South Dakota Soybean Processors LLC 10-Q for FY2025 Q2
South Dakota Soybean Processors LLC (SDSYA)
10-Q
2025-08-08
For: 2025-06-30
View Original
Added on
April 06, 2026
About this 10-Q
South Dakota Soybean Processors LLC filed this 10-Q on August 8, 2025, covering the quarter ended June 30, 2025 (FY2025 Q2).
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $110.64M
- down 26.1% from $149.72M a year earlier
- Net loss
- $973.15K
- compared with net income of $6.03M a year earlier
- Diluted EPS
- -$0.03
- compared with $0.20 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2025
For the transition period from to
☒ COMMISSION FILE NO. 000-50253
| (Exact name of registrant as specified in its charter) | ||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices | (Zip Code) | |||||||
( | ||
| (Registrant's telephone number, including area code) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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.
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 | 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 August 8, 2025, the registrant had 30,411,500 capital units outstanding.
Table of Contents
| Page | |||||||||||
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
South Dakota Soybean Processors, LLC
Condensed Consolidated Financial Statements
June 30, 2025 and 2024
3
South Dakota Soybean Processors, LLC
Condensed Consolidated Balance Sheets
| June 30, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Trade accounts receivable | |||||||||||
| Inventories | |||||||||||
| Commodity derivative instruments | |||||||||||
| Prepaid expenses | |||||||||||
| Total current assets | |||||||||||
| Property and equipment | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Total property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Investments | |||||||||||
| Right-of-use lease asset, net | |||||||||||
| Other assets | |||||||||||
| Total other assets | |||||||||||
| Total assets | $ | $ | |||||||||
(continued on the following page)
4
South Dakota Soybean Processors, LLC
Condensed Consolidated Balance Sheets (continued)
| June 30, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Liabilities and Members' Equity | |||||||||||
| Current liabilities | |||||||||||
| Excess of outstanding checks over bank balance | $ | $ | |||||||||
Notes payable - seasonal loans | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Accounts payable | |||||||||||
| Accrued commodity purchases | |||||||||||
| Commodity derivative instruments | |||||||||||
Current portion - operating leases | |||||||||||
| Accrued expenses | |||||||||||
| Contract liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total long-term liabilities | |||||||||||
| Commitments and contingencies (Notes 4, 5, 6, and 10) | |||||||||||
Members' equity ( | |||||||||||
| Non-controlling interests in consolidated entities | |||||||||||
| Total members' equity | |||||||||||
| Total liabilities and members' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
South Dakota Soybean Processors, LLC
Condensed Consolidated Statements of Operations (Unaudited)
For the Three and Six-Month Periods Ended June 30, 2025 and 2024
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||||||||
| Cost of product sold | ||||||||||||||||||||||||||
| Production | ||||||||||||||||||||||||||
| Freight and rail | ||||||||||||||||||||||||||
| Total cost of revenues | ||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Administration | ||||||||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Other non-operating income (expense) | ||||||||||||||||||||||||||
| Patronage dividend income | ||||||||||||||||||||||||||
| Total other income (expense) | ( | ( | ( | ( | ||||||||||||||||||||||
Net income (loss) | ( | |||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidating entities | ( | ( | ||||||||||||||||||||||||
Net income (loss) attributable to Company | $ | ( | $ | $ | $ | |||||||||||||||||||||
Basic and diluted earnings (loss) per capital unit | $ | ( | $ | $ | $ | |||||||||||||||||||||
Weighted average number of capital units outstanding for calculation of basic and diluted earnings (loss) per capital unit | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
South Dakota Soybean Processors, LLC
Condensed Consolidated Statements of Changes in Members' Equity (Unaudited)
For the Three and Six-Month Periods Ended June 30, 2025 and 2024
| Class A Units | Noncontrolling | Total | |||||||||||||||||||||
| Units | Amount | Interests | Equity | ||||||||||||||||||||
Balances, December 31, 2023 | $ | $ | $ | ||||||||||||||||||||
| Net income | — | ||||||||||||||||||||||
| Distribution to members | — | ( | — | ( | |||||||||||||||||||
| Issuance of units in consolidated entities | — | — | |||||||||||||||||||||
| Redemption of units in consolidated entities | — | — | ( | ( | |||||||||||||||||||
Balances, March 31, 2024 | |||||||||||||||||||||||
| Net income | — | ||||||||||||||||||||||
Balances, June 30, 2024 | $ | $ | $ | ||||||||||||||||||||
Balances, December 31, 2024 | $ | $ | $ | ||||||||||||||||||||
| Net income (loss) | — | ( | |||||||||||||||||||||
| Distributions to members | — | ( | — | ( | |||||||||||||||||||
Balances, March 31, 2025 | — | ||||||||||||||||||||||
Net loss | — | ( | ( | ( | |||||||||||||||||||
Balances, June 30, 2025 | $ | $ | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
South Dakota Soybean Processors, LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2025 and 2024
| 2025 | 2024 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
Net loss recognized on derivative activities | |||||||||||
| Non-cash patronage dividends | ( | ( | |||||||||
| Change in current operating assets and liabilities | ( | ( | |||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Investing activities | |||||||||||
| Increase in other assets | ( | ( | |||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Change in excess of outstanding checks over bank balances | ( | ( | |||||||||
Net proceeds from seasonal borrowings | |||||||||||
| Proceeds from issuance of capital units | |||||||||||
| Distributions paid to members | ( | ( | |||||||||
| Payments for debt issue costs | ( | ||||||||||
| Proceeds from long-term debt | |||||||||||
| Principal payments on long-term debt | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net change in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest | $ | $ | |||||||||
| Noncash investing and financing activities: | |||||||||||
| Soybean meal contributed as investment | $ | $ | |||||||||
| Property and equipment included in accounts payable and other long-term liabilities | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
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, 2024 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, 2024, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 28, 2025.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries, High Plains Partners, LLC, HPP SD Holdings, LLC, and High Plains Processing, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of estimates
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Receivables and Credit Policies
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 thirty to sixty days from invoice date. Accounts considered uncollectible are written off. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers' financial condition, credit history, current and future economic conditions, and unusual circumstances, if any. The valuation allowance was determined to be immaterial as of June 30, 2025 and December 31, 2024, respectively.
