10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

☒ COMMISSION FILE NO. 000-50253

SOUTH DAKOTA SOYBEAN PROCESSORS LLC
(Exact name of registrant as specified in its charter)		SD	46-0462968
---	---
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
100 Caspian Ave; PO Box 500<br><br>Volga, SD	57071
(Address of Principal Executive Offices	(Zip Code)		(605) 627-9240
---
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   x     No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

¨	Large Accelerated Filer	¨	Accelerated Filer	x	Non-Accelerated Filer	¨	Smaller Reporting Company	¨	Emerging Growth Company
					(do not check if a smaller reporting company)

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

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

¨    Yes       x    No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.     Yes   ¨  No   ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On November 14, 2023, the registrant had 30,411,500 capital units outstanding.

Table of Contents

			Page
Part I.	FINANCIAL INFORMATION		3
	Item I.	ConsolidatedFinancial Statements (Unaudited)	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
	Item 4.	Controls and Procedures	24
Part II.	OTHER INFORMATION		25
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	25
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
	Item 3.	Defaults among Senior Securities	25
	Item 4.	Mine Safety Disclosures	25
	Item 5.	Other Information	25
	Item 6.	Exhibits	25
Signatures			26

Item 1.    Financial Statements

South Dakota Soybean Processors, LLC

Condensed Consolidated Financial Statements

September 30, 2023 and 2022

South Dakota Soybean Processors, LLC

Condensed Consolidated Balance Sheets

	September 30, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	62,428,669	$	866,699
Trade accounts receivable	50,964,748		43,517,754
Inventories	92,334,428		134,246,154
Commodity derivative instruments	10,245,404		10,950,831
Margin deposits	3,499,900		5,603,930
Prepaid expenses	3,769,285		2,364,362
Total current assets	223,242,434		197,549,730
Property and equipment	192,482,945		140,903,867
Less accumulated depreciation	(70,089,859)		(66,343,898)
Total property and equipment, net	122,393,086		74,559,969
Other assets
Investments in related parties	13,637,150		14,576,910
Investments in cooperatives	1,737,862		1,705,549
Right-of-use lease asset, net	29,128,808		22,708,362
Other assets	336,500		96,250
Total other assets	44,840,320		39,087,071
Total assets	$	390,475,840	$	311,196,770

(continued on the following page)

South Dakota Soybean Processors, LLC

Condensed Consolidated Balance Sheets (continued)

	September 30, 2023		December 31, 2022
	(Unaudited)
Liabilities and Members' Equity
Current liabilities
Excess of outstanding checks over bank balance	$	11,983,777	$	18,504,251
Current maturities of long-term debt	1,200,000		—
Note payable - seasonal loan	728,833		138,165
Current operating lease liabilities	2,834,052		2,632,995
Accounts payable	2,431,808		2,245,339
Accrued commodity purchases	57,319,831		70,744,667
Commodity derivative instruments	10,455,096		20,010,772
Accrued expenses	5,805,406		6,062,608
Accrued interest	116,056		135,081
Deferred liabilities - current	436,489		1,074,059
Total current liabilities	93,311,348		121,547,937
Long-term liabilities
Long-term debt, net of current maturities and unamortized debt<br>    issuance costs	10,200,000		8,845,683
Long-term operating lease liabilities	23,564,400		17,168,224
Deferred liabilities	43,578		96,250
Total long-term liabilities	33,807,978		26,110,157
Commitments and contingencies (Notes 6, 7, 8, and 13)
Members' equity
Class A Units, no par value, 30,411,500 units issued and<br><br>outstanding on September 30, 2023 and December 31, 2022	177,934,483		163,538,676
Non-controlling interests in consolidated entities	85,422,031		—
Total liabilities and members' equity	$	390,475,840	$	311,196,770

The accompanying notes are an integral part of these condensed consolidated financial statements.

South Dakota Soybean Processors, LLC

Condensed Consolidated Statements of Operations (Unaudited)

For the Three and Nine-Month Periods Ended September 30, 2023 and 2022

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net revenues	$	176,915,209	$	184,725,873	$	533,767,903	$	531,698,305
Cost of revenues:
Cost of product sold	135,145,339		151,274,078		410,182,433		413,824,133
Production	10,212,705		9,419,838		30,613,210		27,361,405
Freight and rail	11,285,844		11,875,724		35,505,132		34,598,723
Brokerage fees	190,804		164,349		589,886		544,050
Total cost of revenues	156,834,692		172,733,989		476,890,661		476,328,311
Gross profit	20,080,517		11,991,884		56,877,242		55,369,994
Operating expenses:
Administration	1,520,090		1,249,945		4,508,549		4,124,844
Operating income	18,560,427		10,741,939		52,368,693		51,245,150
Other income (expense):
Interest expense	(727,968)		(638,690)		(2,705,266)		(1,574,020)
Other non-operating income (expense)	930,131		331,933		854,164		1,126,395
Patronage dividend income	—		—		693,047		699,595
Total other income (expense)	202,163		(306,757)		(1,158,055)		251,970
Net income	18,762,590		10,435,182		51,210,638		51,497,120
Net income attributable to non-controlling interests in consolidating entities	321,031		—		321,031		—
Net income attributable to Company	$	18,441,559	$	10,435,182	$	50,889,607	$	51,497,120
Basic and diluted earnings per capital unit	$	0.61	$	0.34	$	1.67	$	1.69
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		30,411,500

The accompanying notes are an integral part of these condensed consolidated financial statements.

South Dakota Soybean Processors, LLC

Condensed Consolidated Statements of Changes in Members' Equity (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

	Class A Units			Noncontrolling		Total
	Units	Amount		Interests		Equity
Balances, December 31, 2021	30,419,000	$	113,414,905	$	—	$	113,414,905
Net income	—	51,497,120		—		51,497,120
Distribution to members	—	(17,338,830)		—		(17,338,830)
Liquidation of members' equity	(7,500)	(1,500)		—		(1,500)
Balances, September 30, 2022	30,411,500	$	147,571,695	$	—	$	147,571,695
Balances, December 31, 2022	30,411,500	$	163,538,676	$	—	$	163,538,676
Net income	—	50,889,607		321,031		51,210,638
Distribution to members	—	(36,493,800)		—		(36,493,800)
Issuance of new capital units in consolidated entities	—	—		85,101,000		85,101,000
Balances, September 30, 2023	30,411,500	$	177,934,483	$	85,422,031	$	263,356,514

The accompanying notes are an integral part of these condensed consolidated financial statements.

South Dakota Soybean Processors, LLC

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

	2023		2022
Operating activities
Net income	$	51,210,638	$	51,497,120
Charges and credits to net income not affecting cash:
Depreciation and amortization	4,312,771		2,767,194
Net (gain) loss recognized on derivative activities	(17,621,666)		(12,864,652)
Loss (gain) on sale of property and equipment	(59,486)		2,927
Non-cash patronage dividends	(32,313)		(145,749)
Change in current assets and liabilities	31,445,697		(59,254,520)
Net cash provided by (used for) operating activities	69,255,641		(17,997,680)
Investing activities
Increase in other assets	(240,250)		(96,250)
Proceeds from sales of property and equipment	147,718		5,900
Purchase of property and equipment	(52,829,189)		(3,293,497)
Net cash used for investing activities	(52,921,721)		(3,383,847)
Financing activities
Change in excess of outstanding checks over bank balances	(6,520,474)		(4,015,768)
Net proceeds (payments) from seasonal borrowings	590,668		48,666,976
Proceeds from issuance of capital units	85,101,000		—
Distributions to members	(36,493,800)		(17,338,830)
Proceeds from long-term debt	14,766,774		4,224,724
Principal payments on long-term debt	(12,216,118)		(5,127,197)
Net cash provided by financing activities	45,228,050		26,409,905
Net change in cash and cash equivalents	61,561,970		5,028,378
Cash and cash equivalents, beginning of period	866,699		833,738
Cash and cash equivalents, end of period	$	62,428,669	$	5,862,116
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	2,724,291	$	1,400,459
Income taxes	$	—	$	—
Noncash investing activities:
Soybean meal contributed as investment in related party	$	1,436,420	1,436,420

The accompanying notes are an integral part of these condensed consolidated financial statements.

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

Note 1 -         Principal Activity and Significant Accounting Policies

The unaudited condensed consolidated financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although South Dakota Soybean Processors, LLC (the “Company”, “LLC”, “we”, “our”, or “us”) believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full year due in part to the seasonal nature of some of the Company’s businesses. The balance sheet data as of December 31, 2022 has been derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 30, 2023.

