Segment Information

12 Months Ended

Dec. 31, 2019

7. 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, distillers grains and corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes food-grade corn oil and included vinegar production until the sale of Fleischmann’s Vinegar during the fourth quarter of 2018 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, excluding amounts related to discontinued operations (in thousands):


	Year Ended December 31,
	2019 ⁽¹⁾		2018⁽¹⁾		2017 ⁽¹⁾
Revenues:
Ethanol production:
Revenues from external customers	$	1,700,615	$	2,120,475	$	2,507,589
Intersegment revenues		100		186		84
Total segment revenues		1,700,715		2,120,661		2,507,673
Agribusiness and energy services:
Revenues from external customers		708,316		735,855		632,702
Intersegment revenues		27,184		33,101		36,059
Total segment revenues		735,500		768,956		668,761
Food and ingredients:
Revenues from external customers		1,451		121,121		142,907
Intersegment revenues		-		-		-
Total segment revenues		1,451		121,121		142,907
Partnership:
Revenues from external customers		6,856		6,481		6,277
Intersegment revenues		75,531		94,267		100,716
Total segment revenues		82,387		100,748		106,993
Revenues including intersegment activity		2,520,053		3,111,486		3,426,334
Intersegment eliminations		(102,815)		(127,554)		(136,859)
Revenues as reported	$	2,417,238	$	2,983,932	$	3,289,475

(1)Revenues include certain items which were previously considered intercompany transactions prior to the disposition of GPCC and therefore eliminated upon consolidation. These revenue transactions are now presented on a gross basis in product revenues. These revenue transactions total $14.5 million, $24.6 million and $22.2 million for years ended December 31, 2019, 2018 and 2017, respectively.

Refer to Note 4 – Revenue, for further disaggregation of revenue by operating segment.

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	Year Ended December 31,
	2019 ⁽¹⁾		2018⁽¹⁾		2017 ⁽¹⁾
Cost of goods sold:
Ethanol production	$	1,791,099	$	2,118,787	$	2,434,001
Agribusiness and energy services		696,226		717,772		614,582
Food and ingredients		1,526		94,679		109,343
Partnership		-		-		-
Intersegment eliminations		(103,904)		(124,270)		(136,744)
	$	2,384,947	$	2,806,968	$	3,021,182

(1)Cost of goods sold include certain items which were previously considered intercompany transactions prior to the disposition of GPCC and therefore eliminated upon consolidation. These cost of goods sold transactions are now presented on a gross basis in cost of goods sold. These cost of goods sold transactions total $14.4 million, $24.5 million and $22.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.


	Year Ended December 31,
	2019		2018		2017
Operating income (loss):
Ethanol production	$	(178,575)	$	(111,823)	$	(45,074)
Agribusiness and energy services		22,777		29,076		30,443
Food and ingredients		(76)		14,354		17,963
Partnership		50,635		64,770		65,709
Intersegment eliminations		1,188		(3,110)		(61)
Corporate activities ⁽¹⁾		(38,519)		96,687		(45,232)
	$	(142,570)	$	89,954	$	23,748

(1)Corporate activates for fiscal year 2018 include a gain on the sale of assets related to the sale of three ethanol plants and Fleischmann’s Vinegar during the fourth quarter of 2018, which resulted in a net gain of $150.4 million.


	Year Ended December 31,
	2019		2018		2017
Depreciation and amortization:
Ethanol production	$	63,073	$	80,227	$	81,987
Agribusiness and energy services		2,222		2,470		3,462
Food and ingredients		-		7,553		9,324
Partnership		3,441		4,442		5,111
Corporate activities		3,391		3,566		3,698
	$	72,127	$	98,258	$	103,582


	Year Ended December 31,
	2019		2018		2017
Capital expenditures:
Ethanol production	$	72,374	$	27,322	$	28,996
Agribusiness and energy services		2,251		277		397
Food and ingredients		-		9,025		13,467
Partnership		305		1,268		2,024
Corporate activities		1,542		451		3,115
	$	76,472	$	38,343	$	47,999

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The following table sets forth total assets by operating segment (in thousands):


	Year Ended December 31,
	2019		2018
Total assets ⁽¹⁾:
Ethanol production	$	884,293	$	872,845
Agribusiness and energy services		410,400		399,633
Partnership		90,011		67,297
Corporate assets		324,280		334,236
Assets of discontinued operations		-		552,459
Intersegment eliminations		(10,766)		(10,038)
	$	1,698,218	$	2,216,432

(1)Asset balances by segment exclude intercompany payable and receivable balances.