10q10k10q10k.net

What changed in Andersons, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Andersons, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+212 added−207 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-23)

Top changes in Andersons, Inc.'s 2023 10-K

212 paragraphs added · 207 removed · 148 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

26 edited+11 added−2 removed20 unchanged
Biggest changeIt also communicates with employees on a weekly, monthly and quarterly basis through electronic newsletters, town halls, its intranet site and small group meetings with the Chief Executive Officer. • Talent Development : The Company offers several resources to help employees expand their business knowledge and leadership skills, including merchandising and finance development programs.
Biggest changeIt regularly solicits employee feedback through informal pulse surveys and formal engagement surveys. It also communicates with employees on a weekly, monthly and quarterly basis through electronic newsletters, town halls, its intranet site and small group meetings with the Chief Executive Officer. • Talent Development : The Company values our investment in growing and retaining highly skilled talent.
The segment demonstrates an expertise in ethanol plant management, logistics and commercialization of ethanol and co-products with a focus on leading the industry in margins per bushel. The business leverages partnerships, which are discussed in further detail below, to expand market knowledge and shared technology across its five plants.
The segment demonstrates an expertise in ethanol plant management, logistics and commercialization of ethanol and co-products with a focus on leading the industry in margins per bushel. The business leverages partnerships, which are discussed in further detail below, to expand market knowledge and shared technology across its plants.
Additionally, several in-person trainings are led by internal staff. • Health and Wellness : The Company partners with a wellness vendor to offer a comprehensive healthy lifestyles program to employees and their spouses. The program uses rewards and incentives to encourage participants to take the necessary steps to manage their health and wellness.
Additionally, several in-person trainings are led by internal staff. • Health and Wellness : The Company partners with a wellness vendor to offer a comprehensive healthy lifestyles program to employees and their spouses. The program uses rewards and incentives to encourage participants to take the necessary steps to manage their health and wellness goals.
Segment Descriptions The Company's operations are classified into three reportable business segments: Trade, Renewables, and Plant Nutrient. Each of these segments is organized based upon the nature of products and services offered and aligns with the management structure. See Note 12 to the Consolidated Financial Statements in Item 8 for information regarding business segments.
Segment Descriptions The Company's operations are classified into three reportable business segments: Trade, Renewables, and Nutrient & Industrial. Each of these segments is organized based upon the nature of products and services offered and aligns with the management structure. See Note 12 to the Consolidated Financial Statements in Item 8 for information regarding business segments.
Elevation margins consist of appreciation in the basis value of commodities held, which represents the difference between the cash price of a commodity in one of the Company's facilities and an exchange traded futures price (“basis”); appreciation or depreciation between the future exchange contract months (“spread”); and commodities stored for others upon which storage fees are earned.
Elevation margins consist of appreciation in the basis value of commodities held, which represents the difference between the cash price of a commodity in one of the Company's facilities and an exchange traded futures price (“basis”); appreciation or depreciation between different futures exchange contract months (“spread”); and commodities stored for others upon which storage fees are earned.
The segment also operates a merchandising and trade portfolio of ethanol, ethanol co-products and other biofuels, such as renewable feedstocks. The Andersons, Inc. | 2022 Form 10-K | 1 Table of Contents The Company owns a 50.1% interest in The Andersons Marathon Holdings LLC ("TAMH") and Marathon Petroleum Corporation ("Marathon") owns the remaining 49.9% interest.
The segment also operates a merchandising and trade portfolio of ethanol, ethanol co-products and other biofuels, such as renewable feedstocks. The Andersons, Inc. | 2023 Form 10-K | 1 Table of Contents The Company owns a 50.1% interest in The Andersons Marathon Holdings LLC ("TAMH") and Marathon Petroleum Corporation ("Marathon") owns the remaining 49.9% interest.
In its Plant Nutrient business, the Company competes with regional and local cooperatives, wholesalers and retailers, predominantly publicly owned manufacturers and privately-owned retailers, wholesalers and importers. Some of these competitors are also suppliers. Competition in the nutrient business is based largely on depth of product offering, price, location and service.
In its Nutrient & Industrial business, the Company competes with regional and local cooperatives, wholesalers and retailers, predominantly publicly owned manufacturers and privately-owned retailers, wholesalers and importers. Some of these competitors are also suppliers. Competition in the nutrient business is based largely on depth of product offering, price, location and service.
The provisions of these various regulations could require modifications of certain of the Company's existing facilities and could restrict the expansion of future facilities or significantly increase the cost of operations. Compliance with environmental laws and regulations did not materially affect the Company's earnings or competitive position in 2022.
The provisions of these various regulations could require modifications of certain of the Company's existing facilities and could restrict the expansion of future facilities or significantly increase the cost of operations. Compliance with environmental laws and regulations did not materially affect the Company's earnings or competitive position in 2023.
Item 1. Business Company Overview The Andersons, Inc. (the "Company") is a diversified company rooted in agriculture. Founded in Maumee, Ohio in 1947, the Company is a significant player in the North American agricultural supply chain and conducts its business in the trade, renewables, and plant nutrient sectors.
Item 1. Business Company Overview The Andersons, Inc. (the "Company") is a diversified company rooted in agriculture. Founded in Maumee, Ohio in 1947, the Company is a significant player in the North American agricultural supply chain and conducts its business in the trade, renewables, and nutrient & industrial sectors.
The wholesale nutrients business formulates, stores and distributes dry and liquid agricultural nutrients, and soil amendments. The major nutrient products are typically bought and sold as commodities. The farm centers offer a variety of essential crop nutrients, crop protection chemicals and seed products in addition to application and agronomic services to commercial and family farmers.
The wholesale nutrients business formulates, stores and distributes dry and liquid agricultural nutrients, pelleted lime, gypsum and soil amendments. The major nutrient products are typically bought and sold as commodities. The farm centers offer a variety of essential crop nutrients, crop protection chemicals and seed products in addition to application and agronomic services to commercial and family farmers.
Government Regulation Grain sold by the Company must conform to official grade standards imposed under a federal system of grain grading and inspection administered by the United States Department of Agriculture (“USDA”).
Grain sold by the Company must conform to official grade standards imposed under a federal system of grain grading and inspection administered by the United States Department of Agriculture (“USDA”).
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Company periodically provides other information for investors on its corporate website, www.andersonsinc.com, and its investor relations website, https://theandersonsinc.gcs-web.com.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Company periodically provides other information for investors on its corporate website, www.andersonsinc.com, and its investor relations website, https://investors.andersonsinc.com/home.
The Andersons, Inc. | 2022 Form 10-K | 3 Table of Contents The Company, like other companies engaged in similar businesses, is subject to a multitude of federal, state and local environmental protection laws and regulations including, but not limited to, laws and regulations relating to air quality, water quality, pesticides and hazardous materials.
The Andersons, Inc. | 2023 Form 10-K | 3 Table of Contents Government Regulation The Company, like other companies engaged in similar businesses, is subject to a multitude of federal, state, foreign and local environmental protection laws and regulations including, but not limited to, laws and regulations relating to air quality, water quality, pesticides and hazardous materials.
The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge at https://theandersonsinc.gcs-web.com/financial-information/sec-filings when such reports are available on the SEC’s website.
The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge at https://investors.andersonsinc.com/SEC-filings when such reports are available on the SEC’s website.
It also manufactures pelleted lime, gypsum and value add soil amendments sold into agricultural and turf markets. Additionally, corncob-based products are manufactured for a variety of uses including laboratory animal bedding and private-label cat litter, as well as absorbents, blast cleaners, carriers and polishers. The principal sources for corncobs are seed corn producers.
It also manufactures value add soil amendments sold into agricultural and turf markets. Additionally, corncob-based products are manufactured for a variety of uses including laboratory animal bedding and private-label cat litter, as well as absorbents, blast cleaners, carriers and polishers. The principal sources for corncobs are seed corn producers. The products are distributed throughout the U.S. and international markets.
The Company advanced its safety program in recent years by identifying and focusing on high-risk work that has the potential of causing serious injury or fatality. • Employee Engagement : The Company maintains an open-door policy that encourages candid conversations between employees and any level of leadership about job-related concerns without fear of reprisal.
The program also focuses on identifying and focusing on high-risk work that has the potential of causing serious injury or fatality. • Employee Engagement : The Company maintains an open-door policy that encourages candid conversations between employees and any level of leadership about job-related concerns without fear of reprisal.
The products are distributed throughout the U.S. and international markets. Specialty Liquids - The Specialty Liquids division manufactures and distributes a broad range of fertilizers, micronutrients, and soil amendments. The business has a diverse portfolio of specialty products which support more sustainable farming practices and command higher margins.
Specialty Liquids - The Specialty Liquids division manufactures and distributes a broad range of fertilizers, micronutrients, and soil amendments. The business has a diverse portfolio of specialty products which support more sustainable farming practices and command higher margins.
Significant portions of grain bushels purchased and sold are made using forward contracts. Renewables The Renewables segment produces, purchases and sells ethanol and co-products, offers facility operations, and provides risk management and marketing services to the ethanol plants it invests and operates in. The Company co-owns five ethanol plants located in Indiana, Iowa, Kansas, Michigan and Ohio.
Significant portions of grain bushels purchased and sold are made using forward contracts. Renewables The Renewables segment produces, purchases and sells ethanol and co-products, offers facility operations, and provides risk management and marketing services to the ethanol plants it invests and operates in.
The Company advertises opportunities on large online job boards, state job boards and various targeted diversity job boards, as well as geographically specific media channels. The Company strives to find candidates within its geographic footprint to generate a diverse talent pool.
The Company advertises opportunities on large online job boards, state job boards and various targeted diversity job boards, as well as geographically specific media channels. It also engages in campus recruiting efforts for entry level professional talent, internships and professional development programs. The Company strives to find candidates within its geographic footprint to generate a diverse talent pool.
The results include expenses and benefits not allocated to the operating segments. The Andersons, Inc. | 2022 Form 10-K | 2 Table of Contents Human Capital Resources and Management As of December 31, 2022, the Company had a total of 2,283 employees across its Trade, Renewables and Plant Nutrient segments and Corporate Services function.
The Andersons, Inc. | 2023 Form 10-K | 2 Table of Contents Human Capital Resources and Management As of December 31, 2023, the Company had a total of 2,334 employees across its Trade, Renewables and Nutrient & Industrial segments and Corporate Services function.
The Company fully consolidates ELEMENT's results in the Company's Consolidated Financial Statements. Plant Nutrient The Plant Nutrient segment is a leading manufacturer, distributor and retailer of agricultural and related plant nutrients, liquid industrial products, corncob-based products, pelleted lime and gypsum products, and various turf fertilizer, pesticide and herbicide products.
Nutrient & Industrial The Nutrient & Industrial segment (formerly the Plant Nutrient Segment) is a manufacturer, distributor and retailer of agricultural and related plant nutrients, liquid industrial products, corncob-based products, pelleted lime and gypsum products, and various turf fertilizer, pesticide and herbicide products.