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries, High Plains Partners, LLC, HPP SD Holdings, LLC, and High Plains Processing, LLC, after elimination of all material intercompany accounts, transactions, and profits.

Use of estimates

The preparation of 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 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 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 the sale of goods are accounted for as a fulfillment activity and are included in the cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Payments received in advance to the transfer of goods, or "contract liabilities", are included in "Deferred liabilities - current" on the Company's condensed consolidated balance sheets. These customer prepayments totaled $436,489 and $1,074,059 as of September 30, 2023 and December 31, 2022, respectively. Of the $1,074,059 balance as of December 31, 2022, the Company recognized $154,705 and $982,950 as revenues for the three and nine months ended September 30, 2023, respectively. Of the $1,347,409 customer prepayments as of December 31, 2021, the Company recognized $0 and $1,342,478 of contract liabilities as revenues during the three and nine months ended September 30, 2022, respectively.

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

The following table presents a disaggregation of revenue from contracts with customers for the three and nine-month periods ended September 30, 2023 and 2022, by product type:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Soybean meal and hulls	$	85,574,509	$	96,159,809	$	282,972,296	$	271,565,755
Soybean oil and oil byproducts	91,340,700		88,566,064		250,795,607		260,132,550
Totals	$	176,915,209	$	184,725,873	$	533,767,903	$	531,698,305

Recent accounting pronouncements

Any recent accounting pronouncements are not expected to have a material impact on our condensed financial statements.

Note 2 -         Accounts Receivable

Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms, which are generally 30 days from invoice date. Accounts considered uncollectible are written off. The Company’s estimate of the allowance for credit losses is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any.

The following table presents the aging analysis of trade receivables as of September 30, 2023 and December 31, 2022:

	September 30,<br>2023		December 31,<br>2022
Past due:
Less than 30 days past due	$	9,667,285	$	13,779,760
30-60 days past due	1,841,410		1,780,664
60-90 days past due	25,489		182,146
Greater than 90 days past due	210,841		45,830
Total past due	11,745,025		15,788,400
Current	39,219,723		27,729,354
Totals	$	50,964,748	$	43,517,754

The following table provides information regarding the Company's allowance for credit losses as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
Balances, beginning of period	$	—	$	—
Amounts charged (credited) to costs and expenses	—		(115,208)
Additions (deductions)	—		115,208
Balances, end of period	$	—	$	—

In general, cash received is applied to the oldest outstanding invoice first, unless payment is for a specified invoice. The Company, on a case-by-case basis, may charge a late fee of 1.5% per month on past-due receivables.

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

Note 3 -           Inventories

The Company’s inventories consist of the following on September 30, 2023 and December 31, 2022:

	September 30,<br>2023		December 31,<br>2022
Finished goods	$	36,817,686	$	62,619,087
Raw materials	54,868,178		71,001,459
Supplies & miscellaneous	648,564		625,608
Totals	$	92,334,428	$	134,246,154

Finished goods and raw materials are valued at estimated market value, which approximates net realizable value. Supplies and other inventories are stated at the lower of cost or net realizable value.

Note 4 -           Investments in Related Parties

The Company’s investments in related parties consist of the following on September 30, 2023 and December 31, 2022:

	September 30,<br>2023		December 31,<br>2022
High Plains Partners, LLC	$	—	$	2,376,180
Prairie AquaTech, LLC	1,553,727		1,553,727
Prairie AquaTech Investments, LLC	5,000,000		5,000,000
Prairie AquaTech Manufacturing, LLC	7,083,423		5,647,003
Totals	$	13,637,150	$	14,576,910

The Company measures its investments in Prairie AquaTech, LLC, Prairie AquaTech Investments, LLC, Prairie AquaTech Manufacturing, LLC and High Plains Partners, LLC at their cost less any impairment plus or minus any observable price changes in orderly transactions since these equity investments do not have readily determinable fair values.

The Company invested $1,436,420 and $1,436,420 of soybean meal in Prairie AquaTech Manufacturing, LLC for the nine months ended September 30, 2023 and 2022, respectively.

In February 2022, the Company announced its plans to construct a multi-seed processing plant near Mitchell, South Dakota. In September 2023, the Company entered into a capital contribution and commitment agreement with High Plains Partners, LLC. Per the agreement, the Company will transfer to High Plains Partners, LLC all rights, title and interest to all of the tangible and intangible development rights, including engineering, permitting, studies, records, etc., totaling $5.0 million in value in exchange for 2,615 Class B units in High Plains Partners, LLC. The Company also committed to investing up to another $106.3 million for 24,438 Class B capital units in the entity. As of September 30, 2023, the Company had contributed $19.0 towards the project. Operation of the facility is expected to begin in late 2025, subject to permitting and other contingencies.

Effective September 30, 2023, the Company began consolidating the accounts of High Plains Processing, LLC, HPP SD Holdings, LLC, and High Plains Partners, LLC, formerly unconsolidated entities, into its financial statements . The Company and other regional investors committed to investing a total of $192.0 million into High Plains Partners. In September 2023, High Plains Partners created a joint venture with another partner to create High Plains Processing, LLC, to build a new multi-seed crush facility near Mitchell, South Dakota. Construction of the facility is estimated to be completed in late 2025. The consolidation is due to the Company's entering into a management agreement with the new processing facility along with its ability to appoint a majority of the board members of each entity. The financial data for previous periods has not been restated to reflect the consolidation of the three entities. The consolidation is not material to the financial position or results of operations for the periods

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

presented and had no effect on previously reported net income. As of September 30, 2023, High Plains Partners, HPP SD Holdings, and High Plains Processing, LLC received a total of $85.1 million in proceeds from the issuance from capital units.

Note 5 -         Property and Equipment

The following is a summary of the Company's property and equipment at September 30, 2023 and December 31, 2022:

	2023						2022
	Cost		Accumulated Depreciation		Net		Net
Land	$	516,326	$	—	$	516,326	$	516,326
Land improvements	2,695,462		(1,191,468)		1,503,994		1,625,212
Buildings and improvements	26,388,310		(11,789,974)		14,598,336		15,001,754
Machinery and equipment	95,975,676		(55,392,530)		40,583,146		42,924,227
Railroad cars	10,679,356		(638,832)		10,040,524		10,200,714
Company vehicles	151,682		(137,977)		13,705		26,226
Furniture and fixtures	1,548,914		(939,078)		609,836		394,353
Construction in progress	54,527,219		—		54,527,219		3,871,157
Totals	$	192,482,945	$	(70,089,859)	$	122,393,086	$	74,559,969

Depreciation of property and equipment was $1,457,816 and $1,389,920 for the three months ended September 30, 2023 and 2022, respectively, and $4,309,110 and $4,154,674 for the nine months ended September 30, 2023 and 2022, respectively.

Note 6 -         Note Payable – Seasonal Loan

The Company has entered into a revolving credit agreement with CoBank which expires on October 1, 2024. 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 (7.55% on September 30, 2023). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were advances outstanding of $728,833 and $138,165 on September 30, 2023 and December 31, 2022, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were $84.3 million as of September 30, 2023.

Note 7 -         Long-Term Debt

The following is a summary of the Company's long-term debt on September 30, 2023 and December 31, 2022:

	September 30,<br>2023		December 31,<br>2022
Revolving term loan from CoBank, interest at variable rates (7.85% and 6.85% on September 30, 2023 and December 31, 2022, respectively), secured by substantially all property and equipment. The loan matures on March 20, 2026.	$	11,400,000	$	8,849,344
Note payable to CoBank, interest at variable rates (7.85% and 6.85% at September 30, 2023 and December 31, 2022, respectively), secured by substantially all property and equipment. Note matures March 20, 2028.	—		—
Less current maturities	(1,200,000)		—
Less debt issuance costs, net of amortization of $0 and $20,339 as of September 30, 2023 and December 31, 2022, respectively.	—		(3,661)
Total long-term debt	$	10,200,000	$	8,845,683

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

The Company entered into an agreement as of September 20, 2023, with CoBank to amend and restate its Credit Agreement, which includes the revolving term loan, note payable, and seasonal loan. Under the terms and conditions of the Credit Agreement, CoBank agreed to make advances to the Company for up to $12,000,000 on the revolving term loan with a variable effective interest rate of 7.85%. 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. The Company pays a 0.40% annual commitment fee on any funds not borrowed. The debt issuance costs of $24,000 paid by the Company were amortized over the term of the loan. The principal balance outstanding on the revolving term loan was $11,400,000 and $8,849,344 as of September 30, 2023 and December 31, 2022, respectively. There were no remaining commitments available to borrow on the revolving term loan as of September 30, 2023.

