10-K
SOUTH DAKOTA SOYBEAN PROCESSORS LLC (SDSYA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 000-50253
| South Dakota Soybean Processors, LLC | |||
|---|---|---|---|
| (Exact name of registrant as specified in its charter) | South Dakota | 46-0462968 | |
| --- | --- | ||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||
| 100 Caspian Avenue; PO Box 500<br><br>Volga, South Dakota | 57071 | ||
| (Address of Principal Executive Offices | (Zip Code) | (605) 627-9240 | |
| --- | |||
| (Registrant's telephone number, including area code) |
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
CLASS A CAPITAL UNITS
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
¨ Yes x No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨ Yes x No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes ¨ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
| ¨ Large Accelerated Filer | ¨ Accelerated Filer | x Non-Accelerated Filer | ☐ Smaller Reporting Company | ☐ Emerging Growth Company |
|---|---|---|---|---|
| (do not check if a smaller reporting company) |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of these error correction are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
¨ Yes ☒ No
The aggregate market value of the registrant’s Class A units held by non-affiliates at June 30, 2024 was approximately $278,392,000 computed by reference to the most recent public offering price on Form S-1. The registrant's Class A units are not listed on an exchange or otherwise publicly traded. Additionally, the Class A units are subject to significant restrictions on transfer under the registrant's operating agreement.
As of the day of this filing, there were 30,411,500 Class A capital units of the registrant outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of Form 10-K - Portions of the Definitive Proxy Statement to be filed with the Securities Exchange Commission within 120 days after the close of the registrant's fiscal year (December 31, 2024).
Table of Contents
| Page | ||
|---|---|---|
| PART I. | ||
| Item 1. | Business | 3 |
| Item 1A. | Risk Factors | 8 |
| Item 1B. | Unresolved Staff Comments | 12 |
| Item 1C. | Cybersecurity | 12 |
| Item 2. | Properties | 13 |
| Item 3. | Legal Proceedings | 14 |
| Item 4. | Mine Safety Disclosures | 14 |
| PART II. | ||
| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 14 |
| Item 6. | Selected Financial Data | 16 |
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 7A. | Quantitative and Qualitative Disclosure about Market Risk | 22 |
| Item 8. | Financial Statements and Supplementary Data | 23 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 23 |
| Item 9A. | Controls and Procedures | 23 |
| Item 9B. | Other Information | 24 |
| PART III. | 24 | |
| PART IV. | 24 | |
| Item 15. | Exhibits, Financial Statement Schedules | 24 |
| SIGNATURES | 26 |
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information to investors. This Annual Report on Form 10-K includes forward-looking statements that reflect our current expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include all statements that are not historical in nature. We have tried to identify these forward-looking statements by using words including "may," "will," "should," "could," "expect," "anticipate," "believe," "plan," "intend," "estimate," "continue" and similar expressions. These forward looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward looking statements. These factors include the risks, uncertainties, trends and other factors discussed under the headings "Item 1A. Risk Factors," as well as "Item 1. Business," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Annual Report on Form 10-K, including:
•The effect of weather conditions and the impact of crop and animal disease;
•General economic conditions impacting the availability and price of soybeans and natural gas;
•General economic conditions, including any future economic downturn, the impact of inflation or tariffs, disruptions in financial credit and other disruptions resulting from geopolitical events such as the Russian invasion of Ukraine, the conflict in the Middle East, and trade tensions between the U.S. and China;
•The impact of global and regional economic, agricultural, financial and commodities market, political, social and health conditions;
•Fluctuations in U.S. oil consumption and petroleum prices;
•Changes in perception of food quality and safety;
•Damage to or loss of our facilities due to casualty, weather, mechanical failure or any extended or extraordinary maintenance or inspection that may be required;
•Changes in business strategy, capital improvements or development plans;
•Changes in the availability of credit and interest rates;
•Future levels of indebtedness and capital spending, particularly on new projects;
•The availability of additional capital to support capital improvements, development and projects; and
•Other factors discussed under the item below entitled “Risk Factors.”
In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements contained in this Annual Report on Form 10-K. Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Annual Report on Form 10-K not to occur. Except as otherwise required by federal securities law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Annual Report on Form 10-K.
PART I
Item 1. Business.
Overview
South Dakota Soybean Processors, LLC (“we,” “us,” “our” or the “Company”) is the owner and operator of two soybean processing plants and a soybean oil refinery in the state of South Dakota. Our principal place of business
is in Volga, South Dakota, where we operate a soybean processing plant and refinery, and our administrative offices are located. We also own and operate a small oilseed processing plant near Miller, South Dakota, which is approximately 100 miles from Volga. We own a controlling interest in a subsidiary which indirectly owns and, following completion of construction, will operate a large oilseed processing plant and refinery located just south of Mitchell, South Dakota. Construction of the Mitchell facility commenced in September 2023 and is expected to be completed and operational by the fourth quarter of 2025.
We are owned by approximately 2,200 members, many of whom are agricultural producers residing in South Dakota and neighboring states. Our members deliver and sell soybeans to our plants for processing and production of our end products. All our assets and operations are domiciled in South Dakota, where all of our products are produced.
Our core business consists of processing locally grown soybeans into two main products, soybean meal and oil. We market and sell soybean meal primarily to resellers, feed mills, and livestock producers as livestock feed. We market and sell multiple grades of soybean oil, in either crude or refined formats, to food, biodiesel and chemical industries. Under certain market conditions, we may register and deliver warehouse receipts for crude oil under specific terms and conditions of a Chicago Board of Trade (CBOT) soybean oil futures contract. We also market and sell contracting services for the construction and management of oilseed processing plants.
We strive to maintain a competitive position in the marketplace by producing high quality products, operating highly efficient operations, and adding value to our core products to capture larger margins. We continue to research ways to improve overall efficiency by analyzing new methods of vertical integration, adding value to our products through additional processing investment, and studying applications of our products in the food and energy industries. Although a primary objective is to maximize cash distributions to our members from profits generated by operations, we recognize the need to maintain our financial strength through investment in and capital improvements into our business and facilities.
General Development of Business
In 1993, we were organized and operated as a South Dakota cooperative. In 2002, we reorganized and converted our legal form from a South Dakota cooperative to a South Dakota limited liability company. As a limited liability company, we are taxed as a partnership for U.S. tax purposes, meaning we are not subject to U.S. income tax but file information returns and report our income annually, and all of our income is passed through to and included in the taxable income of our members.
After completion of construction of our first facility in Volga in 1996, we commenced operations and processing of soybeans into soybean meal and hulls, and crude soybean oil. Since 1996, we have invested heavily internally by making significant capital improvements and expanding our business to include vertically integrated product lines and services. In 2002, we completed the construction of a refining facility and began refining crude soybean oil which sold to customers in the oil and other industries. In 2011, we completed the construction of a deodorizer and began selling deodorized oil directly to customers in the food industry. In 2014, we purchased the Miller oilseed processing plant, which has permitted expansion into new markets through the processing of identity-preserved soybeans, including non-genetically modified organisms (GMO) and organic soybeans.
In 2019, we invested into Prairie AquaTech, LLC and its affiliates, which are engaged in the research, development and production of high-quality protein feed derived from soybeans. Following our investment, Prairie AquaTech constructed and now operates a 45,000 square foot production facility immediately adjacent to our Volga plant. The facility has the capacity to produce up to 30,000 tons of feed annually, which is currently being marketed and sold to the fish and pet industries.
In 2023, we took major steps toward developing and operating a new oilseed processing facility near Mitchell, South Dakota. We formed a subsidiary, High Plains Partners, LLC, a South Dakota limited liability company, to help finance and develop the Mitchell facility and made a large investment of approximately $100.4 million into it. High Plains Partners then formed its own subsidiary, HPP SD Holdings, LLC, a Delaware limited liability company, of which it owns and controls a majority interest, to hold a one-hundred percent ownership interest in High Plains Processing, LLC, a Delaware limited liability company, which is the owner-operating company of the Mitchell facility. The Mitchell facility will be a switch-processing facility, making it capable of processing soybeans and other oilseed varieties. The facility will have the capacity to process 35 million bushels of soybeans annually. Storage volume for the facility is expected to be 4 million bushels of soybean/oilseed, 8,000 metric tons of meal/hulls, 12.3 million
gallons of crude oil and 3.52 million gallons of refined oil. Construction of the facility commenced in September 2023 and is scheduled to be completed by the fourth quarter of 2025. Once operational, we will manage the operations of the facility through a management services agreement.
Industry Information
Globally, soybean production is concentrated in three principal countries: the U.S., Brazil, and Argentina. The United States Department of Agriculture (“USDA”) reports that, for the 2024 crop year, the U.S. produced approximately 4.37 billion bushels of soybeans, or approximately 28% of estimated world production; Brazil produced 6.2 billion bushels, or 40% of estimated world production; and Argentina produced 1.9 billion bushels, or 12% of estimated world production.
Soybean production fluctuates annually due to various factors, including weather, government policy, economic conditions, and prices of other commodities. Soybean consumption, by contrast, fluctuates less because soybeans are a staple commodity and are used globally. Yet, consumption fluctuates from time-to-time due to various factors, including general economic conditions, health concerns, population growth and trade policy.
Soybean processing generally involves the conversion of soybeans into three principal products: soybean meal, soybean hulls, and soybean oil. A bushel of soybeans, weighing approximately 60 pounds, yields, approximately forty-four pounds of meal, four pounds of hulls, and eleven pounds of crude oil. Approximately 80% of a soybean bushel is processed and sold as soybean meal or hulls, with the remaining 20% extracted as crude soybean oil. Soybean meal and hulls are sold and used as feed by livestock producers and fish farms. Soybean oil, which is produced in multiple grades, is sold to and used in the food, petroleum and chemical industries. The food industry typically integrates soybean oil in cooking and salad dressings, baking and frying fats, and butter substitutes.
Soybean processing facilities are generally located in areas where there are adequate sources of soybeans and a strong demand for soybean meal. In the U.S., soybean meal is predominantly fed to and consumed by the poultry and swine industries. On average, exports of soybean meal from the U.S. account for 20% to 30% of total production. The USDA estimates that approximately 55% of soybeans produced in the U.S. are processed domestically, 42% are exported as whole soybeans, and 3% are retained for seed and residual use. Historically, the U.S. exports more soybeans to China than any other country, followed usually by the European Union, Mexico, and Japan.
Soybean oil refineries are generally located adjacent to soybean processing plants. Refined and crude soybean oil is shipped throughout the U.S. and for export. The USDA estimates that approximately 48% of domestic soybean oil production is used in food, feed and industrial applications, 47% in biofuels production, and 5% for export for various uses.
The soybean industry continues to introduce soy-based products as substitutes for various petroleum-based products including lubricants, plastics, ink, crayons and candles. Soybean oil is increasingly being converted to biofuels, including biodiesel or renewable diesel. Biodiesel and renewable diesel, substitutes for standard, petroleum-based diesel fuel, has experienced rapid growth the past five years following the expansion of the Renewable Fuel Standard (RFS) program and resumption of the biodiesel blenders’ tax credit.
Soybean crushing and refining margins are generally cyclical in nature. The price of soybeans may fluctuate substantially from year to year, whereas the price of meal and oil generally tracks that of soybeans although not necessarily on a one-for-one basis; therefore, margins can be variable.
Raw Materials and Suppliers
The principal raw material used in our production process is soybeans. We primarily purchase soybeans for our Volga and Miller plants from soybean producers and elevators located within approximately 50 miles of these plants. The State of South Dakota and the upper Midwest, historically, has produced an adequate supply of soybean for our procurement and the soybean processing industry. In 2024, agricultural producers in South Dakota grew and harvested approximately 243 million bushels of soybeans, ranking it eighth among the top producing states in the U.S., as illustrated in the following table:
| State | Production (bushels) |
|---|---|
| Illinois | 699 million |
| Iowa | 608 million |
| Indiana | 337 million |
| Minnesota | 358 million |
| Nebraska | 310 million |
| Missouri | 274 million |
| Ohio | 262 million |
| South Dakota | 243 million |
| North Dakota | 219 million |
| Arkansas | 166 million |
Producers in South Dakota, in comparison to previous years, grew and harvested approximately 222 million bushels in 2023, 197 million bushels in 2022, 223 million bushels in 2021, and 224 million bushels in 2020. Of this amount, we purchased and processed 33.3 million bushels in 2024, compared to 33.3 million bushels in 2023, 34.5 million bushels in 2022, 34.9 million bushels in 2021, and 34.3 million bushels in 2020.
We control the flow of soybeans into our facilities with a combination of pricing and contracting options. Threats to our soybean supply include weather (especially drought), changes in government programs, and competition from other processors and export markets.
Products and Services
The principal products produced at our Volga and Miller plants, and upon completion of construction of our Mitchell plant, are soybean meal and hulls, and soybean oil and oil byproducts.
Sales, Marketing and Customers
Our soybean meal is primarily sold to resellers, feed mills, and livestock producers as livestock feed. The meal is primarily sold to customers in the local area (typically within 200 miles of our Volga plant), Western U.S., and Canada. Our crude oil is sold to refining companies for further processing, refined at our facilities, and sold directly to the food industry for human consumption, or to the biofuel industry as transportation fuel.
In 2024, our percentage of sales by quantity of product sold within various markets is illustrated by the following table:
| Market | Soybean<br><br>Meal and Hulls | Soybean<br><br>Oil |
|---|---|---|
| Local | 45% | 14% |
| Other U.S. States | 29% | 76% |
| Export | 26% | 10% |
Over half of our products are shipped by rail. Our rail service is provided by the Rapid City, Pierre & Eastern (RCP&E) rail line, which is owned and operated by Genesee & Wyoming, Inc., which connects to the Burlington-Northern Santa Fe, Canadian Pacific (CP), and the Union Pacific rail lines.
Dependence upon a Single Customer
None.
Competition
We are in direct competition with several other soybean processing companies in the U.S., many of which have significantly greater resources than we. The U.S. soybean processing industry is comprised primarily of 16 different companies which operate 70 plants in the U.S. The industry is generally characterized as mature, consolidated and
vertically-integrated, with four companies - Archer Daniels Midland (ADM), Bunge, Cargill and Ag Processing (AGP) - controlling nearly 85% of the processing industry.
We are one of two soybean processing companies operating in South Dakota. AGP operates a processing facility in Aberdeen, South Dakota, approximately 160 miles from our Volga facility. Our processing facilities represent approximately 7% of the total soybean processing capacity in the upper Midwest and about 1.3% in the U.S. Despite our size, we strive to maintain a competitive position in the market by producing high quality products, operating highly efficient operations at the lowest possible cost, and investing into value-add projects and companies.
Utilities
Volga Plant
We use natural gas and electricity to operate the crushing and refining plants in Volga, South Dakota. Natural gas is used for processing heat and drying soybeans. Our natural gas provider is NorthWestern Energy, Sioux Falls, South Dakota. We are at risk to adverse price fluctuations in the natural gas market but have the capability to use fuel oil and biofuel as a backup to natural gas in the event of delivery interruption or market conditions dictate. We also employ forward contracting to offset some of this risk. Our electricity provider is the City of Volga, South Dakota.
Miller Plant
We use electricity and propane to operate the mechanical press plant in Miller, South Dakota, as natural gas distribution lines are not located in the area. Our electricity provider is NorthWestern Energy, Sioux Falls, South Dakota, and CHS Farmers Alliance, Mitchell, South Dakota, is our propane provider.
Mitchell Plant
We plan to use natural gas and electricity to operate the crushing and refining plants in Mitchell, South Dakota. Our natural gas provider will be Northwestern Energy, and our electricity provider will be Central Electric Cooperative.
Employees
We currently employ approximately 139 individuals, all but eight of whom are full-time. We have no unions or other collective bargaining agreements. Upon completion of the Mitchell plant, we will employ approximately 215 individuals, as we will manage and operate the plant through a management and services agreement.
Government Regulation and Environmental Matters
Our business is subject to various laws and regulations that are designed to protect the environment, which are administered by the U.S. Environmental Protection Agency, the South Dakota Department of Agriculture and Natural Resources, and local government agencies. These laws and regulations govern the discharge of materials to the environment, air and water; reporting storage of hazardous wastes; transporting, handling and disposition of wastes; and the labeling of pesticides and similar substances. Our business is also subject to laws and regulations administered by other federal, state, local and foreign governmental agencies which govern the processing, storage, distribution, advertising, labeling, quality and safety of feed and grain products. Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of products.
The sale of soybean oil for human consumption is impacted by the regulation of trans-fat, which results from the hydrogenation process of products such as soybean oil and plant oils. The U.S. Food and Drug Administration requires that food processors disclose the level of trans-fatty acids contained in their products. In addition, various local governments in the U.S. have enacted, or are considering enacting, restrictions on the use of trans-fats in restaurants. As a result, many food manufacturers have reduced the amount of hydrogenated soybean oil included in their products or switched to other oils containing lower amounts of trans-fat.
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to the Securities Exchange Act of 1934, as amended, are filed with the SEC. These reports and other information filed by us with the SEC are available on the SEC website (www.sec.gov). The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Our website is at www.sdsbp.com.
Item 1A. Risk Factors.
We are affected by changes in commodity prices. Our revenues, earnings and cash flows are affected by market prices for commodities such as crude petroleum oil, natural gas, soybeans, and crude and refined vegetable oils. Commodity prices generally are affected by a wide range of factors beyond our control, including weather, disease, insect damage, drought, the availability and adequacy of soybean supply, government regulation and policies, and general political and economic conditions. In addition, we are exposed to the risk of nonperformance by counterparties to contracts. Risk of nonperformance by counterparties includes the inability to perform because of a counterparty’s financial condition and also the risk the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than the current market prices.
We are affected by inflation. We have experienced and anticipate continued effects of inflation on costs such as soybeans, materials, labor, natural gas, and electricity. In response to inflationary pressures, the U.S. Federal Reserve has raised interest rates, which has resulted in uncertainty and volatility in financial markets and increased borrowing costs under our revolving credit facilities. Although inflation has subsided the past few months, inflation and its effects, many of which are beyond our control, could escalate in the future. We may be unable to pass on all of our increased costs as a result of inflation to customers. Accordingly, inflationary pressures could have a material and adverse effect on our business.
Our business operations and demand for our products are highly dependent on certain global and regional factors which are outside our control. The level of demand for our products is increasingly affected by regional and global demographic and macroeconomic conditions, including population growth rates and changes in standards of living. A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to reduced demand for agricultural commodities which could adversely affect our business and results of operations. Additionally, weak global economic conditions and turmoil in global financial markets, including constraints on the availability of credit, have in the past adversely affected, and may in the future continue to adversely affect, the financial condition and creditworthiness of some of our customers, suppliers and other counterparties which in turn may negatively impact our business.
Current and future geopolitical events outside of our control could adversely impact our business. We face risks related to geopolitical events, international hostility, epidemics, outbreaks and other macroeconomic events that are outside of our control. The occurrence of certain geopolitical events, including those arising from terrorist activity, international hostility, public health crises, and the economic impact of global trade tensions and the imposition of tariffs, could significantly disrupt our business and operational plans and adversely affect our results of operations, cash flows, financial condition and liquidity.
In early 2025, the new U.S. presidential administration announced wide-ranging policy changes and issued numerous executive actions on topics including international trade, energy resources, corporate taxes, global climate change initiatives, employment practices, corporate compliance programs, environmental regulations, as well as other matters. Further, the new presidential administration has indicated an intent to make structural changes to the executive branch of the federal government, including significant reductions in the federal workforce. Continuing legal challenges to many of the policy changes and executive actions are expected. We cannot predict how these policy changes and executive actions will be implemented and interpreted, or the ultimate effect they will have on our business. We cannot reasonably estimate the period of time that these conditions will persist; the full extent of the impact they will have on our business.
Our business and operations may be affected by weather conditions that are outside of our control. For example:
•Weather conditions during the spring planting season and early summer crop nutrient and crop protection application season affect product volumes and profitability.
•Adverse weather conditions, such as heavy snow or rainfall and any flooding that results, may cause delays in or prevent soybeans from being planted which could affect our ability to procure soybeans for production and increase costs.
•Changes in weather patterns and conditions, including changes in rainfall and storm patterns and intensities, water shortages, and temperature levels, could adversely impact our costs and business operations; the location, cost and competitiveness of commodity agricultural production, related storage and processing facilities; and demand for agricultural commodities. These effects could significantly reduce demand for the products we sell to or buy from agricultural producers and local elevators, and therefore could adversely impact our business.
We face risks related to health epidemics, pandemics, and similar outbreaks. While we have effectively managed through the risks arising from the pandemic caused by COVID-19, we could be materially affected in the future if a more severe variant or other disease would arise causing disruptions far more severe than COVID-19. We may be unable to perform fully on our contractual obligations, our supply chain and logistical networks may be affected, and costs and working capital needs may increase. These cost increases may not be fully recoverable or adequately covered by insurance. In addition, demand for certain products, particularly biofuels and ingredients incorporated into food that support the food services channels, could be materially impacted from a prolonged regional or global outbreak, leading to government-imposed lockdowns, quarantines, or other restrictions.
We could be affected by higher than anticipated operating costs, including but not limited to increased prices for soybeans. In addition to general market fluctuations and economic conditions, we could experience significant cost increases associated with the ongoing operation of our soybean processing and refining plants caused by a variety of factors, many of which are beyond our control. These cost increases could arise from an inadequate local supply of soybeans and a resulting price increase which is not accompanied by an increase in the price for soybean meal and oil. Labor costs can also increase over time, particularly if there is a shortage of labor, or shortage of persons with the skills necessary to operate our facility. Adequacy and cost of electric and natural gas utilities could also affect our operating costs. Changes in price, operation and availability of truck and rail transportation may affect our profitability with respect to the transportation of soybean meal, oil and other products to our customers.
It may become more difficult to sell our soybean oil for human consumption. The U.S. Food and Drug Administration requires food manufacturers to disclose the levels of trans-fatty acids contained in their products. In addition, various local governments in the U.S. are considering, and some have enacted, restrictions on the use of trans-fats in restaurants. Several food processors have either switched or indicated an intention to switch to edible oil products with lower levels of trans-fatty acids. Because processing soybean oil, particularly hydrogenation, creates trans-fat, it may become difficult to sell our oil to customers engaged in the food industry which could adversely affect our revenues and profits.
