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Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-04 · 200 added, 128 removed, 284 unchanged (54% of the section changed)

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The following discussion and analysis provides information we believe is relevant to understand our consolidated financial condition and results of operations.

This discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements contained in this report together with our annual report on Form 10-K for the year ended December 31, 2022.

This discussion should be read in conjunction with the unaudited consolidated financial statements and notes to the unaudited consolidated financial statements contained in this report together with our annual report on Form 10-K for the year ended December 31, 2022.

Cautionary Information Regarding Forward-Looking Statements

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These statements may be identified by words such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “outlook,” “plan,” “predict,” “may,” “could,” “should,” “will” and similar expressions, as well as statements regarding future operating or financial performance or guidance, business strategy, environment, key trends and benefits of actual or planned acquisitions.

Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in Part I, Item 1A – Risk Factors of our annual report on Form 10-K for the year ended December 31, 2022, or incorporated by reference.

Specifically, we may experience fluctuations in future operating results due to a number of economic conditions, including:

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Green Plains Partners LP, a master limited partnership, is our primary downstream storage and logistics provider since its assets are the principal method of storing and delivering the ethanol we produce.

As of March 31, 2023, we own a 48.8% limited partner interest, a 2.0% general partner interest and all of the partnership’s incentive distribution rights.

As of June 30, 2023, we own a 48.8% limited partner interest, a 2.0% general partner interest and all of the partnership’s incentive distribution rights.

The public owns the remaining 49.2% limited partner interest.

The partnership is consolidated in our financial statements, and record a noncontrolling interest for the economic interest in the partnership held by the public common unitholders.

The partnership is consolidated in our financial statements, and we record a noncontrolling interest for the economic interest in the partnership held by the public common unitholders.

We group our business activities into the following three operating segments to manage performance:

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We have installed and are operating FQT MSC™ technology at five of our biorefineries.

Through our value-added ingredients initiative, we produce Ultra-High Protein, a feed ingredient with protein concentrations of 50% or greater and yeast concentrations of 25%, increase production of renewable corn oil and produce other higher value products, such as post-MSC TM distillers grains.

We began pilot scale batch operations at the FQT CST TM production facility at our Innovation Center at York in the second quarter of 2021, which allows for the production of both food and industrial grade low-carbon glucose and dextrose to target applications in food production, renewable chemicals and synthetic biology.

In September 2022, we broke ground at our biorefinery in Shenandoah, Iowa, as the first location to deploy FQT CST TM at commercial scale.

We also anticipate modifying additional biorefineries to include FQT CST TM production capabilities to meet anticipated future customer demands.

We began pilot scale batch operations at the FQT CST™ production facility at our Innovation Center at York in the second quarter of 2021, which allows for the production of both food and industrial grade low-carbon glucose and dextrose to target applications in food production, renewable chemicals and synthetic biology.

In September 2022, we broke ground at our biorefinery in Shenandoah, Iowa, as the first location to deploy FQT CST™ at commercial scale.

We also anticipate modifying additional biorefineries to include FQT CST™ production capabilities to meet anticipated future customer demands.

Additionally, we have taken advantage of opportunities to divest certain assets to reallocate capital toward our current growth initiatives.

We are focused on generating stable and growing operating margins through our business segments and risk management strategy.

Our profitability is highly dependent on commodity prices, particularly for ethanol, distillers grains, renewable corn oil, soybean meal, corn, and natural gas.

Eight biorefineries have committed to carbon capture and sequestration through carbon pipeline transport, five with Summit Carbon Solutions and three with another provider, which will lower GHG emissions through the capture of carbon dioxide at each of these biorefineries, significantly lowering their CI.

The anticipated completion for these projects is in 2025.

In addition, we are exploring innovative options for carbon use at Madison and Obion, such as synthetic methane production, with global partners, and intend to sequester the carbon from fermentation at Mount Vernon as well.

Reducing the CI of our fuel ethanol could allow us to benefit from state and federal clean fuel programs, including LCFS and federal tax credits under the Inflation Reduction Act, and could position our low-carbon ethanol as a potential feedstock for ATJ pathways to produce SAF.

Our profitability is highly dependent on commodity prices, particularly for ethanol, distillers grains, Ultra-High Protein, renewable corn oil, soybean meal, corn, and natural gas.

Since market price fluctuations of these commodities are not always correlated, our operations may be unprofitable at times.

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Recent Developments

On April 17, 2023, during routine maintenance on a whole stillage tank, we experienced an explosion at our Wood River, Nebraska facility, which resulted in the fatality of one employee as well as another employee being critically injured.

The plant was not operating at the time of the explosion.

We continue to work with various regulatory agencies, state and local authorities and our insurance providers in investigating the cause and impact of the incident.

We do not currently believe the incident will have a material impact on our consolidated financial statements.

On May 3, 2023, the company submitted a non-binding, preliminary proposal to the Board of Directors of Green Plains Holdings LLC, the general partner of Green Plains Partners LP, to acquire all of the publicly held common units of the partnership not already owned by the company.

The conflicts committee of the Board of Directors of the general partner (the "Conflicts Committee") has been delegated the authority to evaluate and is negotiate, the possible terms of a proposed transaction.

Any transaction involving the company and the partnership is subject to the execution of a mutually

satisfactory definitive agreement and approval of such definitive agreement and the transactions contemplated by the boards of directors of the company and the general partner, the Conflicts Committee, as well as the majority of the partnership's unitholders.

There can be no assurance that the parties will reach an agreement on the terms of a transaction, that a definitive agreement will be executed or that a transaction will be approved or consummated.

On April 17, 2023, during routine maintenance on a whole stillage tank, we experienced an explosion at our Wood River, Nebraska facility.

We have been working with various regulatory agencies, state and local authorities, and our insurance providers to evaluate the financial impact of the incident.

We estimate there was a loss during the second quarter of 2023 of $15 million to $20 million related to this incident, which we anticipate insurance proceeds will partially offset in future quarters.

On July 25, 2023, Green Plains Atkinson LLC, a wholly owned subsidiary of the company, entered into an asset purchase agreement to sell the plant located in Atkinson, Nebraska (the “Atkinson Transaction”).

Correspondingly, we 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 Atkinson Transaction.

The Atkinson Transaction is expected to close in the next 30 days.

The assets to be divested are currently reported within our ethanol production, agribusiness and energy services and partnership segments.

Results of Operations

During the first quarter of 2023, we experienced a weak ethanol margin environment due in part to historically high physical corn basis levels across our entire platform.

We maintained an average utilization rate of approximately 87.5% of capacity, resulting in ethanol production of 206.7 mmg for the first quarter of 2023, compared with 196.3 mmg, or 83.1% of capacity, for the same quarter last year.

During the second quarter of 2023, we experienced plant down time as a result of planned and unplanned occurrences at multiple plants along with the explosion at our Wood River facility.

We maintained an average utilization rate of approximately 81.5% of capacity, resulting in ethanol production of 194.7 mmg for the second quarter of 2023, compared with 231.4 mmg, or 96.9% of capacity, for the same quarter last year.

Our operating strategy is to transform our company to a value-add agricultural technology company.

Depending on the margin environment, we may exercise operational discretion that results in reductions in production volumes.

It is possible that throughput volumes could be below our minimum volume commitments made to the partnership in the future, depending on various factors that drive each biorefineries variable

contribution margin, including future driving and gasoline demand for the industry, demand for valuable coproducts we produce, and the supply and pricing of renewable feedstocks needed to operate our biorefineries.

It is possible that throughput volumes could be below our minimum volume commitments made to the partnership in the future, depending on various factors that drive each biorefinery's variable contribution margin, including future driving and gasoline demand for the industry, demand for valuable coproducts we produce, and the supply and pricing of renewable feedstocks needed to operate our biorefineries.

We are currently producing Ultra-High Protein at five locations, and we are deploying the FQT MSC™ technology at select additional locations across our platform to help meet growing global demand for protein feed ingredients and low-carbon renewable corn oil.

