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 ~~03/31/~~06/30/2022


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

For the transition period from to .

Commission file number 000-20557

THE ANDERSONS, INC.

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


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

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

(419) 893-5050

(Telephone Number)

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

Title of each class:

Trading Symbol

Name of each exchange on which registered:

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

ANDE

The NASDAQ Stock Market LLC

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

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

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


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

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

The registrant had ~~33,829,984~~33,860,914 common shares outstanding at ~~April~~July 22, 2022.

Table of Contents

THE ANDERSONS, INC.

INDEX


			Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations – Three and Si x months ended ~~March 31,~~June 30 , 2022 and 2021			1
Condensed Consolidated Statements of Comprehensive Income – Three ~~– Three~~and Six months ended ~~March 31,~~June 3 0 , 2022 and 2021			2
Condensed Consolidated Balance Sheets – ~~March 31,~~June 3 0 , 2022, December 31, 2021 and ~~March 31,~~June 3 0 , 2021			3
Condensed Consolidated Statements of Cash Flows – ~~Three~~Six months ended ~~March 31,~~June 3 0 , 2022 and 2021			4
Condensed Consolidated Statements of Equity – Three and Si x months ended ~~March 31,~~ June 3 0 , 2022 and 2021			5
Notes to Condensed Consolidated Financial Statements			67
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2528
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3238
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			34
~~Item 4. Mine Safety Disclosure~~			3440
Item 6. Exhibits			3540

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
			2022			2021			2022		2021		2022		2021
Sales and merchandising revenues	Sales and merchandising revenues		$	3,977,954		$	2,594,719	Sales and merchandising revenues	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues		3,858,419			2,481,278		Cost of sales and merchandising revenues	4,219,776		3,072,398		8,078,195		5,553,676
Gross profit	Gross profit		119,535			113,441		Gross profit	230,841		163,407		350,376		276,848
Operating, administrative and general expenses	Operating, administrative and general expenses		101,987			96,998		Operating, administrative and general expenses	112,559		105,560		214,546		202,558

Interest expense, net	Interest expense, net		10,859			9,989		Interest expense, net	16,921		10,060		27,780		20,049
Other income, net:	Other income, net:							Other income, net:
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net		(244)			1,794		Equity in earnings (losses) of affiliates, net	(6,034)		845		(6,278)		2,639
Other income, net	Other income, net		4,162			5,868		Other income, net	22,826		5,070		26,988		10,938
Income before income taxes from continuing operations	Income before income taxes from continuing operations		10,607			14,116		Income before income taxes from continuing operations	118,153		53,702		128,760		67,818
Income tax provision from continuing operations	Income tax provision from continuing operations		4,103			4,361		Income tax provision from continuing operations	15,753		9,677		19,856		14,038
Net income from continuing operations	Net income from continuing operations		6,504			9,755		Net income from continuing operations	102,400		44,025		108,904		53,780
Income (loss) from discontinued operations, net of income taxes	Income (loss) from discontinued operations, net of income taxes		(554)			3,507		Income (loss) from discontinued operations, net of income taxes	(739)		2,099		(1,294)		5,606
Net income	Net income		5,950			13,262		Net income	101,661		46,124		107,610		59,386
Net income (loss) attributable to noncontrolling interests			447			(1,845)
Net income attributable to noncontrolling interests								Net income attributable to noncontrolling interests	21,856		2,625		22,303		780
Net income attributable to The Andersons, Inc.	Net income attributable to The Andersons, Inc.		$	5,503		$	15,107	Net income attributable to The Andersons, Inc.	$	79,805	$	43,499	$	85,307	$	58,606

Average number of shares outstanding - basic	Average number of shares outstanding - basic		33,738			33,188		Average number of shares outstanding - basic	33,850		33,263		33,795		33,226
Average number of share outstanding - diluted	Average number of share outstanding - diluted		34,279			33,577		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:	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):							Basic earnings (loss):
Continuing operations	Continuing operations		$	0.18		$	0.35	Continuing operations	$	2.38	$	1.25	$	2.56	$	1.60
Discontinued operations	Discontinued operations		(0.02)			0.11		Discontinued operations	(0.02)		0.06		(0.04)		0.16
			$	0.16		$	0.46		$	2.36	$	1.31	$	2.52	$	1.76
Diluted earnings (loss):	Diluted earnings (loss):							Diluted earnings (loss):
Continuing operations	Continuing operations		$	0.18		$	0.35	Continuing operations	$	2.34	$	1.23	$	2.52	$	1.58
Discontinued operations	Discontinued operations		(0.02)			0.10		Discontinued operations	(0.02)		0.07		(0.04)		0.16
			$	0.16		$	0.45		$	2.32	$	1.30	$	2.48	$	1.74

See Notes to Condensed Consolidated Financial Statements

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 1

Table of Contents

The Andersons, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
			2022			2021			2022		2021		2022		2021
Net income	Net income		$	5,950		$	13,262	Net income	$	101,661	$	46,124	$	107,610	$	59,386
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:							Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial loss and prior service cost	Change in unrecognized actuarial loss and prior service cost		(159)			(103)		Change in unrecognized actuarial loss and prior service cost	517		(234)		358		(337)
Foreign currency translation adjustments	Foreign currency translation adjustments		98			1,224		Foreign currency translation adjustments	(5,679)		1,469		(5,581)		2,693
Cash flow hedge activity	Cash flow hedge activity		12,422			9,741		Cash flow hedge activity	6,697		(1,858)		19,119		7,883
Other comprehensive income			12,361			10,862
Other comprehensive income (loss)								Other comprehensive income (loss)	1,535		(623)		13,896		10,239
Comprehensive income	Comprehensive income		18,311			24,124		Comprehensive income	103,196		45,501		121,506		69,625
Comprehensive income (loss) attributable to the noncontrolling interests			447			(1,845)
Comprehensive income attributable to the noncontrolling interests								Comprehensive income attributable to the noncontrolling interests	21,856		2,625		22,303		780
Comprehensive income attributable to The Andersons, Inc.	Comprehensive income attributable to The Andersons, Inc.		$	17,864		$	25,969	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 Balance Sheets (Unaudited)


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(In thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Assets	Assets							Assets
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	36,381	$	216,444	$	35,393	Cash and cash equivalents	$	86,035	$	216,444	$	27,538
Accounts receivable, net	Accounts receivable, net	1,050,259		835,180		677,118		Accounts receivable, net	1,141,167		835,180		702,869
Inventories (Note 2)	Inventories (Note 2)	1,950,303		1,814,538		1,287,637		Inventories (Note 2)	1,618,326		1,814,538		904,924
Commodity derivative assets – current (Note 5)	Commodity derivative assets – current (Note 5)	769,916		410,813		317,939		Commodity derivative assets – current (Note 5)	638,357		410,813		507,148
Current assets held-for-sale (Note 14)	Current assets held-for-sale (Note 14)	20,255		20,885		37,136		Current assets held-for-sale (Note 14)	18,627		20,885		28,555
Other current assets	Other current assets	113,589		74,468		81,666		Other current assets	70,367		74,468		63,266
Total current assets	Total current assets	3,940,703		3,372,328		2,436,889		Total current assets	3,572,879		3,372,328		2,234,300
Other assets:	Other assets:							Other assets:
Goodwill	Goodwill	129,342		129,342		131,542		Goodwill	129,342		129,342		131,542
Other intangible assets, net	Other intangible assets, net	111,055		117,137		133,198		Other intangible assets, net	105,222		117,137		125,731
Right of use assets, net	Right of use assets, net	51,821		52,146		34,966		Right of use assets, net	50,233		52,146		42,330
Other assets held-for-sale (Note 14)	Other assets held-for-sale (Note 14)	45,264		43,169		629,228		Other assets held-for-sale (Note 14)	24,298		43,169		620,745
Other assets, net	Other assets, net	92,506		69,068		60,964		Other assets, net	91,758		69,068		70,879
Total other assets	Total other assets	429,988		410,862		989,898		Total other assets	400,853		410,862		991,227

