Green Plains Inc.
Green Plains Inc. (Form: 10-Q, Received: 08/03/2017 09:47:19)









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 , 2017



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 681 06

(402) 884-8700

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area c ode)



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 Sect ion 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 nu mber of s hares of common stock, par value $0.001 per share, outstanding as of August  1 , 2 017 , was 41 , 484 , 094 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 (Loss)  

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

30



 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk  

42



 

 

Item 4.

Controls and Procedures

44



 

 



 

 

PART II – OTHER INFORMATION

 



 

 

Item 1.

Legal Proceedings

45



 

 

Item 1A.

Risk Factors

45



 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46



 

 

Item 3.

Defaults Upon Senior Securities

46



 

 

Item 4.

Mine Safety Disclosures

46



 

 

Item 5.

Other Information

46

 

 

 

Item 6.

Exhibits

47



 

 

 Signatures

48



 

1

 


 

 







Commonly Used Defined Terms



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



Green Plains Inc. and Subsidiaries:





 

Green Plains; the company

Green Plains Inc. and its subsidiaries

BioProcess Algae

BioProcess Algae 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



Accounting Defined Terms:





 

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

GAAP

U.S. Generally Accepted Accounting Principles

LIBOR

London Interbank Offered Rate

LTIP

Green Plains Partners LP 2015 Long-Term Incentive Plan

SEC

Securities and Exchange Commission



Industry Defined Terms:





 

CAFE

Corporate Average Fuel Economy

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 2007, as amended

EPA

U.S. Environmental Protection Agency

MmB TU

Million British Thermal Units

Mmg

Million gallons

Mmgy

Million gallons per year

RFS II

Renewable Fuels Standard II

RVO

Renewable volume obligations

RVP

Reid Vapor Pressure

U.S.

United States











2

 


 

 

PART I – FINANCIAL INFORMATION



Item 1 Financial Statements



GREEN PLAINS INC. AND SUBSIDIARIES

 

  CONSOLIDATED BALANCE SHEETS



(in thousands, except share amounts)









 

 

 

 

 



June 30,

 

December 31,



2017

 

2016



(unaudited)

 

 

 

ASSETS

Current assets

 

 

 

 

 

Cash and cash equivalents

$

195,442 

 

$

304,211 

Restricted cash

 

29,592 

 

 

51,979 

Accounts receivable, net of allowances of $285 and $266, respectively

 

134,885 

 

 

147,495 

Income taxes receivable

 

11,641 

 

 

10,379 

Inventories

 

444,738 

 

 

422,181 

Prepaid expenses and other

 

17,144 

 

 

17,095 

Derivative financial instruments

 

32,784 

 

 

47,236 

Total current assets

 

866,226 

 

 

1,000,576 

Property and equipment, net of accumulated depreciation of
$466,548 and $417,993, respectively

 

1,199,080 

 

 

1,178,706 

Goodwill

 

183,696 

 

 

183,696 

Other assets

 

147,621 

 

 

143,514 

Total assets

$

2,396,623 

 

$

2,506,492 



 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

 

 

 

 

 

Accounts payable

$

139,732 

 

$

192,275 

Accrued and other liabilities

 

44,933 

 

 

67,473 

Derivative financial instruments

 

8,165 

 

 

8,916 

Short-term notes payable and other borrowings

 

341,463 

 

 

291,223 

Current maturities of long-term debt

 

6,178 

 

 

35,059 

Total current liabilities

 

540,471 

 

 

594,946 

Long-term debt

 

733,780 

 

 

782,610 

Deferred income taxes

 

122,810 

 

 

140,262 

Other liabilities

 

8,595 

 

 

9,483 

Total liabilities

 

1,405,656 

 

 

1,527,301 



 

 

 

 

 

Commitments and contingencies (Note 13)

 

 

 

 

 



 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Common stock, $0.001 par value; 75,000,000 shares authorized;
46,415,977 and 46,079,108 shares issued, and 41,484,712
and 38,364,118 shares outstanding, respectively

 

46 

 

 

46 

Additional paid-in capital

 

679,153 

 

 

659,200 

Retained earnings

 

254,030 

 

 

283,214 

Accumulated other comprehensive loss

 

(10,400)

 

 

