What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2021-11-04 · 163 added, 387 removed, 632 unchanged (47% of the section changed)

4 unchanged sentences

(in thousands, except share amounts)

September 30,

Current assets

1 unchanged sentence

Restricted cash

Marketable securities

Accounts receivable, net of allowances of $ 282 and $ 682 , respectively

26 unchanged sentences

Additional paid-in capital

Retained earnings (deficit)

Accumulated other comprehensive income (loss)

Treasury stock, 8,244,456 and 11,813,161 shares, respectively

Retained deficit

Accumulated other comprehensive loss

Treasury stock, 8,244,456 shares

Total Green Plains stockholders'

8 unchanged sentences

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Product revenues

5 unchanged sentences

Selling, general and administrative expenses

Loss (gain) on sale of assets, net

Goodwill impairment

Gain on sale of assets, net

Depreciation and amortization expenses

5 unchanged sentences

Total other expense

Loss before income taxes and income from equity method investees

Loss before income taxes and income (loss) from equity method investees

Income tax benefit (expense)

Income from equity method investees, net of income taxes

Income (loss) from equity method investees

Net income attributable to noncontrolling interests

7 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited and in thousands)

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on derivatives arising during the period, net of tax benefit (expense) of ($ 1,921 ) and $ 1,527 , respectively

Reclassification of realized losses (gains) on derivatives, net of tax benefit (expense) of $ 62 , $ 0 , ($ 750 ) and $ 1,431 , respectively

Other comprehensive income (loss), net of tax

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

Reclassification of realized losses (gains) on derivatives, net of tax expense of $ 701 and $ 434 , respectively

Total other comprehensive income (loss), net of tax

7 unchanged sentences

(unaudited and in thousands)

Nine Months Ended

‎ September 30,

Three Months Ended

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

2 unchanged sentences

Loss on extinguishment of debt

Goodwill impairment

Deferred income taxes

Stock-based compensation

Income from equity method investees, net of income taxes

Distribution from equity method investees, net of income taxes

Loss (income) from equity method investees

Changes in operating assets and liabilities before effects of business combinations and dispositions:

4 unchanged sentences

Current income taxes

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

1 unchanged sentence

Proceeds from the sale of assets

Other investing activities

Net cash used in investing activities

Proceeds from the sale of marketable securities

Net cash provided by investing activities

Cash flows from financing activities:

3 unchanged sentences

Payments on short-term borrowings

( 2,432,553 )

( 1,866,526 )

Payments on extinguishment of convertible debt

Payments for repurchase of common stock

Payments of cash distributions

3 unchanged sentences

Other financing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

7 unchanged sentences

Continued from the previous page

Nine Months Ended

‎ September 30,

Three Months Ended

Reconciliation of total cash, cash equivalents and restricted cash:

2 unchanged sentences

Total cash, cash equivalents and restricted cash

Non-cash financing activity:

Exchange of 4.00 % convertible notes due 2024

Exchange of common stock held in treasury stock for 4.00 %

‎ convertible notes due 2024

Supplemental investing activities:

3 unchanged sentences

Supplemental disclosures of cash flow:

Cash paid (refunded) for income taxes, net

Cash paid for interest

Cash refunded for income taxes, net

Cash paid for interest of continuing operations

Capital expenditures in accounts payable

Cash premium paid for extinguishment of convertible notes

9 unchanged sentences

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.

As of March 31, 2022, 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.

4 unchanged sentences

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 partnership’s consolidated total assets as of March 31, 2022 and December 31, 2021, excluding intercompany balances, are $ 98.7 million and $ 100.3 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 March 31, 2022 and December 31, 2021, excluding intercompany balances, are $ 112.5 million and $ 111.4 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 the company’s general assets.

The company also owns a majority interest in FQT, 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.

3 unchanged sentences

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.

Use of Estimates in the Preparation of Consolidated Financial Statements

4 unchanged sentences

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.

The company operates within three 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 and (3) partnership, which includes fuel storage and transportation services.

Cash and Cash Equivalents

1 unchanged sentence

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.

The company has restricted cash, which can only be used for funding letters of credit, for payment towards a 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.

