GPRE Q2 2018 Form 10-Q



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________





FORM 10-Q



Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934



For the Quarterly Period Ended June 30, 2018



Commission File Number 001-32924



Green Plains Inc.

(Exact name of registrant as specified in its charter)





 

Iowa

84-1652107

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)



 

1811 Aksarben Drive, Omaha, NE 68106

(402) 884-8700

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes   No



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,  a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



 

Large accelerated filer      

Accelerated filer 



 

Non-accelerated filer      (Do not check if a smaller reporting company)



Smaller reporting company 

Emerging growth company 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 



Yes   No



The number of shares of common stock, par value $0.001 per share, outstanding as of July 27, 2018, was 41,429,651 shares.





 

 


 

 

TABLE OF CONTENTS





 

 



 

 



Page

Commonly Used Defined Terms

2

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

 



 

 



Consolidated Balance Sheets 

3



 

 



Consolidated Statements of Operations

4



 

 



Consolidated Statements of Comprehensive Income 

5



 

 



Consolidated Statements of Cash Flows 

6



 

 



Notes to Consolidated Financial Statements 

8



 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31



 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk 

44



 

 

Item 4.

Controls and Procedures

46



 

 



 

 

PART II – OTHER INFORMATION



 

 

Item 1.

Legal Proceedings

47



 

 

Item 1A.

Risk Factors

47



 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

48



 

 

Item 3.

Defaults Upon Senior Securities

49



 

 

Item 4.

Mine Safety Disclosures

49



 

 

Item 5.

Other Information

49

 

 

 

Item 6.

Exhibits

50



 

 

Signatures

51



 

1

 


 

 







Commonly Used Defined Terms



The abbreviations, acronyms and industry terminology used in this quarterly report are defined as follows:



Green Plains Inc., Subsidiaries, and Partners:





 

Green Plains; the company

Green Plains Inc. and its subsidiaries

BioProcess Algae

BioProcess Algae LLC

DKGP

DKGP Energy Terminals LLC

Fleischmann’s Vinegar

Fleischmann’s Vinegar Company, Inc.

Green Plains Cattle

Green Plains Cattle Company LLC

Green Plains Grain

Green Plains Grain Company LLC

Green Plains Partners; the partnership

Green Plains Partners LP

Green Plains Processing

Green Plains Processing LLC and its subsidiaries

Green Plains Trade

Green Plains Trade Group LLC

Green Plains Commodity Management

Green Plains Commodity Management LLC



Accounting Defined Terms:





 

AMT

Alternative minimum tax

ASC

Accounting Standards Codification

EBITDA

Earnings before interest, income taxes, depreciation and amortization

EPS

Earnings per share

Exchange Act

Securities Exchange Act of 1934, as amended

FASB

Financial Accounting Standards Board

GAAP

U.S. Generally Accepted Accounting Principles

LIBOR

London Interbank Offered Rate

LTIP

Long-Term Incentive Plan

R&D Credits

Research and development tax credits

SEC

Securities and Exchange Commission



Other Defined Terms:





 

CAFE

Corporate Average Fuel Economy

D.C.

District of Columbia

E10

Gasoline blended with up to 10% ethanol by volume

E15

Gasoline blended with up to 15% ethanol by volume

E85

Gasoline blended with up to 85% ethanol by volume

EIA

U.S. Energy Information Administration

EISA

Energy Independence and Security Act of 2017, as amended

EPA

U.S. Environmental Protection Agency

MmBtu

Million British Thermal Units

Mmg

Million gallons

MTBE

Methyl tertiary-butyl ether

RBOB

Reformulated blendstock for oxygenate blending

RFS II

Renewable Fuels Standard II

RIN

Renewable identification number

RVO

Renewable volume obligation

U.S.

United States

USDA

U.S. Department of Agriculture











2

 


 

 



PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements.

GREEN PLAINS INC. AND SUBSIDIARIES

 

 CONSOLIDATED BALANCE SHEETS



(in thousands, except share amounts)









 

 

 

 

 



June 30,
2018

 

December 31,
2017



(unaudited)

 

 

 

ASSETS

Current assets

 

 

 

 

 

Cash and cash equivalents

$

235,133 

 

$

266,651 

Restricted cash

 

15,863 

 

 

45,709 

Accounts receivable, net of allowances of $209 and $217, respectively

 

137,068 

 

 

151,122 

Income taxes receivable

 

33,891 

 

 

6,413 

Inventories

 

625,302 

 

 

711,878 

Prepaid expenses and other

 

14,915 

 

 

17,808 

Derivative financial instruments

 

30,647 

 

 

6,890 

Total current assets

 

1,092,819 

 

 

1,206,471 

Property and equipment, net of accumulated depreciation
and amortization of $564,395 and $514,585, respectively

 

1,139,249 

 

 

1,176,707 

Goodwill

 

182,879 

 

 

182,879 

Other assets

 

170,826 

 

 

218,593 

Total assets

$

2,585,773 

 

$

2,784,650 



 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

 

 

 

 

 

Accounts payable

$

121,573 

 

$

205,479 

Accrued and other liabilities

 

53,859 

 

 

63,886 

Derivative financial instruments

 

22,868 

 

 

12,884 

Income taxes payable

 

 -

 

 

9,909 

Short-term notes payable and other borrowings

 

