Cover
Cover - shares | 3 Months Ended | |
Jan. 31, 2023 | Mar. 08, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-53588 | |
Entity Registrant Name | HIGHWATER ETHANOL, LLC | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 20-4798531 | |
Entity Address, Address Line One | 24500 US Highway 14, | |
Entity Address, City or Town | Lamberton, | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 56152 | |
City Area Code | 507 | |
Local Phone Number | 752-6160 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,755 | |
Entity Central Index Key | 0001371451 | |
Current Fiscal Year End Date | --10-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jan. 31, 2023 | Oct. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 13,511,515 | $ 29,790,258 |
Derivative instruments | 344,570 | 743,514 |
Accounts receivable | 2,932,943 | 3,970,064 |
Inventories | 13,983,340 | 19,197,522 |
Prepaids and other | 890,519 | 989,188 |
Total current assets | 31,662,887 | 54,690,546 |
Property and Equipment | ||
Land and land improvements | 13,152,403 | 13,152,403 |
Buildings | 38,848,218 | 38,848,218 |
Office equipment | 1,231,526 | 1,223,869 |
Plant and process equipment | 87,235,438 | 87,235,438 |
Vehicles | 123,779 | 123,779 |
Construction in progress | 488,974 | 426,294 |
Gross property and equipment | 141,080,338 | 141,010,001 |
Less accumulated depreciation | (102,999,383) | (100,585,625) |
Net property and equipment | 38,080,955 | 40,424,376 |
Other Assets | ||
Investments | 4,627,362 | 3,823,638 |
Right of use asset - operating leases | 229,116 | 267,731 |
Right of use asset - finance leases | 926,734 | 961,057 |
Other | 583,232 | 708,232 |
Deposits | 493,330 | 312,269 |
Total other assets | 6,859,774 | 6,072,927 |
Total Assets | 76,603,616 | 101,187,849 |
Current Liabilities | ||
Accounts payable | 8,891,938 | 20,068,351 |
Accrued expenses | 1,110,221 | 1,521,820 |
Current portion of operating lease liability | 159,869 | 157,691 |
Current portion of finance lease liability | 126,614 | 124,889 |
Total Current Liabilities | 10,288,642 | 21,872,751 |
Long-Term Liabilities | ||
Operating lease liability | 69,247 | 110,040 |
Finance lease liability | 879,682 | 911,990 |
Total Long-Term Liabilities | 948,929 | 1,022,030 |
Commitments and Contingencies | ||
Members' Equity | ||
Members' equity, 4,762 and 4,764 units outstanding | 65,366,045 | 78,293,068 |
Total Liabilities and Members’ Equity | $ 76,603,616 | $ 101,187,849 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - shares | Jan. 31, 2023 | Oct. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Members' equity, units outstanding (in shares) | 4,762 | 4,764 |
Condensed Unaudited Statements
Condensed Unaudited Statements of Operations - USD ($) | 3 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Income Statement [Abstract] | ||
Revenues | $ 48,861,565 | $ 58,643,436 |
Cost of Goods Sold | 45,512,464 | 41,482,340 |
Gross Profit | 3,349,101 | 17,161,096 |
Operating Expenses | 1,198,113 | 1,121,700 |
Operating Income | 2,150,988 | 16,039,396 |
Other Income (Expense) | ||
Interest income | 59,669 | 8,567 |
Other income | 111,720 | 62,312 |
Interest expense | (64,712) | (88,836) |
Income from equity method investments | 74,312 | 80,049 |
Total other income (expense), net | 180,989 | 62,092 |
Net Income | $ 2,331,977 | $ 16,101,488 |
Weighted Average Units Outstanding - Basic (in shares) | 4,763 | 4,771 |
Weighted Average Units Outstanding - Diluted (in shares) | 4,763 | 4,771 |
Net Income Per Unit, Basic (in dollars per share) | $ 489.60 | $ 3,374.87 |
Net Income Per Unit, Diluted (in dollars per share) | 489.60 | 3,374.87 |
Distributions Declared Per Unit (in dollars per share) | $ 3,200 | $ 9,800 |
Statements of Changes in Member
Statements of Changes in Members' Equity (Unaudited) - USD ($) | Total | Members' Equity |
Members' Equity, beginning balance at Oct. 31, 2021 | $ 63,215,463 | |
Members' Equity [Roll Forward] | ||
Net income | $ 16,101,488 | 16,101,488 |
Member distribution | (18,130,900) | |
Member unit repurchase | (75,500) | |
Members' Equity, ending balance at Jan. 31, 2022 | 61,110,551 | |
Members' Equity, beginning balance at Oct. 31, 2022 | 78,293,068 | 78,293,068 |
Members' Equity [Roll Forward] | ||
Net income | 2,331,977 | 2,331,977 |
Member distribution | (15,240,000) | |
Member unit repurchase | (19,000) | |
Members' Equity, ending balance at Jan. 31, 2023 | $ 65,366,045 | $ 65,366,045 |
Statements of Changes in Memb_2
Statements of Changes in Members' Equity (Unaudited) (Parenthetical) - shares | 3 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Members' Equity [Abstract] | ||
Member unit repurchase (in units) | 2 | 12 |
Condensed Unaudited Statement_2
Condensed Unaudited Statements of Cash Flows - USD ($) | 3 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Cash Flows from Operating Activities | ||
Net income | $ 2,331,977 | $ 16,101,488 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||
Depreciation and amortization | 2,573,081 | 2,594,690 |
Earnings in excess of distributions from equity method investments | (585,020) | (100,548) |
Non-cash patronage income | (218,704) | (157,260) |
Changes in assets and liabilities | ||
Accounts receivable | 1,037,121 | 2,252,101 |
Inventories | 5,214,182 | (2,573,729) |
Derivative instruments | 398,944 | 45,933 |
Prepaids and other | (82,392) | 80,480 |
Accounts payable | (11,125,173) | (6,569,745) |
Accrued expenses | (411,600) | (202,241) |
Net cash provided by (used in) operating activities | (867,584) | 11,471,169 |
Cash Flows from Investing Activities | ||
Capital expenditures | (121,576) | (139,011) |
Net cash used in investing activities | (121,576) | (139,011) |
Cash Flows from Financing Activities | ||
Payments on long-term debt | 0 | (3,000,000) |
Member unit repurchases | (19,000) | (75,500) |
Payment on finance lease liability | (30,583) | (28,950) |
Member distributions paid | (15,240,000) | (7,158,750) |
Net cash used in financing activities | (15,289,583) | (10,263,200) |
Net Increase (Decrease) in Cash and Cash Equivalents | (16,278,743) | 1,068,958 |
Cash and Cash equivalents – Beginning of Period | 29,790,258 | 7,549,008 |
Cash and Cash equivalents – End of Period | 13,511,515 | 8,617,966 |
Supplemental Cash Flow Information | ||
Cash paid for interest | 14,117 | 29,708 |
Supplemental Disclosure of Noncash Financing and Investing Activities | ||
Capital expenditures included in accounts payable | 0 | 0 |
