Andersons, Inc.

Previous wording

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Such factors include, but are not limited to, the effects of economic, weather and agricultural conditions, regulatory conditions, competition globally and in the markets the Company serves, geopolitical risk, fluctuations in cost and availability of commodities, the effectiveness of the Company's internal control over financial reporting and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors. The reader is urged to carefully consider these risks and others, including those risk factors listed under Item 1A of the 2025 Form 10-K. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, management cannot guarantee future results, levels of activity, performance or achievements.

Current wording

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Such factors include, but are not limited to, the effects of economic, weather and agricultural conditions, regulatory conditions, competition globally and in the markets the Company serves, geopolitical risk, fluctuations in cost and availability of commodities, the effectiveness of the Company's internal control over financial reporting and the unpredictability of existing and possible future litigation. With respect to the pending acquisition of Harvestone Low Carbon Partners, such factors also include, but are not limited to, our ability to satisfy regulatory and other closing conditions, market conditions impacting our expected debt financing and other uncertainties about the timing and impacts of the acquisition. 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 2025 Form 10-K. In some cases, the reader can identify forward-looking statements by terminology such as may, anticipates, believes, estimates, predicts, or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although management believes that the expectations reflected in the forward-looking statements are reasonable, management cannot guarantee future results, levels of activity, performance or achievements.

Previous wording

The critical accounting policies and critical accounting estimates, as described in the 2025 Form 10-K, have not materially changed through the second quarter of 2026.

Current wording

The critical accounting policies and critical accounting estimates, as described in the 2025 Form 10-K, have not materially changed through the third quarter of 2026.

Previous wording

Total Agribusiness grain storage capacity at company-owned or leased grain facilities, including temporary pile storage, was approximately 266 million and 278 million bushels at June 30, 2026 and 2025, respectively. The storage capacity at our nutrient facilities was evenly split between dry and liquid storage with a total capacity of approximately one million tons at June 30, 2026 and 2025.

Current wording

Total Agribusiness grain storage capacity at company-owned or leased grain facilities, including temporary pile storage, was approximately 271 million and 275 million bushels at September 30, 2026 and 2025, respectively. The storage capacity at our nutrient facilities was evenly split between dry and liquid storage with a total capacity of approximately one million tons at September 30, 2026 and 2025.

Previous wording

Ethanol market fundamentals remain supportive as we anticipate continued strong demand, driven by increasing global blend rates and favorable domestic blending economics. Renewable feedstocks are also expected to benefit from healthy bio-based diesel demand and supportive renewable fuel markets.

Current wording

Ethanol market fundamentals remain supportive on anticipated continued strong demand, particularly for low carbon intensity ethanol, driven by increasing global blend rates and favorable domestic blending economics. Renewable feedstocks are expected to benefit from healthy bio-based diesel demand and supportive renewable fuel markets.

Previous wording

Operating results for the Agribusiness segment increased from the same period of the prior year. Sales and merchandising revenues decreased by $301.7 million and cost of sales and merchandising revenues decreased by $316.5 million resulting in increased gross profit of $14.7 million. The majority of the decreases in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to the Company's ongoing portfolio optimization efforts, including actions taken to reduce its participation in underperforming merchandising businesses. Gross profit increased $14.7 million compared to the prior year period, primarily due to a $9.8 million improvement in the Company's merchandising businesses, driven by higher commodity prices and favorable market volatility early in the quarter. Additionally, recent growth investments contributed positively to gross profit, while ongoing portfolio optimization efforts improved overall profitability. These benefits were partially offset by higher fuel surcharge costs. The year-over-year increase also reflects modest improvements in gross profit across the remainder of the Company's business portfolio.

