What changed in this filing

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Item 1A. Risk Factors

2025-05-09 compared with 2024-11-08 · 151 added, 125 removed, 504 unchanged (35% of the section changed)

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Prices and supplies are subject to and determined by numerous market and other forces over which

we have no control, such as inclement or favorable weather, domestic and global demand, supply excesses or shortages, export conditions,

inflationary conditions, global geopolitical tensions and various governmental policies in the United States and throughout the world.

we have no control, such as inclement or favorable weather, domestic and global demand, supply excesses or shortages, import and export

conditions (including tariffs), inflationary conditions, global geopolitical tensions and various governmental policies in the United

States and throughout the world.

Price volatility of corn, natural gas and other

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and may seek to renegotiate prices under those contracts during periods of falling prices or high price volatility.

the past several years, for example, the spread between corn and fuel-grade ethanol prices has fluctuated significantly.

Historically, the spread between corn and fuel-grade

ethanol prices has fluctuated significantly.

Fluctuations are likely to continue to occur.

A sustained negative or narrow spread, whether as a result of sustained high or

increased corn prices or sustained low or decreased alcohol or essential ingredient prices, would adversely affect our results of

operations and financial condition.

Revenues from sales of alcohols, particularly fuel-grade ethanol, and essential ingredients have

in the past and could in the future decline below the marginal cost of production, which have in the past and may again in the

future force us to suspend production, particularly fuel-grade ethanol production, at some or all of our facilities.

For example, we

hot-idled our Magic Valley facility in early 2023 due to unfavorable market conditions and again hot-idled our Magic Valley facility

in early 2024 in part due to unfavorable market conditions and to expedite the installation of additional equipment needed to

achieve the intended production rate, quality and consistency from the corn oil and high protein system at the facility.

We restarted the Magic Valley facility in July 2024, but due to challenging

economics that arose in the fourth quarter and continue through the filing of this report, we plan to idle the plant before the end of

2024 unless there are meaningful improvements in overall economics at the facility.

A sustained negative or narrow spread, whether

as a result of sustained high or increased corn prices or sustained low or decreased alcohol or essential ingredient prices, would adversely

affect our results of operations and financial condition.

Revenues from sales of alcohols, particularly fuel-grade ethanol, and essential

ingredients have in the past and could in the future decline below the marginal cost of production, which have in the past and may again

in the future force us to suspend production, particularly fuel-grade ethanol production, at some or all of our facilities.

we hot-idled our Magic Valley facility in early 2023 due to unfavorable market conditions and again hot-idled our Magic Valley facility

in early 2024 in part due to unfavorable market conditions and to expedite the installation of additional equipment needed to achieve

the intended production rate, quality and consistency from the corn oil and high protein system at the facility.

We restarted the Magic

Valley facility in July 2024, but due to challenging market economics, we cold-idled the plant at the end of 2024.

In addition, some of our fuel-grade ethanol marketing

and distribution activities will likely be unprofitable in a market of generally declining prices due to the nature of our business.

example, to satisfy customer demand, we maintain certain quantities of fuel-grade ethanol inventory for subsequent resale.

procure much of our fuel-grade ethanol inventory outside of contracted third-party marketing and distribution arrangements and therefore

must buy fuel-grade ethanol at a price established at the time of purchase and sell fuel-grade ethanol at an index price established later

at the time of sale that is generally reflective of movements in the market price of fuel-grade ethanol.

As a result, our margins for

fuel-grade ethanol sold in these transactions generally decline and may turn negative as the market price of fuel-grade ethanol declines.

and distribution activities for third-party gallons will likely be unprofitable in a market of generally declining prices due to the nature

of our business.

For example, to satisfy customer demand, we maintain certain quantities of fuel-grade ethanol inventory for subsequent

When quantities in excess of our own production are needed to meet customer demand, we procure fuel-grade ethanol from third parties

and therefore must buy fuel-grade ethanol at a price established at the time of purchase and sell fuel-grade ethanol at an index price

established later at the time of sale that is generally reflective of movements in the market price of fuel-grade ethanol.

our margins for fuel-grade ethanol sold in these transactions generally decline and may turn negative as the market price of fuel-grade

ethanol declines.