Hedging transactions involve risks that could harm our profitability. To reduce our price change risks associated with holding fixed price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight futures contract or an options futures contract) for soybeans, soybean meal and crude soybean oil on the Chicago Board of Trade. While hedging activities reduce our risk of loss from changing market values, such activities also limit the gain potential which otherwise could result from those market fluctuations. Our policy is to maintain hedged positions within limits, but we can be long or short at any time. In addition, at any one time, our inventory and purchase contracts for delivery to our facility may be substantial, which could limit our ability to adjust our hedged positions. If our risk management policies and procedures that guide our net position limits are inadequate, we could suffer adverse financial consequences.
Our business is not diversified. Our success depends primarily on our ability to profitably operate our soybean processing and soybean oil refining plants. We do not have any other material lines of business or other material sources of revenue if we are unable to operate our soybean processing and soybean oil refining plants. This lack of diversification may limit our ability to adapt to changing business conditions and could cause harm to our business.
We are dependent on our management and other key personnel, and the loss of their services may adversely affect our business. Our success and business strategy is dependent in large part on our ability to attract and retain key management and operating personnel. This can present challenges for us, because we operate in a specialized industry and our business is located in a rural area. Key employees are in high demand and are often subject to competing employment offers in the agricultural value-added industries within the local and regional area. Any loss of the key employees or the failure of these individuals to perform their job functions in a satisfactory manner would have a material adverse effect on our business operations and prospects.
We operate in an intensely competitive industry, and we may not be able to continue to compete effectively. We may be unable to continue to successfully penetrate the markets for our products. The soybean processing business is highly competitive, and other companies presently in the market, or that could enter the market, could adversely affect prices for the products we sell. We compete with major soybean processors such as Archer-Daniels Midland (ADM), Cargill, Bunge, and Ag Processing (AGP), among others, all of which are capable of producing significantly greater quantities of soybean products than we do and may achieve higher operating efficiencies and lower costs due to their scale. AGP's processing facility in Aberdeen, South Dakota, could increase the competition for soybeans and adversely affect our business.
Our profitability is influenced by the protein and moisture content of soybeans in the local area. The northern portion of the western soybean belt, where our two soybean crushing plants are located, typically produces a lower protein content soybean, which results in lower protein soybean meal. Because lower protein soybean meal is sold at a lower price, we may not be able to operate as profitably as soybean processing plants in other parts of the country. If adverse weather conditions further reduce the protein content of the soybeans grown in our area, our business may be materially harmed because we will be required to sell our soybean meal at discounted prices to our customers.
In addition, the moisture content of the soybeans that are delivered to our plants also influences our profitability and the efficiency of our plant operations. Soybeans with high moisture content require more energy to dry them before they can be processed. While we may recover some of these extra energy costs by paying producers less for high moisture soybeans, these savings may not be sufficient to offset our additional operating expenses.
Because soybean processing and refining is energy intensive, our business will be materially harmed if energy prices increase substantially. The price of electricity, natural gas and propane, the primary sources of energy for our plants, have steadily increased the last few years. If the trend in electricity, natural gas and propane prices continues, our energy costs will remain high and could adversely affect our profitability and operating results.
Transportation costs are a factor in the price of soybean meal and oil, and increased transportation costs could adversely affect our profitability. Soybean meal and oil may be shipped by trucks, rail cars, and barges. Added transportation costs are a significant factor in the price of our products, and we may be more vulnerable to increases in transportation costs than other producers because our locations in Volga and Miller are more remote than that of most of our competitors. Today, most of our products are sold FOB Volga or Miller, South Dakota, and those that are not, have the full transportation cost added to the contract. Transportation costs do not currently affect our margin directly; however, the added costs could eventually affect demand for our products.
Increases in the production of soybean meal or oil could result in lower prices for soybean meal or oil and have other adverse effects. New and existing soybean processing and refining plants are expected to be constructed or expanded in the near future. The increased expansion is expected to add approximately 750 million bushels in crush capacity per year within the next one to two years. Without a corresponding increase in the demand for soybean meal and oil, increased soybean meal and oil production may lead to lower prices for soybean meal and oil which could adversely affect our business.
We face significant risks associated with our new oilseed processing plant in Mitchell, South Dakota, including cost overruns, construction delays and operational issues. Our investment in the development and construction of our Mitchell facility, the cost of which will be approximately $500 million, is significant. We have contractually committed to invest approximately $100 million into the project, which will be our largest single investment in history. We are also acting as a guarantor on our subsidiary’s, High Plains Partners, investment into the project, which is scheduled for completion by the fourth quarter of 2025. There is no assurance that actual construction costs for the plant will not exceed current estimates, that we will not have to make additional investment or commitment into the project, that the plant will be operational based on our anticipated timing, or that the plant will be profitable.
We are exposed to risk of nonperformance and nonpayment by counterparties. We are exposed to risk of nonperformance and nonpayment by counterparties, whether pursuant to contracts or otherwise. Risk of nonperformance and nonpayment by counterparties includes the inability or refusal of a counterparty to pay us; the inability or refusal to perform because of a counterparty's financial condition and liquidity, operational failures, labor issues, cybersecurity events, outbreaks of disease or for any other reason; and risk that the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than current market prices. In the event we experience significant nonperformance or nonpayment by counterparties, our business could be materially and adversely affected.
Legislative, legal or regulatory developments could adversely affect our profitability. We are subject to extensive air, water and other environmental laws and regulations at the federal and state level. In addition, some of these laws require our plant to operate under a number of environmental permits. These laws, regulations and permits can often require pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, damages, criminal sanctions, permit revocations and/or plant shutdowns.
New environmental laws and regulations, including new regulations relating to alternative energy sources and the risk of climate change, new interpretations of existing laws and regulations, increased governmental enforcement or other developments could require us to make additional unforeseen expenditures. It is expected that some form of regulation will be forthcoming at the federal level in the U.S. with respect to emissions of GHGs, (including carbon dioxide, methane and nitrous oxides). Also, new federal or state legislation or regulatory programs that restrict emissions of GHGs in areas where we conduct business could adversely affect our operations and demand for our products. New legislation or regulator programs could require substantial expenditures for the installation and operation of equipment that we do not currently possess or substantial modifications to existing equipment.
In addition, although our production of soybean meal and oil is not directly regulated by the U.S. Food & Drug Administration, we must comply with the FDA’s content and labeling requirements, which are monitored at our customers’ facilities. Failure to comply with these requirements could result in fines, liability to our customers or other consequences that could increase our operating costs and reduce profits. In addition, changes to the FDA’s rules or regulations could be adopted that would increase our operating costs and expenses, or require capital investment.
We are subject to industry-specific risks that could adversely affect our operating results. These risks include, but are not limited to, product quality or contamination; shifting consumer preferences; federal, state, and local food processing regulations; socially unacceptable farming practices; environmental, health and safety regulations; and customer product liability claims. Any liability resulting from these risks may not always be covered by, or could exceed liability insurance related to product liability and food safety matters maintained by us. The occurrence of any of the matters described above could adversely affect our revenues and operating results. Our products are used as ingredients in livestock and poultry feed. Thus, we are subject to risks associated with the outbreak of disease in livestock and poultry. The outbreak of disease could adversely affect demand for our products used as ingredients in livestock and poultry feed. A decrease in demand for these products could adversely affect our revenues and operating results.
We could face increased operating costs if we are required to segregate genetically modified soybeans and the products generated from these soybeans. Over the last several years, some soybean producers in our area have been planting genetically modified, or GMO, soybeans, commonly known as Round-up Ready beans. Neither the U.S. Department of Agriculture nor the FDA currently requires that genetically modified soybeans be segregated from other soybeans. If these agencies or our customers were to require that we process these genetically modified soybeans separately, we would face increased storage and processing costs, and our profitability could be harmed.
There is no public market for our units. There is no public trading market for our units. While we have established a private online matching service in order to facilitate the transfer of units among our members, the transfer of units on this service is severely limited. The service has been designed to comply with federal tax laws and IRS regulations governing a “qualified matching service,” as well as state and federal securities laws. Under these rules, there are detailed timelines and restrictions that must be followed with respect to offers and sales of units. As a result, capital units held by our members may not be easily resold and members may be required to hold their units indefinitely. Even if a member is able to resell units, the price may be less than the member's original investment for the units or may otherwise be unattractive to the member.
There are significant restrictions on the transfer of our units. To protect our status as a partnership for federal income tax purposes and to assure no public trading market for our units develops or exists, our units are subject to significant restrictions on transfer. All transfers of units must comply with the transfer provisions of our operating agreement and the capital units transfer system and are subject to approval by our board of managers. Our board of managers reserves the right not to approve any transfer of units that could cause us to lose our partnership tax status or violate federal or state securities laws. As a result, members may not be able to transfer their units and may be required to assume the risks of the investment for an indefinite period of time.
Members may realize taxable income without cash distributions, and may have to use funds from other sources to fund tax liabilities. Because we are taxed as a partnership for U.S. federal income tax purposes, members may realize taxable income in excess of cash distributions by us. There can be no assurance that we will pay distributions at a specific rate or at all. As a result, members may have to use funds from other sources to pay their tax liability.
We rely on information technology and any failure, inadequacy, interruption, or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate its business effectively. Hackers, government-backed threat actors, and organized crime may be able to penetrate our network or systems, misappropriate or compromise our confidential information or that of third parties, create system disruptions, corrupt data, or cause shutdowns. Using different tools and methodologies the threat actors may be able to deploy malware that attacks our systems or our supplier’s systems, or otherwise exploits any security vulnerabilities of our facilities and equipment. Vulnerabilities in our systems can also occur due to a lack of robustness, quality, and integrity, in our systems as a whole. While we employ a number of technical, organizational, and physical protective measures, these measures may fail to prevent or detect all attacks on or weaknesses in its systems.
We manage and store various proprietary, sensitive, and confidential information and data relating to our business as well as from our suppliers and customers. Breaches of this information and data due to insufficient security measures, accidental loss, inadvertent disclosure, or unapproved dissemination, including incidents as a result of fraud, trickery, or other forms of deception, could expose us or our customers or suppliers to a risk of loss or misuse of this information.
Any claim that our facilities, equipment, products, or systems are subject to cybersecurity risk or data breaches, whether legitimate or not, could have a material adverse effect on our business.
To the extent we experience any cybersecurity incidents in the future, our relationships with our customers and suppliers may be materially impacted, our brand and reputation may be harmed, and we could incur substantial costs in responding to and remediating the incidents and in resolving any investigations or disputes that may result, any of which could have a material adverse effect on our business. In addition, the cost and operational consequences of implementing and adding further data protection measures could be significant.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
We recognize the importance of developing, implementing, and maintaining cybersecurity measures to safeguard our information and operational technologies and protect our data's confidentiality, integrity, and availability. Our business is dependent upon our computer systems, devices, software, and networks (operational and information technology) to collect, process, and store the data necessary to conduct almost all aspects of our business, including the evaluation of acquisition and development opportunities, the monitoring and evaluation of our existing properties, the performance of any data from our operators, and the recording and reporting of financial information.
Assessing, Identifying, and Managing Material Cybersecurity Risks & Integrated Overall Risk Management. We have processes to assess, identify, manage, and address material cybersecurity threats and incidents. These include, among other things, ongoing security awareness training for employees, mechanisms to detect and monitor unusual network activity, and containment and incident response tools. We regularly assess risks from cybersecurity
and technology threats and monitor our information systems for potential vulnerabilities. We monitor issues that are internally discovered or externally reported that may affect our systems and have processes to assess those issues for potential cybersecurity impact or risk.
We have integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration is designed to include cybersecurity considerations in our decision-making processes at every level. Our IT Security Program ("ITSP") Group and third-party service providers seek to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs and coordinate with our overall risk management framework.
In the event of a cybersecurity incident, we maintain an incident response plan. This plan sets forth immediate actions to mitigate the impact of cybersecurity incidents, including referring certain matters to the our chief executive officer for additional evaluation and oversight, as well as long-term strategies for remediation and prevention of future cybersecurity incidents.
Engaging Third Parties on Cybersecurity Risk Management. Recognizing the complexity and evolving nature of cybersecurity threats, we engage with third-party service providers, including cybersecurity assessors, and consultants, to evaluate and test our cybersecurity risk management systems. This enables us to leverage knowledge and insights to align our cybersecurity strategies and processes with best practices for our industry and size. Accordingly, we engage third-party service providers for regular cybersecurity-related audits, threat assessments, and consultation on security enhancements.
Overseeing Third-Party Risk. Because we know the risks associated with engaging third-party service providers, we have implemented processes designed to oversee and manage these risks. It is our policy to conduct security assessments of all third-party service providers before engagement, and we aim to maintain ongoing monitoring for compliance with our cybersecurity standards. This monitoring includes regular assessments by our chief operations officer and ITSP Group.
Cybersecurity Threats. As of the date of this Annual Report on Form 10-K, though we and our service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our operations or financial condition. We acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains. Despite implementing our cybersecurity processes, our security measures cannot guarantee that a significant cybersecurity attack will not occur. While we devote resources to security measures designed to protect our systems and information, no security measure is infallible. See Item 1A. Risk Factors “Risk Factors Relating to Our Business." We depend on computer and telecommunications systems, and failures in our systems or cyber security threats, attacks, or other disruptions could significantly disrupt our business operations.” for additional information about the risks to our business associated with a breach or other compromise to our information and operational technology systems.
Governance
Board of Directors Oversight. Our board of managers has overall responsibility for the oversight of risk management, which includes cybersecurity risks. Our board receives periodic briefings on cybersecurity matters, including key risks to us, recent developments, and risk mitigation activities from members of management, who are responsible for overseeing our cybersecurity program.
Management’s Role. Our cybersecurity risk assessment and management efforts are led by our chief operations officer, who is responsible for implementing and overseeing processes for the monitoring of our information systems, and the ITSP Group. Included in this responsibility is the deployment of cybersecurity measures and system audits to identify potential cybersecurity vulnerabilities. Our chief operations officer reports directly to our chief executive officer and board of managers.
Item 2. Properties.
We conduct our operations principally at two facilities, one in Volga, South Dakota, and the other in Miller, South Dakota.
At our Volga facility, we own the land, consisting of 98 acres on which most of our infrastructure and physical properties rest. Our facilities consist of a soybean processing plant, a soybean oil refinery and deodorizer, a quality control laboratory, and administrative and operations buildings.
At our Miller facility, we own the land, consisting of approximately 24 acres, on which our soybean processing plant and operations building are situated.
At our Mitchell facility, we indirectly own the land through our subsidiaries, consisting of 296 acres on which the processing plant, operations building, and transportation lines will be situated upon completion of construction.
All of our tangible property, real and personal, serves as collateral for our debt instruments with our primary lender, CoBank, ACB, of Greenwood Village, Colorado, which is described below under “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operation—Indebtedness.”
Item 3. Legal Proceedings.
From time to time in the ordinary course of our business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We carry insurance that provides protection against general commercial liability claims, claims against our directors, officers and employees, business interruption, automobile liability, and workers’ compensation claims. We are not currently involved in any material legal proceedings and are not aware of any potential claim.
Item 4. Mine Safety Disclosures.
None.
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of December 31, 2024 and March 1, 2025, there were 2,226 and 2,229 members of record, respectively, and a total of 30,411,500 Class A capital units issued and outstanding. We did not make any repurchases of Class A units during the fiscal year 2024 and, as of the date of this annual report, we did not have any publicly announced plans or programs with respect to purchases of our units.
Trading Activity
Our capital units are not traded on an exchange or otherwise publicly traded and are subject to significant restrictions on transfer. Most transfers of capital units are conducted through a “qualified matching service” as defined by the publicly-traded partnership rules of the federal tax code. Under the qualified matching service, bids for capital units submitted by interested buyers and sellers are matched on the basis of a strict set of rules and conditions set forth under the federal tax code and by us; plus, all matching and transfers of units are subject to approval by our board of managers. Our qualified matching service is operated through www.AgStockTrade.com, an SEC-registered and regulated Alternative Trading Service which is owned and operated by Variable Investment Advisors, Inc., Tea, South Dakota, a registered broker-dealer with the SEC, FINRA, and various states. The following table contains historical information by quarter for the past two years regarding the matching of capital units through the qualified matching service:
| Quarter | Low Price<br>(1) | High Price<br>(1) | Average<br>Price | # of<br>Capital<br>Units Matched | |||
|---|---|---|---|---|---|---|---|
| First Quarter 2023 | $ | 8.51 | $ | 9.00 | $ | 8.70 | 50,750 |
| Second Quarter 2023 | $ | 8.99 | $ | 10.75 | $ | 9.84 | 28,250 |
| Quarter | Low Price<br>(1) | High Price<br>(1) | Average<br>Price | # of<br>Capital<br>Units Matched | |||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Third Quarter 2023 | $ | 9.00 | $ | 10.00 | $ | 9.72 | 40,500 |
| Fourth Quarter 2023 | $ | 8.90 | $ | 9.12 | $ | 9.00 | 37,250 |
| First Quarter 2024 | $ | 8.77 | $ | 9.50 | $ | 9.08 | 67,500 |
| Second Quarter 2024 | $ | 9.19 | $ | 9.30 | $ | 9.25 | 103,000 |
| Third Quarter 2024 | $ | 9.00 | $ | 9.20 | $ | 9.15 | 56,750 |
| Fourth Quarter 2024 | $ | 8.80 | $ | 9.00 | $ | 8.95 | 44,500 |
(1)The qualified matching service rules prohibit firm bids; therefore, the prices reflect actual sale prices of the capital units.
Transfer Restrictions
As a limited liability company, we must severely restrict trading and transfers of our capital units to preserve our preferential single-level "partnership" tax status at the member level. To preserve this, our operating agreement prohibits transfers of capital units other than through the procedures specified under our capital units transfer system, or CUTS, which may be amended from time to time by our board of managers. Under the CUTS, our capital units cannot be traded on any national securities exchange or in any over-the-counter market. Also, we cannot permit the total number of capital units traded annually through the qualified matching service to exceed 10% of our total issued and outstanding capital units. All transactions, including any trades on the qualified matching service, must be approved by the board of managers, which are generally approved if they fall within “safe harbors” contained in the rules of the federal tax code. Permitted transfers include transfers by gift or death, sales to qualified family members, and trades through the qualified matching service subject to the 10% restriction. Pursuant to our operating agreement, a minimum of 2,500 capital units is required to be owned by an individual or entity for membership, and no member may own more than 10% of our total outstanding capital units.
Distributions to Members
We declared and issued to our members a cash distribution of $39.5 million (130.0¢ per capital unit) and $36.5 million (120.0¢ per capital unit) in the years ended December 31, 2024 and 2023, respectively. On February 4, 2025, our board of managers approved a cash distribution to our members of approximately $7.6 million (25.0¢ per capital unit), which was issued to our members on or about February 6, 2025. Our distributions are declared at the discretion of our board of managers and are issued in accordance with the terms of our operating agreement and distribution policy. Distributions are also subject to restrictions imposed under our loan agreement with our lender. There is no assurance as to if, when, or how much we will make in distributions in the future. Actual distributions depend upon our profitability, expenses and other factors discussed in this report.
Income Tax Considerations
Because we have elected to be taxed as a partnership, each of our members is required to report on his or her income tax return for the taxable year with which, or within which, ends our taxable year his or her distributive share of our income, gains, losses and deductions without regard to whether corresponding cash distributions are received from us. We provide each member with an annual Schedule K-1, indicating the member’s share of our income, loss and their separately stated components.
Under IRS Code Section 701, an entity, such as South Dakota Soybean Processors, subject to taxation as a partnership under Subchapter K of the Code, is not itself subject to U.S. income taxation. Instead, each of our members is required to report his or her allocable share of our income and/or losses, and each of our members is liable for U.S. income tax on such income in each member’s individual or separate capacity. IRS Code Section 702 provides that the character of any such item of income or deduction allocated to a member will be the same as its character to us. Each member will be taxed on his or her distributive share of our income even though the equivalent amount of cash may not be distributed to such member.
Item 6. Selected Financial Data.
The following table sets forth selected financial data of South Dakota Soybean Processors, LLC for the periods indicated. The financial statements included in Item 8 of this report were audited by Eide Bailly LLP.
| 2024 | 2023 | 2022 | 2021 | 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Bushels processed | 33,272,916 | 33,349,230 | 34,465,628 | 34,876,323 | 34,306,674 | |||||
| Statement of Operations Data: | ||||||||||
| Revenues | $ | 554,419,770 | $ | 703,148,409 | $ | 721,532,329 | $ | 590,150,153 | $ | 415,025,765 |
| Costs & expenses: | ||||||||||
| Cost of revenues | (525,031,207) | (624,732,341) | (648,116,685) | (556,675,807) | (395,772,460) | |||||
| Operating expenses | (6,054,341) | (6,487,573) | (5,669,426) | (4,590,227) | (3,819,645) | |||||
| Operating income | 23,334,222 | 71,928,495 | 67,746,218 | 28,884,119 | 15,433,660 | |||||
| Non-operating income | 4,848,180 | 2,018,285 | 1,922,642 | 758,163 | 1,239,018 | |||||
| Interest expense | (6,419,829) | (2,837,555) | (2,204,759) | (1,634,367) | (1,090,951) | |||||
| Income tax benefit (expense) | — | — | — | — | — | |||||
| Net income | 21,762,573 | 71,109,225 | 67,464,101 | 28,007,915 | 15,581,727 | |||||
| Net income attributed to non-controlling interests in consolidated entity | 1,442,756 | 659,647 | — | — | — | |||||
| Net income | $ | 20,319,817 | $ | 70,449,578 | $ | 67,464,101 | $ | 28,007,915 | $ | 15,581,727 |
| Weighted average capital units outstanding | 30,411,500 | 30,411,500 | 30,411,500 | 30,419,000 | 30,419,000 | |||||
| Net income (loss) per capital unit | $ | 0.67 | $ | 2.32 | $ | 2.22 | $ | 0.92 | $ | 0.51 |
| Balance Sheet Data: | ||||||||||
| Working capital | $ | 24,494,884 | $ | 100,176,364 | $ | 76,001,793 | $ | 37,448,081 | $ | 31,391,916 |
| Net property, plant & equipment | 359,781,254 | 174,927,830 | 74,559,969 | 72,532,608 | 64,231,194 | |||||
| Total assets | 541,893,618 | 422,730,882 | 311,196,770 | 245,286,123 | 225,823,047 | |||||
| Long-term obligations | 103,410,124 | 22,881,979 | 26,110,157 | 20,122,452 | 23,613,702 | |||||
| Members’ equity | 178,279,321 | 197,494,454 | 163,538,676 | 113,414,905 | 94,836,880 | |||||
| Other Data: | ||||||||||
| Capital expenditures | $ | 175,696,571 | $ | 106,644,436 | $ | 7,754,541 | $ | 13,442,955 | $ | 4,652,368 |
| Distributions to members | $ | 39,534,950 | $ | 36,493,800 | $ | 17,338,830 | $ | 9,429,890 | $ | 6,692,180 |
| Distributions to members per capital unit | $ | 1.30 | $ | 1.20 | $ | 0.57 | $ | 0.31 | $ | 0.22 |
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion along with our consolidated financial statements and the notes to our consolidated financial statements included elsewhere in this report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance and achievements may differ materially from those expressed in, or implied by, such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this report.
