x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the quarterly period ended June 30, 2018 | |
OR | |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the transition period from to . | |
COMMISSION FILE NUMBER 000-52033 |
North Dakota | 76-0742311 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
3682 Highway 8 South, P.O. Box 11, Richardton, ND 58652 | ||||
(Address of principal executive offices) | ||||
(701) 974-3308 | ||||
(Registrant's telephone number, including area code) |
Large Accelerated Filer o | Accelerated Filer o |
Non-Accelerated Filer x | Smaller Reporting Company o |
Emerging Growth Company o | |
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. o |
Page Number | |
ASSETS | June 30, 2018 | September 30, 2017 | ||||||
(Unaudited) | ||||||||
Current Assets | ||||||||
Cash and equivalents | $ | 14,428,327 | $ | 3,223,342 | ||||
Restricted cash - margin account | 4,025,633 | 5,906,666 | ||||||
Accounts receivable, primarily related party | 3,328,277 | 4,059,227 | ||||||
Other receivables | — | 8,764 | ||||||
Inventory | 12,302,033 | 16,413,742 | ||||||
Prepaid expenses | 128,186 | 33,364 | ||||||
Total current assets | 34,212,456 | 29,645,105 | ||||||
Property, Plant and Equipment | ||||||||
Land | 1,342,381 | 1,342,381 | ||||||
Land improvements | 4,266,953 | 4,266,953 | ||||||
Buildings | 8,091,522 | 8,036,031 | ||||||
Plant and equipment | 87,263,818 | 86,460,902 | ||||||
Construction in progress | 567,176 | 628,454 | ||||||
101,531,850 | 100,734,721 | |||||||
Less accumulated depreciation | 57,138,420 | 53,592,985 | ||||||
Net property, plant and equipment | 44,393,430 | 47,141,736 | ||||||
Other Assets | ||||||||
Investment in RPMG | 605,000 | 605,000 | ||||||
Patronage equity | 3,270,279 | 3,270,279 | ||||||
Deposits | 40,000 | 40,000 | ||||||
Total other assets | 3,915,279 | 3,915,279 | ||||||
Total Assets | $ | 82,521,165 | $ | 80,702,120 |
LIABILITIES AND MEMBERS' EQUITY | June 30, 2018 | September 30, 2017 | ||||||
(Unaudited) | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 9,904,710 | $ | 2,409,171 | ||||
Accrued expenses | 1,717,755 | 3,670,338 | ||||||
Commodities derivative instruments, at fair value (see note 2) | 1,936,750 | 933,312 | ||||||
Accrued loss on firm purchase commitments (see notes 3 and 7) | — | 5,000 | ||||||
Current maturities of notes payable | 2,632 | 2,617 | ||||||
Total current liabilities | 13,561,847 | 7,020,438 | ||||||
Long-Term Liabilities | ||||||||
Notes payable | 945 | 2,921 | ||||||
Members’ Equity (40,148,160 and 41,466,340 as of June 30, 2018 and September 30, 2017, respectively, of Class A Membership Units issued and outstanding) | 68,958,373 | 73,678,761 | ||||||
Total Liabilities and Members’ Equity | $ | 82,521,165 | $ | 80,702,120 |
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||
Revenues, primarily related party | $ | 28,726,715 | $ | 28,536,654 | $ | 81,216,304 | $ | 85,616,060 | |||||||
Cost of Goods Sold | |||||||||||||||
Cost of goods sold | 28,155,815 | 26,132,798 | 80,087,408 | 80,146,245 | |||||||||||
Lower of cost or net realizable value adjustment | — | — | 82,082 | — | |||||||||||
Loss on firm purchase commitments | — | — | 8,000 | — | |||||||||||
Total Cost of Goods Sold | 28,155,815 | 26,132,798 | 80,177,490 | 80,146,245 | |||||||||||
Gross Profit | 570,900 | 2,403,856 | 1,038,814 | 5,469,815 | |||||||||||
General and Administrative Expenses | 611,006 | 565,397 | 2,111,926 | 2,004,142 | |||||||||||
Operating Income (Loss) | (40,106 | ) | 1,838,459 | (1,073,112 | ) | 3,465,673 | |||||||||
Other Income (Expense) | |||||||||||||||
Interest income | 54,605 | 37,297 | 101,872 | 80,275 | |||||||||||
Other income | 47,768 | 25,277 | 471,049 | 664,009 | |||||||||||
Interest expense | (8 | ) | (12 | ) | (42 | ) | (41 | ) | |||||||
Total other income (expense), net | 102,365 | 62,562 | 572,879 | 744,243 | |||||||||||
Net Income (Loss) | $ | 62,259 | $ | 1,901,021 | $ | (500,233 | ) | $ | 4,209,916 | ||||||
Weighted Average Units Outstanding | |||||||||||||||
Basic | 41,031,775 | 41,466,340 | 41,321,485 | 41,451,005 | |||||||||||
Diluted | 41,031,775 | 41,466,340 | 41,321,485 | 41,451,005 | |||||||||||
Net Income (Loss) Per Unit | |||||||||||||||
Basic | $ | — | $ | 0.05 | $ | (0.01 | ) | $ | 0.10 | ||||||
Diluted | $ | — | $ | 0.05 | $ | (0.01 | ) | $ | 0.10 | ||||||
Nine Months Ended | Nine Months Ended | ||||||
June 30, 2018 | June 30, 2017 | ||||||
Cash Flows from Operating Activities | |||||||
Net income (loss) | $ | (500,233 | ) | $ | 4,209,916 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 3,545,435 | 3,506,800 | |||||
Change in fair value of derivative instruments | 1,003,438 | (89,050 | ) | ||||
Lower of cost or net realizable value adjustment | 82,082 | — | |||||
Loss on firm purchase commitments | 8,000 | — | |||||
Noncash patronage equity | — | (2,591 | ) | ||||
Change in operating assets and liabilities: | |||||||
Restricted cash | 1,881,033 | (1,274,474 | ) | ||||
Accounts receivable | 730,950 | (580,365 | ) | ||||
Other receivables | 8,764 | 64,872 | |||||
Inventory | 4,021,626 | (7,949,799 | ) | ||||
Prepaid expenses | (94,822 | ) | (13,170 | ) | |||
Accounts payable | 7,495,539 | 18,899,021 | |||||
Accrued expenses | (1,952,583 | ) | (4,475,572 | ) | |||
Accrued purchase commitment losses | (5,000 | ) | (74,000 | ) | |||