We can provide no assurances that corn, natural

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and product price volatility, in particular, corn and natural gas costs and fuel-grade ethanol prices, we may enter into contracts to

purchase a portion of our corn or natural gas requirements on a forward basis or fix the sale price of portions of our alcohol production.

In addition, we may engage in other hedging transactions involving exchange-traded futures contracts for corn, natural gas and unleaded

gasoline from time to time.

The financial statement impact of these activities is dependent upon, among other things, the prices involved

and our ability to sell sufficient products to use all of the corn and natural gas for which forward commitments have been made.

recognized losses in the past, and may suffer losses in the future, from our hedging arrangements.

For example, for the year ended December

31, 2023, we recognized net losses of $8.0 million, related to the change in the fair values of hedging contracts.

purchase a portion of our corn or natural gas requirements on a forward basis or to lock in the premium to fuel-grade ethanol market prices

on portions of our alcohol production.

In addition, we may engage in other hedging transactions involving exchange-traded futures contracts

for corn, natural gas and unleaded gasoline from time to time.

The financial statement impact of these activities is dependent upon, among

other things, the prices involved and our ability to sell sufficient products to use all of the corn and natural gas for which forward

commitments have been made.

We have recognized losses in the past, and may suffer losses in the future, from our hedging arrangements.

For example, for the year ended December 31, 2023, we recognized net losses of $8.0 million related to the change in the fair values of

hedging contracts.

Hedging arrangements also expose us to the risk

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In the past, poor weather has caused disruptions in rail transportation,

which slowed the delivery of fuel-grade ethanol by rail, a key method by which fuel-grade ethanol from our Pekin Campus is transported

For example, in the first quarter of 2024, extreme

cold weather conditions in January at our Pekin Campus restricted barge deliveries and increased standby fees.

To manage inventory levels,

we transported more product by rail, a higher cost mode of transportation.

Cold weather conditions also required us to shift to lower

margin feed products and reduced our production rates across our Pekin Campus, hindering our ability to produce specialty alcohol at full

In the third quarter of 2023 we experienced unusually high unscheduled production downtime for repairs and maintenance which

reduced sales volumes and profits.

In 2022, a lightning strike at the utility servicing our Pekin Campus disrupted our operations, cutting

power to our facilities and materially affecting our production, resulting in unexpected repair and maintenance costs, lost production

and degradation in the quality of work-in-progress inventories.

In addition, in 2020, we experienced closure of the Illinois River for

lock repairs which required greater use of less cost-effective modes of product transport such as via rail and truck, which resulted in

higher costs and negatively affected our results of operations.

which slowed the delivery of fuel-grade ethanol and/or corn by rail to and from our facilities.

For example, in late April 2025, during a period

of rapidly rising river levels, our loadout dock at our Pekin Campus was damaged, negatively impacting production and logistics.

in the first quarter of 2024, extreme cold weather conditions in January at our Pekin Campus restricted barge deliveries and increased

standby fees.

To manage inventory levels, we transported more product by rail, a higher cost mode of transportation.

Cold weather conditions

also required us to shift to lower margin feed products and reduced our production rates across our Pekin Campus, hindering our ability

to produce specialty alcohol at full capacity.

In the third quarter of 2023 we experienced unusually high unscheduled production downtime

for repairs and maintenance which reduced sales volumes and profits.

Disruptions in production or distribution, whether

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Moreover, our

plants are constructed and operate exclusively as corn-based alcohol production facilities.

plants are constructed and operate primarily as corn-based alcohol production facilities.

Competitors and other third parties have undertaken

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adverse inflationary impacts on our budgets and expenses for many of our in-process and planned capital projects.

Inflation and its negative

impacts could escalate in future periods.

Even if inflation stabilizes or abates, the prices of key production inputs, wages and other

costs of labor, equipment, services, and other business expenses, and for our capital projects, may remain at elevated levels.

not be able to include these additional costs in the prices of the products we sell.

As a result, inflation and sustained higher prices

may have a material adverse effect on our results of operations and financial condition.

Inflation, including

through tariffs, and its negative impacts could escalate in future periods.

Even if inflation stabilizes or abates, the prices of key

production inputs, wages and other costs of labor, equipment, services, and other business expenses, and for our capital projects, will

likely remain at elevated levels.

We may not be able to include these additional costs in the prices of the products we sell.

inflation and sustained higher prices may have a material adverse effect on our results of operations and financial condition.