Overview and Executive Summary
Our consolidated net income decreased from $70.4 million in 2023 to $20.3 million in 2024 as we encountered various changes in the market. In 2023, robust demand for soybean oil from renewable fuel markets propelled soybean processing margins to very high levels. By contrast, processing margins in 2024 were set back as the
industry experienced new challenges. Early in 2024, renewable fuel margins fell as the overproduction of renewable diesel and biodiesel in the market caused a sharp drop in margins and a corresponding reduction in demand for soybean oil. Imports of used cooking oil also surged to record levels, displacing soybean oil as a renewable fuel feedstock. Later in 2024, a lack of guidance and clarity from the U.S. government on the proposed rule changes in the 45Z Clean Fuel program created uncertainty in the biofuels market, causing biofuel producers not to purchase soybean oil feedstocks. Finally, new soybean processing capacity came online, causing overproduction of soybean meal and oil and depressing prices in the process.
In 2025, we expect markets to adjust and respond more positively than in 2024. Soybean meal and oil exports are currently tracking at a record pace, though imposition of tariffs by countries like Canada, Mexico, and China could slow the pace. Moreover, we have an ample supply of soybeans from last year’s crop which puts us in a good position production wise for the first half of the year. While we are still dealing with the uncertainties of the 45Z program, there is a strong desire to increase renewable fuel volume obligations and to address the imports of used cooking oil. We believe that we are positioned well to handle these challenges and deliver value and strong returns.
We are also encouraged by the progress of our new oilseed project, High Plains Processing, near Mitchell, South Dakota. Construction is on schedule, and equipment deliveries are nearly complete. Barring any inclement weather or construction delays, we believe the plant will commence operations in October 2025.
Results of Operations
Comparison of Years Ended December 31, 2024 and 2023
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||
|---|---|---|---|---|
| % of<br>Revenue | % of<br>Revenue | |||
| Revenue | 100.0 | 100.0 | ||
| Cost of revenues | (525,031,207) | (94.7) | (624,732,341) | (88.8) |
| Gross profit | 29,388,563 | 5.3 | 78,416,068 | 11.2 |
| Operating expenses | (6,054,341) | (1.1) | (6,487,573) | (0.9) |
| Interest expense | (6,419,829) | (1.2) | (2,837,555) | (0.4) |
| Other non-operating income (expense) | 4,848,180 | 0.9 | 2,018,285 | 0.3 |
| Net income | 21,762,573 | 3.9 | 71,109,225 | 10.2 |
| Net income attributable to non-controlling interests in consolidate entities | 1,442,756 | 0.3 | 659,647 | 0.1 |
| Net income attributed to Company | 3.6 | 10.1 |
All values are in US Dollars.
Revenue – Revenue decreased $148.7 million, or 21.2%, for the year ended December 31, 2024, compared to the same period in 2023. The decrease was primarily due to a decrease in the average sales price of soybean products. The average price of soybean oil decreased 23.9% during the year ended December 31, 2024, compared to the same period in 2023, due to a decrease in demand. Soybean oil demand from the energy sector dropped dramatically in 2024 as refining margins for biodiesel and renewable diesel producers came under pressure from overproduction, which led to production slowdowns at some locations. Further contributing to the drop was an increase in imports of lower-priced alternatives to soybean oil, specifically used cooking oil. In addition, average soybean meal prices declined by 15.3% in 2024 following the return of Argentine processors to the global export market and an increase in U.S. soybean production.
Gross Profit/Loss – Gross profit decreased by $49.0 million, or 62.5%, for the year ended December 31, 2024, compared to the same period in 2023. The decrease was mainly due to declining board crush margins, which were caused by a decrease in demand for soybean oil and an increase in global soybean meal supply, which negatively affected U.S. export sales including our own.
Operating Expenses – Administrative expenses, including selling, general and administrative expenses, decreased approximately $0.5 million, or 6.7%, during the year ended December 31, 2024, compared to the same period in 2023, due to a decrease in labor costs. The decrease was partially offset by an increase in professional and related costs associated with the start-up of the High Plains Processing plant.
Interest Expense – Interest expense increased $3.6 million, or 126.2%, during the year ended December 31, 2024, compared to the same period in 2023. The increase in interest expense was due to a $28.6 million increase in borrowings from our credit facilities with our senior lender, CoBank. The average debt level was $68.2 million during 2024, compared to $39.6 million in 2023. Debt levels increased mainly to fund our investment commitment into the High Plains Processing plant through our subsidiaries.
Other Non-Operating Income (Expense) – Other non-operating income, including patronage dividend income, increased $2.8 million, or 140.2%, for the year ended December 31, 2024, compared to the same period in 2023. The increase in other non-operating income was due to a $2.6 million increase in interest income. Interest income increased from the deposit of investment proceeds which were received by our subsidiaries in connection with their equity financing of the High Plains Processing plant.
Net Income/Loss – We generated a net income of $20.3 million during the year ended December 31, 2024, a $50.1 million decrease from 2023. The decrease is primarily attributable to the reduction in gross profit and an increase in interest expense.
Comparison of Years Ended December 31, 2023 and 2022
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||
|---|---|---|---|---|
| % of<br>Revenue | % of<br>Revenue | |||
| Revenue | 100.0 | 100.0 | ||
| Cost of revenues | (624,732,341) | (88.8) | (648,116,685) | (89.8) |
| Gross profit | 78,416,068 | 11.2 | 73,415,644 | 10.2 |
| Operating expenses | (6,487,573) | (0.9) | (5,669,426) | (0.8) |
| Interest expense | (2,837,555) | (0.4) | (2,204,759) | (0.3) |
| Other non-operating income (expense) | 2,018,285 | 0.3 | 1,922,642 | 0.3 |
| Net income | 10.2 | 67,464,101 | 9.4 | |
| Net income attributable to non-controlling interests in consolidate entities | 659,647 | 0.1 | — | — |
| Net income attributed to Company | 10.1 | 9.4 |
All values are in US Dollars.
Revenue – Revenue decreased $18.4 million, or 2.5%, for the year ended December 31, 2023, compared to the same period in 2022. The decrease in revenues was primarily due to a 10.7% decrease in the average sales price of refined soybean oil. Oil prices were adversely affected by reduced demand from the renewable diesel industry following a delay in start-up of and various production issues encountered by renewable diesel plants in 2023.
Gross Profit/Loss – Gross profit increased $5.0 million, or 6.8%, for the year ended December 31, 2023, compared to 2022. The increase in gross profit was mainly due to improved board crush margins and growing conditions. Board crush margins improved primarily because of drought conditions in Argentina and North America. Argentina, which accounts for nearly 30% of the world's soybean meal exports, experienced a severe drought which shifted demand for soybean meal to the U.S. as a source. This shift allowed producers, like us, to benefit from increased export opportunities. Partially offsetting the increase in gross profit was a $4.7 million increase, or 12.9%, in production costs in 2023, compared to 2022. The increase in production costs was due to increases in maintenance, personnel, and utility costs resulting from inflation and supply shortages.
Operating Expenses – Administrative expenses, including selling, general and administrative expenses, increased approximately $0.8 million, or 14.4%, during the year ended December 31, 2023, compared to the same period in 2022. The increase was primarily due to an increase in legal and personnel costs.
Interest Expense – Interest expense increased $0.6 million, or 28.7%, during the year ended December 31, 2023, compared to the same period in 2022. The increase in interest expense was due to an increase in interest rates on our senior debt with CoBank. As of December 31, 2023, the interest rate on our revolving long-term loan was 7.85%, compared to 6.85% as of December 31, 2022. The increase in interest expense was partially offset by an $18.7 million decrease in borrowings from our lines of credit, as borrowing decreased due to improved profitability. The average debt level in 2023 was approximately $40.0 million, compared to $58.3 million in 2022.
Other Non-Operating Income (Expense) – Other non-operating income, including patronage dividend income, increased $0.1 million, or 5.0%, for the year ended December 31, 2023, compared to the same period in 2022. The increase in other non-operating income was due to a $1.6 million increase in interest income. During the year ended December 31, 2023, interest income was $1.6 million, compared to $0 in 2022. Partially offsetting the increase in interest income was a $1.3 million decrease in gains on our interest rate hedge instruments. During the year ended December 31, 2023, we had losses on interest rate hedges of $0.2 million, compared to gains of $1.1 million during the same period in 2022.
Net Income/Loss – We generated a net income of $70.5 million during the year ended December 31, 2023, a $3.0 million increase from 2022. The increase is primarily attributable to an increase in gross profit and other non-operating income.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operations and borrowings under our various revolving lines of credit which are discussed below under “Indebtedness.” On December 31, 2024, we had working capital, defined as current assets less current liabilities, of approximately $24.5 million, compared to working capital of $100.2 million on December 31, 2023. Working capital decreased between periods primarily due to expenditures related to the construction and development of the High Plains Processing plant, which we have a controlling ownership stake through our subsidiaries.
Comparison of the Years Ended December 31, 2024 and 2023
| 2024 | 2023 | |||
|---|---|---|---|---|
| Net cash provided by operating activities | $ | 58,395,262 | $ | 128,890,291 |
| Net cash used in investing activities | (176,001,498) | (104,214,603) | ||
| Net cash provided by financing activities | 84,289,984 | 47,367,949 |
Cash Flows Provided by Operating Activities
The $70.5 million decline in cash flows from operating activities was primarily driven by a $49.3 million decrease in net income, along with a $37.0 million reduction in cash generated from inventories. During the year ended December 31, 2024, our inventories decreased by $23.8 million, compared to $60.8 million in 2023.
Cash Flows Used in Investing Activities
The $71.8 million increase in cash flows used for investing activities was primarily driven by the $71.4 million increase in expenditures for purchasing various property and equipment. During 2024, we spent $175.7 million on property and equipment purchases, largely for the construction and development of the High Plains Processing plant, compared to $104.3 million during 2023.
Cash Flows Provided by Financing Activities
The $36.9 million increase in cash flows provided by financing activities was principally due to a $78.1 million increase in net proceeds on borrowings. Net proceeds on borrowings increased by $69.2 million during the year ended December 31, 2024, compared to net payments of $8.9 million during the same period in 2023. Partially offsetting the increase was a $40.6 million decrease in investment proceeds received and a $3.0 million increase in cash distributions to our members during the year ended December 31, 2024, compared to the same period in 2023.
Comparison of the Years Ended December 31, 2023 and 2022
| 2023 | 2022 | |||
|---|---|---|---|---|
| Net cash from operating activities | $ | 128,890,291 | $ | 27,431,814 |
| Net cash used for investing activities | (104,214,603) | (9,951,071) | ||
| Net cash used for financing activities | 47,367,949 | (17,447,782) |
Cash Flows Provided by Operating Activities
The $101.5 million increase in cash flows from operating activities was largely due to a $101.4 million decrease in inventories. During the year ended December 31, 2023, our inventories decreased by $60.8 million, compared to a $40.6 million increase during the same period in 2022.
Cash Flows Used in Investing Activities
The $94.2 million increase in cash flows used for investing activities was due to a $94.3 million increase in expenditures for purchases of various property and equipment which were principally made for the construction and development of the High Plains Processing plant and contributed to our subsidiary, High Plains Partners, as part of our investment into this entity.
Cash Flows Provided by Financing Activities
The $67.3 million increase in cash flows from (used for) financing activities was principally due to the receipt of $98.1 million in investments received by High Plains Partners, the proceeds of which were contributed to pay for the construction and development of the High Plains Processing plant. Partially offsetting the increase is a $19.2 million increase in cash distributions to our members in 2023, compared to 2022.
Indebtedness
We hold various credit facilities with CoBank, our primary lender, to meet the short and long-term needs of our operations. The first credit line is a revolving long-term loan. Under this loan, we may borrow funds, as needed, up to the credit line maximum, or $65.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. The available credit line decreases by $3.25 million every six months until the credit line’s maturity on March 20, 2028 at which time a balloon payment for the remaining balance is due. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0 as of December 31, 2024 and 2023, respectively.
The second line of credit is a multiple advance note payable. The primary purpose of this note is to finance our investment and ownership in the High Plains Processing plant through our subsidiaries and any large capital project. Under this $50.5 million loan, principal payments of $4.5 million are made every six months which began on October 20, 2024 and end on the date of maturity, March 20, 2028, at which time a balloon payment is due for the remaining balance. The principal balance outstanding on this note was $50.5 million and $0 as of December 31, 2024 and 2023, respectively. Starting March 17, 2025, this note was consolidated into the note of the revolving term loan (see below).
The third credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. We may borrow up to $70.0 million until the loan's maturity on December 1, 2025. We pay a 0.20% annual commitment fee on any funds not borrowed; however, we have the option to reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. As of December 31, 2024 and 2023, the principal balance outstanding on this credit line was $0 and $0.0 million, respectively.
The fourth line of credit is a delayed-draw term loan. Under this loan, our subsidiary may borrow funds, as needed up to $254.0 million. Principal payments of $4.5 million are made quarterly beginning six months after the completion date of the High Plains Processing facility. The quarterly principal payments will increase $1.0 million on the anniversary date and continue until the maturity date of December 31, 2029. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the delayed-draw term loan was $18.7 million and $0 as of December 31, 2024 and 2023, respectively. Under this loan, $235.3 million was available to be borrowed as of December 31, 2024.
The last line of credit is another revolving term loan. Under this loan, our subsidiary may borrow funds, as needed, up to the credit line maximum, or $40.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line until the credit line’s maturity on December 31, 2029 at which time a balloon payment for the remaining balance is due. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0 as
of December 31, 2024 and 2023. Under this loan, $40.0 million was available to be borrowed as of December 31, 2024.
The revolving, multiple advance, seasonal and delayed-draw loans with CoBank are set up with a variable rate option. The variable rate is set daily by CoBank. We also have a fixed rate option on all three loans, allowing us to fix rates for any period between one day and the entire commitment period. The annual interest rate on the revolving term and multiple advance loans was 6.56% and 7.85% as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the interest rate on the seasonal loan is 6.56% and 2.31%, respectively. As of December 31, 2024, the interest rate on our subsidiary's delayed-draw and revolving term loans was 7.76%. We were in compliance with all covenants and conditions under the loans as of December 31, 2024.
Capital Expenditures
We made a total of $175.7 million in capital expenditures on various property and equipment in 2024 compared to approximately $104.3 million in 2023. Significant purchases of property and equipment were made for the construction and development of the new Mitchell facility, which were contributed to our subsidiaries as part of our investment into the facility. Additional purchases were made to enhance the quality and efficiency of our Volga and Miller facilities. We anticipate spending approximately $248.0 million in capital purchases and improvements in 2025, which will be financed from our multiple advance loan and cash flows from operating activities.
Off Balance Sheet Financing Arrangements
We do not utilize variable interest entities or other off-balance sheet financial arrangements.
Contractual Obligations
The following table shows our contractual obligations for the periods presented:
| Payment due by period | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CONTRACTUAL<br>OBLIGATIONS | Total | Less than<br>1 year | 1-3 years | 3-5 years | More than 5<br>years | |||||
| Long-Term Debt Obligations (1) | $ | 78,479,000 | $ | 11,636,000 | $ | 21,769,000 | $ | 45,074,000 | $ | — |
| Operating Lease Obligations | 41,746,000 | 5,209,000 | 9,484,000 | 8,419,000 | 18,634,000 | |||||
| Total | $ | 120,225,000 | $ | 16,845,000 | $ | 31,253,000 | $ | 53,493,000 | $ | 18,634,000 |
(1)Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.
Recent Accounting Pronouncements
See page F-10, Note 1 of our audited consolidated financial statements for a discussion on the impact, if any, of the recently pronounced accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Preparation of our consolidated financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. We continually evaluate these estimates based on historical experience and other assumptions that we believe to be reasonable under the circumstances.
The difficulty in applying these policies arises from the assumptions, estimates, and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.
Of the significant accounting policies described in the notes to the consolidated financial statements, we believe that the following may involve a higher degree of estimates, judgments, and complexity:
Commitments and Contingencies
Contingencies, by their nature relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred, as well as in estimating the amount of the potential expense. In conformity with accounting principles generally accepted in the U.S., we accrue an expense when it is probable that a liability has been incurred and the amount can be reasonably estimated.
Inventory Valuation
We account for our inventories at estimated market value. These inventories are agricultural commodities that are freely traded, have quoted market prices, may be sold without significant further processing, and have predictable and insignificant costs of disposal. We derive our estimates from local market prices determined by grain terminals in our area. Processed product price estimates are determined by the ending sales contract price as of the close of the final day of the period. This price is determined by the average closing price on the Chicago Board of Trade, net of the local basis, for the last two business days of the period and the first business day of the subsequent period. Changes in the market values of these inventories are recognized as a component of cost of goods sold.
Accounting for Derivative Instruments and Hedging Activities
We minimize the effects of changes in the price of agricultural commodities by using exchange-traded futures and options contracts to minimize our net positions in these inventories and contracts. We account for changes in market value on exchange-traded futures and option contracts at exchange prices and account for the changes in value of forward purchase and sales contracts at local market prices determined by grain terminals in the area. Changes in the market value of all these contracts are recognized in earnings as a component of cost of goods sold.
Revenue Recognition
We account for all of our revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers, which became effective January 1, 2018. As part of the adoption of ASC 606, we applied the new standard on a modified retrospective basis analyzing open contracts as of January 1, 2018. However, no cumulative effect adjustment to retained earnings was necessary as no revenue recognition differences were identified when comparing the revenue recognition criteria under ASC 606 to previous requirements.
We principally generate revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). We follow a policy of recognizing revenue at a single point in time when we satisfy our performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
Commodities Risk & Risk Management. To reduce the price change risks associated with holding fixed price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight or options futures contract) on a regulated commodity futures exchange, the Chicago Board of Trade. While hedging activities reduce the risk of loss from changing market prices, such activities also limit the gain potential which otherwise could result from these significant fluctuations in market prices. Our policy is generally to maintain a hedged position within limits, but we can be long or short at any time. Our profitability is primarily derived from margins on soybeans processed, not from hedging transactions. Our management does not anticipate that hedging activities will have a significant impact on our future operating results or liquidity. Hedging arrangements do not protect against nonperformance of a cash contract.
At any one time, our inventory and purchase contracts for delivery to our facility may be substantial. We have risk management policies and procedures that include net position limits. They are defined by commodity, and include both trader and management limits. This policy and procedure triggers a review by management when any trader is outside of position limits. The position limits are reviewed at least annually with the board of managers. We monitor current market conditions and may expand or reduce the limits in response to changes in those conditions.
An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.
Foreign Currency Risk. We conduct essentially all of our business in U.S. dollars and have minimal direct risk regarding foreign currency fluctuations. Foreign currency fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of and demand for U.S. agricultural products compared to the same products offered by foreign suppliers.
An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.
Interest Rate Risk. We manage exposure to interest rate changes by using variable rate loan agreements with fixed rate options. Long-term loan agreements can utilize the fixed option through maturity; however, the revolving ability to pay down and borrow back would be eliminated once the funds were fixed.
As of December 31, 2024, we had $0 in fixed rate debt and $354.7 million in variable rate debt available to borrow. Interest rate changes impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other variables remain constant, a one percentage point (1%) increase in interest rates on our variable rate debt could have an estimated impact on profitability of approximately $3,547,000 per year.
Item 8. Financial Statements and Supplementary Data.
Reference is made to the “Index to Consolidated Financial Statements” of South Dakota Soybean Processors, LLC located on the page immediately preceding page F-1 of this report, and consolidated financial statements and schedules for the years ended December 31, 2024, 2023 and 2022.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Control and Procedures.
Evaluation of Disclosure Controls and Procedures. Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, our management has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Additionally, based on management’s evaluation, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is accumulated and communicated to our management to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of December 31, 2024, our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control- Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment using those criteria, management concluded that, as of December 31, 2024, our internal control over financial reporting is effective. Our management reviewed the results of their assessment with the Audit Committee.
This Annual Report does not include a report of our registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to an audit report by our registered public accounting firm pursuant to the rules of the Commission that permit us to provide only management’s report in this report.
Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| /s/ Thomas Kersting | ||
|---|---|---|
| Thomas Kersting, Chief Executive Officer | ||
| (Principal Executive Officer) | /s/ Mark Hyde | |
| --- | ||
| Mark Hyde, Chief Financial Officer | ||
| (Principal Financial Officer) |
Item 9B. Other Information.
During the quarter ended December 31, 2024, none of our directors (managers) or executive officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspection.
Not applicable.
PART III
Pursuant to General Instructions G(3), we omit Part III, Items 10, 11, 12, 13, and 14, and incorporate such items by reference to an amendment to this Annual Report on Form 10-K or to a Definitive Proxy Statement to be filed with the Commission within 120 days after the close of the fiscal year covered by this Report (December 31, 2024).
Part IV
Item 15. Exhibits, Financial Statement Schedules.
The following exhibits and consolidated financial statements are filed as part of, or are incorporated by reference into, this report:
(a)(1) Financial Statements — Reference is made to the “Index to Consolidated Financial Statements” of South Dakota Soybean Processors, LLC located on the page immediately preceding page F-1 of this report
for a list of the consolidated financial statements for the year ended December 31, 2024. The consolidated financial statements appear on page F-2 of this Report.
(2) All supplemental schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the Consolidated Financial Statements or notes thereto.
(3) Exhibits - Exhibits required to be filed by Item 601 of Regulation S-K are set forth in the Exhibit Index accompanying this Annual Report on Form 10-K and are incorporated herein by reference.
