Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Dec. 31, 2018 | Feb. 14, 2019 | |
Entity Information [Line Items] | ||
Entity Registrant Name | RED TRAIL ENERGY, LLC | |
Entity Central Index Key | 1,359,687 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 40,148,160 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Current Assets | ||
Cash and equivalents | $ 3,370,561 | $ 4,573,858 |
Restricted cash - margin account | 6,244,833 | 6,299,481 |
Accounts receivable, primarily related party | 3,260,985 | 3,029,314 |
Inventory | 10,824,605 | 10,971,056 |
Prepaid expenses | 339,556 | 110,974 |
Total current assets | 24,040,540 | 24,984,683 |
Property, Plant and Equipment | ||
Land | 1,342,381 | 1,342,381 |
Land improvements | 4,465,311 | 4,465,311 |
Buildings | 8,111,074 | 8,091,522 |
Plant and equipment | 87,764,475 | 87,740,511 |
Construction in progress | 76,454 | 42,742 |
Gross property, plant and equipment | 101,759,695 | 101,682,467 |
Less accumulated depreciation | 59,514,724 | 58,325,210 |
Net property, plant and equipment | 42,244,971 | 43,357,257 |
Other Assets | ||
Investment in RPMG | 605,000 | 605,000 |
Patronage equity | 3,478,552 | 3,478,552 |
Deposits | 40,000 | 40,000 |
Total other assets | 4,123,552 | 4,123,552 |
Total Assets | 70,409,063 | 72,465,492 |
Current Liabilities | ||
Accounts payable | 4,720,126 | 4,689,119 |
Accrued expenses | 633,595 | 1,005,067 |
Commodities derivative instruments, at fair value (see note 2) | 122,500 | 2,245,650 |
Accrued loss on firm purchase commitments (see notes 3 and 7) | 209,000 | 204,000 |
Current maturities of notes payable | 2,263 | 2,921 |
Total current liabilities | 5,687,484 | 8,146,757 |
Long-Term Liabilities | ||
Notes payable | 0 | 0 |
Members’ Equity (41,466,340 as of March 31, 2018 and September 30, 2017, respectively, of Class A Membership Units issued and outstanding) | 64,721,579 | 64,318,735 |
Total Liabilities and Members’ Equity | $ 70,409,063 | $ 72,465,492 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Operations [Abstract] | ||
Revenues, primarily related party | $ 25,909,136 | $ 26,122,856 |
Cost of Goods Sold | ||
Cost of goods sold | 24,856,341 | 27,743,282 |
Lower of cost or net realizable value adjustment | 0 | 70,979 |
Loss on firm purchase commitments | 5,000 | 8,000 |
Total Cost of Goods Sold | 24,861,341 | 27,822,261 |
Gross Profit | 1,047,795 | (1,699,405) |
General and Administrative Expenses | 674,885 | 715,911 |
Operating Income (Loss) | 372,910 | (2,415,316) |
Other Income (Expense) | ||
Interest income | 27,443 | 23,427 |
Other income | 2,496 | 407,233 |
Interest expense | (5) | (10) |
Total other income (expense), net | 29,934 | 430,650 |
Net Income (Loss) | $ 402,844 | $ (1,984,666) |
Weighted Average Units Outstanding, Basic | 40,148,160 | 41,466,340 |
Weighted Average Units Outstanding, Diluted | 40,148,160 | 41,466,340 |
Net Income (Loss) Per Unit, Basic | $ 0.01 | $ (0.05) |
Net Income (Loss) Per Unit, Diluted | $ 0.01 | $ (0.05) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 402,844 | $ (1,984,666) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 1,189,514 | 1,173,688 |
Loss (gain) on disposal of fixed assets | (13,254) | 0 |
Change in fair value of derivative instruments | (2,123,150) | 343,213 |
Lower of cost or net realizable value adjustment | 0 | 70,979 |
Loss on firm purchase commitments | (5,000) | (8,000) |
Change in operating assets and liabilities: | ||
Accounts receivable | (231,671) | 1,020,221 |
Other receivables | 0 | (6,710) |
Inventory | 141,450 | 455,553 |
Prepaid expenses | (228,582) | (246,604) |
Accounts payable | 20,831 | 1,175,944 |
Accrued expenses | (371,472) | 5,861,537 |
Accrued purchase commitment losses | 5,000 | 8,000 |
Net cash provided by operating activities | (1,176,982) | 7,879,155 |
Cash Flows from Investing Activities | ||
Capital expenditures | (80,306) | (32,345) |
Net cash (used in) investing activities | (80,306) | (32,345) |
Cash Flows from Financing Activities | ||
Debt repayments | (657) | (652) |
Net cash (used in) financing activities | (657) | (652) |
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | (1,257,945) | 7,846,158 |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 10,873,339 | 9,130,008 |
Cash, Cash Equivalents and Restricted Cash - End of Period | 9,615,394 | 16,976,166 |
Cash and equivalents | 3,370,561 | 11,293,024 |
Restricted Cash and Cash Equivalents | 6,244,833 | 5,683,142 |
Supplemental Disclosure of Cash Flow Information | ||
Interest paid | 5 | 3,683 |