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.
9
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Contract liabilities relate to advance payments from customers for goods and services the Company has yet to provide. These customer prepayments totaled $2,504,687 and $10,524,222 as of June 30, 2025 and December 31, 2024, respectively. Of the $10,524,222 balance as of December 31, 2024, the Company recognized $3,839,185 and $8,397,313 as revenues for the three and six months ended June 30, 2025, respectively. Of the $737,503 customer prepayments as of December 31, 2023, the Company recognized $133,935 and $486,290 of contract liabilities as revenues during the three and six months ended June 30, 2024, respectively.
The following table presents a disaggregation of revenue from contracts with customers for the three and six-month periods ended June 30, 2025 and 2024, by product type:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Soybean meal and hulls | $ | $ | $ | $ | |||||||||||||||||||
| Soybean oil and oil byproducts | |||||||||||||||||||||||
| Totals | $ | $ | $ | $ | |||||||||||||||||||
Cash Flow
The Company maintains a revolving line of credit that functions as a sweep account. Borrowings and repayments occur on a daily basis to manage cash balances efficiently and minimize interest expense. The activity is presented on a net basis in the statement of cash flows due to the short-term nature and frequency of the transactions, consistent with the Company’s cash management practices.
Recent accounting pronouncements
Any recent accounting pronouncements are not expected to have a material impact on our condensed financial statements.
Note 2 - Inventories
The Company’s inventories consist of the following on June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | ||||||||||
| Finished goods | $ | $ | |||||||||
| Raw materials | |||||||||||
| Supplies & other inventories | |||||||||||
| Totals | $ | $ | |||||||||
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.
10
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Note 3 - Property and Equipment
The following is a summary of the Company's property and equipment at June 30, 2025 and December 31, 2024:
| 2025 | 2024 | ||||||||||||||||||||||
| Cost | Accumulated Depreciation | Net | Net | ||||||||||||||||||||
| Land | $ | $ | $ | $ | |||||||||||||||||||
| Land improvements | ( | ||||||||||||||||||||||
| Buildings and improvements | ( | ||||||||||||||||||||||
| Machinery and equipment | ( | ||||||||||||||||||||||
| Railroad cars | ( | ||||||||||||||||||||||
| Company vehicles | ( | ||||||||||||||||||||||
| Furniture and fixtures | ( | ||||||||||||||||||||||
| Construction in progress | |||||||||||||||||||||||
| Totals | $ | $ | ( | $ | $ | ||||||||||||||||||
Depreciation of property and equipment was $1,857,919 and $1,519,233 for the three months ended June 30, 2025 and 2024, respectively, and $3,713,850 and $3,023,367 for the six months ended June 30, 2025 and 2024, respectively .
As of June 30, 2025 and December 31, 2024, respectively, the Company has approximately $14.3 million and $15.7 million respectively, in payables related to the construction of the facility in Mitchell, South Dakota. These construction payables are classified as non-current liabilities due to management's intent and ability to settle these liabilities using the Company’s long-term credit facilities.
As of June 30, 2025, the Company had unpaid commitments of approximately $77.2 million for construction and acquisition of property and equipment and is scheduled to be completed by the fourth quarter of 2025.
Note 4 - Notes Payable – Seasonal Loans
The Company entered into a revolving credit agreement with a lending institution which expires on December 1, 2025 . The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement, the Company could borrow up to $70 million, with all advances secured. Interest accrues at a variable rate (6.54 % as of June 30, 2025). The Company pays a 0.20 % annual commitment fee on any funds not borrowed. Outstanding advances totaled $4,595,604 0 as of June 30, 2025 and December 31, 2024, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were approximately $65.4 million as of June 30, 2025.
Beginning July 1, 2025, the credit facilities agreement will provide the Company a revolving seasonal loan which expires on September 1, 2026. The purpose of the credit agreement is to finance the operating needs of High Plains Processing, LLC. Under this agreement, the Company could borrow up to $85 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (7.44% at June 30, 2025). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were no advances outstanding as of June 30, 2025 and December 31, 2024
11
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Note 5 - Long-Term Debt
The following is a summary of the Company's long-term debt on June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | ||||||||||
| Revolving term loans | $ | $ | |||||||||
| Delayed-draw term loan | |||||||||||
Promissory note | 12,600,000 | — | |||||||||
| Less current maturities | ( | ( | |||||||||
| Less unamortized debt issuance costs | ( | ( | |||||||||
| $ | $ | ||||||||||
The Company has a credit agreement with a lending institution that includes a revolving term loan and a seasonal loan. The credit agreements are secured by substantially all business assets of South Dakota Soybean Processors, LLC.
The revolving term loan provides for a maximum borrowing of $65.0 million and the amount available for borrowing on the revolving term loan will decrease by $3.25 million every six months until the loan's maturity date of March 20, 2030 . Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of June 30, 2025 was 6.84 %. The Company pays a 0.40 % annual commitment fee on any funds not borrowed. There were no remaining commitments available to borrow on the revolving term loan as of June 30, 2025.
