UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended 06/30/~~2021~~2022


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

For the transition period from to .

Commission file number 000-20557

THE ANDERSONS, INC.

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


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

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

(419) 893-5050

(Telephone Number)

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

Title of each class:

Trading Symbol

Name of each exchange on which registered:

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

ANDE

The NASDAQ Stock Market LLC

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

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

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


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

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

The registrant had ~~33,282,749~~33,860,914 common shares outstanding at July ~~23, 2021.~~22, 2022.

Table of Contents

THE ANDERSONS, INC.

INDEX


			Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated ~~Balance Sheets~~Statements of Operations – Three and Si x months ended June 30 , 2022 and 2021 ~~December 31, 2020 and June 30, 2020~~			1
Condensed Consolidated Statements of ~~Operations~~Comprehensive Income – Three and Six months ended June ~~30, 2021~~ 3 0 , 2022 and ~~2020~~2021			2
Condensed Consolidated ~~Statements of Comprehensive Income (Loss)~~Balance Sheets – ~~Three and Six months ended~~ June ~~30,~~ 3 0 , 2022, December 31, 2021 and ~~2020~~June 3 0 , 2021			3
Condensed Consolidated Statements of Cash Flows – Six months ended June ~~30, 2021~~ 3 0 , 2022 and ~~2020~~2021			4
Condensed Consolidated Statements of Equity – Three and ~~Six~~ Si x months ended June ~~30,~~3 0 , 2022 and 2021 ~~and 2020~~			5
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2328
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3138
Item 4. Controls and Procedures			3238
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			3339
Item 1A. Risk Factors			3339
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			33
~~Item 4. Mine Safety Disclosure~~			3340
Item 6. Exhibits			3440

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

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc.

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

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

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


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Sales and merchandising revenues	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524
Cost of sales and merchandising revenues	4,219,776		3,072,398		8,078,195		5,553,676
Gross profit	230,841		163,407		350,376		276,848
Operating, administrative and general expenses	112,559		105,560		214,546		202,558

Interest expense, net	16,921		10,060		27,780		20,049
Other income, net:
Equity in earnings (losses) of affiliates, net	(6,034)		845		(6,278)		2,639
Other income, net	22,826		5,070		26,988		10,938
Income before income taxes from continuing operations	118,153		53,702		128,760		67,818
Income tax provision from continuing operations	15,753		9,677		19,856		14,038
Net income from continuing operations	102,400		44,025		108,904		53,780
Income (loss) from discontinued operations, net of income taxes	(739)		2,099		(1,294)		5,606
Net income	101,661		46,124		107,610		59,386
Net income attributable to noncontrolling interests	21,856		2,625		22,303		780
Net income attributable to The Andersons, Inc.	$	79,805	$	43,499	$	85,307	$	58,606

Average number of shares outstanding - basic	33,850		33,263		33,795		33,226
Average number of share outstanding - diluted	34,416		33,579		34,416		33,617

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:
Basic earnings (loss):
Continuing operations	$	2.38	$	1.25	$	2.56	$	1.60
Discontinued operations	(0.02)		0.06		(0.04)		0.16
	$	2.36	$	1.31	$	2.52	$	1.76
Diluted earnings (loss):
Continuing operations	$	2.34	$	1.23	$	2.52	$	1.58
Discontinued operations	(0.02)		0.07		(0.04)		0.16
	$	2.32	$	1.30	$	2.48	$	1.74

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

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

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

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


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net income	$	101,661	$	46,124	$	107,610	$	59,386
Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial loss and prior service cost	517		(234)		358		(337)
Foreign currency translation adjustments	(5,679)		1,469		(5,581)		2,693
Cash flow hedge activity	6,697		(1,858)		19,119		7,883
Other comprehensive income (loss)	1,535		(623)		13,896		10,239
Comprehensive income	103,196		45,501		121,506		69,625
Comprehensive income attributable to the noncontrolling interests	21,856		2,625		22,303		780
Comprehensive income attributable to The Andersons, Inc.	$	81,340	$	42,876	$	99,203	$	68,845

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

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

~~(Unaudited)(In thousands)~~

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


(In thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	86,035	$	216,444	$	27,538
Accounts receivable, net	1,141,167		835,180		702,869
Inventories (Note 2)	1,618,326		1,814,538		904,924
Commodity derivative assets – current (Note 5)	638,357		410,813		507,148
Current assets held-for-sale (Note 14)	18,627		20,885		28,555
Other current assets	70,367		74,468		63,266
Total current assets	3,572,879		3,372,328		2,234,300
Other assets:
Goodwill	129,342		129,342		131,542
Other intangible assets, net	105,222		117,137		125,731
Right of use assets, net	50,233		52,146		42,330
Other assets held-for-sale (Note 14)	24,298		43,169		620,745
Other assets, net	91,758		69,068		70,879
Total other assets	400,853		410,862		991,227

Property, plant and equipment, net (Note 3)	763,443		786,029		823,563
Total assets	$	4,737,175	$	4,569,219	$	4,049,090
Liabilities and equity
Current liabilities:
Short-term debt (Note 4)	$	1,161,428	$	501,792	$	757,271
Trade and other payables	772,996		1,199,324		543,503
Customer prepayments and deferred revenue	184,154		358,119		55,943
Commodity derivative liabilities – current (Note 5)	185,903		128,911		90,366
Current maturities of long-term debt (Note 4)	53,951		32,256		50,069
Current liabilities held-for-sale (Note 14)	7,314		13,379		25,185
Accrued expenses and other current liabilities	211,830		230,148		168,221
Total current liabilities	2,577,576		2,463,929		1,690,558
Long-term lease liabilities	28,929		31,322		27,134
Long-term debt, less current maturities (Note 4)	563,447		600,487		837,609
Deferred income taxes	63,383		71,127		173,212
Other long-term liabilities held-for-sale (Note 14)	3,113		16,119		43,993
Other long-term liabilities	83,521		78,531		51,620
Total liabilities	3,319,969		3,261,515		2,824,126
Commitments and contingencies (Note 13)	0		0		0
Shareholders’ equity:
Common shares, without par value (63,000 shares authorized; 34,064, 33,870 and 33,786 shares issued at 6/30/2022, 12/31/2021 and 6/30/2021, respectively)	142		140		140
Preferred shares, without par value (1,000 shares authorized; none issued)	—		—		—
Additional paid-in-capital	378,740		368,595		357,606
Treasury shares, at cost (62, 11 and 111 shares at 6/30/2022, 12/31/2021 and 6/30/2021, respectively)	(2,313)		(263)		(2,650)
Accumulated other comprehensive income (loss)	15,090		1,194		(1,837)
Retained earnings	775,495		702,759		669,241
Total shareholders’ equity of The Andersons, Inc.	1,167,154		1,072,425		1,022,500
Noncontrolling interests	250,052		235,279		202,464
Total equity	1,417,206		1,307,704		1,224,964
Total liabilities and equity	$	4,737,175	$	4,569,219	$	4,049,090

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 3

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The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

~~(Unaudited)~~(In thousands)


		Six months ended June 30,					Six months ended June 30,
		2021		2020			2022		2021
Operating Activities	Operating Activities					Operating Activities
Net income (loss)		$	59,386	$	(31,078)
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:
Net income from continuing operations						Net income from continuing operations	$	108,904	$	53,780
Income (loss) from discontinued operations, net of income taxes						Income (loss) from discontinued operations, net of income taxes	(1,294)		5,606
Net income						Net income	107,610		59,386
Adjustments to reconcile net income to cash used in operating activities:						Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	95,154		93,898		Depreciation and amortization	67,945		95,154
Bad debt (recovery) expense, net		(1,156)		6,290
Equity in earnings of affiliates, net of dividends		(2,639)		(209)
Gain on sales of Rail assets and related leases, net		(4,987)		(569)
(Gain) loss on sales of assets, net		(1,266)		341
Bad debt expense, net						Bad debt expense, net	3,069		(1,156)
Equity in (earnings) losses of affiliates, net of dividends						Equity in (earnings) losses of affiliates, net of dividends	6,278		(2,639)
Gain on sales of assets, net						Gain on sales of assets, net	(10,305)		(6,253)
Stock-based compensation expense	Stock-based compensation expense	4,112		5,016		Stock-based compensation expense	4,708		4,112
Deferred federal income tax	Deferred federal income tax	170		21,761		Deferred federal income tax	(13,755)		170
Inventory write down		2,599		10,922

Other	Other	2,971		2,797		Other	8,549		5,570
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(58,338)		(9,181)		Accounts receivable	(289,196)		(58,338)
Inventories	Inventories	390,506		536,951		Inventories	186,685		390,506
Commodity derivatives	Commodity derivatives	(250,691)		14,980		Commodity derivatives	(189,090)		(250,691)
Other assets		35,568		(24,784)
Payables and other accrued expenses		(516,883)		(481,624)
Net cash (used in) provided by operating activities		(245,494)		145,511
Other current and non-current assets						Other current and non-current assets	5,106		35,568
Payables and other current and non-current liabilities						Payables and other current and non-current liabilities	(609,403)		(516,883)
Net cash used in operating activities						Net cash used in operating activities	(721,799)		(245,494)
Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant and equipment and capitalized software						Purchases of property, plant and equipment and capitalized software	(43,472)		(34,264)
Proceeds from sale of assets						Proceeds from sale of assets	4,672		3,794
Purchases of investments						Purchases of investments	(2,105)		(4,701)

Purchases of Rail assets	Purchases of Rail assets	(4,751)		(24,649)		Purchases of Rail assets	(27,276)		(4,751)
Proceeds from sale of Rail assets	Proceeds from sale of Rail assets	15,616		4,637		Proceeds from sale of Rail assets	36,341		15,616
Purchases of property, plant and equipment and capitalized software		(34,264)		(44,644)
Proceeds from sale of assets		3,794		1,503
Purchase of investments		(4,701)		(2,849)
Other	Other	832		0		Other	1,746		832
Net cash used in investing activities	Net cash used in investing activities	(23,474)		(66,002)		Net cash used in investing activities	(30,094)		(23,474)
Financing Activities	Financing Activities					Financing Activities
Net borrowings (payments) under lines of credit		(258,157)		(47,564)
Net receipts (payments) under short-term lines of credit						Net receipts (payments) under short-term lines of credit	862,698		(258,157)
Proceeds from issuance of short-term debt	Proceeds from issuance of short-term debt	608,250		0		Proceeds from issuance of short-term debt	350,000		608,250
Payments of short-term debt						Payments of short-term debt	(550,000)		—
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	108,300		165,975		Proceeds from issuance of long-term debt	—		108,300
Payments of long-term debt	Payments of long-term debt	(177,586)		(203,835)		Payments of long-term debt	(15,077)		(177,586)
Contributions from noncontrolling interest owner	Contributions from noncontrolling interest owner	2,940		4,409		Contributions from noncontrolling interest owner	2,450		2,940
Distributions to noncontrolling interest owner	Distributions to noncontrolling interest owner	(25)		(10,298)		Distributions to noncontrolling interest owner	(9,980)		(25)
Payments of debt issuance costs	Payments of debt issuance costs	(2,059)		(250)		Payments of debt issuance costs	(7,802)		(2,059)
Dividends paid	Dividends paid	(11,677)		(11,469)		Dividends paid	(12,245)		(11,677)
Proceeds from exercises of stock options						Proceeds from exercises of stock options	5,024		—
Other	Other	(2,436)		(2,036)		Other	(2,955)		(2,436)
Net cash provided by (used in) financing activities		267,550		(105,068)
Net cash provided by financing activities						Net cash provided by financing activities	622,113		267,550
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(167)		675		Effect of exchange rates on cash and cash equivalents	(629)		(167)
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	(1,585)		(24,884)		Decrease in cash and cash equivalents	(130,409)		(1,585)

Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	29,123		54,895		Cash and cash equivalents at beginning of period	216,444		29,123
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	27,538	$	30,011	Cash and cash equivalents at end of period	$	86,035	$	27,538

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Equity (Unaudited)

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


		Three Months Ended															Three Months Ended
		Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total			Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total
Balance at March 31, 2020		$	137	$	341,382	$	(652)	$	(27,649)	$	599,039	$	201,605	$	1,113,862
Net income (loss)										30,439		(10,407)		20,032
Other comprehensive loss								(234)						(234)
Amounts reclassified from accumulated other comprehensive income								1,638						1,638
Contributions from noncontrolling interests												1,102		1,102
Noncontrolling interests recognized in connection with business combination				(459)								395		(64)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (20 shares)		1		2,807		(454)				(843)				1,511
Dividends declared ($0.175 per common share)										(5,764)				(5,764)
Restricted share award dividend equivalents						153				(153)				0
Balance at June 30, 2020		$	138	$	343,730	$	(953)	$	(26,245)	$	622,718	$	192,695	$	1,132,083

Balance at March 31, 2021	Balance at March 31, 2021	$	140	$	355,961	$	(2,872)	$	(1,214)	$	631,652	$	198,884	$	1,182,551	Balance at March 31, 2021	$	140	$	355,961	$	(2,872)	$	(1,214)	$	631,652	$	198,884	$	1,182,551
Net income (loss)										43,499		2,625		46,124
Net income																Net income									43,499		2,625		46,124
Other comprehensive loss	Other comprehensive loss							(2,108)						(2,108)		Other comprehensive loss							(2,108)						(2,108)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income							1,485						1,485		Amounts reclassified from accumulated other comprehensive income							1,485						1,485
Contributions from noncontrolling interests	Contributions from noncontrolling interests											980		980		Contributions from noncontrolling interests											980		980
Distributions to noncontrolling interests	Distributions to noncontrolling interests											(25)		(25)		Distributions to noncontrolling interests											(25)		(25)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (11 shares)	Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (11 shares)			1,645		138								1,783		Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (11 shares)			1,645		138								1,783
Dividends declared ($0.175 per common share)										(5,826)				(5,826)
Dividends declared ($0.1750 per common share)																Dividends declared ($0.1750 per common share)									(5,826)				(5,826)
Restricted share award dividend equivalents	Restricted share award dividend equivalents					84				(84)				0		Restricted share award dividend equivalents					84				(84)				—
Balance at June 30, 2021	Balance at June 30, 2021	$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964	Balance at June 30, 2021	$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964

Balance at March 31, 2022																Balance at March 31, 2022	$	142	$	375,794	$	(2,265)	$	13,555	$	701,799	$	228,196	$	1,317,221
Net income																Net income									79,805		21,856		101,661
Other comprehensive income																Other comprehensive income							750						750
Amounts reclassified from accumulated other comprehensive income																Amounts reclassified from accumulated other comprehensive income							785						785

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

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 5

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Six Months Ended
Common
Shares Additional
Paid-in
Capital Treasury
Shares Accumulated
Other
Comprehensive Income
(Loss) Retained
Earnings Noncontrolling
Interests Total
Balance at December 31, 2019 $ 137 $ 345,359 $ (7,342) $ (7,231) $ 642,687 $ 222,045 $ 1,195,655
Net income (loss) (7,222) (23,856) (31,078)
Other comprehensive loss (21,208) (21,208)
Amounts reclassified from accumulated other comprehensive income 2,194 2,194
Contributions from noncontrolling interests 4,409 4,409
Distributions to noncontrolling interests (10,298) (10,298)
Noncontrolling interests recognized in connection with business combination (459) 395 (64)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (167 shares) 1 (1,170) 5,998 (843) 3,986
Dividends declared ($0.350 per common share) (11,513) (11,513)
Restricted share award dividend equivalents 391 (391) 0
Balance at June 30, 2020 $ 138 $ 343,730 $ (953) $ (26,245) $ 622,718 $ 192,695 $ 1,132,083
Balance at December 31, 2020 $ 138 $ 348,714 $ (966) $ (12,076) $ 626,081 $ 198,769 $ 1,160,660
Net income (loss) 58,606 780 59,386
Other comprehensive income 7,311 7,311
Amounts reclassified from accumulated other comprehensive income 2,928 2,928
Contributions from noncontrolling interests 2,940 2,940
Distributions to noncontrolling interests (25) (25)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (67 shares) 2 8,892 (2,016) (3,480) 3,398
Dividends declared ($0.350 per common share) (11,634) (11,634)
Restricted share award dividend equivalents 332 (332) 0
Balance at June 30, 2021 $ 140 $ 357,606 $ (2,650) $ (1,837) $ 669,241 $ 202,464 $ 1,224,964


	Six Months Ended
	Common Shares		Additional Paid-in Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests		Total
Balance at December 31, 2020	$	138	$	348,714	$	(966)	$	(12,076)	$	626,081	$	198,769	$	1,160,660
Net income									58,606		780		59,386
Other comprehensive income							7,311						7,311
Amounts reclassified from Accumulated other comprehensive income							2,928						2,928
Cash received from noncontrolling interests, net											2,940		2,940
Distributions to noncontrolling interests											(25)		(25)

Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (67 shares)	2		8,892		(2,016)				(3,480)				3,398
Dividends declared ($0.350 per common share)									(11,634)				(11,634)
Restricted share award dividend equivalents					332				(332)				—
Balance at June 30, 2021	$	140	$	357,606	$	(2,650)	$	(1,837)	$	669,241	$	202,464	$	1,224,964

Balance at December 31, 2021	$	140	$	368,595	$	(263)	$	1,194	$	702,759	$	235,279	$	1,307,704
Net income									85,307		22,303		107,610
Other comprehensive income							11,721						11,721
Amounts reclassified from Accumulated other comprehensive income							2,175						2,175
Cash received from noncontrolling interests, net											2,450		2,450
Distributions to noncontrolling interests											(9,980)		(9,980)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (51 shares)	2		10,091		(2,385)								7,708
Dividends declared ($0.360 per common share)									(12,182)				(12,182)
Restricted share award dividend equivalents			54		335				(389)				—
Balance at June 30, 2022	$	142	$	378,740	$	(2,313)	$	15,090	$	775,495	$	250,052	$	1,417,206

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 6

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The Andersons, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Consolidation

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

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

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

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

In the opinion of management, all adjustments consisting of normal and recurring items considered necessary for the fair presentation of the results of operations, financial position, and cash flows for the periods indicated have been made. The results in these Condensed Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2021.~~2022. An unaudited Condensed Consolidated Balance Sheet as of June 30, ~~2020~~2021 has been included as the Company operates in several seasonal industries.

The Condensed Consolidated Balance Sheet data at December 31, ~~2020~~2021 was derived from the audited Consolidated Financial Statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in The Andersons, Inc. Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Form 10-K”).

~~Recently Adopted Accounting Pronouncements~~

~~Simplified Accounting for Income Taxes~~

~~In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12.~~

The ~~new standard simplifies accounting for income taxes, including guidance relating to the approach for calculating income taxes in an interim period, intraperiod tax allocation, and the recognition~~Andersons, Inc. | Q2 2022 Form 10-Q | 7

Table of deferred tax liabilities among other items. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The new standard does not have a material impact to the company’s financial statements or disclosures.Contents

2. Inventories

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


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Grain and other agricultural products (a)	Grain and other agricultural products (a)	$	636,380	$	1,025,809	$	452,339	Grain and other agricultural products (a)	$	1,241,933	$	1,427,708	$	636,380
Frac sand and propane (a)		11,265		12,477		6,498
Propane and frac sand (a)								Propane and frac sand (a)	19,483		23,780		11,265
Ethanol and co-products (a)	Ethanol and co-products (a)	155,993		114,895		63,195		Ethanol and co-products (a)	179,175		184,354		155,993
Plant nutrients and cob products	Plant nutrients and cob products	101,286		139,885		87,346		Plant nutrients and cob products	177,735		178,696		101,286
Railcar repair parts		7,375		7,627		6,945
Total Inventories	Total Inventories	$	912,299	$	1,300,693	$	616,323	Total Inventories	$	1,618,326	$	1,814,538	$	904,924

(a) Includes RMI of $~~612.2~~1,214.4 million, ~~$983.2~~$1,410.9 million and ~~$418.0~~$612.2 million at June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively.

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 7~~

~~Table of Contents~~

Inventories do not include ~~1.2~~1.3 million,, 3.0 million and ~~1.7~~1.2 million bushels of grain held in storage for others as of June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively. The Company does not have title to the grain and is only liable for any deficiencies in grade or shortage of quantity that may arise during the storage period. Management has not experienced historical losses on any deficiencies and does not anticipate material losses in the future.

Lower of cost or net realizable value charges were $2.6 million and $10.9 million for the six months ended June 30, 2021 and June 30, 2020, respectively. The charge in the prior year was a result of lower ethanol market prices and decreased demand as a result of the COVID-19 pandemic.

3. Property, Plant and Equipment

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


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Land	Land	$	39,884	$	40,222	$	40,188	Land	$	38,630	$	39,162	$	39,367
Land improvements and leasehold improvements	Land improvements and leasehold improvements	97,454		96,700		96,028		Land improvements and leasehold improvements	91,542		91,122		93,166
Buildings and storage facilities	Buildings and storage facilities	386,832		387,992		377,652		Buildings and storage facilities	370,453		368,577		377,946
Machinery and equipment	Machinery and equipment	948,517		925,074		881,144		Machinery and equipment	949,142		936,476		921,190
Construction in progress	Construction in progress	19,987		19,725		35,982		Construction in progress	31,237		20,676		19,723
		1,492,674		1,469,713		1,430,994			1,481,004		1,456,013		1,451,392
Less: accumulated depreciation	Less: accumulated depreciation	650,912		590,534		524,977		Less: accumulated depreciation	717,561		669,984		627,829
Property, plant and equipment, net	Property, plant and equipment, net	$	841,762	$	879,179	$	906,017	Property, plant and equipment, net	$	763,443	$	786,029	$	823,563

Depreciation expense on property, plant and equipment used in continuing operations was ~~$64.2~~$55.8 million and ~~$62.3~~$62.5 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Additionally, depreciation expense on property, plant and equipment used in continuing operations was ~~$32.3~~$27.5 million and ~~$31.2~~$31.4 million for the three months ended June 30, 2022 and 2021, ~~and 2020,~~ respectively.

~~Rail Assets~~

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

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

~~Depreciation expense~~During the second quarter of 2022, the Company closed on ~~Rail~~the sale of the remaining assets ~~leased to others amounted to $15.3~~of the Company's Frac Sand business for total consideration of $8.4 million and $15.4 million for the six months ended June 30, 2021 and 2020, respectively. Additionally, depreciation expense on Rail assets leased to others amounted to $7.6 million and $7.7 million for the three months ended June 30, 2021 and 2020, respectively.resulting in a pre-tax gain of $3.7 million.