On September 20, 2023, the Company entered into note payable to CoBank to borrow up to $90,000,000 until August 1, 2024, the proceeds of which are to be used to finance the Company's investment in High Plains Partners, LLC. The Company will make semi-annual payments of $4,500,000 beginning October 20, 2024 until the note's maturity on March 20, 2028. The principal balance outstanding on the note payable was $— as of September 30, 2023 and December 31, 2022. There was $90.0 million available to borrow on the note payable as of September 30, 2023.

Under this agreement, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios. The Company was in compliance with all covenants and conditions with CoBank as of September 30, 2023.

The following are minimum principal payments on long-term debt obligations for the twelve-month periods ending September 30:

2024	$	1,200,000
2025	1,200,000
2026	1,200,000
2027	1,200,000
2028	6,600,000
Total	$	11,400,000

Note 8 -        Operating Leases

The Company has several operating leases for railcars. These leases have terms ranging from 3-12 years and most do not have renewal terms provided. The leases require the Company to maintain the condition of the railcars, restrict the use of the railcars to specified products, such as soybean meal, hulls or oil, limit usage to the continental United States, Canada or Mexico, require approval to sublease to other entities and require the Company's submission of its financial statements. Lease expense for all railcars was $1,145,549 and $755,494 for the three months ended September 30, 2023 and 2022, respectively, and $3,176,709 and $2,101,770 for the nine months ended September 30, 2023 and 2022, respectively.

The following is a schedule of the Company's operating leases for railcars as of September 30, 2023:

Lessor	Quantity of<br>Railcars	Commencement<br>Date	Maturity<br>Date	Monthly<br>Payment
American Railcar Leasing	13	6/1/2021	5/31/2024	$	7,150
Andersons Railcar Leasing Co.	20	7/1/2019	6/30/2026	11,300
Andersons Railcar Leasing Co.	15	11/1/2021	10/31/2026	8,250
Farm Credit Leasing	87	9/1/2020	8/31/2032	34,929
Farm Credit Leasing	8	6/1/2021	5/31/2033	5,966
Farm Credit Leasing	9	10/1/2021	9/30/2033	4,624

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

Lessor	Quantity of<br>Railcars	Commencement<br>Date	Maturity<br>Date	Monthly<br>Payment
Farm Credit Leasing	23	7/1/2022	6/30/2034	13,863
Farm Credit Leasing	30	8/1/2022	7/31/2034	30,422
Farm Credit Leasing	20	10/1/2022	9/30/2034	21,668
Farm Credit Leasing	100	4/1/2023	3/31/2035	81,466
GATX Corporation	14	7/1/2020	6/30/2024	4,200
Trinity Capital	29	11/1/2020	10/31/2023	17,255
Trinity Capital	20	11/1/2020	10/31/2023	11,900
Trinity Capital	2	6/1/2021	5/31/2026	980
Wells Fargo Rail	109	3/1/2022	2/28/2027	51,775
Wells Fargo Rail	7	5/1/2022	4/30/2027	2,765
Wells Fargo Rail	15	5/1/2022	4/30/2027	5,925
Wells Fargo Rail	105	1/1/2023	12/31/2029	49,875
	626			$	364,313

The Company also has a number of other operating leases for machinery and equipment. These leases have terms ranging from 3-7 years; however, most of these leases have automatic renewal terms. These leases require monthly payments of $3,824. Lease expense under these other operating leases was $13,263 and $9,446 for the three months ended September 30, 2023 and 2022, respectively, and $37,451 and $70,521 for the nine-month periods ended September 30, 2023 and 2022, respectively.

On March 19, 2020, the Company entered into an agreement with an entity in the western United States to provide storage and handling services for the Company's soybean meal. The Company paid the entity $3,300,000 after the entity's construction of additional storage and handling facilities. The agreement began on May 1, 2021 and will mature on April 30, 2027 but includes an additional seven-year renewal period at the sole discretion of the Company. Lease expense under this agreement was $58,929 and $58,929 for the three months ended September 30, 2023 and 2022, respectively, and $176,786 and $176,796 for the nine months ended September 30, 2023 and 2022, respectively.

Operating leases are included in right-to-use lease assets, current operating lease liabilities, and long-term lease liabilities on the Company's condensed 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 condensed balance sheet.

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 condensed statements of operations for the three and nine-month periods ended September 30, 2023 and 2022 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenues - Freight and rail	$	1,145,549	$	755,494	$	3,176,709	$	2,101,770
Cost of revenues - Production	67,735		62,411		201,528		230,155
Administration expenses	4,457		5,964		12,709		17,162
Total operating lease costs	$	1,217,741	$	823,869	$	3,390,946	$	2,349,087

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

The following summarizes the supplemental cash flow information for the three and nine-month periods ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	1,024,713	$	667,523	$	3,100,471	$	1,948,114
Supplemental non-cash information:
Right-of-use assets obtained in exchange for lease liabilities	$	41,523	$	3,511,694	$	8,956,408	$	8,440,866

The following summarizes the weighted-average remaining lease term and weighted-average discount rate as of September 30, 2023:

Weighted-average remaining lease-term - operating leases (in years)	9.5
Weighted-average discount rate - operating leases	4.2	%

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of September 30, 2023:

	Railcars		Other		Total
Twelve-month periods ended September 30:
2024	$	4,009,844	$	45,675	$	4,055,519
2025	3,885,689		29,800		3,915,489
2026	3,847,869		22,796		3,870,665
2027	3,241,704		19,910		3,261,614
2028	2,913,749		9,209		2,922,958
Thereafter	14,001,813		—		14,001,813
Total lease payments	31,900,668		127,390		32,028,058
Less amount of lease payments representing interest	(5,617,760)		(11,846)		(5,629,606)
Total present value of lease payments	$	26,282,908	$	115,544	$	26,398,452

Note 9 -        Member Distribution

On January 31, 2023, the Company’s Board of Managers approved a cash distribution of approximately $36.5 million, or $1.20 per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy on February 2, 2023.

Note 10 -         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, hedging instruments. These contracts are recorded on the Company’s condensed balance sheets at fair value as discussed in Note 11, Fair Value.

As of September 30, 2023 and December 31, 2022, the value of the Company’s open futures, options and forward contracts was $(209,692) and $(9,059,941), respectively.

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

		As of September 30, 2023
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets/Liabilities	$	10,135,021	$	10,239,346
Foreign exchange contracts	Current Assets/Liabilities	91,905		156,936
Interest rate caps and floors	Current Assets/Liabilities	18,478		58,814
Totals		$	10,245,404	$	10,455,096				As of December 31, 2022
---	---	---	---	---	---
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets/Liabilities	$	9,716,111	$	19,820,839
Foreign exchange contracts	Current Assets/Liabilities	77,983		53,267
Interest rate caps and floors	Current Assets/Liabilities	1,156,737		136,666
Totals		$	10,950,831	$	20,010,772

During the three and nine-month periods ended September 30, 2023 and 2022, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed statements of operations as follows:

	Net Gain (Loss) Recognized <br>on Derivative Activities for the				Net Gain (Loss) Recognized <br>on Derivative Activities for the
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Derivatives not designated as hedging instruments:
Commodity contracts	$	6,839,239	$	5,265,221	$	16,891,008	$	12,094,077
Foreign exchange contracts	(35,696)		(21,642)		877,402		(363,180)
Interest rate swaps, caps and floors	21,553		348,001		(146,744)		1,133,755
Totals	$	6,825,096	$	5,591,580	$	17,621,666	$	12,864,652

The Company recorded gains (losses) in cost of goods sold related to its commodity derivative instruments of $6,825,096 and $5,591,580 for the three months ended September 30, 2023 and 2022, respectively, and $17,621,666 and $12,864,652 for the nine-month periods ended September 30, 2023 and 2022, respectively.

Note 11 -       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”).

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

•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.

•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 condensed balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of September 30, 2023 and December 31, 2022:

	Fair Value as of September 30, 2023
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	—	$	91,240,342	$	—	$	91,240,342
Commodity derivative instruments	$	(209,692)	$	—	$	—	$	(209,692)
Margin deposits (deficits)	$	3,499,900	$	—	$	—	$	3,499,900			Fair Value as of December 31, 2022
---	---	---	---	---	---	---	---	---
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	—	$	133,543,821	$	—	$	133,543,821
Commodity derivative instruments	$	(9,059,941)	$	—	$	—	$	(9,059,941)
Margin deposits	$	5,603,930	$	—	$	—	$	5,603,930

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 futures contracts listed on the CBOT and adjusts for the local market adjustments derived from other grain terminals in our area.