Climate change, and governmental regulations aimed

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● water is one of our key production inputs;

water resource limitations may result from drought and other inclement weather;

water resource

limitations may also result from rationing and other governmental regulations limiting water use;

water resource limitations

may result from drought and other inclement weather;

water resource limitations may also result from rationing and other governmental

regulations limiting water use;

● higher water temperatures due to increased global or regional temperatures may negatively affect production efficiencies due to water

temperature production requirements given the poor cooling capacities of our older facilities;

temperature production requirements given the limited cooling capacities of our older facilities;

● flooding and other inclement weather may negatively affect our river access, other transportation logistics and costs, and storage

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New legislation in the United States to address

climate change issues, including at the federal, state and local levels, likely will continue.

This may include new or expanded cap-and-trade

programs that may layer additional costs on any business that emits greenhouse gases.

New legislation, including new or expanded cap-and-trade

programs, could materially and adversely impact our production cost structure and the market viability of our products.

climate change issues, especially at the state and local levels, may be passed and implemented, materially and adversely impacting our

Any of these factors could materially and adversely

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operating cash flow in the past.

For example, for the three months ended September 30, 2024, June 30, 2024 and December 31, 2023, for

the nine months ended September 30, 2024 and for the years ended December 31, 2023 and 2022, we incurred consolidated net losses of approximately

$2.4 million, $3.1 million, $19.0 million, $17.3 million, $28.0 million and $41.6 million, respectively.

We may incur losses and negative

operating cash flow in the future.

We expect to rely on cash on hand, cash, if any, generated from our operations, borrowing availability

under our lines of credit and proceeds from our future financing activities, if any, to fund all of the cash requirements of our business.

Additional losses and negative operating cash flow may hamper our operations and impede us from expanding our business.

For example, for the years ended December 31, 2024, 2023 and 2022, we incurred consolidated net losses

of approximately $59.0 million, $28.0 million and $41.6 million, respectively.

For the year ended December 31, 2024, we incurred negative

operating cash flow of $3.5 million.

We may incur losses and negative operating cash flow in the future.

We expect to rely on cash on

hand, cash, if any, generated from our operations, borrowing availability under our lines of credit and proceeds from our future financing

activities, if any, to fund all of the cash requirements of our business.

Additional losses and negative operating cash flow may hamper

our operations and impede us from expanding our business.

We are engaged in multiple capital improvement projects.

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in multiple capital improvement projects to diversify and enhance our revenue streams and to expand margins and profitability by reducing

These projects have different timelines, returns on investment and risk profiles.

In addition, we must raise significant additional

capital to complete some of our projects, including our CCS project.

Our expected financial and other results from these projects are

based on assumptions around many factors, including their costs, timing, operation and market prices prevailing at project completion

and thereafter, as well as tax and other favorable environmental attributes associated with low carbon alcohol that may accrue to our

For example, our assumptions around the anticipated results of our CCS project rely heavily on the tax benefits that may accrue

to us under the Inflation Reduction Act of 2022 as well as other favorable environmental attributes associated with carbon capture and

storage and low carbon alcohol production.

These tax and other benefits may change, including as a result of new or repealed laws, new

administrations and the implementation or interpretation of existing laws, or the exhaustion of funds or benefits available under a particular

We can provide no assurances that any particular benefit will be available to us upon completion of our CCS project, or thereafter,

or any other capital improvement project.

These projects have different timelines, returns on investment and risk profiles, including regulatory risks.

In addition, we must

raise significant additional capital to complete some of our projects, including our CCS project.

Our expected financial and other results

from these projects are based on assumptions around many factors, including their costs, timing, operation and market prices prevailing

at project completion and thereafter, as well as tax and other favorable environmental attributes associated with low carbon alcohol that

may accrue to our benefit.

For example, our assumptions around the anticipated results of our CCS project rely heavily on the tax benefits

that may accrue to us under the Inflation Reduction Act of 2022 as well as other favorable environmental attributes associated with carbon

capture and storage and low carbon alcohol production.

These tax and other benefits may change, including as a result of new or repealed

laws, new administrations and the implementation or interpretation of existing laws, or the exhaustion of funds or benefits available

under a particular program.

