Group assets leased to others, net 3,796
Total leased assets $ 114,941

Liabilities
Current operating leases Accrued expenses and other current liabilities $ 28,017
Non-current operating leases Long-term lease liabilities 57,451
Total operating lease liabilities 85,468

Current finance leases Current maturities of long-term debt 6,007
Non-current finance leases Long-term debt 23,058
Total finance lease liabilities 29,065
Total lease liabilities $ 114,533

~~The components of lease cost recognized within our Condensed Consolidated Statement of Operations were as follows:~~

(in thousands) Condensed Consolidated Statement of Operations Classification March 31, 2019
Lease cost:
Operating lease cost Cost of sales and merchandising revenues $ 7,239
Operating lease cost Operating, administrative and general expenses 3,954
Finance lease cost

Amortization of right-of-use assets Operating, administrative and general expenses 510
Interest expense on lease liabilities Interest expense 123
Other lease cost (1) Operating, administrative and general expenses 199
Other lease cost (1) Interest expense 24
Total lease cost $ 12,049


~~(1)~~	~~Other lease cost includes short-term lease costs and variable lease costs~~

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options is generally at our sole discretion. In addition, certain lease agreements may be terminated prior to their original expiration date at our discretion. We evaluate each renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The table below summarizes the weighted average remaining lease terms as of March 31, 2019.



~~Weighted Average Remaining Lease Term~~
~~Operating leases~~	~~4.88 years~~
~~Finance leases~~	~~11.0 years~~

The discount rate implicit within our leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for each lease is determined based on its term and the currency in which lease payments are made, adjusted for the impacts of collateral. The table below summarizes the weighted average discount rate used to measure our lease liabilities as of March 31, 2019.



~~Weighted Average Discount Rate~~
~~Operating leases~~	~~4.22~~	%
~~Finance leases~~	~~3.18~~	%

~~Supplemental Cash Flow Information Related to Leases~~

(in thousands) March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 15,418
Operating cash flows from finance leases $ 123
Financing cash flows from finance leases $ 387
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 1,995
Finance leases $ 3,796

~~Maturity Analysis of Lease Liabilities~~

As of March 31, 2019
(in thousands) Operating Leases
Finance
Leases
Total
2019 (excluding the three months ended March 31, 2019) $ 31,076
$ 6,293
$ 37,369
2020 21,688
2,333
24,021
2021 16,289
2,334
18,623
2022 9,927
2,341
12,268
2023 5,793
2,342
8,135
Thereafter 8,688
18,331
27,019
Total lease payments $ 93,461
$ 33,974
$ 127,435
Less interest 7,993
4,909
12,902
Total $ 85,468
$ 29,065
$ 114,533

~~15.~~13. Commitments and Contingencies

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 Company recorded a $5.0 million reserve relating to an outstanding non-regulatory litigation claim, based upon preliminary settlement negotiations in the first quarter of 2019. The claim is in response to penalties and fines paid to regulatory entities by ~~LTG~~a previously unconsolidated subsidiary in 2018 for the settlement of matters which focused on certain trading activity.

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

~~Commitments~~

In the first quarter of 2018, the Company began construction of a new ethanol facility, which is expected to be completed in 2019. Portions of the project are covered by design and build contracts, with approximately $39.8 million of remaining obligation not yet incurred, of which $3.6 million has been prepaid, as of March 31, 2019.

~~16.~~14. Supplemental Cash Flow Information

Certain supplemental cash flow information, including noncash investing and financing activities for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 are as follows:


	Three months ended March 31,					Three months ended March 31,
(in thousands)	2019			2018		2020		2019
Supplemental disclosure of cash flow information
Interest paid	$	16,711		$	9,854	$	16,180	$	16,711
Noncash investing and financing activity
Dividends declared not yet paid						5,748		5,527
Capital projects incurred but not yet paid						8,459		15,974
Equity issued in conjunction with acquisition	123,146			—		—		123,146
Capital projects incurred but not yet paid	15,974			7,115
Removal of pre-existing equity method investment	(159,459		)	—		—		(159,459		)
Purchase price holdback/ other accrued liabilities	31,518			—		—		31,518
Dividends declared not yet paid	5,527			4,663
Debt resulting from accounting standard adoption	—			36,953
Railcar assets and liabilities resulting from accounting standard adoption	—			25,643

~~17.~~

15. Business Acquisition

~~Effective January~~On October 1, 2019, The Andersons entered into an agreement with Marathon to merge TAAE, TACE, TAME and the ~~Company completed its acquisition~~Company's wholly-owned subsidiary, The Andersons Denison Ethanol LLC into a new legal entity, The Andersons Marathon Holdings LLC. As a result of the ~~remaining 67.5%~~merger, The Andersons and Marathon now own 50.1% and 49.9% of the equity ~~of LTG. The transaction resulted~~ in ~~the consolidation of Thompsons Limited of Ontario, Canada and related entities as they were jointly owned by the Company and LTG in equal portions.~~

TAMH, respectively. Total consideration ~~paid~~transferred by the Company to complete the acquisition of ~~LTG~~TAMH was ~~$323.9~~$182.9 million. The ~~Company paid $169.2 million in cash, which includes preliminary working capital adjustments~~company transferred non-cash consideration of ~~$31.5~~$7.3 million and ~~issued 4.1 million unregistered shares valued at $123.1 million based upon the stock price~~its equity values of the ~~Company.~~previously mentioned LLCs.

The purchase price allocation is preliminary, pending, ~~completion~~finalization of ~~the full valuation report and a final working capital adjustment to be agreed upon between the Company and the sellers.~~deferred income taxes adjustments. A summarized preliminary purchase price allocation is as follows:

Cash consideration paid $ 169,218
Equity consideration 123,146
Purchase price holdback/ other accrued liabilities 31,518
Total purchase price consideration $ 323,882



(in thousands)
Non-cash consideration	$	7,318
Investments contributed at fair value	124,662
Investment contributed at cost	50,875
Total purchase price consideration	$	182,855

The preliminary purchase price allocation at ~~January~~October 1, 2019, is as follows:

Cash and cash equivalents $ 21,923
Accounts receivable 320,467
Inventories 456,963
Commodity derivative assets - current 82,595
Other current assets 27,473
Commodity derivative assets - noncurrent 13,576
Goodwill 113,617
Other intangible assets 116,200
Right of use asset 42,972
Equity method investments 28,728
Other assets, net 2,211
Property, plant and equipment, net 173,388
1,400,113

Short-term debt 218,901
Trade and other payables 303,321
Commodity derivative liabilities - current 29,024
Customer prepayments and deferred revenue 99,530
Accrued expense and other current liabilities 63,263
Other long-term liabilities, including commodity derivative liabilities - noncurrent 3,174
Long-term lease liabilities 25,810
Long-term debt, including current maturities 161,688
Deferred income taxes 15,577
920,288
Fair value of acquired assets and assumed liabilities $ 479,825

Removal of preexisting ownership interest, including associated cumulative translation adjustment (159,459 )
Pre-tax loss on derecognition of preexisting ownership interest 3,516
Total purchase price consideration $ 323,882



(in thousands)
Cash and cash equivalents	$	47,042
Accounts receivable	12,175
Inventories	31,765
Other current assets	2,638
Goodwill	2,726
Right of use asset	5,200
Other assets, net	861
Property, plant and equipment, net	321,380
	423,787

Trade and other payables	13,461
Accrued expense and other current liabilities	3,011
Other long-term liabilities	209
Long-term lease liabilities	2,230
Long-term debt, including current maturities	47,886
	66,797
Marathon Noncontrolling Interest	174,135
Net Assets Acquired	$	182,855

Removal of preexisting ownership interest	$	(88,426	)
Pretax gain on derecognition of preexisting ownership interest	$	36,286

Asset and liability account balances in the opening balance sheet above include the previously consolidated TADE investment balances at carryover basis.