The Company considers the carrying amount of significant classes of financial instruments on the 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 balance sheet at the original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.

Note 12 -       Related Party Transactions

The Company has equity investments in Prairie AquaTech, LLC, Prairie AquaTech Manufacturing, LLC and Prairie AquaTech Investments, LLC. The Company sold soybean products to Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC totaling $2,914,118 and $4,976,885 for the three months ended September 30, 2023 and 2022, respectively, and $8,146,985 and $13,126,037 during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 and December 31, 2022, Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC owed the Company $1,133,759 and $1,433,551, respectively.

South Dakota Soybean Processors, LLC

Notes to Condensed Consolidated Financial Statements

Note 13 -       Commitments and Contingencies

As of September 30, 2023, the Company had unpaid commitments of approximately $115,000,000 for construction and acquisition of property and equipment, all of which are expected to be incurred by March 31, 2024.

The Company has entered into an agreement with High Plains Partners, LLC to commit up to $111.3 million into High Plains Partners to facilitate the construction of a multi-seed processing facility near Mitchell, South Dakota.

From time to time in the ordinary course of our business, the Company may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. The Company carries insurance that provides protection against general commercial liability claims, claims against our directors, officers and employees, business interruption, automobile liability, and workers' compensation. The Company is not currently involved in any material legal proceedings and is not aware of any potential claims.

Note 14 -       Subsequent Event

The Company evaluated all of its activities and concluded that no subsequent events have occurred that would require recognition in its financial statements or disclosed in the notes to its financial statements.

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

Forward-Looking Statements

The information in this quarterly report on Form 10-Q for the nine-month period ended September 30, 2023, (including reports filed with the Securities and Exchange Commission (the “SEC” or “Commission”), contains “forward-looking statements” that deal with future results, expectations, plans and performance, and should be read in conjunction with the financial statements and Annual Report on Form 10-K for the year ended December 31, 2022. Forward-looking statements may include statements which use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “predict,” “hope,” “will,” “should,” “could,” “may,” “future,” “potential,” or the negatives of these words, and all similar expressions. Forward-looking statements involve numerous assumptions, risks and uncertainties. Actual results or actual business or other conditions may differ materially from those contemplated by any forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements are identified in our Form 10-K for the year ended December 31, 2022.

We are not under any duty to update the forward-looking statements contained in this report, nor do we guarantee future results or performance or what future business conditions will be like. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report.

Executive Overview and Summary

During the nine months ending on September 30, 2023, we reported a net income of $50.9 million, compared to $51.5 million during the same period in 2022. During the third quarter, we transitioned from managing a tight soybean supply to one of abundant supply. During July and August of this year, we faced a shortage of soybean supply due to lower-than-average production in the state during the 2022 growing season. As a result, our soybean procurement costs were significantly higher than historical averages. The crop matured earlier than expected due to extreme heat in late August and early September. This resulted in an early harvest and allowed us to transition to more favorable new crop basis levels, which significantly improved processing margins. The tight supply of soybeans in the summer months also affected the meal markets during the third quarter, causing the meal basis to trade at high levels. However, as new crops of soybeans became available during the harvest and new processing capacities came online, the basis levels for meal weakened. Soybean oil markets experienced high volatility during the third quarter. While demand from renewable diesel producers was sporadic, we took advantage of profitable sales opportunities.

Looking ahead, we believe that soybean production in South Dakota has returned to average levels historically, which should enable us to procure soybeans at historical average costs. Profit margins during the fourth quarter of 2023 should be a good, considering that most of our expected production has already been sold. However, profit margins in 2024 could decline compared to previous years, because new production capacity in the U.S. is expected be available. Additionally, soybean processing in Argentina is expected to rebound, which could further affect our margins.

Our new crush facility project, near Mitchell, South Dakota, continues to progress well. During the third quarter of 2023, we closed on the project's financing with our financial partners and lender, held a groundbreaking ceremony, and initiated construction activities at the site. The project is currently on track with its construction schedule with an estimated completion date during the fourth quarter of 2025.

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2023 and 2022

	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022
		% of Revenue		% of Revenue
Revenue		100.0		100.0
Cost of revenues	(156,834,692)	(88.6)	(172,733,989)	(93.5)
Gross profit	20,080,517	11.4	11,991,884	6.5
Operating expenses	(1,520,090)	(0.9)	(1,249,945)	(0.7)
Interest expense	(727,968)	(0.4)	(638,690)	(0.3)
Other non-operating income (expense)	930,131	0.5	331,933	0.2
Net income	18,762,590	10.6	10,435,182	5.6
Net income attributable to non-controlling interests in consolidated entities	321,031	0.2	—	—
Net income attributable to Company		10.4		5.6

All values are in US Dollars.

Revenue – Our revenue during the three-month period ending on September 30, 2023 decreased by $7.8 million, or 4.2%, as compared to the same period in 2022. Revenue declined primarily due to a decrease in the average sales price of soybean oil and meal. During the three months ended September 30, 2023, the average price of soybean oil decreased by 23%, compared to the same period in 2022. Oil prices were affected by reduced demand following a delay in start-up and production issues by several renewable diesel plants in 2023. Similarly, the average sales price of soybean meal decreased by 5% during the three months ended September 30, 2023, compared to the same period in 2022, largely in anticipation of increased soybean meal production caused by improved crop conditions and an early harvest. The decrease in revenue was offset, in part, by a 17% increase in the sales volume of soybean oil based on our ability to leverage some sales opportunities.

Gross Profit/Loss – Gross profit increased $8.1 million, or 67.5%, for the three months ended September 30, 2023, compared to the same period in 2022. Gross profits improved primarily due to soybean shortages, an increase in board crush margins and improved growing conditions.

Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, increased approximately $270,000, or 21.6%, during the three-month period ended September 30, 2023, compared to the same period in 2022. The increase was primarily due to an increase in labor costs.

Interest Expense – Interest expense increased $89,000, or 14.0%, during the three months ended September 30, 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 September 30, 2023, the interest rate on our revolving long-term loan was 7.85%, compared to 5.54% as of September 30, 2022. Partially offsetting the increase in interest rates, the average debt level decreased from $58.0 million during the three-month period ended September 30, 2022 to $36.5 million for the same period in 2023, mainly due to decreased inventory levels.

Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, increased $598,000 during the three-month period ended September 30, 2023, compared to the same period in 2022. The increase in other non-operating income was due to an $873,000 increase in interest income which we received from the deposit of proceeds received by a subsidiary in connection with its equity financing.

Net Income/Loss – During the three-month period ended September 30, 2023, we generated a net income of $18.4 million, compared to $10.4 million for the same period in 2022. The $8.0 million increase was primarily attributable to increases in gross profit and interest income.

Comparison of the nine months ended September 30, 2023 and 2022

	Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022
		% of Revenue		% of Revenue
Revenue		100.0		100.0
Cost of revenues	(476,890,661)	(89.3)	(476,328,311)	(89.6)
Gross profit	56,877,242	10.7	55,369,994	10.4
Operating expenses	(4,508,549)	(0.8)	(4,124,844)	(0.8)
Interest expense	(2,705,266)	(0.5)	(1,574,020)	(0.3)
Other non-operating income (expense)	1,547,211	0.3	1,825,990	0.3
Net income	51,210,638	9.6	51497120	9.7
Net income attributable to non-controlling interests in consolidated entities	321,031	0.1	—	—
Net income attributable to Company		9.5		9.7

All values are in US Dollars.

Revenue – Revenue increased by $2.1 million, or 0.4%, for the nine-month period ended September 30, 2023, compared to the same period in 2022. The average sales price of soybean meal increased 5% during the nine months ended September 30, 2023, compared to the same period in 2022, primarily due to 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 meal to the U.S. as a source. This shift allowed producers, like us, to benefit from increased export opportunities.

Gross Profit/Loss – Gross profit increased by $1.5 million, or 2.7%, for the nine months ended September 30, 2023, compared to the same period in 2022. The increase in gross profit was mainly due to improved board crush margins and improved growing conditions.

Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, increased approximately $384,000, or 9.3%, during the nine-month period ended September 30, 2023, compared to the same period in 2022. The increase was primarily due to a decrease in the recovery of accounts receivable previously determined to be uncollectible and an increase in labor costs. During the nine months ended September 30, 2023, we received payments of $115,000 in connection with previously written-off accounts receivable, compared to $0 during the same period in 2023.

