Green Plains Inc. - Quarter Report: 2023 September (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended September 30, 2023

☐ 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 001-32924

GREEN PLAINS INC.

(Exact name of registrant as specified in its charter)


Iowa			84-1652107
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1811 Aksarben Drive, Omaha, NE 68106			(402) 884-8700
(Address of principal executive offices, including zip code)			(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

GPRE

The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 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

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

☐ Yes ☒ No

The registrant had 59,511,339 common stock outstanding as of October 26, 2023.

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TABLE OF CONTENTS


		Page
Commonly Used Defined Terms		3
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	4

	Consolidated Balance Sheets	4

	Consolidated Statements of Operations	5

	Consolidated Statements of Comprehensive Income (Loss)	6

	Consolidated Statements of Cash Flows	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	54


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61

Item 3.	Defaults Upon Senior Securities	61

Item 4.	Mine Safety Disclosures	61

Item 5.	Other Information	61

Item 6.	Exhibits	62

Signatures

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Commonly Used Defined Terms

Green Plains Inc. and Subsidiaries:


Green Plains Inc.; Green Plains; the company			Green Plains Inc. and its subsidiaries
FQT			Fluid Quip Technologies, LLC
Green Plains Commodity Management			Green Plains Commodity Management LLC
Green Plains Finance Company			Green Plains Finance Company LLC
Green Plains Grain			Green Plains Grain Company LLC
Green Plains Mount Vernon; Mount Vernon			Green Plains Mount Vernon LLC
Green Plains Obion; Obion			Green Plains Obion LLC
Green Plains Partners; the partnership			Green Plains Partners LP
Green Plains Shenandoah; Shenandoah			Green Plains Shenandoah LLC
Green Plains Trade			Green Plains Trade Group LLC
Green Plains Wood River; Wood River			Green Plains Wood River LLC

Accounting Defined Terms:


ASC			Accounting Standards Codification
EBITDA			Earnings before interest expense, 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
SEC			Securities and Exchange Commission
SOFR			Secured Overnight Financing Rate

Industry and Other Defined Terms:


ATJ			Alcohol-to-Jet
BlackRock			Funds and accounts managed by BlackRock
the CARES Act			Coronavirus Aid, Relief, and Economic Security Act
CI			Carbon Intensity
COVID-19			Coronavirus Disease 2019
CST™			Clean Sugar Technology™
DOE			Department of Energy
E10			Gasoline blended with up to 10% ethanol by volume
E15			Gasoline blended with up to 15% ethanol by volume
E85			Gasoline blended with up to 85% ethanol by volume
EIA			U.S. Energy Information Administration
EPA			U.S. Environmental Protection Agency
EV			Electric Vehicle
FFV			Flexible-fuel vehicle
GHG			Greenhouse gas
LCFS			Low Carbon Fuel Standard
MmBtu			Million British Thermal Units
Mmg			Million gallons
MSC™			Maximized Stillage Coproducts produced using process technology developed by Fluid Quip Technologies LLC
MTBE			Methyl tertiary-butyl ether
RFS			Renewable Fuels Standard
RIN			Renewable identification number
RVO			Renewable volume obligation
SAF			Sustainable Aviation Fuel
SRE			Small refinery exemption
U.S.			United States
USDA			U.S. Department of Agriculture

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PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements.

GREEN PLAINS INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


	September 30, 2023		December 31, 2022
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	326,701	$	444,661
Restricted cash	39,459		55,615
Accounts receivable, net of allowances of $85 and $429, respectively	142,790		108,610
Income taxes receivable	1,097		1,286
Inventories	208,061		278,950
Prepaid expenses and other	23,164		19,837
Derivative financial instruments	16,271		19,791
Total current assets	757,543		928,750
Property and equipment, net of accumulated depreciation and amortization of $669,936 and $632,298, respectively	1,011,287		1,029,327
Operating lease right-of-use assets	79,376		73,244
Other assets	102,938		91,810
Total assets	$	1,951,144	$	2,123,131

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	138,350	$	234,301
Accrued and other liabilities	57,276		44,443
Derivative financial instruments	21,828		47,941
Operating lease current liabilities	23,335		20,721
Short-term notes payable and other borrowings	159,747		137,678
Current maturities of long-term debt	1,936		1,838
Total current liabilities	402,472		486,922
Long-term debt	491,945		495,243
Operating lease long-term liabilities	59,297		55,515
Other liabilities	22,934		24,385
Total liabilities	976,648		1,062,065

Commitments and contingencies (Note 13)

Stockholders' equity
Common stock, $0.001 par value; 150,000,000 shares authorized; 62,318,266 and 62,100,555 shares issued, and 59,513,207 and 59,295,496 shares outstanding, respectively	62		62
Additional paid-in capital	1,110,425		1,110,151
Retained deficit	(243,034)		(142,417)
Accumulated other comprehensive loss	(8,130)		(26,591)
Treasury stock, 2,805,059 shares	(31,174)		(31,174)
Total Green Plains stockholders' equity	828,149		910,031
Noncontrolling interests	146,347		151,035
Total stockholders' equity	974,496		1,061,066
Total liabilities and stockholders' equity	$	1,951,144	$	2,123,131

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Revenues	$	892,770	$	954,977	$	2,583,351	$	2,748,806

Costs and expenses
Cost of goods sold (excluding depreciation and amortization expenses reflected below)	811,299		956,857		2,471,395		2,650,680
Operations and maintenance expenses	6,709		6,287		21,032		18,012
Selling, general and administrative expenses	35,340		29,066		100,510		90,042
Gain on sale of assets	(5,651)		—		(5,651)		—
Depreciation and amortization expenses	23,899		24,647		73,911		66,013
Total costs and expenses	871,596		1,016,857		2,661,197		2,824,747
Operating income (loss)	21,174		(61,880)		(77,846)		(75,941)

Other income (expense)
Interest income	2,467		1,763		8,403		2,640
Interest expense	(9,550)		(9,576)		(29,029)		(26,182)
Other, net	4,282		(182)		4,310		28,394
Total other income (expense)	(2,801)		(7,995)		(16,316)		4,852
Income (loss) before income taxes and income (loss) from equity method investees	18,373		(69,875)		(94,162)		(71,089)
Income tax benefit	7,763		1,888		5,353		146
Income (loss) from equity method investees	156		84		532		(112)
Net income (loss)	26,292		(67,903)		(88,277)		(71,055)
Net income attributable to noncontrolling interests	3,981		5,623		12,340		17,547
Net income (loss) attributable to Green Plains	$	22,311	$	(73,526)	$	(100,617)	$	(88,602)

Earnings per share
Net income (loss) attributable to Green Plains - basic	$	0.38	$	(1.27)	$	(1.71)	$	(1.62)
Net income (loss) attributable to Green Plains - diluted	$	0.35	$	(1.27)	$	(1.71)	$	(1.62)

Weighted average shares outstanding
Basic	58,910		57,677		58,780		54,550
Diluted	67,402		57,677		58,780		54,550

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited and in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	26,292	$	(67,903)	$	(88,277)	$	(71,055)
Other comprehensive income, net of tax
Unrealized gains on derivatives arising during the period, net of tax expense of ($4,547), ($2,494), ($746) and ($836), respectively	14,469		7,740		2,391		2,591
Reclassification of realized losses (gains) on derivatives, net of tax expense (benefit) of ($3,384), $536, ($5,053) and $359, respectively	10,767		(1,662)		16,070		(1,112)
Total other comprehensive income, net of tax	25,236		6,078		18,461		1,479
Comprehensive income (loss)	51,528		(61,825)		(69,816)		(69,576)
Comprehensive income attributable to noncontrolling interests	3,981		5,623		12,340		17,547
Comprehensive income (loss) attributable to Green Plains	$	47,547	$	(67,448)	$	(82,156)	$	(87,123)

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net loss	$	(88,277)	$	(71,055)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	73,911		66,013
Amortization of debt issuance costs and non-cash interest expense	2,172		3,214
Gain on sale of assets	(5,651)		—
Inventory lower of cost or net realizable value adjustment	1,663		11,177
Loss on extinguishment of debt	—		419
Deferred income taxes	(5,799)		(477)
Stock-based compensation	9,413		6,646
Loss (income) from equity method investees	(532)		112
Other	1,374		1,212
Changes in operating assets and liabilities before effects of asset disposition
Accounts receivable	(34,180)		(1,063)
Inventories	65,480		(2,191)
Derivative financial instruments	2,187		(19,985)
Prepaid expenses and other assets	(3,635)		2,911
Accounts payable and accrued liabilities	(76,134)		(30,283)
Current income tax expense (benefit)	1,094		(51)
Other	1,528		(1,065)
Net cash used in operating activities	(55,386)		(34,466)

Cash flows from investing activities
Purchases of property and equipment, net	(77,876)		(183,225)
Proceeds from the sale of assets	25,106		—
Proceeds from the sale of marketable securities	—		99,917
Investment in equity method investees	(16,299)		(6,976)
Net cash used in investing activities	(69,069)		(90,284)

Cash flows from financing activities
Proceeds from the issuance of long-term debt	—		45,000
Payments of principal on long-term debt	(4,325)		(1,347)
Proceeds from short-term borrowings	1,027,268		1,649,828
Payments on short-term borrowings	(1,006,163)		(1,616,226)
Payments on extinguishment of convertible debt	—		(1,766)
Payments of dividends and distributions	(17,465)		(16,498)
Payments of loan fees	(16)		(2,522)
Payments related to tax withholdings for stock-based compensation	(8,960)		(3,806)
Other financing activities	—		(1,424)
Net cash provided by (used in) financing activities	(9,661)		51,239

Net change in cash and cash equivalents, and restricted cash	(134,116)		(73,511)
Cash and cash equivalents, and restricted cash, beginning of period	500,276		560,959
Cash and cash equivalents, and restricted cash, end of period	$	366,160	$	487,448

Continued on the following page

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GREEN PLAINS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

Continued from the previous page


	Nine Months Ended September 30,
	2023		2022
Reconciliation of total cash and cash equivalents, and restricted cash
Cash and cash equivalents	$	326,701	$	420,838
Restricted cash	39,459		66,610
Total cash and cash equivalents, and restricted cash	$	366,160	$	487,448

Non-cash financing activities
Exchange of 4.00% convertible notes due 2024 for shares of common stock held in treasury stock	$	—	$	64,000
Exchange of 4.125% convertible notes due 2022 for shares of common stock held in treasury stock	$	—	$	32,550

Supplemental investing activities
Assets disposed of in sale	$	22,314	$	—
Less: liabilities relinquished	(3,984)		—
Net assets disposed	$	18,330	$	—

Supplemental disclosures of cash flow
Cash paid for income taxes, net	$	787	$	381
Cash paid for interest	$	28,160	$	26,126
Capital expenditures in accounts payable	$	3,940	$	10,289

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

References to the Company

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

Consolidated Financial Statements

The consolidated financial statements include the company’s accounts and all significant intercompany balances and transactions are eliminated. Unconsolidated entities are included in the financial statements on an equity basis. As of September 30, 2023, the company owns a 48.8% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. Public investors own the remaining 49.2% limited partner interest in the partnership. The company determined that the limited partners in the partnership with equity at risk lack the power, through voting rights or similar rights, to direct the activities that most significantly impact the partnership’s economic performance; therefore, the partnership is considered a variable interest entity. The company, through its ownership of the general partner interest in the partnership, has the power to direct the activities that most significantly affect economic performance and is obligated to absorb losses and has the right to receive benefits that could be significant to the partnership. Therefore, the company is considered the primary beneficiary and consolidates the partnership in the company’s financial statements. The assets of the partnership cannot be used by the company for general corporate purposes. The partnership’s consolidated total assets as of September 30, 2023 and December 31, 2022, excluding intercompany balances, are $108.8 million and $108.7 million, respectively, and primarily consist of cash and cash equivalents, property and equipment, operating lease right-of-use assets and goodwill. The partnership’s consolidated total liabilities as of September 30, 2023 and December 31, 2022, excluding intercompany balances, are $121.0 million and $119.5 million, respectively, which primarily consist of long-term debt as discussed in Note 8 – Debt and operating lease liabilities. The liabilities recognized as a result of consolidating the partnership do not represent additional claims on the company’s general assets.

On September 16, 2023, a definitive agreement and plan of merger was entered into by and among the company, GPLP Holdings Inc., a wholly owned subsidiary of the company, GPLP Merger Sub LLC, a wholly owned subsidiary of GPLP Holdings Inc., the partnership, and Green Plains Holdings LLC. Refer to Note 3 - Merger and Disposition included herein for more information.

The company also owns a majority interest in FQT, with their results being consolidated in our consolidated financial statements.

The accompanying unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Because they do not include all of the information and footnotes required by GAAP for complete financial statements, the unaudited consolidated financial statements should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 10, 2023.

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.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The company bases its estimates on historical experience and assumptions it believes are proper and reasonable under the circumstances and regularly evaluates the appropriateness of its estimates and assumptions. Actual

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results could differ from those estimates. Certain accounting policies, including but not limited to those relating to impairment of 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

The company operates within three operating segments: (1) ethanol production, which includes the production of ethanol, distillers grains, Ultra-High Protein and renewable 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, renewable corn oil, natural gas and other commodities and (3) partnership, which includes fuel storage and transportation services.

Cash and Cash Equivalents

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

Restricted Cash

The company has restricted cash, which can only be used for funding letters of credit and for payment towards a credit agreement. Restricted cash also includes cash margins and securities pledged to commodity exchange clearinghouses and at times, funds in escrow related to acquisition and disposition activities. To the degree these segregated balances are cash and cash equivalents, they are considered restricted cash on the consolidated balance sheets.

Marketable Securities

Marketable securities include highly liquid, fixed maturity investments with original maturities ranging from three to twelve months and are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity.

Revenue Recognition

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

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

The company routinely enters into physical-delivery energy commodity purchase and sale agreements. At times, the company settles these transactions by transferring its obligations to other counterparties rather than delivering the physical commodity. Revenues include net gains or losses from derivatives related to products sold while cost of goods sold includes net gains or losses from derivatives related to commodities purchased. Revenues also include realized gains and losses on related derivative financial instruments and reclassifications of realized gains and losses on cash flow hedges from accumulated other comprehensive income or loss.

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

A substantial portion of the partnership revenues are derived from fixed-fee commercial agreements for storage, terminal or transportation services. The partnership recognizes revenue upon transfer of control of product from its storage tanks and fuel terminals, when railcar volumetric capacity is provided, and as truck transportation services are performed. To the extent shortfalls associated with minimum volume commitments in the previous four quarters continue to exist, volumes in excess of the minimum volume commitment are applied to those shortfalls. Remaining excess volumes generating operating lease revenue are recognized as incurred.

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Shipping and Handling Costs

The company accounts for shipping and handling activities related to contracts with customers as costs to fulfill its promise to transfer the associated products. Accordingly, the company records customer payments associated with shipping and handling costs as a component of revenue, and classifies such costs as a component of cost of goods sold.

Cost of Goods Sold

Cost of goods sold includes materials, direct labor, shipping and plant overhead costs. Materials include the cost of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs, as well as reclassifications of gains and losses on cash flow hedges from accumulated other comprehensive income or loss. Direct labor includes all compensation and related benefits of non-management personnel involved in ethanol production. Shipping costs incurred by the company, including railcar costs, are also reflected in cost of goods sold. Plant overhead consists primarily of plant utilities, repairs and maintenance and outbound freight charges.

The company uses exchange-traded futures and options contracts and forward purchase and sale contracts to attempt to minimize the effect of price changes on ethanol, renewable corn oil, grain and natural gas. 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 basis differences, primarily in transportation, between the exchange-traded market and local market where the terms of the contract is based. Changes in forward purchase contracts and exchange-traded futures and options contracts are recognized as a component of cost of goods sold.

Operations and Maintenance Expenses

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

Derivative Financial Instruments

The company uses various derivative financial instruments, including exchange-traded futures and exchange-traded and over-the-counter options contracts, to attempt to minimize risk and the effect of commodity price changes including but not limited to, corn, ethanol, natural gas and other agricultural and energy products. 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.

Forward contracts are recorded at fair value unless the contracts qualify for, and the company elects, normal purchase or sale exceptions. Changes in fair value are recorded in operating income unless the contracts qualify for, and the company elects, cash flow hedge accounting treatment.

Certain qualifying derivatives related to ethanol production and agribusiness and energy services are designated as cash flow hedges. The company evaluates the derivative instrument to ascertain its effectiveness prior to entering into cash flow hedges. Unrealized gains and losses are reflected in accumulated other comprehensive income or loss until the gain or loss from the underlying hedged transaction is realized and the physical transaction is completed. 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 current liabilities at fair value.

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At times, the company hedges its exposure to changes in inventory values and designates qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted in the current period for changes in fair value. Estimated fair values carried at market are based on exchange-quoted prices, adjusted as appropriate for regional location basis values which represent differences in local markets including transportation as well as quality or grade differences. Basis values are generally determined using inputs from broker quotations or other market transactions. However, a portion of the value may be derived using unobservable inputs. Ineffectiveness of the hedges is recognized in the current period to the extent the change in fair value of the inventory is not offset by the change in fair value of the derivative.

2. REVENUE

Revenue by Source

The following tables disaggregate revenue by major source (in thousands):


	Three Months Ended September 30, 2023
	Ethanol Production		Agribusiness & Energy Services		Partnership		Eliminations		Total
Revenues
Revenues from contracts with customers under ASC 606
Ethanol	$	—	$	—	$	—	$	—	$	—
Distillers grains	22,664		—		—		—		22,664
Renewable corn oil	—		—		—		—		—
Other	5,855		3,437		954		—		10,246
Intersegment revenues	—		151		1,280		(1,431)		—
Total revenues from contracts with customers	28,519		3,588		2,234		(1,431)		32,910
Revenues from contracts accounted for as derivatives under ASC 815 (1)
Ethanol	607,113		99,008		—		—		706,121
Distillers grains	81,288		5,900		—		—		87,188
Renewable corn oil	49,872		7,327		—		—		57,199
Other	6,575		2,777		—		—		9,352
Intersegment revenues	—		6,481		—		(6,481)		—
Total revenues from contracts accounted for as derivatives	744,848		121,493		—		(6,481)		859,860
Leasing revenues under ASC 842 (2)	—		—		17,911		(17,911)		—
Total Revenues	$	773,367	$	125,081	$	20,145	$	(25,823)	$	892,770

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	Nine Months Ended September 30, 2023
	Ethanol Production		Agribusiness & Energy Services		Partnership		Eliminations		Total
Revenues
Revenues from contracts with customers under ASC 606
Ethanol	$	—	$	—	$	—	$	—	$	—
Distillers grains	65,258		—		—		—		65,258
Renewable corn oil	—		—		—		—		—
Other	22,732		13,709		3,136		—		39,577
Intersegment revenues	—		151		4,589		(4,740)		—
Total revenues from contracts with customers	87,990		13,860		7,725		(4,740)		104,835
Revenues from contracts accounted for as derivatives under ASC 815 (1)
Ethanol	1,656,688		306,134		—		—		1,962,822
Distillers grains	297,189		28,715		—		—		325,904
Renewable corn oil	131,893		8,048		—		—		139,941
Other	21,840		28,009		—		—		49,849
Intersegment revenues	—		18,524		—		(18,524)		—
Total revenues from contracts accounted for as derivatives	2,107,610		389,430		—		(18,524)		2,478,516
Leasing revenues under ASC 842 (2)	—		—		53,718		(53,718)		—
Total Revenues	$	2,195,600	$	403,290	$	61,443	$	(76,982)	$	2,583,351


	Three Months Ended September 30, 2022
	Ethanol Production		Agribusiness & Energy Services		Partnership		Eliminations		Total
Revenues
Revenues from contracts with customers under ASC 606
Ethanol	$	—	$	—	$	—	$	—	$	—
Distillers grains	3,219		—		—		—		3,219
Renewable corn oil	—		—		—		—		—
Other	7,347		2,211		1,036		—		10,594
Intersegment revenues	—		—		1,850		(1,850)		—
Total revenues from contracts with customers	10,566		2,211		2,886		(1,850)		13,813
Revenues from contracts accounted for as derivatives under ASC 815 (1)
Ethanol	619,665		127,344		—		—		747,009
Distillers grains	123,892		11,330		—		—		135,222
Renewable corn oil	47,668		—		—		—		47,668
Other	9,224		2,041		—		—		11,265
Intersegment revenues	—		6,836		—		(6,836)		—
Total revenues from contracts accounted for as derivatives	800,449		147,551		—		(6,836)		941,164
Leasing revenues under ASC 842 (2)	—		—		17,180		(17,180)		—
Total Revenues	$	811,015	$	149,762	$	20,066	$	(25,866)	$	954,977

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	Nine Months Ended September 30, 2022
	Ethanol Production		Agribusiness & Energy Services		Partnership		Eliminations		Total
Revenues
Revenues from contracts with customers under ASC 606
Ethanol	$	—	$	—	$	—	$	—	$	—
Distillers grains	19,982		—		—		—		19,982
Renewable corn oil	—		—		—		—		—
Other	27,984		5,160		2,953		—		36,097
Intersegment revenues	—		234		5,788		(6,022)		—
Total revenues from contracts with customers	47,966		5,394		8,741		(6,022)		56,079
Revenues from contracts accounted for as derivatives under ASC 815 (1)
Ethanol	1,736,228		361,036		—		—		2,097,264
Distillers grains	365,839		34,629		—		—		400,468
Renewable corn oil	140,513		3,957		—		—		144,470
Other	19,188		31,337		—		—		50,525
Intersegment revenues	—		19,680		—		(19,680)		—
Total revenues from contracts accounted for as derivatives	2,261,768		450,639		—		(19,680)		2,692,727
Leasing revenues under ASC 842 (2)	—		—		50,079		(50,079)		—
Total Revenues	$	2,309,734	$	456,033	$	58,820	$	(75,781)	$	2,748,806

(1)Revenues from contracts accounted for as derivatives represent physically settled derivative sales that are outside the scope of ASC 606.

(2)Leasing revenues do not represent revenues recognized from contracts with customers under ASC 606, and are accounted for under ASC 842, Leases.

Major Customers

Revenues from Customer A represented 14% of total revenues for both the three and nine months ended September 30, 2023, recorded within the ethanol production segment. For the three and nine months ended September 30, 2022, Customer A represented 14% and 13% of total revenues, respectively, recorded within the ethanol production segment.

3. MERGER AND DISPOSITION

Green Plains Partners Definitive Merger Agreement

On September 16, 2023, the company, GPLP Holdings Inc. (“Holdings”), GPLP Merger Sub LLC (“Merger Sub”), the partnership, and Green Plains Holdings LLC, the general partner of the partnership (the “General Partner”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the partnership, with the partnership surviving as an indirect, wholly owned subsidiary of the company (the “Merger”).

Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding common unit representing a limited partner interest in the partnership (each, a “Partnership Common Unit”) other than partnership common units owned by the company, the General Partner and their respective affiliates (each, a “Public Common Unit”) will be converted into the right to receive, subject to adjustment as described in the Merger Agreement, (i) 0.405 shares of common stock, par value $0.001 per share, of the company (the “Company Common Stock” and the shares of the company common stock to be issued in the Merger, the “Stock Consideration”) and (ii) an amount of cash equal to the sum of (a) $2.00 plus (b) the product of (x) $0.455 divided by 90, multiplied by (y) the number of days from, but excluding, the last day of the calendar quarter with respect to which the General Partner has declared a quarterly cash distribution to the holders of partnership common units of no less than $0.455 per Partnership Common Unit with a record date prior to the date of the closing of the Merger (the “Closing Date”), to, but excluding, the Closing Date, computed on the basis of a 360-day year comprised of twelve 30-day months and the actual number of days for any period less than a calendar month, and rounded to the nearest whole cent, without interest (the “Cash Consideration” and, together with the Stock Consideration, the “Merger Consideration”). In addition, at the Effective Time, each of the outstanding awards relating to a Partnership Common Unit issued under a partnership long-term incentive plan (as defined in the Merger Agreement) will become fully vested and will be automatically canceled and converted into the right to receive,

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with respect to each Partnership Common Unit subject thereto, the Merger Consideration (plus any accrued but unpaid amounts in relation to distribution equivalent rights). Except for the incentive distribution rights representing limited partner interests in the partnership, which will be automatically canceled immediately prior to the Effective Time for no consideration in accordance with the First Amended and Restated Agreement of Limited Partnership of the partnership, dated as of July 1, 2015 (as amended, the “Partnership Agreement”), the limited partner interests in the partnership owned by the company, the General Partner and their respective affiliates prior to the Effective Time will remain outstanding as limited partner interests in the surviving entity. The economic general partner interest in the partnership will remain outstanding as a general partner interest in the surviving entity immediately following the Effective Time, and the General Partner will continue as the sole general partner of the surviving entity.

The Conflicts Committee (the "Conflicts Committee") of the board of directors of the General Partner has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the partnership, including the holders of public common units, (ii) approved the Transaction Documents related to the Merger (the "Transaction Documents") and the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Transaction Documents (the foregoing constituting “Special Approval” as defined in the Partnership Agreement) and (iii) recommended to the board of directors of the General Partner the approval by the board of directors of the General Partner of the Transaction Documents and the execution, delivery and performance of the Transaction Documents and the transactions contemplated thereby, including the Merger. The board of directors of the General Partner (acting, in part, based upon the recommendation of the Conflicts Committee) has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the partnership, including the holders of Public Common Units, (ii) approved the Transaction Documents and the transactions contemplated thereby, including the Merger, (iii) authorized the execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby, including the Merger, on the terms and subject to the conditions set forth in the Transaction Documents and (iv) directed that the Merger Agreement and the Merger be submitted to a vote of the limited partners of the partnership (the “Limited Partners”) for approval pursuant to Section 14.3 of the Partnership Agreement and authorized the limited partners to act by written consent pursuant to Section 13.11 of the partnership agreement.

The board of directors of the company (the “Company Board”) has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of the company Common Stock as part of the Merger Consideration (the “Company Stock Issuance”), are in the best interests of the company and its shareholders and (ii) approved and authorized the execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby, including the Merger and the company stock issuance, on the terms and subject to the conditions set forth in the Transaction Documents.

The Merger Agreement contains customary representations and warranties from the parties, and each party has agreed to customary covenants applicable to such party, including, among others, covenants relating to (i) the company’s and the partnership’s conduct of business during the interim period between the execution of the Merger Agreement and the Effective Time and (ii) the obligation to use reasonable best efforts to cause the Merger to be consummated.

Completion of the Merger is subject to certain customary conditions, including, among others: (i) the receipt of the written consent as contemplated by the Merger Agreement; (ii) there being no law or injunction prohibiting consummation of the transactions contemplated under the Merger Agreement; (iii) the effectiveness of a registration statement on Form S-4 relating to the shares of the company Common Stock to be issued as the Stock Consideration (the “Registration Statement”); (iv) approval for listing on The Nasdaq Stock Market LLC of the shares of the company common stock to be issued as the Stock Consideration; (v) subject to specified materiality standards, the accuracy of certain representations and warranties of each party; and (vi) compliance by each party in all material respects with its covenants.

The Merger Agreement provides for certain termination rights for both the company and the partnership, including in the event that (i) the parties agree by mutual written consent (duly authorized by the Conflicts Committee and the Company Board) to terminate the Merger Agreement, (ii) the Merger is not consummated by March 16, 2024, (iii) a law or injunction prohibiting the consummation of the transactions contemplated by the Merger Agreement is in effect and has become final and non-appealable, or (iv) the other party is in material breach of the Merger Agreement. The Merger Agreement provides that upon termination of the Merger Agreement under certain circumstances, (i) the company will be obligated to reimburse the partnership for its out-of-pocket fees and expenses and (ii) the partnership will be obligated to reimburse the company for its out-of-pocket fees and expenses, in each case, in an amount not to exceed $5 million.

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Disposition of Green Plains Atkinson LLC

On September 7, 2023, the company completed the sale of the plant located in Atkinson, Nebraska and certain related assets and transfer of liabilities ("the Atkinson Transaction") for a sale price of $22.9 million, plus working capital of $1.0 million. Correspondingly, the company entered into a separate asset purchase agreement with the partnership for $2.1 million to acquire the storage assets and the associated railcar operating leases. The divested assets were reported within the company's ethanol production, agribusiness and energy services and partnership segments. The company recorded a pretax gain on the sale of the Atkinson plant of $4.6 million recorded within corporate activities.

The assets sold and liabilities transferred of the Atkinson plant at closing on September 7, 2023 were as follows (in thousands):


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Inventories	$	3,226
Prepaid expenses and other	308
Property, plant and equipment	15,199
Operating lease right-of-use assets	3,428

Accrued and other liabilities	(367)
Operating lease current liabilities	(1,332)
Operating lease long-term liabilities	(2,096)
Other liabilities	(189)
Total identifiable net assets disposed	$	18,177

The amounts reflected above represent working capital estimates, which are considered preliminary until contractual post-closing working capital adjustments are finalized, which had not yet occurred as of September 30, 2023.

4. FAIR VALUE DISCLOSURES

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

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

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

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

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

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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 September 30, 2023
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash and cash equivalents	$	326,701	$	—	$	326,701
Restricted cash	39,459		—		39,459
Inventories carried at market	—		18,758		18,758
Derivative financial instruments - assets	—		14,037		14,037
Other assets	110		1		111
Total assets measured at fair value	$	366,270	$	32,796	$	399,066

Liabilities
Accounts payable (1)	$	—	$	20,093	$	20,093
Accrued and other liabilities (2)	—		6,269		6,269
Derivative financial instruments - liabilities	—		21,577		21,577
Other liabilities (2)	—		3,411		3,411
Total liabilities measured at fair value	$	—	$	51,350	$	51,350


	Fair Value Measurements at December 31, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash and cash equivalents	$	444,661	$	—	$	444,661
Restricted cash	55,615		—		55,615
Inventories carried at market	—		61,885		61,885
Derivative financial instruments - assets	—		16,420		16,420
Other assets	110		1		111
Total assets measured at fair value	$	500,386	$	78,306	$	578,692

Liabilities
Accounts payable (1)	$	—	$	31,925	$	31,925
Accrued and other liabilities (2)	—		1,909		1,909
Derivative financial instruments - liabilities	—		44,686		44,686
Other liabilities (2)	—		6,640		6,640
Total liabilities measured at fair value	$	—	$	85,160	$	85,160

(1)Accounts payable is generally stated at historical amounts with the exception of $20.1 million and $31.9 million at September 30, 2023 and December 31, 2022, respectively, related to certain delivered inventory for which the payable fluctuates based on changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option.

(2)As of September 30, 2023 and December 31, 2022, respectively, accrued and other liabilities includes $6.3 million and $1.9 million and other liabilities includes $3.2 million and $6.6 million of consideration related to potential earn-out payments recorded at fair value.

As of September 30, 2023, the fair value of the company’s debt was approximately $663.5 million compared with a book value of $653.6 million. At December 31, 2022, the fair value of the company’s debt was approximately $654.5

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million compared with a book value of $634.8 million. The company estimated the fair value of its outstanding debt using Level 2 inputs. The company believes the fair value of its accounts receivable approximated book value, which was $142.8 million and $108.6 million at September 30, 2023 and December 31, 2022, respectively.

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

5. SEGMENT INFORMATION

The company reports the financial and operating performance for the following three operating segments: (1) ethanol production, which includes the production of ethanol, distillers grains, Ultra-High Protein and renewable 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, Ultra-High Protein, renewable corn oil, natural gas and other commodities, and (3) 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, Ultra-High Protein and renewable corn oil for the ethanol production segment. The partnership segment provides fuel storage and transportation services for the ethanol production segment. These intersegment activities are treated like third-party transactions with origination, marketing and storage fees charged at estimated market values. Consequently, these transactions affect segment performance; however, they do not impact the company’s consolidated results since the revenues and corresponding costs are eliminated.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues
Ethanol production
Revenues from external customers	$	773,367	$	811,015	$	2,195,600	$	2,309,734
Intersegment revenues	—		—		—		—
Total segment revenues	773,367		811,015		2,195,600		2,309,734
Agribusiness and energy services
Revenues from external customers	118,449		142,926		384,615		436,119
Intersegment revenues	6,632		6,836		18,675		19,914
Total segment revenues	125,081		149,762		403,290		456,033
Partnership
Revenues from external customers	954		1,036		3,136		2,953
Intersegment revenues	19,191		19,030		58,307		55,867
Total segment revenues	20,145		20,066		61,443		58,820
Revenues including intersegment activity	918,593		980,843		2,660,333		2,824,587
Intersegment eliminations	(25,823)		(25,866)		(76,982)		(75,781)
	$	892,770	$	954,977	$	2,583,351	$	2,748,806

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of goods sold
Ethanol production	$	728,360	$	843,843	$	2,176,253	$	2,310,224
Agribusiness and energy services	109,292		139,922		371,981		418,017
Intersegment eliminations	(26,353)		(26,908)		(76,839)		(77,561)
	$	811,299	$	956,857	$	2,471,395	$	2,650,680


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Gross margin
Ethanol production	$	45,007	$	(32,828)	$	19,347	$	(490)
Agribusiness and energy services	15,789		9,840		31,309		38,016
Partnership	20,145		20,066		61,443		58,820
Intersegment eliminations	530		1,042		(143)		1,780
	$	81,471	$	(1,880)	$	111,956	$	98,126


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating income (loss)
Ethanol production (1)	$	11,973	$	(64,121)	$	(77,759)	$	(87,773)
Agribusiness and energy services	11,313		5,205		17,612		25,894
Partnership	11,428		11,993		34,744		35,906
Intersegment eliminations	530		1,042		(143)		1,780
Corporate activities (2)	(14,070)		(15,999)		(52,300)		(51,748)
	$	21,174	$	(61,880)	$	(77,846)	$	(75,941)

(1)Operating income (loss) for ethanol production includes an inventory lower of cost or net realizable value adjustment of $1.7 million for the three and nine months ended September 30, 2023, and $11.2 million for the three and nine months ended September 30, 2022.

(2)Corporate activities for the three and nine months ended September 30, 2023 includes the $5.7 million pretax gain on sale of assets.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Depreciation and amortization
Ethanol production	$	21,816	$	21,555	$	67,179	$	59,101
Agribusiness and energy services	534		1,280		1,883		2,214
Partnership	780		1,194		2,424		2,915
Corporate activities	769		618		2,425		1,783
	$	23,899	$	24,647	$	73,911	$	66,013

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


	September 30, 2023		December 31, 2022
Total assets (1)
Ethanol production	$	1,158,191	$	1,157,791
Agribusiness and energy services	481,793		489,083
Partnership	108,773		108,680
Corporate assets	216,649		386,437
Intersegment eliminations	(14,262)		(18,860)
	$	1,951,144	$	2,123,131

(1)Asset balances by segment exclude intercompany balances.

6. INVENTORIES

Inventories are carried at the lower of cost or net realizable value, except fair-value hedged inventories. The company recorded a $1.7 million and $12.3 million lower of cost or net realizable value inventory adjustment associated with finished goods in cost of goods sold within the ethanol production segment as of September 30, 2023 and December 31, 2022, respectively.

The components of inventories are as follows (in thousands):


	September 30, 2023		December 31, 2022
Finished goods	$	83,214	$	97,719
Commodities held for sale	18,758		61,885
Raw materials	42,211		55,983
Work-in-process	15,568		18,499
Supplies and parts	48,310		44,864
	$	208,061	$	278,950

7. DERIVATIVE FINANCIAL INSTRUMENTS

At September 30, 2023, the company’s consolidated balance sheet reflected unrealized losses of $8.1 million, net of tax, in accumulated other comprehensive loss. The company expects these items will be reclassified as operating income (loss) over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount realized in operating income (loss) will differ as commodity prices change.

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Fair Values of Derivative Instruments

The fair values of the company’s derivative financial instruments and the line items on the consolidated balance sheets where they are reported are as follows (in thousands):


	Asset Derivatives' Fair Value						Liability Derivatives' Fair Value
	September 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
Derivative financial instruments - forwards	$	14,037	(1)	$	16,420	(2)	$	21,577	(3)	$	44,686	(4)
Other assets	1			1			—			—
Other liabilities	—			—			234			—
Total	$	14,038		$	16,421		$	21,811		$	44,686

(1)At September 30, 2023, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange-traded futures and options contracts of $2.2 million, which included $0.1 million of unrealized gains on derivative financial instruments designated as fair value hedging instruments, and the balance representing economic hedges.

(2)At December 31, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange-traded futures and options contracts of $3.4 million, which included $9.0 million of unrealized gains on derivative financial instruments designated as fair value hedging instruments, partially offset by $2.0 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments, and the balance representing economic hedges.

(3)At September 30, 2023, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange-traded futures and options contracts of $0.3 million, which included $5.1 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments, $0.2 million of net unrealized gains on derivative financial instruments designated as fair value hedging instruments, and the balance representing economic hedges.

(4)At December 31, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange-traded futures and options contracts of $3.3 million, which included $0.6 million of net unrealized losses on derivative financial instruments designated as fair value hedging instruments and the balance representing economic hedges.

Refer to Note 4 - Fair Value Disclosures, which contains fair value information related to derivative financial instruments.

Effect of Derivative Instruments on Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income

The gains or losses recognized in income and other comprehensive income related to the company’s derivative financial instruments and the line items on the consolidated financial statements where they are reported are as follows (in thousands):


	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues	$	(917)	$	6,958	$	(2,435)	$	5,219
Cost of goods sold	(13,234)		(4,760)		(18,688)		(3,748)
Net gain (loss) recognized in income (loss) before income taxes	$	(14,151)	$	2,198	$	(21,123)	$	1,471


	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
Gain (Loss) Recognized in Other Comprehensive Income on Derivatives	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Commodity contracts	$	19,016	$	10,234	$	3,137	$	3,427

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A portion of the company’s derivative instruments are considered economic hedges and as such are not designated as hedging instruments. The company uses exchange-traded futures and options contracts to manage its net position of product inventories and forward cash purchase and sales contracts to reduce price risk caused by market fluctuations. Derivatives, including exchange traded contracts and forward commodity purchase or sale contracts, and inventories of certain agricultural products, which include amounts acquired under deferred pricing contracts, are stated at fair value. Fair value estimates are based on exchange-quoted prices, adjusted as appropriate for regional location basis value, which represent differences in local markets including transportation as well as quality or grade differences.


		Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Exchange-traded futures and options	Revenues	$	3,484	$	1,302	$	(7,661)	$	1,271
Forwards	Revenues	121		(4,775)		4,747		(508)
Exchange-traded futures and options	Cost of goods sold	295		(13,455)		34,028		(53,663)
Forwards	Cost of goods sold	23,347		16,231		(8,940)		(2,066)
Net gain (loss) recognized in income (loss) before income taxes		$	27,247	$	(697)	$	22,174	$	(54,966)

The following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items (in thousands):


	September 30, 2023				December 31, 2022
Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets		Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Inventories	$	18,758	$	1,188	$	61,885	$	(13,776)

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Effect of Cash Flow and Fair Value Hedge Accounting on the Statements of Operations


	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended September 30,
	2023				2022
	Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain (loss) on cash flow hedging relationships

Commodity contracts
Amount of gain (loss) on exchange-traded futures reclassified from accumulated other comprehensive income into income	$	(917)	$	(13,234)	$	6,958	$	(4,760)

Gain (loss) on fair value hedging relationships

Commodity contracts
Fair-value hedged inventories	—		1,135		—		1,656
Exchange-traded futures designated as hedging instruments	—		(1,122)		—		(4,262)
Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	(917)	$	(13,221)	$	6,958	$	(7,366)


	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Nine Months Ended September 30,
	2023				2022
	Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain (loss) on cash flow hedging relationships

Commodity contracts
Amount of gain (loss) on exchange traded futures reclassified from accumulated other comprehensive income into income	$	(2,435)	$	(18,688)	$	5,219	$	(3,748)

Gain (loss) on fair value hedging relationships

Commodity contracts
Fair-value hedged inventories	—		(9,286)		—		11,492
Exchange-traded futures designated as hedging instruments	—		10,803		—		(8,973)
Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	(2,435)	$	(17,171)	$	5,219	$	(1,229)

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The notional volume of open commodity derivative positions as of September 30, 2023, are as follows (in thousands):

Exchange-Traded (1)

Non-Exchange-Traded (2)

Derivative
Instruments

Net Long &
(Short)

Long

(Short)

Unit of
Measure

Commodity

Futures

(13,750)

Bushels

Corn

Futures

(420)

(4)

Bushels

Corn

Futures

(5,880)

Gallons

Ethanol

Futures

(1,315)

MmBTU

Natural Gas

Futures

6,080

(3)

MmBTU

Natural Gas

Futures

(5,895)

(4)

MmBTU

Natural Gas

Options

(1,283)

Bushels

Corn

Options

2,339

Gallons

Ethanol

Options

Tons

Soybean Meal

Options

10,079

Pounds

Soybean Oil

Options

1,839

MmBTU

Natural Gas

Forwards

25,672

Bushels

Corn

Forwards

6,844

(230,170)

Gallons

Ethanol

Forwards

(337)

Tons

Distillers Grains

Forwards

—

(81,881)

Pounds

Renewable Corn Oil

Forwards

10,816

(439)

MmBTU

Natural Gas

(1)Notional volume of exchange-traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis.

(2)Notional volume of non-exchange-traded forward physical contracts are presented on a gross long and (short) position basis, including both fixed-price and basis contracts, for which only the basis portion of the contract price is fixed.

(3)Notional volume of exchange-traded futures used for cash flow hedges.

(4)Notional volume of exchange-traded futures used for fair value hedges.

Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Included in revenues are net losses of $0.1 million and net gains of $4.1 million for the three and nine months ended September 30, 2023, respectively, and net losses of $0.1 million and net gains of $1.2 million for the three and nine months ended September 30, 2022, respectively, on energy trading contracts.

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8. DEBT

The components of long-term debt are as follows (in thousands):


	September 30, 2023		December 31, 2022
Corporate
2.25% convertible notes due 2027 (1)	$	230,000	$	230,000
Green Plains SPE LLC
$125.0 million junior secured mezzanine notes due 2026 (2)	125,000		125,000
Green Plains Wood River and Green Plains Shenandoah
$75.0 million loan agreement (3)	73,500		74,625
Green Plains Partners
$60.0 million term loan (4)	55,969		58,969
Other	14,830		15,097
Total book value of long-term debt	499,299		503,691
Unamortized debt issuance costs	(5,418)		(6,610)
Less: current maturities of long-term debt	(1,936)		(1,838)
Total long-term debt	$	491,945	$	495,243

(1)Includes $4.3 million and $5.2 million of unamortized debt issuance costs as of September 30, 2023 and December 31, 2022, respectively.

(2)Includes $0.5 million and $0.7 million of unamortized debt issuance costs as of September 30, 2023 and December 31, 2022, respectively.

(3)Includes $0.3 million of unamortized debt issuance costs as of both September 30, 2023 and December 31, 2022.

(4)Includes $0.3 million and $0.4 million of unamortized debt issuance costs as of September 30, 2023 and December 31, 2022, respectively.

The components of short-term notes payable and other borrowings are as follows (in thousands):


	September 30, 2023		December 31, 2022
Green Plains Finance Company, Green Plains Grain and Green Plains Trade
$350.0 million revolver	$	150,000	$	115,000
Green Plains Commodity Management
$40.0 million hedge line	9,747		22,678
	$	159,747	$	137,678

Corporate Activities

In March 2021, the company issued an aggregate $230.0 million of 2.25% convertible senior notes due in 2027, or the 2.25% notes. The 2.25% notes bear interest at a rate of 2.25% per year, payable on March 15 and September 15 of each year, beginning September 15, 2021, and mature on March 15, 2027. The 2.25% notes are senior, unsecured obligations of the company. The 2.25% notes are convertible, at the option of the holders, into consideration consisting of, at the company’s election, cash, shares of the company’s common stock, or a combination of cash and stock (and cash in lieu of fractional shares). However, before September 15, 2026, the 2.25% notes will not be convertible unless certain conditions are satisfied. The initial conversion rate is 31.6206 shares of the company’s common stock per $1,000 principal amount of 2.25% notes (equivalent to an initial conversion price of approximately $31.62 per share of the company’s common stock), representing an approximately 37.5% premium over the offering price of the company’s common stock. The conversion rate is subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; or a tender or exchange offering. In addition, the company may be obligated to increase the conversion rate for any conversion that occurs in connection with certain corporate events, including the company’s calling the 2.25% notes for redemption.

On and after March 15, 2024, and prior to the maturity date, the company may redeem, for cash, all, but not less than all, of the 2.25% notes if the last reported sale price of the company’s common stock equals or exceeds 140% of the applicable conversion price on (i) at least 20 trading days during a 30 consecutive trading day period ending on the trading day immediately prior to the date the company delivers notice of the redemption; and (ii) the trading day immediately

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before the date of the redemption notice. The redemption price will equal 100% of the principal amount of the 2.25% notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of a “fundamental change” (as defined in the indenture for the 2.25% notes), holders of the 2.25% notes will have the right, at their option, to require the company to repurchase their 2.25% notes for cash at a price equal to 100% of the principal amount of the 2.25% notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

During June 2019, the company issued an aggregate $115.0 million of 4.00% convertible senior notes due in 2024, or the 4.00% notes. The 4.00% notes were senior, unsecured obligations of the company, with interest payable on January 1 and July 1 of each year, beginning January 1, 2020, at a rate of 4.00% per annum. The 4.00% notes were convertible, at the option of the holders, into consideration consisting of, at the company’s election, cash, shares of the company’s common stock, or a combination of cash and shares of the company’s common stock until the close of business on the scheduled trading day immediately preceding the maturity date. The initial conversion rate was 64.1540 shares of common stock per $1,000 of principal, which was equal to a conversion price of approximately $15.59 per share.

During May 2021, the company entered into a privately negotiated agreement with certain noteholders of the company’s 4.00% notes. Under this agreement, approximately 3.6 million shares of the company’s common stock were exchanged for $51.0 million in aggregate principal amount of the 4.00% notes.

On May 25, 2022, the company gave notice calling for the redemption of its outstanding 4.00% notes, totaling an aggregate principal amount of $64.0 million. The final conversion rate was 66.4178 shares of common stock per $1,000 of principal. From July 1, 2022 through July 8, 2022, the remaining $64.0 million of the 4.00% notes were converted into approximately 4.3 million shares of common stock. Common stock held as treasury shares were exchanged for the 4.00% notes. Pursuant to the guidance within ASC 470, Debt, the company recorded the exchanges as a conversion. The 4.00% notes were retired effective July 8, 2022.

In August 2016, the company issued $170.0 million of 4.125% convertible senior notes due in 2022, or the 4.125% notes. The 4.125% notes were senior, unsecured obligations of the company, with interest payable on March 1 and September 1 of each year. The notes were convertible at the Holder’s option. The initial conversion rate was 35.7143 shares of common stock per $1,000 of principal, which was equal to a conversion price of approximately $28.00 per share.

In March 2021, concurrent with the issuance of the 2.25% notes, the company used approximately $156.5 million of the net proceeds of the 2.25% notes to repurchase approximately $135.7 million aggregate principal amount of the 4.125% notes, in privately negotiated transactions.

During August 2022, the company entered into four privately negotiated exchange agreements with certain noteholders of the 4.125% notes to exchange approximately $32.6 million aggregate principal amount for approximately 1.2 million shares of the company's common stock. Pursuant to the guidance within ASC 470, Debt, the company recorded the exchanges as a conversion and recorded a loss of $419 thousand, which was recorded as a charge to interest expense in the consolidated financial statements during the year ended December 31, 2022. Additionally, on September 1, 2022, approximately $1.7 million aggregate principal amount of the 4.125% notes were settled through a combination of $1.7 million in cash and approximately 15 thousand shares of the company's common stock. The remaining $23 thousand aggregate principal amount and accrued interest were settled in cash. The 4.125% notes were fully retired effective September 1, 2022.

Ethanol Production Segment

On February 9, 2021, Green Plains SPE LLC, a wholly-owned special purpose subsidiary and parent of Green Plains Obion and Green Plains Mount Vernon, issued $125.0 million of junior secured mezzanine notes due 2026 (the “Junior Notes”) with BlackRock, a holder of a portion of the company’s common stock.

The Junior Notes will mature on February 9, 2026 and are secured by a pledge of the membership interests in and the real property owned by Green Plains Obion and Green Plains Mount Vernon. The proceeds of the Junior Notes were used to construct high protein processing systems at the Green Plains Obion and Green Plains Mount Vernon facilities. The Junior Notes accrue interest at an annual rate of 11.75%. However, subject to the satisfaction of certain conditions, the Green Plains SPE LLC may elect to pay an amount in cash equal to interest accruing at a rate of 6.00% per annum plus an amount equal to interest accruing at a rate of 6.75% per annum to be paid in kind. The entire outstanding principal balance, plus any accrued and unpaid interest is due upon maturity. Green Plains SPE LLC is required to comply with certain financial covenants regarding minimum liquidity at Green Plains and a maximum aggregate loan to value. The Junior Notes can be retired or refinanced after 42 months with no prepayment premium. The Junior Notes have an unsecured

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parent guarantee from the company and have certain limitations on distributions, dividends or loans to the company unless there will not exist any event of default. At September 30, 2023, the interest rate on the Junior Notes was 11.75%.

On September 3, 2020, Green Plains Wood River and Green Plains Shenandoah, wholly-owned subsidiaries of the company, entered into a loan agreement with MetLife Real Estate Lending LLC. The $75.0 million loan matures on September 1, 2035 and is secured by substantially all of the assets of the Wood River and Shenandoah facilities. The proceeds from the loan were used to add MSC™ technology at the Wood River and Shenandoah facilities as well as other capital expenditures.

The loan bears interest at a fixed rate of 5.02%, plus an interest rate premium of 1.5% until the loan is fully drawn. The remaining availability was drawn in the first quarter of 2022. Beginning in the second quarter of 2022, the interest rate premium may be adjusted quarterly from 0.00% to 1.50% based on the leverage ratio of total funded debt to EBITDA of Wood River and Shenandoah. Principal payments of $1.5 million per year began 24 months from the closing date. Prepayments are prohibited until September 2024. Financial covenants of the loan agreement include a minimum loan to value ratio of 50%, a minimum fixed charge coverage ratio of 1.25x, a total debt service reserve of six months of future principal and interest payments and a minimum working capital requirement at Green Plains of not less than $0.10 per gallon of nameplate capacity or $95.8 million. The loan is guaranteed by the company and has certain limitations on distributions, dividends or loans to Green Plains by Wood River and Shenandoah unless immediately after giving effect to such action, there will not exist any event of default. At September 30, 2023, the interest rate on the loan was 6.52%.

The company also has small equipment financing loans, finance leases on equipment or facilities, and other forms of debt financing.

Agribusiness and Energy Services Segment

On March 25, 2022, Green Plains Finance Company, Green Plains Grain and Green Plains Trade (collectively, the “Borrowers”), all wholly owned subsidiaries of the company, together with the company, as guarantor, entered into a five-year, $350.0 million senior secured sustainability-linked revolving Loan and Security Agreement (the “Facility”) with a group of financial institutions. This transaction refinanced the separate credit facilities previously held by Green Plains Grain and Green Plains Trade. The Facility matures on March 25, 2027.

The Facility includes revolving commitments totaling $350.0 million and an accordion feature whereby amounts available under the Facility may be increased by up to $100.0 million of new lender commitments subject to certain conditions. Each SOFR rate loan shall bear interest for each day at a rate per annum equal to the Term SOFR rate for the outstanding period plus a Term SOFR adjustment and an applicable margin of 2.25% to 2.50%, which is dependent on undrawn availability under the Facility. Each base rate loan shall bear interest at a rate per annum equal to the base rate plus the applicable margin of 1.25% to 1.50%, which is dependent on undrawn availability under the Facility. The unused portion of the Facility is also subject to a commitment fee of 0.275% to 0.375%, dependent on undrawn availability. Additionally, the applicable margin and commitment fee are subject to certain increases or decreases of up to 0.10% and 0.025%, respectively, tied to the company’s achievement of certain sustainability criteria, including the reduction of GHG emissions, recordable incident rate reduction, increased renewable corn oil production and the implementation of technology to produce sustainable ingredients.

The Facility contains customary affirmative and negative covenants, as well as the following financial covenants to be calculated as of the last day of any month: the current ratio of the Borrowers shall not be less than 1.00 to 1.00; the collateral coverage ratio of the Borrowers shall not be less than 1.20 to 1.00; and the debt to capitalization ratio of the company shall not be greater than 0.60 to 1.00.

The Facility also includes customary events of default, including without limitation, failure to make required payments of principal or interest, material incorrect representations and warranties, breach of covenants, events of bankruptcy and other certain matters. The Facility is secured by the working capital assets of the Borrowers and is guaranteed by the company. At September 30, 2023, the interest rate on the Facility was 8.74%.

Green Plains Commodity Management has an uncommitted $40.0 million revolving credit facility to finance margins related to its hedging programs. During the first quarter of 2023, this revolving credit facility was extended five years to mature on April 30, 2028. Advances are subject to variable interest rates equal to SOFR plus 1.75%. At September 30, 2023, the interest rate on the facility was 7.06%.

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fluctuations in market prices of the inventory. This agreement is subject to negotiated variable interest rates. The company had no outstanding short-term notes payable related to the inventory financing agreement as of September 30, 2023.

Partnership Segment

Green Plains Partners has a term loan to fund working capital, capital expenditures and other general partnership purposes. The term loan has a maturity date of July 20, 2026. Interest on the term loan is based on 3-month SOFR plus 8.26%, and is payable on the 15th day of each March, June, September and December. The term loan does not require any principal payments; however, the partnership has the option to prepay $1.5 million per quarter beginning twelve months after the closing date. The partnership repurchased $1.0 million of the outstanding notes during the six months ended September 30, 2022. Prepayments totaling $1.5 million and $3.0 million were made during the three and nine months ended September 30, 2023, respectively.

The partnership’s obligations under the term loan are secured by a first priority lien on (i) the equity interests of the partnership’s present and future subsidiaries, (ii) all of the partnership’s present and future personal property, such as investment property, general intangibles and contract rights, including rights under any agreements with Green Plains Trade, (iii) all proceeds and products of the equity interests of the partnership’s present and future subsidiaries and its personal property and (iv) substantially all of the partnership’s real property and material leases of real property. The terms impose affirmative and negative covenants, including restrictions on the partnership’s ability to incur additional debt, acquire and sell assets, create liens, invest capital, pay distributions and materially amend the partnership’s commercial agreements with Green Plains Trade. The term loan also requires the partnership to maintain a maximum consolidated leverage ratio and a minimum consolidated debt service coverage ratio as of the end of any fiscal quarter, each of which is calculated on a pro forma basis with respect to acquisitions and divestitures occurring during the applicable period. The maximum consolidated leverage ratio is required to be no more than 2.50x. The minimum debt service coverage ratio is required to be no less than 1.10x. The consolidated leverage ratio is calculated by dividing total funded indebtedness by the sum of the four preceding fiscal quarters’ consolidated EBITDA. The consolidated debt service coverage ratio is calculated by taking the sum of the four preceding fiscal quarters’ consolidated EBITDA minus income taxes and consolidated capital expenditures for such period divided by the sum of the four preceding fiscal quarters’ consolidated interest charges plus consolidated scheduled funded debt payments for such period.

Under the terms of the loan, the partnership has no restrictions on the amount of quarterly distribution payments, so long as (i) no default has occurred and is continuing, or would result from payment of the distribution, and (ii) the partnership and its subsidiaries are in compliance with its financial covenants and remain in compliance after payment of the distribution. The term loan is not guaranteed by the company. At September 30, 2023, the interest rate on the term loan was 13.67%. On October 30, 2023, the partnership entered into an amendment to the term loan to include written consent from the lenders to permit the Merger to be completed.

On April 19, 2023, the term loan was amended to change the underlying floating interest rate to a SOFR-based rate from a LIBOR-based rate. The impact of the amendment was not material to interest expense.

Covenant Compliance

The company was in compliance with its debt covenants as of September 30, 2023.

Restricted Net Assets

At September 30, 2023, there were approximately $121.9 million of net assets at the company’s subsidiaries that could not be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.

9. STOCK-BASED COMPENSATION

The company has an equity incentive plan which reserved a total of 5.7 million shares of common stock for issuance pursuant to the plan, of which 1.4 million shares remain available for issuance. The plan provides for shares, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, performance share awards, and restricted and deferred stock unit awards, to be granted to eligible employees, non-employee directors and consultants. The company measures stock-based compensation at fair value on the grant date, with no adjustments for estimated forfeitures. The company records noncash compensation expense related to equity awards in its consolidated financial statements over the requisite period on a straight-line basis.

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Restricted Stock Awards and Deferred Stock Units

The restricted non-vested stock awards and deferred stock units activity for the nine months ended September 30, 2023, is as follows:


	Non-Vested Shares and Deferred Stock Units	Weighted- Average Grant- Date Fair Value		Weighted-Average Remaining Vesting Term (in years)
Non-Vested at December 31, 2022	813,033	$	19.98
Granted	288,755	34.07
Forfeited	(42,078)	29.42
Vested	(457,502)	13.63
Non-Vested at September 30, 2023	602,208	$	30.90	1.5

Performance Share Awards

On March 9, 2023, March 14, 2022, and February 18, 2021, the board of directors granted performance shares to be awarded in the form of common stock to certain participants of the plan. These performance shares vest based on the level of achievement of certain performance goals, including the incremental value achieved from the company's high-protein initiatives, annual production levels and return on investment (ROI). Performance shares granted in 2023, 2022 and 2021 do not contain market based factors requiring a Monte Carlo valuation model. The performance shares were granted at a target of 100%, but each performance share can be reduced or increased depending on results for the performance period. If the company achieves the maximum performance goals, the maximum amount of shares available to be issued pursuant to the 2023, 2022 and 2021 awards are 904,418 performance shares which represents approximately 223% of the 404,740 performance shares which remain outstanding. The actual number of performance shares that will ultimately vest is based on the actual performance targets achieved at the end of the performance period.

On March 18, 2020, the board of directors granted performance shares to be awarded in the form of common stock to certain participants of the plan. The performance shares were granted at a target of 100%, but each performance share was reduced or increased depending on results for the performance period for the company’s total shareholder return relative to that of the company’s performance peer group. On March 17, 2023, based on the criteria discussed above, the 196,382 2020 performance shares vested at approximately 123%, which resulted in the issuance of 241,589 shares of common stock.