Ethanol Supply and Demand

According to the EIA, domestic ethanol production averaged 1.01 million barrels per day during the first quarter of 2023, which was 1.0% lower than the 1.02 million barrels per day for the same quarter last year.

Refiner and blender input volume was 853 thousand barrels per day for the first quarter of 2023, compared with 840 thousand barrels per day for the same quarter last year.

Gasoline demand for the first quarter of 2023 was in line with the prior year quarter at 8.6 million barrels per day.

domestic ethanol ending stocks decreased by approximately 1.4 million barrels compared to the prior year, or 5.3%, to 25.1 million barrels as of March 31, 2023.

As of this filing, according to Prime the Pump, there were approximately 386 suppliers at 113 pipeline terminal locations now offering E15 to wholesale customers.

According to the EIA, domestic ethanol production averaged 1.01 million barrels per day during the second quarter of 2023, which was consistent with the same quarter last year.

Refiner and blender input volume was 905 thousand barrels per day for the second quarter of 2023, compared with 898 thousand barrels per day for the same quarter last year.

Gasoline demand increased 0.3 million barrels per day, or 3.5% during the second quarter of 2023 compared to the prior year.

domestic ethanol ending stocks decreased by approximately 0.4 million barrels compared to the prior year, or 1.8%, to 22.3 million barrels as of June 30, 2023.

As of this filing, according to Prime the Pump, there were approximately 3,159 retail stations selling E15 year-round in 31 states, and approximately 386 suppliers at 113 pipeline terminal locations now offer E15 to wholesale customers.

Global Ethanol Supply and Demand

According to the USDA Foreign Agriculture Service, domestic ethanol exports through February 28, 2023, were approximately 222 mmg, down from the 267 mmg for the same period of 2022.

According to the USDA Foreign Agriculture Service, domestic ethanol exports through May 31, 2023, were approximately 593 mmg, down from the 726 mmg for the same period of 2022.

Canada was the largest export destination for U.S.

ethanol accounting for 41% of domestic ethanol export volume, driven in part by their national clean fuel standard.

The United Kingdom, South Korea, the Netherlands, and Mexico accounted for 12%, 11%, 5% and 5%, respectively, of U.S.

The Netherlands, the United Kingdom, South Korea, and India accounted for 10%, 10%, 8% and 8%, respectively, of U.S.

ethanol exports.

We currently estimate that net ethanol exports will range from 1.3 to 1.5 billion gallons in 2023, based on historical demand from a variety of countries and certain countries that seek to improve their air quality, reduce greenhouse gas emissions through low carbon fuel programs and eliminate MTBE from their own fuel supplies.

The strength of the U.S.

Dollar relative to other currencies has the potential to adversely impact the U.S.

We currently estimate that net ethanol exports will range from 1.3 to 1.5 billion gallons in 2023, based on historical demand from a variety of countries and certain countries that seek to improve their air quality, reduce GHG emissions through low-carbon fuel programs and eliminate MTBE from their own fuel supplies.

Fluctuations in currencies relative to the U.S.

dollar could impact the U.S.

ethanol competitiveness in the global market.

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We are sensitive to government programs and policies that affect the supply and demand for ethanol and other fuels, which in turn may impact the volume of ethanol and other products we handle.

Over the years, various bills and amendments have been proposed in the House and Senate, which would eliminate the RFS entirely, eliminate the corn based ethanol portion of the mandate, and make it more difficult to sell fuel blends with higher levels of ethanol.

Bills have also been introduced to require higher levels of octane blending, and require car manufacturers to produce vehicles that can operate on higher ethanol blends.

Over the years, various bills and amendments have been proposed in the House and Senate, which would eliminate the RFS entirely, eliminate the corn

based ethanol portion of the mandate, lower the price of RINs and make it more difficult to sell fuel blends with higher levels of ethanol.

Bills have also been introduced to require higher levels of octane blending, allow for year-round sales of higher blends of ethanol and require car manufacturers to produce vehicles that can operate on higher ethanol blends.

We believe it is unlikely that any of these bills will become law in the current Congress.

