Green Plains Inc. 10-Q

Item 1. Financial Statements. GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) March 31, ‎ 2022 December 31, ‎ 2021 (unaudited) ASSETS Current assets Cash and cash equivalents $ 509,195 $ 426,220 Restricted cash 95,070 134,739 Marketable securities 24,942 124,859 Accounts receivable, net of allowances of $ 282 and $ 682 , respectively 142,041 119,961 Income taxes receivable 646 911 Inventories 313,950 267,838 Prepaid expenses and other 20,675 16,483 Derivative financial instruments 56,087 26,738 Total current assets 1,162,606 1,117,749 Property and equipment, net of accumulated depreciation ‎ and amortization of $ 584,957 and $ 567,027 , respectively 940,912 893,517 Operating lease right-of-use assets 64,376 64,042 Other assets 84,607 84,447 Total assets $ 2,252,501 $ 2,159,755 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 106,308 $ 146,063 Accrued and other liabilities 46,979 56,980 Derivative financial instruments 64,620 43,244 Operating lease current liabilities 16,859 16,814 Short-term notes payable and other borrowings 310,190 173,418 Current maturities of long-term debt 35,701 35,285 Total current liabilities 580,657 471,804 Long-term debt 557,937 514,006 Operating lease long-term liabilities 50,233 49,795 Other liabilities 21,067 22,131 Total liabilities 1,209,894 1,057,736 Commitments and contingencies (Note 13) Stockholders' equity Common stock, $ 0.001 par value; 75,000,000 shares authorized; ‎ 62,066,201 and 61,840,434 shares issued, and 53,821,745 ‎ and 53,595,978 shares outstanding, respectively 62 62 Additional paid-in capital 1,067,651 1,069,573 Retained deficit ( 76,673 ) ( 15,199 ) Accumulated other comprehensive loss ( 8,889 ) ( 12,310 ) Treasury stock, 8,244,456 shares ( 91,626 ) ( 91,626 ) Total Green Plains stockholders' equity 890,525 950,500 Noncontrolling interests 152,082 151,519 Total stockholders' equity 1,042,607 1,102,019 Total liabilities and stockholders' equity $ 2,252,501 $ 2,159,755 See accompanying notes to the consolidated financial statements. ‎ 4 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share amounts) Three Months Ended ‎ March 31, 2022 2021 Revenues Product revenues $ 776,690 $ 551,980 Service revenues 4,745 1,660 Total revenues 781,435 553,640 Costs and expenses Cost of goods sold (excluding depreciation and amortization expenses reflected below) 772,509 509,233 Operations and maintenance expenses 5,566 5,754 Selling, general and administrative expenses 30,863 23,518 Gain on sale of assets, net - ( 36,893 ) Depreciation and amortization expenses 20,399 20,681 Total costs and expenses 829,337 522,293 Operating income (loss) ( 47,902 ) 31,347 Other income (expense) Interest income 71 30 Interest expense ( 8,806 ) ( 31,679 ) Other, net 411 10 Total other expense ( 8,324 ) ( 31,639 ) Loss before income taxes and income (loss) from equity method investees ( 56,226 ) ( 292 ) Income tax benefit (expense) 1,153 ( 1,862 ) Income (loss) from equity method investees ( 799 ) 175 Net loss ( 55,872 ) ( 1,979 ) Net income attributable to noncontrolling interests 5,602 4,566 Net loss attributable to Green Plains $ ( 61,474 ) $ ( 6,545 ) Earnings per share: Net loss attributable to Green Plains - basic and diluted $ ( 1.16 ) $ ( 0.17 ) Weighted average shares outstanding: Basic and diluted 52,887 37,695 See accompanying notes to the consolidated financial statements. ‎ 5 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited and in thousands) Three Months Ended ‎ March 31, 2022 2021 Net loss $ ( 55,872 ) $ ( 1,979 ) 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 5,386 ( 4,849 ) Reclassification of realized losses (gains) on derivatives, net of tax expense of $ 701 and $ 434 , respectively ( 1,965 ) ( 1,377 ) Total other comprehensive income (loss), net of tax 3,421 ( 6,226 ) Comprehensive loss ( 52,451 ) ( 8,205 ) Comprehensive income attributable to noncontrolling interests 5,602 4,566 Comprehensive loss attributable to Green Plains $ ( 58,053 ) $ ( 12,771 ) See accompanying notes to the consolidated financial statements. ‎ 6 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three Months Ended ‎ March 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 55,872 ) $ ( 1,979 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 20,399 