Capital Expenditures Incurred but Not yet Paid | $ 10,176 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Account Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Red Trail Energy, LLC, a North Dakota limited liability company (the “Company”), owns and operates a 50 million gallon annual name-plate production ethanol plant near Richardton, North Dakota (the “Plant”). Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, inventory and allowance for doubtful accounts. Actual results could differ from those estimates. Net Income Per Unit Net income per unit is calculated on a basic and fully diluted basis using the weighted average units outstanding during the period. Recently Issued Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued ASC 606, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASC 606 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. Effective October 1, 2018, the Company adopted ASC 606 for all of its contracts using the modified retrospective approach. See note 2. Statement of Cash Flows; Restricted Cash In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annal periods beginning after December 15, 2017, and interim periods within those annual periods. Effective October 1, 2018 the Company retrospectively adopted ASU No. 2016-18. As a result, net cash used in operating activities for the three months ended December 31, 2017 was adjusted to exclude the change in restricted cash and decreased the previously reported balance by approximately $224,000 . Also the previously reported cash and cash equivalent balance was adjusted to include restricted cash and has increased by approximately $5,683,000 . Lease Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, "Leases (topic 842)" which requires a lessee to recognize a right to use asset and a lease liability on its balance sheet for all leases with terms of twelve months or greater. This guidance is effective for fiscal years beginning after December 15, 2018, included interim periods within those years with early adoption permitted. The Company has evaluated the new standard and expects it will have a material impact on the financial statements as we will have to begin capitalizing leases on the balance sheet when the new standard is implemented. See note 7 for current operating lease commitments. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS Commodity Contracts As part of its hedging strategy, the Company may enter into ethanol, soybean, soybean oil, natural gas and corn commodity-based derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices in order to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales, corn oil sales, and corn purchase commitments where the prices are set at a future date. These derivatives are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair value is recorded through earnings in the period of change. Ethanol derivative fair market value gains or losses are included in the results of operations and are classified as revenue and corn derivative changes in fair market value are included in cost of goods sold. As of: December 31, 2018 (unaudited) September 30, 2018 Contract Type # of Contracts Notional Amount (Qty) Fair Value # of Contracts Notional Amount (Qty) Fair Value Corn futures — — bushels $ — 800 4,000,000 bushels $ (319,400 ) Corn options 400 2,000,000 bushels $ (122,500 ) 2,800 14,000,000 bushels $ (1,926,250 ) Total fair value $ (122,500 ) $ (2,245,650 ) Amounts are combined on the balance sheet - negative numbers represent liabilities The following tables provide details regarding the Company's derivative financial instruments at December 31, 2018 and September 30, 2018 : Derivatives not designated as hedging instruments: Balance Sheet - as of December 31, 2018 (unaudited) Asset Liability Commodity derivative instruments, at fair value $ — $ 122,500 Total derivatives not designated as hedging instruments for accounting purposes $ — $ 122,500 Balance Sheet - as of September 30, 2018 Asset Liability Commodity derivative instruments, at fair value $ — $ 2,245,650 Total derivatives not designated as hedging instruments for accounting purposes $ — $ 2,245,650 Statement of Operations Income/(Expense) Location of gain (loss) in fair value recognized in income Amount of gain (loss) recognized in income during the three months ended December 31, 2018 (unaudited) Amount of gain (loss) recognized in income during the three months ended , December 31, 2017 (unaudited) Corn derivative instruments Cost of Goods Sold $ 2,068,502 $ (568,536 ) Ethanol derivative instruments Revenue — 1,800 Total $ 2,068,502 $ (566,736 ) |
Inventory
Inventory | 3 Months Ended |
Dec. 31, 2018 | |
Inventory [Abstract] | |