Marketable Securities

Marketable securities include highly liquid, fixed maturity investments with original maturities ranging from three to twelve months and are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity.

Revenue Recognition

3 unchanged sentences

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.

Sales of ethanol, distillers grains, Ultra-High Protein, 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.

10 unchanged sentences

Revenues from grain storage are recognized over time as the services are rendered.

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.

13 unchanged sentences

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.

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 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.

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 is based.

Changes in forward purchase contracts and exchange-traded futures and options contracts are recognized as a component of cost of goods sold.

3 unchanged sentences

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 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 and other agricultural and energy products.

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.

13 unchanged sentences

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.

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.

4 unchanged sentences

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.

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

Revenues from contracts with customers under ASC 606:

Distillers grains

Service revenues

Intersegment revenues

Total revenues from contracts with customers

Revenues from contracts accounted for as derivatives under ASC 815 (1) :

Distillers grains

Intersegment revenues

Total revenues from contracts accounted for as derivatives

Leasing revenues under ASC 842 (2) :

Total Revenues

Nine Months Ended September 30, 2021

Ethanol Production

Agribusiness & Energy Services

Revenues from contracts with customers under ASC 606:

Distillers grains

Service revenues

Intersegment revenues

Total revenues from contracts with customers

Revenues from contracts accounted for as derivatives under ASC 815 (1) :

Distillers grains

Intersegment revenues

Total revenues from contracts accounted for as derivatives

Leasing revenues under ASC 842 (2) :

Total Revenues

Three Months Ended September 30, 2020

Three Months Ended March 31, 2022

Ethanol Production

11 unchanged sentences

Total Revenues

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Ethanol Production

14 unchanged sentences

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.

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.

For the three months ended March 31, 2022, no single customer’s revenue was over 10% of total revenues.

Revenues from Customer A represented approximately 13 % of total revenues for the three months ended March 31, 2021.

Disposition of Ord Ethanol Plant

2 unchanged sentences

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

Prepaid expenses and other

Property and equipment

Operating lease right-of-use assets

Accrued and other liabilities

Operating lease current liabilities

Operating lease long-term liabilities

Total identifiable net assets disposed

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.

The company recorded a pretax gain on the sale of the Ord plant of $ 36.9 million within corporate activities during the three months ended March 31, 2021.

FAIR VALUE DISCLOSURES

2 unchanged sentences

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.

Grain purchase and sale contracts 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.

5 unchanged sentences

The company’s assets and liabilities by level are as follows (in thousands):

Fair Value Measurements at September 30, 2021

Fair Value Measurements at March 31, 2022

Quoted Prices in

25 unchanged sentences

Accounts payable (1)

Accrued and other liabilities (2)

Unrealized losses on derivatives

Other liabilities (2)

Total liabilities measured at fair value

(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.

(1) Accounts payable is generally stated at historical amounts with the exception of $ 5.5 million and $ 12.6 million at March 31, 2022 and December 31, 2021, 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.

(2) As of both March 31, 2022 and December 31, 2021, respectively, accrued and other liabilities includes $ 3.3 million and $ 3.3 million and other liabilities includes $ 7.8 million and $ 7.6 million of consideration related to potential earn-out payments recorded at fair value.

As of March 31, 2022, the fair value of the company’s debt was approximately $ 1,023.5 million compared with a book value of $ 903.8 million.

At December 31, 2021, the fair value of the company’s debt was approximately $ 891.1 million compared with a book value of $ 722.7 million.

The company estimated the fair value of its outstanding debt using Level 2 inputs.

The company believes the fair values of its marketable securities approximated book value, which was $ 24.9 million and $ 124.9 million at March 31, 2022 and December 31, 2021, respectively.

The company believes the fair values of its accounts receivable approximated book value, which was $ 142.0 million and $ 120.0 million at March 31, 2022 and December 31, 2021, 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.

SEGMENT INFORMATION

The company reports the financial and operating performance for the following four operating segments:

The food and ingredients segment, had no activity during the three and nine months ended September 30, 2021 and 2020.

The company reports the financial and operating performance for the following three 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, and (3) partnership, which includes fuel storage and transportation services.

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.