Net cash provided by operating activities | 16,224,229 | 12,221,588 | |||||
Cash Flows from Investing Activities | |||||||
Capital expenditures | (797,128 | ) | (945,406 | ) | |||
Net cash (used in) investing activities | (797,128 | ) | (945,406 | ) | |||
Cash Flows from Financing Activities | |||||||
Dividends paid | (2,901,975 | ) | (4,977,453 | ) | |||
Unit repurchase | (1,318,180 | ) | (681,820 | ) | |||
Debt repayments | (1,961 | ) | (1,946 | ) | |||
Net cash (used in) financing activities | (4,222,116 | ) | (5,661,219 | ) | |||
Net Increase in Cash and Equivalents | 11,204,985 | 5,614,963 | |||||
Cash and Equivalents - Beginning of Period | 3,223,342 | 10,274,166 | |||||
Cash and Equivalents - End of Period | $ | 14,428,327 | $ | 15,889,129 | |||
Supplemental Disclosure of Cash Flow Information | |||||||
Interest paid | $ | 42 | $ | 41 | |||
Units issued in exchange for property | $ | — | $ | 3,320,000 |
As of: | June 30, 2018 (unaudited) | September 30, 2017 | ||||||||||||||||
Contract Type | # of Contracts | Notional Amount (Qty) | Fair Value | # of Contracts | Notional Amount (Qty) | Fair Value | ||||||||||||
Corn futures | 1,500 | 7,500,000 | bushels | $ | (1,121,750 | ) | 81 | 405,000 | bushels | $ | 16,688 | |||||||
Corn options | 600 | 3,000,000 | bushels | $ | (815,000 | ) | 1,800 | 9,000,000 | bushels | $ | (950,000 | ) | ||||||
Total fair value | $ | (1,936,750 | ) | $ | (933,312 | ) | ||||||||||||
Amounts are combined on the balance sheet - negative numbers represent liabilities |
Derivatives not designated as hedging instruments: | ||||||||
Balance Sheet - as of June 30, 2018 (unaudited) | Asset | Liability | ||||||
Commodity derivative instruments, at fair value | $ | — | $ | 1,936,750 | ||||
Total derivatives not designated as hedging instruments for accounting purposes | $ | — | $ | 1,936,750 | ||||
Balance Sheet - as of September 30, 2017 | Asset | Liability | ||||||
Commodity derivative instruments, at fair value | $ | — | $ | 933,312 | ||||
Total derivatives not designated as hedging instruments for accounting purposes | $ | — | $ | 933,312 |
Statement of Operations Income/(Expense) | Location of gain (loss) in fair value recognized in income | Amount of gain (loss) recognized in income during the three months ended June 30, 2018 (unaudited) | Amount of gain (loss) recognized in income during the three months ended June 30, 2017 (unaudited) | Amount of gain (loss) recognized in income during the nine months ended June 30, 2018 (unaudited) | Amount of gain (loss) recognized in income during the nine months ended June 30, 2017 (unaudited) | |||||||||||||
Corn derivative instruments | Cost of Goods Sold | $ | (1,901,509 | ) | $ | 182,791 | $ | (767,270 | ) | $ | 947,046 | |||||||
Ethanol derivative instruments | Revenue | — | — | 1,800 | 306,180 | |||||||||||||
Soybean oil derivative instruments | Revenue | — | (4,164 | ) | — | 70,518 | ||||||||||||
Natural gas derivative instruments | Cost of Goods Sold | — | — | — | 10,780 | |||||||||||||
Total | $ | (1,901,509 | ) | $ | 178,627 | $ | (765,470 | ) | $ | 1,334,524 |
As of | June 30, 2018 (unaudited) | September 30, 2017 | ||||||
Raw materials, including corn, chemicals and supplies | $ | 8,065,229 | $ | 11,952,560 | ||||
Work in process | 806,096 | 773,786 | ||||||
Finished goods, including ethanol and distillers grains | 1,356,601 | 1,577,066 | ||||||
Spare parts | 2,074,107 | 2,110,330 | ||||||
Total inventory | $ | 12,302,033 | $ | 16,413,742 |
For the three months ended June 30, 2018 (unaudited) | For the three months ended June 30, 2017 (unaudited) | For the nine months ended June 30, 2018 (unaudited) | For the nine months ended June 30, 2017 (unaudited) | |||||||||||||
Loss on firm purchase commitments | $ | — | $ | — | $ | 8,000 | $ | — | ||||||||
Loss on lower of cost or net realizable value adjustment for inventory on hand | $ | — | $ | — | $ | 82,082 | $ | — | ||||||||
Total loss on lower of cost or net realizable value adjustments | $ | — | $ | — | $ | 90,082 | $ | — |
As of | June 30, 2018 (unaudited) | September 30, 2017 | ||||||
Capital lease obligations (Note 6) | $ | 3,577 | $ | 5,538 | ||||
Total Long-Term Debt | 3,577 | 5,538 | ||||||
Less amounts due within one year | 2,632 | 2,617 | ||||||
Total Long-Term Debt Less Amounts Due Within One Year | $ | 945 | $ | 2,921 |
Fair Value Measurement Using | |||||||||||||||||||
Carrying Amount as of June 30, 2018 (unaudited) | Fair Value as of June 30, 2018 (unaudited) | Level 1 | Level 2 | Level 3 | |||||||||||||||
Liabilities | |||||||||||||||||||
Commodities derivative instruments | $ | 1,936,750 | $ | 1,936,750 | $ | 1,936,750 | $ | — | $ | — | |||||||||
Total | $ | 1,936,750 | $ | 1,936,750 | $ | 1,936,750 | $ | — | $ | — | |||||||||
Fair Value Measurement Using | |||||||||||||||||||
Carrying Amount as of September 30, 2017 | Fair Value as of September 30, 2017 | Level 1 | Level 2 | Level 3 | |||||||||||||||
Liabilities | |||||||||||||||||||
Commodities derivative instruments | $ | 933,312 | $ | 933,312 | $ | 933,312 | $ | — | $ | — | |||||||||
Total | $ | 933,312 | $ | 933,312 | $ | 933,312 | $ | — | $ | — |
As of | June 30, 2018 | September 30, 2017 | ||||||
Equipment | $ | 483,488 | $ | 483,488 | ||||
Less accumulated amortization | (136,124 | ) | (120,029 | ) | ||||
Net equipment under capital lease | $ | 347,364 | $ | 363,459 |
Operating Leases | Capital Leases | |||||||
2019 | $ | 525,383 | $ | 2,632 | ||||
2020 | 424,463 | 945 | ||||||
2021 | 365,663 | — | ||||||
2022 | 296,640 | — | ||||||
2023 | 202,290 | — | ||||||
Total minimum lease commitments | $ | 1,814,439 | 3,577 | |||||
Less amount representing interest | — | |||||||
Present value of minimum lease commitments included in current maturities of long-term debt on the balance sheet | $ | 3,577 |
June 30, 2018 (unaudited) | September 30, 2017 | |||||||
Balance Sheet | ||||||||
Accounts receivable | $ | 3,115,384 | $ | 4,027,061 | ||||
Accounts Payable | 3,648,459 | 1,569 | ||||||
Accrued Expenses | 152,615 | 925,503 | ||||||
For the three months ended June 30, 2018 (unaudited) | For the three months ended June 30, 2017 (unaudited) | For the nine months ended June 30, 2018 (unaudited) | For the nine months ended June 30, 2017 (unaudited) | |||||||||||||
Statement of Operations | ||||||||||||||||
Revenues | $ | 27,381,514 | $ | 27,795,610 | $ | 76,354,225 | $ | 82,706,618 | ||||||||
Cost of goods sold | 9,012 | 7,674 | 21,936 | 37,625 | ||||||||||||
General and administrative | 62,019 | 17,990 | 100,330 | 51,038 | ||||||||||||
Other income/expense | — | — | 140,538 | 247,307 | ||||||||||||
Inventory Purchases | $ | 7,710,883 | $ | 15,395,091 | $ | 18,036,469 | $ | 35,060,321 |
(a) | (b) | (c) | (d) | |
Period | Total Number of Units Purchased | Average Price Paid per Unit | Total Number of Units Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of the Units that May Yet Be Purchased Under the Plans or Programs |
April 2018 | None | None | None | None |
May 2018 | 1,318,180 | $1.00 | None | None |
June 2018 | None | None | None | None |
Total | 1,318,180 | $1.00 | None | None |
• | Reductions in the corn-based ethanol use requirement in the Federal Renewable Fuels Standard; |
• | Lower oil prices which result in lower ethanol prices; |
• | Negative operating margins which result from lower ethanol prices; |
• | Lower distillers grains prices which result from the Chinese anti-dumping and countervailing duty tariffs; |
• | Lower ethanol prices due to the Chinese ethanol tariff and the Brazilian ethanol tariff; |
• | Logistics difficulties preventing us from delivering our products to our customers; |
• | Fluctuations in the price and market for ethanol, distillers grains and corn oil; |
• | Availability and costs of products and raw materials, particularly corn and natural gas; |
• | Changes in the environmental regulations that apply to our plant operations and our ability to comply with such regulations; |
• | Ethanol supply exceeding demand and corresponding ethanol price reductions impacting our ability to operate profitably and maintain a positive spread between the selling price of our products and our raw material costs; |
• | Our ability to generate and maintain sufficient liquidity to fund our operations and meet our necessary capital expenditures; |
• | Our ability to continue to meet our loan covenants; |
• | Limitations and restrictions contained in the instruments and agreements governing our indebtedness; |
• | Results of our hedging transactions and other risk management strategies; |
• | Changes and advances in ethanol production technology; and |
• | Competition from alternative fuels and alternative fuel additives. |
Three Months Ended June 30, 2018 (Unaudited) | Three Months Ended June 30, 2017 (Unaudited) | |||||||||||
Statement of Operations Data | Amount | % | Amount | % | ||||||||
Revenues | $ | 28,726,715 | 100.00 | $ | 28,536,654 | 100.00 | ||||||
Cost of Goods Sold | 28,155,815 | 98.01 | 26,132,798 | 91.58 | ||||||||
Gross Profit | 570,900 | 1.99 | 2,403,856 | 8.42 | ||||||||
General and Administrative Expenses | 611,006 | 2.13 | 565,397 | 1.98 | ||||||||
Operating Income (Loss) | (40,106 | ) | (0.14 | ) | 1,838,459 | 6.44 | ||||||
Other Income | 102,365 | 0.36 | 62,562 | 0.22 | ||||||||
Net Income (Loss) | $ | 62,259 | 0.22 | $ | 1,901,021 | 6.66 |
Three Months Ended June 30, 2018 (unaudited) | Three Months Ended June 30, 2017 (unaudited) | |||||||
Production: | ||||||||
Ethanol sold (gallons) | 16,030,562 | 16,344,034 | ||||||
Dried distillers grains sold (tons) | 28,905 | 33,858 | ||||||
Modified distillers grains sold (tons) | 25,386 | 19,864 | ||||||
Corn oil sold (pounds) | 3,287,520 | 4,308,180 | ||||||
Revenues: | ||||||||
Ethanol average price per gallon (net of hedging) | $ | 1.37 | $ | 1.42 | ||||
Dried distillers grains average price per ton | 149.95 | 92.76 | ||||||
Modified distillers grains average price per ton | 61.27 | 49.87 | ||||||
Corn oil average price per pound | 0.25 | 0.25 | ||||||
Primary Inputs: | ||||||||
Corn ground (bushels) | 5,605,055 | 5,719,865 | ||||||
Natural gas (MMBtu) | 410,950 | 418,783 | ||||||
Costs of Primary Inputs: | ||||||||
Corn average price per bushel (net of hedging) | $ | 3.40 | $ | 3.31 | ||||
Natural gas average price per MMBtu (net of hedging) | 1.97 | 2.78 | ||||||
Other Costs (per gallon of ethanol sold): | ||||||||
Chemical and additive costs | $ | 0.120 | $ | 0.088 | ||||
Denaturant cost | 0.040 | 0.037 | ||||||
Electricity cost | 0.049 | 0.048 | ||||||
Direct labor cost | 0.061 | 0.052 |
Nine Months Ended June 30, 2018 (Unaudited) | Nine Months Ended June 30, 2017 (Unaudited) | |||||||||||
Statement of Operations Data | Amount | % | Amount | % | ||||||||
Revenues | $ | 81,216,304 | 100.00 | $ | 85,616,060 | 100.00 | ||||||
Cost of Goods Sold | 80,177,490 | 98.72 | 80,146,245 | 93.61 | ||||||||
Gross Profit | 1,038,814 | 1.28 | 5,469,815 | 6.39 | ||||||||
General and Administrative Expenses | 2,111,926 | 2.60 | 2,004,142 | 2.34 | ||||||||
Operating Income (Loss) | (1,073,112 | ) | (1.32 | ) | 3,465,673 | 4.05 | ||||||
Other Income | 572,879 | 0.71 | 744,243 | 0.87 | ||||||||
Net Income (Loss) | $ | (500,233 | ) | (0.62 | ) | $ | 4,209,916 | 4.92 |
Nine Months Ended June 30, 2018 (unaudited) | Nine Months Ended June 30, 2017 (unaudited) | |||||||
Production: | ||||||||
Ethanol sold (gallons) | 48,009,628 | 49,036,181 | ||||||
Dried distillers grains sold (tons) | 81,073 | 83,480 | ||||||
Modified distillers grains sold (tons) | 92,976 | 81,927 | ||||||
Corn oil sold (pounds) | 9,492,100 | 12,924,780 | ||||||
Revenues: | ||||||||
Ethanol average price per gallon (net of hedging) | $ | 1.28 | $ | 1.42 | ||||
Dried distillers grains average price per ton | 136.09 | 99.67 | ||||||
Modified distillers grains average price per ton | 63.17 | 46.44 | ||||||
Corn oil average price per pound | 0.26 | 0.26 | ||||||
Primary Inputs: | ||||||||
Corn ground (bushels) | 16,998,419 | 17,103,310 | ||||||
Natural gas (MMBtu) | 1,258,627 | 1,225,419 | ||||||
Costs of Primary Inputs: | ||||||||
Corn average price per bushel (net of hedging) | $ | 3.35 | $ | 3.47 | ||||
Natural gas average price per MMBtu (net of hedging) | 2.38 | 2.86 | ||||||
Other Costs (per gallon of ethanol sold): | ||||||||
Chemical and additive costs | $ | 0.108 | $ | 0.084 | ||||
Denaturant cost | 0.038 | 0.033 | ||||||
Electricity cost | 0.045 | 0.045 | ||||||
Direct labor cost | 0.064 | 0.059 |
June 30, 2018 (unaudited) | June 30, 2017 (unaudited) | |||||||
Net cash provided by operating activities | $ | 16,224,229 | $ | 12,221,588 | ||||
Net cash (used in) investing activities | (797,128 | ) | (945,406 | ) | ||||
Net cash (used in) financing activities | (4,222,116 | ) | (5,661,219 | ) | ||||
Net increase in cash | $ | 11,204,985 | $ | 5,614,963 | ||||
Cash and cash equivalents, end of period | $ | 14,428,327 | $ | 15,889,129 |
Estimated Volume Requirements for the next 12 months (net of forward and futures contracts) | Unit of Measure | Hypothetical Adverse Change in Price | Approximate Adverse Change to Income | ||||||||
Ethanol | 63,900,000 | Gallons | 10 | % | $ | (8,946,000 | ) | ||||
Corn | 22,821,000 | Bushels | 10 | % | $ | (3,415,000 | ) | ||||
Natural gas | 1,664,000 | MMBtu | 10 | % | $ | (349,000 | ) |
(a) | (b) | (c) | (d) | |
Period | Total Number of Units Purchased | Average Price Paid per Unit | Total Number of Units Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of the Units that May Yet Be Purchased Under the Plans or Programs |
April 1-30, 2018 | None | None | None | None |
May 1-31, 2018 | 1,318,180 | $1.00 | None | None |
June 1-30, 2018 | None | None | None | None |
Total | 1,318,180 | $1.00 | None | None |
(a) | The following exhibits are filed as part of this report. |
Exhibit No. | Exhibits | ||
31.1 | Certificate Pursuant to 17 CFR 240.13a-14(a)* | ||
31.2 | Certificate Pursuant to 17 CFR 240.13a-14(a)* | ||
32.1 | Certificate Pursuant to 18 U.S.C. Section 1350* | ||
32.2 | Certificate Pursuant to 18 U.S.C. Section 1350* | ||
101 | The following financial information from Red Trail Energy, LLC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of June 30, 2018 and September 30, 2017, (ii) Statements of Operations for the three and nine months ended June 30, 2018 and 2017, (iii) Statements of Cash Flows for the nine months ended June 30, 2018 and 2017, and (iv) the Notes to Unaudited Condensed Financial Statements.** |
RED TRAIL ENERGY, LLC | |||
Date: | August 14, 2018 | /s/ Gerald Bachmeier | |
Gerald Bachmeier | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | August 14, 2018 | /s/ Jodi Johnson | |
Jodi Johnson | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Red Trail Energy, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 14, 2018 | /s/ Gerald Bachmeier | |
Gerald Bachmeier Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Red Trail Energy, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 14, 2018 | /s/ Jodi Johnson | |
Jodi Johnson Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | August 14, 2018 | /s/ Gerald Bachmeier | |
Gerald Bachmeier | |||
Chief Executive Officer | |||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | August 14, 2018 | /s/ Jodi Johnson | |
Jodi Johnson | |||
Chief Financial Officer | |||
Document and Entity Information Document - shares |
9 Months Ended | |
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Jun. 30, 2018 |
Aug. 14, 2018 |
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Entity Information [Line Items] | ||
Entity Registrant Name | RED TRAIL ENERGY, LLC | |
Entity Central Index Key | 0001359687 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 40,148,160 |
Condensed Balance Sheets Parenthetical - shares |
Jun. 30, 2018 |
Sep. 30, 2017 |
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Membership units issued | 40,148,160 | 41,466,340 |
Membership units outstanding | 40,148,160 | 41,466,340 |
Condensed Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Revenues, primarily related party | $ 28,726,715 | $ 28,536,654 | $ 81,216,304 | $ 85,616,060 |
Cost of Goods Sold | ||||
Cost of goods sold | 28,155,815 | 26,132,798 | 80,087,408 | 80,146,245 |
Lower of cost or net realizable value adjustment | 0 | 0 | 82,082 | 0 |
Loss on firm purchase commitments | 0 | 0 | 8,000 | 0 |
Total Cost of Goods Sold | 28,155,815 | 26,132,798 | 80,177,490 | 80,146,245 |
Gross Profit | 570,900 | 2,403,856 | 1,038,814 | 5,469,815 |
General and Administrative Expenses | 611,006 | 565,397 | 2,111,926 | 2,004,142 |
Operating Income (Loss) | (40,106) | 1,838,459 | (1,073,112) | 3,465,673 |
Other Income (Expense) | ||||
Interest income | 54,605 | 37,297 | 101,872 | 80,275 |
Other income | 47,768 | 25,277 | 471,049 | 664,009 |
Interest expense | (8) | (12) | (42) | (41) |
Total other income (expense), net | 102,365 | 62,562 | 572,879 | 744,243 |
Net Income (Loss) | $ 62,259 | $ 1,901,021 | $ (500,233) | $ 4,209,916 |
Weighted Average Units Outstanding, Basic | 41,031,775 | 41,466,340 | 41,321,485 | 41,451,005 |
Weighted Average Units Outstanding, Diluted | 41,031,775 | 41,466,340 | 41,321,485 | 41,451,005 |
Net Income (Loss) Per Unit, Basic | $ 0.00 | $ 0.05 | $ (0.01) | $ 0.10 |
Net Income (Loss) Per Unit, Diluted | $ 0.00 | $ 0.05 | $ (0.01) | $ 0.10 |
Summary of Significant Accounting Policies |
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Jun. 30, 2018 | |
Summary of Significant Account Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Red Trail Energy, LLC, a North Dakota limited liability company (the “Company”), owns and operates a 50 million gallon annual name-plate production ethanol plant near Richardton, North Dakota (the “Plant”). Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, inventory and allowance for doubtful accounts. Actual results could differ from those estimates. Net Income Per Unit Net income per unit is calculated on a basic and fully diluted basis using the weighted average units outstanding during the period. Recently Issued Accounting Pronouncements Simplifying the Measurement of Inventory In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurements of Inventory" regarding inventory that is measured using the first-in, first-out or average cost method. The guidance does not apply to inventory measured using the last-in, first-out or the retail inventory method. The guidance requires inventory within its scope to be measured at the lower of cost or net realizable value, which is the estimated selling price in the normal course of business less reasonable predictable costs of completion, disposal and transportation. These amendments more closely align GAAP with International Financial Reporting Standards (IFRS). ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and should be applied prospectively with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has adopted the new standard during the first quarter of this fiscal year and there has been no significant impact to our financial statements. Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. The Company has evaluated the new standard and anticipates a change in the reporting of revenue as enhanced disclosures will be required. The Company does not anticipate a significant impact on our financial statements due to the nature of our revenue streams and our revenue recognition policy. Lease Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, "Leases (topic 842)" which requires a lessee to recognize a right to use asset and a lease liability on its balance sheet for all leases with terms of twelve months or greater. This guidance is effective for fiscal years beginning after December 15, 2018, included interim periods within those years with early adoption permitted. The Company has evaluated the new standard and expects it will have a material impact on the financial statements as we will have to begin capitalizing leases on the balance sheet when the new standard is implemented. See note 6 for current operating lease commitments. Statement of Cash Flows; Restricted Cash In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annal periods beginning after December 15, 2017, and interim periods within those annual periods. The Company has evaluated the new standard and anticipates a change in the presentation of restricted cash on the cash flow statement once the standard is adopted. |
Derivative Instruments |
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Derivative Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | DERIVATIVE INSTRUMENTS Commodity Contracts As part of its hedging strategy, the Company may enter into ethanol, soybean, soybean oil, natural gas and corn commodity-based derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices in order to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales, corn oil sales, and corn purchase commitments where the prices are set at a future date. These derivatives are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair value is recorded through earnings in the period of change. Ethanol derivative fair market value gains or losses are included in the results of operations and are classified as revenue and corn derivative changes in fair market value are included in cost of goods sold.