____________________________________________________________________________
(*) Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
| SOUTH DAKOTA SOYBEAN PROCESSORS, LLC | |||
|---|---|---|---|
| Dated: | March 28, 2025 | By | /s/ Thomas Kersting |
| Thomas Kersting, Chief Executive Officer | |||
| (Principal Executive Officer) | |||
| Dated: | March 28, 2025 | /s/ Mark Hyde | |
| Mark Hyde, Chief Financial Officer | |||
| (Principal Financial Officer) |
Pursuant to the requirements of the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Dated: | March 28, 2025 | By | /s/ Thomas Kersting |
|---|---|---|---|
| Thomas Kersting, Chief Executive Officer | |||
| (Principal Executive Officer) | |||
| Dated: | March 28, 2025 | By | /s/ Mark Hyde |
| Mark Hyde | |||
| Chief Financial Officer (Principal Financial Officer) | |||
| Dated: | March 28, 2025 | By | /s/ Lewis Bainbridge |
| Lewis Bainbridge, Manager | |||
| Dated: | March 28, 2025 | By | /s/ Mark Brown |
| Mark Brown, Manager | |||
| Dated: | March 28, 2025 | By | /s/ Spencer Enninga |
| Spencer Enninga, Manager | |||
| Dated: | March 28, 2025 | By | /s/ Brandon Hope |
| Brandon Hope, Manager | |||
| Dated: | March 28, 2025 | By | '/s/ Alex Johnson |
| Alex Johnson, Manager | |||
| Dated: | March 28, 2025 | By | /s/ Robert Nelsen |
| Robert Nelsen, Manager | |||
| Dated: | March 28, 2025 | By | /s/ Doyle Renaas |
| Doyle Renaas, Manager | |||
| Dated: | March 28, 2025 | By | '/s/ Michael Reiner |
| --- | --- | --- | --- |
| Michael Reiner, Manager | |||
| Dated: | March 28, 2025 | By | /s/ Craig Weber |
| Craig Weber, Manager |
South Dakota Soybean Processors, LLC
Consolidated Financial Statements
December 31, 2024, 2023, and 2022
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Index to Consolidated Financial Statements
| Page | |
|---|---|
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 286) | F-3 |
| CONSOLIDATED FINANCIAL STATEMENTS | |
| Consolidated Balance Sheets | F-5 |
| Consolidated Statements of Operations | F-6 |
| Consolidated Statements of Changes in Members’ Equity | F-7 |
| Consolidated Statements of Cash Flows | F-8 |
| Notes to Consolidated Financial Statements | F-9 |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
| --- |
The Board of Managers and Members
South Dakota Soybean Processors, LLC
Volga, South Dakota
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of South Dakota Soybean Processors, LLC (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in members’ equity, and cash flows, for the years ended December 31, 2024, 2023, and 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of South Dakota Soybean Processors, LLC as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Inventory Basis Adjustment
As discussed in Notes 1, 2 and 10 in the accompanying financial statements, the fair value measurements for inventories carried at market value, which approximates net realizable value, are based on exchange-quoted prices adjusted for differences in local markets and/or quality, referred to as basis adjustments. Fair values for sales contracts are adjusted for location and quality differences (basis adjustments) because the exchange-quoted prices
represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The reported fair value as of December 31, 2024 for inventories was $45 million.
We identified the Inventory Basis Adjustment as a critical audit matter. Auditing these complex judgments and assumptions involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
The primary procedures we performed to address this critical audit matter included:
•Gaining an understanding of management's process, controls, and methodology to develop the estimated fair values, including controls related to the identification and reasonableness of key assumptions and accuracy and completeness of the underlying data used in the determination of fair value.
•Testing and evaluation of management's process and methodology for determining and developing the estimated fair values of inventories carried at market value through evaluating (i) the reasonableness of the significant assumptions used by management including comparison of quoted commodity pricing to local and regional market conditions (ii) the historical adjustments to inventory balances as compared to the current year’s adjustment, and (iii) the completeness and accuracy of the underlying data supporting the basis adjustments
•Evaluating whether the assumptions used were reasonable by considering comparable basis adjustments used by management to local grain elevators and recent trade prices, including recently executed transactions, and whether such assumptions were consistent with evidence obtained in other areas of the audit.
•Evaluating the adequacy of the consolidated financial statement disclosure related to the estimated fair value of inventories carried at market value.
/s/ Eide Bailly LLP
We have served as the Company’s auditor since 2001 (such date incorporates the acquisition of certain assets of Gordon, Hughes & Banks, LLP by Eide Bailly LLP in 2008).
Denver. Colorado
March 28, 2025
South Dakota Soybean Processors, LLC
Consolidated Balance Sheets
December 31, 2024 and 2023
___________________________________________________________________________________________________________________
| 2024 | 2023 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 39,594,084 | $ | 72,910,336 |
| Trade accounts receivable | 29,771,609 | 43,548,706 | ||
| Inventories | 45,078,676 | 72,045,951 | ||
| Commodity derivative instruments | 9,600,761 | 9,667,621 | ||
| Prepaid expenses | 2,976,524 | 5,621,052 | ||
| Total current assets | 127,021,654 | 203,793,666 | ||
| Property and equipment | 435,335,629 | 246,347,535 | ||
| Less accumulated depreciation | (75,554,375) | (71,419,705) | ||
| Total property and equipment, net | 359,781,254 | 174,927,830 | ||
| Other assets | ||||
| Investments | 18,605,021 | 15,375,012 | ||
| Right-of-use lease asset, net | 35,829,689 | 28,297,874 | ||
| Other assets | 656,000 | 336,500 | ||
| Total other assets | 55,090,710 | 44,009,386 | ||
| Total assets | $ | 541,893,618 | $ | 422,730,882 |
| Liabilities and Members' Equity | ||||
| Current liabilities | ||||
| Excess of outstanding checks over bank balance | $ | 12,972,629 | $ | 15,728,259 |
| Current maturities of long-term debt | 9,000,000 | — | ||
| Note payable - seasonal loan | — | — | ||
| Accounts payable | 3,979,895 | 7,462,996 | ||
| Accrued commodity purchases | 54,412,561 | 66,240,599 | ||
| Commodity derivative instruments | 3,500,672 | 3,929,649 | ||
| Current portion - Operating leases | 3,512,822 | 2,798,561 | ||
| Accrued expenses | 4,623,969 | 6,719,735 | ||
| Contract liabilities | 10,524,222 | 737,503 | ||
| Total current liabilities | 102,526,770 | 103,617,302 | ||
| Long-term liabilities | ||||
| Long-term debt, net | 57,673,180 | — | ||
| Long-term operating lease liabilities | 29,881,151 | 22,827,885 | ||
| Other long-term liabilities | 15,855,793 | 54,094 | ||
| Total long-term liabilities | 103,410,124 | 22,881,979 | ||
| Commitments and contingencies (Notes 4, 5, 6, & 12) | ||||
| Members' equity (30,411,500 units issued and outstanding) | 178,279,321 | 197,494,454 | ||
| Non-controlling interests in consolidated entities | 157,677,403 | 98,737,147 | ||
| Total members' equity | 335,956,724 | 296,231,601 | ||
| Total liabilities and members' equity | $ | 541,893,618 | $ | 422,730,882 |
The accompanying notes are an integral part of these consolidated financial statements.
South Dakota Soybean Processors, LLC
Consolidated Statements of Operations
For the Years Ended December 31, 2024, 2023, and 2022
___________________________________________________________________________________________________________________
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Revenues | $ | 554,419,770 | $ | 703,148,409 | $ | 721,532,329 |
| Cost of revenues: | ||||||
| Cost of product sold | 436,337,299 | 535,807,382 | 565,364,324 | |||
| Production | 40,312,307 | 41,344,244 | 36,607,609 | |||
| Freight and rail | 48,381,601 | 47,580,715 | 46,144,752 | |||
| Total cost of revenues | 525,031,207 | 624,732,341 | 648,116,685 | |||
| Gross profit | 29,388,563 | 78,416,068 | 73,415,644 | |||
| Operating expenses: | ||||||
| Administration | 6,054,341 | 6,487,573 | 5,669,426 | |||
| Operating income | 23,334,222 | 71,928,495 | 67,746,218 | |||
| Other income (expense): | ||||||
| Interest expense | (6,419,829) | (2,837,555) | (2,204,759) | |||
| Other non-operating income (expense) | 4,418,292 | 1,325,238 | 1,223,024 | |||
| Patronage dividend income | 429,888 | 693,047 | 699,618 | |||
| Total other income (expense) | (1,571,649) | (819,270) | (282,117) | |||
| Net income | 21,762,573 | 71,109,225 | 67,464,101 | |||
| Net income attributable to non-controlling interests in consolidating entities | 1,442,756 | 659,647 | — | |||
| Net income attributable to Company | $ | 20,319,817 | $ | 70,449,578 | $ | 67,464,101 |
| Basic and diluted earnings per capital unit | $ | 0.67 | $ | 2.32 | $ | 2.22 |
| Weighted average number of capital units outstanding for calculation of basic and diluted earnings per capital unit | 30,411,500 | 30,411,500 | 30,411,500 |
The accompanying notes are an integral part of these consolidated financial statements.
South Dakota Soybean Processors, LLC
Consolidated Statements of Changes in Members’ Equity
For the Years Ended December 31, 2024, 2023, and 2022
___________________________________________________________________________________________________________________
| Class A Units | Non-controlling | Total | |||||
|---|---|---|---|---|---|---|---|
| Units | Amount | Interests | Equity | ||||
| Balances, January 1, 2021 | 30,419,000 | $ | 113,414,905 | $ | — | $ | 113,414,905 |
| Net income | — | 67,464,101 | — | 67,464,101 | |||
| Liquidation of members' equity | (7,500) | (1,500) | — | (1,500) | |||
| Distribution to members | — | (17,338,830) | — | (17,338,830) | |||
| Balances, December 31, 2022 | 30,411,500 | 163,538,676 | — | 163,538,676 | |||
| Net income | — | 70,449,578 | 659,647 | 71,109,225 | |||
| Issuance of units in consolidated entities | — | — | 98,077,500 | 98,077,500 | |||
| Distribution to members | — | (36,493,800) | — | (36,493,800) | |||
| Balances, December 31, 2023 | 30,411,500 | 197,494,454 | 98,737,147 | 296,231,601 | |||
| Net income | — | 20,319,817 | 1,442,756 | 21,762,573 | |||
| Issuance of units in consolidated entities | — | — | 57,500,000 | 57,500,000 | |||
| Distributions to members | — | (39,534,950) | — | (39,534,950) | |||
| Redemption of units in consolidated entities | — | — | (2,500) | (2,500) | |||
| Balances, December 31, 2024 | 30,411,500 | $ | 178,279,321 | $ | 157,677,403 | $ | 335,956,724 |
The accompanying notes are an integral part of these consolidated financial statements.
South Dakota Soybean Processors, LLC
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024, 2023, and 2022
___________________________________________________________________________________________________________________
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Operating activities | ||||||
| Net income | $ | 21,762,573 | $ | 71,109,225 | $ | 67,464,101 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 6,521,980 | 5,834,248 | 5,563,024 | |||
| Net (gain) loss recognized on derivative instruments | 1,065,204 | (24,864,543) | 1,073,579 | |||
| (Gain) loss on sales of property and equipment | 68,659 | 152,085 | (106,863) | |||
| Non-cash patronage dividends | (59,702) | (32,313) | (145,749) | |||
| Change in current operating assets and liabilities | 29,036,548 | 76,691,589 | (46,416,278) | |||
| Net cash provided by operating activities | 58,395,262 | 128,890,291 | 27,431,814 | |||
| Investing activities | ||||||
| Purchase of investments | — | — | (2,376,180) | |||
| Increase in other assets | (319,500) | (240,250) | (96,250) | |||
| Proceeds from sales of property and equipment | 14,573 | 293,903 | 275,900 | |||
| Purchase of property and equipment | (175,696,571) | (104,268,256) | (7,754,541) | |||
| Net cash used in investing activities | (176,001,498) | (104,214,603) | (9,951,071) | |||
| Financing activities | ||||||
| Change in excess of outstanding checks over bank balances | (2,755,630) | (2,775,992) | 7,806,012 | |||
| Net (payments) proceeds from seasonal borrowings | — | (138,165) | 138,165 | |||
| Proceeds from issuance of capital units | 57,497,500 | 98,077,500 | — | |||
| Distributions paid to members | (39,534,950) | (36,493,800) | (17,338,830) | |||
| Payments for debt issuance costs | (132,071) | (2,452,250) | — | |||
| Proceeds from long-term debt | 69,215,135 | 22,706,726 | 5,761,268 | |||
| Principal payments on long-term debt | — | (31,556,070) | (13,814,397) | |||
| Net cash provided by (used in) financing activities | 84,289,984 | 47,367,949 | (17,447,782) | |||
| Net change in cash and cash equivalents | (33,316,252) | 72,043,637 | 32,961 | |||
| Cash and cash equivalents, beginning of year | 72,910,336 | 866,699 | 833,738 | |||
| Cash and cash equivalents, end of year | $ | 39,594,084 | $ | 72,910,336 | $ | 866,699 |
| Supplemental disclosures of cash flow information | ||||||
| Cash paid during the year for: | ||||||
| Interest | $ | 5,946,675 | $ | 2,136,804 | $ | 1,607,805 |
| Noncash investing and financing activities: | ||||||
| Soybean meal contributed as investment | $ | 3,170,307 | $ | 1,436,420 | $ | 1,436,420 |
| Property and equipment included in accounts payable and other long-term liabilities | $ | 15,719,699 | $ | — | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
Note 1 - Principal Activity and Significant Accounting Policies
Organization
South Dakota Soybean Processors, LLC (the “Company” or “LLC”) processes and sells soybean products, such as soybean meal, oil, and hulls. The Company’s principal operations are located where we have plants in Volga and Miller, South Dakota.
Effective September 30, 2023, the Company began consolidating the financial accounts of High Plains Processing, LLC, HPP SD Holdings, LLC, and High Plains Partners, LLC—entities that were previously unconsolidated—into its financial statements. This consolidation followed the Company’s management agreement with the new processing facility and its ability to appoint a majority of the board members for each entity. Together with other investors, the Company has committed $244.0 million to construct a new multi-seed crush facility near Mitchell, South Dakota, with completion expected by late 2025.
The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries, High Plains Partners, LLC, HPP SD Holdings, LLC, and High Plains Processing, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Cash and cash equivalents
The Company considers all highly liquid investment instruments with original maturities of three months or less at the time of acquisition to be cash equivalents.These cash balances regularly exceed amounts insured by the Federal Deposit Insurance Corporation; however, the Company does not believe it is exposed to any significant credit risk on these balances.
Receivables and Credit Policies
Trade accounts receivable are presented at original invoice amount, net of the allowance for credit losses. Trade accounts receivable are uncollateralized customer obligations due under normal trade terms generally requiring payment within thirty to sixty days from the invoice date. Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms. Payments of accounts receivable are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The Company's accounts receivable as of January 1, 2023 was $43,517,754.
The carrying amount of trade receivables is reduced by an allowance for credit loss that reflects management's best estimate of the amounts that will not be collected. Management regularly reviews trade receivable balances and based on an assessment of current creditworthiness and historical write-off experience, adjusted for various industry and regional data and current expectations of future credit losses, estimates the portion, if any, of the balance that will not be collected. Recoveries of trade receivables previously written off are recognized when received. The valuation allowance was determined to be immaterial as of December 31, 2024 and 2023.
Inventories and commodity derivative instruments
The Company’s operating results can be impacted by fluctuations in commodity prices. When the Company enters into commodity purchase or sales commitments, it is exposed to risks related to price changes, as well as performance factors such as delivery, quality, quantity, and shipment timing. If market prices decrease, the Company may face losses on the market value of inventory and purchase contracts with fixed or partially fixed prices. To manage this risk, the Company uses futures and options contracts through regulated commodity exchanges as part of its trading strategy, typically taking offsetting positions to mitigate the risk.
The Company also uses interest rate swaps, caps, and floors through regulated commodity exchanges to manage the risk of loss from potential increases in interest rates on variable-rate debt. Unrealized gains and losses on these instruments are recognized in earnings immediately.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
All of the Company’s derivatives are classified as non-hedge derivatives. While these instruments may serve as effective economic hedges for specific risks, they are not designated as, nor accounted for as, hedging instruments.
Commodity derivative transactions, as well as finished goods (soybean meal, oil, refined oil, and hulls) and raw materials (soybeans), are valued at estimated market value, which approximates net realizable value based on their commodity characteristics, widely available markets, and pricing mechanisms. These inventories and commodity derivative instruments are priced in active markets, can be sold without significant further processing, and have predictable and minimal disposal costs. Changes in the fair values of these inventories and commodity derivative instruments are recognized in earnings as part of the cost of products sold in the consolidated statements of operations. This accounting policy is consistent with the guidelines outlined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 905, Agriculture (formerly AICPA Statement of Position No. 85-3, Accounting by Agricultural Producers and Agricultural Cooperatives). Supplies and other inventories are stated at the lower of cost or net realizable value.
Investments
The Company measures its equity investments at cost less any impairment plus or minus observable price changes in orderly transactions since these investments do not have readily determinable fair values and does not have significant influence over the invested.
The Company invested $0 in cash and an additional $3,170,307, $1,436,420 and $1,436,420 of soybean meal in 2024, 2023, and 2022 respectively, to be used in the entity's operations.
Investments in cooperatives are recorded in a manner similar to equity investments without readily determinable fair values, cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.
Property and equipment
Property and equipment is stated at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. When depreciable properties are sold or retired, the cost and accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income.
Depreciation is provided for over the estimated useful lives of the individual assets using the straight-line method. The range of the estimated useful lives used in the computation of depreciation is as follows:
| Building and improvements | 5-39 years |
|---|---|
| Equipment and furnishings | 3-39 years |
| Railcars | 50 years |
The Company capitalized interest on major construction projects in progress of approximately $118,306, $0, and $0 for the years ending December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2024 and 2023, the Company has approximately $15.7 million and $0, respectively, in payables related to the construction of the facility in Mitchell, South Dakota. These construction payables are classified as non-current liabilities due to management's intent and ability to settle these liabilities using the Company’s long-term credit facilities.
The Company reviews its long-lived assets for impairment whenever events indicate that the carrying amount of an asset group may not be recoverable. If impairment indicators are present and the undiscounted future cash flows is less than the carrying amount of the asset group, values are reduced to the estimated fair value of those assets. The Company did not recognize any impairment on property and equipment during the years ended December 31, 2024, 2023, and 2022.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
Leases
The Company accounts for leases in accordance with ASC Section 842, Leases ("ASC 842"), which requires lessees to recognize the following at the commencement date for all leases (except short-term leases): (1) a lease liability, representing the lessee’s obligation to make lease payments, measured using a discounted cash flow approach; and (2) a “right of use” asset, which reflects the lessee’s right to use the specified asset for the lease term. For additional details, refer to Note 6.
Accrued commodity purchases
Accrued commodity purchases refer to commodities for which the Company has taken ownership and possession, but the final purchase price has not yet been fully determined. If the futures and basis components remain unpriced, this is classified as a delayed price payable. If the futures component is unpriced but the basis has been set, it is referred to as a basis payable. The unpriced portion of these payables is subject to changes in the fair value of the underlying commodity, which is based on quoted prices on commodity exchanges (or basis levels).
Debt issuance costs
Debt issuance costs represent the expenses incurred to secure debt financing, including all related fees. These costs are amortized as interest expense over the duration of the associated financing, using the straight-line method, which is an approximation of the effective interest rate method. The amortization of these deferred financing costs is included in interest expense in the consolidated statements of operations. As of December 31, 2024, unamortized deferred financing costs were approximately $2.5 million, recorded as a reduction of long-term debt in the consolidated balance sheets. As of December 31, 2023, unamortized deferred financing costs of approximately $2.5 million, were recorded as prepaid expenses and other assets on the consolidated balance sheets, due to the absence of outstanding long-term debt at that time.
Use of estimates
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue
The Company accounts for all of its revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers.
The Company principally generates revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.
Contract liabilities
Contract liabilities relate to advance payments from customers for goods and services the Company has yet to provide. These customer prepayments totaled $10,524,222 and $737,503 as of December 31, 2024 and 2023, respectively. The Company recognized $667,558 of the $737,503 balance as of December 31, 2023 as revenue during the year ended December 31, 2024. All of the $1,074,059 balance as of December 31, 2022 was recognized as revenue during the year ended December 31, 2023.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
Disaggregation of Revenues
The following table presents a disaggregation of revenue from contracts with customers for the years ended December 31, 2024, 2023, and 2022, by product type:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Soybean meal and hulls | $ | 311,671,305 | $ | 374,038,170 | $ | 358,833,129 |
| Soybean oil and oil byproducts | 242,748,465 | 329,110,239 | 362,699,200 | |||
| Totals | $ | 554,419,770 | $ | 703,148,409 | $ | 721,532,329 |
Revenue by geographic area for the years ended December 31, 2024, 2023, and 2022 are as follows:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| United States | $ | 451,737,947 | $ | 564,558,539 | $ | 580,508,085 |
| Canada | 102,681,823 | 138,589,870 | 141,024,244 | |||
| Totals | $ | 554,419,770 | $ | 703,148,409 | $ | 721,532,329 |
Advertising costs
Advertising and promotion costs are expensed as incurred. The Company incurred $65,000, $115,000, and $96,000, of advertising costs in the years ended December 31, 2024, 2023, and 2022, respectively.
Environmental remediation
It is management’s opinion that the amount of any potential environmental remediation costs will not be material to the Company’s financial condition, results of operations, or cash flows; therefore, no accrual has been recorded.
Earnings per capital unit
Earnings per capital unit are calculated based on the weighted average number of capital units outstanding. The Company has no other capital units or other member equity instruments that are dilutive for purposes of calculating earnings per capital unit.
Income taxes
As a limited liability company, the Company’s taxable income or loss is allocated to members in accordance with their respective percentage ownership. Therefore, no provision or liability for income taxes has been included in the consolidated financial statements.
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Management has evaluated the Company's tax positions under the Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. Generally, the Company is no longer subject to income tax examinations by the U.S. federal, state or local authorities beyond three years for jurisdictions in which they file. The Company will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred.
Segment Reporting
Operating segments are defined as parts of an organization for which distinct financial information is available and regularly reviewed by the chief operating decision maker (CODM) or the decision-making group to guide resource allocation and performance assessment. The Company has identified one reportable business segment: the production and marketing of meal and oil derived from the grain production process. The CODM, which is the Company's Chief Executive Officer, evaluates the overall financial performance of the Company when making
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
operational decisions. Net income is used by the CODM to assess returns on segment assets and to determine whether profits should be reinvested into the segment, directed to other areas of the business (such as acquisitions), or distributed as dividends. Additionally, net income serves as a tool for monitoring budgeted versus actual results. The CODM also leverages net income for competitive analysis, comparing the Company’s performance to that of its competitors. Both the competitive analysis and the budget monitoring process are critical for evaluating segment performance and setting management compensation.