For example, the agribusiness and energy services segment procures grain and natural gas and sells products, including ethanol, distillers grains, Ultra-High Protein and corn oil for the ethanol production segment.

The partnership segment provides fuel storage and transportation services for the ethanol production segment.

4 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Ethanol production:

14 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of goods sold:

3 unchanged sentences

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Operating income (loss):

3 unchanged sentences

Corporate activities (2)

(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.

(1) Operating loss for ethanol production includes an inventory lower of cost or net realizable value adjustment charge of $ 13.2 million for the three months ended March 31, 2022.

(2) Corporate activities for the three months ended March 31, 2021 include a $ 36.9 million gain on sale of assets .

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Depreciation and amortization:

3 unchanged sentences

The following table sets forth total assets by operating segment (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

5 unchanged sentences

(1) Asset balances by segment exclude intercompany balances .

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.

Inventories are carried at the lower of cost or net realizable value, except fair-value hedged inventories.

As of March 31, 2022, the company recorded a $ 13.2 million lower of cost or net realized value inventory adjustment reflected in cost of goods sold within the ethanol production segment.

There was no lower of cost or market inventory adjustment as of December 31, 2021.

The components of inventories are as follows (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

5 unchanged sentences

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.

At March 31, 2022, the company’s consolidated balance sheet reflected unrealized losses of $ 8.9 million, net of tax, in accumulated other comprehensive loss.

The company expects these items will be reclassified as operating income (loss) over the next 12 months as a result of hedged transactions that are forecasted to occur.

The amount realized in operating income (loss) will differ as commodity prices change.

Fair Values of Derivative Instruments

2 unchanged sentences

Liability Derivatives'

September 30,

Derivative financial instruments

(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.

Other liabilities

(1) At March 31, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange traded futures and options contracts of $ 1.9 million, which included $ 0.9 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments.

(2) At March 31, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $ 30.4 million.

(3) At December 31, 2021, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $ 17.1 million, which include $ 1.3 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments.

Refer to Note 4 - Fair Value Disclosures , which contains fair value information related to derivative financial instruments.

4 unchanged sentences

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Comprehensive Income into Income

4 unchanged sentences

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Commodity contracts

A portion of the company’s derivative instruments are considered economic hedges and as such are not designated as hedging instruments.

The company uses exchange-traded futures and options con t racts to manage its net position of product inventories and forward cash purchase and sal e s contracts to reduce price risk caused by market fluctuations.

including exchange traded c ontracts and forward commodity purchase or sale contracts, and inventories of certain agricultural products, which include amounts acquired under deferred pricing contracts, are stated at fair value.

Inventories are not considered a derivative, rather they are carried at the lower of cost or market.

As such, changes in the fair value of inventories are not included in the table below.

Amount of Gain (Loss)

3 unchanged sentences

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Hedging Instruments

5 unchanged sentences

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

March 31, 2022

December 31, 2021

5 unchanged sentences

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,

Gain (loss) on cash flow hedging relationships:

Commodity contracts:

Amount of gain (loss) reclassified from accumulated other comprehensive income into income

Gain (loss) on fair value hedging relationships:

Commodity contracts:

Derivatives designated as hedging instruments

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

Location and Amount of Gain (Loss) Recognized in

Income on Cash Flow and Fair Value Hedging

Relationships for the Nine Months Ended September 30,

Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended March 31,

Gain (loss) on cash flow hedging relationships:

5 unchanged sentences

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

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.

The open commodity derivative positions as of September 30, 2021, are as follows (in thousands):

There were no gains or losses from discontinuing cash flow or fair value hedge treatment during the three months ended March 31, 2022 and 2021.

The open commodity derivative positions as of March 31, 2022, are as follows (in thousands):

Exchange Traded (1)

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(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.

(3) 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.

On January 1, 2021, the company early adopted the amended guidance in ASC 470-20 , using the modified retrospective method of transition.

Included in revenues are net gains of $ 0.8 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively, on energy trading contracts.

The components of long-term debt are as follows (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

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Green Plains Partners:

$ 60.0 million credit facility (7)

$ 60.0 million term loan (6) (7)

Total book value of long-term debt

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Total long-term debt

(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.