The following tables provide details regarding the Company's derivative financial instruments at June 30, 2018 and September 30, 2017:
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Inventory |
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Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | INVENTORY Inventory is valued at the lower of cost or net realizable value. Inventory values as of June 30, 2018 and September 30, 2017 were as follows:
Lower of cost or net realizable value adjustments for the three and nine months ended June 30, 2018 and 2017 were as follows:
The Company has entered into forward corn purchase contracts under which it is required to take delivery at the contract price. At the time the contracts were created, the price of the contract approximated market price. Subsequent changes in market conditions could cause the contract prices to become higher or lower than market prices. As of June 30, 2018, the average price of corn purchased under certain fixed price contracts, that had not yet been delivered, was greater than approximated market price. Based on this information, the Company has an $8,000 estimated loss on firm purchase commitments for the nine months ended June 30, 2018 and no estimated loss for the nine months ended June 30, 2017. The loss is recorded in “Loss on firm purchase commitments” on the statement of operations. The amount of the potential loss was determined by applying a methodology similar to that used in the impairment valuation with respect to inventory. Given the uncertainty of future ethanol prices, further losses on the outstanding purchase commitments could be recorded in future periods. |
Bank Financing |
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Bank Financing [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank Financing | BANK FINANCING
The Company had a $10 million operating line-of-credit with First National Bank of Omaha that matured on March 20, 2017. On May 31, 2018, we renewed our $10 million revolving loan (the "Revolving Loan") with U.S. Bank National Association ("U.S. Bank"). The maturity date of the Revolving Loan is May 31, 2019. Our ability to draw funds on the Revolving Loan is subject to a borrowing base calculation as set forth in the Credit Agreement. At June 30, 2018, we had $10,000,000 available on the Revolving Loan, taking into account the borrowing base calculation. We had $0 drawn on the Revolving Loan as of June 30, 2018. The variable interest rate on June 30, 2018 was 3.90%. See note 6 for the Company's additional future minimum lease commitments. The Company's loans are secured by a lien on substantially all of the assets of the Company. As of June 30, 2018, the Company was in compliance with its quarterly debt covenant. |
Fair Value Measurements |
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following table provides information on those assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2018 and September 30, 2017, respectively.
The fair value of the corn, ethanol, soybean oil and natural gas derivative instruments is based on quoted market prices in an active market. |
Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASES The Company leases equipment under operating and capital leases through July 2023. The Company is generally responsible for maintenance, taxes, and utilities for leased equipment. Equipment under operating lease includes a locomotive and rail cars. Rent expense for operating leases was approximately $153,000 and $136,000 for the three months ended June 30, 2018 and 2017, respectively and $465,000 and $395,000 for the nine months ended June 30, 2018 and 2017, respectively. Equipment under capital leases consists of office equipment and plant equipment. Equipment under capital leases is as follows at:
At June 30, 2018, the Company had the following minimum commitments, which at inception had non-cancelable terms of more than one year. Amounts shown below are for the 12 months period ending June 30:
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Commitments and Contingencies |
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Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Firm Purchase Commitments for Corn To ensure an adequate supply of corn to operate the Plant, the Company enters into contracts to purchase corn from local farmers and elevators. At June 30, 2018, the Company had various fixed price contracts for the purchase of approximately 2.3 million bushels of corn. Using the stated contract price for the fixed price contracts, the Company had commitments of approximately $8.1 million related to the 2.3 million bushels under contract. The Company also has various unpriced basis contracts for the purchase of approximately 113 thousand bushels of corn that have been delivered to the Plant. The purchase price of these bushels will be set at the time of pricing the contracts at the September 2018 index price less basis. The estimated accrued payable for these bushels is $380 thousand. The deadline for pricing these 113 thousand bushels is August 24, 2018. Profit and Cost Sharing Agreement The Company has entered into a Profit and Cost Sharing Agreement with Bismarck Land Company, LLC which became effective on November 1, 2016. The Profit and Cost Sharing Agreement provides that the Company will share 70% of the net revenue generated by the Company from business activities which are brought to the Company by Bismarck Land Company, LLC and conducted on the real estate purchased from the Bismarck Land Company, LLC. The real estate was initially purchased in exchange for 2 million membership units at $1.66 per unit. This obligation will terminate ten years after the real estate closing date of October 11, 2016 or after Bismarck Land Company, LLC receives $10 million in proceeds from the agreement. In addition, the Company will pay Bismarck Land Company, LLC 70% of any net proceeds received by the Company from the sale of the subject real estate if a sale were to occur in the future, subject to the $10 million cap and the 10 year termination of this obligation. No payments have been made to the Bismarck Land Company, LLC at this time. |
Related-Party Transactions |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | RELATED PARTY TRANSACTIONS The Company has balances and transactions in the normal course of business with various related parties for the purchase of corn, sale of distillers grains and sale of ethanol. The related parties include unit holders, members of the board of governors of the Company, and RPMG, Inc. (“RPMG”). During the Company's first quarter of 2018, the Company received a capital account refund from RPMG which is included in other income (expense) in the Company's Statement of Operations. Significant related party activity affecting the financial statements is as follows:
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Uncertainties Impacting the Ethanol Industry and Our Future Operations |
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Jun. 30, 2018 | |
Uncertainties Impacting the Ethanol Industry and Our Future Operations [Abstract] | |
Uncertainties Impacting the Ethanol Industry and Our Future Operations | UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS The Company has certain risks and uncertainties that it experiences during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distillers grains to customers primarily located in the United States. Corn for the production process is supplied to the Plant primarily from local agricultural producers and from purchases on the open market. The Company's operating and financial performance is largely driven by prices at which the Company sells ethanol and distillers grains and by the cost at which it is able to purchase corn for operations. The price of ethanol is influenced by factors such as prices, supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets, although since 2005 the prices of ethanol and gasoline began a divergence with ethanol selling for less than gasoline at the wholesale level. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities. The Company's financial performance is highly dependent on the Federal Renewable Fuels Standard ("RFS") which requires that a certain amount of renewable fuels must be used each year in the United States. Corn based ethanol, such as the ethanol the Company produces, can be used to meet a portion of the RFS requirement. In November 2013, the EPA issued a proposed rule which would reduce the RFS for 2014, including the RFS requirement related to corn based ethanol. The EPA proposed rule was subject to a comment period which expired in January 2014. On November 30, 2015, the EPA released its final ethanol use requirements for 2014, 2015 and 2016 which were lower than the statutory requirements in the RFS. However, the final RFS for 2017 equaled the statutory requirement which was also the case for the 2018 RFS final rule. The Company anticipates that the results of operations during the remainder of fiscal year 2018 will continue to be affected by volatility in the commodity markets. The volatility is due to various factors, including uncertainty with respect to the availability and supply of corn, increased demand for grain from global and national markets, speculation in the commodity markets and demand for corn from the ethanol industry. |
Member's Equity |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Members' Equity Notes Disclosure [Text Block] | MEMBER'S EQUITY Unregistered Units Sales by the Company. On October 10, 2016, the Company issued two million of the Company's membership units to Bismarck Land Company, LLC as part of the consideration for the acquisition of 338 acres of land adjacent to the ethanol plant that the Company will use to expand its rail yard. The membership units were issued pursuant to the exemption from registration set forth in Regulation D, Rule 506(b), as Bismarck Land Company, LLC is an accredited investor. Unit Purchases By the Company.