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 8

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4. Debt

Short-term and long-term debt at June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020~~2021 consisted of the following:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Short-term debt – non-recourse	Short-term debt – non-recourse	$	120,020	$	93,192	$	43,284	Short-term debt – non-recourse	$	97,668	$	65,485	$	120,020
Short-term debt – recourse	Short-term debt – recourse	637,251		310,511		52,787		Short-term debt – recourse	1,063,760		436,307		637,251
Total short-term debt	Total short-term debt	$	757,271	$	403,703	$	96,071	Total short-term debt	$	1,161,428	$	501,792	$	757,271

Current maturities of long-term debt – non-recourse	Current maturities of long-term debt – non-recourse	$	9,078	$	6,438	$	4,845	Current maturities of long-term debt – non-recourse	$	7,707	$	7,601	$	3,691
Current maturities of long-term debt – recourse	Current maturities of long-term debt – recourse	47,504		69,037		63,632		Current maturities of long-term debt – recourse	46,244		24,655		46,378
Total current maturities of long-term debt	Total current maturities of long-term debt	$	56,582	$	75,475	$	68,477	Total current maturities of long-term debt	$	53,951	$	32,256	$	50,069

Long-term debt, less: current maturities – non-recourse	Long-term debt, less: current maturities – non-recourse	$	116,219	$	143,406	$	325,819	Long-term debt, less: current maturities – non-recourse	$	60,396	$	64,972	$	100,876
Long-term debt, less: current maturities – recourse	Long-term debt, less: current maturities – recourse	750,235		773,134		650,154		Long-term debt, less: current maturities – recourse	503,051		535,515		736,733
Total long-term debt, less: current maturities	Total long-term debt, less: current maturities	$	866,454	$	916,540	$	975,973	Total long-term debt, less: current maturities	$	563,447	$	600,487	$	837,609

On ~~February 4, 2021,~~March 2, 2022, the Company completed ~~the second~~an incremental term loan amendment to its credit agreement dated January 11, 2019. The amendment ~~which replaced an underwritten bridge loan received on January 21, 2021,~~ provided for a short-term ~~$250 million term note in which the entire stated principal is due on December 31, 2021. The term note bears interest at variable rates, which are based on LIBOR plus an applicable spread.~~

~~On May 6, 2021, the Company completed the third amendment to its credit agreement dated January 11, 2019. The amendment provides for a short term~~ note of ~~approximately $358~~$250.0 million in which the entire stated principal iswas due on May 31, 2022 (subsequently extended to August 31, 2022 as described below). On March 9, 2022, the Company completed an additional term loan amendment that expanded the short-term note capacity from $250.0 million to $450.0 million. On May 27, 2022, the Company completed an additional amendment to convert the $350.0 million then outstanding balance from the $450.0 million incremental term loan amendment to a revolving credit agreement with a capacity of up to $450.0 million. The entire amount outstanding will be due on August 31, 2022. The ~~term note~~revolving credit agreement will bear interest at variable rates, which are based on ~~LIBOR~~SOFR plus an applicable spread. As of June 30, 2022, the Company had drawn $250.0 million on the revolving credit agreement.

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

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

The total borrowing capacity of the Company's lines of credit at June 30, ~~2021~~2022 was ~~$1,404.6~~$2,501.7 million of which the Company had a total of ~~$1,173.5~~$1,315.2 million available for borrowing under its lines of credit. The Company's borrowing capacity is reduced by a combination of outstanding borrowings and letters of credit.

As of June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, the estimated fair value of long-term debt, including the current portion, was ~~$946.8~~$617.5 million, ~~$1,026.8~~$650.7 million and ~~$1,090.1~~$910.5 million, respectively. The Company estimates the fair value of its long-term debt based upon the Company’s credit standing and current interest rates offered to the Company on similar bonds and rates currently available to the Company for long-term borrowings with similar terms and remaining maturities.

The Company is in compliance with all financial covenants as of June 30, ~~2021.~~2022.

The Andersons, Inc. | Q2 2022 Form 10-Q | 9

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5. Derivatives

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

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 9~~

~~Table of Contents~~

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

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

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

The following table presents at June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, a summary of the estimated fair value of the Company’s commodity derivative instruments that require cash collateral and the associated cash posted/received as collateral. The net asset or liability positions of these derivatives (net of their cash collateral) are determined on a counterparty-by-counterparty basis and are included within current or non-current commodity derivative assets (or liabilities) on the Condensed Consolidated Balance Sheets:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		June 30, 2020		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Cash collateral paid	Cash collateral paid	$	219,469	$	208,670	$	799	Cash collateral paid	$	70,442	$	165,250	$	219,469
Fair value of derivatives	Fair value of derivatives	(180,842)		(157,301)		21,363		Fair value of derivatives	165,223		(36,843)		(180,842)
Net derivative asset position	Net derivative asset position	$	38,627	$	51,369	$	22,162	Net derivative asset position	$	235,665	$	128,407	$	38,627

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

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


		June 30, 2021											June 30, 2022
(in thousands)	(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total		(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	Commodity derivative assets	$	547,186	$	16,480	$	34,327	$	423	$	598,416	Commodity derivative assets	$	707,542	$	14,257	$	29,223	$	1,945	$	752,967
Commodity derivative liabilities	Commodity derivative liabilities	(259,507)		(873)		(124,693)		(3,874)		(388,947)		Commodity derivative liabilities	(138,627)		(2,132)		(216,126)		(12,040)		(368,925)
Cash collateral paid	Cash collateral paid	219,469		0		0		0		219,469		Cash collateral paid	69,442		—		1,000		—		70,442
Balance sheet line item totals	Balance sheet line item totals	$	507,148	$	15,607	$	(90,366)	$	(3,451)	$	428,938	Balance sheet line item totals	$	638,357	$	12,125	$	(185,903)	$	(10,095)	$	454,484

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

~~Table of Contents~~


		December 31, 2020											December 31, 2021
(in thousands)	(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total		(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	Commodity derivative assets	$	304,533	$	4,328	$	19,386	$	14	$	328,261	Commodity derivative assets	$	339,321	$	4,677	$	23,762	$	1,209	$	368,969
Commodity derivative liabilities	Commodity derivative liabilities	(192,023)		(348)		(166,850)		(243)		(359,464)		Commodity derivative liabilities	(93,758)		(105)		(152,673)		(2,578)		(249,114)
Cash collateral paid	Cash collateral paid	208,196		0		474		0		208,670		Cash collateral paid	165,250		—		—		—		165,250
Balance sheet line item totals	Balance sheet line item totals	$	320,706	$	3,980	$	(146,990)	$	(229)	$	177,467	Balance sheet line item totals	$	410,813	$	4,572	$	(128,911)	$	(1,369)	$	285,105


		June 30, 2020											June 30, 2021
(in thousands)	(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total		(in thousands)	Commodity Derivative Assets - Current		Commodity Derivative Assets - Noncurrent		Commodity Derivative Liabilities - Current		Commodity Derivative Liabilities - Noncurrent		Total
Commodity derivative assets	Commodity derivative assets	$	142,110	$	2,916	$	5,511	$	124	$	150,661	Commodity derivative assets	$	547,186	$	16,480	$	34,327	$	423	$	598,416
Commodity derivative liabilities	Commodity derivative liabilities	(30,820)		(214)		(70,697)		(3,813)		(105,544)		Commodity derivative liabilities	(259,507)		(873)		(124,693)		(3,874)		(388,947)
Cash collateral paid	Cash collateral paid	799		0		0		0		799		Cash collateral paid	219,469		—		—		—		219,469
Balance sheet line item totals	Balance sheet line item totals	$	112,089	$	2,702	$	(65,186)	$	(3,689)	$	45,916	Balance sheet line item totals	$	507,148	$	15,607	$	(90,366)	$	(3,451)	$	428,938

The net pre-tax gains and losses on commodity derivatives not designated as hedging instruments are included in the Company’s Condensed Consolidated Statements of Operations ~~and the line item in which they are located~~ for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 are as follows:


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Gains on commodity derivatives included in cost of sales and merchandising revenues		$	73,688	$	8,797	$	240,673	$	39,757
Gains on commodity derivatives included in Cost of sales and merchandising revenues										Gains on commodity derivatives included in Cost of sales and merchandising revenues	$	230,188	$	73,688	$	264,186	$	240,673

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 11

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The Company had the following volume of commodity derivative contracts outstanding (on a gross basis) at June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020:~~2021:


		June 30, 2021					June 30, 2022
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	696,674	0	0	0	Corn	628,471	—	—
Soybeans	Soybeans	75,507	0	0	0	Soybeans	116,679	—	—
Wheat	Wheat	129,264	0	0	0	Wheat	97,224	—	—
Oats	Oats	45,810	0	0	0	Oats	37,355	—	—
Ethanol	Ethanol	0	198,316	0	0	Ethanol	—	200,388	—
Corn oil		0	0	70,637	0
Soybean Oil		0	0	23,952	0
Dried distillers grain						Dried distillers grain	—	—	318
Soybean meal						Soybean meal	—	—	421
Other	Other	7,803	3,957	2,757	1,925	Other	8,549	25,767	3,032
Subtotal	Subtotal	955,058	202,273	97,346	1,925	Subtotal	888,278	226,155	3,771
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	243,190	0	0	0	Corn	219,020	—	—
Soybeans	Soybeans	49,375	0	0	0	Soybeans	69,115	—	—
Wheat	Wheat	80,004	0	0	0	Wheat	74,418	—	—
Oats	Oats	1,430	0	0	0	Oats	650	—	—
Ethanol	Ethanol	0	112,812	0	0	Ethanol	—	94,794	—
Propane	Propane	0	18,480	0	0	Propane	—	25,578	—
Other	Other	0	5	2,351	197	Other	95	546	360
Subtotal	Subtotal	373,999	131,297	2,351	197	Subtotal	363,298	120,918	360
Total	Total	1,329,057	333,570	99,697	2,122	Total	1,251,576	347,073	4,131


		December 31, 2020				December 31, 2021
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons		(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:						Non-exchange traded:
Corn	Corn	684,654	0	0	0		Corn	685,681	—	—
Soybeans	Soybeans	73,521	0	0	0		Soybeans	77,592	—	—
Wheat	Wheat	109,661	0	0	0		Wheat	109,547	—	—
Oats	Oats	27,482	0	0	0		Oats	31,627	—	—
Ethanol	Ethanol	0	124,795	0	0		Ethanol	—	192,447	—
Corn oil		0	0	36,015	0
Soybean oil		0	0	26,510	0
Dried distillers grain							Dried distillers grain	—	—	507
Soybean meal							Soybean meal	—	—	544
Other	Other	4,371	2,058	740	1,859		Other	57,268	16,092	1,854
Subtotal	Subtotal	899,689	126,853	63,265	1,859		Subtotal	961,715	208,539	2,905
Exchange traded:	Exchange traded:						Exchange traded:
Corn	Corn	267,792	0	0	0		Corn	226,215	—	—
Soybeans	Soybeans	53,730	0	0	0		Soybeans	64,730	—	—
Wheat	Wheat	80,733	0	0	0		Wheat	65,020	—	—
Oats	Oats	1,800	0	0	0		Oats	1,300	—	—
Ethanol	Ethanol	0	73,584	0	0		Ethanol	—	100,884	—
Propane	Propane	0	17,094	0	0		Propane	—	31,542	—
Other	Other	0	2,898	14	149		Other	75	798	353
Subtotal	Subtotal	404,055	93,576	14	149		Subtotal	357,340	133,224	353
Total	Total	1,303,744	220,429	63,279	2,008		Total	1,319,055	341,763	3,258

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 12

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		June 30, 2020					June 30, 2021
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons	Number of Pounds	Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	437,275	0	0	0	Corn	696,674	—	—
Soybeans	Soybeans	50,012	0	0	0	Soybeans	75,507	—	—
Wheat	Wheat	95,133	0	0	0	Wheat	129,264	—	—
Oats	Oats	49,053	0	0	0	Oats	45,810	—	—
Ethanol	Ethanol	0	141,549	0	0	Ethanol	—	198,316	—
Corn oil		0	0	8,098	0
Dried distillers grain						Dried distillers grain	—	—	372
Soybean meal						Soybean meal	—	—	411
Other	Other	25,005	5,000	415	2,370	Other	7,803	3,957	1,191
Subtotal	Subtotal	656,478	146,549	8,513	2,370	Subtotal	955,058	202,273	1,974
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	287,840	0	0	0	Corn	243,190	—	—
Soybeans	Soybeans	36,970	0	0	0	Soybeans	49,375	—	—
Wheat	Wheat	67,040	0	0	0	Wheat	80,004	—	—
Oats	Oats	685	0	0	0	Oats	1,430	—	—
Ethanol	Ethanol	0	27,300	0	0	Ethanol	—	112,812	—