Recent accounting pronouncements
Any recent accounting pronouncements are not expected to have a material impact on our consolidated financial statements.
Note 2 - Inventories
The Company’s inventories consist of the following as of December 31:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Finished goods | $ | 27,477,041 | $ | 32,772,392 |
| Raw materials | 17,090,010 | 38,730,545 | ||
| Supplies & other inventories | 511,625 | 543,014 | ||
| Totals | $ | 45,078,676 | $ | 72,045,951 |
Note 3 - Property and Equipment
The following is a summary of property and equipment at December 31:
| 2024 | 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| Cost | Accumulated<br>Depreciation | Net | Net | |||||
| Land | $ | 516,326 | $ | — | $ | 516,326 | $ | 516,326 |
| Land improvements | 2,759,442 | (1,395,245) | 1,364,197 | 1,527,776 | ||||
| Buildings and improvements | 35,308,346 | (12,777,129) | 22,531,217 | 17,629,613 | ||||
| Machinery and equipment | 111,193,923 | (59,244,890) | 51,949,033 | 40,837,043 | ||||
| Railroad cars | 10,411,185 | (889,726) | 9,521,459 | 9,729,683 | ||||
| Company vehicles | 280,947 | (137,763) | 143,184 | 9,532 | ||||
| Furniture and fixtures | 1,829,179 | (1,109,622) | 719,557 | 581,676 | ||||
| Construction in progress | 273,036,281 | — | 273,036,281 | 104,096,181 | ||||
| Totals | $ | 435,335,629 | $ | (75,554,375) | $ | 359,781,254 | $ | 174,927,830 |
Depreciation of property and equipment amounts to $6,479,614, $5,830,587, and $5,558,143 for the years ended December 31, 2024, 2023, and 2022, respectively.
As of December 31, 2024, the Company had unpaid commitments of approximately $156.9 million for construction and acquisition of property and equipment and is scheduled to be completed by the fourth quarter of 2025.
Note 4 - Notes Payable - Seasonal Loan
Prior to the amendment to the credit agreement as described in Note 13 - Subsequent events, the Company had entered into a revolving credit agreement with a lending institution which expires on March 15, 2025. The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement, the Company could borrow up to $85 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (6.56% at December 31, 2024). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were no advances outstanding at December 31, 2024 and 2023. The remaining available funds to borrow under the terms of the revolving credit agreement were $85.0 million as of December 31, 2024.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
Beginning July 1, 2025, the credit facilities agreement will provide the Company a revolving seasonal loan which expires on September 1, 2026. The purpose of the credit agreement is to finance the operating needs of High Plains Processing, LLC. Under this agreement, the Company could borrow up to $85.0 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (7.76% at December 31, 2024). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were no advances outstanding at December 31, 2024 and 2023.
Note 5 - Long-Term Debt
The following is a summary of the Company's long-term debt at December 31:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Revolving term loan | $ | — | $ | — |
| Note payable | 50,500,000 | — | ||
| Delayed- draw term loan | 18,715,135 | — | ||
| 69,215,135 | — | |||
| Less current maturities | (9,000,000) | — | ||
| Less unamortized debt issuance costs | (2,541,955) | — | ||
| Totals | $ | 57,673,180 | $ | — |
Prior to the amendment to the credit agreement as described in Note 13 - Subsequent events, the Company had a credit agreement with a lending institution that includes a revolving term loan, note payable, and seasonal loan. The credit agreements is secured by substantially all business assets of South Dakota Soybean Processors, LLC.
The revolving term loan was for up to $12.0 million and the amount available for borrowing on the revolving term loan will decrease by $600,000 every six months until the loan's maturity date of March 20, 2028. Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of December 31, 2024 was 6.56%. The Company pays a 0.40% annual commitment fee on any funds not borrowed. There were approximately $10.2 million in remaining commitments available to borrow on the revolving term loan as of December 31, 2024.
The note payable provided borrowing up to $90.0 million until October 1, 2024 to finance the Company's investment in High Plains Partners, LLC. The Company will make semi-annual payments of $4.5 million plus interest beginning October 20, 2024 until the note's maturity on March 20, 2028. Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of December 31, 2024 was 6.56%.
The Company has a credit facilities agreement with a lending institution that includes a delayed-draw term loan, a revolving term loan, and a revolving seasonal loan. The credit facilities agreement is secured by substantially all business assets of the High Plains Processing, LLC.
The delayed-draw term loan provided borrowing up to $254.0 million until March 31, 2026 to finance the construction of the operating facility in Mitchell, South Dakota. The Company will make quarterly principal payments of $4.5 million plus interest beginning six months after the outside completion date as defined within the agreement. The quarterly principal payments will increase each year by $1.0 million on the anniversary date. The delayed-draw term loan matures on December 31, 2029. Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of December 31, 2024 was 7.76%. The Company pays a 0.50% annual commitment fee on any funds not borrowed. There were approximately $235.3 million available to borrow on the delayed draw term loan as of December 31, 2024.
The revolving term loan was for up to $40.0 million. The revolving term loan matures on December 31, 2029. Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of December 31, 2024 was 7.76%. The Company pays a 0.50% annual commitment fee on any funds not borrowed. There were $40.0 million in remaining commitments available to borrow on the revolving term loan as of December 31, 2024.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
Under the agreements, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios that limits distributions.
The following are minimum principal payments on long-term debt obligations for the years ended December 31:
| 2025 | $ | 9,000,000 |
|---|---|---|
| 2026 | 22,500,000 | |
| 2027 | 14,215,135 | |
| 2028 | 23,500,000 | |
| Total | $ | 69,215,135 |
Note 6 - Operating Leases
The Company has several operating leases for railcars, machinery and equipment, and storage facilities. Operating leases are included in right-to-use lease assets, current operating lease liabilities, and long-term lease liabilities on the Company's consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company's secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the consolidate balance sheet.These leases have terms ranging from 3-12 years and may include renewal terms. The renewal options are not included in the measurement of the right of use assets and lease liabilities unless the Company is reasonably certain to exercise the optional renewal periods. The Company does not have lease arrangements with residual value guarantees, sale-leaseback terms or material restrictive covenants. The Company does not have any material finance lease obligations nor sublease agreements.
Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our consolidated statements of operations for the years ended December 31, 2024, 2023, and 2022 were as follows:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Cost of revenues - Freight and rail | $ | 4,932,702 | $ | 4,264,107 | $ | 2,938,930 |
| Cost of revenues - Production | 300,902 | 272,805 | 295,271 | |||
| Administration expenses | 18,735 | 17,542 | 22,416 | |||
| Total operating lease costs | $ | 5,252,339 | $ | 4,554,454 | $ | 3,256,617 |
The following summarizes the supplemental cash flow information for the years ended December 31:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Cash paid for amounts included in measurement of lease liabilities | $ | 4,674,912 | $ | 4,146,569 | $ | 2,828,257 |
| Supplemental non-cash information: | ||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 11,123,660 | $ | 8,956,408 | $ | 14,387,685 |
The following summarizes the weighted-average remaining lease term and weighted-average discount rate as of December 31, 2024:
| Weighted-average remaining lease term - operating leases (in years) | 9.5 | |
|---|---|---|
| Weighted-average discount rate - operating leases | 4.83 | % |
The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of December 31, 2024:
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
| Railcars | Other | Total | ||||
|---|---|---|---|---|---|---|
| Year ended December 31: | ||||||
| 2025 | $ | 5,163,159 | $ | 46,174 | $ | 5,209,333 |
| 2026 | 5,071,999 | 42,877 | 5,114,876 | |||
| 2027 | 4,329,529 | 39,587 | 4,369,116 | |||
| 2028 | 4,191,219 | 27,190 | 4,218,409 | |||
| 2029 | 4,191,219 | 9,511 | 4,200,730 | |||
| Thereafter | 18,633,473 | — | 18,633,473 | |||
| Total lease payments | 41,580,598 | 165,339 | 41,745,937 | |||
| Less amount of lease payments representing interest | (8,332,709) | (19,255) | (8,351,964) | |||
| Total present value of lease payments | $ | 33,247,889 | $ | 146,084 | $ | 33,393,973 |
Note 7 - Employee Benefit Plans
The Company maintains a Section 401(k) plan for employees who meet the eligibility requirements set forth in the plan documents. The Company matches a percentage of an employee's contributed earnings. The amounts charged to expense under this plan were approximately $256,000, $313,000, and $305,000 for the years ended December 31, 2024, 2023, and 2022, respectively.
The Company's Board of Managers approved the payment of a profit-based incentive bonus to be awarded to eligible employees following the close of each fiscal year. The Board has allocated approximately 4.7% of profits over $2 million to fund this benefit. Individual amounts are based upon criteria determined by a formula that considers current pay, level of responsibility, and impact on profits of each position. The amounts charged to expense under this incentive were approximately $894,000, $3,521,000, and $3,246,000 for the years ended December 31, 2024, 2023, and 2022, respectively.
In 2022, the Company entered into deferred compensation agreements with four key executives. The agreement provides for a monetary incentive, contingent on each individual's performance. These incentives will vest, ratable over eight years, at 12.5% per year. Vested amounts will then be paid in conjunction with retirement or post-separation, as specified by the executives upon the initial awards. The Company recognized expense of $82,000, $42,000 and $12,000 related to this agreement during the years ended December 31, 2024, 2023 and 2022, respectively, related to this agreement.
Note 8 - Cash Flow Information
The following is a schedule of changes in assets and liabilities used to determine cash from operating activities:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Changes in operating assets and liabilities: | ||||||
| Trade accounts receivable | $ | 13,777,097 | $ | (30,952) | $ | (6,948,255) |
| Inventories | 23,796,968 | 60,763,783 | (40,616,189) | |||
| Commodity derivative instruments | (1,427,321) | 15,670,560 | (11,229,041) | |||
| Prepaid expenses | 427,990 | (568,725) | 563,692 | |||
| Accounts payable | (3,483,101) | 5,217,657 | 313,428 | |||
| Accrued commodity purchases | (11,828,038) | (4,504,068) | 9,852,373 | |||
| Accrued expenses and interest | (2,095,766) | 522,046 | 1,824,814 | |||
| Deferred liabilities | 9,868,719 | (378,712) | (177,100) | |||
| Totals | $ | 29,036,548 | $ | 76,691,589 | $ | (46,416,278) |
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
Note 9 - Derivative Instruments and Hedging Activities
In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices and, occasionally, foreign exchange and interest rates. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts, and interest rate swaps, caps and floors. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. Futures and options contracts, along with margin deposit, are with a single counterparty and are subject to a right of offset. As a result, these items are netted on the balance sheet, regardless of their position. In contrast, forward contracts are with multiple counterparties and do not have a right of offset. Therefore, these contracts are reported at their gross amounts on the balance sheet. These contracts are recorded on the Company’s consolidated balance sheets at fair value as discussed in Note 10, Fair Value.
Derivatives not designated as hedging instruments at December 31, 2024 and 2023 were as follows:
| Balance Sheet Classification | December 31, 2024 | December 31, 2023 | |||
|---|---|---|---|---|---|
| Forward contracts in gain position | $ | 4,839,408 | $ | 7,202,924 | |
| Futures and options in gain position | 4,415,641 | $ | 3,131,757 | ||
| Futures and options in loss position | (3,614,540) | $ | (2,010,038) | ||
| Total forward, futures and options contracts | $ | 5,640,509 | $ | 8,324,643 | |
| Margin deposit | 3,960,252 | $ | 1,342,978 | ||
| Current assets | $ | 9,600,761 | $ | 9,667,621 | |
| Forward contracts in loss position | $ | 3,483,207 | $ | 3,859,347 | |
| Interest rate swap | 17,465 | 70,302 | |||
| Current liabilities | $ | 3,500,672 | $ | 3,929,649 |
During the years ended December 31, 2024, 2023, and 2022, net realized and unrealized gains (losses) on derivative transactions were recognized in the consolidated statements of operations as follows:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Derivatives not designated as hedging instruments: | ||||||
| Commodity contracts | $ | (1,222,695) | $ | 24,295,668 | $ | (1,731,138) |
| Foreign exchange contracts | 104,655 | 741,696 | (434,848) | |||
| Interest rate swaps, caps and floors | 52,836 | (172,821) | 1,092,407 | |||
| Totals | $ | (1,065,204) | $ | 24,864,543 | $ | (1,073,579) |
Note 10 - Fair Value
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures that are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The three levels of hierarchy and examples are as follows:
•Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Board of Trade (“CBOT”).
•Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs, such as commodity prices using forward future prices.
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
•Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
The following tables set forth financial assets and liabilities measured at fair value in the consolidated balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of December 31:
| Fair Value as of December 31, 2024 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Financial assets: | ||||||||||||||||||
| Inventory | $ | — | $ | 44,241,428 | $ | — | $ | 44,241,428 | ||||||||||
| Commodity derivative instruments | $ | 801,101 | $ | 1,338,736 | $ | — | $ | 2,139,837 | ||||||||||
| Provisionally priced contracts | $ | — | $ | 13,593,068 | $ | — | $ | 13,593,068 | Fair Value as of December 31, 2023 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Financial assets: | ||||||||||||||||||
| Inventory | $ | — | $ | 70,872,435 | $ | — | $ | 70,872,435 | ||||||||||
| Commodity derivative instruments | $ | 4,394,994 | $ | — | $ | — | $ | 4,394,994 | ||||||||||
| Provisionally priced contracts | $ | — | $ | 21,530,506 | $ | — | $ | 21,530,506 |
The Company enters into various commodity derivative instruments, including futures, options, swaps and other agreements. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the CBOT. The Company estimates the fair market value of their finished goods and raw materials inventories using the market price quotations of similar forward future contracts listed on the CBOT and adjusts for the local market adjustments derived from other grain terminals in the area.
Estimated fair values of inventories and provisionally priced contracts stated at market are based on exchange-quoted prices, adjusted for differences in local markets and quality, referred to as basis. Market valuations for the Company’s inventories are adjusted for location and quality (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade.
The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions and are considered observable. Basis adjustments are impacted by specific local supply and demand characteristics at each facility and the overall market. Factors such as substitute products, weather, fuel costs, contract terms, and futures prices also impact the movement of these basis adjustments.
The Company considers the carrying amount of significant classes of financial instruments on the consolidated balance sheets, including cash, accounts receivable, and accounts payable, to be reasonable estimates of fair value due to their length or maturity. The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.
The Company has patronage investments in other cooperatives and common and preferred stock holdings in privately held entities. There is no market for their patronage credits or the entity’s common and preferred holdings, and it is impracticable to estimate the fair value of the Company’s investments. These investments are carried on the consolidated balance sheet at original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.
Note 11 - Members' Equity
A minimum of 2,500 capital units is required for an ownership interest in the Company. Such units are subject to certain transfer restrictions. The Company retains the right to redeem the units at the greater of $0.20 per unit or the original purchase price less cumulative distributions through the date of redemption in the event a member attempts
South Dakota Soybean Processors, LLC
Notes to the Consolidated Financial Statements
___________________________________________________________________________________________________________________
to dispose of the units in a manner not in conformity with the Operating Agreement, if a member becomes a holder of less than 2,500 units, or if a member becomes an owner (directly or indirectly) of more than 10% of the issued and outstanding capital units. Earnings, losses and cash distributions are allocated to members based on their percentage of ownership in the Company.
Note 12 - Commitments and Contingencies
From time to time in the ordinary course of our business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We carry insurance that provides protection against general commercial liability claims, claims against our directors, officers and employees, business interruption, automobile liability, and workers’ compensation claims. We are not currently involved in any material legal proceedings and are not aware of any potential claims.
Note 13 - Subsequent Events
Except for the events listed below, we evaluated all of our activity and concluded that no subsequent events have occurred that would require recognition in our consolidated financial statements or disclosed in the notes to our consolidated financial statements.
On February 4, 2025, the Company’s Board of Managers declared a cash distribution to its members of approximately $7.6 million. The distribution was issued and paid to members on February 6, 2025 in accordance with the Company's operating agreement and distribution policy.
On March 17, 2025, the Company entered into an Amended and Restated Credit Agreement ("Restated Credit Agreement") with our lender, CoBank, ACB of Greenwood Village, Colorado, which amends and restates our existing Credit Agreement dated September 20, 2023, our revolving term note dated March 2, 2023. The Restated Credit Agreement includes several key changes. The principal available on the seasonal loan decreases from $85.0 million to $70.0 million, and the maturity date is extended to December 1, 2025. The revolving term loan limit increases from $10.2 million to $65.0 million, and starting on March 20, 2025, the amount available for borrowing will be reduced by $3.25 million every six months until the loan matures on March 20, 2028. Additionally, the note payable for the Company’s investment in our subsidiary, High Plains Partners, LLC, the proceeds of which were contributed for the construction of the Mitchell facility, has been consolidated into the revolving term loan.
The Restated Credit Agreement also revises certain standard financial covenants, including the maintenance of specific financial ratios, limitations on certain investments, and restrictions on distributions.
19
Document
Exhibit 10.11
Agreement No. 18462590SLA-H
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (thus “Agreement”), dated as of 03/17/2025 is entered into by and between SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, Volga, South Dakota, a limited liability company (the “Borrower”), and COBANK, ACB, a federally-chartered instrumentality of the United States (“Lender”).
RECITALS
(A) The Borrower and Lender are parties to that certain Amended and Restated Credit Agreement dated as of September 20, 2023 (the “Existing Agreement”). Pursuant to the terms of the Existing Agreement, the parties entered into one or more Promissory Note(s) thereunder (the “Existing Promissory Note(s)”). The Borrower and Lender now desire to amend and restate the Existing Agreement and to apply this Agreement to the Existing Promissory Note(s), as well as any new Promissory Note(s) that may be issued hereunder. For that reason and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Borrower and Lender hereby agree that the Existing Agreement will be amended and restated by this Agreement, provided, however, this Agreement is not a novation of the Existing Agreement and all security under the Existing Agreement shall remain in full force and effect under this Agreement.
In consideration of the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and Lender agree as follows:
ARTICLE 1 Defined Terms; Accounting Principles. Certain capitalized terms used in this Agreement bear the definitions given to them in this Agreement. References to accounting standards are to United States generally accepted accounting principles, consistently applied (the “Accounting Standards”).
ARTICLE 2 The Facilities.
2.1Promissory Note. In the event the Borrower desires to borrow from Lender and Lender is willing to lend to the Borrower, or in the event the parties desire to consolidate any existing loans hereunder, the parties will enter into a promissory note (a “Promissory Note”). Each Promissory Note will set forth Lender’s commitment to make a loan or loans to the Borrower, the amount of the loan(s), the purpose of the loan(s), the interest rate or rate options applicable to the loan(s), the repayment terms of the loan(s), and any other terms and conditions applicable to the particular loan(s). Each Promissory Note will also contain the Borrower’s promise to make payments of interest on the unpaid principal balance of the loan(s), and fees and premiums, if any, and to repay the principal balance of the loan(s). Each loan will be governed by the terms and conditions contained in this Agreement and in the Promissory Note relating to that loan.
2.2Availability. Loans will be made available on any day on which Lender and the Federal Reserve Banks are open for business (a “Business Day”) upon the telephonic or written request of an authorized employee of the Borrower. Requests for loans must be received by 12:00 p.m. Denver, Colorado time on the date the loan is desired. Loans will be made available by wire transfer of immediately available funds. Wire transfers will be made to such account or accounts as may be authorized by the Borrower.
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
2.3Security. The Borrower’s obligations under this Agreement, each Promissory Note, and each interest rate swap, hedge, cap, collar, forward fix or similar agreement, including any master agreement published by the International Swap and Derivatives Association, Inc., between the Borrower and Lender, designed to protect the Borrower from fluctuations in interest rates (the “Interest Rate Agreement”) will be secured by a statutory first lien on all equity that the Borrower may now own or hereafter acquire or be allocated in Lender. In addition, except as otherwise provided in a Promissory Note or in a closing instruction letter signed by the parties (an “Instruction Letter”), the Borrower’s obligations hereunder and under each Promissory Note and any Interest Rate Agreement will be:
(a)secured by a first priority lien (subject only to exceptions approved in writing by Lender) on all real and personal property of the Borrower, whether now existing or hereafter acquired. The Borrower agrees to take such steps, including, without limitation, the execution and recordation or filing, as applicable, of mortgages, deeds of trust, security agreements, intercreditor or parity agreements, pledge agreements, control agreements, financing statements, and amendments to any of the foregoing, and such other instruments and documents as Lender may require to enable Lender to obtain, perfect, and maintain a lien on such property, and the payment of any applicable mortgage recording, documentary stamp, or intangible taxes; and
(b)guaranteed by an unsecured or secured, limited or continuing guarantee of payment, in form and substance and from such parties as may be required by Lender from time to time. If Lender requires such guarantee(s) to be secured by a lien on the real and/or personal property of a guarantor (a “Guarantor”), Borrower will cause each Guarantor to take such steps, including, without limitation, the execution and recordation or filing, as applicable, of mortgages, deeds of trust, security agreements, pledge agreements, control agreements, financing statements, and amendments to any of the foregoing, and such other instruments and documents as Lender may require to enable Lender to obtain, perfect, and maintain a lien on such property, and the payment of any applicable mortgage recording, documentary stamp, or intangible taxes.
(c)In addition, the Borrower agrees, as may be required by Lender from time to time, to provide to Lender ALTA lender’s policies of title insurance in face amounts and from title companies acceptable to Lender insuring the lien under any mortgage or deed of trust granted by the Borrower or any Guarantor to Lender. The Borrower agrees to pay the cost of such title policies, together with such endorsements as may be reasonably requested by Lender.
2.4Payments Generally. The Borrower’s obligation to repay each loan will be evidenced by a Promissory Note. Lender will maintain a record of all loans, the interest accrued thereon, and all payments made with respect thereto, and such record will, absent proof of manifest error, be conclusive evidence of the outstanding principal and interest on the loans. Payments under each Promissory Note will be made by wire transfer of immediately available funds, by check, or by automated clearing house (ACH) or other similar cash handling processes as specified by separate agreement between the Borrower and Lender. Wire transfers will be made to ABA No. 307088754 for advice to and credit of “CoBANK” (or to such other account as Lender may direct by notice). The Borrower will give Lender telephonic notice no later than 12:00 p.m. Denver, Colorado time on the day the Borrower intends to pay by wire of such intent, and funds received after 3:00 p.m. Denver, Colorado time will be credited on the next Business Day. Checks will be mailed to CoBANK, Department 167, Denver, Colorado 80291-0167 (or to such other place as Lender may direct by notice). Credit for payment by check will not be given until the later of the next Business Day after receipt of the check or the day on which Lender receives immediately available funds. If any installment of principal or interest is due on a date that is not a Business Day, then such installment will be due and payable on the next Business Day.