457,472 

 

 

526,180 

Current maturities of long-term debt

 

69,752 

 

 

67,923 

Total current liabilities

 

725,524 

 

 

886,261 

Long-term debt

 

768,111 

 

 

767,396 

Deferred income taxes

 

40,591 

 

 

56,801 

Other liabilities

 

14,434 

 

 

15,056 

Total liabilities

 

1,548,660 

 

 

1,725,514 



 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

 

 

 



 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Common stock, $0.001 par value; 75,000,000 shares authorized;
46,760,696 and 46,410,405 shares issued, and 41,434,804
and 41,084,463 shares outstanding, respectively

 

47 

 

 

46 

Additional paid-in capital

 

687,469 

 

 

685,019 

Retained earnings

 

293,405 

 

 

325,411 

Accumulated other comprehensive loss

 

(4,208)

 

 

(13,110)

Treasury stock, 5,325,892 and 5,325,942 shares, respectively

 

(55,183)

 

 

(55,184)

Total Green Plains stockholders' equity

 

921,530 

 

 

942,182 

Noncontrolling interests

 

115,583 

 

 

116,954 

Total stockholders' equity

 

1,037,113 

 

 

1,059,136 

Total liabilities and stockholders' equity

$

2,585,773 

 

$

2,784,650 



See accompanying notes to the consolidated financial statements.

3

 


 

 

GREEN PLAINS INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS



(unaudited and in thousands, except per share amounts)









 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2018

 

2017

 

2018

 

2017

Revenues

 

 

 

 

 

 

 

 

 

 

 

Product revenues

$

985,217 

 

$

884,712 

 

$

2,028,876 

 

$

1,770,924 

Service revenues

 

1,620 

 

 

1,551 

 

 

3,248 

 

 

3,023 

Total revenues

 

986,837 

 

 

886,263 

 

 

2,032,124 

 

 

1,773,947 



 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding depreciation and amortization expenses reflected below)

 

910,625 

 

 

830,019 

 

 

1,898,960 

 

 

1,641,915 

Operations and maintenance expenses

 

7,893 

 

 

8,267 

 

 

16,293 

 

 

16,798 

Selling, general and administrative expenses

 

29,731 

 

 

25,575 

 

 

55,734 

 

 

49,357 

Depreciation and amortization expenses

 

26,823 

 

 

26,188 

 

 

53,297 

 

 

52,271 

Total costs and expenses

 

975,072 

 

 

890,049 

 

 

2,024,284 

 

 

1,760,341 

Operating income (loss)

 

11,765 

 

 

(3,786)

 

 

7,840 

 

 

13,606 



 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

709 

 

 

314 

 

 

1,346 

 

 

678 

Interest expense

 

(22,021)

 

 

(19,430)

 

 

(44,149)

 

 

(37,926)

Other, net

 

2,545 

 

 

1,357 

 

 

2,479 

 

 

1,367 

Total other expense

 

(18,767)

 

 

(17,759)

 

 

(40,324)

 

 

(35,881)

Loss before income taxes

 

(7,002)

 

 

(21,545)

 

 

(32,484)

 

 

(22,275)

Income tax benefit

 

10,753 

 

 

9,749 

 

 

16,780 

 

 

12,130 

Net income (loss)

 

3,751 

 

 

(11,796)

 

 

(15,704)

 

 

(10,145)

Net income attributable to noncontrolling interests

 

4,745 

 

 

4,570 

 

 

9,407 

 

 

9,818 

Net loss attributable to Green Plains

$

(994)

 

$

(16,366)

 

$

(25,111)

 

$

(19,963)



 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Green Plains - basic

$

(0.02)

 

$

(0.41)

 

$

(0.63)

 

$

(0.51)

Net loss attributable to Green Plains - diluted

$

(0.02)

 

$

(0.41)

 

$

(0.63)

 

$

(0.51)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

40,194 

 

 

40,220 

 

 

40,168 

 

 

39,326 

Diluted

 

40,194 

 

 

40,220 

 

 

40,168 

 

 

39,326 



 

 

 

 

 

 

 

 

 

 

 

Cash dividend declared per share

$

0.12 

 

$

0.12 

 

$

0.24 

 

$

0.24 





See accompanying notes to the consolidated financial statements.



4

 


 

 

GREEN PLAINS INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



(unaudited and in thousands)









 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2018

 

2017

 

2018

 

2017



 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

3,751 

 

$

(11,796)

 

$

(15,704)

 

$

(10,145)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on derivatives arising during the period, net of tax benefit (expense) of $1,145, $2,026, ($3,971) and $1,058, respectively

 

(4,277)

 

 

(3,418)

 

 

12,873 

 

 

(1,776)

Reclassification of realized gains (losses) on derivatives, net of tax benefit of $185, $824, $365 and $2,672, respectively

 

(581)

 

 

(1,353)

 

 

(1,184)

 

 

(4,487)

Total other comprehensive income (loss), net of tax

 

(4,858)

 

 

(4,771)

 

 

11,689 

 

 

(6,263)

Comprehensive loss

 

(1,107)

 

 

(16,567)

 

 

(4,015)

 

 

(16,408)

Comprehensive income attributable to noncontrolling interests

 

4,745 

 

 

4,570 

 

 

9,407 

 

 

9,818 

Comprehensive loss attributable to Green Plains

$

(5,852)

 

$

(21,137)

 

$

(13,422)

 

$

(26,226)





See accompanying notes to the consolidated financial statements.