The Company fully consolidates TAMH's results in the Company's Consolidated Financial Statements. The Company also owns 51% of ELEMENT, LLC ("ELEMENT") and ICM, Inc. ("ICM") owns the remaining 49% interest. ELEMENT is comprised of a 70 million-gallon-per-year bio-refinery in Kansas. The Company operates the facility under a management contract, provides corn origination, ethanol marketing, and risk management services.
The Company fully consolidates TAMH's results in the Company's Consolidated Financial Statements. During the year ended December 31, 2023, the Company also owned 51% of ELEMENT, LLC ("ELEMENT") and ICM, Inc. ("ICM") owned the remaining 49% interest. ELEMENT is comprised of a 70 million-gallon-per-year bio-refinery in Kansas.
The production levels, markets and prices of the grains that the Company merchandises are affected by United States government programs, which include acreage control and price support programs of the USDA. In regard to our investments in ethanol production facilities, much of the ethanol blending is done to meet the Renewable Fuel Standard by adding 10% ethanol. The U.S.
The production levels, markets and prices of the grains that the Company merchandises are affected by United States government programs, which include acreage control and price support programs of the USDA. The U.S.
As a part of our employee onboarding process, employees are required to complete core safety courses. A yearly training calendar is followed to ensure timely completion of annual safety training.
Systems and technology have been implemented to support the Company’s safety culture, maintain a safe working environment and foster personal accountability. As a part of our employee onboarding process, employees are required to complete core safety courses. A yearly training calendar is followed to ensure timely completion of annual safety training.
It hosts a Foundations of Leadership training course to newly appointed supervisors. It also offers a learning management system which houses numerous online courses, videos, audiobooks and podcasts that are available to all employees on demand.
It also offers a learning management system which houses numerous online courses, videos, audiobooks and podcasts that are available to all employees on demand and provides for thousands of continuing education credits for various professional certifications.
This total was comprised of 940 salary, 1,264 hourly and 79 seasonal employees who conducted work at 117 locations across the United States, Canada, United Kingdom, Switzerland, Mexico and Singapore. Sixty-Three of the Company’s locations included less than 10 employees. • Recruiting : Talent acquisition efforts target both internal and external candidates.
This total was comprised of 982 salary, 1,277 hourly and 75 seasonal employees who conducted work at 122 locations across the United States, Canada, United Kingdom, Switzerland, Mexico, Romania and Singapore.
Removed
It also engages in campus recruiting efforts for entry level professional talent, internships and professional development programs. • Focus on Safety : Maintaining a high standard of employee safety is paramount to the Company’s core values. Systems and technology have been implemented to support the Company’s safety initiative, maintain a safe working environment and foster a culture of personal accountability.
Added
The Company had acted as the manager of the facility, responsibilities which were assumed per the Management Services Agreement dated January 1, 2021, and ELEMENT was concluded to be a variable interest entity ("VIE") and had been consolidated within the Company's Consolidated Financial Statements.
Removed
It regularly solicits employee feedback through informal pulse surveys and formal engagement surveys.
Added
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.
Added
Accordingly, the Company deconsolidated ELEMENT at that time and began accounting for the subsidiary as an equity method investment. Substantially all of the ELEMENT's assets were sold on January 31, 2024, see Note 19 of the Consolidated Financial Statements for more information.
Added
The results include expenses and benefits not allocated to the operating segments and other elimination and consolidation adjustments.
Added
Sixty-seven of the Company’s locations included less than 10 employees. • Recruiting : The Company aims to attract the best talent to sustain our ongoing success and this is a key aspect of succession planning across the Company. Talent acquisition efforts target both internal and external candidates.
Added
It believes that a diverse workforce with a range of experiences and perspectives is a significant driver of sustainable innovation and growth. • Focus on Safety : Maintaining a high standard of employee safety is paramount to the Company’s core values.
Added
The Company's safety program stays current on real-time concerns using anonymous employee surveys to confirm the effectiveness of the program.
Added
The Company aims to provide all of its employees with regular feedback to support their growth and development. It offers several resources to help employees expand their business knowledge and leadership skills, including merchandising and finance development programs. It hosts a Foundations of Leadership training course to newly appointed supervisors.
Added
Failure to comply with the laws and regulations of the FDA or similar state agencies could prevent us from selling certain of our products or subject us to liability. In regard to our investments in ethanol production facilities, we follow standards implemented by the Renewable Fuel Standard ("RFS") and Environmental Protection Agency ("EPA").
Added
We obtain and maintain various environmental permits to operate our plants and other facilities. Legislation and regulatory rule making at the federal, state, and international level can impact us. Based on the standards, much of the blending is done to meet the RFS standard by adding 10% ethanol.
Added
Blending fuel-grade ethanol into gasoline is one means of reducing carbon intensity of transportation fuels. We employ maintenance and operations personnel at each of our plants. In addition to the attention we place on the health and safety of our employees, the operations of our facilities are regulated by the Occupational Safety and Health Administration (“OSHA”).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+12 added−10 removed79 unchanged
Biggest changeFor example, risk of bin failures and fires in bins are mitigated by exercising caution with moving grain and controlling temperatures, respectively. We also have an increased focus on safety and training employees to be able to identify potential safety and asset integrity issues. We also are undergoing capital spending allocations to ensure that proper maintenance can occur timely.
Biggest changeWe also have an increased focus on safety and training employees to be able to identify potential safety and asset integrity issues. We also are undergoing capital spending allocations to ensure that proper maintenance can occur timely. To help mitigate losses in the event of a claim, we are insured under inventory, property, liability and business interruption policies.
The price of corn is influenced by weather conditions and other factors affecting crop yields, shifts in acreage allocated to corn versus other major crops and general economic and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply.
The price of corn is influenced by weather conditions and other factors affecting crop yields, shifts in acreage allocated to corn versus other major crops and general economic and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local supply and demand.
Any claims raised in legal and regulatory proceedings, whether with or without merit, could be time consuming and expensive to defend and could divert management’s attention and resources. Additionally, the outcome of legal and regulatory proceedings may differ from our expectations because the outcomes of these proceedings are often difficult to predict reliably.
Any claims raised in legal and regulatory proceedings, whether with or without merit, could be time consuming and expensive to defend and could divert management’s attention and resources. Additionally, the outcome of legal and regulatory proceedings may differ from our expectations because the outcomes of these proceedings are often difficult to reliably predict.
Additionally, we have a diverse customer base, so we have the ability to divert cargo in transit to another counterparty, country, or region to limit the exposure to a material financial loss. Our business involves considerable safety risks. Significant unexpected costs and liabilities would have an adverse effect on our profitability and overall financial position.
Additionally, we have a diverse customer base, so we have the ability to divert cargo in transit to another counterparty, country, or region to limit the exposure of a material financial loss. Our business involves considerable safety risks. Significant unexpected costs and liabilities would have an adverse effect on our profitability and overall financial position.
The Company, through our Enterprise Risk Management program and other efforts, is actively focused on strategic goals to expand responsible practices to reduce environmental risks while ensuring compliance with evolving laws and regulations.
The Company, through our Enterprise Risk Management ("ERM") program and other efforts, is actively focused on strategic goals to expand responsible practices to reduce environmental risks while ensuring compliance with evolving laws and regulations.
Plant Nutrient - Our Plant Nutrient business manufactures certain agricultural nutrients and uses potentially hazardous materials. All products containing pesticides, fungicides and herbicides must be registered with the EPA and state regulatory bodies before they can be sold. The inability to obtain or the cancellation of such registrations could have an adverse impact on our business.
Nutrient & Industrial - Our Nutrient & Industrial business manufactures certain agricultural nutrients and uses potentially hazardous materials. All products containing pesticides, fungicides and herbicides must be registered with the EPA and state regulatory bodies before they can be sold. The inability to obtain or the cancellation of such registrations could have an adverse impact on our business.
Potash, phosphate and nitrogen - Raw materials used by the Plant Nutrient business include potash, phosphate and nitrogen, for which prices can be volatile and are driven by global and local supply and demand factors. Significant increases in the price of these commodities may result in lower customer demand and higher than optimal inventory levels.
Potash, phosphate and nitrogen - Raw materials used by the Nutrient & Industrial business include potash, phosphate and nitrogen, for which prices can be volatile and are driven by global and local supply and demand factors. Significant increases in the price of these commodities may result in lower customer demand and higher than optimal inventory levels.
A significant amount of purchases and sales within the Trade and Renewables segments are made through forward contracting, much of which includes a natural back-to-back hedging relationship. In addition, the Company uses exchange traded and, to a lesser degree, over-the-counter contracts to further reduce volatility in changing commodity prices.
A significant number of purchases and sales within the Trade and Renewables segments are made through forward contracting, much of which includes a natural back-to-back hedging relationship. In addition, the Company uses exchange traded and, to a lesser degree, over-the-counter contracts to further reduce volatility in changing commodity prices.
A significant portion of the Company's assets are exposed to conditions in the Eastern Grain Belt. In this region, adverse weather during the fertilizer application, planting, and harvest seasons can have negative impacts on our Trade, Renewables and Plant Nutrient businesses.
A significant portion of the Company's assets are exposed to conditions in the Eastern Grain Belt. In this region, adverse weather during the fertilizer application, planting, and harvest seasons can have negative impacts on our Trade, Renewables and Nutrient & Industrial businesses.
In our Plant Nutrient business, changes in the supply and demand of these commodities can also affect the value of inventories that we hold, as well as the price of raw materials as we are unable to effectively hedge these commodities.
In our Nutrient & Industrial business, changes in the supply and demand of these commodities can also affect the value of inventories that we hold, as well as the price of raw materials as we are unable to effectively hedge these commodities.
In our Plant Nutrient business, planted acreage, and consequently the volume of fertilizer and crop protection products applied, is partially dependent upon government programs and the producer's perception of demand.
In our Nutrient & Industrial business, planted acreage, and consequently the volume of fertilizer and crop protection products applied, is partially dependent upon government programs and the producer's perception of demand.
Other regulations are applicable generally to all our businesses and corporate functions, including, without limitation, those promulgated under the Internal Revenue Code, the Affordable Care Act, the Employee Retirement Income Security Act and other employment and health care related laws, federal and state securities laws, and the US Patriot Act.
Other regulations are applicable generally to all our businesses and corporate functions, including, without limitation, those promulgated under the Internal Revenue Code, the Affordable Care Act, the Employee Retirement Income Security Act and other employment and health care related laws, federal and state securities laws, and the U.S. Patriot Act.
Our Trade, Renewables and Plant Nutrient businesses buy, sell and hold inventories of agricultural input and output commodities, some of which are readily traded on commodity futures exchanges.
Our Trade, Renewables and Nutrient & Industrial businesses buy, sell and hold inventories of agricultural input and output commodities, some of which are readily traded on commodity futures exchanges.
Although the basis component is smaller and generally less volatile than the futures component of our grain market price, basis moves on a large commodity position can significantly impact the profitability of the Trade business. Our futures, options and over-the-counter contracts are subject to margin calls.