Propane	Propane	0	28,602	0	0	Propane	—	18,480	—
Other	Other	0	13,650	340	208	Other	—	5	198
Subtotal	Subtotal	392,535	69,552	340	208	Subtotal	373,999	131,297	198
Total	Total	1,049,013	216,101	8,853	2,578	Total	1,329,057	333,570	2,172

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

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Interest Rate and Other Derivatives

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

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

At June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, the Company had recorded the following amounts for the fair value of the Company's other derivatives:

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

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 13~~

~~Table of Contents~~


(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Derivatives not designated as hedging instruments
Interest rate contracts included in Accrued expenses and other current liabilities	$	—	$	(174)	$	—
Interest rate contracts included in Other long-term liabilities	—		—		(309)
Foreign currency contracts included in Other current (liabilities) assets	(1,749)		(1,069)		1,523
Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets	$	3,276	$	—	$	—
Interest rate contracts included in Other assets	15,047		4,574		3,849
Interest rate contracts included in Accrued expenses and other current liabilities	—		(5,206)		(6,944)
Interest rate contracts included in Other long-term liabilities	—		(6,555)		(11,506)

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


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Interest rate derivative gains (losses) included in Interest income (expense), net		$	355	$	186	$	709	$	(720)
Interest rate derivative gains (losses) included in Interest expense, net										Interest rate derivative gains (losses) included in Interest expense, net	$	114	$	355	$	123	$	709

Derivatives designated as hedging instruments	Derivatives designated as hedging instruments									Derivatives designated as hedging instruments
Interest rate derivative losses included in Other comprehensive income (loss)		2,471		(2,475)		$	(10,476)	$	(20,657)
Interest rate derivatives losses included in Interest income (expense), net		$	(1,656)	$	(1,917)	(3,273)		(2,700)
Interest rate derivative gains (losses) included in Other comprehensive income (loss)										Interest rate derivative gains (losses) included in Other comprehensive income (loss)	$	8,923	$	2,471	$	25,464	$	(10,476)
Interest rate derivative gains (losses) included in Interest expense, net										Interest rate derivative gains (losses) included in Interest expense, net	(1,013)		(1,656)		(2,631)		(3,273)

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

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Outstanding interest rate derivatives, as of June 30, ~~2021,~~2022, are as follows:


Interest Rate Hedging Instrument	Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate	Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate
Long-term	Long-term							Long-term
Swap	Swap	2014	2023	$	23.0	Interest rate component of debt - not accounted for as a hedge	1.9%	Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.3%
Swap	Swap	2017	2022	$	20.0	Interest rate component of debt - accounted for as a hedge	1.8%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	Swap	2018	2023	$	10.0	Interest rate component of debt - accounted for as a hedge	2.6%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	Swap	2018	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.7%	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap	Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.5%	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%	Swap	2022	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.6%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.5%	Swap	2022	2029	$	100.0	Interest rate component of debt - accounted for as a hedge	2.0%
Swap		2020	2023	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap		2020	2023	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.7%
Swap		2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap		2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%

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

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6. Revenue

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

Three months ended June 30, Six months ended June 30,
(in thousands) 2021 2020 2021 2020
Revenues under ASC 606 $ 640,083 $ 459,105 $ 1,146,551 $ 806,607
Revenues under ASC 815 2,611,981 1,406,307 4,719,603 2,886,360
Revenues under ASC 842 21,662 24,768 43,301 50,319
Total revenues $ 3,273,726 $ 1,890,180 $ 5,909,455 $ 3,743,286

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 14~~

~~Table of Contents~~

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

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


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2022		2021		2022		2021
Revenues under ASC 606	$	956,013	$	623,813	$	1,633,869	$	1,110,908
Revenues under ASC 815	3,494,604		2,611,992		6,794,702		4,719,616
Total revenues	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524

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

Disaggregation of revenue

The following tables disaggregate revenues under ASC 606 by major product/service line for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively:


		Three months ended June 30, 2021											Three months ended June 30, 2022
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	84,915	$	0	$	84,915	Specialty nutrients	$	—	$	—	$	104,357	$	104,357
Primary nutrients	Primary nutrients	0		0		213,604		0		213,604		Primary nutrients	—		—		336,487		336,487
Services		2,114		0		3,869		9,233		15,216
Products and co-products	Products and co-products	74,948		184,263		0		0		259,211		Products and co-products	101,195		329,224		—		430,419
Frac sand and propane		36,649		0		0		0		36,649
Propane and frac sand												Propane and frac sand	46,935		—		—		46,935
Other	Other	4,037		394		19,020		7,037		30,488		Other	6,997		1,378		29,440		37,815
Total	Total	$	117,748	$	184,657	$	321,408	$	16,270	$	640,083	Total	$	155,127	$	330,602	$	470,284	$	956,013


		Three months ended June 30, 2020											Three months ended June 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	82,634	$	0	$	82,634	Specialty nutrients	$	—	$	—	$	84,915	$	84,915
Primary nutrients	Primary nutrients	0		0		188,463		0		188,463		Primary nutrients	—		—		213,604		213,604
Service		2,357		0		2,596		8,658		13,611
Products and co-products	Products and co-products	63,344		75,773		0		0		139,117		Products and co-products	74,948		184,263		—		259,211
Frac sand and propane		21,439		0		0		0		21,439
Propane and frac sand												Propane and frac sand	36,649		—		—		36,649
Other	Other	5,330		352		6,132		2,027		13,841		Other	6,151		394		22,889		29,434
Total	Total	$	92,470	$	76,125	$	279,825	$	10,685	$	459,105	Total	$	117,748	$	184,657	$	321,408	$	623,813


		Six months ended June 30, 2021											Six months ended June 30, 2022
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	161,721	$	0	$	161,721	Specialty nutrients	$	—	$	—	$	197,625	$	197,625
Primary nutrients	Primary nutrients	0		0		285,263		0		285,263		Primary nutrients	—		—		426,369		426,369
Service		3,568		0		5,158		19,177		27,903
Products and co-products	Products and co-products	146,936		329,907		0		0		476,843		Products and co-products	209,066		561,918		—		770,984
Frac sand and propane		128,714		0		0		0		128,714
Propane and frac sand												Propane and frac sand	166,727		—		—		166,727
Other	Other	6,969		4,153		38,518		16,467		66,107		Other	13,239		2,593		56,332		72,164
Total	Total	$	286,187	$	334,060	$	490,660	$	35,644	$	1,146,551	Total	$	389,032	$	564,511	$	680,326	$	1,633,869

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 1516

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		Six months ended June 30, 2020											Six months ended June 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	0	$	0	$	155,865	$	0	$	155,865	Specialty nutrients	$	—	$	—	$	161,721	$	161,721
Primary nutrients	Primary nutrients	0		0		234,153		0		234,153		Primary nutrients	—		—		285,263		285,263
Service		4,043		0		2,778		17,394		24,215
Products and co-products	Products and co-products	116,509		177,472		0		0		293,981		Products and co-products	146,936		329,907		—		476,843
Frac sand and propane		71,314		0		0		0		71,314
Propane and frac sand												Propane and frac sand	128,714		—		—		128,714
Other	Other	9,318		968		11,942		4,851		27,079		Other	10,538		4,153		43,676		58,367
Total	Total	$	201,184	$	178,440	$	404,738	$	22,245	$	806,607	Total	$	286,188	$	334,060	$	490,660	$	1,110,908

~~Approximately 3%~~Substantially all of the Company's revenues accounted for under ASC 606 during ~~both~~the three and six months ~~periods~~ ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, are recorded at a point in time instead of over ~~time which primarily relates to service revenues noted above.~~time.

Contract balances

The balances of the Company’s contract liabilities were ~~$17.0~~$21.7 million and ~~$45.6~~$100.8 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The main driver of the contract liabilities balance as of December 31, 2021, is payments for primary and specialty nutrients received in advance of fulfilling our performance obligations under our customer contracts. Due to seasonality of this business, contract liabilities were built up at year-end and through the first quarter in preparation for the spring application season. As expected, the revenue recognized in the current period satisfied the contract liabilities throughout the spring application ~~season.~~season for our Plant Nutrient segment.

7. Income Taxes

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

For the ~~six~~three months ended June 30, ~~2021,~~2022, the Company ~~estimated its annual~~recorded income tax expense from continuing operations of $15.8 million. The Company's effective tax rate ~~utilizing~~was 13.3% on income before taxes from continuing operations of $118.2 million. The difference between the ~~annualized~~13.3% effective tax rate ~~method under ASC 740,~~ ~~Income Taxes, to calculate its interim income tax provision. For~~and the ~~six months ended June 30, 2020, the Company utilized the discrete effective~~U.S. federal statutory tax rate ~~method,~~of 21.0% is primarily attributable to the tax impact of non-controlling interest as ~~allowed under ASC 740, to calculate its interim income tax provision. The~~well as certain discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual periodderivatives and ~~determines the income tax expense or benefit on that basis. At the time, it was not possible to reliably estimate the annual effective tax rate for the year due to uncertainty created~~hedging activities offset by ~~the COVID-19 pandemic. As a result, relatively small changes in the provision for~~state and local income taxes ~~in 2020 caused disproportionate changes in the effective tax rate, as compared to 2021.~~and nondeductible compensation.

For the three months ended June 30, 2021, the Company recorded income tax expense from continuing operations of ~~$10.6 million at an~~$9.7 million. The Company’s effective ~~income~~ tax rate was 18.0% on income from continuing operations of ~~18.7%.~~$53.7 million. The ~~annual~~ effective tax rate differs from the ~~statutory~~ U.S. ~~Federal~~federal statutory tax rate of 21.0% due to the ~~impacts~~tax impact of certain discrete derivatives and hedging activities offset by state and local taxes and ~~non-deductible compensation, offset by benefits related to~~nondeductible compensation.

For the ~~treatment of mark-to-market activity on certain contracts in the Ethanol segment. The change in effective tax rate for the three~~six months ended June 30, ~~2021 as compared to~~2022, the ~~same period last year was primarily attributed to the favorable impact~~Company recorded income tax expense from continuing operations of the mark-to-market activity on certain contracts in the Ethanol segment, coupled with additional benefits from the CARES Act in the prior year. For the three months ended June 30, 2020, using the discrete$19.9 million. The Company's effective tax rate ~~method to calculate~~was 15.4% on income before taxes from continuing operations of $128.8 million. The difference between the ~~interim~~15.4% effective tax ~~provision,~~rate and the ~~Company recorded an income tax benefit of $12.2 million at an effective income~~U.S. federal statutory tax rate of ~~155.8%.~~

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

~~Table~~21.0% is primarily attributable to the tax impact of ~~Contents~~

non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

For the six months ended June 30, 2021, the Company recorded an income tax expense from continuing operations of ~~$16.4 million at an~~$14.0 million. The Company’s effective ~~income~~ tax rate was 20.7% on income from continuing operations of ~~21.6%.~~$67.8 million. The ~~annual~~ effective tax rate differs from the ~~statutory~~ U.S. ~~Federal~~federal statutory tax rate of 21.0% due to the ~~impacts~~tax impact of certain discrete derivatives and hedging activities offset by state and local taxes and non-deductible compensation, offset by benefits related to the treatment of mark-to-market activity on certain contracts in the Ethanol segment. The change in effective tax rate for the six months ended June 30, 2021, as compared to the same period last year was primarily attributed to additional tax benefits from net operating loss carry backs as a result of the CARES Act in the prior year, offset by the favorable impact of the mark-to-market activity on the contracts within the ethanol segment. For the six months ended June 30, 2020, using the discrete effective tax rate method to calculate the interim tax provision, the Company recorded an income tax benefit of $13.7 million at an effective income tax rate of 30.5%.nondeductible compensation.