2.5Broken Funding Surcharge. Notwithstanding the terms of any Promissory Note giving the Borrower the right to repay any loan prior to the date it would otherwise be due and payable, the Borrower agrees to provide three Business Days’ prior written notice for any prepayment of a fixed rate balance and to pay to Lender a broken funding surcharge in the amount set forth below in the event the
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
Borrower: (a) repays any fixed rate balance prior to the last day of its fixed rate period (whether such payment is made voluntarily, as a result of an acceleration, or otherwise); (b) converts any fixed rate balance to another fixed rate or to a variable rate prior to the last day of the fixed rate period applicable to such balance; or (c) fails to borrow any fixed rate balance on the date scheduled therefor. The surcharge will be in an amount equal to the greater of (1) the present value of any funding losses imputed by Lender to have been incurred as a result of such payment, conversion or failure or (2) $300.00. Notwithstanding the foregoing, in the event any fixed rate balance is repaid as a result of the Borrower refinancing the loan with another lender or by other means, then in lieu of the foregoing, the Borrower will pay to Lender a surcharge in an amount sufficient (on a present value basis) to enable Lender to maintain the yield it would have earned during the fixed rate period on the amount repaid. Any surcharge will be determined and calculated in accordance with methodology established by Lender, a copy of which will be made available upon request. Notwithstanding the foregoing, in the event of a conflict between the provisions of this section and of the broken funding charge section of a forward fix agreement between Lender and the Borrower, the provisions of the forward fix agreement will control.
2.6Taxes; Change in Law. Any payment by the Borrower to Lender will be made net of any taxes (other than income and similar taxes imposed on or measured by Lender’s overall net income). If any change in any applicable law, rule, regulation, code, ordinance, order or the like, including, without limitation, all laws relating to environmental protection, and taxes (collectively, “Laws”), increases the cost of making or maintaining any loan (or any associated commitment to lend), or reduces the amount received or receivable by Lender hereunder, or requires or modifies any reserve or similar requirements of the Lender, then, upon request, the Borrower will pay to Lender such additional amount as will compensate Lender for such additional costs incurred or reduction suffered.
ARTICLE 3 Conditions Precedent.
3.1Conditions to Initial Promissory Note. Lender’s obligation to extend credit under the initial Promissory Note hereunder is subject to the condition precedent that Lender receive, in form and substance satisfactory to Lender, each of the following, except as otherwise provided in the Promissory Note or in an Instruction Letter:
(a)This Agreement. A duly executed copy of this Agreement, the other Loan Documents (as defined below), the Instruction Letter accompanying this Agreement, and all instruments and documents contemplated hereby and thereby.
(b)Banking Service Agreements. A duly completed and executed copy of any banking service agreement, including any agreement relating to the provision by Lender of cash management services, required by Lender from time to time. Lender will be entitled to rely on (and will incur no liability to the Borrower in acting on) any request or direction furnished in accordance with the terms thereof.
3.2Conditions to Each Promissory Note. Lender’s obligations to extend credit under each Promissory Note hereunder, including the initial Promissory Note, is subject to the condition precedent that Lender receive, in form and substance satisfactory to Lender, each of the following, except as otherwise provided in the Promissory Note or in an Instruction Letter:
(a)Promissory Note. A duly executed copy of the Promissory Note and all instruments and documents contemplated by the Promissory Note.
(b)Instruction Letter. Any and all items or requirements detailed in an Instruction Letter.
(c)Evidence of Perfection. Such evidence as Lender may require that it has duly perfected liens as required under this Agreement.
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
(d)Evidence of Authority. Such certified board resolutions, certificates of incumbency, and other evidence that Lender may require that the Promissory Note, all instruments and documents executed in connection therewith, and, in the case of the initial Promissory Note hereto, this Agreement, the other Loan Documents (as defined below) and all instruments and documents executed in connection herewith and therewith, including any security documents, have been duly authorized and executed.
(e)Fees and Other Charges. Any fees or other charges provided for herein, in the Promissory Note or in any invoice provided by Lender.
(f)Insurance. Such evidence as Lender may require that the Borrower is in compliance with Section 5.4 below.
3.3Conditions to Each Loan. Lender’s obligation under each Promissory Note to make any loan to the Borrower thereunder is subject to the condition that no “Event of Default” (as defined in Section 8.1 below) or event that, with the giving of notice and/or the passage of time and/or the occurrence of any other condition, would ripen into an Event of Default (a “Potential Default”) will have occurred and be continuing or would be caused by the making of such loan.
ARTICLE 4 Representations and Warranties. The execution by the Borrower of this Agreement and each Promissory Note hereunder, or any renewal or extension by Lender of any Promissory Note hereunder, will constitute a representation and warranty by the Borrower that:
4.1Instruction Letter; Loan Documents. Each representation and warranty and all information set forth in any Instruction Letter and/or any of the Loan Documents (as defined below) and/or any other document submitted in connection with, or to induce Lender to enter into, such Promissory Note is correct in all material respects as of the date of such Promissory Note.
4.2Compliance; Legal Proceedings. Each Loan Party (as defined below) and its Subsidiaries (as defined below) and all property owned or leased or proposed to be acquired with the proceeds of any Promissory Note hereunder by each Loan Party and/or its Subsidiaries and all of its/their operations are in compliance with all applicable Laws and the terms of the Loan Documents and no Event of Default or Potential Default exists or is continuing. In addition, there are no pending legal, arbitration, or governmental actions or proceedings to which any Loan Party or any Subsidiary is a party or to which any of its or any Subsidiaries’ property is subject which, if adversely determined, might have a material adverse effect on the financial condition, operations, properties, profits, or business of any Loan Party or any Subsidiary, and to the best of each Loan Party’s knowledge, no such actions or proceedings are threatened or contemplated. “Loan Party” means the Borrower and any Guarantor.
4.3Organization; Good Standing. Each Loan Party (a) is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, (b) has the lawful power to own or lease its properties and to engage in the business it conducts or proposes to conduct, and (c) is duly qualified and in good standing in each jurisdiction where the property owned or leased by it or the nature of the business transacted by it makes such qualification necessary.
4.4Binding Agreement. The Loan Documents constitute legal, valid, and binding obligations of each Loan Party that are enforceable in accordance with their terms.
4.5Conflicting Agreements. Neither this Agreement nor any Promissory Note, Interest Rate Agreement, or other instrument or document securing or otherwise relating hereto or to any Promissory Note (each a “Loan Document” and collectively, at any time, the “Loan Documents”) conflicts with, or constitutes (with or without the giving of notice and/or the passage of time and/or the occurrence of any other condition) a default under, any other agreement to which the Borrower is a party or by which it or any of its property may be bound or affected, and does not conflict with any provision of its bylaws, articles of incorporation or other organizational documents.
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
4.6Consents and Approvals. No consent, permission, authorization, order or license of any governmental authority or of any party to any agreement to which each Loan Party is a party or by which it or any of its property may be bound or affected, is necessary in connection with the project, acquisition or other activity being financed by such Promissory Note, or the execution, delivery, performance or enforcement of any Loan Document, except as have been obtained and are in full force and effect.
4.7Budgets; Full Disclosure. All budgets, projections, feasibility studies, and other documentation submitted by the Borrower or its Affiliates (as defined below) to Lender in connection with, or to induce Lender to enter into, such Promissory Note are based upon assumptions that are reasonable and realistic, and as of the date of such Promissory Note, no fact has come to light, and no event has occurred, that would cause any assumption made therein to not be reasonable or realistic. No Loan Document or other certificate, statement, agreement, or document furnished to Lender in connection with this Agreement or any other Loan Document (a) contains any untrue statement of a material fact, or (b) fails to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. The Borrower is not aware of any Material Adverse Change that has not been disclosed in writing to Lender. “Affiliate” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency, (1) that directly or indirectly controls, is controlled by, or is under common control with the Borrower, (2) that beneficially owns or holds 5% or more of any class of the voting or other equity interests of the Borrower, or (3) 5% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by the Borrower. A “Material Adverse Change” means any material adverse change, as reasonably determined by Lender, in the condition, financial or otherwise, operations, business, liabilities (actual or contingent) or properties of a Loan Party or Subsidiary or in its ability to perform its obligations hereunder, under any security instrument or document, or under any other Loan Document.
4.8Accurate Financial Information. Each submission of financial information or documents relating to a Loan Party will constitute a representation and warranty by the Loan Party that such information and documents (a) are true and accurate in all material respects, (b) do not fail to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading, and (c) have been reviewed by a Principal Financial Officer of the Borrower or, as applicable, the relevant Loan Party. As used herein, the term “Principal Financial Officer” means an officer of the applicable Loan Party responsible for overseeing the financial activities of the Loan Party.
4.9ERISA. The Borrower and its Subsidiaries are in compliance in all material respects with the applicable provisions of the Employee Retirement Income Security Act of 1974, and the regulations and published interpretations thereunder from time to time (“ERISA”).
4.10Margin Stock. No Loan Party is engaged or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System of the United States of America (the “Board”)). No part of the proceeds of any loan made by Lender to the Borrower has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or in any way that is inconsistent with the provisions of the regulations of the Board. No Loan Party or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.
ARTICLE 5 Affirmative Covenants. Unless otherwise agreed to in writing by Lender, while this Agreement is in effect, the Borrower agrees to, and with respect to Sections 5.3, 5.4, 5.5, and 5.8, agrees
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to cause each subsidiary, if any, listed on SCHEDULE 5.0 attached hereto (singularly a “Subsidiary”, and collectively the “Subsidiaries”) to:
5.1Reports and Notices. Furnish to Lender:
(a)Annual Financial Statements. As soon as available, but in no event more than 90 days after the end of each fiscal year of the Borrower occurring during the term hereof, annual consolidated and consolidating financial statements of the Borrower and its consolidated Subsidiaries, prepared in accordance with the Accounting Standards. Such financial statements will: (1) be audited by independent certified public accountants selected by the Borrower and acceptable to Lender; (2) be accompanied by a report of such accountants containing an opinion thereon acceptable to Lender; (3) be prepared in reasonable detail and in comparative form; and (4) include a balance sheet, a statement of income, a statement of retained earnings, a statement of cash flows, and all notes and schedules relating thereto.
(b)Interim Financial Statements. As soon as available, but in no event more than 30 days after the end of each month, a balance sheet of the Borrower as of the end of such month a statement of income for the Borrower for such period and for the period year to date, and such other interim statements as Lender may specifically request, all prepared in reasonable detail and in comparative form in accordance with the Accounting Standards; and, if required by written notice from Lender, certified by a Principal Financial Officer of the Borrower.
(c)Notice of Default. Promptly after becoming aware thereof, notice of the occurrence of an Event of Default or a Potential Default, including, without limitation, any error in the Borrower’s financial information previously provided to Lender and the occurrence of any breach, default, event of default or event that, with the giving of notice and/or the passage of time and/or the occurrence of any other condition, would become a breach, default or event of default under any loan agreement, indenture, mortgage, or other credit or security agreement or instrument to which a Loan Party is a party or by which it or any of its property may be bound or affected.
(d)Notice of Litigation, Environmental Matters, Etc. Promptly after becoming aware thereof, notice of: (1) the commencement of any action, suit or proceeding before any court, arbitrator or governmental department, commission, board, bureau, agency, or instrumentality having jurisdiction over any Loan Party or any Subsidiary, that, if adversely decided, could result in a Material Adverse Change; (2) the receipt of any notice, indictment, pleading or other communication alleging a condition that may require any Loan Party or any Subsidiary to undertake or to contribute to a clean-up or other response under any environmental Law, or that seeks penalties, damages, injunctive relief, criminal sanctions or other relief as a result of an alleged violation of any such Law, or that claims personal injury or property damage as a result of environmental factors or conditions; and (3) any matter that could cause a Material Adverse Change, including any decision of any regulatory authority or commission.
(e)Notice of Certain Events. (1) Notice at least 30 days prior thereto, of any change in the Borrower’s name or corporate structure; (2) notice at least 30 days prior thereto, of any change in the Borrower’s organizational documents or membership and marketing agreements (or similar documents), which changes must be approved in writing by Lender in its reasonable discretion; (3) notice at least 30 days prior thereto, of any change in the principal place of business of the Borrower or the office where its records concerning its accounts are kept; and (4) as soon as available after any changes thereto, copies of the Borrower’s organizational documents or membership and marketing agreements (or similar documents), in each case certified by the Borrower’s Secretary or equivalent officer acceptable to Lender.
(f)Compliance Certificates. Together with each set of financial statements furnished to Lender pursuant to Section 5.1(a) and Section 5.1(b) above, as applicable, a certificate of a Principal Financial Officer of the Borrower, in form and content acceptable to Lender: (1) certifying that no Event of Default or Potential Default occurred during the period covered by such statement(s) or, if an Event of Default or Potential Default occurred, a description thereof and of all actions taken or to be taken to
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remedy same; and (2) setting forth calculations showing compliance with the financial covenants set forth in Article 7 below.
5.2Instruction Letter. Comply with any and all requirements detailed in an Instruction Letter.
5.3Corporate Existence, Etc. Preserve and keep in full force and effect its existence and good standing in the jurisdiction of its incorporation or formation, qualify and remain qualified to transact business in all jurisdictions where such qualification is required, and obtain and maintain all licenses, certificates, permits, authorizations, approvals, and the like that are material to the conduct of its business or required by any Law.
5.4Insurance. Maintain insurance with reputable and financially sound insurance companies or associations, including self-insurance to the extent customary, acceptable to Lender in such amounts and covering such risks as are usually carried by companies engaged in the same or similar business and similarly situated, and make such increases in the type or amount of coverage as Lender may reasonably request. All such policies insuring any collateral for the Borrower’s obligations to Lender will have additional insured, mortgagee and lender’s loss payee clauses or endorsements, as applicable, in form and substance satisfactory to Lender. At Lender’s request, the Borrower agrees to deliver to Lender such proof of compliance with this section as Lender may require.
5.5Property Maintenance. Maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and make all alterations, replacements, and improvements thereto as may from time to time be necessary in order to ensure that its properties remain in good working order and condition. The Borrower agrees that at Lender’s request, which request may not be made more than once a year, the Borrower will furnish to Lender a report on the condition of the Borrower’s property.
5.6Inspection. Permit Lender or its agents, upon reasonable notice and during normal business hours or at such other times as the parties may agree, to inspect and visit any of its properties, examine and make excerpts from its books and records, and to discuss its business affairs, finances and accounts with its officers, directors, employees, and independent certified public accountants and to conduct reviews of any collateral. Without limiting the foregoing, the Borrower will permit Lender, through an employee of Lender or through an independent third party contracted by Lender, to conduct on an annual basis a review of the collateral covered by any security instruments or documents provided to Lender pursuant to this Agreement. The Borrower further agrees to pay to Lender a collateral inspection fee designated by Lender and reimburse Lender all reasonable costs and expenses incurred by Lender in connection with such collateral inspection reviews performed by Lender employees or its agents.
5.7Books and Records. Maintain and keep proper books and records of account in which full, true and correct entries of all its dealings, business and financial affairs will be made in accordance with the Accounting Standards.
5.8Compliance with Laws. Comply in all material respects with all Laws and any patron or member investment program applicable to the Borrower. In addition, the Borrower agrees to cause all persons occupying or present on any of its properties, and to cause each Subsidiary to cause all persons occupying or present on any of its properties, to comply in all material respects with all Laws relating to such properties.
5.9Further Assurances and Other Information. From time to time and at its expense, execute and deliver such documents and do such other acts and things as Lender in its sole discretion may deem necessary or advisable from time to time in order to more fully carry out the provisions and purpose of the Loan Documents, including delivery of such other information regarding the condition or operations, financial or otherwise, of a Loan Party or Subsidiary as Lender may from time to time
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reasonably request, including, but not limited to, copies of all pleadings, notices and communications referred to in Section 5.1(d) above.
5.10Capital. Maintain its status as an entity eligible to borrow from Lender and acquire equity in Lender in such amounts and at such times as Lender may from time to time require in accordance with its Bylaws and Capital Plan (as each may be amended from time to time), except that the maximum amount of equity that the Borrower may be required to purchase in connection with a loan may not exceed the maximum amount permitted by the Bylaws at the time the Promissory Note relating to such loan is entered into or such loan is renewed or refinanced by Lender. The rights and obligations of the parties with respect to such equity and any patronage or other distributions made by Lender will be governed by Lender’s Bylaws and Capital Plan (as each may be amended from time to time).
5.11Delivery of Original Loan Documents. If copies of any executed Loan Documents are delivered to Lender as provided in Article 3 above, immediately deliver to Lender the original executed versions of such Loan Documents.
5.12Indemnity for Taxes. At all times indemnify and hold and save Lender harmless from and against any and all actions or causes of action, claims, demands, liabilities, loss, damage or expense of whatsoever kind and nature incurred by Lender as a result of the non-payment of any documentary stamp tax, intangible tax, interest or penalties associated therewith or any other local, state or federal assessment required to be paid, but not paid in conjunction with the indebtedness evidenced by the Loan Documents. The Borrower agrees to pay to Lender, its successors and assigns, all sums of money requested by Lender hereunder within ten days of such request, which Lender will or may advance, pay or cause to be paid, or become liable to pay, on account of or in connection with failure to pay as required by the regulations of the governmental authority so imposing said payment. Lender will be entitled to charge for any and all disbursements made by it in good faith, under the reasonable belief that it or the Borrower is or was liable for the amount so assessed. Any default by the Borrower in making any payments required under this covenant will constitute a payment Event of Default under the Loan Documents and Lender may, at its option, declare the entire amount of principal plus accrued interest thereon due and payable without notice or demand.
5.13ERISA. The Borrower and its Subsidiaries, for so long as this Agreement remains outstanding, will remain in compliance in all material respects with the applicable provisions of ERISA, the failure to comply with which has or may cause a Material Adverse Change.
ARTICLE 6 Negative Covenants. Unless otherwise agreed to in writing by Lender, while this Agreement is in effect, the Borrower will not and will not permit its Subsidiaries to:
1.1Other Indebtedness. Create, incur, assume or allow to exist, directly or indirectly, any indebtedness or liability for borrowed money (including trade or bankers’ acceptances), letters of credit, or for the deferred purchase price of property or services (including leases that should be capitalized on the books of the lessee in accordance with the Accounting Standards), except for:
(a)debt to Lender.
(b)accounts payable to trade creditors incurred in the ordinary course of business.
(c)current operating liabilities (other than for borrowed money) incurred in the ordinary course of business.
(d)capitalized leases with Farm Credit Leasing Services Corporation.
(e)indebtedness of the Borrower under its member or patron investment program.
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(f)debt of the Borrower to other lenders and finance companies in an aggregate amount not to exceed $300,000.00.
(g)those operating leases, insofar as they are considered indebtedness in accordance with the Accounting Standards, as allowed for in Section 6.11 herein.
1.2Contingent Liabilities. Assume, guarantee, become liable as a surety, endorse, contingently agree to purchase, or otherwise be or become liable, directly or indirectly (including, but not limited to, by means of a maintenance agreement, an asset or stock purchase agreement, or any other agreement designed to ensure any creditor against loss), for or on account of the obligation of any person or entity, except:
(a)by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of the Borrower’s business.
1.3Liens. Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge, lien (including the lien of an attachment, judgment, or execution), security interest, or other encumbrance of any kind upon any of its property, real or personal (collectively, “Liens”). The foregoing restrictions will not apply to:
(a)Liens in favor of Lender.
(b)Liens for taxes, assessments, or governmental charges that are not past due.
(c)Liens and deposits under workers’ compensation, unemployment insurance, and social security Laws.
(d)Liens and deposits to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), and like obligations arising in the ordinary course of business as conducted on the date hereof.
(e)Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and like persons that secure obligations that are not past due.
(f)Easements, rights-of-way, restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto.
(g)Liens in favor of Farm Credit Leasing Services Corporation.
(h)Liens in favor of other lenders or finance companies to secure indebtedness permitted hereunder.
1.4Transactions with Affiliates. Enter into any transaction with any Affiliate except in the ordinary course of and pursuant to the reasonable requirements of its business and upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s-length transaction with a person or entity that was not an Affiliate.
1.5Loans and Investments. Make any loan or advance to any person or entity, or purchase any capital stock, obligations or other securities of, make any capital contributions to, or otherwise invest in any person or entity, or form or create any partnerships or joint ventures, except:
(a)trade credit extended in the ordinary course of business.
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(b)equity in, or obligation of, Lender.
(c)investments by the Borrower in the stock or other equities of Prairie AquaTech, LLC, Prairie AquaTech Manufacturing, LLC, and/or Prairie AquaTech Investments, LLC, provided that the aggregate amount of all such investments may not exceed $20,000,000.00 at any one time outstanding, plus future retained earnings.
(d)investments by the Borrower in the stock or other equities of High Plains Partners, LLC, provided that the aggregate amount of all such investments may not exceed $90,000,000.00 at any one time outstanding, plus future retained earnings.
(e)investments existing as of the date hereof.
1.6Dividends and Distributions. Declare or pay any dividends, or make any distribution of assets to the stockholders, or purchase, redeem, retire or otherwise acquire for value any of its capital stock, or allocate or otherwise set apart any sum for any of the foregoing, except that in any fiscal year of the Borrower, the Borrower may pay dividends in an amount up to 75.00% of its unconsolidated net income for the prior fiscal year, provided that no Event of Default or Potential Default will have occurred and be continuing or would result therefrom.
1.7Mergers, Acquisitions, Etc. Merge or consolidate with any other entity or acquire all or a material part of the assets of any other person or entity, or form or create any new Subsidiary, or commence operations under any other name, organization, or entity, including any joint venture.
1.8Transfer of Assets. Sell, transfer, lease, or otherwise dispose of any of its assets, except: (a) in the ordinary course of business; and (b) the sale, transfer or disposal of any obsolete or worn-out assets that are no longer necessary or required in the conduct of the Borrower’s business.
1.9Change in Business. Engage in any business activities or operations substantially different from or unrelated to the Borrower’s present business activities or operations.
1.10Use of Proceeds. Use the proceeds of any loan made by Lender to the Borrower, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
1.11Operating Leases. Create, incur, assume, or permit to exist any obligation as lessee under operating leases for the rental or hire of any real or personal property except:
(a)railroad leases.