Distribution payable | $ 0 | $ 10,972,150 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jan. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. The accompanying balance sheet and related notes as of October 31, 2022 are derived from the audited financial statements as of that date. These condensed financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s audited financial statements for the year ended October 31, 2022, contained in the Company’s Form 10-K. In the opinion of management, the interim condensed financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation of the Company's financial position as of January 31, 2023 and the results of operations and cash flows for all periods presented. Nature of Business Highwater Ethanol, LLC, (a Minnesota Limited Liability Company) operates an ethanol plant near Lamberton, Minnesota. The ethanol plant was constructed as a 50 million gallon per year nameplate ethanol plant. The plant currently operates in excess of its nameplate capacity due to the approval of air permit by the Minnesota Pollution Control Agency which allows for 70.2 million gallons of denatured ethanol per 12-month rolling average. The Company produces and sells, primarily through third-party professional marketers, fuel ethanol and co-products of the fuel ethanol production process in the continental United States. 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. The Company uses estimates and assumptions in accounting for significant matters, among others, the carrying value of property and equipment and related impairment testing, inventory valuation, and derivative instruments. Actual results could differ from those estimates and such differences may be material to the financial statements. The Company periodically reviews estimates and assumptions and the effects of revisions are reflected in the period in which the revision is made. Revenue Recognition ASC Topic 606, Revenue from Contracts with Customers, further details the Company’s requirement to recognize revenue of transferred goods or services to customers in an amount which is expected to be received in exchange for those goods or services. Five steps are required as part of the new guidance: 1. Identify the contract 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price to the performance obligation 5. Recognize revenue when each performance obligation is satisfied. The Company generally sells ethanol and related products pursuant to marketing agreements. The Company’s products are shipped FOB shipping point. The Company recognizes revenue when control of goods is transferred, which is consistent with the Company's previous policy where revenues were recognized when the customer has taken title and has assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. For ethanol sales by single manifest railcars and trucks, and distillers grains sales, control transfers when loaded into the rail car. For ethanol sales by unit trains, control transfers once the last railcar of the unit train has loaded and the shipping documentation transferred to the marketer. In accordance with the Company’s agreements for the marketing and sale of ethanol and related products, marketing fees and freight due to the marketers are deducted from the gross sales price at the time incurred. Revenue is recorded net of these marketing fees and freight as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. • ethanol sales • modified distillers grains sales • dried distillers grains sales • corn oil sales Disaggregation of revenue: All revenue recognized in the statement of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line for the three months ended January 31, 2023 and 2022: Three Months Ended January 31, 2023 Three Months Ended January 31, 2022 Revenue Sources Amount Amount Ethanol Sales $ 35,041,206 $ 48,357,467 Modified Distillers Grains Sales 3,360,928 1,741,199 Dried Distillers Grains Sales 6,140,728 5,386,603 Corn Oil Sales 4,318,703 3,158,167 Total Revenues $ 48,861,565 $ 58,643,436 Contract assets and contract liabilities: The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. The Company had short term contract liabilities from contracts with customers of $293,772 at January 31, 2023 and $0 at October 31, 2022. Shipping Costs Shipping costs incurred by the Company in the sale of ethanol, dried distillers grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer. Operating Segment The Company uses the "management approach" for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the "management approach" model, the Company has determined that its business is comprised of a single operating segment. Derivative Instruments Derivatives are recognized in the balance sheets and the measurement of these instruments are at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Contracts are evaluated to determine whether the contracts are derivatives. Certain contracts that meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting as derivatives, therefore, are not marked to market in our financial statements. The Company enters into ethanol, corn and natural gas derivatives in order to protect cash flows from fluctuations caused by volatility in prices. 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 changes in fair market value are included in revenue. Corn and natural gas derivative changes in fair market value are included in costs of goods sold. Carrying Value of Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset group to the carrying value of the asset group. If the carrying value of the long-lived asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. In accordance with the Company’s policy for evaluating impairment of long-lived assets described above, when a triggering event occurs management evaluates the recoverability of the facilities based on projected future cash flows from operations over the facilities’ estimated useful lives. In determining the projected future undiscounted cash flows, the Company makes significant assumptions concerning the future viability of the ethanol industry, the future price of corn in relation to the future price of ethanol and the overall demand in relation to production and supply capacity. The Company has not recorded any impairment for the three months ended January 31, 2023 and 2022. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, and other working capital items approximate fair value at January 31, 2023 due to the short maturity nature of these instruments (Level 2). Derivative instruments are carried at fair value, based on dealer quotes and live trading levels (Note 5). Investments The Company has a 5.26% investment interest in an unlisted company, Renewable Products Marketing Group, LLC (RPMG), who markets the Company’s ethanol. The Company also has a 7% ownership interest in Lawrenceville Tank, LLC (LT), which owns and operates a trans load/tank facility near Atlanta, Georgia. These investments are flow-through entities and are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account. Distributions or dividends received from the investment are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income (loss) from equity method investments based on the most recent reliable data. Therefore, the net income (loss) which is reported in the Company's statement of operations for the period ended January 31, 2023 is based on the investee’s results of operations for the period ended December 31, 2022. The Company has cost method of investments in cooperatives. The corresponding patronage income is recorded in costs of goods sold. Grants On February 17, 2023, the Company received an award from the Minnesota Bioincentive Program of approximately $100,000. The Minnesota State Legislature established the Bioincentive Program in 2015 to encourage commercial-scale production of advanced biofuels, renewable chemicals, and biomass thermal energy thorough production incentive payments. Eligible producers of cellulosic ethanol may receive $0.16 per gallon of cellulosic ethanol produced subject to program funding limitations. The award was recorded in the first quarter of fiscal 2023 in other income. |
UNCERTAINTIES
UNCERTAINTIES | 3 Months Ended |
Jan. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
UNCERTAINTIES | UNCERTAINTIESThe Company derives substantially all of its revenues from the sale of ethanol, distillers grains and corn oil. These products are commodities and the market prices for these products display substantial volatility and are subject to a number of factors which are beyond the control of the Company. The Company’s most significant manufacturing inputs are corn and natural gas. The price of these commodities is also subject to substantial volatility and uncontrollable market factors. In addition, these input costs do not necessarily fluctuate with the market prices for ethanol and distillers grains. As a result, the Company is subject to significant risk that its operating margins can be reduced or eliminated due to the relative movements in the market prices of its products and major manufacturing inputs. As a result, market fluctuations in the price of or demand for these commodities can have a significant adverse effect on the Company’s operations, profitability, and availability of cash flows to make loan payments and maintain compliance with the loan agreement. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Jan. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following at: January 31, 2023 October 31, 2022 Raw materials $ 4,200,949 $ 11,103,311 Spare parts and supplies 5,089,753 4,800,511 Work in process 1,328,216 1,342,412 Finished goods 3,364,422 1,951,288 Total $ 13,983,340 $ 19,197,522 The Company recorded a lower of cost or net realizable value write-down on finished goods inventory of approximately $66,000 and $0 at January 31, 2023 and October 31, 2022, respectively. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended |
Jan. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS As of January 31, 2023, the Company had entered into corn, natural gas and ethanol derivative instruments, which are required to be recorded as either assets or liabilities at fair value in the balance sheet. The Company uses these instruments to manage risks from changes in market rates and prices. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. The Company may designate the hedging instruments based upon the exposure being hedged as a fair value hedge or a cash flow hedge. The derivative instruments outstanding at January 31, 2023 are not designated as hedges for accounting purposes. Commodity Contracts The following tables provide details regarding the Company's derivative instruments at January 31, 2023 and October 31, 2022: Instrument Balance Sheet location January 31, 2023 October 31, 2022 Corn, natural gas and ethanol contracts In gain position $ — $ — In loss position (596,874) (1,101,594) Deposits with broker 941,444 1,845,108 Current assets $ 344,570 $ 743,514 The Company has 468,000 bushels of corn inventory delivered under delayed-pricing contracts. The contracts have various pricing deadlines through August 31, 2023. The Company is subject to risk of changes in the corn market until they are priced. The following tables provide details regarding the gains (losses) from the Company's derivative instruments in the statements of operations, none of which are designated as hedging instruments: Statement of Three Months Ended January 31, Operations location 2023 2022 Ethanol contracts Revenues $ 60,465 $ 4,388 Corn contracts Cost of goods sold 313,674 569,872 Natural gas contracts Cost of goods sold 83,875 (125,867) |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Jan. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following table provides information on those assets (liabilities) measured at fair value on a recurring basis. Fair Value as of Fair Value Measurement Using January 31, 2023 Level 1 Level 2 Level 3 Derivative instruments - commodities In loss position (596,874) (19,680) (577,194) Fair Value as of Fair Value Measurement Using October 31, 2022 Level 1 Level 2 Level 3 Derivative instruments - commodities In loss position $ (1,101,594) $ (45,075) $ (1,056,519) $ — |
DEBT FINANCING
DEBT FINANCING | 3 Months Ended |