5

 


 

 

GREEN PLAINS INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS



(unaudited and in thousands)







 

 

 

 

 



Six Months Ended
June 30,



2018

 

2017

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(15,704)

 

$

(10,145)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation and amortization

 

53,297 

 

 

52,271 

Amortization of debt issuance costs and debt discount

 

7,515 

 

 

7,925 

Loss on exchange of 3.25% convertible notes due 2018

 

 -

 

 

1,291 

Gain on disposal of assets

 

(2,624)

 

 

(1,422)

Deferred income taxes

 

(23,061)

 

 

(12,896)

Stock-based compensation

 

5,435 

 

 

5,497 

Undistributed equity loss of affiliates

 

239 

 

 

75 

Other

 

 -

 

 

19 

Changes in operating assets and liabilities before effects of business combinations:

 

 

 

 

 

Accounts receivable

 

14,054 

 

 

12,341 

Inventories

 

88,450 

 

 

(1,079)

Derivative financial instruments

 

1,513 

 

 

(17,236)

Prepaid expenses and other assets

 

2,797 

 

 

(9)

Accounts payable and accrued liabilities

 

(96,295)

 

 

(74,435)

Current income taxes

 

10,540 

 

 

(1,262)

Other

 

(297)

 

 

1,322 

Net cash provided by (used in) operating activities

 

45,859 

 

 

(37,743)



 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment, net

 

(14,640)

 

 

(27,985)

Acquisition of a business, net of cash acquired

 

(1,629)

 

 

(61,727)

Investments in unconsolidated subsidiaries

 

(2,253)

 

 

(8,849)

Other investing activities

 

7,500 

 

 

 -

Net cash used in investing activities

 

(11,022)

 

 

(98,561)



 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from the issuance of long-term debt

 

42,300 

 

 

33,800 

Payments of principal on long-term debt

 

(43,370)

 

 

(66,339)

Proceeds from short-term borrowings

 

2,089,208 

 

 

2,149,950 

Payments on short-term borrowings

 

(2,158,274)

 

 

(2,099,929)

Cash payment for exchange of 3.25% convertible notes due 2018

 

 -

 

 

(8,523)

Payments of cash dividends and distributions

 

(20,580)

 

 

(19,244)

Payments of loan fees

 

(2,622)

 

 

(1,675)

Payments related to tax withholdings for stock-based compensation

 

(3,013)

 

 

(3,801)

Proceeds from exercise of stock options

 

150 

 

 

50 

Net cash used in financing activities

 

(96,201)

 

 

(15,711)



 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

(61,364)

 

 

(152,015)

Cash, cash equivalents and restricted cash, beginning of period

 

312,360 

 

 

406,791 

Cash, cash equivalents and restricted cash, end of period

$

250,996 

 

$

254,776 



 

 

 

 

 

Continued on the following page

 

 

 

 

 

6

 


 

 

GREEN PLAINS INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS



(unaudited and in thousands)













 

 

 

 

 

Continued from the previous page

 

 

 

 

 



Six Months Ended
June 30,



2018

 

2017

Reconciliation of total cash, cash equivalents and restricted cash:

 

 

 

 

 

Cash and cash equivalents

$

235,133 

 

$

195,442 

Restricted cash

 

15,863 

 

 

59,334 

Total cash, cash equivalents and restricted cash

$

250,996 

 

$

254,776 



 

 

 

 

 

Non-cash financing activity:

 

 

 

 

 

Exchange of 3.25% convertible notes due 2018 for shares of
common stock

$

 -

 

$

47,743 

Exchange of common stock held in treasury stock for 3.25%
convertible notes due 2018

$

 

$

27,356 



 

 

 

 

 

Supplemental investing and financing activities:

 

 

 

 

 

Assets acquired in acquisitions and mergers, net of cash

$

1,629 

 

$

62,209 

Less: liabilities assumed

 

 -

 

 

(482)

Net assets acquired

$

1,629 

 

$

61,727 



 

 

 

 

 

Supplemental disclosures of cash flow:

 

 

 

 

 

Cash paid (received) for income taxes

$

(3,163)

 

$

1,976 

Cash paid for interest

$

36,923 

 

$

30,314 







See accompanying notes to the consolidated financial statements.

7

 


 

 

GREEN PLAINS INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(unaudited)



1.  BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



References to the Company



References to “Green Plains” or the “company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Inc., an Iowa corporation, and its subsidiaries.