The $2.7 million of goodwill recognized ~~as a result~~is primarily attributable to expected synergies and the assembled workforce of ~~the LTG acquisition is $113.6 million and is allocated to the Trade Group segment. A portion~~TAMH. None of the goodwill is expected to be deductible for income tax purposes.

The ~~goodwill recognized is primarily attributable to the addition of an assembled workforce and complementary assets with greater scale that significantly expands the Company's reach~~fair value in the ~~agricultural marketplace.~~

~~Details~~opening balance sheet of the ~~intangible assets acquired are as follows:~~49.9% noncontrolling interest in TAMH was estimated to be $174.1 million. The fair value was estimated based on 49.9% of the total equity value of TAMH based on the transaction price for the 50.1% stake in TAMH, considering the consideration transferred noted above.

Estimated useful life
Customer relationships $ 95,200
10 years
Noncompete agreements 21,000
3 years
$ 116,200
8 years *

*weighted average number of years

Pro Forma Financial Information (Unaudited)

The summary pro forma financial information for the periods presented below gives effect to the ~~LTG~~TAMH acquisition as if it had occurred at January 1, ~~2018.~~2019.


	Three Months Ended March 31						Three months ended March 31,
	2019			2018
(in thousands)							2020			2019
Net sales	$	1,974,092		$	1,928,312		$	1,853,105		$	2,031,510
Net loss	(10,753		)	(10,396		)
Net income							(51,111		)	(15,228		)

Pro forma net ~~loss~~income was also adjusted to account for the tax effects of the pro forma adjustments noted above using a statutory tax rate of 25%. The ~~amount~~ pro forma amounts for net income above have been adjusted to reflect additional depreciation and amortization that would have been charged assuming the fair value adjustments to Property, plant and equipment had been applied on January 1, 2019 related to the TAMH merger.

Pro forma financial information is not necessarily indicative of ~~LTG’s and Thompsons’ revenue and earnings included in~~ the ~~Company’s consolidated statement~~Company's actual results of operations ~~for~~if the ~~quarter ended March 31, 2019~~acquisition had been completed at the date indicated, nor is it necessarily an indication of future operating results. Amounts do not include any operating efficiencies or cost savings that the Company believes are ~~not practicable to determine given the immediate integration of LTG and Thompsons into the Company’s operations effective January 1, 2019.~~

achievable.

~~18.~~

16. Goodwill

During the quarter the Company completed a reorganization of its organization and internal structure whereby the Company reorganized its operations between the Trade and Ethanol segments to enhance operating decisions and assessing performance. On January 1, 2020, the Company moved its Distillers Dried Grains ("DDG") business from the Trade to Ethanol segment. The reorganization resulted in the reassignment of goodwill to the affected reporting units using a relative fair value approach. As a result of the reassignment and allocation, the Company performed an interim review of the carrying value of goodwill at the Trade and Ethanol segments for possible impairment on both a pre and post-reorganization basis. No impairment of goodwill was indicated at the pre-reorganization reporting units.

The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, ~~2019~~2020 are as follows:

(in thousands) Trade Plant Nutrient Rail Total
Balance as of January 1, 2019 $ 1,171
$ 686
$ 4,167
$ 6,024
Acquisitions 113,617
—
—
113,617
Balance as of March 31, 2019 $ 114,788
$ 686
$ 4,167
$ 119,641



(in thousands)	Trade			Ethanol		Plant Nutrient		Rail		Total
Balance as of January 1, 2020	$	127,781		$	2,726	$	686	$	4,167	$	135,360
Reorganization (a)	(5,714		)	5,714		—		—		—
Balance as of March 31, 2020	$	122,067		$	8,440	$	686	$	4,167	$	135,360

~~Acquisitions represent~~(a) Reorganization related to move of the ~~LTG acquisition's preliminary goodwill allocation.~~DDG business line from the Trade to Ethanol segment.

Due to the severe decline in ethanol prices, largely impacted by COVID-19 during the period, management determined that a triggering event occurred within the Ethanol segment. Accordingly, an interim impairment test was performed over the Ethanol group's goodwill as well as its other intangible and long-lived assets. Based on the results of the impairment test, the Ethanol segment did not record an impairment charge.

~~19. Exit Costs~~

When performing our test for impairment, we measured each reporting unit's fair value using a combination of income and ~~Assets Held for Sale~~market approaches.

The ~~Company classified $0.4 million~~income approach calculates the fair value of ~~assets~~the reporting unit based on a discounted cash flow analysis, incorporating the weighted average cost of capital of a hypothetical third-party buyer. Significant estimates in the income approach include the following: discount rate, expected financial outlook and profitability of the reporting unit's business (all Level 3 inputs in the fair value hierarchy). Discount rates use the weighted average cost of capital for companies within our peer group, adjusted for specific company risk premium factors.

The market approach uses the "Guideline Company" method, which calculates the fair value of the reporting unit based on a comparison of the reporting unit to comparable publicly traded companies. Significant estimates in the market approach model include identifying similar companies with comparable business factors such as ~~held for sale~~size, growth, profitability, risk and return on investment, assessing comparable multiples, as well as consideration of control premiums. The blended approach assigns an equal weighting to each approach. The blended fair value of both approaches is then compared to the ~~Condensed Consolidated Balance Sheet at March 31, 2019~~carrying value, and ~~at December 31, 2018.~~to the extent that fair value exceeds the carrying value, no impairment exists. However, to the extent the carrying value exceeds the fair value, an impairment is recorded.

The Company classified $57.8 million of assets as Assets held for sale on the Condensed Consolidated Balance Sheet at March 31, 2018. This includes $19.4 million of Property, plant and equipment, net, $13.8 million of Inventories, and $18.8 million of Commodity derivative assets related to certain western Tennessee locationsresults of the ~~Trade Group. The Company classified $4.2 million~~goodwill impairment test within the Ethanol group supported the calculated fair value exceeding the carrying values by greater than 20%. However, as the fair value is highly sensitive to changes in assumptions, including interest rates and ~~$1.6 million of additional Property, plant~~outlook for future volume and ~~equipment, net as Assets held for sale related to the remaining Retail store assets and administrative offices at an outlying location~~margins, general trends in the ~~Plant Nutrient Group, respectively.~~business and/or macro-economic factors could cause the estimated fair value of the reporting unit to fall below its carrying value.

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. The reader is urged to carefully consider these risks and others, including those risk factors listed under Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (“~~2018~~2019 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 we believe 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 ~~2018~~2019 Form 10-K, have not materially changed through the first quarter of 2019, other than as a result of adopting the new lease accounting standard. See additional information regarding these policies in the Notes to the Condensed Consolidated Financial statements herein in Notes 1 and 14.2020.

Executive Overview

Our operations are organized, managed and classified into four reportable business segments: Trade, Ethanol, Plant Nutrient, and Rail. Each of these segments is generally based on the nature of products and services offered. In January, the Company completed the acquisition of 67.5% of LTG equity that it did not already own. The transaction also resulted in the consolidation of Thompsons Limited of Ontario, Canada and related entities, which LTG and the Company jointly owned. The Company is continuing to evaluate its segment reporting structure as a result of the acquisition. The presentation here includes a majority of the acquired business within the legacy Grain Group which has been renamed, Trade Group. The acquired ethanol trading business is included within the Ethanol Group. This presentation is preliminary as the reporting structure may evolve during the remainder of this year. The LTG acquisition, the Company also moved certain commission income and an elevator lease from the legacy Grain Group to the Ethanol Group to better align business segments. Prior year results have been recast to reflect this change.

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

The Company has ethanol production, merchandising and goodwill assets within the Ethanol segment. Due to an adverse change within the industry, the Company determined that a triggering event had occurred during the quarter for the asset group to be assessed for impairment. The asset group was determined to not be impaired in the first quarter, however, continuing adverse market conditions or alternative management decisions surrounding the future of these operations may result in future impairment considerations.