Jan. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT FINANCING | DEBT FINANCING The Company had no long-term debt at January 31, 2023 or October 31, 2022, respectively. Bank Financing The Company has a loan facility with Compeer Financial f/k/a AgStar Financial Services, PCA ("Compeer") that includes a $20,000,000 Term Revolving Loan and a Revolving Line of Credit Loan. The loan facility with Compeer is secured by substantially all business assets and also subjects the Company to various financial and non-financial covenants. Term Revolving Loan The Term Revolving Loan is for $20,000,000, and has a variable interest rate based on the Wall Street Journal's Prime Rate plus 10 basis points with a minimum interest rate of 2.10%. The applicable interest rate at January 31, 2023 was 7.10%. The Term Revolving Loan may be advanced, repaid and re-borrowed during the term. Monthly interest payments are due on the Term Revolving Loan. Payment of all amounts outstanding are due on November 1, 2027. The outstanding balance on this note was $0 at January 31, 2023. The Company pays interest at a rate of 1.50% on amounts outstanding for letters of credit which also reduce the amount available under the Term Revolving Loan. The Company has no letters of credit outstanding at January 31, 2023. The Company is also required to pay unused commitment fees for the Term Revolving Loan. Revolving Line of Credit Loan The Revolving Line of Credit Loan is for an amount equal to the borrowing base, with a maximum limit of $10,000,000, and has a variable interest rate based on the Wall Street Journal's Prime Rate plus 10 basis points with a minimum interest rate of 2.10%. The amount available to borrow per the borrowing base calculations at January 31, 2023 was approximately $531,000. The applicable interest rate at January 31, 2023 was 7.10%. The Revolving Line of Credit Loan may be advanced, repaid and re-borrowed during the term. Monthly interest payments are due on the Revolving Line of Credit Loan with payment of all amounts outstanding due on November 1, 2023. The maturity date may be extended for up to four additional one year terms upon written request of the Company which will be deemed automatically granted by Compeer upon written certification that there is no event of default. The outstanding balance on this note was $0 at January 31, 2023. The Company is also required to pay unused commitment fees for the Revolving Line of Credit Loan. Covenants and other Miscellaneous Terms The loan facility with Compeer is secured by substantially all business assets. The Company executed a mortgage creating a first lien on its real estate and plant and a security interest in all personal property located on the premises and assigned all rents and leases to property, marketing contracts, risk management services contract, and natural gas, electricity, water service and grain procurement agreements. The Company is also subject to various financial and non-financial covenants that limit distributions and debt and require minimum debt service coverage and working capital requirements. The Company is limited to annual capital expenditures of $5,000,000 without prior approval, incurring additional debt over certain amounts without prior approval, and making additional investments as described in the Second Amended and Restated Credit Agreement without prior approval. The minimum working capital is $9,000,000, which is calculated as current assets plus the amount available for drawing under our Term Revolving Loan, and undrawn amounts on outstanding letters of credit less current liabilities, and is measured quarterly. The Company is allowed to make distributions to members as frequently as monthly in an amount equal to 75% of net income if working capital is greater than or equal to $9,000,000, or or an unlimited amount of net income if working capital is greater than or equal to $12,000,000. The requirement to maintain a minimum debt service coverage ratio has been eliminated. |
LEASES
LEASES | 3 Months Ended |
Jan. 31, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases rail cars for its facility to transport dried distillers grains to its end customers. We classified these identified assets as operating leases after assessing the terms under lease classification guidance. The Company has a contract for use of a natural gas pipeline which transports natural gas from the Northern Natural Gas pipeline to the Company’s facility. This natural gas line has no alternate use and is specifically for the benefit of the Company. The contract has minimum volume requirements as well as a fixed monthly fee. This contract meets the definition of a lease and is classified as a finance lease. Right of use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used in determining the lease liability for each individual lease is the Company's estimated incremental borrowing rate at the time the lease is entered into. An incremental borrowing rate of 5.5% was utilized for each of the Company's leases. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s operating and finance leases have remaining lease terms of approximately 3 years and 9 years, respectively. These leases include options to extend the lease. When it is reasonably certain the Company will exercise those options, the Company will update the remaining terms of the leases. The Company does not have lease arrangements with residual value guarantees, sale leaseback terms or material restrictive covenants. The following table summarizes the remaining maturities of the Company’s operating and finance lease liabilities as of January 31, 2023: For the Period Ending January 31, Operating Leases Finance Leases 2024 $ 168,480 $ 178,800 2025 70,200 178,800 2026 — 178,800 2027 — 178,800 2028 — 178,800 Thereafter — 312,900 Totals 238,680 1,206,900 Amount representing interest (9,566) (200,603) Lease liability $ 229,114 $ 1,006,297 Lease Cost Three Months ended Operating lease cost $ 42,120 Short term lease cost 10,194 Finance lease cost Amortization of leased assets 34,323 Interest on lease liabilities 14,117 Net lease cost $ 100,754 |
LEASES | LEASES The Company leases rail cars for its facility to transport dried distillers grains to its end customers. We classified these identified assets as operating leases after assessing the terms under lease classification guidance. The Company has a contract for use of a natural gas pipeline which transports natural gas from the Northern Natural Gas pipeline to the Company’s facility. This natural gas line has no alternate use and is specifically for the benefit of the Company. The contract has minimum volume requirements as well as a fixed monthly fee. This contract meets the definition of a lease and is classified as a finance lease. Right of use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used in determining the lease liability for each individual lease is the Company's estimated incremental borrowing rate at the time the lease is entered into. An incremental borrowing rate of 5.5% was utilized for each of the Company's leases. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s operating and finance leases have remaining lease terms of approximately 3 years and 9 years, respectively. These leases include options to extend the lease. When it is reasonably certain the Company will exercise those options, the Company will update the remaining terms of the leases. The Company does not have lease arrangements with residual value guarantees, sale leaseback terms or material restrictive covenants. The following table summarizes the remaining maturities of the Company’s operating and finance lease liabilities as of January 31, 2023: For the Period Ending January 31, Operating Leases Finance Leases 2024 $ 168,480 $ 178,800 2025 70,200 178,800 2026 — 178,800 2027 — 178,800 2028 — 178,800 Thereafter — 312,900 Totals 238,680 1,206,900 Amount representing interest (9,566) (200,603) Lease liability $ 229,114 $ 1,006,297 Lease Cost Three Months ended Operating lease cost $ 42,120 Short term lease cost 10,194 Finance lease cost Amortization of leased assets 34,323 Interest on lease liabilities 14,117 Net lease cost $ 100,754 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jan. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Marketing Agreements The Company has an ethanol marketing agreement with a marketer (RPMG) to purchase, market, and distribute the ethanol produced by the Company. The Company also entered into a member control agreement with the marketer whereby the Company made capital contributions and became a minority owner of the marketer. The member control agreement became effective on February 1, 2011 and provides the Company a membership interest with voting rights. The marketing agreement will terminate if the Company ceases to be a member. The Company will assume certain of the member’s rail car leases if the agreement is terminated. The Company can sell its ethanol either through an index arrangement or at an agreed upon fixed price. The marketing agreement is perpetual until terminated according to the agreement. The Company may be obligated to continue to market its ethanol through the marketer for a period of time. The amended agreement requires minimum capital amounts invested as required under the agreement. RPMG will also purchase, market, and distribute the Company's high purity alcohol. The Company has a distillers grains marketing agreement with a marketer to market all the dried distillers grains produced at the plant. Under the agreement the marketer charges a maximum of $2.00 per ton and a minimum of $1.50 per ton using 2% of the FOB plant price actually received by them for all dried distillers grains removed. The agreement will remain in effect unless otherwise terminated by either party with 120 days notice. Under the agreement, the marketer is responsible for all transportation arrangements for the distribution of the dried distillers grains. The Company markets and sells its modified and wet distillers grains. On August 26, 2022, the Company gave written notice of its election to terminate its distillers grain marketing agreement with its current marketer. The termination became effective on January 1, 2023. On August 26, 2022, the Company entered into a distillers grains marketing agreement with a marketer (RPMG) pursuant to which RPMG began purchasing and marketing all of the distillers grains produced at the plant beginning January 1, 2023. The Company pays RPMG a fee to market distillers grains to third party end purchasers and reimburse RPMG for certain charges paid to third parties. RPMG agrees to market the distillers grains using commercially reasonable efforts and endeavor to maximize price and minimize freight and other costs but does not guarantee the price that will be obtained from the sale. Following an initial term, the agreement will be automatically extended for additional terms unless either party gives proper notice of non-extension. The Company may immediately terminate the agreement upon written notice if RPMG fails on 3 separate occasions within any 12-month period to purchase or market distillers grains under circumstances where such breach or failure is not excused or upon RPMG's insolvency. RPMG may immediately terminate the agreement upon written notice if the variance of the Company's actual distillers grains inventory when compared to monthly production and inventory estimates exceeds certain threshold amounts. The Company has a crude corn oil marketing agreement with a marketer (RPMG) to market all corn oil to be produced at the plant for an initial term. Under the agreement, the Company must provide estimates of production and inventory of corn oil. The marketer may execute sales contracts with buyers for future delivery of corn oil. The Company receives a percentage of the F.O.B. sale price less a marketing fee, actual freight and transportation costs and certain taxes and other charges related to the purchase, delivery or sale. The Company is required to provide corn oil meeting certain specifications as provided in the agreement and the agreement provides for a process for rejection of nonconforming corn oil. The agreement automatically renews for successive terms unless terminated in accordance with the agreement. Regulatory Agencies The Company is subject to oversight from regulatory agencies regarding environmental concerns which arise in the ordinary course of its business. Forward Contracts In the ordinary course of business, we enter into forward contracts for our commodity purchases and sales. Forward contracts outstanding are as follows at January 31, 2023: Quantity Average Price Date Delivery Through Purchase of corn (in bushels): Basis Contracts 3,766,250 12/31/25 Priced Contracts 2,115,715 $ 6.79 12/31/23 Total 5,881,965 Purchase of natural gas (in dekatherms): Priced contracts 3,639,050 $ 3.42 10/31/26 Total 3,639,050 Purchase of denaturant (in gallons): Priced contracts 573,500 $ 1.74 5/31/23 Total 573,500 Sales of dry distillers grains (in tons): Priced contracts 21,325 $ 260.26 9/30/23 Total 21,325 Sales of modified distillers grains (in tons) Priced contracts 14,200 $ 124.11 8/31/23 Total 14,200 Sales of corn oil (in pounds) Priced contracts 905,000 $ 0.70 3/31/23 Total 905,000 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 31, 2023 | |
Accounting 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. The Company uses estimates and assumptions in accounting for significant matters, among others, the carrying value of property and equipment and related impairment testing, inventory valuation, and derivative instruments. Actual results could differ from those estimates and such differences may be material to the financial statements. The Company periodically reviews estimates and assumptions and the effects of revisions are reflected in the period in which the revision is made. |
Revenue Recognition | Revenue Recognition ASC Topic 606, Revenue from Contracts with Customers, further details the Company’s requirement to recognize revenue of transferred goods or services to customers in an amount which is expected to be received in exchange for those goods or services. Five steps are required as part of the new guidance: 1. Identify the contract 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price to the performance obligation 5. Recognize revenue when each performance obligation is satisfied. The Company generally sells ethanol and related products pursuant to marketing agreements. The Company’s products are shipped FOB shipping point. The Company recognizes revenue when control of goods is transferred, which is consistent with the Company's previous policy where revenues were recognized when the customer has taken title and has assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. For ethanol sales by single manifest railcars and trucks, and distillers grains sales, control transfers when loaded into the rail car. For ethanol sales by unit trains, control transfers once the last railcar of the unit train has loaded and the shipping documentation transferred to the marketer. In accordance with the Company’s agreements for the marketing and sale of ethanol and related products, marketing fees and freight due to the marketers are deducted from the gross sales price at the time incurred. Revenue is recorded net of these marketing fees and freight as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. • ethanol sales • modified distillers grains sales • dried distillers grains sales • corn oil sales Disaggregation of revenue: All revenue recognized in the statement of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line for the three months ended January 31, 2023 and 2022: Three Months Ended January 31, 2023 Three Months Ended January 31, 2022 Revenue Sources Amount Amount Ethanol Sales $ 35,041,206 $ 48,357,467 Modified Distillers Grains Sales 3,360,928 1,741,199 Dried Distillers Grains Sales 6,140,728 5,386,603 Corn Oil Sales 4,318,703 3,158,167 Total Revenues $ 48,861,565 $ 58,643,436 Contract assets and contract liabilities: The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. The Company had short term contract liabilities from contracts with customers of $293,772 at January 31, 2023 and $0 at October 31, 2022. Shipping Costs |
Operating Segment | Operating SegmentThe Company uses the "management approach" for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the "management approach" model, the Company has determined that its business is comprised of a single operating segment. |
Derivative Instruments | Derivative Instruments Derivatives are recognized in the balance sheets and the measurement of these instruments are at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Contracts are evaluated to determine whether the contracts are derivatives. Certain contracts that meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting as derivatives, therefore, are not marked to market in our financial statements. The Company enters into ethanol, corn and natural gas derivatives in order to protect cash flows from fluctuations caused by volatility in prices. 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 changes in fair market value are included in revenue. Corn and natural gas derivative changes in fair market value are included in costs of goods sold. |
Carrying Value of Long-Lived Assets | Carrying Value of Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset group to the carrying value of the asset group. If the carrying value of the long-lived asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. In accordance with the Company’s policy for evaluating impairment of long-lived assets described above, when a triggering event occurs management evaluates the recoverability of the facilities based on projected future cash flows from operations over the facilities’ estimated useful lives. In determining the projected future undiscounted cash flows, the Company makes significant assumptions concerning the future viability of the ethanol industry, the future price of corn in relation to the future price of ethanol and the overall demand in relation to production and supply capacity. The Company has not recorded any impairment for the three months ended January 31, 2023 and 2022. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, and other working capital items approximate fair value at January 31, 2023 due to the short maturity nature of these instruments (Level 2). |
Investments | Investments The Company has a 5.26% investment interest in an unlisted company, Renewable Products Marketing Group, LLC (RPMG), who markets the Company’s ethanol. The Company also has a 7% ownership interest in Lawrenceville Tank, LLC (LT), which owns and operates a trans load/tank facility near Atlanta, Georgia. These investments are flow-through entities and are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account. Distributions or dividends received from the investment are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income (loss) from equity method investments based on the most recent reliable data. Therefore, the net income (loss) which is reported in the Company's statement of operations for the period ended January 31, 2023 is based on the investee’s results of operations for the period ended December 31, 2022. The Company has cost method of investments in cooperatives. The corresponding patronage income is recorded in costs of goods sold. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Jan. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | The following table depicts the disaggregation of revenue according to product line for the three months ended January 31, 2023 and 2022: Three Months Ended January 31, 2023 Three Months Ended January 31, 2022 Revenue Sources Amount Amount Ethanol Sales $ 35,041,206 $ 48,357,467 Modified Distillers Grains Sales 3,360,928 1,741,199 Dried Distillers Grains Sales 6,140,728 5,386,603 Corn Oil Sales 4,318,703 3,158,167 Total Revenues $ 48,861,565 $ 58,643,436 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Jan. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consisted of the following at: January 31, 2023 October 31, 2022 Raw materials $ 4,200,949 $ 11,103,311 Spare parts and supplies 5,089,753 4,800,511 Work in process 1,328,216 1,342,412 Finished goods 3,364,422 1,951,288 Total $ 13,983,340 $ 19,197,522 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended |
Jan. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivatives Instruments | The following tables provide details regarding the Company's derivative instruments at January 31, 2023 and October 31, 2022: Instrument Balance Sheet location January 31, 2023 October 31, 2022 Corn, natural gas and ethanol contracts In gain position $ — $ — In loss position (596,874) (1,101,594) Deposits with broker 941,444 1,845,108 Current assets $ 344,570 $ 743,514 |
Schedule of Gains (Losses) From Derivative Instruments | The following tables provide details regarding the gains (losses) from the Company's derivative instruments in the statements of operations, none of which are designated as hedging instruments: Statement of Three Months Ended January 31, Operations location 2023 2022 Ethanol contracts Revenues $ 60,465 $ 4,388 Corn contracts Cost of goods sold 313,674 569,872 Natural gas contracts Cost of goods sold 83,875 (125,867) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jan. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following table provides information on those assets (liabilities) measured at fair value on a recurring basis. Fair Value as of Fair Value Measurement Using January 31, 2023 Level 1 Level 2 Level 3 Derivative instruments - commodities In loss position (596,874) (19,680) (577,194) Fair Value as of Fair Value Measurement Using October 31, 2022 Level 1 Level 2 Level 3 Derivative instruments - commodities In loss position $ (1,101,594) $ (45,075) $ (1,056,519) $ — |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jan. 31, 2023 | |
Leases [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | The following table summarizes the remaining maturities of the Company’s operating and finance lease liabilities as of January 31, 2023: For the Period Ending January 31, Operating Leases Finance Leases 2024 $ 168,480 $ 178,800 2025 70,200 178,800 2026 — 178,800 2027 — 178,800 2028 — 178,800 Thereafter — 312,900 Totals 238,680 1,206,900 Amount representing interest (9,566) (200,603) Lease liability $ 229,114 $ 1,006,297 |
Schedule of Maturities of Financing Lease Liabilities | The following table summarizes the remaining maturities of the Company’s operating and finance lease liabilities as of January 31, 2023: For the Period Ending January 31, Operating Leases Finance Leases 2024 $ 168,480 $ 178,800 2025 70,200 178,800 2026 — 178,800 2027 — 178,800 2028 — 178,800 Thereafter — 312,900 Totals 238,680 1,206,900 Amount representing interest (9,566) (200,603) Lease liability $ 229,114 $ 1,006,297 |
Schedule of Lease Cost | Lease Cost Three Months ended Operating lease cost $ 42,120 Short term lease cost 10,194 Finance lease cost Amortization of leased assets 34,323 Interest on lease liabilities 14,117 Net lease cost $ 100,754 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Jan. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Forward Contracts | Forward contracts outstanding are as follows at January 31, 2023: Quantity Average Price Date Delivery Through Purchase of corn (in bushels): Basis Contracts 3,766,250 12/31/25 Priced Contracts 2,115,715 $ 6.79 12/31/23 Total 5,881,965 Purchase of natural gas (in dekatherms): Priced contracts 3,639,050 $ 3.42 10/31/26 Total 3,639,050 Purchase of denaturant (in gallons): Priced contracts 573,500 $ 1.74 5/31/23 Total 573,500 Sales of dry distillers grains (in tons): Priced contracts 21,325 $ 260.26 9/30/23 Total 21,325 Sales of modified distillers grains (in tons) Priced contracts 14,200 $ 124.11 8/31/23 Total 14,200 Sales of corn oil (in pounds) Priced contracts 905,000 $ 0.70 3/31/23 Total 905,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) gal in Millions | 3 Months Ended | |||
Feb. 17, 2023 USD ($) | Jan. 31, 2023 USD ($) segment gal | Jan. 31, 2022 USD ($) | Oct. 31, 2022 USD ($) | |
Product Information [Line Items] | ||||
Short term contract liabilities from contracts with customers | $ 293,772 | $ 0 | ||
Number of operating segments | segment | 1 | |||
Impairment of long-lived assets | $ 0 | $ 0 | ||
Renewable Fuels Marketing Group (RPMG) | ||||
Product Information [Line Items] | ||||
Ownership percentage | 5.26% | |||
Lawrenceville Tank, LLC | ||||
Product Information [Line Items] | ||||
Ownership percentage | 7% | |||
Ethanol | ||||
Product Information [Line Items] | ||||
Annual production capacity (in gallons) | gal | 50 | |||
Denatured Ethanol | ||||
Product Information [Line Items] | ||||
Annual production capacity (in gallons) | gal | 70.2 | |||
Grant | Subsequent Event | ||||
Product Information [Line Items] | ||||
Amount of award from program received | $ 100,000 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 48,861,565 | $ 58,643,436 |
Ethanol Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 35,041,206 | 48,357,467 |
Modified Distillers Grains Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,360,928 | 1,741,199 |
Dried Distillers Grains Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 6,140,728 | 5,386,603 |
Corn Oil Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 4,318,703 | $ 3,158,167 |
INVENTORIES - Schedule of Inven
INVENTORIES - Schedule of Inventory (Details) - USD ($) | Jan. 31, 2023 | Oct. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,200,949 | $ 11,103,311 |
Spare parts and supplies | 5,089,753 | 4,800,511 |
Work in process | 1,328,216 | 1,342,412 |
Finished goods | 3,364,422 | 1,951,288 |
Total | $ 13,983,340 | $ 19,197,522 |
INVENTORIES - Narrative (Detail
INVENTORIES - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Jan. 31, 2023 | Oct. 31, 2022 | |
Inventory Disclosure [Abstract] | ||
Inventory write-down | $ 66,000 | $ 0 |
DERIVATIVE INSTRUMENTS - Schedu
DERIVATIVE INSTRUMENTS - Schedule of Derivatives Instruments (Details) - USD ($) | Jan. 31, 2023 | Oct. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 344,570 | $ 743,514 |
Not designated as hedging instrument | Commodity Contract | ||
Derivatives, Fair Value [Line Items] | ||
In gain position | 0 | 0 |
In loss position | (596,874) | (1,101,594) |