20,681 Amortization of debt issuance costs and debt discount 1,846 2,672 Gain on sale of assets, net - ( 36,303 ) Loss on extinguishment of debt - 22,100 Deferred income taxes ( 1,219 ) 1,960 Stock-based compensation 1,875 882 Loss (income) from equity method investees 799 ( 175 ) Other ( 442 ) ( 82 ) Changes in operating assets and liabilities before effects of business combinations and dispositions: Accounts receivable ( 22,783 ) ( 6,874 ) Inventories ( 46,112 ) 332 Derivative financial instruments ( 3,788 ) 18,574 Prepaid expenses and other assets ( 4,192 ) 917 Accounts payable and accrued liabilities ( 52,661 ) ( 62,032 ) Current income taxes 265 177 Other ( 655 ) 2,169 Net cash used in operating activities ( 162,540 ) ( 36,981 ) Cash flows from investing activities: Purchases of property and equipment, net ( 61,984 ) ( 31,524 ) Proceeds from the sale of assets - 73,846 Proceeds from the sale of marketable securities 99,917 - Net cash provided by investing activities 37,933 42,322 Cash flows from financing activities: Proceeds from the issuance of long-term debt 45,000 355,000 Payments of principal on long-term debt ( 1,177 ) ( 135,835 ) Proceeds from short-term borrowings 1,075,119 686,486 Payments on short-term borrowings ( 939,647 ) ( 691,166 ) Payments on extinguishment of convertible debt - ( 20,861 ) Payments of cash distributions ( 5,122 ) ( 1,395 ) Proceeds from issuance of common stock, net - 191,134 Payments of loan fees ( 2,522 ) ( 8,614 ) Payments related to tax withholdings for stock-based compensation ( 3,738 ) ( 3,804 ) Other financing activities - 3,330 Net cash provided by financing activities 167,913 374,275 Net change in cash, cash equivalents and restricted cash 43,306 379,616 Cash, cash equivalents and restricted cash, beginning of period 560,959 274,810 Cash, cash equivalents and restricted cash, end of period $ 604,265 $ 654,426 Continued on the following page ‎ 7 Table of Contents GREEN PLAINS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Continued from the previous page Three Months Ended ‎ March 31, 2022 2021 Reconciliation of total cash, cash equivalents and restricted cash: Cash and cash equivalents $ 509,195 $ 446,833 Restricted cash 95,070 207,593 Total cash, cash equivalents and restricted cash $ 604,265 $ 654,426 Supplemental investing activities: Assets disposed of in sale $ - $ 35,317 Less: liabilities relinquished - ( 415 ) Net assets disposed $ - $ 34,902 Supplemental disclosures of cash flow: Cash refunded for income taxes, net $ ( 198 ) $ ( 106 ) Cash paid for interest of continuing operations $ 10,212 $ 8,688 Capital expenditures in accounts payable $ 14,620 $ 15,569 Cash premium paid for extinguishment of convertible notes $ - $ 20,861 See accompanying notes to the consolidated financial statements. ‎ 8 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. 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. 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 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. 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, 2021, filed with the SEC on February 18, 2022. 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. 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. ‎ 9 Table of Contents Description of Business 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 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 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 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, 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. 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. 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. 10 Table of Contents 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 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. 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. 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 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. 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. 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 11 Table of Contents 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. 