*1,318,180 Units were purchased other than through a publicly announced plan or program, pursuant to a Membership Unit Repurchase Agreement, a private transaction between the Company and a Member. |
Subsequent Event |
9 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the condensed financial statements or disclosure in the notes to the condensed financial statements. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Jun. 30, 2018 | |
Summary of Significant Account Policies [Abstract] | |
Accounting Estimates | Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, inventory and allowance for doubtful accounts. Actual results could differ from those estimates. |
Net Income (Loss) Per Unit | Net Income Per Unit Net income per unit is calculated on a basic and fully diluted basis using the weighted average units outstanding during the period. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Simplifying the Measurement of Inventory In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurements of Inventory" regarding inventory that is measured using the first-in, first-out or average cost method. The guidance does not apply to inventory measured using the last-in, first-out or the retail inventory method. The guidance requires inventory within its scope to be measured at the lower of cost or net realizable value, which is the estimated selling price in the normal course of business less reasonable predictable costs of completion, disposal and transportation. These amendments more closely align GAAP with International Financial Reporting Standards (IFRS). ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and should be applied prospectively with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has adopted the new standard during the first quarter of this fiscal year and there has been no significant impact to our financial statements. Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. The Company has evaluated the new standard and anticipates a change in the reporting of revenue as enhanced disclosures will be required. The Company does not anticipate a significant impact on our financial statements due to the nature of our revenue streams and our revenue recognition policy. Lease Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, "Leases (topic 842)" which requires a lessee to recognize a right to use asset and a lease liability on its balance sheet for all leases with terms of twelve months or greater. This guidance is effective for fiscal years beginning after December 15, 2018, included interim periods within those years with early adoption permitted. The Company has evaluated the new standard and expects it will have a material impact on the financial statements as we will have to begin capitalizing leases on the balance sheet when the new standard is implemented. See note 6 for current operating lease commitments. Statement of Cash Flows; Restricted Cash In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annal periods beginning after December 15, 2017, and interim periods within those annual periods. The Company has evaluated the new standard and anticipates a change in the presentation of restricted cash on the cash flow statement once the standard is adopted. |
Derivative Instruments (Tables) |
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Derivatives Not Designated As Hedging Instruments, Balance Sheet |
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Derivatives Not Designated as Hedging Instruments, Statement of Operations |
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Inventory (Tables) |
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Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory |
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Long-term Purchase Commitment |
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Bank Financing (Tables) |
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Bank Financing [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt |
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Fair Value Measurements (Tables) |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Capital Leased Assets |
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Schedule of Future Minimum Payments for Capital and Operating Leases |
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Related-Party Transactions (Tables) |
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Schedule of Related Party Transactions |
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Member's Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Class of Treasury Stock | Unit Purchases By the Company.
*1,318,180 Units were purchased other than through a publicly announced plan or program, pursuant to a Membership Unit Repurchase Agreement, a private transaction between the Company and a Member. |
Summary of Significant Accounting Policies Nature of Business (Details) gal in Millions |
9 Months Ended |
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Jun. 30, 2018
gal
| |
Ethanol [Member] | |
Product Information [Line Items] | |
Annual Production Capacity | 50 |
Derivative Instruments - Commodity Contracts (Details) |
Jun. 30, 2018
USD ($)
bu
|
Sep. 30, 2017
USD ($)
bu
|
---|---|---|
Derivative [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (1,936,750) | $ (933,312) |
Commodity Contract [Member] | Commodity [Member] | ||
Derivative [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (1,936,750) | $ (933,312) |
Corn [Member] | Commodity [Member] | ||
Derivative [Line Items] | ||
Number of Commodity Contracts Held | 1,500 | 81 |
Notional Amount Held by Contract | bu | 7,500,000 | 405,000 |
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | $ 1,121,750 | $ 16,688 |
Corn [Member] | Commodity Option [Member] | ||
Derivative [Line Items] | ||
Number of Commodity Contracts Held | 600 | 1,800 |
Notional Amount Held by Contract | bu | 3,000,000 | 9,000,000 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (815,000) | $ (950,000) |