The Company has a credit facilities agreement with a lending institution that includes a delayed-draw term loan, a revolving term loan, and a revolving seasonal loan. The credit facilities agreement is secured by substantially all business assets of the High Plains Processing, LLC.
The delayed-draw term loan provides borrowing up to $254.0 million until March 31, 2026 to finance the construction of the operating facility in Mitchell, South Dakota. The Company will make quarterly principal payments of $4.50 million plus interest beginning six months after the outside completion date as defined within the agreement. The quarterly principal payments will increase each year by $1.0 million on the anniversary date. The delayed-draw term loan matures on December 31, 2029. Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of June 30, 2025 was 7.74%. The Company pays a 0.50% annual commitment fee on any funds not borrowed. There were approximately $122.2 million available to borrow on the delayed draw term loan as of June 30, 2025.
The revolving term loan provides for a maximum borrowing of $40.0 million. The revolving term loan matures on December 31, 2029. Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of June 30, 2025 was 7.44%. The Company pays a 0.50% annual commitment fee on any funds not borrowed. There were $40.0 million in remaining commitments available to borrow on the revolving term loan as of June 30, 2025.
Under the agreements, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios that limits distributions.
Effective March 19, 2025, the State of South Dakota Department of Transportation agreed to loan the Davison Regional Railroad Authority $12.6 million for purposes of making improvements to the railway infrastructure at the operating facility near Mitchell, South Dakota. In consideration of this secured loan, the Company agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus interest. This guarantee was converted into a direct obligation of the Company's on May 27, 2025, when the Company received the entire loan proceeds and assumed responsibility for paying the annual principal and interest payments. The note bears interest at a fixed rate of 2% per annum. Beginning in October 2026, the Company will make annual
12
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
principal and interest payments of $987,500. These payments will continue through October 1, 2032, at which time a final balloon payment will be due for the remaining unpaid principal and any accrued interest.
The following are minimum principal payments on long-term debt obligations for the twelve-month periods ending June 30:
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 6 - Operating Leases
The Company has several operating leases for railcars, machinery and equipment, and storage facilities. These leases have terms ranging from 3 -12 years and most do not have renewal terms provided. The Company does not have lease arrangements with residual value guarantees, sale-leaseback terms or material restrictive covenants. The Company does not have any material finance lease obligations nor sublease agreements.
Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our condensed consolidated statements of operations for the three and six-month periods ended June 30, 2025 and 2024 were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Cost of revenues - Freight and rail | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cost of revenues - Production | |||||||||||||||||||||||||||||||||||
| Administration expenses | |||||||||||||||||||||||||||||||||||
| Total operating lease costs | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
The following summarizes the supplemental cash flow information for the three and six-month periods ended June 30, 2025 and 2024:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Supplemental non-cash information: | |||||||||||||||||||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
13
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
The following summarizes the weighted-average remaining lease term and weighted-average discount rate as of June 30, 2025:
| Weighted-average remaining lease-term - operating leases (in years) | ||||||||
| Weighted-average discount rate - operating leases | % | |||||||
The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of June 30, 2025:
| Railcars | Other | Total | ||||||||||||||||||
Twelve-month periods ended June 30: | ||||||||||||||||||||
| 2026 | $ | $ | $ | |||||||||||||||||
| 2027 | ||||||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2030 | ||||||||||||||||||||
| Thereafter | ||||||||||||||||||||
| Total lease payments | ||||||||||||||||||||
| Less amount of lease payments representing interest | ( | ( | ( | |||||||||||||||||
| Total present value of lease payments | $ | $ | $ | |||||||||||||||||
Note 7 - Member Distribution
On February 4, 2025 , the Company’s Board of Managers declared and approved a cash distribution of approximately $7.6 million, or $0.25 per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy on February 6, 2025 .
Note 8 - Derivative Instruments and Hedging Activities
In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices and, occasionally, foreign exchange and interest rates. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts, and interest rate swaps, caps and floors. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. Futures and options contracts, along with margin deposit, are with a single counterparty and are subject to a right of offset. As a result, these items are netted on the balance sheet, regardless of their position. In contrast, forward contracts are with multiple counterparties and do not have a right of offset. Therefore, these contracts are reported at their gross amounts on the balance sheet. These contracts are recorded on the Company’s consolidated balance sheets at fair value as discussed in Note 9, Fair Value.
Derivatives not designated as hedging instruments as of June 30, 2025 and December 31, 2024 were as follows:
14
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
| Balance Sheet Classification | June 30, 2025 | December 31, 2024 | |||||||||||||||
| Forward contracts in gain position | $ | $ | |||||||||||||||
| Futures and options in gain position | |||||||||||||||||
| Futures and options in loss position | ( | ( | |||||||||||||||
| Total forward, futures and options contracts | 1,865,419 | 5,640,509 | |||||||||||||||
| Margin deposit | |||||||||||||||||
Current assets | $ | $ | |||||||||||||||
| Forward contracts in loss position | $ | $ | |||||||||||||||
| Interest rate swap | |||||||||||||||||
| Current liabilities | $ | $ | |||||||||||||||
During the three and six-month periods ended June 30, 2025 and 2024, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed consolidated statements of operations as follows:
| Net Gain (Loss) Recognized on Derivative Activities for the | Net Gain (Loss) Recognized on Derivative Activities for the | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Commodity contracts | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Foreign exchange contracts | |||||||||||||||||||||||
| Interest rate swaps, caps and floors | ( | ( | |||||||||||||||||||||
| Totals | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Note 9 - Fair Value
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures that are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The three levels of hierarchy and examples are as follows:
•Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Board of Trade (“CBOT”).
•Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs, such as commodity prices using forward future prices.
•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 June 30, 2025 and December 31, 2024:
15
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Fair Value as of June 30, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Inventory | $ | $ | $ | $ | |||||||||||||||||||
| Commodity derivative instruments | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Provisionally priced contracts | $ | $ | $ | $ | |||||||||||||||||||
Fair Value as of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Inventory | $ | $ | $ | $ | |||||||||||||||||||
| Commodity derivative instruments | $ | $ | $ | $ | |||||||||||||||||||
| Provisionally priced contracts | $ | $ | $ | $ | |||||||||||||||||||
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 condensed consolidated balance sheets, including cash, accounts receivable, and accounts payable, to be reasonable estimates of fair value due to their length or maturity. The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.
The Company has patronage investments in other cooperatives and common and preferred stock holdings in privately held entities. There is no market for their patronage credits or the entity’s common and preferred holdings, and it is impracticable to estimate the fair value of the Company’s investments. These investments are carried on the balance sheet at the original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.
Note 10 - Commitments and Contingencies
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 11 - 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.
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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 six-month period ended June 30, 2025, (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, 2024. 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, 2024.
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 six-months ended June 30, 2025, we recorded a $8.1 million decline in net income compared to the same period in 2024. The primary cause of the decline was weaker product values for both soybean meal and soybean oil.
Soybean oil prices were significantly impacted by reduced demand from the biofuels sector. A key factor in reduced demand was the federal government’s delay in implementing critical components of the biofuel programs, prompting many biodiesel and renewable diesel producers to cut production. Additionally, a surge of imported feedstocks, such as used cooking oil, entered the U.S. market, challenging soybean oil's competitiveness due to less favorable carbon intensity scores.
An increase in soybean processing capacity resulting from several new plants coming operational further impacted the market. This expansion boosted the supply of both soybean oil and soybean meal. Although soybean meal exports remained strong, the additional domestic supply and heightened competition from South American producers pressured U.S. cash basis values, which fell to record lows in the latter half of the period.
Looking ahead, the federal government has issued guidance that is expected to strengthen biofuels demand. The proposed Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard for 2026 and 2027 represent a significant increase over prior years, likely driving robust demand from the biofuels sector beginning in late 2025 and continuing through 2027.
Further, new legislation has been introduced to address the impact of imported feedstocks and biofuels on domestic markets. Elements of the recently passed "Big Beautiful Bill," including more favorable carbon intensity scoring for soybean oil under the 45Z tax credit framework, have already contributed to stronger soybean oil values and significantly improved board crush margin.
Construction of the High Plains Processing plant near Mitchell, South Dakota, continued to progress steadily. A relatively mild winter once again supported construction efforts, helping to keep the project on schedule. Costs remained within budgeted estimates, and design changes were minimal. The plant remains on track to begin operations in the fall of 2025.
17
RESULTS OF OPERATIONS
Comparison of the Three Months Ended June 30, 2025 and 2024
| Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | ||||||||||||||||||||||
| $ | % of Revenue | $ | % of Revenue | ||||||||||||||||||||
| Revenue | $ | 110,640,734 | 100.0 | $ | 149,716,835 | 100.0 | |||||||||||||||||
| Cost of revenues | (110,367,359) | (99.8) | (141,155,491) | (94.3) | |||||||||||||||||||
| Gross profit | 273,375 | 0.2 | 8,561,344 | 5.7 | |||||||||||||||||||
| Operating expenses | (1,681,784) | (1.5) | (1,503,055) | (1.0) | |||||||||||||||||||
| Interest expense | (1,227,078) | (1.1) | (1,919,069) | (1.3) | |||||||||||||||||||
| Other non-operating income (expense) | 184,593 | 0.2 | 1,497,166 | 1.0 | |||||||||||||||||||
Net income (loss) | (2,450,894) | (2.2) | 6,636,386 | 4.4 | |||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidated entities | (1,477,747) | (1.3) | 606,027 | 0.4 | |||||||||||||||||||
Net income (loss) attributable to Company | $ | (973,147) | (0.9) | $ | 6,030,359 | 4.0 | |||||||||||||||||
Revenue – Revenue decreased by $39.1 million, or 26.1%, for the three months ended June 30, 2025, compared to the same period in 2024 due to decreases in the average sales price of soybean products and in production. The average soybean meal prices declined by 15.4% from 2024 due to an increase in U.S. soybean crushing capacity in 2024. The average price of soybean oil decreased 13.2% during the three months ended June 30, 2025, compared to the same period in 2024, due to a decrease in demand from the energy sector as refining margins for biodiesel and renewable diesel producers came under pressure from overproduction, which led to production slowdowns at some location. In addition, imports of used cooking oil and other feedstocks lower-priced alternatives to soybean oil flooded the market, contributing to an oversupply and adversely affecting soybean oil sales.
Gross Profit/Loss – Gross profit decreased by $8.3 million, or 96.8%, for the three months ended June 30, 2025, compared to the same period in 2024. The decrease was mainly due to declining board crush margins which was caused by a decrease in demand for soybean oil and an increase in the U.S. soybean meal supply.
Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, increased by $0.2 million for the three months ended June 30, 2025, compared to the same period in 2024. The increase was primarily due to higher administrative costs related to our new High Plains Processing facility. Expenses increased due to increased in administrative costs resulting from getting closer to the facility's start up in October 2025.