Current wording

Operating results for the Agribusiness segment increased by $5.8 million compared to the same quarter of the prior year. Sales and merchandising revenues decreased by $140.0 million and cost of sales and merchandising revenues decreased by $150.0 million resulting in increased gross profit of $9.9 million. The majority of the decreases in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to the Company's ongoing portfolio optimization efforts, including actions taken to reduce its participation in underperforming merchandising businesses. Gross profit increased compared to the prior year period, primarily due to a $14.3 million improvement in the Company's merchandising businesses, driven by higher commodity prices and market volatility early in the quarter. Additionally, recent growth investments contributed positively to gross profit, while ongoing portfolio optimization efforts improved overall profitability. These benefits were partially offset by a slight reduction in the Company's asset businesses, reflecting a late start to the eastern harvest and lower wheat storage income.

Previous wording

Other income, net decreased by $4.1 million, primarily reflecting a $4.5 million reduction in property insurance recoveries recognized in the current quarter.

Current wording

Other income, net decreased by $16.6 million, primarily reflecting $12.4 million less property insurance recoveries recognized compared to the prior period.

Previous wording

Operating results for the Renewables segment increased by $55.3 million compared to the same quarter of the prior year, primarily reflecting the recognition of clean fuel production credits in the current year and the benefits of full ownership of the ethanol plants. Sales and merchandising revenues increased by $263.5 million, while related cost of sales and merchandising revenues increased by $212.9 million, resulting in a $50.6 million increase in gross profit year-over-year. Substantially all of the increases in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to higher volumes and commodity values within the Renewables segment's renewable feedstocks business. The $50.6 million increase in gross profit for the current period was primarily attributable to a $40.8 million increase in earnings from the Company's ethanol plants, reflecting strong ethanol margins. In addition, the merchandising businesses contributed a $9.0 million increase in gross profit compared to the prior year, benefiting from continued favorable market conditions driven by the final RVO policy and higher RIN values in 2026.

Current wording

Operating results for the Renewables segment increased by $26.0 million compared to the same quarter of the prior year. Sales and merchandising revenues increased by $296.0 million, while related cost of sales and merchandising revenues increased by $294.8 million, resulting in a $1.2 million increase in gross profit year-over-year. Substantially all of the increases in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to higher volumes and commodity values within the renewable feedstocks business. The increase in gross profit was primarily attributable to a $14.7 million increase in earnings from the Company's ethanol plants, reflecting lower corn basis values at the eastern plants and improved co-product sales. This was partially offset by the merchandising businesses declining $13.3 million in gross profit compared to the prior year, largely attributed to the renewable feedstocks business.

Previous wording

Other income, net increased by $23.7 million compared to the prior year, primarily due to $24.2 million of clean fuel production credits recognized in the current year.

Current wording

Other income, net increased by $10.6 million compared to the prior year, primarily due to a $7.1 million increase of clean fuel production credits recognized in the current year.

Previous wording

For the three months ended June 30, 2026, the Company recorded an income tax expense of $13.4 million. The Company's effective tax rate was 19.9% on income before taxes of $67.3 million. The difference between the 19.9% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to nontaxable clean fuel production credits offset by state and local taxes, nondeductible compensation, valuation allowances on losses in foreign tax jurisdictions, and other taxes.

Current wording

For the three months ended September 30, 2025, the Company recorded an income tax benefit of $0.2 million. The Company's effective tax rate was (0.9)% on income before taxes of $25.8 million. The difference between the (0.9)% effective tax rate and the U.S. federal statutory tax rate of 21.0% was primarily attributable to nontaxable clean fuel production credits and the reversal of certain unrecognized tax benefits, offset by state and local taxes, nondeductible compensation, and valuation allowances on losses in foreign tax jurisdictions.