(4,137)

Treasury stock, 4,931,265 and 7,714,990 shares, respectively

 

(48,460)

 

 

(75,816)

Total Green Plains stockholders' equity

 

874,369 

 

 

862,507 

Noncontrolling interests

 

116,598 

 

 

116,684 

Total stockholders' equity

 

990,967 

 

 

979,191 

Total liabilities and stockholders' equity

$

2,396,623 

 

$

2,506,492 



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,



2017

 

2016

 

2017

 

2016



 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Product revenues

$

884,712 

 

$

885,772 

 

$

1,770,924 

 

$

1,632,956 

Service revenues

 

1,551 

 

 

1,955 

 

 

3,023 

 

 

3,975 

Total revenues

 

886,263 

 

 

887,727 

 

 

1,773,947 

 

 

1,636,931 



 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

830,019 

 

 

809,524 

 

 

1,641,915 

 

 

1,534,211 

Operations and maintenance expenses

 

8,267 

 

 

8,504 

 

 

16,798 

 

 

17,149 

Selling, general and administrative expenses

 

25,575 

 

 

23,589 

 

 

49,357 

 

 

43,962 

Depreciation and amortization expenses

 

26,188 

 

 

18,701 

 

 

52,271 

 

 

36,846 

Total costs and expenses

 

890,049 

 

 

860,318 

 

 

1,760,341 

 

 

1,632,168 

Operating income (loss)

 

(3,786)

 

 

27,409 

 

 

13,606 

 

 

4,763 



 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

314 

 

 

368 

 

 

678 

 

 

778 

Interest expense

 

(19,430)

 

 

(10,499)

 

 

(37,926)

 

 

(21,297)

Other, net

 

1,357 

 

 

1,178 

 

 

1,367 

 

 

(497)

Total other expense

 

(17,759)

 

 

(8,953)

 

 

(35,881)

 

 

(21,016)

Income (loss) before income taxes

 

(21,545)

 

 

18,456 

 

 

(22,275)

 

 

(16,253)

Income tax expense (benefit)

 

(9,749)

 

 

5,471 

 

 

(12,130)

 

 

(9,422)

Net income (loss)

 

(11,796)

 

 

12,985 

 

 

(10,145)

 

 

(6,831)

Net income attributable to noncontrolling interests

 

4,570 

 

 

4,794 

 

 

9,818 

 

 

9,116 

Net income (loss) attributable to Green Plains

$

(16,366)

 

$

8,191 

 

$

(19,963)

 

$

(15,947)



 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Green Plains - basic

$

(0.41)

 

$

0.21 

 

$

(0.51)

 

$

(0.42)

Net income (loss) attributable to Green Plains - diluted

$

(0.41)

 

$

0.21 

 

$

(0.51)

 

$

(0.42)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

40,220 

 

 

38,425 

 

 

39,326 

 

 

38,311 

Diluted

 

40,220 

 

 

38,536 

 

 

39,326 

 

 

38,311 



 

 

 

 

 

 

 

 

 

 

 

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 (LOSS)



(unaudited and in thousands)







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2017

 

2016

 

2017

 

2016



 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(11,796)

 

$

12,985 

 

$

(10,145)

 

$

(6,831)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on derivatives arising during period,
net of tax (expense) benefit of $2,026, $2,849, $1,058
and $2,093, respectively

 

(3,418)

 

 

(4,840)

 

 

(1,776)

 

 

(3,314)

Reclassification of realized (gains) losses on derivatives, net
of tax expense (benefit) of $824, $(932), $2,672
and $(225), respectively

 

(1,353)

 

 

1,783 

 

 

(4,487)

 

 

356 

Total other comprehensive loss, net of tax

 

(4,771)

 

 

(3,057)

 

 

(6,263)

 

 

(2,958)

Comprehensive income (loss)

 

(16,567)

 

 

9,928 

 

 

(16,408)

 

 

(9,789)

Comprehensive income attributable to noncontrolling interests

 

4,570 

 

 

4,794 

 

 

9,818 

 

 

9,116 

Comprehensive (income) loss attributable to Green Plains

$

(21,137)

 

$

5,134 

 

$

(26,226)

 

$

(18,905)





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,



2017

 

2016

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(10,145)