Interest Expense – Interest expense decreased by $692,000, or 36.1%, during the three months ended June 30, 2025, compared to the same period in 2024. The decrease in interest expense was principally due to a decrease in borrowings from our credit facilities (excluding loans by our subsidiary, High Plains Processing), with an average debt level of $61.3 million during the three months ended June 30, 2025, compared to $90.3 million during the same period in 2024. Additionally, approximately $2.3 million in interest costs related to the construction of the High Plains Processing facility were capitalized during the six months ended June 30, 2025, compared to $0 in the same period of 2024.
Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, decreased $1.3 million during the three months ended June 30, 2025, compared to the same period in 2024. The decline was primarily driven by an approximate $1.3 million decrease in interest income earned on investment proceeds held by our subsidiaries in connection with the equity financing of the High Plains Processing plant.
Net Income/Loss – During the three-month period ended June 30, 2025, we generated a net loss attributed to the Company of $1.0 million compared to a net income of $6.0 million for the same period in 2024. The $7.0 million decrease was primarily attributable to decreased gross margins and interest income.
18
Comparison of the Six Months Ended June 30, 2025 and 2024
| Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | ||||||||||||||||||||||
| $ | % of Revenue | $ | % of Revenue | ||||||||||||||||||||
| Revenue | $ | 228,554,043 | 100.0 | $ | 297,977,739 | 100.0 | |||||||||||||||||
| Cost of revenues | (222,374,364) | (97.3) | (282,080,346) | (94.7) | |||||||||||||||||||
| Gross profit | 6,179,679 | 2.7 | 15,897,393 | 5.3 | |||||||||||||||||||
| Operating expenses | (3,406,750) | (1.5) | (3,137,428) | (1.1) | |||||||||||||||||||
| Interest expense | (2,378,004) | (1.0) | (3,373,060) | (1.1) | |||||||||||||||||||
| Other non-operating income (expense) | 1,244,577 | 0.5 | 3,328,466 | 1.1 | |||||||||||||||||||
| Net income | 1,639,502 | 0.7 | 12,715,371 | 4.3 | |||||||||||||||||||
| Net income attributable to non-controlling interests in consolidated entities | (1,760,424) | (0.8) | 1,210,558 | 0.4 | |||||||||||||||||||
| Net income attributable to Company | $ | 3,399,926 | 1.5 | $ | 11,504,813 | 3.9 | |||||||||||||||||
Revenue – Revenue decreased by $69.4 million, or 23.3%, for the six-month period ended June 30, 2025, compared to the same period in 2024 due to decreases in the average sales price of soybean products and in production. The average soybean meal prices declined by 17.0% from 2024 due to an increase in U.S. soybean crushing capacity in 2024. The average price of soybean oil decreased 17.5% during the six months ended June 30, 2025, compared to the same period in 2024, due to a decrease in demand. Soybean oil demand from the energy sector dropped dramatically in 2024 as refining margins for biodiesel and renewable diesel producers came under intense pressure from overproduction which led to production slowdowns at some locations. In addition, imports of used cooking oil and other feedstocks flooded the market, contributing to an oversupply and adversely affecting soybean oil sales.
Gross Profit/Loss – Gross profit decreased by $9.7 million, or 61.1%, for the six months ended June 30, 2025, compared to the same period in 2024. The decrease was mainly due to declining board crush margins which was caused by a decrease in demand for soybean oil and an increase in United States soybean meal supply.
Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, increased approximately $269,000, or 8.6%, during the six-month period ended June 30, 2025, compared to the same period in 2024, due to an increase in professional and related costs associated with the start-up of the High Plains Processing plant.
Interest Expense – Interest expense decreased by $1.0 million, or 29.5%, during the six months ended June 30, 2025, compared to the same period in 2024. The decrease in interest expense was principally due to a decrease in borrowings from our credit facilities (excluding loans by our subsidiary, High Plains Processing), with an average debt level of $67.8 million during the three months ended June 30, 2025, compared to $82.1 million during the same period in 2024. Additionally, approximately $3.4 million in interest costs related to the construction of the High Plains Processing facility were capitalized during the six months ended June 30, 2025, compared to $0 in the same period of 2024.
Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, decreased $2.1 million during the six-month period ended June 30, 2025, compared to the same period in 2024. The increase in other non-operating income was due to a $2.2 million increase in interest income which we received from the deposit of investment proceeds received by our subsidiaries in connection with their equity financing of the High Plains Processing plant.
Net Income/Loss – During the six-month period ended June 30, 2025, we generated a net income of $3.4 million, compared to $11.5 million for the same period in 2024. The $8.1 million decrease was primarily attributable to decreased gross margins and decrease in interest income.
19
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash generated from operations and borrowings from our two revolving lines of credit, which are discussed in the section titled “Indebtedness.” As of June 30, 2025, we had working capital, defined as current assets less current liabilities, of approximately $38.1 million, compared to $107.8 million on June 30, 2024. Working capital decreased between periods primarily due to expenditures related to the construction and development of the High Plains Processing plant, of which we have a controlling ownership interest through our subsidiaries.
Comparison of the Six Months Ended June 30, 2025 and 2024
| 2025 | 2024 | ||||||||||
| Net cash used for operating activities | $ | (38,054,353) | $ | (3,135,955) | |||||||
| Net cash used for investing activities | (123,247,693) | (70,277,842) | |||||||||
| Net cash provided by financing activities | 128,886,639 | 99,227,129 | |||||||||
Cash Flows Provided By (Used For) Operations
The $34.9 million decrease in cash flows used for operating activities was largely due to a $13.8 million increase in inventories, a decrease in contract liabilities of approximately $8.0 million and by a decrease in net income of approximately $11.1 million.