Interest Expense – Interest expense increased by $1.1 million, or 71.9%, during the nine months ended September 30, 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 September 30, 2023, the interest rate on our revolving long-term loan was 7.85%, compared to 5.54% as of September 30, 2022. Partially offsetting the increase in interest rates was a $11.1 million decrease in borrowings from our lines of credit. The average debt level was $51.0 million during the nine months ended September 30, 2023, compared to $62.1 million during the same period in 2022. The decrease is mainly due to decreased inventory quantities and lower commodity prices.

Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, decreased $279,000 during the nine-month period ended September 30, 2023, compared to the same period in 2022. The decrease in other non-operating income was due to a $1.3 million change in gains (losses) on our interest rate hedge instruments. During the nine-month period ended September 30, 2023, losses on interest rate hedges totaled $0.1 million, compared to a $1.1 million gain during the same period in 2022. Partially offsetting the decrease by interest rate hedges was a $0.9 million increase in interest income which we received from the deposit of investment proceeds received by a subsidiary in connection with its equity financing.

Net Income/Loss – During the nine-month period ended September 30, 2023, we generated a net income of $50.9 million, compared to $51.5 million for the same period in 2022. The $0.6 million decrease was primarily attributable to increased operating and interest costs and decrease in other non-operating income.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash provided by operations and borrowings under our two revolving lines of credit which are discussed below under “Indebtedness.” On September 30, 2023, we had working capital, defined as current assets less current liabilities, of approximately $129.9 million, compared to $63.8 million on September 30, 2022. Working capital increased between periods primarily due to investment proceeds raised by one of our consolidated subsidiaries, High Plains Partners, LLC, in connection with its equity financing, the proceeds of which were contributed to our new crush facility project near Mitchell, South Dakota. We hold a majority interest in High Plains Partners, having agreed to contribute to High Plain Partners cash, property and various construction and development rights, which were subsequently contributed to and then through a holding company, HPP SD Holdings, LLC, to High Plains Processing, LLC, the owner and operator of the crush facility. High Plains Partners holds a majority interest in HPP SD Holdings, whose only asset is High Plains Processing.

Comparison of the Nine Months Ended September 30, 2023 and 2022

	2023		2022
Net cash provided by (used for) operating activities	$	69,255,641	$	(17,997,680)
Net cash provided by (used for) investing activities	(52,921,721)		(3,383,847)
Net cash provided by (used for) financing activities	45,228,050		26,409,905

Cash Flows Provided By (Used For) Operations

The $87.3 million change in cash flows used for operating activities was largely due to a $93.0 million change in inventory and an $8.5 million change in margin deposits. During the nine-month period ended September 30, 2023, our inventories decreased by $41.9 million, compared to a $51.1 million increase during the same period in 2022. During the nine months ended September 30, 2023, margin deposits decreased by $2.1 million, compared to a $6.4 million increase in 2022. Partially offsetting changes in inventory and margin deposits, was a $13.7 million change in accrued commodity purchases. Accrued commodity purchases decreased by $13.4 million during the nine-month period ended September 30, 2023, compared to $0.3 million increase during the same period in 2022.

Cash Flows Used For Investing Activities

The $49.5 million increase in cash flows used for investing activities during the nine-month period ended September 30, 2023, compared to the same period in 2022, was due to a $49.5 million increase in expenditures for purchases of various property and equipment that we made for the construction and development of the new crush facility near Mitchell, which were subsequently contributed to High Plains Partners and High Plains Processing. During the nine months ended September 30, 2023, we spent $52.8 million on our purchases of property and equipment, compared to $3.3 million during the same period in 2022.

Cash Flows Provided By Financing Activities

The $18.8 million increase in cash flows provided by financing activities was principally due to the receipt of $85.1 million in investment proceeds received by our subsidiaries, High Plains Partners and HPP SD Holdings, in connection with their equity financing, which subsequently was contributed to High Plains Processing for the construction and development of the new crush facility. Partially offsetting the increase is a $44.6 million decrease in net proceeds on borrowings and a $19.2 million increase in cash distributions to our members during the nine-month period ended September 30, 2023, compared to the same period in 2022. During the nine months ended September 30, 2023, net proceeds on borrowings increased by $3.2 million, compared to $47.8 million during the same period in 2022.

Indebtedness

We have three lines of credit 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 $12.0 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 $0.6 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 $11.4 million and $8.8 million as of September 30, 2023 and December 31, 2022, respectively. Under this loan, there were no additional funds available to borrow as of September 30, 2023.

The second credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. The maximum we may borrow under this line is $85.0 million until the loan's maturity on October 1, 2024. 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 September 30, 2023 and December 31, 2022, the principal balance outstanding on this credit line was $0.7 million and $0.1 million, respectively, allowing us to borrow an additional $84.3 million as of September 30, 2023.

The third line of credit is a multiple advance note payable. The primary purpose of this note is to finance our investment in High Plains Partners and other larger capital projects. We have an agreement with High Plains Partners to commit up to $111.3 million in cash, property and development rights to High Plains Partners to facilitate the construction and development of the new crush facility near Mitchell. The maximum we may borrow under this note is $90.0 million. Under this loan, principal payments of $4.5 million are made every six months which begin on October 20, 2024 and end on the date of maturity, March 20, 2024, at which time a balloon payment is due for the remaining balance. The principal balance outstanding on this note was $0 as of September 30, 2023 and December 31, 2022. Under this note, there were $90.0 million of funds available to borrow as of September 30, 2023.

The revolving, seasonal and multiple advance 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 7.85% and 6.85% as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023 and December 31, 2022, the interest rate on the seasonal loan was 7.55% and 6.55%, respectively. We were in compliance with all covenants and conditions under the loans as of September 30, 2023.

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<br>5 years
Long-Term Debt Obligations (1)	$	14,144,000	$	2,037,000	$	3,729,000	$	8,378,000	$	—
Operating Lease Obligations	32,028,000		4,055,000		7,786,000		6,185,000		14,002,000
Totals	$	46,172,000	$	6,092,000	$	11,515,000	$	14,563,000	$	14,002,000

(1)    Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of our Financial Statements under Part I, Item 1, for a discussion on the impact, if any, of the recently pronounced accounting standards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies and estimates from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 3.    Quantitative and Qualitative Disclosures 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 future operating results or liquidity. Hedging arrangements do not protect against the 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 trigger 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 September 30, 2023, we had $0 in fixed-rate debt outstanding and $186.4 million of variable-rate lines of credit. Interest rate changes impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other variables remain constant, a 1.0% increase in interest rates on our variable-rate debt could have an estimated impact on profitability of approximately $1.9 million per year.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) 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.

Changes in Internal Control Over Financial Reporting. There were no changes to our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting during the quarter ended September 30, 2023.

Item 1.    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, officer and employees, business interruption, automobile liability, and workers' compensation. We are not currently involved in any material legal proceedings and are not aware of any potential claims.

Item 1A. Risk Factors.

During the quarter ended September 30, 2023, there were no material changes to the Risk Factors disclosed in Item 1A (Part I) of our 2022 Annual Report on Form 10-K.

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

None.

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.    Mine Safety Disclosures.

None.

Item 5.    Other Information.

Insider Adoption or Termination of Trading Arrangements

During the three months ended September 30, 2023, none of our managers or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K..

Item 6.    Exhibits.

Exhibit<br>Number	Description
3.1(i)	Articles of Organization (1)
3.1(ii)	Operating Agreement, as amended (2)
3.1(iii)	Articles of Amendment to Articles of Organization (3)
4.1	Form of Class A Unit Certificate (4)
10.1	Capital Commitment and Contribution Agreement, dated September 21, 2022
10.2	SDSP Parent Guarantee, dated September 7, 2023
31.1	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer
32.1	Section 1350 Certification by Chief Executive Officer
32.2	Section 1350 Certification by Chief Financial Officer

____________________________________________________________________________

(1) Incorporated by reference from Appendix B to the information statement/prospectus filed as a part of the issuer’s Registration Statement on Form S-4 (File No. 333-75804).

(2) Incorporated by reference from the same numbered exhibit to the issuer’s Form 8-K filed on June 21, 2022.

(3) Incorporated by reference from the same numbered exhibit to the issuer’s Form 10-Q filed on August 14, 2002.

