UNITED STATES
______________________
Quarterly Report Pursuant to Section 13 or 15(d) of the
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Green Plains Inc.
Iowa | 84-1652107 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
1811 Aksarben Drive, Omaha, NE 68106 | (402) 884-8700 | ||||
(Address of principal executive offices, including zip code) | (Registrant’s telephone number, including area code) | ||||
Title of each class Common Stock, par value $0.001 per share Large accelerated filer ☒ Smaller reporting company ☐ Green Plains; the company Green Plains Inc. and its subsidiaries FQT Fluid Quip Technologies, LLC Green Plains Commodity Management Green Plains Commodity Management LLC Green Plains Finance Company Green Plains Grain Company LLC Green Plains Mount Vernon; Mount Vernon Green Plains Mount Vernon LLC Green Plains Obion; Obion Green Plains Obion LLC Green Plains Partners; the partnership Green Plains Partners LP Green Plains Shenandoah; Shenandoah Green Plains Shenandoah LLC Green Plains Trade Green Plains Trade Group LLC Green Plains Wood River; Wood River Green Plains Wood River LLC AOCI Accounting Standards Codification EBITDA Earnings before interest, income taxes, depreciation and amortization EPS Earnings per share Exchange Act Securities Exchange Act of 1934, as amended GAAP U.S. Generally Accepted Accounting Principles LIBOR London Interbank Offered Rate SEC Securities and Exchange Commission BlackRock Funds and accounts managed by BlackRock the CARES Act Coronavirus Aid, Relief, and Economic Security Act COVID-19 Coronavirus Disease 2019 CST DOE Department of Energy E10 Gasoline blended with up to 10% ethanol by volume E15 Gasoline blended with up to 15% ethanol by volume EIA U.S. Energy Information Administration EPA U.S. Environmental Protection Agency FFV Flexible-fuel vehicle MmBtu Million British Thermal Units Mmg Million gallons Methyl tertiary-butyl ether Renewable Fuels Standard RIN Renewable identification number RVO Renewable volume obligation SRE Small refinery exemption U.S. United States USDA U.S. Department of Agriculture PART 1 – FINANCIAL INFORMATION September 30, December 31, (unaudited) ASSETS ASSETS Current assets Cash and cash equivalents $ 589,822 $ 233,860 Restricted cash 131,073 40,950 Accounts receivable, net of allowances of $382 and $143, respectively 90,271 55,568 Income taxes receivable 1,732 661 Inventories 243,207 269,491 Prepaid expenses and other 15,730 16,531 Derivative financial instruments 45,691 25,292 Total current assets 1,117,526 642,353 Property and equipment, net of accumulated depreciation 842,141 801,690 Operating lease right-of-use assets 66,971 61,883 Other assets 86,566 72,991 Total assets $ 2,113,204 $ 1,578,917 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 112,459 $ 140,058 Accrued and other liabilities 42,731 38,471 Derivative financial instruments 35,401 20,265 Operating lease current liabilities 16,766 14,902 Short-term notes payable and other borrowings 162,470 140,808 Current maturities of long-term debt 34,477 98,052 Total current liabilities 404,304 452,556 Long-term debt 514,434 287,299 Operating lease long-term liabilities 53,050 49,549 Other liabilities 23,798 12,849 Total liabilities 995,586 802,253 Commitments and contingencies (Note 13) Stockholders' equity Common stock, $0.001 par value; 75,000,000 shares authorized; 65 47 Additional paid-in capital 1,067,583 740,889 Retained earnings (deficit) (5,631) 39,375 Accumulated other comprehensive income (loss) 1,038 (2,172) Treasury stock, 8,244,456 and 11,813,161 shares, respectively (91,626) (131,287) Total Green Plains stockholders' equity 971,429 646,852 Noncontrolling interests 146,189 129,812 Total stockholders' equity 1,117,618 776,664 Total liabilities and stockholders' equity $ 2,113,204 $ 1,578,917 GREEN PLAINS INC. AND SUBSIDIARIES Three Months Ended Nine Months Ended 2021 2020 2021 2020 Revenues Product revenues $ 745,240 $ 423,027 $ 2,019,006 $ 1,441,248 Service revenues 1,551 1,035 5,843 3,707 Total revenues 746,791 424,062 2,024,849 1,444,955 Costs and expenses Cost of goods sold (excluding depreciation and amortization expenses reflected below) 730,179 393,933 1,878,820 1,372,057 Operations and maintenance expenses 5,162 6,647 17,153 19,410 Selling, general and administrative expenses 26,022 19,934 72,923 62,090 Loss (gain) on sale of assets, net 1,823 (2,000) (31,245) (2,000) Goodwill impairment - - - 24,091 Depreciation and amortization expenses 28,280 19,753 69,493 57,208 Total costs and expenses 791,466 438,267 2,007,144 1,532,856 Operating income (loss) (44,675) (14,205) 17,705 (87,901) Other income (expense) Interest income 25 3 496 643 Interest expense (9,488) (10,169) (60,225) (29,536) Other, net (440) 12 (1,680) 862 Total other expense (9,903) (10,154) (61,409) (28,031) Loss before income taxes and income from equity method investees (54,578) (24,359) (43,704) (115,932) Income tax benefit (expense) (7) (7,280) 2,914 48,461 Income from equity method investees, net of income taxes 174 906 517 20,917 Net loss (54,411) (30,733) (40,273) (46,554) Net income attributable to noncontrolling interests 5,211 3,753 16,151 12,591 Net loss attributable to Green Plains $ (59,622) $ (34,486) $ (56,424) $ (59,145) Earnings per share: Net loss attributable to Green Plains - basic and diluted $ (1.18) $ (1.00) $ (1.27) $ (1.71) Weighted average shares outstanding: Basic and diluted 50,482 34,629 44,581 34,632 GREEN PLAINS INC. AND SUBSIDIARIES (LOSS) Three Months Ended Nine Months Ended 2021 2020 2021 2020 Net loss $ (54,411) $ (30,733) $ (40,273) $ (46,554) Other comprehensive income (loss), net of tax: Unrealized gains (losses) on derivatives arising during the period, net of tax benefit (expense) of ($171), $859, ($260) and ($160), respectively 538 (2,696) 820 503 Reclassification of realized losses (gains) on derivatives, net of tax benefit (expense) of $62, $0, ($750) and $1,431, respectively (194) - 2,390 (4,492) Other comprehensive income (loss), net of tax 344 (2,696) 3,210 (3,989) Share of equity method investees other comprehensive income (loss) arising during the period, net of tax benefit (expense) of $0, $6,705, $0 and ($1,318), respectively - (21,057) - 4,140 Total other comprehensive income (loss), net of tax 344 (23,753) 3,210 151 Comprehensive loss (54,067) (54,486) (37,063) (46,403) Comprehensive income attributable to noncontrolling interests 5,211 3,753 16,151 12,591 Comprehensive loss attributable to Green Plains $ (59,278) $ (58,239) $ (53,214) $ (58,994) GREEN PLAINS INC. AND SUBSIDIARIES Nine Months Ended 2021 2020 Cash flows from operating activities: Net loss $ (40,273) $ (46,554) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 69,493 57,208 Amortization of debt issuance costs and debt discount 6,957 16,097 Gain on sale of assets, net (31,245) (1,405) Loss on extinguishment of debt 32,645 - Goodwill impairment - 24,091 Deferred income taxes (3,008) (10,569) Stock-based compensation 3,980 5,720 Income from equity method investees, net of income taxes (517) (20,917) Distribution from equity method investees, net of income taxes - 27,910 Other 1,199 18 Changes in operating assets and liabilities before effects of business combinations and dispositions: Accounts receivable (33,776) 54,683 Inventories 4,088 68,301 Derivative financial instruments (2,386) 5,532 Prepaid expenses and other assets 175 2,051 Accounts payable and accrued liabilities (35,007) (78,091) Current income taxes (1,073) (26,825) Other 876 (802) Net cash provided by (used in) operating activities (27,872) 76,448 Cash flows from investing activities: Purchases of property and equipment, net (123,687) (85,376) Proceeds from the sale of assets 87,217 - Other investing activities (7,000) (4,098) Net cash used in investing activities (43,470) (89,474) Cash flows from financing activities: Proceeds from the issuance of long-term debt 367,701 13,000 Payments of principal on long-term debt (188,706) (12,933) Proceeds from short-term borrowings 2,450,416 1,816,821 Payments on short-term borrowings (2,432,553) (1,866,526) Payments on extinguishment of convertible debt (20,861) - Payments for repurchase of common stock - (11,479) Payments of cash distributions (4,187) (8,281) Proceeds from issuance of common stock, net 356,011 - Payments of loan fees (9,050) (3,900) Payments related to tax withholdings for stock-based compensation (4,674) (1,288) Other financing activities 3,330 - Net cash provided by (used in) financing activities 517,427 (74,586) Net change in cash, cash equivalents and restricted cash 446,085 (87,612) Cash, cash equivalents and restricted cash, beginning of period 274,810 269,896 Cash, cash equivalents and restricted cash, end of period $ 720,895 $ 182,284 Continued on the following page GREEN PLAINS INC. AND SUBSIDIARIES Continued from the previous page Nine Months Ended 2021 2020 Reconciliation of total cash, cash equivalents and restricted cash: Cash and cash equivalents $ 589,822 $ 150,407 Restricted cash 131,073 31,877 Total cash, cash equivalents and restricted cash $ 720,895 $ 182,284 Non-cash financing activity: Exchange of 4.00% convertible notes due 2024 $ 51,000 $ - Exchange of common stock held in treasury stock for 4.00% $ 39,661 $ - Supplemental investing activities: Assets disposed of in sale $ 54,626 $ - Less: liabilities relinquished (3,706) - Net assets disposed $ 50,920 $ - Supplemental disclosures of cash flow: Cash paid (refunded) for income taxes, net $ 1,336 $ (4,533) Cash paid for interest $ 25,529 $ 20,325 Cash premium paid for extinguishment of convertible notes $ 20,861 $ - GREEN PLAINS INC. AND SUBSIDIARIES 18, 2022. Use of Estimates in the Preparation of Consolidated Financial Statements A substantial portion of the partnership revenues are derived from fixed-fee commercial agreements for storage, terminal or transportation services. The partnership recognizes revenue upon transfer of control of product from its storage tanks and fuel terminals, when railcar volumetric capacity is provided, and as truck transportation services are performed. To the extent shortfalls associated with minimum volume commitments in the previous four quarters continue to exist, volumes in excess of the minimum volume commitment are applied to those shortfalls. Remaining excess volumes generating operating lease revenue are recognized as incurred. By using derivatives to hedge exposures to changes in commodity prices, the company is exposed to credit and market risk. The company’s exposure to credit risk includes the counterparty’s failure to fulfill its performance obligations under the terms of the derivative contract. The company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring their financial condition. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The company manages market risk by incorporating parameters to monitor exposure within its risk management strategy, which limits the types of derivative instruments and strategies the company can use and the degree of market risk it can take using derivative instruments. 2. REVENUE Three Months Ended September 30, 2021 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 6,936 - - - 6,936 Corn oil - - - - - Service revenues 520 - 1,019 - 1,539 Other 8,633 9,597 - - 18,230 Intersegment revenues - - 1,969 (1,969) - Total revenues from contracts with customers 16,089 9,597 2,988 (1,969) 26,705 Revenues from contracts accounted for as derivatives under ASC 815 (1): Ethanol 455,843 109,552 - - 565,395 Distillers grains 77,008 9,699 - - 86,707 Corn oil 35,363 11,222 - - 46,585 Grain - 13,505 - - 13,505 Other 4,046 3,837 - - 7,883 Intersegment revenues - 5,362 - (5,362) - Total revenues from contracts accounted for as derivatives 572,260 153,177 - (5,362) 720,075 Leasing revenues under ASC 842 (2): - - 16,263 (16,252) 11 Total Revenues $ 588,349 $ 162,774 $ 19,251 $ (23,583) $ 746,791 Nine Months Ended September 30, 2021 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 14,974 - - - 14,974 Corn oil - - - - - Service revenues 2,545 - 3,235 - 5,780 Other 25,062 12,640 - - 37,702 Intersegment revenues - - 6,147 (6,147) - Total revenues from contracts with customers 42,581 12,640 9,382 (6,147) 58,456 Revenues from contracts accounted for as derivatives under ASC 815 (1): Ethanol 1,159,020 324,395 - - 1,483,415 Distillers grains 268,167 27,953 - - 296,120 Corn oil 75,252 23,808 - - 99,060 Grain - 36,473 - - 36,473 Other 22,324 28,939 - - 51,263 Intersegment revenues - 15,997 - (15,997) - Total revenues from contracts accounted for as derivatives 1,524,763 457,565 - (15,997) 1,966,331 Leasing revenues under ASC 842 (2): - - 49,976 (49,914) 62 Total Revenues $ 1,567,344 $ 470,205 $ 59,358 $ (72,058) $ 2,024,849 Three Months Ended September 30, 2020 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 4,095 - - - 4,095 Corn oil - 2,938 - - 2,938 Service revenues - - 920 - 920 Other 66 1,408 - - 1,474 Intersegment revenues 25 - 2,289 (2,314) - Total revenues from contracts with customers 4,186 4,346 3,209 (2,314) 9,427 Revenues from contracts accounted for as derivatives under ASC 815 (1): Ethanol 263,390 56,895 - - 320,285 Distillers grains 51,692 10,696 - - 62,388 Corn oil 12,433 5,805 - - 18,238 Grain 1 11,099 - - 11,100 Other 1,276 1,233 - - 2,509 Intersegment revenues - 5,354 - (5,354) - Total revenues from contracts accounted for as derivatives 328,792 91,082 - (5,354) 414,520 Leasing revenues under ASC 842 (2): - - 18,173 (18,058) 115 Total Revenues $ 332,978 $ 95,428 $ 21,382 $ (25,726) $ 424,062 Nine Months Ended September 30, 2020 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 25,159 - - - 25,159 Corn oil - 2,938 - - 2,938 Service revenues - - 3,366 - 3,366 Other 4,257 3,668 - - 7,925 Intersegment revenues 75 - 6,201 (6,276) - Total revenues from contracts with customers 29,491 6,606 9,567 (6,276) 39,388 Revenues from contracts accounted for as derivatives under ASC 815 (1): Ethanol 849,298 243,930 - - 1,093,228 Distillers grains 179,854 28,960 - - 208,814 Corn oil 36,621 23,681 - - 60,302 Grain 7 26,773 - - 26,780 Other 3,974 12,128 - - 16,102 Intersegment revenues - 17,030 - (17,030) - Total revenues from contracts accounted for as derivatives 1,069,754 352,502 - (17,030) 1,405,226 Leasing revenues under ASC 840 (2): - - 52,467 (52,126) 341 Total Revenues $ 1,099,245 $ 359,108 $ 62,034 $ (75,432) $ 1,444,955 (1)Revenues from contracts accounted for as derivatives represent physically settled derivative sales that are outside the scope of ASC 3. DISPOSITION Amounts of Identifiable Assets Disposed and Liabilities Relinquished Inventory $ 10,400 Prepaid expenses and other 632 Property and equipment 24,285 Operating lease right-of-use assets 1,811 Accrued and other liabilities (156) Operating lease current liabilities (1,021) Operating lease long-term liabilities (790) Total identifiable net assets disposed $ 35,161 4. FAIR VALUE DISCLOSURES Fair Value Measurements at September 30, 2021 Quoted Prices in Significant Other (Level 1) (Level 2) Total Assets: Cash and cash equivalents $ 589,822 $ - $ 589,822 Restricted cash 131,073 - 131,073 Inventories carried at market - 41,456 41,456 Unrealized gains on derivatives - 45,691 45,691 Other assets 111 94 205 Total assets measured at fair value $ 721,006 $ 87,241 $ 808,247 Liabilities: Accounts payable (1) $ - $ 18,732 $ 18,732 Accrued and other liabilities (2) - 3,377 3,377 Unrealized losses on derivatives - 11,730 11,730 Other liabilities (2) - 9,320 9,320 Total liabilities measured at fair value $ - $ 43,159 $ 43,159 Fair Value Measurements at December 31, 2020 Quoted Prices in Significant Other (Level 1) (Level 2) Total Assets: Cash and cash equivalents $ 233,860 $ - $ 233,860 Restricted cash 40,950 - 40,950 Inventories carried at market - 77,900 77,900 Unrealized gains on derivatives - 21,956 21,956 Other assets 112 29 141 Total assets measured at fair value $ 274,922 $ 99,885 $ 374,807 Liabilities: Accounts payable (1) $ - $ 19,355 $ 19,355 Unrealized losses on derivatives - 10,997 10,997 Total liabilities measured at fair value $ - $ 30,352 $ 30,352 (1)Accounts payable is generally stated at historical amounts with the exception of The following tables set forth certain financial data for the company’s operating segments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues: Ethanol production: Revenues from external customers $ 588,349 $ 332,953 $ 1,567,344 $ 1,099,170 Intersegment revenues - 25 - 75 Total segment revenues 588,349 332,978 1,567,344 1,099,245 Agribusiness and energy services: Revenues from external customers 157,412 90,074 454,208 342,078 Intersegment revenues 5,362 5,354 15,997 17,030 Total segment revenues 162,774 95,428 470,205 359,108 Partnership: Revenues from external customers 1,030 1,035 3,297 3,707 Intersegment revenues 18,221 20,347 56,061 58,327 Total segment revenues 19,251 21,382 59,358 62,034 Revenues including intersegment activity 770,374 449,788 2,096,907 1,520,387 Intersegment eliminations (23,583) (25,726) (72,058) (75,432) Total Revenues $ 746,791 $ 424,062 $ 2,024,849 $ 1,444,955 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of goods sold: Ethanol production $ 597,854 $ 330,162 $ 1,507,035 $ 1,103,486 Agribusiness and energy services 154,427 87,027 440,682 339,332 Intersegment eliminations (22,102) (23,256) (68,897) (70,761) $ 730,179 $ 393,933 $ 1,878,820 $ 1,372,057 Three Months Ended Nine Months Ended 2021 2020 2021 2020 Operating income (loss): Ethanol production (1) $ (44,192) $ (21,351) $ (30,969) $ (100,924) Agribusiness and energy services 3,225 4,296 15,720 7,207 Partnership 12,417 12,986 37,204 37,641 Intersegment eliminations (1,481) (2,447) (3,161) (4,597) Corporate activities (2) (14,644) (7,689) (1,089) (27,228) $ (44,675) $ (14,205) $ 17,705 $ (87,901) (1)Operating loss for ethanol production includes Three Months Ended Nine Months Ended 2021 2020 2021 2020 Depreciation and amortization: Ethanol production $ 25,644 $ 17,493 $ 62,655 $ 50,575 Agribusiness and energy services 870 655 2,072 1,764 Partnership 1,089 940 2,771 2,867 Corporate activities 677 665 1,995 2,002 $ 28,280 $ 19,753 $ 69,493 $ 57,208 The following table sets forth total assets by operating segment (in thousands): September 30, 2021 December 31, 2020 Total assets (1): Ethanol production $ 1,069,056 $ 900,963 Agribusiness and energy services 429,450 378,720 Partnership 102,116 91,205 Corporate assets 552,040 228,074 Intersegment eliminations (39,458) (20,045) $ 2,113,204 $ 1,578,917 September 30, 2021 December 31, 2020 Finished goods $ 98,044 $ 89,223 Commodities held for sale 33,835 40,147 Raw materials 57,342 90,800 Work-in-process 19,356 13,201 Supplies and parts 34,630 36,120 $ 243,207 $ 269,491 Asset Derivatives' Liability Derivatives' Fair Value Fair Value September 30, December 31, September 30, December 31, Derivative financial instruments $ 45,691 $ 21,956 (1) $ 11,730 (2) $ 10,997 (3) Other assets 94 29 - - Total $ 45,785 $ 21,985 $ 11,730 $ 10,997 Refer to Note 4 - Fair Value Disclosures, which contains fair value information related to derivative financial instruments. Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Location of Gain (Loss) Reclassified from Accumulated Other Three Months Ended Nine Months Ended Comprehensive Income into Income 2021 2020 2021 2020 Revenues $ (691) $ - $ (39,571) $ 8,824 Cost of goods sold 947 - 36,431 (2,901) Net gain (loss) recognized in income (loss) before income taxes $ 256 $ - $ (3,140) $ 5,923 Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives Gain (Loss) Recognized in Other Comprehensive Income on Three Months Ended Nine Months Ended Derivatives 2021 2020 2021 2020 Commodity contracts $ 709 $ (3,555) $ 1,080 $ 663 Amount of Gain (Loss) Recognized in Income on Derivatives Derivatives Not Designated as Location of Gain (Loss) Recognized in Income Three Months Ended Nine Months Ended Hedging Instruments on Derivatives 2021 2020 2021 2020 Commodity contracts Revenues $ 1,638 $ (21,128) $ (50,257) $ 8,681 Commodity contracts Costs of goods sold (7,594) 4,184 3,960 10,678 Net gain (loss) recognized in income (loss) before income taxes $ (5,956) $ (16,944) $ (46,297) $ 19,359 The following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items (in thousands): September 30, 2021 December 31, 2020 Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Inventories $ 41,456 $ 14,734 $ 53,963 $ 9,041 Effect of Cash Flow and Fair Value Hedge Accounting on the Statements of Operations Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended September 30, 2021 2020 Revenue Cost of Revenue Cost of Gain (loss) on cash flow hedging relationships: Commodity contracts: Amount of gain (loss) reclassified from accumulated other comprehensive income into income $ (691) $ 947 $ - $ - Gain (loss) on fair value hedging relationships: Commodity contracts: Hedged item - 10,359 - 4,264 Derivatives designated as hedging instruments - (10,726) - (5,380) Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded $ (691) $ 580 $ - $ (1,116) Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Nine Months Ended September 30, 2021 2020 Revenue Cost of Revenue Cost of Gain (loss) on cash flow hedging relationships: Commodity contracts: Amount of gain (loss) reclassified from accumulated other comprehensive income into income $ (39,571) $ 36,431 $ 8,824 $ (2,901) Gain (loss) on fair value hedging relationships: Commodity contracts: Hedged item - 28,732 - (3,665) Derivatives designated as hedging instruments - (25,078) - 3,220 Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded $ (39,571) $ 40,085 $ 8,824 $ (3,346) There were Exchange Traded (1) Non-Exchange Traded (2) Derivative Net Long & Long (Short) Unit of Commodity Futures (29,345) Bushels Corn Futures 56,130 (3) Bushels Corn Futures (1,360) (4) Bushels Corn Futures (23,436) Gallons Ethanol Futures (160,104) (3) Gallons Ethanol Futures (15,430) MmBTU Natural Gas Futures 1,888 (3) MmBTU Natural Gas Futures (6,055) (4) MmBTU Natural Gas Options 36,205 Pounds Soybean Oil Options 2,665 Bushels Corn Options (2,511) MmBTU Natural Gas Forwards 42,008 (108) Bushels Corn Forwards 1,159 (357,410) Gallons Ethanol Forwards 99 (612) Tons Distillers Grains Forwards 2,496 (71,617) Pounds Corn Oil Forwards 16,532 (295) MmBTU Natural Gas 8. DEBT September 30, 2021 December 31, 2020 Corporate: 2.25% convertible notes due 2027 $ 230,000 $ - 4.00% convertible notes due 2024 64,000 89,125 4.125% convertible notes due 2022 34,316 156,441 Green Plains SPE LLC: $125.0 million junior secured mezzanine notes due 2026 125,000 - Green Plains Wood River and Green Plains Shenandoah: $75.0 million delayed draw loan agreement 30,000 30,000 Green Plains Partners: $60.0 million credit facility (7) 60,000 100,000 Other 15,580 15,936 Total book value of long-term debt 558,896 391,502 Unamortized debt issuance costs (9,985) (6,151) Less: current maturities of long-term debt (34,477) (98,052) Total long-term debt $ 514,434 $ 287,299 On February 11, 2022, the term loan was modified to allow Green Plains Partners and its affiliates to repurchase outstanding notes. On the same day, the partnership purchased $1.0 million of the outstanding notes from accounts and funds managed by BlackRock and subsequently retired the notes. September 30, 2021 December 31, 2020 Green Plains Trade: $300.0 million revolver $ 109,624 $ 79,251 Green Plains Grain: $100.0 million revolver 22,800 38,700 $50.0 million inventory financing - - Green Plains Commodity Management: $30.0 million hedge line 30,046 21,682 Other - 1,175 $ 162,470 $ 140,808 Corporate Activities May 25, 2022. From July 1, 2022 through July 8, 2022, the remaining $64.0 million of the 4.00% notes were converted into approximately 4.3 million shares of common stock. Common stock held as treasury shares were exchanged for the 4.00% notes. Pursuant to the guidance within ASC 470, Debt, the company recorded the exchanges as a conversion. The 4.00% notes were retired effective July 8, 2022. Debt , the company recorded the exchanges as a conversion and recorded a loss of $419 thousand, which was recorded as a charge to interest expense in the consolidated financial statements during the three months ended September 30, 2022. On March 25, 2022, Green Plains Finance Company, Green Plains Grain and Green Plains Trade , dependent on undrawn availability. Additionally, the applicable margin and commitment fee are subject to certain increases or decreases of up to 0.10% and 0.025%, respectively, tied to the company’s achievement of certain sustainability criteria, including the reduction of greenhouse gas emissions, recordable incident rate reduction, increased corn oil production and the implementation of technology to produce sustainable ingredients. Green Plains Commodity Management has an uncommitted The company had $11.1 million short-term notes payable related to this credit facility as of September 30, 2022. notes. 2022. Restricted Stock Awards and Deferred Stock Units Non-Vested Weighted- Weighted-Average Non-Vested at December 31, 2020 1,028,739 $ 9.15 Granted 353,181 27.27 Forfeited (115,896) 14.63 Vested (474,432) 12.23 Non-Vested at September 30, 2021 791,592 $ 14.59 2.0 The performance shares were granted at a target of 100%, but each performance share The non-vested performance share award activity for the nine months ended September 30, Performance Weighted- Weighted-Average Non-Vested at December 31, 2020 517,969 $ 10.82 Granted 183,316 26.41 Forfeited (118,023) 15.83 Vested (87,915) 17.68 Non-Vested at September 30, 2021 495,347 $ 14.18 2.2 Non-Vested Weighted- Weighted-Average Non-Vested at December 31, 2020 47,620 $ 6.72 Granted 25,976 12.32 Forfeited (6,494) 12.32 Vested (47,620) 6.72 Non-Vested at September 30, 2021 19,482 $ 12.32 0.8 expenses. The basic and diluted EPS are calculated as follows (in The effect related to the company’s convertible debt, warrants and certain stock-based compensation awards has been excluded from diluted EPS for the periods presented as the inclusion of these shares would have been antidilutive. Three Months Ended Nine Months Ended 2021 2020 2021 2020 EPS - basic and diluted: Net loss attributable to Green Plains $ (59,622) $ (34,486) $ (56,424) $ (59,145) Weighted average shares outstanding - basic and diluted 50,482 34,629 44,581 34,632 EPS - basic and diluted: $ (1.18) $ (1.00) $ (1.27) $ (1.71) Anti-dilutive weighted-average convertible debt, warrants and stock-based compensation 14,055 14,187 12,458 14,059 Convertible Note Exchange Total Additional Retained Accum. Other Green Plains Non- Total Common Stock Paid-in Earnings Comp. Income Treasury Stock Stockholders' Controlling Stockholders' Shares Amount Capital (Deficit) (Loss) Shares Amount Equity Interests Equity Balance, December 31, 2020 47,471 $ 47 $ 740,889 $ 39,375 $ (2,172) 11,813 $ (131,287) $ 646,852 $ 129,812 $ 776,664 Impact of ASC 470-20 adoption (1) - - (49,496) 11,418 - - - (38,078) - (38,078) Balance, January 1, 2021 47,471 47 691,393 50,793 (2,172) 11,813 (131,287) 608,774 129,812 738,586 Net income (loss) - - - (6,545) - - - (6,545) 4,566 (1,979) Distributions declared - - - - - - - - (1,395) (1,395) Other comprehensive income (loss) before reclassification - - - - (4,849) - - (4,849) - (4,849) Amounts reclassified from accumulated other comprehensive income (loss) - - - - (1,377) - - (1,377) - (1,377) Other comprehensive income (loss), net of tax - - - - (6,226) - - (6,226) - (6,226) Investment in subsidiary - - - - - - - - 3,330 3,330 Issuance of warrants - - 3,431 - - - - 3,431 (3,431) - Issuance of common stock for cash at $23.00 per share, net of fees 8,752 9 191,125 - - - - 191,134 - 191,134 Stock-based compensation 230 - (3,000) - - - - (3,000) 79 (2,921) Balance, March 31, 2021 56,453 56 882,949 44,248 (8,398) 11,813 (131,287) 787,568 132,961 920,529 Net income (loss) - - - 9,743 - - - 9,743 6,374 16,117 Distributions declared - - - - - - - - (1,395) (1,395) Other comprehensive income (loss) before reclassification - - - - 5,131 - - 5,131 - 5,131 Amounts reclassified from accumulated other comprehensive income (loss) - - - - 3,961 - - 3,961 - 3,961 Other comprehensive income (loss), net of tax - - - - 9,092 - - 9,092 - 9,092 Exchange of 4.00% convertible notes due 2024 - - 17,679 - - (3,569) 39,661 57,340 - 57,340 Investment in subsidiary - - - - - - - - 3,139 3,139 Stock-based compensation (20) 4 324 - - - - 328 80 408 Balance, June 30, 2021 56,433 60 900,952 53,991 694 8,244 (91,626) 864,071 141,159 1,005,230 Net income (loss) - - - (59,622) - - - (59,622) 5,211 (54,411) Distributions declared - - - - - - - - (1,397) (1,397) Other comprehensive income (loss) before reclassification - - - - 538 - - 538 - 538 Amounts reclassified from accumulated other comprehensive income (loss) - - - - (194) - - (194) - (194) Other comprehensive income (loss), net of tax - - - - 344 - - 344 - 344 Investment in subsidiary - - - - - - - - 1,156 1,156 Issuance of common stock for cash at $32.00 per share, net of fees 5,463 5 164,872 - - - - 164,877 - 164,877 Stock-based compensation (57) - 1,759 - - - - 1,759 60 1,819 Balance, September 30, 2021 61,839 $ 65 $ 1,067,583 $ (5,631) $ 1,038 8,244 $ (91,626) $ 971,429 $ 146,189 $ 1,117,618 Total Additional Accum. Other Green Plains Non- Total Common Stock Paid-in Retained Comp. Income Treasury Stock Stockholders' Controlling Stockholders' Shares Amount Capital Earnings (Loss) Shares Amount Equity Interests Equity Balance, January 1, 2020 46,964 $ 47 $ 734,580 $ 148,150 $ (11,064) 10,932 $ (119,808) $ 751,905 $ 113,381 $ 865,286 Net income (loss) - - - (16,445) - - - (16,445) 6,098 (10,347) Distributions declared - - - - - - - - (5,498) (5,498) Other comprehensive income (loss) before reclassification - - - - 4,532 - - 4,532 - 4,532 Amounts reclassified from accumulated other comprehensive income (loss) - - - - (4,485) - - (4,485) - (4,485) Other comprehensive income (loss), net of tax - - - - 47 - - 47 - 47 Share of equity method investees other comprehensive income (loss) arising during the period, net of tax - - - - 41,956 - - 41,956 - 41,956 Repurchase of common stock - - - - - 881 (11,479) (11,479) - (11,479) Stock-based compensation 343 - 36 - - - - 36 79 115 Balance, March 31, 2020 47,307 47 734,616 131,705 30,939 11,813 (131,287) 766,020 114,060 880,080 Net income (loss) - - - (8,214) - - - (8,214) 2,740 (5,474) Distributions declared - - - - - - - - (1,389) (1,389) Other comprehensive income (loss) before reclassification - - - - (1,333) - - (1,333) - (1,333) Amounts reclassified from accumulated other comprehensive income (loss) - - - - (7) - - (7) - (7) Other comprehensive income (loss), net of tax - - - - (1,340) - - (1,340) - (1,340) Share of equity method investees other comprehensive income (loss) arising during the period, net of tax - - - - (16,759) - - (16,759) - (16,759) Stock-based compensation 160 - 2,072 - - - - 2,072 80 2,152 Balance, June 30, 2020 47,467 47 736,688 123,491 12,840 11,813 (131,287) 741,779 115,491 857,270 Net income (loss) - - - (34,486) - - - (34,486) 3,753 (30,733) Distributions declared - - - - - - - - (1,394) (1,394) Other comprehensive income (loss) before reclassification - - - - (2,696) - - (2,696) - (2,696) Amounts reclassified from accumulated other comprehensive income (loss) - - - - - - - - - - Other comprehensive income (loss), net of tax - - - - (2,696) - - (2,696) - (2,696) Share of equity method investees other comprehensive income (loss) arising during the period, net of tax - - - - (21,057) - - (21,057) - (21,057) Stock-based compensation - - 2,086 - - - - 2,086 79 2,165 Balance, September 30, 2020 47,467 $ 47 $ 738,774 $ 89,005 $ (10,913) 11,813 $ (131,287) $ 685,626 $ 117,929 $ 803,555 Amounts reclassified from accumulated other comprehensive income are as follows (in thousands): Three Months Ended Nine Months Ended Statements of 2021 2020 2021 2020 Classification Gains (losses) on cash flow hedges: Commodity derivatives $ (691) $ - $ (39,571) $ 8,824 (1) Commodity derivatives 947 - 36,431 (2,901) (2) Total gains on cash flow hedges 256 - (3,140) 5,923 (3) Income tax benefit (expense) (62) - 750 (1,431) (4) Amounts reclassified from accumulated other comprehensive income (loss) $ 194 $ - $ (2,390) $ 4,492 benefits at this time. accumulated other comprehensive income. 13. COMMITMENTS AND CONTINGENCIES Three Months Ended Nine Months Ended 2021 2020 2021 2020 Lease expense Operating lease expense $ 4,803 $ 5,232 $ 14,645 $ 15,432 Variable lease expense (1) 301 530 892 1,429 Total lease expense $ 5,104 $ 5,762 $ 15,537 $ 16,861 (1)Represents amounts incurred in excess of the minimum payments required for a certain building lease and for the handling and unloading of railcars for a certain land lease, offset by railcar lease abatements provided by the lessor when railcars are out of service during periods of maintenance or upgrade. Three Months Ended Nine Months Ended 2021 2020 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,706 $ 5,136 $ 14,352 $ 15,004 Right-of-use assets obtained in exchange for lease obligations: Operating leases 7,162 11,053 17,934 17,932 Right-of-use assets and lease obligations derecognized due to lease modifications: Operating leases 1,838 12 1,889 12 September 30, 2021 December 31, 2020 Weighted average remaining lease term 5.7 years 6.2 years Weighted average discount rate 4.17% 4.55% Aggregate minimum lease payments under the operating lease agreements for the remainder of Year Ending December 31, Amount 2021 $ 5,432 2022 19,026 2023 16,197 2024 13,797 2025 9,508 Thereafter 17,127 Total 81,087 Less: Present value discount (11,271) Lease liabilities $ 69,816 Storage and Transportation Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 2021. As part of our transformation to a value-add agricultural technology company, we completed our first TM Our profitability could be significantly impacted by price movements of the aforementioned commodities. 1, 2022. TM technology at two additional locations, which we expect to be commissioned in the fourth quarter of 2022. We are deploying the FQT MSC™ technology at select locations across our platform to help meet growing global demand for protein feed ingredients and low-carbon renewable corn oil. Global Ethanol Supply and Demand global market. ethanol. RFS, including the so-called e-RINs for electric vehicles. According to the RFS, U.S. District Court for D.C. and RFS rulemakings. In October 2019, the White House directed the USDA and EPA to move forward with rulemaking to expand access to higher blends of biofuels. This includes funding for infrastructure, labeling changes and allowing E15 to be sold through E10 infrastructure. The USDA rolled out the Higher Blend Infrastructure Incentive Program in the summer of 2020, providing competitive grants to fuel terminals and retailers for installing equipment for dispensing higher blends of ethanol and biodiesel. bill. Comparability of our Financial Results Segment Results Three Months Ended % Nine Months Ended % 2021 2020 Variance 2021 2020 Variance Revenues: Ethanol production: Revenues from external customers $ 588,349 $ 332,953 76.7% $ 1,567,344 $ 1,099,170 42.6% Intersegment revenues - 25 * - 75 * Total segment revenues 588,349 332,978 76.7 1,567,344 1,099,245 42.6 Agribusiness and energy services: Revenues from external customers 157,412 90,074 74.8 454,208 342,078 32.8 Intersegment revenues 5,362 5,354 0.1 15,997 17,030 (6.1) Total segment revenues 162,774 95,428 70.6 470,205 359,108 30.9 Partnership: Revenues from external customers 1,030 1,035 (0.5) 3,297 3,707 (11.1) Intersegment revenues 18,221 20,347 (10.4) 56,061 58,327 (3.9) Total segment revenues 19,251 21,382 (10.0) 59,358 62,034 (4.3) Revenues including intersegment activity 770,374 449,788 71.3 2,096,907 1,520,387 37.9 Intersegment eliminations (23,583) (25,726) (8.3) (72,058) (75,432) (4.5) Revenues as reported $ 746,791 $ 424,062 76.1% $ 2,024,849 $ 1,444,955 40.1% Three Months Ended % Nine Months Ended % 2021 2020 Variance 2021 2020 Variance Cost of goods sold: Ethanol production $ 597,854 $ 330,162 81.1% $ 1,507,035 $ 1,103,486 36.6% Agribusiness and energy services 154,427 87,027 77.4 440,682 339,332 29.9 Intersegment eliminations (22,102) (23,256) (5.0) (68,897) (70,761) (2.6) $ 730,179 $ 393,933 85.4% $ 1,878,820 $ 1,372,057 36.9% Three Months Ended % Nine Months Ended % 2021 2020 Variance 2021 2020 Variance Operating income (loss): Ethanol production (1) $ (44,192) $ (21,351) 107.0% $ (30,969) $ (100,924) (69.3%) Agribusiness and energy services 3,225 4,296 (24.9%) 15,720 7,207 118.1 Partnership 12,417 12,986 (4.4) 37,204 37,641 (1.2) Intersegment eliminations (1,481) (2,447) (39.5) (3,161) (4,597) (31.2) Corporate activities (2) (14,644) (7,689) 90.5 (1,089) (27,228) (96.0) $ (44,675) $ (14,205) * $ 17,705 $ (87,901) * (1)Operating loss for ethanol production includes Three Months Ended % Nine Months Ended % 2021 2020 Variance 2021 2020 Variance Depreciation and amortization: Ethanol production $ 25,644 $ 17,493 46.6% $ 62,655 $ 50,575 23.9% Agribusiness and energy services 870 655 32.8 2,072 1,764 17.5 Partnership 1,089 940 15.9 2,771 2,867 (3.3) Corporate activities 677 665 1.8 1,995 2,002 (0.3) $ 28,280 $ 19,753 43.2% $ 69,493 $ 57,208 21.5% * Percentage variance not considered meaningful. Three Months Ended Nine Months Ended 2021 2020 2021 2020 Net loss $ (54,411) $ (30,733) $ (40,273) $ (46,554) Interest expense (1) 9,488 10,169 60,225 29,536 Income tax expense (benefit), net of equity method income tax expense 7 7,518 (2,914) (41,957) Depreciation and amortization (2) 28,280 19,753 69,493 57,208 EBITDA (16,636) 6,707 86,531 (1,767) Loss (gain) on sale of assets, net 1,823 (2,000) (31,245) (2,000) Proportional share of EBITDA adjustments to equity method investees 45 2,071 139 7,049 Noncash goodwill impairment - - - 24,091 Adjusted EBITDA $ (14,768) $ 6,778 $ 55,425 $ 27,373 The following table reconciles segment EBITDA to consolidated adjusted EBITDA (in thousands): Three Months Ended % Nine Months Ended % 2021 2020 Variance 2021 2020 Variance Adjusted EBITDA: Ethanol production $ (18,524) $ (3,856) * $ 31,739 $ (49,588) 164.0% Agribusiness and energy services 3,818 4,950 (22.9) 17,515 9,115 92.2 Partnership 13,679 14,082 (2.9) 40,492 40,996 (1.2) Intersegment eliminations (1,480) (2,447) (39.5) (3,160) (4,597) (31.3) Corporate activities (1) (14,129) (6,022) 134.6 (55) 2,307 (102.4) EBITDA (16,636) 6,707 * 86,531 (1,767) * Loss (gain) on sale of assets, net 1,823 (2,000) * (31,245) (2,000) * Proportional share of EBITDA adjustments to equity method investees 45 2,071 (97.8) 139 7,049 (98.0) Noncash goodwill impairment - - * - 24,091 * Adjusted EBITDA $ (14,768) $ 6,778 * $ 55,425 $ 27,373 102.5% (1) 2021 Three Months Ended September 30, 2021 2020 % Variance Ethanol sold (thousands of gallons) 181,214 189,202 (4.2) Distillers grains sold (thousands of equivalent dried tons) 492 479 2.7 Corn oil sold (thousands of pounds) 55,397 50,953 8.7 Corn consumed (thousands of bushels) 62,524 65,284 (4.2) Cost of goods sold year. 2021. The Nine Months Ended 2021 2020 % Variance Ethanol sold (thousands of gallons) 550,127 579,540 (5.1) Distillers grains sold (thousands of equivalent dried tons) 1,459 1,504 (3.0) Corn oil sold (thousands of pounds) 156,835 153,001 2.5 Corn consumed (thousands of bushels) 189,544 201,075 (5.7) Partnership Segment 2021. nine months ended September 30, 2021. Net cash used in operating activities was activities. We were in compliance with our debt covenants at September 30, redemption on May 25, 2022. were converted into approximately 4.3 million shares of common stock and were retired effective July 8, 2022. Agribusiness and Energy Services Segment Payments Due By Period Contractual Obligations Total Less Than 1-3 Years 3-5 Years More Than Long-term and short-term debt obligations (1) $ 721,366 $ 197,117 $ 67,642 $ 188,629 $ 267,978 Interest and fees on debt obligations (2) 178,697 9,051 62,623 73,023 34,000 Operating lease obligations (3) 81,087 19,497 31,331 15,817 14,442 Other 24,447 3,450 4,108 9,349 7,540 Purchase obligations: Forward grain purchase contracts (4) 226,253 222,806 3,447 - - Other commodity purchase contracts (5) 146,472 129,447 13,567 3,458 - Other 1,167 912 255 - - Total contractual obligations $ 1,379,489 $ 582,280 $ 182,973 $ 290,276 $ 323,960 included in the notes to consolidated financial statements for more information. 2021. Commodity Price Risk Commodity Estimated Total Volume Unit of Net Income Effect of Ethanol 958,000 Gallons $ 126,295 Corn 331,000 Bushels $ 136,086 Distillers grains 2,400 Tons (2) $ 28,190 Corn oil 258,000 Pounds $ 10,388 Natural gas 27,700 MmBTU $ 5,237 The market value of exchange-traded futures and options used for hedging are highly correlated with the underlying market value of grain inventories and related purchase and sale contracts for grain. The less correlated portion of inventory and purchase and sale contract market values, known as basis, is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. We manage this less volatile risk by constantly monitoring our position relative to the price changes in the market. Inventory values are affected by the month-to-month spread in the futures markets. These spreads are also less volatile than overall market value of our inventory and tend to follow historical patterns, but cannot be mitigated directly. Our accounting policy for futures and options, as well as the underlying inventory held for sale and purchase and sale contracts, is to reflect their current market values and include gains and losses in the consolidated statement of operations. PART II – OTHER INFORMATION Ethanol is marketed as a fuel additive that reduces vehicle emissions, an economical source of Government mandates affecting ethanol could change and impact the ethanol market. U.S. District Court for D.C. Notwithstanding, on April 12, 2022, the President announced that he has directed the EPA to issue an emergency waiver to allow for the continued sale of E15 during the June 1 to September 15 period. As of this filing, E15 is sold year-round at approximately 2,743 stations in 31 states. Future demand may be influenced by economic incentives to blend based on the relative value of gasoline versus ethanol, taking into consideration the octane value of ethanol, environmental requirements and the value of RFS To the extent federal or state laws or regulations are modified and/or enacted, it may result in the demand for ethanol being reduced, which could negatively and materially affect our financial performance. 2022: Period Total Number of Average Price July 1 - July 31 2,976 $ 34.07 August 1 - August 31 992 33.68 September 1 - September 30 - - Total 3,968 $ 33.98 Item 6. Exhibits. Exhibit No. Description of Exhibit 10.3 31.2 32.1 32.2 101 104 SIGNATURES GREEN PLAINS INC. By:Trading Symbol Name of each exchange on which registered GPRE The Nasdaq Stock Market LLC x☒ Yes o☐ Nox☒ Yes o☐ NooAccelerated filer x☐ Non-accelerated filer o☐ oEmerging growth company o☐ o☐o☐ Yes x☒ Nonumber of shares ofregistrant had 59,295,496 common stock par value $0.001 per share, outstanding as of November 1, 2021, was 53,595,978 shares.October 28, 2022.