Cash Flows Used For Investing Activities
The $53.0 million increase in cash flows used for investing activities during the six-month period ended June 30, 2025, compared to the same period in 2024, was due to an increase in expenditures for purchases of various property and equipment used for the construction and development of the High Plains Processing plant.
Cash Flows Provided By Financing Activities
The $29.7 million increase in cash flows provided by financing activities was principally due to a decrease in proceeds from issuance of new capital units in our consolidated entities offset by an increase in borrowings with our lender. During the six months ended June 30, 2024, our subsidiaries received $57.5 million in investment proceeds in connection with their equity financing, which were subsequently contributed for the construction and development of the High Plains Processing plant. Net proceeds from seasonal borrowings and long-term debt were $141.5 million during the six months ended June 30, 2025, compared to $88.2 million during the same period in 2024. Partially offsetting the decrease was a $31.8 million reduction in cash distributions to members during the six months ended June 30, 2025, compared to the same period in 2024.
Indebtedness
We hold various credit facilities with CoBank, our primary lender, to meet the short and long-term needs of our operations. The first credit line is a revolving long-term loan. Under this loan, we may borrow funds, as needed, up to the credit line maximum, or $65.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. The available credit line decreases by $3.25 million every six months until the credit line’s maturity on March 20, 2030, 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 $61.8 million and $50.5 million as of June 30, 2025 and December 31, 2024, respectively. Under this loan, there were no additional funds available to borrow as of June 30, 2025.
The second credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. We may borrow up to $70.0 million until the loan's maturity on December 1, 2025. We pay a 0.20% annual commitment fee on any funds not borrowed; however, we have the option to reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. As of June 30, 2025 and December 31, 2024, the principal balance outstanding on this credit line was $4.6 million and $0, respectively. Under this loan, there were $65.4 million of additional funds available to borrow as of June 30, 2025.
20
The third line of credit is a delayed-draw term loan. Under this loan, our subsidiary may borrow funds, as needed up to $254.0 million until March 31, 2026. Principal payments of $4.5 million are made quarterly beginning six months after the completion date of the High Plains Processing facility. The quarterly principal payments will increase by $1.0 million on the anniversary date and continue until the maturity date of December 31, 2029. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed;. The principal balance outstanding on this note was $131.8 million and $18.7 million as of June 30, 2025 and December 31, 2024, respectively. Under this note, there were $122.2 million of funds available to borrow as of June 30, 2025.
The fourth credit line is a revolving long-term loan. Under this loan, our subsidiary may borrow funds, as needed, up to the credit line maximum, or $40.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line until the credit line’s maturity on December 31, 2029 at which time a balloon payment for the remaining balance is due. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0 as of June 30, 2025 and December 31, 2024. Under this loan, there were $40.0 million of additional funds available to borrow as of June 30, 2025.
The last credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance the operating needs of the High Plains Processing facility. Beginning July 1, 2025, our subsidiary may borrow up to $85.0 million until the loan's maturity on September 1, 2026. A 0.20% annual commitment fee is paid 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 June 30, 2025 and December 31, 2024, there was no principal balance outstanding on this credit line.
The revolving, seasonal and delayed-draw term 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 loans was range between 6.54% and 7.44% as of June 30, 2025.
On March 19,2025, the State of South Dakota Department of Transportation agreed to loan the Davison Regional Railroad Authority $12.6 million for purposes of making improvements to the railway infrastructure at the operating facility near Mitchell, South Dakota. In consideration of this secured loan, agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus 2.0% interest. This guarantee was converted into a direct obligation of ours on May 27, 2025, when we received the entire loan proceeds and assumed responsibility for the annual principal and interest payments of $987,500, which begins on October 1, 2026. These payments will continue through October 1, 2032, at which time a final balloon payment will be due for the remaining unpaid principal and any accrued interest.
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 OBLIGATIONS | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||||||||||||||
| Long-Term Debt Obligations (1) | $ | 258,530,300 | $ | 20,700,000 | $ | 79,102,000 | $ | 148,533,000 | $ | 10,195,300 | ||||||||||||||||||||||
| Operating Lease Obligations | 39,324,000 | 5,236,000 | 9,050,000 | 8,159,000 | 16,879,000 | |||||||||||||||||||||||||||
| Totals | $ | 297,854,300 | $ | 25,936,000 | $ | 88,152,000 | $ | 156,692,000 | $ | 27,074,300 | ||||||||||||||||||||||
(1) Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.
21
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, 2024.
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 June 30, 2025, we had $12.6 million in fixed-rate debt outstanding and $510.8 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 $5.1 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.
22
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 June 30, 2025.
PART II – OTHER INFORMATION
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 June 30, 2025, there were no material changes to the Risk Factors disclosed in Item 1A (Part I) of our 2024 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 June 30, 2025, none of our managers or officers adopted terminated
Item 6. Exhibits.
| Exhibit Number | Description | |||||||
| 10.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 101.INS | XBRL Instance Document | |||||||
| 101.SCH | XBRL Schema Document | |||||||
| 101.CAL | XBRL Calculation Document | |||||||
| 101.LAB | XBRL Labels Linkbase Document | |||||||
| 101.PRE | XBRL Presentation Linkbase Document | |||||||
| 101.DEF | XBRL Definition Linkbase Document | |||||||
| 104 | The cover page from this Current Report on Form 10-Q formatted as Inline XBRL | |||||||
____________________________________________________________________________
* Filed herewith.