Inventory | INVENTORY Inventory is valued at the lower of cost or net realizable value. Inventory values as of December 31, 2018 and September 30, 2018 were as follows: As of December 31, 2018 (unaudited) September 30, 2018 Raw materials, including corn, chemicals and supplies $ 6,332,326 $ 6,684,322 Work in process 747,769 738,991 Finished goods, including ethanol and distillers grains 1,529,373 1,405,806 Spare parts 2,215,137 2,141,937 Total inventory $ 10,824,605 $ 10,971,056 Lower of cost or net realizable value adjustments for the three months ended December 31, 2018 and 2017 were as follows: For the three months ended December 31, 2018 (unaudited) For the three months ended December 31, 2017 (unaudited) Loss on firm purchase commitments $ 5,000 $ 8,000 Loss on lower of cost or net realizable value adjustment for inventory on hand $ — $ 70,979 Total loss on lower of cost or net realizable value adjustments $ 5,000 $ 78,979 The Company has entered into forward corn purchase contracts under which it is required to take delivery at the contract price. At the time the contracts were created, the price of the contract approximated market price. Subsequent changes in market conditions could cause the contract prices to become higher or lower than market prices. As of December 31, 2018 , the average price of corn purchased under certain fixed price contracts, that had not yet been delivered, was greater than approximated market price. Based on this information, the Company has a $5,000 estimated loss on firm purchase commitments for the three months ended December 31, 2018 . The loss is recorded in “Loss on firm purchase commitments” on the statement of operations. The amount of the potential loss was determined by applying a methodology similar to that used in the impairment valuation with respect to inventory. Given the uncertainty of future ethanol prices, further losses on the outstanding purchase commitments could be recorded in future periods. |
Bank Financing
Bank Financing | 3 Months Ended |
Dec. 31, 2018 | |
Bank Financing [Abstract] | |
Bank Financing | BANK FINANCING As of December 31, 2018 (unaudited) September 30, 2018 Capital lease obligations (Note 6) $ 2,263 $ 2,921 Total Long-Term Debt 2,263 2,921 Less amounts due within one year 2,263 2,921 Total Long-Term Debt Less Amounts Due Within One Year $ — $ — On May 31, 2018, we renewed our $10 million revolving loan (the "Revolving Loan") with U.S. Bank National Association ("U.S. Bank"). The maturity date of the Revolving Loan is May 31, 2019. Our ability to draw funds on the Revolving Loan is subject to a borrowing base calculation as set forth in the Credit Agreement. At December 31, 2018 , we had $10,000,000 available on the Revolving Loan, taking into account the borrowing base calculation. We had $0 drawn on the Revolving Loan as of December 31, 2018 . The variable interest rate on December 31, 2018 was 4.33% . See note 7 for the Company's additional future minimum lease commitments. The Company's loans are secured by a lien on substantially all of the assets of the Company. As of December 31, 2018 , the Company was in compliance with its quarterly debt covenant. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following table provides information on those assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018 and September 30, 2018 , respectively. Fair Value Measurement Using Carrying Amount as of December 31, 2018 (unaudited) Fair Value as of December 31, 2018 (unaudited) Level 1 Level 2 Level 3 Liabilities Commodities derivative instruments $ 122,500 $ 122,500 $ 122,500 $ — $ — Total $ 122,500 $ 122,500 $ 122,500 $ — $ — Fair Value Measurement Using Carrying Amount as of September 30, 2018 Fair Value as of September 30, 2018 Level 1 Level 2 Level 3 Liabilities Commodities derivative instruments $ 2,245,650 $ 2,245,650 $ 2,245,650 $ — $ — Total $ 2,245,650 $ 2,245,650 $ 2,245,650 $ — $ — The fair value of the corn, ethanol, soybean oil and natural gas derivative instruments is based on quoted market prices in an active market. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases | LEASES The Company leases equipment under operating and capital leases through July 2023. The Company is generally responsible for maintenance, taxes, and utilities for leased equipment. Equipment under operating lease includes a locomotive and rail cars. Rent expense for operating leases was approximately $161,000 and $154,000 for the three months ended December 31, 2018 and 2017. Equipment under capital leases consists of office equipment and plant equipment. Equipment under capital leases is as follows at: As of December 31, 2018 September 30, 2018 Equipment $ 483,488 $ 483,488 Less accumulated amortization (146,853 ) (141,488 ) Net equipment under capital lease $ 336,635 $ 342,000 At December 31, 2018 , the Company had the following minimum commitments, which at inception had non-cancelable terms of more than one year. Amounts shown below