In addition, the manner in which the EPA administers the RFS and related regulations can have a significant impact on the actual amount of ethanol and other biofuels blended into the domestic fuel supply.

Federal mandates and state-level clean fuel programs supporting the use of renewable fuels are a significant driver of ethanol demand in the U.S.

Federal mandates and state-level clean fuel standards supporting the use of renewable fuels are a significant driver of ethanol demand in the U.S.

Ethanol policies are influenced by concerns for the environment, diversifying the fuel supply, supporting agricultural production and reducing the country’s dependence on foreign oil.

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light duty surface transportation fleet market share.

In addition, expansion of clean fuel programs in other states and countries, or a national LCFS could increase the demand for ethanol, depending on how they are structured.

In addition, expansion of clean fuel standards in other states and countries, or a national LCFS could increase the demand for ethanol, depending on how they are structured.

Incentives for automakers to produce FFVs phased out in 2020, and the EPA's recently proposed Corporate Average Fuel Economy (CAFE) standards further incentivize EV production, with the administration's stated goal of having two-thirds of vehicles sold in 2032 be EVs.

Sales of EVs in the U.S.

were close to 300,000 vehicles in the first quarter of 2023, which represented approximately 8.4% of new vehicles sales.

were close to 300,000 vehicles during the second quarter of 2023, which represented approximately 7.2% of new vehicles sales.

Transition of the light duty surface transportation fleet from internal combustion engines to EVs could decrease the demand for ethanol.

The Inflation Reduction Act of 2022, which was signed into law on August 16, 2022, is a sweeping policy that could have many potential impacts on our business which we are continuing to evaluate.

The legislation (1) created a new Clean Fuel Production Credit, section 45Z of the Internal Revenue Code, which runs from 2025 to 2027 of $1.00 per gallon, which could impact our fuel ethanol, depending on the level of GHG reduction for each gallon;

(2) created a new tax credit for SAF of $1.25 to $1.75 per gallon, depending on the GHG reduction for each gallon, that could possibly involve some of our low carbon ethanol through an ATJ pathway, depending on the life cycle analysis model being used (this credit expires after 2024 and shifts to the 45Z Clean Fuel Production Credit, where it qualifies for between $0.00 and $1.75 per gallon);

(3) expanded the carbon capture and sequestration credit, section 45Q of the Internal Revenue Code, to $85 for each ton of

carbon sequestered, which could impact our carbon capture partnership and other potential carbon capture investments, though it cannot be claimed in conjunction with the 45Z Clean Fuel Production Credit, which could prove to be more valuable;

(4) extended the biodiesel tax credit, which could impact our renewable corn oil values, as this co-product serves as a low-carbon feedstock for renewable diesel and biomass based diesel production (this credit expires after 2024 and shifts to the 45Z Clean Fuel Production credit, where all non-SAF fuels qualify for up to $1.00 per gallon);

(5) funded biofuel blending infrastructure by $500 million, which could impact the availability of higher level ethanol blended fuel;

(6) increased funding for working lands conservation programs for farmers by $20 billion;

The legislation (1) created a new Clean Fuel Production Credit of $0.02 per gallon per CI point reduction for any fuel below a 50 CI threshold from 2025 to 2027, section 45Z of the Internal Revenue Code, which could impact our fuel ethanol, depending on the level of GHG reduction for each gallon;

(2) created a new tax credit for SAF of $1.25 to $1.75 per gallon for 2023 and 2024, depending on the GHG reduction for each gallon, that could possibly involve some of our low carbon ethanol through an ATJ pathway, depending on the life cycle analysis model being used (this credit expires after 2024 and shifts to the 45Z Clean Fuel Production Credit, where it qualifies for up to $0.035 per gallon per CI point reduction below a 50 CI threshold);

(3) expanded the carbon capture and sequestration credit, section 45Q of the Internal Revenue Code, to $85 for each metric ton of carbon dioxide sequestered, which could impact our carbon capture strategies, though it cannot be claimed in conjunction with the 45Z Clean Fuel Production Credit, which could prove to be more valuable;