Consolidated Financial Statements



The consolidated financial statements include the company’s accounts and all significant intercompany balances and transactions are eliminated. Unconsolidated entities are included in the financial statements on an equity basis. As of June 30, 2018, the company owns a 62.5% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. Public investors own the remaining 35.5% limited partner interest in the partnership. The company determined that the limited partners in the partnership with equity at risk lack the power, through voting rights or similar rights, to direct the activities that most significantly impact partnership’s economic performance; therefore, the partnership is considered a variable interest entity. The company, through its ownership of the general partner interest in the partnership, has the power to direct the activities that most significantly affect economic performance and is obligated to absorb losses and has the right to receive benefits that could be significant to the partnership. Therefore, the company is considered the primary beneficiary and consolidates the partnership in the company’s financial statements. The assets of the partnership cannot be used by the company for general corporate purposes. The partnership’s consolidated total assets as of June 30, 2018 and December 31, 2017, excluding intercompany balances, were $73.2 million and $74.9 million, respectively, and primarily consisted of property and equipment and goodwill. The partnership’s consolidated total liabilities as of June 30, 2018 and December 31, 2017, excluding intercompany balances, were $155.1 million and $153.0 million, respectively, which primarily consisted of long-term debt as discussed in Note 9 – Debt. The liabilities recognized as a result of consolidating the partnership do not represent additional claims on our general assets. The company also owns a 90.0% interest in BioProcess Algae, a joint venture formed in 2008, and consolidates their results in its consolidated financial statements.



The accompanying unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Because they do not include all of the information and notes required by GAAP, the consolidated financial statements should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, 2017.



The unaudited financial information reflects adjustments which are, in the opinion of management, necessary for a fair presentation of results of operations, financial position and cash flows for the periods presented. The adjustments are normal and recurring in nature, unless otherwise noted. Interim period results are not necessarily indicative of the results to be expected for the entire year.



Reclassifications



Certain prior year amounts were reclassified to conform to the current year presentation. These reclassifications did not affect total revenues, costs and expenses, net income (loss) or stockholders’ equity.



Use of Estimates in the Preparation of Consolidated Financial Statements



The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities,  disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The company bases its estimates on historical experience and assumptions it believes are proper and reasonable under the circumstances and regularly evaluates the appropriateness of its estimates and assumptions. Actual results could differ from those estimates. Key accounting policies, including but not limited to those relating to revenue recognition, depreciation of property and equipment, carrying value of intangible assets, impairment of long-lived assets and goodwill, derivative financial instruments, and accounting for income taxes, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements.



8

 


 

 

Description of Business



The company operates within four business segments: (1) ethanol production, which includes the production of ethanol and distillers grains, and recovery of corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes cattle feeding, vinegar production and food-grade corn oil operations and (4) partnership, which includes fuel storage and transportation services.



Cash and Cash Equivalents



Cash and cash equivalents includes bank deposits as well as short-term, highly liquid investments with original maturities of three months or less.



Restricted Cash



The company has restricted cash, which can only be used for funding letters of credit or for payment towards a revolving credit agreement. Restricted cash also includes cash margins and securities pledged to commodity exchange clearinghouses.  To the degree these segregated balances are cash and cash equivalents, they are considered restricted cash on the consolidated statements of cash flows.



Revenue Recognition



The company recognizes revenue at the point in time when the product or service is transferred to the customer.



Sales of ethanol, distillers grains, corn oil, natural gas and other commodities by the company’s marketing business are recognized when obligations under the terms of a contract with a customer are satisfied. Generally, this occurs with the transfer of control of products or services. Revenues related to marketing for third parties are presented on a gross basis as the company controls the product prior to the sale to the end customer, takes title of the product and has inventory risk. Unearned revenue is recorded for goods in transit when the company has received payment but control has not yet been transferred to the customer. Revenues for receiving, storing, transferring and transporting ethanol and other fuels are recognized when the product is delivered to the customer.



The company routinely enters into physical-delivery energy commodity purchase and sale agreements. At times, the company settles these transactions by transferring its obligations to other counterparties rather than delivering the physical commodity. Energy trading transactions are reported net as a component of revenue. All other transactions are reported net as either a component of revenue or cost of goods sold, depending on their position as a gain or loss. Revenues also include realized gains and losses on related derivative financial instruments and reclassifications of realized gains and losses on cash flow hedges from accumulated other comprehensive income or loss.



Sales of products, including agricultural commodities, cattle and vinegar, are recognized when control of the product is transferred to the customer, which depends on the agreed upon shipment or delivery terms.  Revenues related to grain merchandising are presented gross and include shipping and handling, which is also a component of cost of goods sold. Revenues from grain storage are recognized when services are rendered.



A substantial portion of the partnership revenues are derived from fixed-fee commercial agreements for storage, terminal or transportation services. The partnership recognizes revenue upon transfer of control of product from its storage tanks and fuel terminals, when railcar volumetric capacity is provided, and as truck transportation services are performed.



Shipping and Handling Costs 



We account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, we record customer payments associated with shipping and handling costs as a component of revenue, and classify such costs as a component of cost of goods sold.



Cost of Goods Sold



Cost of goods sold includes direct labor, materials, shipping and plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in ethanol and vinegar production, and cattle feeding operations. Grain purchasing and receiving costs, excluding labor costs for grain buyers and scale operators, are also included in cost of goods sold. Materials include the cost of corn feedstock, denaturant, process chemicals, cattle and

9

 


 

 

veterinary supplies. Corn feedstock costs include gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs, as well as reclassifications of gains and losses on cash flow hedges from accumulated other comprehensive income or loss. Plant overhead consists primarily of plant and feedlot utilities, repairs and maintenance, yard expenses and outbound freight charges. Shipping costs incurred by the company, including railcar costs, are also reflected in cost of goods sold.



