Green Plains Inc. 10-Q

Item 1. Financial Statements. GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) September 30, ‎ 2021 December 31, ‎ 2020 (unaudited) ASSETS Current assets Cash and cash equivalents $ 589,822 $ 233,860 Restricted cash 131,073 40,950 Accounts receivable, net of allowances of $ 382 and $ 143 , respectively 90,271 55,568 Income taxes receivable 1,732 661 Inventories 243,207 269,491 Prepaid expenses and other 15,730 16,531 Derivative financial instruments 45,691 25,292 Total current assets 1,117,526 642,353 Property and equipment, net of accumulated depreciation ‎ and amortization of $ 547,599 and $ 530,194 , respectively 842,141 801,690 Operating lease right-of-use assets 66,971 61,883 Other assets 86,566 72,991 Total assets $ 2,113,204 $ 1,578,917 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 112,459 $ 140,058 Accrued and other liabilities 42,731 38,471 Derivative financial instruments 35,401 20,265 Operating lease current liabilities 16,766 14,902 Short-term notes payable and other borrowings 162,470 140,808 Current maturities of long-term debt 34,477 98,052 Total current liabilities 404,304 452,556 Long-term debt 514,434 287,299 Operating lease long-term liabilities 53,050 49,549 Other liabilities 23,798 12,849 Total liabilities 995,586 802,253 Commitments and contingencies (Note 13) Stockholders' equity Common stock, $ 0.001 par value; 75,000,000 shares authorized; ‎ 61,838,598 and 47,470,505 shares issued, and 53,594,142 ‎ and 35,657,344 shares outstanding, respectively 65 47 Additional paid-in capital 1,067,583 740,889 Retained earnings (deficit) ( 5,631 ) 39,375 Accumulated other comprehensive income (loss) 1,038 ( 2,172 ) Treasury stock, 8,244,456 and 11,813,161 shares, respectively ( 91,626 ) ( 131,287 ) Total Green Plains stockholders' equity 971,429 646,852 Noncontrolling interests 146,189 129,812 Total stockholders' equity 1,117,618 776,664 Total liabilities and stockholders' equity $ 2,113,204 $ 1,578,917 See accompanying notes to the consolidated financial statements. ‎ 3 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share amounts) Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 Revenues Product revenues $ 745,240 $ 423,027 $ 2,019,006 $ 1,441,248 Service revenues 1,551 1,035 5,843 3,707 Total revenues 746,791 424,062 2,024,849 1,444,955 Costs and expenses Cost of goods sold (excluding depreciation and amortization expenses reflected below) 730,179 393,933 1,878,820 1,372,057 Operations and maintenance expenses 5,162 6,647 17,153 19,410 Selling, general and administrative expenses 26,022 19,934 72,923 62,090 Loss (gain) on sale of assets, net 1,823 ( 2,000 ) ( 31,245 ) ( 2,000 ) Goodwill impairment - - - 24,091 Depreciation and amortization expenses 28,280 19,753 69,493 57,208 Total costs and expenses 791,466 438,267 2,007,144 1,532,856 Operating income (loss) ( 44,675 ) ( 14,205 ) 17,705 ( 87,901 ) Other income (expense) Interest income 25 3 496 643 Interest expense ( 9,488 ) ( 10,169 ) ( 60,225 ) ( 29,536 ) Other, net ( 440 ) 12 ( 1,680 ) 862 Total other expense ( 9,903 ) ( 10,154 ) ( 61,409 ) ( 28,031 ) Loss before income taxes and income from equity method investees ( 54,578 ) ( 24,359 ) ( 43,704 ) ( 115,932 ) Income tax benefit (expense) ( 7 ) ( 7,280 ) 2,914 48,461 Income from equity method investees, net of income taxes 174 906 517 20,917 Net loss ( 54,411 ) ( 30,733 ) ( 40,273 ) ( 46,554 ) Net income attributable to noncontrolling interests 5,211 3,753 16,151 12,591 Net loss attributable to Green Plains $ ( 59,622 ) $ ( 34,486 ) $ ( 56,424 ) $ ( 59,145 ) Earnings per share: Net loss attributable to Green Plains - basic and diluted $ ( 1.18 ) $ ( 1.00 ) $ ( 1.27 ) $ ( 1.71 ) Weighted average shares outstanding: Basic and diluted 50,482 34,629 44,581 34,632 See accompanying notes to the consolidated financial statements. ‎ 4 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited and in thousands) Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 Net loss $ ( 54,411 ) $ ( 30,733 ) $ ( 40,273 ) $ ( 46,554 ) Other comprehensive income (loss), net of tax: Unrealized gains (losses) on derivatives arising during the period, net of tax benefit (expense) of ($ 171 ), $ 859 , ($ 260 ) and ($ 160 ), respectively 538 ( 2,696 ) 820 503 Reclassification of realized losses (gains) on derivatives, net of tax benefit (expense) of $ 62 , $ 0 , ($ 750 ) and $ 1,431 , respectively ( 194 ) - 2,390 ( 4,492 ) Other comprehensive income (loss), net of tax 344 ( 2,696 ) 3,210 ( 3,989 ) Share of equity method investees other comprehensive income (loss) arising during the period, net of tax benefit (expense) of $ 0 , $ 6,705 , $ 0 and ($ 1,318 ), respectively - ( 21,057 ) - 4,140 Total other comprehensive income (loss), net of tax 344 ( 23,753 ) 3,210 151 Comprehensive loss ( 54,067 ) ( 54,486 ) ( 37,063 ) ( 46,403 ) Comprehensive income attributable to noncontrolling interests 5,211 3,753 16,151 12,591 Comprehensive loss attributable to Green Plains $ ( 59,278 ) $ ( 58,239 ) $ ( 53,214 ) $ ( 58,994 ) See accompanying notes to the consolidated financial statements. ‎ 5 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Nine Months Ended ‎ September 30, 2021 2020 Cash flows from operating activities: Net loss $ ( 40,273 ) $ ( 46,554 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 69,493 57,208 Amortization of debt issuance costs and debt discount 6,957 16,097 Gain on sale of assets, net ( 31,245 ) ( 1,405 ) Loss on extinguishment of debt 32,645 - Goodwill impairment - 24,091 Deferred income taxes ( 3,008 ) ( 10,569 ) Stock-based compensation 3,980 5,720 Income from equity method investees, net of income taxes ( 517 ) ( 20,917 ) Distribution from equity method investees, net of income taxes - 27,910 Other 1,199 18 Changes in operating assets and liabilities before effects of business combinations and dispositions: Accounts receivable ( 33,776 ) 54,683 Inventories 4,088 68,301 Derivative financial instruments ( 2,386 ) 5,532 Prepaid expenses and other assets 175 2,051 Accounts payable and accrued liabilities ( 35,007 ) ( 78,091 ) Current income taxes ( 1,073 ) ( 26,825 ) Other 876 ( 802 ) Net cash provided by (used in) operating activities ( 27,872 ) 76,448 Cash flows from investing activities: Purchases of property and equipment, net ( 123,687 ) ( 85,376 ) Proceeds from the sale of assets 87,217 - Other investing activities ( 7,000 ) ( 4,098 ) Net cash used in investing activities ( 43,470 ) ( 89,474 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 367,701 13,000 Payments of principal on long-term debt ( 188,706 ) ( 12,933 ) Proceeds from short-term borrowings 2,450,416 1,816,821 Payments on short-term borrowings ( 2,432,553 ) ( 1,866,526 ) Payments on extinguishment of convertible debt ( 20,861 ) - Payments for repurchase of common stock - ( 11,479 ) Payments of cash distributions ( 4,187 ) ( 8,281 ) Proceeds from issuance of common stock, net 356,011 - Payments of loan fees ( 9,050 ) ( 3,900 ) Payments related to tax withholdings for stock-based compensation ( 4,674 ) ( 1,288 ) Other financing activities 3,330 - Net cash provided by (used in) financing activities 517,427 ( 74,586 ) Net change in cash, cash equivalents and restricted cash 446,085 ( 87,612 ) Cash, cash equivalents and restricted cash, beginning of period 274,810 269,896 Cash, cash equivalents and restricted cash, end of period $ 720,895 $ 182,284 Continued on the following page 6 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Continued from the previous page Nine Months Ended ‎ September 30, 2021 2020 Reconciliation of total cash, cash equivalents and restricted cash: Cash and cash equivalents $ 589,822 $ 150,407 Restricted cash 131,073 31,877 Total cash, cash equivalents and restricted cash $ 720,895 $ 182,284 Non-cash financing activity: Exchange of 4.00 % convertible notes due 2024 $ 51,000 $ - Exchange of common stock held in treasury stock for 4.00 % ‎ convertible notes due 2024 $ 39,661 $ - Supplemental investing activities: Assets disposed of in sale $ 54,626 $ - Less: liabilities relinquished ( 3,706 ) - Net assets disposed $ 50,920 $ - Supplemental disclosures of cash flow: Cash paid (refunded) for income taxes, net $ 1,336 $ ( 4,533 ) Cash paid for interest $ 25,529 $ 20,325 Cash premium paid for extinguishment of convertible notes $ 20,861 $ - See accompanying notes to the consolidated financial statements. ‎ 7 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES References to the Company References to “Green Plains” or the “company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Inc., an Iowa corporation, and its subsidiaries. Consolidated Financial Statements The consolidated financial statements include the company’s accounts and all significant intercompany balances and transactions are eliminated. Unconsolidated entities are included in the financial statements on an equity basis. The company owns a 48.9 % limited partner interest and a 2.0 % general partner interest in Green Plains Partners LP. Public investors own the remaining 49.1 % limited partner interest in the partnership. The company determined that the limited partners in the partnership with equity at risk lack the power, through voting rights or similar rights, to direct the activities that most significantly impact the partnership’s economic performance; therefore, the partnership is considered a variable interest entity. The company, through its ownership of the general partner interest in the partnership, has the power to direct the activities that most significantly affect economic performance and is obligated to absorb losses and has the right to receive benefits that could be significant to the partnership. Therefore, the company is considered the primary beneficiary and consolidates the partnership in the company’s financial statements. The assets of the partnership cannot be used by the company for general corporate purposes. The partnership’s consolidated total assets as of September 30, 2021 and December 31, 2020, excluding intercompany balances, are $ 102.1 million and $ 91.2 million, respectively, and primarily consist of property and equipment, operating lease right-of-use assets and goodwill. The partnership’s consolidated total liabilities as of September 30, 2021 and December 31, 2020, excluding intercompany balances, are $ 112.6 million and $ 151.2 million, respectively, which primarily consist of long-term debt as discussed in Note 8 – Debt and operating lease liabilities. The liabilities recognized as a result of consolidating the partnership do not represent additional claims on our general assets. The company also owns a majority interest in BioProcess Algae, a joint venture formed in 2008, as well as a majority interest in Fluid Quip Technologies, LLC, with their results being consolidated in our consolidated financial statements. The accompanying unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Because they do not include all of the information and notes required by GAAP, the consolidated financial statements should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 16, 2021. The unaudited financial information reflects adjustments, which are, in the opinion of management, necessary for a fair presentation of results of operations, financial position and cash flows for the periods presented. The adjustments are normal and recurring in nature, unless otherwise noted. Interim period results are not necessarily indicative of the results to be expected for the entire year. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications did not affect total revenues, costs and expenses or net income. See Note 8 – Debt and Note 11 – Stockholders’ Equity for further details. 