Further, the Company has considered the potential impact that the book value of the Company’s total shareholders’ equity exceeded the Company’s market capitalization for impairment indicators. Management ultimately concluded that, while the Company's shareholders equity exceeded the market capitalization for the period, an impairment triggering event had not occurred. The Company continues to believe that the share price is not an accurate reflection of its current value. While the adverse conditions are currently present and pervasive in the agriculture space during this time, the long-term outlook remains positive and we believe that the market’s impact on the Company’s equity value does not actually reflect the impact of these external factors on the Company. Further, due to internal reorganizations within the Plant Nutrient, Ethanol and Trade segments, certain portions of goodwill have been subject to a quantitative goodwill assessment during the period which resulted in no impairment charges. As a result of these tests, the Company concluded that no impairment existed as of March 31, 2020.

Recent Developments

For the first quarter of 2020, the global emergence of the novel strain of COVID-19 had a significant impact to the global economy, including several industries in which The Andersons operates. The government-induced stay-at-home orders reduced demand for gasoline, ethanol and corn, primarily impacting the Ethanol and Trade Groups. As previously announced the Company has idled its ethanol plants for extended maintenance shutdowns in an effort to maintain the Company's ethanol plants, protect employees and conserve cash. The future impacts of the COVID-19 pandemic on the Company’s business are highly uncertain at this time.

The Company is a critical infrastructure industry as that term has been defined by The United States Department of Homeland Security, Cybersecurity and Infrastructure Agency, in its March 19, 2020 Memorandum. As COVID-19 continues to spread, the Company is currently conducting business as usual to the greatest extent possible in the current circumstances. The Company is taking a variety of measures to ensure the availability of its services throughout our network, promote the safety and security of our employees, and support the communities in which we operate. Certain modifications the Company has made in response to the COVID-19 pandemic include: implementing a period of working at home for all non-essential support staff; restricting employee business travel; strengthening clean workplace practices; reinforcing socially responsible sick leave recommendations; limiting visitor and third-party access to Company facilities; launching internal COVID-19 resources for employees; creating a pandemic response team comprised of employees and members of senior management; encouraging telephonic and video conference-based meetings along with other hygiene and social distancing practices recommended by health authorities including Health Canada, the U.S. Centers for Disease Control and Prevention, and the World Health Organization; and supplementing employment insurance payments and maintaining health benefit coverage of employees through the pandemic. The Company is responding to this crisis through measures designed to protect our workforce and preventing disruptions to the Company's operations within the North American agricultural supply chain. The Andersons service is deemed essential as part of the agricultural industry.

As previously announced, the Company’s annual meeting of shareholders, held on May 8, 2020, will be conducted via a virtual-only format by live webcast online for the first time. We have observed many other companies, taking precautionary and preemptive actions to address the COVID-19 pandemic, and companies may take further actions that alter their normal business operations. We will continue to actively monitor the situation and may take further actions that could materially alter our business operations as may be required or recommended by federal, provincial, state or local authorities, or that we determine are in the best interests of our employees, customers, shareholders, partners, suppliers, and other stakeholders.

Additional information concerning the impact COVID-19 may have to our future business and results of operations is provided in Part II, Item 1A. Risk Factors.

Trade Group

The Trade Group’s results in the first quarter ~~reflects difficult market conditions~~reflect lower income as the Group recorded a significant loss on its corn position during the quarter as basis depreciated due to the sharp reduction in ethanol demand along with significant addition to credit reserves for customers in the ethanol market. The food and ~~significant transaction-related costs~~specialty ingredients businesses enjoyed a strong quarter, more than doubling last year's first quarter results partially offsetting the loss from corn basis depreciation and ~~purchase accounting impacts. The group was challenged by flat commodity markets and damage from heavy rains in Nebraska, but were able to take advantage of weather-related supply disruption.~~credit reserves.

Agricultural inventories on hand at March 31, ~~2019~~2020 were ~~136.8~~128.8 million bushels, of which ~~1.9~~3.9 million bushels were stored for others. These amounts compare to ~~108.4~~136.8 million bushels on hand at March 31, ~~2018,~~2019, of which ~~0.7~~1.9 million bushels were stored for others. Total Trade storage capacity, including temporary pile storage, was approximately 205 million bushels at March 31, 2020 compared to 218 million bushels at March 31, ~~2019 compared to 153 million bushels at March 31, 2018. This increase in capacity is a result of the LTG acquisition.~~2019.

The ~~Trade Group will continue to focus~~group expects continued pressure on ~~integration~~the profitability of its Eastern assets until the 2020 corn crop is harvested. However, the group believes an expected large corn crop in 2020 should help create increased space income beginning later this year and ~~capturing synergies as a result of the transaction.~~into 2021.

Ethanol Group

The Ethanol Group's first quarter results ~~reflect an environment with lower~~were significantly impacted by the COVID-19 pandemic as the lack of demand created a surplus of supply of both oil and ethanol driving margins ~~which lead to a slight decrease in operating results year over year. Despite tough industry-wide market conditions,~~negative during the quarter. The Ethanol Group ~~was profitable due~~expects these headwinds to ~~continued increase in plant efficiencies and improving yields. The addition~~continue as long as the lack of ~~the LTG trading team has also added value on ethanol and~~

~~DDGs. The construction of the Ethanol Group's new bio-refinery facility continues and the project is on target to be operational early in the third quarter of 2019.~~

demand from COVID-19 continues.

Ethanol and related co-products volumes for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 were as follows:


			Three months ended March 31,
(in thousands)	Three months ended March 31,		2020	2019
	2019	2018
Ethanol (gallons shipped)	131,028	103,075	147,345	131,028
E-85 (gallons shipped)	8,932	14,901	9,093	8,932
Corn Oil (pounds shipped)	4,932	4,807	29,294	4,932
DDG (tons shipped) *	36	39	536	36

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

The above table shows only shipped volumes that flow through the ~~Company's sales revenues.~~Consolidated Financial Statements of the Company. As the Company merged its former unconsolidated LLCs into the consolidated TAMH entity in the fourth quarter of 2019, these consolidated volumes are now included in the 2020 amounts above. Total ethanol, DDG, and corn oil ~~and DDG~~ production by the unconsolidated LLCs for the first quarter of 2019 is ~~higher.~~actually higher than disclosed above. However, the portion of ~~that~~this volume that iswas sold from the unconsolidated LLCs directly to ~~its~~their customers for the first quarter of 2019 is excluded here. ~~The increase in Ethanol gallons shipped is a result of the LTG acquisition.~~

Plant Nutrient Group

The Plant Nutrient Group's first quarter results ~~reflect delayed primary~~were an improvement from the prior period, primarily as a result of the Engineered Granules business, which was driven by lower of cost of sales for its cob-based products. The Ag Supply Chain and ~~specialty nutrient sales~~Specialty Liquids businesses were comparable to the prior year. While volumes were up, due to ~~weather and~~product mix, overall margin per ton was lower ~~lawn and cob results. The outlook~~overall for the ~~Group remains challenged.~~full quarter, but improved planting began in the second half of March.

Storage capacity at our wholesale nutrient and farm center facilities, including leased storage, was approximately ~~487~~486 thousand tons for dry nutrients and approximately 515 thousand tons for liquid nutrients at March 31, ~~2019, compared to approximately 484 thousand tons for dry nutrients~~2020 and ~~approximately 513 thousand tons for liquid nutrients at~~ March 31, ~~2018.~~2019, respectively.

As of January 1, 2020, the group reorganized into three divisions: Ag Supply Chain, which includes wholesale distribution centers and retail farm centers; Specialty Liquids, which includes manufactured liquid products intended for agricultural and industrial uses; and Engineered Granules, which includes granular products for turf and agricultural uses, contract manufacturing and cob products. Prior period amounts below were recast to reflect this change.