are for the 12 months period ending December 31 : Operating Leases Capital Leases 2019 $ 501,198 $ 2,263 2020 374,063 — 2021 331,151 — 2022 296,640 — 2023 53,970 — Total minimum lease commitments $ 1,557,022 2,263 Less amount representing interest — Present value of minimum lease commitments included in current maturities of long-term debt on the balance sheet $ 2,263 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Firm Purchase Commitments for Corn To ensure an adequate supply of corn to operate the Plant, the Company enters into contracts to purchase corn from local farmers and elevators. At December 31, 2018 , the Company had various fixed price contracts for the purchase of approximately 2.2 million bushels of corn. Using the stated contract price for the fixed price contracts, the Company had commitments of approximately $7.6 million related to the 2.2 million bushels under contract. Profit and Cost Sharing Agreement The Company has entered into a Profit and Cost Sharing Agreement with Bismarck Land Company, LLC which became effective on November 1, 2016. The Profit and Cost Sharing Agreement provides that the Company will share 70% of the net revenue generated by the Company from business activities which are brought to the Company by Bismarck Land Company, LLC and conducted on the real estate purchased from the Bismarck Land Company, LLC. The real estate was initially purchased in exchange for 2 million membership units at $1.66 per unit. This obligation will terminate ten years after the real estate closing date of October 11, 2016 or after Bismarck Land Company, LLC receives $10 million in proceeds from the agreement. In addition, the Company will pay Bismarck Land Company, LLC 70% of any net proceeds received by the Company from the sale of the subject real estate if a sale were to occur in the future, subject to the $10 million cap and the 10 year termination of this obligation. No payments have been made to the Bismarck Land Company, LLC at this time. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS The Company has balances and transactions in the normal course of business with various related parties for the purchase of corn, sale of distillers grains and sale of ethanol. The related parties include unit holders, members of the board of governors of the Company, and RPMG, Inc. (“RPMG”). During the Company's first quarter of 2018, the Company received a capital account refund from RPMG of $140,539 which is included in other income (expense) in the Company's Statement of Operations. Significant related party activity affecting the financial statements is as follows: December 31, 2018 (unaudited) September 30, 2018 Balance Sheet Accounts receivable $ 2,972,516 $ 2,680,445 Accounts Payable 160,220 312,701 Accrued Expenses 4,124 95,704 For the three months ended December 31, 2018 (unaudited) For the three months ended December 31, 2017 (unaudited) Statement of Operations Revenues $ 24,188,143 $ 24,798,144 Cost of goods sold 14,104 6,462 General and administrative 30,910 19,067 Other income/expense — 140,539 Inventory Purchases $ 3,703,065 $ 4,293,979 |
Uncertainties Impacting the Eth
Uncertainties Impacting the Ethanol Industry and Our Future Operations | 3 Months Ended |
Dec. 31, 2018 | |
Uncertainties Impacting the Ethanol Industry and Our Future Operations [Abstract] | |
Uncertainties Impacting the Ethanol Industry and Our Future Operations | UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS The Company has certain risks and uncertainties that it experiences during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distillers grains to customers primarily located in the United States. Corn for the production process is supplied to the Plant primarily from local agricultural producers and from purchases on the open market. The Company's operating and financial performance is largely driven by prices at which the Company sells ethanol and distillers grains and by the cost at which it is able to purchase corn for operations. The price of ethanol is influenced by factors such as prices, supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets, although since 2005 the prices of ethanol and gasoline began a divergence with ethanol selling for less than gasoline at the wholesale level. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities. The Company's financial performance is highly dependent on the Federal Renewable Fuels Standard ("RFS") which requires that a certain amount of renewable fuels must be used each year in the United States. Corn based ethanol, such as the ethanol the Company produces, can be used to meet a portion of the RFS requirement. In November 2013, the EPA issued a proposed rule which would reduce the RFS for 2014, including the RFS requirement related to corn based ethanol. The EPA proposed rule was subject to a comment period which expired in January 2014. On November 30, 2015, the EPA released its final ethanol use requirements for 2014, 2015 and 2016 which were lower than the statutory requirements in the RFS. However, the final RFS for 2017 equaled the statutory requirement which was also the case for the 2018 and 2019 RFS final rules. The Company anticipates that the results of operations during the remainder of fiscal year 2019 will continue to be affected by volatility in the commodity markets. The volatility is due to various factors, including uncertainty with respect to the availability and supply of corn, increased demand for grain from global and national markets, speculation in the commodity markets and demand for corn from the ethanol industry. |
Member's Equity
Member's Equity | 3 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Members' Equity Notes Disclosure [Text Block] | MEMBER'S EQUITY Unregistered Units Sales by the Company . On October 10, 2016, the Company issued two million of the Company's membership units to Bismarck Land Company, LLC as part of the consideration for the acquisition of 338 acres of land adjacent to the ethanol plant that the Company will use to expand its rail yard. The membership units were issued pursuant to the exemption from registration set forth in Regulation D, Rule 506(b), as Bismarck Land Company, LLC is an accredited investor. Unit Purchases By the Company . (a) (b) (c) (d) Period Total Number of Units Purchased Average Price Paid per Unit Total Number of Units Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of the Units that May Yet Be Purchased Under the Plans or Programs April 2018 None None None None May 2018 1,318,180 $1.00 None None June 2018 None None None None Total 1,318,180 $1.00 None None * 1,318,180 Units were purchased other than through a publicly announced plan or program, pursuant to a Membership Unit Repurchase Agreement, a private transaction between the Company and a Member. No other activity has occurred since the third quarter of our 2018 fiscal year. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the condensed financial statements or disclosure in the notes to the condensed financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Account Policies [Abstract] | |
Accounting Estimates | Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, inventory and allowance for doubtful accounts. Actual results could differ from those estimates. |
Net Income (Loss) Per Unit | Net Income Per Unit Net income per unit is calculated on a basic and fully diluted basis using the weighted average units outstanding during the period. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued ASC 606, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASC 606 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. Effective October 1, 2018, the Company adopted ASC 606 for all of its contracts using the modified retrospective approach. See note 2. Statement of Cash Flows; Restricted Cash In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annal periods beginning after December 15, 2017, and interim periods within those annual periods. Effective October 1, 2018 the Company retrospectively adopted ASU No. 2016-18. As a result, net cash used in operating activities for the three months ended December 31, 2017 was adjusted to exclude the change in restricted cash and decreased the previously reported balance by approximately $224,000 . Also the previously reported cash and cash equivalent balance was adjusted to include restricted cash and has increased by approximately $5,683,000 . Lease Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, "Leases (topic 842)" which requires a lessee to recognize a right to use asset and a lease liability on its balance sheet for all leases with terms of twelve months or greater. This guidance is effective for fiscal years beginning after December 15, 2018, included interim periods within those years with early adoption permitted. The Company has evaluated the new standard and expects it will have a material impact on the financial statements as we will have to begin capitalizing leases on the balance sheet when the new standard is implemented. See note 7 for current operating lease commitments. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments [Abstract] | |
Derivative Instruments Commodity Contracts | As of: December 31, 2018 (unaudited) September 30, 2018 Contract Type # of Contracts Notional Amount (Qty) Fair Value # of Contracts Notional Amount (Qty) Fair Value Corn futures — — bushels $ — 800 4,000,000 bushels $ (319,400 ) Corn options 400 2,000,000 bushels $ (122,500 ) 2,800 14,000,000 bushels $ (1,926,250 ) Total fair value $ (122,500 ) $ (2,245,650 ) Amounts are combined on the balance sheet - negative numbers represent liabilities |