2. REVENUE Revenue by Source The following tables disaggregate revenue by major source (in thousands): Three Months Ended March 31, 2022 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 7,362 - - - 7,362 Corn oil - - - - - Service revenues 3,740 - 1,005 - 4,745 Other 9,621 1,288 - - 10,909 Intersegment revenues - - 1,885 ( 1,885 ) - Total revenues from contracts with customers 20,723 1,288 2,890 ( 1,885 ) 23,016 Revenues from contracts accounted for as derivatives under ASC 815 (1) : Ethanol 471,922 95,660 - - 567,582 Distillers grains 98,512 15,126 - - 113,638 Corn oil 40,889 2,406 - - 43,295 Grain - 102 - - 102 Other 5,507 28,295 - - 33,802 Intersegment revenues - 5,835 - ( 5,835 ) - Total revenues from contracts accounted for as derivatives 616,830 147,424 - ( 5,835 ) 758,419 Leasing revenues under ASC 842 (2) : - - 16,210 ( 16,210 ) - Total Revenues $ 637,553 $ 148,712 $ 19,100 $ ( 23,930 ) $ 781,435 Three Months Ended March 31, 2021 Ethanol Production Agribusiness & Energy Services Partnership Eliminations Total Revenues: Revenues from contracts with customers under ASC 606: Ethanol $ - $ - $ - $ - $ - Distillers grains 3,613 - - - 3,613 Corn oil - - - - - Service revenues 563 - 1,057 - 1,620 Other 4,062 826 - - 4,888 Intersegment revenues - - 2,006 ( 2,006 ) - Total revenues from contracts with customers 8,238 826 3,063 ( 2,006 ) 10,121 Revenues from contracts accounted for as derivatives under ASC 815 (1) : Ethanol 289,585 75,912 - - 365,497 Distillers grains 95,694 9,239 - - 104,933 Corn oil 14,540 4,811 - - 19,351 Grain - 12,170 - - 12,170 Other 15,665 25,863 - - 41,528 Intersegment revenues - 5,123 - ( 5,123 ) - Total revenues from contracts accounted for as derivatives 415,484 133,118 - ( 5,123 ) 543,479 Leasing revenues under ASC 842 (2) : - - 17,343 ( 17,303 ) 40 Total Revenues $ 423,722 $ 133,944 $ 20,406 $ ( 24,432 ) $ 553,640 ‎ 12 Table of Contents (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 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. 3. DISPOSITIONS 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 $ 36.9 million within corporate activities during the three months ended March 31, 2021. 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 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. 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. ‎ 13 Table of Contents 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 March 31, 2022 Quoted Prices in ‎ Active Markets for ‎ Identical Assets Significant Other ‎ Observable Inputs (Level 1) (Level 2) Total Assets: Cash and cash equivalents $ 509,195 $ - $ 509,195 Restricted cash 95,070 - 95,070 Inventories carried at market - 70,460 70,460 Unrealized gains on derivatives - 54,149 54,149 Other assets 110 464 574 Total assets measured at fair value $ 604,375 $ 125,073 $ 729,448 Liabilities: Accounts payable (1) $ - $ 5,488 $ 5,488 Accrued and other liabilities (2) - 3,339 3,339 Unrealized losses on derivatives - 34,206 34,206 Other liabilities (2) - 7,776 7,776 Total liabilities measured at fair value $ - $ 50,809 $ 50,809 Fair Value Measurements at December 31, 2021 Quoted Prices in ‎ Active Markets for ‎ Identical Assets Significant Other ‎ Observable Inputs (Level 1) (Level 2) Total Assets: Cash and cash equivalents $ 426,220 $ - $ 426,220 Restricted cash 134,739 - 134,739 Inventories carried at market - 72,320 72,320 Unrealized gains on derivatives - 26,738 26,738 Other assets 111 8 119 Total assets measured at fair value $ 561,070 $ 99,066 $ 660,136 Liabilities: Accounts payable (1) $ - $ 12,617 $ 12,617 Accrued and other liabilities (2) - 3,260 3,260 Unrealized losses on derivatives - 26,117 26,117 Other liabilities (2) - 7,788 7,788 Total liabilities measured at fair value $ - $ 49,782 $ 49,782 (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 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. ‎ 14 Table of Contents 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 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, 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. 