(b)leases with Farm Credit Leasing Services Corporation.
(c)railcar leases, on terms and conditions acceptable to Lender.
(d)other leases, excluding those allowed above, which do not in the aggregate require the Borrower or any Subsidiary to make scheduled payments to the lessors in any fiscal year of the Borrower in excess of $400,000.00.
ARTICLE 7 Financial Covenants. Unless otherwise agreed to in writing by Lender, while this Agreement is in effect:
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7.1Working Capital. The Borrower will have at the end of each period for which financial statements are required to be furnished pursuant to this Agreement an excess of unconsolidated current assets over unconsolidated current liabilities of not less than $14,000,000.00, except that in determining unconsolidated current assets, any amount available under any revolving term promissory note hereunder (less the amount that would be considered a current liability if fully advanced) may be included (all as determined in accordance with the Accounting Standards).
7.2Debt Service Coverage Ratio. The Borrower will have at the end of each fiscal year of the Borrower a Debt Service Coverage Ratio (as defined below) for such year of not less than 1.50 to 1.00. For purposes hereof, “Debt Service Coverage Ratio” means: (a) unconsolidated net income (after taxes), plus depreciation and amortization, minus non-cash patronage income, minus extraordinary gains (plus losses), minus gain (plus loss) on asset sale; divided by (b) $6,500,000.00 (all as determined in accordance with the Accounting Standards).
ARTICLE 8 Default.
8.1Each of the following will constitute an “Event of Default” hereunder:
(a)Payment Default. The Borrower should fail to make any payment to Lender when due.
(b)Representations and Warranties. Any representation, warranty, certification or statement of fact made at any time by the Borrower, herein or in any other Loan Document, or in any certificate, other instrument or statement furnished to Lender by or on behalf of the Borrower, will have been false or misleading in any material respect as of the time it was made or furnished.
(c)Covenants. The Borrower will default in the observance or performance of any covenant set forth in Article 5 (other than Sections 5.1(c), 5.1(d), 5.1(e)(1), 5.1(e)(2), and 5.2 above), and such default continues for 30 days after written notice thereof will have been delivered to the Borrower by Lender.
(d)Other Covenants and Agreements. The Borrower will default in the observance or performance of Sections 5.1(c), 5.1(d), 5.1(e)(1), 5.1(e)(2), and 5.2 or any other covenant or agreement contained herein or in any other Loan Document or if Borrower uses the proceeds of any loan for any unauthorized purpose.
(e)Cross Default. Any Loan Party should, after any applicable grace period, breach or be in default under the terms of any other Loan Document (including, without limitation, any security instrument or document) or any other agreement between any Loan Party and Lender, or between any Loan Party and any Affiliate of Lender, including without limitation Farm Credit Leasing Services Corporation.
(f)Other Indebtedness. Any Loan Party or Subsidiary should fail to pay when due any indebtedness to any other person or entity for borrowed money or any long-term obligation for the deferred purchase price of property (including any capitalized lease), or any other event occurs that, under any agreement or instrument relating to such indebtedness or obligation, has the effect of accelerating or permitting the acceleration of such indebtedness or obligation, whether or not such indebtedness or obligation is actually accelerated or the right to accelerate is conditioned on the giving of notice, the passage of time, or otherwise.
(g)Judgments. A judgment, decree, or order for the payment of money will have been rendered against any Loan Party and either: (1) enforcement proceedings will have been commenced; (2) a Lien prohibited by this Agreement, any security instrument, or any other Loan Document, will have been obtained; or (3) such judgment, decree, or order will continue unsatisfied and in effect for a period of 30 consecutive days without being vacated, discharged, satisfied, bonded, or stayed pending appeal.
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(h)Loan Document Unenforceable. Any of the Loan Documents ceases to be a legal, valid, and binding agreement enforceable against any Loan Party or is in any way terminated (except in accordance with its terms) or becomes or is declared ineffective or inoperative.
(i)Revocation of Guaranty. Any guaranty, suretyship, subordination agreement, maintenance agreement, or other agreement furnished in connection with the Borrower’s obligations hereunder and under any Promissory Note will, at any time, cease to be in full force and effect, or will be revoked or declared null and void, or the validity thereof will be contested by the Guarantor, surety or other maker thereof, or the Guarantor will deny any further liability or obligations thereunder, or will fail to perform its obligations thereunder, or any representation or warranty set forth therein will be breached, or the Guarantor will breach or be in default under the terms of any other agreement with Lender (including any loan agreement or security agreement), or a default set forth in sections (f) through (h) will occur with respect to the Guarantor.
(j)Insolvency, Etc. Any Loan Party or Subsidiary will: (1) become insolvent or will generally not, or will be unable to, or will admit in writing its inability to, pay its debts as they become due; or (2) suspend its business operations or a material part thereof or make an assignment for the benefit of creditors; or (3) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, or other custodian for it or any of its property; or (4) have commenced against it any action or proceeding for the appointment of a trustee, receiver, or other custodian and such action or proceeding is not dismissed within 30 days of the date thereof, or a trustee, receiver, or other custodian is appointed for all or any part of its property; or (5) receive notice from any regulatory or governmental authority to the effect that such authority intends to replace the management of any Loan Party or assume control over any Loan Party or Subsidiary; or (6) commence or have commenced against it any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law of any jurisdiction.
(k)Material Adverse Change. Any Material Adverse Change occurs, as reasonably determined by Lender.
8.2Remedies. Upon the occurrence and during the continuance of an Event of Default or Potential Default, Lender will have no obligation to extend or continue to extend credit to the Borrower and may discontinue doing so at any time without prior notice or other limitation. In addition, upon the occurrence and during the continuance of any Event of Default, Lender may, upon notice to the Borrower:
(a)Termination and Acceleration. Terminate any commitment and declare the unpaid principal balance of the loans, all accrued interest thereon, and all other amounts payable under this Agreement, each Promissory Note, and all other Loan Documents to be immediately due and payable. Upon such a declaration, the unpaid principal balance of the loans and all such other amounts will become immediately due and payable, without protest, presentment, demand, or further notice of any kind, all of which are hereby expressly waived by the Borrower.
(b)Enforcement. Proceed to protect, exercise, and enforce such rights and remedies as may be provided by this Agreement, any security instrument or document, any other Loan Document, or under Law. Each and every one of such rights and remedies will be cumulative and may be exercised from time to time, and no failure on the part of Lender to exercise, and no delay in exercising, any right or remedy will operate as a waiver thereof, and no single or partial exercise of any right or remedy will preclude any future or other exercise thereof, or the exercise of any other right. Without limiting the foregoing, Lender may hold and/or set off and apply against the Borrower’s obligations to Lender the proceeds of any equity in Lender, any cash collateral held by Lender, or any balances held by Lender for the Borrower’s account (whether or not such balances are then due).
(c)Application of Funds. Lender may apply all payments received by it to the Borrower’s obligations to Lender in such order and manner as Lender may elect in its sole discretion.
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(d)Interest upon default. In addition to the rights and remedies set forth above and notwithstanding any Promissory Note: (1) upon the occurrence and during the continuance of an Event of Default, at Lender’s option in each instance, the entire indebtedness outstanding hereunder and under each Promissory Note will bear interest from the date of such Event of Default until such Event of Default will have been waived or cured in a manner satisfactory to Lender at 4.00% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan under the terms of the applicable Promissory Note; and (2) after the maturity of any loan (whether as a result of acceleration or otherwise), the unpaid principal balance of such loan (including without limitation, principal, interest, fees and expenses) will automatically bear interest at 4.00% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan under the terms of the Promissory Note. All interest provided for herein will be payable on demand and will be calculated on the basis of a year consisting of 360 days.
(e)CoBank Equities. In addition to the other remedies set forth in this section, during the existence of any Event of Default, CoBank may at its sole discretion, but shall not be required to, (i) foreclose on its statutory first Lien on any of the Borrower’s stock, patronage refunds issued in the form of stock or otherwise constituting allocated units, patronage surplus (including any such surplus accrued by Lender for the account of Borrower) and other equities in Lender acquired in connection with, or because of the existence of, Borrower’s patronage loan from Lender, and the proceeds of any of the foregoing (the “CoBank Equities”) and/or set off the value thereof or of any cash patronage against the Borrower’s obligations under this Agreement and the other Loan Documents; and (ii) without notice except as required by applicable Law, retire and cancel all or part of the CoBank Equities owned by or allocated to the Borrower in accordance with the Farm Credit Act of 1971 (as amended from time to time) and any regulations promulgated pursuant thereto in total or partial liquidation of the obligations under this Agreement and the other Loan Documents, for such value as may be required pursuant applicable Law and Lender’s Bylaws and Capital Plan (as each may be amended from time to time). Any setoff effectuated pursuant to the preceding clauses (i) or (ii) may be undertaken whether or not the obligations under this Agreement and the other Loan Documents are currently due and payable. CoBank shall have no obligation to retire the CoBank Equities upon any Event of Default or any other default, or at any other time, either for application to the obligations under this Agreement and the other Loan Documents or otherwise. The Borrower acknowledges that any corresponding tax liability associated with Lender’s application of the value of the CoBank Equities to any portion of such obligations is the sole responsibility of the Borrower.
ARTICLE 9 Expenses; Indemnification; Damage Waiver.
9.1Costs and Expenses. To the extent allowed by Law, the Borrower agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained or employed by Lender) incurred by Lender and any participants of Lender in connection with the origination, administration, collection and enforcement of this Agreement and the other Loan Documents, including, without limitation, all costs and expenses incurred in obtaining, perfecting, maintaining, determining the priority of, and releasing any security for the Borrower’s obligations to Lender, and any stamp, intangible, transfer or like tax incurred in connection with this Agreement or any other Loan Document or the recording hereof or thereof.
9.2Indemnification. The Borrower indemnifies Lender, its Affiliates and its and their respective officers, directors, employees, agents and advisors (each an “Indemnitee”) against, and holds each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including fees and expenses of employed or retained counsel) incurred by any Indemnitee or asserted against any Indemnitee by any third party arising out of or as a result of (a) the execution or delivery of any Loan Document, the performance or nonperformance by the Borrower of its obligations under any Loan Document or the consummation of the transactions contemplated thereby, including the use of the proceeds therefrom, (b) breach of representations, warranties or covenants of the Borrower under any Loan Document, or (c) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under environmental Laws or
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pertaining to environmental matters, regardless whether any Indemnitee is a party thereto; provided that such indemnity will not, as to an Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.
9.3Waiver of Consequential Damages. To the fullest extent permitted by applicable Law, the Borrower will not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages arising out of, in connection with, or as a result of, any Loan Document, the transactions contemplated thereby or the use of the proceeds thereof.
ARTICLE 10 Miscellaneous.
10.1Amendments; Waivers; Etc. No amendment, modification, or waiver of any provision of this Agreement or the other Loan Documents, and no consent to any departure by the Borrower herefrom or therefrom, will be effective unless approved by Lender and contained in a writing signed by or on behalf of Lender, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given. In the event this Agreement is amended or restated, each such amendment or restatement will be applicable to all Promissory Notes hereto.
10.2Notices. All notices hereunder will be in writing and will be deemed to have been duly given when addressed to the party intended to receive the same at the address of such party set forth below (or such other address either party may specify by like notice), (a) upon delivery if personally delivered to a party at such address, (b) three days after the same is deposited in the United States mail as first class, certified mail, return receipt requested, postage paid, (c) one business day after the same has been deposited with Federal Express or another nationally recognized overnight courier service if designated for next-day delivery, and (d) upon delivery if sent by facsimile or electronic mail with confirmation of delivery of the same:
| If to Lender, as follows: | If to the Borrower, as follows: |
|---|---|
| For general correspondence purposes: | South Dakota Soybean Processors, LLC |
| P.O. Box 5110 | P.O. Box 500 |
| Denver, Colorado 80217-5110 | Volga, South Dakota 57071 |
| For direct delivery purposes, when desired: | 100 Caspain Ave |
| 6340 South Diddlers Green Circle | Volga, South Dakota 57071 |
| Greenwood Village, Colorado 80111-1914 | |
| Attention: Credit Information Services | Attention: CEO |
| Fax No.: (303)224-6101 |
10.3Survival. Notwithstanding anything to the contrary in this or any other Loan Document, Sections 5.12, 8.2, all of Article 9, and Section 10.7 will survive the termination of this Agreement, repayment of every Promissory Note, and the foreclosure, or any other enforcement action, of any and all security pledged pursuant to Section 2.3 above. The representations, warranties, acknowledgments, and agreements set forth herein will survive the date of this Agreement, but not its termination unless otherwise agreed.
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Agreement No: 18462590SLA-H
10.4Effectiveness and Severability. This Agreement will continue in effect until: (a) all indebtedness and obligations of the Borrower under this Agreement and the other Loan Documents have been paid or satisfied; (b) Lender has no commitment to extend credit to or for the account of the Borrower under any Promissory Note; and (c) either party sends written notice to the other party terminating this Agreement. Any provision of this Agreement or any other Loan Document that is prohibited or unenforceable in any jurisdiction will be ineffective to the extent of such prohibition or unenforceable without invalidating the remaining provisions hereof or thereof.
10.5Successors and Assigns.
(a)Successors and Assigns Generally. This Agreement and the other Loan Documents will be binding upon and inure to the benefit of the Borrower and Lender and their respective successors and assigns, except that the Borrower may not assign or transfer its rights or obligations under this Agreement or the other Loan Documents without the prior written consent of Lender.
(b)Participations, Etc. From time to time, Lender may sell to one or more banks, financial institutions, or other lenders a participation in one or more of the loans or other extensions of credit made pursuant to this Agreement. However, no such participation will relieve Lender of any commitment made to the Borrower hereunder. In connection with the foregoing, Lender may disclose information concerning the Borrower and its subsidiaries, if any, to any participant or prospective participant, provided that such participant or prospective participant agrees to keep such information confidential. Patronage distributions in the event of a sale of a participation interest will be governed by Lender’s Bylaws and Capital Plan (as each may be amended from time to time). A sale of a participation interest may include certain voting rights of the participants regarding the loans hereunder (including without limitation the administration, servicing, and enforcement thereof). Lender will maintain a record of all participation interests, a copy of which will be made available to the Borrower upon request.
10.6Integration; Other Types of Credit; Counterparts; Electronic Signatures.
(a)Integration. The Loan Documents are intended by the parties to be a complete and final expression of their agreement. Each Promissory Note will be deemed to incorporate all of the terms and conditions of this Agreement as if fully set forth therein. Without limiting the foregoing, any capitalized term utilized in any Promissory Note (or in any amendment to this Agreement or Promissory Note) and not otherwise defined in the Promissory Note (or amendment) will have the meaning set forth herein or, if applicable, in the Accounting Standards. In the event the Accounting Standards are changed after the date hereof, then all such changes will be applicable hereto, unless Lender otherwise specifies in writing.
(b)Other Types of Credit. From time to time, Lender may issue letters of credit or extend other types of credit to or for the account of the Borrower. In the event the parties desire to do so under the terms of this Agreement, then the agreement of the parties with respect thereto may be set forth in a Promissory Note and this Agreement will be applicable thereto.
(c)Counterparts; Electronic Signatures. This Agreement, each Promissory Note and any other Loan Document may be executed in counterparts, each of which will constitute an original, but all of which when taken together will constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement, any Promissory Note or any other Loan Document by facsimile or other electronic means will be as effective as delivery of a manually executed counterpart of each such Agreement, Promissory Note or Loan Document. The parties agree that the electronic signature of a party to this Agreement, any Promissory Note or any other Loan Document shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement or such Loan Document. The parties agree that any electronically signed Loan Document (including this Agreement) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. The parties presently intend to authenticate any Loan Documents to which they are a
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Agreement No: 18462590SLA-H
party by either signing such Loan Document or attaching thereto or logically associating therewith an electronic sound, symbol or process as their respective electronic signature. The words “execution,” “signed,” “signature,” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, or any similar state Laws based on the Uniform Electronic Transactions Act.
10.7Applicable Law; Submission to Jurisdiction; Service of Process; Waiver of Venue; Waiver of Jury Trial.
(a)Applicable Law. Without giving effect to the principles of conflict of laws and except to the extent governed by federal law, the Laws of the State of Colorado, without reference to choice of law doctrine, will govern this Agreement, each Promissory Note and any other Loan Document for which Colorado is specified as the applicable law, and all disputes and matters between the parties to this Agreement, including all disputes and matters whatsoever arising under, in connection with or incident to the lending and/or leasing or other business relationship between the parties, and the rights and obligations of the parties to this Agreement or any other Loan Document by and between the parties for which Colorado is specified as the applicable law.
(b)Submission to Jurisdiction; Service of Process. The Borrower hereby irrevocably consents to the nonexclusive jurisdiction of any state or federal court in Denver, Colorado, and consents that Lender may effect any service of process in the manner and at the Borrower’s address set forth herein for providing notice or demand; provided that nothing contained in this Agreement will prevent Lender from bringing any action, enforcing any award or judgment or exercising any rights against the Borrower individually, against any collateral or against any property of the Borrower within any other county, state or other foreign or domestic jurisdiction.
(c)Waiver of Venue. The Borrower acknowledges and agrees that the venue provided above is the most convenient forum for the Borrower and Lender. The Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Agreement.
(d)Waiver of Jury Trial. The Borrower and Lender each hereby irrevocably waives any right it may have to a trial by jury in connection with any action directly or indirectly arising out of or relating to this Agreement or any other Loan Document. Each party hereto (1) certifies that no representative, administrative agent or attorney of any other person has represented, expressly or otherwise, that such other person would not, in the event of litigation, seek to enforce the foregoing waiver and (2) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and other Loan Documents by, among other things, the mutual waivers and certifications in this section.
10.8USA Patriot Act Notice. Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify, and record information that identifies the Borrower in accordance with the USA Patriot Act. The Borrower covenants and agrees it will not, and agrees to cause each of its subsidiaries not to, at any time, directly or indirectly be (a) a person with whom Lender is restricted from doing business under any Anti-Terrorism Law, (b) engaged in any business involved in making or receiving any contribution of funds, goods or services to or for the benefit of such a person or in any transaction that evades or avoids, or has the purpose of evading or avoiding, the prohibitions set forth in any Anti-Terrorism Law, or (c) otherwise in violation of any Anti-Terrorism Law (the Borrower will and will cause each of its subsidiaries to provide to Lender any certifications or information that Lender requests to confirm compliance by the Borrower and its subsidiaries with any Anti- Terrorism Law). “Anti-Terrorism Law” means any Law relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of Foreign
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Asset Control, as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced.
SIGNATURE PAGE FOLLOWS
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
SIGNATURE PAGE TO CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers, have executed this Agreement.
| SOUTH DAKOTA SOYBEAN PROCESSORS, LLC | |
|---|---|
| By: | /s/ Mark Hyde |
| Name: | Mark Hyde |
| Title: | Chief Financial Officer |
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
SIGNATURE PAGE TO CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers, have executed this Agreement.
| COBANK, ACB | |
|---|---|
| By: | /s/ Kelli Cholas |
| Name: | Kelli Cholas |
| Title: | Assistant Corporate Secretary |
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Agreement No: 18462590SLA-H
SCHEDULE 5.0 - Subsidiaries
Agreement No. 18462590SLA-H
None.
20
Document
Exhibit 10.15
Loan No. 18462590S01-N
AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE
THIS AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE (this “Promissory Note”) to the Amended and Restated Credit Agreement dated 03/17/2025 (such agreement, as may be amended, hereinafter referred to as the “Credit Agreement”), is entered into as of 03/17/2025 between COBANK, ACB, a federally-chartered instrumentality of the United States (“Lender”) and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, Volga, South Dakota, a limited liability company (together with its permitted successors and assigns, the “Borrower”). Capitalized terms not otherwise defined in this Promissory Note will have the meanings set forth in the Credit Agreement.
RECITALS
(A) This Promissory Note amends, restates, replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Amended and Restated Revolving Credit Promissory Note numbered 18462590S01-M, dated as of March 2, 2023, between Lender and the Borrower.
SECTION 1. REVOLVING CREDIT COMMITMENT. On the terms and conditions set forth in the Credit Agreement and this Promissory Note, Lender agrees to make loans to the Borrower during the period set forth below in an aggregate principal amount not to exceed $70,000,000.00, at any one time outstanding (the “Commitment”). Within the limits of the Commitment, the Borrower may borrow, repay and re-borrow.
SECTION 2. PURPOSE. The purpose of the Commitment is to finance the operating needs of the Borrower.
SECTION 3. TERM. The term of the Commitment will be from the date hereof, up to and including December 1, 2025, or such later date as Lender may, in its sole discretion, authorize in writing (the “Term Expiration Date”). Notwithstanding the foregoing, the Commitment will be renewed for an additional year only if, on or before the Term Expiration Date, Lender provides to the Borrower a written notice of renewal for an additional year (a “Renewal Notice”). If on or before the Term Expiration Date, Lender grants a short-term extension of the Commitment, the Commitment will be renewed for an additional year only if Lender provides to the Borrower a Renewal Notice on or before such extended expiration date. All annual renewals will be measured from, and effective as of, the same day as the Term Expiration Date in any year.
SECTION 4. LIMITS ON ADVANCES, AVAILABILITY, ETC. The loans will be made available as provided in Article 2 of the Credit Agreement.
SECTION 5. INTEREST. The Borrower agrees to pay interest on the unpaid balance of the loan(s) in accordance with the following interest rate option(s):
(A)Daily Simple SOFR. At a variable rate per annum equal at all times to 2.250% (the “Daily Simple SOFR Margin”) plus the higher of: (1) zero percent (0.00%); and (2) Daily Simple SOFR (as defined below). Borrowings may only be made on a day which is a Business Day (as defined below) and requests for borrowings must be received by 12:00 p.m. Denver, Colorado time on the date the borrowing is desired. Information about the then-current rate will be made available upon telephonic
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Promissory Note No. 18462590S01-N
request. For purposes of this Promissory Note, Daily Simple SOFR shall be considered a variable rate option. For purposes hereof, (a) “Daily Simple SOFR” means SOFR (as defined below) for the day that is five U.S. Government Securities Business Days (as defined below) prior to (i) if such day is a U.S. Government Securities Business Day, such day or (ii) if such day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such day. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower; (b) “SOFR” means, for any U.S. Government Securities Business Day, a rate per annum equal to the secured overnight financing rate for such day published (at such time as Lender may determine in its sole discretion) by the SOFR Administrator on its website (or any successor source identified by the SOFR Administrator from time to time) on the immediately succeeding U.S. Government Securities Business Day; (c) “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate); (d) “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday, or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities; and (e) “Business Day” means a day on which Lender and the Federal Reserve Banks are open for business.