23
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: | August 8, 2025 | By | /s/ Thomas Kersting | ||||||||
| Thomas Kersting, Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
| Dated: | August 8, 2025 | By | /s/ Mark Hyde | ||||||||
| Mark Hyde, Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
24
Exhibit 10.1
Loan No. 18462590T05-G
AMENDED AND RESTATED REVOLVING TERM PROMISSORY NOTE
THIS AMENDED AND RESTATED REVOLVING TERM PROMISSORY NOTE (this “Promissory Note”) to the Amended and Restated Credit Agreement dated March 17, 2025 (such agreement, as may be amended, hereinafter referred to as the “Credit Agreement”), is entered into as of 5/22/2025 between COBANK, ACB, a federally-chartered instrumentality of the United States (“Lender”) and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, Volga, South Dakota, a limited liability company (together with its permitted successors and assigns, the “Borrower”). Capitalized terms not otherwise defined in this Promissory Note will have the meanings set forth in the Credit Agreement.
RECITALS
(A)This Promissory Note amends, restates, replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Amended and Restated Revolving Term Promissory Note numbered 18462590T05-F, dated as of March 17, 2025, between Lender and the Borrower.
SECTION 1. REVOLVING TERM COMMITMENT. On the terms and conditions set forth in the Credit Agreement and this Promissory Note, Lender agrees to make loans to the Borrower during the period set forth below in an aggregate principal amount not to exceed the Maximum Commitment Amount (as set forth below) at any one time outstanding (the “Commitment”). The "Maximum Commitment Amount" will be initially $61,750,000.00 and will be reduced by $3,250,000.00 on the 20th day of each March and September beginning September 20, 2025, and continuing through and including September 20, 2029, with a final reduction equal to the remaining balance due on March 20, 2030. Within the limits of the Commitment, the Borrower may borrow, repay, and re-borrow.
SECTION 2. PURPOSE. The purpose of the Commitment is to provide working capital to the Borrower.
SECTION 3. TERM. The term of the Commitment will be from the date hereof, up to and including March 20, 2030, or such later date as Lender may, in its sole discretion, authorize in writing (the “Term Expiration Date”).
SECTION 4. LIMITS ON ADVANCES, AVAILABILITY, ETC. The loans will be made available as provided in Article 2 of the Credit Agreement.
SECTION 5. INTEREST. The Borrower agrees to pay interest on the unpaid balance of the loan(s) in accordance with the following interest rate option(s):
(A)Daily Simple SOFR. At a variable rate per annum equal at all times to 2.550% (the “Daily Simple SOFR Margin”) plus the higher of: (1) zero percent (0.00%); and (2) Daily Simple SOFR (as defined below). Borrowings may only be made on a day which is a Business Day (as defined below) and requests for borrowings must be received by 12:00 p.m. Denver, Colorado time on the date the borrowing is desired. Information about the then-current rate will be made available upon telephonic request. For purposes of this Promissory Note, Daily Simple SOFR shall be considered a variable rate option. For purposes hereof, (a) “Daily Simple SOFR” means SOFR (as defined below) for the day that is five U.S. Government Securities Business Days (as defined below) prior to (i) if such day is a U.S. Government Securities Business Day, such day or (ii) if such day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such day. Any change in Daily Simple SOFR due to a change in SOFR shall be effective
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from and including the effective date of such change in SOFR without notice to the Borrower; (b) “SOFR” means, for any U.S. Government Securities Business Day, a rate per annum equal to the secured overnight financing rate for such day published (at such time as Lender may determine in its sole discretion) by the SOFR Administrator on its website (or any successor source identified by the SOFR Administrator from time to time) on the immediately succeeding U.S. Government Securities Business Day; (c) “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate); (d) “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday, or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities; and (e) “Business Day” means a day on which Lender and the Federal Reserve Banks are open for business.
(B)Quoted Rate. At a fixed rate per annum to be quoted by Lender in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to Lender in its sole discretion in each instance, provided that: (1) the minimum fixed period will be 365 days; (2) amounts may be fixed in an amount not less than $500,000.00; and (3) the maximum number of fixes in place at any one time will be ten, provided, however, the maximum number of fixes in place at any one time may be increased, at Lender's sole discretion, upon written notification to the Borrower by Lender.
The Borrower will select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. If the Borrower fails to elect an interest rate option, interest will accrue at the variable rate option. Upon the expiration of any fixed rate period, interest will automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed for periods expiring after the maturity date of a loan and rates may not be fixed in such a manner as to cause the Borrower to have to break any fixed rate balance in order to pay any installment of principal. All elections provided for herein will be made telephonically or in writing and must be received by 12:00 p.m. Denver, Colorado time. Interest will be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and will be payable monthly in arrears by the 20th day of the following month or on such other day as Lender will require in a written notice to the Borrower (“Interest Payment Date”).
SECTION 6. PROMISSORY NOTE. The Borrower promises to repay on the date of each reduction in the Commitment set forth in the schedule in Section 1 above, the outstanding principal, if any, that is in excess of the reducing Commitment amount set forth in the aforementioned schedule, followed by a final installment in an amount equal to the remaining unpaid principal balance of the loans on the Term Expiration Date.
In addition to the above, the Borrower promises to pay interest on the unpaid principal balance of the loans at the times and in accordance with the provisions set forth herein.
SECTION 7. SECURITY. The Borrower’s obligations hereunder and, to the extent related hereto, under the Credit Agreement, will be secured as provided in Section 2.3 of the Credit Agreement.
SECTION 8. FEES.
(A)Commitment Fee. In consideration of the Commitment, the Borrower agrees to pay to Lender a commitment fee on the average daily unused available portion of the Commitment at the rate of 0.400% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such
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fee will be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.