TABLE OF CONTENTS
BioProcess AlgaeBioProcess Algae LLCGreen Plains Cattle; GPCCGreen Plains Cattle Company LLCGreen Plains Finance Company LLC Green Plains Grain Accumulated Other Comprehensive Income ASC JVJoint VentureSOFR Secured Overnight Financing Rate CAFECorporate Average Fuel EconomyCARBCalifornia Air Resources BoardE85Gasoline blended with up to 85% ethanol by volumeGNSLCFSGrain Neutral SpiritsLow Carbon Fuel StandardMaximized Stillage Coproducts produced using process technology developed by Fluid Quip Technologies LLC MTBE MVCRFSMinimum volume commitmentRFS II II
2021
2020September 30,
2022December 31,
2021(unaudited) ASSETS Current assets Cash and cash equivalents $ 420,838 $ 426,220 Restricted cash 66,610 134,739 Marketable securities Marketable securities 24,989 124,859 Accounts receivable, net of allowances of $204 and $682, respectively Accounts receivable, net of allowances of $204 and $682, respectively 118,362 119,961 Income taxes receivable 1,072 911 Inventories 258,852 267,838 Prepaid expenses and other 13,572 16,483 Derivative financial instruments 31,318 26,738 Total current assets 935,613 1,117,749
and amortization of $547,599 and $530,194, respectivelyProperty and equipment, net of accumulated depreciation and amortization of $611,773 and $567,027, respectively Property and equipment, net of accumulated depreciation and amortization of $611,773 and $567,027, respectively 1,016,349 893,517 Operating lease right-of-use assets 63,464 64,042 Other assets 86,114 84,447 Total assets $ 2,101,540 $ 2,159,755 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 123,035 $ 146,063 Accrued and other liabilities 45,947 56,980 Derivative financial instruments 25,883 43,244 Operating lease current liabilities 17,800 16,814 Short-term notes payable and other borrowings 206,102 173,418 Current maturities of long-term debt 1,835 35,285 Total current liabilities 420,602 471,804 Long-term debt 495,269 514,006 Operating lease long-term liabilities 48,934 49,795 Other liabilities 23,501 22,131 Total liabilities 988,306 1,057,736 Commitments and contingencies (Note 13) Stockholders' equity
61,838,598 and 47,470,505 shares issued, and 53,594,142
and 35,657,344 shares outstanding, respectivelyCommon stock, $0.001 par value; 150,000,000 shares authorized; 62,087,927 and 61,840,434 shares issued, and 59,282,868 and 53,595,978 shares outstanding, respectively Common stock, $0.001 par value; 150,000,000 shares authorized; 62,087,927 and 61,840,434 shares issued, and 59,282,868 and 53,595,978 shares outstanding, respectively 62 62 Additional paid-in capital 1,107,786 1,069,573 Retained deficit Retained deficit (103,801) (15,199) Accumulated other comprehensive loss Accumulated other comprehensive loss (10,831) (12,310) Treasury stock, 2,805,059 and 8,244,456 shares, respectively Treasury stock, 2,805,059 and 8,244,456 shares, respectively (31,174) (91,626) Total Green Plains stockholders' equity 962,042 950,500 Noncontrolling interests 151,192 151,519 Total stockholders' equity 1,113,234 1,102,019 Total liabilities and stockholders' equity $ 2,101,540 $ 2,159,755
September 30,
September 30,Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Revenues Product revenues $ 946,852 $ 745,240 $ 2,733,477 $ 2,019,006 Service revenues 8,125 1,551 15,329 5,843 Total revenues 954,977 746,791 2,748,806 2,024,849 Costs and expenses Cost of goods sold (excluding depreciation and amortization expenses reflected below) 956,857 730,179 2,650,680 1,878,820 Operations and maintenance expenses 6,287 5,162 18,012 17,153 Selling, general and administrative expenses 29,066 26,022 90,042 72,923 Loss (gain) on sale of assets, net — 1,823 — (31,245) Depreciation and amortization expenses 24,647 28,280 66,013 69,493 Total costs and expenses 1,016,857 791,466 2,824,747 2,007,144 Operating income (loss) (61,880) (44,675) (75,941) 17,705 Other income (expense) Interest income 1,763 25 2,640 496 Interest expense (9,576) (9,488) (26,182) (60,225) Other, net (182) (440) 28,394 (1,680) Total other income (expense) Total other income (expense) (7,995) (9,903) 4,852 (61,409) Loss before income taxes and income (loss) from equity method investees Loss before income taxes and income (loss) from equity method investees (69,875) (54,578) (71,089) (43,704) Income tax benefit (expense) 1,888 (7) 146 2,914 Income (loss) from equity method investees Income (loss) from equity method investees 84 174 (112) 517 Net loss (67,903) (54,411) (71,055) (40,273) Net income attributable to noncontrolling interests 5,623 5,211 17,547 16,151 Net loss attributable to Green Plains $ (73,526) $ (59,622) $ (88,602) $ (56,424) Earnings per share: Net loss attributable to Green Plains - basic and diluted $ (1.27) $ (1.18) $ (1.62) $ (1.27) Weighted average shares outstanding: Basic and diluted 57,677 50,482 54,550 44,581
September 30,
September 30,Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Net loss $ (67,903) $ (54,411) $ (71,055) $ (40,273) Other comprehensive income, net of tax: Unrealized gains on derivatives arising during the period, net of tax expense of ($2,494), ($171), ($836) and ($260), respectively 7,740 538 2,591 820 Reclassification of realized losses (gains) on derivatives, net of tax expense (benefit) of $536, $62, $359 and ($750), respectively (1,662) (194) (1,112) 2,390 Total other comprehensive income, net of tax 6,078 344 1,479 3,210 Comprehensive loss (61,825) (54,067) (69,576) (37,063) Comprehensive income attributable to noncontrolling interests 5,623 5,211 17,547 16,151 Comprehensive loss attributable to Green Plains $ (67,448) $ (59,278) $ (87,123) $ (53,214)
September 30,Nine Months Ended
September 30,2022 2021 Cash flows from operating activities: Net loss $ (71,055) $ (40,273) Adjustments to reconcile net loss to net cash used in operating activities: Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 66,013 69,493 Amortization of debt issuance costs Amortization of debt issuance costs 3,214 6,957 Gain on sale of assets, net — (31,245) Inventory lower of cost or net realizable value adjustment Inventory lower of cost or net realizable value adjustment 11,177 — Loss on extinguishment of debt 419 32,645 Deferred income taxes (477) (3,008) Stock-based compensation 6,646 3,980 Loss (income) from equity method investees Loss (income) from equity method investees 112 (517) Other 1,212 1,199 Changes in operating assets and liabilities before effects of business combinations and dispositions: Accounts receivable (1,063) (33,776) Inventories (2,191) 4,088 Derivative financial instruments (19,985) (2,386) Prepaid expenses and other assets 2,911 175 Accounts payable and accrued liabilities (30,283) (35,007) Current income taxes (51) (1,073) Other (1,065) 876 Net cash used in operating activities Net cash used in operating activities (34,466) (27,872) Cash flows from investing activities: Purchases of property and equipment, net (183,225) (123,687) Proceeds from the sale of assets — 87,217 Proceeds from the sale of marketable securities Proceeds from the sale of marketable securities 99,917 — Other investing activities (6,976) (7,000) Net cash used in investing activities (90,284) (43,470) Cash flows from financing activities: Proceeds from the issuance of long-term debt 45,000 367,701 Payments of principal on long-term debt (1,347) (188,706) Proceeds from short-term borrowings 1,649,828 2,450,416 Payments on short-term borrowings (1,616,226) (2,432,553) Payments on extinguishment of convertible debt (1,766) (20,861) Payments of cash distributions (16,498) (4,187) Proceeds from issuance of common stock, net — 356,011 Payments of loan fees (2,522) (9,050) Payments related to tax withholdings for stock-based compensation (3,806) (4,674) Other financing activities (1,424) 3,330 Net cash provided by financing activities Net cash provided by financing activities 51,239 517,427 Net change in cash, cash equivalents and restricted cash (73,511) 446,085 Cash, cash equivalents and restricted cash, beginning of period 560,959 274,810 Cash, cash equivalents and restricted cash, end of period $ 487,448 $ 720,895
September 30,Nine Months Ended
September 30,2022 2021 Reconciliation of total cash, cash equivalents and restricted cash: Cash and cash equivalents $ 420,838 $ 589,822 Restricted cash 66,610 131,073 Total cash, cash equivalents and restricted cash $ 487,448 $ 720,895
convertible notes due 2024Non-cash financing activities: Non-cash financing activities: Exchange of 4.00% convertible notes due 2024 for shares of common stock held in treasury stock Exchange of 4.00% convertible notes due 2024 for shares of common stock held in treasury stock $ 64,000 $ 51,000 Exchange of 4.125% convertible notes due 2022 for shares of common stock held in treasury stock Exchange of 4.125% convertible notes due 2022 for shares of common stock held in treasury stock $ 32,550 $ — Supplemental investing activities: Assets disposed of in sale $ — $ 54,626 Less: liabilities relinquished — (3,706) Net assets disposed $ — $ 50,920 Supplemental disclosures of cash flow: Cash paid for income taxes, net Cash paid for income taxes, net $ 381 $ 1,336 Cash paid for interest $ 26,126 $ 25,529 Capital expenditures in accounts payable Capital expenditures in accounts payable $ 10,289 $ 12,207 Cash premium paid for extinguishment of convertible notes $ — $ 20,861
TheAs of September 30, 2022, the company owns a 48.9%48.8% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. Public investors own the remaining 49.1%49.2% limited partner interest in the partnership. The company determined that the limited partners in the partnership with equity at risk lack the power, through voting rights or similar rights, to direct the activities that most significantly impact the partnership’s economic performance; therefore, the partnership is considered a variable interest entity. The company, through its ownership of the general partner interest in the partnership, has the power to direct the activities that most significantly affect economic performance and is obligated to absorb losses and has the right to receive benefits that could be significant to the partnership. Therefore, the company is considered the primary beneficiary and consolidates the partnership in the company’s financial statements. The assets of the partnership cannot be used by the company for general corporate purposes. The partnership’s consolidated total assets as of September 30, 20212022 and December 31, 2020,2021, excluding intercompany balances, are $102.1$95.4 million and $91.2$100.3 million, respectively, and primarily consist of cash and cash equivalents, property and equipment, operating lease right-of-use assets and goodwill. The partnership’s consolidated total liabilities as of September 30, 20212022 and December 31, 2020,2021, excluding intercompany balances, are $112.6$109.7 million and $151.2$111.4 million, respectively, which primarily consist of long-term debt as discussed in Note 8 – Debtand operating lease liabilities. The liabilities recognized as a result of consolidating the partnership do not represent additional claims on ourthe company’s general assets.BioProcess Algae, a joint venture formed in 2008, as well as a majority interest in Fluid Quip Technologies, LLC,FQT, with their results being consolidated in our consolidated financial statements.2020,2021, filed with the SEC on February 16, 2021.ReclassificationsCertain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications did not affect total revenues, costs and expenses or net income. See Note 8 – Debt and Note 11 – Stockholders’ Equity for further details.revenue recognition, carrying value of intangible assets, operating leases, impairment of long-lived assets and goodwill, derivative financial instruments, and accounting for income taxes, and assets acquired and liabilities assumed in acquisitions, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements.four businessthree operating segments: (1) ethanol production, which includes the production of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities (3) food and ingredients, which includes food-grade corn oil and (4)(3) partnership, which includes fuel storage and transportation services.The food and ingredients segment had no activity during the three and nine months ended September 30, 2021 and 2020.revolving credit agreement, or for capital expenditures as specified in certain credit facility agreements. Restricted cash also includes cash margins and securities pledged to commodity exchange clearinghouses and at times, funds in escrow related to acquisition and disposition activities. To the degree these segregated balances are cash and cash equivalents, they are considered restricted cash on the consolidated balance sheets. Energy trading transactions are reported net as a component of revenue. Revenues include net gains or losses from derivatives related to products sold while cost of goods sold includes net gains or losses from derivatives related to commodities purchased. Revenues also include realized gains and losses on related derivative financial instruments and reclassifications of realized gains and losses on cash flow hedges from accumulated other comprehensive income or loss.Revenues related to the design, engineering and installation of equipment are recognized over the term of the related contracts as equipment is delivered and installed and services are performed.grain, corn oil, grain and natural gas. Exchange-traded futures and options contracts are valued at quoted market prices and settled predominantly in cash. The company is exposed to loss when counterparties default on forward purchase and sale contracts. Grain inventories held for sale and forwardForward purchase and sale contracts are valued at market prices when available or other market quotes adjusted for basis differences, primarily in transportation, between the exchange-traded market and local market where the terms of the contract areis based. Changes in forward purchase contracts and exchange-traded futures and options contracts are recognized as a component of cost of goods sold.soybean meal and soybean oil.other agricultural and energy products. The company monitors and manages this exposure as part of its overall risk management policy to reduce the adverse effect market volatility may have on its operating results. The company may hedge these commodities as one way to mitigate risk; however, there may be situations when these hedging activities themselves result in losses.On January 1, 2021, the company early adopted the amended guidance in ASC 470-20, Debt - Debt with Conversion and Other Options andASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity - Accounting for Convertible Instruments and Contracts in an Equity’s Own Equity. The adoption of this guidance resulted in a $49.5 million decrease in additional paid-in capital, an $11.4 million increase in retained earnings and a $38.1 million increase in long-term debt, which included a $39.4 million increase in debt principal offset by a $1.3 million increase in debt issuance costs, resulting from amounts previously bifurcated to equity being reclassified to debt. See Note 8 – Debt and Note 11 – Stockholders’ Equity for further details.- Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and a subsequent update in January 2021 and October 2022, which provides optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. The expedients and exceptions provided by the amended guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022,2024, except for hedging relationships existing as of December 31, 2022,2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The guidance is effective upon issuance and to be applied prospectively from any date beginning March 12, 2020, through December 31, 2022.2024. The company does not expect the amended guidance is not expected to have a material impact on the company’s consolidated financial statements.In December 2019, the FASB issued amended guidance in ASC 740, Income Taxes - Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740by clarifying and amending existing guidance. The amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted. The amended guidance is not expected to haveits hedging relationships nor a material impact on the company’scompany's consolidated financial statements.
Revenue RecognitionRevenue is recognized when obligations under the terms of a contract with a customer are satisfied. Generally, this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Sales, value add, and other taxes the company collects concurrent with revenue-producing activities are excluded from revenue.
Three Months Ended September 30, 2022 Ethanol Production Agribusiness & Energy
ServicesPartnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ — $ — $ — $ — $ — Distillers grains 3,219 — — — 3,219 Corn oil — — — — — Service revenues 7,089 — 1,036 — 8,125 Other 258 2,211 — — 2,469 Intersegment revenues — — 1,850 (1,850) — Total revenues from contracts with customers 10,566 2,211 2,886 (1,850) 13,813 Ethanol 619,665 127,344 — — 747,009 Distillers grains 123,892 11,330 — — 135,222 Corn oil 47,668 — — — 47,668 Other 9,224 2,041 — — 11,265 Intersegment revenues — 6,836 — (6,836) — Total revenues from contracts accounted for as derivatives 800,449 147,551 — (6,836) 941,164 — — 17,180 (17,180) — Total Revenues $ 811,015 $ 149,762 $ 20,066 $ (25,866) $ 954,977 Nine Months Ended September 30, 2022 Ethanol Production Agribusiness & Energy
ServicesPartnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ — $ — $ — $ — $ — Distillers grains 19,982 — — — 19,982 Corn oil — — — — — Service revenues 12,376 — 2,953 — 15,329 Other 15,608 5,160 — — 20,768 Intersegment revenues — 234 5,788 (6,022) — Total revenues from contracts with customers 47,966 5,394 8,741 (6,022) 56,079 Ethanol 1,736,228 361,036 — — 2,097,264 Distillers grains 365,839 34,629 — — 400,468 Corn oil 140,513 3,957 — — 144,470 Other 19,188 31,337 — — 50,525 Intersegment revenues — 19,680 — (19,680) — Total revenues from contracts accounted for as derivatives 2,261,768 450,639 — (19,680) 2,692,727 — — 50,079 (50,079) — Total Revenues $ 2,309,734 $ 456,033 $ 58,820 $ (75,781) $ 2,748,806 Three Months Ended September 30, 2021 Ethanol Production Agribusiness & Energy
ServicesPartnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ — $ — $ — $ — $ — Distillers grains 6,936 — — — 6,936 Corn oil — — — — — Service revenues 520 — 1,019 — 1,539 Other 8,633 9,597 — — 18,230 Intersegment revenues — — 1,969 (1,969) — Total revenues from contracts with customers 16,089 9,597 2,988 (1,969) 26,705 Ethanol 455,843 109,552 — — 565,395 Distillers grains 77,008 9,699 — — 86,707 Corn oil 35,363 11,222 — — 46,585 Grain — 13,505 — — 13,505 Other 4,046 3,837 — — 7,883 Intersegment revenues — 5,362 — (5,362) — Total revenues from contracts accounted for as derivatives 572,260 153,177 — (5,362) 720,075 — — 16,263 (16,252) 11 Total Revenues $ 588,349 $ 162,774 $ 19,251 $ (23,583) $ 746,791 Nine Months Ended September 30, 2021 Ethanol Production Agribusiness & Energy
ServicesPartnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ — $ — $ — $ — $ — Distillers grains 14,974 — — — 14,974 Corn oil — — — — — Service revenues 2,545 — 3,235 — 5,780 Other 25,062 12,640 — — 37,702 Intersegment revenues — — 6,147 (6,147) — Total revenues from contracts with customers 42,581 12,640 9,382 (6,147) 58,456 Ethanol 1,159,020 324,395 — — 1,483,415 Distillers grains 268,167 27,953 — — 296,120 Corn oil 75,252 23,808 — — 99,060 Grain — 36,473 — — 36,473 Other 22,324 28,939 — — 51,263 Intersegment revenues — 15,997 — (15,997) — Total revenues from contracts accounted for as derivatives 1,524,763 457,565 — (15,997) 1,966,331 — — 49,976 (49,914) 62 Total Revenues $ 1,567,344 $ 470,205 $ 59,358 $ (72,058) $ 2,024,849 606, where the company recognizes revenue when control of the inventory is transferred within the meaning of ASC 606 as required by ASC 610-20, 606.Gains and Losses from Derecognition of Nonfinancial Assets.For2021, 0 single customer’s revenue was over 10% of total revenues. NaN2022, respectively, recorded within the ethanol production segment. No single customer’s revenue was over 10% of total revenues for the three months ended September 30, 2020, while revenues from Customer A represented approximately 10% of total revenues for theand nine months ended September 30, 2020, which are reported in the ethanol production segment.
ACQUISITIONS AND DISPOSITIONSAcquisition of a Majority Interest in Fluid Quip Technologies, LLCOn December 9, 2020, the company acquired a majority interest in Fluid Quip Technologies, LLC. During the second quarter of 2021, the company identified additional information through analysis of the final FQT acquisition agreements that resulted in a reassessment of certain contingent considerations related to potential earn-out payments which identified an understatement of other long term assets by $16.7 million, accrued liabilities of $2.4 million, long term other liabilities of $12.4 million and noncontrolling interests of $1.9 million as previously reported within ethanol production segment as of March 31, 2021 and December 31, 2020.activities.The asset and liabilities of the Ord ethanol plant at closing on March 22, 2021 were as follows: (in thousands):The amounts reflected above represent working capital estimates, which are considered preliminary until contractual post-closing working capital adjustments are finalized.Disposition of Hereford Ethanol PlantOn December 28, 2020, the company completed the sale of the plant located in Hereford, Texas, and certain related assets, to Hereford Ethanol Partners, L.P. There were no material changes to the assets disposed and liabilities relinquished from the disposition of the Hereford plantactivities during the three and nine months ended September 30, 2021.Disposition of Equity Interest in Green Plains Cattle Company LLCOn October 1, 2020, pursuant to the Securities Purchase Agreement, the company sold its remaining 50% joint venture interest in GPCC to AGR, TGAM Agribusiness Fund LP and StepStone (the “Buyers”) for $80.5 million in cash, plus closing adjustments. The transaction resulted in a reduction in other assets of $69.7 million as a result of the removal of the equity method investment in GPCC, and a reduction in accumulated other comprehensive income (loss) of $10.7 million as a result of the removal of the company’s share of equity method investees accumulated other comprehensive loss. Transaction fees related to the disposal were not material. The Securities Purchase Agreement contains certain earn-out provisions of up to $4.0 million to be paid to the Buyers if certain EBITDA thresholds are met. During the three months ended September 30, 2021, the company recorded an estimated loss of $2.0 million associated with the earn-out provision, and will record any additional contingent amounts associated with the earn-out provision in the consolidated financial statements when the amount is reasonably determinable.inventories held forpurchase and sale contracts in the agribusiness and energy services segment are valued at nearby futures values, plus or minus nearby basis values, which represent differences in local markets, including transportation or commodity quality or grade differences.
Active Markets for
Identical Assets
Observable InputsFair Value Measurements at September 30, 2022 Quoted Prices in
Active Markets for
Identical Assets
(Level 1)Significant Other
Observable Inputs
(Level 2)Total Assets: Cash and cash equivalents $ 420,838 $ — $ 420,838 Restricted cash 66,610 — 66,610 Inventories carried at market — 49,157 49,157 Derivative financial instruments - assets — 24,156 24,156 Other assets 110 8 118 Total assets measured at fair value $ 487,558 $ 73,321 $ 560,879 Liabilities: $ — $ 14,168 $ 14,168 — 3,364 3,364 Derivative financial instruments - liabilities — 24,337 24,337 — 6,877 6,877 Total liabilities measured at fair value $ — $ 48,746 $ 48,746 Fair Value Measurements at December 31, 2021 Quoted Prices in
Active Markets for
Identical Assets
(Level 1)Significant Other
Observable Inputs
(Level 2)Total Assets: Cash and cash equivalents $ 426,220 $ — $ 426,220 Restricted cash 134,739 — 134,739 Inventories carried at market — 72,320 72,320 Derivative financial instruments - assets — 26,738 26,738 Other assets 111 8 119 Total assets measured at fair value $ 561,070 $ 99,066 $ 660,136 Liabilities: $ — $ 12,617 $ 12,617 — 3,260 3,260 Derivative financial instruments - liabilities — 26,117 26,117 — 7,788 7,788 Total liabilities measured at fair value $ — $ 49,782 $ 49,782
Active Markets for
Identical Assets
Observable Inputs$18.7$14.2 million and $19.4$12.6 million at September 30, 20212022 and December 31, 2020,2021, respectively, related to certain delivered inventory for which the payable fluctuates based on changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option.$9.3$6.8 million and $7.6 million of consideration related to potential earn-out payments recorded at fair value.The$858.9$711.0 million compared with a book value of $711.4 million, excluding debt issuance costs, at September 30, 2021. The$703.2 million. At December 31, 2021, the fair value of the company’s debt was approximately $535.9$891.1 million compared with a book value of $526.2 million at December 31, 2020.$722.7 million. The company estimated the fair value of its convertible notes using Level 1 inputs, and the fair value of its other outstanding debt using Level 2 inputs.inputs. The company believes the fair values of its marketable securities approximated book value, which was $25.0 million and $124.9 million at September 30, 2022 and December 31, 2021, respectively. The company believes the fair values of its accounts receivable approximated book value, which was $90.3$118.4 million and $55.6$120.0 million at September 30, 20212022 and December 31, 2020,2021, respectively.fourthree operating segments: (1) ethanol production, which includes the production of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes food-grade corn oil and (4)(3) partnership, which includes fuel storage and transportation services.The food and ingredients segment, had no activity during the three and nine months ended September 30, 2021 and 2020., general and administrative expenses, consisting primarily of compensation, professional fees and overhead costs not directly related to a specific operating segment.
Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Revenues: Ethanol production: Revenues from external customers $ 811,015 $ 588,349 $ 2,309,734 $ 1,567,344 Intersegment revenues — — — — Total segment revenues 811,015 588,349 2,309,734 1,567,344 Agribusiness and energy services: Revenues from external customers 142,926 157,412 436,119 454,208 Intersegment revenues 6,836 5,362 19,914 15,997 Total segment revenues 149,762 162,774 456,033 470,205 Partnership: Revenues from external customers 1,036 1,030 2,953 3,297 Intersegment revenues 19,030 18,221 55,867 56,061 Total segment revenues 20,066 19,251 58,820 59,358 Revenues including intersegment activity 980,843 770,374 2,824,587 2,096,907 Intersegment eliminations (25,866) (23,583) (75,781) (72,058) $ 954,977 $ 746,791 $ 2,748,806 $ 2,024,849 Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Cost of goods sold: Ethanol production $ 843,843 $ 597,854 $ 2,310,224 $ 1,507,035 Agribusiness and energy services 139,922 154,427 418,017 440,682 Intersegment eliminations (26,908) (22,102) (77,561) (68,897) $ 956,857 $ 730,179 $ 2,650,680 $ 1,878,820 Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Gross margin: Ethanol production $ (32,828) $ (9,505) $ (490) $ 60,309 Agribusiness and energy services 9,840 8,347 38,016 29,523 Partnership 20,066 19,251 58,820 59,358 Intersegment eliminations 1,042 (1,481) 1,780 (3,161) $ (1,880) $ 16,612 $ 98,126 $ 146,029 Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Operating income (loss): Operating income (loss): (1)$ (64,121) $ (44,192) $ (87,773) $ (30,969) Agribusiness and energy services 5,205 3,225 25,894 15,720 Partnership Partnership 11,993 12,417 35,906 37,204 Intersegment eliminations 1,042 (1,481) 1,780 (3,161) (15,999) (14,644) (51,748) (1,089) $ (61,880) $ (44,675) $ (75,941) $ 17,705
September 30,
September 30,a goodwill impairment chargean inventory lower of $24.1cost or net realizable value adjustment of $11.2 million for the three and nine months ended September 30, 2020.2022.respectively, as well as a gain on sale of assets of $2.0 million for both the three and nine months ended September 30, 2020.respectively.
September 30,
September 30,
Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Depreciation and amortization: Ethanol production $ 21,555 $ 25,644 $ 59,101 $ 62,655 Agribusiness and energy services 1,280 870 2,214 2,072 Partnership 1,194 1,089 2,915 2,771 Corporate activities 618 677 1,783 1,995 $ 24,647 $ 28,280 $ 66,013 $ 69,493 September 30,
2022December 31,
2021Ethanol production $ 1,172,799 $ 1,101,151 Agribusiness and energy services 429,624 487,164 Partnership 95,425 100,349 Corporate assets 411,843 524,206 Intersegment eliminations (8,151) (53,115) $ 2,101,540 $ 2,159,755 balancesbalances.. grain held for sale and fair-value hedged inventories. Commodities held for sale are reported at market value.As of September 30, 2022, the company recorded a $11.2 million lower of cost or net realizable value inventory adjustment associated with finished goods in cost of goods sold within the ethanol production segment. There was 0no lower of cost or net realizable value inventory adjustment as of September 30, 2021 and December 31, 2020.2021.September 30,
2022December 31,
2021Finished goods $ 95,547 $ 91,448 Commodities held for sale 39,868 72,320 Raw materials 63,062 50,604 Work-in-process 21,671 19,783 Supplies and parts 38,704 33,683 $ 258,852 $ 267,838 2021,2022, the company’s consolidated balance sheet reflected unrealized gainslosses of $1.0$10.8 million, net of tax, in accumulated other comprehensive income (loss).loss. The company expects these lossesitems will be reclassified toas operating income (loss) over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount realized in operating income (loss) will differ as commodity prices change.Asset Derivatives'
Fair ValueLiability Derivatives'
Fair ValueSeptember 30,
2022December 31,
2021September 30,
2022December 31,
2021
2021
2020
2021
2020Derivative financial instruments - forwards Derivative financial instruments - forwards $ 24,156 (1) $ 26,738 $ 24,337 (2) $ 26,117 (3) Other assets 8 8 — — Other liabilities Other liabilities — — 38 196 Total $ 24,164 $ 26,746 $ 24,375 $ 26,313 December 31, 2020, September 30, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange traded futures and options contracts of $3.3$7.2 million, which included $2.8$1.2 million of net unrealized gainslosses on derivative financial instruments designated as cash flow hedging instruments.instruments, $7.1 million of unrealized gains on derivative financial instruments designated as fair value hedging instruments, and the balance representing economic hedges.2021, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $23.7$1.5 million, which included $14.3 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments.representing economic hedges.2020, 2021, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $9.3$17.1 million, 0newhich include $1.3 million of which werenet unrealized losses on derivative financial instruments designated as cash flow hedging instruments.instruments, $0.5 million of unrealized losses on derivative financial instruments designated as fair value hedging instruments, and the balance representing economic hedges.Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Location of Gain (Loss) Reclassified from Accumulated Other
Comprehensive Income into IncomeThree Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Revenues $ 6,958 $ (691) $ 5,219 $ (39,571) Cost of goods sold (4,760) 947 (3,748) 36,431 Net gain (loss) recognized in loss before income taxes $ 2,198 $ 256 $ 1,471 $ (3,140) Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives Gain (Loss) Recognized in Other Comprehensive Income on
DerivativesThree Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Commodity contracts $ 10,234 $ 709 $ 3,427 $ 1,080 Amount of Gain (Loss)
Recognized in Income on DerivativesDerivatives Not Designated as
Hedging InstrumentsLocation of Gain (Loss) Recognized in Income
on DerivativesThree Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Exchange traded futures and options Revenues $ 1,302 $ (7,076) $ 1,271 $ (63,612) Forwards Revenues (4,775) 8,714 (508) 13,355 Exchange trade futures and options Costs of goods sold (13,455) 6,618 (53,663) 13,659 Forwards Costs of goods sold 16,231 (14,212) (2,066) (9,699) Net loss recognized in loss before income taxes $ (697) $ (5,956) $ (54,966) $ (46,297)
September 30,
September 30,
September 30,
September 30,
September 30,
September 30,
September 30, 2022 December 31, 2021 Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Inventories $ 49,157 $ (4,876) $ 72,320 $ 6,291 Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended September 30, 2022 2021 Revenue Cost of
Goods SoldRevenue Cost of
Goods SoldGain (loss) on cash flow hedging relationships: Commodity contracts: Amount of gain (loss) on exchange traded futures reclassified from accumulated other comprehensive income into income $ 6,958 $ (4,760) $ (691) $ 947 Gain (loss) on fair value hedging relationships: Commodity contracts: Fair-value hedged inventories — 1,656 — 10,359 Exchange traded futures designated as hedging instruments — (4,262) — (10,726) Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded $ 6,958 $ (7,366) $ (691) $ 580 Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Nine Months Ended September 30, 2022 2021
Goods Sold
Goods SoldRevenue Cost of
Goods SoldRevenue Cost of
Goods SoldGain (loss) on cash flow hedging relationships: Commodity contracts: Amount of gain (loss) on exchange traded futures reclassified from accumulated other comprehensive income into income Amount of gain (loss) on exchange traded futures reclassified from accumulated other comprehensive income into income $ 5,219 $ (3,748) $ (39,571) $ 36,431 Gain (loss) on fair value hedging relationships: Commodity contracts: Fair-value hedged inventories Fair-value hedged inventories — 11,492 — 28,732 Exchange traded futures designated as hedging instruments Exchange traded futures designated as hedging instruments — (8,973) — (25,078) Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded $ 5,219 $ (1,229) $ (39,571) $ 40,085
Goods Sold
Goods Sold0no gains or losses from discontinuing cash flow or fair value hedge treatment during the three and nine months ended September 30, 20212022 and 2020.
The open commodity derivative positions as of September 30, 2021,2022, are as follows (in thousands):
Instruments
(Short)
MeasureDerivative
InstrumentsDerivative
InstrumentsNet Long &
(Short)Long (Short) Unit of
MeasureCommodity Futures (20,605) Bushels Corn Futures 15,105 (3) Bushels Corn Futures (1,290) (4) Bushels Corn Futures 3,150 Gallons Ethanol Futures (44,100) (3) Gallons Ethanol Futures (7,420) MmBTU Natural Gas Futures 6,420 (3) MmBTU Natural Gas Futures (6,210) (4) MmBTU Natural Gas Options 6,204 Pounds Soybean Oil Options (56) MmBTU Natural Gas Forwards 27,808 (18) Bushels Corn Forwards 1,989 (241,680) Gallons Ethanol Forwards 95 (361) Tons Distillers Grains Forwards — (57,205) Pounds Corn Oil Forwards 25,041 (516) MmBTU Natural Gas ExchangeNotional volume of exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis.Non-exchangeNotional volume of non-exchange traded forwardsforward physical contracts are presented on a gross long and (short) position basis including both fixed-price and basis contracts.contracts, for which only the basis portion of the contract price is fixed.FuturesNotional volume of exchange traded futures used for cash flow hedges.FuturesNotional volume of exchange traded futures used for fair value hedges.Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Included in revenues are net gains on energy trading contracts of $0.1 million and $0.6 million for the three and nine months ended September 30, 2021, respectively, and net losses on energy trading contracts of $0.9 million and net gains on energy trading contracts of $2.1 million for the three and nine months ended September 30, 2020, respectively.
On January 1, 2021, the company early adopted the amended guidance in ASC 470-20, using the modified retrospective method of transition. The adoption of this guidance resulted in a $49.5 million decrease in additional paid-in capital, an $11.4 million increase in retained earnings and a $38.1 million increase in long-term debt, which included a $39.4 million increase in debt principal offset by a $1.3 million increase in debt issuance costs, resulting from amounts previously bifurcated to equity being reclassified to debt.September 30,
2022December 31,
2021(1)(2)(1)$ 230,000 $ 230,000 (3)(2)— 64,000 (4)(3)— 34,316 Green Plains SPE LLC: (5)(4)125,000 125,000 Green Plains Wood River and Green Plains Shenandoah: (6)(5)75,000 30,000 Green Plains Partners: 58,969 60,000 Other 15,147 15,531 Total book value of long-term debt 504,116 558,847 Unamortized debt issuance costs (7,012) (9,556) Less: current maturities of long-term debt (1,835) (35,285) Total long-term debt $ 495,269 $ 514,006 See discussion on early adoption of the amended guidance in ASC 470-20 above.(2)Includes $6.8$5.6 million and $6.5 million of unamortized debt issuance costs as of September 30, 2021.2022 and December 31, 2021, respectively.(3)See discussion below regardingThe 2024 notes were converted into shares of common stock of the exchange of convertible notes due in 2024.company and were retired effective July 8, 2022. Includes $1.3 million and $2.2$1.2 million of unamortized debt issuance costs as of September 30, 2021 and December 31, 2020, respectively.2021.(4)See discussion below regardingThe 2022 notes were converted into shares of common stock of the repurchase of convertible notes duecompany and settled in cash, and were retired upon maturity, effective September 1, 2022. Includes $0.2 million and $1.3$0.1 million of unamortized debt issuance costs as of September 30, 2021 and December 31, 2020, respectively.2021.(5)(4)Includes $0.7 million and $0.9 million of unamortized debt issuance costs as of September 30, 2021.2022 and December 31, 2021, respectively.(6)(5)Includes $0.3 million of unamortized debt issuance costs as of both September 30, 20212022 and December 31, 2020,2021, respectively.(7)(6)The Green Plains Partners credit facility was amended on July 20, 2021, reducing the total amount available to $60.0 million and includes $0.4 million and $2.3Includes $0.5 million of unamortized debt issuance costs as of both September 30, 20212022 and December 31, 2020,2021, respectively.September 30,
2022December 31,
2021Green Plains Finance Company, Green Plains Grain and Green Plains Trade: $350.0 million revolver $ 195,000 $ — Green Plains Commodity Management: $40.0 million hedge line 11,102 16,210 Green Plains Trade: $300.0 million revolver — 137,208 Green Plains Grain: $100.0 million revolver — 20,000 $ 206,102 $ 173,418 arewere senior, unsecured obligations of the company, with interest payable on January 1 and July 1 of each year, beginning January 1, 2020, at a rate of 4.00% per annum. The 4.00% notes will mature on July 1, 2024, unless earlier converted, redeemed or repurchased. The 4.00% notes will bewere convertible, at the option of the holders, into consideration consisting of, at the company’s election, cash, shares of the company’s common stock, or a combination of cash and shares of the company’s common stock until the close of business on the scheduled trading day immediately preceding the maturity date. However, before January 1, 2024, the 4.00% notes will not be convertible unless certain conditions are satisfied. The initial conversion rate iswas 64.1540 shares of common stock per $1,000 of principal, which is equal to a conversion price of approximately $15.59 per share. The company increased the final conversion rate will be subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering. In addition, the company may be obligated to increase the conversion rate for any conversion that occurs66.4178 in connection with certain corporate events, including the company’s calling the 4.00% notes for redemption.On and after July 1, 2022, and prior to the maturity date, the company may redeem all, but not less than all, of the 4.00% notes for cash if the sale price of the company’s common stock equals or exceeds 140% of the applicable conversion price for a specified time period endingredemption on the trading day immediately prior to the date the company delivers notice of the redemption. The redemption price will equal 100% of the principal amount of the 4.00% notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of a fundamental change, holders of the 4.00% notes will have the right, at their option, to require the company to repurchase the 4.00% notes in cash at a price equal to 100% of the principal amount of the 4.00% notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.arewere senior, unsecured obligations of the company, with interest payable on March 1 and September 1 of each year. The company may settlenotes were convertible at the 4.125% notes in cash, common stock or a combination of cash and common stock. Prior to March 1, 2022, the 4.125% notes are not convertible unless certain conditions are satisfied.Holder’s option. The initial conversion rate iswas 35.7143 shares of common stock per $1,000 of principal, which is equal to a conversion price of approximately $28.00 per share. The conversion rate will bewas subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering.The company may redeem all, but not less than all, of the 4.125% notes at any time on or after September 1, 2020, if the company’s common stock equals or exceeds 140% of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date the company delivers notice of the redemption. The redemption price will equal 100% of the principal plus any accrued and unpaid interest. Holders of the 4.125% notes have the option to require the company to repurchase the 4.125% notes in cash at a price equal to 100% of the principal plus accrued and unpaid interest when there is a fundamental change, such as change in control. If an event of default occurs, it could result in the 4.125% notes being declared due and payable.has(collectively, the “Borrowers”), all wholly owned subsidiaries of the company, together with the company, as guarantor, entered into a $300.0five-year, $350.0 million senior secured asset-basedsustainability-linked revolving Loan and Security Agreement (the “Facility”) with a group of financial institutions. This transaction refinanced the separate credit facility to finance working capital for marketingfacilities previously held by Green Plains Grain and distribution activities based on eligible collateral equal to the sum of percentages of eligible receivables and inventories, less miscellaneous adjustments.Green Plains Trade. The credit facilityFacility matures on July 28, 2022March 25, 2027. consists of a $285 million credit facility and a $15 million first-in-last-out (FILO) credit facility and includes an accordion feature that enableswhereby amounts available under the credit facility toFacility may be increased by up to $70.0$100.0 million with agent approval. Advances areof new lender commitments subject to variablecertain conditions. Each SOFR rate loan shall bear interest ratesfor each day at a rate per annum equal to daily LIBORthe Term SOFR rate for the outstanding period plus a Term SOFR adjustment and an applicable margin of 2.25% to 2.50%, which is dependent on undrawn availability under the credit facility and daily LIBORFacility. Each base rate loan shall bear interest at a rate per annum equal to the base rate plus 3.25%the applicable margin of 1.25% to 1.50%, which is dependent on undrawn availability under the FILO credit facility.Facility. The total unused portion of the revolving credit facilityFacility is also subject to a commitment fee of 0.275% to 0.375% per annum.terms imposeFacility contains customary affirmative and negative covenants, for Green Plains Trade, including maintaining a minimum fixed chargeas well as the following financial covenants to be calculated as of the last day of any month: the current ratio of the Borrowers shall not be less than 1.00 to 1.00; the collateral coverage ratio of 1.15the Borrowers shall not be less than 1.20 to 1.00. Capital expenditures are limited1.00; and the debt to $1.5 million per year under the credit facility. The credit facility also restricts distributions related to capital stock, with an exception for distributions up to 50% of net income if, on a pro forma basis, (a) availability has been greater than $10.0 million for the last 30 days and (b) the borrower would be in compliance with the fixed charge coveragecapitalization ratio on the distribution date.Green Plains Grain has a $100.0 million senior secured asset-based revolving credit facility, which matures on June 28, 2022. The credit facility finances working capital up to the maximum commitment based on eligible collateral equal to the sum of percentages of eligible cash, receivables and inventories, less miscellaneous adjustments. Advances are subject to an interest rate equal to LIBOR plus 3.00% or the lenders’ base rate plus 2.00%. The credit facility also includes an accordion feature that enables the facility to be increased by up to $75.0 million with agent approval. The credit facility can also be increased by up to $50.0 million for seasonal borrowings. Total commitments outstanding cannot exceed $225.0 million. Depending on utilization, the total unused portion of the $100.0 million revolving credit facility is also subject to a commitment fee ranging from 0.375% to 0.50%.Lenders receive a first priority lien on certain cash, inventory, accounts receivable and other assets owned by Green Plains Grain. The terms impose affirmative and negative covenants for Green Plains Grain, including maintaining minimum working capital to be the greater of (i) $18,000,000 and (ii) 18% of the sum of the then total commitment plus the aggregate seasonal line commitments. Minimum tangible net worth is required tocompany shall not be greater than 21%0.60 to 1.00.sum ofBorrowers and is guaranteed by the then total commitment plus the aggregate seasonal line commitments. The credit facility also requires the company to maintain a maximum annual leverage of 6.00 to 1.00. Capital expenditures are limited to $8.0 million per year under the credit facility, plus equity contributions from the company and unused amounts of up to $8.0 million from the previous year. In addition, if the company has long-term indebtedness on the date of calculation of greater than $10.0 million, the credit facility requires the company to maintain a minimum fixed charge coverage ratio of 1.25 to 1.00 and a maximum long term debt capitalization of 40%. company.Green Plains Grain has entered into a $50.0 million short-term inventory financing agreement with a financial institution. The company has accounted for the agreements as short-term notes, rather than sales, and has elected the fair value option to offset fluctuations in market prices of the inventory. The company had 0 short-term notes payable related to these inventory financing agreements as of September 30, 2021.$30.0$40.0 million revolving credit facility which matures April 30, 2023, to finance margins related to its hedging programs. Advances are subject to variable interest rates equal to LIBORSOFR plus 1.75%.will beare being used to construct highMSCTM protein processing systemstechnology at the Green Plains Obion and Green Plains Mount Vernon facilities. The Junior Notes accrue interest at an annual rate of 11.75%. However, subject to the satisfaction of certain conditions, the Green Plains SPE LLC may elect to pay an amount in cash equal to interest accruing at a rate of 6.00% per annum plus an amount equal to interest accruing at a rate of 6.75% per annum to be paid in kind. The entire outstanding principal balance, plus any accrued and unpaid interest is due upon maturity. Green Plains SPE LLC is required to comply with certain financial covenants regarding minimum liquidity at Green Plains and a maximum aggregate loan to value. The Junior Notes can be retired or refinanced after 42 months with no prepayment premium. The Junior Notes have an unsecured parent guarantee from the company and have certain limitations on distributions, dividends or loans to the company unless there will not exist any event of default. Funds associated with the Junior Notes are administered by a trustee and a portion are included in the balance of restricted cash as of September 30, 2021.2022.will bewere used to add highMSCTM protein processing systemstechnology at the Wood River and Shenandoah facilities as well as other capital expenditures.which must occur withinin the 18 month draw period. Afterfirst quarter of 2022. Beginning in the earliersecond quarter of the 18 month draw period or the loan being fully drawn,2022, the interest rate premium may be adjusted quarterly from 0.00% to 1.50% based on the leverage ratio of total funded debt to EBITDA of Wood River and Shenandoah. Principal payments of $1.5 million per year begin 24 months from the closing date. Prepayments are prohibited until September 2024. Financial covenants of the delayed draw loan agreement include a minimum loan to value ratio of 50%, a minimum fixed charge coverage ratio of 1.25x commencing on June 30, 2021, a total debt service reserve of six months of future principal and interest payments and a minimum working capital requirement at Green Plains of not less than $0.10 per gallon of nameplate capacity or $95.8 million. The loan is guaranteed by the company and has certain limitations on distributions, dividends or loans to Green Plains by Wood River and Shenandoah unless immediately after giving effect to such action, there will not exist any event of default.decreasing the total amount available to $60.0 million, extending the maturity from December 31, 2021 to July 20, 2026, and converting the credit facility to a term loan. Under the terms of the amended agreement, BlackRock purchased the outstanding $50.0 million balance of the prior credit facility from the previous lenders. Interest on the amended term loan is based on 3-month LIBOR plus 8.00%, with a 0% LIBOR floor. Interest is payable on the 15th day of each March, June, September and December during the term with the first interest payment being September 15, 2021. The amended term loan does not require any principal payments; however, the partnership has the option to prepay $1.5 million per quarter beginning twelve months after the closing date.During On February 11, 2022, the nine months ended September 30, 2021, prioramended term loan was modified to allow Green Plains Partners and its affiliates to repurchase outstanding notes. On the amendment,same day, the partnership made principal payments of $50.0 million on the prior credit facility, including $19.5purchased $1.0 million of scheduled repayments, $27.5 million related to the sale ofoutstanding notes from accounts and funds managed by BlackRock and subsequently retired the storage assets located adjacent to the Ord, Nebraska ethanol plant and a $3.0 million prepayment made with excess cash.2021.2021,2022, there were approximately $174.4$115.4 million of net assets at the company’s subsidiaries that could not be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.plan.plan, of which 1.6 million shares remain outstanding and available. The plan provides for shares, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, restricted and deferred stock unit awards and performance share awards to eligible employees, non-employee directors and consultants. The company measures stock-based compensation at fair value on the grant date, with no adjustments for estimated forfeitures. The company records noncash compensation expense related to equity awards in its consolidated financial statements over the requisite period on a straight-line basis.