Tons of product sold for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 were as follows:

(in thousands) Three months ended March 31,
2019 2018
Primary nutrients 178
202
Specialty nutrients 165
186
Other 16
16
Total tons 359
404



	Three months ended March 31,
(in thousands)	2020	2019
Ag Supply Chain	211	170
Specialty Liquids	73	59
Engineered Granules	121	130
Total tons	405	359

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

The group's near-term outlook is positive, as ~~well as~~weather has been favorable for planting and a large corn crop is anticipated. However, a significant decrease in corn prices may cause some planting to shift from corn to beans and may lessen growers' and other customers' ability to buy the ~~lawn business. Other tons include those from the cob business.~~group's products.

Rail Group

The Rail Group results ~~reflect strong lease income~~declined mainly due to ~~a growing fleet~~fewer car sales than the prior year. Leasing income slightly decreased from the prior year as the group faced headwinds in the sand and ~~higher average lease rates~~ethanol markets as well as ~~improved rail repair income. These increases were largely offset by a decrease in income from car sales.~~lower lease renewal rates. Average utilization rates ~~increased~~decreased from ~~87.9 percent in the first quarter of 2018 to~~ 95.7 percent in the first quarter of ~~2019. A portion of this increase is attributable~~2019 to ~~the railcar scrap program which occurred~~89.0 percent in the ~~second~~first quarter of ~~2018. Additionally,~~2020 as the ~~Company focused~~group had fewer cars on ~~putting idle cars in service~~lease from the sand and ~~growing the fleet with strategic purchases.~~ethanol market headwinds. Rail Group assets under management (owned, leased or managed for financial institutions in non-recourse arrangements) at March 31, ~~2019~~2020 were ~~23,550~~24,416 compared to ~~23,044~~23,550 at March 31, ~~2018.~~2019.

The ~~leasing business continues to perform well with more cars~~group expects continued pressure on ~~lease~~utilization and ~~higher average~~ lease rates, as the COVID pandemic has driven railcar loadings 20 percent lower year over ~~year. Lease rates and utilization rates have~~year for several weeks running. This condition will also likely ~~hit their peak but should remain steady.~~decrease demand for contract railcar repairs.

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, including a portion of our ERP project, and other elimination and consolidation adjustments.

Operating Results

On May 6, 2019, we furnished a Current Report on Form 8-K to the SEC that included a press release issued that same day announcing the first quarter financial results for the period ended March 31, 2019, which was furnished as Exhibit 99.1 thereto (the Earnings Release). The Earnings Release reported: (a) Sales and merchandising revenues of $2,079.4 million and (b) Cost of sales and merchandising revenues of $1,969.7 million, for the three months ended March 31, 2019. The Consolidated Statements of Operations and accompanying notes in this Form 10-Q reports (a) Sales and merchandising revenues of $1,976.8 million and (b) Cost of sales and merchandising revenues of $1,867.1 million, for the three months ended March 31, 2019. Subsequent to the Earnings Release, we recorded a correction related to intercompany elimination of sales and merchandising revenue and cost of sales and merchandising revenue of $102.6 million, which did not impact gross profit.

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 1312, Segment Information.

Comparison of the three months ended March 31, ~~2019~~2020 with the three months ended March 31, ~~2018:~~2019 including a reconciliation of GAAP to non-GAAP measures:


	Three months ended March 31, 2019																	Three months ended March 31, 2020
(in thousands)	Trade			Ethanol			Plant Nutrient			Rail		Other			Total			Trade			Ethanol			Plant Nutrient			Rail		Other			Total
Sales and merchandising revenues	$	1,598,021		$	208,831		$	128,525		$	41,415	$	—		$	1,976,792		$	1,378,040		$	313,039		$	124,913		$	37,113	$	—		$	1,853,105
Cost of sales and merchandising revenues	1,529,032			205,023			107,591			25,482		—			1,867,128			1,315,574			342,438			104,549			27,414		—			1,789,975
Gross profit	68,989			3,808			20,934			15,933		—			109,664			62,466			(29,399		)	20,364			9,699		—			63,130
Operating, administrative and general expenses	72,416			3,949			23,169			8,151		5,664			113,349			68,155			6,115			19,741			5,259		5,790			105,060
Interest expense (income)	10,916			(824		)	2,261			3,679		(122		)	15,910
Interest expense (income), net																		7,188			2,357			1,785			4,483		(226		)	15,587
Equity in earnings (losses) of affiliates, net	(131		)	1,650			—			—		—			1,519			129			—			—			—		—			129
Other income (expense), net	(2,990		)	84			567			209		616			(1,514		)	2,765			446			(30		)	1,050		582			4,813
Income (loss) before income taxes	(17,464		)	2,417			(3,929		)	4,312		(4,926		)	(19,590		)	(9,983		)	(37,425		)	(1,192		)	1,007		(4,982		)	(52,575		)
Income (loss) attributable to the noncontrolling interests	—			(155		)	—			—		—			(155		)
Income (loss) attributable to The Andersons, Inc.	$	(17,464	)	$	2,572		$	(3,929	)	$	4,312	$	(4,926	)	$	(19,435	)
Income (loss) before income taxes attributable to the noncontrolling interests																		—			(13,449		)	—			—		—			(13,449		)
Non-GAAP Income (loss) before income taxes, net of noncontrolling interests attributable to The Andersons, Inc.																		$	(9,983	)	$	(23,976	)	$	(1,192	)	$	1,007	$	(4,982	)	$	(39,126	)


	Three months ended March 31, 2018																Three months ended March 31, 2019
(in thousands)	Trade			Ethanol			Plant Nutrient		Rail		Other			Total			Trade			Ethanol			Plant Nutrient			Rail		Other			Total
Sales and merchandising revenues	$	276,027		$	173,663		$	135,617	$	50,432	$	—		$	635,739		$	1,537,686		$	269,166		$	128,525		$	41,415	$	—		$	1,976,792
Cost of sales and merchandising revenues	250,802			169,972			113,380		37,880		—			572,034			1,470,289			263,766			107,591			25,482		—			1,867,128
Gross profit	25,225			3,691			22,237		12,552		—			63,705			67,397			5,400			20,934			15,933		—			109,664
Operating, administrative and general expenses	25,821			3,162			20,357		6,231		8,686			64,257			71,375			4,990			23,169			8,151		5,664			113,349
Interest expense (income)	2,960			(42		)	1,441		2,368		272			6,999
Interest expense (income), net																	10,804			(712		)	2,261			3,679		(122		)	15,910
Equity in earnings (losses) of affiliates, net	1,987			1,586			—		—		—			3,573			(131		)	1,650			—			—		—			1,519
Other income (expense), net	325			614			652		16		79			1,686			(2,990		)	84			567			209		616			(1,514		)
Income (loss) before income taxes	(1,244		)	2,771			1,091		3,969		(8,879		)	(2,292		)	(17,903		)	2,856			(3,929		)	4,312		(4,926		)	(19,590		)
Income (loss) attributable to the noncontrolling interests	—			(282		)	—		—		—			(282		)
Income (loss) attributable to The Andersons, Inc.	$	(1,244	)	$	3,053		$	1,091	$	3,969	$	(8,879	)	$	(2,010	)
Income (loss) before income taxes attributable to the noncontrolling interests																	—			(155		)	—			—		—			(155		)
Non-GAAP Income (loss) before income taxes, net of noncontrolling interests attributable to The Andersons, Inc.																	$	(17,903	)	$	3,011		$	(3,929	)	$	4,312	$	(4,926	)	$	(19,435	)

Trade Group

Operating results for the Trade Group ~~declined~~increased by ~~$16.2~~$7.9 million compared to the results of the same period last ~~year.~~year, however prior year results included $11.6 million of transaction-related expenses. Sales and merchandising revenues ~~increased $1,322.0~~decreased by $159.6 million and cost of sales and merchandising revenues ~~increased $1,278.2~~decreased $154.7 million for ~~favorable~~an unfavorable net gross profit impact of ~~$43.8~~$4.9 million. ~~The gross profit increase~~This decrease was ~~a direct result~~primarily driven by the depreciation of ~~acquiring LTG~~corn basis and ~~Thompsons.~~the decreased oil demand creating headwinds in the Company's frac sand operations.