Deposits with broker | 941,444 | 1,845,108 |
Derivative asset, fair value | $ 344,570 | $ 743,514 |
DERIVATIVE INSTRUMENTS - Narrat
DERIVATIVE INSTRUMENTS - Narrative (Details) | Jan. 31, 2023 bu |
Corn Delayed Pricing Contract | Not designated as hedging instrument | |
Derivative [Line Items] | |
Derivative, nonmonetary notional amount | 468,000 |
DERIVATIVE INSTRUMENTS - Sche_2
DERIVATIVE INSTRUMENTS - Schedule of Gains (Losses) From Derivative Instruments (Details) - Not designated as hedging instrument - USD ($) | 3 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Ethanol contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivative | $ 60,465 | $ 4,388 |
Corn contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivative | 313,674 | 569,872 |
Natural gas contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivative | $ 83,875 | $ (125,867) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Commodity Contract - Recurring - USD ($) | Jan. 31, 2023 | Oct. 31, 2022 |
Derivative instruments - commodities | ||
In loss position | $ (596,874) | $ (1,101,594) |
Level 1 | ||
Derivative instruments - commodities | ||
In loss position | (19,680) | (45,075) |
Level 2 | ||
Derivative instruments - commodities | ||
In loss position | (577,194) | (1,056,519) |
Level 3 | ||
Derivative instruments - commodities | ||
In loss position | $ 0 |
DEBT FINANCING (Details)
DEBT FINANCING (Details) | 3 Months Ended |
Jan. 31, 2023 USD ($) segment | |
Debt Instrument [Line Items] | |
Annual capital expenditure limit | $ 5,000,000 |
Working capital requirement | 9,000,000 |
75 percent of net income | |
Debt Instrument [Line Items] | |
Working capital requirement | $ 9,000,000 |
Restrictive covenants (as a percent) | 75% |
Unlimited Amount | |
Debt Instrument [Line Items] | |
Working capital requirement | $ 12,000,000 |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Effective interest rate | 7.10% |
Outstanding balance | $ 0 |
Maximum borrowing capacity | 10,000,000 |
Current borrowing capacity | $ 531,000 |
Minimum | Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt stated interest rate | 2.10% |
Prime Rate | Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Basis spread on variable rate (as a percent) | 0.10% |
Notes payable to banks | Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt instrument, number of extensions | segment | 4 |
Additional maturity period | 1 year |
Notes payable to banks | Term Revolving Loan | |
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 20,000,000 |
Effective interest rate | 7.10% |
Outstanding balance | $ 0 |
Notes payable to banks | Term Revolving Loan | Letter of Credit | |
Debt Instrument [Line Items] | |
Letter of credit, interest rate at period end | 1.50% |
Letters of credit outstanding balance | $ 0 |
Notes payable to banks | Term Revolving Loan | Minimum | |
Debt Instrument [Line Items] | |
Debt stated interest rate | 2.10% |
Notes payable to banks | Term Revolving Loan | Prime Rate | |
Debt Instrument [Line Items] | |
Basis spread on variable rate (as a percent) | 0.10% |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Jan. 31, 2023 |
Leases [Abstract] | |
Operating lease discount rate | 5.50% |
Operating leases remaining lease terms | 3 years |
Finance leases remaining lease terms | 9 years |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating and Financing Lease Liabilities (Details) | Jan. 31, 2023 USD ($) |
Operating Leases | |
2024 | $ 168,480 |
2025 | 70,200 |
2026 | 0 |
2027 | 0 |
2028 | 0 |
Thereafter | 0 |
Totals | 238,680 |
Amount representing interest | (9,566) |
Lease liability | 229,114 |
Finance Leases | |
2024 | 178,800 |
2025 | 178,800 |
2026 | 178,800 |
2027 | 178,800 |
2028 | 178,800 |
Thereafter | 312,900 |
Totals | 1,206,900 |
Amount representing interest | (200,603) |
Lease liability | $ 1,006,297 |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) | 3 Months Ended |
Jan. 31, 2023 USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 42,120 |
Short term lease cost | 10,194 |
Amortization of leased assets | 34,323 |
Interest on lease liabilities | 14,117 |
Net lease cost | $ 100,754 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Marketing Agreements (Details) - Distillers Grains Marketing Group - Marketing Agreements | 3 Months Ended |
Jan. 31, 2023 $ / T | |
Related Party Transaction [Line Items] | |
Related party transaction, fees, percentage of total | 2% |
Related party contract termination notice period | 120 days |
Maximum | |
Related Party Transaction [Line Items] | |
Related party transaction, marketing expense (in dollars per ton) | 2 |
Minimum | |
Related Party Transaction [Line Items] | |
Related party transaction, marketing expense (in dollars per ton) | 1.50 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Forward Contracts (Details) | Jan. 31, 2023 MMBTU lb bu T gal $ / gal $ / T $ / MMBTU $ / lb $ / bu |
Distillers grains | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | 21,325 |
Modified distillers grains | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | 14,200 |
Corn oil | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | lb | 905,000 |
Corn contracts | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | bu | 5,881,965 |
Natural gas | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | MMBTU | 3,639,050 |
Denaturant | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | gal | 573,500 |
Basis Contracts | Corn contracts | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | bu | 3,766,250 |
Priced contracts | Distillers grains | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | 21,325 |
Derivative, average forward price | $ / T | 260.26 |
Priced contracts | Modified distillers grains | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | 14,200 |
Derivative, average forward price | $ / T | 124.11 |
Priced contracts | Corn oil | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | lb | 905,000 |
Derivative, average forward price | $ / lb | 0.70 |
Priced contracts | Corn contracts | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | bu | 2,115,715 |
Derivative, average forward price | $ / bu | 6.79 |
Priced contracts | Natural gas | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | MMBTU | 3,639,050 |
Derivative, average forward price | $ / MMBTU | 3.42 |
Priced contracts | Denaturant | |
Supply Commitment [Line Items] | |
Derivative, nonmonetary notional amount | gal | 573,500 |
Derivative, average forward price | $ / gal | 1.74 |