Forward Looking Statements
The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Such factors include, but are not limited to, the effects on our business from the COVID-19 pandemic and the pace of recovery from the pandemic, economic and political conditions, globally and in the markets we serve including the ongoing economic impacts from the conflict inUkraine , fluctuations in cost and availability of commodities, weather and agricultural conditions, governmental regulations, the effectiveness of our internal control over financial reporting and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors. The reader is urged to carefully consider these risks and others, including those risk factors listed under Item 1A of the 2021 Form 10-K and under Item 1A in this report. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Critical Accounting Policies and Estimates
Our critical accounting policies and critical accounting estimates, as described in our 2021 Form 10-K, have not materially changed through the third quarter of 2022. Executive Overview Our operations are organized, managed and classified into three reportable business segments: Trade, Renewables and Plant Nutrient. Each of these segments is generally based on the nature of products and services offered and aligns with the management structure. Due to the Rail segment being presented as discontinued operations, the Company has excluded Rail from the following discussions of financial condition and results of operations. The agricultural commodity-based business is one in which changes in selling prices generally move in relationship to changes in purchase prices. Therefore, increases or decreases in prices of the agricultural commodities that the business deals in will have a relatively equal impact on Sales and merchandising revenues and Cost of sales and merchandising revenues and a much less significant impact on Gross profit. As a result, changes in Sales and merchandising revenues between periods may not necessarily be indicative of the overall performance of the business and greater emphasis should be placed on changes in Gross profit. The Company has considered the potential impact that the book value of the Company's total shareholders' equity exceeded the Company's market capitalization during the quarter for impairment indicators. Management ultimately concluded that an impairment triggering event had not occurred. The Company believes that the share price is not an accurate reflection of its current value as conditions are currently strong in the agriculture space with a positive long-term outlook. Management believes that the market's impact on the Company's equity value does not actually reflect the impact of these external factors on the Company. As a result of prior period tests, reviews of current operating results and other relevant market factors, the Company concluded that no impairment trigger existed as ofSeptember 30, 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. This was the case in the third quarter of 2022 for the Company's 51% owned ELEMENT plant located inColwich, 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. The adverse operating conditions led to a failure of a debt covenant during the third quarter, as well as, a forecasted failure of another covenant within the next 12 months. Accordingly, it was deemed that a triggering event occurred as ofSeptember 30, 2022 related to the ELEMENT ethanol plant. 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 onThe Andersons, Inc. | Q3 2022 Form 10-Q | 26 -------------------------------------------------------------------------------- Table of Contents management's assessment regarding the likelihood of the respective forecasts. 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. Therefore, 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.
Trade
The Trade segment's third quarter operating results improved from the prior year as the segment benefited from strong elevation margins at our grain assets. In addition, well-positioned feed ingredients inventory generated good margins. Agricultural inventories on hand were 103.1 million and 84.1 million bushels atSeptember 30, 2022 andSeptember 30, 2021 , respectively. These bushels consist of inventory held at company-owned or leased facilities, transload inventory, in-transit inventory, and third-party held inventory. Total Trade storage space capacity at company-owned or leased facilities, including temporary pile storage, was approximately 185 million bushels atSeptember 30, 2022 , which was comparable to the prior year. The majority of our assets are located in areas expected to experience above-trend yields. Continuing global supply and demand imbalances within the market from production shortfalls and logistical challenges are expected to keep prices historically high and should allow for continued merchandising opportunities and strong elevation margins through the end of the year.
Renewables
The Renewables segment's third quarter operating results increased from the prior year due to continued strength in co-product values and higher production margins in our ethanol plants. This was particularly evident in our eastern plants where corn basis was lower in anticipation of a strong harvest. The renewable diesel feedstock merchandising business also contributed to results.
Higher corn costs for ethanol production in the western
Ethanol and related co-products volumes for the three and nine months ended
Three months ended September 30, Nine months ended September 30, (in thousands) 2022 2021 2022 2021 Ethanol (gallons shipped) 184,845 184,655 576,392 538,955 E-85 (gallons shipped) 11,624 12,977 28,938 32,781 Corn oil (pounds shipped) 141,313 79,756 373,858 188,974 DDG (tons shipped)* 386 570 1,336 1,544
* DDG tons shipped converts wet tons to a dry ton equivalent amount.