Although the basis component is smaller and generally less volatile than the futures component of our grain market price, basis moves on a large commodity position can significantly impact the profitability of the Company. Our futures, options and over-the-counter contracts are subject to margin calls.
If we are unable to properly assess these risks and meet our ESG reporting goals and metrics for Scope 1, 2 and 3 greenhouse gas emissions, or if our efforts are considered to be inadequate, then stakeholders, industry, and investors might perceive that we are not responding appropriately and responsibly to the growing concern, and we could be subject to fines and penalties.
If we are unable to properly assess these risks and meet our ESG reporting goals and metrics for Scope 1, 2 and 3 greenhouse gas emissions, or if our efforts are considered to be inadequate, then stakeholders, the industry, and investors might perceive that we are not responding appropriately and responsibly to the growing concern.
A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to reduced demand for agricultural commodities and food products, which could adversely affect our business and results of operations. The occurrence of health-related risks including epidemics or global pandemics such as COVID-19 may adversely affect the economy.
A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to reduced demand for agricultural commodities and food products, which could adversely affect our business and results of operations. The occurrence of health-related risks including epidemics or global pandemics may adversely affect the economy.
If our goodwill, amortizable intangible assets and long-lived assets become impaired, then we could be required to record a significant charge to earnings. GAAP requires us to test for goodwill impairment at least annually. In addition, we review our tangible and intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
If our goodwill, amortizable intangible assets and long-lived assets become impaired, then we could be required to record a significant charge to earnings. The Company is required to test for goodwill impairment at least annually. In addition, we review our tangible and intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Any such breach or unauthorized access could result in an inability to perform critical functions, significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our services that could potentially have an adverse effect on our business.
Any such incident to the Company or a third party could result in an inability to perform critical functions, significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our services that could potentially have an adverse effect on our business.
Although we believe we have appropriate levels of insurance to cover material losses, if we continue to experience insurable claims, our annual insurance premiums could increase, and some insurance carriers may cease to cover us. Obtaining adequate insurance at that point could have additional costs and lesser coverage.
However, these policies are subject to deductibles and certain limits. Although we believe we have appropriate levels of insurance to cover material losses, if we continue to experience insurable claims, our annual insurance premiums could increase, and some insurance carriers may cease to cover us. Obtaining adequate insurance at that point could have additional costs and lesser coverage.
These effects could be material to our results of operations, liquidity or capital resources. The Company faces risks related to international conflicts, acts of terrorism and wars, such as the ongoing conflict between Russia and Ukraine, that may adversely impact the Company's financial condition or results of operations.
These effects could be material to our results of operations, liquidity or capital resources. The Company faces risks related to international conflicts, acts of terrorism and wars that may adversely impact the Company's financial condition or results of operations.
In contrast, reductions in the price of these commodities may create lower of cost or net realizable value adjustments to inventories. Some of our business segments operate in highly regulated industries. Changes in government regulations or trade association policies could adversely affect our results of operations.
In contrast, reductions in the price of these commodities may create lower of cost or net realizable value adjustments to inventories. The Andersons, Inc. | 2023 Form 10-K | 5 Table of Contents Some of our business segments operate in highly regulated industries. Changes in government regulations or trade association policies could adversely affect our results of operations.
Failure to comply with such regulations can result in additional costs, fines or criminal action. The Andersons, Inc. | 2022 Form 10-K | 5 Table of Contents A significant part of our operations is regulated by environmental laws and regulations, including those governing the labeling, use, storage, discharge and disposal of hazardous materials.
Failure to comply with such regulations can result in additional costs, fines or criminal action. A significant part of our operations is regulated by environmental laws and regulations, including those governing the labeling, use, storage, discharge and disposal of hazardous materials.
Consequently, changes in existing and future government or trade association polices may restrict our ability to do business and have an adverse impact on the Company's financial results. We are required to carry significant amounts of inventory across all of our businesses.
Consequently, changes in existing and future government or trade association polices may restrict our ability to do business and have an adverse impact on the Company's financial results. The Andersons, Inc. | 2023 Form 10-K | 6 Table of Contents We are required to carry significant amounts of inventory across all of our businesses.
If any significant judgment or claim is not fully insured or indemnified against, it could have a material adverse impact on our business, financial condition and results of operations. The Andersons, Inc. | 2022 Form 10-K | 11 Table of Contents Item 1B. Unresolved Staff Comments The Company has no unresolved staff comments.
If any significant judgment or claim is not fully insured or indemnified against, it could have a material adverse impact on our business, financial condition and results of operations. Item 1B. Unresolved Staff Comments The Company has no unresolved staff comments.
The Andersons, Inc. | 2022 Form 10-K | 8 Table of Contents General Risk Factors We rely on a limited number of suppliers for certain of our raw materials and other products and the loss of one or several of these suppliers could increase our costs and have a material adverse effect on any one of our business segments.
General Risk Factors We rely on a limited number of suppliers for certain of our raw materials and other products and the loss of one or several of these suppliers could increase our costs and have a material adverse effect on any one of our business segments.
Depending on the results of our review, we could be required to record a significant charge to earnings in our Consolidated Financial Statements during the period in which any impairment is determined, negatively impacting our results of operations. Our business depends on our ability to attract and retain talented employees.
Depending on the results of our review, we could be required to record a significant charge to earnings in our Consolidated Financial Statements during the period in which any impairment is determined, negatively impacting our results of operations.
We are subject to various legal and regulatory proceedings, including litigation in the ordinary course of business, and uninsured judgments or a rise in insurance premiums may adversely impact our business, financial condition and results of operations.
The Andersons, Inc. | 2023 Form 10-K | 11 Table of Contents We are subject to various legal and regulatory proceedings, including litigation in the ordinary course of business, and uninsured judgments or a rise in insurance premiums may adversely impact our business, financial condition and results of operations.
Risks Related to our Business and Industry Our business is affected by the supply and demand of commodities and is sensitive to factors outside of our control. Adverse price movements could negatively affect our profitability and results of operations.
The Andersons, Inc. | 2023 Form 10-K | 4 Table of Contents Risks Related to our Business and Industry Our business is affected by the supply and demand of commodities and is sensitive to factors outside of our control. Adverse price movements could negatively affect our profitability and results of operations.
Increased costs of inventory and prices of raw material would decrease our profit margins and adversely affect our results of operations. The Andersons, Inc. | 2022 Form 10-K | 4 Table of Contents Corn - The principal raw material used to produce ethanol and co-products is corn.
Increased costs of inventory and prices of raw material would decrease our profit margins and adversely affect our results of operations. Corn - The principal raw material used to produce ethanol and co-products is corn.
A change in tax laws or regulations of any federal, state or international jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows and liquidity.
For information on our cybersecurity risk management, strategy and governance, see Item 1C. Cybersecurity . A change in tax laws or regulations of any federal, state or international jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows and liquidity.
Our success as a Company is dependent on hiring and retaining highly skilled employees with diverse backgrounds and experiences. If we are unable to motivate and retain employees, we may not be able to maximize productivity and effectively operate our facilities. Further, our long-term success depends on effective succession planning across all levels of management and operations.
If we are unable to motivate and retain employees, we may not be able to maximize productivity and effectively operate our facilities. Further, our long-term success depends on effective succession planning across all levels of management and operations.
Higher basis levels or adverse crop conditions in the Eastern Grain Belt can increase the input costs or lower the market value of our products relative to other market participants that do not have the same geographic concentration. Additionally, the potential physical impacts of climate change are uncertain and may vary by region.
Higher basis levels or adverse crop conditions in the Eastern Grain Belt can increase the input costs or lower the market value of our products relative to other market participants that do not have the same geographic concentration.
The Andersons, Inc. | 2022 Form 10-K | 7 Table of Contents We own several aging assets that require regular assessment and continual investments in maintenance capital. If we experience catastrophic damage to our facilities due to structural integrity, this could result in disruptions to operations, potential safety incidents and losses not covered by insurance.
We own several aging assets that require regular assessment and continual investments in maintenance capital. If we experience catastrophic damage to our facilities due to structural integrity, this could result in disruptions to operations, potential safety incidents and losses not covered by insurance. The Company has several aging assets that require continual maintenance to remain reliable and safe to operate.
As a Company, we assess the potential impacts of our business on environmental risks including climate change, carbon emissions, physical and transition risks, along with other environmental issues.
There is an increased focus on environmental, social and corporate governance regulations for the industry. As a Company, we assess the potential impacts of our business on environmental risks including climate change, carbon emissions, physical and transition risks, along with other environmental issues.
The COVID-19 pandemic has had unpredictable impacts on global economies, financial markets, and society. The extent to which similar outbreaks or future pandemics impact our business going forward will depend on the duration or scope of the outbreak and how governmental, businesses, and society respond, along with the economic impact including financial market volatility.
The extent to future epidemics or pandemics impact our business going forward will depend on the duration or scope of the outbreak and how governmental, businesses, and society respond, along with the economic impact including financial market volatility.
With the increased international presence comes additional country risk through trade flows around the globe with direct exposure to the counterparty, via contract mark-to-market exposure, unsecured accounts receivable or inventory in the country.
With our 2021 launch of the Company’s Switzerland merchandising business, we have increased our international supply chain operations and exposure. With the increased international presence comes additional country risk through trade flows around the globe with direct exposure to the counterparty, via contract mark-to-market exposure, unsecured accounts receivable or inventory in the country.
There could be trade restrictions including export restrictions and tariffs which would increase costs and have an adverse effect on results from operations. In late February of 2022, Russia initiated a military operation in Ukraine.
There could be trade restrictions including export restrictions and tariffs which would increase costs and have an adverse effect on results from operations.
We face increasing exposure to country risk in countries that face financial, political, and economic unrest through unsecured credit, inventory, forward contract risk or payment origination that could adversely affect our future results of operations, financial position, and cash flows. With our 2021 launch of the Company’s Switzerland merchandising business, we have increased our international supply chain operations and exposure.
The Andersons, Inc. | 2023 Form 10-K | 7 Table of Contents We face increasing exposure to country risk in countries that face financial, political, and economic unrest through unsecured credit, inventory, forward contract risk or payment origination that could adversely affect our future results of operations, financial position, and cash flows.
The Andersons, Inc. | 2022 Form 10-K | 6 Table of Contents Our indebtedness could negatively affect our financial condition, decrease our liquidity and impair our ability to operate the business.
Our indebtedness could negatively affect our financial condition, decrease our liquidity and impair our ability to operate the business.
If our strategies prove ineffective, our business could be adversely affected. The Company's information technology systems may impose limitations or failures, or may face external threats, which may affect the Company's ability to conduct its business.
If our strategies prove ineffective, our business could be adversely affected. The Company's information technology systems may impose limitations or failures which may affect the Company's ability to conduct its business. The Company's information technology systems, some of which are dependent on services provided by third parties, provide critical data connectivity, information and services for internal and external users.