(4) Incorporated by reference from the same numbered exhibit to the issuer’s Registration Statement on Form S-4 (File No. 333-75804).

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Dated:	November 14, 2023	By	/s/ Thomas Kersting
			Thomas Kersting, Chief Executive Officer
			(Principal Executive Officer)
Dated:	November 14, 2023	By	/s/ Mark Hyde
			Mark Hyde, Chief Financial Officer
			(Principal Financial Officer)

26

Document

Exhibit 10.1

CAPITAL CONTRIBUTION AND COMMITMENT AGREEMENT

This Capital Contribution and Commitment Agreement is made and entered into effective this 21st day of September, 2022 (the “Effective Date”) by and between South Dakota Soybean Processors, LLC, a South Dakota limited liability company, located at 100 Caspian Ave., Volga, SD 57071 (“SDSP”) and High Plains Partners, LLC, a South Dakota limited liability company, located at 100 Caspian Ave., Volga, SD 57071 (“HPP”).

RECITALS

A.SDSP desires to develop an oilseed processing facility to be located near Mitchell, South Dakota (the “Project”);

B.SDSP has conducted and paid for various development work including, but not limited to entering certain contracts and arrangements, received proposals, obtained permits and approvals, performed services and analyses and other necessary work for the development of the Project;

C.HPP has been formed as a special purpose entity through which SDSP will capitalize, further develop, and ultimately hold an equity interest in the Project;

D.SDSP desire to transfer to HPP and HPP desires to accept and assume from SDSP all of the development work, contracts and other assets related to the Project to date in exchange for an equity interest in HPP;

E.SDSP desire to help complete the development of the Project by committing to make a capital contribution in the form of cash and other consideration in exchange for an equity interest in HPP.

NOW, THEREFORE, in consideration of the mutual promises and conditions hereinafter set forth in this Agreement, SDSP and HPP hereby agree as follows:

1.Capital Contribution of Property.

a.Transfer. SDSP will transfer, assign and deliver to HPP all of SDSP’s right, title and interest in and to all of the tangible and intangible development rights held by SDSP including, without limitation, (i) all rights under the contracts and arrangements listed on Exhibit A (the “Contracts”); (ii) all permitting, tests, studies, plans, materials, books and records, administrative services, and costs and expenses whether incurred or paid related to the Project including those listed on Exhibit B (the “Pre-Development Work”); and (iii) know-how, expertise, and trade secrets necessary or useful for the development, construction and operation of the Project (the “Intellectual Property”) (the Contracts, Pre-Development Work and Intellectual Property, collectively, the “Property”).

b.Assumption of Liabilities. HPP will assume all of SDSP’s obligations under the Property.

2.Additional Capital Contribution.

a.Commitment. SDSP agrees to make an additional capital contribution in the form of cash and other consideration to HPP for an amount not less than Seventy Million and No/Dollars ($70.0 Million) (the “Capital Commitment”).

b.Payment and Funding.

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i.First Contribution. HPP will deliver to SDSP a written notice (the “Contribution Notice”) setting forth: (A) the capital contribution amount required to be contributed by SDSP to HPP, which will not be less than Thirty Five Million and No/Dollars ($35.0 Million), or other amount agreed by the parties (the “First Funding Contribution”); (B) the date by which the First Funding Contribution is to be funded (which date will be no earlier than 10 days after delivery of the Contribution Notice (such date, the “First Funding Date”); and (C) the depositary institution and account of HPP into which the First Funding Contribution is to be made.

ii.Second Contribution HPP will deliver to SDSP a written notice (the “Contribution Notice”) setting forth (A) the capital contribution amount required to be contributed by SDSP to HPP, which will not be less than Thirty Five Million and No/Dollars ($35.0 Million), or other amount agreement by the parties (the “Second Funding Contribution”); (B) the date by which the Second Funding Contribution is to be funded (which date will be no earlier than 10 days after delivery of the Contribution Notice (such date, the “Second Funding Date”); and (C) the depositary institution and account of HPP into which the Second Funding Contribution is to be made.

3.Additional Contributions. To the extent the parties mutually agree for SDSP to make capital contributions to HPP of property or cash in excess of Seventy Five Million and No/Dollars ($75.0 Million) (“Additional Contributions”), the actual amount in Additional Contributions and funding dates of such Additional Contributions (“Additional Funding Dates”) will be determined by mutually agreement of the parties.

4.Consideration for Property and Capital Commitment. In consideration for SDSP’s capital contribution to HPP of the Property and the Capital Commitment:

a.HPP, in consideration of the Property contributed by SDSP, will issue to SDSP a total of Two Thousand Six Hundred Fifteen (2,615) Class B Capital Units (the “Units”) at a price of $1,912 per Unit.

b.HPP, in consideration of the First Funding Contribution, will issue to SDSP on the First Funding Date one (1) Unit for each Three Thousand Four Hundred Forty Two Dollars and No/Cents ($3,442.00) of the First Funding Contribution amount.

c.HPP, in consideration of the Second Funding Contribution, will issue to SDSP on the Second Funding Date one (1) Unit for each Five Thousand Dollars and No/Cents ($5,000.00) of the Second Funding Contribution amount.

d.To the extent Additional Contributions are agreed to and made by SDSP to HPP, the number of Units issued to SDSP will be determined by the mutual agreement of the parties.

5.Closing.

a.Contribution of Property. The closing of the Property will occur on the Effective Date.

b.Capital Commitment. The closing of the Capital Commitment will occur on the First Funding Date, Second Funding Date, and any Additional Funding Dates, whatever the case may be.

6.SDSP Closing Documents.

a.At closing on the Property, SDSP will deliver to HPP the following:

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

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i.A properly executed Assignment and Assumption Agreement conveying to HPP all of SDSP’s interest in the Contracts and, if applicable, Pre-Development Work.

ii.The necessary consent of any third parties which are parties to the Contracts and the transfers of Contracts and, if necessary, Pre-Development Work;

iii.The Pre-Development Work and Intellectual Property;

iv.A properly executed counterpart signature page to HPP’s operating agreement; and

v.Any and all other documents consistent with this Agreement, reasonably requested by HPP.

b.At closing on the Capital Commitment, SDSP will deliver to HPP the following:

i.The First Funding Contribution on the First Funding Date;

ii.The Second Funding Contribution on the Second Funding Date;

iii.The Additional Contributions on the Additional Funding Dates; and

iv.Any and all other documents consistent with this Agreement and reasonably requested by HPP.

7.HPP Closing Documents. At closing, HPP will deliver to SDSP, the following:

a.At closing of the Property, HPP will deliver to SDSP the following:

i.Evidence satisfactory to SDSP of the issuance to SDSP of 2,615 Units.

ii.A properly executed Assignment and Assumption Agreement of HPP accepting all SDSP’s interest in the Contracts and, if necessary, Pre-Development Work;

iii.A properly executed counterpart signature page to HPP’s operating agreement; and

iv.Any other documents consistent with this Agreement and reasonably requested by SDSP.

b.At closing of each Capital Commitment, HPP will deliver to SDSP the following:

i.Evidence satisfactory to SDSP of the issuance to SDSP of the appropriate number of Units in consideration of the First Funding Contribution, Second Funding Contribution and Additional Contributions;

ii.A properly updated Member Ledger/Register of HPP recording the issuance of additional Units from the First Funding Contribution, Second Funding Contribution and Additional Contributions; and

iii.Any other documents consistent with this Agreement and reasonably requested by SDSP.

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

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8.Representations and Warranties of SDSP. SDSP makes the following representations and warranties to HPP:

a.SDSP has full power and authority to execute and deliver this Agreement and to perform their obligations under this Agreement. This Agreement constitutes the valid and legally binding obligation of SDSP, enforceable in accordance with its terms and conditions.

b.The execution, delivery and performance of this Agreement by SDSP will not (i) violate any law, regulation, rule, judgment, order, ruling, or other restriction to which SDSP is subject, or any provision of its articles of organization, operating agreement or other governing documents, or (ii) conflict with, result in a breach of, or constitute a default under any of the Contract.

c.Exhibits A and B correctly and completely lists all of the material Contracts and Pre-Development Work relating to or in connection with the Project as of the Effective Date. The Contracts are legal, valid, binding, enforceable, and in full force and effect.

d.SDSP is the sole and exclusive owner of the Property and has good and marketable title to, or a valid leasehold interest in the Property. The Property to the applicable is free and clear of all security interests, liens and encumbrances. There are no outstanding judgments, orders, decrees, awards, stipulations or injunctions against or affecting SDSP or the Property and to SDSP’s knowledge, no legal proceedings pending or threatened against or affecting SDSP or the Property.

e.SDSP has carefully reviewed HPP’s operating agreement and understands that its equity interest in HPP will be governed by the terms of the operating agreement, and agrees to be bound thereto.

f.SDSP has been actively involved in the formation and organization of HPP and has had access to and is familiar with all financial and other information regarding HPP.

g.SDSP understands the high risk of its ownership of the Units and the financial hazard involved, including the risk of loss of its entire investment and the lack of liquidity of the Units.

h.SDSP understand that the transfer of the Units is restricted by HPP’s operating agreement and by federal and state securities law, that there will be no public market for the Units, and that it may not be possible to sell or dispose of the Units.

i.SDSP, through its authorized officers, has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of its ownership of the Units.

j.SDSP intend to acquire the Units for their own account, for investment purposes, and not with a view to, or for, resale in connection with any distribution thereof.

9.Representations and Warranties of HPP. HPP hereby makes the following representations and warranties to SDSP:

a.HPP is duly organized, and validly existing under the laws of the state of South Dakota.

b.HPP has full power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement. Without limiting the generality of the foregoing,

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

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HPP’s board of managers has duly authorized the execution, delivery and performance of this Agreement by HPP. This Agreement constitutes the valid and legally binding obligation of HPP, enforceable in accordance with its terms and conditions.

c.The execution, delivery and performance of this Agreement by HPP will not (i) violate any law, regulation, rule, judgment, order, ruling, or other restriction to which HPP is subject, or any provision of its articles of organization or operating agreement, or (ii) conflict with, result in a breach of, or constitute a default under any contract to which HPP is a party.

d.The Units will be duly authorized, validly issued and outstanding, fully paid, non-assessable and free and clear of all pledges, liens, encumbrances and restrictions imposed by HPP other than those restrictions imposed by HPP’s operating agreement and applicable law.

10.Miscellaneous.

a.Notices. Any notice under this Agreement must be given in writing to the party for whom it is intended in person, by certified mail at the addresses set forth in the first paragraph of this Agreement, or last known email address.

b.Entire Agreement. This Agreement and the Exhibits attached to this Agreement comprise the entire Agreement between HPP and SDSP and any amendment, extension, modification or supplement to this Agreement or to the Exhibits to this Agreement must be in writing only, signed by HPP and SDSP.

c.Severability. In the event that any term, condition, or provision of this Agreement is held to be invalid by any court of competent jurisdiction, such holding or Partners will not invalidate or make unenforceable any other term, condition or provision of this Agreement. The remaining terms, conditions and provisions will be fully severable, and the remaining terms, conditions and provisions will be construed and enforced as if such term, condition or provision held invalid had never been inserted in this Agreement initially.

d.Text to Control. All references to Sections and Exhibits refer to Sections and Exhibits of this Agreement. The headings of Sections are included solely for convenience. If a conflict exists between any heading and the text of this Agreement, the text will control.

e.Governing Law. This Agreement will be construed, performed, and enforced in accordance with, and governed by, the internal laws of the State of South Dakota without giving effect to the principles of conflict of laws thereof.

f.Assignment and Succession. This Agreement will bind and inure to the benefit of the successors and assigns of the respective parties. This Agreement may not be assigned by either party without the consent of the other party; provided, however, either party may assign this Agreement to an affiliate of either party without the consent of the other party.

g.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together will constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart.

[Signature page on following page]

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

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IN WITNESS WHEREOF, HPP and SDSP have executed this Agreement as of the date and year first above written.

SDSP: SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
By:	/s/ Thomas J. Kersting
		Thomas J. Kersting
HPP: HIGH PLAINS PARTNERS, LLC
By:	/s/ Mark Hyde
		Mark Hyde

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

Signature Page

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CONTRACTS

1.Master Services Agreement - KFI Engineers

2.Engagement Letter Agreement - A1 Development Solutions

3.Agreement for Professional Services - Short Elliot Hendrickson, Inc.

4.Master Services Agreement - Stantec Consulting Services, Inc.

5.Option to Purchase Real Estate - Neal R. Johnson Revocable Trust

6.Master Services Agreement - Civil Design, Inc.

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

Exhibit A -Contracts

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EXHIBIT B

PRE-DEVELOPMENT WORK

1.Costs and expenses paid or incurred for and associated with the Project as of the date herewith

2.Conditional Use Permit dated July 12, 2022 – Davison County

High Plains Partners, LLC

Capital Contribution and Commitment Agreement

Exhibit B - Pre-Development Work

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Document

Exhibit 10.2

Execution Version

SDSP PARENT GUARANTEE

This GUARANTEE, dated as of September 7, 2023 (the “Effective Date”), is made by South Dakota Soybean Processors, LLC, a South Dakota limited liability company (“Guarantor”), in favor of each of BP Products North America Inc., a Maryland corporation (“Beneficiary”). Guarantor and Beneficiary are referred to herein as the “Parties”, and each as a “Party”. Capitalized terms used but not defined herein have the meanings set forth in the Company LLC Agreement (defined below).

1.Guarantee. To induce Beneficiary to enter into (a) the Amended and Restated Limited Liability Company Agreement of HPP Holdings, LLC (the “Company”), dated as of September 7, 2023 (the “Company LLC Agreement”), with High Plains Partners, LLC (“HPP”), a South Dakota limited liability company, and (b) the Contribution Agreement, dated as of September 7, 2023 (the “Contribution Agreement” and, together with the Company LLC Agreement, the “Relevant Agreements”), with HPP, Guarantor, as a primary and original obligor (and not merely as a surety), absolutely, unconditionally and irrevocably guarantees to Beneficiary and its successors and permitted assigns the prompt payment of all present and future amounts, whether absolute or contingent, owing by HPP to such Beneficiary under the Contribution Agreement and Sections 11.4(a) and 11.5 (Reserved Capital Contributions and Reserved Capital Loans) of the Company LLC Agreement (the “Contractual Obligations”), as and when such amounts become due and payable (or would otherwise be owing, due or payable under the applicable Relevant Agreement but for the commencement of any bankruptcy, insolvency or similar proceeding in respect of HPP), including payment obligations in respect of any breach of or indemnification obligation under and the performance of all other obligations of HPP under the Relevant Agreement relating to the Contractual Obligations (such guarantee being a guarantee of payment and performance and not merely of collection) (collectively, the “Obligations”). HPP is a subsidiary of Guarantor and Guarantor acknowledges that it will benefit, directly and indirectly, from Beneficiary’s entry into and performance of the Relevant Agreements.

2.Nature of Guarantee. This Guarantee is a primary and original obligation of Guarantor and is an absolute, unconditional, irrevocable and joint and several guaranty and, to the extent permitted by applicable law, shall remain in full force and effect without regard to any invalidity with respect to the execution and delivery of any Relevant Agreement by HPP or the execution and delivery by HPP of any other agreement between HPP and Beneficiary or any other Person.

3.Waiver of Defenses. Guarantor’s obligations hereunder shall not be affected by, and Guarantor expressly waives any defense it may have as result of, the following:

(a)any claim as to the existence, validity or enforceability;

(b)the extension (or subsequent reduction) of any collateral for the Obligations or the perfection or priority (or subsequent loss of perfection or priority) of security interests in connection therewith or by any other circumstance relating to the Obligations that might otherwise constitute a legal or equitable discharge of or defense to Guarantor not available to HPP;

(c)the lack of authority of HPP to execute or deliver any Relevant Agreement;

(d)any change in the time, manner or place of payment or performance of, or in any other term of, or amendment, modification or supplementation to any Relevant Agreement;

(e)any waiver or consent by Beneficiary with respect to any provision of the Relevant Agreements or any compromise or release of any of the Obligations;

(f)the absence of any action to enforce the Relevant Agreements, to recover any judgment against HPP or to enforce a judgment against HPP under any Relevant Agreement;

Confidential

(g)the occurrence of a breach or default, or potential breach or default, under the Relevant Agreements;

(h)the existence of any bankruptcy, insolvency or similar proceedings involving HPP;

(i)any setoff, counterclaim or defense of any kind or nature that may be available to or asserted by Guarantor or HPP against Beneficiary or any of its Affiliates;

(j)any impairment, taking, furnishing, exchange or release of or failure to perfect or obtain protection of any security interest in, collateral securing the Obligations;

(k)any change in the laws, rules or regulations of any jurisdiction;

(l)any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, any of the Obligations or of the obligations of Guarantor hereunder; or

(m)any other circumstance (other than full and indefeasible payment and performance) that might otherwise constitute a legal or equitable discharge or defense to a guarantor generally.