Property, plant and equipment, net (Note 3)	Property, plant and equipment, net (Note 3)	772,245		786,029		839,950		Property, plant and equipment, net (Note 3)	763,443		786,029		823,563
Total assets	Total assets	$	5,142,936	$	4,569,219	$	4,266,737	Total assets	$	4,737,175	$	4,569,219	$	4,049,090
Liabilities and equity	Liabilities and equity							Liabilities and equity
Current liabilities:	Current liabilities:							Current liabilities:
Short-term debt (Note 4)	Short-term debt (Note 4)	$	1,449,768	$	501,792	$	915,205	Short-term debt (Note 4)	$	1,161,428	$	501,792	$	757,271
Trade and other payables	Trade and other payables	741,124		1,199,324		534,660		Trade and other payables	772,996		1,199,324		543,503
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	384,723		358,119		161,696		Customer prepayments and deferred revenue	184,154		358,119		55,943
Commodity derivative liabilities – current (Note 5)	Commodity derivative liabilities – current (Note 5)	216,836		128,911		91,448		Commodity derivative liabilities – current (Note 5)	185,903		128,911		90,366
Current maturities of long-term debt (Note 4)	Current maturities of long-term debt (Note 4)	54,158		32,256		42,824		Current maturities of long-term debt (Note 4)	53,951		32,256		50,069
Current liabilities held-for-sale (Note 14)	Current liabilities held-for-sale (Note 14)	10,200		13,379		26,362		Current liabilities held-for-sale (Note 14)	7,314		13,379		25,185
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	205,958		230,148		145,921		Accrued expenses and other current liabilities	211,830		230,148		168,221
Total current liabilities	Total current liabilities	3,062,767		2,463,929		1,918,116		Total current liabilities	2,577,576		2,463,929		1,690,558
Long-term lease liabilities	Long-term lease liabilities	31,419		31,322		21,210		Long-term lease liabilities	28,929		31,322		27,134
Long-term debt, less current maturities (Note 4)	Long-term debt, less current maturities (Note 4)	571,181		600,487		877,583		Long-term debt, less current maturities (Note 4)	563,447		600,487		837,609
Deferred income taxes	Deferred income taxes	68,437		71,127		173,481		Deferred income taxes	63,383		71,127		173,212
Other long-term liabilities held-for-sale (Note 14)	Other long-term liabilities held-for-sale (Note 14)	14,738		16,119		45,172		Other long-term liabilities held-for-sale (Note 14)	3,113		16,119		43,993
Other long-term liabilities	Other long-term liabilities	77,173		78,531		48,624		Other long-term liabilities	83,521		78,531		51,620
Total liabilities	Total liabilities	3,825,715		3,261,515		3,084,186		Total liabilities	3,319,969		3,261,515		2,824,126
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)	0		0		0		Commitments and contingencies (Note 13)	0		0		0
Shareholders’ equity:	Shareholders’ equity:							Shareholders’ equity:
Common shares, without par value (63,000 shares authorized; 34,064, 33,870 and 33,786 shares issued at 3/31/2022, 12/31/2021 and 3/31/2021, respectively)		142		140		140
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)								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)	Preferred shares, without par value (1,000 shares authorized; none issued)	—		—		—		Preferred shares, without par value (1,000 shares authorized; none issued)	—		—		—
Additional paid-in-capital	Additional paid-in-capital	375,794		368,595		355,961		Additional paid-in-capital	378,740		368,595		357,606
Treasury shares, at cost (61, 11 and 123 shares at 3/31/2022, 12/31/2021 and 3/31/2021, respectively)		(2,265)		(263)		(2,872)
Treasury shares, at cost (62, 11 and 111 shares at 6/30/2022, 12/31/2021 and 6/30/2021, respectively)								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)	Accumulated other comprehensive income (loss)	13,555		1,194		(1,214)		Accumulated other comprehensive income (loss)	15,090		1,194		(1,837)
Retained earnings	Retained earnings	701,799		702,759		631,652		Retained earnings	775,495		702,759		669,241
Total shareholders’ equity of The Andersons, Inc.	Total shareholders’ equity of The Andersons, Inc.	1,089,025		1,072,425		983,667		Total shareholders’ equity of The Andersons, Inc.	1,167,154		1,072,425		1,022,500
Noncontrolling interests	Noncontrolling interests	228,196		235,279		198,884		Noncontrolling interests	250,052		235,279		202,464
Total equity	Total equity	1,317,221		1,307,704		1,182,551		Total equity	1,417,206		1,307,704		1,224,964
Total liabilities and equity	Total liabilities and equity	$	5,142,936	$	4,569,219	$	4,266,737	Total liabilities and equity	$	4,737,175	$	4,569,219	$	4,049,090

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


		Three months ended March 31,					Six months ended June 30,
		2022		2021			2022		2021
Operating Activities	Operating Activities					Operating Activities
Net income from continuing operations	Net income from continuing operations	$	6,504	$	9,755	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	(554)		3,507		Income (loss) from discontinued operations, net of income taxes	(1,294)		5,606
Net income	Net income	5,950		13,262		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:					Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	34,377		47,504		Depreciation and amortization	67,945		95,154
Bad debt expense, net	Bad debt expense, net	1,255		(1,686)		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	244		(1,794)		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	(81)		(2,635)		Gain on sales of assets, net	(10,305)		(6,253)
Stock-based compensation expense	Stock-based compensation expense	1,818		1,990		Stock-based compensation expense	4,708		4,112
Deferred federal income tax	Deferred federal income tax	(6,947)		(2)		Deferred federal income tax	(13,755)		170

Other	Other	2,885		4,579		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	(215,012)		(33,476)		Accounts receivable	(289,196)		(58,338)
Inventories	Inventories	(136,820)		5,007		Inventories	186,685		390,506
Commodity derivatives	Commodity derivatives	(277,761)		(53,295)		Commodity derivatives	(189,090)		(250,691)
Other current and non-current assets	Other current and non-current assets	(38,810)		16,740		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	(446,096)		(441,921)		Payables and other current and non-current liabilities	(609,403)		(516,883)
Net cash used in operating activities	Net cash used in operating activities	(1,074,998)		(445,727)		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	(20,722)		(16,919)		Purchases of property, plant and equipment and capitalized software	(43,472)		(34,264)
Proceeds from sale of assets	Proceeds from sale of assets	72		385		Proceeds from sale of assets	4,672		3,794
Purchases of investments	Purchases of investments	(1,333)		(2,800)		Purchases of investments	(2,105)		(4,701)

Purchases of Rail assets	Purchases of Rail assets	(3,186)		(2,611)		Purchases of Rail assets	(27,276)		(4,751)
Proceeds from sale of Rail assets	Proceeds from sale of Rail assets	248		5,383		Proceeds from sale of Rail assets	36,341		15,616
Other	Other	—		832		Other	1,746		832
Net cash used in investing activities	Net cash used in investing activities	(24,921)		(15,730)		Net cash used in investing activities	(30,094)		(23,474)
Financing Activities	Financing Activities					Financing Activities
Net receipts under short-term lines of credit		796,209		260,160
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	350,000		250,000		Proceeds from issuance of short-term debt	350,000		608,250
Payments of short-term debt	Payments of short-term debt	(200,000)		—		Payments of short-term debt	(550,000)		—
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	—		89,700		Proceeds from issuance of long-term debt	—		108,300
Payments of long-term debt	Payments of long-term debt	(7,566)		(125,884)		Payments of long-term debt	(15,077)		(177,586)
Contributions from noncontrolling interest owner	Contributions from noncontrolling interest owner	2,450		1,960		Contributions from noncontrolling interest owner	2,450		2,940
Distributions to noncontrolling interest owner	Distributions to noncontrolling interest owner	(9,980)		—		Distributions to noncontrolling interest owner	(9,980)		(25)
Payments of debt issuance costs	Payments of debt issuance costs	(7,310)		(1,225)		Payments of debt issuance costs	(7,802)		(2,059)
Dividends paid	Dividends paid	(6,144)		(5,839)		Dividends paid	(12,245)		(11,677)
Proceeds from exercises of stock options	Proceeds from exercises of stock options	5,024		—		Proceeds from exercises of stock options	5,024		—
Other	Other	(2,926)		(1,110)		Other	(2,955)		(2,436)
Net cash provided by financing activities	Net cash provided by financing activities	919,757		467,762		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	99		(35)		Effect of exchange rates on cash and cash equivalents	(629)		(167)
Increase (decrease) in cash and cash equivalents		(180,063)		6,270
Decrease in cash and cash equivalents						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	216,444		29,123		Cash and cash equivalents at beginning of period	216,444		29,123
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	36,381	$	35,393	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)

(In thousands, except per share data)


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

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


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

Three Months Ended
Common
Shares Additional
Paid-in
Capital Treasury
Shares Accumulated
Other
Comprehensive Income
(Loss) Retained
Earnings Noncontrolling
Interests Total
Balance at December 31, 2020 $ 138 $ 348,714 $ (966) $ (12,076) $ 626,081 $ 198,769 $ 1,160,660
Net income (loss) 15,107 (1,845) 13,262
Other comprehensive income 9,418 9,418
Amounts reclassified from Accumulated other comprehensive income 1,444 1,444
Cash received from noncontrolling interests, net 1,960 1,960
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $0 (86 shares) 2 7,247 (2,154) (3,480) 1,615
Dividends declared ($0.175 per common share) (5,808) (5,808)
Restricted share award dividend equivalents 248 (248) —
Balance at March 31, 2021 $ 140 $ 355,961 $ (2,872) $ (1,214) $ 631,652 $ 198,884 $ 1,182,551
Balance at December 31, 2021 $ 140 $ 368,595 $ (263) $ 1,194 $ 702,759 $ 235,279 $ 1,307,704
Net income 5,503 447 5,950
Other comprehensive income 10,822 10,822
Amounts reclassified from Accumulated other comprehensive income 1,539 1,539
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 (59 shares) 2 7,145 (2,322) 0 4,825
Dividends declared ($0.180 per common share) (6,089) (6,089)
Restricted share award dividend equivalents 54 320 (374) —
Balance at March 31, 2022 $ 142 $ 375,794 $ (2,265) $ 13,555 $ 701,799 $ 228,196 $ 1,317,221

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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, 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

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The Andersons, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Consolidation

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

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

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

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

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

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

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2. Inventories

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


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Grain and other agricultural products (a)	Grain and other agricultural products (a)	$	1,435,763	$	1,427,708	$	971,914	Grain and other agricultural products (a)	$	1,241,933	$	1,427,708	$	636,380
Propane and frac sand (a)	Propane and frac sand (a)	17,529		23,780		8,388		Propane and frac sand (a)	19,483		23,780		11,265
Ethanol and co-products (a)	Ethanol and co-products (a)	193,303		184,354		136,234		Ethanol and co-products (a)	179,175		184,354		155,993
Plant nutrients and cob products	Plant nutrients and cob products	303,708		178,696		171,101		Plant nutrients and cob products	177,735		178,696		101,286
Total Inventories	Total Inventories	$	1,950,303	$	1,814,538	$	1,287,637	Total Inventories	$	1,618,326	$	1,814,538	$	904,924

(a) Includes RMI of $~~1,413.5~~1,214.4 million, $1,410.9 million and ~~$942.4~~$612.2 million at ~~March 31,~~June 30, 2022, December 31, 2021 and ~~March 31,~~June 30, 2021, respectively.

Inventories do not include ~~1.0~~1.3 million,, 3.0 million and ~~1.6~~1.2 million bushels of grain held in storage for others as of ~~March 31,~~June 30, 2022, December 31, 2021 and ~~March 31,~~June 30, 2021, respectively. The Company does not have title to the grain and is only liable for any deficiencies in grade or shortage of quantity that may arise during the storage period. Management has not experienced historical losses on any deficiencies and does not anticipate material losses in the future.

3. Property, Plant and Equipment

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


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Land	Land	$	39,183	$	39,162	$	39,357	Land	$	38,630	$	39,162	$	39,367
Land improvements and leasehold improvements	Land improvements and leasehold improvements	91,061		91,122		92,656		Land improvements and leasehold improvements	91,542		91,122		93,166
Buildings and storage facilities	Buildings and storage facilities	369,850		368,577		379,245		Buildings and storage facilities	370,453		368,577		377,946
Machinery and equipment	Machinery and equipment	946,352		936,476		912,372		Machinery and equipment	949,142		936,476		921,190
Construction in progress	Construction in progress	23,512		20,676		16,108		Construction in progress	31,237		20,676		19,723
		1,469,958		1,456,013		1,439,738			1,481,004		1,456,013		1,451,392
Less: accumulated depreciation	Less: accumulated depreciation	697,713		669,984		599,788		Less: accumulated depreciation	717,561		669,984		627,829
Property, plant and equipment, net	Property, plant and equipment, net	$	772,245	$	786,029	$	839,950	Property, plant and equipment, net	$	763,443	$	786,029	$	823,563

Depreciation expense on property, plant and equipment used in continuing operations was ~~$28.3~~$55.8 million and ~~$31.1~~$62.5 million for the six months ended June 30, 2022 and 2021, respectively. Additionally, depreciation expense on property, plant and equipment used in continuing operations was $27.5 million and $31.4 million for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively.

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

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4. Debt

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


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Short-term debt – non-recourse	Short-term debt – non-recourse	$	148,216	$	65,485	$	140,730	Short-term debt – non-recourse	$	97,668	$	65,485	$	120,020
Short-term debt – recourse	Short-term debt – recourse	1,301,552		436,307		774,475		Short-term debt – recourse	1,063,760		436,307		637,251
Total short-term debt	Total short-term debt	$	1,449,768	$	501,792	$	915,205	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	$	7,959	$	7,601	$	118	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	46,199		24,655		42,706		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	$	54,158	$	32,256	$	42,824	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	$	62,675	$	64,972	$	126,772	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	508,506		535,515		750,811		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	$	571,181	$	600,487	$	877,583	Total long-term debt, less: current maturities	$	563,447	$	600,487	$	837,609

On March 2, 2022, the Company completed an incremental term loan amendment to its credit agreement dated January 11, 2019. The amendment ~~provides~~provided for a short-term note of $250.0 million in which the entire stated principal iswas due on May 31, ~~2022.~~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 ~~term note~~entire amount outstanding will be due on August 31, 2022. The revolving credit agreement will bear interest at variable rates, which are based on SOFR plus an applicable spread. As of ~~March 31,~~June 30, 2022, the Company had drawn ~~$350.0~~$250.0 million on the ~~short-term note.~~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.

AsDuring the first quarter of ~~March 31,~~ 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 ~~March 31,~~June 30, 2022 was ~~$2,031.4~~$2,501.7 million of which the Company had a total of ~~$907.3~~$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 ~~March 31,~~June 30, 2022, December 31, 2021 and ~~March 31,~~June 30, 2021, the estimated fair value of long-term debt, including the current portion, was ~~$633.9~~$617.5 million, $650.7 million and ~~$940.7~~$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 ~~March 31,~~June 30, 2022.

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5. Derivatives

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

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

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

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

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


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Cash collateral paid	Cash collateral paid	$	409,743	$	165,250	$	95,533	Cash collateral paid	$	70,442	$	165,250	$	219,469
Fair value of derivatives	Fair value of derivatives	(144,937)		(36,843)		(76,388)		Fair value of derivatives	165,223		(36,843)		(180,842)
Net derivative asset position	Net derivative asset position	$	264,806	$	128,407	$	19,145	Net derivative asset position	$	235,665	$	128,407	$	38,627

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


		March 31, 2022											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	$	637,947	$	15,860	$	34,798	$	1,264	$	689,869	Commodity derivative assets	$	707,542	$	14,257	$	29,223	$	1,945	$	752,967
Commodity derivative liabilities	Commodity derivative liabilities	(276,874)		(848)		(252,534)		(5,759)		(536,015)		Commodity derivative liabilities	(138,627)		(2,132)		(216,126)		(12,040)		(368,925)
Cash collateral paid	Cash collateral paid	408,843		—		900		—		409,743		Cash collateral paid	69,442		—		1,000		—		70,442
Balance sheet line item totals	Balance sheet line item totals	$	769,916	$	15,012	$	(216,836)	$	(4,495)	$	563,597	Balance sheet line item totals	$	638,357	$	12,125	$	(185,903)	$	(10,095)	$	454,484


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


		March 31, 2021											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	$	357,802	$	6,762	$	20,752	$	16	$	385,332	Commodity derivative assets	$	547,186	$	16,480	$	34,327	$	423	$	598,416
Commodity derivative liabilities	Commodity derivative liabilities	(123,480)		(925)		(124,116)		(1,029)		(249,550)		Commodity derivative liabilities	(259,507)		(873)		(124,693)		(3,874)		(388,947)
Cash collateral paid	Cash collateral paid	83,617		—		11,916		—		95,533		Cash collateral paid	219,469		—		—		—		219,469
Balance sheet line item totals	Balance sheet line item totals	$	317,939	$	5,837	$	(91,448)	$	(1,013)	$	231,315	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 for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 are as follows:


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Gains (losses) on commodity derivatives included in Cost of sales and merchandising revenues			$	33,998		$	166,985
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

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


		March 31, 2022		June 30, 2022
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons		Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	722,719	—		—	Corn	628,471	—	—
Soybeans	Soybeans	133,043	—		—	Soybeans	116,679	—	—
Wheat	Wheat	102,690	—		—	Wheat	97,224	—	—
Oats	Oats	45,967	—		—	Oats	37,355	—	—
Ethanol	Ethanol	—	214,513		—	Ethanol	—	200,388	—
Dried distillers grain	Dried distillers grain	—	—		435	Dried distillers grain	—	—	318
Soybean meal	Soybean meal	—	—		550	Soybean meal	—	—	421
Other	Other	8,697	24,565		3,078	Other	8,549	25,767	3,032
Subtotal	Subtotal	1,013,116	239,078		4,063	Subtotal	888,278	226,155	3,771
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	267,135	—		—	Corn	219,020	—	—
Soybeans	Soybeans	86,410	—		—	Soybeans	69,115	—	—
Wheat	Wheat	78,500	—		—	Wheat	74,418	—	—
Oats	Oats	1,815	—		—	Oats	650	—	—
Ethanol	Ethanol	—	47,082		—	Ethanol	—	94,794	—
Propane	Propane	—	13,356		—	Propane	—	25,578	—
Other	Other	110	1,470		547	Other	95	546	360
Subtotal	Subtotal	433,970	61,908		547	Subtotal	363,298	120,918	360
Total	Total	1,447,086	300,986		4,610	Total	1,251,576	347,073	4,131


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

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 1112

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		March 31, 2021		June 30, 2021
(in thousands)	(in thousands)	Number of Bushels	Number of Gallons		Number of Tons	(in thousands)	Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:	Non-exchange traded:					Non-exchange traded:
Corn	Corn	745,248	—		—	Corn	696,674	—	—
Soybeans	Soybeans	64,698	—		—	Soybeans	75,507	—	—
Wheat	Wheat	110,930	—		—	Wheat	129,264	—	—
Oats	Oats	48,066	—		—	Oats	45,810	—	—
Ethanol	Ethanol	—	200,232		—	Ethanol	—	198,316	—
Dried distillers grain	Dried distillers grain	—	—		409	Dried distillers grain	—	—	372
Soybean meal	Soybean meal	—	—		383	Soybean meal	—	—	411
Other	Other	4,645	1,834		1,103	Other	7,803	3,957	1,191
Subtotal	Subtotal	973,587	202,066		1,895	Subtotal	955,058	202,273	1,974
Exchange traded:	Exchange traded:					Exchange traded:
Corn	Corn	262,920	—		—	Corn	243,190	—	—
Soybeans	Soybeans	62,020	—		—	Soybeans	49,375	—	—
Wheat	Wheat	76,164	—		—	Wheat	80,004	—	—
Oats	Oats	310	—		—	Oats	1,430	—	—
Ethanol	Ethanol	—	96,978		—	Ethanol	—	112,812	—

Propane	Propane	—	12,894		—	Propane	—	18,480	—
Other	Other	—	423		265	Other	—	5	198
Subtotal	Subtotal	401,414	110,295		265	Subtotal	373,999	131,297	198
Total	Total	1,375,001	312,361		2,160	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) and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

~~The Andersons, Inc. | Q1 2022 Form 10-Q | 12~~

~~Table of Contents~~

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


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments							Derivatives not designated as hedging instruments
Interest rate contracts included in Accrued expenses and other current liabilities	Interest rate contracts included in Accrued expenses and other current liabilities	$	—	$	(174)	$	(300)	Interest rate contracts included in Accrued expenses and other current liabilities	$	—	$	(174)	$	—
Interest rate contracts included in Other long-term liabilities	Interest rate contracts included in Other long-term liabilities	—		—		(364)		Interest rate contracts included in Other long-term liabilities	—		—		(309)
Foreign currency contracts included in Other current (liabilities) assets	Foreign currency contracts included in Other current (liabilities) assets	1,330		(1,069)		2,107		Foreign currency contracts included in Other current (liabilities) assets	(1,749)		(1,069)		1,523
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments							Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets	Interest rate contracts included in Other current assets	$	805	$	—	$	—	Interest rate contracts included in Other current assets	$	3,276	$	—	$	—
Interest rate contracts included in Other assets	Interest rate contracts included in Other assets	10,223		4,574		6,622		Interest rate contracts included in Other assets	15,047		4,574		3,849
Interest rate contracts included in Accrued expenses and other current liabilities	Interest rate contracts included in Accrued expenses and other current liabilities	(1,596)		(5,206)		(6,773)		Interest rate contracts included in Accrued expenses and other current liabilities	—		(5,206)		(6,944)
Interest rate contracts included in Other long-term liabilities	Interest rate contracts included in Other long-term liabilities	—		(6,555)		(11,959)		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 March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments							Derivatives not designated as hedging instruments
Interest rate derivative gains (losses) included in Interest expense, net	Interest rate derivative gains (losses) included in Interest expense, net		$	9		$	354	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 gains (losses) included in Other comprehensive income (loss)	Interest rate derivative gains (losses) included in Other comprehensive income (loss)		$	16,540		$	(12,947)	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		(1,443)			(1,618)		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 ~~March 31,~~June 30, 2022, are as follows:


Interest Rate Hedging Instrument	Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate	Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Initial Notional Amount (in millions)		Description	Interest Rate
Long-term	Long-term							Long-term
Swap	Swap	2017	2022	$	20.0	Interest rate component of debt - accounted for as a hedge	1.8%	Swap	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.3%
Swap	Swap	2018	2025	$	20.0	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	2019	2025	$	100.0	Interest rate component of debt - accounted for as a hedge	2.3%	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%
Swap	Swap	2019	2025	$	50.0	Interest rate component of debt - accounted for as a hedge	2.4%	Swap	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	2.4%	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%
Swap	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%	Swap	2022	2025	$	20.0	Interest rate component of debt - accounted for as a hedge	2.6%
Swap	Swap	2020	2030	$	50.0	Interest rate component of debt - accounted for as a hedge	0.0% to 0.8%	Swap	2022	2029	$	100.0	Interest rate component of debt - accounted for as a hedge	2.0%

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 1315

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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 Renewables sales contracts are derivatives under ASC 815, Derivatives and Hedging. The breakdown of revenues between the two standards are as follows:


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Revenues under ASC 606	Revenues under ASC 606		$	677,856		$	487,094	Revenues under ASC 606	$	956,013	$	623,813	$	1,633,869	$	1,110,908
Revenues under ASC 815	Revenues under ASC 815		3,300,098			2,107,625		Revenues under ASC 815	3,494,604		2,611,992		6,794,702		4,719,616
Total revenues	Total revenues		$	3,977,954		$	2,594,719	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 ~~March 31,~~June 30, 2022 and 2021, respectively:


	Three months ended June 30, 2022
(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	$	—	$	—	$	104,357	$	104,357
Primary nutrients	—		—		336,487		336,487
Products and co-products	101,195		329,224		—		430,419
Propane and frac sand	46,935		—		—		46,935
Other	6,997		1,378		29,440		37,815
Total	$	155,127	$	330,602	$	470,284	$	956,013


	Three months ended June 30, 2021
(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	$	—	$	—	$	84,915	$	84,915
Primary nutrients	—		—		213,604		213,604
Products and co-products	74,948		184,263		—		259,211
Propane and frac sand	36,649		—		—		36,649
Other	6,151		394		22,889		29,434
Total	$	117,748	$	184,657	$	321,408	$	623,813


		Three months ended March 31, 2022									Six months ended June 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	Specialty nutrients	$	—	$	—	$	93,268	$	93,268	Specialty nutrients	$	—	$	—	$	197,625	$	197,625
Primary nutrients	Primary nutrients	—		—		89,882		89,882		Primary nutrients	—		—		426,369		426,369
Products and co-products	Products and co-products	107,871		232,694		—		340,565		Products and co-products	209,066		561,918		—		770,984
Propane and frac sand	Propane and frac sand	119,792		—		—		119,792		Propane and frac sand	166,727		—		—		166,727
Other	Other	6,242		1,215		26,892		34,349		Other	13,239		2,593		56,332		72,164
Total	Total	$	233,905	$	233,909	$	210,042	$	677,856	Total	$	389,032	$	564,511	$	680,326	$	1,633,869

Three months ended March 31, 2021
(in thousands) Trade Renewables Plant Nutrient Total
Specialty nutrients $ — $ — $ 76,806 $ 76,806
Primary nutrients — — 71,659 71,659
Products and co-products 71,988 145,644 — 217,632
Propane and frac sand 92,065 — — 92,065
Other 4,386 3,759 20,787 28,932
Total $ 168,439 $ 149,403 $ 169,252 $ 487,094

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

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	Six months ended June 30, 2021
(in thousands)	Trade		Renewables		Plant Nutrient		Total
Specialty nutrients	$	—	$	—	$	161,721	$	161,721
Primary nutrients	—		—		285,263		285,263
Products and co-products	146,936		329,907		—		476,843
Propane and frac sand	128,714		—		—		128,714
Other	10,538		4,153		43,676		58,367
Total	$	286,188	$	334,060	$	490,660	$	1,110,908

Substantially all of the Company's revenues accounted for under ASC 606 during the three and six months ended ~~March 31,~~June 30, 2022 and 2021, respectively, are recorded at a point in time instead of over time.

Contract balances

The balances of the Company’s contract liabilities were ~~$185.5~~$21.7 million and $100.8 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The main driver of the contract liabilities balance as of December 31, 2021, is payments for primary and specialty nutrients received in advance of fulfilling our performance obligations under our customer contracts. Due to seasonality of this business, contract liabilities were built up at year-end and through the first quarter in preparation for the spring application season. As expected, the revenue recognized in the current period satisfied the contract liabilities throughout the spring application season for our Plant Nutrient segment.

~~The Andersons, Inc. | Q1 2022 Form 10-Q | 14~~

~~Table of Contents~~

7. Income Taxes

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

For the three months ended ~~March 31,~~June 30, 2022, the Company recorded income tax expense from continuing operations of ~~$4.1~~$15.8 million. The Company's effective tax rate was ~~38.7%~~13.3% on income before taxes from continuing operations of ~~$10.6~~$118.2 million. The difference between the ~~38.7%~~13.3% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible ~~compensation offset by the effect of non-controlling interest and Federal Research and Development Credits.~~compensation.

For the three months ended ~~March 31,~~June 30, 2021, the Company recorded income tax expense from continuing operations of ~~$4.4~~$9.7 million. The Company’s effective tax rate was 18.0% on income from continuing operations of $53.7 million. The effective tax rate differs from the U.S. federal statutory tax rate of 21.0% due to the tax impact of certain discrete derivatives and hedging activities offset by state and local taxes and nondeductible compensation.

For the six months ended June 30, 2022, the Company recorded income tax expense from continuing operations of $19.9 million. The Company's effective tax rate was ~~30.9%~~15.4% on income before taxes from continuing operations of ~~$14.1~~$128.8 million. The difference between the ~~30.9%~~15.4% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

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

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 1517

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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 ~~March 31,~~June 30, 2022 and 2021:


		Three months ended March 31,					Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)		2022		2021			(in thousands)	2022		2021		2022		2021
Currency Translation Adjustment	Currency Translation Adjustment							Currency Translation Adjustment
Beginning balance	Beginning balance		$	5,631	$	5,739		Beginning balance	$	5,729	$	6,963	$	5,631	$	5,739
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications		98		1,224			Other comprehensive income (loss) before reclassifications	(5,679)		1,469		(5,581)		2,693

Tax effect	Tax effect		—		—			Tax effect	—		—		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		98		1,224			Other comprehensive income (loss), net of tax	(5,679)		1,469		(5,581)		2,693
Ending balance	Ending balance		$	5,729	$	6,963		Ending balance	$	50	$	8,432	$	50	$	8,432
Hedging Adjustment	Hedging Adjustment							Hedging Adjustment
Beginning balance	Beginning balance		$	(5,335)	$	(18,106)		Beginning balance	$	7,087	$	(8,365)	$	(5,335)	$	(18,106)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications		10,712		8,126			Other comprehensive income (loss) before reclassifications	7,910		(3,514)		22,833		4,613
Amounts reclassified from AOCI (a)	Amounts reclassified from AOCI (a)		2,279		2,153			Amounts reclassified from AOCI (a)	1,013		2,208		2,631		4,360
Tax effect	Tax effect		(569)		(538)			Tax effect	(2,226)		(552)		(6,345)		(1,090)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		12,422		9,741			Other comprehensive income (loss), net of tax	6,697		(1,858)		19,119		7,883
Ending balance	Ending balance		$	7,087	$	(8,365)		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		$	640	$	33		Beginning balance	$	481	$	(70)	$	640	$	33
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications		12		68			Other comprehensive income (loss) before reclassifications	845		(63)		914		5
Amounts reclassified from AOCI (b)	Amounts reclassified from AOCI (b)		(228)		(228)			Amounts reclassified from AOCI (b)	(228)		(228)		(456)		(456)
Tax effect	Tax effect		57		57			Tax effect	(100)		57		(100)		114
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(159)		(103)			Other comprehensive income (loss), net of tax	517		(234)		358		(337)
Ending balance	Ending balance		$	481	$	(70)		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		Beginning balance	$	258	$	258	$	258	$	258

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

Total AOCI Ending Balance	Total AOCI Ending Balance		$	13,555	$	(1,214)		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.

(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. | Q1Q2 2022 Form 10-Q | 1618

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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 March 31,			(in thousands, except per common share data)	Three months ended June 30,						Six months ended June 30,
			2022				2021		(in thousands, except per common share data)	2022		2021		2022		2021
Numerator:	Numerator:
Net income from continuing operations	Net income from continuing operations		$	6,504			$	9,755	Net income from continuing operations	$	102,400	$	44,025	$	108,904	$	53,780
Net income (loss) attributable to noncontrolling interests(a)			447				(1,845)
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		$	6,057			$	11,600	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		$	(554)			$	3,507	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		33,738				33,188		Weighted average shares outstanding – basic	33,850		33,263		33,795		33,226
Effect of dilutive awards	Effect of dilutive awards		541				389		Effect of dilutive awards	566		316		621		391
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted		34,279				33,577		Weighted average shares outstanding – diluted	34,416		33,579		34,416		33,617

Earnings (loss) per share attributable to The Andersons, Inc. common shareholders:	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):								Basic earnings (loss):
Continuing operations	Continuing operations		$	0.18			$	0.35	Continuing operations	$	2.38	$	1.25	$	2.56	$	1.60
Discontinued operations	Discontinued operations		(0.02)				0.11		Discontinued operations	(0.02)		0.06		(0.04)		0.16
			$	0.16			$	0.46		$	2.36	$	1.31	$	2.52	$	1.76
Diluted earnings (loss):	Diluted earnings (loss):								Diluted earnings (loss):
Continuing operations	Continuing operations		$	0.18			$	0.35	Continuing operations	$	2.34	$	1.23	$	2.52	$	1.58
Discontinued operations	Discontinued operations		(0.02)				0.10		Discontinued operations	(0.02)		0.07		(0.04)		0.16
			$	0.16			$	0.45		$	2.32	$	1.30	$	2.48	$	1.74

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

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 1719

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


(in thousands)	(in thousands)	March 31, 2022								(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)	$	264,806	$	298,791	$	—	$	563,597	Commodity derivatives, net (a)	$	235,665	$	218,819	$	—	$	454,484
Provisionally priced contracts (b)	Provisionally priced contracts (b)	47,505		(42,698)		—		4,807		Provisionally priced contracts (b)	38,061		(27,945)		—		10,116
Convertible preferred securities (c)	Convertible preferred securities (c)	—		—		15,905		15,905		Convertible preferred securities (c)	—		—		16,803		16,803
Other assets and liabilities (d)	Other assets and liabilities (d)	4,677		9,432		—		14,109		Other assets and liabilities (d)	1,097		18,323		—		19,420
Total	Total	$	316,988	$	265,525	$	15,905	$	598,418	Total	$	274,823	$	209,197	$	16,803	$	500,823


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

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


(in thousands)	(in thousands)	March 31, 2021								(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)	$	19,145	$	212,170	$	—	$	231,315	Commodity derivatives, net (a)	$	38,627	$	390,311	$	—	$	428,938
Provisionally priced contracts (b)	Provisionally priced contracts (b)	14,231		(31,602)		—		(17,371)		Provisionally priced contracts (b)	32,710		(25,210)		—		7,500
Convertible preferred securities (c)	Convertible preferred securities (c)	—		—		11,649		11,649		Convertible preferred securities (c)	—		—		13,550		13,550
Other assets and liabilities (d)	Other assets and liabilities (d)	6,147		(12,774)		—		(6,627)		Other assets and liabilities (d)	5,373		(14,909)		—		(9,536)
Total	Total	$	39,523	$	167,794	$	11,649	$	218,966	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).

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. | Q1Q2 2022 Form 10-Q | 1820

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

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

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

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


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

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

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

Quantitative Information about Recurring Level 3 Fair Value Measurements

Fair Value as of

(in thousands)

March 31, 2022

December 31, 2021

March 31, 2021

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)

15,905

11,618

11,649

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 ~~(a)~~(b)

2,946

Third party appraisal

Various

N/A

Real property ~~(b)~~(c)

700

Market approach

Various

N/A

~~(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.

~~(b)~~(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 ~~were~~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 ~~March 31, 2022 or March 31,~~June 30, 2021.

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

~~The Andersons, Inc. | Q1 2022 Form 10-Q | 19~~

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11. Related Parties

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

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


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Sales revenues	Sales revenues		$	86,149		$	66,646	Sales revenues	$	103,106	$	85,294	$	189,255	$	151,940
Purchases of product and capital assets	Purchases of product and capital assets		26,427			11,674		Purchases of product and capital assets	11,983		8,662		38,409		20,336


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Accounts receivable	Accounts receivable	$	18,539	$	9,984	$	11,844	Accounts receivable	$	17,560	$	9,984	$	11,835
Accounts payable	Accounts payable	3,371		6,034		2,850		Accounts payable	3,060		6,034		2,287

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 2022

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12. Segment Information

The Company’s operations include 3 reportable business segments that are distinguished primarily on the basis of products and services offered as well as the structure of management. The Trade business includes commodity merchandising and the operation of terminal grain elevator facilities. The Renewables business produces ethanol and co-products through its five co-owned and fully consolidated ethanol production facilities as well as purchases and sells ethanol and ethanol co-products. The Plant Nutrient business manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers, along with turf care and corncob-based products. The Other category includes other corporate level costs not attributable to an operating segment and intercompany eliminations between the segments. See Note 14 for details of the divestiture of the Rail segment.

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


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Revenues from external customers	Revenues from external customers							Revenues from external customers
Trade	Trade		$	3,084,681		$	1,982,508	Trade	$	3,097,767	$	2,297,869	$	6,182,448	$	4,280,377
Renewables	Renewables		683,231			442,959		Renewables	882,567		616,527		1,565,798		1,059,486
Plant Nutrient	Plant Nutrient		210,042			169,252		Plant Nutrient	470,283		321,409		680,325		490,661
Total	Total		$	3,977,954		$	2,594,719	Total	$	4,450,617	$	3,235,805	$	8,428,571	$	5,830,524


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Income (loss) before income taxes from continuing operations	Income (loss) before income taxes from continuing operations							Income (loss) before income taxes from continuing operations
Trade	Trade		$	3,669		$	13,855	Trade	$	23,666	$	13,777	$	27,335	$	27,632
Renewables1	Renewables1		5,962			1,081		Renewables1	67,776		26,156		73,738		27,237
Plant Nutrient	Plant Nutrient		10,743			8,523		Plant Nutrient	38,311		23,995		49,054		32,518
Other	Other		(9,767)			(9,343)		Other	(11,600)		(10,226)		(21,367)		(19,569)
Income before income taxes from continuing operations	Income before income taxes from continuing operations		$	10,607		$	14,116	Income before income taxes from continuing operations	$	118,153	$	53,702	$	128,760	$	67,818

1 Includes income ~~(loss)~~ attributable to noncontrolling interests of ~~$0.4~~$21.9 million and ~~$(1.8)~~$2.6 million for the ~~Three~~three months ended ~~March 31,~~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. | Q1Q2 2022 Form 10-Q | 2123

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13. Commitments and Contingencies

Litigation activities

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

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

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

The Andersons Marathon Holdings LLC ("TAMH") received a Pre-Filing Negotiation Offer from the United States Environmental Protection Agency ("U.S. EPA") regarding the ethanol facilities owned by TAMH. The Company owns 50.1% of TAMH, which is a consolidated subsidiary of the Company. The U.S. EPA ~~is investigating~~investigated alleged recordkeeping and reporting violations under the Emergency Planning and Community Right-to-Know Act. The Company ~~is cooperating~~settled this matter with the U.S. EPA. The Company does not believe that any loss from this matter would have a material impact on its operations or financial condition, although the Company is unable to predict what action might be takenEPA for approximately $1.7 million in the ~~future by the U.S. EPA regarding this matter.~~second quarter of 2022.

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

The Andersons, Inc. | Q2 2022 Form 10-Q | 24

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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 Andersons, Inc. | Q1 2022 Form 10-Q | 22~~

~~Table of Contents~~

The table below summarizes the results of the Rail Leasing business and the Rail Repair business for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 which are reflected in the Consolidated Statements of Operations as discontinued operations.


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Sales and merchandising revenues	Sales and merchandising revenues		$	13,115		$	41,010	Sales and merchandising revenues	$	12,076	$	37,921	$	25,191	$	78,931
Cost of sales and merchandising revenues	Cost of sales and merchandising revenues		11,071			31,739		Cost of sales and merchandising revenues	12,877		27,284		23,948		59,023
Gross profit			2,044			9,271
Gross profit (loss)								Gross profit (loss)	(801)		10,637		1,243		19,908
Operating, administrative and general expenses	Operating, administrative and general expenses		1,379			2,874		Operating, administrative and general expenses	4,434		4,416		5,813		7,290
Interest expense, net	Interest expense, net		—			3,180		Interest expense, net	—		3,394		—		6,574
Other income, net:			73			1,674
Other income, net								Other income, net	6,547		237		6,620		1,911
Income from discontinued operations before income taxes	Income from discontinued operations before income taxes		738			4,891		Income from discontinued operations before income taxes	1,312		3,064		2,050		7,955
Income tax provision	Income tax provision		1,292			1,384		Income tax provision	2,051		965		3,344		2,349
Income from discontinued operations, net of income taxes			$	(554)		$	3,507
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

The Andersons, Inc. | Q2 2022 Form 10-Q | 25

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


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

Accounts receivable, net	Accounts receivable, net	$	11,424	$	12,643	$	22,607	Accounts receivable, net	$	11,998	$	12,643	$	18,707
Inventories	Inventories	7,119		6,739		7,424		Inventories	6,318		6,739		7,375
Other current assets	Other current assets	1,712		1,503		7,105		Other current assets	311		1,503		2,473
Current assets held-for-sale	Current assets held-for-sale	20,255		20,885		37,136		Current assets held-for-sale	18,627		20,885		28,555
Other assets:	Other assets:							Other assets:
Rail assets leased to others, net	Rail assets leased to others, net	3,574		458		580,599		Rail assets leased to others, net	427		458		574,585
Property, plant and equipment, net	Property, plant and equipment, net	17,375		17,280		18,319		Property, plant and equipment, net	17,370		17,280		18,199
Goodwill	Goodwill	4,167		4,167		4,167		Goodwill	4,167		4,167		4,167
Other intangible assets, net	Other intangible assets, net	—		24		2,412		Other intangible assets, net	—		24		2,025
Right of use assets, net	Right of use assets, net	19,918		20,999		20,836		Right of use assets, net	2,322		20,999		18,969
Other assets, net	Other assets, net	230		241		2,895		Other assets, net	12		241		2,800
Total non-current assets held-for-sale	Total non-current assets held-for-sale	45,264		43,169		629,228		Total non-current assets held-for-sale	24,298		43,169		620,745
Total assets held-for-sale	Total assets held-for-sale	$	65,519	$	64,054	$	666,364	Total assets held-for-sale	$	42,925	$	64,054	$	649,300
Liabilities	Liabilities							Liabilities
Current liabilities:	Current liabilities:							Current liabilities:
Trade and other payables	Trade and other payables	$	2,864	$	2,546	$	4,031	Trade and other payables	$	1,883	$	2,546	$	3,666
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	—		—		2,239		Customer prepayments and deferred revenue	—		—		2,211
Current maturities of long-term debt	Current maturities of long-term debt	—		—		7,113		Current maturities of long-term debt	—		—		6,513
Current operating lease liabilities	Current operating lease liabilities	4,235		4,672		6,561		Current operating lease liabilities	2,112		4,672		6,023
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	3,101		6,161		6,418		Accrued expenses and other current liabilities	3,319		6,161		6,772
Total current liabilities held-for-sale	Total current liabilities held-for-sale	10,200		13,379		26,362		Total current liabilities held-for-sale	7,314		13,379		25,185
Long-term lease liabilities	Long-term lease liabilities	14,738		16,119		16,035		Long-term lease liabilities	3,113		16,119		14,718
Long-term debt, less current maturities	Long-term debt, less current maturities	—		—		29,137		Long-term debt, less current maturities	—		—		28,845

Other long-term liabilities								Other long-term liabilities	—		—		430
Non-current liabilities held-for-sale	Non-current liabilities held-for-sale	14,738		16,119		45,172		Non-current liabilities held-for-sale	3,113		16,119		43,993
Total liabilities held-for-sale	Total liabilities held-for-sale	$	24,938	$	29,498	$	71,534	Total liabilities held-for-sale	$	10,427	$	29,498	$	69,178

~~The Andersons, Inc. | Q1 2022 Form 10-Q | 23~~

~~Table of Contents~~

The following table summarizes cash flow data relating to discontinued operations for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021:


		Three months ended March 31,					Six months ended June 30,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2022		2021
Depreciation and amortization	Depreciation and amortization	$	—	$	8,887	Depreciation and amortization	$	—	$	17,588
Capital expenditures	Capital expenditures	(3,284)		(2,913)		Capital expenditures	(27,276)		(5,703)
Proceeds from sale of assets	Proceeds from sale of assets	248		5,383		Proceeds from sale of assets	36,341		15,616

Non-cash operating activities - Gain on sale of railcars	Non-cash operating activities - Gain on sale of railcars	—		(2,717)		Non-cash operating activities - Gain on sale of railcars	(6,176)		(4,987)

Non-cash operating activities - fixed asset impairment						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	Non-cash investing activities - capital expenditures, consisting of unpaid capital expenditure liabilities at period end	—		(110)		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 ~~May 3,~~July 8, 2022, the Company ~~entered into a definitive agreement to sell substantially all~~closed on the sale of the remaining assets and certain liabilities of the Company's Rail Repair ~~business. The sale is expected to close later~~business for $55.1 million resulting in ~~2022.~~an estimated pre-tax gain of approximately $30 million.

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 2427

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

Forward Looking Statements

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

Critical Accounting Policies and Estimates

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

Executive Overview

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

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

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

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Trade

The Trade segment’s ~~first~~second quarter operating results ~~decreased~~improved from the ~~prior~~prior year as ~~grain futures prices rose sharply as~~ the ~~war in Ukraine continues to disrupt the agricultural commodity supply chain. The increases in futures prices resulted in significant domestic basis depreciation for~~segment entered the quarter ~~despite the~~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 ~~performance~~results from our Midwest truck grain merchandising business. Our food and specialty ingredients business also delivered strong results in the ~~Company's recently added international merchandising business. Additionally, good first~~ quarter, ~~results~~particularly in ~~propane merchandising did not match the strong performance from the unseasonably frigid weather experienced by the central U.S. in the first quarter of the prior year.~~our UK subsidiary, Feed Factors.

Agricultural inventories on hand were ~~188.9~~107.0 million and ~~124.9~~85.8 million bushels at ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively. These bushels consist of inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory. Total Trade storage space capacity at ~~company owned~~company-owned or leased facilities, including temporary pile storage, was approximately ~~185~~184 million bushels at ~~March 31,~~June 30, 2022 compared to 202 million bushels at ~~March 31,~~June 30, 2021.

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~~Capitalizing on the drop~~Current crop conditions vary by geography, but despite initial delays in ~~grain basis values, Trade has accumulated a strong inventory and purchase book at~~planting, crop conditions are good ~~values as it looks ahead to the remainder of 2022. Planting outlook for the Eastern Grain Belt is expected to ramp up quickly, despite a slow start.~~in our key draw areas. Continued merchandising opportunities and strong elevation margins are also expected to continue through the remainder of the year as global stocks are not projected to recover ~~even with an excellent harvest. Outlook for~~quickly from the ~~grain elevator assets is improved with storage income earned on wheat inventory. Expected basis appreciation into harvest should drive improved elevation margins.~~recent worldwide production shortfalls.

Renewables

The Renewables segment's ~~first~~second quarter ~~income from operations~~operating results increased from the prior year asdue to higher production margins ~~improved across all ethanol plants~~ and yields. Also contributing to the ~~strength~~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 ~~co-products continued. Also,~~ the ~~third-party trading of ethanol, feed ingredients and renewable feedstocks more than doubled the first~~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 ~~prior year. Partially offsetting these two factors was an unrealized mark-to-market adjustment of approximately $8.3 million.~~Company.

~~Industry fundamentals~~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 improving as we expect increased seasonal demand along with production declines during the spring maintenance season and increases in exports. Ethanol stocks remain high compared to last year's very low levels, but spot ethanol crush margins have improved heading into the second quarter.better positioned for corn supply.

Ethanol and related co-products volumes for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 were as follows:


		Three months ended March 31,		Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)		2022		2021	(in thousands)	2022	2021	2022	2021
Ethanol (gallons shipped)	Ethanol (gallons shipped)		197,318		172,212	Ethanol (gallons shipped)	196,536	186,396	391,547	358,608
E-85 (gallons shipped)	E-85 (gallons shipped)		6,715		7,890	E-85 (gallons shipped)	10,600	11,914	17,315	19,805
Corn oil (pounds shipped)	Corn oil (pounds shipped)		110,321		47,947	Corn oil (pounds shipped)	122,223	56,760	232,544	104,708
DDG (tons shipped)*	DDG (tons shipped)*		501		442	DDG (tons shipped)*	450	454	950	931

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

Plant Nutrient

The Plant Nutrient segment's ~~first~~second quarter operating results increased from the prior period. Tons sold across all product lines were down period over period, however, the lower volumes were more than offset by significant margin ~~increases.~~increases from well-positioned inventory. The 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 the low-salt starters in particular. While sales volumes for most agricultural fertilizers are depressed from the prior year and supplies remain tight, the Company believes our inventory is well positioned through the spring application season.disruption should keep prices higher than historical averages. Strong farm income may drive purchasing decisions while overall price levels could cause customers to delay fertilizer purchases.

Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately ~~447~~448 thousand tons for dry nutrients and approximately ~~513~~511 thousand tons for liquid nutrients at ~~March 31,~~June 30, 2022, which is similar to the prior year.

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Tons of product sold for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 were as follows:


		Three months ended March 31,		Three months ended June 30,				Six months ended June 30,
(in thousands)	(in thousands)		2022		2021	(in thousands)	2022	2021	2022	2021
Ag Supply Chain	Ag Supply Chain		157		222	Ag Supply Chain	492	661	649	1,008
Specialty Liquids	Specialty Liquids		92		100	Specialty Liquids	98	133	190	233
Engineered Granules	Engineered Granules		107		157	Engineered Granules	121	165	228	323
Total tons	Total tons		356		479	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.

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Other

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

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Operating Results

~~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 ~~March 31,~~June 30, 2022 with the three months ended ~~March 31,~~June 30, 2021 including a reconciliation of GAAP to non-GAAP measures:

Three months ended March 31, 2022
(in thousands) Trade Renewables Plant Nutrient Other Total
Sales and merchandising revenues $ 3,084,681 $ 683,231 $ 210,042 $ — $ 3,977,954
Cost of sales and merchandising revenues 3,017,062 668,040 173,317 — 3,858,419
Gross profit 67,619 15,191 36,725 — 119,535
Operating, administrative and general expenses 59,543 7,890 25,325 9,229 101,987
Interest expense (income), net 8,187 1,767 1,461 (556) 10,859
Equity in earnings (losses) of affiliates, net (244) — — — (244)
Other income (expense), net 4,024 428 804 (1,094) 4,162
Income (loss) before income taxes from continuing operations $ 3,669 $ 5,962 $ 10,743 $ (9,767) $ 10,607
Income (loss) before income taxes attributable to the noncontrolling interests — 447 — — 447
Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 3,669 $ 5,515 $ 10,743 $ (9,767) $ 10,160


		Three months ended March 31, 2021											Three months ended June 30, 2022
(in thousands)	(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total		(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	Sales and merchandising revenues	$	1,982,508	$	442,959	$	169,252	$	—	$	2,594,719	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	1,909,951		434,476		136,851		—		2,481,278		Cost of sales and merchandising revenues	2,995,773		822,679		401,324		—		4,219,776
Gross profit	Gross profit	72,557		8,483		32,401		—		113,441		Gross profit	101,994		59,888		68,959		—		230,841
Operating, administrative and general expenses	Operating, administrative and general expenses	56,931		6,656		23,399		10,012		96,998		Operating, administrative and general expenses	62,977		8,590		29,591		11,401		112,559
Interest expense (income), net	Interest expense (income), net	7,051		2,073		1,066		(201)		9,989		Interest expense (income), net	13,300		2,012		1,923		(314)		16,921
Equity in earnings (losses) of affiliates, net	Equity in earnings (losses) of affiliates, net	1,794		—		—		—		1,794		Equity in earnings (losses) of affiliates, net	(6,034)		—		—		—		(6,034)
Other income (expense), net	Other income (expense), net	3,486		1,327		587		468		5,868		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	$	13,855	$	1,081	$	8,523	$	(9,343)	$	14,116	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	—		(1,845)		—		—		(1,845)		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 from continuing operations	Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations	$	13,855	$	2,926	$	8,523	$	(9,343)	$	15,961	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, 2021
(in thousands)	Trade		Renewables		Plant Nutrient		Other		Total
Sales and merchandising revenues	$	2,297,869	$	616,527	$	321,409	$	—	$	3,235,805
Cost of sales and merchandising revenues	2,220,038		581,811		270,549		—		3,072,398
Gross profit	77,831		34,716		50,860		—		163,407
Operating, administrative and general expenses	61,514		6,577		26,568		10,901		105,560
Interest expense (income), net	7,452		2,021		1,146		(559)		10,060
Equity in earnings (losses) of affiliates, net	845		—		—		—		845
Other income (expense), net	4,067		38		849		116		5,070
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	—		2,625		—		—		2,625
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 an alternative to Income (loss) before income taxes from continuing operations, the most directly comparable amounts reported under GAAP.

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Trade

Operating results for the Trade ~~decreased~~segment increased by ~~$10.2~~$9.9 million compared to the results of the same period last year. Sales and merchandising revenues increased by ~~$1,102.2~~$799.9 million and ~~Cost~~cost of sales and merchandising revenues increased by ~~$1,107.1~~$775.7 million for a ~~decreased~~favorable net gross profit impact of ~~$4.9~~$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 increase to gross profit in the current period results reflect stronger production margins and yields. Included in pre-tax income in the 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 $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.

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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.

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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~~sales and merchandising revenues and ~~Cost~~cost of sales and merchandising revenues was a result of increased commodity prices ~~from~~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 ~~net decrease~~increase in ~~Gross~~gross profit was driven by a strong elevation margins in our domestic ~~corn and soybean basis depreciation from the increases in futures prices~~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 ~~$2.6~~$4.1 million. The increase from the prior year is primarily related to higher labor costs as a result of new locations opened in the second half of 2021.

Interest expense increased by ~~$1.1~~$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.

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

Renewables

Operating results for Renewables increased by ~~$2.6~~$25.0 million from the same period last year. Sales and merchandising revenues increased by ~~$240.3~~$506.3 million and ~~Cost~~cost of sales and merchandising revenues increased by ~~$233.6~~$474.4 million compared to prior year. As a result, ~~Gross~~gross profit increased by ~~$6.7~~$31.9 million compared to prior year. The vast majority of the increase to ~~Sales~~sales and merchandising revenues and ~~Cost~~cost of sales and merchandising revenues is the result of increased commodity prices. The net increase to ~~Gross~~gross profit in the current period results reflect improved ~~Board~~board crush margins and yields across ~~all~~the ethanol plants, improved co-product values and strong merchandising margins. ~~Partially offsetting~~Unrealized mark-to-market adjustments improved approximately $3.7 million from the ~~factors above was a mark-to-market adjustment of $8.3 million.~~prior year.

Operating, administrative and general expenses increased by ~~$1.2~~$3.2 million primarily due to higher labor and utility costs from the prior year.

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

Plant Nutrient

Operating results for the Plant Nutrient segment increased by ~~$2.2~~$16.5 million compared to the same period in the prior year. Sales and merchandising revenues increased ~~$40.8~~$189.7 million and ~~Cost~~cost of sales and merchandising revenues increased by ~~$36.5~~$167.2 million resulting in increased ~~Gross~~gross profit of ~~$4.3~~$22.4 million. Both ~~Sales~~sales and merchandising revenues and ~~Cost~~cost of sales and merchandising revenues were higher due to higher fertilizer prices from the prior year. Gross profit improved ~~year over year~~year-over-year due to strong margins from well-positioned inventory in a tight supply ~~marke~~t.market. The most significant margin improvements came from ~~specialty liquids~~Ag Supply Chain and Specialty Liquids product ~~lines, specifically low-salt starters.~~lines.

Operating, administrative and general expenses increased by ~~$1.9~~$4.9 million due to increased labor costs from the prior year.

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

Other

Operating results declined by ~~$0.4~~$1.8 million from the same period last year. The decrease in other income, net from the prior year was due to interest received on a tax refund as a result of the CARES Act that did not recur in current year.

Income Taxes

InFor the ~~first quarter of~~six months ended June 30, 2022, the Company recorded income tax expense from continuing operations of ~~$4.1~~$19.9 million. The Company's effective tax rate ~~for 2022~~ was ~~38.7%~~15.4% on ~~Income~~income before ~~income~~ taxes from continuing operations of ~~$10.6~~$128.8 million. The difference between the ~~38.7%~~15.4% effective tax rate and the U.S. federal statutory tax rate of ~~21.0%~~21% is primarily attributable to ~~primarily attributable~~the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation.

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

~~In the first quarter of 2021, the Company recorded income tax expense from continuing operations of $4.4 million. The Company’s effective rate for~~ ~~2021~~ was 30.9% on Income before income taxes from continuing operations of $14.1 million. The difference between the 30.9% effective tax rate and the U.S. federal statutory tax rate of 21.0% is primarily attributable to the tax impact of state and local income taxes, U.S. income taxes on foreign earnings, and nondeductible compensation.

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Liquidity and Capital Resources

Working Capital

At ~~March 31,~~June 30, 2022, the Company had working capital from continuing operations of ~~$867.9~~$984.0 million, an increase of ~~$359.9~~$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 from continuing operations:


(in thousands)	(in thousands)	March 31, 2022		March 31, 2021		Variance		(in thousands)	June 30, 2022		June 30, 2021		Variance
Current Assets from Continuing Operations:	Current Assets from Continuing Operations:							Current Assets from Continuing Operations:
Cash and cash equivalents	Cash and cash equivalents	$	36,381	$	35,393	$	988	Cash and cash equivalents	$	86,035	$	27,538	$	58,497
Accounts receivable, net	Accounts receivable, net	1,050,259		677,118		373,141		Accounts receivable, net	1,141,167		702,869		438,298
Inventories	Inventories	1,950,303		1,287,637		662,666		Inventories	1,618,326		904,924		713,402
Commodity derivative assets – current	Commodity derivative assets – current	769,916		317,939		451,977		Commodity derivative assets – current	638,357		507,148		131,209
Other current assets	Other current assets	113,589		81,666		31,923		Other current assets	70,367		63,266		7,101
Total current assets from continuing operations	Total current assets from continuing operations	$	3,920,448	$	2,399,753	$	1,520,695	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:							Current Liabilities from Continuing Operations:
Short-term debt	Short-term debt	1,449,768		915,205		534,563		Short-term debt	1,161,428		757,271		404,157
Trade and other payables	Trade and other payables	741,124		534,660		206,464		Trade and other payables	772,996		543,503		229,493
Customer prepayments and deferred revenue	Customer prepayments and deferred revenue	384,723		161,696		223,027		Customer prepayments and deferred revenue	184,154		55,943		128,211
Commodity derivative liabilities – current	Commodity derivative liabilities – current	216,836		91,448		125,388		Commodity derivative liabilities – current	185,903		90,366		95,537
Current maturities of long-term debt	Current maturities of long-term debt	54,158		42,824		11,334		Current maturities of long-term debt	53,951		50,069		3,882
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	205,958		145,921		60,037		Accrued expenses and other current liabilities	211,830		168,221		43,609
Total current liabilities from continuing operations	Total current liabilities from continuing operations	$	3,052,567	$	1,891,754	$	1,160,813	Total current liabilities from continuing operations	$	2,570,262	$	1,665,373	$	904,889
Working Capital from Continuing Operations	Working Capital from Continuing Operations	$	867,881	$	507,999	$	359,882	Working Capital from Continuing Operations	$	983,990	$	540,372	$	443,618

Current assets from continuing operations as of ~~March 31,~~June 30, 2022 increased ~~$1,520.7~~$1,348.5 million in comparison to those as of ~~March 31,~~June 30, 2021. This increase was noted in mainly accounts receivable, inventories and current commodity derivative assets. The increases in those accounts can largely be attributed to the significant increases in the prices of agricultural commodities, including fertilizer, that the Company transacts in the ordinary course of business from the same period of the prior year. The Company also opened an international merchandising office in the third quarter of the prior year which is contributing to the increase in working capital as there is a substantial volume of commodities held in that business in 2022.

Current liabilities from continuing operations increased ~~$1,160.8~~$904.9 million across all financial statement line items when compared to the prior year. The increase in short-term debt is the result of higher working capital needs and driven by the significant increase in agricultural commodity prices from the prior year. The increase in trade and other payables, customer prepayments and deferred revenue, and current commodity derivative liabilities are also the result of increasing agricultural commodity prices.

Sources and Uses of Cash


		Three Months Ended					Six Months Ended
(in thousands)	(in thousands)	March 31, 2022		March 31, 2021		(in thousands)	June 30, 2022		June 30, 2021
Net cash used in operating activities	Net cash used in operating activities	$	(1,074,998)	$	(445,727)	Net cash used in operating activities	$	(721,799)	$	(245,494)
Net cash used in investing activities	Net cash used in investing activities	(24,921)		(15,730)		Net cash used in investing activities	(30,094)		(23,474)
Net cash provided by financing activities	Net cash provided by financing activities	919,757		467,762		Net cash provided by financing activities	622,113		267,550

Operating Activities

Our operating activities used cash of ~~$1,075.0~~$721.8 million and ~~$445.7~~$245.5 million in the first ~~three~~six months of 2022 and 2021, respectively. The increase in cash used was primarily due to the increased working capital needs, as discussed above, driven by significant increases in agricultural commodity ~~prices.~~prices and the new international merchandising locations being included in the current year. When the changes in operating assets and liabilities are removed, cash provided by operating activities was slightly lower than prior year due to the timing of tax refunds and credits ~~as well as~~in the ~~sale~~first quarter of ~~the rail leasing business.~~2021.

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Investing Activities

Investing activities used cash of ~~$24.9~~$30.1 million through the first ~~three~~six months of 2022 compared to cash used of ~~$15.7~~$23.5 million in the prior ~~year.~~period. The increase from the prior ~~year~~period was a result of a modest increase in capital spending on continuing operations from the prior ~~year combined with net proceeds from sales occurring within the Rail segment in 2021 that did not recur in the current quarter.~~year.

We expect to invest approximately $100 ~~to $125~~ million in property, plant and equipment in 2022 related to continuing operations.

Financing Activities

Financing activities provided cash of ~~$919.8~~$622.1 million and ~~$467.8~~$267.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively. This increase from the prior year was due to the significant increase in agricultural commodity prices from the prior ~~period. Our~~period and the related need for short-term borrowings. The Company's short-term debt balance of ~~$1,449.8~~$1,161.4 million is ~~very~~ closely aligned to ~~our~~the balance of readily marketable inventories of ~~$1,413.5~~$1,214.4 million as of ~~March 31,~~June 30, 2022.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of ~~$2,031.4~~$2,501.7 million in ~~borrowings.~~borrowing capacity. Of the total capacity, ~~$375.4~~$395.7 million is non-recourse to the Company. As of ~~March 31,~~June 30, 2022, the Company had ~~$907.3~~$1,315.2 million available for borrowing with ~~$168.5~~$277.5 million of that total being non-recourse to the Company.

The Company paid ~~$6.1~~$12.2 million in dividends in the first ~~three~~six months of 2022 compared to ~~$5.8~~$11.7 million in the prior ~~year.~~period. The Company paid dividends of $0.180 and $0.175 per common share in January and April of 2022 and 2021, respectively. On ~~February 18,~~June 16, 2022, the Company declared a cash dividend of $0.180 per common share payable on ~~April~~July 22, 2022 to shareholders of record on ~~April~~July 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 ~~March 31,~~June 30, 2022, the Company had standby letters of credit outstanding of ~~$4.0~~$5.1 million.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of ~~March 31,~~June 30, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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

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Part II. Other Information

Item 1. Legal Proceedings

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

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

Item 1A. Risk Factors

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

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

Periods
Total Number of Shares Purchased (1)
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 2022 75,629 $ 38.73 — $ —
February 2022 — — — —
March 2022 10,137 38.49 — —
Total 85,766 $ 38.70 — $ 100,000,000


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 ~~March 31,~~June 30, 2022, the Company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

(2) As of August 20, 2021, the Company was authorized to purchase up to $100 million of the Company’s common stock (the "Repurchase Plan") on or before August 20, 2024. As of ~~March 31,~~June 30, 2022, none of the $100 million available to repurchase shares had been utilized. The Repurchase Plan does not obligate the Company to acquire any specific number of shares. Under the Repurchase Plan, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

~~Item 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. | Q1 2022 Form 10-Q | 34~~

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Item 6. Exhibits



Exhibit Number						Description

10.1*10.1						~~Form of Restricted Share Unit~~Incremental Revolving Loan Amendment to Credit Agreement

~~10.2~~						~~INCREMENTAL TERM LOAN AMENDMENT TO CREDIT AGREEMENT (MARCH 2, 2022)~~

~~10.3~~						~~INCREMENTAL TERM LOAN AMENDMENT TO CREDIT AGREEMENT (MARCH 9, 2022)~~

~~10.4~~						~~CREDIT AGREEMENT DATED AS OF JANUARY 11, 2019 AMONG THE ANDERSONS, INC., THE LENDERS, U.S. BANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT (AMENDED AS OF MARCH 28, 2022)~~

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.

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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: ~~May 5,~~August 8, 2022						/s/ Patrick E. Bowe
						Patrick E. Bowe
						President and Chief Executive Officer

Date: ~~May 5,~~August 8, 2022						/s/ Brian A. Valentine
						Brian A. Valentine
						Executive Vice President and Chief Financial Officer

The Andersons, Inc. | Q1Q2 2022 Form 10-Q | 3641