For example, in January 2025, the new administration suspended all Inflation Reduction Act spending for 90

In addition, certain provisions of the Inflation Reduction Act lack proposed or final regulations and guidance.

Regulators could

issue new regulations or guidance that significantly narrows the application of clean energy tax incentives, and could even defer or withdraw

regulations, which could materially and adversely affect the economic outcome of our CCS project.

We can provide no assurances that any

particular benefit will be available to us upon completion of our CCS project, or thereafter, or any other capital improvement project.

Capital improvement

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Our CCS project in particular

requires Environmental Protection Agency, or EPA, approval but the EPA’s own projected

requires EPA approval but the EPA’s own projected

timeline for approval has lengthened and may lengthen further.

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and, as circumstances require, may have to do so again.

our CCS project may be adversely affected by the SAFE CCS Act or the United States Supreme Court’s decision in the case of Chevron

Natural Resources Defense Council, Inc., or both, as discussed below.

our CCS project may be adversely affected by the SAFE CCS Act, proposed legislation in Illinois or the United States Supreme Court’s

decision in the case of Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., or any of them, as discussed below.

and economics of our CCS project may also be adversely affected by new rules proposed by the U.S.

Department of Transportation’s

Pipeline and Hazardous Materials Safety Administration that impose stronger standards for CO 2 pipelines and establish new standards

for transporting CO 2 in a gaseous state via pipeline, adding additional requirements and costs to the project.

We can provide

no assurances that our projects will be completed, or if completed, will be completed timely.

We also can provide no assurances that our

project assumptions will reflect prevailing future conditions or that our projects will achieve the results we expect, including as to

projected additional EBITDA and Adjusted EBITDA.

Failure to achieve our expected results may have a material adverse effect on our business,

financial condition and results of operations.

no assurances that our projects will be completed, or if completed, will be completed timely or within budget.

We also can provide no

assurances that our project assumptions will reflect prevailing future conditions or that our projects will achieve the results we expect,

including as to projected additional EBITDA and Adjusted EBITDA.

Failure to achieve our expected results may have a material adverse effect

on our business, financial condition and results of operations.

We regularly incur significant expenses to repair,

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maintain and upgrade our production facilities and operating equipment, estimated at an average of $30.0 million per year.

expect these expenses will be approximately $34.0 million for 2024.

The machines and equipment we use to produce our alcohols and essential

ingredients are complex, have many parts, and some operate on a continuous basis.

We must perform routine equipment maintenance and must

periodically replace a variety of parts such as motors, pumps, pipes and electrical parts, and engage in other repairs.

In addition, our

production facilities require periodic shutdowns to perform major maintenance and upgrades.

Our production facilities also occasionally

require unscheduled shutdowns to perform repairs.

For example, we recently completed our biennial wet mill outage at our Pekin Campus.

The wet mill was offline for ten days, which negatively impacted sales and margins for the second quarter.

In the first quarter of 2024,

production at our Colombia facility was hampered by equipment issues that extended the facility’s regularly scheduled outage.

the third quarter of 2023 we experienced unusually high unscheduled production downtime for repairs and maintenance at our Pekin Campus

which reduced sales volumes and increased losses.

These scheduled and unscheduled shutdowns result in lower sales and increased costs

in the periods during which a shutdown occurs and could result in unexpected operational issues in future periods resulting from changes

to equipment and operational and mechanical processes made during shutdown.

$35.0 million of these expenses for 2024.

The machines and equipment we use to produce our alcohols and essential ingredients are complex,

have many parts, and some operate on a continuous basis.

We must perform routine equipment maintenance and must periodically replace a

variety of parts such as motors, pumps, pipes and electrical parts, and engage in other repairs.

In addition, our production facilities

require periodic shutdowns to perform major maintenance and upgrades.

Our production facilities also occasionally require unscheduled

shutdowns to perform repairs.

For example, we completed our biennial wet mill outage at our Pekin Campus in Spring 2024.

was offline for ten days, which negatively impacted sales and margins for the second quarter.

In the first quarter of 2024, production

at our Colombia facility was hampered by equipment issues that extended the facility’s regularly scheduled outage.

quarter of 2023 we experienced unusually high unscheduled production downtime for repairs and maintenance at our Pekin Campus which reduced

sales volumes and increased losses.