Operating, administrative and general expenses ~~increased $46.6~~decreased by $3.2 million. The ~~acquisition drove this increase with an additional $41.0 million of operational~~decrease from the prior year is primarily related to transaction expenses ~~including~~that did not recur in 2020. This decrease was partially offset by approximately $3.4 million of ~~stock-based compensation expense, and $4.4 million of incremental depreciation and amortization, and $0.8 million of other transaction-related costs.~~additional bad debt reserves for customers that were adversely impacted by the COVID-19 pandemic.

Interest expense ~~increased $8.0~~decreased $3.6 million ~~primarily~~ due to the ~~acquisition~~Company paying down debt and ~~rising interest rates. The Company~~lower group borrowings on the Company's short-term line of credit compared to the prior year. Prior year results also ~~wrote off~~include a $0.6 million inwrite-off of deferred financing fees as part of its new credit facility.

~~Equity in earnings of affiliates declined by $2.1 million because LTG and Thompsons are now consolidated entities.~~

Other income ~~net includes a~~increased by $5.8 million as there were approximately $2.0 million worth of insurance settlements in the current year along with an initial remeasurement loss of $3.5 million ~~loss~~ on the Company's pre-existing ~~investments~~equity method investment in LTG ~~and Thompson's which was driven by foreign currency translation losses related to Thompsons.~~that didn't recur in the current year.

Ethanol Group

Operating results for the Ethanol Group declined ~~$0.5~~$27.0 million from the same period last year. Sales and merchandising revenues increased ~~$35.2~~$43.9 million and cost of sales and merchandising revenues increased ~~$35.1~~$78.7 million compared to ~~2018 results. The incremental sales volumes and corresponding cost of sales is~~2019 results, primarily attributable to the ~~LTG acquisition. This resulted in~~TAMH merger. Gross profit decreased by $34.8 million compared to 2019 results from the fallout of the COVID-19 pandemic leading to an over saturation of the supply of oil and a ~~gross profit increase of $0.1 million.~~negative margin environment for the ethanol industry.

Operating, administrative and general expenses increased ~~$0.8~~$1.1 million primarily due to an increase in labor and benefits, most of which was ~~driven by~~from the ~~addition of the acquired ethanol trading team to the group.~~TAMH merger.

Interest expense ~~decreased $0.8~~increased $3.1 million due to the ~~capitalization~~inclusion of interest expense related to the consolidation of TAMH and due to ELEMENT's ability to capitalize interest related to the construction of ~~ELEMENT.~~the ELEMENT facility in the prior year.

Equity in earnings of affiliates decreased $1.7 million as a result of the former unconsolidated ethanol LLCs being merged into the consolidated entity of TAMH.

Plant Nutrient Group

Operating results for the Plant Nutrient Group ~~declined $5.0~~increased by $2.7 million compared to the same period in the prior year. Sales and merchandising revenues decreased ~~$7.1 million. This was driven by a 13% decrease in primary tons~~$3.6 million and ~~10% decrease in specialty tons. These decreases are due to unfavorable weather conditions as well as higher volumes in the lawn business that did not recur in the current year. Cost~~cost of sales and merchandising revenues decreased by ~~$5.8~~$3.0 million ~~due to the decrease~~resulting in ~~sales. While primary nutrient margins improved, lower volumes led to an overall decrease in~~decreased gross profit of ~~$1.3 million.~~$0.6. This was driven by weaker margins in Ag Supply Chain sales when compared to the favorable positions the Company had in the same period of the prior year.

Operating, administrative and general expenses ~~increased $2.8~~decreased $3.4 million ~~primarily~~ due ~~a $0.5 million increase in rent and storage and an increase in labor and benefits.~~to more efficient production compared to the prior year.

Interest expense ~~increased $0.8~~decreased $0.5 million from ~~rising~~lower interest rates ~~and higher working capital from a slow start~~compared to the ~~spring season.~~prior year.

Rail Group

Operating results ~~improved $0.3~~declined $3.3 million from the same period last year while ~~Sales~~sales and merchandising revenues decreased ~~$9.0~~$4.3 million. This decrease was mainly driven by a ~~$13.9~~$3.7 million decrease in ~~car sale~~leasing revenues as ~~the Company sold more~~a result of lower cars ~~in the first quarter of 2018. This decrease was partially offset by an increase of $3.1 million in leasing revenues due to higher~~on lease and ~~utilization~~lower average lease rates ~~and $1.8 million in repair and other revenues.~~from the prior year. Cost of sales and merchandising ~~revenues decreased $12.4~~increased $1.9 million compared to the prior year due to ~~lower car sales~~higher storage costs on more idle cars and ~~improved margins in services.~~higher maintenance and depreciation expenses from the larger fleet from the prior year. As a result, gross profit ~~increased $3.4~~decreased $6.2 million compared to ~~last~~the period year.

Operating, administrative and general expenses ~~increased $1.9~~decreased $2.9 million driven by ~~$0.9 million increase in~~more efficient labor ~~and benefits due to the growth in~~costs within the repair ~~business and $0.7 million of reserves on customer accounts.~~business.

Interest expense increased ~~$1.3~~$0.8 million due to ~~rising interest rates and~~ higher debt balances.

~~Other~~

~~Operating, administrative and general expenses decreased $3.0 million due to severance and other IT implementation costs reflected in 2018 which did not recur in 2019.~~

Income Taxes

For the three months ended March 31, 2020, the Company recorded an income tax benefit of $1.5 million at an effective rate of 2.8%. For the three months ended March 31, 2019, the Company recorded an income tax benefit of $5.4 million at an effective tax rate of 27.8%. ~~In 2018, the Company recorded an income tax benefit of $0.3 million at an effective tax rate of 13.5%.~~ The ~~net increase~~decrease in effective tax rate ~~resulted from~~for the ~~current~~three months ended March 31, 2020 as compared to the same period ~~impact of state income taxes,~~last year primarily attributed to nondeductible ~~compensation, and~~losses related to our noncontrolling ~~interests. The prior period produced income tax benefit from~~interests within the ~~loss before income taxes that was~~Ethanol group. These losses were offset by ~~net~~NOL carryback tax ~~expense from discrete activity related to a statutory merger. This discrete activity did not recur in~~savings opportunities as provided by the ~~current period, resulting in less offset to the income tax benefit from the loss before income taxes.~~CARES act.

Liquidity and Capital Resources

Working Capital

At March 31, ~~2019~~2020, the Company had working capital of ~~$440.3~~$436.4 million. The following table presents changes in the components of current assets and current liabilities:

(in thousands) March 31, 2019 March 31, 2018 Variance
Current Assets:
Cash and cash equivalents $ 29,991
$ 31,497
$ (1,506 )
Accounts receivable, net 611,290
216,021
395,269
Inventories 1,026,465
731,629
294,836
Commodity derivative assets – current 158,277
43,810
114,467
Other current assets 60,222
57,147
3,075
Assets held for sale 364
57,775
(57,411 )
Total current assets 1,886,609
1,137,879
748,730
Current Liabilities:
Short-term debt 434,304
489,000
(54,696 )
Trade and other payables 590,258
263,519
326,739
Customer prepayments and deferred revenue 148,345
81,778
66,567
Commodity derivative liabilities – current 66,623
15,424
51,199
Accrued expenses and other current liabilities 151,648
60,095
91,553
Current maturities of long-term debt 55,160
14,134
41,026
Total current liabilities 1,446,338
923,950
522,388
Working Capital $ 440,271
$ 213,929
$ 226,342

March 31, 2019 current assets increased $748.7 million in comparison to those of March 31, 2018. This increase was primarily due to increases in accounts receivable, inventories, and commodity derivative assets. Accounts receivable increased due to the acquisition. The increase in inventory primarily relates to the acquisition. Additionally, Plant Nutrients inventory increased as a result of higher inventory levels as a result of a delayed planting season due to wet weather conditions. Current commodity derivative assets and liabilities, which reflects the customer net asset or liability based on the value of forward contracts as compared to market prices at the end of the period, show a net increase due to the acquisition. See also the discussion below on additional sources and uses of cash for an understanding of the decrease in cash from prior year.