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

The Andersons, Inc. | Q2 2022 Form 10-Q | 17

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8. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) ("AOCI") attributable to the Company for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Currency Translation Adjustment	Currency Translation Adjustment									Currency Translation Adjustment
Beginning balance	Beginning balance	$	6,963	$	(5,574)	$	5,739	$	1,065	Beginning balance	$	5,729	$	6,963	$	5,631	$	5,739
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	1,469		3,249		2,693		(3,390)		Other comprehensive income (loss) before reclassifications	(5,679)		1,469		(5,581)		2,693

Tax effect	Tax effect	0		0		0		0		Tax effect	—		—		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	1,469		3,249		2,693		(3,390)		Other comprehensive income (loss), net of tax	(5,679)		1,469		(5,581)		2,693
Ending balance	Ending balance	$	8,432	$	(2,325)	$	8,432	$	(2,325)	Ending balance	$	50	$	8,432	$	50	$	8,432
Hedging Adjustment	Hedging Adjustment									Hedging Adjustment
Beginning balance	Beginning balance	$	(8,365)	$	(23,106)	$	(18,106)	$	(9,443)	Beginning balance	$	7,087	$	(8,365)	$	(5,335)	$	(18,106)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(3,514)		(3,669)		4,613		(18,059)		Other comprehensive income (loss) before reclassifications	7,910		(3,514)		22,833		4,613
Amounts reclassified from accumulated other comprehensive income (loss)(a)		2,208		2,412		4,360		3,381
Amounts reclassified from AOCI (a)										Amounts reclassified from AOCI (a)	1,013		2,208		2,631		4,360
Tax effect	Tax effect	(552)		(603)		(1,090)		(845)		Tax effect	(2,226)		(552)		(6,345)		(1,090)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(1,858)		(1,860)		7,883		(15,523)		Other comprehensive income (loss), net of tax	6,697		(1,858)		19,119		7,883
Ending balance	Ending balance	$	(10,223)	$	(24,966)	$	(10,223)	$	(24,966)	Ending balance	$	13,784	$	(10,223)	$	13,784	$	(10,223)
Pension and Other Postretirement Adjustment	Pension and Other Postretirement Adjustment									Pension and Other Postretirement Adjustment
Beginning balance	Beginning balance	$	(70)	$	773	$	33	$	889	Beginning balance	$	481	$	(70)	$	640	$	33
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(63)		186		5		241		Other comprehensive income (loss) before reclassifications	845		(63)		914		5
Amounts reclassified from accumulated other comprehensive income (loss)(b)		(228)		(228)		(456)		(456)
Amounts reclassified from AOCI (b)										Amounts reclassified from AOCI (b)	(228)		(228)		(456)		(456)
Tax effect	Tax effect	57		57		114		114		Tax effect	(100)		57		(100)		114
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(234)		15		(337)		(101)		Other comprehensive income (loss), net of tax	517		(234)		358		(337)
Ending balance	Ending balance	$	(304)	$	788	$	(304)	$	788	Ending balance	$	998	$	(304)	$	998	$	(304)
Investments in Convertible Preferred Securities Adjustment	Investments in Convertible Preferred Securities Adjustment									Investments in Convertible Preferred Securities Adjustment
Beginning balance	Beginning balance	$	258	$	258	$	258	$	258	Beginning balance	$	258	$	258	$	258	$	258

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

Total AOCI Ending Balance	Total AOCI Ending Balance	$	(1,837)	$	(26,245)	$	(1,837)	$	(26,245)	Total AOCI Ending Balance	$	15,090	$	(1,837)	$	15,090	$	(1,837)

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

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

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

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 18

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9. Earnings Per Share


(in thousands, except per common share data)	(in thousands, except per common share data)	Three months ended June 30,				Six months ended June 30,				(in thousands, except per common share data)	Three months ended June 30,				Six months ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Net income (loss) available to The Andersons Inc. common shareholders		$	43,499	$	30,439	$	58,606	$	(7,222)
Net income from continuing operations										Net income from continuing operations	$	102,400	$	44,025	$	108,904	$	53,780
Net income attributable to noncontrolling interests(a)										Net income attributable to noncontrolling interests(a)	21,856		2,625		22,303		780
Net income attributable to The Andersons Inc. common shareholders from continuing operations										Net income attributable to The Andersons Inc. common shareholders from continuing operations	$	80,544	$	41,400	$	86,601	$	53,000

Income (loss) from discontinued operations, net of income taxes										Income (loss) from discontinued operations, net of income taxes	$	(739)	$	2,099	$	(1,294)	$	5,606

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	33,263		32,932		33,226		32,876		Weighted average shares outstanding – basic	33,850		33,263		33,795		33,226
Effect of dilutive awards	Effect of dilutive awards	316		77		391		0		Effect of dilutive awards	566		316		621		391
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	33,579		33,009		33,617		32,876		Weighted average shares outstanding – diluted	34,416		33,579		34,416		33,617
Earnings (loss) per share
Basic		$	1.31	$	0.92	$	1.76	$	(0.22)
Diluted		$	1.30	$	0.92	$	1.74	$	(0.22)

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:										Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:
Basic earnings (loss):										Basic earnings (loss):
Continuing operations										Continuing operations	$	2.38	$	1.25	$	2.56	$	1.60
Discontinued operations										Discontinued operations	(0.02)		0.06		(0.04)		0.16
											$	2.36	$	1.31	$	2.52	$	1.76
Diluted earnings (loss):										Diluted earnings (loss):
Continuing operations										Continuing operations	$	2.34	$	1.23	$	2.52	$	1.58
Discontinued operations										Discontinued operations	(0.02)		0.07		(0.04)		0.16
											$	2.32	$	1.30	$	2.48	$	1.74

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

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

~~All awards were antidilutive for the six months ended June 30, 2020 as the Company incurred a net loss.~~

The Andersons, Inc. | Q2 2022 Form 10-Q | 19

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10. Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020:~~2021:


(in thousands)	(in thousands)	June 30, 2021								(in thousands)	June 30, 2022
Assets (liabilities)	Assets (liabilities)	Level 1		Level 2		Level 3		Total		Assets (liabilities)	Level 1		Level 2		Level 3		Total
Commodity derivatives, net (a)	Commodity derivatives, net (a)	$	38,627	$	390,311	$	0	$	428,938	Commodity derivatives, net (a)	$	235,665	$	218,819	$	—	$	454,484
Provisionally priced contracts (b)	Provisionally priced contracts (b)	32,710		(25,210)		0		7,500		Provisionally priced contracts (b)	38,061		(27,945)		—		10,116
Convertible preferred securities (c)	Convertible preferred securities (c)	0		0		13,550		13,550		Convertible preferred securities (c)	—		—		16,803		16,803
Other assets and liabilities (d)	Other assets and liabilities (d)	5,373		(14,909)		0		(9,536)		Other assets and liabilities (d)	1,097		18,323		—		19,420
Total	Total	$	76,710	$	350,192	$	13,550	$	440,452	Total	$	274,823	$	209,197	$	16,803	$	500,823


(in thousands)	(in thousands)	December 31, 2020								(in thousands)	December 31, 2021
Assets (liabilities)	Assets (liabilities)	Level 1		Level 2		Level 3		Total		Assets (liabilities)	Level 1		Level 2		Level 3		Total

Commodity derivatives, net (a)	Commodity derivatives, net (a)	$	51,369	$	126,098	$	0	$	177,467	Commodity derivatives, net (a)	$	128,407	$	156,698	$	—	$	285,105
Provisionally priced contracts (b)	Provisionally priced contracts (b)	19,793		(48,818)		0		(29,025)		Provisionally priced contracts (b)	43,944		(89,797)		—		(45,853)
Convertible preferred securities (c)	Convertible preferred securities (c)	0		0		8,849		8,849		Convertible preferred securities (c)	—		—		11,618		11,618
Other assets and liabilities (d)	Other assets and liabilities (d)	7,972		(26,058)		0		(18,086)		Other assets and liabilities (d)	2,784		(7,361)		—		(4,577)
Total	Total	$	79,134	$	51,222	$	8,849	$	139,205	Total	$	175,135	$	59,540	$	11,618	$	246,293


(in thousands)	(in thousands)	June 30, 2020								(in thousands)	June 30, 2021
Assets (liabilities)	Assets (liabilities)	Level 1		Level 2		Level 3		Total		Assets (liabilities)	Level 1		Level 2		Level 3		Total

Commodity derivatives, net (a)	Commodity derivatives, net (a)	$	22,162	$	23,754	$	0	$	45,916	Commodity derivatives, net (a)	$	38,627	$	390,311	$	—	$	428,938
Provisionally priced contracts (b)	Provisionally priced contracts (b)	(15,139)		(41,897)		0		(57,036)		Provisionally priced contracts (b)	32,710		(25,210)		—		7,500
Convertible preferred securities (c)	Convertible preferred securities (c)	0		0		8,654		8,654		Convertible preferred securities (c)	—		—		13,550		13,550
Other assets and liabilities (d)	Other assets and liabilities (d)	4,102		(34,922)		0		(30,820)		Other assets and liabilities (d)	5,373		(14,909)		—		(9,536)
Total	Total	$	11,125	$	(53,065)	$	8,654	$	(33,286)	Total	$	76,710	$	350,192	$	13,550	$	440,452

(a)Includes associated cash posted/received as collateral

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

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

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

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

~~Table of Contents~~

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

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

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

The Andersons, Inc. | Q2 2022 Form 10-Q | 20

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

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

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

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


		Convertible Preferred Securities					Convertible Preferred Securities
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Assets at January 1,	Assets at January 1,	$	8,849	$	8,404	Assets at January 1,	$	11,618	$	8,849
Additional investments	Additional investments	2,800		250		Additional investments	3,883		2,800

Gains included in Other income, net						Gains included in Other income, net	404		—
Assets at March 31,	Assets at March 31,	$	11,649	$	8,654	Assets at March 31,	$	15,905	$	11,649
Additional Investments	Additional Investments	1,901		0		Additional Investments	772		1,901

Gains included in Other income, net						Gains included in Other income, net	126		—
Assets at June 30,	Assets at June 30,	$	13,550	$	8,654	Assets at June 30,	$	16,803	$	13,550

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2021

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The following tables summarize quantitative information about the Company's Level 3 fair value measurements as of June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and June 30, ~~2020:~~2021:

Quantitative Information about Recurring Level 3 Fair Value Measurements

Fair Value as of

(in thousands)

June 30, 2021

December 31, 2020

June 30, 2020

Valuation Method

Unobservable Input

Weighted Average

(in thousands)

June 30, 2022

December 31, 2021

June 30, 2021

Valuation Method

Unobservable Input

Weighted Average

Convertible preferred securities (a)

13,550

8,849

8,654

Implied based on market prices

N/A

Convertible preferred securities (a)

16,803

11,618

13,550

Implied based on market prices

N/A

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

Quantitative Information about Non-Recurring Level 3 Fair Value Measurements

(in thousands)

Fair Value as of 6/30/2022

Valuation Method

Unobservable Input

Weighted Average

Equity method investment (a)