These scheduled and unscheduled shutdowns result in lower sales and increased costs in the periods

during which a shutdown occurs and could result in unexpected operational issues in future periods resulting from changes to equipment

and operational and mechanical processes made during shutdown.

Our indebtedness may expose us to risks that could

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losses that are not fully covered by insurance could have a material adverse effect on our results of operations and financial condition.

Our CCS project may be adversely affected

by the SAFE CCS Act.

Our CCS project may be adversely affected by the SAFE

CCS Act, Illinois Senate Bill 1723 and other Regulations.

The SAFE CCS Act was signed into law in Illinois

in July 2024.

We are evaluating at our Pekin Campus, located in Illinois, a CCS project that will require significant financial and personnel

We are pursuing at our Pekin Campus, located in Illinois, a CCS project that will require significant financial and personnel

Our CCS project is our most important ongoing capital improvement initiative.

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financial and insurance requirements on CO 2 pipelines and imposes a moratorium on the construction of new CO 2 pipelines

until the federal Pipeline and Hazardous Materials Safety Administration finalizes its new safety rules or July 1, 2026, whichever occur

The SAFE CCS Act will result in increased compliance and other requirements likely adding costs and potentially adding time to

complete our CCS project.

We can provide no assurance that our CCS project will not be adversely affected by the SAFE CCS Act or that

it will be financially viable in light of any new requirements and potential delays.

until the U.S.

Department of Transportation’s Pipeline and Hazardous Materials Safety Administration finalizes its new safety rules

or July 1, 2026, whichever occur sooner.

The SAFE CCS Act will result in increased compliance and other requirements likely adding costs

and potentially adding time to complete our CCS project.

In January 2025, the U.S.

Department of Transportation’s Pipeline and Hazardous

Materials Safety Administration proposed new rules that impose stronger standards for CO 2 pipelines and establish new standards

for transporting CO 2 in a gaseous state via pipeline, adding additional requirements

and costs to the project.

In February 2025, new legislation in Illinois (Senate

Bill 1723), was proposed that amends the Illinois Environmental Protection Act to provide that carbon storage activity shall not be conducted

within a storage facility that overlies, underlies or passes through a sole-source aquifer.

This legislation, if passed, may have a material

and adverse impact on our current CCS project plans and may necessitate a more costly, or less profitable, carbon capture and storage

solution, such as carbon transportation via barge instead of through pipelines.

We can provide no assurance that our CCS project

will not be adversely affected by the SAFE CCS Act, Senate Bill 1723 or other regulations or that it will be financially viable in light

of any new requirements and potential delays.

We may be adversely affected by food and drug laws

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The EPA finalized mandatory volumes of 15.0 billion gallons for each

of 2023, 2024, and 2025 of conventional renewable fuel, or corn-based fuel-grade ethanol, which could decline in future years.

of 2023, 2024, and 2025 of conventional renewable fuels, or corn-based fuel-grade ethanol, which could decline in future years.

The EPA may issue small refinery waivers, in full

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outcome could also materially and adversely affect the Treasury Department’s ability to promulgate favorable regulations under the

Inflation Reduction Act of 2022, including tax credits such as the 45Q carbon capture and storage tax credits, and other industry-favorable

Less industry-favorable rulemaking and agency interpretations of laws and regulations could materially and adversely affect

our results of operations, cash flows and financial condition as well as the financial prospects of certain capital improvement projects,

Inflation Reduction Act of 2022, including tax credits such as the section 45Q carbon capture and storage tax credits and section 45Z

low carbon fuel tax credits, as well as other industry-favorable tax credits.

Less industry-favorable rulemaking and agency interpretations

of laws and regulations could materially and adversely affect our results of operations, cash flows and financial condition as well as

the financial prospects of certain capital improvement projects, such as CCS.

Risks Related to Ownership of our Common Stock

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● fluctuations in the costs of key production input commodities such as corn and natural gas;

● the timing, cost and effects of, and our ability to fund, our capital improvement projects, including with respect to our CCS project;

● the timing, cost and effects of, and our ability to fund, our capital improvement projects, including our CCS initiative;

● regulatory developments or increased enforcement relating to our initiatives and projects or to our business, including our CCS initiative;

● anticipated trends in our financial condition and results of operations;

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● stock market price and volume fluctuations generally;

● regulatory developments or increased enforcement;

● additions or departures of key personnel;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors