Andersons, Inc. — Interim / Quarterly Report 2024

Aug 7, 2024

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended 06/30/2024

☐ 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 34,068,496 common shares outstanding at July 26, 2024.

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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 June 30 , 2024 and 2023	1
Condensed Consolidated Statements of Comprehensive Income – Three and Six months ended June 30, 2024 and 2023	2
Condensed Consolidated Balance Sheets – June 30 , 2024, December 31, 2023 and June 30 , 2023	3
Condensed Consolidated Statements of Cash Flows – Six months ended June 30 , 2024 and 2023	4
Condensed Consolidated Statements of Equity – Three and Six months ended June 30 , 2024 and 2023	5
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures about Market Risk	28
Item 4. Controls and Procedures	28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 5. Other Information	29
Item 6. Exhibits	30

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Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)

	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Sales and merchandising revenues	$ 2,795,205	$ 4,020,183	$ 5,513,422	$ 7,901,421
Cost of sales and merchandising revenues	2,619,834	3,798,246	5,209,731	7,531,473
Gross profit	175,371	221,937	303,691	369,948
Operating, administrative and general expenses	116,614	116,007	235,972	233,242
Asset impairment	—	—	—	87,156
Interest expense, net	6,611	13,953	13,133	30,578
Other income, net	5,200	12,441	16,728	20,445
Income before income taxes	57,346	104,418	71,314	39,417
Income tax provision	4,876	21,732	6,179	15,848
Net income	52,470	82,686	65,135	23,569
Net income (loss) attributable to noncontrolling interests	16,494	27,640	23,578	( 16,727 )
Net income attributable to The Andersons, Inc.	$ 35,976	$ 55,046	$ 41,557	$ 40,296
Average number of shares outstanding - basic	34,060	33,744	33,996	33,683
Average number of share outstanding - diluted	34,339	34,165	34,302	34,193
Earnings per share attributable to The Andersons, Inc. common shareholders:
Basic earnings per share attributable to The Andersons, Inc. common shareholders	$ 1.06	$ 1.63	$ 1.22	$ 1.20
Diluted earnings per share attributable to The Andersons, Inc. common shareholders	$ 1.05	$ 1.61	$ 1.21	$ 1.18

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Net income	$ 52,470	$ 82,686	$ 65,135	$ 23,569
Other comprehensive income (loss), net of tax:
Change in unrecognized actuarial loss and prior service cost	( 175 )	( 189 )	( 350 )	( 377 )
Foreign currency translation adjustments	( 1,965 )	2,669	( 4,883 )	3,436
Cash flow hedge activity	( 90 )	6,735	3,549	1,939
Other comprehensive income (loss)	( 2,230 )	9,215	( 1,684 )	4,998
Comprehensive income	50,240	91,901	63,451	28,567
Comprehensive income (loss) attributable to the noncontrolling interests	16,494	27,640	23,578	( 16,727 )
Comprehensive income attributable to The Andersons, Inc.	$ 33,746	$ 64,261	$ 39,873	$ 45,294

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Assets
Current assets:
Cash and cash equivalents	$ 530,386	$ 643,854	$ 96,293
Accounts receivable, net	743,550	762,549	1,030,271
Inventories	686,540	1,166,700	990,789
Commodity derivative assets – current	180,189	178,083	347,684
Other current assets	108,634	55,777	72,228
Total current assets	2,249,299	2,806,963	2,537,265
Property, plant and equipment, net	694,136	693,365	663,441
Other asset, net	356,378	354,679	369,340
Total assets	$ 3,299,813	$ 3,855,007	$ 3,570,046
Liabilities and equity
Current liabilities:
Short-term debt	$ 4,021	$ 43,106	$ 102,752
Trade and other payables	607,083	1,055,473	641,376
Customer prepayments and deferred revenue	124,424	187,054	189,947
Commodity derivative liabilities – current	128,847	90,849	251,101
Current maturities of long-term debt	27,671	27,561	27,511
Accrued expenses and other current liabilities	192,683	232,288	180,552
Total current liabilities	1,084,729	1,636,331	1,393,239
Long-term debt, less current maturities	549,378	562,960	576,489
Other long-term liabilities	145,444	139,329	161,836
Total liabilities	1,779,551	2,338,620	2,131,564
Commitments and contingencies ( Note 11 )
Shareholders’ equity:
Common shares, without par value ( 63,000 shares authorized and 34,083 shares at 6/30/2024 and 34,064 shares at 12/31/2023 and 6/30/2023)	143	142	142
Preferred shares, without par value ( 1,000 shares authorized; none issued)	—	—	—
Additional paid-in-capital	378,453	387,210	380,376
Treasury shares, at cost ( 14 , 270 and 270 shares at 6/30/2024, 12/31/2023 and 6/30/2023, respectively)	( 631 )	( 10,261 )	( 10,270 )
Accumulated other comprehensive income	21,181	22,865	25,482
Retained earnings	911,455	882,943	835,256
Total shareholders’ equity of The Andersons, Inc.	1,310,601	1,282,899	1,230,986
Noncontrolling interests	209,661	233,488	207,496
Total equity	1,520,262	1,516,387	1,438,482
Total liabilities and equity	$ 3,299,813	$ 3,855,007	$ 3,570,046

See Notes to Condensed Consolidated Financial Statements

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The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six months ended June 30, — 2024	2023
Operating Activities
Net income	$ 65,135	$ 23,569
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	61,218	62,585
Asset impairment	—	87,156
Other	10,821	952
Changes in operating assets and liabilities:
Accounts receivable	15,284	207,867
Inventories	477,723	734,855
Commodity derivatives	36,010	102,753
Other current and non-current assets	( 50,587 )	( 1,247 )
Payables and other current and non-current liabilities	( 550,797 )	( 1,011,086 )
Net cash provided by operating activities	64,807	207,404
Investing Activities
Acquisition of businesses, net of cash acquired	( 9,561 )	—
Purchases of property, plant and equipment and capitalized software	( 55,389 )	( 74,991 )
Other	6,812	3,318
Net cash used in investing activities	( 58,138 )	( 71,673 )
Financing Activities
Net payments under short-term lines of credit	( 37,705 )	( 173,384 )
Proceeds from issuance of long-term debt	—	100,000
Payments of long-term debt	( 13,752 )	( 35,861 )
Distributions to noncontrolling interest owner	( 47,405 )	( 24,344 )
Dividends paid	( 12,993 )	( 12,527 )
Value of shares withheld for taxes	( 8,071 )	( 6,616 )
Other	—	( 2,255 )
Net cash used in financing activities	( 119,926 )	( 154,987 )
Effect of exchange rates on cash and cash equivalents	( 211 )	280
Decrease in cash and cash equivalents	( 113,468 )	( 18,976 )
Cash and cash equivalents at beginning of period	643,854	115,269
Cash and cash equivalents at end of period	$ 530,386	$ 96,293