11,538

Discounted cash flow analysis

Various

N/A

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

Quantitative Information about Non-Recurring Level 3 Fair Value Measurements

(in thousands)

Fair Value as of 12/31/2021

Valuation Method

Unobservable Input

Weighted Average

Frac sand assets (b)

2,946

Third party appraisal

Various

N/A

Real property (c)

700

Market approach

Various

N/A

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

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

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

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

11. Related Parties

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

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


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Sales revenues	Sales revenues	$	85,294	$	29,659	$	151,940	$	84,353	Sales revenues	$	103,106	$	85,294	$	189,255	$	151,940
Purchases of product and capital assets	Purchases of product and capital assets	8,662		6,419		20,336		21,996		Purchases of product and capital assets	11,983		8,662		38,409		20,336

(in thousands) June 30, 2021 December 31, 2020 June 30, 2020
Accounts receivable (a)
$ 11,835 $ 5,623 $ 7,332
Accounts payable (b)
2,287 5,251 2,598

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

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


(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Accounts receivable	$	17,560	$	9,984	$	11,835
Accounts payable	3,060		6,034		2,287

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

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12. Segment Information

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

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


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2022		2021		2022		2021
Revenues from external customers
Trade	$	3,097,767	$	2,297,869	$	6,182,448	$	4,280,377
Renewables	882,567		616,527		1,565,798		1,059,486
Plant Nutrient	470,283		321,409		680,325		490,661
Total	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2022		2021		2022		2021
Income (loss) before income taxes from continuing operations
Trade	$	23,666	$	13,777	$	27,335	$	27,632
Renewables1	67,776		26,156		73,738		27,237
Plant Nutrient	38,311		23,995		49,054		32,518
Other	(11,600)		(10,226)		(21,367)		(19,569)
Income before income taxes from continuing operations	$	118,153	$	53,702	$	128,760	$	67,818

1Includes income attributable to noncontrolling interests of $21.9 million and $2.6 million for the three months ended June 30, 2022 and 2021, respectively, and $22.3 million and $0.8 million for the six months ended June 30, 2022 and 2021, respectively.

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2123

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

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

13. Commitments and Contingencies

Litigation activities

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

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

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

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

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

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2224

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14. Discontinued Operations

On August 16, 2021, the Company entered into a definitive agreement under which the Company sold the assets of the Company’s Rail Leasing business for a cash purchase price of approximately $543.1 million. In conjunction with the sale of the Rail Leasing business, the Company announced its intent to divest the remaining pieces of the Rail Leasing business and the Rail Repair business. In the second quarter of 2022, the Company entered into an agreement to sell the Rail Repair business and divested substantially all of the remaining leases under the Rail Leasing business.

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

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


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

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


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

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

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


	Six months ended June 30,
(in thousands)	2022		2021
Depreciation and amortization	$	—	$	17,588
Capital expenditures	(27,276)		(5,703)
Proceeds from sale of assets	36,341		15,616

Non-cash operating activities - Gain on sale of railcars	(6,176)		(4,987)
Non-cash operating activities - fixed asset impairment	2,818		234
Non-cash investing activities - capital expenditures, consisting of unpaid capital expenditure liabilities at period end	—		(113)

The Andersons, Inc. | Q2 2022 Form 10-Q | 26

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15. Subsequent Events

On July 8, 2022, the Company closed on the sale of the remaining assets and certain liabilities of the Company's Rail Repair business for $55.1 million resulting in an estimated pre-tax gain of approximately $30 million.

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

Forward Looking Statements

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Such factors include, but are not limited to, the effects on our business from the COVID-19 pandemic and the pace of recovery from the pandemic, economic and political conditions, globally and in the markets we serve including the ongoing economic impacts from the conflict in Ukraine, fluctuations in cost and availability of commodities, weather and agricultural conditions, governmental regulations, the effectiveness of our internal control over financial reporting and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors. The reader is urged to carefully consider these risks and others, including those risk factors listed under Item 1A of ~~our Annual Report on~~the 2021 Form 10-K ~~for the year ended December 31, 2020 (“2020 Form 10-K”).~~and under Item 1A in this report. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Critical Accounting Policies and Estimates

Our critical accounting policies and critical accounting estimates, as described in our ~~2020~~2021 Form 10-K, have not materially changed through the second quarter of ~~2021.~~2022.

Executive Overview

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

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

The Company has considered the potential impact ofthat the book value of the Company’s total shareholders’ equity ~~exceeding~~briefly exceeded the Company’s market capitalization ~~at various points~~ during the ~~year~~quarter for impairment indicators. Management ultimately concluded that an impairment triggering event had not occurred. The Company ~~continues to believe~~believes that the share price is not an accurate reflection of its current ~~value. The~~value as conditions are currently strong in the agriculture space with a positive long-term ~~outlook remains positive for agricultural commodities due to market volatility driven by scarcity of supply and strong demand.~~outlook. Management believes that the market’s impact on the Company’s equity value does not ~~accurately~~actually reflect the impact of these external factors on the Company. As a result of prior period tests, reviews of current operating results and other relevant market factors, ~~management ultimately~~the Company concluded ~~that, while the Company's shareholders equity exceeded the market capitalization for certain portions of the period,~~ that no impairment trigger existed as of June 30, ~~2021. However, adverse market conditions or alternative management decisions on operations may result in future impairment considerations.~~2022.

~~Trade~~

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

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2328

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Trade

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

Agricultural inventories on hand were 107.0 million and 85.8 million bushels at June 30, ~~2021 were 85.8 million bushels, of which 1.2 million bushels were~~ ~~stored for others. These amounts compare to 74.4 million bushels on hand at~~2022 and June 30, ~~2020,~~2021, respectively. These bushels consist of ~~which 1.7 million bushels were stored for others.~~inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory. Total Trade storage space capacity at company-owned or leased facilities, including temporary pile storage, was ~~approximate~~ly ~~202 million~~ bu~~shels at June 30, 2021 compared to 201~~approximately 184 million bushels at June 30, ~~2020.~~2022 compared to 202 million bushels at June 30, 2021.

~~We expect continued~~Current crop conditions vary by geography, but despite initial delays in planting, crop conditions are good in our key draw areas. Continued merchandising opportunities into harvest as scarcity of supply is impacting overall prices. Crop conditions in the majority of the Group's draw area are excellent and the business is preparing for a large harvest. As the volume of grain in store is expected to remain at levels below recent years for some time, high prices and strong elevation margins are also expected to continue ~~into 2022.~~through the remainder of the year as global stocks are not projected to recover quickly from the recent worldwide production shortfalls.

~~Ethanol~~Renewables

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

~~Spot ethanol crush margins have continued to improve~~ from the prior year ~~and~~due to higher corn and soybean meal prices continue to support feed product values. While there is a level of uncertainty that persists regarding a tighter corn balance sheet and how quickly the ethanol industry as a whole will recover from COVID-19, the group has observed rebounding driving demand, strong coproductproduction margins and ~~continued trading opportunities.~~yields. Also contributing to the increased results was $24.4 million of positive mark-to-market impact; nearly $18 million of which are reversals of prior losses. This compared to positive mark-to-market impacts of $13.5 million in the second quarter of 2021. The ethanol facilities received $17.6 million of USDA Biofuels Producer COVID relief funds, of which, $8.9 million is included in pre-tax income attributable to the Company.

Higher export demand has helped keep ethanol prices firm, despite lower than anticipated seasonal domestic demand being impacted by the overall high gasoline prices. High corn costs for ethanol production in the western US may negatively impact ethanol production there, while the Company's eastern corn belt production facilities are better positioned for corn supply.

Ethanol and related co-products volumes for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


		Three months ended June 30,		Six months ended June 30,			Three months ended June 30,		Six months ended June 30,
(in thousands)	(in thousands)	2021	2020	2021	2020	(in thousands)	2022	2021	2022	2021
Ethanol (gallons shipped)	Ethanol (gallons shipped)	186,396	119,528	358,608	266,873	Ethanol (gallons shipped)	196,536	186,396	391,547	358,608
E-85 (gallons shipped)	E-85 (gallons shipped)	11,914	4,396	19,805	13,489	E-85 (gallons shipped)	10,600	11,914	17,315	19,805
Corn oil (pounds shipped)	Corn oil (pounds shipped)	56,760	20,968	104,708	50,262	Corn oil (pounds shipped)	122,223	56,760	232,544	104,708
DDG (tons shipped)*	DDG (tons shipped)*	454	334	931	964	DDG (tons shipped)*	450	454	950	931

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

Plant Nutrient

The Plant Nutrient ~~Group's~~segment's second quarter operating results ~~were considerably improved compared to~~increased from the prior ~~year~~ period. Tons sold across all product lines were down period over period, however, the lower volumes were more than offset by significant margin increases from well-positioned inventory. The ~~improvement was largely driven by improved margins in~~most significant margin improvements came from the Ag Supply Chain and Specialty Liquids product ~~lines~~lines. While we have seen some lowering of base nutrient prices, continued strong global demand and ~~reflect demand from favorable spring weather, strong grower~~disruption should keep prices higher than historical averages. Strong farm income ~~and well-positioned~~may drive purchasing decisions while overall price levels could cause customers to delay fertilizer inventory. Engineered Granules maintained strong demand but contended against rising input costs and a tight labor market. The group's outlook is positive, anticipating continued higher fertilizer prices and strong demand into the fall application season.purchases.

Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately ~~463~~448 thousand tons for dry nutrients and approximately ~~509~~511 thousand tons for liquid nutrients at June 30, ~~2021, compared~~2022, which is similar to ~~approximately 481 thousand tons for dry nutrients and approximately 510 thousand tons for liquid nutrients at June 30, 2020.~~the prior year.

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2429

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Tons of product sold for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


		Three months ended June 30,		Six months ended June 30,			Three months ended June 30,		Six months ended June 30,
(in thousands)	(in thousands)	2021	2020	2021	2020	(in thousands)	2022	2021	2022	2021
Ag Supply Chain	Ag Supply Chain	661	690	1,008	904	Ag Supply Chain	492	661	649	1,008
Specialty Liquids	Specialty Liquids	133	121	233	196	Specialty Liquids	98	133	190	233
Engineered Granules	Engineered Granules	165	151	323	273	Engineered Granules	121	165	228	323
Total tons	Total tons	959	962	1,564	1,373	Total tons	711	959	1,067	1,564

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

~~Rail~~

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

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

Other

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

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2530

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Operating Results

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

Comparison of the three months ended June 30, ~~2021~~2022 with the three months ended June 30, ~~2020~~2021 including a reconciliation of GAAP to non-GAAP measures:


		Three months ended June 30, 2021													Three months ended June 30, 2022
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Other		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	2,297,869	$	616,527	$	321,409	$	37,921	$	—	$	3,273,726	Sales and merchandising revenues	$	3,097,767	$	882,567	$	470,283	$	—	$	4,450,617
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	2,220,038		581,811		270,549		27,284		—		3,099,682		Cost of sales and merchandising revenues	2,995,773		822,679		401,324		—		4,219,776
Gross profit	Gross profit	77,831		34,716		50,860		10,637		—		174,044		Gross profit	101,994		59,888		68,959		—		230,841
Operating, administrative and general expenses	Operating, administrative and general expenses	61,514		6,577		26,568		4,416		10,901		109,976		Operating, administrative and general expenses	62,977		8,590		29,591		11,401		112,559
Interest expense (income), net	Interest expense (income), net	7,452		2,021		1,146		3,394		(559)		13,454		Interest expense (income), net	13,300		2,012		1,923		(314)		16,921
Equity in earnings of affiliates, net		845		—		—		—		—		845
Other income, net		4,067		38		849		237		116		5,307
Income (loss) before income taxes		$	13,777	$	26,156	$	23,995	$	3,064	$	(10,226)	$	56,766
Equity in earnings (losses) of affiliates, net														Equity in earnings (losses) of affiliates, net	(6,034)		—		—		—		(6,034)
Other income (expense), net														Other income (expense), net	3,983		18,490		866		(513)		22,826
Income (loss) before income taxes from continuing operations														Income (loss) before income taxes from continuing operations	$	23,666	$	67,776	$	38,311	$	(11,600)	$	118,153
Income (loss) before income taxes attributable to the noncontrolling interests	Income (loss) before income taxes attributable to the noncontrolling interests	—		2,625		—		—		—		2,625		Income (loss) before income taxes attributable to the noncontrolling interests	—		21,856		—		—		21,856
Non-GAAP Income (loss) before income taxes attributable to the Company		$	13,777	$	23,531	$	23,995	$	3,064	$	(10,226)	$	54,141
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations														Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	23,666	$	45,920	$	38,311	$	(11,600)	$	96,297