2021,2022, is as follows:
Shares and
Deferred Stock
Units
Average Grant-
Date Fair Value
Remaining
Vesting Term
(in years)Non-Vested
Shares and
Deferred Stock
UnitsWeighted-
Average Grant-
Date Fair ValueWeighted-Average
Remaining
Vesting Term
(in years)Non-Vested at December 31, 2021 Non-Vested at December 31, 2021 793,337 $ 14.64 Granted 290,471 30.16 Forfeited (6,547) 20.23 Vested (276,856) 15.79 Non-Vested at September 30, 2022 Non-Vested at September 30, 2022 800,405 $ 19.83 2.0 Performance shares granted in 2021 and 2020 do not contain market-based factors requiring a Monte Carlo valuation model. The performance shares were granted at a target of 100%, but each performance share will reducecan be reduced or increaseincreased depending on results for the performance period. If the company achieves the maximum performance goals, the maximum amount of shares available to be issued pursuant to the 2022, 2021 and 2020 awards are 936,1411,210,935 performance shares which represents approximately 271%251% of the 345,414482,811 performance shares which remain outstanding. The actual number of performance shares that will ultimately vest is based on the actual performance targets achieved at the end of theeach performance period. and March 19, 2018, the board of directors granted performance shares to be awarded in the form of common stock to certain participants of the plan. These performance shares vest based on the company’s average return on net assets (RONA) and the company’s total shareholder return (TSR), as further described herein. The performance shares vest on the third anniversary of the grant, if the RONA and TSR criteria are achieved and the participant is then employed by the company. NaN percent of the performance shares vest based upon the company’s ability to achieve a predetermined RONA during the three year performance period. The remaining 50 percent of the performance shares vest based upon the company’s total TSR during the three year performance period relative to that of the company’s performance peer group.will reducewas reduced or increaseincreased depending on results for the performance period for the company's RONA,company’s average return on net assets, and the company’s TSRtotal shareholder return relative to that of the company’s performance peer group. On MarchFebruary 19, 2021,2022, based on the criteria discussed above, the 2018149,933 2019 performance shares vested at a target of 75%. If the company’s RONA and TSR achieve the maximum goals, the maximum amount of shares available to be issued pursuant to the 2019 awards are 224,900 performance shares or 150% of the 149,933 performance shares, which remain outstanding. The actual number of performance shares that will ultimately vest is based on the actual percentile ranking of the company’s RONA, and the company’s TSR compared to the peer performance at the end of the performance period.For performance shares which include market-based factors, the company uses the Monte Carlo valuation model to estimate the fair value of the performance shares on the date of the grant.The weighted average assumptions used by the company in applying the Monte Carlo valuation model for performance share grants and related valuation are illustratedresulted in the following table:FY 2019 Performance AwardsRisk-free interest rate2.45%Dividend yield3.13%Expected volatility41.69%Monte Carlo valuation99.62%Closing stock price on the date of grant$15.34
2021,2022, is as follows:
Shares
Average Grant-
Date Fair Value
Remaining
Vesting Term
(in years)Performance
SharesWeighted-
Average Grant-
Date Fair ValueWeighted-Average
Remaining
Vesting Term
(in years)Non-Vested at December 31, 2021 486,155 $ 13.93 Granted 146,589 29.47 Vested (149,933) 15.31 Non-Vested at September 30, 2022 482,811 $ 18.22 2.1 at fair value on the grant date, with no adjustments for estimated forfeitures. The partnership records noncash compensation expense related to theequity awards in its consolidated financial statements over the requisite service period on a straight-line basis.2021,2022, is as follows:
Shares and
Deferred Stock
Units
Average Grant-
Date Fair Value
Remaining
Vesting Term
(in years)Non-Vested Units Weighted-
Average Grant-
Date Fair ValueWeighted-Average
Remaining
Vesting Term
(in years)Non-Vested at December 31, 2021 19,482 $ 12.32 Granted 19,707 12.18 Vested (19,482) 12.32 Non-Vested at September 30, 2022 19,707 $ 12.18 0.8 stock-basedstock-based and unit-based payment plans were $2.4 million and $6.6 million for the three and nine months ended September 30, 2022, respectively, and $2.0 million and $4.0 million for the three and nine months ended September 30, 2021, respectively, and $2.1 million and $5.7 million for the three and nine months ended September 30, 2020, respectively. At September 30, 2021,2022, there was $11.5$15.6 million of unrecognized compensation costs from stock-based and unit-based compensation related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 2.12.0 years. The potential tax benefit related to stock-based payment is approximately 23.9%19.1% of these expenses.
thousands, except per share amounts)thousands):Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 EPS - basic and diluted: Net loss attributable to Green Plains $ (73,526) $ (59,622) $ (88,602) $ (56,424) Weighted average shares outstanding - basic and diluted 57,677 50,482 54,550 44,581 EPS - basic and diluted $ (1.27) $ (1.18) $ (1.62) $ (1.27) 8,660 14,055 8,571 12,458
September 30,
September 30,Early Adoption of ASC 470-20On January 1, 2021, the company early adopted the amended guidance in ASC 470-20, using the modified retrospective method of transition. The adoption of this guidance resulted in a $49.5 million decrease in additional paid-in capital, an $11.4 million increase in retained earnings and a $38.1 million increase in long-term debt, which included a $39.4 million increase in debt principal offset by a $1.3 million increase in debt issuance costs, resulting from amounts previously bifurcated to equity being reclassified to debt.Upon adoption of amended guidance in ASC 470-20, the company reversed the remaining deferred tax liability of $9.2 million associated to the equity portion of previously issued convertible debt. As the company had recorded a full valuation allowance against its deferred tax assets, the reversal of the $9.2 million deferred tax liability would require an increase to the existing valuation allowance by the same amount, which would normally be recorded through current income tax expense. However, because the change in the deferred tax liability is directly linked to the adoption of ASC 470-20, which is accounted for as a cumulative effect adjustment, the required increase to the valuation allowance is recorded as part of the cumulative adjustment to stockholders’ equity and has no effect on the income statement.Offering”Offering���). The March Common Stock Offering resulted in net proceeds of $191.1 million, after deducting underwriting discounts and commissions and the company’s offering expenses.exercisable.exercisable, and are treated as equity based awards and recorded as a reduction in additional paid-in capital. The remaining 275,000 warrants, of which 83,333 are exercisable as a result of achieving certain earn-out provisions and 191,667 are contingent upon certain earn-out provisions, are treated as liability based awards, and valued quarterly using the company’s stock price. These warrants could potentially dilute basic earnings per share in future periods. The exercise price of the warrants is $22.00 and expiration dates are December 8, 2025 for 275,000 warrants, February 9, 2026 for 275,000 warrants and April 28, 2026 for 2,000,000 warrants.
closed oncompleted a privately negotiated exchange agreement with certain noteholders of the company’s 4.00% notes,, pursuant to which the noteholders agreed to exchange $51.0 million in aggregate principal for 3,568,705 shares of the company’s common stock at an implied price of $26.80.and 2020 are as follows (in thousands):(1)See Note 1 – Recent Accounting Pronouncements and Note 8 – Debt for discussion on adoption of ASC 470-20.
Common Stock Additional
Paid-in
CapitalRetained
Earnings
(Deficit)Accum. Other
Comp. Income
(Loss)Treasury Stock Total
Green Plains
Stockholders'
EquityNon-
Controlling
InterestsTotal
Stockholders'
EquityShares Amount Shares Amount Balance, December 31, 2021 61,840 $ 62 $ 1,069,573 $ (15,199) $ (12,310) 8,244 $ (91,626) $ 950,500 $ 151,519 $ 1,102,019 Net income (loss) — — — (61,474) — — — (61,474) 5,602 (55,872) Distributions declared — — — — — — — — (5,122) (5,122) Other comprehensive income (loss) before reclassification — — — — 5,386 — — 5,386 — 5,386 Amounts reclassified from accumulated other comprehensive income (loss) — — — — (1,965) — — (1,965) — (1,965) Other comprehensive income (loss), net of tax — — — — 3,421 — — 3,421 — 3,421 Investment in subsidiary — — — — — — — — 24 24 Stock-based compensation 226 — (1,922) — — — — (1,922) 59 (1,863) Balance, March 31, 2022 62,066 62 1,067,651 (76,673) (8,889) 8,244 (91,626) 890,525 152,082 1,042,607 Net income — — — 46,398 — — — 46,398 6,322 52,720 Distributions declared — — — — — — — — (8,098) (8,098) Other comprehensive income (loss) before reclassification — — — — (10,535) — — (10,535) — (10,535) Amounts reclassified from accumulated other comprehensive income (loss) — — — — 2,515 — — 2,515 — 2,515 Other comprehensive income (loss), net of tax — — — — (8,020) — — (8,020) — (8,020) Investment in subsidiary — — — — — — — — 190 190 Stock-based compensation 21 — 2,270 — — — — 2,270 60 2,330 Balance, June 30, 2022 62,087 62 1,069,921 (30,275) (16,909) 8,244 (91,626) 931,173 150,556 1,081,729 Net income (loss) — — — (73,526) — — — (73,526) 5,623 (67,903) Distributions declared — — — — — — — — (5,247) (5,247) Other comprehensive income (loss) before reclassification — — — — 7,740 — — 7,740 — 7,740 Amounts reclassified from accumulated other comprehensive income (loss) — — — — (1,662) — — (1,662) — (1,662) Other comprehensive income (loss), net of tax — — — — 6,078 — — 6,078 — 6,078 Exchange of 4.125% convertible notes due 2022 — — 19,756 — — (1,188) 13,211 32,967 — 32,967 Redemption of 4.00% convertible notes due 2024 — — 15,797 — — (4,251) 47,241 63,038 — 63,038 Investment in subsidiary — — — — — — — — 199 199 Stock-based compensation 1 — 2,312 — — — — 2,312 61 2,373 Balance, September 30, 2022 62,088 $ 62 $ 1,107,786 $ (103,801) $ (10,831) 2,805 $ (31,174) $ 962,042 $ 151,192 $ 1,113,234
Common Stock Additional
Paid-in
CapitalRetained
Earnings
(Deficit)Accum. Other
Comp. Income
(Loss)Treasury Stock Total
Green Plains
Stockholders'
EquityNon-
Controlling
InterestsTotal
Stockholders'
EquityShares Amount Shares Amount Balance, January 1, 2021 47,471 $ 47 $ 691,393 $ 50,793 $ (2,172) 11,813 $ (131,287) $ 608,774 $ 129,812 $ 738,586 Net income (loss) — — — (6,545) — — — (6,545) 4,566 (1,979) Distributions declared — — — — — — — — (1,395) (1,395) Other comprehensive income (loss) before reclassification — — — — (4,849) — — (4,849) — (4,849) Amounts reclassified from accumulated other comprehensive income (loss) — — — — (1,377) — — (1,377) — (1,377) Other comprehensive income (loss), net of tax — — — — (6,226) — — (6,226) — (6,226) Investment in subsidiary — — — — — — — — 3,330 3,330 Issuance of warrants — — 3,431 — — — — 3,431 (3,431) — Issuance of common stock for cash at $23.00 per share, net of fees 8,752 9 191,125 — — — — 191,134 — 191,134 Stock-based compensation 230 — (3,000) — — — — (3,000) 79 (2,921) Balance, March 31, 2021 56,453 56 882,949 44,248 (8,398) 11,813 (131,287) 787,568 132,961 920,529 Net income (loss) — — — 9,743 — — — 9,743 6,374 16,117 Distributions declared — — — — — — — — (1,395) (1,395) Other comprehensive income (loss) before reclassification — — — — 5,131 — — 5,131 — 5,131 Amounts reclassified from accumulated other comprehensive income (loss) — — — — 3,961 — — 3,961 — 3,961 Other comprehensive income (loss), net of tax — — — — 9,092 — — 9,092 — 9,092 Exchange of 4.00% convertible notes due 2024 — — 17,679 — — (3,569) 39,661 57,340 — 57,340 Investment in subsidiary — — — — — — — — 3,139 3,139 Stock-based compensation (20) 4 324 — — — — 328 80 408 Balance, June 30, 2021 56,433 60 900,952 53,991 694 8,244 (91,626) 864,071 141,159 1,005,230 Net income (loss) — — — (59,622) — — — (59,622) 5,211 (54,411) Distributions declared — — — — — — — — (1,397) (1,397) Other comprehensive income (loss) before reclassification — — — — 538 — — 538 — 538 Amounts reclassified from accumulated other comprehensive income (loss) — — — — (194) — — (194) — (194) Other comprehensive income (loss), net of tax — — — — 344 — — 344 — 344 Investment in subsidiary — — — — — — — — 1,156 1,156 Issuance of common stock for cash at $32.00 per share, net of fees 5,463 5 164,872 — — — — 164,877 — 164,877 Stock-based compensation (57) — 1,759 — — — — 1,759 60 1,819 Balance, September 30, 2021 61,839 $ 65 $ 1,067,583 $ (5,631) $ 1,038 8,244 $ (91,626) $ 971,429 $ 146,189 $ 1,117,618
September 30,
September 30,
OperationsThree Months Ended
September 30,Nine Months Ended
September 30,Statements of
Operations
Classification2022 2021 2022 2021 Gains (losses) on cash flow hedges: Commodity derivatives $ 6,958 $ (691) $ 5,219 $ (39,571) (1) Commodity derivatives (4,760) 947 (3,748) 36,431 (2) Total gains (losses) on cash flow hedges Total gains (losses) on cash flow hedges 2,198 256 1,471 (3,140) (3) Income tax benefit (expense) (536) (62) (359) 750 (4) Amounts reclassified from accumulated other comprehensive income (loss) $ 1,662 $ 194 $ 1,112 $ (2,390) CARESInflation Reduction Act (IRA), was signed into law on March 27, 2020.August 16, 2022. The CARES ActIRA includes several significant businesslaw changes relating to tax, climate change, energy and health care. The IRA significantly expands clean energy incentives by providing an estimated $370 billion of new energy related tax credits over the next ten years. It also permits more flexibility for taxpayers to use the credits with direct-pay and transferable credit options. In addition, the IRA includes key revenue-raising provisions including eliminationwhich include a 15% book-income alternative minimum tax on corporations with adjusted financial statement income over $1 billion, a 1% excise tax on the value of the taxable limit for certain net operating losses (“NOL”), allowing businesses to carry back NOLs arisingstock repurchases by publicly traded companies, and the reinstatement of Superfund excise taxes. The company expects it will benefit from certain energy related tax credits in 2018, 2019future years and 2020 tonot be negatively impacted by the five prior tax years, accelerating refunds of previously generated corporate AMT credits, and loosening the business interest limitation under §163(j) from 30% to 50%. The CARES Act also contains an employee retention credit to encourage employers to maintain headcounts even if employees cannot report to work because of issues related to the COVID-19. In the first quarter of 2020,revenue raising provisions; however, the company recorded an incomedoes not have enough information to provide a reasonable estimate of future tax benefit related to the expected NOL carry back claim of $28.4 million, which was an estimate based on the amount of NOL rated to the 2019 year-end tax provision. NaN additional tax benefit was recorded related to the CARES Act during the nine months ended September 30, 2021.income tax expense of $7 thousand and income tax benefit of $2.9$1.9 million for the three and nine months ended September 30, 2021, compared with income tax expense of $7.3 million and income tax benefit of $48.5 million for the same periods in 2020.The decrease in income tax expense recorded for the three months ended September 30, 2021 was primarily due to a decrease in pretax book2022, compared with income tax expense of $7 thousand for the same period offset by recording a valuation allowance against the tax net operating loss (NOL) generated in the period.2021. The decreaseincrease in the amount of tax benefit recorded for the ninethree months ended September 30, 2021 compared to the same period in 20202022 was primarily due to a decrease in the valuation allowance recorded against deferred tax benefit recognizedassets related to gains (losses) on derivatives included in 2020 associated with the carry back of the tax NOL generated in 2019 to the 2014 tax year under the newly enacted CARES Act. The amount of unrecognized tax benefits for uncertain tax positions was $51.4 million as of September 30, 2021 and December 31, 2020.Upon adoption of amended guidance in ASC 470-20, during the first quarter of 2021, the company reversed the remaining deferred tax liability of $9.2 million associated to the equity portion of previously issued convertible debt. As the company had recorded a full valuation allowance against its deferred tax assets, the reversal of the $9.2 million deferred tax liability would require an increase to the existing valuation allowance by the same amount which would normally be recorded through current income tax expense. However, as the change in the deferred tax liability is directly linked to the adoption of ASC 470-20, which is accounted for as a cumulative effect adjustment, the required increase to the valuation allowance is recorded as part of the cumulative adjustment to stockholders’ equity and has no effect on the consolidated statements of operations.1615.1 years. The land and facility leases include renewal options. The renewal options are included in the lease term only for those sites or locations that are reasonably certain to be renewed. Equipment renewals are not considered reasonably certain to be exercised as they typically renew with significantly different underlying terms.Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Lease expense Operating lease expense $ 5,220 $ 4,803 $ 15,608 $ 14,645 776 301 1,181 892 Total lease expense $ 5,996 $ 5,104 $ 16,789 $ 15,537
September 30,
September 30,
September 30,
September 30,Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,949 $ 4,706 $ 14,823 $ 14,352 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1,428 7,162 13,151 17,934 Right-of-use assets and lease obligations derecognized due to lease modifications: Operating leases — 1,838 — 1,889
September 30,
2022December 31,
2021Weighted average remaining lease term 5.2 years 5.5 years Weighted average discount rate 4.12 % 4.16 % 20212022 and in future years are as follows (in thousands):Year Ending December 31, Amount 2022 $ 5,529 2023 19,424 2024 16,888 2025 12,327 2026 6,117 Thereafter 14,839 Total 75,124 Less: Present value discount (8,390) Lease liabilities $ 66,734 The company has an additional railcar operating lease that will commence in the fourth quarterTable of 2021, with estimated future minimum lease commitments of approximately $0.7 million and a lease term of three years. The undiscounted amounts are not included in the tables above.Contents Refer to Note 2 – Revenue for further discussion on lease revenue.2021,2022, the company had contracted future purchases of ethanol, grain, corn oil, natural gas, ethanol and distillers grains, valued at approximately $372.7$366.0 million and future commitments for storage and transportation, valued at approximately $27.8 million.14. RELATED PARTY TRANSACTIONSGreen Plains Cattle Company LLCThe company engaged in certain related party transactions with GPCC, which was considered a related party until the fourth quarter of 2020 at which time the company’s remaining 50% interest was sold. The company provided a variety of shared services to GPCC, including accounting and finance, payroll and human resources, information technology, legal, communications and treasury activities. The company reduced selling, general and administrative expenses by $0.4 million and $1.2 million related to shared services provided for the three and nine months ended September 30, 2020.Green Plains Trade Group, a subsidiary of the company, enters into certain sale contracts with GPCC during the normal course of business. Revenues were $2.2 million and $8.2 million for the three and nine months ended September 30, 2020.Mr. Ejnar Knudsen, a member of the company’s board of directors, has an indirect ownership interest in GPCC of 0.0736% by reason of his ownership in TGAM Agribusiness Fund LP. Based on the purchase price, the value of that ownership interest is approximately $0.1 million. Mr. Knudsen also is the CEO and partial owner of AGR Partners LLC, which provides investment advisory services to TGAM Agribusiness Fund LP pursuant to a sub-advisory agreement between AGR Partners LLC and Nuveen Alternative Advisors LLC, which is the investment manager for TGAM Agribusiness Fund LP and receives usual and customary advisory fees.2020.2020,2021, Part II, Item 1A – Risk Factors in this report, or incorporated by reference. Specifically, we may experience fluctuations in future operating results due to a number of economic conditions, including: disruption caused by health epidemics, such as the COVID-19 outbreak; competition in the ethanol industry and other industries in which we operate; commodity market risks, including those that may result from weather conditions; financial market risks; counterparty risks; risks associated with changes to government policy or regulation, including changes to tax laws; risks related to acquisition and disposition activities and achieving anticipated results; risks associated with merchant trading; risks related to our equity method investees and other factors detailed in reports filed with the SEC. Additional risks related to Green Plains Partners LP include compliance with commercial contractual obligations, potential tax consequences related to our investment in the partnership and risks disclosed in the partnership’s SEC filings associated with the operation of the partnership as a separate, publicly traded entity.one of thea leading corn processors in the world.ag-tech innovator. We continue the transition from a commodity-processing business to a value-addvalue-added agricultural technology company focusing on creating diverse, non-cyclical, higher margin products.sustainable, high-value ingredients. In addition, we are currently undergoing a number of project initiatives to improvegenerate higher non-cyclical margins. Through our Project 24 initiative, we anticipate reductions in operating expense per gallon across our non-ICM plants and with our Total Transformation Plan to a value-add agricultural technology company, weWe believe we can further increase margin per gallonmargins by producing additional value-added ingredients, such as Ultra-High Protein, dextrose and expanding corn oil yields.more.ownformed Green Plains Partners LP, a master limited partnership, to be our primary downstream storage and operatelogistics provider since its assets throughoutare the principal method of storing and delivering the ethanol value chain: upstream, with grain handlingwe produce. The partnership completed its initial public offering on July 1, 2015. As of September 30, 2022, we own a 48.8% limited partner interest, astorage; throughall of the partnership’s incentive distribution rights. The public owns the remaining 49.2% limited partner interest. The partnership is consolidated in our financial statements.facilities; and downstream, with marketing and distribution services to mitigate commodity price volatility. Our other businesses leverage our supply chain, production platform and expertise.We operate within four business segments: (1) ethanol production, whichsegment includes the production of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil (2)at 11 ethanol plants in Illinois, Indiana, Iowa, Minnesota, Nebraska and Tennessee. At capacity, our facilities are capable of processing approximately 330 million bushels of corn per year and producing approximately 1 billion gallons of ethanol, 2.5 million tons of distillers grains and Ultra-High Protein and 290 million pounds of industrial grade corn oil, making us one of the largest ethanol producers in North America.whichsegment includes grain handlingprocurement, with approximately 27 million bushels of grain storage capacity, and storage, andour commodity marketing for company-producedbusiness, which markets, sells and third-partydistributes ethanol, distillers grains, Ultra-High Protein and corn oil produced at our ethanol plants. We also market ethanol for a third-party producer as well as buy and sell ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein, corn oil, grain, natural gas and other commodities (3) food and ingredients, and (4)in various markets.which includesprovides fuel storage and transportation services.services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. The foodpartnership’s assets include 29 ethanol storage facilities, two fuel terminal facilities and ingredients segment had no activity during the three and nine months ended September 30, 2021 and 2020.approximately 2,500 leased railcars.Our ethanol production segment operates 11 facilities across the Midwest that process annually renewable crops to produce a growing number of value-added ingredients, including low-carbon biofuels, specialty alcohols, Ultra-High Protein, distillers grains and renewable corn oil. We are executing on our Total Transformation Plan by utilizing Fluid Quip Technologies’ MSC™ protein technology to expand our ability to produce value-added ingredients at each of our locations while expanding corn oil yields.MSC™ Ultra-High Protein MSCTM installation at our Shenandoah, Iowa, biorefinery during the first quarter of 2020. Our Wood River, Nebraska, plant began MSCTM operations in October 2021. ThreeCommissioning on our MSCTM installation at our Central City plant began during the third quarter with two additional locations are slated to begin operating by mid-2022, and installationcommissioning in the fourth quarter of 2022. Installation at certain of our remaining biorefineries is expected over the course of the next severalfew years. Through our value-added ingredients initiative, we expect to produce Ultra-High Protein, a feed ingredient with protein concentrations of 50% or greater and yeast concentrations of 25%, increase production of renewable corn oil as welland produce other higher value products, such as post-MSC distillers grains.Our agribusinessTM production facility at our Innovation Center at York in the second quarter of 2021, which allows for the production of both food and energy segment procures grainindustrial grade low-carbon glucose and natural gas for our ethanoldextrose to target applications in food production, segment as well as manages risk for it. It also markets finished goods for our ethanol production segment as well as third parties, manages product inventoryrenewable chemicals and customer invoicing, and optimizes physical and financial flows for many of our products. Consisting of fee based, marketing and origination entities, it originates corn directly from local farmers and stores it onsite for later utilization insynthetic biology. In September 2022, we broke ground at our biorefinery plants and later handlesin Shenandoah, Iowa, as the sale of valued-added ingredientsfirst location to final destinations.deploy FQT CSTOur partnership segment represents our consolidated ownership of Green Plains Partners LP, a publicly-traded, master limited partnership. Green Plains Partners LP is our primary downstream logistics provider, storing and delivering the ethanol we produce. at commercial scale. We own a 48.9% limited partner interest, a 2.0% general partner interest and all of the partnership’s incentive distribution rights. The public owns the remaining 49.1% limited partner interest. The partnership is consolidated in our financial statements. It owns storage terminals at each of our 11 plant locations as well as other locations and primarily provides biofuel storage for our ethanolalso anticipate modifying additional biorefineries to include FQT CSTTM production segment. Through its railcar and trucking fleet, it provides transportation and logistics servicescapabilities to efficiently deliver low-carbon fuels produced by our ethanol production segment to their end destinations.meet anticipated future customer demands.In August 2021, we announced a turnkey solution for the installation of Fluid Quip Technologies’ MSC™ protein technology for third party plants with Tharaldson Ethanol, a 175 million-gallon facility in North Dakota. have committed our Nebraska, Iowa and Minnesota plants to the Summit Carbon Solutions Midwest Carbon Express project to capture and store biogenic carbon dioxide produced through the fermentation process. In total,These eight of our biorefineries have entered into long-termtwelve-year carbon offtake agreements, which will lower greenhouse gas emissions through the capturing and storingcapture of carbon dioxide at each of the biorefineries, significantly lowering their carbon intensity. ThisAccording to Summit Carbon Solutions, the anticipated completion date for this project is expected to be completed in 2024.In December 2020, we completed the purchase of a majority interest in Fluid Quip Technologies, LLC. The acquisition capitalizes on the core strengths of each company to develop and implement proven, value-added agriculture, food and industrial biotechnology systems and rapidly expand installation and production of Ultra-High Protein across Green Plains facilities, as well as offer these technologies to partnering biofuel facilities through our turnkey initiative.Recent DevelopmentsPublic OfferingFrom July 1, 2022 through July 8, 2022, all $64.0 million of Common StockOnthe 4.00% convertible notes were converted into approximately 4.3 million shares of common stock. All $64.0 million were retired effective July 8, 2022.9, 2021,2022, we completedentered into four privately negotiated exchange agreements with certain noteholders of the public offering of 5,462,5004.125% Convertible Senior Notes due 2022 to exchange approximately $32.6 million aggregate principal amount for approximately 1.2 million shares of our common stock, par value $0.001 per share, at a public offering price of $32.00 per share (the “August Common Stock Offering”). The August Common Stock Offering resulted in net proceeds ofstock.$164.9$1.7 million after deducting underwriting discounts and commissions and the company’s estimated offering expenses. We intend to use the proceeds from the August Common Stock Offering for growth investments to further accelerate our downstream development opportunities. For additional information related to the August Common Stock Offering, see Note 11 – Stockholders’ Equity included as partaggregate principal amount of the 4.125% notes to consolidated financial statements.Amendment to Partnership Credit AgreementOn July 20, 2021, the partnership entered into an Amendedwere settled through a combination of $1.7 million in cash and Restated Credit Agreement to its existing credit facility with funds and account managed by BlackRock and TMI Trust Company as administrative agent.Under the termsapproximately 15 thousand shares of our common stock. The remaining $23 thousand aggregate principal amount of the agreement, BlackRock purchased the outstanding balance of the previous credit facility from the previous lenders4.125% notes and the credit facility was modified to a term loan.accrued interest were settled in cash. The term loan matures on July 20, 2026, and has a principal balance of $60.0 million. Interest on the term loan is based on 3-month LIBOR plus 8.00%, with a 0% LIBOR floor. Interest is payable on the 15th day of each March, June,4.125% notes were retired effective September and December, with the first interest payment being September 15, 2021. The term loan does not require any principal payments; however, we have the option to prepay $1.5 million per quarter beginning twelve months after the closing date. Financial covenants include a maximum consolidated leverage ratio of 2.50x and a minimum consolidated debt service coverage ratio of 1.10x. The Amended Credit Facility continues to be secured by substantially all of the assets of the partnership.2021,2022, we experienced a weak ethanol margin environment due in part to historically high physical corn basis levels across our entire platform. We maintained an average utilization rate of approximately 75.0%90.9% of capacity, resulting in ethanol production of 181.2219.4 mmg for the third quarter of 2021,2022, compared with 189.2181.2 mmg, or 66.8%75.0% of capacity, for the same quarter last year. The increase in the average utilization rate was primarily due to capacity offline in the prior year due to poor margins driven in part by a significant reduction in motor fuel demand as a result of the COVID-19 pandemic, while the decline in overall volumes was primarily due to the sale of Green Plains Ord.completing our plant modernization and upgrade program earlier this year. Our operating strategy is to reduce operating expenses, energy usage and water consumption throughtransform our Project 24 initiative while running at higher utilization rates in ordercompany to achieve improved margins. However, ina value-add agricultural technology company. Depending on the currentmargin environment, we may continue to exercise operational discretion that results in reductions in production. Additionally, we may experience lower run rates due to the construction of various projects.production volumes. It is possible that productionthroughput volumes could be below our minimum volume commitments made to the partnership in the future, depending on various factors that drive each biorefineries variable contribution margin, including future driving and gasoline demand for the industry. industry, demand for valuable coproducts we produce, and the supply and pricing of renewable feedstocks needed to operate our biorefineries. We are currently producing Ultra-High Protein at two locations, commissioned a third plant in the third quarter, and are deploying FQT MSC1.0 million979 thousand barrels per day during the third quarter of 2021,2022, which was 6%0.5% higher than the 0.92 million974 thousand barrels per day for the same quarter last year. Refiner and blender input volume increased 9% to 919was 902 thousand barrels per day for the third quarter of 2021,2022, compared with 846919 thousand barrels per day for the same quarter last year. Gasoline demand increased 0.7decreased 0.6 million barrels per day, or 9%,6.6% during the third quarter of 20212022 compared to the prior year. U.S. domestic ethanol ending stocks increased by approximately 0.51.5 million barrels compared to the prior year, or 3%7.2%, to 20.221.7 million barrels during the third quarter of 2021. Asas of September 30, 2021,2022. As of this filing, according to Prime the Pump, there were approximately 2,5042,743 retail stations selling E15 in 3031 states, up from 2,3002,555 at the beginning of the year, and approximately 262386 suppliers at 113 pipeline terminal locations now offering E15 to wholesale customers.2021,2022, were approximately 7961,012 mmg, down 10%up from 885the 796 mmg for the same period of 2020.2021. Canada was the largest export destination for U.S. ethanol accounting for 28%32% of domestic ethanol export volume. India,volume, driven in part by their national clean fuel standard. South Korea, China,India, and Peruthe Netherlands accounted for 13%, 13%8%, 13% and 4%7%, respectively, of U.S. ethanol exports. We currently estimate that net ethanol exports will be approximatelyrange from 1.3 to 1.5 billion gallons in 2021,2022, based on historical demand from a variety of countries and certain countries whothat seek to improve their air quality, reduce green house gas emissions through low carbon fuel programs and eliminate MTBE from their own fuel supplies.In January 2020, China and The recent strengthening of the United States struck a “Phase I” trade agreement, which included commitments on agricultural commodity purchases. Ethanol, corn and distillers grains were included asU.S. Dollar relative to other currencies has the potential purchasesto adversely impact the U.S. ethanol competitiveness in the agreement. China has been purchasing large quantities of corn, which has raised domestic prices of this feedstock for our ethanol production process. In addition, in October 2020, it was announced that China had purchased a shipment of U.S. ethanol for the first time since March 2018. Total ethanol exports to China in 2020 were 31.7 million gallons, and through August 2021 were 100.1 million gallons, according to the USDA Foreign Agriculture Service.Year-to-date U.S. distillers grains exports through August 31, 2021, were 7.7 million metric tons, or 9.2% higher than the same period last year, according to the USDA Foreign Agriculture Service. Mexico, Vietnam, South Korea, Turkey and Indonesia accounted for approximately 57.8% of total U.S. distillers export volumes.II entirely, eliminate the corn based ethanol portion of the mandate, and make it more difficult to sell fuel blends with higher levels of ethanol. Bills have also been introduced to require higher levels of octane blending, and require car manufacturers to produce vehicles that can operate on higher ethanol blends. We believe it is unlikely that any of these bills will become law in the current Congress. In II and related regulations can have a significant impact on the actual amount of ethanol and other biofuels blended into the domestic fuel supply.low carbon fuel standardLCFS could increase the demand for ethanol, depending on how it is structured.Congress first enacted CAFE standards in 1975reduce energy consumptionevaluate. The legislation (a) created a new Clean Fuel Production Credit, section 45Z of the Internal Revenue Code, which runs from 2025 to 2027 of up to $1.00 per gallon, which could impact our fuel ethanol, depending on the level of green house gas reduction for each gallon; (b) created a new tax credit for sustainable aviation fuel of $1.25 to $1.75 per gallon, depending on the green house gas reduction for each gallon, that could possibly involve some of our low carbon ethanol through an alcohol to jet pathway, depending on the life cycle analysis model being used (this credit expires after 2024 and shifts to the Clean Fuel Production Credit, where it qualifies for up to $1.75 per gallon); (c) expanded the carbon capture and sequestration credit, section 45Q, to $85 for each ton of carbon sequestered, which could impact our carbon capture partnership and other potential carbon capture investments; (d) extended the biodiesel tax credit which could impact our renewable corn oil values, as this co-product serves as a low-carbon feedstock for renewable diesel and biomass based diesel production; (e) funded biofuel refueling infrastructure, which could impact the availability of higher level ethanol blended fuel; (f) increased funding for working lands conservation programs for farmers by increasing$20 billion; and (g) provided credits for the fuel economyproduction and purchase of carselectric vehicles, which could impact the amount of internal combustion engines built and light trucks. FFVs, which are designed to run on a mixture ofsold longer term, and by extension impact the demand for liquid fuels including higher blends of ethanol such as E85, used to receive preferential treatment in the form of CAFE credits. There are approximately 21 million FFVs on the road in the U.S. today, 16 million of which are light duty trucks. FFV credits have been decreasing since 2014 and were completely phased out in 2020. Absent CAFE preferences, auto manufacturers may not be willing to build flexible-fuel vehicles, which has the potential to slow the growth of E85 markets. However, California’s Low Carbon Fuel Standard program (LCFS) has driven growth in E85 usage, and other state/regional LCFS programs have the potential to do the same. II sets a floor for biofuels use in the United States. When the RFS II was established in 2010, the required volume of “conventional”,conventional, or corn-based, ethanol to be blended with gasoline was to increase each year until it reached 15.015 billion gallons in 2015, which left the EPA to address existing limitations in both supply and demand. As of this filing, the EPA has not releasedfinalized RVOs reducing the proposedconventional ethanol levels for 2020 and 2021 to reflect lower fuel demand during the pandemic, and finalized an RVO at the statutory 15 billion gallons for 2022, with an additional 250 million gallons of supplemental volume to reflect a court-ordered remand of a previously-lowered RVO. The EPA has agreed to consent decree from the U.S. District Court for D.C. to propose an RVO for 20212023 (and possibly 2024 and 2022, although they are expected to propose a joint rule in2025) by November of 202116, 2022, and finalize the rule by June 14, 2023. It is possible the endexpand the types of fuels that can qualify for credits under the calendar year. II, if mandatory renewable fuel volumes are reduced by at least 20% for two consecutive years, the EPA is required to modify, or reset, statutory volumes through 2022, – the year through which the statutorily prescribed volumes run. While conventional ethanol maintained 15 billion gallons, 2019 was the second consecutive year that the total RVO was more than 20% below the statutory volumesvolume levels. Thus, the EPA was expected to initiate a reset rulemaking, and modify statutory volumes through 2022, and do so based on the same factors they are to use in setting the RVOs post 2022. These factors include environmental impact, domestic energy security, expected production, infrastructure impact, consumer costs, job creation, price of agricultural commodities, food prices, and rural economic development. However, in late 2019, the EPA announced it would not be moving forward with a reset rulemaking in 2020. It is unclear when or if theThe current EPA has indicated they will not propose a reset rulemaking, though they have stated an intention to propose a post 2022post-2022 set rulemaking by November 16, 2022, and finalize by June 14, 2023, in compliance with a consent decree from the end of 2021.fuel sales.fuel. Obligated parties use RINs to show compliance with the RFS II mandated volumes. Ethanol producers assign RINsa RIN to each gallon of renewable fuelsfuel they produce and the RINs are detached when the renewable fuel is blended with transportation fuel domestically. Market participants can trade the detached RINs in the open market. The market price of detached RINs can affectaffects the price of ethanol in certain markets and can influence purchasing decisions by obligated parties.them a full or partial waiver, or deny it outright within 90the past,prior years, totaling 790 mmg of waived requirements for the 2016 compliance year, 1.82 billion gallons for 2017 and 1.43 billion gallons for 2018. In doing so, the EPA effectively reduced the RFS II mandated volumes for those compliance years by those amounts respectively, and as a result, RIN values declined significantly. In the waning days of the Trumpprevious administration, the EPA approved three additional SREs, reversing one denial from 2018 and granting two from 2019. A total of 88 SREs were granted under the Trump Administration, totalingerasing a total of 4.3 billion gallons of potential blending demand erased.demand. The EPA, under the current administration, reversed the three SREs issued in the final weeks of the previous administration, and have indicated they will take a different approachin conjunction with the RVO rulemaking for 2020, 2021 and 2022, denied all pending SREs. There are multiple legal challenges to adjudicatinghow the EPA has handled SREs than the prior administration.thatwhich was extended in May 2019 to allow E15 to be sold year-round to all vehicles model year 2001 and newer, was challenged in an action filed in Federal District Court for the D.C. Circuit. On July 2, 2021, the Circuit Court vacated the EPA’s rule so the future of summertime, defined as June 1 to September 15, sales of E15 to non-FFVs is uncertain. The Supreme Court declined to hear a challenge to this ruling. On April 12, 2022, the President announced that he has directed the EPA to issue an emergency waiver to allow for the continued sale of E15 during the summer months, and that the temporary waiver should be extended as long as the gasoline supply emergency lasts. As of this filing, E15 is sold year-round at approximately 2,743 stations in approximately 3031 states. In January 2021, the EPA announced it intended to begin a rulemaking regarding E15 labels and underground storage tank compatibility.Biofuels groups have filed a lawsuit in the Court of Appeals for the D.C. Circuit, challenging the 2019 RVO rule over the EPA’s failure to address SREs in the rulemaking. This was the first RFS II rulemaking since the expanded use of the exemptions came to light. However, the EPA had declined to cap the number of waivers it grants, and until late 2019, had declined to alter how it accounts for the retroactive waivers in its annual volume calculations. The EPA has a statutory mandate to ensure the volume requirements are met, which is achieved by setting the percentage standards for obligated parties. The EPA’s recent approach accomplished the opposite. Even if all the obligated parties complied with their respective percentage obligations for 2019, the nation’s overall supply of renewable fuel would not meet the total volume requirements set by the EPA. This undermines Congressional intent to increase the consumption of renewable fuels in the domestic transportation fuel supply. Biofuels groups have argued the EPA must therefore adjust its percentage standard calculations to make up for past retroactive waivers and adjust the standards to account for any waivers it reasonably expects to grant in the future.In 2017, while citing inadequate domestic supply, the D.C. Circuit ruled in favor of biofuel groups against the EPA related to its decision to lower the 2016 volume requirements by 500 mmg. As a result, the Court remanded to the EPA to make up for the 500 mmg. Despite this, in the proposed 2020 RVO rulemaking released in July 2019, the EPA stated it does not intend to make up the 500 mmg as the court directed, citing potential burden on obligated parties. The EPA had, at one point, indicated that it planned to address this court ordered remand in conjunction with the 2021 RVO rulemaking; however that rulemaking has been delayed indefinitely, and whether these gallons will be accounted for is unclear.In 2019, in a supplemental rulemaking to the 2020 RVO rule, the EPA changed their approach, and for the first time accounted for the gallons that they anticipate will be waived from the blending requirements due to small refinery exemptions. To accomplish this, they added in the trailing three year average of gallons the DOE recommended be waived, in effect raising the blending volumes across the board in anticipation of waiving the obligations in whole or in part for certain refineries that qualify for the exemptions. Though the EPA has often disregarded the recommendations of the DOE in years past, they stated in the rule their intent to adhere to these recommendations going forward, including granting partial waivers rather than an all or nothing approach.In January 2020, the U.S. Court of Appeals for the 10th Circuit ruled on RFA et. al. vs. EPA in favor of biofuels interests, overturning EPA’s granting of refinery exemptions to three refineries on two separate grounds. The Court agreed that, under the Clean Air Act, refineries are eligible for SREs for a given RVO year only if such exemptions are extensions of exemptions granted in previous RVO years. In this case, the three refineries at issue did not qualify for SREs in the year prior to the year that EPA granted them. They were thus ineligible for additional SRE relief because there were no immediately prior SREs to extend. In addition, the Court agreed that the disproportionate economic hardship prong of SRE eligibility should be determined solely by reference to whether compliance with the RFS II creates such hardship, not whether compliance plus other issues create disproportionate economic hardship. The Court thus vacated EPA's grant of SREs for certain years and remanded the grants back to EPA. The refiners appealed for a rehearing which was denied. Two of the refiners appealed the decision to the U.S. Supreme Court and in January 2021, the Supreme Court announced they would hear the case, and oral arguments were held in late April 2021. In February 2021, the EPA indicated that it intends to adhere to the 10th Circuit ruling. On June 25, 2021, the Supreme Court ruled that the 10th Circuit’s interpretation of “extension” was too narrow, and vacated that portion of the ruling. As of this filing, it is unclear how this Supreme Court decision may impact the EPA’s handling of SREs.In light of the 10th Circuit ruling, a number of refineries applied for “gap year” SREs in an effort to establish a continuous string of relief and to ensure they are able to qualify for SREs going forward. A total of 64 gap year requests were filed with the EPA and reviewed by the DOE. In September 2020, the EPA announced that they were denying 54 of the gap year requests that had been scored and returned by DOE, regardless of how they had been scored.Congress is considering legislation thatIn December 2021, the USDA announced they would provideadminister another infrastructure grant program. The recently enacted Inflation Reduction Act provided for an additional $1 billion$500 million in USDA grants for biofuel infrastructure from 2022 to 2031. In 2020, five Governors and 15 Republican Senators sent letters to the EPA requesting a general waiver from the RFS due to the drop in demand caused by COVID-19 travel restrictions. Since then there have been additional petitions for waivers from the RFS requirements. As of this filing the EPA had indicated only that they are watching the situation closely and reviewing the various requests. the COVID-19 health crisis and attempt to offset the subsequent economic damage, Congress passed multiple relief measures, most notably the CARES Act in March 2020, which created and funded multiple programs that have impacted our industry. The USDA was given additional resources for the Commodity Credit Corporation (CCC) and they are using those funds to provide direct payments to farmers, including corn farmers from whom we purchase most of our feedstock for ethanol production. Similar to the trade aid payments made by the USDA over the past two years, this cash injection for farmers could cause them to delay marketing decisions and increase the price we have to pay to purchase corn. The CARES Act also allowed for certain net operating loss carrybacks, which has allowed us to receive certain tax refunds. In December 2020, Congress passed and then the President signed into law an annual spending package coupled with another COVID relief bill which included additional funds for the Secretary of Agriculture to distribute to those impacted by the pandemic. The language of the bill specifically includesincluded biofuels producers as eligible for some of this aid, and in March of 2021,May 2022, the USDA indicated that biofuels would be abledistributed funds to apply for a portion of these funds in a forthcoming rulemaking. On June 15, 2021, the USDA indicated that $700 million would be made available to biofuels producers, and that details for the program would be released within 60 days; however, they have yet to make additional details public.The CARES Act provided a tax exclusion on the shipment of undenatured ethanol for use in manufacturing hand sanitizer, a key ingredient of which is undenatured ethanol of specific grades. The FDA announced that it is ending, effective December 31, 2021, the expanded guidance, which allowed for more denaturants to be used in ethanol intended for hand sanitizer production, and expanded the grades of ethanol for the duration of the public health crisis.The current administration has indicated a desire to dramatically expand electric vehicle (EV) charging stations, and initially proposed $174 billion for EV charging infrastructure, purchase rebates, and other incentives. The bipartisan infrastructure package being considered by Congress includes $15 billion for EV charging infrastructure, and $5 billion for electric busses and ferries. Additionally, Congress is considering expanded EV incentives in a budget reconciliation package, with the goal of installing 500,000 EV charging stations and providing incentives to middle and lower income Americans to purchase EVs, in addition to manufacturing incentives for car makers. The package would offer consumers tax rebates of $7,500 to $12,500 for purchasing EVs, and would invest billions in charging infrastructure. These tax incentives could reduce the overall market for liquid fuelsus in the surface transportation sector and with it, thatamount of ethanol.The budget reconciliation package currently being considered by Congress also would extend the $1.00/gallon tax credits for renewable diesel and biodiesel, which use our distillers corn oil as one of their low-carbon feedstocks. The package would also create a $1.25 - $1.75/gallon tax incentive for the production of sustainable aviation fuel, which could possibly utilize our distillers corn oil or our ethanol as a feedstock. The package would also expand tax credits for carbon capture and sequestration (CCS) and extend the time frame for projects$27.7 million pursuant to qualify for this credit. The fermentation process by which we produce ethanol releases a nearly pure stream of CO2 which has the potential to be captured and sequestered. The package would also create a technology-neutral clean fuel production tax credit for 2027, but this would not be applicable for fuels that take advantage of the CCS tax credits. The package in its current form also expands the eligibility of Master Limited Partnership tax status to clean energy projects, including CCS and renewable fuels. There can be no assurance, however, these provisions make it into any final legislation.Government actions abroad can significantly impact the demand for U.S. ethanol. In September 2017, China’s National Development and Reform Commission, the National Energy Agency and 15 other state departments issued a joint plan to expand the use and production of biofuels containing up to 10% ethanol by 2020. China, the number three importer of U.S. ethanol in 2016, imported negligible volumes during 2018 and 2019 due to a 30% tariff on U.S. ethanol, which increased to 70% in early 2018. There is no assurance that China’s joint plan to expand blending to 10% will be carried to fruition, nor that it will lead to increased imports of U.S. ethanol in the near term. Ethanol is included as an agricultural commodity under the “Phase I” agreement with China, wherein they are to purchase upwards of $40 billion in agricultural commodities from the U.S. in both 2020 and 2021. According to the U.S. Department of Agriculture Foreign Agricultural Service, China purchased 32 mmg of U.S. ethanol in 2020 and through August 2021 had imported 100 mmg.In Brazil, the Secretary of Foreign Trade had issued a tariff rate quota which expired in December of 2020. All U.S. ethanol gallons now face a 20% tariff into Brazil. Exports to Brazil were 200 mmg in 2020. Our exports also face tariffs, rate quotas, countervailing duties, and other hurdles in the European Union, India, Peru, Colombia and elsewhere, which limits the ability to compete in some markets. We believe some countries are using the COVID-19 crisis as justification for raising duties on imports of U.S. ethanol, or blocking our imports entirely.In June 2017, the Energy Regulatory Commission of Mexico (CRE) approved the use of 10% ethanol blends, which was challenged by multiple lawsuits, of which several were dismissed. The remaining four cases follow one of two tracks: 1) to determine the constitutionality of the CRE regulation, or 2) to determine the benefits, or lack thereof, of introducing E10 to Mexico. An injunction was granted in October 2017, preventing the blending and selling of E10, but was overturned by a higher court in June 2018, making it legal to blend and sell E10 by PEMEX throughout Mexico except for its three largest metropolitan areas. On January 15, 2020, the Mexican Supreme Court ruled that the expedited process for the CRE regulation was unconstitutional, and that after a 180 day period the maximum ethanol blend allowed in the country would revert to 5.8%. There was an effort to go through the full regulatory process to allow for 10% blends countrywide, including in the three major metropolitan areas. The 180 day window was extended multiple times due to COVID-19, but eventually lapsed in June 2021, decreasing the maximum ethanol blend back to 5.8%.In January 2020, the updated North American Free Trade Agreement, known as the United States Mexico Canada Agreement or USMCA was signed. The USMCA went into effect on July 1, 2020, and maintains the duty free access of U.S. agricultural commodities, including ethanol, into Canada and Mexico. According to the U.S. Department of Agriculture Foreign Agricultural Service, exports to Canada were 326 mmg and exports to Mexico were 64 mmg in 2020.Impact of COVID-19The COVID-19 pandemic and related economic repercussions have created significant volatility, uncertainty, and turmoil in the energy industry. The situation surrounding COVID-19 continues to evolve and the ultimate duration and impact of the outbreak remains highly uncertain and subject to change.We continue to closely monitor the impact of COVID-19 on all aspects of our business, including how it will impact our employees, customers, vendors, and business partners. For the nine months ended September 30, 2021, there has been no adverse effect due to COVID-19 on our ability to maintain operations, including our financial reporting systems, our internal controls over financial reporting or our disclosure controls and procedures. Although we did not incur significant disruptions during the three and nine months ended September 30, 2021, from COVID-19, we are unable to predict the impact that COVID-19 will have on our future financial position and operating results due to numerous uncertainties.For further information regarding the impact of COVID-19 and the decline in oil demand on the company, please see Part I, Item 1A, “Risk Factors,” of our 2020 annual report.to 2020, including the sale of our 50% interest of GPCC in October 2020, the sale of our Hereford, Texas plant in December 2020, the acquisition of a majority interest in FQT in December 2020ethanol production rates and the disposition of our Ord, Nebraska plant in March 2021.We report the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes food-grade corn oil and (4) partnership, which includes fuel storage and transportation services. The food and ingredients segment had no activity during the three and nine months ended September 30, 2021 and 2020., general and administrative expenses, consisting primarily of compensation, professional fees and overhead costs not directly related to a specific operating segment. segment and the loss (gain) on sale of assets. When we evaluate segment performance, we review the following segment information as well as earnings before interest, income taxes, depreciation and amortization, excluding amortization of operating lease right-of-use assetsor EBITDA, and amortization of debt issuance costs, oradjusted EBITDA.As of September 30, 2021, we, together with our subsidiaries, own a 48.9% limited partner interest and a 2.0% general partner interest in the partnership and own all of the partnership’s incentive distribution rights, with the remaining 49.1% limited partner interest owned by public common unitholders. We consolidate the financial results of the partnership, and record a noncontrolling interest for the economic interest in the partnership held by the public common unitholders.