~~Current liabilities increased $522.4 million compared to the prior year primarily due to the acquisition of LTG, and the debt related changes detailed in Note 4, Debt.~~



(in thousands)	March 31, 2020		March 31, 2019		Variance
Current Assets:
Cash, cash equivalents and restricted cash	$	19,693	$	29,991	$	(10,298	)
Accounts receivable, net	539,671		611,290		(71,619		)
Inventories	1,028,076		1,026,465		1,611
Commodity derivative assets – current	149,070		158,277		(9,207		)
Other current assets	85,372		60,586		24,786
Total current assets	$	1,821,882	$	1,886,609	$	(64,727	)
Current Liabilities:
Short-term debt	392,450		434,304		(41,854		)
Trade and other payables	553,416		590,258		(36,842		)
Customer prepayments and deferred revenue	121,148		148,345		(27,197		)
Commodity derivative liabilities – current	90,491		66,623		23,868
Current maturities of long-term debt	80,758		55,160		25,598
Accrued expenses and other current liabilities	147,225		151,648		(4,423		)
Total current liabilities	$	1,385,488	$	1,446,338	$	(60,850	)
Working Capital	$	436,394	$	440,271	$	(3,877	)

Sources and Uses of Cash



	Three Months Ended
(in thousands)	March 31, 2020			March 31, 2019
Net cash used in operating activities	$	(228,430	)	$	(122,045	)
Net cash used in investing activities	(30,416		)	(205,836		)
Net cash provided by financing activities	223,577			336,050

Operating Activities

Our operating activities used cash of ~~$122.0~~$228.4 million and ~~$378.7~~$122.0 million in the first three months of ~~2019~~2020 and ~~2018,~~2019, respectively. The ~~decrease~~increase in cash used was primarily due to ~~changes~~a result of net losses incurred as well as the seasonality in ~~working capital,~~the use of cash. Cash spend is typically high in the first quarter as ~~discussed above.~~the Company prepares for the spring planting season.

Investing Activities

Investing activities used cash of ~~$205.8~~$30.4 million through the first three months of ~~2019~~2020 compared to cash used of ~~$44.3~~$205.8 million in the prior year. ~~Cash used for~~The decrease from the prior year was a result of the acquisition of ~~business increased $147.3 million primarily due to the recent acquisition.~~LTG and decreased capital spending.

In ~~2019,~~2020, we expect to spend up to a total of ~~$160~~approximately $31.0 million for the purchase of railcars and related leases and capitalized modifications of railcars. ~~We also expect these purchases to be funded from sales and dispositions or non-recourse debt of approximately $135 million during the year.~~

~~In addition to the construction of the bio-refinery, total~~Total capital spending ~~for 2019~~ on property, plant and equipment in our base business excluding rail leasing activity, but inclusive of information technology spending is expected to be approximately ~~$54~~$87.0 million.

Financing Activities

Financing activities provided cash of ~~$336.1~~$223.6 million and ~~$419.6~~$336.1 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. This decrease from the prior year was largely due to a decrease in proceeds as new debt was issued in the prior year to finance the LTG acquisition. This decrease in long term debt proceeds was partially offset by an increase in ~~proceeds from debt as a result of additional debt assumed~~short-term borrowing used to finance ~~the acquisition and higher seasonal~~ working capital.

We are party to borrowing arrangements with a syndicate of banks that provide a total of ~~$1,625~~$1,684.0 million in borrowings. ~~This amount includes $70~~Of the total capacity, $491.0 million ~~of debt of ELEMENT LLC, $200.0 million of debt of The Andersons Railcar Leasing Company LLC, that is non-recourse to the Company, and $180 million of debt of Thompsons, that~~ is non-recourse to the Company. ~~Of that total, we~~As of March 31, 2020, the Company had ~~$1,029~~$1,006.4 million available for borrowing ~~at March 31, 2019. Consistent~~ with $145.4 million of that total being non-recourse to the ~~seasonal inventory requirements in our fertilizer and grain businesses, short-term borrowings were higher in the quarter.~~Company.

We paid ~~$5.5~~$5.7 million in dividends in the first three months of ~~2019~~2020 compared to ~~$4.7~~$5.5 million in the prior year. WeThe Company paid $0.175 per common share for the dividends paid in January of 2020 and $0.17 per common share for the dividends paid in January ~~2019 and $0.165 per common share for the dividends paid in January 2018.~~of 2019. On February ~~22, 2019~~21, 2020 we declared a cash dividend of ~~$0.17~~$0.175 per common share payable on April 22, ~~2019~~2020 to shareholders of record on April 1, ~~2019.~~2020.

Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of equity and limitations on additional debt. We are in compliance with all such covenants as of March 31, ~~2019.~~2020. In addition, certain of our long-term borrowings are collateralized by first mortgages on various facilities or are collateralized by railcar assets. Our non-recourse long-term debt is collateralized by ethanol plant assets and railcar assets.

Because we are 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. However, much of this risk is mitigated by hedging instruments that are in place. 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, we could receive a return of cash.

WeWhile the effects of the coronavirus pandemic are expected to have a negative impact on operating cash flows, we believe our sources of liquidity will be adequate to fund our operations, capital expenditures and ~~payments of dividends in the foreseeable future.~~

~~Contractual Obligations~~

~~Future payments due under contractual obligations at March 31, 2019 are as follows:~~

Payments Due by Period

(in thousands)
2019 (remaining nine months) 2020-2021 2022-2023 After 2023 Total
Long-term debt, recourse $ 49,498
$ 264,940
$ 323,420
$ 338,695
$ 976,553
Long-term debt, non-recourse 4,829
130,859
9,961
6,370
152,019
Interest obligations (a) 39,974
60,746
40,971
36,856
178,547
Operating leases (b) 30,678
34,749
12,294
8,688
86,409
Purchase commitments (c) 3,479,536
386,147
1,395
—
3,867,078
Other long-term liabilities (d) 3,317
6,711
6,804
24,695
41,527
Construction commitment (e) 39,747
—
—
—
39,747
Total contractual cash obligations $ 3,647,579
$ 884,152
$ 394,845
$ 415,304
$ 5,341,880

(a) Future interest obligations are calculated based on interest rates in effect as of March 31, 2019 for the Company's variable rate debt and do not include any assumptions on expected borrowings, if any, under the short-term line of credit.

~~(b) Approximately 39% of the operating lease commitments above relate to Rail Group assets that the Company leases from financial intermediaries.~~

(c) Includes the amounts related to purchase obligations in the Company's operating units, including $3,247,212 million for the purchase of commodities, including grain from producers and $182 million for the purchase of ethanol from the unconsolidated ethanol LLCs. There are also forward commodities sales contracts, including those for grain and ethanol, to consumers and traders and the net of these forward contracts are offset by exchange-traded futures and options contracts or over-the-counter contracts. See the narrative description of businesses for the Grain and Ethanol Groups in Item 1 of 2018 Annual Report on Form 10-K for further discussion.

~~(d) Other long-term liabilities include estimated obligations under~~service our retiree healthcare programs and principal and interest payments for the financing arrangement on our headquarters. Obligations under the retiree healthcare programs are not fixed commitments and will vary depending on various factors, including the level of participant utilization and inflation. Our estimates of postretirement payments through 2023 have considered recent payment trends and actuarial assumptions.