 

$

(6,831)

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

 

 

 

 

 

Depreciation and amortization

 

60,196 

 

 

41,433 

Loss on exchange of 3.25% convertible notes due 2018

 

1,291 

 

 

 -

Gain on disposal of assets

 

(1,422)

 

 

 -

Deferred income taxes

 

(12,896)

 

 

(17,936)

Stock-based compensation

 

5,497 

 

 

4,648 

Undistributed equity in loss of affiliates

 

75 

 

 

508 

Other

 

19 

 

 

58 

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

 

 

 

 

 

Accounts receivable

 

12,341 

 

 

(45,364)

Inventories

 

(1,079)

 

 

73,257 

Derivative financial instruments

 

3,622 

 

 

(160)

Prepaid expenses and other assets

 

(9)

 

 

668 

Accounts payable and accrued liabilities

 

(74,435)

 

 

(50,981)

Current income taxes

 

(1,262)

 

 

5,067 

Change in restricted cash

 

4,299 

 

 

 -

Other

 

1,322 

 

 

567 

Net cash provided (used) by operating activities

 

(12,586)

 

 

4,934 



 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(27,985)

 

 

(29,084)

Acquisition of a business, net of cash acquired

 

(61,727)

 

 

(19,935)

Distributions from (investments in) unconsolidated subsidiaries

 

(8,849)

 

 

994 

Net cash used by investing activities

 

(98,561)

 

 

(48,025)



 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from the issuance of long-term debt

 

33,800 

 

 

66,000 

Payments of principal on long-term debt

 

(66,339)

 

 

(21,223)

Proceeds from short-term borrowings

 

2,149,950 

 

 

1,970,026 

Payments on short-term borrowings

 

(2,099,929)

 

 

(1,951,610)

Cash payment for exchange of 3.25% convertible notes due 2018

 

(8,523)

 

 

 -

Payments for repurchase of common stock

 

 -

 

 

(6,005)

Payments of cash dividends and distributions

 

(19,244)

 

 

(18,520)

Change in restricted cash

 

18,089 

 

 

8,234 

Payments of loan fees

 

(1,675)

 

 

 -

Payments related to tax withholdings for stock-based compensation

 

(3,801)

 

 

(2,168)

Proceeds from exercise of stock options

 

50 

 

 

410 

Net cash provided by financing activities

 

2,378 

 

 

45,144 



 

 

 

 

 

Net change in cash and cash equivalents

 

(108,769)

 

 

2,053 

Cash and cash equivalents, beginning of period

 

304,211 

 

 

384,867 

Cash and cash equivalents, end of period

$

195,442 

 

$

386,920 



 

 

 

 

 

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,



2017

 

2016

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 disclosures of cash flow:

 

 

 

 

 

Cash paid for income taxes

$

1,976 

 

$

3,304 

Cash paid for interest

$

30,134 

 

$

20,564 



 

 

 

 

 

Supplemental investing and financing activities:

 

 

 

 

 

Assets acquired in acquisitions and mergers, net of cash

$

62,209 

 

$

23,986 

Less: liabilities assumed

 

(482)

 

 

(1,244)

Less: allocation of noncontrolling interest in
consolidation of BioProcess Algae

 

 -

 

 

(2,807)

Net assets acquired

$

61,727 

 

$

19,935 



 

 

 

 

 







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. 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 partnership is consolidated in the company’s financial statements. Effective April 1, 2016, the company increased its ownership of BioProcess Algae, a joint venture formed in 2008, to 82.8% and consolidated BioProcess Algae in its consolidated financial statements beginning on that date.



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 footnotes 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, 2016.



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 or stockholders’ equity.



Use of Estimates in the Preparation of Consolidated Financial Statements



The preparation of the consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and 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, 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.



Description of Business



Green Plains is North America’s second largest consolidated owner of ethanol plants. The company operates within four business segments: (1) ethanol production, which includes the production of ethanol, distillers grains and corn oil, (2) agribusiness and energy services, which includes grain handling and storage and 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 feedlot s , vinegar production and food- grade corn oil operations, and (4) partnership, which includes fuel storage and transportation services.