Three Months Ended
September 30,%
VarianceNine Months Ended
September 30,%
Variance2022 2021 2022 2021 Revenues: Ethanol production: Revenues from external customers $ 811,015 $ 588,349 37.8% $ 2,309,734 $ 1,567,344 47.4% Intersegment revenues — — * — — * Total segment revenues 811,015 588,349 37.8 2,309,734 1,567,344 47.4 Agribusiness and energy services: Revenues from external customers 142,926 157,412 (9.2) 436,119 454,208 (4.0) Intersegment revenues 6,836 5,362 27.5 19,914 15,997 24.5 Total segment revenues 149,762 162,774 (8.0) 456,033 470,205 (3.0) Partnership: Revenues from external customers 1,036 1,030 0.6 2,953 3,297 (10.4) Intersegment revenues 19,030 18,221 4.4 55,867 56,061 (0.3) Total segment revenues 20,066 19,251 4.2 58,820 59,358 (0.9) Revenues including intersegment activity 980,843 770,374 27.3 2,824,587 2,096,907 34.7 Intersegment eliminations (25,866) (23,583) 9.7 (75,781) (72,058) 5.2 $ 954,977 $ 746,791 27.9% $ 2,748,806 $ 2,024,849 35.8% Three Months Ended
September 30,%
VarianceNine Months Ended
September 30,%
Variance2022 2021 2022 2021 Cost of goods sold: Ethanol production $ 843,843 $ 597,854 41.1% $ 2,310,224 $ 1,507,035 53.3% Agribusiness and energy services 139,922 154,427 (9.4) 418,017 440,682 (5.1) Intersegment eliminations (26,908) (22,102) 21.7 (77,561) (68,897) 12.6 $ 956,857 $ 730,179 31.0% $ 2,650,680 $ 1,878,820 41.1% Three Months Ended
September 30,%
VarianceNine Months Ended
September 30,%
Variance2022 2021 2022 2021 Gross margin: Ethanol production $ (32,828) $ (9,505) 245.4% $ (490) $ 60,309 (100.8)% Agribusiness and energy services 9,840 8,347 17.9 38,016 29,523 28.8 Partnership 20,066 19,251 4.2 58,820 59,358 (0.9) Intersegment eliminations 1,042 (1,481) 170.4 1,780 (3,161) 156.3 $ (1,880) $ 16,612 (111.3)% $ 98,126 $ 146,029 (32.8)%
September 30,
September 30,Three Months Ended
September 30,%
VarianceNine Months Ended
September 30,%
Variance2022 2021 2022 2021 Operating income (loss): $ (64,121) $ (44,192) 45.1% $ (87,773) $ (30,969) 183.4% Agribusiness and energy services 5,205 3,225 61.4 25,894 15,720 64.7 Partnership 11,993 12,417 (3.4) 35,906 37,204 (3.5) Intersegment eliminations 1,042 (1,481) 170.4 1,780 (3,161) 156.3 (15,999) (14,644) 9.3 (51,748) (1,089) * $ (61,880) $ (44,675) 38.5% $ (75,941) $ 17,705 *
September 30,
September 30,
September 30,
September 30,a goodwill impairment chargean inventory lower of $24.1cost or net realizable value adjustment of $11.2 million for the three and nine months ended September 30, 2020.2022.respectively, as well as a gain on sale of assets of $2.0 million for both the three and nine months ended September 30, 2020.respectively.
Three Months Ended
September 30,%
VarianceNine Months Ended
September 30,%
Variance2022 2021 2022 2021 Depreciation and amortization: Ethanol production $ 21,555 $ 25,644 (15.9 %) $ 59,101 $ 62,655 (5.7 %) Agribusiness and energy services 1,280 870 47.1 2,214 2,072 6.9 Partnership 1,194 1,089 9.6 2,915 2,771 5.2 Corporate activities 618 677 (8.7) 1,783 1,995 (10.6) $ 24,647 $ 28,280 (12.8 %) $ 66,013 $ 69,493 (5.0 %)
September 30,
September 30,and adjusted EBITDA, and segment EBITDA as segment measures of profitability to compare the financial performance of our reportable segments and manage those segments. EBITDA is defined as earnings before interest expense, income tax expense, including related tax expense of equity method investments, depreciation and amortization excluding the amortization of right-of-use assets and debt issuance costs. Adjusted EBITDA includes adjustments related to gains or losses on sale of assets, other income associated with the USDA COVID-19 relief grant, and our proportional share of EBITDA adjustments of our equity method investees and noncash goodwill impairment.investees. We believe EBITDA, adjusted EBITDA and adjustedsegment EBITDA are useful measures to compare our performance against other companies. EBITDA and adjusted EBITDAThese measures should not be considered an alternative to, or more meaningful than, net income, which is prepared in accordance with GAAP. EBITDA, adjusted EBITDA, and adjustedsegment EBITDA calculations may vary from company to company. Accordingly, our computation of EBITDA, adjusted EBITDA, and adjustedsegment EBITDA may not be comparable with a similarly titled measure of other companies.
September 30,
September 30,Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Net loss $ (67,903) $ (54,411) $ (71,055) $ (40,273) 9,576 9,488 26,182 60,225 Income tax expense (benefit) Income tax expense (benefit) (1,888) 7 (146) (2,914) 24,647 28,280 66,013 69,493 EBITDA (35,568) (16,636) 20,994 86,531 — — (27,712) — Loss (gain) on sale of assets, net — 1,823 — (31,245) Proportional share of EBITDA adjustments to equity method investees 45 45 135 139 Adjusted EBITDA $ (35,523) $ (14,768) $ (6,583) $ 55,425 the change inamortization of operating lease right-of-use assets and amortization of debt issuance costs.
Three Months Ended
September 30,%
VarianceNine Months Ended
September 30,%
Variance2022 2021 2022 2021 Adjusted EBITDA: $ (42,471) $ (18,524) 129.3% $ (517) $ 31,739 (101.6)% Agribusiness and energy services 6,536 3,818 71.2 28,009 17,515 59.9 Partnership 13,270 13,679 (3.0) 39,275 40,492 (3.0) Intersegment eliminations 1,042 (1,480) 170.4 1,780 (3,160) 156.3 (13,945) (14,129) (1.3) (47,553) (55) * EBITDA (35,568) (16,636) 113.8 20,994 86,531 (75.7) — — * (27,712) — * Loss (gain) on sale of assets, net — 1,823 * — (31,245) * Proportional share of EBITDA adjustments to equity method investees 45 45 — 135 139 (2.9) $ (35,523) $ (14,768) 140.5% $ (6,583) $ 55,425 (111.9)%
September 30,
September 30,Includes corporate expenses, offset by theOperating loss on salefor ethanol production includes an inventory lower of assetscost or net realizable value adjustment of $1.8 million and the gain on sale of assets of $31.2$11.2 million for the three and nine months ended September 30, 2021, respectively, the2022. of $2.0 million for both the three and nine months for the three and nine months ended September 30, 2020 and earnings from equity method investments of $0.6 million and $20.4 million2021, respectively. three and nine months ended September 30, 2020, respectively.2022 includes a grant received from the USDA related to the Biofuel Producer Program of $27.7 million.20212022 Compared with the Three Months Ended September 30, 2020$322.7$208.2 million for the three months ended September 30, 2021,2022 compared with the same period in 2020,2021 primarily due to higher average prices and higher volumes sold on ethanol, distillers grains, and corn oil and increased trading revenues within our agribusiness and energy services segment.Operatingoil.$30.5$13.5 million and adjusted EBITDA decreased $21.5$20.8 million for the three months ended September 30, 2022, compared with the same period last year primarily due to lower ethanol crush margins, offset by the $27.7 million USDA COVID-19 relief grant received, which is excluded from adjusted EBITDA, and also higher margins on agribusiness and energy services. Interest expense increased $0.1 million for the three months ended September 30, 2022, compared with the same period in 2021. Income tax benefit was $1.9 million for the three months ended September 30, 2022, compared with income tax expense of $7 thousand for the same period in 2021 primarily due to a decrease in the valuation allowance recorded against deferred tax assets included in AOCI for the three months ended September 30, 2022.Three Months Ended
September 30,2022 2021 % Variance Ethanol sold (thousands of gallons) 219,166 181,214 20.9% Distillers grains sold (thousands of equivalent dried tons) 586 492 19.1 Corn oil sold (thousands of pounds) 72,975 55,397 31.7 Corn consumed (thousands of bushels) 75,308 62,524 20.4% $0.7$34.0 million for the threenine months ended September 30, 2021,2022 compared with the same period in 2020. Income tax expense was $7 thousand2021 primarily due to the loss upon extinguishment of convertible notes of $31.6 million for the threenine months ended September 30, 2021,2021. Income tax benefit was $0.1 million for the nine months ended September 30, 2022, compared with income tax expensebenefit of $7.3$2.9 million for the same period in 20202021 primarily due to a decrease in the recording of a valuation allowance recorded against increases in deferred tax NOLs arising duringassets included in AOCI for both the threenine months ended September 30, 2020.2022 and the nine months ended September 30, 2021.third quarteryear-to-date segment performance.Nine Months Ended
September 30,2022 2021 % Variance Ethanol sold (thousands of gallons) 646,927 550,127 17.6% Distillers grains sold (thousands of equivalent dried tons) 1,695 1,459 16.2 Corn oil sold (thousands of pounds) 204,502 156,835 30.4 Corn consumed (thousands of bushels) 223,830 189,544 18.1% $255.4$742.4 million for the threenine months ended September 30, 2021,2022 compared with the same period in 2020,2021, primarily due to higher average selling prices ofon ethanol, distillers grains and corn oil.oil resulting in increased revenues of $278.1 million, $59.1 million and $42.5 million, respectively, and higher ethanol, distillers grains and corn oil volumes sold resulting in increased revenues of $217.8 million, $45.3 million and $22.8 million, respectively. Revenues also increased as a result of hedging activities by $79.5 million.forin our ethanol production segment increased $267.7$803.2 million for the threenine months ended September 30, 2021,2022 compared with the same period last year primarily due to higher weighted average corn prices, higher corn costs. volumes processed and hedging activities, resulting in increased costs of $277.3 million, $206.4 million and $133.7 million, respectively, with the remainder of the increase primarily driven by higher utilities, freight and chemical costs.$22.8 million and EBITDA decreased $14.7$56.8 million for the threenine months ended September 30, 2021,2022 compared with the same period in 20202021 primarily due to decreased margins on ethanol production.production as outlined above. Depreciation and amortization expense for the ethanol production segment was $25.6$59.1 million for the threenine months ended September 30, 2021,2022, compared with $17.5$62.7 million for the same period last year, with the increase driven primarily by accelerated depreciation on assets retired in conjunction with Project 24 and other plant improvements.increased $67.3decreased $14.2 million while operating loss and EBITDA decreased $1.1 million for the three months ended September 30, 2021, compared with the same period in 2020. The increase in revenues was primarily due to an increase in ethanol, distillers grain and corn oil trading activity driven by higher prices. Operating loss and EBITDA decreased primarily as a result of lower trading margins.Food and Ingredients SegmentThe food and ingredients segment, which now represents food-grade corn oil production, had no activity during the three months ended September 30, 2021.Partnership SegmentRevenues generated by our partnership segment decreased $2.1 million for the three months ended September 30, 2021, compared with the same period for 2020. Railcar transportation services revenue decreased $0.9 million primarily due to a reduction in average volumetric capacity provided, and storage and throughput services revenue decreased $1.0 million due to a decrease in throughput volumes, both of which were a result of the sale of our Hereford ethanol plant in the fourth quarter of 2020 and our Ord ethanol plant in the first quarter of 2021. Terminal services revenue decreased $0.1 million due to lower throughput at our terminals. Trucking and other revenue decreased $0.1 million as a result of lower affiliate freight volume. Operating income decreased $0.6 million and EBITDA decreased $0.4 million for the three months ended September 30, 2021 compared with the same period in 2020.Intersegment EliminationsIntersegment eliminations of revenues decreased by $2.1 million for the three months ended September 30, 2021 compared with the same period in 2020 primarily due to decreased partnership revenues.Corporate ActivitiesOperating income was impacted by an increase in corporate activities of $7.0 million for the three months ended September 30, 2021, compared to the same period in 2020, primarily due to the estimated loss of $2.0 million associated with the contingent earn-out provisions on the sale of GPCC recorded during the three months ended September 30, 2021, the gain of $2.0 million associated with the recognition of earn-out provisions related to the initial sale of GPCC for the three months ended September 30, 2020, as well as higher personnel costs.Income TaxesWe recorded income tax expense of $7 thousand for the three months ended September 30, 2021, compared with income tax expense of $7.3 million for the same period in 2020. The decrease in the amount of tax expense recorded for the three months ended September 30, 2021 was primarily due to a decrease in pretax book income offset by the recording of a valuation allowance against the tax net operating loss generated in the period.