The company uses exchange-traded futures and options contracts and forward purchase and sales contracts to attempt to minimize the effect of price changes on grain, natural gas and cattle inventories. Exchange-traded futures and options contracts are valued at quoted market prices and settled predominantly in cash. The company is exposed to loss when counterparties default on forward purchase and sale contracts. Grain inventories held for sale and forward purchase and sale contracts are valued at market prices when available or other market quotes adjusted for differences, primarily in transportation, between the exchange-traded market and local market where the terms of the contract is based. Changes in forward purchase contracts and exchange-traded futures and options contracts are recognized as a component of cost of goods sold.



Operations and Maintenance Expenses



In the partnership segment, transportation expenses represent the primary component of operations and maintenance expenses. Transportation expenses include railcar leases, freight and shipping of the company’s ethanol and co-products, as well as costs incurred storing ethanol at destination terminals.



Derivative Financial Instruments



The company uses various derivative financial instruments, including exchange-traded futures and exchange-traded and over-the-counter options contracts, to attempt to minimize risk and the effect of commodity price changes including but not limited to, corn, ethanol, cattle, natural gas and crude oil. The company monitors and manages this exposure as part of its overall risk management policy to reduce the adverse effect market volatility may have on its operating results. The company may hedge these commodities as one way to mitigate risk; however, there may be situations when these hedging activities themselves result in losses.



By using derivatives to hedge exposures to changes in commodity prices, the company is exposed to credit and market risk. The company’s exposure to credit risk includes the counterparty’s failure to fulfill its performance obligations under the terms of the derivative contract. The company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring their financial condition. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The company manages market risk by incorporating parameters to monitor exposure within its risk management strategy, which limits the types of derivative instruments and strategies the company can use and the degree of market risk it can take using derivative instruments.



The company evaluates its physical delivery contracts to determine if they qualify for normal purchase or sale exemptions which are expected to be used or sold over a reasonable period in the normal course of business. Contracts that do not meet the normal purchase or sale criteria are recorded at fair value. Changes in fair value are recorded in operating income unless the contracts qualify for, and the company elects, cash flow hedge accounting treatment. 



Certain qualifying derivatives related to ethanol production, agribusiness and energy services, and food and ingredients segments are designated as cash flow hedges. The company evaluates the derivative instrument to ascertain its effectiveness prior to entering into cash flow hedges. Unrealized gains and losses are reflected in accumulated other comprehensive income or loss until the gain or loss from the underlying hedged transaction is realized. When it becomes probable a forecasted transaction will not occur, the cash flow hedge treatment is discontinued, which affects earnings. These derivative financial instruments are recognized in current assets or other current liabilities at fair value.



At times, the company hedges its exposure to changes in inventory values and designates qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted in the current period for changes in fair value. Ineffectiveness of the hedges is recognized in the current period to the extent the change in fair value of the inventory is not offset by the change in fair value of the derivative. 









10

 


 

 

Recent Accounting Pronouncements

 

Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 606, Revenue from Contracts with Customers. Please refer to Note 2 – Revenue for further details.



Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 230, Statement of Cash Flows: Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents to 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. The amended guidance was applied retrospectively. As a result, net cash used in operating activities for the six months ended June 30, 2017 was adjusted to exclude the change in restricted cash and decreased the previously reported balance by $25.2 million. Net cash provided by financing activities for the six months ended June 30, 2017 was adjusted to exclude the change in restricted cash and decreased the previously reported balance by $18.1 million.



Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 740, Income Taxes: Intra-Entity Transfers of Assets other than Inventory, which requires the recognition of current and deferred income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amended guidance is required on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The adoption of the guidance did not have an impact to the financial statements.



Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 805, Business Combinations: Clarifying the Definition of a Business, which clarifies the definition of a business and provides guidance to assist companies and other reporting organizations evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amended guidance will be applied prospectively.



Effective January 1, 2018, the company early adopted the amended guidance in ASC Topic 350, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment, which simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge equal to the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit, would be recognized. The amended guidance will be applied prospectively, and used when the annual impairment test is performed in the current year. The company does not believe the new guidance will have a material impact on the consolidated financial statements.



Effective January 1, 2018, the company early adopted the amended guidance in ASC Topic 220, Income Statement – Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendment eliminates the stranded tax effects resulting from the Tax Cuts and Jobs Act and is intended to improve the usefulness of information reported. As a result, the company recorded a $2.8 million reclassification from accumulated other comprehensive income to retained earnings during the first quarter of 2018.  It is the company’s policy to release income tax effects from accumulated other comprehensive income using the portfolio approach.



Effective January 1, 2019, the company will adopt the amended guidance in ASC Topic 842, Leases,  which aims to make leasing activities more transparent and comparable, requiring substantially all leases to be recognized by lessees on the balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The new standard is effective for fiscal years and interim periods within those years, beginning after December 15, 2018. The standard requires a modified retrospective transition approach and allows for early adoption. In July 2018, the FASB issued Accounting Standards Update, Leases (Topic 842): Targeted Improvements, which provides an option to apply the transition provisions of the new standard at adoption date instead of the earliest comparative period presented in the financial statements. The company will elect to use this optional transition method.