~~(e) In 2018, the Company entered into an agreement to construct a bio-refinery. The company expects to contribute $70 million in 2019 for the construction of this plant.~~indebtedness.

At March 31, ~~2019,~~2020, we had standby letters of credit outstanding of ~~$32.9~~$76.3 million.

~~Off-Balance Sheet Transactions~~

Our Rail Group utilizes leasing arrangements that provide off-balance sheet financing for its activities. We lease assets from financial intermediaries through sale-leaseback transactions, the majority of which involve operating leasebacks. Rail Group assets we own or lease from a financial intermediary are generally leased to a customer under an operating lease. We also arrange non-recourse lease transactions under which we sell assets to a financial intermediary, and assign the related operating lease to the financial intermediary on a non-recourse basis. In such arrangements, we generally provide ongoing maintenance and management services for the financial intermediary, and receive a fee for such services.

~~The following table describes our Rail Group asset positions at March 31, 2019:~~



~~Method of Control~~	~~Financial Statement~~	~~Units~~
~~Owned - railcars available for sale~~	~~On balance sheet – current~~	~~271~~
~~Owned - railcar assets leased to others~~	~~On balance sheet – non-current~~	~~20,812~~
~~Railcars leased from financial intermediaries~~	~~Off balance sheet~~	~~2,261~~
~~Railcars in non-recourse arrangements~~	~~Off balance sheet~~	~~163~~
~~Total Railcars~~		~~23,507~~
~~Locomotive assets leased to others~~	~~On balance sheet – non-current~~	24
~~Locomotives leased from financial intermediaries~~	~~Off balance sheet~~	4
~~Total Locomotives~~		28
~~Barge assets leased from financial intermediaries~~	~~Off balance sheet~~	15
~~Total Barges~~		15

~~In addition, we manage 1,207 railcars for third party customers or owners for which we receive a fee.~~

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, ~~2018.~~2019. There were no material changes in market risk, specifically commodity and interest rate risk during the ~~quarter~~three months ended March 31, ~~2019.~~2020.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~The Company maintains~~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 ~~that are designed~~as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of March 31, 2020 to ~~ensure~~provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the ~~Company's~~ Exchange Act ~~reports~~ is (i) recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission's~~SEC rules and forms and ~~that such information is~~(ii) accumulated and communicated to the ~~Company's~~Company’s management, including its ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer ("Certifying Officers"),~~principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation (excluding LTG and Thompsons), under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on the results of this evaluation, management concluded that, as of March 31, 2019, the Company's disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

~~Management concluded that~~There were no changes in the Company’s ~~system of~~ internal control over financial reporting (excluding LTG and Thompsons) was effective as of December 31, 2018. As required by Rule 13a-15(d) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of any change in the Company’s internal controls over financial reporting that have materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

~~The Company acquired LTG~~ during the first quarter of ~~2019. In~~2020, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the integration of LTG and Thompsons, the Company will implement enhancements to its internal control over financial reporting as necessary. Additionally, the Company is undertaking the phased implementation of an ERP software system. The Company believes it is maintaining and monitoring appropriate internal controls during the implementation period and further believes that its internal control environment will be enhanced as a result of this implementation. There have been no other changes in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarterExchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result of the COVID-19 pandemic, the majority of our workforce began working remotely in March 2020. These changes to the working environment did not have a material effect on our internal controls over financial ~~reporting.~~

reporting during the most recent quarter.

Part II. Other Information

Item 1. Legal Proceedings

~~We are currently~~

The Company is subject to ~~various~~legal proceedings and claims that have not been fully resolved and ~~suits arising~~that have arisen in the ordinary course of ~~business, which include environmental issues, employment claims, contractual disputes,~~business. Except as described in Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 13, “Commitments and ~~defensive counter~~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. ~~We accrue liabilities where~~

The outcome of litigation ~~losses are deemed probable~~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 ~~estimable. We believe it is unlikely~~operating results for that ~~the results of our current legal proceedings, even if unfavorable, will~~reporting period could be materially ~~different from what we currently have accrued. There can be no assurance, however,~~adversely affected. The Company settled certain matters during the first quarter of 2020 that ~~any claims or suits arising in the future, whether taken~~did not individually or in the aggregate ~~will not~~ have a material ~~adverse effect~~impact on ~~our~~the Company’s financial condition or ~~results of operations.~~operating results.

Item 1A. Risk Factors

~~Our operations are subject~~

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 ~~risks~~those described in Part I, Item 1A of the 2019 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 ~~uncertainties that could cause actual~~operating results to ~~differ~~vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. There have been no material changes to the Company’s risk factors since the 2019 Form 10-K with the exception of those ~~discussed~~disclosed below.

The COVID-19 pandemic could negatively affect the Company's business and operating results

The future impacts of the global emergence of the novel strain of Coronavirus and the disease it causes on the Company's business or operating and financial results are unpredictable and cannot be identified with certainty at this time. The widespread health crisis has adversely affected the global economy and resulted in ~~this Form 10-Q~~a widespread economic downturn which could adversely impact demand for our services. Such interruptions could include fluctuations to commodity prices, disruptions or restrictions on the ability to transport freight in the ordinary course, temporary closures of facilities and ~~could~~ports, or the facilities and ports of our customers, decreased demand for our products, and/or changes to export/import restrictions. The pandemic caused by COVID-19 may impact the seasonal trends that typically characterize our revenues and operating income. There is no assurance that the outbreak will not have a material adverse impact on our ~~financial results. These risks can~~business or results of operations. Further, our operations could be ~~impacted by factors~~negatively affected if a significant number of our employees are unable to perform their normal duties because of contracting COVID-19 or based on further direction from governments, public health authorities or regulatory agencies. The extent of the impact, if any, will depend on developments beyond our control, including actions taken by governments, financial institutions, monetary policy authorities, and public health authorities to contain and respond to public health concerns and general economic conditions as ~~well~~a result of the pandemic.

We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required or recommended by ~~errors~~federal, provincial, state or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers, shareholders and ~~omissions~~other stakeholders. We cannot be certain of potential effects any such alterations or modifications may have on our ~~part. The most significant factors known to us that could materially adversely affect our~~ business ~~financial condition~~ or operating and financial results ~~are described in our 2018 Form 10-K (Item 1A).~~for the fiscal year ending December 31, 2020.

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

Period
Total Number of Shares Purchased⁽¹⁾
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾

Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

January 2019 30,158
$ 30.03
—

February 2019 1,673
35.24
—

March 2019 —
—
—

Total 31,831
30.30
—



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 2020	64,420	$	25.28	—	—
February 2020	2,101	22.79		—	—
March 2020	1,913	18.85		—	—
Total	68,434	$	25.02	—	—

(1) During the three months ended March 31, ~~2019,~~2020, the company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

(2) No shares were purchased as part of publicly announced plans or programs.

Item 4. Mine Safety Disclosure

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

Under the Dodd-Frank Act, each operator of a coal or other mine is required to include certain mine safety results within its periodic reports filed with the SEC. As required by the reporting requirements included in §1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K, the required mine safety results regarding certain mining safety and health matters for each of our mine locations that are covered under the scope of the Dodd-Frank Act are included in Exhibit 9595.1 of Item 6. Exhibits of this Quarterly Report on Form 10-Q.

