Andersons, Inc.ANDE
Andersons, Inc. Income Taxes Disclosure
Income Taxes
The income tax provision consists of the following:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 18,072 | $ | 21,081 | $ | 30,274 | |||||||||||
| State and local | 8,521 | 7,568 | 5,852 | ||||||||||||||
| Foreign | 4,235 | 4,780 | 2,869 | ||||||||||||||
| 30,828 | 33,429 | 38,995 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (3,180) | (4,028) | (1,012) | ||||||||||||||
| State and local | (5,084) | (202) | 1,252 | ||||||||||||||
| Foreign | (396) | 858 | (2,201) | ||||||||||||||
| (8,660) | (3,372) | (1,961) | |||||||||||||||
| Total: | |||||||||||||||||
| Federal | 14,892 | 17,053 | 29,262 | ||||||||||||||
| State and local | 3,437 | 7,366 | 7,104 | ||||||||||||||
| Foreign | 3,839 | 5,638 | 668 | ||||||||||||||
| $ | 22,168 | $ | 30,057 | $ | 37,034 | ||||||||||||
Income before income taxes consists of the following:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. | $ | 138,469 | $ | 199,950 | $ | 161,377 | |||||||||||
| Foreign | 3,000 | 807 | 8,186 | ||||||||||||||
| $ | 141,469 | $ | 200,757 | $ | 169,563 | ||||||||||||
A reconciliation from the statutory U.S. federal tax rate to the effective tax rate follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Statutory U.S. federal tax rate | $ | 29,706 | 21.0% | $ | 42,159 | 21.0% | $ | 35,608 | 21.0% | |||||||||||||||||
State and local income taxes, net of related federal taxes (1) | 1,728 | 1.2 | 6,231 | 3.1 | 2,149 | 1.3 | ||||||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||
| Switzerland | ||||||||||||||||||||||||||
| Changes in valuation allowance | 1,919 | 1.4 | 1,005 | 0.5 | — | — | ||||||||||||||||||||
| Other | 253 | 0.2 | 480 | 0.2 | (876) | (0.5) | ||||||||||||||||||||
| Other foreign jurisdictions | 2,548 | 1.8 | 4,186 | 2.1 | 136 | 0.1 | ||||||||||||||||||||
| Effect of cross-border tax laws | 580 | 0.4 | (501) | (0.2) | (784) | (0.5) | ||||||||||||||||||||
| Income tax credits: | ||||||||||||||||||||||||||
| Energy credits | — | — | (10,906) | (5.4) | — | — | ||||||||||||||||||||
| Research and development | — | — | — | — | (1,758) | (1.0) | ||||||||||||||||||||
| Foreign tax credits | (299) | (0.2) | (763) | (0.4) | (1,525) | (0.9) | ||||||||||||||||||||
| Other | — | — | (2,091) | (1.0) | — | — | ||||||||||||||||||||
| Changes in valuation allowance | 213 | 0.2 | 1,197 | 0.6 | 579 | 0.3 | ||||||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
| Effect of noncontrolling interest | (4,989) | (3.5) | (11,932) | (5.9) | (6,650) | (3.9) | ||||||||||||||||||||
| Clean fuel production credits | (7,347) | (5.2) | — | — | — | — | ||||||||||||||||||||
| Nondeductible compensation | 2,484 | 1.8 | 2,476 | 1.2 | 2,585 | 1.5 | ||||||||||||||||||||
| Other | 657 | 0.5 | 40 | — | (423) | (0.2) | ||||||||||||||||||||
| Changes in unrecognized tax benefits | (8,580) | (6.1) | (1,302) | (0.6) | 7,511 | 4.4 | ||||||||||||||||||||
| Interest on tax positions | 2,045 | 1.4 | 864 | 0.4 | — | — | ||||||||||||||||||||
| Other adjustments | 1,250 | 0.8 | (1,086) | (0.6) | 482 | 0.2 | ||||||||||||||||||||
| Effective tax rate | $ | 22,168 | 15.7% | $ | 30,057 | 15.0% | $ | 37,034 | 21.8% | |||||||||||||||||
(1) In 2025, state and local income taxes in California comprise the majority of state and local income taxes, net of federal effect. In 2024, state and local income taxes in Indiana, Kansas, Illinois, and Michigan comprise the majority of state and local income taxes, net of federal effect. In 2023, state and local income taxes in Kansas comprise the majority of state and local income taxes, net of federal effect.
Income taxes paid (net of refunds received) by jurisdiction exceeded five percent of total income taxes paid (net of refunds received) as noted in the following:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| US federal | $ | 7,793 | $ | 20,596 | $ | 27,800 | |||||||||||
| US state and local: | |||||||||||||||||
| Kansas | * | 2,770 | 3,971 | ||||||||||||||
| Other | 2,529 | 4,780 | 8,505 | ||||||||||||||
| 2,529 | 7,550 | 12,476 | |||||||||||||||
| Foreign: | |||||||||||||||||
| Canada | 1,814 | * | * | ||||||||||||||
| Mexico | 950 | * | * | ||||||||||||||
| United Kingdom | 1,385 | * | * | ||||||||||||||
| Other | 1,776 | 3,328 | 5,377 | ||||||||||||||
| 5,925 | 3,328 | 5,377 | |||||||||||||||
| Total: | $ | 16,247 | $ | 31,474 | $ | 45,653 | |||||||||||
*Jurisdiction is below the threshold for the period presented.
TAMH, Skyland, and ELEMENT, for the periods in which the entity was consolidated, are treated as partnerships for U.S. tax purposes. Partnerships are not taxable entities so the tax consequences of the partnership’s transactions flow through to the partners at their proportionate share. As a result, the Consolidated Statements of Operations do not reflect such income taxes within Net income attributable to the noncontrolling interest.
The Company has elected to treat Global Intangible Low Tax Income (“GILTI”) as a period cost and, therefore, has not recognized deferred taxes for basis differences that may reverse as GILTI tax in future years.
For the years ended December 31, 2025, and 2024, the Company has not recognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries that were deemed permanently reinvested. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing and if/when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings.
Significant components of the Company's deferred tax liabilities and assets are as follows:
| December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | $ | (26,677) | $ | (64,934) | |||||||
| Operating lease right-of-use assets | (23,370) | (18,029) | |||||||||
| Investments | (793) | (21,968) | |||||||||
| Derivative instruments | (4,192) | (7,202) | |||||||||
| Other | (5,111) | (5,607) | |||||||||
| (60,143) | (117,740) | ||||||||||
| Deferred tax assets: | |||||||||||
| Employee benefits | 23,250 | 24,346 | |||||||||
| Accounts and notes receivable | 11,931 | 12,289 | |||||||||
| Inventory | 2,892 | 3,166 | |||||||||
| Identifiable intangibles | 3,874 | 655 | |||||||||
| Federal income tax credits | 4,502 | 4,203 | |||||||||
| Net operating loss carryforwards | 5,437 | 1,212 | |||||||||
| Operating lease liability | 23,635 | 17,685 | |||||||||
| Other | 10,216 | 7,402 | |||||||||
| Total deferred tax assets | 85,737 | 70,958 | |||||||||
| Less: valuation allowance | 9,168 | 6,591 | |||||||||
| 76,569 | 64,367 | ||||||||||
| Net deferred tax assets (liabilities) | $ | 16,426 | $ | (53,373) | |||||||
The following table summarizes the amounts recognized in the Company's Consolidated Balance Sheets related to deferred tax assets and liabilities:
| December 31, | ||||||||||||||||||||
| (in thousands) | Consolidated Balance Sheet Classification | 2025 | 2024 | |||||||||||||||||
| Deferred tax assets, net of valuation allowance | Other assets | $ | 30,634 | $ | 1,632 | |||||||||||||||
| Deferred tax liabilities | Other long-term liabilities | (14,208) | (55,005) | |||||||||||||||||
| Net deferred tax assets (liabilities) | $ | 16,426 | $ | (53,373) | ||||||||||||||||
At December 31, 2025, the Company had $48.9 million, $25.4 million, and $118.1 million of U.S. Federal, non-U.S., and state net operating loss carryforwards that for non-U.S. and state purposes begin to expire in 2027 and 2026, respectively. The Company also has $4.5 million of U.S. foreign tax credit ("FTCs") carryforwards that begin to expire in 2026. The valuation allowance of $9.2 million is related to $4.5 million, $3.4 million, and $1.3 million of U.S. federal FTCs, foreign net operating losses, and other U.S. deferred tax assets, respectively.
Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance will be recorded to reduce deferred tax assets if, based on all available evidence, it is considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. In assessing the realizability of our deferred tax assets, we consider positive and negative evidence, including historical operating results, future reversals of existing taxable temporary differences, projected future earnings, and tax planning strategies.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of period | $ | 70,451 | $ | 84,719 | $ | 79,262 | |||||||||||
| Tax positions related to the current year | |||||||||||||||||
| Gross additions | — | — | — | ||||||||||||||
| Tax positions related to prior years | |||||||||||||||||
| Gross additions | 1,843 | — | 6,395 | ||||||||||||||
| Gross reductions | (9,818) | (3,880) | (58) | ||||||||||||||
| Settlements | (21,508) | (9,993) | — | ||||||||||||||
| Lapse in statute of limitations | (79) | — | (619) | ||||||||||||||
| Exchange rate fluctuations | 271 | (395) | (261) | ||||||||||||||
| Balance at end of period | $ | 41,160 | $ | 70,451 | $ | 84,719 | |||||||||||
As of December 31, 2025, 2024 and 2023, if our unrecognized tax benefits were recognized in future periods, they would favorably impact our effective tax rate by $39.3 million, $70.5 million, and $84.7 million, respectively. As of December 31, 2025, unrecognized tax benefits of $41.2 million include $22.9 million associated with the federal and state research & development credits.
The Company’s practice is to recognize interest and penalties on uncertain tax positions in the Income tax provision within the Consolidated Statements of Operations. At December 31, 2025, 2024, and 2023, the Company recorded reserves of $11.7 million, $15.7 million, and $13.0 million, respectively, of interest and penalties on uncertain tax positions in Other long-term liabilities within the Consolidated Balance Sheets.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.