4.No Prior Action Required. Guarantor hereby waives diligence, presentment and demand on HPP and agrees that Beneficiary may resort to Guarantor for payment of any of the Obligations whether or not such Beneficiary has resorted to any collateral therefor or has proceeded against HPP or any other obligor principally or secondarily obligated with respect to any of the Obligations and Beneficiary shall not be obligated to make any demand on HPP prior to enforcing this Guarantee. Beneficiary shall not be obligated to take any action, obtain any judgment or file any claim prior to enforcing this Guarantee. Beneficiary shall not be obligated to file any claim relating to the Obligations in the event that HPP becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of Beneficiary to so file shall not affect Guarantor’s obligations hereunder.

5.Reinstatement. In the event that any payment to Beneficiary in respect of any Obligations is rescinded or must otherwise be restored or returned for any reason whatsoever, Guarantor’s obligations hereunder with respect to such Obligations shall be reinstated upon such rescission, restoration or return as if such payment had not been made.

6.Changes to Obligations. Guarantor agrees that Beneficiary may at any time and from time to time, either before or after the maturity thereof, without notice to or further consent of Guarantor, extend the time of payment of, or exchange or surrender any collateral for, any of the Obligations, and may also make any agreement with HPP or with any other party to or person liable on any of the Obligations or interested therein, for the extension, payment, compromise, discharge or release thereof, in whole or in part, or for any modification or any amendment of the provisions of the Relevant Agreements or of any agreement between Beneficiary and HPP or any such other party or person without in any way impairing or affecting this Guarantee.

7.Subrogation. Guarantor will not exercise any rights against HPP which it may acquire by way of subrogation, reimbursement, exoneration, contribution or indemnification in connection with this Guarantee by any payment made hereunder or otherwise, until all Obligations shall have been fully and indefeasibly paid and performed, and any amount paid to Guarantor on account of such rights prior to such time shall be held in trust for the benefit of Beneficiary and shall forthwith be paid to Beneficiary to be credited and applied to the Obligations.

2

Confidential

8.Expenses. Guarantor agrees to pay on demand all fees and out of pocket expenses (including the reasonable fees and expenses of Beneficiary’s counsel) in any way relating to the enforcement or protection of the rights of Beneficiary hereunder.

9.No Waiver; Cumulative Rights. No failure on the part of Beneficiary to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Beneficiary of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power. Each and every right, remedy and power hereby granted to Beneficiary, or allowed it or them by law or other agreement, shall be cumulative and not exclusive of any other, and may be exercised by Beneficiary at any time or from time to time.

10.Representations and Warranties. Guarantor hereby represents and warrants to Beneficiary that:

(a)Guarantor is duly organized, validly existing and in good standing under the laws of the place of its formation and has full limited company power to execute, deliver and perform this Guarantee;

(b)the execution, delivery and performance of this Guarantee have been duly authorized by all necessary limited company action and do not contravene any provision of Guarantor’s certificate of formation or limited liability company operating agreement or any law, regulation, rule, decree, order, judgment or contractual restriction binding on Guarantor or its assets;

(c)all notices, consents, licenses, clearances, authorizations and approvals of, and registrations and declarations with, any governmental authority or regulatory body necessary for the due execution, delivery and performance of this Guarantee have been obtained and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Guarantee; and

(d)this Guarantee constitutes a legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

11.Assignment. Neither Guarantor nor Beneficiary may assign its rights, interests or obligations hereunder to any other person or entity without the prior written consent of Guarantor, on the one hand, or Beneficiary, on the other hand, as the case may be, except that Beneficiary may, without any need for consent from Guarantor or any other Person, assign its rights under this Guarantee in full or in part to any Person to whom Beneficiary transfers its Membership Interests in the Company.

12.Successors and Assigns. This Guarantee shall inure to the benefit of and be binding upon the respective successors and permitted assigns of Guarantor and Beneficiary.

13.Notices. All notices or demands on Guarantor shall be deemed effective when received, shall be in writing and shall be delivered by hand or by registered mail, or by facsimile transmission promptly confirmed by registered mail, addressed to Guarantor at:

South Dakota Soybean Processors, LLC

Attn: Thomas Kersting, CEO

100 Caspian Ave., P.O. Box 500

Volga, South Dakota 57071

Email: Tom.Kersting@sdsbp.com

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With a copy to:

Woods Fuller Law Firm

Attention: Daniel Harmelink

300 S. Phillips Ave., Suite 300, P.O. Box 5027

Sioux Falls, South Dakota 57104

Email: Dan.Harmelink@woodsfuller.com

or to such other address or facsimile number as Guarantor has notified Beneficiary in a written notice delivered to Beneficiary in accordance with Section 18.6 (Notices) of the Company LLC Agreement.

14.Demand and Payment. Any demand by Beneficiary for payment hereunder shall be in writing, reference this Guarantee, and be signed by a duly authorized officer or other signatory of such Beneficiary and delivered to Guarantor pursuant to Section 13 hereof. There are no other requirements of notice, presentment or demand. Guarantor shall pay, or cause to be paid, such Obligations within five (5) Business Days of receipt of such demand. Notwithstanding anything to the contrary in this Section 14, if Beneficiary is prevented from making a demand on Guarantor as a result of any applicable law, any injunction, order or other action of any court or other governmental authority or any stay, moratorium or other action in any bankruptcy, insolvency or other similar proceeding, Guarantor shall not be excused from paying and performing its obligations under this Guarantee as and when due. All payments by Guarantor hereunder shall be paid in U.S. dollars in immediately available funds to such accounts as may be designated by the applicable Beneficiary from time to time.

15.Term; Termination. This Guarantee shall remain in full force and effect from the Effective Date until the date the Obligations with respect to all transactions under the Relevant Agreements have been fully and indefeasibly paid and performed.

16.Governing Law. The substantive laws of the State of Delaware, exclusive of any conflicts of laws principles that could require the application of any other law, shall govern this Guarantee for all purposes, including the resolution of all Disputes.

17.Dispute Resolution. The provisions of Article 17 (Dispute Resolution) of the Company LLC Agreement are hereby incorporated herein by reference, mutatis mutandis, and shall apply to each Party for all purposes of this Guarantee as if references to a “Member” or “Members” therein referred to each Party hereunder.

18.Severability. Whenever possible, each provision of this Guarantee shall be interpreted in such a manner as to be effective and valid under applicable law but if any provision of this Guarantee is held to be invalid, illegal or unenforceable under any applicable law or rule, the validity, legality and enforceability of the other provisions of this Guarantee will not be affected or impaired thereby.

19.Further Assurances. In connection with this Guarantee and the transactions contemplated hereby, the parties shall execute and deliver all such future instruments and take such other

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and further action as may be reasonably necessary or appropriate to carry out the provisions of this Guarantee and the intention of the parties as expressed herein.

20.Signatures; Counterparts. This Guarantee may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. A facsimile, PDF or other electronic signature will be considered an original signature.

21.Amendment. This Guarantee may not be amended, modified, varied or supplemented except by an instrument in writing signed by Guarantor and Beneficiary.

22.Entire Agreement. This Guarantee constitutes the entire agreement by Guarantor for the benefit of Beneficiary relating to the subject matter hereof and supersedes and replaces any provisions on the same subject contained in any other instrument by Guarantor for the benefit of Beneficiary, whether written or oral, prior to the Effective Date.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed and signed by its duly authorized officer as of the Effective Date.

GUARANTOR:
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC,
a South Dakota Limited Liability Company
By:	/s/ Thomas J. Kersting
Name:	Thomas J. Kersting
Title:	CEO

[Signature Page to SDSP Parent Guarantee]

Document

Exhibit 31.1

Certification

I, Thomas Kersting, certify that:

1.I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended September 30, 2023;

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 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: November 14, 2023

/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-Q of South Dakota Soybean Processors, LLC for the quarter ended September 30, 2023;

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 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: November 14, 2023

/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 Quarterly Report of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-Q for the quarter ending September 30, 2023, 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 September 30, 2023 (the last date of the period covered by the Report).

Dated:	November 14, 2023	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 Quarterly Report of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-Q for the quarter ending September 30, 2023, 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 September 30, 2023 (the last date of the period covered by the Report).

Dated:	November 14, 2023	By	/s/ Mark Hyde
			Mark Hyde, Chief Financial Officer
			(Principal Financial and Accounting Officer)