Plant Nutrient
The Plant Nutrient segment's third quarter operating results decreased from the prior period. Ag Supply Chain and Specialty Liquids product lines continued to see strong margins on well-positioned inventory, which more than offset a decline in volumes. The Engineered Granules business recorded some inventory write-offs on lawn products, which negatively impacted our performance. While we have seen base nutrient prices level off in the third quarter, continued strong global demand, a tight supply and high farmer income should continue to support the fundamentals of this business. Storage capacity at our Ag Supply Chain and Specialty Liquids facilities, including leased storage, was approximately 448 thousand tons for dry nutrients and approximately 511 thousand tons for liquid nutrients atSeptember 30, 2022 , which is similar to the prior year. The Andersons, Inc. | Q3 2022 Form 10-Q | 27 -------------------------------------------------------------------------------- Table of Contents Tons of product sold for the three and nine months endedSeptember 30, 2022 and 2021 were as follows: Three months ended September 30, Nine months ended September 30, (in thousands) 2022 2021 2022 2021 Ag Supply Chain 191 253 840 1,261 Specialty Liquids 70 71 261 304 Engineered Granules 51 60 278 383 Total tons 312 384 1,379 1,948 In the table above, Ag Supply Chain represents facilities principally engaged in the wholesale distribution and retail sale and application of primary agricultural nutrients such as bulk nitrogen, phosphorus, and potassium. Specialty Liquid locations produce and sell a variety of low-salt liquid starter fertilizers, micronutrients for agricultural use, and specialty products for use in various industrial processes. Engineered Granules include a variety of corncob-based products and facilities that primarily manufacture granulated dry products for use in specialty turf and agricultural applications.
Other
Our "Other" activities include corporate income and expense and cost for functions that provide support and services to the operating segments. The results include expenses and benefits not allocated to the operating segments and other elimination and consolidation adjustments.
The Andersons, Inc. | Q3 2022 Form 10-Q | 28 -------------------------------------------------------------------------------- Table of Contents Operating Results
The following discussion focuses on the operating results as shown in the Condensed Consolidated Statements of Operations and includes a separate discussion by segment. Additional segment information is included herein in Note 12, Segment Information.
Comparison of the three months ended
Three months ended September 30, 2022 (in thousands) Trade Renewables Plant Nutrient Other Total Sales and merchandising revenues$ 3,240,526 $
814,923
790,246 149,156 - 4,055,560 Gross profit 124,368 24,677 14,720 - 163,765 Operating, administrative and general expenses 73,347 7,053 25,427 9,712 115,539 Interest expense (income), net 10,782 2,555 1,920 (275) 14,982 Equity in earnings (losses) of affiliates, net 681 - - - 681 Other income (expense), net (262) 832 1,018 (794) 794 Income (loss) before income taxes from continuing operations$ 40,658 $
15,901
- 7,524 - - 7,524 Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations$ 40,658 $ 8,377 $ (11,609) $ (10,231) $ 27,195 Three months ended September 30, 2021 (in thousands) Trade Renewables Plant Nutrient Other Total Sales and merchandising revenues$ 2,242,131 $
614,637
608,886 124,168 - 2,876,989 Gross profit 98,196 5,751 17,888 - 121,835 Operating, administrative and general expenses 67,590 10,014 22,883 9,788 110,275 Interest expense (income), net 5,243 1,658 1,146 752 8,799 Equity in earnings (losses) of affiliates, net (250) - - - (250) Other income (expense), net 16,886 683 309 (4,072) 13,806 Income (loss) before income taxes from continuing operations$ 41,999 $
(5,238)
- (1,602) - - (1,602) Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations$ 41,999 $ (3,636) $ (5,832) $ (14,612) $ 17,919 The Company uses Income (loss) before income taxes attributable to the Company from continuing operations, a non-GAAP financial measure as defined by theSecurities and Exchange Commission , to evaluate the Company's financial performance. This performance measure is not defined by accounting principles generally accepted inthe United States and should be considered in addition to, and not in lieu of, GAAP financial measures. Management believes that Income (loss) before income taxes attributable to the Company from continuing operations is a useful measure of the Company's performance because it provides investors additional information about the Company's operations allowing evaluation of underlying business performance and period-to-period comparability. This measure is not intended to replace or be an alternative to Income (loss) before income taxes from continuing operations, the most directly comparable amounts reported under GAAP. The Andersons, Inc. | Q3 2022 Form 10-Q | 29 -------------------------------------------------------------------------------- Table of Contents Trade While operating results for the Trade segment were consistent