(1) Includes $ 6.2 million and $ 6.5 million of unamortized debt issuance costs as of March 31, 2022 and December 31, 2021, respectively.

(2) Includes $ 1.1 million and $ 1.2 million of unamortized debt issuance costs as of March 31, 2022 and December 31, 2021, respectively.

(3) Includes $ 0.1 million of unamortized debt issuance costs as of both March 31, 2022 and December 31, 2021, respectively.

(4) Includes $ 0.8 million and $ 0.9 million of unamortized debt issuance costs as of March 31, 2022 and December 31, 2021, respectively.

(5) On September 3, 2020, Green Plains Wood River and Green Plains Shenandoah, wholly-owned subsidiaries of the company, entered into a $ 75.0 million delayed draw loan agreement.

Includes $ 0.3 million of unamortized debt issuance costs as of both March 31, 2022 and December 31, 2021, respectively .

(6) The Green Plains Partners credit facility was amended on July 20, 2021, to $ 60.0 million and includes $ 0.5 million of unamortized debt issuance costs as of both March 31, 2022 and December 31, 2021, respectively .

(7) On February 11, 2022, the term loan was modified to allow Green Plains Partners and its affiliates to repurchase outstanding notes.

On the same day, the partnership purchased $ 1.0 million of the outstanding notes from accounts and funds managed by BlackRock and subsequently retired the notes.

The components of short-term notes payable and other borrowings are as follows (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

Green Plains Finance Company, Green Plains Grain and Green Plains Trade:

$ 350.0 million revolver

Green Plains Commodity Management:

$ 40.0 million hedge line

Green Plains Trade:

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$ 100.0 million revolver

$ 50.0 million inventory financing

Green Plains Commodity Management:

$ 30.0 million hedge line

Corporate Activities

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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.

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.

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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 company anticipates it will settle the 4.125 % notes in a combination of cash and common stock.

The notes are convertible at the Holder’s option.

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.

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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 %.

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.

On March 25, 2022, Green Plains Finance Company, Green Plains Grain and Green Plains Trade (collectively, the “Borrowers”), all wholly owned subsidiaries of the company, together with the company, as guarantor, entered into a five-year, $ 350.0 million senior secured sustainability-linked revolving Loan and Security Agreement (the “Facility”) with a group of financial institutions.

This transaction refinanced the separate credit facilities previously held by Green Plains Grain and Green Plains Trade.

The Facility matures on March 25, 2027 .

The Facility includes revolving commitments totaling $ 350.0 million and an accordion feature whereby amounts available under the Facility may be increased by up to $ 100.0 million of new lender commitments subject to certain conditions.

Each SOFR rate loan shall bear interest for each day at a rate per annum equal to the Term SOFR rate for the outstanding period plus a Term SOFR adjustment and an applicable margin of 2.25 % to 2.50 %, which is dependent on undrawn availability under the Facility.

Each base rate loan shall bear interest at a rate per annum equal to the base rate plus the applicable margin of 1.25 % to 1.50 %, which is dependent on undrawn availability under the Facility.

The unused portion of the Facility is also subject to a commitment fee of 0.275 % to 0.375 %, dependent on undrawn availability.

Additionally, the applicable margin and commitment fee are subject to certain increases or decreases of up to 0.10 % and 0.025 %, respectively, tied to the company’s achievement of certain sustainability criteria, including the reduction of greenhouse gas emissions, recordable incident rate reduction, increased corn oil production and the implementation of technology to produce sustainable ingredients.

The Facility contains customary affirmative and negative covenants, as well as the following financial covenants to be calculated as of the last day of any month:

the current ratio of the Borrowers shall not be less than 1.00 to 1.00;

the collateral coverage ratio of the Borrowers shall not be less than 1.20 to 1.00;

and the debt to capitalization ratio of the company shall

not be greater than 0.60 to 1.00.

The Facility also includes customary events of default, including without limitation, failure to make required payments of principal or interest, material incorrect representations and warranties, breach of covenants, events of bankruptcy and other certain matters.

The Facility is secured by the working capital assets of the Borrowers and is guaranteed by the company.

Green Plains Commodity Management has an uncommitted $ 40.0 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 %.