Derivative Instruments - Balance Sheet (Details) - USD ($) |
Jun. 30, 2018 |
Sep. 30, 2017 |
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Derivatives, Fair Value [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ (1,936,750) | $ (933,312) |
Derivative Financial Instruments, Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | 0 | 0 |
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | (1,936,750) | (933,312) |
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | 1,936,750 | 933,312 |
Corn [Member] | Commodity [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | $ (1,121,750) | $ (16,688) |
Inventory (Details) - USD ($) |
Jun. 30, 2018 |
Sep. 30, 2017 |
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Inventory [Abstract] | ||
Raw materials, including corn, chemicals and supplies | $ 8,065,229 | $ 11,952,560 |
Work in process | 806,096 | 773,786 |
Finished goods, including ethanol and distillers grains | 1,356,601 | 1,577,066 |
Spare parts | 2,074,107 | 2,110,330 |
Inventory | $ 12,302,033 | $ 16,413,742 |
Inventory Total Loss on Lower of Cost or Market Adjustment (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Long-term Purchase Commitment [Line Items] | ||||
Loss on firm purchase commitments | $ 0 | $ 0 | $ 8,000 | $ 0 |
Lower of cost or market inventory adjustment | 0 | 0 | 82,082 | 0 |
Inventories [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Lower of cost or market inventory adjustment | 0 | 0 | 82,082 | 0 |
Total loss on lower of cost or market adjustments | $ 0 | $ 0 | $ 90,082 | $ 0 |
Bank Financing (Details) - USD ($) |
Jun. 30, 2018 |
Sep. 30, 2017 |
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Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations | $ 3,577 | $ 5,538 |
Current maturities of long-term debt | 2,632 | 2,617 |
Long-term Debt, Excluding Current Maturities | 945 | 2,921 |
Line of Credit Facility, Fair Value of Amount Outstanding | 0 | |
Capital Lease Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Capital Lease Obligations | 3,577 | $ 5,538 |
Domestic Line of Credit [Member] | Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | 10,000,000 | |
Line of Credit Facility, Amount Outstanding | 10,000,000 | |
Line of Credit Facility, Remaining Borrowing Capacity | $ 10,000,000 | |
Line of Credit Facility, Interest Rate at Period End | 3.90% |
Bank Financing Schedule of Maturities of Long-Term Debt (Details) - USD ($) |
Jun. 30, 2018 |
Sep. 30, 2017 |
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Debt Instrument [Line Items] | ||
Long-term Debt and Capital Lease Obligations | $ 3,577 | $ 5,538 |
Leases Equipment Under Capital Lease (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Sep. 30, 2017 |
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Transportation Equipment [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Operating Leases, Rent Expense, Net | $ 153,000 | $ 136,000 | $ 465,000 | $ 395,000 | |
Equipment [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Equipment | 483,488 | 483,488 | $ 483,488 | ||
Less accumulated amortization | (136,124) | (136,124) | (120,029) | ||
Net equipment under capital lease | $ 347,364 | $ 347,364 | $ 363,459 |
Leases (Details) - Transportation Equipment [Member] - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Operating and Capital Leased Assets [Line Items] | ||||
Operating Leases, Rent Expense, Net | $ 153,000 | $ 136,000 | $ 465,000 | $ 395,000 |
Operating Leases, 2018 | 525,383 | 525,383 | ||
Capital Leases, 2018 | 2,632 | 2,632 | ||
Operating Leases, 2019 | 424,463 | 424,463 | ||
Capital Leases, 2019 | 945 | 945 | ||
Operating Leases, 2020 | 365,663 | 365,663 | ||
Capital Leases, 2020 | 0 | 0 | ||
Operating Leases, 2021 | 296,640 | 296,640 | ||
Capital Leases, 2021 | 0 | 0 | ||
Operating Leases, 2022 | 202,290 | 202,290 | ||
Capital Leases, 2022 | 0 | 0 | ||
Total Minimum Operating Lease Commitments | 1,814,439 | 1,814,439 | ||
Total Minimum Capital Lease Commitments | 3,577 | 3,577 | ||
Less amount representing interest on capital lease | 0 | |||
Present Value of Minimum Lease Commitments Included in Liabilities on the Balance Sheet | $ 3,577 | $ 3,577 |
Related-Party Transactions (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Sep. 30, 2017 |
|
Related Party Transaction [Line Items] | |||||
Due from Other Related Parties | $ 152,615 | $ 152,615 | $ 925,503 | ||
Accounts Receivable, Related Parties, Current | 3,115,384 | 3,115,384 | 4,027,061 | ||
Accounts Payable, Related Parties, Current | 3,648,459 | 3,648,459 | $ 1,569 | ||
Revenue from Related Parties | 27,381,514 | $ 27,795,610 | 76,354,225 | $ 82,706,618 | |
Cost of Goods Sold, Related Parties | 9,012 | 7,674 | 21,936 | 37,625 | |
General and Administrative Expenses from Transactions with Related Party | 62,019 | 17,990 | 100,330 | 51,038 | |
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 0 | 140,538 | 247,307 | |
Related Party Transaction, Purchases from Related Party | $ 7,710,883 | $ 15,395,091 | $ 18,036,469 | $ 35,060,321 |
Member's Equity (Details) |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 10, 2016
shares
|
Jun. 30, 2018
USD ($)
a
$ / shares
shares
|
May 31, 2018
USD ($)
$ / shares
shares
|
Apr. 30, 2018
USD ($)
$ / shares
shares
|
Jun. 30, 2018
USD ($)
a
$ / shares
shares
|
|
Equity, Class of Treasury Stock [Line Items] | |||||
Membership units issues as part of purchase consideration | 2,000,000 | ||||
Area of Land | a | 338 | 338 | |||
Partners' Capital Account, Units, Treasury Units Purchased | 0 | 1,318,180 | 0 | 1,318,180 | |
Treasury Stock Acquired, Average Cost Per Share | $ / shares | $ 0 | $ 1.00 | $ 0 | $ 1.00 | |
Treasury Stock Acquired, Repurchase Authorization | 0 | 0 | 0 | 0 | |
Stock Repurchase Program, Authorized Amount | $ | $ 0 | $ 0 | $ 0 | $ 0 | |
Treasury Stock [Member] | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Partners' Capital Account, Units, Treasury Units Purchased | 1,318,180 |
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