The Company has several aging assets that require continual maintenance to remain reliable and safe to operate. Mitigating asset structural integrity risk is critical to avoid property damage claims, business interruptions, and injuries. Engineers undergo inspections of assets regularly and based on the nature of our business there are some heightened risks.
Mitigating asset structural integrity risk is critical to avoid property damage claims, business interruptions, and injuries. Engineers undertake inspections of assets regularly and based on the nature of our business there are some heightened risks. For example, risk of bin failures and fires in bins are mitigated by exercising caution with moving grain and controlling temperatures, respectively.
Failure to effectively identify key employees and ensure appropriate training and smooth transitions could adversely impact our ability to execute our business strategies and operations.
Failure to effectively identify key employees and ensure appropriate training and smooth transitions could adversely impact our ability to execute our business strategies and operations. Compliance with evolving environmental, social and corporate governance ("ESG") regulations including climate change may impact our reputation, increase our operating costs, and reduce the value of our assets and products.
The Andersons, Inc. | 2022 Form 10-K | 10 Table of Contents Additionally, outside parties may attempt to destroy critical information, or fraudulently induce employees, third-party service providers, or users to disclose sensitive information to gain access to our data or our users' data. As a response, the Company requires usernames and passwords to access its information technology systems.
Additionally, outside parties may attempt to destroy critical information, or fraudulently induce employees, third-party service providers, or users to disclose sensitive information to gain access to our data or our users' data. Notwithstanding the attention the Company pays to cybersecurity risks and the processes and controls implemented, the Company may not be successful in preventing or mitigating a cybersecurity incident.
Our security measures may also be breached due to employee error, malfeasance, or otherwise.
We are at risk of cyber-incidents or other security breaches that could undermine our ability to operate effectively. Our security measures may be breached due to employee error, malfeasance, or otherwise.
As with all companies, these security measures are subject to third-party security breaches, employee error, malfeasance, faulty password management, or other irregularities. We cannot assure our ability to prevent, repel or mitigate the effects of such an attack by outside parties.
As with all companies, these security measures are subject to third-party security breaches, employee error, malfeasance, faulty password management, or other irregularities. Cybersecurity risks rapidly evolve and are complex, so the Company must continually adapt and enhance processes and controls.
Removed
To help mitigate losses in the event of a claim, we are insured under inventory, property, liability and business interruption policies. However, these policies are subject to deductibles and certain limits.
Added
The Andersons, Inc. | 2023 Form 10-K | 8 Table of Contents Additionally, the potential physical impacts of climate change are uncertain and may vary by region.
Removed
The Black Sea region is a key international grain and fertilizer export market and the conflict between Russia and Ukraine could continue to disrupt supply and logistics, cause volatility in prices, and impact global margins due to increased commodity, energy, and input costs.
Added
The Andersons, Inc. | 2023 Form 10-K | 9 Table of Contents Our business depends on our ability to attract and retain talented employees. Our success as a Company is dependent on hiring and retaining highly skilled employees with diverse backgrounds and experiences.
Removed
While the Company does not have any assets or employees located in the Black Sea region, it does engage in business with parties operating in the region, including some grain originations directly from Ukrainian producers. The conflict could negatively affect our ability to secure product in this region and the credit worthiness of agricultural producers with which we do business.
Added
The Andersons, Inc. | 2023 Form 10-K | 10 Table of Contents We are in the process of reviewing our system roadmaps, to help standardize processes and support growth initiatives. This will likely result in potential system implementations as part of our ongoing information technology transformation strategy, and we plan to implement these systems throughout relevant parts of our business.
Removed
The Company currently does not purchase fertilizer directly from this region, however, the impact to the global fertilizer supply could put the Company’s ability to secure product at risk over time.
Added
If we do not allocate and effectively manage the resources necessary to explore, build and sustain the proper information technology infrastructure, or if we fail to achieve the expected benefits from this initiative, it may impact our ability to process transactions accurately and remain aligned with the changing needs of our business.
Removed
The Andersons, Inc. | 2022 Form 10-K | 9 Table of Contents Compliance with evolving environmental, social and corporate governance ("ESG") regulations including climate change may impact our reputation, increase our operating costs, and reduce the value of our assets and products. There is an increased focus on environmental, social and corporate governance regulations for the industry.
Added
In addition, failure to deliver the applications on time or anticipate the necessary readiness and training needs could lead to business disruption, and loss of customers and employees.
Removed
The Company's information technology systems, some of which are dependent on services provided by third parties, provide critical data connectivity, information and services for internal and external users.
Added
In connection with potential implementations and resulting business process changes, we will continue to enhance the design and documentation of business processes and controls, including our internal control over financial reporting processes, to maintain effective controls over financial reporting.
Removed
The Company also uses encryption and authentication technologies designed to secure the transmission and storage of data and prevent access to Company and user data or accounts. The Company also conducts tests and assessments using independent third parties on a regular basis.
Added
We utilize cloud-based services, systems and networks managed by third-party vendors to process, transmit and store information and to conduct certain business activities and transactions with employees, customers, vendors and other third parties. Our utilization of these cloud-based services and systems could increase as we implement our information technology transformation initiatives.
Removed
Unauthorized disclosure of sensitive or confidential customer information could harm the Company's business and standing with our customers. The protection of our customer, employee and Company data is critical to us. The Company relies on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information.
Added
If any of these third-party service providers or vendors do not perform effectively, or if we fail to adequately monitor their performance (including compliance with service-level agreements or regulatory or legal requirements), we may have to incur additional costs to correct errors made by such service providers, or we could be subject to litigation, claims, or regulatory proceedings.
Removed
The Company also conducts annual tests and assessments using independent third parties. Despite the security measures the Company has in place, its facilities and systems, and those of its third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, or other similar events.
Added
Depending on the function involved, such errors may also lead to business disruption, processing inefficiencies, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, adverse effects on financial reporting, or damage to our reputation. In addition, the management of multiple third-party service providers increases operational complexity and decreases our control.
Removed
Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by the Company or its vendors, could damage our reputation, expose us to risk of litigation and liability, disrupt our operations and harm our business.
Added
As the Company does this, management must make judgments about where to invest resources to protect the Company and our assets most effectively.
Added
These are inherently challenging processes, and management can provide no assurance that the processes and controls implemented will be effective or that we will be able to prevent, repel or mitigate the effects of such an attack by outside parties.
Added
We must rely on these entities for adequately detecting and reporting cyber incidents, in which delays could disrupt our operations or potentially affect our ability to report or respond to cybersecurity incidents effectively or in a timely manner.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeTrade Renewables Plant Nutrient (in thousands) Grain Storage Nameplate Capacity Dry Fertilizer Storage Liquid Fertilizer Storage Location (bushels) (gallons) (tons) (tons) Canada 23,509 — — — Idaho 18,840 — — — Indiana 16,640 110,000 134 136 Iowa — 55,000 — 67 Kansas — 70,000 — — Louisiana 24,184 — — — Michigan 27,459 130,000 67 46 Nebraska 19,484 — — 45 Ohio 42,151 110,000 165 76 Wisconsin — — 25 78 Other 11,381 — 57 67 183,648 475,000 448 515 The Trade facilities are mostly concrete and steel tanks, with some flat storage buildings.
Biggest changeTrade Renewables Nutrient & Industrial (in thousands) Grain Storage Nameplate Capacity Dry Fertilizer Storage Liquid Fertilizer Storage Location (bushels) (gallons) (tons) (tons) Canada 21,598 — — — Idaho 18,840 — — — Indiana 16,800 110,000 135 138 Iowa — 55,000 — 67 Louisiana 23,962 — — — Michigan 25,459 130,000 75 46 Nebraska 11,424 — — 40 Ohio 41,078 110,000 168 77 Wisconsin — — 25 78 Other 9,237 — 57 67 168,398 405,000 460 513 The Trade facilities are mostly concrete and steel tanks, with some flat storage buildings.
The Company also owns grain inspection buildings and dryers, maintenance buildings and truck scales and dumps. Approximately 79% of the total storage capacity noted above, which includes temporary pile storage, is owned, while the remaining capacity is leased from third parties.
The Company also owns grain inspection buildings and dryers, maintenance buildings and truck scales and dumps. Approximately 81% of the total storage capacity noted above, which includes temporary pile storage, is owned, while the remaining capacity is leased from third parties.
The Renewables properties are five ethanol plants owned under the TAMH and ELEMENT investments that are consolidated in the Company's Consolidated Financial Statements. The Plant Nutrient properties consist mainly of fertilizer warehouse and formulation and packaging facilities for dry and liquid fertilizers. The Company owns substantially all of the facilities noted above.
The Renewables properties are four ethanol plants owned under the TAMH investment that is consolidated in the Company's Consolidated Financial Statements. The Nutrient & Industrial properties consist mainly of fertilizer warehouse and formulation and packaging facilities for dry and liquid fertilizers. The Company owns substantially all of the facilities noted above.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−1 removed2 unchanged
Biggest changeBoth the Nasdaq U.S Index and the Russell 3000 Index are included in the graph below for comparison purposes. The indices reflect the year-end market value of an investment in the stock of each company in the index, including additional shares assumed to have been acquired with cash dividends, if any.
Biggest changeThe indices reflect the year-end market value of an investment in the stock of each company in the index, including additional shares assumed to have been acquired with cash dividends, if any. The Peer Group Index, weighted for market capitalization, includes the following companies: Archer-Daniels-Midland Co. Green Plains Inc. Alto Ingredients, Inc. Ingredion Incorporated Bunge Global SA Nutrien Ltd.
(2) As of August 20, 2021, the Company was authorized to purchase up to $100 million of the Company's common stock (the "Repurchase Plan") on or before August 20, 2024. As of December 31, 2022, approximately $12.7 million of the $100 million available to repurchase shares had been utilized.
(2) As of August 20, 2021, the Company was authorized to purchase up to $100 million of the Company's common stock (the "Repurchase Plan") on or before August 20, 2024. As of December 31, 2023, approximately $14.5 million of the $100 million available to repurchase shares had been utilized.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Common Shares of The Andersons, Inc. trade on the Nasdaq Global Select Market under the symbol “ANDE”. Shareholders At February 10, 2023, there were 457 shareholders of record and approximately 28,660 shareholders for whom security firms acted as nominees.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Common Shares of The Andersons, Inc. trade on the Nasdaq Global Select Market under the symbol “ANDE”. Shareholders At February 9, 2024, there were 434 shareholders of record and approximately 29,227 shareholders for whom security firms acted as nominees.
Dividends paid from January 2021 to January 2023 are as follows: Payment Date Amount 1/20/2021 $0.175 4/21/2021 $0.175 7/22/2021 $0.175 10/22/2021 $0.175 1/21/2022 $0.180 4/22/2022 $0.180 7/22/2022 $0.180 10/21/2022 $0.180 1/20/2023 $0.185 While the Company's objective is to pay a quarterly cash dividend, dividends are subject to approval from the Board of Directors.