Derivatives Not Designated As Hedging Instruments, Balance Sheet | Derivatives not designated as hedging instruments: Balance Sheet - as of December 31, 2018 (unaudited) Asset Liability Commodity derivative instruments, at fair value $ — $ 122,500 Total derivatives not designated as hedging instruments for accounting purposes $ — $ 122,500 Balance Sheet - as of September 30, 2018 Asset Liability Commodity derivative instruments, at fair value $ — $ 2,245,650 Total derivatives not designated as hedging instruments for accounting purposes $ — $ 2,245,650 |
Derivatives Not Designated as Hedging Instruments, Statement of Operations | Statement of Operations Income/(Expense) Location of gain (loss) in fair value recognized in income Amount of gain (loss) recognized in income during the three months ended December 31, 2018 (unaudited) Amount of gain (loss) recognized in income during the three months ended , December 31, 2017 (unaudited) Corn derivative instruments Cost of Goods Sold $ 2,068,502 $ (568,536 ) Ethanol derivative instruments Revenue — 1,800 Total $ 2,068,502 $ (566,736 ) |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Inventory [Abstract] | |
Schedule of Inventory | As of December 31, 2018 (unaudited) September 30, 2018 Raw materials, including corn, chemicals and supplies $ 6,332,326 $ 6,684,322 Work in process 747,769 738,991 Finished goods, including ethanol and distillers grains 1,529,373 1,405,806 Spare parts 2,215,137 2,141,937 Total inventory $ 10,824,605 $ 10,971,056 |
Long-term Purchase Commitment | For the three months ended December 31, 2018 (unaudited) For the three months ended December 31, 2017 (unaudited) Loss on firm purchase commitments $ 5,000 $ 8,000 Loss on lower of cost or net realizable value adjustment for inventory on hand $ — $ 70,979 Total loss on lower of cost or net realizable value adjustments $ 5,000 $ 78,979 |
Bank Financing (Tables)
Bank Financing (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Bank Financing [Abstract] | |
Schedule of Long-term Debt | As of December 31, 2018 (unaudited) September 30, 2018 Capital lease obligations (Note 6) $ 2,263 $ 2,921 Total Long-Term Debt 2,263 2,921 Less amounts due within one year 2,263 2,921 Total Long-Term Debt Less Amounts Due Within One Year $ — $ — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Fair Value Measurement Using Carrying Amount as of December 31, 2018 (unaudited) Fair Value as of December 31, 2018 (unaudited) Level 1 Level 2 Level 3 Liabilities Commodities derivative instruments $ 122,500 $ 122,500 $ 122,500 $ — $ — Total $ 122,500 $ 122,500 $ 122,500 $ — $ — Fair Value Measurement Using Carrying Amount as of September 30, 2018 Fair Value as of September 30, 2018 Level 1 Level 2 Level 3 Liabilities Commodities derivative instruments $ 2,245,650 $ 2,245,650 $ 2,245,650 $ — $ — Total $ 2,245,650 $ 2,245,650 $ 2,245,650 $ — $ — |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of Capital Leased Assets | As of December 31, 2018 September 30, 2018 Equipment $ 483,488 $ 483,488 Less accumulated amortization (146,853 ) (141,488 ) Net equipment under capital lease $ 336,635 $ 342,000 |
Schedule of Future Minimum Payments for Capital and Operating Leases | Operating Leases Capital Leases 2019 $ 501,198 $ 2,263 2020 374,063 — 2021 331,151 — 2022 296,640 — 2023 53,970 — Total minimum lease commitments $ 1,557,022 2,263 Less amount representing interest — Present value of minimum lease commitments included in current maturities of long-term debt on the balance sheet $ 2,263 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | December 31, 2018 (unaudited) September 30, 2018 Balance Sheet Accounts receivable $ 2,972,516 $ 2,680,445 Accounts Payable 160,220 312,701 Accrued Expenses 4,124 95,704 For the three months ended December 31, 2018 (unaudited) For the three months ended December 31, 2017 (unaudited) Statement of Operations Revenues $ 24,188,143 $ 24,798,144 Cost of goods sold 14,104 6,462 General and administrative 30,910 19,067 Other income/expense — 140,539 Inventory Purchases $ 3,703,065 $ 4,293,979 |
Member's Equity (Tables)