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. The following tables set forth certain financial data for the company’s operating segments (in thousands): Three Months Ended ‎ March 31, 2022 2021 Revenues: Ethanol production: Revenues from external customers $ 637,553 $ 423,722 Intersegment revenues - - Total segment revenues 637,553 423,722 Agribusiness and energy services: Revenues from external customers 142,877 128,821 Intersegment revenues 5,835 5,123 Total segment revenues 148,712 133,944 Partnership: Revenues from external customers 1,005 1,097 Intersegment revenues 18,095 19,309 Total segment revenues 19,100 20,406 Revenues including intersegment activity 805,365 578,072 Intersegment eliminations ( 23,930 ) ( 24,432 ) Total Revenues $ 781,435 $ 553,640 Refer to Note 2 - Revenue , for further disaggregation of revenue by operating segment. Three Months Ended ‎ March 31, 2022 2021 Cost of goods sold: Ethanol production $ 661,560 $ 415,525 Agribusiness and energy services 134,439 116,074 Intersegment eliminations ( 23,490 ) ( 22,366 ) $ 772,509 $ 509,233 15 Table of Contents Three Months Ended ‎ March 31, 2022 2021 Operating income (loss): Ethanol production (1) $ ( 51,158 ) $ ( 20,320 ) Agribusiness and energy services 10,408 13,346 Partnership 11,809 12,871 Intersegment eliminations ( 440 ) ( 2,066 ) Corporate activities (2) ( 18,521 ) 27,516 $ ( 47,902 ) $ 31,347 (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 ‎ March 31, 2022 2021 Depreciation and amortization: Ethanol production $ 18,432 $ 18,528 Agribusiness and energy services 464 607 Partnership 898 887 Corporate activities 605 659 $ 20,399 $ 20,681 The following table sets forth total assets by operating segment (in thousands): March 31, 2022 December 31, 2021 Total assets (1) : Ethanol production $ 1,093,026 $ 1,101,151 Agribusiness and energy services 608,136 487,164 Partnership 98,692 100,349 Corporate assets 479,185 524,206 Intersegment eliminations ( 26,538 ) ( 53,115 ) $ 2,252,501 $ 2,159,755 (1) Asset balances by segment exclude intercompany balances . 6. INVENTORIES 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): March 31, 2022 December 31, 2021 Finished goods $ 132,198 $ 91,448 Commodities held for sale 5,141 72,320 Raw materials 119,122 50,604 Work-in-process 22,255 19,783 Supplies and parts 35,234 33,683 $ 313,950 $ 267,838 ‎ 16 Table of Contents 7. DERIVATIVE FINANCIAL INSTRUMENTS 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 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 March 31, ‎ 2022 December 31, ‎ 2021 March 31, ‎ 2022 December 31, ‎ 2021 Derivative financial instruments $ 54,149 (1) $ 26,738 $ 34,206 (2) $ 26,117 (3) Other assets 464 8 - - Other liabilities - - 1 196 Total $ 54,613 $ 26,746 $ 34,207 $ 26,313 (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. 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 ‎ March 31, Comprehensive Income into Income 2022 2021 Revenues $ ( 628 ) $ ( 15,188 ) Cost of goods sold 3,294 16,999 Net gain (loss) recognized in income (loss) before income taxes $ 2,666 $ 1,811 Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives Gain (Loss) Recognized in Other Comprehensive Income on Three Months Ended ‎ March 31, Derivatives 2022 2021 Commodity contracts $ 7,307 $ ( 6,376 ) 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. Derivatives, 17 Table of Contents 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) Recognized in Income on Derivatives Derivatives Not Designated as Location of Gain (Loss) Recognized in Income Three Months Ended ‎ March 31, Hedging Instruments on Derivatives 2022 2021 Commodity contracts Revenues $ ( 5,358 ) $ ( 40,794 ) Commodity contracts Costs of goods sold ( 48,402 ) 8,563 Net gain (loss) recognized in income (loss) before income taxes $ ( 53,760 ) $ ( 32,231 ) The following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items (in thousands): March 31, 2022 December 31, 2021 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 $ 70,460 $ 21,326 $ 72,320 $ 6,291 Effect of Cash Flow and Fair Value Hedge Accounting on the Statements of Operations Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended March 31, 2022 2021 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 $ ( 628 ) $ 3,294 $ ( 15,188 ) $ 16,999 Gain (loss) on fair value hedging relationships: Commodity contracts: Hedged item - 18,386 - 7,967 Derivatives designated as hedging instruments - ( 17,244 ) - ( 7,108 ) 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 $ ( 628 ) $ 4,436 $ ( 15,188 ) $ 17,858 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. ‎ 18 Table of Contents The open commodity derivative positions as of March 31, 2022, are as follows (in thousands): Exchange Traded (1) Non-Exchange Traded (2) Derivative ‎ Instruments Net Long & ‎ (Short) Long (Short) Unit of ‎ Measure Commodity Futures ( 19,985 ) Bushels Corn Futures ( 8,205 ) (3) Bushels Corn Futures ( 2,142 ) Gallons Ethanol Futures 5,398 MmBTU Natural Gas Futures ( 960 ) (3) MmBTU Natural Gas Options 32,007 Pounds Soybean Oil Options 5,102 Bushels Corn Options 487 MmBTU Natural Gas Forwards 55,634 ( 123 ) Bushels Corn Forwards - ( 274,797 ) Gallons Ethanol Forwards 173 ( 381 ) Tons Distillers Grains Forwards - ( 110,529 ) Pounds Corn Oil Forwards 18,501 ( 482 ) 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 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 of $ 0.8 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively, on energy trading contracts. 8. DEBT The components of long-term debt are as follows (in thousands): March 31, 2022 December 31, 2021 Corporate: 2.25 % convertible notes due 2027 (1) $ 230,000 $ 230,000 4.00 % convertible notes due 2024 (2) 64,000 64,000 4.125 % convertible notes due 2022 (3) 34,316 34,316 Green Plains SPE LLC: $ 125.0 million junior secured mezzanine notes due 2026 (4) 125,000 125,000 Green Plains Wood River and Green Plains Shenandoah: $ 75.0 million delayed draw loan agreement (5) 75,000 30,000 Green Plains Partners: $ 60.0 million term loan (6) (7) 58,969 60,000 Other 15,363 15,531 Total book value of long-term debt 602,648 558,847 Unamortized debt issuance costs ( 9,010 ) ( 9,556 ) Less: current maturities of long-term debt ( 35,701 ) ( 35,285 ) Total long-term debt $ 557,937 $ 514,006 (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. ‎ 19 Table of Contents The components of short-term notes payable and other borrowings are as follows (in thousands): March 31, 2022 December 31, 2021 Green Plains Finance Company, Green Plains Grain and Green Plains Trade: $ 350.0 million revolver $ 305,000 $ - Green Plains Commodity Management: $ 40.0 million hedge line 5,190 16,210 Green Plains Trade: $ 300.0 million revolver - 137,208 Green Plains Grain: $ 100.0 million revolver - 20,000 $ 310,190 $ 173,418 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 20 Table of Contents 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. 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 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. 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 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 21 Table of Contents 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 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 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 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% . 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 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 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. 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 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. 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. On February 11, 2022, the amended term loan was modified to allow Green Plains Partners and its 22 Table of Contents 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. 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 March 31, 2022. Restricted Net Assets 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. 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, 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. 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. Restricted Stock Awards and Deferred Stock Units The non-vested stock award and deferred stock unit activity for the three months ended March 31, 2022, 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, 2021 793,337 $ 14.64 Granted 257,002 29.91 Forfeited ( 5,954 ) 20.12 Vested ( 240,223 ) 13.65 Non-Vested at March 31, 2022 804,162 $ 19.77 2.5 23 Table of Contents Performance Shares 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 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: Performance ‎ Shares Weighted- ‎ Average Grant- ‎ Date Fair Value Weighted-Average ‎ Remaining ‎ Vesting Term ‎ (in years) Non-Vested at December 31, 2021 486,155 $ 13.93 Granted 146,589 29.47 Vested ( 149,933 ) 15.31 Non-Vested at March 31, 2022 482,811 $ 18.22 2.5 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 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 $ 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. The potential tax benefit related to stock-based payment is approximately 21.4 % 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. 24 Table of Contents The basic and diluted EPS are calculated as follows (in thousands): Three Months Ended ‎ March 31, 2022 2021 EPS - basic and diluted: Net loss attributable to Green Plains $ ( 61,474 ) $ ( 6,545 ) Weighted average shares outstanding - basic and diluted 52,887 37,695 EPS - basic and diluted: $ ( 1.16 ) $ ( 0.17 ) Anti-dilutive weighted-average convertible debt, warrants and stock-based compensation (1) 13,823 13,714 (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. 11. STOCKHOLDERS’ EQUITY 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, 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. 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. Convertible Note Exchange 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 . ‎ 25 Table of Contents Components of stockholders’ equity for the three months ended March 31, 2022 and 2021 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, 2021 61,840 $ 62 $ 1,069,573 $ ( 15,199 ) $ ( 12,310 ) 8,244 $ ( 91,626 ) $ 950,500 $ 151,519 $ 1,102,019 Net income (loss) - - - ( 61,474 ) - - - ( 61,474 ) 5,602 ( 55,872 ) Distributions declared - - - - - - - - ( 5,122 ) ( 5,122 ) Other comprehensive income (loss) before reclassification - - - - 5,386 - - 5,386 - 5,386 Amounts reclassified from accumulated other comprehensive income (loss) - - - - ( 1,965 ) - - ( 1,965 ) - ( 1,965 ) Other comprehensive income (loss), net of tax - - - - 3,421 - - 3,421 - 3,421 Investment in subsidiary - - - - - - - - 24 24 Stock-based compensation 226 - ( 1,922 ) - - - - ( 1,922 ) 59 ( 1,863 ) Balance, March 31, 2022 62,066 $ 62 $ 1,067,651 $ ( 76,673 ) $ ( 8,889 ) 8,244 $ ( 91,626 ) $ 890,525 $ 152,082 $ 1,042,607 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 $ 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 subsidiaries - - - - - - - - 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 Amounts reclassified from accumulated other comprehensive income are as follows (in thousands): Three Months Ended ‎ March 31, Statements of ‎ Operations 2022 2021 Classification Gains (losses) on cash flow hedges: Commodity derivatives $ ( 628 ) $ ( 15,188 ) (1) Commodity derivatives 3,294 16,999 (2) Total gains on cash flow hedges 2,666 1,811 (3) Income tax expense ( 701 ) ( 434 ) (4) Amounts reclassified from accumulated other comprehensive income (loss) $ 1,965 $ 1,377 (1) Revenues (2) Costs of goods sold (3) Loss before income taxes and income (loss) from equity method investees (4) Income tax benefit (expense) ‎ 26 Table of Contents 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 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. 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 15.6 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 ‎ March 31, 2022 2021 Lease expense Operating lease expense $ 4,998 $ 4,934 Variable lease expense (1) 179 69 Total lease expense $ 5,177 $ 5,003 (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 ‎ March 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,845 $ 4,832 Right-of-use assets obtained in exchange for lease obligations: Operating leases 4,709 6,464 Right-of-use assets and lease obligations derecognized due to lease modifications: Operating leases - 51 27 Table of Contents Supplemental balance sheet information related to operating leases is as follows: March 31, 2022 December 31, 2021 Weighted average remaining lease term 5.5 years 5.5 years Weighted average discount rate 4.11 % 4.16 % Aggregate minimum lease payments under the operating lease agreements for the remainder of 2022 and in future years are as follows (in thousands): Year Ending December 31, Amount 2022 $ 14,455 2023 17,315 2024 14,774 2025 10,405 2026 4,844 Thereafter 14,353 Total 76,146 Less: Present value discount ( 9,054 ) Lease liabilities $ 67,092 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. 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. 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. ‎ 28 Table of Contents