Dividends paid from January 2022 to January 2024 are as follows: Payment Date Amount January 21, 2022 $0.180 April 22, 2022 $0.180 July 22, 2022 $0.180 October 21, 2022 $0.180 January 20, 2023 $0.185 April 24, 2023 $0.185 July 24, 2023 $0.185 October 20, 2023 $0.185 January 22, 2024 $0.190 While the Company's objective is to pay a quarterly cash dividend, dividends are subject to approval from the Board of Directors.
The Andersons, Inc. | 2022 Form 10-K | 13 Table of Contents Performance Graph The graph below compares the total shareholder return on the Company's Common Shares to the cumulative total return for the Russell 3000 Index and a Peer Group Index. The Company chose to switch from the Nasdaq U.S.
The Andersons, Inc. | 2023 Form 10-K | 15 Table of Contents Performance Graph The graph below compares the total shareholder return on the Company's Common Shares to the cumulative total return for the Russell 3000 Index and a Peer Group Index.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 2022 127,599 $ 32.86 127,599 $ 88,105,714 November 2022 893 36.23 — 88,105,714 December 2022 24,423 33.86 24,423 87,278,795 Total 152,915 $ 34.32 152,022 $ 87,278,795 (1) During the three months ended December 31, 2022, the Company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations along with common stock repurchased as a part of the Company's Repurchase Plan.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 2023 — $ — — $ 85,532,211 November 2023 — — — 85,532,211 December 2023 — — — 85,532,211 Total — $ — — $ 85,532,211 (1) During the three months ended December 31, 2023, the Company acquired shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations along with common stock repurchased as a part of the Company's Repurchase Plan.
Index and Peer Group indices, respectively, on December 31 of the first year of the graph. The value of these investments as of the following calendar year-ends is shown in the table below the graph.
The value of these investments as of the following calendar year-ends is shown in the table below the graph.
The Peer Group Index, weighted for market capitalization, includes the following companies: Archer-Daniels-Midland Co. Green Plains, Inc. Alto Ingredients Ingredion Incorporated Bunge Ltd. Nutrien Ltd. The graph assumes a $100 investment in The Andersons, Inc. Common Shares on December 31, 2017, and also assumes investments of $100 in each of the Russell 3000 Index, Nasdaq U.S.
The graph assumes a $100 investment in The Andersons, Inc. Common Shares on December 31, 2018, and also assumes investments of $100 in the Russell 3000 Index and Peer Group Index, respectively, on December 31 of the first year of the graph.
Base Period Cumulative Returns 2017 2018 2019 2020 2021 2022 The Andersons, Inc. $ 100.00 $ 97.88 $ 84.96 $ 85.59 $ 138.25 $ 127.49 Russell 3000 Index $ 100.00 $ 94.76 $ 124.15 $ 150.08 $ 188.60 $ 152.37 NASDAQ U.S. $ 100.00 $ 97.16 $ 132.81 $ 192.47 $ 235.15 $ 158.65 Peer Group Index $ 100.00 $ 91.44 $ 100.56 $ 108.82 $ 160.43 $ 185.18 The Andersons, Inc. | 2022 Form 10-K | 14 Table of Contents
Base Period Cumulative Returns 2018 2019 2020 2021 2022 2023 The Andersons, Inc. $ 100.00 $ 86.80 $ 87.44 $ 141.25 $ 130.25 $ 217.47 Russell 3000 Index $ 100.00 $ 131.02 $ 158.39 $ 199.03 $ 160.80 $ 202.54 Peer Group Index $ 100.00 $ 110.27 $ 119.44 $ 175.89 $ 203.54 $ 172.96 The Andersons, Inc. | 2023 Form 10-K | 16 Table of Contents
Removed
Index used in the prior year to the Russell 3000 Index in the current year. The Company currently uses the Russell 3000 Index as a benchmark for stock compensation awards as it more accurately reflects the Company's market capitalization and broad array of industries.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

60 edited+36 added−46 removed19 unchanged
Biggest changeYear ended December 31, 2022 (in thousands) Trade Renewables Plant Nutrient Other Total Sales and merchandising revenues $ 13,047,537 $ 3,178,539 $ 1,099,308 $ — $ 17,325,384 Cost of sales and merchandising revenues 12,639,830 3,051,544 949,846 — 16,641,220 Gross profit 407,707 126,995 149,462 — 684,164 Operating, administrative and general expenses 282,592 30,730 106,003 47,231 466,556 Interest expense (income) 42,551 8,775 7,298 (1,775) 56,849 Other income (expense), net 12,661 20,731 3,001 (2,570) 33,823 Income (loss) before income taxes from continuing operations 95,225 108,221 39,162 (48,026) 194,582 Income before income taxes attributable to the noncontrolling interests — 35,899 — — 35,899 Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 95,225 $ 72,322 $ 39,162 $ (48,026) $ 158,683 The Andersons, Inc. | 2022 Form 10-K | 17 Table of Contents Year ended December 31, 2021 (in thousands) Trade Renewables Plant Nutrient Other Total Sales and merchandising revenues $ 9,304,357 $ 2,440,798 $ 866,895 $ — $ 12,612,050 Cost of sales and merchandising revenues 8,968,675 2,324,172 726,506 — 12,019,353 Gross profit 335,682 116,626 140,389 — 592,697 Operating, administrative and general expenses 259,926 31,019 95,547 45,581 432,073 Interest expense 23,688 7,602 4,355 1,647 37,292 Other income (expense), net 35,878 3,200 2,128 (3,768) 37,438 Income (loss) before income taxes from continuing operations 87,946 81,205 42,615 (50,996) 160,770 Income before income taxes attributable to the noncontrolling interests — 31,880 — — 31,880 Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 87,946 $ 49,325 $ 42,615 $ (50,996) $ 128,890 The Company uses Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations, a non-GAAP financial measure as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance.
Biggest changeYear Ended December 31, 2023 (in thousands) Trade Renewables Nutrient & Industrial Other Total Sales and merchandising revenues $ 10,426,083 $ 3,380,632 $ 943,397 $ — $ 14,750,112 Cost of sales and merchandising revenues 10,016,133 3,178,235 810,381 — 14,004,749 Gross profit 409,950 202,397 133,016 — 745,363 Operating, administrative and general expenses 308,470 32,737 103,342 47,711 492,260 Asset impairment — 87,156 — — 87,156 Interest expense (income) 35,234 6,385 7,016 (1,768) 46,867 Other income, net 29,988 15,056 2,391 3,048 50,483 Income (loss) before income taxes from continuing operations 96,234 91,175 25,049 (42,895) 169,563 Income before income taxes attributable to the noncontrolling interests — 31,339 — — 31,339 Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 96,234 $ 59,836 $ 25,049 $ (42,895) $ 138,224 Year Ended December 31, 2022 (in thousands) Trade Renewables Nutrient & Industrial Other Total Sales and merchandising revenues $ 13,047,537 $ 3,178,539 $ 1,099,308 $ — $ 17,325,384 Cost of sales and merchandising revenues 12,639,830 3,051,544 949,846 — 16,641,220 Gross profit 407,707 126,995 149,462 — 684,164 Operating, administrative and general expenses 273,592 30,730 106,003 47,231 457,556 Asset impairment 9,000 — — — 9,000 Interest expense (income) 42,551 8,775 7,298 (1,775) 56,849 Other income (expense), net 12,661 20,731 3,001 (2,570) 33,823 Income (loss) before income taxes from continuing operations 95,225 108,221 39,162 (48,026) 194,582 Income before income taxes attributable to the noncontrolling interests — 35,899 — — 35,899 Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations $ 95,225 $ 72,322 $ 39,162 $ (48,026) $ 158,683 The Company uses Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations, a non-GAAP financial measure as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Executive Overview Our operations are organized, managed and classified into three reportable business segments: Trade, Renewables, and Plant Nutrient.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Executive Overview Our operations are organized, managed and classified into three reportable business segments: Trade, Renewables, and Nutrient & Industrial.
These factors are discussed in more detail in Note 17, Goodwill and Intangible Assets, to the Consolidated Financial Statements. Our annual goodwill impairment test is performed as of October 1 each year which is discussed in further detail in Note 17 to the Consolidated Financial Statements.
These factors are discussed in more detail in Note 16, Goodwill and Intangible Assets, to the Consolidated Financial Statements. Our annual goodwill impairment test is performed as of October 1 each year which is discussed in further detail in Note 16 to the Consolidated Financial Statements.
Obligations under the retiree healthcare programs are not fixed commitments and will vary depending on multiple factors, including the level of participant utilization and inflation. Our estimates of postretirement payments have considered recent payment trends and actuarial assumptions. As of December 31, 2022, the Company had outstanding benefit obligations of $17.4 million, with $1.3 million payable within 12 months.
Obligations under the retiree healthcare programs are not fixed commitments and will vary depending on multiple factors, including the level of participant utilization and inflation. Our estimates of postretirement payments have considered recent payment trends and actuarial assumptions. As of December 31, 2023, the Company had outstanding benefit obligations of $17.3 million, with $1.2 million payable within 12 months.
Management believes that the accounting for readily marketable inventories and commodity derivative contracts, including adjustments for counterparty risk, impairment of long-lived assets, goodwill and equity method investments, and uncertain tax positions involve significant estimates and assumptions in the preparation of the Consolidated Financial Statements.
Management believes that the accounting for readily marketable inventories and commodity derivative contracts, including adjustments for counterparty risk, impairment of long-lived assets and goodwill, and uncertain tax positions involve significant estimates and assumptions in the preparation of the Consolidated Financial Statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 24, 2022. Operating Results The following discussion focuses on the operating results as shown in the Consolidated Statements of Operations with a separate discussion by segment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023. Operating Results The following discussion focuses on the operating results as shown in the Consolidated Statements of Operations with a separate discussion by segment.
The difference between the 20.4% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax benefit generated from Federal Research and Development Credits ("R&D Credits"), foreign tax credits, derivative instruments and hedging activities and the effect of non-controlling interest offset by state and local income taxes, nondeductible compensation, and changes in unrecognized tax benefits.
The difference between the 20.4% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax benefit generated from federal research and development credits, foreign tax credits and the effect of non-controlling interest offset by state and local income taxes, nondeductible compensation, and changes in unrecognized tax benefits.
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.
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.
Agricultural inventories on hand were 129.7 million and 187.0 million bushels at December 31, 2022, and December 31, 2021, respectively. These bushels consist of inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory.
Agricultural inventories on hand were 127.6 million and 129.7 million bushels at December 31, 2023, and December 31, 2022, respectively. These bushels consist of inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory.
Total storage capacity at our Ag Supply Chain and Engineered Granules locations was approximately 448 thousand tons for dry nutrients and approximately 515 thousand tons for liquid nutrients at December 31, 2022, which is similar to the prior year.
Total storage capacity at our Ag Supply Chain and Engineered Granules locations was approximately 460 thousand tons for dry nutrients and approximately 513 thousand tons for liquid nutrients at December 31, 2023, which is similar to the prior year.