The non-vested performance share award activity for the nine months ended September 30, 2023, is as follows:


	Performance Shares	Weighted- Average Grant- Date Fair Value		Weighted-Average Remaining Vesting Term (in years)
Non-Vested at December 31, 2022	482,811	$	18.22
Granted	200,294	27.74
Forfeited	(13,069)	27.50
Vested	(265,296)	6.21
Non-Vested at September 30, 2023	404,740	$	30.51	1.5

Green Plains Partners

Green Plains Partners has a long-term incentive plan (LTIP) intended to promote the interests of the partnership, its general partner and affiliates by providing unit-based incentive compensation awards to employees, consultants and directors to encourage superior performance. The LTIP reserves 2.5 million common limited partner units for issuance in the form of options, restricted units, phantom units, distribution equivalent rights, substitute awards, unit appreciation

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rights, unit awards, profit interest units or other unit-based awards. The partnership measures unit-based compensation related to equity awards in its consolidated financial statements over the requisite service period on a straight-line basis.

The non-vested unit-based awards activity for the nine months ended September 30, 2023, is as follows:


	Non-Vested Units	Weighted- Average Grant- Date Fair Value		Weighted-Average Remaining Vesting Term (in years)
Non-Vested at December 31, 2022	19,707	$	12.18
Granted	18,549	12.94
Vested	(19,707)	12.18
Non-Vested at September 30, 2023 (1)	18,549	$	12.94	0.8

(1)Per the Merger Agreement, each of these unvested awards will become fully vested at the Effective Time of the Merger.

Stock-Based and Unit Based Compensation Expense

Compensation costs for stock-based and unit-based payment plans were $2.7 million and $9.4 million for the three and nine months ended September 30, 2023, respectively, and $2.4 million and $6.6 million for the three and nine months ended September 30, 2022, respectively. At September 30, 2023, there was $18.6 million of unrecognized compensation costs from stock-based and unit-based compensation related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 1.5 years. The potential tax benefit related to stock-based payment is approximately 23.9% of these expenses.

10. EARNINGS PER SHARE

Basic earnings per share, or EPS, is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period.

The company computes diluted EPS by dividing net income on an if-converted basis, adjusted to add back net interest expense related to the convertible debt instruments, by the weighted average number of common shares outstanding during the period, adjusted to include the shares that would be issued if the convertible debt instruments were converted to common shares and the effect of any outstanding dilutive securities.

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The basic and diluted EPS are calculated as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
EPS - basic
Net income (loss) attributable to Green Plains	$	22,311	$	(73,526)	$	(100,617)	$	(88,602)
Weighted average shares outstanding - basic	58,910		57,677		58,780		54,550
EPS - basic	$	0.38	$	(1.27)	$	(1.71)	$	(1.62)

EPS - diluted
Net income (loss) attributable to Green Plains	$	22,311	$	(73,526)	$	(100,617)	$	(88,602)
Interest and amortization on 2.25% convertible notes due 2027, net of tax effect	1,201		—		—		—
Net income (loss) attributable to Green Plains - diluted	$	23,512	$	(73,526)	$	(100,617)	$	(88,602)

Weighted average shares outstanding - basic	58,910		57,677		58,780		54,550
Effect of dilutive 2.25% convertible notes due 2027	7,273		—		—		—
Effect of dilutive warrants	837		—		—		—
Effect of dilutive stock-based compensation awards	382		—		—		—
Weighted average shares outstanding - diluted	$	67,402	$	57,677	$	58,780	$	54,550
EPS - diluted	$	0.35	$	(1.27)	$	(1.71)	$	(1.62)

Anti-dilutive weighted-average convertible debt, warrants and stock-based compensation (1)	—		8,660		8,516		8,571

(1)For the nine months ended September 30, 2023, the effects related to the company’s 2.25% convertible notes due in 2027, warrants and certain stock-based compensation awards have been excluded from diluted EPS as the inclusion of these shares would have been anti-dilutive. For the three and nine months ended September 30, 2022, the effects related to the company's 2.25% convertible notes due in 2027, warrants and certain stock-based compensation awards were excluded from diluted EPS as the inclusion of these shares would have been anti-dilutive.

11. STOCKHOLDERS’ EQUITY

Convertible Note Exchange

On May 25, 2022, the company gave notice calling for the redemption of all its outstanding 4.00% Convertible Senior Notes due 2024, totaling an aggregate principal amount of $64.0 million. The conversion rate was 66.4178 shares of common stock per $1,000 of principal. From July 1, 2022 through July 8, 2022, all $64.0 million of the 4.00% convertible notes were converted into approximately 4.3 million shares of common stock.

During August 2022, the company entered into four privately negotiated exchange agreements with certain noteholders of the 4.125% Convertible Senior Notes due 2022 to exchange approximately $32.6 million aggregate principal amount for approximately 1.2 million shares of the company's common stock. Additionally, on September 1, 2022, approximately $1.7 million aggregate principal amount was settled through a combination of $1.7 million in cash and approximately 15 thousand shares of the company's common stock.

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Components of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):


	Common Stock			Additional Paid-in Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Treasury Stock			Total Green Plains Stockholders' Equity		Non- Controlling Interests		Total Stockholders' Equity
	Shares	Amount								Shares	Amount

Balance, December 31, 2022	62,101	$	62	$	1,110,151	$	(142,417)	$	(26,591)	2,805	$	(31,174)	$	910,031	$	151,035	$	1,061,066
Net loss	—	—		—		(70,324)		—		—	—		(70,324)		4,075		(66,249)
Cash dividends and distributions declared	—	—		—		—		—		—	—		—		(5,305)		(5,305)
Other comprehensive loss before reclassification	—	—		—		—		(12,788)		—	—		(12,788)		—		(12,788)
Amounts reclassified from accumulated other comprehensive loss	—	—		—		—		1,701		—	—		1,701		—		1,701
Other comprehensive loss, net of tax	—	—		—		—		(11,087)		—	—		(11,087)		—		(11,087)
Investment in subsidiaries	—	—		—		—		—		—	—		—		185		185
Stock-based compensation	217	—		(5,632)		—		—		—	—		(5,632)		59		(5,573)
Balance, March 31, 2023	62,318	62		1,104,519		(212,741)		(37,678)		2,805	(31,174)		822,988		150,049		973,037
Net loss	—	—		—		(52,604)		—		—	—		(52,604)		4,284		(48,320)
Cash dividends and distributions declared	—	—		—		—		—		—	—		—		(6,497)		(6,497)
Other comprehensive loss before reclassification	—	—		—		—		710		—	—		710		—		710
Amounts reclassified from accumulated other comprehensive loss	—	—		—		—		3,602		—	—		3,602		—		3,602
Other comprehensive income, net of tax	—	—		—		—		4,312		—	—		4,312		—		4,312
Investment in subsidiaries	—	—		—		—		—		—	—		—		8		8
Stock-based compensation	15	—		3,252		—		—		—	—		3,252		60		3,312
Balance, June 30, 2023	62,333	62		1,107,771		(265,345)		(33,366)		2,805	(31,174)		777,948		147,904		925,852
Net income	—	—		—		22,311		—		—	—		22,311		3,981		26,292
Cash dividends and distributions declared	—	—		—		—		—		—	—		—		(5,663)		(5,663)
Other comprehensive income (loss) before reclassification	—	—		—		—		14,469		—	—		14,469		—		14,469
Amounts reclassified from accumulated other comprehensive income (loss)	—	—		—		—		10,767		—	—		10,767		—		10,767
Other comprehensive income (loss), net of tax	—	—		—		—		25,236		—	—		25,236		—		25,236
Investment in subsidiary	—	—		—		—		—		—	—		—		65		65
Stock-based compensation	(15)	—		2,654		—		—		—	—		2,654		60		2,714
Balance, September 30, 2023	62,318	$	62	$	1,110,425	$	(243,034)	$	(8,130)	2,805	$	(31,174)	$	828,149	$	146,347	$	974,496

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	Common Stock			Additional Paid-in Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Treasury Stock			Total Green Plains Stockholders' Equity		Non- Controlling Interests		Total Stockholders' Equity
	Shares	Amount								Shares	Amount

Balance, December 31, 2021	61,840	$	62	$	1,069,573	$	(15,199)	$	(12,310)	8,244	$	(91,626)	$	950,500	$	151,519	$	1,102,019
Net income (loss)	—	—		—		(61,474)		—		—	—		(61,474)		5,602		(55,872)
Cash dividends and distributions declared	—	—		—		—		—		—	—		—		(5,122)		(5,122)
Other comprehensive income (loss) before reclassification	—	—		—		—		5,386		—	—		5,386		—		5,386
Amounts reclassified from accumulated other comprehensive income (loss)	—	—		—		—		(1,965)		—	—		(1,965)		—		(1,965)
Other comprehensive income, net of tax	—	—		—		—		3,421		—	—		3,421		—		3,421
Investment in subsidiaries	—	—		—		—		—		—	—		—		24		24
Stock-based compensation	226	—		(1,922)		—		—		—	—		(1,922)		59		(1,863)
Balance, March 31, 2022	62,066	62		1,067,651		(76,673)		(8,889)		8,244	(91,626)		890,525		152,082		1,042,607
Net income	—	—		—		46,398		—		—	—		46,398		6,322		52,720
Cash dividends and distributions declared	—	—		—		—		—		—	—		—		(8,098)		(8,098)
Other comprehensive income (loss) before reclassification	—	—		—		—		(10,535)		—	—		(10,535)		—		(10,535)
Amounts reclassified from accumulated other comprehensive income (loss)	—	—		—		—		2,515		—	—		2,515		—		2,515
Other comprehensive loss, net of tax	—	—		—		—		(8,020)		—	—		(8,020)		—		(8,020)
Investment in subsidiaries	—	—		—		—		—		—	—		—		190		190
Stock-based compensation	21	—		2,270		—		—		—	—		2,270		60		2,330
Balance, June 30, 2022	62,087	62		1,069,921		(30,275)		(16,909)		8,244	(91,626)		931,173		150,556		1,081,729
Net income (loss)	—	—		—		(73,526)		—		—	—		(73,526)		5,623		(67,903)
Cash dividends and distributions declared	—	—		—		—		—		—	—		—		(5,247)		(5,247)
Other comprehensive income (loss) before reclassification	—	—		—		—		7,740		—	—		7,740		—		7,740
Amounts reclassified from accumulated other comprehensive income (loss)	—	—		—		—		(1,662)		—	—		(1,662)		—		(1,662)
Other comprehensive income (loss), net of tax	—	—		—		—		6,078		—	—		6,078		—		6,078
Exchange of 4.125% convertible notes due 2022	—	—		19,756		—		—		(1,188)	13,211		32,967		—		32,967
Redemption of 4.00% convertible notes due 2024	—	—		15,797		—		—		(4,251)	47,241		63,038		—		63,038
Investment in subsidiary	—	—		—		—		—		—	—		—		199		199
Stock-based compensation	1	—		2,312		—		—		—	—		2,312		61		2,373
Balance, September 30, 2022	62,088	$	62	$	1,107,786	$	(103,801)	$	(10,831)	2,805	$	(31,174)	$	962,042	$	151,192	$	1,113,234

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Amounts reclassified from accumulated other comprehensive loss are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Statements of Operations Classification
	2023		2022		2023		2022
Gains (losses) on cash flow hedges
Commodity derivatives	$	(917)	$	6,958	$	(2,435)	$	5,219	(1)
Commodity derivatives	(13,234)		(4,760)		(18,688)		(3,748)		(2)
Total gains (losses) on cash flow hedges	(14,151)		2,198		(21,123)		1,471		(3)
Income tax benefit (expense)	3,384		(536)		5,053		(359)		(4)
Amounts reclassified from accumulated other comprehensive loss	$	(10,767)	$	1,662	$	(16,070)	$	1,112

(1)Revenues

(2)Costs of goods sold

(3)Income (loss) before income taxes and income (loss) from equity method investees

(4)Income tax benefit (expense)

12. INCOME TAXES

The company records actual income tax expense or benefit during interim periods rather than on an annual effective tax rate method. Certain items are given discrete period treatment and the tax effect of those items are reported in full in the relevant interim period. Green Plains Partners is a limited partnership, which is treated as a flow-through entity for federal income tax purposes and is not subject to federal income taxes. As a result, the consolidated financial statements do not reflect such income taxes on pre-tax income or loss attributable to the noncontrolling interest in the partnership.

The Inflation Reduction Act (IRA), was signed into law on August 16, 2022. The IRA includes significant law changes relating to tax, climate change, energy and health care. The IRA significantly expands clean energy incentives by providing an estimated $370 billion of new energy related tax credits over the next ten years. It also permits more flexibility for taxpayers to use the credits with direct-pay and transferable credit options. In addition, the IRA includes key revenue-raising provisions which include a 15% book-income alternative minimum tax on corporations with adjusted financial statement income over $1 billion, a 1% excise tax on the value of certain net stock repurchases by publicly traded companies, and the reinstatement of Superfund excise taxes. The company expects it will benefit from certain energy related tax credits in future years and not be negatively impacted by the revenue raising provisions; however, the company does not have enough information to provide a reasonable estimate of future tax benefits at this time.

The company recorded income tax benefit of $7.8 million for the three months ended September 30, 2023, compared with income tax benefit of $1.9 million for the same period in 2022. The increase in the amount of tax benefit recorded for the three months ended September 30, 2023 was primarily due to a decrease in the valuation allowance recorded against deferred tax assets related to gains (losses) on derivatives.

The effective tax rate can be affected by variances in the estimates and amounts of taxable income among the various states, entities and activity types, realization of tax credits, adjustments from resolution of tax matters under review, valuation allowances and the company’s assessment of its liability for uncertain tax positions.

13. COMMITMENTS AND CONTINGENCIES

Lease Expense

The company leases certain facilities, parcels of land, and equipment, with remaining terms ranging from less than one year to approximately 14.1 years. The land and facility leases include renewal options. The renewal options are included in the lease term only for those sites or locations in which they are reasonably certain to be renewed. Equipment renewals are not considered reasonably certain to be exercised as they typically renew with significantly different underlying terms.

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The components of lease expense are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Lease expense
Operating lease expense	$	7,155	$	5,220	$	20,744	$	15,608
Variable lease expense (benefit) (1)	211		776		(96)		1,181
Total lease expense	$	7,366	$	5,996	$	20,648	$	16,789

(1)Represents amounts incurred in excess of the minimum payments required for a certain building lease and for the handling and unloading of railcars for a certain land lease, offset by railcar lease abatements provided by the lessor when railcars are out of service during periods of maintenance or upgrade.

Supplemental cash flow information related to operating leases is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	7,075	$	4,949	$	19,914	$	14,823

Right-of-use assets obtained in exchange for lease obligations
Operating leases	4,330		1,428		27,786		13,151

Right-of-use assets and lease obligations derecognized due to lease modifications:
Operating leases (1)	3,428		—		3,428		—

(1)As part of the Atkinson disposition, the company derecognized $3.4 million of right-of-use assets and lease obligations related to railcar operating leases.

Supplemental balance sheet information related to operating leases is as follows:


	September 30, 2023		December 31, 2022
Weighted average remaining lease term	4.6 years		4.9 years

Weighted average discount rate	5.09	%	4.32	%

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Aggregate minimum lease payments under the operating lease agreements for the remainder of 2023 and in future years are as follows (in thousands):


Year Ending December 31,	Amount
2023	$	7,334
2024	25,824
2025	21,256
2026	14,808
2027	11,312
Thereafter	12,809
Total	93,343
Less: Present value discount	(10,711)
Lease liabilities	$	82,632

Lease Revenue

As described in Note 2 – Revenue, the majority of the partnership’s segment revenue is generated through their storage and throughput services and rail transportation services agreements with Green Plains Trade and are accounted for as lease revenue. Leasing revenues do not represent revenues recognized from contracts with customers under ASC 606, and are accounted for under ASC 842, Leases. Lease revenue associated with agreements with Green Plains Trade is eliminated upon consolidation. The remaining lease revenue is not material to the company.

Commodities, Storage and Transportation

As of September 30, 2023, the company had contracted future purchases of grain, ethanol, distillers grains, and natural gas valued at approximately $205.8 million and future commitments for storage and transportation valued at approximately $27.2 million.

Legal

The company is currently involved in litigation that has arisen in the ordinary course of business, but does not believe any pending litigation will have a material adverse effect on its financial position, results of operations or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

The following discussion and analysis provides information we believe is relevant to understand our consolidated financial condition and results of operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and notes to the unaudited consolidated financial statements contained in this report together with our annual report on Form 10-K for the year ended December 31, 2022.

Cautionary Information Regarding Forward-Looking Statements

Forward-looking statements are made in accordance with safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations that involve a number of risks and uncertainties and do not relate strictly to historical or current facts, but rather to plans and objectives for future operations. These statements may be identified by words such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “outlook,” “plan,” “predict,” “may,” “could,” “should,” “will” and similar expressions, as well as statements regarding future operating or financial performance or guidance, business strategy, environment, key trends and benefits of actual or planned acquisitions.

Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in Part I, Item 1A – Risk Factors of our annual report on Form 10-K for the year ended December 31, 2022 and in Part II, Item 1A, “Risk Factors” in this report, or incorporated by reference. Specifically, we may experience fluctuations in future operating results due to a number of economic conditions and other factors, including: competition in the ethanol industry and other industries in which we operate; commodity market risks, including those that may result from weather conditions; financial market risks; counterparty risks; risks associated with changes to government policy or regulation, including changes to tax laws; risks related to acquisition and disposition activities and achieving anticipated results; risks associated with merchant trading; risks related to our equity method investees; disruption caused by health epidemics, such as the COVID-19 outbreak; our ability to consummate the transactions contemplated by the Merger Agreement; the anticipated completion of the Merger and the timing thereof; the failure to realize any anticipated cost savings or other benefits of the Merger; the possible diversion of management time on Merger-related issues; and other factors detailed in reports filed with the SEC. Additional risks related to Green Plains Partners LP include compliance with commercial contractual obligations, potential tax consequences related to our investment in the partnership and risks disclosed in the partnership’s SEC filings associated with the operation of the partnership as a separate, publicly traded entity.

We believe our expectations regarding future events are based on reasonable assumptions; however, these assumptions may not be accurate or account for all risks and uncertainties. Consequently, forward-looking statements are not guaranteed. Actual results may vary materially from those expressed or implied in our forward-looking statements. In addition, we are not obligated and do not intend to update our forward-looking statements as a result of new information unless it is required by applicable securities laws. We caution investors not to place undue reliance on forward-looking statements, which represent management’s views as of the date of this report or documents incorporated by reference.

Overview

Green Plains is an Iowa corporation, founded in June 2004 as a producer of low-carbon fuels and has grown to be a leading biorefining company maximizing the potential of existing resources through fermentation and patented agribusiness technologies. We continue the transition from a commodity-processing business to a value-added agricultural technology company creating sustainable, high-value ingredients from existing resources. To that end, we are currently executing on a number of initiatives to allow for product diversification, new market opportunities and production of additional value-added low-carbon ingredients, such as Ultra-High Protein, dextrose, renewable corn oil and more.

We are developing and implementing proven agricultural, food and industrial biotechnology systems that allow for product diversification and new market opportunities, rapidly expanding installation and production across our facilities, and offering these technologies to the broader biofuels industry.

Green Plains Partners LP, a master limited partnership, is our primary downstream storage and logistics provider since its assets are the principal method of storing and delivering the ethanol we produce. As of September 30, 2023, we own a 48.8% limited partner interest, a 2.0% general partner interest and all of the partnership’s incentive distribution rights. The

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public owns the remaining 49.2% limited partner interest. The partnership is consolidated in our financial statements, and we record a noncontrolling interest for the economic interest in the partnership held by the public common unitholders.

We group our business activities into the following three operating segments to manage performance:

•Ethanol Production. Our ethanol production segment includes the production of ethanol, distillers grains, Ultra-High Protein and renewable corn oil at ten ethanol plants in Illinois, Indiana, Iowa, Minnesota, Nebraska and Tennessee. At capacity, our facilities are capable of processing approximately 310 million bushels of corn per year and producing approximately 903 million gallons of ethanol, 2.2 million tons of distillers grains and Ultra-High Protein, and 300 million pounds of renewable corn oil, a low-carbon feedstock for biodiesel and renewable diesel. We are one of the largest ethanol producers in North America.

•Agribusiness and Energy Services. Our agribusiness and energy services segment includes grain procurement, with approximately 21.4 million bushels of grain storage capacity, and our commodity marketing business, which markets, sells and distributes the ethanol, distillers grains, Ultra-High Protein and renewable corn oil produced at our ethanol plants. We also market ethanol for a third-party producer as well as buy and sell ethanol, distillers grains, Ultra-High Protein, renewable corn oil, grain, natural gas and other commodities in various markets.

•Partnership. Our master limited partnership provides fuel storage and transportation services through owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. The partnership’s assets include 24 ethanol storage facilities, two fuel terminal facilities and approximately 2,210 leased railcars.

We have installed and are operating FQT MSC™ technology at five of our biorefineries. Through our value-added ingredients initiative, we produce Ultra-High Protein, a feed ingredient with protein concentrations of 50% or greater and yeast concentrations of 25%, increase production of renewable corn oil and produce other higher value products, such as post-MSC™ distillers grains.

We began pilot scale batch operations at the FQT CST™ production facility at our Innovation Center at York in the second quarter of 2021, which allows for the production of both food and industrial grade low-carbon glucose and dextrose to target applications in food production, renewable chemicals and synthetic biology. In September 2022, we broke ground at our biorefinery in Shenandoah, Iowa, as the first location to deploy FQT CST™ at commercial scale. We also anticipate modifying additional biorefineries to include FQT CST™ production capabilities to meet anticipated future customer demands.

Additionally, we have taken advantage of opportunities to divest certain assets to reallocate capital toward our current growth initiatives. We are focused on generating stable and growing operating margins through our business segments and risk management strategy.

Seven biorefineries have committed to carbon capture and sequestration through carbon pipeline transport, four with Summit Carbon Solutions and three with another provider, which will lower GHG emissions through the capture of carbon dioxide at each of these biorefineries, significantly lowering their CI. We anticipate completion of the Summit Carbon Solutions projects in 2026, and the remainder in 2025. In addition, we are collaborating with global partners to explore innovative options for carbon use, such as synthetic methane production at Madison and Obion. We intend to sequester the carbon from fermentation at Mount Vernon as well. Reducing the CI of our fuel ethanol could allow us to benefit from state and federal clean fuel programs, including LCFS and federal tax credits under the Inflation Reduction Act, and could position our low-carbon ethanol as a potential feedstock for ATJ pathways to produce SAF.

Our profitability is highly dependent on commodity prices, particularly for ethanol, distillers grains, Ultra-High Protein, renewable corn oil, soybean meal, corn, and natural gas. Since market price fluctuations of these commodities are not always correlated, our operations may be unprofitable at times. We use a variety of risk management tools and hedging strategies to monitor price risk exposure at our ethanol plants and lock in favorable margins or reduce production when margins are compressed. Our profitability could be significantly impacted by price movements of the aforementioned commodities.

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Recent Developments

The Partnership Merger

On September 16, 2023, the company, Holdings, Merger Sub, the partnership, and the General Partner, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the partnership, with the partnership surviving as an indirect, wholly owned subsidiary of the company. Refer to Note 3 - Merger and Disposition included in the notes to the unaudited consolidated financial statements included herein for more information.

Disposition of Atkinson Ethanol Plant

On July 25, 2023, Green Plains Atkinson LLC, a wholly owned subsidiary of the company, entered into an asset purchase agreement to sell the plant located in Atkinson, Nebraska (the “Atkinson Transaction”). Correspondingly, we entered into a separate asset purchase agreement with the partnership to acquire the storage assets and the associated railcar operating leases.

On September 7, 2023, we completed the Atkinson Transaction and sale of certain related assets and transfer of certain related liabilities. The divested assets were reported within our ethanol production, agribusiness and energy services and partnership segments. The company recorded a pretax gain on the sale of the Atkinson plant of $4.6 million recorded within corporate activities. Refer to Note 3 - Merger and Disposition included in the notes to the unaudited consolidated financial statements included herein for more information.

Wood River Incident

On April 17, 2023, during routine maintenance on a whole stillage tank, we experienced an explosion at our Wood River, Nebraska facility. We worked with various regulatory agencies, state and local authorities, and our insurance providers to evaluate the financial impact of the incident. We estimate there was a loss during the second and third quarters of 2023 of approximately $15 million to $17 million related to this incident, before insurance proceeds, which covered a portion of the estimated loss.

Results of Operations

During the third quarter of 2023, we maintained an average utilization rate of approximately 93.9% of capacity, resulting in ethanol production of 223.4 mmg for the third quarter of 2023, compared with 219.4 mmg, or 90.9% of capacity, for the same quarter last year. Our operating strategy is to transform our company to a value-add agricultural technology company. Depending on the margin environment, we may exercise operational discretion that results in reductions in production volumes. It is possible that throughput volumes could be below our minimum volume commitments made to the partnership in the future, depending on various factors that drive each biorefinery's variable contribution margin, including future driving and gasoline demand for the industry, demand for valuable coproducts we produce, and the supply and pricing of renewable feedstocks needed to operate our biorefineries. We are currently producing Ultra-High Protein at five locations, and we are deploying the FQT MSC™ technology at select additional locations across our platform to help meet growing global demand for protein feed ingredients and low-carbon renewable corn oil.

U.S. Ethanol Supply and Demand

According to the EIA, domestic ethanol production averaged 1.04 million barrels per day during the third quarter of 2023, which was 6.2% higher than the 979 thousand barrels per day for the same quarter last year. Refiner and blender input volume was 907 thousand barrels per day for the third quarter of 2023, compared with 902 thousand barrels per day for the same quarter last year. Gasoline demand was in line with the prior year at 8.8 million barrels per day during the third quarter of 2023. U.S. domestic ethanol ending stocks increased by approximately 0.2 million barrels compared to the prior year, or 0.9%, to 21.9 million barrels as of September 30, 2023. As of this filing, according to Prime the Pump, there were approximately 3,244 retail stations selling E15 year-round in 31 states, and approximately 386 suppliers at 113 pipeline terminal locations now offer E15 to wholesale customers.

Global Ethanol Supply and Demand

According to the USDA Foreign Agriculture Service, domestic ethanol exports through August 31, 2023, were approximately 921 mmg, down from the 1,012 mmg for the same period of 2022. Canada was the largest export destination

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for U.S. ethanol accounting for approximately 46% of domestic ethanol export volume, driven in part by their national clean fuel standard. The United Kingdom, the Netherlands, South Korea, and India accounted for approximately 11%, 9%, 8% and 5%, respectively, of U.S. ethanol exports. We currently estimate that net ethanol exports will range from 1.3 to 1.5 billion gallons in 2023, based on historical demand from a variety of countries and certain countries that seek to improve their air quality, reduce GHG emissions through low-carbon fuel programs and eliminate MTBE from their own fuel supplies. Fluctuations in currencies relative to the U.S. dollar could impact the U.S. ethanol competitiveness in the global market.

Legislation and Regulation

We are sensitive to government programs and policies that affect the supply and demand for ethanol and other fuels, which in turn may impact the volume of ethanol and other products we handle. Over the years, various bills and amendments have been proposed in the House and Senate, which would eliminate the RFS entirely, eliminate the corn based ethanol portion of the mandate, lower the price of RINs and make it more difficult to sell fuel blends with higher levels of ethanol. Bills have also been introduced to require higher levels of octane blending, allow for year-round sales of higher blends of ethanol and require car manufacturers to produce vehicles that can operate on higher ethanol blends. We believe it is unlikely that any of these bills will become law in the current Congress. In addition, the manner in which the EPA administers the RFS and related regulations can have a significant impact on the actual amount of ethanol and other biofuels blended into the domestic fuel supply.

Federal mandates and state-level clean fuel standards supporting the use of renewable fuels are a significant driver of ethanol demand in the U.S. Ethanol policies are influenced by concerns for the environment, diversifying the fuel supply, supporting U.S. farmers and reducing the country’s dependence on foreign oil. Consumer acceptance of FFVs and increased use of higher ethanol blends in non-FFVs may be necessary before ethanol can achieve further growth in the U.S. light duty surface transportation fleet market share. In addition, expansion of clean fuel standards in other states and countries, or a national LCFS could increase the demand for ethanol, depending on how they are structured. Incentives for automakers to produce FFVs phased out in 2020, and the EPA's recently proposed Corporate Average Fuel Economy (CAFE) standards further incentivize EV production, with the administration's stated goal of having EVs represent two-thirds of vehicles sold by 2032. Sales of EVs in the U.S. were approximately 313,000 vehicles during the third quarter of 2023, which represented approximately 7.9% of new vehicles sales. Transition of the light duty surface transportation fleet from internal combustion engines to EVs could decrease the demand for ethanol.

The Inflation Reduction Act of 2022, which was signed into law on August 16, 2022, is a sweeping policy that could have many potential impacts on our business which we are continuing to evaluate. The legislation (1) created a new Clean Fuel Production Credit of $0.02 per gallon per CI point reduction for any fuel below a 50 CI threshold from 2025 to 2027, section 45Z of the Internal Revenue Code, which could impact our fuel ethanol, depending on the level of GHG reduction for each gallon; (2) created a new tax credit for SAF of $1.25 to $1.75 per gallon for 2023 and 2024, depending on the GHG reduction for each gallon, that could possibly involve some of our low carbon ethanol through an ATJ pathway, depending on the life cycle analysis model being used (this credit expires after 2024 and shifts to the 45Z Clean Fuel Production Credit, where it qualifies for up to $0.035 per gallon per CI point reduction below a 50 CI threshold); (3) expanded the carbon capture and sequestration credit, section 45Q of the Internal Revenue Code, to $85 for each metric ton of carbon dioxide sequestered, which could impact our carbon capture strategies, though it cannot be claimed in conjunction with the 45Z Clean Fuel Production Credit, which could prove to be more valuable; (4) extended the $1.00 per gallon biomass-based diesel tax credit through 2024, which could impact our renewable corn oil values, as this co-product serves as a low-carbon feedstock for renewable diesel and bio diesel production (this credit expires after 2024 and shifts to the 45Z Clean Fuel Production credit, where all non-SAF fuels qualify for $0.02 per gallon for each point of CI reduction under the 50 CI threshold); (5) funded $500 million of biofuel blending infrastructure, which could impact the availability of higher level ethanol blended fuel; (6) increased funding for climate smart agriculture and working lands conservation programs for farmers by $20 billion; and (7) provided credits for the production and purchase of electric vehicles, which could impact the amount of internal combustion engines built and sold longer term, and by extension impact the demand for liquid fuels including ethanol. There are numerous additional clean energy credits included in this law, including investment tax credits for construction of clean energy infrastructure, that could impact us and our overall competitiveness. Regulatory rulemaking for the administration of these programs is underway, and the final regulations could impact many aspects of our business.

The RFS sets a floor for biofuels use in the United States. On June 21, 2023, the EPA finalized RVOs for 2023, 2024 and 2025, setting the implied conventional ethanol levels at 15.25 billion gallons for 2023, and 15 billion for 2024 and 2025, inclusive of 250 million gallons of supplemental volume in 2023 to reflect a court-ordered remand of a previously

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lowered RVO. The EPA also proposed a modest increase in biomass based diesel volumes over the three years, setting the volumes at 2.82 billion for 2023, 3.04 billion for 2024 and 3.35 billion for 2025. The EPA also indicated that corn kernel fiber would contribute to the cellulosic volumes finalized, and could move to approve registrations that have been languishing for years at the agency. The EPA also removed a proposed e-RIN program from the final rule, but indicated they may move forward with it in a separate rulemaking.

Under the RFS, RINs and SREs are important tools impacting supply and demand. The EPA assigns individual refiners, blenders, and importers the volume of renewable fuels they are obligated to use in each annual RVO based on their percentage of total production of domestic transportation fuel sales. Obligated parties use RINs to show compliance with the RFS mandated volumes. Ethanol producers assign RINs to each gallon of renewable fuel they produce and the RINs are detached when the renewable fuel is blended with transportation fuel domestically. Market participants can trade the detached RINs in the open market. The market price of detached RINs can affect the price of ethanol in certain markets and can influence purchasing decisions by obligated parties. Of note, the RIN mechanism for proposed e-RINs could vary from the traditional process.

As it relates to SREs, a small refinery is defined as one that processes fewer than 75,000 barrels of petroleum per day. Small refineries can petition the EPA for an SRE which, if approved, waives their portion of the annual RVO requirements. The EPA, through consultation with the DOE and the USDA can grant them a full or partial waiver, or deny it outright within 90 days of submittal. The EPA granted significantly more of these waivers for the 2016, 2017 and 2018 reporting years than it had in prior years, totaling 790 mmg of waived requirements for the 2016 compliance year, 1.82 billion gallons for 2017 and 1.43 billion gallons for 2018. In doing so, the EPA effectively reduced the RFS mandated volumes for those compliance years by those amounts respectively, and as a result, RIN values declined significantly. In the waning days of the previous administration, the EPA approved three additional SREs, reversing one denial from 2018 and granting two from 2019. A total of 88 SREs were granted under the previous administration, erasing a total 4.3 billion gallons of blending requirements. Under the current administration, the EPA reversed the three SREs issued in the final weeks of the previous administration, and in conjunction with the RVO rulemaking for 2020, 2021, and 2022, denied all pending SREs; however, the EPA allowed for so-called "alternative compliance" for these refineries, which in practice waived their blending obligations for those years. The EPA reiterated its stance of denying all SRE applications in the final 2023, 2024 and 2025 RVO rulemaking, and on July 14, 2023 announced that they had denied 26 SREs for the 2016-2018 and 2021-2023 compliance years, leaving only two SREs pending. There are multiple on-going legal challenges to how the EPA has handled SREs and RFS rulemakings.

The One-Pound Waiver, which was extended in May 2019 to allow E15 to be sold year-round to all vehicles model year 2001 and newer, was challenged in an action filed in Federal District Court for the D.C. Circuit. On July 2, 2021, the Circuit Court vacated the EPA’s rule so the future of summertime, defined as June 1 to September 15, sales of E15 is uncertain. The Supreme Court declined to hear a challenge to this ruling. On April 12, 2022, the President announced that he had directed the EPA to issue an emergency waiver to allow for the continued sale of E15 during the summer months, and that the temporary waiver should be extended as long as the gasoline supply emergency lasts. On April 28, 2023, the administration announced emergency waivers for the 2023 summer driving season of June 1 to September 15. The EPA has also indicated it will undertake rulemaking to allow for the elimination of the One-Pound Waiver for E10 in several Midwestern states in time for the 2024 summer driving season, which would have the practical effect of allowing for E15 to be sold year round in the following states: Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin.

In October 2019, the White House directed the USDA and EPA to move forward with rulemaking to expand access to higher blends of biofuels. This includes funding for infrastructure, labeling changes and allowing E15 to be sold through E10 infrastructure. The USDA rolled out the Higher Blend Infrastructure Incentive Program in the summer of 2020, providing competitive grants to fuel terminals and retailers for installing equipment for dispensing higher blends of ethanol and biodiesel. In December 2021, the USDA announced it would administer another infrastructure grant program. The Inflation Reduction Act, signed into law in 2022, provided for an additional $500 million in USDA grants for biofuel infrastructure. On June 26, 2023, the USDA announced the initial $50 million in awards, and laid out a process for distributing the remaining $450 million, with $90 million being made available each quarter.

To respond to COVID-19 health crisis and attempt to offset the subsequent economic damage, Congress passed multiple relief measures, most notably the CARES Act in March 2020, which created and funded multiple programs that have impacted our industry. The CARES Act also allowed for certain net operating loss carrybacks, which has allowed us to receive certain tax refunds. In December 2020, Congress passed and the then President signed into law an annual spending package coupled with another COVID relief bill which included additional funds for the Secretary of Agriculture

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to distribute to those impacted by the pandemic. The language of the bill specifically included biofuels producers as eligible for some of this aid, and in May 2022, the USDA distributed funds to us in the amount of $27.7 million pursuant to this bill. In July 2023, the USDA distributed supplemental program funds to us in the amount of $3.4 million.

Environmental and Other Regulation

Our operations are subject to environmental regulations, including those that govern the handling and release of ethanol, crude oil and other liquid hydrocarbon materials. Compliance with existing and anticipated environmental laws and regulations may increase our overall cost of doing business, including capital costs to construct, maintain, operate and upgrade equipment and facilities. Our business may also be impacted by government policies, such as tariffs, duties, subsidies, import and export restrictions and outright embargos. We employ maintenance and operations personnel at each of our facilities, which are regulated by the Occupational Safety and Health Administration.

The U.S. ethanol industry relies heavily on tank cars to deliver its product to market. In 2015, the DOT finalized the Enhanced Tank Car Standard and Operational Controls for High-Hazard and Flammable Trains, or DOT specification 117, which established a schedule to retrofit or replace older tank cars that carry crude oil and ethanol, braking standards intended to reduce the severity of accidents and new operational protocols. The rule has increased the lease costs for railcars in the short term and may increase the lease costs long term, which will in turn result in an increase in the fees our partnership charges for railcar capacity. The deadline for compliance with DOT specification 117 was May 1, 2023. Our partnership's fleet was DOT 117 compliant by the deadline.

Comparability

There are various events that could affect comparability of our operating results, including increased production rates in 2023 from 2022.

Segment Results

We report the financial and operating performance for the following three operating segments: (1) ethanol production, which includes the production of ethanol, distillers grains, Ultra-High Protein and renewable 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, Ultra-High Protein, renewable corn oil, natural gas and other commodities, and (3) partnership, which includes fuel storage and transportation services.

During the normal course of business, our operating segments do business with each other. For example, our agribusiness and energy services segment procures grain and natural gas and sells products, including ethanol, distillers grains, Ultra-High Protein, and renewable corn oil of our ethanol production segment. Our partnership segment provides fuel storage and transportation services for our 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 our consolidated results since the revenues and corresponding costs are eliminated.

When we evaluate segment performance, we review the following segment information as well as earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA.

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The selected operating segment financial information is as follows (in thousands):


	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Revenues
Ethanol production
Revenues from external customers	$	773,367	$	811,015	(4.6)%	$	2,195,600	$	2,309,734	(4.9)%
Intersegment revenues	—		—		—	—		—		—
Total segment revenues	773,367		811,015		(4.6)	2,195,600		2,309,734		(4.9)
Agribusiness and energy services
Revenues from external customers	118,449		142,926		(17.1)	384,615		436,119		(11.8)
Intersegment revenues	6,632		6,836		(3.0)	18,675		19,914		(6.2)
Total segment revenues	125,081		149,762		(16.5)	403,290		456,033		(11.6)
Partnership
Revenues from external customers	954		1,036		(7.9)	3,136		2,953		6.2
Intersegment revenues	19,191		19,030		0.8	58,307		55,867		4.4
Total segment revenues	20,145		20,066		0.4	61,443		58,820		4.5
Revenues including intersegment activity	918,593		980,843		(6.3)	2,660,333		2,824,587		(5.8)
Intersegment eliminations	(25,823)		(25,866)		(0.2)	(76,982)		(75,781)		1.6
	$	892,770	$	954,977	(6.5)%	$	2,583,351	$	2,748,806	(6.0)%


	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Cost of goods sold
Ethanol production	$	728,360	$	843,843	(13.7)%	$	2,176,253	$	2,310,224	(5.8)%
Agribusiness and energy services	109,292		139,922		(21.9)	371,981		418,017		(11.0)
Intersegment eliminations	(26,353)		(26,908)		(2.1)	(76,839)		(77,561)		(0.9)
	$	811,299	$	956,857	(15.2)%	$	2,471,395	$	2,650,680	(6.8)%


	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Gross margin
Ethanol production	$	45,007	$	(32,828)	237.1%	$	19,347	$	(490)	*%
Agribusiness and energy services	15,789		9,840		60.5	31,309		38,016		(17.6)
Partnership	20,145		20,066		0.4	61,443		58,820		4.5
Intersegment eliminations	530		1,042		(49.1)	(143)		1,780		(108.0)
	$	81,471	$	(1,880)	*%	$	111,956	$	98,126	14.1%

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	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Operating income (loss)
Ethanol production (1)	$	11,973	$	(64,121)	118.7%	$	(77,759)	$	(87,773)	(11.4)%
Agribusiness and energy services	11,313		5,205		117.3	17,612		25,894		(32.0)
Partnership	11,428		11,993		(4.7)	34,744		35,906		(3.2)
Intersegment eliminations	530		1,042		(49.1)	(143)		1,780		(108.0)
Corporate activities (2)	(14,070)		(15,999)		(12.1)	(52,300)		(51,748)		1.1
	$	21,174	$	(61,880)	134.2%	$	(77,846)	$	(75,941)	2.5%

(2)Corporate activities for the three and nine months ended September 30, 2023 includes a $5.7 million pretax gain on sale of assets.


	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Depreciation and amortization
Ethanol production	$	21,816	$	21,555	1.2 %	$	67,179	$	59,101	13.7 %
Agribusiness and energy services	534		1,280		(58.3)	1,883		2,214		(15.0)
Partnership	780		1,194		(34.7)	2,424		2,915		(16.8)
Corporate activities	769		618		24.4	2,425		1,783		36.0
	$	23,899	$	24,647	(3.0 %)	$	73,911	$	66,013	12.0 %

* Percentage variances not considered meaningful.

We use EBITDA, adjusted EBITDA, and segment EBITDA as measures of profitability to compare the financial performance of our reportable segments and manage those segments. EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization excluding the amortization of right-of-use assets and debt issuance costs. Adjusted EBITDA includes adjustments related to other income associated with the USDA COVID-19 relief grant, and our proportional share of EBITDA adjustments of our equity method investees. We believe EBITDA, adjusted EBITDA and segment EBITDA are useful measures to compare our performance against other companies. These measures should not be considered an alternative to, or more meaningful than, net income, which is prepared in accordance with GAAP. EBITDA, adjusted EBITDA, and segment EBITDA calculations may vary from company to company. Accordingly, our computation of EBITDA, adjusted EBITDA, and segment EBITDA may not be comparable with a similarly titled measure of other companies.

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The following table reconciles net loss including noncontrolling interest to adjusted EBITDA (in thousands):


	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Net income (loss)	$	26,292	$	(67,903)	138.7%	$	(88,277)	$	(71,055)	24.2%
Interest expense	9,550		9,576		(0.3)	29,029		26,182		10.9
Income tax benefit	(7,763)		(1,888)		311.2	(5,353)		(146)		*
Depreciation and amortization (1)	23,899		24,647		(3.0)	73,911		66,013		12.0
EBITDA	51,978		(35,568)		246.1	9,310		20,994		(55.7)
Other income (2)	(3,440)		—		*	(3,440)		(27,712)		(87.6)
Gain on sale of assets	(5,651)		—		*	(5,651)		—		*
Proportional share of EBITDA adjustments to equity method investees	45		45		—	135		135		—
Adjusted EBITDA	$	42,932	$	(35,523)	220.9%	$	354	$	(6,583)	105.4%

(1)Excludes amortization of operating lease right-of-use assets and amortization of debt issuance costs.

(2)Other income includes grants received from the USDA related to the Biofuel Producer Program of $3.4 million for the three and nine months ended September 30, 2023 and $27.7 million for the nine months ended September 30, 2022.

The following table reconciles segment EBITDA to consolidated adjusted EBITDA (in thousands):


	Three Months Ended September 30,				% Variance	Nine Months Ended September 30,				% Variance
	2023		2022			2023		2022
Adjusted EBITDA
Ethanol production (1)	$	37,815	$	(42,471)	189.0%	$	(6,201)	$	(517)	*%
Agribusiness and energy services	12,160		6,536		86.0	20,258		28,009		(27.7)
Partnership	12,638		13,270		(4.8)	38,382		39,275		(2.3)
Intersegment eliminations	530		1,042		(49.1)	(143)		1,780		(108.0)
Corporate activities (2)	(11,165)		(13,945)		(19.9)	(42,986)		(47,553)		(9.6)
EBITDA	51,978		(35,568)		246.1	9,310		20,994		(55.7)
Other income (3)	(3,440)		—		*	(3,440)		(27,712)		(87.6)
Gain on sale of assets	(5,651)		—		*	(5,651)		—		*
Proportional share of EBITDA adjustments to equity method investees	45		45		—	135		135		—
	$	42,932	$	(35,523)	220.9%	$	354	$	(6,583)	105.4%

(1)Ethanol production includes an inventory lower of cost or net realizable value adjustment of $1.7 million for the three and nine months ended September 30, 2023, and $11.2 million for the three and nine months ended September 30, 2022.

(2)Includes corporate expenses, offset by a gain on sale of assets of $5.7 million for the three and nine months ended September 30, 2023.

(3)Other income includes grants received from the USDA related to the Biofuel Producer Program of $3.4 million for the three and nine months ended September 30, 2023 and $27.7 million for the nine months ended September 30, 2022.

* Percentage variances not considered meaningful.

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Consolidated Results

Consolidated revenues decreased $62.2 million for the three months ended September 30, 2023 compared with the same period in 2022 primarily due to lower weighted average selling prices on ethanol and distillers grains, as well as lower volumes sold on distillers grains, partially offset by higher volumes sold on ethanol and renewable corn oil, as well

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as higher weighted average selling prices on renewable corn oil within our ethanol production segment as described below. Revenues were also lower within our agribusiness and energy services segment as a result of decreased ethanol and distillers grains trading volumes.

Net income increased $94.2 million and adjusted EBITDA increased $78.5 million for the three months ended September 30, 2023 compared with the same period last year primarily due to higher margins in our ethanol production segment and to a lesser extent in our agribusiness and energy services segment. Interest expense was consistent for the three months ended September 30, 2023 compared with the same period in 2022. Income tax benefit was $7.8 million for the three months ended September 30, 2023 compared with income tax benefit of $1.9 million for the same period in 2022 primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets for the three months ended September 30, 2023.

The following discussion provides greater detail about our third quarter segment performance.

Ethanol Production Segment

Key operating data for our ethanol production segment is as follows:


	Three Months Ended September 30,
	2023	2022	% Variance

Ethanol sold
(thousands of gallons)	223,469	219,166	2.0%
Distillers grains sold
(thousands of equivalent dried tons)	514	571	(10.0)
Ultra-High Protein sold
(thousands of tons)	61	15	306.7
Renewable corn oil sold
(thousands of pounds)	74,227	72,975	1.7
Corn consumed
(thousands of bushels)	76,544	75,308	1.6%

Revenues in our ethanol production segment decreased $37.6 million for the three months ended September 30, 2023 compared with the same period in 2022, primarily due to lower weighted average selling prices on ethanol and distillers grains resulting in decreased revenues of $20.3 million and $23.3 million, respectively, as well as lower distillers grains volumes sold resulting in decreased revenues of $2.5 million, partially offset by higher ethanol and renewable corn oil volumes sold resulting in increased revenues of $12.0 million and $0.8 million, respectively, as well as higher weighted average selling prices on renewable corn oil resulting in increased revenues of $1.4 million. Revenues also decreased as a result of hedging activities by $1.7 million.

Cost of goods sold in our ethanol production segment decreased $115.5 million for the three months ended September 30, 2023 compared with the same period last year primarily due to lower weighted average corn prices resulting in decreased costs of $102.3 million, as well as lower chemicals and other costs of $30.2 million, partially offset by higher corn volumes processed resulting in increased costs of $11.1 million. Costs also increased as a result of hedging activities of $10.1 million.

Operating income in our ethanol production segment increased $76.1 million for the three months ended September 30, 2023 compared with the same period in 2022 primarily due to increased margins as outlined above. Depreciation and amortization expense for the ethanol production segment was $21.8 million for the three months ended September 30, 2023, compared with $21.6 million for the same period last year.

Agribusiness and Energy Services Segment

Revenues in our agribusiness and energy services segment decreased $24.7 million while operating income increased $6.1 million for the three months ended September 30, 2023 compared with the same period in 2022. The decrease in

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revenues was primarily due to a decrease in ethanol and distillers grains trading volumes, partially offset by an increase in renewable corn oil trading volumes. Operating income increased primarily as a result of higher renewable corn oil trading margins and higher trading margins in natural gas driven by market volatility.

Partnership Segment

Revenues generated by our partnership segment increased $0.1 million for the three months ended September 30, 2023 compared with the same period for 2022. Storage and throughput services revenue was consistent with the prior year. Railcar transportation services revenue increased $0.7 million primarily due to an increase in transportation services fees charged as a result of our partnership upgrading its leased railcar fleet to comply with DOT 117 regulations. Terminal services revenue increased $0.3 million due to higher throughput at our partnership's terminals. Trucking and other revenue decreased $1.0 million compared to the prior year primarily due to the discontinuance of trucking operations that occurred in May of 2023. Operating income decreased $0.6 million for the three months ended September 30, 2023 compared with the same period in 2022 primarily due to the transaction costs related to the Merger Agreement, offset by gains realized on the sale of trucking assets.

Intersegment Eliminations

Intersegment eliminations of revenues was consistent for the three months ended September 30, 2023 compared with the same period in 2022.

Corporate Activities

Operating income was impacted by a decrease in corporate activities of $1.9 million for the three months ended September 30, 2023 compared to the same period in 2022, primarily due to the gain on sale of assets, partially offset by increased personnel costs and transaction costs related to the Merger Agreement during the three months ended September 30, 2023.

Income Taxes

We recorded income tax benefit of $7.8 million for the three months ended September 30, 2023, compared with income tax benefit of $1.9 million for the same period in 2022. The increase in the amount of tax benefit recorded for the three months ended September 30, 2023 was primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Consolidated Results

Consolidated revenues decreased $165.5 million for the nine months ended September 30, 2023 compared with the same period in 2022 primarily due to lower volumes sold on ethanol and distiller grains, as well as lower weighted average selling prices on ethanol, distillers grains, and renewable corn oil, partially offset by higher volumes sold on renewable corn oil within our ethanol production segment as described below. Revenues were also lower within our agribusiness and energy services segment as a result of decreased trading volumes.

Net loss increased $17.2 million for the nine months ended September 30, 2023 compared with the same period last year primarily due to decreased volumes and margins in our ethanol production segment, lower trading margins in our agribusiness and energy services segment, increased depreciation expense, and the $27.7 million USDA COVID-19 relief grant received in the second quarter of 2022. Adjusted EBITDA increased $6.9 million for the nine months ended September 30, 2023 compared with the same period last year primarily due to higher margins in our ethanol production segment exclusive of the USDA COVID-19 relief grants, partially offset by lower trading margins in our agribusiness and energy services segment. Interest expense increased $2.8 million for the nine months ended September 30, 2023 compared with the same period in 2022 primarily due to higher interest rates on floating rate debt and reduced capitalized interest as certain projects have been completed. Income tax benefit was $5.4 million for the nine months ended September 30, 2023, compared with income tax benefit of $0.1 million for the same period in 2022 primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets for the nine months ended September 30, 2023.

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The following discussion provides greater detail about our year-to-date segment performance.

Ethanol Production Segment

Key operating data for our ethanol production segment is as follows:


	Nine Months Ended September 30,
	2023	2022	% Variance

Ethanol sold
(thousands of gallons)	625,102	646,927	(3.4)%
Distillers grains sold
(thousands of equivalent dried tons)	1,454	1,650	(11.9)
Ultra-High Protein sold
(thousands of tons)	157	45	248.9
Renewable corn oil sold
(thousands of pounds)	206,927	204,502	1.2
Corn consumed
(thousands of bushels)	215,115	223,830	(3.9)%

Revenues in our ethanol production segment decreased $114.1 million for the nine months ended September 30, 2023 compared with the same period in 2022, primarily due to lower ethanol and distillers grains volumes sold resulting in decreased revenues of $58.5 million and $19.0 million, respectively, as well as lower weighted average selling prices on ethanol, distillers grains, and renewable corn oil resulting in decreased revenues of $13.9 million, $4.1 million, and $10.3 million, respectively, partially offset by higher renewable corn oil volumes sold resulting in increased revenues of $1.7 million. Revenues also decreased as a result of hedging activities by $7.4 million.

Cost of goods sold in our ethanol production segment decreased $134.0 million for the nine months ended September 30, 2023 compared with the same period last year primarily due to lower weighted average corn prices resulting in $135.3 million in decreased costs, lower corn volumes processed resulting in decreased corn costs of $63.1 million and hedging activities of $44.3 million, as well as lower chemical and other costs of $29.0 million, partially offset by higher ethanol volumes purchased of $124.3 million, as well as higher utilities and freight costs of $20.8 million.

Operating loss decreased $10.0 million for the nine months ended September 30, 2023 compared with the same period in 2022 primarily due to increased margins on ethanol production as outlined above. Depreciation and amortization expense for the ethanol production segment was $67.2 million for the nine months ended September 30, 2023, compared with $59.1 million for the same period last year, with the increase primarily due to Ultra-High Protein assets placed in service.

Agribusiness and Energy Services Segment

Revenues in our agribusiness and energy services segment decreased $52.7 million while operating income also decreased $8.3 million for the nine months ended September 30, 2023 compared with the same period in 2022. The decrease in revenues was primarily due to a decrease in ethanol and distillers grains trading volumes, partially offset by an increase in renewable corn oil trading volumes. Operating income decreased primarily as a result of lower distillers grains trading margins and lower trading margins in natural gas driven by market volatility.

Partnership Segment

Revenues generated by our partnership segment increased $2.6 million for the nine months ended September 30, 2023 compared with the same period for 2022. Storage and throughput services revenue was consistent with the prior year. Railcar transportation services revenue increased $3.6 million primarily due to an increase in transportation service fees charged as a result of our partnership upgrading its leased railcar fleet to comply with DOT 117 regulations. Terminal services revenue increased $0.4 million due to higher throughput at our partnership's terminals. Trucking and other revenue decreased $1.4 million primarily due to the discontinuance of trucking operations that occurred in May of 2023. Operating

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income decreased $1.2 million for the nine months ended September 30, 2023 compared with the same period in 2022 primarily due to the transaction costs related to the Merger Agreement.

Intersegment Eliminations

Intersegment eliminations of revenues increased by $1.2 million for the nine months ended September 30, 2023 compared with the same period in 2022 primarily due to increased railcar fees paid to the partnership segment, partially offset by decreased intersegment marketing and service fees within the agribusiness and energy services segment as a result of lower production volumes.

Corporate Activities

Operating loss was impacted by an increase in corporate activities of $0.6 million for the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to increased personnel costs and transaction costs related to the Merger Agreement, partially offset by the gain on the sale of assets during the nine months ended September 30, 2023.

Income Taxes

We recorded income tax benefit of $5.4 million for the nine months ended September 30, 2023 compared with income tax benefit of $0.1 million for the same period in 2022 primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets for the nine months ended September 30, 2023.

Liquidity and Capital Resources

Our principal sources of liquidity include cash generated from operating activities and bank credit facilities. We fund our operating expenses and service debt primarily with operating cash flows. Capital resources for maintenance and growth expenditures are funded by a variety of sources, including cash generated from operating activities, borrowings under bank credit facilities, or issuance of senior notes or equity. Our ability to access capital markets for debt under reasonable terms depends on our financial condition, credit ratings and market conditions. We believe that our ability to obtain financing at reasonable rates based on these factors remains sufficient and provides a solid foundation to meet our future liquidity and capital resource requirements.

On September 30, 2023, we had $326.7 million in cash and cash equivalents and $39.5 million in restricted cash. We also had $200.0 million available under our committed revolving credit agreement, subject to restrictions or other lending conditions. Funds at certain subsidiaries are generally required for their ongoing operational needs and restricted from distribution. At September 30, 2023, our subsidiaries had approximately $121.9 million of net assets that were not available to use in the form of dividends, loans or advances due to restrictions contained in their credit facilities.

Net cash used in operating activities was $55.4 million for the nine months ended September 30, 2023, compared with net cash used in operating activities of $34.5 million for the same period in 2022. Net cash used in operating activities compared to the prior year was primarily affected by a higher net loss as well as increases in cash used related to higher payments of accounts payables and higher accounts receivable, partially offset by higher derivative financial instruments as well as decreases in cash used related to inventory when compared to the same period of the prior year. Net cash used in investing activities was $69.1 million for the nine months ended September 30, 2023 compared with net cash used in investing activities of $90.3 million for the same period in 2022. Investing activities compared to the prior year were primarily affected by the proceeds from the sale of marketable securities during the same period in 2022, partially offset by increased cash provided by lower purchases of fixed assets and cash provided by the disposition of assets when compared to the same period in the prior year. Net cash used in financing activities was $9.7 million for the nine months ended September 30, 2023 compared with net cash provided by financing activities of $51.2 million for the same period in 2022, primarily due to higher debt proceeds as a result of changes in our debt structure during the same period in 2022.

Additionally, Green Plains Finance Company, Green Plains Trade, Green Plains Grain and Green Plains Commodity Management use revolving credit facilities to finance working capital requirements. We frequently draw from and repay these facilities, which results in significant cash movements reflected on a gross basis within financing activities as proceeds from and payments on short-term borrowings.

We incurred capital expenditures of approximately $78.2 million during the nine months ended September 30, 2023, primarily for Ultra-High Protein expansion projects at Mount Vernon and Obion, the clean sugar expansion project at Shenandoah and for various other capital projects. Capital spending for the remainder of 2023 is expected to be between

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$25.0 million and $45.0 million, which is subject to review prior to the initiation of any project. The estimate includes additional expenditures to deploy FQT's MSC™ and FQT's CST™ technology, as well as expenditures for various other capital projects, which are expected to be financed with cash on hand and with cash provided by operating activities.

Our business is highly sensitive to the price of commodities, particularly for corn, ethanol, distillers grains, Ultra-High Protein, renewable corn oil and natural gas. We use derivative financial instruments to reduce the market risk associated with fluctuations in commodity prices. Sudden changes in commodity prices may require cash deposits with brokers for margin calls or significant liquidity with little advanced notice to meet margin calls, depending on our open derivative positions. We continuously monitor our exposure to margin calls and believe we will continue to maintain adequate liquidity to cover margin calls from our operating results and borrowings.

The partnership agreement requires the partnership to distribute all available cash, as defined, to its partners, including us, within 45 days after the end of each calendar quarter. Available cash generally means all cash and cash equivalents on hand at the end of that quarter less cash reserves established by the general partner, including those for future capital expenditures, future acquisitions and anticipated future debt service requirements, plus all or any portion of the cash on hand resulting from working capital borrowings made subsequent to the end of that quarter.

Our board of directors authorized a share repurchase program of up to $200.0 million of our common stock. Under the program, we may repurchase shares in open market transactions, privately negotiated transactions, accelerated share buyback programs, tender offers or by other means. The timing and amount of repurchase transactions are determined by our management based on market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. We did not repurchase any shares of common stock during the third quarter of 2023. To date, we have repurchased approximately 7.4 million shares of common stock for approximately $92.8 million under the program.

We believe we have sufficient working capital for our existing operations. A continued sustained period of unprofitable operations, however, may strain our liquidity. We may sell additional assets or equity or borrow capital to improve or preserve our liquidity, expand our business or acquire businesses.

Debt

For additional information related to our debt, see Note 8 – Debt included as part of the notes to the unaudited consolidated financial statements included herein and Note 12 – Debt included as part of the notes to consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2022.

We were in compliance with our debt covenants at September 30, 2023. Based on our forecasts, we believe we will maintain compliance at each of our subsidiaries for the next twelve months or have sufficient liquidity available on a consolidated basis to resolve noncompliance. We cannot provide assurance that actual results will approximate our forecasts or that we will inject the necessary capital into a subsidiary to maintain compliance with its respective covenants. In the event a subsidiary is unable to comply with its debt covenants, the subsidiary’s lenders may determine that an event of default has occurred, and following notice, the lenders may terminate the commitment and declare the unpaid balance due and payable.

Corporate Activities

In March 2021, we issued $230.0 million of 2.25% convertible senior notes due in 2027, or the 2.25% notes. The 2.25% notes bear interest at a rate of 2.25% per year, payable on March 15 and September 15 of each year. The initial conversion rate is 31.6206 shares of our common stock per $1,000 principal amount of 2.25% notes (equivalent to an initial conversion price of approximately $31.62 per share of our common stock), representing an approximately 37.5% premium over the offering price of our common stock. The conversion rate is subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; or a tender or exchange offering. In addition, we may be obligated to increase the conversion rate for any conversion that occurs in connection with certain corporate events, including our calling the 2.25% notes for redemption. We may settle the 2.25% notes in cash, common stock or a combination of cash and common stock. At September 30, 2023, the outstanding principal balance on the 2.25% notes was $230.0 million.

In June 2019, we issued $115.0 million of 4.00% convertible senior notes due in 2024, or the 4.00% notes. The 4.00% notes were senior, unsecured obligations, with interest payable on January 1 and July 1 of each year, beginning January 1, 2020, at a rate of 4.00% per annum. The initial conversion rate was 64.1540 shares of our common stock per $1,000

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principal amount of the 4.00% notes, which is equivalent to an initial conversion price of approximately $15.59 per share of our common stock.

During May 2021, we entered into a privately negotiated agreement with certain noteholders of our 4.00% notes. Under this agreement, approximately 3.6 million shares of our common stock were exchanged for $51.0 million in aggregate principal amount of the 4.00% notes.

On May 25, 2022, we gave notice calling for the redemption of our outstanding 4.00% notes, totaling an aggregate principal amount of $64.0 million. The final conversion rate was increased to 66.4178 shares of common stock per $1,000 of principal. From July 1, 2022 through July 8, 2022, the remaining $64.0 million of the 4.00% notes were converted into approximately 4.3 million shares of common stock. Common stock held as treasury shares were exchanged for the 4.00% notes. Pursuant to the guidance within ASC 470, Debt, we recorded the exchanges as a conversion. The 4.00% notes were retired effective July 8, 2022.

In August 2016, we issued $170.0 million of 4.125% convertible senior notes due in 2022, or 4.125% notes, which were senior, unsecured obligations with interest payable on March 1 and September 1 of each year. The initial conversion rate was 35.7143 shares of common stock per $1,000 of principal, which was equal to a conversion price of approximately $28.00 per share.

In March 2021, concurrent with the issuance of the 2.25% notes, we used approximately $156.5 million of the net proceeds of the 2.25% notes to repurchase approximately $135.7 million aggregate principal amount of the 4.125% notes due 2022, in privately negotiated transactions.

During August 2022, we entered into four privately negotiated exchange agreements with certain noteholders of the 4.125% notes to exchange approximately $32.6 million aggregate principal amount for approximately 1.2 million shares of our common stock. Additionally, on September 1, 2022, approximately $1.7 million aggregate principal amount of the 4.125% notes were settled through a combination of $1.7 million in cash and approximately 15 thousand shares of our common stock, and the remaining $23 thousand aggregate principal amount and accrued interest were settled in cash. The 4.125% notes were fully retired effective September 1, 2022.

Ethanol Production Segment

On February 9, 2021, Green Plains SPE LLC, a wholly-owned special purpose subsidiary and parent of Green Plains Obion and Green Plains Mount Vernon issued $125.0 million of junior secured mezzanine notes due 2026 with BlackRock for the purchase of all notes issued. These notes will mature on February 9, 2026 and are secured by a pledge of the membership interests in, and the real property owned by, Green Plains Obion and Green Plains Mount Vernon. At September 30, 2023, the outstanding principal balance was $125.0 million on the loan and the interest rate was 11.75%.

Green Plains Wood River and Green Plains Shenandoah, wholly-owned subsidiaries of us, have a $75.0 million loan agreement, which matures on September 1, 2035. At September 30, 2023, the outstanding principal balance was $73.5 million on the loan and the interest rate was 6.52%.

We also have small equipment financing loans, finance leases on equipment or facilities, and other forms of debt financing.

Agribusiness and Energy Services Segment

Green Plains Finance Company, Green Plains Grain and Green Plains Trade have total revolving commitments of $350.0 million and an accordion feature whereby amounts available under the facility may be increased by up to $100.0 million of new lender commitments subject to certain conditions. The facility matures in March 2027. Each SOFR rate loan shall bear interest for each day at a rate per annum equal to the Term SOFR rate for the outstanding period plus a Term SOFR adjustment and an applicable margin of 2.25% to 2.50%, which is dependent on undrawn availability under the facility. Each base rate loan shall bear interest at a rate per annum equal to the base rate plus the applicable margin of 1.25% to 1.50%, which is dependent on undrawn availability under the facility. The unused portion of the facility is also subject to a commitment fee of 0.275% to 0.375%, dependent on undrawn availability. At September 30, 2023, the outstanding principal balance was $150.0 million on the facility and the interest rate was 8.74%.

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mature on April 30, 2028. Advances are subject to variable interest rates equal to SOFR plus 1.75%. At September 30, 2023, the outstanding principal balance was $9.7 million on the facility and the interest rate was 7.06%.

Green Plains Grain has a short-term inventory financing agreement with a financial institution. The company has accounted for the agreement as short-term notes, rather than revenues, and has elected the fair value option to offset fluctuations in market prices of the inventory. This agreement is subject to negotiated variable interest rates. The company had no outstanding short-term notes payable related to the inventory financing agreement as of September 30, 2023.

Partnership Segment

Green Plains Partners, through a wholly owned subsidiary, has a term loan to fund working capital, capital expenditures and other general partnership purposes. The term loan has a maturity date of July 20, 2026. The term loan does not require any principal payments; however, the partnership has the option to prepay $1.5 million per quarter. The partnership repurchased $1.0 million of the outstanding notes during the nine months ended September 30, 2022. Prepayments totaling $1.5 million and $3.0 million were made during the three and nine months ended September 30, 2023, respectively.

Interest on the term loan is based on 3-month SOFR plus 8.26%, and is payable on the 15th day of each March, June, September and December. The term loan is secured by substantially all of the assets of the partnership. As of September 30, 2023, the term loan had a balance of $56.0 million and an interest rate of 13.67%.

Effects of Inflation

We have experienced inflationary impacts on labor costs, wages, components, equipment, other inputs and services across our business and inflation and its impact could escalate in future quarters, much of which is beyond our control. Moreover, we have fixed price arrangements with some of our customers and are not able to pass those costs along in most instances. As such, inflationary pressures could have a material adverse effect on our performance and financial statements.

Contractual Obligations and Commitments

In addition to debt, our material future obligations include certain lease agreements and contractual and purchase commitments related to commodities, storage and transportation. Aggregate minimum lease payments under the operating lease agreements for future fiscal years as of September 30, 2023 totaled $93.3 million. As of September 30, 2023, we had contracted future purchases of grain, ethanol, distillers grains, and natural gas valued at approximately $205.8 million and future commitments for storage and transportation valued at approximately $27.2 million. Refer to Note 13 – Commitments and Contingencies included in the notes to the unaudited consolidated financial statements included herein for more information.

Critical Accounting Policies and Estimates

Critical accounting policies, including those relating to derivative financial instruments, accounting for income taxes, and impairment of goodwill, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements. Information about our critical accounting policies and estimates are included in our annual report on Form 10-K for the year ended December 31, 2022.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We use various financial instruments to manage and reduce our exposure to various market risks, including changes in commodity prices and interest rates. We conduct the majority of our business in U.S. dollars and are not currently exposed to material foreign currency risk.

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Interest Rate Risk

We are exposed to interest rate risk through our loans which bear interest at variable rates. Interest rates on our variable-rate debt are based on the market rate for the lender’s prime rate, SOFR or LIBOR. At September 30, 2023, we had a total book value of $659.0 million in debt, $215.7 million of which had variable interest rates. A 10% increase in interest rates would affect our interest cost by approximately $2.1 million per year.

Commodity Price Risk

Our business is highly sensitive to commodity price risk, particularly for ethanol, corn, distillers grains, Ultra-High Protein, renewable corn oil and natural gas. Ethanol prices are sensitive to world crude oil supply and demand, the price of crude oil, gasoline, corn, the price of substitute fuels, refining capacity and utilization, government regulations and consumer demand for alternative fuels. Corn prices are affected by weather conditions, crop yields, changes in domestic and global supply and demand, and government programs and policies. Distillers grains prices are impacted by livestock numbers on feed, prices for feed alternatives and supply, which is associated with ethanol plant production. Natural gas prices are influenced by severe weather in the summer and winter and hurricanes in the spring, summer and fall. Other factors include North American energy exploration and production, and the amount of natural gas in underground storage during injection and withdrawal seasons.

To reduce the risk associated with fluctuations in the price of ethanol, corn, distillers grains, Ultra-High Protein, renewable corn oil and natural gas, at times we use forward fixed-price physical contracts and derivative financial instruments, such as futures and options executed on the Chicago Board of Trade, the New York Mercantile Exchange and the Chicago Mercantile Exchange. We focus on locking in favorable operating margins, when available, using a model that continually monitors market prices for corn, natural gas and other inputs relative to the price for ethanol and distillers grains at each of our production facilities. We create offsetting positions using a combination of forward fixed-price purchases, sales contracts and derivative financial instruments. As a result, we frequently have gains on derivative financial instruments that are offset by losses on forward fixed-price physical contracts or inventories and vice versa. Our results can be impacted if there is a mismatch of gains or losses associated with the derivative instrument during a reporting period when the physical commodity purchases or sale has not yet occurred. During the three and nine months ended September 30, 2023, revenues included net gains of $2.7 million and net losses of $5.3 million, respectively, and cost of goods sold included net gains of $9.3 million and $17.2 million, respectively, associated with derivative financial instruments.

Ethanol Production Segment

In the ethanol production segment, net gains and losses from settled derivative instruments are offset by physical commodity purchases or sales to achieve the intended operating margins. To reduce commodity price risk caused by market fluctuations, we enter into exchange-traded futures and options contracts that serve as economic hedges.

Our exposure to market risk, which includes the impact of our risk management activities resulting from our fixed-price purchase and sale contracts and derivatives, is based on the estimated net income effect resulting from a hypothetical 10% change in price for the next 12 months starting on September 30, 2023, which is as follows (in thousands):


Commodity	Estimated Total Volume Requirements for the Next 12 Months (1)	Unit of Measure	Net Income Effect of Approximate 10% Change in Price
Ethanol	903,000	Gallons	$125,976
Corn	310,000	Bushels	$115,007
Distillers grains	2,200	Tons (2)	$25,383
Renewable corn oil	300,000	Pounds	$11,170
Natural gas	26,400	MmBTU	$4,538

(1)Estimated volumes assume production at full capacity.

(2)Distillers grains quantities are stated on an equivalent dried ton basis.

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Agribusiness and Energy Services Segment

In the agribusiness and energy services segment, our physical purchase and sale contracts, derivatives and some of our inventories are marked to market. Our inventories are carried at the lower of cost or net realizable value, except fair-value hedged inventories. To reduce commodity price risk caused by market fluctuations for purchase and sale commitments of grain and grain held in inventory, we enter into exchange-traded futures and options contracts that serve as economic hedges.

The market value of exchange-traded futures and options used for hedging are highly correlated with the underlying market value of grain inventories and related purchase and sale contracts for grain. The less correlated portion of inventory and purchase and sale contract market values, known as basis, is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. We manage this less volatile risk by constantly monitoring our position relative to the price changes in the market. Inventory values are affected by the month-to-month spread in the futures markets. These spreads are also less volatile than overall market value of our inventory and tend to follow historical patterns, but cannot be mitigated directly. Our accounting policy for futures and options, as well as the underlying inventory held for sale and purchase and sale contracts, is to reflect their current market values and include gains and losses in the consolidated statement of operations.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure the information that must be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and participation of our chief executive officer and chief financial officer, management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023 as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

Management is responsible for establishing and maintaining effective internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. There were no material changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently involved in litigation that has arisen during the ordinary course of business. We do not believe this litigation will have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

Investors should carefully consider the discussion of risks and the other information in our annual report on Form 10-K for the year ended December 31, 2022, in Part I, Item 1A, “Risk Factors,” and the discussion of risks and other information in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under “Cautionary Information Regarding Forward-Looking Statements,” of this report. Investors should also carefully consider the discussion of risks with the partnership under the heading “Risk Factors” and other information in their annual report on Form 10-K for the year ended December 31, 2022. Although we have attempted to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. The following risk factors supplement and/or update risk factors previously disclosed and should be considered in conjunction with the other information included in, or incorporated by reference in, this quarterly report on Form 10-Q.

Our margins are dependent on managing the spread between the price of corn, natural gas, ethanol, distillers grains, Ultra-High Protein and renewable corn oil.

Our operating results are highly sensitive to the spread between the corn and natural gas we purchase, and the ethanol, distillers grains, Ultra-High Protein and renewable corn oil we sell. Price and supply are subject to various market forces, such as weather, domestic and global demand, global political or economic issues, including but not limited to the war in Ukraine including sanctions associated therewith, shortages, export prices, crude oil prices, currency valuations and government policies in the United States and around the world, over which we have no control. Price volatility of these commodities may cause our operating results to fluctuate substantially. Increases in corn or natural gas prices or decreases in ethanol, distillers grains, Ultra-High Protein and renewable corn oil prices may make it unprofitable to operate. No assurance can be given that we will purchase corn and natural gas or sell ethanol, distillers grains, Ultra-High Protein and renewable corn oil at or near prices which would provide us with positive margins. Consequently, our results of operations and financial position may be adversely affected by increases in corn or natural gas prices or decreases in ethanol, distillers grains, Ultra-High Protein and renewable corn oil prices. We have made significant investments in our biorefinery platform to produce Ultra-High Protein, and our financial results are increasingly dependent on our ability to operate these new systems consistently and to sell the products into new markets at a premium to distillers grains and soybean meal. Rapid expansion of soybean crushing capacity to meet the soybean oil demands of the growing biomass-based diesel industry could result in an oversupply of soybean meal, which could depress prices for all protein feed ingredients, and negatively impact our anticipated financial returns.

We continuously monitor the margins at our ethanol plants using a variety of risk management tools and hedging strategies when appropriate. Should our combined revenue from ethanol, distillers grains, Ultra-High Protein and renewable corn oil fall below our cost of production, we could decide to slow or suspend production at some or all of our ethanol plants, which could also adversely affect our results of operations and financial position.

The products we buy and sell are subject to price volatility and uncertainty.

Our operating results are highly sensitive to commodity prices.

Corn. We are generally unable to pass increased corn costs to our customers since ethanol competes with other fuels. We continue to see considerable volatility in corn prices. Ethanol plants, livestock industries and other corn-consuming enterprises put significant price pressure on local corn markets. In addition, local corn supplies and prices could be adversely affected by, but not limited to: prices for alternative crops, increasing pricing for seed corn, fertilizers, crop protection products and other input costs; changes in government policies including crop insurance, conservation programs, regulation of farmland, and other regulations; shifts in global supply and demand; global political or economic issues, including but not limited to the war in Ukraine including sanctions associated therewith; and global or regional growing conditions, such as plant disease, pests or adverse weather, including drought.

Ethanol. Our revenues are dependent on market prices for ethanol which can be volatile as a result of a number of factors, including but not limited to: the price and availability of competing fuels and oxygenates for fuels; the domestic

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and global supply and demand for ethanol, gasoline and corn; the price of gasoline, crude oil and corn; global political or economic issues, including but not limited to the war in Ukraine including sanctions associated therewith, and government policies that impact the supply, demand and pricing of corn, oil, gasoline, ethanol and other liquid fuels.

Ethanol is marketed as a fuel additive that reduces vehicle emissions, an economical source of octane and, to a lesser extent, as a gasoline substitute through higher blends such as E15 and E85. Consequently, gasoline supply and demand can affect the price of ethanol. Should gasoline prices or demand change significantly, our results of operations could be materially impacted.

Ethanol imports also affect domestic supply and demand. Imported ethanol is not subject to an import tariff and, under the RFS, sugarcane ethanol from Brazil can be used as a means for obligated parties to meet the advanced biofuel standard, in addition to state level low carbon fuel standards. Brazil is also rapidly expanding corn and corn ethanol production, which can have a lower carbon intensity score if it is produced from the second crop or “Safrinha” crop, which could be imported into the U.S. or displace our exports elsewhere globally.

Distillers Grains. Distillers grains compete with other protein-based animal feed products. Downward pressure on other commodity prices, such as corn, wheat, soybeans, soybean meal, and other feed ingredients, will generally cause the price of competing animal feed products to decline, resulting in downward pressure on the price of distillers grains. Occasionally, the price of distillers grains will lag behind fluctuations in corn or other feedstock prices, lowering our cost recovery percentage. Additionally, exports of distiller grains could be impacted by the enactment of foreign policy, or expanded production of soybean meal or distillers grains elsewhere.

Natural Gas. The price and availability of natural gas are subject to volatile market conditions. These market conditions are often affected by factors beyond our control, such as weather, drilling economics, overall economic conditions and government regulations. Significant disruptions in natural gas supply could impair our ability to produce ethanol. Furthermore, increases in natural gas prices or changes in our cost relative to our competitors cannot be passed on to our customers, which may adversely affect our results of operations and financial position.

Ultra High Protein. Our Ultra-High Protein has unique nutritional advantages and a higher protein concentration than soybean meal and can be included in a variety of feed rations in the pet, dairy, swine, poultry and aquaculture industries. As a value-added feed ingredient, quality control is imperative. Demand for feed products and pricing pressure from competing feed products may result in downward pressure on the price of Ultra-High Protein. Reliable production of Ultra-High Protein from both consistent operations of the biorefinery as well as the MSC™ technology is necessary to produce anticipated volumes. Changes in our customers willingness to accept these ingredients, inconsistency in production volumes, quality or downward pressure on prices could result in adverse impact on our business and profitability.

Renewable Corn Oil. Renewable corn oil is generally marketed as a low-carbon feedstock for biofuel production including renewable diesel, biodiesel and currently to a lesser extent, sustainable aviation fuel; therefore, the price of renewable corn oil is affected by demand for renewable diesel and biodiesel. Expanded demand from the renewable diesel and biodiesel industry due to the extended blending tax credit and growing LCFS markets in California, Oregon, Washington state, Canada and elsewhere as well as customer acceptance for such fuels could impact renewable corn oil demand. In general, renewable corn oil prices follow the prices of heating oil and soybean oil, though LCFS programs incentivize the lower carbon intensity of renewable corn oil as a feedstock relative to soybean oil. Federal incentives for sustainable aviation fuel also provide higher credit values for lower carbon intensity. Decreases in the price of or demand for renewable corn oil could have an adverse impact on our business and profitability.

We may be affected by or unable to fulfill our total transformation strategies.

In 2018, we announced that we were evaluating the performance of our entire portfolio of assets and businesses. As part of that process, we sold three ethanol plants, permanently closed one ethanol plant and sold Fleischmann’s Vinegar Company, Inc. Furthermore, we sold our 50% interest in JGP Energy Partners and Green Plains Cattle Company in 2019. We sold the remaining 50% interest in Green Plains Cattle Company and our Hereford, Texas ethanol plant in 2020, our Ord, Nebraska ethanol plant in March 2021, and our Atkinson, Nebraska ethanol plant in September 2023.

As we continue to evaluate our portfolio, we may sell additional assets or businesses or exit particular markets that are no longer a strategic fit or no longer meet their growth or profitability targets. Depending on the nature of the assets sold, our profitability may be impacted by lost operating income or cash flows from such businesses. In addition, divestitures we complete may not yield the targeted improvements in our business and may divert management’s attention from our day-to-day operations. We also undertook a number of project initiatives to improve margins, including our Project 24 initiative and Total Transformation Plan focused on reducing operating costs and expanding the products and value we can extract

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from a kernel of corn. The Ultra-High Protein strategy includes substantial construction projects and significant capital expenditures to deploy FQT’s MSC™ technology, and FQT’s CST™ production capabilities to meet anticipated customers' demands.

We may not achieve our construction goals on time or within our budget. We may not achieve the operating yields we project or our technologies may not perform as expected. We may not achieve product market sales, margins or pricing we project, and our operating cost goals may not be achieved due to a variety of factors. Increasing costs for construction materials, supply chain issues limiting the availability of certain components, lack of available labor and delays in required permitting could all lead to projects being over budget and behind schedule. Our failure to achieve our production, sales and pricing targets, including, but not limited to, construction, yield, sales, margin, pricing, or financial results associated with our total transformation strategies could have an adverse effect on our business, financial condition or results of operations.

Government biofuels programs could change and impact the ethanol market.

The RFS mandates the minimum volume of renewable fuels that must be blended into the transportation fuel supply each year, which affects the domestic market for ethanol. Through 2022, the EPA undertook rulemaking to set the RVO for the following year, though at times months or years would pass without a finalized RVO. Further, the EPA has the authority to waive the requirements, in whole or in part, if there is inadequate domestic renewable fuel supply or the requirement severely harms the economy or the environment. After 2022, volumes shall be determined by the EPA in coordination with the Secretaries of Energy and Agriculture, taking into account such factors as impact on environment, energy security, future rates of production, cost to consumers, infrastructure and other factors, such as impact on commodity prices, job creation, rural economic development or food prices. The EPA also has the authority to set volumes for multiple years at a time, rather than annually as required prior to 2022. In December 2022, the EPA proposed a multi-year RVO for 2023, 2024 and 2025, and finalized the volumes on June 21, 2023.

Volumes can also be impacted as small refineries can petition the EPA for an SRE which, if approved, waives their portion of the annual RVO requirements. The EPA, through consultation with the DOE and the USDA, can grant them a full or partial waiver, or deny it outright within 90 days of submittal. Elimination of a refinery’s obligation effectively lowers the amount of renewable fuels required to be blended.

Our operations could be adversely impacted by legislation, administration actions, EPA actions, or lawsuits that may reduce the RFS mandated volumes of conventional ethanol and other biofuels through the RVO levels, a change in the RFS point of obligation from blenders and importers to retailers, or SREs. A recent Supreme Court ruling held that the small refineries can continue to apply for an extension of their waivers from the RFS, even if they have not been awarded a continuous string of exemptions, though the EPA under the current administration, in conjunction with the RVO rulemaking for 2020, 2021 and 2022, denied all pending SREs, a stance they reiterated in the finalized 2023, 2024 and 2025 RVO rule. There are multiple legal challenges to how the EPA has handled SREs and RFS rulemakings.

The D.C. Circuit Court of Appeals ruled that the EPA overstepped its authority in extending the one pound Reid Vapor Pressure waiver for 10% ethanol blends to 15% ethanol blends in the summer, effectively limiting summertime sales of ethanol blends above 10% to FFVs from June 1 to September 15 each year. Notwithstanding, on April 12, 2022, the President announced that he had directed the EPA to issue an emergency waiver to allow for the continued sale of E15 during the June 1 to September 15 period. On April 28, 2023, the EPA issued an emergency waiver to allow for continued sale of E15 during the 2023 summer driving season. As of this filing, according to Prime the Pump, E15 is sold year-round at approximately 3,244 stations in 31 states.

Similarly, should federal mandates regarding oxygenated gasoline be repealed, the market for domestic ethanol could be adversely impacted. Economic incentives to blend based on the relative value of gasoline versus ethanol, taking into consideration the octane value of ethanol, environmental requirements and the RFS mandate, may affect future demand. A significant increase in supply of biofuels beyond the RFS mandated volumes could have an adverse impact on ethanol prices. Moreover, changes to the RFS could negatively impact the price of ethanol or cause imported sugarcane or corn ethanol from Brazil to become more economical than domestic corn ethanol. Likewise, national, state and regional LCFS like that of California, Oregon, Washington state, Brazil or Canada could be favorable or harmful to U.S. corn ethanol, depending on how the regulations are crafted, enforced and modified.

Future demand may be influenced by economic incentives to blend based on the relative value of gasoline versus ethanol, taking into consideration the octane value of ethanol, environmental requirements and the value of RFS credits known as RINs. A significant increase in supply of biofuels beyond the RFS mandated levels could have an adverse impact on ethanol prices. Moreover, any changes to RFS, whether by legislation, EPA action or lawsuit, originating from issues

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associated with the market price of RINs could negatively impact the demand for ethanol, discretionary blending of ethanol and/or the price of ethanol. Prior actions by the EPA to grant SREs without accounting for the lost gallons, for example, resulted in lower RIN prices. Similarly, proposals to reduce annual RVO levels could also lead to lower RIN prices.

To the extent federal or state laws or regulations are modified and/or enacted, it may result in the demand for ethanol being reduced, which could negatively and materially affect our financial performance.

Future demand for ethanol is uncertain and changes in public perception, consumer acceptance and overall consumer demand for transportation fuel could affect demand.

While many trade groups, academics and government agencies support ethanol as a fuel additive that promotes cleaner air and reduces GHG emissions, others claim growing corn and producing ethanol consumes more energy, emits more GHG emissions than other fuels and depletes water resources. While we do not agree, some studies suggest ethanol produced from corn is less efficient than ethanol produced from switch grass or wheat grain. Others claim corn ethanol negatively impacts consumers by causing the prices of food made from corn and corn byproducts, as well as meat derived from corn-consuming livestock to increase. Ethanol critics also contend the industry redirects corn supplies from international food markets to domestic fuel markets, and contributes to land use change domestically and abroad.

Today there are limited markets for ethanol beyond its value as an oxygenate domestically and abroad. We believe further consumer acceptance of E15 and E85 fuels may be necessary before ethanol can achieve significant market share growth in the U.S. Discretionary and E85 blending are important secondary markets. Discretionary blending is often determined by the price of ethanol relative to gasoline, the value of RINs, and availability to consumers. When discretionary blending is financially unattractive, the demand for ethanol may be reduced. New incentives for SAF could open new markets for ethanol through alcohol to jet technologies, though commercial production is essentially nonexistent as of this filing.

Demand for ethanol is also affected by overall demand for surface transportation fuel, which is affected by cost, number of miles traveled and vehicle fuel economy. Miles traveled typically increases during the spring and summer months related to vacation travel, followed closely by the fall season due to holiday travel. Global events, such as COVID-19, greatly decreased miles traveled and in turn, the demand for ethanol. Consumer demand for gasoline may be impacted by various transportation trends, such as widespread adoption of electric vehicles. Numerous automakers have announced plans to phase out the production of gasoline and diesel powered vehicles by the mid-2030s. These announcements coincide with pledges to ban the sale of internal combustion engines in countries such as Japan and the United Kingdom by 2035, as well as a statewide ban in California, which several states are imitating. If realized, these bans would accelerate the decline of liquid fuel demand for surface transportation and by extension demand for ethanol, biodiesel and renewable diesel. The EPA has proposed CAFE standards which would require aggressive EV deployment by Original Equipment Manufacturers (OEMs). We are closely monitoring legislation and regulation that may impact the future sales of electric vehicles as well as vehicles with internal combustion engines in various states and around the world.

Additionally, factors such as over-supply of ethanol, which has been the case for some time, could continue to negatively impact our business. Reduced demand for ethanol may depress the value of our products, erode our margins, and reduce our ability to generate revenue or operate profitably.

Our business is directly affected by the supply and demand for ethanol and other fuels in the markets served by our assets. Reduced demand for ethanol, regardless of cause, may erode our margins and reduce our ability to generate revenue and operate profitably.

Our production levels may fluctuate due to planned and unplanned downtime at our assets, and we are required to continue to make minimum volume commitment payments to the partnership regardless of our production levels.

Unplanned downtime may occur from time to time at our facilities. Moreover, we are party to the storage and throughput agreement with our partnership, under which we are obligated to pay a minimum volume commitment regardless of whether or not we operate. Our plants may not produce at yields we expect or the required MVC volumes due to a variety of reasons, including, but not limited to, equipment failures and other breakdowns; labor shortages; lack of adequate raw materials, including corn supply; adverse pricing on raw materials and finished goods that becomes uneconomical; poor rail service; lack of adequate storage for distillers grains, Ultra-High Protein, renewable corn oil or ethanol; permitting or regulatory issues, adverse weather and other reasons. We may not run our plants at volumes sufficient enough to cover the MVC resulting in payments being made to the partnership. In times of sustained negative margins, our volumes may be insufficient to recover these MVC payments in the following four quarters as outlined in the partnership agreement. Any of these production events may adversely impact our profitability and financial position.

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Our success depends on our ability to manage our growing and changing operations.

Since our formation in 2004, our business has grown significantly in size, products and complexity. This growth places substantial demands on our management, systems, internal controls, and financial and physical resources. If we acquire or develop additional operations, implement new technologies, sell into new markets, track the carbon intensity of the feedstocks we purchase and finished products we sell, we may need to further develop our financial and managerial controls and reporting systems, and could incur expenses related to hiring additional qualified personnel and expanding our information technology infrastructure. Our ability to manage growth effectively could impact our results of operations, financial position and cash flows.

New ethanol process technologies could emerge that require less energy per gallon to produce or increase yields of various products and in some cases develop new coproducts and result in lower production costs or more favorable economics for a plant. Our process technologies could become less effective or competitive than competing technologies or become obsolete and place us at a competitive disadvantage, which could have a material adverse effect on our operations, cash flows and financial position. Newly constructed plants could operate more efficiently and reliably than older plants, putting us at a competitive disadvantage.

Business disruptions due to unforeseen operational failures or factors outside of our control could impact our ability to fulfill contractual obligations.

Natural disasters, pandemics, transportation issues, significant track damage resulting from a train derailment, aging equipment breakdowns, coupled with supply chain challenges impacting repairs or replacements, or labor strikes by our transportation providers could adversely impact operations and/or delay shipments of raw materials to our plants or deliveries of ethanol, distillers grains, Ultra-High Protein and renewable corn oil to our customers. If we are unable to meet customer demand or contract delivery requirements due to stalled operations caused by business disruptions, we could potentially lose customers or volume with such customers.

Shifts in global markets, supply or demand changes, as well as adverse weather conditions, such as inadequate or excessive amounts of rain during the growing season, overly wet conditions, hail, derecho wind events, an early freeze or snowy weather during harvest could impact the supply of corn that is needed to produce ethanol. Corn stored in a temporary open pile may be damaged by rain or warm weather before the corn is dried, shipped or moved into a permanent storage structure.

Compliance with and changes in tax laws could adversely affect our performance.

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use, gross receipts, and value-added taxes), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties. Tax incentives for producing low carbon fuels may add additional complexity to our business, and our ability to qualify for them relative to other producers may put us at a competitive disadvantage.

The ability of suppliers to deliver inputs, parts, components and equipment to our facilities, and our ability to construct our facilities without disruption, could affect our business performance.

We use a wide range of materials and components in the production of our products and our transformation construction, which come from numerous suppliers. Also, key parts may be available only from a single or a limited group of suppliers, and we are subject to supply and pricing risk. Our operations and those of our suppliers are subject to disruption for a variety of reasons, including supplier plant shutdowns or slowdowns, parts availability, transportation delays, work stoppages, labor relations, governmental regulatory and enforcement actions, disputes with suppliers, distributors or transportation providers, information technology failures, and natural hazards, including due to climate change. We may be impacted by supply chain issues, due to factors largely beyond our control, which could escalate in future quarters. Any of the foregoing factors may result in higher costs, operational disruptions or construction delays, which could have an adverse impact on our business and financial statements. Such disruption has in the past and could in the future interrupt our ability to manufacture certain products. Any significant disruption could have a material adverse impact on our financial statements.

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Risks Related to the Merger

The Merger is subject to conditions, including some conditions that may not be satisfied on a timely basis, if at all. Failure to complete the Merger, or significant delays in completing the Merger, could negatively affect the company’s and the partnership’s future business and financial results and the trading prices of shares of the company’s common stock and the Partnership Common Units.

The completion of the Merger is subject to a number of conditions. The completion of the Merger is not assured and is subject to risks. The Merger Agreement contains conditions, some of which are beyond the parties’ control, that, if not satisfied or waived, may prevent, delay or otherwise result in the Merger not occurring.

If the Merger is not completed, or if there are significant delays in completing the Merger, the company’s and the partnership’s future business and financial results and the trading prices of shares of the company’s common stock and the Partnership Common Units could be negatively affected, and each of the parties will be subject to several risks, including the following:

•the parties may be liable for fees or expenses to one another under the terms and conditions of the Merger Agreement;

•there may be negative reactions from the financial markets due to the fact that current prices of shares of the company’s common stock and the Partnership Common Units may reflect a market assumption that the Merger will be completed; and

•the attention of management will have been diverted to the Merger rather than their own operations and pursuit of other opportunities that could have been beneficial to their respective businesses.

The company and the partnership may incur substantial transaction-related costs in connection with the Merger. If the Merger does not occur, the company and the partnership will not benefit from these costs.

The company and the partnership expect to incur substantial expenses in connection with completing the Merger, including fees paid to legal, financial and accounting advisors, filing fees, written consent costs and printing costs. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.

The company and the partnership may in the future be targets of securities class action and derivative lawsuits, which could result in substantial costs and may delay or prevent the completion of the Merger.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements in an effort to enjoin the relevant merger or seek monetary relief. The company and the partnership may in the future be defendants in one or more lawsuits, relating to the Merger Agreement and the Merger and, even if the pending or any future lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. The company and the partnership cannot predict the outcome of these lawsuits, or others, nor can either company predict the amount of time and expense that will be required to resolve such litigation. An unfavorable resolution of any such litigation surrounding the Merger could delay or prevent its consummation. In addition, the costs of defending the litigation, even if resolved in the company’s or the partnership’s favor, could be substantial and such litigation could distract the company and the partnership from pursuing the consummation of the Merger and other potentially beneficial business opportunities.

Financial projections of the company and/or the partnership may not prove to be accurate.

In connection with the Merger, the company and the partnership prepared and considered, among other things, internal financial forecasts for the company and the partnership, respectively. These forecasts speak only as of the date made and will not be updated. These financial projections were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties, and may not be achieved in full, at all or within projected time frames. In addition, the failure of businesses to achieve projected results could have a material adverse effect on the share price of the company’s common stock and financial position following the Merger.

The market value of shares of the company’s common stock could decline if large amounts of such stock are sold following the Merger; the market value of shares of the company’s common stock could also decline as a result of issuances and sales of shares of the company’s common stock other than in connection with the Merger.

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Following the Merger, holders of Public Common Units as of the Effective Time will own interests in a combined company operating an expanded business with more assets and a different mix of liabilities. Current holders of the company’s common stock and former holders of Public Common Units may not wish to continue to invest in the combined company, or may wish to reduce their investment in the combined company, in order to comply with institutional investing guidelines, to increase diversification or to track any rebalancing of stock indices in which the company’s common stock or the Partnership Common Units are or were included. If, following the Merger, large amounts of the company’s common stock are sold, the price of the company’s common stock could decline.

Furthermore, the company cannot predict the effect that issuances and sales of shares of the company’s common stock, whether taking place before the Merger (subject to the limitations of the Merger Agreement) or after the Merger, including issuances and sales in connection with capital markets transactions, acquisition transactions or other transactions, may have on the market value of shares of the company’s common stock. The issuance and sale of substantial amounts of the company’s common stock could adversely affect the market value of such common stock.

The Merger may not be accretive to certain financial metrics, which may negatively affect the market price of shares of the company’s common stock.

Preliminary financial estimates used in projected accretion may materially change. The company may encounter additional transaction and integration-related costs, may fail to realize all of the benefits anticipated in the Merger or be subject to other factors that affect preliminary estimates or its ability to realize operational efficiencies. Any of these factors could cause a decrease in the company’s operating earnings per share or decrease or delay the expected effect of the Merger and contribute to a decrease in the price of shares of the company’s common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Employees and directors may surrender shares when restricted stock grants are vested to satisfy statutory minimum required payroll tax withholding obligations.

The following table lists the shares that were surrendered during the third quarter of 2023:


Period	Total Number of Shares Withheld	Average Price Paid per Share
July 1 - July 31	—	$	—
August 1 - August 31	416	31.32
September 1 - September 30	239	33.80
Total	655	$	32.22

Our board of directors authorized a share repurchase program of up to $200 million of our common stock. Under this program, we may repurchase shares in open market transactions, privately negotiated transactions, accelerated buyback programs, tender offers or by other means. The timing and amount of the transactions are determined by management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time, without prior notice. We did not repurchase any shares during the third quarter of 2023. Since inception of the repurchase program, the company has repurchased approximately 7.4 million shares of common stock for approximately $92.8 million under the program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended September 30, 2023, no director or officer of the company adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.

Exhibit Index


Exhibit No.			Description of Exhibit
2.1			Agreement and Plan of Merger, dated September 16, 2023, by and among Green Plains Inc., GPLP Holdings Inc., GPLP Merger Sub LLC, Green Plains Holdings LLC and Green Plains Partners LP. (The schedules have been om itted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request.) (incorporated herein by reference to Exhibit 2.1 to the company's Current Report on Form 8-K filed September 18, 2023).
10.1			Amendment No. 3 to the Amended and Restated Credit Agreement, dated October 30, 2023, by and among Green Plains Operating Company LLC, as the Borrower, the guarantors identified therein, Argent Institutional Trust Company, as Administrative Agent and the other lenders party thereto (The schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request).
10.2			Support Agreement, dated September 16, 2023, by and among Green Plains Partners LP, Green Plains Inc., and the parties listed on the signature pages thereto (incorporated herein by reference to Exhibit 10.1 to the company's Current Report on Form 8-K filed September 18, 2023).
31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101			The following information from Green Plains Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements
104			The cover page from Green Plains Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, formatted in iXBRL.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	GREEN PLAINS INC.
	(Registrant)

Date: October 31, 2023	By:	/s/ Todd A. Becker
		Todd A. Becker
		President and Chief Executive Officer
		(Principal Executive Officer)


Date: October 31, 2023	By:	/s/ James E. Stark
		James E. Stark
		Chief Financial Officer
		(Principal Financial Officer)