(4) extended the $1.00 per gallon biomass-based diesel tax credit through 2024, which could impact our renewable corn oil values, as this co-product serves as a low-carbon feedstock for renewable diesel and bio diesel production (this credit expires after 2024 and shifts to the 45Z Clean Fuel Production credit, where all non-SAF fuels qualify for $0.02 per gallon for each point of CI reduction under the 50 CI threshold);

(5) funded $500 million of biofuel blending infrastructure, which could impact the availability of higher level ethanol blended fuel;

(6) increased funding for climate smart agriculture and working lands conservation programs for farmers by $20 billion;

and (7) provided credits for the production and purchase of electric vehicles, which could impact the amount of internal combustion engines built and sold longer term, and by extension impact the demand for liquid fuels including ethanol.

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The RFS sets a floor for biofuels use in the United States.

As of March 31, 2023, the EPA has proposed RVOs for 2023, 2024 and 2025, setting the implied conventional ethanol levels at 15.25 billion gallons for each year, inclusive of 250 million gallons of supplemental volume in 2023 to reflect a court-ordered remand of a previously lowered RVO.

The EPA also proposed a modest increase in biomass based diesel volumes over the three years, with a large increase in advanced biofuels for 2024 and 2025, which they expect to be fulfilled by e-RINs for electric vehicles.

The EPA has agreed to a consent decree from the U.S.

District Court for D.C.

to finalize an RVO for 2023 (and possibly 2024 and 2025) by June 14, 2023.

On June 21, 2023, the EPA finalized RVOs for 2023, 2024 and 2025, setting the implied conventional ethanol levels at 15.25 billion gallons for 2023, and 15 billion for 2024 and 2025, inclusive of 250 million gallons of supplemental volume in 2023 to reflect a court-ordered remand of a previously lowered RVO.

The EPA also proposed a modest increase in biomass based diesel volumes over the three years, setting the volumes at 2.82 billion for 2023, 3.04 billion for 2024 and 3.35 billion for 2025.

The EPA also indicated that corn kernel fiber would contribute to the cellulosic volumes finalized, and could move to approve registrations that have been languishing for years at the agency.

The EPA also removed a proposed e-RIN program from the final rule, but indicated they may move forward with it in a separate rulemaking.

Under the RFS, RINs and SREs are important tools impacting supply and demand.

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Market participants can trade the detached RINs in the open market.

The market price of detached RINs can affect the price of ethanol in certain markets and can influence purchasing decisions by obligated parties.

The market price of detached RINs can affect the price of ethanol in certain markets

and can influence purchasing decisions by obligated parties.

Of note, the RIN mechanism for proposed e-RINs could vary from the traditional process.

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The EPA, through consultation with the DOE and the USDA can grant them a full or partial waiver, or deny it outright within 90 days of submittal.

The EPA granted significantly more of these waivers for the 2016, 2017 and 2018 reporting years than they had in prior years, totaling 790 mmg of waived requirements for the 2016 compliance year, 1.82 billion gallons for 2017 and 1.43 billion gallons for 2018.

The EPA granted significantly more of these waivers for the 2016, 2017 and 2018 reporting years than it had in prior years, totaling 790 mmg of waived requirements for the 2016 compliance year, 1.82 billion gallons for 2017 and 1.43 billion gallons for 2018.

In doing so, the EPA effectively reduced the RFS mandated volumes for those compliance years by those amounts respectively, and as a result, RIN values declined significantly.

In the waning days of the previous administration, the EPA approved three additional SREs, reversing one denial from 2018 and granting two from 2019.

A total of 88 SREs were granted under the previous administration, erasing a total 4.3 billion gallons of potential blending demand.

A total of 88 SREs were granted under the previous administration, erasing a total 4.3 billion gallons of blending requirements.

Under the current administration, the EPA reversed the three SREs issued in the final weeks of the previous administration, and in conjunction with the RVO rulemaking for 2020, 2021, and 2022, denied all pending SREs;

however, the EPA allowed for so-called "alternative compliance" for these refineries, which in practice waives their blending obligations for those years.