Member's Equity (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Class of Treasury Stock | Unit Purchases By the Company . (a) (b) (c) (d) Period Total Number of Units Purchased Average Price Paid per Unit Total Number of Units Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of the Units that May Yet Be Purchased Under the Plans or Programs April 2018 None None None None May 2018 1,318,180 $1.00 None None June 2018 None None None None Total 1,318,180 $1.00 None None * 1,318,180 Units were purchased other than through a publicly announced plan or program, pursuant to a Membership Unit Repurchase Agreement, a private transaction between the Company and a Member. No other activity has occurred since the third quarter of our 2018 fiscal year. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies Nature of Business (Details) gal in Millions | 3 Months Ended | |||
Dec. 31, 2018USD ($)gal | Dec. 31, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | |
Product Information [Line Items] | ||||
Net cash provided by operating activities | $ (1,176,982) | $ 7,879,155 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 9,615,394 | 16,976,166 | $ 10,873,339 | $ 9,130,008 |
Ethanol [Member] | ||||
Product Information [Line Items] | ||||
Annual Production Capacity | gal | 50 | |||
Previously Reported | Accounting Standards Update 2016-18 | ||||
Product Information [Line Items] | ||||
Net cash provided by operating activities | 224,000 | |||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 5,683,000 |
Derivative Instruments - Commod
Derivative Instruments - Commodity Contracts (Details) | Dec. 31, 2018USD ($)bu | Sep. 30, 2018USD ($)bu |
Derivative [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (122,500) | $ (2,245,650) |
Commodity Contract [Member] | Commodity [Member] | ||
Derivative [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (122,500) | $ (2,245,650) |
Corn [Member] | Commodity [Member] | ||
Derivative [Line Items] | ||
Number of Commodity Contracts Held | 0 | 800 |
Notional Amount Held by Contract | bu | 0 | 4,000,000 |
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | $ 0 | $ (319,400) |
Corn [Member] | Commodity Option [Member] | ||
Derivative [Line Items] | ||
Number of Commodity Contracts Held | 400 | 2,800 |
Notional Amount Held by Contract | bu | 2,000,000 | 14,000,000 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (122,500) | $ (1,926,250) |
Derivative Instruments - Balanc
Derivative Instruments - Balance Sheet (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Derivatives, Fair Value [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (122,500) | $ (2,245,650) |
Derivative Financial Instruments, Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | 0 | 0 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | (122,500) | (2,245,650) |
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | 122,500 | 2,245,650 |
Corn [Member] | Commodity [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | $ 0 | $ (319,400) |
Derivative Instruments - Income
Derivative Instruments - Income Statement (Details) - Not Designated as Hedging Instrument [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Corn [Member] | Cost of Sales [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Income, Net | $ 2,068,502 | $ (568,536) |
Ethanol [Member] | Sales [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Income, Net | 0 | 1,800 |
Commodity Contract [Member] | Gain (Loss) on Derivative Instruments [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Income, Net | $ 2,068,502 | $ (566,736) |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Inventory [Abstract] | ||
Raw materials, including corn, chemicals and supplies | $ 6,332,326 | $ 6,684,322 |
Work in process | 747,769 | 738,991 |
Finished goods, including ethanol and distillers grains | 1,529,373 | 1,405,806 |
Spare parts | 2,215,137 | 2,141,937 |
Inventory | $ 10,824,605 | $ 10,971,056 |
Inventory Total Loss on Lower o
Inventory Total Loss on Lower of Cost or Market Adjustment (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Long-term Purchase Commitment [Line Items] | ||
Loss on firm purchase commitments | $ 5,000 | $ 8,000 |
Lower of cost or market inventory adjustment | 0 | 70,979 |
Inventories [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
Lower of cost or market inventory adjustment | 0 | 70,979 |
Total loss on lower of cost or market adjustments | $ 5,000 | $ 78,979 |
Bank Financing (Details)
Bank Financing (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations | $ 2,263 | $ 2,921 |
Current maturities of long-term debt | 2,263 | 2,921 |
Long-term Debt, Excluding Current Maturities | 0 | 0 |
Line of Credit Facility, Fair Value of Amount Outstanding | 0 | |
Capital Lease Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Capital Lease Obligations | 2,263 | $ 2,921 |
Domestic Line of Credit [Member] | Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Amount Outstanding | 10,000,000 | |
Line of Credit Facility, Remaining Borrowing Capacity | $ 10,000,000 | |
Line of Credit Facility, Interest Rate at Period End | 4.33% |
Bank Financing Schedule of Matu
Bank Financing Schedule of Maturities of Long-Term Debt (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations | $ 2,263 | $ 2,921 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (122,500) | $ (2,245,650) |
Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodities derivative instruments, at fair value | 122,500 | 2,245,650 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | (122,500) | (2,245,650) |
Liability [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodities derivative instruments, at fair value | 122,500 | 2,245,650 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | (122,500) | (2,245,650) |
Liability [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodities derivative instruments, at fair value | 0 | 0 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | 0 | 0 |
Liability [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodities derivative instruments, at fair value | 0 | 0 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ 0 | $ 0 |
Leases Equipment Under Capital
Leases Equipment Under Capital Lease (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Transportation Equipment [Member] | |||
Capital Leased Assets [Line Items] | |||
Operating Leases, Rent Expense, Net | $ 161,000 | $ 154,000 | |
Equipment [Member] | |||
Capital Leased Assets [Line Items] | |||
Equipment | 483,488 | $ 483,488 | |
Less accumulated amortization | (146,853) | (141,488) | |
Net equipment under capital lease | $ 336,635 | $ 342,000 |
Leases (Details)
Leases (Details) - Transportation Equipment [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating and Capital Leased Assets [Line Items] | ||
Operating Leases, Rent Expense, Net | $ 161,000 | $ 154,000 |
Operating Leases, 2019 | 501,198 | |
Capital Leases, 2019 | 2,263 | |
Operating Leases, 2020 | 374,063 | |
Capital Leases, 2020 | 0 | |
Operating Leases, 2021 | 331,151 | |
Capital Leases, 2021 | 0 | |
Operating Leases, 2022 | 296,640 | |
Capital Leases, 2022 | 0 | |
Operating Leases, 2023 | 53,970 | |
Capital Leases, 2023 | 0 | |
Total Minimum Operating Lease Commitments | 1,557,022 | |
Total Minimum Capital Lease Commitments | 2,263 | |
Less amount representing interest on capital lease | 0 | |
Present Value of Minimum Lease Commitments Included in Liabilities on the Balance Sheet | $ 2,263 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, shares in Millions, bu in Millions, $ in Millions | 3 Months Ended | |
Dec. 31, 2018USD ($)sharesbu | Nov. 01, 2016$ / shares | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Percent of net revenue generated from business activities conducted on purchased real estate | 70.00% | |
Stock Issued During Period, Shares, Purchase of Assets | shares | 2 | |
Shares Issued, Price Per Share | $ / shares | $ 1.66 | |
Length of contract | 10 years | |
Payments for (Proceeds from) Other Real Estate Partnerships | $ 10 | |
Guarantor Obligations, Liquidation Proceeds, Percentage | 70.00% | |
Commodity [Member] | Fixed Price Commodity Contract [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Nonmonetary Notional Amount, Volume | bu | 2.2 | |
Inventories [Member] | Fixed Price Commodity Contract [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Purchases | $ 7.6 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Related Party Transaction [Line Items] | |||
Due from Other Related Parties | $ 4,124 | $ 95,704 | |
Accounts Receivable, Related Parties, Current | 2,972,516 | 2,680,445 | |
Accounts Payable, Related Parties, Current | 160,220 | $ 312,701 | |
Revenue from Related Parties | 24,188,143 | $ 24,798,144 | |
Cost of Goods Sold, Related Parties | 14,104 | 6,462 | |
General and Administrative Expenses from Transactions with Related Party | 30,910 | 19,067 | |
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 140,539 | |
Related Party Transaction, Purchases from Related Party | $ 3,703,065 | $ 4,293,979 |
Member's Equity (Details)
Member's Equity (Details) | Oct. 10, 2016shares | Jun. 30, 2018$ / sharesshares | May 31, 2018USD ($)$ / sharesshares | Apr. 30, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)a$ / sharesshares |
Equity, Class of Treasury Stock [Line Items] | |||||
Membership units issues as part of purchase consideration | 2,000,000 | ||||
Area of Land | a | 338 | ||||
Partners' Capital Account, Units, Treasury Units Purchased | 0 | 1,318,180 | 0 | 1,318,180 | |
Treasury Stock Acquired, Average Cost Per Share | $ / shares | $ 0 | $ 1 | $ 0 | $ 1 | |
Treasury Stock Acquired, Repurchase Authorization | 0 | 0 | 0 | 0 | |
Stock Repurchase Program, Authorized Amount | $ | $ 0 | $ 0 | $ 0 | ||
Treasury Stock [Member] | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Partners' Capital Account, Units, Treasury Units Purchased | 1,318,180 |