Nine Months Ended September 30, 2021 Compared with the Nine Months Ended September 30, 2020Consolidated ResultsConsolidated revenues increased $579.9$10.2 million for the nine months ended September 30, 2021,2022, compared with the same period in 2020, primarily due to higher prices on ethanol, distillers grains and corn oil and increased trading revenues within our agribusiness and energy services segment.Operating income increased $105.6 million and for the nine months ended September 30, 2021, compared with the same period last year primarily due to the $31.2 million gain on sale of assets and improved margins on ethanol production during the second quarter of 2021, as well as the goodwill impairment charge of $24.1 million during the first quarter of 2020. Adjusted EBITDA increased $28.1 million due to improved margins on ethanol production and higher margins in our agribusiness and energy services segment. Interest expense increased $30.7 million for the nine months ended September 30, 2021 compared with the same period in 2020 due to the loss upon settlement of convertible notes of $22.1 million, recorded in the first quarter and the $9.5 million loss upon settlement of convertible notes recorded in the second quarter. Income tax benefit was $2.9 million for the nine months ended September 30, 2021, compared with income tax benefit of $48.5 million for the same period in 2020, primarily due to benefits recorded related to the CARES Act during the nine months ended September 30, 2020.following discussion provides greater detail about our year-to-date segment performance.Ethanol Production SegmentKey operating data for our ethanol production segment is as follows:
September 30,Revenues in our ethanol production segment increased $468.1 million for the nine months ended September 30, 2021, compared with the same period in 2020 primarily due to higher prices on ethanol, distillers grains and corn oil, offset by lower ethanol volumes sold.Cost of goods sold for our ethanol production segment increased $403.5 million for the nine months ended September 30, 2021, compared with the same period last year primarily due to higher corn costs. Operating income increased $70.0 million and EBITDA increased $81.3 million for the nine months ended September 30, 2021 compared with the same period in 2020 primarily due to improved margins as well as the $24.1 million noncash impairment charge recorded during the three months ended March 31, 2020. Depreciation and amortization expense for the ethanol production segment was $62.7 million for the nine months ended September 30, 2021 compared with $50.6 million for the same period last year.Agribusiness and Energy Services SegmentRevenues in our agribusiness and energy services segment increased $111.1 million while operating income increased $8.5 million and EBITDA increased $8.4 million for the nine months ended September 30, 2021, compared with the same period in 2020. The increasedecrease in revenues was primarily due to an increasea decrease in ethanol distillers grain and corn oil trading activity.volume. Operating income and EBITDA increased primarily as a result of higher trading margins.Food and Ingredients SegmentThe food and ingredients segment, which now represents food-grade corn oil production had no activity during the nine months ended September 30, 2021.$2.7$0.5 million for the nine months ended September 30, 2021,2022 compared with the same period for 2020. Railcar transportation services revenue decreased $1.5 million due to a reduction in average volumetric capacity provided and lower sublease revenue.2021. Storage and throughput services revenue decreased $0.7 million due to a decreasereduction in throughput volumesthe contracted minimum volume commitment as a result of ourthe sale of the Hereford ethanol plant in the fourth quarter of 2020 and our Ord ethanol plant in the first quarter of 2021. Railcar transportation services revenue increased $0.9 million primarily due to an increase in capacity provided and higher fees charged on the volumetric capacity. Terminal services revenue decreased $0.3 million due to lower minimum volume commitment fees earned. Trucking and other revenue decreased $0.2$0.4 million primarily as a result of lower third partynon-affiliate freight volume. Terminal services revenue decreased $0.2 million due to lower throughput at our terminals. Operating income decreased $0.4 million and EBITDA decreased $0.5$1.3 million for the nine months ended September 30, 20212022, compared with the same period in 2020.decreasedincreased by $3.4$3.7 million for the nine months ended September 30, 20212022, compared with the same period in 20202021 primarily due to decreased partnership revenues andincreased intersegment marketing and service fees within thelowerhigher production volumes.incomeloss was impacted by an increase in corporate activities of $26.1$50.7 million for the nine months ended September 30, 2021,2022 compared to the same period in 2020,2021, primarily due to the $31.2 million net gain on sale of assets recorded in the same period last year, as well as increased personnel costs, professional fees and memberships, and travel costs during the second quarternine months ended September 30, 2022.2021.Income TaxesWe recorded$0.1 million for the nine months ended September 30, 2022, compared with income tax benefit of $2.9 million for the nine months ended September 30, 2021, compared with income tax benefit of $48.5 million for the same period in 2020. The2021 primarily due to a decrease in the amount of tax benefit was primarily due to an increase in pretax book income compared to the tax benefit recorded for the same period in 2020 to reflect the benefit associated with the carry back of the 2019 tax NOLs to the 2014 tax year under the CARES Act of 2020, as well as the release of a previously recorded valuation allowance recorded against the 2019 NOL and other deferred tax assets.Income from Equity Method InvesteesIncome from equity method investees decreased $20.4 millionassets included in AOCI for both the nine months ended September 30, 2021 compared with2022 and the same period last year due primarily to the disposition of our GPCC joint venture during the fourth quarter of 2020.ratingsrisk profile and market conditions.conditions generally. We believe that our ability to obtain financing at reasonable ratesbased on these factors remains sufficient and history of positive cash flow from operating activities, which have been positive for seven of the previous ten years, provideprovides a solid foundation to meet our future liquidity and capital resource requirements.2021,2022, we had $589.8$420.8 million in cash and equivalents, excluding restricted cash, consisting of $497.6 million held at our parent company and the remainder held at our subsidiaries.cash. Additionally, we had $131.1$66.6 million in restricted cash and $25.0 million in marketable securities at September 30, 2021.2022. We also had $312.6$155.0 million available under our committed revolving credit and term loan agreements, some of which wereagreement, subject to restrictions orand other lending conditions. Funds at certain subsidiaries are generally required for their ongoing operational needs and restricted from distribution. At September 30, 2021,2022, our subsidiaries had approximately $174.4$115.4 million of net assets that were not available to use in the form of dividends, loans or advances due to restrictions contained in their credit facilities.$27.9$34.5 million for the nine months ended September 30, 2021,2022, compared with net cash provided byused in operating activities of $76.4$27.9 million for the same period in 2020. Operating2021. Net cash used in operating activities compared to the prior yearyear were primarily affected by changesa higher net loss as well as increases in working capitalcash used related to derivative financial instruments, offset by decreases in cash used related to accounts receivable and a decrease related to the gain on sale of assets when compared to the same period of the prior year. Net cash used in investing activities was $43.5$90.3 million for the nine months ended September 30, 2021,2022, compared with net cash used in investing activities of $89.5$43.5 million for the same period in 2020.2021. Investing activities compared to the prior year were primarily affected by the increased purchases of fixed assets, offset by proceeds from the sale of assetsmarketable securities during 2021.the first quarter of 2022. Net cash provided by financing activities was $517.4$51.2 million for the nine months ended September 30, 2021,2022, compared with net cash used inprovided by financing activities of $74.6$517.4 million for the same period in 2020,2021, primarily due to proceeds from the issuance of common stock and debt offerings and proceeds during the same period in 2021.incurredhad capital expenditures of approximately $123.7$183.2 million during the nine months ended September 30, 2021,2022, primarily for Ultra High-ProteinUltra-High Protein expansion projects at various facilities Project 24 operating expense reduction and for various maintenance projects. Capital spending for the remainder of 20212022 is expected to be between $75.0$70.0 million and $100.0 million for various projects, including the Ultra High-ProteinUltra-High Protein expansion at our Wood River, Obion, Central City and Mount Vernon locations, which are expected to be financed with cash on hand and by cash provided by operating activities, as well as available borrowings under our $75.0 million delayed draw loan and cash on hand. On October 19, 2021, the board of directors of the general partner of the partnership declared a cash distribution of $0.435 per unit on outstanding common and subordinated units. The distribution is payable on November 12, 2021, to unitholders of record at the close of business on November 5, 2021.notice.notice. We did not repurchase any shares during the third quarter of 2021.2022. To date, we have repurchased 7,396,936 of common stock for approximately $92.8 million under the program. We cannot provide assurance that we will be able to secure funding necessary for additional working capital or these projects at reasonable terms, if at all.2020.2021.2021.2022. Based on our forecasts, we believe we will maintain compliance at each of our subsidiaries for the next twelve months or have sufficient liquidity available on a consolidated basis to resolve noncompliance. We cannot provide assurance that actual results will approximate our forecasts or that we will inject the necessary capital into a subsidiary to maintain compliance with its respective covenants. In the event a subsidiary is unable to comply with its debt covenants, the subsidiary’s lenders may determine that an event of default has occurred, and following notice, the lenders may terminate the commitment and declare the unpaid balance due and payable.various credit facilities.our Green Plain Partners term loan. The administrator of LIBOR has announced it will ceaseceased the publication of the one week and two month LIBOR settings immediately following the LIBOR publication on December 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023. ItThe U.S. Federal Reserve, in conjunction with the Alternative Reference Rate Committee, a steering committee comprised of large U.S. financial institutions, is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will be established by the applicable phase out dates. We expect to amend our credit facilities to determine the interest rate to replaceconsidering replacing U.S. dollar LIBOR with a new reference rate, the new standard that is established.SOFR, calculated using short-term repurchase agreements backed by Treasury securities. The potential effect of any such event on interest expense cannot yet be determined.2021,2022, the outstanding principal balance on the 2.25% notes was $230.0 million.arewere senior, unsecured obligations, with interest payable on January 1 and July 1 of each year, beginning January 1,will bewas 64.1540 shares of our common stock per $1,000 principal amount of the 4.00% notes, which is equivalent to an initial conversion price of approximately $15.59 per share of our common stock. The final conversion rate will be subjectwas increased to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering. In addition, we may be obligated to increase the conversion rate for any conversion that occurs66.4178 in connection with certain corporate events, including ourthe company's calling the 4.00% notes for redemption. We may settle the 4.00% notes in cash, common stock or a combination of cash and common stock.At September 30, 2021,balance onamount of $64.0 million. The conversion rate was 66.4178 shares of common stock per $1,000 of principal.was $64.0 million.arewere senior, unsecured obligations with interest payable on March 1 and September 1 of each year. Prior to March 1, 2022,The notes were convertible at the 4.125% notes are not convertible unless certain conditions are satisfied.Holder’s option. The initial conversion rate iswas 35.7143 shares of common stock per $1,000 of principal which is equal to a conversion price of approximately $28.00 per share. The conversion rate will be subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering. We may settle the 4.125% notes in cash, common stock or a combination of cash and common stock.itsthe 4.125% notes due 2022, in privately negotiated transactions. At September 30, 2021,outstanding principal balance oncompany entered into four privately negotiated exchange agreements with certain noteholders of the 4.125% notes to exchange approximately $32.6 million aggregate principal amount for approximately 1.2 million shares of the company's common stock. Additionally, on September 1, 2022, approximately $1.7 million aggregate principal amount were settled through a combination of $1.7 million in cash and approximately 15 thousand shares of the company's common stock. Pursuant to the guidance within ASC 470, Debt, the company recorded the exchanges as a conversion and recorded a loss of $419 thousand, which was $34.3 million.recorded as a charge to interest expense in the consolidated financial statements during the three months ended September 30, 2022.has a $300.0have total revolving commitments of $350.0 million senior secured asset-based revolving credit facility to finance working capital up toand an accordion feature whereby amounts available under the maximum commitment based on eligible collateral, which matures in July of 2022. This facility canFacility may be increased by up to $70.0$100.0 million with agent approval. Advances areof new lender commitments subject to variablecertain conditions. Each SOFR rate loan shall bear interest ratesfor each day at a rate per annum equal to the Term SOFR rate for the outstanding period plus a daily LIBORTerm SOFR adjustment and an applicable margin of 2.25% to 2.50%, which is dependent on undrawn availability under the Facility. Each base rate plus 2.25% orloan shall bear interest at a rate per annum equal to the base rate plus the applicable margin of 1.25%. to 1.50%, which is dependent on undrawn availability under the Facility. The unused portion of the credit facilityFacility is also subject to a commitment fee of 0.275% to 0.375% per annum., dependent on undrawn availability. At September 30, 2021,2022, the outstanding principal balance was $109.6$195.0 million on the facility and the interest rate was 2.40%6.11%.Green Plains Grain has a $100.0 million senior secured asset-based revolving credit facility to finance working capital up to the maximum commitment based on eligible collateral, which matures in June of 2022. This facility can be increased by up to $75.0 million with agent approval and up to $50.0 million for seasonal borrowings. Total commitments outstanding under the facility cannot exceed $225.0 million. At September 30, 2021, the outstanding principal balance was $22.8 million on the facility and the interest rate was 5.25%.Green Plains Grain has short-term inventory financing agreements with a financial institution with a maximum commitment of up to $50.0 million, which matures June 2022. Green Plains Grain has accounted for the agreements as short-term notes, rather than sales, and has elected the fair value option to offset fluctuations in market prices of the inventory. Green Plains Grain had no short-term notes payable related to these inventory financing agreements as of September 30, 2021.$30.0$40.0 million revolving credit facility which matures April 30, 2023, to finance margins related to its hedging programs. Advances are subject to variable interest rates equal to LIBORSOFR plus 1.75%. At September 30, 2021,2022, the outstanding principal balance was $30.0$11.1 million on the facility and the interest rate was 1.82%4.73%.2021,2022, the outstanding principal balance was $125.0 million on the loan and the interest rate was 11.75%.2021,2022, the outstanding principal balance was $30.0$75.0 million on the loan and the interest rate was 6.52%5.02%.As of September 30, 2021, Green Plains Partners, through a wholly owned subsidiary, had a term loan to fund working capital, capital expenditures and other general partnership purposes. Facility”Agreement”) to our existing credit facility with funds and accounts managed by BlackRock and TMI Trust Company as administrative agent. The Amended Credit Facility decreased the total amount available toagent creating a $60.0 million extended the maturity from December 31, 2021term loan to fund working capital, capital expenditures and other general partnership purposes. The amended term loan matures July 20, 2026, and converted the balance to a term loan.2026. The amended term loan does not require any principal payments; however, the partnership has the option to prepay $1.5 million per quarter beginning twelve months after the closing date. As of September 30, 2021, the term loan had a balance of $60.0 million and an interest rate of 8.13%.amended agreement,Amended Credit Agreement, BlackRock purchased the outstanding balance of the existing notes from the previous lenders. Interest on the term loan is based on 3-month LIBOR plus 8.00%, with a 0% LIBOR floor and is payable on the 15th day of each March, June, September and December, during the term, with the first interest payment being September 15, 2021. Financial covenantsamended agreement include a maximum consolidated leverage ratiooutstanding notes from accounts and funds managed by BlackRock and subsequently retired the notes. As of 2.5x and a minimum consolidated debt service coverage ratio of 1.10x. The Amended Credit Facility continues to be secured by substantially all of the assets of the partnership.During the nine months ended September 30, 2021, prior2022, the term loan had a balance of $59.0 million and an interest rate of 11.19%.the amendment, principal payments of $50.0 million were made on the previous credit facility, including $19.5 million of scheduled repayments, $27.5 milliondebt, our material future obligations include certain lease agreements and contractual and purchase commitments related to commodities, storage and transportation. Aggregate minimum lease payments under the sale of the storage assets located adjacent to the Ord, Nebraska ethanol plant and a $3.0 million prepayment made with excess cash.Contractual ObligationsContractual obligationsoperating lease agreements for future fiscal years as of September 30, 2021 were as follows (in thousands):
1 Year
5 Years(1)Includes the current portion2022 totaled $75.1 million. As of long-term debtSeptember 30, 2022, we had contracted future purchases of grain, natural gas, and distillers grains valued at approximately $366.0 million and future finance lease obligationscommitments for storage and excludes the effect of any debt issuance costs.(2)Interest amounts are calculated over the terms of the loans using current interest rates, assuming scheduled principal and interest amounts are paid pursuant to the debt agreements. Includes administrative and/or commitment fees on debt obligations.(3)Operating lease costs are primarily for railcars and office space and exclude leases not yet commenced with undiscounted future lease payments of approximately $0.7 million.(4)Purchase contracts represent index-priced and fixed-price contracts. Index purchase contracts aretransportation valued at current quarter-end prices.(5)approximately $27.8 million. Refer to Includes fixed-price ethanol, dried distillers grainsNote 13 – Commitments and natural gas purchase contracts.ContingenciesKey revenue recognition, impairment of long-lived assets and goodwill, derivative financial instruments, and accounting for income taxes, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements. Information about our critical accounting policies and estimates are included in our annual report on Form 10-K for the year ended December 31, 2020.allthe majority of our business in U.S. dollars and are not currently exposed to foreign currency risk.$0.9$1.9 million per year. At September 30, 2021, we had $711.4 million in debt, $222.0 million of which had variable interest rates.2020.2021.
2021,2022, revenues included net gains of $0.9$3.5 million and net losses of $89.8$6.0 million, respectively, and cost of goods sold included net losses of $17.4$6.3 million and net gains of $15.3$68.5 million, respectively, associated with derivative financial instruments.2021,2022, which is as follows (in thousands):
Requirements for the
Next 12 Months (1)
Measure
Approximate 10%
Change in PriceCommodity Unit of
MeasureNet Income Effect of
Approximate 10%
Change in PriceEthanol 958,000 Gallons $156,984 Corn 330,000 Bushels $167,483 Distillers grains 2,500 $44,382 Corn oil 290,000 Pounds $10,512 Natural gas 27,700 MmBTU $2,962 our inventories, physical purchase and sale contracts and derivatives are marked to market. Our inventories are carried at the lower of cost or net realizable value, except fair-value hedged inventories. To reduce commodity price risk caused by market fluctuations for purchase and sale commitments of grain and grain held in inventory, we enter into exchange-traded futures and options contracts that serve as economic hedges.Our daily net commodity position consists of inventories related to purchase and sale contracts and exchange-traded contracts. The fair value of our position was approximately $0.7 million for grain at September 30, 2021. Our market risk at that date, based on the estimated net income effect resulting from a hypothetical 10% change in price, was approximately $55 thousand.2021,2022 as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and concluded that our disclosure controls and procedures were effective.
2020,2021, in Part I, Item 1A, “Risk Factors,” and the discussion of risks and other information in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under “Cautionary Information Regarding Forward-Looking Statements,” of this report. Investors should also carefully consider the discussion of risks with the partnership under the heading “Risk Factors” and other information in their annual report on Form 10-K for the year ended December 31, 2020.2021. Although we have attempted to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. The following risk factors supplement and/or update risk factors previously disclosed and should be considered in conjunction with the other information included in, or incorporated by reference in, this quarterly report on Form 10-Q.In recent years, theThe spread between ethanol and corn prices has fluctuatedcan fluctuate widely, narrowed significantly and has been negative at times. Fluctuations are likely to continue. A sustained narrow spread or further reduction in the spread between ethanol and corn prices as a result of increased corn prices or decreased ethanol prices, would adversely affect our results of operations and financial position. Should our combined revenue from ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil fall below our cost of production, we could decide to slow or suspend production at some or all of our ethanol plants, which also could adversely affect our results of operations and financial position.commoditiesproducts we buy and sell are subject to price volatility and uncertainty.damagingeconomic issues, including but not limited to the war in Ukraine including sanctions associated therewith, or global or regional growing conditions, such as plant disease, pests or adverse weather, including drought.drought, as well as global conflicts.including:including but not limited to: the price and availability of competing fuels; the overall supply and demand for ethanol and corn; the price of gasoline, crude oil and corn; global political or economic issues, including but not limited tooctanesoctane and, to a lesser extent, a gasoline substitute. Consequently, gasoline supply and demand affect the price of ethanol. Should gasoline prices or demand decrease significantly, our results of operations could be materially impacted.II, sugarcane ethanol from Brazil is one of the most economical means for obligated parties to meet the advanced biofuel standard. the 200-proof alcohol. Further distillation removes impurities which allows it to be used as an ingredient for sanitation products. Should industrial-grade alcohol prices or demand decrease significantly, or competition and supply increase, our results of operations could be negatively impacted.Distillers Grains. Increased U.S. dry mill ethanol production has resulted in increased distillers grains production. Should this trend continue, distillers grains prices could fall unless demand increases or other market sources are found. The price of distillers grains has historically been correlated with the price of corn. Occasionally, the price of distillers grains will lag behind fluctuations in corn or other feedstock prices, lowering our cost recovery percentage. Additionally, exports of distiller grains could be impacted by the enactment of foreign policy.Distillers grains compete with other protein-based animal feed products. Downward pressure on other commodity prices, such as corn and soybeans, will generally cause the price of competing animal feed products to decline, resulting in downward pressure on the price of distillers grains.Natural Gas. The price and availability of natural gas are subject to volatile market conditions. These market conditions are often affected by factors beyond our control, such as weather, drilling economics, overall economic conditions and government regulations. Significant disruptions in natural gas supply could impair our ability to produce ethanol. Furthermore, increases in natural gas prices or changes in our cost relative to our competitors cannot be passed on to our customers, which may adversely affect our results of operations and financial position.Corn Oil. Industrial corn oil is generally marketed as a renewable diesel and biodiesel feedstock; therefore, the price of corn oil is affected by demand for renewable diesel and biodiesel. Expanded profitability in the renewable diesel and biodiesel industry due to the extended blending tax credit and low carbon fuels standards could impact corn oil demand. In general, corn oil prices follow the prices of heating oil and soybean oil. Decreases in the price of corn oil could have an unfavorable impact on our business.Business disruptions due to unforeseen operational failures or factors outside of our control could impact our ability to fulfill contractual obligations.Natural disasters, pandemics, transportation issues, significant track damage resulting from a train derailment or strikes by our transportation providers could delay shipments of raw materials to our plants or deliveries of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil to our customers. If we are unable to meet customer demand or contract delivery requirements due to stalled operations caused by business disruptions, we could potentially lose customers.Shifts in global markets, supply or demand changes, as well as adverse weather conditions, such as inadequate or excessive amounts of rain during the growing season, overly wet conditions, an early freeze or snowy weather during harvest could impact the supply of corn that is needed to produce ethanol. Corn stored in an open pile may be damaged by rain or warm weather before the corn is dried, shipped or moved into a storage structure.(EISA),of 2007, as amended, Congress expanded the Renewable Fuel Standard (RFS II).RFS. The RFS II mandates the minimum volume of renewable fuels that must be blended into the transportation fuel supply each year which affects the domestic market for ethanol. Each year the Environmental Protection Agency (EPA)EPA is supposed to undertake rulemaking to set the Renewable Volume Obligation (RVO)RVO for the following year, though at times months or years pass without a finalized RVO. Further, the EPA has the authority to waive the requirements, in whole or in part, if there is inadequate domestic renewable fuel supply or the requirement severely harms the economy or the environment. After 2022, volumes shall be determined by the EPA in coordination with the Secretaries of Energy and Agriculture, taking into account such factors as impact on environment, energy security, future rates of production, cost to consumers, infrastructure, and other factors such as impact on commodity prices, job creation, rural economic development, or impact on food prices. II, if mandatory renewable fuel volumes are reduced by at least 20% for two consecutive years, the EPA is required to modify, or reset, statutory volumes through 2022; the year through which the statutorily prescribed volumes run. While conventional ethanol maintained 15 billion gallons, 2019 was the second consecutive year that the total RVO was more than 20% below the statutory volumes levels. Thus, the EPA was expected to initiate a reset rulemaking, and modify statutory volumes through 2022, and do so based on the same factors they are to use in setting the RVOs post-2022. However, on December 19, 2019, the EPA announced it would not be moving forward with a reset rulemaking. It is unclear when or if they will propose a reset rulemaking. The EPA has stated an intention to propose a post-2022 ‘set’set rulemaking by November 16, 2022, and finalize by June 14, 2023, in compliance with a consent decree from the end of 2021. II mandated volumes of conventional ethanol and other biofuels through the annual RVO, the 2022 set rulemaking, the point of obligation for blending, or small refinery exemptions.SREs. A recent Supreme Court ruling held that the small refineries can continue to apply for an extension of their waivers from the RFS, II, even if they have not been awarded a continuous string of exemptions. exemptions, though the current EPA, in conjuction with the RVO rulemaking for 2020, 2021 and 2022, denied all pending SREs. There are multiple legal challenges to how the EPA has handled SREs and RFS rulemakings.flex fuel vehicles (FFVs)FFVs from June 1 to September 15 each year.II mandate, may affect future demand. A significant increase in supply beyond the RFS II mandate could have an adverse impact on ethanol prices. Moreover, changes II could negatively impact the price of ethanol or cause imported sugarcane ethanol to become more economical than domestic ethanol. Likewise, national, state and regional low carbon fuel standards (LCFS)LCFS like that of California, Oregon, Brazil or Canada could be favorable or harmful to conventional ethanol, depending on how the regulations are crafted, enforced and modified.II credits or Renewable Identification Numbers (RINs).RINs. A significant increase in supply beyond the RFS II mandate could have an adverse impact on ethanol prices. Moreover, any changes to RFS, II, whether by legislation, EPA action or lawsuit, originating from issues associated with the market price of RINs could negatively impact the demand for ethanol, discretionary blending of ethanol and/or the price of ethanol. RecentPrior actions by the EPA to grant small refiner exemptionsSREs without accounting for the lost gallons, for example, resulted in lower RIN prices. Similarly, reducingproposals to reduce annual RVO levels could also lead to lower RIN prices.Congress first enacted CAFE in 1975 to reduce energy consumption by increasing the fuel economy of cars and light trucks. FFVs, which are designed to run on a mixture of fuels, including higher blends of ethanol such as E85, used to receive preferential treatment in the form of corporate average fuel economy (CAFE) credits. There are approximately 21 million FFVs on the road in the U.S. today, 16 million of which are light duty trucks. FFV credits have been decreasing since 2014 and were completely phased out in 2020. Absent CAFE preferences or manufacturing tax credits, auto manufacturers may not be willing to build FFVs, which has the potential to slow the growth of E85 markets. However, California’s Low Carbon Fuel Standard program (LCFS) has driven growth in E85 usage, and other state/regional LCFS programs have the potential to do the same.2021:
Shares Withheld for
Employee Awards
Paid per SharePeriod Total Number of
Shares Withheld for
Employee AwardsAverage Price
Paid per ShareJuly 1 - July 31 — $ — August 1 - August 31 416 38.22 September 1 - September 30 — — Total 416 $ 38.22 2021.2022. Since inception of the repurchase program, the company has repurchased 7,396,936 shares of common stock for approximately $92.8 million under the program.
3.110.110.110.210.4 10.5 31.1 2021,2022, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements2021,2022, formatted in iXBRL.SIGNATURES
Date: November 4, 2021(Registrant) Date: November 3, 2022 By: /s/ Todd A. Becker _ Todd A. Becker
President and Chief Executive Officer (Principal Executive Officer)
Date: November 4, 20213, 2022/s/ G. Patrich Simpkins Jr.James E. StarkJames E. Stark _G. Patrich Simpkins Jr.
Chief Financial Officer (Principal Financial Officer)