8

 


 

 

Revenue Recognition



The company recognizes revenue when the following criteria are satisfied: persuasive evidence that an arrangement exists, title of product and risk of loss are transferred to the customer, price is fixed and determinable and collectability is reasonably assured.



Sales of ethanol, distillers grains, corn oil, natural gas and other commodities by the company’s marketing business are recognized when title of product and risk of loss are transferred to an external customer. Revenues related to marketing for third parties are presented on a gross basis when the company takes title of the product and assumes risk of loss. Unearned revenue is recorded for goods in transit when the company has received payment but the title 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 fixed-price, 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. These transactions are reported net as a component of revenues. Revenues also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income or loss.



Sales of products, including agricultural commodities, cattle and vinegar, are recognized when title of product and risk of loss are transferred to the customer, which depends on the agreed upon terms. The sales terms provide passage of title when shipment is made or the commodity is delivered. 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 when there is evidence an arrangement exists; risk of loss and title transfer to the customer; the price is fixed or determinable; and collectability is reasonably ensured. Revenues from base storage, terminal or transportation services are recognized once these services are performed, which occurs when the product is delivered to the customer.



Cost of Goods Sold



Cost of goods sold includes direct labor, materials and plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in ethanol plant, vinegar and cattle feedlot 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 veterinary supplies. Corn feedstock costs include unrealized 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 realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges and reclassifications of realized gains and losses on effective 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 to minimize the effect of price changes on grain and cattle inventories and forward purchase and sales contracts. 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 the fair value of grain inventories held for sale, forward purchase and sale 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 includes railcar leases, freight and shipping of the company’s ethanol and co-products, as well as costs incurred storing ethanol at destination terminals.



9

 


 

 

Derivative Financial Instruments



The company uses various derivative financial instruments, including exchange-traded futures and exchange-traded and over-the-counter options contracts, to minimize risk and the effect of price changes related 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, hedge accounting treatment.



Certain qualifying derivatives related to the 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. Ineffectiveness is recognized in current period results, while other unrealized gains and losses are reflected in accumulated other comprehensive income 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 the value of inventories and designates qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted in current period results for changes in fair value. Ineffectiveness of the hedges is recognized in current period results to the extent the change in fair value of the inventory is not offset by the change in fair value of the derivative.



Recent Accounting Pronouncements



Effective January 1, 2017, the company adopted the amended guidance in ASC Topic 330, Inventory: Simplifying the Measurement of Inventory , which requires inventory to be measured at lower of cost or net realizable value. Net realizable value is the estimated selling prices during the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amended guidance was applied prospectively.



Effective January 1, 2017, the company adopted the amended guidance in ASC Topic 718, Compensation – Stock Compensation : Improvements to Employee Share-Based Payment Accounting , which requires all income tax effects of awards to be recognized in the income statement when the awards vest or settle. The amended guidance also allows an employer to repurchase more of an employee’s shares than it can currently for tax withholding purposes without triggering liability accounting and make a policy election to account for forfeitures as they occur. The amended guidance requiring recognition of excess tax benefits and tax deficiencies in the income statement was applied prospectively. The amended guidance related to the timing of when excess tax benefits are recognized, did not have an impact on the consolidated financial statements. The amended guidance related to the presentation of employee taxes paid on the statement of cash flows was applied retrospectively. This change resulted in a $2. 2 million increase in cash flows from operating activities and a decrease in cash flows f rom financing activities for the six months ended June 30, 2016 . The company has elected to account for forfeitures as they occur. This change did not have a material impact on the financial statements.



Effective January 1, 2018, the company will adopt 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 will be applied retrospectively.  



10

 


 

 

Effective January 1, 2018, the company will adopt the amended guidance in ASC Topic 606, Revenue from Contracts with Customers . ASC Topic 606 is designed to create improved revenue recognition and disclosure comparability in financial statements. The provisions of ASC Topic 606 include a five-step process by which an entity will determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which an entity expects to be entitled in exchange for those goods or services. The new guidance requires the company to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the company satisfies the performance obligation. ASC Topic 606 requires certain disclosures about contracts with customers and provides more comprehensive guidance for transactions such as service revenue, contract modifications, and multiple-element arrangements. The new standard is effective for fiscal years and interim periods within those years, beginning after December 15, 2017 and allows for early adoption.