		Three months ended June 30, 2020													Three months ended June 30, 2021
(in thousands)	(in thousands)	Trade		Ethanol		Plant Nutrient		Rail		Other		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	1,351,168	$	223,745	$	279,825	$	35,442	$	—	$	1,890,180	Sales and merchandising revenues	$	2,297,869	$	616,527	$	321,409	$	—	$	3,235,805
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues	1,291,786		226,344		241,060		24,724		—		1,783,914		Cost of sales and merchandising revenues	2,220,038		581,811		270,549		—		3,072,398
Gross profit	Gross profit	59,382		(2,599)		38,765		10,718		—		106,266		Gross profit	77,831		34,716		50,860		—		163,407
Operating, administrative and general expenses	Operating, administrative and general expenses	54,998		5,506		18,281		5,184		6,167		90,136		Operating, administrative and general expenses	61,514		6,577		26,568		10,901		105,560
Interest expense (income), net	Interest expense (income), net	5,056		1,900		1,463		3,833		(425)		11,827		Interest expense (income), net	7,452		2,021		1,146		(559)		10,060
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	79		—		—		—		—		79		Equity in earnings (losses) of affiliates, net	845		—		—		—		845
Other income (expense), net	Other income (expense), net	986		466		386		905		707		3,450		Other income (expense), net	4,067		38		849		116		5,070
Income (loss) before income taxes		$	393	$	(9,539)	$	19,407	$	2,606	$	(5,035)	$	7,832
Income (loss) before income taxes from continuing operations														Income (loss) before income taxes from continuing operations	$	13,777	$	26,156	$	23,995	$	(10,226)	$	53,702
Income (loss) before income taxes attributable to the noncontrolling interests	Income (loss) before income taxes attributable to the noncontrolling interests	—		(10,407)		—		—		—		(10,407)		Income (loss) before income taxes attributable to the noncontrolling interests	—		2,625		—		—		2,625
Non-GAAP Income (loss) before income taxes attributable to the Company		$	393	$	868	$	19,407	$	2,606	$	(5,035)	$	18,239
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations														Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	13,777	$	23,531	$	23,995	$	(10,226)	$	51,077

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

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 2631

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Trade

Operating results for the Trade ~~Group~~segment increased by ~~$13.4~~$9.9 million compared to the results of the same period last year. Sales and merchandising revenues increased by ~~$946.7~~$799.9 million and cost of sales and merchandising revenues increased by ~~$928.3~~$775.7 million for a favorable net gross profit impact of ~~$18.4~~$24.2 million. The increase to sales and cost of sales is the result of increased commodity prices and volumes. Much of the volume increase is related to the opening of the international merchandising office in the second half of prior year. The increase in gross profit was driven by a strong performance in our domestic assets, particularly around our core footprint in the eastern grain belt, along with well-positioned inventory in our in our feed ingredients business that led to strong margins.

Operating, administrative and general expenses increased by $1.5 million. The increase from the prior year is primarily related to higher labor costs as a result of new locations opened in the second half of 2021.

Interest expense increased by $5.8 million due to both higher borrowings and interest rates on the Company's short-term line of credit compared to the prior year.

Equity in earnings of affiliates decreased by $6.9 million mainly as a result of an impairment of one of the Company's equity method investments of approximately $4.5 million.

Renewables

Operating results for the Renewables segment increased by $22.4 million from the same period last year. Sales and merchandising revenues increased by $266.0 million and cost of sales and merchandising revenues increased by $240.9 million compared to prior year results. As a result, gross profit increased by $25.2 million compared to 2021 results. Most of the increase to sales and cost of sales is the result of increased corn and ethanol commodity prices. The ~~net~~ increase into gross profit was primarily driven by improved merchandising results as weather and export demand created volatility that allowed traders to identify arbitrage opportunities from geographical dislocations. This increase was partially offset by a decrease in the ~~Group's traditional assets, however, as inverted futures markets~~current period results reflect stronger production margins and yields. Included in ~~several commodities provided less space~~pre-tax income ~~replacing and accelerating~~in the ~~income with merchandising opportunities noted above.~~quarter is $24.4 million of positive mark-to-market impact of which nearly $18 million are reversals of prior mark-to-market losses. This compared to positive mark-to-market impacts of $13.5 million in the second quarter of 2021.

Operating, administrative and general expenses increased by ~~$6.5~~$2.0 million primarily due to higher labor and utility costs from the prior year.

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

Plant Nutrient

Operating results for the Plant Nutrient segment increased by $14.3 million compared to the same period in the prior year. Sales and merchandising revenues increased by $148.9 million and cost of sales and merchandising revenues increased by $130.8 million resulting in an $18.1 million increase in gross profit. The increase in gross profit was driven by very strong margins across the Ag Supply Chain and Specialty Liquids product lines due to strong grower income and well-positioned fertilizer inventory despite lower volumes sold.

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

Interest expense increased by $0.8 million due to higher interest rates and borrowings.

Other

Operating results for the quarter declined by $1.4 million compared to the same period in the prior year. The increase in operating losses was primarily driven by higher operating, administrative and general expenses due to increased variable incentive-based compensation as a result of improved company-wide performance year-over-year.

The Andersons, Inc. | Q2 2022 Form 10-Q | 32

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Income Taxes

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

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

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

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Operating Results

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


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


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

Trade

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

Operating, administrative and general expenses increased by $4.1 million. The increase from the prior year is primarily related to higher ~~incentive compensation~~labor costs ~~from improved operating results and other professional service fees.~~as a result of new locations opened in the second half of 2021.

Interest expense increased by ~~$2.4~~$7.0 million due to both higher ~~group~~ borrowings and interest rates on the Company's short-term line of credit compared to the prior year.

~~Other income increased~~

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Equity in earnings of affiliates decreased by ~~$3.1~~$8.9 million mainly as a result of an impairment of one of the Company's equity method investments of approximately $4.5 million combined with favorable results from the same equity method investment in the prior year ~~largely driven by a gain on the sale of a grain location~~that didn't recur in ~~the current year.~~2022.

~~Ethanol~~Renewables

Operating results for ~~the Ethanol Group~~Renewables increased by ~~$22.7~~$25.0 million from the same period last year. Sales and merchandising revenues increased by ~~$392.8~~$506.3 million and cost of sales and merchandising revenues increased by ~~$355.5~~$474.4 million compared to prior ~~year results.~~year. As a result, gross profit increased by ~~$37.3~~$31.9 million compared to ~~2020 results. Most~~prior year. The vast majority of the increase to sales and merchandising revenues and cost of sales and merchandising revenues is the result of increased commodity prices. The net increase to gross profit in the current period results reflect improved board crush margins and yields across the ethanol ~~margins, higher coproduct sales from DDGs and corn oil~~plants, improved co-product values and strong merchandising ~~revenues. The~~margins. Unrealized mark-to-market adjustments improved approximately $3.7 million from the prior ~~year results were significantly impacted by COVID-19.~~year.

Operating, administrative and general expenses increased by ~~$1.1~~$3.2 million primarily due to higher labor and utility costs from the prior year.

Other income increased by $17.6 million and almost all of the increase ~~in labor and incentive compensation costs~~ from ~~increased production and improved operating results, respectively.~~the prior year was a result of the proceeds received as a part of the USDA Biofuel Producer Relief Program that was enacted as a part of the CARES Act, of which approximately half of these proceeds were attributable to the noncontrolling interest.

Plant Nutrient

Operating results for the Plant Nutrient ~~Group~~segment increased by ~~$4.6~~$16.5 million compared to the same period in the prior year. Sales and merchandising revenues increased ~~by $41.6~~$189.7 million and cost of sales and merchandising revenues increased by ~~$29.5~~$167.2 million resulting in ~~a $12.1 million increase in gross profit. The increase in~~increased gross profit ~~was driven by~~of $22.4 million. Both sales and merchandising revenues and cost of sales and merchandising revenues were higher due to higher fertilizer prices from the prior year. Gross profit improved year-over-year due to strong margins ~~across the~~from well-positioned inventory in a tight supply market. The most significant margin improvements came from Ag Supply Chain and Specialty Liquids product ~~lines and reflects higher spring demand, strong grower income and well positioned fertilizer inventory.~~lines.

Operating, administrative and general expenses increased by ~~$8.3~~$4.9 million due to ~~higher incentive compensation~~increased labor costs ~~from and improved operating results.~~

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

~~Rail~~

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

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

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

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

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~~Other~~

Operating results for the second quarter declined by $5.2 million compared to the same period in 2020. The increase in operating losses was primarily driven by higher operating, administrative and general expenses due to increased incentive-based compensation as a result of improved company-wide performance year over year and higher professional services expenses.

~~Income Taxes~~

For the three months ended June 30, 2021, the Company recorded an income tax expense of $10.6 million at an effective rate of 18.7%. For the three months ended June 30, 2020, the Company recorded an income tax benefit of $12.2 million at an effective tax rate of 155.8%. The change in effective tax rate for the three months ended June 30, 2021 as compared to the same period last year was primarily attributed to the treatment of mark-to-market activity on certain contracts in the Ethanol segment. The prior year also reflects the benefit of net operating loss carryback tax savings opportunities as provided by the CARES Act.

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

Six months ended June 30, 2021
(in thousands) Trade Ethanol Plant Nutrient Rail Other Total
Sales and merchandising revenues $ 4,280,377 $ 1,059,486 $ 490,661 $ 78,931 $ — $ 5,909,455
Cost of sales and merchandising revenues 4,129,989 1,016,287 407,400 59,023 — 5,612,699
Gross profit 150,388 43,199 83,261 19,908 — 296,756
Operating, administrative and general expenses 118,445 13,233 49,967 7,290 20,913 209,848
Interest expense (income), net 14,503 4,094 2,212 6,574 (760) 26,623
Equity in earnings (losses) of affiliates, net 2,639 — — — — 2,639
Other income (expense), net 7,553 1,365 1,436 1,911 584 12,849
Income (loss) before income taxes $ 27,632 $ 27,237 $ 32,518 $ 7,955 $ (19,569) $ 75,773
Income (loss) before income taxes attributable to the noncontrolling interests — 780 — — — 780
Non-GAAP Income (loss) before income taxes attributable to the Company $ 27,632 $ 26,457 $ 32,518 $ 7,955 $ (19,569) $ 74,993

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

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

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~~Trade~~

Operating results for the Trade Group increased by $37.2 million compared to the results of the same period last year. Sales and merchandising revenues increased by $1,551.2 million and cost of sales and merchandising revenues increased by $1,522.6 million for an increased gross profit impact of $28.5 million. Most of the increase to sales and cost of sales is the result of increased commodity prices. The net increase in gross profit was primarily driven by improved merchandising results as weather and export demand created volatility that allowed traders to identify arbitrage opportunities from geographical dislocations. This increase was partially offset by a decrease in the Group's traditional assets, however, as inverted futures markets in several commodities provided less space income, replacing and accelerating the income with merchandising opportunities noted above.