Interest will be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and will be payable monthly in arrears by the 20th day of the following month or on such other day as Lender will require in a written notice to the Borrower (“Interest Payment Date”).
SECTION 6. PROMISSORY NOTE. The Borrower promises to repay the unpaid principal balance of the loans on the Term Expiration Date, as the term may be extended from time to time.
In addition to the above, the Borrower promises to pay interest on the unpaid principal balance of the loans at the times and in accordance with the provisions set forth herein.
SECTION 7. SECURITY. The Borrower’s obligations hereunder and, to the extent related hereto, under the Credit Agreement, will be secured as provided in Section 2.3 of the Credit Agreement.
SECTION 8. FEES.
(A)Commitment Fee. In consideration of the Commitment, the Borrower agrees to pay to Lender a commitment fee on the average daily unused available portion of the Commitment at the rate of 0.200% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee will be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.
(B)Letter of Credit Fee(s): The Borrower agrees to pay to Lender any fees, administrative expenses, and other customary charges that Lender may charge or incur from time to time in connection with the issuance, maintenance, amendment (if any), assignment or transfer (if any), negotiation, and administration of the letter of credit. In addition, the Borrower agrees to pay to Lender:
1.Issuance Fee. Upon the issuance of the letter of credit, an issuance fee equal to $1,000.00.
2.Commission Fee. A commission fee equal to the Daily Simple SOFR Margin multiplied by the face amount of the letter of credit (computed on the basis of a year of 360 days and actual days elapsed), which fee shall be payable quarterly in arrears on the 20th of each calendar quarter following issuance of the letter of credit, and on the last day of the term of the Commitment.
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Promissory Note No. 18462590S01-N
SECTION 9. LETTERS OF CREDIT. If agreeable to Lender in its sole discretion in each instance, in addition to loans, the Borrower may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after Lender’s receipt of a duly completed and executed copy of Lender’s then current form of Application and Reimbursement Agreement or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and will reduce the amount available under the Commitment by the maximum amount capable of being drawn under such letter of credit. Any draw under any letter of credit issued hereunder will be deemed a loan under the Commitment and will be repaid in accordance with this Promissory Note. Each letter of credit must be in form and content acceptable to Lender and must expire no later than the maturity date of the Commitment, unless the letter of credit automatically renews on terms satisfactory to Lender.
SECTION 10. OVERADVANCES. Lender shall not be obligated to make advances in excess of the Commitment (“Overadvances”), but may elect to do so in its sole discretion. Each such Overadvance shall be secured hereunder and under Section 2.3 of the Credit Agreement. If Lender approves an Overadvance, the Borrower shall reimburse Lender immediately and without notice or demand for (1) the full amount of each overadvance; (2) all overadvance fees and charges that Lender may impose from time to time; (3) interest on the amount of each overadvance at the rate that applies to the loan(s) for the day such overadvance was created and for each following day until it has been repaid, and (4) all losses Lender incurs in collecting the overadvance and any fees, charges, expenses or interest relating to it. In addition to all other rights and remedies available to Lender, Lender may (and the Borrower specifically gives Lender the authority to): (1) set off the unpaid balance of any overadvance against any debt or other amount that Lender owes to the Borrower; (2) liquidate any investments or other assets in any account the Borrower maintains with Lender or in connection with the loan(s); and (3) enforce its interests in any available collateral it holds to secure the Borrower’s obligations hereunder and under the Credit Agreement. If Lender elects to make an advance in excess of the Commitment, doing so does not obligate Lender to make or permit future Overadvances under the Commitment.
SECTION 11. BENCHMARK AND TENOR REPLACEMENT AND MODIFICATION. Notwithstanding anything to the contrary in this Promissory Note or in any other Loan Document,
(A)if at any time Lender determines that (1) any interest rate offered hereunder (each such interest rate, a “Benchmark”) or any tenor of such Benchmark has been, or is likely to be, discontinued; (2) any Benchmark or any tenor of any Benchmark is not or is likely to not be representative of the underlying market and economic reality that such Benchmark or tenor is intended to measure; or (3) any Benchmark or any tenor of any Benchmark does not, or is likely not to, adequately and fairly reflect the cost to Lender of making or maintaining loans hereunder, or (4) any Benchmark or any tenor of any Benchmark is, or is likely to be, unlawful, Lender may amend this Promissory Note and any other Loan Document to replace such Benchmark or tenor with a Benchmark Replacement or to remove such tenor. The selection of a Benchmark Replacement by Lender may be for one, some or all tenors of the then-current Benchmark. “Benchmark Replacement” means, for any Benchmark or tenor, a replacement benchmark rate, which may include a spread adjustment, that has been selected by Lender in its sole discretion, giving due consideration to (a) any recommendation by a relevant governmental body of a replacement benchmark rate, the mechanism for determining such a rate or a spread adjustment, or (b) any evolving or then-prevailing market convention for determining a benchmark rate or a spread adjustment. Lender may effect such amendments to this Promissory Note and the other Loan Documents as Lender in its sole discretion deems appropriate to reflect the adoption and implementation of such replacement rate, which amendments will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Document; provided that Lender shall give the Borrower notice of any such amendment. In no event shall any Benchmark Replacement be less than zero percent (0.00%).
(B)if at any time Lender determines in its discretion that any Benchmark or any tenor of any Benchmark is unavailable for any reason on a temporary basis, Lender may (i) calculate such Benchmark or tenor using such previous or historical publications of such Benchmark or tenor as Lender determines
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in its discretion to be appropriate, (ii) suspend the availability of such tenor or (iii) select and apply a Benchmark Replacement during such period.
(C)Lender will have the right to make from time to time any technical, administrative or operational changes that Lender decides in its discretion may be appropriate to permit or enhance the efficient administration of any Benchmark or any tenor of any Benchmark or the adoption, implementation or administration of any Benchmark Replacement or any tenor of any Benchmark Replacement. Any amendments implementing such changes will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Document; provided that Lender shall give the Borrower notice of any such amendment.
SIGNATURE PAGE FOLLOWS
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Promissory Note No. 18462590S01-N
SIGNATURE PAGE TO PROMISSORY NOTE
IN WITNESS WHEREOF, the parties have caused this Promissory Note to the Credit Agreement to be executed by their duly authorized officer(s).
| SOUTH DAKOTA SOYBEAN PROCESSORS, LLC | |
|---|---|
| By: | /s/ Mark Hyde |
| Name: | Mark Hyde |
| Title: | Chief Financial Officer |
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Volga, South Dakota
Promissory Note No. 18462590S01-N
SIGNATURE PAGE TO PROMISSORY NOTE
IN WITNESS WHEREOF, the parties have caused this Promissory Note to the Credit Agreement to be executed by their duly authorized officer(s).
| COBANK, ACB | |
|---|---|
| By: | /s/ Kelli Cholas |
| Name: | Kelli Cholas |
| Title: | Assistant Corporate Secretary |
6
Document
Exhibit 10.18
Loan No. 18462590T05-F
AMENDED AND RESTATED REVOLVING TERM PROMISSORY NOTE
THIS AMENDED AND RESTATED REVOLVING TERM PROMISSORY NOTE (this “Promissory Note”) to the Amended and Restated Credit Agreement dated 03/17/2025 (such agreement, as may be amended, hereinafter referred to as the “Credit Agreement”), is entered into as of 03/17/2025 between COBANK, ACB, a federally-chartered instrumentality of the United States (“Lender”) and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, VOLGA, South Dakota, a limited liability company (together with its permitted successors and assigns, the “Borrower”). Capitalized terms not otherwise defined in this Promissory Note will have the meanings set forth in the Credit Agreement.
RECITALS
(A)This Promissory Note amends, restates, replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Amended and Restated Revolving Term Promissory Note numbered 18462590T05-E, dated as of September 20, 2023, between Lender and the Borrower.
SECTION 1. REVOLVING TERM COMMITMENT. On the terms and conditions set forth in the Credit Agreement and this Promissory Note, Lender agrees to make loans to the Borrower during the period set forth below in an aggregate principal amount not to exceed the Maximum Commitment Amount (as set forth below) at any one time outstanding (the “Commitment”). The "Maximum Commitment Amount" will be initially $65,000,000.00 and will be reduced by $3,250,000.00 on the 20th day of each March and September beginning March 20, 2025, and continuing through and including September 20, 2027, with a final reduction equal to the remaining balance due on March 20, 2028. Within the limits of the Commitment, the Borrower may borrow, repay, and re-borrow.
SECTION 2. PURPOSE. The purpose of the Commitment is to provide working capital to the Borrower. In addition, the purpose of the Commitment is to consolidate under this Promissory Note the Borrower’s existing indebtedness to Lender under the Multiple Advance Term Promissory Note numbered 18462590T06, dated as of September 20, 2023 (such agreement, as may be amended, hereinafter referred to as the “Existing Agreement(s)”). The Borrower agrees that on the date when all conditions precedent to Lender’s obligation to extend credit hereunder have been satisfied: (A) the principal balance outstanding under the Existing Agreement(s) will be transferred to and charged against the Commitment; (B) all obligations relating to any letters of credit issued and outstanding under the Existing Agreement(s), if any, will be transferred to and continued as if the letters of credit had been issued under this Promissory Note; (A) all accrued obligations of the Borrower under the Existing Agreement(s) for the payment of interest or other charges will be transferred to and become part of the Borrower’s obligations under this Promissory Note as if fully set forth herein; and (D) the Existing Agreement(s) and the promissory note(s) set forth in or executed in connection therewith will be deemed replaced and superseded, but the indebtedness evidenced by such note will not be deemed to have been paid off, by this Promissory Note and the Credit Agreement. In addition, in the event any balances bearing interest at a fixed rate are outstanding on the date such loans are being transferred hereto, then such balances will continue to be subject to such rates for the remaining agreed upon fixed rate periods but will otherwise be subject to the terms hereof.
SECTION 3. TERM. The term of the Commitment will be from the date hereof, up to and including March 20, 2028, or such later date as Lender may, in its sole discretion, authorize in writing (the “Term Expiration Date”).
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Promissory Note No. 18462590T05-F
SECTION 4. LIMITS ON ADVANCES, AVAILABILITY, ETC. The loans will be made available as provided in Article 2 of the Credit Agreement.
SECTION 5. INTEREST. The Borrower agrees to pay interest on the unpaid balance of the loan(s) in accordance with the following interest rate option(s):
(A)Daily Simple SOFR. At a variable rate per annum equal at all times to 2.550% (the “Daily Simple SOFR Margin”) plus the higher of: (1) zero percent (0.00%); and (2) Daily Simple SOFR (as defined below). Borrowings may only be made on a day which is a Business Day (as defined below) and requests for borrowings must be received by 12:00 p.m. Denver, Colorado time on the date the borrowing is desired. Information about the then-current rate will be made available upon telephonic request. For purposes of this Promissory Note, Daily Simple SOFR shall be considered a variable rate option. For purposes hereof, (a) “Daily Simple SOFR” means SOFR (as defined below) for the day that is five U.S. Government Securities Business Days (as defined below) prior to (i) if such day is a U.S. Government Securities Business Day, such day or (ii) if such day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such day. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower; (b) “SOFR” means, for any U.S. Government Securities Business Day, a rate per annum equal to the secured overnight financing rate for such day published (at such time as Lender may determine in its sole discretion) by the SOFR Administrator on its website (or any successor source identified by the SOFR Administrator from time to time) on the immediately succeeding U.S. Government Securities Business Day; (c) “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate); (d) “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday, or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities; and (e) “Business Day” means a day on which Lender and the Federal Reserve Banks are open for business.
(B)Quoted Rate. At a fixed rate per annum to be quoted by Lender in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to Lender in its sole discretion in each instance, provided that: (1) the minimum fixed period will be 365 days; (2) amounts may be fixed in an amount not less than $500,000.00; and (3) the maximum number of fixes in place at any one time will be ten, provided, however, the maximum number of fixes in place at any one time may be increased, at Lender's sole discretion, upon written notification to the Borrower by Lender.
The Borrower will select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. If the Borrower fails to elect an interest rate option, interest will accrue at the variable rate option. Upon the expiration of any fixed rate period, interest will automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed for periods expiring after the maturity date of a loan and rates may not be fixed in such a manner as to cause the Borrower to have to break any fixed rate balance in order to pay any installment of principal. All elections provided for herein will be made telephonically or in writing and must be received by 12:00 p.m. Denver, Colorado time. Interest will be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and will be payable monthly in arrears by the 20th day of the following month or on such other day as Lender will require in a written notice to the Borrower (“Interest Payment Date”).
SECTION 6. PROMISSORY NOTE. The Borrower promises to repay on the date of each reduction in the Commitment set forth in the schedule in Section 1 above, the outstanding principal, if any, that is in excess of the reducing Commitment amount set forth in the aforementioned schedule, followed by a final
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
VOLGA, South Dakota
Promissory Note No. 18462590T05-F
installment in an amount equal to the remaining unpaid principal balance of the loans on the Term Expiration Date.
In addition to the above, the Borrower promises to pay interest on the unpaid principal balance of the loans at the times and in accordance with the provisions set forth herein.
SECTION 7. SECURITY. The Borrower’s obligations hereunder and, to the extent related hereto, under the Credit Agreement, will be secured as provided in Section 2.3 of the Credit Agreement.
SECTION 8. FEES.
(A)Commitment Fee. In consideration of the Commitment, the Borrower agrees to pay to Lender a commitment fee on the average daily unused available portion of the Commitment at the rate of 0.400% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee will be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.
SECTION 9. OVERADVANCES. Lender shall not be obligated to make advances in excess of the Commitment (“Overadvances”), but may elect to do so in its sole discretion. Each such Overadvance shall be secured hereunder and under Section 2.3 of the Credit Agreement. If Lender approves an Overadvance, the Borrower shall reimburse Lender immediately and without notice or demand for (1) the full amount of each overadvance; (2) all overadvance fees and charges that Lender may impose from time to time; (3) interest on the amount of each overadvance at the rate that applies to the loan(s) for the day such overadvance was created and for each following day until it has been repaid, and (4) all losses Lender incurs in collecting the overadvance and any fees, charges, expenses or interest relating to it. In addition to all other rights and remedies available to Lender, Lender may (and the Borrower specifically gives Lender the authority to): (1) set off the unpaid balance of any overadvance against any debt or other amount that Lender owes to the Borrower; (2) liquidate any investments or other assets in any account the Borrower maintains with Lender or in connection with the loan(s); and (3) enforce its interests in any available collateral it holds to secure the Borrower’s obligations hereunder and under the Credit Agreement. If Lender elects to make an advance in excess of the Commitment, doing so does not obligate Lender to make or permit future Overadvances under the Commitment.
SECTION 10. BENCHMARK AND TENOR REPLACEMENT AND MODIFICATION. Notwithstanding anything to the contrary in this Promissory Note or in any other Loan Document,
(A)if at any time Lender determines that (1) any interest rate offered hereunder (each such interest rate, a “Benchmark”) or any tenor of such Benchmark has been, or is likely to be, discontinued; (2) any Benchmark or any tenor of any Benchmark is not or is likely to not be representative of the underlying market and economic reality that such Benchmark or tenor is intended to measure; or (3) any Benchmark or any tenor of any Benchmark does not, or is likely not to, adequately and fairly reflect the cost to Lender of making or maintaining loans hereunder, or (4) any Benchmark or any tenor of any Benchmark is, or is likely to be, unlawful, Lender may amend this Promissory Note and any other Loan Document to replace such Benchmark or tenor with a Benchmark Replacement or to remove such tenor. The selection of a Benchmark Replacement by Lender may be for one, some or all tenors of the then-current Benchmark. “Benchmark Replacement” means, for any Benchmark or tenor, a replacement benchmark rate, which may include a spread adjustment, that has been selected by Lender in its sole discretion, giving due consideration to (a) any recommendation by a relevant governmental body of a replacement benchmark rate, the mechanism for determining such a rate or a spread adjustment, or (b) any evolving or then-prevailing market convention for determining a benchmark rate or a spread adjustment. Lender may effect such amendments to this Promissory Note and the other Loan Documents as Lender in its sole discretion deems appropriate to reflect the adoption and implementation of such replacement rate, which amendments will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Document; provided that Lender shall give the
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Promissory Note No. 18462590T05-F
Borrower notice of any such amendment. In no event shall any Benchmark Replacement be less than zero percent (0.00%).
(B)if at any time Lender determines in its discretion that any Benchmark or any tenor of any Benchmark is unavailable for any reason on a temporary basis, Lender may (i) calculate such Benchmark or tenor using such previous or historical publications of such Benchmark or tenor as Lender determines in its discretion to be appropriate, (ii) suspend the availability of such tenor or (iii) select and apply a Benchmark Replacement during such period.
(C)Lender will have the right to make from time to time any technical, administrative or operational changes that Lender decides in its discretion may be appropriate to permit or enhance the efficient administration of any Benchmark or any tenor of any Benchmark or the adoption, implementation or administration of any Benchmark Replacement or any tenor of any Benchmark Replacement. Any amendments implementing such changes will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Document; provided that Lender shall give the Borrower notice of any such amendment.
SIGNATURE PAGE FOLLOWS
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
VOLGA, South Dakota
Promissory Note No. 18462590T05-F
SIGNATURE PAGE TO PROMISSORY NOTE
IN WITNESS WHEREOF, the parties have caused this Promissory Note to the Credit Agreement to be executed by their duly authorized officer(s).
| SOUTH DAKOTA SOYBEAN PROCESSORS, LLC | |
|---|---|
| By: | /s/ Mark Hyde |
| Name: | Mark Hyde |
| Title: | Chief Financial Officer |
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
VOLGA, South Dakota
Promissory Note No. 18462590T05-F
SIGNATURE PAGE TO PROMISSORY NOTE
IN WITNESS WHEREOF, the parties have caused this Promissory Note to the Credit Agreement to be executed by their duly authorized officer(s).
| COBANK, ACB | |
|---|---|
| By: | /s/ Kelli Cholas |
| Name: | Kelli Cholas |
| Title: | Assistant Corporate Secretary |
6
Document
Exhibit 10.24
Adopted March 25, 2025
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
INSIDER TRADING POLICY
It is the policy of South Dakota Soybean Processors, LLC (the “Company”) to comply with all laws, rules, and regulations, including those promulgated by the Securities and Exchange Commission (“SEC”), governing the trading of securities, including Company capital units. This policy applies to all officers of the Company, all members of its Board of Managers, and all Company employees who receive or have access to “material non-public information.” This policy refers to these persons as “Insiders.” Among other things, these laws prohibit the use of “material non-public information” in several key areas:
•No Insider may purchase or sell Company capital units while in the possession of material non-public information.
•If any Insider has material non-public information, that person may not encourage another person to buy or sell Company capital units.
•No Insider may provide material non-public information regarding the Company to any person – including family members – who does not have a legitimate business purpose to have such information. If an Insider does have a legitimate business purpose for providing material non-public information to another person, the Insider must inform that person that he may not buy or sell Company capital units based on that material non-public information and must keep such material non-public information confidential.
“Material non-public information” is information that has not been made public t is likely to have an impact on the price of the Company’s capital units, or information that is likely to be considered important by an investor in making a decision to buy, hold or sell the Company’s capital units. Material non-public information about the Company includes, but is not limited to:
•knowledge of significant new services or products
•knowledge of future or pending dividend distribution
•internal sales and earnings information
•internal forecasts
•major contracts
•business acquisitions or mergers
•pending litigation or legal developments
•any other significant development, event or situation that has not yet been made public.
1.Rules Governing Statutory Insiders.
(a)All executive officers (for the purpose of this policy, an executive officer shall include the general manager of the plant), members of the Board of Managers of the Company, and any beneficial owner of more than 10% of the Company’s capital units are deemed to be statutory insiders (“Statutory Insiders”). Statutory Insiders may, from time to time, also include other employees of the Company. While all
Statutory Insiders are also Insiders, not all Insiders are Statutory Insiders. If you have any questions regarding whether you are considered a Statutory Insider, you should consult with the Company’s designated compliance person or counsel.
(b)Statutory insiders are required to file a report with the SEC within two days of when buying or selling Company capital units. The Company will assist in filing necessary reports by Statutory Insiders relating to their shareholder and trading activity. To this end, Statutory Insiders should consult with the Company’s designated compliance person before making any transaction in the Company’s capital units.
2.Rules Regarding Short–Swing Profits.
This policy is not intended to address the SEC’s short-swing profit rules under Section 16(b) of the Exchange Act. Among other things, these rules prohibit Statutory Insiders from realizing any profit from purchases and sales of Company securities during any six-month period. Therefore, Statutory Insiders should consult with the Company’s Section 16 Procedures and counsel before purchasing or selling capital units.
3.Enforcement.
If you violate the insider trading rules, you can be subject to criminal and/or monetary penalties. In addition, the Company views any violation of this policy as extremely serious, and such violation may be grounds for dismissal of the Insider.
If you have any questions regarding this policy, please do not hesitate to contact the Company’s designated compliance person or legal counsel with respect to these matters.
Document
Exhibit 31.1
Certification
I, Thomas Kersting, certify that:
1.I have reviewed the report on Form 10-K of South Dakota Soybean Processors, LLC for the year ended December 31, 2024;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 28, 2025
| /s/ Thomas Kersting |
|---|
| Thomas Kersting |
| Chief Executive Officer |
| (Principal Executive Officer) |
Document
Exhibit 31.2
Certification
I, Mark Hyde, certify that:
1.I have reviewed the report on Form 10-K of South Dakota Soybean Processors, LLC for the year ended December 31, 2024;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 28, 2025
| /s/ Mark Hyde |
|---|
| Mark Hyde |
| Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
Document
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-K for the year ending December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas Kersting, the Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of December 31, 2024 (the last date of the period covered by the Report).
| Dated: | March 28, 2025 | By | /s/ Thomas Kersting |
|---|---|---|---|
| Thomas Kersting, Chief Executive Officer | |||
| (Principal Executive Officer) |
Document
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-K for the year ending December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Hyde, the Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of December 31, 2024 (the last date of the period covered by the Report).
| Dated: | March 28, 2025 | By | /s/ Mark Hyde |
|---|---|---|---|
| Mark Hyde, Chief Financial Officer | |||
| (Principal Financial and Accounting Officer) |