The company is in the process of completing a comparison of the company’s current revenue recognition policies to the requirements of ASC Topic 606 for each of the company’s major revenue categories. The company has established a cross-functional implementation team, consisting of representatives from various business segments. Initial assessment indicates that the amended guidance will not materially change the amount or timing of revenues recognized by the company and the majority of the company's contracts will continue to be recognized at a point in time and that the number of performance obligations and the accounting for variable consideration are not expected to be significantly different from current practice. In addition, many of the company's sales contracts are considered derivatives under ASC Topic 815, Derivatives and Hedging , and are therefore excluded from the scope of Topic 606. ASC Topic 606 will also require disclosure of significant changes in contract asset and contract liability balances period to period and the amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period, as applicable. ASC Topic 606 provides for adoption either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The company anticipates finalizing its assessment of the financial impact of the new guidance on its consolidated financial statements during the third quarter of 2017. The company anticipates adopting the amended guidance using the modified retrospective transition method.



Effective January 1, 2018, the company will adopt 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 will be applied on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption.



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



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 and requires substantially all leases to be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. Early application is permitted. The company is currently evaluating the impact the adoption of the amended guidance will have on the consolidated financial statements and related disclosures , but expects the adoption will result in a significant increase in total assets and liabilities .   The amended guidance will be applied on a modified retrospective basis.



Effective January 1, 2020, the company will adopt 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 would be recognized for 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. The amended guidance will be applied prospectively .



2 .  ACQUISITIONS



Acquisition of Cattle Feedlots



On May 16, 2017, the company acquire d   two cattle-feeding operations from Cargill Cattle Feeders, LLC for $ 57 .7 million , including certain working capital adjus tments. The transaction included the feed yards located in Leoti, Kan sas and

11

 


 

 

Yuma, Colorado , which add ed combined feedlot capacity of 155,000 head of cattle to the company’s operations. The transaction w as financed using cash on hand.   The re were no material acquisition costs recorded for the acquisition.



As part of th e transaction, the company also enter ed into a long-term cattle supply agreement with Cargill Meat Solutions Corporation. Under the cattle supply agreement, all cattle placed in the Leoti, Yuma and the company’s existing Kismet, Kansas feedlots will be sold exclusively to Cargill Meat Soluti ons under an agreed upon pricing arrangement.



The purchase price allocation is based on the p reliminary results of internal valuations. The purchase price and purchase price allocation are preliminary until contractual post-closing working capital adjustments and valuations are finalized.



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







 

 

 

 

Amounts of Identifiable Assets Acquired
and Liabilities Assumed

Inventory

 

$

20,576 

Prepaid expenses and other

 

 

52 

Property and equipment, net

 

37,205 



 

 

 

 

Current liabilities

 

(180)



Total identifiable net assets

$

57,653 



Acquisition of Fleischmann’s Vinegar Company



On October 3, 2016, the company acquired all of the issued and outstanding stock of SCI Ingredients Holdings, Inc. , the holding company of Fleischmann’s Vinegar Company, Inc., for $258.3 million in cash . A portion of the purchase price was used to repay existing debt . Fleischmann’s Vinegar is one of the world’s largest producers of food-grade industrial vinegar.



The purchase price allocation is based on the preliminary results of independent valuations. The purchase price and purchase price allocation are prelim inary until the fin al independent valuation report s are issued.



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







 

 

 

 

Amounts of Identifiable Assets Acquired
and Liabilities Assumed

Cash

 

$

4,148 

Inventory

 

 

9,308 

Accounts receivable, net

 

 

13,919 

Prepaid expenses and other

 

 

1,054 

Property and equipment

 

 

43,011 

Intangible assets

 

 

94,500 



 

 

 

 

Current liabilities

 

 

(9,689)

Income taxes payable

 

 

(330)

Deferred tax liabilities

 

 

(40,421)



Total identifiable net assets

 

115,500 



 

 

 

 

Goodwill

 

142,819 



Purchase price

$

258,319 



As of June 30, 2017 , based on the preliminary valuations , the company’s customer relationship intangible asset recognized in connection with the Fleischmann’s acquisition is $79.8 million, net of $4.2 million of accumulated amortization, and has a 15 - year weighted-average amortization period. As of June 30, 2017 , the company also has an indefinite-lived trade name intangible asset of $10.5 million. The company recognized $1.4 million and $2.8 million of amortization expense associated with the amortizing customer relationship intangible asset during the three and six months ended June 30, 2017, respectively, and expects estimated amortization expense for the next five years of   $5.6 million per annum. The excess of the purchase price over the intangibles fair values was allocated to goodwill, none of which is expected

12

 


 

 

to be deductible for tax purposes. The goodwill is primarily attributable to the synergies expected to arise after the acquisition.



Acquisition of Ethanol Plants



On September 23, 2016, the company acquired three ethanol plants located in Madison, Illinois, Mount Vernon, Indiana, and York, Nebraska from subsidiaries of Abengoa S.A. for approximately $23 4 . 9   million for the ethanol plant assets , and $1 9 . 1 million for working capital acquired and liabilities assumed . These ethanol facilities have a combined annual production capacity of   approximately   23 0 mmgy.



The purchase price allocation is based on the preliminary results of an independent valuation. The purchase price and purchase price allocation are preliminary until the final independent valuation report is issued. The following is a summary of the preliminary purchase price of assets acquired and liabilities assumed (in thousands):







 

 

 

 

Amounts of Identifiable Assets Acquired
and Liabilities Assumed

Inventory

 

$

16,904 

Accounts receivable, net

 

1,826 

Prepaid expenses and other

 

 

2,224 

Property and equipment, net

 

234,947 

Other assets

 

 

3,885 



 

 

 

 

Current maturities of long-term debt

 

(406)

Current liabilities

 

(2,580)

Long-term debt

 

(2,763)



Total identifiable net assets

$

254,037 



Concurrently with the company’s acquisition of the Abengoa ethanol plants, on September 23, 2016, the partnership acquired the storage assets of the Abengoa ethanol plants from the company for $90 .0 million in a transfer between entities under common control and entered into amendments to the related commercial agree ments with Green Plains Trade .    









3 .  FAIR VALUE DISCLOSURES



The following methods, assumptions and valuation techniques were used to estimate 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 1 unrealized gains and losses on commodity derivatives relate to exchange-traded open trade equity and option values in the company’s brokerage accounts.



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 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.



13

 


 

 

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, 2017



Quoted Prices in
Active Markets for
Identical Assets

 

Significant Other
Observable Inputs

 

Reclassification for
Balance Sheet

 

 

 



(Level 1)

 

(Level 2)

 

Presentation

 

Total



 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

195,442 

 

$

 -

 

$

 -

 

$

195,442 

Restricted cash

 

29,592 

 

 

 -

 

 

 -

 

 

29,592 

Margin deposits

 

29,743 

 

 

 -

 

 

(29,743)

 

 

 -

Inventories carried at market

 

 -

 

 

86,441 

 

 

 -

 

 

86,441 

Unrealized gains on derivatives

 

9,460 

 

 

5,938 

 

 

17,386 

 

 

32,784 

Other assets

 

115 

 

 

12 

 

 

 -

 

 

127 

Total assets measured at fair value

$

264,352 

 

$

92,391 

 

$

(12,357)

 

$

344,386 



 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable (1)

$

 -

 

$

15,754 

 

$

 -

 

$

15,754 

Unrealized losses on derivatives

 

12,357 

 

 

8,165 

 

 

(12,357)

 

 

8,165 

Other

 

 -

 

 

 

 

 -

 

 

Total liabilities measured at fair value

$

12,357 

 

$

23,925 

 

$

(12,357)

 

$

23,925 







 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2016



Quoted Prices in
Active Markets for
Identical Assets

 

Significant Other
Observable Inputs

 

Reclassification for
Balance Sheet

 

 

 



(Level 1)

 

(Level 2)

 

Presentation

 

Total



 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

304,211 

 

$

 -

 

$

 -

 

$

304,211 

Restricted cash

 

51,979 

 

 

 -

 

 

 -

 

 

51,979 

Margin deposits

 

50,601 

 

 

 -

 

 

(50,601)

 

 

 -

Inventories carried at market (2)

 

 -

 

 

154,022 

 

 

 -

 

 

154,022 

Unrealized gains on derivatives

 