Advances are subject to variable interest rates equal to SOFR plus 1.75 %.

The company had $ 5.2 million short-term notes payable related to this credit facility as of March 31, 2022.

Ethanol Production Segment

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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 proceeds of the Junior Notes are being used to construct MSC TM protein technology at the Green Plains Obion and Green Plains Mount Vernon facilities.

The Junior Notes accrue interest at an annual rate of 11.75% .

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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.

Funds associated with the Junior Notes are administered by a trustee and are included in the balance of restricted cash as of March 31, 2022.

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.

The proceeds from the loan were used to add MSC TM protein technology 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.

The remaining availability was drawn in the first quarter of 2022.

Beginning in the second quarter of 2022, 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.

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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.

On July 20, 2021, the prior credit facility was amended to $ 60.0 million, extending the maturity to July 20, 2026 , and converting the credit facility to a term loan.

Under the terms of the amended agreement, BlackRock purchased the outstanding 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.

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however, the partnership has the option to prepay $ 1.5 million per quarter beginning twelve months after the closing date.

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.

On February 11, 2022, the amended term loan was modified to allow Green Plains Partners and its

affiliates to repurchase outstanding notes.

On the same day, the partnership purchased $ 1.0 million of the outstanding notes from accounts and funds managed by BlackRock and subsequently retired the notes.

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.

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Covenant Compliance

The company was in compliance with its debt covenants as of September 30, 2021.

The company was in compliance with its debt covenants as of March 31, 2022.

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.

At March 31, 2022, there were approximately $ 108.8 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.

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 company has an equity incentive plan which reserved a total of 5.7 million shares of common stock for issuance pursuant to the plan, of which 1.7 million shares remain outstanding and available.

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.

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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:

The non-vested stock award and deferred stock unit activity for the three months ended March 31, 2022, is as follows:

‎ Deferred Stock

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Non-Vested at December 31, 2021

Non-Vested at September 30, 2021

Non-Vested at March 31, 2022

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.

On March 14, 2022, 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 various metrics including but not limited to the company’s high-protein initiatives, annual production levels and return on investment (ROI).

The performance shares were granted at a target of 100 %, but each performance share can be reduced or increased 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 2022, 2021 and 2020 awards are 1,210,935 performance shares which represents approximately 251 % of the 482,811 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

Dividend yield

Expected volatility

Monte Carlo valuation

Closing stock price on the date of grant

The non-vested performance share award activity for the nine months ended September 30, 2021, is as follows:

The actual number of performance shares that will ultimately vest is based on the actual performance targets achieved at the end of each performance period.

On February 19, 2019, the board of directors granted performance shares to be awarded in the form of common stock to certain participants of the plan.

The performance shares were granted at a target of 100 %, but each performance share was reduced or increased depending on results for the performance period for the company’s average return on net assets, and the company’s total shareholder return relative to that of the company’s performance peer group.

On February 19, 2022, based on the criteria discussed above, the 149,933 2019 performance shares vested at 75 %, which resulted in the issuance of 112,450 shares of common stock.

The non-vested performance share award activity for the three months ended March 31, 2022, is as follows:

‎ Average Grant-

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Non-Vested at December 31, 2021

Non-Vested at September 30, 2021

Non-Vested at March 31, 2022

Green Plains Partners

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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:

‎ Deferred Stock

‎ Average Grant-

‎ Date Fair Value

Weighted-Average

‎ Vesting Term

Non-Vested at December 31, 2020

Non-Vested at September 30, 2021

The partnership measures unit-based compensation related to equity awards in its consolidated financial statements over the requisite service period on a straight-line basis.

There was no change in the number of non-vested unit-based awards for the three months ended March 31, 2022.

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.

Compensation costs for stock-b ased and unit-based payment plans were $ 1.9 million and $ 0.9 million for the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, there was $ 19.2 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 2.5 years.

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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.

The basic and diluted EPS are calculated as follows (in thousands, except per share amounts):

The basic and diluted EPS are calculated as follows (in thousands):

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

EPS - basic and diluted:

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Anti-dilutive weighted-average convertible debt, warrants and stock-based compensation (1)

(1) The effect related to the company’s convertible debt, warrants and certain stock-based compensation awards has been excluded from diluted EPS for the periods presented as the inclusion of these shares would have been antidilutive.

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.

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

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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.

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, and are treated as equity based awards and recorded as a reduction in additional paid-in capital.

The remaining 275,000 warrants, of which 55,555 are exercisable as a result of achieving certain earn-out provisions and 219,445 are contingent upon certain earn-out provisions, are 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.

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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):

On May 18, 2021, the company completed 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 months ended March 31, 2022 and 2021 are as follows (in thousands):

Treasury Stock

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Balance, December 31, 2021

Impact of ASC 470-20 adoption (1)

Balance, January 1, 2021

Net income (loss)

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Investment in subsidiary

Issuance of warrants

Issuance of common stock for cash at $ 23.00 per share, net of fees

Stock-based compensation

Balance, March 31, 2022

Net income (loss)

Distributions declared

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Other comprehensive income (loss), net of tax

Exchange of 4.00 % convertible notes due 2024

Investment in subsidiary

Stock-based compensation

Balance, June 30, 2021

Net income (loss)

Distributions declared

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Other comprehensive income (loss), net of tax

Investment in subsidiary

Issuance of common stock for cash at $ 32.00 per share, net of fees

Stock-based compensation

Balance, September 30, 2021

(1) See Note 1 – Recent Accounting Pronouncements and Note 8 – Debt for discussion on adoption of ASC 470-20 .

Treasury Stock

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Stockholders'

Balance, January 1, 2020

Balance, December 31, 2020

Net income (loss)

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Other comprehensive income (loss), net of tax

Share of equity method investees other comprehensive income (loss) arising during the period, net of tax

Repurchase of common stock

Investment in subsidiaries

Issuance of warrants

Issuance of common stock for cash at $ 23.00 per share, net of fees

Stock-based compensation

Balance, March 31, 2021

Net income (loss)

Distributions declared

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Other comprehensive income (loss), net of tax

Share of equity method investees other comprehensive income (loss) arising during the period, net of tax

Stock-based compensation

Balance, June 30, 2020

Net income (loss)

Distributions declared

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other comprehensive income (loss)

Other comprehensive income (loss), net of tax

Share of equity method investees other comprehensive income (loss) arising during the period, net of tax

Stock-based compensation

Balance, September 30, 2020

Amounts reclassified from accumulated other comprehensive income are as follows (in thousands):

Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Statements of

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Total gains on cash flow hedges

Income tax benefit (expense)

Income tax expense

Amounts reclassified from accumulated other comprehensive income (loss)

(2) Costs of goods sold

(3) Loss before income taxes and income from equity method investees

(3) Loss before income taxes and income (loss) from equity method investees

(4) Income tax benefit (expense)

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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 company recorded income tax benefit of $ 1.2 million for the three months ended March 31, 2022, compared with income tax expense of $ 1.9 million for the same period in 2021.

The increase in income tax benefit was primarily due to the release of a valuation allowance against decreases in certain deferred tax assets for the three months ended March 31, 2022 compared to income tax expense recorded for the three months ended March 31, 2021, to reflect the recording of a valuation allowance against increases in certain deferred tax assets.

The amount of unrecognized tax benefits for uncertain tax positions was $ 51.4 million as of March 31, 2022 and December 31, 2021.

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.

COMMITMENTS AND CONTINGENCIES

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Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Lease expense

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Three Months Ended

‎ September 30,

Nine Months Ended

‎ September 30,

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Supplemental balance sheet information related to operating leases is as follows:

September 30, 2021

March 31, 2022

December 31, 2021

5 unchanged sentences

Lease liabilities

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

3 unchanged sentences

The remaining lease revenue is not material to the company.

Refer to Note 2 – Revenue for further discussion on lease revenue.

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.

Commodities, Storage and Transportation

As of March 31, 2022, the company had contracted future purchases of grain, natural gas, and distillers grains, valued at approximately $ 532.4 million and future commitments for storage and transportation, valued at approximately $ 31.4 million.

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.

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.

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.

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.

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

What changed 10-Q

Item 1. Financial Statements