Previous wording

Comparison of the six months ended June 30, 2026, with the six months ended June 30, 2025, including a reconciliation of GAAP to non-GAAP measures:

Current wording

Comparison of the nine months ended September 30, 2026, with the nine months ended September 30, 2025, including a reconciliation of GAAP to non-GAAP measures:

Previous wording

Operating results for the Agribusiness segment increased by $21.2 million from the prior year. Sales and merchandising revenues decreased by $375.1 million, and cost of sales and merchandising revenues decreased by $405.1 million for an increased gross profit impact of $30.0 million. The majority of the decrease in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to the Company's ongoing portfolio optimization efforts, including actions taken to reduce its participation in underperforming merchandising businesses. The $30.0 million improvement in gross profit from the prior year was primarily driven by a $21.1 million improvement in the Company's merchandising businesses, reflecting favorable market conditions, the benefits of recent capital investments, and the continued optimization of the Company's merchandising portfolio. Also contributing to the increase was a $6.7 million improvement in the Nutrient business, driven by stronger margins.

Current wording

Operating results for the Agribusiness segment increased by $27.0 million from the prior year. Sales and merchandising revenues decreased by $515.1 million, and cost of sales and merchandising revenues decreased by $555.0 million for an increased gross profit impact of $40.0 million. The majority of the decrease in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to the Company's ongoing portfolio optimization efforts, including actions taken to reduce its participation in underperforming merchandising businesses. The improvement in gross profit was primarily driven by a $27.4 million improvement in the Company's merchandising businesses, reflecting favorable market conditions, the benefits of recent capital investments, and the continued optimization of the Company's merchandising portfolio. Also contributing to the increase was a $7.1 million improvement in the Nutrient business, driven by stronger margins.

Previous wording

Interest expense increased by $2.9 million, due to increased borrowings on the Company's revolving credit facility.

Current wording

Interest expense increased by $4.9 million, due to increased borrowings on the Company's revolving credit facility.

Previous wording

Other income, net decreased by $3.7 million, primarily reflecting a $5.5 million reduction in property insurance recoveries recognized in the current quarter.

Current wording

Other income, net decreased by $20.7 million, primarily reflecting $16.9 million less in property insurance recoveries recognized compared to the prior year.

Previous wording

The Renewables segment's operating results improved $79.6 million compared to the second quarter of the prior year, primarily reflecting strong ethanol margins, the recognition of clean fuel production credits in the current year, the benefits of full ownership of the ethanol plants. Substantially all of the increases in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to higher volumes and commodity values within the Renewables segment's renewable feedstocks business. Gross profit increased by $43.0 million, primarily due to a $27.9 million improvement at the ethanol plants, reflecting strong ethanol margins. In addition, the merchandising businesses contributed a $15.0 million increase in gross profit compared to the prior year, benefiting from continued favorable market conditions driven by the final RVO policy and higher RIN values in 2026.

Current wording

The Renewables segment's operating results improved $105.7 million compared to the prior year. Sales and merchandising revenues increased by $601.0 million, while related cost of sales and merchandising revenues increased by $556.8 million, resulting in a $44.2 million increase in gross profit year-over year. Substantially all of the increases in sales and merchandising revenues and the related cost of sales and merchandising revenues were attributable to higher volumes and commodity values within the renewable feedstocks business. The increase in gross profit was primarily due to a $42.7 million improvement at the ethanol plants on higher board crush and co-product sales.

Previous wording

Operating, administrative and general expenses increased by $25.1 million, primarily due to a $10.6 million impairment charge related to capitalized engineering and design costs, $11.6 million of additional litigation expenses associated with the receivership of a former consolidated subsidiary, and a $2.5 million increase in incentives driven by the Company's strong operating performance.

Current wording

Operating, administrative and general expenses increased by $17.3 million, primarily due to a $10.6 million impairment charge related to capitalized engineering and design costs, and $11.0 million of additional litigation expenses associated with the receivership of a former consolidated subsidiary.

Previous wording

Results declined by $6.0 million, primarily due to increased incentive costs driven by improved Renewables results along with a $1.5 million impairment charge on a cost method investment.

Current wording

Results declined by $5.6 million, primarily due to increased incentive costs driven by improved results in the current year.

Previous wording

For the six months ended June 30, 2026, the Company recorded an income tax expense of $17.9 million. The Company's effective tax rate was 17.7% on income before taxes of $101.2 million. The difference between the 17.7% effective tax rate and the U.S. federal statutory rate of 21.0% is primarily attributable to nontaxable clean fuel production credits offset by state and local taxes, nondeductible compensation, valuation allowances on losses in foreign tax jurisdictions, and other taxes.

Current wording

For the nine months ended September 30, 2026, the Company recorded an income tax expense of $24.7 million. The Company's effective tax rate was 16.3% on income before taxes of $151.9 million. The difference between the 16.3% effective tax rate and the U.S. federal statutory rate of 21.0% is primarily attributable to nontaxable clean fuel production credits offset by the tax impact of noncontrolling interest, nondeductible compensation, state and local income taxes, valuation allowances on losses in foreign tax jurisdictions, and other taxes.

Previous wording

For the six months ended June 30, 2025, the Company recorded income tax expense of $5.9 million. The Company’s effective tax rate was 21.1% on income before income taxes of $28.0 million. The 21.1% effective tax rate was consistent with the U.S. federal statutory tax rate of 21.0% as state and local income taxes and valuation allowances on losses in foreign tax jurisdictions offset the tax impact of noncontrolling interest.

Current wording

For the nine months ended September 30, 2025, the Company recorded income tax expense of $5.7 million. The Company’s effective tax rate was 10.5% on income before income taxes of $53.9 million. The difference between the 10.5% effective tax rate and the U.S. federal statutory tax rate is primarily attributable to the tax impact of noncontrolling interest, nontaxable clean fuel production credits and the reversal of certain unrecognized tax benefits, offset by state and local taxes, nondeductible compensation, and valuation allowances on losses in foreign tax jurisdictions.

Previous wording

The Company and its subsidiary partnership returns are under U.S. federal and certain state tax examinations for tax years 2018 through 2024. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015. The U.S. federal, state, and Mexican tax authorities’ examinations could potentially be resolved within the next 12 months. The resolution of ongoing examinations and the expiration of applicable statutes of limitations could change our unrecognized tax benefits and favorably impact income tax expense by a range of zero to $10.2 million.

Current wording

The Company and its subsidiary partnership returns are under U.S. federal and certain state tax examinations for tax years 2018 through 2024. The Company’s subsidiary is under federal tax examination by the Mexican tax authorities for tax year 2015. The U.S. federal, state, and Mexican tax authorities' examinations could potentially be resolved within the next 12 months. The resolution of ongoing examinations and the expiration of applicable statutes of limitations could change our unrecognized tax benefits and favorably impact income tax expense by a range of zero to $9.5 million.

Previous wording

On December 20, 2021, the Organization for Economic Co-operation and Development ("OECD") issued Pillar Two model rules introducing a global minimum tax of 15% on large corporations. Although the U.S. has not adopted the Pillar Two model rules, several foreign countries have enacted legislation which closely follows OECD’s Pillar Two guidance. Additional OECD guidance issued on January 5, 2026 introduced a "side-by-side" framework which provides relief from certain Pillar Two charging provisions for eligible U.S.-parented multinational groups while keeping foreign country minimum tax regimes in place. Future enactment of the OECD's "side-by-side" framework by our relevant jurisdictions is expected to reduce the Company's exposure to UTPR-related taxes. The impact of other Pillar Two related taxes is not expected to materially impact the Company's effective tax rate.

Current wording

On December 20, 2021, the Organization for Economic Co-operation and Development ("OECD") issued Pillar Two model rules introducing a global minimum tax of 15% on large corporations. Although the U.S. has not adopted the Pillar Two model rules, several foreign countries have enacted legislation which closely follows OECD’s Pillar Two guidance. Additional OECD guidance issued on January 5, 2026 introduced a "side-by-side" framework which provides relief from certain Pillar Two charging provisions for eligible U.S.-parented multinational groups while keeping foreign country minimum tax regimes in place. Future enactment of the OECD's "side-by-side" framework by our relevant jurisdictions is expected to reduce the Company's exposure to UTPR-related taxes. The impact of other Pillar Two related taxes is expected to be immaterial to the Company's effective tax rate.

Previous wording

On July 4, 2025, the U.S. passed the OBBBA, which modified the existing international tax framework and permanently extended select provisions of the Tax Cuts and Jobs Act. This legislation is not expected to materially affect the Company's effective tax rate for 2026, with the exception of clean fuel production credits. Changes in the calculation of the carbon intensity score may significantly affect credits, recorded as Other income, resulting in a favorable impact on the effective tax rate through 2029.

Current wording

On July 4, 2025, the U.S. passed the One Big Beautiful Bill Act ("OBBBA"), which modified the existing international tax framework and permanently extended select provisions of the Tax Cuts and Jobs Act. This legislation is not expected to materially affect the Company's effective tax rate for 2026, with the exception of clean fuel production credits. Changes in the calculation of the carbon intensity score may significantly affect credits, recorded as Other income, resulting in a favorable impact on the effective tax rate through 2029.

Previous wording

At June 30, 2026, the Company had working capital of $702.7 million, a decrease of $392.1 million from the prior year. This decrease was attributable to changes in the following components of current assets and current liabilities:

Current wording

At September 30, 2026, the Company had working capital of $707.4 million, an increase of $76.7 million from the prior year. This increase was attributable to changes in the following components of current assets and current liabilities:

Previous wording

Current liabilities increased $298.5 million year over year, primarily driven by $209.9 million of additional borrowings under the Company's revolving credit facilities, reflecting lower cash balances than the prior year following the TAMH transaction and increased market volatility in 2026.

Current wording

Current liabilities increased $328.5 million year over year, primarily driven by $353.8 million of additional borrowings under the Company's revolving credit facilities, reflecting higher commodity prices and increased market volatility in 2026.

Previous wording

Operating activities provided $94.2 million of cash during the first six months of 2026, compared to $50.7 million of cash used in the same period of 2025. The $144.9 million year-over-year increase in cash provided was attributable to a $63.7 million favorable shift in operating assets and liabilities through normal business operations, a $61.1 million improvement to earnings in the current year, and the impact of $15.7 million of noncash impairment charges recognized in the current year.

Current wording

Operating activities used $30.0 million of cash during the first nine months of 2026, compared to $183.2 million of cash provided in the same period of 2025. The $213.2 million year-over-year decrease in cash provided was attributable to a $309.4 million unfavorable shift in operating assets and liabilities through normal business operations, a $78.9 million improvement to earnings in the current year, and the impact of $15.7 million of noncash impairment charges recognized in the current year. Cash generation excluding working capital changes has improved with strong performance in both segments.

Previous wording

Investing activities used $123.3 million of cash during the first six months of 2026, up from $75.7 million in the prior year. The $47.6 million increase was primarily attributable to $31.9 million in higher capital expenditures related to previously announced growth initiatives along with $12.9 million of additional property insurance proceeds received in the prior year. Management expects to invest approximately $225 million in property, plant, and equipment in 2026; roughly split 50% between growth and maintenance capital.

Current wording

Investing activities used $171.0 million of cash during the first nine months of 2026, up from $127.3 million in the prior year. The $43.7 million increase was primarily attributable to $24.6 million in higher capital expenditures related to previously announced growth initiatives along with $18.4 million of additional property insurance proceeds received in the prior year. Management expects to invest approximately $225 million in property, plant, and equipment in 2026; roughly split 50% between growth and maintenance capital.

Previous wording

Financing activities used $2.2 million of cash during the six months ended June 30, 2026, compared to $87.0 million for the same period in 2025. The $84.8 million year-over-year reduction was primarily driven by 130.3 million of additional borrowings on the Company's short-term lines of credit. This was partially offset by additional net payments of long-term debt of $34.8 million from the prior year.

Current wording

Financing activities provided $161.5 million of cash during the nine months ended September 30, 2026, compared to $538.0 million used for the same period in 2025. The $699.5 million year-over-year increase was primarily driven by the $425.0 million cash outlay to purchase the remaining noncontrolling interest in TAMH in the prior year, as well as $274.4 million of additional borrowings on the Company's short-term lines of credit in the current year.

Previous wording

The Company paid $13.6 million in dividends in the first six months of 2026 compared to $13.4 million paid in the prior period. The Company paid dividends of $0.20 and $0.195 per common share in January and April of 2026 and 2025, respectively. On June 18, 2026, the Company declared a cash dividend of $0.20 per common share, payable on July 22, 2026, to shareholders of record on July 1, 2026.

Current wording

The Company paid $20.4 million in dividends in the first nine months of 2026 compared to $19.9 million paid in the prior period. The Company paid dividends of $0.20 and $0.195 per common share in January, April and July of 2026 and 2025, respectively. On August 20, 2026, the Company declared a cash dividend of $0.20 per common share, payable on October 22, 2026, to shareholders of record on October 1, 2026.

Previous wording

The Company believes it has sufficient liquidity to meet its operating needs, capital expenditures, and debt service requirements. As of June 30, 2026, the Company had consolidated cash and cash equivalents of $66.5 million and total long-term debt of $586.4 million, with $22.9 million payable within the next twelve months.

Current wording

The Company believes it has sufficient liquidity to meet its operating needs, capital expenditures, and debt service requirements. As of September 30, 2026, the Company had consolidated cash and cash equivalents of $58.3 million and total long-term debt of $590.5 million, with $22.6 million payable within the next twelve months.

Previous wording

The Company's is also party to borrowing arrangements with a syndicate of banks that provide a total borrowing capacity of $1,799.2 million. As of June 30, 2026, the Company had $314.4 million of short-term debt on these borrowing arrangements and $1,481.9 million capacity available for borrowing. A significant portion of the Company's short-term borrowings support grain inventories and other working capital assets that are considered RMIs and are readily convertible to cash through normal merchandising and processing activities. Accordingly, management evaluates liquidity in conjunction with the value of these inventories, available borrowing capacity, and expected operating cash flows, rather than based solely on outstanding debt balances. As of June 30, 2026, the Company had $646.1 million of RMI which exceeded the Company's outstanding short-term debt balances.

Current wording

The Company is also party to borrowing arrangements with a syndicate of banks that provide a total borrowing capacity of $1,798.7 million. As of September 30, 2026, the Company had $495.2 million of short-term debt on these borrowing arrangements and $1,300.6 million capacity available for borrowing. A significant portion of the Company's short-term borrowings support grain inventories and other working capital assets that are considered RMIs and are readily convertible to cash through normal merchandising and processing activities. Accordingly, management evaluates liquidity in conjunction with the value of these inventories, available borrowing capacity, and expected operating cash flows, rather than based solely on outstanding debt balances. As of September 30, 2026, the Company had $903.2 million of RMI which exceeded the Company's outstanding short-term debt balances.

Previous wording

The Company is typically in a net short-term borrowing position during the first half of the year due to the seasonal nature of its agricultural merchandising and trading activities. Short-term borrowings are primarily used to finance grain inventory purchases and other working capital assets that are expected to be converted to cash in the ordinary course of business. As commodity prices increase, the value of these inventories and related financing requirements generally increase, which may result in higher short-term borrowings and additional margin deposit requirements on exchange-traded futures contracts. Conversely, periods of declining commodity prices or inventory turnover generally release working capital and margin deposits, providing a source of liquidity that may be used to reduce outstanding borrowings. Because a substantial portion of these borrowings bear interest at variable rates, increases in interest rates could have a significant impact on the Company's profitability.