Item 6. Exhibits

~~(a) Exhibits~~




~~No.~~Exhibit Number		Description

~~10.1~~10.1*		~~Employment Agreement between The Andersons, Inc. and William E. Krueger~~Form of Restricted Share Award ~~(Incorporated by reference to Form 8-K filed January 14, 2019).~~

~~10.2~~		~~Credit Agreement, dated January 11, 2019, between The Andersons, Inc., as borrower, and several banks with U.S. Bank National Association acting as Lead Agent.~~ ~~(Incorporated by reference to Form 8-K filed January 2, 2019).~~

~~10.3~~10.2*		Form of Performance Share Unit Agreement - Total Shareholder Return ~~(filed herewith).~~

~~10.4~~		~~Form of Restricted Share Award~~ ~~(filed herewith).~~

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

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

~~32.1~~32.1**		Certifications Pursuant to 18 U.S.C. Section 1350 ~~(filed herewith).~~

9595.1*		Mine Safety Disclosure ~~(filed herewith).~~

~~101~~101**		~~Financial Statements from~~Inline XBRL Document Set for the ~~interim report~~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, ~~of The Andersons, Inc. for~~included in the period ended March 31, 2019, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Equity, (v) the Condensed Consolidated Statement of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.Exhibit 101 Inline XBRL Document Set.

* Filed herewith
** Furnished herewith

Items 3 and 5 are not applicable and have been omitted

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. (Registrant)

Date: May ~~10, 2019~~8, 2020		By /s/ Patrick E. Bowe
		Patrick E. Bowe
		Chief Executive Officer (Principal Executive Officer)

Date: May ~~10, 2019~~8, 2020		By /s/ Brian A. Valentine
		Brian A. Valentine
		~~Senior~~Executive Vice President and Chief Financial Officer (Principal Financial Officer)

~~Exhibit Index~~

~~The Andersons, Inc.~~




~~No.~~		~~Description~~

~~10.1~~		~~Employment Agreement between The Andersons, Inc. and William E. Krueger~~ ~~(Incorporated by reference to Form 8-K filed January 14, 2019).~~

~~10.2~~		~~Credit Agreement, dated January 11, 2019, between The Andersons, Inc., as borrower, and several banks with U.S. Bank National Association acting as Lead Agent.~~ ~~(Incorporated by reference to Form 8-K filed January 2, 2019).~~

~~10.3~~		~~Form of Performance Share Unit Agreement - Total Shareholder Return~~ ~~(filed herewith).~~

~~10.4~~		~~Form of Restricted Share Award~~ ~~(filed herewith).~~

~~31.1~~		~~Certification of the Chief Executive Officer under Rule 13(a)-14(a)/15d-14(a)~~ ~~(filed herewith).~~

~~31.2~~		~~Certification of the Chief Financial Officer under Rule 13(a)-14(a)/15d-14(a)~~ ~~(filed herewith).~~

~~32.1~~		~~Certifications Pursuant to 18 U.S.C. Section 1350~~ ~~(filed herewith).~~

95		~~Mine Safety Disclosure~~ ~~(filed herewith).~~

~~101~~		Financial Statements from the interim report on Form 10-Q of The Andersons, Inc. for the period ended March 31, 2019, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Equity, (v) the Condensed Consolidated Statement of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.

4540



	Pension Benefits
(in thousands)	Three months ended March 31,
(in thousands)	2019		2018
Interest cost	$	29	$	33
Recognized net actuarial loss	58		61
Benefit cost	$	87	$	94



	Postretirement Benefits
(in thousands)	Three months ended March 31,
(in thousands)	2019			2018
Service cost	$	73		$	87
Interest cost	206			187
Amortization of prior service cost	(228		)	(228		)
Benefit cost	$	51		$	46



		Three months ended March 31,
(in thousands)	% Ownership at March 31, 2019	2019			2018
The Andersons Albion Ethanol LLC	55%	$	259		$	1,121
The Andersons Clymers Ethanol LLC	39%	581			509
The Andersons Marathon Ethanol LLC	33%	809			(44		)
Lansing Trade Group, LLC (a)	100% (a)	—			2,584
Thompsons Limited (a)	100% (a)	—			(669		)
Providence Grain	39%	(125		)	—
Other	5% - 51%	(5		)	72
Total		$	1,519		$	3,573



(in thousands)	Condensed Consolidated Balance Sheet Classification	March 31, 2019
Assets
Operating lease assets	Right of use asset, net	$	85,766
Finance lease assets	Property, plant and equipment, net	25,379
Finance lease assets	Rail Group assets leased to others, net	3,796
Total leased assets		$	114,941

Liabilities
Current operating leases	Accrued expenses and other current liabilities	$	28,017
Non-current operating leases	Long-term lease liabilities	57,451
Total operating lease liabilities		85,468

Current finance leases	Current maturities of long-term debt	6,007
Non-current finance leases	Long-term debt	23,058
Total finance lease liabilities		29,065
Total lease liabilities		$	114,533



(in thousands)	Condensed Consolidated Statement of Operations Classification	March 31, 2019
Lease cost:
Operating lease cost	Cost of sales and merchandising revenues	$	7,239
Operating lease cost	Operating, administrative and general expenses	3,954
Finance lease cost
Amortization of right-of-use assets	Operating, administrative and general expenses	510
Interest expense on lease liabilities	Interest expense	123
Other lease cost (1)	Operating, administrative and general expenses	199
Other lease cost (1)	Interest expense	24
Total lease cost		$	12,049



(in thousands)	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,418
Operating cash flows from finance leases	$	123
Financing cash flows from finance leases	$	387
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,995
Finance leases	$	3,796



	As of March 31, 2019
(in thousands)	Operating Leases		Finance Leases		Total
2019 (excluding the three months ended March 31, 2019)	$	31,076	$	6,293	$	37,369
2020	21,688		2,333		24,021
2021	16,289		2,334		18,623
2022	9,927		2,341		12,268
2023	5,793		2,342		8,135
Thereafter	8,688		18,331		27,019
Total lease payments	$	93,461	$	33,974	$	127,435
Less interest	7,993		4,909		12,902
Total	$	85,468	$	29,065	$	114,533




Cash consideration paid	$	169,218
Equity consideration	123,146
Purchase price holdback/ other accrued liabilities	31,518
Total purchase price consideration	$	323,882




Cash and cash equivalents	$	21,923
Accounts receivable	320,467
Inventories	456,963
Commodity derivative assets - current	82,595
Other current assets	27,473
Commodity derivative assets - noncurrent	13,576
Goodwill	113,617
Other intangible assets	116,200
Right of use asset	42,972
Equity method investments	28,728
Other assets, net	2,211
Property, plant and equipment, net	173,388
	1,400,113

Short-term debt	218,901
Trade and other payables	303,321
Commodity derivative liabilities - current	29,024
Customer prepayments and deferred revenue	99,530
Accrued expense and other current liabilities	63,263
Other long-term liabilities, including commodity derivative liabilities - noncurrent	3,174
Long-term lease liabilities	25,810
Long-term debt, including current maturities	161,688
Deferred income taxes	15,577
	920,288
Fair value of acquired assets and assumed liabilities	$	479,825

Removal of preexisting ownership interest, including associated cumulative translation adjustment	(159,459		)
Pre-tax loss on derecognition of preexisting ownership interest	3,516
Total purchase price consideration	$	323,882



			Estimated useful life
Customer relationships	$	95,200	10 years
Noncompete agreements	21,000		3 years
	$	116,200	8 years	*



	Payments Due by Period
(in thousands)	2019 (remaining nine months)		2020-2021		2022-2023		After 2023		Total
Long-term debt, recourse	$	49,498	$	264,940	$	323,420	$	338,695	$	976,553
Long-term debt, non-recourse	4,829		130,859		9,961		6,370		152,019
Interest obligations (a)	39,974		60,746		40,971		36,856		178,547
Operating leases (b)	30,678		34,749		12,294		8,688		86,409
Purchase commitments (c)	3,479,536		386,147		1,395		—		3,867,078
Other long-term liabilities (d)	3,317		6,711		6,804		24,695		41,527
Construction commitment (e)	39,747		—		—		—		39,747
Total contractual cash obligations	$	3,647,579	$	884,152	$	394,845	$	415,304	$	5,341,880