The company has established an implementation team which continues to review current accounting policies, internal controls, processes, and disclosures that will change as a result of adopting the new standard. The company has gathered information on existing leases to obtain a complete population of leases upon adoption. The company is also working with a third-party vendor to implement a lease accounting system, which will assist in delivering the required accounting changes and disclosures. The new standard will significantly increase right-of-use assets and lease liabilities on the company’s consolidated balance sheet, primarily due to operating leases that are currently not recognized on the balance sheet. In addition, it will also require expanded disclosures in the company’s consolidated financial statements. The company expects to complete its assessment of the impact of the new guidance on its consolidated financial statements in the second half of 2018.

11

 


 

 



2REVENUE



Adoption of ASC Topic 606



On January 1, 2018, the company adopted the amended guidance in ASC Topic 606, Revenue from Contracts with Customers, and all related amendments (“new revenue standard”) and applied it to all contracts using the modified retrospective transition method. There were no adjustments to the consolidated January 1, 2018 balance sheets for the adoption of the new revenue standard. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. In addition, there was no impact of adoption on the consolidated statements of operations or balance sheets for the six months ended June 30, 2018.



Revenue Recognition



Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Generally this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Sales, value add, and other taxes the company collects concurrent with revenue-producing activities are excluded from revenue.



Revenue by Source



The following table disaggregates revenue by major source for the three and six months ended June 30, 2018 (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended June 30, 2018



Ethanol Production

 

Agribusiness & Energy Services

 

Food & Ingredients

 

Partnership

 

Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from contracts with customers under ASC Topic 606:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Ethanol

$

634 

 

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

634 

 Distillers grains

 

62,657 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

62,657 

 Cattle and vinegar

 

 -

 

 

 -

 

 

222,059 

 

 

 -

 

 

 -

 

 

222,059 

 Service revenues

 

 -

 

 

 -

 

 

 -

 

 

1,229 

 

 

 -

 

 

1,229 

 Other

 

1,201 

 

 

806 

 

 

 -

 

 

 -

 

 

 -

 

 

2,007 

 Intersegment revenues

 

875 

 

 

 -

 

 

38 

 

 

 -

 

 

(913)

 

 

 -

Total revenues from contracts with customers

 

65,367 

 

 

806 

 

 

222,097 

 

 

1,229 

 

 

(913)

 

 

288,586 

Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Ethanol

 

451,083 

 

 

106,117 

 

 

 -

 

 

 -

 

 

 -

 

 

557,200 

 Distillers grains

 

49,940 

 

 

32,706 

 

 

 -

 

 

 -

 

 

 -

 

 

82,646 

 Corn oil

 

19,132 

 

 

3,488 

 

 

5,350 

 

 

 -

 

 

 -

 

 

27,970 

 Grain

 

337 

 

 

22,843 

 

 

 -

 

 

 -

 

 

 -

 

 

23,180 

 Cattle and vinegar

 

 -

 

 

 -

 

 

(1,522)

 

 

 -

 

 

 -

 

 

(1,522)

 Other

 

4,272 

 

 

4,114 

 

 

 -

 

 

 -

 

 

 -

 

 

8,386 

 Intersegment revenues

 

3,344 

 

 

14,128 

 

 

 -

 

 

2,517 

 

 

(19,989)

 

 

 -

Total revenues from contracts accounted for as derivatives

 

528,108 

 

 

183,396 

 

 

3,828 

 

 

2,517 

 

 

(19,989)

 

 

697,860 

 Leasing revenues under ASC Topic 840 (2)

 

 -

 

 

 -

 

 

 -

 

 

22,094 

 

 

(21,703)

 

 

391 

Total Revenues

$

593,475 

 

$

184,202 

 

$

225,925 

 

$

25,840 

 

$

(42,605)

 

$

986,837 



12

 


 

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Six Months Ended June 30, 2018



Ethanol Production

 

Agribusiness & Energy Services

 

Food & Ingredients

 

Partnership

 

Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from contracts with customers under ASC 606:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Ethanol

$

3,100 

 

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

3,100 

 Distillers grains

 

119,902 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

119,902 

 Cattle and vinegar

 

 -

 

 

 -

 

 

489,475 

 

 

 -

 

 

 -

 

 

489,475 

 Service revenues

 

 -

 

 

 -

 

 

 -

 

 

2,447 

 

 

 -

 

 

2,447 

 Other

 

1,332 

 

 

1,483 

 

 

 -

 

 

 -

 

 

 -

 

 

2,815 

 Intersegment revenues

 

1,537 

 

 

 -

 

 

80 

 

 

 -

 

 

(1,617)

 

 

 -

Total revenues from contracts with customers

 

125,871 

 

 

1,483 

 

 

489,555 

 

 

2,447 

 

 

(1,617)

 

 

617,739 

Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Ethanol

 

893,656 

 

 

228,658 

 

 

 -

 

 

 -

 

 

 -

 

 

1,122,314 

 Distillers grains

 

90,401 

 

 

53,918 

 

 

 -

 

 

 -

 

 

 -

 

 

144,319 

 Corn oil

 

35,602 

 

 

12,158 

 

 

7,637 

 

 

 -

 

 

 -

 

 

55,397 

 Grain

 

470 

 

 

37,129 

 

 

 -

 

 

 -

 

 

 -

 

 

37,599 

 Cattle and vinegar

 

 -

 

 

 -

 

 

6,884 

 

 

 -

 

 

 -

 

 

6,884 

 Other

 

8,556 

 

 

38,515 

 

 

 -

 

 

 -

 

 

 -

 

 

47,071 

 Intersegment revenues

 

4,635 

 

 

25,557 

 

 

 -

 

 

4,689 

 

 

(34,881)

 

 

 -

Total revenues from contracts accounted for as derivatives

 

1,033,320 

 

 

395,935 

 

 

14,521 

 

 

4,689 

 

 

(34,881)

 

 

1,413,584 

 Leasing revenues under ASC 840 (2)

 

 -

 

 

 -

 

 

 -

 

 

44,589 

 

 

(43,788)

 

 

801 

Total Revenues

$

1,159,191 

 

$

397,418 

 

$

504,076 

 

$

51,725 

 

$

(80,286)

 

$

2,032,124 











(1)

Revenues from contracts accounted for as derivatives represent physically settled derivative sales that are outside the scope of ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), where the company recognizes revenue when control of the inventory is transferred within the meaning of ASC Topic 606 as required by ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets.

(2)

Leasing revenues do not represent revenues recognized from contracts with customers under ASC Topic 606, and continue to be accounted for under ASC Topic 840, Leases.



Payment Terms



The company has standard payment terms, which vary depending upon the nature of the services provided, with the majority falling within 10 to 30 days after transfer of control or completion of services. In instances where the timing of revenue recognition differs from the timing of invoicing, the company has determined that contracts generally do not include a significant financing component.



Contract Liabilities



The company records unearned revenue when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of service and lease agreements. Unearned revenue from service agreements, which represents a contract liability, is recorded for fees that have been charged to the customer prior to the completion of performance obligations, and is generally recognized in the subsequent quarter. The company expects to recognize all of the unearned revenue associated with service agreements as of June 30, 2018 in the subsequent quarter when the inventory is withdrawn from the partnership’s tank storage.



Practical Expedients



Under the new revenue standard, companies may elect various practical expedients upon adoption. As a result, the company elected to recognize the cost for shipping and handling activities that occur after the customer obtains control of the promised goods as fulfillment activities and not when performance obligations are met. The company also elected to exclude sales taxes from transaction prices.







3.  ACQUISITIONS



Acquisition of Cattle Feeding Operations



On May 16, 2017, the company acquired two cattle-feeding operations from Cargill Cattle Feeders, LLC for $59.3 million, including certain working capital adjustments. The transaction included the feed yards located in Leoti, Kansas and Eckley, Colorado, which added combined feedlot capacity of 155,000 head of cattle to the company’s operations. The transaction was financed using cash on hand. There were no material acquisition costs recorded for the acquisition.



13

 


 

 

As part of the transaction, the company also entered into a long-term cattle supply agreement with Cargill Meat Solutions Corporation. Under the cattle supply agreement, all cattle placed in the Leoti and Eckley feedlots are sold exclusively to Cargill Meat Solutions under an agreed upon pricing arrangement.



The following is a summary of the assets acquired and liabilities assumed (in thousands):







 

 

 

 

Amounts of Identifiable Assets Acquired
and Liabilities Assumed

Inventory

 

$

22,450 

Prepaid expenses and other

 

 

52 

Property and equipment, net

 

36,960 



 

 

 

 

Current liabilities

 

(180)



Total identifiable net assets

$

59,282 





The amounts above reflect the final purchase price allocation, which included working capital true-up payments by the company of $1.6 million made during the first half of 2018.









4.  FAIR VALUE DISCLOSURES



The following methods, assumptions and valuation techniques were used in estimating the fair value of the company’s financial instruments:



Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities the company can access at the measurement date.



Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1, quoted prices for identical or similar assets in markets that are not active, and other inputs that are observable or can be substantially corroborated by observable market data through correlation or other means. Grain inventories held for sale in the agribusiness and energy services segment are valued at nearby futures values, plus or minus nearby basis.



Level 3 – unobservable inputs that are supported by little or no market activity and comprise a significant component of the fair value of the assets or liabilities. The company currently does not have any recurring Level 3 financial instruments.



Derivative contracts include exchange-traded commodity futures and options contracts and forward commodity purchase and sale contracts. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the company’s exchange-traded futures and options contracts are cash-settled on a daily basis.



14

 


 

 

There have been no changes in valuation techniques and inputs used in measuring fair value. The company’s assets and liabilities by level are as follows (in thousands):







 

 

 

 

 

 

 

 



Fair Value Measurements at June 30, 2018



Quoted Prices in
Active Markets for
Identical Assets

 

Significant Other
Observable Inputs

 

 

 



(Level 1)

 

(Level 2)

 

Total

Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

235,133 

 

$

 -

 

$

235,133 

Restricted cash

 

15,863 

 

 

 -

 

 

15,863 

Inventories carried at market

 

 -

 

 

58,710 

 

 

58,710 

Unrealized gains on derivatives

 

 -

 

 

18,969 

 

 

18,969 

Other assets

 

114 

 

 

 -

 

 

114 

Total assets measured at fair value

$

251,110 

 

$

77,679 

 

$

328,789 



 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable (1)

$

 -

 

$

9,961 

 

$

9,961 

Unrealized losses on derivatives

 

 -

 

 

22,868 

 

 

22,868 

Other

 

 -

 

 

84 

 

 

84 

Total liabilities measured at fair value

$

 -

 

$

32,913 

 

$

32,913 









 

 

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2017



Quoted Prices in
Active Markets for
Identical Assets

 

Significant Other
Observable Inputs

 

 

 



(Level 1)

 

(Level 2)

 

Total

Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

266,651 

 

$

 -

 

$

266,651 

Restricted cash

 

45,709 

 

 

 -

 

 

45,709 

Inventories carried at market

 

 -

 

 

26,834 

 

 

26,834 

Unrealized gains on derivatives

 

 -

 

 

12,045 

 

 

12,045 

Other assets

 

115 

 

 

 -

 

 

115 

Total assets measured at fair value

$

312,475 

 

$

38,879 

 

$

351,354 



 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable (1)

$

 -

 

$

37,401 

 

$

37,401 

Unrealized losses on derivatives

 

 -

 

 

12,884 

 

 

12,884 

Other liabilities

 

 -

 

 

92 

 

 

92 

Total liabilities measured at fair value

$

 -

 

$

50,377 

 

$

50,377 





(1)

Accounts payable is generally stated at historical amounts with the exception of $10.0 million and  $37.4 million at June 30, 2018 and December 31, 2017, respectively, related to certain delivered inventory for which the payable fluctuates based on changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option.



The company believes the fair value of its debt approximated book value, which was $1.3 billion at June 30, 2018 and $1.4 billion at December 31, 2017.  The company estimated the fair value of its outstanding debt using Level 2 inputs. The company believes the fair value of its accounts receivable approximated book value, which was  $137.1 million and $151.1 million at June 30, 2018 and December 31, 2017, respectively.



Although the company currently does not have any recurring Level 3 financial measurements, the fair values of tangible assets and goodwill acquired and the equity component of convertible debt issued represent Level 3 measurements which were derived using a combination of the income approach, market approach and cost approach for the specific assets or liabilities being valued.







15

 


 

 

5.  SEGMENT INFORMATION



The company reports the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol and distillers grains, and recovery of corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes cattle feeding, vinegar production and food-grade corn oil operations and (4) partnership, which includes fuel storage and transportation services.



Corporate activities include selling, general and administrative expenses, consisting primarily of compensation, professional fees and overhead costs not directly related to a specific operating segment.



During the normal course of business, the operating segments conduct business with each other. For example, the agribusiness and energy services segment procures grain and natural gas and sells products, including ethanol, distillers grains and corn oil for the ethanol production segment. The partnership segment provides fuel storage and transportation services for the ethanol production segment. These intersegment activities are treated like third-party transactions with origination, marketing and storage fees charged at estimated market values. Consequently, these transactions affect segment performance; however, they do not impact the company’s consolidated results since the revenues and corresponding costs are eliminated. 



The following tables set forth certain financial data for the company’s operating segments (in thousands):







 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2018

 

2017

 

2018

 

2017

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Ethanol production:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

589,256 

 

$

617,297 

 

$

1,153,019 

 

$

1,237,176 

Intersegment revenues

 

4,219 

 

 

1,549 

 

 

6,172 

 

 

3,045 

Total segment revenues

 

593,475 

 

 

618,846 

 

 

1,159,191 

 

 

1,240,221 

Agribusiness and energy services:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

170,074 

 

 

150,755 

 

 

371,861 

 

 

319,066 

Intersegment revenues

 

14,128 

 

 

9,781 

 

 

25,557 

 

 

19,273 

Total segment revenues

 

184,202 

 

 

160,536 

 

 

397,418 

 

 

338,339 

Food and ingredients:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

225,887 

 

 

116,660 

 

 

503,996 

 

 

214,682 

Intersegment revenues

 

38 

 

 

37 

 

 

80 

 

 

75 

Total segment revenues

 

225,925 

 

 

116,697 

 

 

504,076 

 

 

214,757 

Partnership:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

1,620 

 

 

1,551 

 

 

3,248 

 

 

3,023 

Intersegment revenues

 

24,220 

 

 

23,514 

 

 

48,477 

 

 

49,271 

Total segment revenues

 

25,840 

 

 

25,065 

 

 

51,725 

 

 

52,294 

Revenues including intersegment activity

 

1,029,442 

 

 

921,144 

 

 

2,112,410 

 

 

1,845,611 

Intersegment eliminations

 

(42,605)

 

 

(34,881)

 

 

(80,286)

 

 

(71,664)

Revenues as reported

$

986,837 

 

$

886,263 

 

$

2,032,124 

 

$

1,773,947 



 

 

 

 

 

 

 

 

 

 

 

Refer to Note 2 - Revenue, for further disaggregation of revenue by operating segment.

16

 


 

 





 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2018

 

2017

 

2018

 

2017

Cost of goods sold:

 

 

 

 

 

 

 

 

 

 

 

Ethanol production

$

581,613 

 

$

612,646 

 

$

1,146,172 

 

$

1,211,784 

Agribusiness and energy services

 

165,174 

 

 

152,110 

 

 

366,886 

 

 

318,504 

Food and ingredients

 

206,440 

 

 

100,009 

 

 

466,205 

 

 

183,044 

Partnership

 

 -

 

 

 -

 

 

 -

 

 

 -

Intersegment eliminations

 

(42,602)

 

 

(34,746)

 

 

(80,303)

 

 

(71,417)



$

910,625 

 

$

830,019 

 

$

1,898,960 

 

$

1,641,915