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

Interest expense increased by ~~$2.3~~$1.2 million due to higher ~~group borrowings on the Company's short-term line of credit compared to the prior year.~~

~~Ethanol~~

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

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

~~Plant Nutrient~~

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

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

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

~~Rail~~

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

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

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

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

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borrowings.

Other

Operating results declined by ~~$9.6~~$1.8 million from the same period last year. The ~~increase~~decrease in ~~operating losses~~other income, net from the prior year was ~~primarily driven by increased incentive-based compensation in operating, administrative and general expenses~~ due to ~~improved company-wide performance year over year and higher professional services expenses.~~interest received on a tax refund as a result of the CARES Act that did not recur in current year.

Income Taxes

For the six months ended June 30, ~~2021,~~2022, the Company recorded an income tax expense from continuing operations of ~~$16.4 million at an~~$19.9 million. The Company's effective tax rate was 15.4% on income before taxes from continuing operations of $128.8 million. The difference between the 15.4% effective tax rate and the U.S. federal statutory tax rate of ~~21.6%.~~ 21% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

For the six months ended June 30, ~~2020,~~2021, the Company recorded an income tax ~~benefit~~expense from continuing operations of ~~$13.7~~$14.0 million at an effective tax rate of ~~30.5%~~20.7%. The ~~change in~~difference between the 20.7% effective tax rate ~~for~~and the ~~six months ended June 30, 2021 as compared~~U.S. federal statutory tax rate of 21% due to the ~~same period last year primarily attributed improved operating results in the current year, including additional~~tax impact of certain discrete derivatives and hedging activities offset by state and local taxes and nondeductible ~~compensation and increased foreign tax expense, as well as the treatment of mark-to-market activity on certain contracts in the Ethanol segment.~~compensation.

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Liquidity and Capital Resources

Working Capital

At June 30, ~~2021,~~2022, the Company had working capital from continuing operations of ~~$543.7 million. The following table presents~~$984.0 million, an increase of $443.6 million from the prior year. This increase was attributable to changes in the following components of current assets from continuing operations and current ~~liabilities:~~liabilities from continuing operations:


(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		Variance		(in thousands)	June 30, 2022		June 30, 2021		Variance
Current Assets:
Current Assets from Continuing Operations:								Current Assets from Continuing Operations:
Cash and cash equivalents	Cash and cash equivalents	$	27,538	$	30,011	$	(2,473)	Cash and cash equivalents	$	86,035	$	27,538	$	58,497
Accounts receivable, net	Accounts receivable, net	721,575		537,011		184,564		Accounts receivable, net	1,141,167		702,869		438,298
Inventories	Inventories	912,299		616,323		295,976		Inventories	1,618,326		904,924		713,402
Commodity derivative assets – current	Commodity derivative assets – current	507,148		112,089		395,059		Commodity derivative assets – current	638,357		507,148		131,209
Other current assets	Other current assets	65,740		102,755		(37,015)		Other current assets	70,367		63,266		7,101
Total current assets		$	2,234,300	$	1,398,189	$	836,111
Current Liabilities:
Total current assets from continuing operations								Total current assets from continuing operations	$	3,554,252	$	2,205,745	$	1,348,507
Current Liabilities from Continuing Operations:								Current Liabilities from Continuing Operations:
Short-term debt	Short-term debt	757,271		96,071		661,200		Short-term debt	1,161,428		757,271		404,157
Trade and other payables	Trade and other payables	547,169		503,892		43,277		Trade and other payables	772,996		543,503		229,493
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	58,155		45,734		12,421		Customer prepayments and deferred revenue	184,154		55,943		128,211
Commodity derivative liabilities – current	Commodity derivative liabilities – current	90,366		65,186		25,180		Commodity derivative liabilities – current	185,903		90,366		95,537
Current maturities of long-term debt	Current maturities of long-term debt	56,582		68,477		(11,895)		Current maturities of long-term debt	53,951		50,069		3,882
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	181,015		147,422		33,593		Accrued expenses and other current liabilities	211,830		168,221		43,609
Total current liabilities		$	1,690,558	$	926,782	$	763,776
Working Capital		$	543,742	$	471,407	$	72,335
Total current liabilities from continuing operations								Total current liabilities from continuing operations	$	2,570,262	$	1,665,373	$	904,889
Working Capital from Continuing Operations								Working Capital from Continuing Operations	$	983,990	$	540,372	$	443,618

Current assets from continuing operations as of June 30, ~~2021~~2022 increased ~~$836.1~~$1,348.5 million in comparison to those as of June 30, ~~2020.~~2021. This increase was noted in ~~all areas except for cash~~mainly accounts receivable, inventories and ~~cash equivalents and other~~ current commodity derivative assets. The increases in those accounts ~~receivable, current commodity derivative assets and inventory balances~~ can largely be ~~attributable~~attributed to the significant increases in the prices of agricultural commodities, including fertilizer, that the Company transacts in the ordinary course of ~~business. The decrease in other current assets is attributable to~~business from the ~~receipt of federal income tax refunds as a result~~same period of the ~~CARES Act~~prior year. The Company also opened an international merchandising office in ~~2020. See also~~ the ~~discussion below on additional sources and uses~~third quarter of ~~cash for an understanding of~~the prior year which is contributing to the increase in ~~cash from prior year.~~working capital as there is a substantial volume of commodities held in that business in 2022.

Current liabilities from continuing operations increased ~~$763.8~~$904.9 million across all financial statement line items when compared to the prior ~~year primarily due to increases in short-term debt and trade and other payables.~~year. The increase in short-term debt is the result of higher working capital needs and driven by the significant ~~increases~~increase in agricultural commodity prices from the ~~prices of agricultural commodities.~~prior year. The increase in trade and other payables, iscustomer prepayments and deferred revenue, and current commodity derivative liabilities are also the result of increasing agricultural commodity prices. Short-term borrowings, while typically at a seasonal high in the spring, are further supporting an unusual price run-up in our core commodities. As we liquidate these commodities in advance of harvest, we expect a reduction to the level of short-term borrowing. The increase in current liabilities was slightly offset by reductions in current maturities of long-term debt.

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 30~~

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Sources and Uses of Cash


		Six Months Ended					Six Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		(in thousands)	June 30, 2022		June 30, 2021
Net cash (used in) provided by operating activities		$	(245,494)	$	145,511
Net cash used in operating activities						Net cash used in operating activities	$	(721,799)	$	(245,494)
Net cash used in investing activities	Net cash used in investing activities	(23,474)		(66,002)		Net cash used in investing activities	(30,094)		(23,474)
Net cash provided by (used in) financing activities		267,550		(105,068)
Net cash provided by financing activities						Net cash provided by financing activities	622,113		267,550

Operating Activities

Our operating activities used cash of ~~$245.5~~$721.8 million and ~~provided cash of $145.5~~$245.5 million in the first six months of ~~2021~~2022 and ~~2020,~~2021, respectively. The increase in cash used was primarily due to ~~a result in~~ the ~~change of~~increased working capital needs, as discussed above, driven by significant increases in agricultural commodity ~~prices. However, when you remove~~prices and the ~~impact from~~new international merchandising locations being included in the current year. When the changes in ~~working capital,~~operating assets and liabilities are removed, cash provided by operating activities was ~~much stronger~~slightly lower than ~~the~~ prior ~~period~~year due to ~~favorable operating results.~~the timing of tax refunds and credits in the first quarter of 2021.

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Investing Activities

Investing activities used cash of ~~$23.5~~$30.1 million through the first six months of ~~2021~~2022 compared to cash used of ~~$66.0~~$23.5 million in the prior ~~year.~~period. The ~~decrease~~increase from the prior ~~year~~period was a result of ~~higher proceeds from sales of assets and railcars, fewer purchased railcars and the continued strategic use of~~a modest increase in capital spending ~~to enhance overall liquidity and cash management.~~on continuing operations from the prior year.

We expect to invest approximately $100 million in property, plant and equipment in ~~2021; approximately 60% of which will be~~2022 related to ~~maintain facilities.~~continuing operations.

Financing Activities

Financing activities provided cash of ~~$267.6~~$622.1 million and ~~$105.1~~$267.6 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. This ~~change~~increase from the prior year was ~~largely~~ due to athe significant increase in ~~short term borrowings~~agricultural commodity prices from the prior period and the related need for short-term borrowings. The Company's short-term debt balance of $1,161.4 million is closely aligned to ~~cover working capital needs~~the balance of readily marketable inventories of $1,214.4 million as ~~the prices~~ of ~~agricultural commodities continue to rise.~~June 30, 2022.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of ~~$1,404.6~~$2,501.7 million in ~~borrowings.~~borrowing capacity. Of the total capacity, ~~$404.6~~$395.7 million is non-recourse to the Company. As of June 30, ~~2021,~~2022, the Company had ~~$1,173.5~~$1,315.2 million available for borrowing with ~~$237.2~~$277.5 million of that total being non-recourse to the Company.

The Company paid ~~$11.7~~$12.2 million in dividends in the first six months of ~~2021~~2022 compared to ~~$11.5~~$11.7 million in the prior ~~year.~~period. The Company paid dividends of $0.180 and $0.175 per common share ~~for the dividends paid~~ in January and April of 2022 and 2021, ~~and 2020.~~respectively. On June ~~25, 2021,~~16, 2022, the Company declared a cash dividend of ~~$0.175~~$0.180 per common share payable on July 22, ~~2021~~2022 to shareholders of record on July ~~6, 2021.~~

Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of equity and limitations on additional debt. The Company is in compliance with all such covenants as of June 30, 2021. 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.1, 2022.

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

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

At June 30, ~~2021,~~2022, the Company had standby letters of credit outstanding of ~~$25.5~~$5.1 million.

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 3137

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

For further information, refer to our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There were no material changes in market risk, specifically commodity and interest rate risk during the six months ended June 30, ~~2021.~~2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of June 30, ~~2021~~2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the second quarter of ~~2021,~~2022, identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 3238

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Part II. Other Information

Item 1. Legal Proceedings

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

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

Item 1A. Risk Factors

The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the ~~2020~~2021 Form 10-K under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. ~~There have been~~The information presented below updates, and should be read in conjunction with, the risk factors in Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Except as presented below, there were no ~~material~~other significant changes toin the Company’s risk factors ~~since~~during the ~~2020 Form 10-K.~~

quarter ended June 30, 2022.

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

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

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

The Andersons, Inc. | Q2 2022 Form 10-Q | 39

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

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


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






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

(1) During the three months ended June 30, ~~2021,~~2022, the Company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

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

~~Item 4. Mine Safety Disclosure~~

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

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

~~The Andersons, Inc. | Q2 2021 Form 10-Q | 33~~

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Item 6. Exhibits



Exhibit Number						Description

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

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

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

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

95.1*						~~Mine Safety Disclosure~~

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

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

* Filed herewith
** Furnished herewith

Items 3, 4, and 5 are not applicable and have been ~~omitted~~omitted.

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 3440

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Signatures

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



						THE ANDERSONS, INC.

Date: August ~~4, 2021~~8, 2022						/s/ Patrick E. Bowe
						Patrick E. Bowe
						President and Chief Executive Officer

Date: August ~~4, 2021~~8, 2022						/s/ Brian A. Valentine
						Brian A. Valentine
						Executive Vice President and Chief Financial Officer

The Andersons, Inc. | Q2 ~~2021~~2022 Form 10-Q | 3541


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



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



Total	12,937	$	27.43	—	—