8,272 

 

 

14,818 

 

 

24,146 

 

 

47,236 

Other assets

 

116 

 

 

 -

 

 

 -

 

 

116 

Total assets measured at fair value

$

415,179 

 

$

168,840 

 

$

(26,455)

 

$

557,564 



 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable (1)

$

 -

 

$

35,288 

 

$

 -

 

$

35,288 

Unrealized losses on derivatives

 

26,455 

 

 

8,916 

 

 

(26,455)

 

 

8,916 

Other liabilities

 

 -

 

 

81 

 

 

 -

 

 

81 

Total liabilities measured at fair value

$

26,455 

 

$

44,285 

 

$

(26,455)

 

$

44,285 



(1)

Accounts payable is generally stated at historical amounts with the exception of $1 5. 8 million and $35.3 million at June 30, 2017 and December 31, 2016, respectively, related to certain delivered inventory subject to changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option.

(2)

Inventories carried at market have been revised from previously reported results to include   $77.0 million of inventories held under a fair value hedging relationship .   T here wa s no impact to the financial s tatements resulting from this revision.



The company believes the fair value of its debt was approximately $1.1  b illion compared with a book value of $1.1  b illion at June 30, 2017 , and December 31, 2016 , respectively. The company estimated the fair value o f its outstanding debt using Level 2 inputs. Th e company believes the fair values of its accounts receivable app roximated book value, which was  $ 134.9 million and $147 .5 million at June 30, 2017 ,   and December 31, 2016 , respectively .



Although the company currently does not have any recurring Level 3 financial measurements, the fair values of tangible

14

 


 

 

assets and goodwill acquired and the equity component of convertible debt issued repr esent Level 3 measurements that were derived using a combination of the income approach, market approach and cost approach for the specific assets or liabilities being valued .



4 .  SEGMENT INFORMATION



As a result of acquisitions during 2016, the company implemented organization al segment changes during the fourth quarter of 2016, whereby the company management now reports the financial and operating performance in the following four operating segments: (1) ethanol production, which includes the production of ethanol, distillers grains and corn oil, (2) agribusiness and energy services, which includes grain handling and storage and 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 feedlot s ,   vinegar production and food - grade corn oil operations and (4) partnership, which includes fuel storage and transportation services. Prior periods have been reclassified to conform to the revised segment presentation.



T he company has re-evaluated the profitability measure of its reportable segments’ operating performance and has determined that segment EBITDA (earnings before interest, taxes, depreciation and amortization) is primarily used by the company’s management to evaluate segment operating activities, and therefore is a more meaningful profitability measure than the previously r eported segment operating income .   In addition, EBITDA is a financial measure that is widely used by analysts and investors in the company’s industries. As a result, the company is now including segment EBITDA as a performance measure.



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 bus iness, 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 agribusiness and energy services 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.  



15

 


 

 

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,



2017

 

2016

 

2017

 

2016

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Ethanol production:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

617,297 

 

$

595,168 

 

$

1,237,176 

 

$

1,123,496 

Intersegment revenues

 

1,549 

 

 

 -

 

 

3,045 

 

 

 -

Total segment revenues

 

618,846 

 

 

595,168 

 

 

1,240,221 

 

 

1,123,496 

Agribusiness and energy services:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

150,755 

 

 

203,158 

 

 

319,066 

 

 

363,303 

Intersegment revenues

 

9,781 

 

 

8,589 

 

 

19,273 

 

 

15,998 

Total segment revenues

 

160,536 

 

 

211,747 

 

 

338,339 

 

 

379,301 

Food and ingredients:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

116,660 

 

 

87,446 

 

 

214,682 

 

 

146,157 

Intersegment revenues

 

37 

 

 

38 

 

 

75 

 

 

75 

Total segment revenues

 

116,697 

 

 

87,484 

 

 

214,757 

 

 

146,232 

Partnership:

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

1,551 

 

 

1,955 

 

 

3,023 

 

 

3,975 

Intersegment revenues

 

23,514 

 

 

23,538 

 

 

49,271 

 

 

45,306 

Total segment revenues

 

25,065 

 

 

25,493 

 

 

52,294 

 

 

49,281 

Revenues including intersegment activity

 

921,144 

 