year over year, prior year results include a large one-time gain from the sale of a grain asset that did not reoccur. Sales and merchandising revenues increased by$998.4 million and cost of sales and merchandising revenues increased by$972.2 million for a favorable net gross profit impact of$26.2 million . The increase to sales and merchandising revenues and cost of sales and merchandising revenues is mainly a result of new merchandising locations opened in the second half of 2021 as these new locations are responsible for approximately 65% of the increase from the prior year. The remainder of the increase from the prior year was a result of increased commodity prices and volumes in the existing business. The increase in gross profit was mainly a result of improved margins as they accounted for approximately 80% of the improvement with increases in volumes responsible for the remainder of the increase from the prior year. The improved margins were driven by strong elevation margins, particularly in our early harvest geographies with the volume increases from our new merchandising locations opened in the second half of 2021. Operating, administrative and general expenses increased by$5.8 million . The increase from the prior year is primarily related to wage inflation from a strong labor market as it resulted in an increase of approximately$4.0 million . The new merchandising locations caused an additional$1.4 million of expense in the third quarter of 2022. Interest expense increased by$5.5 million due to higher borrowings with the addition of our new merchandising locations and increased commodity prices that are reflected in the short-term debt within the Company's Condensed Consolidated Balance Sheets along with rising interest rates on the Company's short-term line of credit compared to the prior year. Other income, net decreased by$17.1 million from the same quarter of 2021. The decrease was primarily attributable to the sale of a grain asset inChampaign, Illinois in which the Company recorded a$14.6 million gain in the prior year that did not reoccur in 2022.
Renewables
Operating results for the Renewables segment increased by$12.0 million from the same period last year. Sales and merchandising revenues increased by$200.3 million and cost of sales and merchandising revenues increased by$181.4 million compared to prior year results. As a result, gross profit increased by$18.9 million compared to 2021 results. 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 were consistent between the current year and prior year. The increase to gross profit in the current period results reflect a$15.1 million margin improvement at the ethanol plants, primarily from lower corn basis in our eastern footprint. Operating, administrative and general expenses decreased by$3.0 million from the prior year. The prior year contained$3.7 million worth of accelerated depreciation expense associated with experimental technology at the Company's ethanol plants that did not reoccur in the third quarter of 2022.
Plant Nutrient
Operating results for the Plant Nutrient segment declined by$5.8 million compared to the same period in the prior year. Sales and merchandising revenues increased by$21.8 million and cost of sales and merchandising revenues increased by$25.0 million resulting in an$3.2 million decrease in gross profit. The increase in sales and merchandising revenues and cost of sales and merchandising revenues was due to fertilizer prices increasing approximately 45% 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 20% in the third quarter of 2022. The decrease in gross profit was mainly driven by a$3.9 million impact from associated inventory write-downs in the Engineered Granules business. Operating, administrative and general expenses increased by$2.5 million from the prior year. Most of this increase is due to inflationary pressures, with labor costs being the single biggest driver.
Interest expense increased by
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Other
Results for the quarter improved by$4.4 million compared to the same period in the prior year. The improvement in results was primarily driven by a$2.8 million loss on a cost method investment and approximately$1.0 million of stranded costs from theRail Leasing sale in the prior year.
Income Taxes
For the three months endedSeptember 30, 2022 , the Company recorded income tax expense from continuing operations of$9.8 million . The Company's effective tax rate was 28.3% on income before taxes from continuing operations of$34.7 million . The difference between the 28.3% effective tax rate and theU.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest and state and local income taxes. For the three months endedSeptember 30, 2021 , the Company recorded income tax expense from continuing operations of$4.0 million . The Company's effective tax rate was 24.7% on income from continuing operations of$16.3 million . The effective tax rate differs from theU.S. federal statutory tax rate of 21.0% due to the tax impact of certain discrete derivatives and hedging activities, state and local taxes, and nondeductible compensation offset by the tax impact of non-controlling interest.
Comparison of the nine months ended
Nine months ended September 30, 2022 (in thousands) Trade Renewables Plant Nutrient Other Total Sales and merchandising revenues$ 9,422,974 $
2,380,721
2,280,965 723,797 - 12,133,755 Gross profit 293,981 99,756 120,404 - 514,141 Operating, administrative and general expenses 195,867 23,533 80,343 30,342 330,085 Interest expense (income), net 32,269 6,334 5,304 (1,145) 42,762 Equity in earnings (losses) of affiliates, net (5,597) - - - (5,597) Other income (expense), net 7,745 19,750 2,688 (2,401) 27,782 Income (loss) before income taxes from continuing operations$ 67,993 $
89,639
- 29,827 - - 29,827 Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations$ 67,993 $ 59,812 $ 37,445 $ (31,598) $ 133,652 Nine months ended September 30, 2021 (in thousands) Trade Renewables Plant Nutrient Other Total Sales and merchandising revenues$ 6,522,508 $
1,674,123
1,625,173 531,568 - 8,430,665 Gross profit 248,584 48,950 101,149 - 398,683 Operating, administrative and general expenses 186,035 23,247 72,850 30,701 312,833 Interest expense (income), net 19,746 5,752 3,358 (8) 28,848 Equity in earnings (losses) of affiliates, net 2,389 - - - 2,389 Other income (expense), net 24,439 2,048 1,745 (3,489) 24,743 Income (loss) before income taxes from continuing operations$ 69,631 $
21,999
- (822) - - (822) Non-GAAP Income (loss) before income taxes attributable to the Company from continuing operations$ 69,631 $ 22,821 $ 26,686 $ (34,182) $ 84,956 The Andersons, Inc. | Q3 2022 Form 10-Q | 31
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Trade
While operating results for the Trade segment were consistent year over year, prior year results include a large one-time gain from the sale of a grain asset that did not reoccur. Sales and merchandising revenues increased by$2,900.5 million and cost of sales and merchandising revenues increased by$2,855.1 million for an increased gross profit impact of$45.4 million . The increase to sales and merchandising revenues and cost of sales and merchandising revenues is mainly a result of new merchandising locations opened in the second half of 2021 as these new locations are responsible for approximately 60% of the increase from the prior year with the remainder of the increase a result of increased commodity prices and volumes in the existing business. The$45.4 million increase in gross profit was an even split between increases in both margins and volumes. The improved margins were driven by strong elevation margins and well-positioned animal feed ingredients and organic food and specialty inventories with the volume increases from our new merchandising locations opened in the second half of 2021. Operating, administrative and general expenses increased by$9.8 million . The increase from the prior year is primarily related to approximately$12.2 million of higher labor and benefits costs, with about half from business growth and half from wage inflation. Interest expense increased by$12.5 million due to higher borrowings with the addition of our new merchandising locations and increased commodity prices that are reflected in the short-term debt within the Company's Condensed Consolidated Balance Sheets along with rising interest rates on the Company's short-term line of credit compared to the prior year. Equity in earnings of affiliates decreased by$8.0 million mainly due to the results of one of the Company's equity method investments being$8.4 million more favorable in the prior year. Included in this decrease was an impairment of$4.5 million in 2022. Other income, net decreased by$16.7 million from the same period of 2021. The decrease was primarily attributable to the sale of a grain asset inChampaign, Illinois in which the Company recorded a$14.6 million gain in the prior year that did not reoccur in 2022.
Renewables
Operating results for Renewables increased by$37.0 million from the same period last year. Sales and merchandising revenues increased by$706.6 million and cost of sales and merchandising revenues increased by$655.8 million compared to prior year. As a result, gross profit increased by$50.8 million compared to prior year. The vast majority of the increase to sales and merchandising revenues and cost of sales and merchandising revenues is the result of increased ethanol and corn commodity prices as ethanol volumes sold were consistent between the current year and prior year. An improvement of gross profit from the ethanol plants of$41.6 million with favorable realized crush margins and higher corn oil volumes being the main drivers of the increase from the prior year. Also contributing to the increased gross profit was an improvement of unrealized mark-to-market adjustments of approximately$5.8 million from the prior year. Other income increased by$17.7 million and almost all of the increase from the prior year was a result of$17.6 million in proceeds received as a part of the USDA Biofuel Producer Relief Program that was enacted as a part of the CARES Act, of which approximately$8.8 million of these proceeds were attributable to the noncontrolling interest. Plant Nutrient Operating results for the Plant Nutrient segment increased by$10.8 million compared to the same period in the prior year. Sales and merchandising revenues increased$211.5 million and cost of sales and merchandising revenues increased by$192.2 million resulting in increased gross profit of$19.3 million . The increase in sales and merchandising revenues and cost of sales and merchandising revenues was due to fertilizer prices more than doubling from the prior year. This increase in fertilizer prices from the same period of prior year was partially offset by a decrease in demand as volumes sold decreased by approximately 30%. Gross profit improved year-over-year due to increased margins on well-positioned inventory from the prior year representing a$46.2 million difference that was partially offset by a$27.3 million decrease in sales volumes. Ag Supply Chain led the way in 2022 with a$16.2 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 by$7.5 million from the prior year. Most of this increase is due to inflationary pressures, with labor costs being the single biggest driver.The Andersons, Inc. | Q3 2022 Form 10-Q | 32 -------------------------------------------------------------------------------- Table of Contents Interest expense increased by$1.9 million due to higher net working capital usage from higher commodity prices along with the rising interest rates.
Other
Results improved by
Income Taxes
For the nine months endedSeptember 30, 2022 , the Company recorded income tax expense from continuing operations of$29.7 million . The Company's effective tax rate was 18.2% on income before taxes from continuing operations of$163.5 million . The difference between the 18.2% effective tax rate and theU.S. federal statutory tax rate of 21% is primarily attributable to the tax impact of non-controlling interest as well as certain discrete derivatives and hedging activities offset by state and local income taxes and nondeductible compensation. For the nine months endedSeptember 30, 2021 , the Company recorded income tax expense from continuing operations of$18.1 million . The Company's effective tax rate was 21.5% on income from continuing operations of$84.1 million . The effective tax rate differs from theU.S. federal statutory tax rate of 21% due to the tax impact of state and local taxes and nondeductible compensation offset by non-controlling interest and certain discrete derivatives and hedging activities.
Liquidity and Capital Resources
Working Capital
AtSeptember 30, 2022 , the Company had working capital from continuing operations of$944.7 million , an increase of$182.6 million from the prior year. This increase was attributable to changes in the following components of current assets from continuing operations and current liabilities from continuing operations: September 30, September 30, (in thousands) 2022 2021 Variance Current Assets from Continuing Operations: Cash and cash equivalents$ 140,771 $ 216,874 $ (76,103) Accounts receivable, net 990,531 735,349 255,182 Inventories 1,556,426 1,017,804 538,622 Commodity derivative assets - current 502,097 409,647 92,450 Other current assets 75,402 92,159 (16,757) Total current assets from continuing operations$ 3,265,227 $ 2,471,833 $ 793,394 Current Liabilities from Continuing Operations: Short-term debt 652,947 281,199 371,748 Trade and other payables 930,027 825,923 104,104 Customer prepayments and deferred revenue 258,828 147,225 111,603 Commodity derivative liabilities - current 137,168 78,702 58,466 Current maturities of long-term debt 112,029 106,255 5,774 Accrued taxes 23,439 97,215 (73,776) Accrued expenses and other current liabilities 206,069 173,215 32,854
Total current liabilities from continuing operations
$ 944,720
Current assets from continuing operations as ofSeptember 30, 2022 increased$793.4 million in comparison to those as ofSeptember 30, 2021 . This increase was noted mainly in accounts receivable, inventories and current commodity derivative assets. The increases in those accounts can largely be attributed to the significant increases in the prices of agricultural commodities, including fertilizer, that the Company transacts in the ordinary course of business from the same period of theThe Andersons, Inc. | Q3 2022 Form 10-Q | 33
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prior year. The Company also opened new merchandising offices in the second half of the prior year which is contributing to the increase in working capital as there is a substantial volume of commodities held in that business in 2022. Current liabilities from continuing operations increased$610.8 million across all financial statement line items when compared to the prior year. The increase was driven by short-term debt, trade and other payables, customer prepayments and deferred revenue, and current commodity derivative liabilities. These accounts were driven higher from the prior year as a result of higher working capital needs from the significant increase in agricultural commodity prices and the opening of the new merchandising offices in the second half of prior year. Sources and Uses of Cash Nine Months Ended September 30, September 30, (in thousands) 2022 2021 Net cash (used in) provided by operating activities$ (153,370) $ 119,067 Net cash provided by investing activities 2,919 519,523 Net cash provided by (used in) financing activities 75,489 (450,647) Operating Activities Our operating activities used cash of$153.4 million and provided cash of$119.1 million in the first nine months of 2022 and 2021, respectively. The increase in cash used was primarily due to the increased working capital needs, as discussed above, driven by significant increases in agricultural commodity prices and the new merchandising locations that were opened in the second half of 2021. When the changes in operating assets and liabilities are removed, cash provided by operating activities was slightly lower than prior year due to the timing of tax refunds and credits in the first quarter of 2021.
Investing Activities
Investing activities provided cash of$2.9 million through the first nine months of 2022 compared to cash provided of$519.5 million in the prior period. The decrease from the prior period was a result of the sale of theRail Leasing business that provided cash of$543 million in the prior year which was partially offset by$56 million in proceeds associated to the sale of the Rail Repair business in the current year. The Company has now sold substantially all of the remaining pieces of its legacy Rail segment.
Purchases of property, plant and equipment were approximately
Financing Activities
Financing activities provided cash of$75.5 million and used cash of$450.6 million for the nine months endedSeptember 30, 2022 and 2021, respectively. This increase from the prior year was due to the significant increase in agricultural commodity prices from the prior period and the related need for short-term borrowings. The Company's short-term debt balance of$652.9 million is highly correlated to the balance of readily marketable inventories of$1,167.0 million as ofSeptember 30, 2022 . The Company is party to borrowing arrangements with a syndicate of banks that provide a total of$1,978.6 million in borrowing capacity. Of the total capacity,$328.6 million is non-recourse to the Company. As ofSeptember 30, 2022 , the Company had$1,302.6 million available for borrowing with$230.4 million of that total being non-recourse to the Company. The Company paid$18.3 million in dividends in the first nine months of 2022 compared to$17.5 million in the prior period. The Company paid dividends of$0.180 and$0.175 per common share in January, April and September of 2022 and 2021, respectively. OnAugust 19, 2022 , the Company declared a cash dividend of$0.180 per common share payable onOctober 21, 2022 to shareholders of record onOctober 3, 2022 . 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. The Company has concluded that in relation to the$65.2 million non-recourse credit agreement associated with the ELEMENT operations, it was out of compliance regarding the minimum working capital covenant as ofAugust 31, 2022 , and is virtually certain to be out of compliance for an owner's equity ratio covenant within the next 12 months. As these covenants have yet to be cured or waived, the Company classified the total$65.2 million of non-recourse debt under the ELEMENT credit agreement as a current maturity of long-term debt as ofSeptember 30, 2022 . The Company is in compliance with all other covenants as ofSeptember 30, 2022 . In addition, certain of our long-term borrowingsThe Andersons, Inc. | Q3 2022 Form 10-Q | 34 -------------------------------------------------------------------------------- Table of Contents are collateralized by first mortgages on various facilities. Our non-recourse long-term debt is collateralized by ethanol plant assets. Because the Company is a significant borrower of short-term debt in peak seasons and the majority of this is variable rate debt, increases in interest rates could have a significant impact on our profitability. In addition, periods of high grain prices and/or unfavorable market conditions could require us to make additional margin deposits on our exchange traded futures contracts. Conversely, in periods of declining prices, the Company could receive a return of cash.
Management believes our sources of liquidity will be adequate to fund our operations, capital expenditures and service our indebtedness.
At
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