This measure is not intended to replace or be an alternative to Income (loss) before income taxes from continuing operations, the most directly comparable amount reported under GAAP, which is also presented in the table above. Comparison of 2022 with 2021 Trade Operating results for the Trade segment increased $7.3 million compared to prior year results.
This measure is not intended to replace or be an alternative to Income (loss) before income taxes from continuing operations, the most directly comparable amount reported under GAAP, which is also presented in the table above. Comparison of 2023 with 2022 Trade Operating results for the Trade segment were consistent with the prior year results.
Management believes that Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations is a useful measure of the Company’s performance as it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability.
The Andersons, Inc. | 2023 Form 10-K | 19 Table of Contents Management believes that Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations is a useful measure of the Company’s performance as it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability.
We expect to invest approximately $125 to $150 million in property, plant and equipment in 2023; approximately 60% of which will be to maintain current facilities. Financing Arrangements Net cash used in financing activities was $334.7 million in 2022, compared to $248.8 million used in 2021.
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 Arrangements Net cash used in financing activities was $264.0 million in 2023, compared to $334.7 million used in 2022.
The Company paid $24.6 million in dividends in 2022 compared to $23.7 million in 2021. The Company paid $0.180 per common share for the dividends paid in January, April, July and October 2022, and $0.175 per common share for the dividends paid in January, April, July and October 2021.
The Company paid $25.4 million in dividends in 2023 compared to $24.6 million in 2022. The Company paid $0.185 per common share for the dividends paid in January, April, July and October 2023, and $0.180 per common share for the dividends paid in January, April, July and October 2022.
Critical Accounting Estimates The process of preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Management evaluates these estimates and assumptions on an ongoing basis.
At December 31, 2023, the Company had standby letters of credit outstanding of $3.3 million. Critical Accounting Estimates The process of preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Management evaluates these estimates and assumptions on an ongoing basis.
Results for Fiscal 2021 compared to Fiscal 2020 For comparisons of the Company's consolidated and segment results of operations and consolidated cash flows for the fiscal years ended December 31, 2021 to December 31, 2020, refer to Part II, Item 7.
The Andersons, Inc. | 2023 Form 10-K | 18 Table of Contents Results for Fiscal 2022 compared to Fiscal 2021 For comparisons of the Company's consolidated and segment results of operations and consolidated cash flows for the fiscal years ended December 31, 2022, to December 31, 2021, refer to Part II, Item 7.
The Andersons, Inc. | 2022 Form 10-K | 24 Table of Contents
The Andersons, Inc. | 2023 Form 10-K | 25 Table of Contents
Subsequent to year end, the Company began to consider various strategies related to the investment. The Company is in compliance with all covenants as of December 31, 2022. In addition, certain of our recourse long-term borrowings are collateralized by first mortgages on various facilities.
The Company is in compliance with all covenants as of December 31, 2023. In addition, certain of our long-term borrowings are collateralized by first mortgages on various facilities.
As of December 31, 2022, the Company had forward purchase contracts of $4,866.5 million, with $4,757.3 million payable within 12 months. See Note 5 to the Consolidated Financial Statements for additional information. Postretirement Healthcare Program The Company has a postretirement health care benefit plan that covers substantially all of its full-time employees hired prior to January 1, 2003.
See Note 5 to the Consolidated Financial Statements for additional information. Postretirement Healthcare Program The Company has a postretirement health care benefit plan that covers substantially all of its full-time employees hired prior to January 1, 2003.
The difference between the 18.2% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to the tax benefit generated from Federal R&D Credits, foreign tax credits and the effect of non-controlling interest offset by state and local income taxes, nondeductible compensation, and changes in unrecognized tax benefits.
The difference between the 21.8% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to state and local income taxes and changes in unrecognized tax benefits offset by the effect of non-controlling interest and foreign tax credits. In 2022, the Company recorded Income tax expense from continuing operations of $39.6 million.
In addition, periods of high commodity prices and/or unfavorable market conditions could require additional margin deposits on the Company's exchange traded futures contracts. Conversely, in periods of declining prices, the Company would receive a return of cash. Management believes the sources of liquidity will be adequate to fund operations, capital expenditures and payments of dividends in the foreseeable future.
Conversely, in periods of declining prices, the Company would receive a return of cash. Management believes the sources of liquidity will be adequate to fund operations, capital expenditures and payments of dividends in the foreseeable future.
Other income increased by $17.5 million from prior year as a result of $17.6 million in proceeds received as a part of the USDA Biofuel Producer Program that was enacted as a part of the CARES Act, of which approximately $8.7 million of these proceeds were attributable to the noncontrolling interest.
Other income decreased by $5.7 million from prior year due to $15.4 million more proceeds received in the prior year as a part of the USDA Biofuel Producer Program that was enacted as a part of the CARES Act.
The Andersons, Inc. | 2022 Form 10-K | 16 Table of Contents Tons of product sold for the years ended December 31, 2022 and December 31, 2021 were as follows: Twelve months ended December 31, (in thousands) 2022 2021 Ag Supply Chain 1,143 1,621 Specialty Liquids 338 410 Engineered Granules 360 453 Total tons 1,841 2,484 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.
Tons of product sold were as follows: Year Ended December 31, (in thousands) 2023 2022 Ag Supply Chain 1,376 1,238 Specialty Liquids 397 415 Engineered Granules 165 188 Total tons 1,938 1,841 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.
The increase in sales and merchandising revenues and cost of sales and merchandising revenues was due a significant appreciation of fertilizer prices from the prior year. This increase in fertilizer prices from the prior year was partially offset by a decrease in demand as volumes sold decreased by approximately 25%.
This decrease in fertilizer prices from the prior year was partially offset by a modest increase in demand as volumes sold increased by approximately 5%.
Total Trade storage space capacity at company owned or leased facilities, including temporary pile storage, was approximately 183.6 million bushels at December 31, 2022, and 185.5 million bushels at December 31, 2021. Looking forward, ag supply chain opportunities are expected to remain strong into 2023.
Total Trade storage space capacity at company owned or leased facilities, including temporary pile storage, was approximately 168 million bushels at December 31, 2023, and 184 million bushels at December 31, 2022. Looking forward, agriculture fundamentals are shifting due to increased global supply.
Contractual Obligations Long-term Debt As of December 31, 2022, the Company had outstanding recourse and non-recourse long-term debt with both floating and fixed rates of varying maturities for an aggregate principal amount outstanding of $541.4 million and $64.2 million, respectively. $46.3 million and $63.8 million of the outstanding principal of the recourse and non-recourse long-term debt is payable within 12 months.
Contractual Obligations Long-term Debt As of December 31, 2023, the Company had total outstanding long-term debt with both floating and fixed rates of varying maturities for an aggregate principal amount outstanding of $593.6 million. $27.6 million of the outstanding principal of the long-term debt is payable within 12 months. See Note 4 to the Consolidated Financial Statements for additional information.
Sales and merchandising revenues increased $3,743.2 million and cost of sales and merchandising revenues increased by $3,671.2 million resulting in an increase in gross profit of $72.0 million.
Sales and merchandising revenues decreased $2,621.5 million and cost of sales and merchandising revenues decreased by $2,623.7 million resulting in an increase in gross profit of $2.2 million.
The Andersons, Inc. | 2022 Form 10-K | 23 Table of Contents Impairment of Long-Lived Assets, Goodwill, and Equity Method Investments The Company's business segments are each highly capital intensive and require significant investment. Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Impairment of Long-Lived Assets and Goodwill The Company's business segments are each highly capital intensive and require significant investment. Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. This is done by evaluating the recoverability based on undiscounted projected cash flows, excluding interest.
As a result, changes in sales and merchandising revenues between periods may not necessarily be indicative of the overall performance of the business and more focus should be placed on changes in gross profit.
As a result, changes in sales and merchandising revenues between periods may not necessarily be indicative of the overall performance of the business and greater emphasis should be placed on changes in gross profit. Trade The Trade segment's operating results were consistent with the prior year as the segment continued to capitalize on strong agriculture fundamentals.
The increase in cash used in financing activities from the prior year was due to several factors. First, the Company made distributions of approximately $44.9 million to the non-controlling interest shareholder of TAMH due to the strength of the financial results in both 2021 and 2022.
The decrease in cash used in financing activities from the prior year was mainly due to the issuance of a $100.0 million term note in 2023. The Company continued to make substantial distributions to the non-controlling interest shareholder of TAMH due to the strength of the entity's financial results in both 2023 and 2022.
Other The Company's “Other” activities include corporate income and expense and cost for functions that provide support and services to the operating segments. The results include expenses and benefits not allocated to the operating segments and other elimination and consolidation adjustments.
The results include expenses and benefits not allocated to the operating segments and other elimination and consolidation adjustments.
In 2021, the Company recorded Income tax expense from continuing operations of $29.2 million. The Company’s effective rate for 2021 was 18.2% on Income before income taxes from continuing operations of $160.8 million.
The Company's effective rate for 2023 was 21.8% on Income before income taxes from continuing operations of $169.6 million.
The Andersons, Inc. | 2022 Form 10-K | 20 Table of Contents Sources and Uses of Cash in 2022 Compared to 2021 Twelve Months Ended (in thousands) December 31, 2022 December 31, 2021 Net cash provided by (used in) operating activities $ 287,117 $ (51,050) Net cash (used in) provided by investing activities (52,902) 487,248 Net cash used in financing activities (334,730) (248,769) Operating Activities and Liquidity Our operating activities provided cash of $287.1 million in 2022 compared to cash used in operations of $51.1 million in 2021.
Sources and Uses of Cash in 2023 Compared to 2022 Year Ended (in thousands) December 31, 2023 December 31, 2022 Net cash provided by operating activities $ 946,750 $ 287,117 Net cash used in investing activities (153,879) (52,902) Net cash used in financing activities (263,993) (334,730) Operating Activities and Liquidity Operating activities provided cash of $946.8 million in 2023 compared to $287.1 million in 2022.
Net income taxes of $88.7 million and $51.7 million were paid in the years ended December 31, 2022 and 2021, respectively. The increase in the current year is driven by the increased Income before income taxes from continuing operations combined with the taxable gain associated with the sale of the remaining pieces of the Company's Rail segment in 2022.
The decrease in the current year is driven by decreased Income before income taxes from continuing operations combined with the taxable gain associated with the sale of the remaining pieces of the Company's Rail segment in 2022. Investing Activities Investing activities used cash of $153.9 million in the current year compared to $52.9 million used in the prior year.
Readily Marketable Inventories and Derivative Contracts Readily Marketable Inventories ("RMI") are stated at their net realizable value, which approximates fair value based on their commodity characteristics, widely available markets, and pricing mechanisms. The Company marks to market all forward purchase and sale contracts for commodities and ethanol, over-the-counter commodity and ethanol contracts, and exchange-traded futures and options contracts.
The Andersons, Inc. | 2023 Form 10-K | 24 Table of Contents Readily Marketable Inventories and Derivative Contracts Readily Marketable Inventories ("RMI") are stated at their net realizable value, which approximates fair value based on their commodity characteristics, widely available markets, and pricing mechanisms.
This is done by evaluating the recoverability based on undiscounted projected cash flows, excluding interest. If an asset group is considered impaired, the impairment loss to be recognized is measured as the amount by which the asset group's carrying amount exceeds its fair value.
If an asset group is considered impaired, the impairment loss to be recognized is measured as the amount by which the asset group's carrying amount exceeds its fair value. Goodwill is tested for impairment at the reporting unit level, which is the operating segment or one level below the operating segment.
Goodwill is tested for impairment at the reporting unit level, which is the operating segment or one level below the operating segment. The quantitative review for impairment takes into account our estimates of future cash flows, as well as a market-based approach.
During the year ended December 31, 2023, the Company evaluated goodwill for impairment using a quantitative assessment in three reporting units and using a qualitative assessment in one reporting unit. The quantitative review for impairment takes into account our estimates of future cash flows, as well as a market based approach.
There was $1,659.6 million available for borrowing at December 31, 2022. Typically, the Company's highest borrowing occurs in the late winter and early spring due to seasonal inventory requirements in the fertilizer and grain businesses. At December 31, 2022, the Company had standby letters of credit outstanding of $38.6 million.
While in the current year the Company's cash on hand exceeds total debt, typically, its highest borrowing occurs in the late winter and early spring due to seasonal inventory requirements in the fertilizer and grain businesses. At December 31, 2023, the Company had total available liquidity of $2,461.4 million comprised of cash and cash equivalents and unused lines of credit.
Operating Leases The Company has lease arrangements for certain equipment and facilities, including grain facilities, fertilizer facilities and equipment. As of December 31, 2022, the Company had fixed operating lease payment obligations of $67.5 million, with $28.1 million payable within 12 months. See Note 13 to the Consolidated Financial Statements for additional information.
As of December 31, 2023, the Company had fixed operating lease payment obligations of $59.1 million, with $23.8 million payable within 12 months. See Note 13 to the Consolidated Financial Statements for additional information. Commodity Purchase Obligations The Company enters into forward purchase contracts of commodities with producers through the normal course of business.
Without limitation, these risks include economic, weather and regulatory conditions, competition, the ongoing economic impacts from the war in Ukraine, and those listed under Item 1.A, "Risk Factors." The reader is urged to carefully consider these risks and factors.
Without limitation, these risks include economic, weather and regulatory conditions, competition, geopolitical risk, and those listed under Item 1.A, "Risk Factors." The reader is urged to carefully consider these risks and factors. 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.
The Andersons, Inc. | 2022 Form 10-K | 19 Table of Contents The Company’s subsidiary partnership returns are under federal tax examination by the Internal Revenue Service (“IRS”) for the tax years 2015 through 2018, respectively. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015.
The Company's subsidiary partnership returns are under federal tax examination by the Internal Revenue Service ("IRS") for tax years 2015 through 2018. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015. The IRS and Mexican tax authorities’ examinations could potentially be resolved within the next 12 months.
Commodity Purchase Obligations The Company enters into forward purchase contracts of commodities with producers through the normal course of business. These forward purchase contracts are largely offset by forward sales contracts of commodities and the net of these forward contracts are offset by exchange-traded futures and options contracts or over-the-counter contracts.
These forward purchase contracts are largely offset by forward sales contracts of commodities and the net of these forward contracts are offset by exchange-traded futures and options contracts or over-the-counter contracts. As of December 31, 2023, the Company had forward purchase contracts of $2,575.7 million, with $2,468.3 million payable within 12 months.
Gross profit improved year-over-year due to increased margins on well-positioned inventory from the prior year representing a $43.4 million margin difference that was partially offset by a $34.3 million decrease in margins directly correlated with the reduced sales volumes.
The $16.4 million decline in gross profit across the segment is represented by a $21.4 million margin difference from the prior year that was partially offset by a $5.0 million increase in gross profit directly correlated with increased sales volumes.
The Company also continued to pay down both long and short-term debt in the current year which resulted in additional cash of $17.7 million used. Lastly, the Company also began to repurchase common shares under its Repurchase Plan where $100 million of repurchases were authorized to be repurchased on or before August 20, 2024.
Lastly, the Company continued to repurchase common shares under its Repurchase Plan where $100 million of repurchases were authorized to be repurchased on or before August 20, 2024. As of December 31, 2023, approximately $14.5 million of the Repurchase Plan had been utilized.
See Note 4 to the Consolidated Financial Statements for additional information. Future interest payments associated with the recourse long-term debt total $165.6 million, with $28.1 million payable within 12 months.
Future interest payments associated with the long-term debt total $192.5 million, with $36.6 million payable within 12 months. See Note 4 to the Consolidated Financial Statements for additional information. The Andersons, Inc. | 2023 Form 10-K | 23 Table of Contents Operating Leases The Company has lease arrangements for certain equipment and facilities, including grain facilities, fertilizer facilities and equipment.
Plant Nutrient The Plant Nutrient segment had a decrease of $3.5 million in operating results when compared to the record results of the prior year. Sales and merchandising revenues increased $232.4 million and cost of sales and merchandising revenues increased $223.3 million resulting in increased gross profit of $9.1 million from the prior year.
Sales and merchandising revenues decreased $155.9 million and cost of sales and merchandising revenues decreased $139.5 million resulting in decreased gross profit of $16.4 million from the prior year.
Liquidity and Capital Resources Working Capital At December 31, 2022, the Company had working capital from continuing operations of $941.8 million, an increase of $40.9 million from the prior year.
The Andersons, Inc. | 2023 Form 10-K | 21 Table of Contents Liquidity and Capital Resources Working Capital At December 31, 2023, the Company had working capital of $1,170.6 million, an increase of $226.0 million from the prior year.
Our non-recourse long-term debt that is currently classified in current maturities of long-term debt as described above, is collateralized by ELEMENT plant assets. Because we are a significant consumer of short-term debt in peak seasons and the majority of this is variable rate debt, increases in interest rates could have a significant impact on our profitability.
Because we are a significant consumer of short-term debt in peak seasons and the majority of this is variable rate debt, increases in interest rates could have a significant impact on our profitability. In addition, periods of high commodity prices and/or unfavorable market conditions could require additional margin deposits on the Company's exchange traded futures contracts.
Investing Activities Investing activities used cash of $52.9 million in the current year compared to $487.2 million provided in the prior year. The significant change from the prior year was mainly driven by approximately $500 million more net proceeds from the sale of discontinued operations received in the prior year.
The significant change from the prior year was mainly driven by approximately $58.7 million of additional net proceeds from the sale of discontinued Rail operations received in the prior year combined with approximately $42.1 million of additional purchases of property, plant and equipment in the current year.
The Andersons, Inc. | 2022 Form 10-K | 21 Table of Contents Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of working capital and a minimum ratio of owner's equity.
On December 14, 2023, the Company declared a cash dividend of $0.190 per common share, payable on January 22, 2024, to shareholders of record on January 2, 2024. Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of working capital and a minimum ratio of owner's equity.
Ag Supply Chain led the way in 2022 with a $9.2 million increase in gross profit as a result of strong margins from well-positioned inventory in a tight supply market. Operating, administrative and general expenses increased $10.5 million from the prior year.
Ag Supply Chain made up $10.1 million of the reduction as the market dynamics significantly shifted and the strong margins realized in a tight 2022 supply market were unable to be repeated. Operating, administrative and general expenses decreased $2.7 million from the prior year from approximately $3.9 million in reduced incentive compensation expense.
As of December 31, 2022, approximately $12.7 million of the Repurchase Plan had been utilized, with all of these repurchases being made in the year ended December 31, 2022. As of December 31, 2022, the Company was party to borrowing arrangements with a syndicate of banks that provide a total borrowing capacity of $1,990.8 million.
As of December 31, 2023, the Company was party to borrowing arrangements with a syndicate of banks that provide a total borrowing capacity of $1,863.9 million. There was $1,817.5 million available for borrowing at December 31, 2023.
Volumes shipped for the years ended December 31, 2022 and December 31, 2021, were as follows: Twelve months ended December 31, (in thousands) 2022 2021 Ethanol (gallons shipped) 771,142 726,512 E-85 (gallons shipped) 38,980 41,572 Corn Oil (pounds shipped) 507,143 286,082 Dried Distillers Grain (tons shipped) 1,836 2,040 Plant Nutrient The Plant Nutrient segment's 2022 operating results decreased slightly from the segment's record year in 2021.
Volumes shipped were as follows: Year Ended December 31, (in thousands) 2023 2022 Ethanol (gallons shipped) 774,550 771,142 E-85 (gallons shipped) 42,270 38,980 Vegetable Oil (pounds shipped) (a) 1,263,924 790,218 Dried Distillers Grain (tons shipped) (b) 2,052 1,836 (a) Includes corn oil, soybean oil, and other fats, oils, and greases.
Sales and merchandising revenues increased $737.7 million and cost of sales and merchandising revenues increased $727.4 million compared to the prior year. As a result, gross profit increased by $10.4 million.
As a result, gross profit increased by $75.4 million. The increase in both sales and merchandising revenues and cost of sales and merchandising revenues can be attributed to increased third-party trading volumes mainly in renewable diesel feedstocks as the merchandising businesses continue to diversify and grow.
The IRS and Mexican tax authorities’ examinations could potentially be resolved within the next 12 months. The resolution of these examinations could change our unrecognized tax benefits and favorably impact income tax expense by a range of $6.4 million to $20.3 million.
The resolution of these examinations could change our unrecognized tax benefits and favorably impact income tax expense by a range of $2.9 million to $7.6 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.
The vast majority of the increase to sales and merchandising revenues and cost of sales and merchandising revenues is the result of increased ethanol and corn commodity prices as ethanol volumes sold only slightly increased from the prior year.
The vast majority of the decrease in sales and merchandising revenues and cost of sales and merchandising revenues is attributable to sharp commodity price decreases from the prior year as the war in Ukraine created uncertainty around global supply which temporarily drove commodity prices higher in 2022.
Additional contributing factors to the change from the prior year were higher amounts of purchases of property, plant and equipment combined with additional spending on business acquisitions. Capital expenditures of $108.3 million for 2022 on property, plant and equipment includes: Trade - $29.4 million; Renewables - $42.7 million; Plant Nutrient - $34.7 million; and $1.4 million in Other.
Capital expenditures of $150.4 million for 2023 on property, plant and equipment and capitalized software includes: Trade - $49.7 million; Renewables - $54.5 million; Nutrient & Industrial - $42.5 million; and $3.6 million in Other.
This increase was attributable to changes in the following components of current assets from continuing operations and current liabilities from continuing operations: (in thousands) December 31, 2022 December 31, 2021 Variance Current Assets from Continuing Operations: Cash and cash equivalents $ 115,269 $ 216,444 $ (101,175) Accounts receivable, net 1,248,878 835,180 413,698 Inventories 1,731,725 1,814,538 (82,813) Commodity derivative assets – current 295,588 410,813 (115,225) Other current assets 71,622 74,468 (2,846) Total current assets from continuing operations 3,463,082 3,351,443 111,639 Current Liabilities from Continuing Operations: Short-term debt 272,575 501,792 (229,217) Trade and other payables 1,423,633 1,199,324 224,309 Customer prepayments and deferred revenue 370,524 358,119 12,405 Commodity derivative liabilities – current 98,519 128,911 (30,392) Current maturities of long-term debt 110,155 32,256 77,899 Accrued expenses and other current liabilities 245,916 230,148 15,768 Total current liabilities from continuing operations 2,521,322 2,450,550 70,772 Working Capital from Continuing Operations $ 941,760 $ 900,893 $ 40,867 Current assets from continuing operations increased $111.6 million in comparison to prior year.
This increase was attributable to changes in the following components of current assets and current liabilities: (in thousands) December 31, 2023 December 31, 2022 Variance Current Assets Cash and cash equivalents $ 643,854 $ 115,269 $ 528,585 Accounts receivable, net 762,549 1,248,878 (486,329) Inventories 1,166,700 1,731,725 (565,025) Commodity derivative assets – current 178,083 295,588 (117,505) Other current assets 55,777 74,493 (18,716) Total current assets 2,806,963 3,465,953 (658,990) Current Liabilities Short-term debt 43,106 272,575 (229,469) Trade and other payables 1,055,473 1,423,633 (368,160) Customer prepayments and deferred revenue 187,054 370,524 (183,470) Commodity derivative liabilities – current 90,849 98,519 (7,670) Current maturities of long-term debt 27,561 110,155 (82,594) Accrued expenses and other current liabilities 232,288 245,916 (13,628) Total current liabilities 1,636,331 2,521,322 (884,991) Working Capital $ 1,170,632 $ 944,631 $ 226,001 Current assets decreased $659.0 million in comparison to prior year.
The increase in cash provided by operating activities was primarily due to increased operating results and a decrease in the cash used through working capital changes.
The vast majority of the increase in cash provided by operating activities was due to favorable changes in operating assets and liabilities as commodity prices dropped in the current year and the Company increased its focus on managing working capital balances in light of the rising interest rate environment.
This improvement from the prior year was mainly due to $3.4 million of stranded costs from the sale of our Rail Leasing business being held in Corporate in the prior year. Income Taxes In 2022, the Company recorded Income tax expense from continuing operations of $39.6 million.
Other Results improved by $5.1 million from the prior year. This improvement from the prior year was primarily driven by a $4.8 million revaluation gain of a cost method investment. Income Taxes In 2023, the Company recorded Income tax expense from continuing operations of $37.0 million.
Removed
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.
Added
The asset-based business benefited from strong elevation margins and good space income on a large and wet harvest combined with better wheat income opportunities during the year.
Removed
The Company has considered the potential impact of the book value of the Company’s total shareholders’ equity exceeded the Company’s market capitalization during the quarter for impairment indicators. Management ultimately concluded that an impairment triggering event had not occurred.
Added
Merchandising fundamentals were also solid during 2023, especially with a market inverse through the first part of the year, but were negatively impacted from fewer merchandising opportunities in the Middle East and North Africa including losses related to the currency liquidity issues in Egypt. The premium ingredients business also delivered positive results from acquisitions and other recently deployed capital.
Removed
The Company believes that the share price is not an accurate reflection of its current value as conditions are currently strong in the agriculture space with a positive long-term outlook. Management believes that the market’s impact on the Company’s equity value does not actually reflect the impact of these external factors on the Company.
Added
The Company's mix of assets and merchandising businesses provide a solid foundation to benefit from large crops and carry markets. With lower commodity prices, domestic producers are hesitant to forward sell, but the Company's assets are well-positioned for the grains to flow in due course.
Removed
As a result of prior period tests, reviews of current operating results and other relevant market factors, the Company concluded that no impairment trigger existed as of December 31, 2022. Management reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of an asset group may no longer be recoverable.
Added
With continuing global unrest, volatility exists in key international shipping lanes which could provide ongoing merchandising opportunities. The Andersons, Inc. | 2023 Form 10-K | 17 Table of Contents Renewables The Renewables segment performed very well in 2023 led by outstanding earnings from strong operations at the Company's ethanol plants.
Removed
This was the case in 2022 for the Company's 51% owned ELEMENT plant located in Colwich, Kansas. The plant faced a combination of high corn basis, increased natural gas prices and a rapid decline in Low Carbon Fuel Standards credit values, that negatively impacted operations.
Added
The plants continue to run efficiently with high ethanol yields and favorable ethanol crush margins. The Company's renewable diesel feedstock business continued to grow as it continued to add more products to its portfolio. While the segment's results were down from the prior period, the current year includes an $87.2 million impairment charge related to the ELEMENT ethanol plant.
Removed
The adverse operating conditions led to a failure of a debt covenant during the year, as well as, a forecasted failure of another covenant within the next 12 months. Accordingly, it was deemed that a triggering event occurred as of September 30, 2022, related to the ELEMENT ethanol plant.
Added
While spot ethanol crush margins have softened into 2024, the first quarter generally experiences seasonally weak margins. Upcoming planned maintenance in the industry and the spring driving rebound should support improved plant economics; however, co-product values are facing headwinds as weaker corn prices are expected to compress feed values.
Removed
Management performed a recoverability test of the ELEMENT plant’s long-lived assets as this is the lowest level of identifiable cash flows. The key assumptions used in the recoverability test included input costs (corn, natural gas, etc.), production days, and co-product premiums. Each of these inputs were given probability weightings based on management's assessment regarding the likelihood of the respective forecasts.
Added
(b) DDG tons shipped converts wet tons to a dry ton equivalent amount. Nutrient & Industrial The Nutrient & Industrial segment's 2023 operating results decreased from the strong prior year results.
Removed
Using future forecasted cash flows, the ELEMENT asset group passed its recoverability test on an undiscounted cash flow basis by 15% over the carrying value of its assets. Assumptions used in the model did not change materially during the fourth quarter.
Added
The Ag Supply Chain product line experienced compressed margins in 2023 that were partially offset with increased volumes as nutrient prices moved lower throughout the year providing fewer margin opportunities when compared to 2022. The Specialty Liquids and Engineered Granules product lines fell slightly behind the prior year mainly due to decreased volumes.
Removed
However, if there are changes to key assumptions in the analysis it is reasonably possible management's estimate that it will recover the carrying amount of these assets could change, even in the near term. See further discussion on ELEMENT developments subsequent to December 31, 2022, in Note 4 of the Consolidated Financial Statements.
Added
Management is optimistic for a good spring application season as nutrient prices have stabilized, and farm economics should incentivize application of crop inputs.
Removed
The Andersons, Inc. | 2022 Form 10-K | 15 Table of Contents Trade The Trade segment's operating results improved from the prior year as the segment had a second consecutive record year. Both asset and merchandising businesses exceeded prior year results as they were able to successfully navigate global disruptions and a volatile market.
Added
Prior year volumes have been reclassified for the twelve months ended December 31, 2022, to conform with current year presentation as the product mix in certain facilities has evolved. Other The Company's “Other” activities include corporate income and expense and cost for functions that provide support and services to the operating segments.

… 62 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+5 added−0 removed9 unchanged
Biggest changeMarket risk, which is estimated as the potential increase in fair value resulting from a hypothetical one-half percent decrease in interest rates, is summarized below: December 31, (in thousands) 2022 2021 Fair value of long-term debt, including current maturities $ 595,705 $ 650,765 Fair value in excess of carrying value (10,087) 13,795 Market risk 4,707 6,648 Actual results may differ.
Biggest changeMarket risk, which is estimated as the potential increase in fair value resulting from a hypothetical one-half percent decrease in interest rates, is summarized below: December 31, (in thousands) 2023 2022 Fair value of long-term debt, including current maturities $ 585,137 $ 595,705 Fair value in excess of carrying value (8,495) (10,087) Market risk 4,237 4,707 The Andersons, Inc. | 2023 Form 10-K | 26 Table of Contents Actual results may differ.
Additionally, the Company may enter into interest rate swaps from time to time to manage our mix of fixed and variable interest rate debt effectively which may decrease market risk noted above. As of December 31, 2022, the majority of the Company's long-term debt is hedged with interest rate swaps limiting interest rate volatility.
Additionally, the Company may enter into interest rate swaps from time to time to manage our mix of fixed and variable interest rate debt effectively which may decrease the market risk noted above. As of December 31, 2023, the majority of the Company's long-term debt is hedged with interest rate swaps, limiting interest rate volatility.
The estimated fair value and market risk will vary from year to year depending on the total amount of long-term debt and the mix of variable and fixed rate debt. The Company is also party to short-term debt borrowing arrangements with a capacity of approximately $2.0 billion.
The estimated fair value and market risk will vary from year to year depending on the total amount of long-term debt and the mix of variable and fixed rate debt. The Company is also party to short-term debt borrowing arrangements with a capacity of approximately $1.9 billion.
See Note 5 to the Consolidated Financial Statements for further discussion on the impact of these hedging instruments. The Andersons, Inc. | 2022 Form 10-K | 25 Table of Contents
See Note 5 to the Consolidated Financial Statements for further discussion on the impact of these hedging instruments. The Andersons, Inc. | 2023 Form 10-K | 27 Table of Contents
The result of this analysis, which may differ from actual results, is as follows: December 31, (in thousands) 2022 2021 Net long (short) commodity position $ (8,810) $ 10,987 Market risk (881) 1,099 Foreign Currency The Company has subsidiaries located outside the United States where the local currency is the functional currency.
The result of this analysis, which may differ from actual results, is as follows: December 31, (in thousands) 2023 2022 Net long (short) commodity position $ 6,508 $ (8,810) Market risk 651 (881) Foreign Currency The Company has subsidiaries located outside the United States where the local currency is the functional currency.
Added
In 2023, due to ongoing foreign currency challenges in Egypt, the Company made an exception to its normal practice regarding sales into the Middle East and North Africa when it allowed customers to make payments in Egyptian pounds on receivables originally contracted in U.S. dollars.
Added
Based on the information available at the time, management expected to be able to convert the local currency to U.S. dollars within a relatively short timeframe and was able to use non-deliverable forward currency hedges to manage the foreign currency exposure through part of the year.
Added
As geopolitical instability and currency liquidity challenges continued to grow in the region, the non-deliverable forward currency hedges ceased to be effective and management made the decision to limit losses and accept a lower exchange rate on these receivables.
Added
The Company was able to convert all but $5.0 million of the receivables by December 31, 2023, incurring a currency loss during the year. Due to the economic and geopolitical risk in this region of the world, management resumed its standard practice of only accepting U.S. dollars in this region.
Added
The Company believes that the foreign currency risk that existed in 2023 is sufficiently mitigated and is not expected to be material to the Company's financial results as the Company moves forward into 2024.

Other ANDE 10-K year-over-year comparisons