Current wording

The Company is typically in a net short-term borrowing position due to the nature of its agricultural merchandising and trading activities, and will fluctuate with seasonality and market conditions during the year. Short-term borrowings are primarily used to finance grain inventory purchases and other working capital assets that are expected to be converted to cash in the ordinary course of business. As commodity prices increase, the value of these inventories and related financing requirements generally increase, which may result in higher short-term borrowings and additional margin deposit requirements on exchange-traded futures contracts. Conversely, periods of declining commodity prices or inventory turnover generally release working capital and margin deposits, providing a source of liquidity that may be used to reduce outstanding borrowings. Because a substantial portion of these borrowings bear interest at variable rates, increases in interest rates could have a significant impact on the Company's profitability.

Previous wording

The Company's debt structure includes both recourse indebtedness at the parent and certain subsidiaries and non-recourse indebtedness at a consolidated subsidiary. Obligations under the non-recourse debt agreements are limited to the assets and operations of Skyland, a 65% owned and consolidated subsidiary, along with a separate facility under the Company's wholly owned Canadian subsidiary, and are not guaranteed by the parent company.

Current wording

The Company's debt structure includes both recourse indebtedness at the parent and certain subsidiaries and non-recourse indebtedness at a consolidated subsidiary. Obligations under the non-recourse debt agreements are limited to the assets and operations of Skyland, a 68% owned and consolidated subsidiary, along with a separate facility under the Company's wholly owned Canadian subsidiary, and are not guaranteed by the parent company.

Previous wording

As of June 30, 2026, the Company had $1,152.7 million recourse capacity available for borrowing under its various credit facilities and was in compliance with all financial covenants. The Company does not expect any challenges in complying with the covenant requirements of its recourse debt agreements during the next twelve months. Certain recourse long-term borrowings are collateralized by mortgages on various facilities.

Current wording

As of September 30, 2026, the Company had $962.3 million recourse capacity available for borrowing under its various credit facilities and was in compliance with all financial covenants. The Company does not expect any challenges in complying with the covenant requirements of its recourse debt agreements during the next twelve months. Certain recourse long-term borrowings are collateralized by mortgages on various facilities.

Previous wording

Skyland maintains a non-recourse credit facility that is secured by substantially all of the assets of the subsidiary. As of June 30, 2026, Skyland had approximately $149.3 million of short-term borrowings and $81.4 million of term debt outstanding, including $9.0 million classified as current maturities of long-term debt.

Current wording

Skyland maintains a non-recourse credit facility that is secured by substantially all of the assets of the subsidiary. As of September 30, 2026, Skyland had approximately $114.5 million of short-term borrowings and $88.9 million of term debt outstanding, including $8.6 million classified as current maturities of long-term debt.

Previous wording

During the second quarter of 2026, Skyland and its lenders executed an amendment to its credit facilities that modified certain financial covenant requirements and increased available liquidity through an additional $10.0 million term loan commitment. As amended, Skyland had approximately $165.8 million of remaining borrowing availability under its credit facilities as of June 30, 2026.

Current wording

During the second quarter of 2026, Skyland and its lenders executed an amendment to its credit facilities that modified certain financial covenant requirements and increased available liquidity through an additional $10.0 million term loan commitment. The additional term loan was funded on August 3, 2026. As of September 30, 2026, Skyland had approximately $200.5 million of remaining borrowing availability under its credit facilities and was in compliance with all financial covenants.

Previous wording

The Company's Canadian subsidiary also maintains a non-recourse revolving credit facility that is secured by substantially all of the assets of the subsidiary. As of June 30, 2026, this subsidiary had approximately $5.7 million of short-term borrowings outstanding and $163.5 million available for borrowing. The Company's Canadian subsidiary was in compliance with all its financial covenants as of June 30, 2026.

Current wording

The Company's Canadian subsidiary also maintains a non-recourse revolving credit facility that is secured by substantially all of the assets of the subsidiary. As of September 30, 2026, this subsidiary had approximately $30.9 million of short-term borrowings outstanding and $137.8 million available for borrowing. The Company's Canadian subsidiary was in compliance with all its financial covenants as of September 30, 2026.