SECTION 9. OVERADVANCES. Lender shall not be obligated to make advances in excess of the Commitment (“Overadvances”), but may elect to do so in its sole discretion. Each such Overadvance shall be secured hereunder and under Section 2.3 of the Credit Agreement. If Lender approves an Overadvance, the Borrower shall reimburse Lender immediately and without notice or demand for (1) the full amount of each overadvance; (2) all overadvance fees and charges that Lender may impose from time to time; (3) interest on the amount of each overadvance at the rate that applies to the loan(s) for the day such overadvance was created and for each following day until it has been repaid, and (4) all losses Lender incurs in collecting the overadvance and any fees, charges, expenses or interest relating to it. In addition to all other rights and remedies available to Lender, Lender may (and the Borrower specifically gives Lender the authority to): (1) set off the unpaid balance of any overadvance against any debt or other amount that Lender owes to the Borrower; (2) liquidate any investments or other assets in any account the Borrower maintains with Lender or in connection with the loan(s); and (3) enforce its interests in any available collateral it holds to secure the Borrower’s obligations hereunder and under the Credit Agreement. If Lender elects to make an advance in excess of the Commitment, doing so does not obligate Lender to make or permit future Overadvances under the Commitment.
SECTION 10. BENCHMARK AND TENOR REPLACEMENT AND MODIFICATION. Notwithstanding anything to the contrary in this Promissory Note or in any other Loan Document,
(A)if at any time Lender determines that (1) any interest rate offered hereunder (each such interest rate, a “Benchmark”) or any tenor of such Benchmark has been, or is likely to be, discontinued; (2) any Benchmark or any tenor of any Benchmark is not or is likely to not be representative of the underlying market and economic reality that such Benchmark or tenor is intended to measure; or (3) any Benchmark or any tenor of any Benchmark does not, or is likely not to, adequately and fairly reflect the cost to Lender of making or maintaining loans hereunder, or (4) any Benchmark or any tenor of any Benchmark is, or is likely to be, unlawful, Lender may amend this Promissory Note and any other Loan Document to replace such Benchmark or tenor with a Benchmark Replacement or to remove such tenor. The selection of a Benchmark Replacement by Lender may be for one, some or all tenors of the then-current Benchmark. “Benchmark Replacement” means, for any Benchmark or tenor, a replacement benchmark rate, which may include a spread adjustment, that has been selected by Lender in its sole discretion, giving due consideration to (a) any recommendation by a relevant governmental body of a replacement benchmark rate, the mechanism for determining such a rate or a spread adjustment, or (b) any evolving or then-prevailing market convention for determining a benchmark rate or a spread adjustment. Lender may effect such amendments to this Promissory Note and the other Loan Documents as Lender in its sole discretion deems appropriate to reflect the adoption and implementation of such replacement rate, which amendments will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Documents as Lender in its sole discretion deems appropriate to reflect the adoption and implementation of such replacement rate, which amendments will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Document; provided that Lender shall give the Borrower notice of any such amendment. In no event shall any Benchmark Replacement be less than zero percent (0.00%).
(B)if at any time Lender determines in its discretion that any Benchmark or any tenor of any Benchmark is unavailable for any reason on a temporary basis, Lender may (i) calculate such Benchmark or tenor using such previous or historical publications of such Benchmark or tenor as Lender determines in its discretion to be appropriate, (ii) suspend the availability of such tenor or (iii) select and apply a Benchmark Replacement during such period.
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(C)Lender will have the right to make from time to time any technical, administrative or operational changes that Lender decides in its discretion may be appropriate to permit or enhance the efficient administration of any Benchmark or any tenor of any Benchmark or the adoption, implementation or administration of any Benchmark Replacement or any tenor of any Benchmark Replacement. Any amendments implementing such changes will become effective without any further action or consent of any other party to this Promissory Note or any other Loan Document; provided that Lender shall give the Borrower notice of any such amendment.
SIGNATURE PAGE FOLLOWS
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SIGNATURE PAGE TO PROMISSORY NOTE
IN WITNESS WHEREOF, the parties have caused this Promissory Note to the Credit Agreement to be executed by their duly authorized officer(s).
| SOUTH DAKOTA SOYBEAN PROCESSORS, LLC | |||||||||||
| By: | /s/ Mark Hyde | ||||||||||
| Name: | Mark Hyde | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
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SIGNATURE PAGE TO PROMISSORY NOTE
IN WITNESS WHEREOF, the parties have caused this Promissory Note to the Credit Agreement to be executed by their duly authorized officer(s).
| COBANK, ACB | |||||||||||
| By: | /s/ Jared A Greene | ||||||||||
| Name: | Jared A Greene | ||||||||||
| Title: | Assistant Corporate Secretary | ||||||||||
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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 June 30, 2025;
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: August 8, 2025
| /s/ Thomas Kersting | |||||
| Thomas Kersting | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
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 June 30, 2025;
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: August 8, 2025
| /s/ Mark Hyde | |||||
| Mark Hyde | |||||
| Chief Financial Officer | |||||
| (Principal Financial and Accounting Officer) | |||||
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 June 30, 2025, 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 June 30, 2025 (the last date of the period covered by the Report).
| Dated: | August 8, 2025 | By | /s/ Thomas Kersting | ||||||||
| Thomas Kersting, Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
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 June 30, 2025, 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 June 30, 2025 (the last date of the period covered by the Report).
| Dated: | August 8, 2025 | By | /s/ Mark Hyde | ||||||||
| Mark Hyde, Chief Financial Officer | |||||||||||
| (Principal Financial and Accounting Officer) | |||||||||||