 

919,892 

 

 

1,845,611 

 

 

1,698,310 

Intersegment eliminations

 

(34,881)

 

 

(32,165)

 

 

(71,664)

 

 

(61,379)

Revenues as reported

$

886,263 

 

$

887,727 

 

$

1,773,947 

 

$

1,636,931 













 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2017

 

2016

 

2017

 

2016

Cost of goods sold:

 

 

 

 

 

 

 

 

 

 

 

Ethanol production

$

612,646 

 

$

565,438 

 

$

1,211,784 

 

$

1,099,936 

Agribusiness and energy services

 

152,110 

 

 

195,077 

 

 

318,504 

 

 

354,492 

Food and ingredients

 

100,009 

 

 

81,041 

 

 

183,044 

 

 

140,295 

Partnership

 

 -

 

 

 -

 

 

 -

 

 

 -

Intersegment eliminations

 

(34,746)

 

 

(32,032)

 

 

(71,417)

 

 

(60,512)



$

830,019 

 

$

809,524 

 

$

1,641,915 

 

$

1,534,211 













 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2017

 

2016

 

2017

 

2016

EBITDA:

 

 

 

 

 

 

 

 

 

 

 

Ethanol production

$

(873)

 

$

22,744 

 

$

12,951 

 

$

9,008 

Agribusiness and energy services

 

3,747 

 

 

11,881 

 

 

10,760 

 

 

14,936 

Food and ingredients

 

13,955 

 

 

6,042 

 

 

26,469 

 

 

4,965 

Partnership

 

16,066 

 

 

16,312 

 

 

33,960 

 

 

30,621 

Intersegment eliminations

 

(80)

 

 

(314)

 

 

(155)

 

 

(1,135)

Corporate activities

 

(8,742)

 

 

(9,009)

 

 

(16,063)

 

 

(16,505)



$

24,073 

 

$

47,656 

 

$

67,922 

 

$

41,890 

16

 


 

 







 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2017

 

2016

 

2017

 

2016

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Ethanol production

$

20,142 

 

$

15,150 

 

$

40,484 

 

$

30,930 

Agribusiness and energy services

 

659 

 

 

947 

 

 

1,319 

 

 

1,253 

Food and ingredients

 

3,240 

 

 

274 

 

 

6,120 

 

 

545 

Partnership

 

1,247 

 

 

1,488 

 

 

2,501 

 

 

2,705 

Corporate activities

 

900 

 

 

842 

 

 

1,847 

 

 

1,413 



$

26,188 

 

$

18,701 

 

$

52,271 

 

$

36,846 



The following table reconciles net income (loss) to EBITDA for the periods indicated (in thousands):







 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2017

 

2016

 

2017

 

2016



 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(11,796)

 

$

12,985 

 

$

(10,145)

 

$

(6,831)

Interest expense

 

19,430 

 

 

10,499 

 

 

37,926 

 

 

21,297 

Income tax expense (benefit)

 

(9,749)

 

 

5,471 

 

 

(12,130)

 

 

(9,422)

Depreciation and amortization

 

26,188 

 

 

18,701 

 

 

52,271 

 

 

36,846 

EBITDA

$

24,073 

 

$

47,656 

 

$

67,922 

 

$

41,890 



The following table sets forth third-party revenues by product line (in thousands):







 

 

 

 

 

 

 

 

 

 

 



Three Months Ended
June 30,

 

Six Months Ended
June 30,



2017

 

2016

 

2017

 

2016

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Ethanol

$

607,693 

 

$

572,394 

 

$

1,205,100 

 

$

1,071,445 

Distillers grains

 

87,696 

 

 

115,507 

 

 

206,392 

 

 

227,724 

Corn oil

 

46,791 

 

 

41,009 

 

 

87,488 

 

 

61,883 

Grain

 

28,498 

 

 

64,742 

 

 

54,522 

 

 

115,797 

Food and ingredients

 

102,029 

 

 

75,178 

 

 

192,514 

 

 

131,411 

Service revenues

 

1,551 

 

 

1,955 

 

 

3,023 

 

 

3,975 

Other

 

12,005 

 

 

16,942 

 

 

24,908 

 

 

24,696 



$

886,263 

 

$

887,727