8 Table of Contents Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The company bases its estimates on historical experience and assumptions it believes are proper and reasonable under the circumstances and regularly evaluates the appropriateness of its estimates and assumptions. Actual results could differ from those estimates. Key accounting policies, including but not limited to those relating to revenue recognition, carrying value of intangible assets, operating leases, impairment of long-lived assets and goodwill, derivative financial instruments, accounting for income taxes and assets acquired and liabilities assumed in acquisitions, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements. Description of Business The company operates within four business segments: (1) ethanol production, which includes the production of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes food-grade corn oil and (4) partnership, which includes fuel storage and transportation services. The food and ingredients segment had no activity during the three and nine months ended September 30, 2021 and 2020. Cash and Cash Equivalents Cash and cash equivalents includes bank deposits as well as short-term, highly liquid investments with original maturities of three months or less. Restricted Cash The company has restricted cash, which can only be used for funding letters of credit, for payment towards a revolving credit agreement, or for capital expenditures as specified in certain credit facility agreements. Restricted cash also includes cash margins and securities pledged to commodity exchange clearinghouses and at times, funds in escrow related to acquisition and disposition activities. To the degree these segregated balances are cash and cash equivalents, they are considered restricted cash on the consolidated balance sheets. Revenue Recognition The company recognizes revenue when obligations under the terms of a contract with a customer are satisfied. Generally, this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Sales, value add, and other taxes the company collects concurrent with revenue-producing activities are excluded from revenue. Sales of ethanol, distillers grains, corn oil, natural gas and other commodities by the company’s marketing business are recognized when obligations under the terms of a contract with a customer are satisfied. Generally, this occurs with the transfer of control of products or services. Revenues related to marketing for third parties are presented on a gross basis as the company controls the product prior to the sale to the end customer, takes title of the product and has inventory risk. Unearned revenue is recorded for goods in transit when the company has received payment but control has not yet been transferred to the customer. Revenues for receiving, storing, transferring and transporting ethanol and other fuels are recognized when the product is delivered to the customer. The company routinely enters into physical-delivery energy commodity purchase and sale agreements. At times, the company settles these transactions by transferring its obligations to other counterparties rather than delivering the physical commodity. Energy trading transactions are reported net as a component of revenue. Revenues include net gains or losses from derivatives related to products sold while cost of goods sold includes net gains or losses from derivatives related to commodities purchased. Revenues also include realized gains and losses on related derivative financial instruments and reclassifications of realized gains and losses on cash flow hedges from accumulated other comprehensive income or loss. Sales of products, including agricultural commodities, are recognized when control of the product is transferred to the customer, which depends on the agreed upon shipment or delivery terms. Revenues related to grain merchandising are presented gross and include shipping and handling, which is also a component of cost of goods sold. Revenues from grain storage are recognized over time as the services are rendered. 9 Table of Contents Revenues related to the design, engineering and installation of equipment are recognized over the term of the related contracts as equipment is delivered and installed and services are performed. A substantial portion of the partnership revenues are derived from fixed-fee commercial agreements for storage, terminal or transportation services. The partnership recognizes revenue upon transfer of control of product from its storage tanks and fuel terminals, when railcar volumetric capacity is provided, and as truck transportation services are performed. To the extent shortfalls associated with minimum volume commitments in the previous four quarters continue to exist, volumes in excess of the minimum volume commitment are applied to those shortfalls. Remaining excess volumes generating operating lease revenue are recognized as incurred. Shipping and Handling Costs The company accounts for shipping and handling activities related to contracts with customers as costs to fulfill its promise to transfer the associated products. Accordingly, the company records customer payments associated with shipping and handling costs as a component of revenue, and classifies such costs as a component of cost of goods sold. Cost of Goods Sold Cost of goods sold includes direct labor, materials, shipping and plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in ethanol production. Grain purchasing and receiving costs, excluding labor costs for grain buyers and scale operators, are also included in cost of goods sold. Materials include the cost of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs, as well as reclassifications of gains and losses on cash flow hedges from accumulated other comprehensive income or loss. Plant overhead consists primarily of plant utilities, repairs and maintenance and outbound freight charges. Shipping costs incurred by the company, including railcar costs, are also reflected in cost of goods sold. The company uses exchange-traded futures and options contracts and forward purchase and sale contracts to attempt to minimize the effect of price changes on ethanol, grain, corn oil and natural gas. Exchange-traded futures and options contracts are valued at quoted market prices and settled predominantly in cash. The company is exposed to loss when counterparties default on forward purchase and sale contracts. Grain inventories held for sale and forward purchase and sale contracts are valued at market prices when available or other market quotes adjusted for basis differences, primarily in transportation, between the exchange-traded market and local market where the terms of the contract are based. Changes in forward purchase contracts and exchange-traded futures and options contracts are recognized as a component of cost of goods sold. Operations and Maintenance Expenses In the partnership segment, transportation expenses represent the primary component of operations and maintenance expenses. Transportation expenses include railcar leases, freight and shipping of the company’s ethanol and co-products, as well as costs incurred storing ethanol at destination terminals. Derivative Financial Instruments The company uses various derivative financial instruments, including exchange-traded futures and exchange-traded and over-the-counter options contracts, to attempt to minimize risk and the effect of commodity price changes, including, but not limited to, corn, ethanol, natural gas, soybean meal and soybean oil. The company monitors and manages this exposure as part of its overall risk management policy to reduce the adverse effect market volatility may have on its operating results. The company may hedge these commodities as one way to mitigate risk; however, there may be situations when these hedging activities themselves result in losses. 10 Table of Contents By using derivatives to hedge exposures to changes in commodity prices, the company is exposed to credit and market risk. The company’s exposure to credit risk includes the counterparty’s failure to fulfill its performance obligations under the terms of the derivative contract. The company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring their financial condition. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The company manages market risk by incorporating parameters to monitor exposure within its risk management strategy, which limits the types of derivative instruments and strategies the company can use and the degree of market risk it can take using derivative instruments. The company evaluates its physical delivery contracts to determine if they qualify for normal purchase or sale exemptions which are expected to be used or sold over a reasonable period in the normal course of business. Contracts that do not meet the normal purchase or sale criteria are recorded at fair value. Changes in fair value are recorded in operating income unless the contracts qualify for, and the company elects, cash flow hedge accounting treatment. Certain qualifying derivatives related to ethanol production and agribusiness and energy services are designated as cash flow hedges. The company evaluates the derivative instrument to ascertain its effectiveness prior to entering into cash flow hedges. Unrealized gains and losses are reflected in accumulated other comprehensive income or loss until the gain or loss from the underlying hedged transaction is realized and the physical transaction is completed. When it becomes probable a forecasted transaction will not occur, the cash flow hedge treatment is discontinued, which affects earnings. These derivative financial instruments are recognized in current assets or current liabilities at fair value. At times, the company hedges its exposure to changes in inventory values and designates qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted in the current period for changes in fair value. Estimated fair values carried at market are based on exchange-quoted prices, adjusted as appropriate for regional location basis values, which represent differences in local markets, including transportation as well as quality or grade differences. Basis values are generally determined using inputs from broker quotations or other market transactions. However, a portion of the value may be derived using unobservable inputs. Ineffectiveness of the hedges is recognized in the current period to the extent the change in fair value of the inventory is not offset by the change in fair value of the derivative. Recent Accounting Pronouncements On January 1, 2021, the company early adopted the amended guidance in ASC 470-20 , Debt - Debt with Conversion and Other Options and ASC 815-40 , Derivatives and Hedging - Contracts in Entity’s Own Equity - Accounting for Convertible Instruments and Contracts in an Equity’s Own Equity. The adoption of this guidance resulted in a $ 49.5 million decrease in additional paid-in capital, an $ 11.4 million increase in retained earnings and a $ 38.1 million increase in long-term debt, which included a $ 39.4 million increase in debt principal offset by a $ 1.3 million increase in debt issuance costs, resulting from amounts previously bifurcated to equity being reclassified to debt. See Note 8 – Debt and Note 11 – Stockholders’ Equity for further details. In March 2020, the FASB issued amended guidance in ASC 848, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and a subsequent update in January 2021, which provides optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. The expedients and exceptions provided by the amended guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The guidance is effective upon issuance and to be applied prospectively from any date beginning March 12, 2020 through December 31, 2022. The amended guidance is not expected to have a material impact on the company’s consolidated financial statements. In December 2019, the FASB issued amended guidance in ASC 740, Income Taxes - Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 74 0. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. The amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted. The amended guidance is not expected to have a material impact on the company’s consolidated financial statements. ‎ 11 Table of Contents 2. REVENUE Revenue Recognition Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Generally, this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Sales, value add, and other taxes the company collects concurrent with revenue-producing activities are excluded from revenue. Revenue by Source The following tables disaggregate revenue by major source (in thousands): Three Months Ended September 30, 2021 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 6,936 - - - 6,936 Corn oil - - - - - Service revenues 520 - 1,019 - 1,539 Other 8,633 9,597 - - 18,230 Intersegment revenues - - 1,969 ( 1,969 ) - Total revenues from contracts with customers 16,089 9,597 2,988 ( 1,969 ) 26,705 Revenues from contracts accounted for as derivatives under ASC 815 (1) : Ethanol 455,843 109,552 - - 565,395 Distillers grains 77,008 9,699 - - 86,707 Corn oil 35,363 11,222 - - 46,585 Grain - 13,505 - - 13,505 Other 4,046 3,837 - - 7,883 Intersegment revenues - 5,362 - ( 5,362 ) - Total revenues from contracts accounted for as derivatives 572,260 153,177 - ( 5,362 ) 720,075 Leasing revenues under ASC 842 (2) : - - 16,263 ( 16,252 ) 11 Total Revenues $ 588,349 $ 162,774 $ 19,251 $ ( 23,583 ) $ 746,791 Nine Months Ended September 30, 2021 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 14,974 - - - 14,974 Corn oil - - - - - Service revenues 2,545 - 3,235 - 5,780 Other 25,062 12,640 - - 37,702 Intersegment revenues - - 6,147 ( 6,147 ) - Total revenues from contracts with customers 42,581 12,640 9,382 ( 6,147 ) 58,456 Revenues from contracts accounted for as derivatives under ASC 815 (1) : Ethanol 1,159,020 324,395 - - 1,483,415 Distillers grains 268,167 27,953 - - 296,120 Corn oil 75,252 23,808 - - 99,060 Grain - 36,473 - - 36,473 Other 22,324 28,939 - - 51,263 Intersegment revenues - 15,997 - ( 15,997 ) - Total revenues from contracts accounted for as derivatives 1,524,763 457,565 - ( 15,997 ) 1,966,331 Leasing revenues under ASC 842 (2) : - - 49,976 ( 49,914 ) 62 Total Revenues $ 1,567,344 $ 470,205 $ 59,358 $ ( 72,058 ) $ 2,024,849 ‎ 12 Table of Contents Three Months Ended September 30, 2020 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 4,095 - - - 4,095 Corn oil - 2,938 - - 2,938 Service revenues - - 920 - 920 Other 66 1,408 - - 1,474 Intersegment revenues 25 - 2,289 ( 2,314 ) - Total revenues from contracts with customers 4,186 4,346 3,209 ( 2,314 ) 9,427 Revenues from contracts accounted for as derivatives under ASC 815 (1) : Ethanol 263,390 56,895 - - 320,285 Distillers grains 51,692 10,696 - - 62,388 Corn oil 12,433 5,805 - - 18,238 Grain 1 11,099 - - 11,100 Other 1,276 1,233 - - 2,509 Intersegment revenues - 5,354 - ( 5,354 ) - Total revenues from contracts accounted for as derivatives 328,792 91,082 - ( 5,354 ) 414,520 Leasing revenues under ASC 842 (2) : - - 18,173 ( 18,058 ) 115 Total Revenues $ 332,978 $ 95,428 $ 21,382 $ ( 25,726 ) $ 424,062 Nine Months Ended September 30, 2020 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 25,159 - - - 25,159 Corn oil - 2,938 - - 2,938 Service revenues - - 3,366 - 3,366 Other 4,257 3,668 - - 7,925 Intersegment revenues 75 - 6,201 ( 6,276 ) - Total revenues from contracts with customers 29,491 6,606 9,567 ( 6,276 ) 39,388 Revenues from contracts accounted for as derivatives under ASC 815 (1) : Ethanol 849,298 243,930 - - 1,093,228 Distillers grains 179,854 28,960 - - 208,814 Corn oil 36,621 23,681 - - 60,302 Grain 7 26,773 - - 26,780 Other 3,974 12,128 - - 16,102 Intersegment revenues - 17,030 - ( 17,030 ) - Total revenues from contracts accounted for as derivatives 1,069,754 352,502 - ( 17,030 ) 1,405,226 Leasing revenues under ASC 840 (2) : - - 52,467 ( 52,126 ) 341 Total Revenues $ 1,099,245 $ 359,108 $ 62,034 $ ( 75,432 ) $ 1,444,955 (1) Revenues from contracts accounted for as derivatives represent physically settled derivative sales that are outside the scope of ASC 606, where the company recognizes revenue when control of the inventory is transferred within the meaning of ASC 606 as required by ASC 610-20, Gains and Losses from Derecognition of Nonfinancial Assets . (2) Leasing revenues do not represent revenues recognized from contracts with customers under ASC 606, and are accounted for under ASC 842, Leases . Major Customers For the three and nine months ended September 30, 2021, no single customer’s revenue was over 10% of total revenues. No single customer’s revenue was over 10% of total revenues for the three months ended September 30, 2020, while revenues from Customer A represented approximately 10 % of total revenues for the nine months ended September 30, 2020, which are reported in the ethanol production segment. ‎ 13 Table of Contents 3. ACQUISITIONS AND DISPOSITIONS Acquisition of a Majority Interest in Fluid Quip Technologies, LLC On December 9, 2020, the company acquired a majority interest in Fluid Quip Technologies, LLC. During the second quarter of 2021, the company identified additional information through analysis of the final FQT acquisition agreements that resulted in a reassessment of certain contingent considerations related to potential earn-out payments which identified an understatement of other long term assets by $ 16.7 million, accrued liabilities of $ 2.4 million, long term other liabilities of $ 12.4 million and noncontrolling interests of $ 1.9 million as previously reported within ethanol production segment as of March 31, 2021 and December 31, 2020. Disposition of Ord Ethanol Plant On March 22, 2021, the company completed the sale of the plant located in Ord, Nebraska and certain related assets, to GreenAmerica Biofuels Ord LLC (the “Ord Transaction”) for a sale price of $ 64.0 million, plus working capital of $ 9.8 million. Correspondingly, the company entered into a separate asset purchase agreement with the Partnership to acquire the storage assets and assign the rail transportation assets to be disposed of in the Ord Transaction for $ 27.5 million, which was used to pay down a portion of the partnership’s credit facility. The divested assets were reported within the company’s ethanol production, agribusiness and energy services and partnership segments. The company recorded a pretax gain on the sale of the Ord plant of $ 35.9 million within corporate activities. The asset and liabilities of the Ord ethanol plant at closing on March 22, 2021 were as follows: (in thousands): Amounts of Identifiable Assets Disposed and Liabilities Relinquished Inventory $ 10,400 Prepaid expenses and other 632 Property and equipment 24,285 Operating lease right-of-use assets 1,811 Accrued and other liabilities ( 156 ) Operating lease current liabilities ( 1,021 ) Operating lease long-term liabilities ( 790 ) Total identifiable net assets disposed $ 35,161 The amounts reflected above represent working capital estimates, which are considered preliminary until contractual post-closing working capital adjustments are finalized. Disposition of Hereford Ethanol Plant On December 28, 2020, the company completed the sale of the plant located in Hereford, Texas, and certain related assets, to Hereford Ethanol Partners, L.P. There were no material changes to the assets disposed and liabilities relinquished from the disposition of the Hereford plant during the three and nine months ended September 30, 2021. Disposition of Equity Interest in Green Plains Cattle Company LLC On October 1, 2020, pursuant to the Securities Purchase Agreement, the company sold its remaining 50 % joint venture interest in GPCC to AGR, TGAM Agribusiness Fund LP and StepStone (the “Buyers”) for $ 80.5 million in cash, plus closing adjustments. The transaction resulted in a reduction in other assets of $ 69.7 million as a result of the removal of the equity method investment in GPCC, and a reduction in accumulated other comprehensive income (loss) of $ 10.7 million as a result of the removal of the company’s share of equity method investees accumulated other comprehensive loss. Transaction fees related to the disposal were not material. The Securities Purchase Agreement contains certain earn-out provisions of up to $ 4.0 million to be paid to the Buyers if certain EBITDA thresholds are met. During the three months ended September 30, 2021, the company recorded an estimated loss of $ 2.0 million associated with the earn-out provision, and will record any additional contingent amounts associated with the earn-out provision in the consolidated financial statements when the amount is reasonably determinable. 14 Table of Contents 4 . FAIR VALUE DISCLOSURES The following methods, assumptions and valuation techniques were used in estimating the fair value of the company’s financial instruments: Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities the company can access at the measurement date. Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1, quoted prices for identical or similar assets in markets that are not active, and other inputs that are observable or can be substantially corroborated by observable market data through correlation or other means. Grain inventories held for sale in the agribusiness and energy services segment are valued at nearby futures values, plus or minus nearby basis values, which represent differences in local markets, including transportation or commodity quality or grade differences. Level 3 – unobservable inputs that are supported by little or no market activity and comprise a significant component of the fair value of the assets or liabilities. The company currently does not have any recurring Level 3 financial instruments. Derivative contracts include exchange-traded commodity futures and options contracts and forward commodity purchase and sale contracts. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the company’s exchange-traded futures and options contracts are cash-settled on a daily basis. There have been no changes in valuation techniques and inputs used in measuring fair value. The company’s assets and liabilities by level are as follows (in thousands): Fair Value Measurements at September 30, 2021 Quoted Prices in ‎ Active Markets for ‎ Identical Assets Significant Other ‎ Observable Inputs (Level 1) (Level 2) Total Assets: Cash and cash equivalents $ 589,822 $ - $ 589,822 Restricted cash 131,073 - 131,073 Inventories carried at market - 41,456 41,456 Unrealized gains on derivatives - 45,691 45,691 Other assets 111 94 205 Total assets measured at fair value $ 721,006 $ 87,241 $ 808,247 Liabilities: Accounts payable (1) $ - $ 18,732 $ 18,732 Accrued and other liabilities (2) - 3,377 3,377 Unrealized losses on derivatives - 11,730 11,730 Other liabilities (2) - 9,320 9,320 Total liabilities measured at fair value $ - $ 43,159 $ 43,159 15 Table of Contents Fair Value Measurements at December 31, 2020 Quoted Prices in ‎ Active Markets for ‎ Identical Assets Significant Other ‎ Observable Inputs (Level 1) (Level 2) Total Assets: Cash and cash equivalents $ 233,860 $ - $ 233,860 Restricted cash 40,950 - 40,950 Inventories carried at market - 77,900 77,900 Unrealized gains on derivatives - 21,956 21,956 Other assets 112 29 141 Total assets measured at fair value $ 274,922 $ 99,885 $ 374,807 Liabilities: Accounts payable (1) $ - $ 19,355 $ 19,355 Unrealized losses on derivatives - 10,997 10,997 Total liabilities measured at fair value $ - $ 30,352 $ 30,352 (1) Accounts payable is generally stated at historical amounts with the exception of $ 18.7 million and $ 19.4 million at September 30, 2021 and December 31, 2020, respectively, related to certain delivered inventory for which the payable fluctuates based on changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option. (2) As of September 30, 2021, accrued and other liabilities includes $ 3.4 million and other liabilities includes $ 9.3 million of consideration related to potential earn-out payments recorded at fair value. The fair value of the company’s debt was approximately $ 858.9 million compared with a book value of $ 711.4 million, excluding debt issuance costs, at September 30, 2021. The fair value of the company’s debt was approximately $ 535.9 million compared with a book value of $ 526.2 million at December 31, 2020. The company estimated the fair value of its convertible notes using Level 1 inputs, and the fair value of its other outstanding debt using Level 2 inputs . The company believes the fair values of its accounts receivable approximated book value, which was $ 90.3 million and $ 55.6 million at September 30, 2021 and December 31, 2020, respectively. Although the company currently does not have any recurring Level 3 financial measurements, the fair values of tangible and intangible assets and goodwill acquired represent Level 3 measurements which were derived using a combination of the income approach, market approach and cost approach for the specific assets or liabilities being valued. 5. SEGMENT INFORMATION The company reports the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol, including industrial-grade alcohol, distillers grains, Ultra-High Protein and corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes food-grade corn oil and (4) partnership, which includes fuel storage and transportation services. The food and ingredients segment, had no activity during the three and nine months ended September 30, 2021 and 2020. Corporate activities include selling , general and administrative expenses, consisting primarily of compensation, professional fees and overhead costs not directly related to a specific operating segment. During the normal course of business, the operating segments conduct business with each other. For example, the agribusiness and energy services segment procures grain and natural gas and sells products, including ethanol, distillers grains and corn oil for the ethanol production segment. The partnership segment provides fuel storage and transportation services for the ethanol production segment. These intersegment activities are treated like third-party transactions with origination, marketing and storage fees charged at estimated market values. Consequently, these transactions affect segment performance; however, they do not impact the company’s consolidated results since the revenues and corresponding costs are eliminated. ‎ 16 Table of Contents The following tables set forth certain financial data for the company’s operating segments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues: Ethanol production: Revenues from external customers $ 588,349 $ 332,953 $ 1,567,344 $ 1,099,170 Intersegment revenues - 25 - 75 Total segment revenues 588,349 332,978 1,567,344 1,099,245 Agribusiness and energy services: Revenues from external customers 157,412 90,074 454,208 342,078 Intersegment revenues 5,362 5,354 15,997 17,030 Total segment revenues 162,774 95,428 470,205 359,108 Partnership: Revenues from external customers 1,030 1,035 3,297 3,707 Intersegment revenues 18,221 20,347 56,061 58,327 Total segment revenues 19,251 21,382 59,358 62,034 Revenues including intersegment activity 770,374 449,788 2,096,907 1,520,387 Intersegment eliminations ( 23,583 ) ( 25,726 ) ( 72,058 ) ( 75,432 ) Total Revenues $ 746,791 $ 424,062 $ 2,024,849 $ 1,444,955 Refer to Note 2 - Revenue , for further disaggregation of revenue by operating segment. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of goods sold: Ethanol production $ 597,854 $ 330,162 $ 1,507,035 $ 1,103,486 Agribusiness and energy services 154,427 87,027 440,682 339,332 Intersegment eliminations ( 22,102 ) ( 23,256 ) ( 68,897 ) ( 70,761 ) $ 730,179 $ 393,933 $ 1,878,820 $ 1,372,057 Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 Operating income (loss): Ethanol production (1) $ ( 44,192 ) $ ( 21,351 ) $ ( 30,969 ) $ ( 100,924 ) Agribusiness and energy services 3,225 4,296 15,720 7,207 Partnership 12,417 12,986 37,204 37,641 Intersegment eliminations ( 1,481 ) ( 2,447 ) ( 3,161 ) ( 4,597 ) Corporate activities (2) ( 14,644 ) ( 7,689 ) ( 1,089 ) ( 27,228 ) $ ( 44,675 ) $ ( 14,205 ) $ 17,705 $ ( 87,901 ) (1) Operating loss for ethanol production includes a goodwill impairment charge of $ 24.1 million for the nine months ended September 30, 2020. (2) Corporate activities for the three and nine months ended September 30, 2021 include a $ 1.8 million loss on sale of assets and a $ 31.2 million gain on sale of assets, respectively, as well as a gain on sale of assets of $ 2.0 million for both the three and nine months ended September 30, 2020. Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 Depreciation and amortization: Ethanol production $ 25,644 $ 17,493 $ 62,655 $ 50,575 Agribusiness and energy services 870 655 2,072 1,764 Partnership 1,089 940 2,771 2,867 Corporate activities 677 665 1,995 2,002 $ 28,280 $ 19,753 $ 69,493 $ 57,208 ‎ 17 Table of Contents The following table sets forth total assets by operating segment (in thousands): September 30, 2021 December 31, 2020 Total assets (1) : Ethanol production $ 1,069,056 $ 900,963 Agribusiness and energy services 429,450 378,720 Partnership 102,116 91,205 Corporate assets 552,040 228,074 Intersegment eliminations ( 39,458 ) ( 20,045 ) $ 2,113,204 $ 1,578,917 (1) Asset balances by segment exclude intercompany balances . 6. INVENTORIES Inventories are carried at the lower of cost or net realizable value, except grain held for sale and fair-value hedged inventories. Commodities held for sale are reported at market value. There was no lower of cost or net realizable value inventory adjustment as of September 30, 2021 and December 31, 2020. The components of inventories are as follows (in thousands): September 30, 2021 December 31, 2020 Finished goods $ 98,044 $ 89,223 Commodities held for sale 33,835 40,147 Raw materials 57,342 90,800 Work-in-process 19,356 13,201 Supplies and parts 34,630 36,120 $ 243,207 $ 269,491 7. DERIVATIVE FINANCIAL INSTRUMENTS At September 30, 2021, the company’s consolidated balance sheet reflected unrealized gains of $ 1.0 million, net of tax, in accumulated other comprehensive income (loss). The company expects these losses will be reclassified to operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount realized in operating income will differ as commodity prices change. Fair Values of Derivative Instruments The fair values of the company’s derivative financial instruments and the line items on the consolidated balance sheets where they are reported are as follows (in thousands): Asset Derivatives' Liability Derivatives' Fair Value Fair Value September 30, ‎ 2021 December 31, ‎ 2020 September 30, ‎ 2021 December 31, ‎ 2020 Derivative financial instruments $ 45,691 $ 21,956 (1) $ 11,730 (2) $ 10,997 (3) Other assets 94 29 - - Total $ 45,785 $ 21,985 $ 11,730 $ 10,997 (1) At December 31, 2020, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange traded futures and options contracts of $ 3.3 million, which included $ 2.8 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments. (2) At September 30, 2021, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $ 23.7 million, which included $ 14.3 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments. (3) At December 31, 2020, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $ 9.3 million, no ne of which were designated as cash flow hedging instruments. 18 Table of Contents Refer to Note 4 - Fair Value Disclosures , which contains fair value information related to derivative financial instruments. Effect of Derivative Instruments on Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income The gains or losses recognized in income and other comprehensive income related to the company’s derivative financial instruments and the line items on the consolidated financial statements where they are reported are as follows (in thousands): Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Location of Gain (Loss) Reclassified from Accumulated Other Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, Comprehensive Income into Income 2021 2020 2021 2020 Revenues $ ( 691 ) $ - $ ( 39,571 ) $ 8,824 Cost of goods sold 947 - 36,431 ( 2,901 ) Net gain (loss) recognized in income (loss) before income taxes $ 256 $ - $ ( 3,140 ) $ 5,923 Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives Gain (Loss) Recognized in Other Comprehensive Income on Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, Derivatives 2021 2020 2021 2020 Commodity contracts $ 709 $ ( 3,555 ) $ 1,080 $ 663 Amount of Gain (Loss) Recognized in Income on Derivatives Derivatives Not Designated as Location of Gain (Loss) Recognized in Income Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, Hedging Instruments on Derivatives 2021 2020 2021 2020 Commodity contracts Revenues $ 1,638 $ ( 21,128 ) $ ( 50,257 ) $ 8,681 Commodity contracts Costs of goods sold ( 7,594 ) 4,184 3,960 10,678 Net gain (loss) recognized in income (loss) before income taxes $ ( 5,956 ) $ ( 16,944 ) $ ( 46,297 ) $ 19,359 The following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items (in thousands): September 30, 2021 December 31, 2020 Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Inventories $ 41,456 $ 14,734 $ 53,963 $ 9,041 ‎ 19 Table of Contents Effect of Cash Flow and Fair Value Hedge Accounting on the Statements of Operations The effect of cash flow and fair value hedges and the line items on the consolidated statements of operations where they are reported are as follows (in thousands): Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended September 30, 2021 2020 Revenue Cost of ‎ Goods Sold Revenue Cost of ‎ Goods Sold Gain (loss) on cash flow hedging relationships: Commodity contracts: Amount of gain (loss) reclassified from accumulated other comprehensive income into income $ ( 691 ) $ 947 $ - $ - Gain (loss) on fair value hedging relationships: Commodity contracts: Hedged item - 10,359 - 4,264 Derivatives designated as hedging instruments - ( 10,726 ) - ( 5,380 ) Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded $ ( 691 ) $ 580 $ - $ ( 1,116 ) Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Nine Months Ended September 30, 2021 2020 Revenue Cost of ‎ Goods Sold Revenue Cost of ‎ Goods Sold Gain (loss) on cash flow hedging relationships: Commodity contracts: Amount of gain (loss) reclassified from accumulated other comprehensive income into income $ ( 39,571 ) $ 36,431 $ 8,824 $ ( 2,901 ) Gain (loss) on fair value hedging relationships: Commodity contracts: Hedged item - 28,732 - ( 3,665 ) Derivatives designated as hedging instruments - ( 25,078 ) - 3,220 Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded $ ( 39,571 ) $ 40,085 $ 8,824 $ ( 3,346 ) There were no gains or losses from discontinuing cash flow or fair value hedge treatment during the three and nine months ended September 30, 2021 and 2020. ‎ 20 Table of Contents The open commodity derivative positions as of September 30, 2021, are as follows (in thousands): Exchange Traded (1) Non-Exchange Traded (2) Derivative ‎ Instruments Net Long & ‎ (Short) Long (Short) Unit of ‎ Measure Commodity Futures ( 29,345 ) Bushels Corn Futures 56,130 (3) Bushels Corn Futures ( 1,360 ) (4) Bushels Corn Futures ( 23,436 ) Gallons Ethanol Futures ( 160,104 ) (3) Gallons Ethanol Futures ( 15,430 ) MmBTU Natural Gas Futures 1,888 (3) MmBTU Natural Gas Futures ( 6,055 ) (4) MmBTU Natural Gas Options 36,205 Pounds Soybean Oil Options 2,665 Bushels Corn Options ( 2,511 ) MmBTU Natural Gas Forwards 42,008 ( 108 ) Bushels Corn Forwards 1,159 ( 357,410 ) Gallons Ethanol Forwards 99 ( 612 ) Tons Distillers Grains Forwards 2,496 ( 71,617 ) Pounds Corn Oil Forwards 16,532 ( 295 ) MmBTU Natural Gas (1) Exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis. (2) Non-exchange traded forwards are presented on a gross long and (short) position basis including both fixed-price and basis contracts. (3) Futures used for cash flow hedges. (4) Futures used for fair value hedges. Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Included in revenues are net gains on energy trading contracts of $ 0.1 million and $ 0.6 million for the three and nine months ended September 30, 2021, respectively, and net losses on energy trading contracts of $ 0.9 million and net gains on energy trading contracts of $ 2.1 million for the three and nine months ended September 30, 2020, respectively. ‎ 21 Table of Contents 8. DEBT On January 1, 2021, the company early adopted the amended guidance in ASC 470-20 , using the modified retrospective method of transition. The adoption of this guidance resulted in a $ 49.5 million decrease in additional paid-in capital, an $ 11.4 million increase in retained earnings and a $ 38.1 million increase in long-term debt, which included a $ 39.4 million increase in debt principal offset by a $ 1.3 million increase in debt issuance costs, resulting from amounts previously bifurcated to equity being reclassified to debt. The components of long-term debt are as follows (in thousands): September 30, 2021 December 31, 2020 Corporate: (1) 2.25 % convertible notes due 2027 (2) $ 230,000 $ - 4.00 % convertible notes due 2024 (3) 64,000 89,125 4.125 % convertible notes due 2022 (4) 34,316 156,441 Green Plains SPE LLC: $ 125.0 million junior secured mezzanine notes due 2026 (5) 125,000 - Green Plains Wood River and Green Plains Shenandoah: $ 75.0 million delayed draw loan agreement (6) 30,000 30,000 Green Plains Partners: $ 60.0 million credit facility (7) 60,000 100,000 Other 15,580 15,936 Total book value of long-term debt 558,896 391,502 Unamortized debt issuance costs ( 9,985 ) ( 6,151 ) Less: current maturities of long-term debt ( 34,477 ) ( 98,052 ) Total long-term debt $ 514,434 $ 287,299 (1) See discussion on early adoption of the amended guidance in ASC 470-20 above. (2) Includes $ 6.8 million of unamortized debt issuance costs as of September 30, 2021. (3) See discussion below regarding the exchange of convertible notes due in 2024. Includes $ 1.3 million and $ 2.2 million of unamortized debt issuance costs as of September 30, 2021 and December 31, 2020, respectively. (4) See discussion below regarding the repurchase of convertible notes due in 2022. Includes $ 0.2 million and $ 1.3 million of unamortized debt issuance costs as of September 30, 2021 and December 31, 2020, respectively. (5) Includes $ 0.9 million of unamortized debt issuance costs as of September 30, 2021 . (6) Includes $ 0.3 million of unamortized debt issuance costs as of both September 30, 2021 and December 31, 2020, respectively . (7) The Green Plains Partners credit facility was amended on July 20, 2021, reducing the total amount available to $ 60.0 million and includes $ 0.4 million and $ 2.3 million of unamortized debt issuance costs as of September 30, 2021 and December 31, 2020, respectively. The components of short-term notes payable and other borrowings are as follows (in thousands): September 30, 2021 December 31, 2020 Green Plains Trade: $ 300.0 million revolver $ 109,624 $ 79,251 Green Plains Grain: $ 100.0 million revolver 22,800 38,700 $ 50.0 million inventory financing - - Green Plains Commodity Management: $ 30.0 million hedge line 30,046 21,682 Other - 1,175 $ 162,470 $ 140,808 22 Table of Contents Corporate Activities In March 2021, the company issued an aggregate $ 230.0 million of 2.25 % convertible senior notes due in 2027, or the 2.25 % notes. The 2.25 % notes bear interest at a rate of 2.25 % per year, payable on March 15 and September 15 of each year, beginning September 15, 2021, and mature on March 15, 2027 . The 2.25 % notes are senior, unsecured obligations of the company. The 2.25 % notes are convertible, at the option of the holders, into consideration consisting of, at the company’s election, cash, shares of the company’s common stock, or a combination of cash and stock (and cash in lieu of fractional shares). However, before September 15, 2026, the 2.25 % notes will not be convertible unless certain conditions are satisfied. The initial conversion rate is 31.6206 shares of the company’s common stock per $ 1,000 principal amount of 2.25 % notes (equivalent to an initial conversion price of approximately $ 31.62 per share of the company’s common stock), representing an approximately 37.5 % premium over the offering price of the company’s common stock. The conversion rate is subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering. In addition, the company may be obligated to increase the conversion rate for any conversion that occurs in connection with certain corporate events, including the company’s calling the 2.25 % notes for redemption. On and after March 15, 2024, and prior to the maturity date, the company may redeem, for cash, all, but not less than all, of the 2.25 % notes if the last reported sale price of the company’s common stock equals or exceeds 140 % of the applicable conversion price on (i) at least 20 trading days during a 30 consecutive trading day period ending on the trading day immediately prior to the date the company delivers notice of the redemption; and (ii) the trading day immediately before the date of the redemption notice. The redemption price will equal 100 % of the principal amount of the 2.25 % notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of a “fundamental change” (as defined in the indenture for the 2.25 % notes), holders of the 2.25 % notes will have the right, at their option, to require the company to repurchase their 2.25 % notes for cash at a price equal to 100 % of the principal amount of the 2.25 % notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. During June 2019, the company issued an aggregate $ 115.0 million of 4.00 % convertible senior notes due in 2024, or the 4.00 % notes. The 4.00 % notes are senior, unsecured obligations of the company, with interest payable on January 1 and July 1 of each year, beginning January 1, 2020, at a rate of 4.00 % per annum. The 4.00 % notes will mature on July 1, 2024 , unless earlier converted, redeemed or repurchased. The 4.00 % notes will be convertible, at the option of the holders, into consideration consisting of, at the company’s election, cash, shares of the company’s common stock, or a combination of cash and shares of the company’s common stock until the close of business on the scheduled trading day immediately preceding the maturity date. However, before January 1, 2024, the 4.00 % notes will not be convertible unless certain conditions are satisfied. The initial conversion rate is 64.1540 shares of common stock per $ 1,000 of principal, which is equal to a conversion price of approximately $ 15.59 per share. The conversion rate will be subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering. In addition, the company may be obligated to increase the conversion rate for any conversion that occurs in connection with certain corporate events, including the company’s calling the 4.00 % notes for redemption. On and after July 1, 2022, and prior to the maturity date, the company may redeem all, but not less than all, of the 4.00 % notes for cash if the sale price of the company’s common stock equals or exceeds 140 % of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date the company delivers notice of the redemption. The redemption price will equal 100 % of the principal amount of the 4.00 % notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of a fundamental change, holders of the 4.00 % notes will have the right, at their option, to require the company to repurchase the 4.00 % notes in cash at a price equal to 100 % of the principal amount of the 4.00 % notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. During May 2021, the company entered into a privately negotiated agreement with certain noteholders of the company’s 4.00 % notes. Under this agreement, 3,568,705 shares of the company’s common stock were exchanged for $ 51.0 million in aggregate principal amount of the 4.00 % notes. Common stock held as treasury shares were exchanged for the 4.00 % notes. Pursuant to the guidance within ASC 470, Debt , the company recorded a loss of $ 9.5 million which was recorded as a charge to interest expense in the consolidated financial statements during the three months ended June 30, 2021, of which $ 1.2 million related to unamortized debt issuance costs. 23 Table of Contents In August 2016, the company issued $ 170.0 million of 4.125 % convertible senior notes due in 2022, or the 4.125 % notes. The 4.125 % notes are senior, unsecured obligations of the company, with interest payable on March 1 and September 1 of each year. The company may settle the 4.125 % notes in cash, common stock or a combination of cash and common stock. Prior to March 1, 2022, the 4.125 % notes are not convertible unless certain conditions are satisfied. The initial conversion rate is 35.7143 shares of common stock per $ 1,000 of principal, which is equal to a conversion price of approximately $ 28.00 per share. The conversion rate will be subject to adjustment upon the occurrence of certain events, including but not limited to; the event of a stock dividend or stock split; the issuance of additional rights, options and warrants; spinoffs; the event of a cash dividend or distribution; or a tender or exchange offering. The company may redeem all, but not less than all, of the 4.125 % notes at any time on or after September 1, 2020, if the company’s common stock equals or exceeds 140 % of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date the company delivers notice of the redemption. The redemption price will equal 100 % of the principal plus any accrued and unpaid interest. Holders of the 4.125 % notes have the option to require the company to repurchase the 4.125 % notes in cash at a price equal to 100 % of the principal plus accrued and unpaid interest when there is a fundamental change, such as change in control. If an event of default occurs, it could result in the 4.125 % notes being declared due and payable. In March 2021, concurrent with the issuance of the 2.25 % notes, the company used approximately $ 156.5 million of the net proceeds of the 2.25 % notes to repurchase approximately $ 135.7 million aggregate principal amount of the 4.125 % notes, in privately negotiated transactions. Pursuant to the guidance within ASC 470, Debt , the company recorded a loss upon extinguishment of $ 22.1 million. This charge included $ 1.2 million of unamortized debt issuance costs related to the principal balance extinguished. Agribusiness and Energy Services Segment Green Plains Trade has a $ 300.0 million senior secured asset-based revolving credit facility to finance working capital for marketing and distribution activities based on eligible collateral equal to the sum of percentages of eligible receivables and inventories, less miscellaneous adjustments. The credit facility matures on July 28, 2022 and consists of a $ 285 million credit facility and a $ 15 million first-in-last-out (FILO) credit facility and includes an accordion feature that enables the credit facility to be increased by up to $ 70.0 million with agent approval. Advances are subject to variable interest rates equal to daily LIBOR plus 2.25 % on the credit facility and daily LIBOR plus 3.25 % on the FILO credit facility. The total unused portion of the revolving credit facility is also subject to a commitment fee of 0.375 % per annum. The terms impose affirmative and negative covenants for Green Plains Trade, including maintaining a minimum fixed charge coverage ratio of 1.15 to 1.00. Capital expenditures are limited to $ 1.5 million per year under the credit facility. The credit facility also restricts distributions related to capital stock, with an exception for distributions up to 50 % of net income if, on a pro forma basis, (a) availability has been greater than $ 10.0 million for the last 30 days and (b) the borrower would be in compliance with the fixed charge coverage ratio on the distribution date. Green Plains Grain has a $ 100.0 million senior secured asset-based revolving credit facility, which matures on June 28, 2022 . The credit facility finances working capital up to the maximum commitment based on eligible collateral equal to the sum of percentages of eligible cash, receivables and inventories, less miscellaneous adjustments. Advances are subject to an interest rate equal to LIBOR plus 3.00 % or the lenders’ base rate plus 2.00 %. The credit facility also includes an accordion feature that enables the facility to be increased by up to $ 75.0 million with agent approval. The credit facility can also be increased by up to $ 50.0 million for seasonal borrowings. Total commitments outstanding cannot exceed $ 225.0 million. Depending on utilization, the total unused portion of the $ 100.0 million revolving credit facility is also subject to a commitment fee ranging from 0.375 % to 0.50 %. Lenders receive a first priority lien on certain cash, inventory, accounts receivable and other assets owned by Green Plains Grain. The terms impose affirmative and negative covenants for Green Plains Grain, including maintaining minimum working capital to be the greater of (i) $ 18,000,000 and (ii) 18 % of the sum of the then total commitment plus the aggregate seasonal line commitments . Minimum tangible net worth is required to be greater than 21 % of the sum of the then total commitment plus the aggregate seasonal line commitments. The credit facility also requires the company to maintain a maximum annual leverage of 6.00 to 1.00. Capital expenditures are limited to $ 8.0 million per year under the credit facility, plus equity contributions from the company and unused amounts of up to $ 8.0 million from the previous year. In addition, if the company has long-term indebtedness on the date of calculation of greater than $ 10.0 million, the credit facility requires the company to maintain a minimum fixed charge coverage ratio of 1.25 to 1.00 and a maximum long term debt capitalization of 40 %. 24 Table of Contents Green Plains Grain has entered into a $ 50.0 million short-term inventory financing agreement with a financial institution. The company has accounted for the agreements as short-term notes, rather than sales, and has elected the fair value option to offset fluctuations in market prices of the inventory. The company had no short-term notes payable related to these inventory financing agreements as of September 30, 2021. Green Plains Commodity Management has an uncommitted $ 30.0 million revolving credit facility which matures April 30, 2023 , to finance margins related to its hedging programs. Advances are subject to variable interest rates equal to LIBOR plus 1.75 %. Ethanol Production Segment On February 9, 2021, Green Plains SPE LLC, a wholly-owned special purpose subsidiary and parent of Green Plains Obion and Green Plains Mount Vernon, issued $ 125.0 million of junior secured mezzanine notes due 2026 (the “Junior Notes”) with BlackRock, a holder of a portion of the company’s common stock, for the purchase of all notes issued. The Junior Notes will mature on February 9, 2026 and are secured by a pledge of the membership interests in and the real property owned by Green Plains Obion and Green Plains Mount Vernon. The proceeds of the Junior Notes will be used to construct high protein processing systems at the Green Plains Obion and Green Plains Mount Vernon facilities. The Junior Notes accrue interest at an annual rate of 11.75% . However, subject to the satisfaction of certain conditions, the Green Plains SPE LLC may elect to pay an amount in cash equal to interest accruing at a rate of 6.00% per annum plus an amount equal to interest accruing at a rate of 6.75% per annum to be paid in kind. The entire outstanding principal balance, plus any accrued and unpaid interest is due upon maturity. Green Plains SPE LLC is required to comply with certain financial covenants regarding minimum liquidity at Green Plains and a maximum aggregate loan to value. The Junior Notes can be retired or refinanced after 42 months with no prepayment premium. The Junior Notes have an unsecured parent guarantee from the company and have certain limitations on distributions, dividends or loans to the company unless there will not exist any event of default. Funds associated with the Junior Notes are administered by a trustee and are included in the balance of restricted cash as of September 30, 2021. On September 3, 2020, Green Plains Wood River and Green Plains Shenandoah, wholly-owned subsidiaries of the company, entered into a delayed draw loan agreement with MetLife Real Estate Lending LLC. The $ 75.0 million delayed draw loan matures on September 1, 2035 and is secured by substantially all of the assets of the Wood River and Shenandoah facilities. The proceeds from the loan will be used to add high protein processing systems at the Wood River and Shenandoah facilities as well as other capital expenditures. The delayed draw loan bears interest at a fixed rate of 5.02 %, plus an interest rate premium of 1.5 % until the loan is fully drawn, which must occur within the 18 month draw period. After the earlier of the 18 month draw period or the loan being fully drawn, the interest rate premium may be adjusted quarterly from 0.00 % to 1.50 % based on the leverage ratio of total funded debt to EBITDA of Wood River and Shenandoah. Principal payments of $ 1.5 million per year begin 24 months from the closing date. Prepayments are prohibited until September 2024. Financial covenants of the delayed draw loan agreement include a minimum loan to value ratio of 50 %, a minimum fixed charge coverage ratio of 1.25 x commencing on June 30, 2021, a total debt service reserve of six months of future principal and interest payments and a minimum working capital requirement at Green Plains of not less than $ 0.10 per gallon of nameplate capacity or $ 95.8 million. The loan is guaranteed by the company and has certain limitations on distributions, dividends or loans to Green Plains by Wood River and Shenandoah unless immediately after giving effect to such action, there will not exist any event of default. The company also has small equipment financing loans, finance leases on equipment or facilities, and other forms of debt financing. Partnership Segment Green Plains Partners has a term loan to fund working capital, capital expenditures and other general partnership purposes. On July 20, 2021, the prior credit facility was amended decreasing the total amount available to $ 60.0 million, extending the maturity from December 31, 2021 to July 20, 2026 , and converting the credit facility to a term loan. Under the terms of the amended agreement, BlackRock purchased the outstanding $ 50.0 million balance of the prior credit facility from the previous lenders. Interest on the amended term loan is based on 3-month LIBOR plus 8.00 %, with a 0% LIBOR floor. Interest is payable on the 15th day of each March, June, September and December during the term with the first interest payment being September 15, 2021. The amended term loan does not require any principal payments; however, the partnership has the option to prepay $ 1.5 million per quarter beginning twelve months after the closing date. 25 Table of Contents During the nine months ended September 30, 2021, prior to the amendment, the partnership made principal payments of $ 50.0 million on the prior credit facility, including $ 19.5 million of scheduled repayments, $ 27.5 million related to the sale of the storage assets located adjacent to the Ord, Nebraska ethanol plant and a $ 3.0 million prepayment made with excess cash. The partnership’s obligations under the term loan are secured by a first priority lien on (i) the equity interests of the partnership’s present and future subsidiaries, (ii) all of the partnership’s present and future personal property, such as investment property, general intangibles and contract rights, including rights under any agreements with Green Plains Trade, (iii) all proceeds and products of the equity interests of the partnership’s present and future subsidiaries and its personal property and (iv) substantially all of the partnership’s real property and material leases of real property. The terms impose affirmative and negative covenants, including restrictions on the partnership’s ability to incur additional debt, acquire and sell assets, create liens, invest capital, pay distributions and materially amend the partnership’s commercial agreements with Green Plains Trade. The term loan also requires the partnership to maintain a maximum consolidated leverage ratio and a minimum consolidated debt service coverage ratio, each of which is calculated on a pro forma basis with respect to acquisitions and divestitures occurring during the applicable period. The maximum consolidated leverage ratio required, as of the end of any fiscal quarter, is no more than 2.50 x . The minimum debt service coverage ratio required, as of the end of any fiscal quarter, is no less 1.10 x. The consolidated leverage ratio is calculated by dividing total funded indebtedness by the sum of the four preceding fiscal quarters’ consolidated EBITDA. The consolidated debt service coverage ratio is calculated by taking the sum of the four preceding fiscal quarters’ consolidated EBITDA minus income taxes and consolidated capital expenditures for such period divided by the sum of the four preceding fiscal quarters’ consolidated interest charges plus consolidated scheduled funded debt payments for such period. Under the amended terms of the loan, the partnership has no restrictions on the amount of quarterly distribution payments, so long as (i) no default has occurred and is continuing, or would result from payment of the distribution, and (ii) the partnership and its subsidiaries are in compliance with its financial covenants and remain in compliance after payment of the distribution. The term loan is not guaranteed by the company. Covenant Compliance The company was in compliance with its debt covenants as of September 30, 2021. Restricted Net Assets At September 30, 2021, there were approximately $ 174.4 million of net assets at the company’s subsidiaries that could not be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries. 9. STOCK-BASED COMPENSATION The company has an equity incentive plan which reserved a total of 5.7 million shares of common stock for issuance pursuant to the plan. The plan provides for shares, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, restricted and deferred stock unit awards and performance share awards to eligible employees, non-employee directors and consultants. The company measures stock-based compensation at fair value on the grant date, with no adjustments for estimated forfeitures. The company records noncash compensation expense related to equity awards in its consolidated financial statements over the requisite period on a straight-line basis. ‎ 26 Table of Contents Restricted Stock Awards and Deferred Stock Units The non-vested stock award and deferred stock unit activity for the nine months ended September 30, 2021, is as follows: Non-Vested ‎ Shares and ‎ Deferred Stock ‎ Units Weighted- ‎ Average Grant- ‎ Date Fair Value Weighted-Average ‎ Remaining ‎ Vesting Term ‎ (in years) Non-Vested at December 31, 2020 1,028,739 $ 9.15 Granted 353,181 27.27 Forfeited ( 115,896 ) 14.63 Vested ( 474,432 ) 12.23 Non-Vested at September 30, 2021 791,592 $ 14.59 2.0 Performance Shares On February 18, 2021 and March 18, 2020, the board of directors granted performance shares to be awarded in the form of common stock to certain participants of the plan. These performance shares vest based on the level of achievement of certain performance goals, including the incremental value achieved from the company’s high-protein initiatives, annual production levels and return on investment (ROI). Performance shares granted in 2021 and 2020 do not contain market-based factors requiring a Monte Carlo valuation model. The performance shares were granted at a target of 100 %, but each performance share will reduce or increase depending on results for the performance period. If the company achieves the maximum performance goals, the maximum amount of shares available to be issued pursuant to the 2021 and 2020 awards are 936,141 performance shares which represents approximately 271 % of the 345,414 performance shares which remain outstanding. The actual number of performance shares that will ultimately vest is based on the actual performance targets achieved at the end of the performance period. On February 19, 2019, and March 19, 2018, the board of directors granted performance shares to be awarded in the form of common stock to certain participants of the plan. These performance shares vest based on the company’s average return on net assets (RONA) and the company’s total shareholder return (TSR), as further described herein. The performance shares vest on the third anniversary of the grant, if the RONA and TSR criteria are achieved and the participant is then employed by the company. Fifty percent of the performance shares vest based upon the company’s ability to achieve a predetermined RONA during the three year performance period. The remaining fifty percent of the performance shares vest based upon the company’s total TSR during the three year performance period relative to that of the company’s performance peer group. The performance shares were granted at a target of 100 %, but each performance share will reduce or increase depending on results for the performance period for the company's RONA, and the company’s TSR relative to that of the performance peer group. On March 19, 2021, based on criteria discussed above, the 2018 performance shares vested at a target of 75 %. If the company’s RONA and TSR achieve the maximum goals, the maximum amount of shares available to be issued pursuant to the 2019 awards are 224,900 performance shares or 150 % of the 149,933 performance shares which remain outstanding. The actual number of performance shares that will ultimately vest is based on the actual percentile ranking of the company’s RONA, and the company’s TSR compared to the peer performance at the end of the performance period. For performance shares which include market-based factors, the company uses the Monte Carlo valuation model to estimate the fair value of the performance shares on the date of the grant. The weighted average assumptions used by the company in applying the Monte Carlo valuation model for performance share grants and related valuation are illustrated in the following table: FY 2019 Performance Awards Risk-free interest rate 2.45 % Dividend yield 3.13 % Expected volatility 41.69 % Monte Carlo valuation 99.62 % Closing stock price on the date of grant $ 15.34 ‎ 27 Table of Contents The non-vested performance share award activity for the nine months ended September 30, 2021, is as follows: Performance ‎ Shares Weighted- ‎ Average Grant- ‎ Date Fair Value Weighted-Average ‎ Remaining ‎ Vesting Term ‎ (in years) Non-Vested at December 31, 2020 517,969 $ 10.82 Granted 183,316 26.41 Forfeited ( 118,023 ) 15.83 Vested ( 87,915 ) 17.68 Non-Vested at September 30, 2021 495,347 $ 14.18 2.2 Green Plains Partners Green Plains Partners has a long-term incentive plan (LTIP) intended to promote the interests of the partnership, its general partner and affiliates by providing unit-based incentive compensation awards to employees, consultants and directors to encourage superior performance. The LTIP reserves 2,500,000 common limited partner units for issuance in the form of options, restricted units, phantom units, distribution equivalent rights, substitute awards, unit appreciation rights, unit awards, profit interest units or other unit-based awards. The partnership measures unit-based compensation at fair value on the grant date, with no adjustments for estimated forfeitures. The partnership records noncash compensation expense related to the awards over the requisite service period on a straight-line basis. The unit-based awards activity for the nine months ended September 30, 2021, is as follows: Non-Vested ‎ Shares and ‎ Deferred Stock ‎ Units Weighted- ‎ Average Grant- ‎ Date Fair Value Weighted-Average ‎ Remaining ‎ Vesting Term ‎ (in years) Non-Vested at December 31, 2020 47,620 $ 6.72 Granted 25,976 12.32 Forfeited ( 6,494 ) 12.32 Vested ( 47,620 ) 6.72 Non-Vested at September 30, 2021 19,482 $ 12.32 0.8 Stock-Based and Unit Based Compensation Expense Compensation costs for stock-b ased and unit-based payment plans were $ 2.0 million and $ 4.0 million for the three and nine months ended September 30, 2021, respectively, and $ 2.1 million and $ 5.7 million for the three and nine months ended September 30, 2020, respectively. At September 30, 2021, there was $ 11.5 million of unrecognized compensation costs from stock-based and unit-based compensation related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 2.1 years. The potential tax benefit related to stock-based payment is approximately 23.9 % of these expe nses . 10. EARNINGS PER SHARE Basic earnings per share, or EPS, is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. The company computed diluted EPS by dividing net income on an if-converted basis, adjusted to add back net interest expense related to the convertible debt instruments, by the weighted average number of common shares outstanding during the period, adjusted to include the shares that would be issued if the convertible debt instruments were converted to common shares and the effect of any outstanding dilutive securities. ‎ 28 Table of Contents The basic and diluted EPS are calculated as follows (in thousands, except per share amounts): Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 EPS - basic and diluted: Net loss attributable to Green Plains $ ( 59,622 ) $ ( 34,486 ) $ ( 56,424 ) $ ( 59,145 ) Weighted average shares outstanding - basic and diluted 50,482 34,629 44,581 34,632 EPS - basic and diluted: $ ( 1.18 ) $ ( 1.00 ) $ ( 1.27 ) $ ( 1.71 ) Anti-dilutive weighted-average convertible debt, warrants and stock-based compensation 14,055 14,187 12,458 14,059 11. STOCKHOLDERS’ EQUITY Early Adoption of ASC 470-20 On January 1, 2021, the company early adopted the amended guidance in ASC 470-20 , using the modified retrospective method of transition. The adoption of this guidance resulted in a $ 49.5 million decrease in additional paid-in capital, an $ 11.4 million increase in retained earnings and a $ 38.1 million increase in long-term debt, which included a $ 39.4 million increase in debt principal offset by a $ 1.3 million increase in debt issuance costs, resulting from amounts previously bifurcated to equity being reclassified to debt. Upon adoption of amended guidance in ASC 470-20 , the company reversed the remaining deferred tax liability of $ 9.2 million associated to the equity portion of previously issued convertible debt. As the company had recorded a full valuation allowance against its deferred tax assets, the reversal of the $ 9.2 million deferred tax liability would require an increase to the existing valuation allowance by the same amount, which would normally be recorded through current income tax expense. However, because the change in the deferred tax liability is directly linked to the adoption of ASC 470-20, which is accounted for as a cumulative effect adjustment, the required increase to the valuation allowance is recorded as part of the cumulative adjustment to stockholders’ equity and has no effect on the income statement. Public Offerings of Common Stock On March 1, 2021, the company completed an offering of 8,751,500 shares of our common stock, par value $ 0.001 per share, in a public offering at a price of $ 23.00 per share (the “March Common Stock Offering”). The March Common Stock Offering resulted in net proceeds of $ 191.1 million, after deducting underwriting discounts and commissions and the company’s offering expenses. On August 9, 2021, the company completed an offering of 5,462,500 shares of our common stock, par value $ 0.001 per share, in a public offering at a price of $ 32.00 per share (the “August Common Stock Offering”). The August Common Stock Offering resulted in net proceeds of $ 164.9 million, after deducting underwriting discounts and commissions and the company’s offering expenses. Warrants During the three months ended March 31, 2021, in connection with certain agreements, the company issued warrants to purchase shares of its common stock. The company measures the fair value of the warrants using the Black-Scholes option pricing model as of the issuance date. Exercisable warrants are equity based and recorded as a reduction in additional paid-in capital. The company has reserved 2,550,000 shares of common stock for the exercise of warrants to non-employees, of which 2,275,000 are exercisable. The remaining 275,000 warrants are contingent upon certain earn-out provisions, treated as liability based awards, and valued quarterly using the company’s stock price. These warrants could potentially dilute basic earnings per share in future periods. The exercise price of the warrants is $ 22.00 and expiration dates are December 8, 2025 for 275,000 warrants, February 9, 2026 for 275,000 warrants and April 28, 2026 for 2,000,000 warrants. ‎ 29 Table of Contents Convertible Note Exchange On May 18, 2021, the company closed on a privately negotiated exchange agreement with certain noteholders of the company’s 4.00 % notes , pursuant to which the noteholders agreed to exchange $ 51.0 million in aggregate principal for 3,568,705 shares of the company’s common stock at an implied price of $ 26.80 . Components of stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands): Total Additional Retained Accum. Other Green Plains Non- Total Common Stock Paid-in Earnings Comp. Income Treasury Stock Stockholders' Controlling Stockholders' Shares Amount Capital (Deficit) (Loss) Shares Amount Equity Interests Equity Balance, December 31, 2020 47,471 $ 47 $ 740,889 $ 39,375 $ ( 2,172 ) 11,813 $ ( 131,287 ) $ 646,852 $ 129,812 $ 776,664 Impact of ASC 470-20 adoption (1) - - ( 49,496 ) 11,418 - - - ( 38,078 ) - ( 38,078 ) Balance, January 1, 2021 47,471 47 691,393 50,793 ( 2,172 ) 11,813 ( 131,287 ) 608,774 129,812 738,586 Net income (loss) - - - ( 6,545 ) - - - ( 6,545 ) 4,566 ( 1,979 ) Distributions declared - - - - - - - - ( 1,395 ) ( 1,395 ) Other comprehensive income (loss) before reclassification - - - - ( 4,849 ) - - ( 4,849 ) - ( 4,849 ) Amounts reclassified from accumulated other comprehensive income (loss) - - - - ( 1,377 ) - - ( 1,377 ) - ( 1,377 ) Other comprehensive income (loss), net of tax - - - - ( 6,226 ) - - ( 6,226 ) - ( 6,226 ) Investment in subsidiary - - - - - - - - 3,330 3,330 Issuance of warrants - - 3,431 - - - - 3,431 ( 3,431 ) - Issuance of common stock for cash at $ 23.00 per share, net of fees 8,752 9 191,125 - - - - 191,134 - 191,134 Stock-based compensation 230 - ( 3,000 ) - - - - ( 3,000 ) 79 ( 2,921 ) Balance, March 31, 2021 56,453 56 882,949 44,248 ( 8,398 ) 11,813 ( 131,287 ) 787,568 132,961 920,529 Net income (loss) - - - 9,743 - - - 9,743 6,374 16,117 Distributions declared - - - - - - - - ( 1,395 ) ( 1,395 ) Other comprehensive income (loss) before reclassification - - - - 5,131 - - 5,131 - 5,131 Amounts reclassified from accumulated other comprehensive income (loss) - - - - 3,961 - - 3,961 - 3,961 Other comprehensive income (loss), net of tax - - - - 9,092 - - 9,092 - 9,092 Exchange of 4.00 % convertible notes due 2024 - - 17,679 - - ( 3,569 ) 39,661 57,340 - 57,340 Investment in subsidiary - - - - - - - - 3,139 3,139 Stock-based compensation ( 20 ) 4 324 - - - - 328 80 408 Balance, June 30, 2021 56,433 60 900,952 53,991 694 8,244 ( 91,626 ) 864,071 141,159 1,005,230 Net income (loss) - - - ( 59,622 ) - - - ( 59,622 ) 5,211 ( 54,411 ) Distributions declared - - - - - - - - ( 1,397 ) ( 1,397 ) Other comprehensive income (loss) before reclassification - - - - 538 - - 538 - 538 Amounts reclassified from accumulated other comprehensive income (loss) - - - - ( 194 ) - - ( 194 ) - ( 194 ) Other comprehensive income (loss), net of tax - - - - 344 - - 344 - 344 Investment in subsidiary - - - - - - - - 1,156 1,156 Issuance of common stock for cash at $ 32.00 per share, net of fees 5,463 5 164,872 - - - - 164,877 - 164,877 Stock-based compensation ( 57 ) - 1,759 - - - - 1,759 60 1,819 Balance, September 30, 2021 61,839 $ 65 $ 1,067,583 $ ( 5,631 ) $ 1,038 8,244 $ ( 91,626 ) $ 971,429 $ 146,189 $ 1,117,618 (1) See Note 1 – Recent Accounting Pronouncements and Note 8 – Debt for discussion on adoption of ASC 470-20 . ‎ 30 Table of Contents Total Additional Accum. Other Green Plains Non- Total Common Stock Paid-in Retained Comp. Income Treasury Stock Stockholders' Controlling Stockholders' Shares Amount Capital Earnings (Loss) Shares Amount Equity Interests Equity Balance, January 1, 2020 46,964 $ 47 $ 734,580 $ 148,150 $ ( 11,064 ) 10,932 $ ( 119,808 ) $ 751,905 $ 113,381 $ 865,286 Net income (loss) - - - ( 16,445 ) - - - ( 16,445 ) 6,098 ( 10,347 ) Distributions declared - - - - - - - - ( 5,498 ) ( 5,498 ) Other comprehensive income (loss) before reclassification - - - - 4,532 - - 4,532 - 4,532 Amounts reclassified from accumulated other comprehensive income (loss) - - - - ( 4,485 ) - - ( 4,485 ) - ( 4,485 ) Other comprehensive income (loss), net of tax - - - - 47 - - 47 - 47 Share of equity method investees other comprehensive income (loss) arising during the period, net of tax - - - - 41,956 - - 41,956 - 41,956 Repurchase of common stock - - - - - 881 ( 11,479 ) ( 11,479 ) - ( 11,479 ) Stock-based compensation 343 - 36 - - - - 36 79 115 Balance, March 31, 2020 47,307 47 734,616 131,705 30,939 11,813 ( 131,287 ) 766,020 114,060 880,080 Net income (loss) - - - ( 8,214 ) - - - ( 8,214 ) 2,740 ( 5,474 ) Distributions declared - - - - - - - - ( 1,389 ) ( 1,389 ) Other comprehensive income (loss) before reclassification - - - - ( 1,333 ) - - ( 1,333 ) - ( 1,333 ) Amounts reclassified from accumulated other comprehensive income (loss) - - - - ( 7 ) - - ( 7 ) - ( 7 ) Other comprehensive income (loss), net of tax - - - - ( 1,340 ) - - ( 1,340 ) - ( 1,340 ) Share of equity method investees other comprehensive income (loss) arising during the period, net of tax - - - - ( 16,759 ) - - ( 16,759 ) - ( 16,759 ) Stock-based compensation 160 - 2,072 - - - - 2,072 80 2,152 Balance, June 30, 2020 47,467 47 736,688 123,491 12,840 11,813 ( 131,287 ) 741,779 115,491 857,270 Net income (loss) - - - ( 34,486 ) - - - ( 34,486 ) 3,753 ( 30,733 ) Distributions declared - - - - - - - - ( 1,394 ) ( 1,394 ) Other comprehensive income (loss) before reclassification - - - - ( 2,696 ) - - ( 2,696 ) - ( 2,696 ) Amounts reclassified from accumulated other comprehensive income (loss) - - - - - - - - - - Other comprehensive income (loss), net of tax - - - - ( 2,696 ) - - ( 2,696 ) - ( 2,696 ) Share of equity method investees other comprehensive income (loss) arising during the period, net of tax - - - - ( 21,057 ) - - ( 21,057 ) - ( 21,057 ) Stock-based compensation - - 2,086 - - - - 2,086 79 2,165 Balance, September 30, 2020 47,467 $ 47 $ 738,774 $ 89,005 $ ( 10,913 ) 11,813 $ ( 131,287 ) $ 685,626 $ 117,929 $ 803,555 ‎ 31 Table of Contents Amounts reclassified from accumulated other comprehensive income are as follows (in thousands): Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, Statements of ‎ Operations 2021 2020 2021 2020 Classification Gains (losses) on cash flow hedges: Commodity derivatives $ ( 691 ) $ - $ ( 39,571 ) $ 8,824 (1) Commodity derivatives 947 - 36,431 ( 2,901 ) (2) Total gains on cash flow hedges 256 - ( 3,140 ) 5,923 (3) Income tax benefit (expense) ( 62 ) - 750 ( 1,431 ) (4) Amounts reclassified from accumulated other comprehensive income (loss) $ 194 $ - $ ( 2,390 ) $ 4,492 (1) Revenues (2) Costs of goods sold (3) Loss before income taxes and income from equity method investees (4) Income tax benefit (expense) 12. INCOME TAXES The company records actual income tax expense or benefit during interim periods rather than on an annual effective tax rate method. Certain items are given discrete period treatment and the tax effect of those items are reported in full in the relevant interim period. Green Plains Partners is a limited partnership, which is treated as a flow-through entity for federal income tax purposes and is not subject to federal income taxes. As a result, the consolidated financial statements do not reflect income taxes on pre-tax income or loss attributable to the noncontrolling interest in the partnership. The CARES Act was signed into law on March 27, 2020. The CARES Act includes several significant business tax provisions, including elimination of the taxable limit for certain net operating losses (“NOL”), allowing businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior tax years, accelerating refunds of previously generated corporate AMT credits , and loosening the business interest limitation under §163(j) from 30 % to 50 %. The CARES Act also contains an employee retention credit to encourage employers to maintain headcounts even if employees cannot report to work because of issues related to the COVID-19. In the first quarter of 2020, the company recorded an income tax benefit related to the expected NOL carry back claim of $ 28.4 million, which was an estimate based on the amount of NOL rated to the 2019 year-end tax provision. No additional tax benefit was recorded related to the CARES Act during the nine months ended September 30, 2021. The company recorded income tax expense of $ 7 thousand and income tax benefit of $ 2.9 million for the three and nine months ended September 30, 2021, compared with income tax expense of $ 7.3 million and income tax benefit of $ 48.5 million for the same periods in 2020. The decrease in income tax expense recorded for the three months ended September 30, 2021 was primarily due to a decrease in pretax book income for the period offset by recording a valuation allowance against the tax net operating loss (NOL) generated in the period. The decrease in the amount of tax benefit recorded for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to the tax benefit recognized in 2020 associated with the carry back of the tax NOL generated in 2019 to the 2014 tax year under the newly enacted CARES Act. The amount of unrecognized tax benefits for uncertain tax positions was $ 51.4 million as of September 30, 2021 and December 31, 2020. The effective tax rate can be affected by variances in the estimates and amounts of taxable income among the various states, entities and activity types, realization of tax credits, adjustments from resolution of tax matters under review, valuation allowances and the company’s assessment of its liability for uncertain tax positions. Upon adoption of amended guidance in ASC 470-20, during the first quarter of 2021, the company reversed the remaining deferred tax liability of $ 9.2 million associated to the equity portion of previously issued convertible debt. As the company had recorded a full valuation allowance against its deferred tax assets, the reversal of the $ 9.2 million deferred tax liability would require an increase to the existing valuation allowance by the same amount which would normally be recorded through current income tax expense. However, as the change in the deferred tax liability is directly linked to the adoption of ASC 470-20, which is accounted for as a cumulative effect adjustment, the required increase to the valuation allowance is recorded as part of the cumulative adjustment to stockholders’ equity and has no effect on the consolidated statements of operations. 32 Table of Contents 13. COMMITMENTS AND CONTINGENCIES Lease Expense The company leases certain facilities, parcels of land, and equipment, with remaining terms ranging from less than one year to approximately 16 years. The land and facility leases include renewal options. The renewal options are included in the lease term only for those sites or locations that are reasonably certain to be renewed. Equipment renewals are not considered reasonably certain to be exercised as they typically renew with significantly different underlying terms. The company may sublease certain of its railcars to third parties on a short-term basis. The subleases are classified as operating leases, with the associated sublease income being recognized on a straight-line basis over the lease term. The components of lease expense are as follows (in thousands): Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 Lease expense Operating lease expense $ 4,803 $ 5,232 $ 14,645 $ 15,432 Variable lease expense (1) 301 530 892 1,429 Total lease expense $ 5,104 $ 5,762 $ 15,537 $ 16,861 (1) Represents amounts incurred in excess of the minimum payments required for a certain building lease and for the handling and unloading of railcars for a certain land lease, offset by railcar lease abatements provided by the lessor when railcars are out of service during periods of maintenance or upgrade. Supplemental cash flow information related to operating leases is as follows (in thousands): Three Months Ended ‎ September 30, Nine Months Ended ‎ September 30, 2021 2020 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,706 $ 5,136 $ 14,352 $ 15,004 Right-of-use assets obtained in exchange for lease obligations: Operating leases 7,162 11,053 17,934 17,932 Right-of-use assets and lease obligations derecognized due to lease modifications: Operating leases 1,838 12 1,889 12 Supplemental balance sheet information related to operating leases is as follows: September 30, 2021 December 31, 2020 Weighted average remaining lease term 5.7 years 6.2 years Weighted average discount rate 4.17 % 4.55 % ‎ 33 Table of Contents Aggregate minimum lease payments under the operating lease agreements for the remainder of 2021 and in future years are as follows (in thousands): Year Ending December 31, Amount 2021 $ 5,432 2022 19,026 2023 16,197 2024 13,797 2025 9,508 Thereafter 17,127 Total 81,087 Less: Present value discount ( 11,271 ) Lease liabilities $ 69,816 The company has an additional railcar operating lease that will commence in the fourth quarter of 2021, with estimated future minimum lease commitments of approximately $ 0.7 million and a lease term of three years . The undiscounted amounts are not included in the tables above. Lease Revenue As described in Note 2 – Revenue , the majority of the partnership’s segment revenue is generated through their storage and throughput services and rail transportation services agreements with Green Plains Trade and are accounted for as lease revenue. Leasing revenues do not represent revenues recognized from contracts with customers under ASC 606, and are accounted for under ASC 842, Leases . Lease revenue associated with agreements with Green Plains Trade is eliminated upon consolidation. The remaining lease revenue is not material to the company. Refer to Note 2 – Revenue for further discussion on lease revenue. Commodities As of September 30, 2021, the company had contracted future purchases of grain, corn oil, natural gas, ethanol and distillers grains, valued at approximately $ 372.7 million. Legal The company is currently involved in litigation that has arisen during the ordinary course of business, but does not believe any pending litigation will have a material adverse effect on its financial position, results of operations or cash flows. 14. RELATED PARTY TRANSACTIONS Green Plains Cattle Company LLC The company engaged in certain related party transactions with GPCC, which was considered a related party until the fourth quarter of 2020 at which time the company’s remaining 50 % interest was sold. The company provided a variety of shared services to GPCC, including accounting and finance, payroll and human resources, information technology, legal, communications and treasury activities. The company reduced selling, general and administrative expenses by $ 0.4 million and $ 1.2 million related to shared services provided for the three and nine months ended September 30, 2020. Green Plains Trade Group, a subsidiary of the company, enters into certain sale contracts with GPCC during the normal course of business. Revenues were $ 2.2 million and $ 8.2 million for the three and nine months ended September 30, 2020. Mr. Ejnar Knudsen, a member of the company’s board of directors, has an indirect ownership interest in GPCC of 0.0736 % by reason of his ownership in TGAM Agribusiness Fund LP. Based on the purchase price, the value of that ownership interest is approximately $ 0.1 million. Mr. Knudsen also is the CEO and partial owner of AGR Partners LLC, which provides investment advisory services to TGAM Agribusiness Fund LP pursuant to a sub-advisory agreement between AGR Partners LLC and Nuveen Alternative Advisors LLC, which is the investment manager for TGAM Agribusiness Fund LP and receives usual and customary advisory fees. 34 Table of Contents