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	Retained Earnings	Noncontrolling Interests	Total
Balance at March 31, 2023	$ 142	$ 377,768	$ ( 11,006 )	$ 16,267	$ 786,420	$ 176,821	$ 1,346,412
Net income					55,046	27,640	82,686
Other comprehensive income				11,957			11,957
Amounts reclassified from accumulated other comprehensive income				( 2,742 )			( 2,742 )
Distributions to noncontrolling interests						( 14,364 )	( 14,364 )
Deconsolidation of joint venture						17,399	17,399
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $ 0 ( 21 shares)		2,593	812				3,405
Purchase of treasury shares ( 2 shares)			( 76 )				( 76 )
Dividends declared ($ 0.185 per common share)					( 6,245 )		( 6,245 )
Restricted share award dividend equivalents		15			35		50
Balance at June 30, 2023	$ 142	$ 380,376	$ ( 10,270 )	$ 25,482	$ 835,256	$ 207,496	$ 1,438,482
Balance at March 31, 2024	$ 142	$ 375,155	$ ( 631 )	$ 23,411	$ 881,911	$ 195,662	$ 1,475,650
Net income					35,976	16,494	52,470
Other comprehensive income				1,201			1,201
Amounts reclassified from accumulated other comprehensive income				( 3,431 )			( 3,431 )
Distributions to noncontrolling interests						( 2,495 )	( 2,495 )
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $ 0 ( 0 shares)	1	3,284					3,285
Dividends declared ($ 0.19 per common share)					( 6,473 )		( 6,473 )
Restricted share award dividend equivalents		14			41		55
Balance at June 30, 2024	$ 143	$ 378,453	$ ( 631 )	$ 21,181	$ 911,455	$ 209,661	$ 1,520,262

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	Six Months Ended — Common Shares	Additional Paid-in Capital	Treasury Shares	Accumulated Other Comprehensive Income	Retained Earnings	Noncontrolling Interests	Total
Balance at December 31, 2022	$ 142	$ 385,248	$ ( 15,043 )	$ 20,484	$ 807,770	$ 231,168	$ 1,429,769
Net income (loss)					40,296	( 16,727 )	23,569
Other comprehensive income				10,073			10,073
Amounts reclassified from Accumulated other comprehensive income				( 5,075 )			( 5,075 )
Distributions to noncontrolling interests						( 24,344 )	( 24,344 )
Deconsolidation of joint venture						17,399	17,399
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $ 0 ( 222 shares)		( 5,494 )	6,355				861
Purchase of treasury shares ( 51 shares)			( 1,747 )				( 1,747 )
Dividends declared ($ 0.37 per common share)					( 12,485 )		( 12,485 )
Restricted share award dividend equivalents		622	165		( 325 )		462
Balance at June 30, 2023	$ 142	$ 380,376	$ ( 10,270 )	$ 25,482	$ 835,256	$ 207,496	$ 1,438,482
Balance at December 31, 2023	$ 142	$ 387,210	$ ( 10,261 )	$ 22,865	$ 882,943	$ 233,488	$ 1,516,387
Net income					41,557	23,578	65,135
Other comprehensive income				5,928			5,928
Amounts reclassified from Accumulated other comprehensive income				( 7,612 )			( 7,612 )
Distributions to noncontrolling interests						( 47,405 )	( 47,405 )
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $ 0 ( 256 shares)	1	( 9,465 )	9,569				105
Dividends declared ($ 0.38 per common share)					( 12,943 )		( 12,943 )
Restricted share award dividend equivalents		708	61		( 102 )		667
Balance at June 30, 2024	$ 143	$ 378,453	$ ( 631 )	$ 21,181	$ 911,455	$ 209,661	$ 1,520,262

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 Recently Issued Accounting Standards

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and are in the form prescribed by the Securities and Exchange Commission (the “SEC”) in instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of The Andersons, Inc. and its wholly owned and controlled subsidiaries (the “Company”). In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of financial position, results of operations and cash flows for the periods indicated. All intercompany accounts and transactions have been eliminated in consolidation.

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, 2024. An unaudited Condensed Consolidated Balance Sheet as of June 30, 2023, has been included as the Company operates in several seasonal industries.

The Condensed Consolidated Balance Sheet data at December 31, 2023, was derived from the audited Consolidated Financial Statements but does not include all disclosures required by GAAP. 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, 2023 (the “2023 Form 10-K”).

Variable Interest Entities ("VIEs")

The Company consolidates any VIE of which it is the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. A variable interest holder is required to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company evaluates its relationships with the VIEs on an ongoing basis to determine if it is the primary beneficiary.

The Company's Condensed Consolidated Financial Statements include the assets, liabilities and results of operations of VIEs for which the Company is deemed to be the primary beneficiary. The other equity holders’ interests are reflected in "Net income (loss) attributable to noncontrolling interests" in the Condensed Consolidated Statements of Operations and "Noncontrolling interests" in the Condensed Consolidated Balance Sheets.

On October 1, 2019, the Company formed The Andersons Marathon Holding Company ("TAMH") with MPC Investments, LLC ("Marathon") for the primary purpose of producing ethanol, dried distillers grains, and corn oil and TAMH has plants located in Iowa, Indiana, Michigan, and Ohio. The plants have a combined nameplate capacity of 405 million gallons of ethanol but have a history of outperforming the nameplate capacity. The Company has ownership of 50.1 % of TAMH's common units and management has determined that TAMH is a VIE in which the Company is the primary beneficiary. Accordingly, the Company consolidates TAMH and records noncontrolling interest for the share of the entity owned by Marathon.

ELEMENT was structured as a limited liability company which began operations in 2019 for the primary purpose of producing ethanol and additional co-products such as dried distillers grain and corn oil. The Company held 51 % of the membership units and the Company had acted as the manager of the facility. As a result, ELEMENT was concluded to be a variable interest entity in which the Company was the primary beneficiary and had been consolidated within the Company’s Consolidated Financial Statements. On April 18, 2023, ELEMENT was placed into receivership and a receiver was appointed, which took possession and control of the rights and interests of ELEMENT. With this appointment, while retaining its investment in ELEMENT, the Company ceased to have a controlling financial interest and was no longer deemed to be the primary beneficiary in the subsidiary. Accordingly, the Company deconsolidated ELEMENT at that time and began accounting for the subsidiary as an equity method investment. Therefore, operating results from January 1, 2023 to April 18, 2023, are included within the Condensed Consolidated Statements of Operations.

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The creditors of the consolidated VIEs do not have recourse to the Company other than to the assets of the consolidated VIEs. The following table summarizes the carrying amounts of the assets and liabilities of TAMH, the Company's only consolidated VIE for the periods presented in the Company’s Condensed Consolidated Balance Sheets:

(In thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Assets
Current assets:
Cash and cash equivalents	$ 97,047	$ 153,258	$ 55,527
Accounts receivable, net	9,228	9,324	10,201
Inventories	47,079	61,270	73,703
Other current assets	5,530	6,844	8,920
Total current assets	158,884	230,696	148,351
Property, plant and equipment, net	271,073	270,379	269,179
Other assets, net	24,137	25,434	27,201
Total assets	$ 454,094	$ 526,509	$ 444,731
Liabilities
Current liabilities	$ 42,162	$ 51,020	$ 38,424
Long-term liabilities	9,940	12,010	14,757
Total liabilities	$ 52,102	$ 63,030	$ 53,181

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning with the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expect the adoption of this guidance to have a material impact on the Consolidated Financial Statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning with the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on the Consolidated Financial Statements.

2. Inventories

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

(in thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Grain and other agricultural products (a)	$ 452,314	$ 886,725	$ 707,980
Energy inventories (a)	14,085	21,705	19,564
Ethanol and co-products (a)	108,407	104,349	142,978
Plant nutrients and cob products	111,734	153,921	120,267
Total inventories	$ 686,540	$ 1,166,700	$ 990,789

(a) Includes RMI of $ 455.8 million, $ 862.5 million, and $ 691.7 million at June 30, 2024, December 31, 2023, and June 30, 2023, respectively.

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3. Property, Plant and Equipment

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

(in thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Land	$ 31,008	$ 30,912	$ 31,838
Land improvements and leasehold improvements	84,019	82,438	81,470
Buildings and storage facilities	370,877	365,744	349,773
Machinery and equipment	977,948	951,544	891,368
Construction in progress	48,771	36,541	56,578
	1,512,623	1,467,179	1,411,027
Less: accumulated depreciation	818,487	773,814	747,586
Property, plant and equipment, net	$ 694,136	$ 693,365	$ 663,441

Depreciation expense on property, plant, and equipment was $ 24.6 million and $ 24.4 million for three months ended June 30, 2024, and 2023, respectively. Additionally, depreciation expense on property, plant and equipment was $ 49.3 million and $ 50.5 million for the six months ended June 30, 2024, and 2023, respectively.

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

4. 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

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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 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 Condensed Consolidated Balance Sheets in Commodity derivative assets (liabilities) - current or if long-term in nature, Other assets, net or Other long-term liabilities:

(in thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Cash collateral paid (received)	$ ( 25,316 )	$ 24,439	$ ( 15,290 )
Fair value of derivatives	75,903	24,237	85,123
Net derivative asset position	$ 50,587	$ 48,676	$ 69,833

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

(in thousands)	June 30, 2024 — Commodity Derivative Assets - Current	Commodity Derivative Assets - Noncurrent	Commodity Derivative Liabilities - Current	Commodity Derivative Liabilities - Noncurrent	Total
Commodity derivative assets	$ 276,764	$ 8,141	$ 12,625	$ 35	$ 297,565
Commodity derivative liabilities	( 71,259 )	( 96 )	( 141,472 )	( 7,756 )	( 220,583 )
Cash collateral paid (received)	( 25,316 )	—	—	—	( 25,316 )
Balance sheet line item totals	$ 180,189	$ 8,045	$ ( 128,847 )	$ ( 7,721 )	$ 51,666

(in thousands)	December 31, 2023 — Commodity Derivative Assets - Current	Commodity Derivative Assets - Noncurrent	Commodity Derivative Liabilities - Current	Commodity Derivative Liabilities - Noncurrent	Total
Commodity derivative assets	$ 201,542	$ 1,496	$ 7,868	$ 13	$ 210,919
Commodity derivative liabilities	( 47,898 )	( 64 )	( 98,717 )	( 431 )	( 147,110 )
Cash collateral paid (received)	24,439	—	—	—	24,439
Balance sheet line item totals	$ 178,083	$ 1,432	$ ( 90,849 )	$ ( 418 )	$ 88,248

(in thousands)	June 30, 2023 — Commodity Derivative Assets - Current	Commodity Derivative Assets - Noncurrent	Commodity Derivative Liabilities - Current	Commodity Derivative Liabilities - Noncurrent	Total
Commodity derivative assets	$ 438,227	$ 3,959	$ 26,312	$ 59	$ 468,557
Commodity derivative liabilities	( 75,253 )	( 1,029 )	( 277,413 )	( 4,215 )	( 357,910 )
Cash collateral paid (received)	( 15,290 )	—	—	—	( 15,290 )
Balance sheet line item totals	$ 347,684	$ 2,930	$ ( 251,101 )	$ ( 4,156 )	$ 95,357

The net pretax gains and losses on commodity derivatives not designated as hedging instruments included in the Company’s Condensed Consolidated Statements of Operations and the line items in which they are located are as follows:

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Gains (losses) on commodity derivatives included in Cost of sales and merchandising revenues	$ ( 6,168 )	$ 4,827	$ 13,173	$ ( 22,741 )

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

(in thousands)	June 30, 2024 — Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:
Corn	459,565	—	—
Soybeans	33,415	—	—
Wheat	101,022	—	—
Oats	31,958	—	—
Ethanol	—	241,555	—
Dried distillers grain	—	—	872
Soybean meal	—	—	420
Other	4,928	53,698	2,151
Subtotal	630,888	295,253	3,443
Exchange traded:
Corn	190,010	—	—
Soybeans	42,830	—	—
Wheat	110,618	—	—
Oats	155	—	—
Ethanol	—	75,306	—
Propane	—	113,274	—
Other	—	3,780	692
Subtotal	343,613	192,360	692
Total	974,501	487,613	4,135

(in thousands)	December 31, 2023 — Number of Bushels	Number of Gallons	Number of Tons
Non-exchange traded:
Corn	519,825	—	—
Soybeans	41,848	—	—
Wheat	66,953	—	—
Oats	15,355	—	—
Ethanol	—	206,986	—
Dried distillers grain	—	—	740
Soybean meal	—	—	546
Other	6,847	37,153	1,882
Subtotal	650,828	244,139	3,168
Exchange traded:
Corn	160,795	—	—
Soybeans	34,250	—	—
Wheat	64,778	—	—
Oats	375	—	—
Ethanol	—	97,272	—
Propane	—	74,550	—
Other	—	420	825
Subtotal	260,198	172,242	825
Total	911,026	416,381	3,993

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

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, net 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, net as interest payments are made on the Company’s variable-rate debt. In the case where interest rate derivatives are settled prior to maturity, the gain or loss is recorded in Other income, net within the Condensed Consolidated Statements of Operations.

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The Company had recorded the following amounts for the fair value of the other derivatives:

(in thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Derivatives designated as hedging instruments
Interest rate contracts included in Other current assets	$ 9,961	$ 9,968	$ 11,107
Interest rate contracts included in Other assets	22,788	18,041	22,881

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

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Derivatives designated as hedging instruments
Interest rate derivative gains (losses) included in Other comprehensive income	$ ( 120 )	$ 8,996	$ 4,723	$ 2,590
Interest rate derivative gains included in Interest expense, net	3,203	2,515	6,588	4,619
Interest rate derivative gains included in Other income, net	—	—	568	—

Outstanding interest rate derivatives, as of June 30, 2024, are as follows:

Interest Rate Hedging Instrument	Year Entered	Year of Maturity	Notional Amount (in millions)	Description	Interest Rate
Swap	2019	2025	$ 45.3	Interest rate component of debt - accounted for as a hedge	2.4 %
Swap	2019	2025	$ 90.6	Interest rate component of debt - accounted for as a hedge	2.3 %
Swap	2019	2025	$ 45.3	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	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	2022	2029	$ 100.0	Interest rate component of debt - accounted for as a hedge	2.0 %
Swap	2022	2029	$ 50.0	Interest rate component of debt - accounted for as a hedge	2.4 %
Swap	2023	2025	$ 50.0	Interest rate component of debt - accounted for as a hedge	3.7 %
Swap	2023	2031	$ 50.0	Interest rate component of debt - accounted for as a hedge	2.9 %

5. Revenue

Many of the Company’s sales and merchandising revenues are generated from contracts that are outside the scope of ASC 606, Revenue from Contracts with Customers . Specifically, the vast majority of the Company's Trade and Renewables sales contracts are derivatives within the scope of ASC 815, Derivatives and Hedging . Of the sales and merchandising revenues within the scope of ASC 606 in the Trade and Renewables segments, substantially all of the activity occurs at a point in time with de minimis outstanding contract liabilities. In the Company's Nutrient & Industrial segment, all of the sales and merchandising revenues are within the scope of ASC 606. Therefore, a further disaggregation of revenues and detail of outstanding contract balances have been provided below:

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Ag Supply Chain	$ 236,307	$ 321,287	$ 306,113	$ 387,065
Specialty Liquids	62,508	81,171	108,308	126,604
Engineered Granules	52,522	43,134	104,235	95,865
Total	$ 351,337	$ 445,592	$ 518,656	$ 609,534

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The Nutrient & Industrial group is organized into three divisions: Ag Supply Chain, which includes wholesale distribution centers and retail farm centers; Specialty Liquids, which includes manufactured liquid products intended for agricultural and industrial uses; and Engineered Granules, which includes granular products for turf and agricultural uses, contract manufacturing and cob products. Prior period amounts above were recast to conform to this organization.

Substantially all of the Nutrient & Industrial segment revenues presented in the preceding table occurred within the United States and are recorded at a point in time instead of over time.

Contract balances

The balances of the Nutrient & Industrial segment's contract liabilities were $ 16.2 million and $ 30.7 million as of June 30, 2024 and December 31, 2023, respectively. The difference between the opening and closing balances of the Company’s contract liabilities is primarily a result of timing differences between the Company’s performance and the customer’s payment. The main driver of the contract liabilities balance are payments for primary and specialty nutrients within the Nutrient & Industrial segment received in advance of fulfilling our performance obligations under our customer contracts. Due to seasonality of this business, contract liabilities are built up through the first quarter in preparation for the spring application season. Revenue is then recognized in the Nutrient & Industrial segment throughout the spring application season as the Company fulfills its contract obligations.

6. Income Taxes

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Income before income taxes	$ 57,346	$ 104,418	$ 71,314	$ 39,417
Income tax provision	4,876	21,732	6,179	15,848
Effective tax rate	8.5 %	20.8 %	8.7 %	40.2 %

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

The difference between the 8.5 % effective tax rate and the U.S. federal statutory tax rate of 21.0% for the three months ended June 30, 2024, is primarily attributable to the tax impact of non-controlling interest, federal tax credits, and the reversal of certain unrecognized tax benefits offset by state and local income taxes and nondeductible compensation.

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

The difference between the 8.7 % effective tax rate and the U.S. federal statutory tax rate of 21.0% for the six months ended June 30, 2024, is primarily attributable to the tax impact of non-controlling interest, federal tax credits, stock based compensation, and the reversal of certain unrecognized tax benefits offset by state and local income taxes and nondeductible compensation.

The difference between the 40.2 % effective tax rate and the U.S. federal statutory tax rate of 21.0% for the six months ended June 30, 2023, was primarily attributable to the tax impact of non-controlling interest, state and local income taxes and nondeductible compensation. During the six months ended June 30, 2023, a net discrete income tax benefit of $ 10.6 million was recorded on a net loss before taxes of $ 88.8 million related to the current year operations, impairment charge, and gain on deconsolidation associated with ELEMENT.

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7. Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated other comprehensive income ("AOCI") attributable to the Company:

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Currency Translation Adjustment
Beginning balance	$ ( 5,499 )	$ ( 7,436 )	$ ( 2,581 )	$ ( 8,203 )
Other comprehensive income (loss) before reclassifications	( 1,965 )	2,669	( 4,883 )	3,436
Tax effect	—	—	—	—
Other comprehensive income (loss), net of tax	( 1,965 )	2,669	( 4,883 )	3,436
Ending balance	$ ( 7,464 )	$ ( 4,767 )	$ ( 7,464 )	$ ( 4,767 )
Hedging Adjustment
Beginning balance	$ 24,624	$ 18,750	$ 20,985	$ 23,546
Other comprehensive income (loss) before reclassifications	3,083	11,511	11,879	7,209
Amounts reclassified from AOCI (a)	( 3,203 )	( 2,514 )	( 7,156 )	( 4,619 )
Tax effect (c)	30	( 2,262 )	( 1,174 )	( 651 )
Other comprehensive income (loss), net of tax	( 90 )	6,735	3,549	1,939
Ending balance	$ 24,534	$ 25,485	$ 24,534	$ 25,485
Pension and Other Postretirement Adjustment
Beginning balance	$ 4,028	$ 4,695	$ 4,203	$ 4,883
Other comprehensive income (loss) before reclassifications	5	( 15 )	10	( 29 )
Amounts reclassified from AOCI (b)	( 228 )	( 228 )	( 456 )	( 456 )
Tax effect (c)	48	54	96	108
Other comprehensive income (loss), net of tax	( 175 )	( 189 )	( 350 )	( 377 )
Ending balance	$ 3,853	$ 4,506	$ 3,853	$ 4,506
Investments in Convertible Preferred Securities Adjustment
Beginning balance	$ 258	$ 258	$ 258	$ 258
Other comprehensive income (loss), net of tax	—	—	—	—
Ending balance	$ 258	$ 258	$ 258	$ 258
Total AOCI Ending Balance	$ 21,181	$ 25,482	$ 21,181	$ 25,482

(a) Amounts reclassified from gain (loss) on cash flow hedges are reclassified from AOCI to income when the hedged item affects earnings. Gains and losses from interest rate derivatives are recognized in Interest expense, net as interest payments are made on the Company's variable rate debt. When interest rate derivatives are settled prior to maturity the gain or loss is recognized in Other income, 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.

(c) The Company utilizes the aggregate approach for releasing disproportionate income tax effects in AOCI.

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8. Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis:

(in thousands) — Assets (liabilities)	June 30, 2024 — Level 1	Level 2	Level 3	Total
Commodity derivatives, net (a)	$ 50,587	$ 1,079	$ —	$ 51,666
Provisionally priced contracts (b)	( 40,720 )	( 16,133 )	—	( 56,853 )
Convertible preferred securities (c)	—	—	15,625	15,625
Other assets and liabilities (d)	4,949	32,749	—	37,698
Total	$ 14,816	$ 17,695	$ 15,625	$ 48,136

(in thousands) — Assets (liabilities)	December 31, 2023 — Level 1	Level 2	Level 3	Total
Commodity derivatives, net (a)	$ 48,676	$ 39,572	$ —	$ 88,248
Provisionally priced contracts (b)	( 108,736 )	( 65,343 )	—	( 174,079 )
Convertible preferred securities (c)	—	—	15,625	15,625
Other assets and liabilities (d)	5,477	28,009	—	33,486
Total	$ ( 54,583 )	$ 2,238	$ 15,625	$ ( 36,720 )

(in thousands) — Assets (liabilities)	June 30, 2023 — Level 1	Level 2	Level 3	Total
Commodity derivatives, net (a)	$ 69,833	$ 25,524	$ —	$ 95,357
Provisionally priced contracts (b)	( 19,061 )	( 16,529 )	—	( 35,590 )
Convertible preferred securities (c)	—	—	15,424	15,424
Other assets and liabilities (d)	5,018	33,988	—	39,006
Total	$ 55,790	$ 42,983	$ 15,424	$ 114,197

(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.

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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:

(in thousands)	Convertible Preferred Securities — 2024	2023
Assets at January 1,	$ 15,625	$ 16,278
Gains included in Other income, net	—	802
Proceeds from investments	—	( 1,670 )
Assets at March 31,	15,625	15,410
Additional investments	—	235
Losses included in Other income, net	—	( 221 )
Assets at June 30,	$ 15,625	$ 15,424

The following summarize quantitative information about the Company's Level 3 fair value measurements:

	Quantitative Information about Recurring Level 3 Fair Value Measurements
	Fair Value as of
(in thousands)	June 30, 2024	December 31, 2023	June 30, 2023	Valuation Method	Unobservable Input	Weighted Average
Convertible preferred securities (a)	$ 15,625	$ 15,625	$ 15,424	Implied based on market prices	N/A	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.

There were no nonrecurring level 3 fair value measurements as of June 30, 2024, December 31, 2023, or June 30, 2023.

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

As of June 30, 2024, December 31, 2023 and June 30, 2023, the estimated fair value of long-term debt, including the current portion, was $ 568.0 million, $ 585.1 million, and $ 597.6 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.

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9. 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 shareholder of the Company's Renewables operations and certain equity method investments that the Company holds, along with other related parties.

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

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Sales of products	$ 70,691	$ 97,099	$ 132,301	$ 172,050
Purchases of products	7,964	14,524	16,256	30,226

(in thousands)	June 30, 2024	December 31, 2023	June 30, 2023
Accounts receivable	$ 15,435	$ 6,732	$ 15,218
Accounts payable	10,765	3,901	2,503

10. Segment Information

The Company’s operations include three reportable business segments that are distinguished primarily on the basis of products and services offered as well as the structure of management. The Trade business includes commodity merchandising and the operation of terminal grain elevator facilities. The Renewables business produces ethanol and co-products through its four co-owned and consolidated ethanol production facilities as well as purchases and sells ethanol and ethanol co-products. The Nutrient & Industrial business manufactures and distributes plant nutrient products such as agricultural inputs, primarily fertilizers and turf care products along with industrial products such as deicers, dust abatement solutions and corncob-based products. The Other category includes other corporate level costs not attributable to an operating segment and intercompany eliminations between the segments.

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

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Revenues from external customers
Trade	$ 1,757,741	$ 2,696,810	$ 3,651,600	$ 5,574,590
Renewables	686,127	877,781	1,343,166	1,717,297
Nutrient & Industrial	351,337	445,592	518,656	609,534
Total	$ 2,795,205	$ 4,020,183	$ 5,513,422	$ 7,901,421

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Income (loss) before income taxes
Trade	$ 5,424	$ 4,990	$ 11,348	$ 44,354
Renewables (a)	39,200	66,604	61,991	( 15,909 )
Nutrient & Industrial	23,419	42,565	21,569	32,127
Other	( 10,697 )	( 9,741 )	( 23,594 )	( 21,155 )
Total	$ 57,346	$ 104,418	$ 71,314	$ 39,417

(a) Includes income (loss) attributable to noncontrolling interests of $ 16.5 million and $ 27.6 million for the three months ended June 30, 2024 and 2023, respectively, and $ 23.6 million and $( 16.7 ) million for the six months ended June 30, 2024 and 2023, respectively.

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11. Commitments and Contingencies

Litigation activities

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

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

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

12. Other Income, net

The following table sets forth the items in Other income, net within the Condensed Consolidated Statements of Operations:

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Interest income	$ 3,712	$ 1,708	$ 8,394	$ 3,175
Patronage income	537	78	3,406	2,094
Gain on deconsolidation of joint venture	—	6,544	3,117	6,544
Property insurance recoveries	—	2,180	—	3,183
Other	951	1,931	1,811	5,449
Total	$ 5,200	$ 12,441	$ 16,728	$ 20,445

Individually significant items included in the table above are:

Interest income - In 2024, the vast majority of interest income recorded by the Company was due to the amount of cash and cash equivalents on hand.

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

Gain on deconsolidation of joint venture - On April 18, 2023, ELEMENT was placed into receivership. As the receiver took control of ELEMENT, under the VIE consolidation model, the Company was deemed to have lost control of the entity and therefore deconsolidated ELEMENT from its Condensed Consolidated Financial Statements. As a result of these activities, the Company recognized a gain on deconsolidation in the second quarter of 2023. The Company recognized an additional $ 3.1 million gain in the first quarter of 2024 as the amount of cash distributed to the Company related to its receivables from ELEMENT exceeded management's estimate at the time of deconsolidation.

Property insurance recoveries - In 2023, property insurance recoveries consisted of proceeds of $ 2.2 million relating to a conveyor collapse in Delhi, Louisiana. The remaining proceeds consists of several individually insignificant amounts in the ordinary course of business.

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

Forward Looking Statements

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Such factors include, but are not limited to, the effects of economic, weather and agricultural conditions, regulatory conditions, competition globally and in the markets the Company serves, geopolitical risk, fluctuations in cost and availability of commodities, the effectiveness of the Company's internal control over financial reporting and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors. The reader is urged to carefully consider these risks and others, including those risk factors listed under Item 1A of the 2023 Form 10-K. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Critical Accounting Policies and Estimates

Our critical accounting policies and critical accounting estimates, as described in our 2023 Form 10-K, have not materially changed through the second quarter of 2024.

Executive Overview

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

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

Trade

The Trade segment’s second quarter operating results were slightly ahead of the prior year. Trade's growing premium food and feed ingredients business showed year-over-year improvement, driven by the addition of ACJ International, acquired in July 2023, and other recent growth capital investments. Results from our grain asset footprint were also better than the prior year, with wheat storage income leading improvements in the eastern grain belt. The merchandising business remained profitable but below 2023. Commodity markets are currently well-supplied with limited volatility. Farmer engagement remains slow due to overall market prices. While these carry markets benefit our assets, reduced volatility and lower prices reduce opportunities for the merchandising business.

Trade's portfolio mix of assets, ingredients and merchandising businesses provide a solid foundation for us to benefit from large crops and carry markets as well as tight, demand-driven markets. Our assets are well-positioned for the grains to flow in due course. Domestic premium ingredient demand is also expected to stay solid and should continue to support recent capital growth investments.

Agricultural inventories on hand were 78.1 million and 74.5 million bushels at June 30, 2024, and June 30, 2023, respectively. These bushels consist of inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory. Total Trade storage space capacity at company-owned or leased facilities, including temporary pile storage, was approximately 168 million bushels at June 30, 2024, which is slightly lower than the 175 million bushels of capacity in the prior year after the divestiture of certain grain assets.

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Renewables

The Renewables segment's second quarter operating results were lower than the outsized performance in the prior year as plant co-product values, particularly feed ingredients, were lower with feed ingredients following the overall price reduction of corn. Despite the lower co-product values, margins on ethanol production improved year-over-year on lower corn basis in the east and our production facilities continued to operate efficiently in the quarter with increased production and ethanol yields. Renewable diesel feedstocks volumes continue to grow albeit with compressed margins on industry fundamentals. Feed ingredient demand was also improved; however, values declined on lower corn prices. With a continued strong export environment, the ethanol margin environment should remain favorable.

Ethanol and related co-products volumes were as follows:

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Ethanol (gallons shipped)	187,050	198,633	372,876	385,200
E-85 (gallons shipped)	13,494	9,562	25,785	19,081
Vegetable oils (pounds shipped) (a)	404,589	303,701	775,572	565,357
DDG (tons shipped) (b)	553	508	1,101	1,031

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

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

Nutrient & Industrial

The Nutrient & Industrial segment's second quarter operating results were lower than the very strong prior year. Volumes were negatively impacted by a late and wet spring planting season in our market areas and relatively flat nutrient prices did not provide outsized margin opportunities we've seen in prior years. Also impacting the year-over-year comparison was a 2023 second quarter that had a significant shift of income from the first quarter into the second quarter. The engineered granules business saw improvement in the quarter on higher sales volume. Looking forward, second half agronomy sales and applications are dependent on the timing of harvest and grower's overall profitability.

Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately 458 thousand tons for dry nutrients and approximately 510 thousand tons for liquid nutrients at June 30, 2024, which is similar to the prior year.

Tons of product sold were as follows:

(in thousands)	Three months ended June 30, — 2024	2023	Six months ended June 30, — 2024	2023
Ag Supply Chain	578	674	777	844
Specialty Liquids	117	141	208	222
Engineered Granules	57	46	121	109
Total tons	752	861	1,106	1,175

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

Other

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

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Operating Results

The following discussion focuses on the operating results as shown in the Condensed Consolidated Statements of Operations and includes a separate discussion by segment. Additional segment information is included herein in Note 10, Segment Information.

Comparison of the three months ended June 30, 2024, with the three months ended June 30, 2023, including a reconciliation of GAAP to non-GAAP measures:

(in thousands)	Three months ended June 30, 2024 — Trade	Renewables	Nutrient & Industrial	Other	Total
Sales and merchandising revenues	$ 1,757,741	$ 686,127	$ 351,337	$ —	$ 2,795,205
Cost of sales and merchandising revenues	1,678,093	639,400	302,341	—	2,619,834
Gross profit	79,648	46,727	48,996	—	175,371
Operating, administrative and general expenses	72,803	7,756	25,393	10,662	116,614
Interest expense (income), net	5,454	947	693	(483)	6,611
Other income (loss), net	4,033	1,176	509	(518)	5,200
Income (loss) before income taxes	$ 5,424	$ 39,200	$ 23,419	$ (10,697)	$ 57,346
Income before income taxes attributable to the noncontrolling interests	—	16,494	—	—	16,494
Non-GAAP Income (loss) before income taxes attributable to the Company	$ 5,424	$ 22,706	$ 23,419	$ (10,697)	$ 40,852

(in thousands)	Three months ended June 30, 2023 — Trade	Renewables	Nutrient & Industrial	Other	Total
Sales and merchandising revenues	$ 2,696,810	$ 877,781	$ 445,592	$ —	$ 4,020,183
Cost of sales and merchandising revenues	2,616,099	809,489	372,658	—	3,798,246
Gross profit	80,711	68,292	72,934	—	221,937
Operating, administrative and general expenses	69,146	7,568	28,886	10,407	116,007
Interest expense (income), net	10,903	1,588	1,983	(521)	13,953
Other income, net	4,328	7,468	500	145	12,441
Income (loss) before income taxes	$ 4,990	$ 66,604	$ 42,565	$ (9,741)	$ 104,418
Income before income taxes attributable to the noncontrolling interests	—	27,640	—	—	27,640
Non-GAAP Income (loss) before income taxes attributable to the Company	$ 4,990	$ 38,964	$ 42,565	$ (9,741)	$ 76,778

The Company uses Income (loss) before income taxes attributable to the Company, 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 is a useful measure of the Company’s performance as it provides investors additional information about the Company's operations, allowing evaluation of underlying business performance and period-to-period comparability. This measure is not intended to replace or be an alternative to Income (loss) before income taxes, the most directly comparable measure reported under GAAP.

Trade

Operating results for the Trade segment improved slightly from the same period of the prior year. Sales and merchandising revenues decreased by $939.1 million and cost of sales and merchandising revenues decreased by $938.0 million that resulted in decreased gross profit of $1.1 million. A vast majority of the decrease in sales and merchandising revenues and cost of sales and merchandising revenues can be attributed to our merchandising business as management made a prudent decision to

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intentionally pull back on volumes traded in certain regions due to the recent geopolitical unrest. Reduced commodity prices also contributed to this contraction in sales and merchandising revenues and cost of sales and merchandising revenues across all of our business lines as the oversupply of commodities has shifted to a carry market. The slight decrease in gross profit can be attributed to reduced opportunities in a market with less volatility and stable commodity prices for the merchandising business. This decrease was partially offset by improved results in our asset business, primarily from wheat opportunities, and our premium ingredients business, including the benefits of its recent acquisition and other growth investments.

Operating, administrative and general expenses increased by $3.7 million. The majority of the increase from the prior year can be attributed to an additional $3.1 million of costs from organic growth and an acquisition.

Interest expense decreased by $5.4 million due to reduced short-term borrowings from lower commodity prices.

Renewables

Operating results for the Renewables segment declined by $16.3 million from the same period last year. Sales and merchandising revenues decreased by $191.7 million and cost of sales and merchandising revenues decreased by $170.1 million compared to prior year results. As a result, gross profit decreased by $21.6 million compared to 2023 results. The decrease in both sales and merchandising revenues and cost of sales and merchandising revenues can be attributed to lower ethanol and renewable diesel feedstocks values. Sales volumes remained consistent for the base ethanol business and increased in our growing renewable diesel feedstocks business. Ethanol and ethanol co-products sales values have decreased by approximately 26% from the prior period along with substantial declines in values across the various renewable diesel feedstocks. The $21.6 million decrease to gross profit in the current period results reflect a $23.0 million decrease at our ethanol plants when compared to the outstanding 2023 performance. The main contributor to the decline from the prior year was due to lower ethanol co-product values as the price of corn decreased.

Other income, net decreased from the prior year by $6.3 million primarily due to a $6.5 million gain as a result of the deconsolidation of the ELEMENT ethanol plant in the prior year.

Nutrient & Industrial

Operating results for the Nutrient & Industrial segment declined by $19.1 million compared to the same period in the prior year. Sales and merchandising revenues decreased by $94.3 million and cost of sales and merchandising revenues decreased by $70.3 million resulting in a $23.9 million decrease in gross profit. The decrease in sales and merchandising revenues and cost of sales and merchandising revenues can be equally attributable to both declines in volumes and prices. The business faced more challenging conditions thus far in 2024 as our core geographic footprint experienced a wet and late spring preventing the application of nutrients. This was a difficult comparison to the second quarter of 2023 in which the business experienced better weather and a stronger price environment during the spring application season. Our Ag Supply Chain and Specialty Liquids businesses were impacted the most by the poor weather conditions as the two businesses equally contributed to $23.2 million of the $23.9 million gross profit shortfall when compared to the outsized prior year results.

Income Taxes

For the three months ended June 30, 2024, the Company recorded income tax expense of $4.9 million. The Company's effective tax rate was 8.5% on income before taxes of $57.3 million. The difference between the 8.5% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest, federal tax credits, and the reversal of certain unrecognized tax benefits offset by state and local income taxes and nondeductible compensation.

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

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Comparison of the six months ended June 30, 2024, with the six months ended June 30, 2023, including a reconciliation of GAAP to non-GAAP measures:

(in thousands)	Six months ended June 30, 2024 — Trade	Renewables	Nutrient & Industrial	Other	Total
Sales and merchandising revenues	$ 3,651,600	$ 1,343,166	$ 518,656	$ —	$ 5,513,422
Cost of sales and merchandising revenues	3,493,670	1,269,869	446,192	—	5,209,731
Gross profit	157,930	73,297	72,464	—	303,691
Operating, administrative and general expenses	145,061	15,753	50,836	24,322	235,972
Interest expense (income), net	11,087	1,479	1,616	(1,049)	13,133
Other income (loss), net	9,566	5,926	1,557	(321)	16,728
Income (loss) before income taxes	$ 11,348	$ 61,991	$ 21,569	$ (23,594)	$ 71,314
Income before income taxes attributable to the noncontrolling interests	—	23,578	—	—	23,578
Non-GAAP Income (loss) before income taxes attributable to the Company	$ 11,348	$ 38,413	$ 21,569	$ (23,594)	$ 47,736

(in thousands)	Six months ended June 30, 2023 — Trade	Renewables	Nutrient & Industrial	Other	Total
Sales and merchandising revenues	$ 5,574,590	$ 1,717,297	$ 609,534	$ —	$ 7,901,421
Cost of sales and merchandising revenues	5,376,701	1,633,202	521,570	—	7,531,473
Gross profit	197,889	84,095	87,964	—	369,948
Operating, administrative and general expenses	141,126	16,472	53,018	22,626	233,242
Asset impairment	—	87,156	—	—	87,156
Interest expense (income), net	22,720	4,685	4,165	(992)	30,578
Other income, net	10,311	8,309	1,346	479	20,445
Income (loss) before income taxes	$ 44,354	$ (15,909)	$ 32,127	$ (21,155)	$ 39,417
Loss before income taxes attributable to the noncontrolling interests	—	(16,727)	—	—	(16,727)
Non-GAAP Income (loss) before income taxes attributable to the Company	$ 44,354	$ 818	$ 32,127	$ (21,155)	$ 56,144

The Company uses Income (loss) before income taxes attributable to the Company, 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 is a useful measure of the Company’s performance as it provides investors additional information about the Company's operations, allowing evaluation of underlying business performance and period-to-period comparability. This measure is not intended to replace or be an alternative to Income (loss) before income taxes, the most directly comparable amounts reported under GAAP.

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Trade

Operating results for the Trade segment decreased by $33.0 million from the prior year. Sales and merchandising revenues decreased by $1,923.0 million, and cost of sales and merchandising revenues decreased by $1,883.0 million for a decreased gross profit impact of $40.0 million. A vast majority of the decrease in sales and merchandising revenues and cost of sales and merchandising revenues can be attributed to our merchandising business as management made a prudent decision to intentionally pull back on volumes traded in certain regions due to the recent geopolitical unrest. Reduced commodity prices also contributed to this contraction in sales and merchandising revenues and cost of sales and merchandising revenues across all of our business lines as the oversupply of commodities has shifted to a carry market. Of the $40.0 million decrease in gross profit, $20.3 million was related to insurance recoveries recorded in the prior year within the asset-based business. This was followed by a $26.5 million decrease in the merchandising businesses as there were less trading opportunities in a less volatile commodity market, which was partially offset by $8.8 million of improved results in our premium ingredients business as recent acquisitions were accretive to results.

Interest expense decreased by $11.6 million due to reduced short-term borrowings from lower commodity prices.

Renewables

Operating results for Renewables increased by $37.6 million from the same period of prior year. Sales and merchandising revenues decreased by $374.1 million, and cost of sales and merchandising revenues decreased by $363.3 million compared to prior year. As a result, gross profit decreased by $10.8 million. The decrease in both sales and merchandising revenues and cost of sales and merchandising revenues can be attributed to lower ethanol and renewable diesel feedstocks values. Sales volumes remained consistent for the base ethanol business and increased in our growing renewable diesel feedstocks business. Ethanol and ethanol co-products sales values have decreased by approximately 27% from the prior period along with substantial declines in values across the various renewable diesel feedstocks. The $10.8 million decrease in gross profit from the prior period can mainly be attributable to the ethanol plants which are $7.6 million behind the strong prior year results. The main contributor to the decline from the prior year was due to lower ethanol co-product values as the price of corn decreased.

An asset impairment charge of $87.2 million related to ELEMENT was recorded in the prior year. As ELEMENT was a consolidated subsidiary of the Company at the time, the entire impairment charge is reflected in Asset impairment.

Interest expense decreased by $3.2 million from the prior year due to the deconsolidation of ELEMENT non-recourse debt.

Other income, net decreased from the prior year by $2.4 million as the Company recorded an additional $3.4 million in gains as a result of the deconsolidation of the ELEMENT ethanol plant in the prior year, which was partially offset by increased interest income in the current year.

Nutrient & Industrial

Operating results for the Nutrient & Industrial segment decreased by $10.6 million when compared to the same period of the prior year. Sales and merchandising revenues decreased $90.9 million, and cost of sales and merchandising revenues decreased by $75.4 million resulting in decreased gross profit of $15.5 million. Approximately 80% of the decrease in sales and merchandising revenues and cost of sales and merchandising revenues was due to margin compression as the segment experienced reduced demand from a wet and late spring preventing the application of nutrients. Our Ag Supply Chain and Specialty Liquids businesses were impacted the most by the poor weather conditions as the two businesses equally contributed to $12.9 million of the $15.5 million gross profit shortfall when compared to the outsized prior year results.

Interest expense decreased $2.5 million from prior year due to lower working capital usage.

Income Taxes

For the six months ended June 30, 2024, the Company recorded income tax expense of $6.2 million. The Company's effective tax rate was 8.7% on income before taxes of $71.3 million. The difference between the 8.7% 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, federal tax credits, stock based compensation, and the reversal of certain unrecognized tax benefits offset by state and local income taxes and nondeductible compensation.

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For the six months ended June 30, 2023, the Company recorded an income tax expense of $15.8 million. The Company’s effective tax rate was 40.2% on income before income taxes of $39.4 million. The difference between the 40.2% effective tax rate and the U.S. federal statutory rate of 21.0% is primarily attributable to the tax impact of noncontrolling interest, state and local income taxes, and nondeductible compensation. During the six months ended June 30, 2023, a net discrete income tax benefit of $10.6 million was recorded on a net loss before income taxes of $88.8 million related to the operations, impairment charge, and gain on the deconsolidation of a joint venture.

The Company’s subsidiary partnership returns are under U.S. federal and certain state tax examinations for tax years 2015 through 2021. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015. The U.S. federal, state, and Mexican tax authorities’ examinations could potentially be resolved within the next 12 months. The resolution of these examinations could change our unrecognized tax benefits and favorably impact income tax expense by a range of $5.6 million to $10.7 million.

On December 20, 2021, the Organization for Economic Co-operation and Development ("OECD") issued Pillar Two model rules introducing a global minimum tax of 15% on large corporations. Although the U.S. has not yet adopted the Pillar Two model rules, several foreign countries enacted legislation in 2023 which closely follow OECD’s Pillar Two guidance to be effective January 1, 2024. The impact of Pillar Two legislation on the Company's 2024 effective tax rate is expected to be minimal. Management will continue to monitor Pillar Two legislation in our relevant jurisdictions to determine any changes to the Company's effective tax rate.

Liquidity and Capital Resources

Working Capital

At June 30, 2024, the Company had working capital of $1,164.6 million, an increase of $20.5 million from the prior year. This increase was attributable to changes in the following components of current assets and current liabilities:

(in thousands)	June 30, 2024	June 30, 2023	Variance
Current Assets:
Cash and cash equivalents	$ 530,386	$ 96,293	$ 434,093
Accounts receivable, net	743,550	1,030,271	(286,721)
Inventories	686,540	990,789	(304,249)
Commodity derivative assets – current	180,189	347,684	(167,495)
Other current assets	108,634	72,228	36,406
Total current assets	2,249,299	2,537,265	(287,966)
Current Liabilities:
Short-term debt	4,021	102,752	(98,731)
Trade and other payables	607,083	641,376	(34,293)
Customer prepayments and deferred revenue	124,424	189,947	(65,523)
Commodity derivative liabilities – current	128,847	251,101	(122,254)
Current maturities of long-term debt	27,671	27,511	160
Accrued expenses and other current liabilities	192,683	180,552	12,131
Total current liabilities	1,084,729	1,393,239	(308,510)
Working Capital	$ 1,164,570	$ 1,144,026	$ 20,544

Current assets as of June 30, 2024, decreased $288.0 million in comparison to those as of June 30, 2023. This decrease related to the reduction of all current asset accounts with the exception of the increase in cash and other current assets. The decreases in these current asset accounts can largely be attributed to the reduction and stabilization of agricultural commodity prices over the last year in comparison to historically high price levels of agricultural commodities, including fertilizer, in the same period of the prior year. The decreases in the working capital asset accounts also had a direct impact on cash as the Company was not deploying cash to hold working capital as it had done in the previous year.

Current liabilities decreased $308.5 million from the prior year. Current liabilities have decreased almost across the board as commodity prices have continued to stabilize over the last year compared to the historically high commodity prices in the same period of the prior year.

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Sources and Uses of Cash

(in thousands)	Six months ended June 30, — 2024	2023
Net cash provided by operating activities	$ 64,807	$ 207,404
Net cash used in investing activities	(58,138)	(71,673)
Net cash used in financing activities	(119,926)	(154,987)

Operating Activities

Operating activities provided cash of $64.8 million and $207.4 million in the first six months of 2024 and 2023, respectively. The decrease in the amount of cash provided in operating activities is due to an unfavorable change of $105.5 million in operating assets and liabilities through the normal course of business combined with lower earnings from the prior year. Cash generation excluding working capital changes remained solid.

Investing Activities

Investing activities used cash of $58.1 million through the first six months of 2024 compared to $71.7 million in the prior period. Cash used in investing activities decreased from the prior year mainly due to reduced capital spending which was partially offset by $9.6 million in business acquisitions in the current year.

We expect to invest approximately $150 to $175 million in property, plant and equipment in 2024; approximately 50% of which will be to maintain current facilities.

Financing Activities

Financing activities used cash of $119.9 million and $155.0 million for the six months ended June 30, 2024, and 2023, respectively. This decrease in cash used from the prior year is mainly due to the change in the Company's borrowings on its short-term credit facility as the Company had sufficient cash on hand in 2024 to cover a large amount of settled payables and other changes in working capital.

The Company paid $13.0 million in dividends in the first six months of 2024 compared to $12.5 million paid in the prior period. The Company paid dividends of $0.19 and $0.185 per common share in January and April of 2024, and 2023, respectively. On June 20, 2024, the Company declared a cash dividend of $0.19 per common share payable on July 22, 2024, to shareholders of record on July 1, 2024.

The Company is party to borrowing arrangements with a syndicate of banks that provide a total of $1,857.0 million in borrowing capacity. As of June 30, 2024, the Company had $1,849.6 million available for borrowing.

Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of working capital and various debt leverage ratios. The Company is in compliance with all covenants as of June 30, 2024. In addition, certain of our long-term borrowings are collateralized by mortgages on various facilities.

The Company is typically in a net short-term borrowing position in the first two quarters of the year. The majority of these short-term borrowings bear interest at variable rates, an increase in interest rates could have a significant impact on our profitability. In addition, periods of high grain prices could require us to make additional margin deposits on our exchange traded futures contracts. Conversely, in periods of declining prices, the Company could receive a return of cash.

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

At June 30, 2024, the Company had standby letters of credit outstanding of $3.3 million.

Recent Developments

On June 6, 2024, the Company entered into a non-binding letter of intent to purchase a controlling interest in Skyland Grain, LLC ("Skyland"). Under the terms of the letter of intent, the Company has been granted exclusivity while the parties work in good faith to negotiate a definitive agreement. The Company is continuing to work through the due diligence process and, subject to agreeing to definitive documentation and the appropriate approvals, expects that the transaction could close in the second half of 2024. However, there can be no assurance that the parties will enter into a definitive agreement or that the proposed transaction will be completed.

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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, 2023. There were no material changes in market risk, specifically commodity and interest rate risk during the six months ended June 30, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of June 30, 2024, to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the second quarter of 2024, 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. Refer to Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 11, “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 2023 Form 10-K under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

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

There were no unregistered sales of equity securities during the three months ended June 30, 2024. As of August 20, 2021, the Company was authorized to purchase up to $100 million of the Company’s common stock (the "Repurchase Plan") on or before August 20, 2024. As of June 30, 2024, $14.5 million of the $100 million available to repurchase shares had been utilized. The Repurchase Plan does not obligate the Company to acquire any specific number of shares. Under the Repurchase Plan, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

Item 5. Other Information

During the three months ended June 30, 2024, none of the Company’s directors or executive officers adopted , modified, or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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Item 6. Exhibits

Exhibit Number	Description
10.1	Second Amended and Restated Loan Agreement (as amended) by and between SCOTIABANK ASSET FINANCE, a division of The Bank of Nova Scotia as Administrative Agent and THE LENDERS THAT ARE SIGNATORIES HERETO as Lenders and THE ANDERSONS CANADA LIMITED
31.1*	Certification of the Chief Executive Officer under Rule 13(a)-14(a)/15d-14(a)
31.2*	Certification of the Chief Financial Officer under Rule 13(a)-14(a)/15d-14(a)
32.1**	Certifications Pursuant to 18 U.S.C. Section 1350
101**	Inline XBRL Document Set for the Condensed Consolidated Financial Statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
104**	Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.
* Filed herewith
** Furnished herewith

Items 3 and 4 are not applicable and have been omitted.

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Signatures

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

	THE ANDERSONS, INC.
Date: August 7, 2024	/s/ Patrick E. Bowe
	Patrick E. Bowe
	Chairman, President and Chief Executive Officer
Date: August 7, 2024	/s/ Brian A. Valentine
	Brian A. Valentine
	Executive Vice President and Chief Financial Officer