The EPA has reiterated their stance on denying all SRE applications in the proposed 2023, 2024 and 2025 RVO rulemaking, and there are multiple on-going legal challenges to how they have handled SREs and RFS rulemakings.

however, the EPA allowed for so-called "alternative compliance" for these refineries, which in practice waived their blending obligations for those years.

The EPA has reiterated its stance on denying all SRE applications in the final 2023, 2024 and 2025 RVO rulemaking, and there are multiple on-going legal challenges to how it has handled SREs and RFS rulemakings.

The One-Pound Waiver, which was extended in May 2019 to allow E15 to be sold year-round to all vehicles model year 2001 and newer, was challenged in an action filed in Federal District Court for the D.C.

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On April 12, 2022, the President announced that he had directed the EPA to issue an emergency waiver to allow for the continued sale of E15 during the summer months, and that the temporary waiver should be extended as long as the gasoline supply emergency lasts.

As of this filing, the administration has announced they will take the same approach with emergency waivers for the 2023 summer driving season.

The EPA has also instigated regulatory rulemaking to allow for the elimination of the One-Pound Waiver for E10 in several Midwestern states in time for the 2024 summer driving season, which would have the practical effect of allowing for E15 to be sold year round in the following states:

On April 28, 2023, the administration announced emergency waivers for the 2023 summer driving season of June 1 to September 15.

The EPA has also indicated it will undertake rulemaking to allow for the elimination of the One-Pound Waiver for E10 in several Midwestern states in time for the 2024 summer driving season, which would have the practical effect of allowing for E15 to be sold year round in the following states:

Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin.

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In December 2021, the USDA announced it would administer another infrastructure grant program.

The Inflation Reduction Act, signed into law in 2022, provided for an additional $500 million in USDA grants for biofuel infrastructure from 2022 to 2031, though all the funds could be awarded in the first few years of the program.

The Inflation Reduction Act, signed into law in 2022, provided for an additional $500 million in USDA grants for biofuel infrastructure.

On June 26, 2023, the USDA announced the initial $50 million in awards, and laid out a process for distributing the remaining $450 million, with $90 million being made available each quarter.

To respond to COVID-19 health crisis and attempt to offset the subsequent economic damage, Congress passed multiple relief measures, most notably the CARES Act in March 2020, which created and funded multiple programs that have impacted our industry.

The CARES Act also allowed for certain net operating loss carrybacks, which has allowed us to receive certain tax refunds.

In December 2020, Congress passed and then the President signed into law an annual spending package coupled with another COVID relief bill which included additional funds for the Secretary of Agriculture to distribute to those impacted by the pandemic.

In December 2020, Congress passed and the then President signed into law an annual spending package coupled with another COVID relief bill which included additional funds for the Secretary of Agriculture to distribute to those impacted by the pandemic.

The language of the bill specifically included biofuels producers as eligible for some of this aid, and in May 2022, the USDA distributed funds to us in the amount of $27.7 million pursuant to this bill.

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The rule has increased the lease costs for railcars in the short term and may increase the lease costs long term, which will in turn result in an increase in the fees our partnership charges for railcar capacity.

The deadline for compliance with DOT specification 117 is May 1, 2023.

As of March 31, 2023, our partnership's fleet was DOT 117 compliant.

The deadline for compliance with DOT specification 117 was May 1, 2023.

Our partnership's fleet was DOT 117 compliant by the deadline.

Comparability

There are various events that could affect comparability of our operating results, including increased production rates from 2023 to 2022.

There are various events that could affect comparability of our operating results, including decreased production rates in 2023 from 2022.

Segment Results

We report the financial and operating performance for the following three operating segments:

(1) ethanol production, which includes the production of ethanol, distillers grains, Ultra-High Protein and renewable 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, renewable corn oil, natural gas and other commodities, and (3) partnership, which includes fuel storage and transportation services.

(1) ethanol production, which includes the production of ethanol, distillers grains, Ultra-High Protein and renewable 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, Ultra-High Protein, renewable corn oil, natural gas and other commodities, and (3) partnership, which includes fuel storage and transportation services.

During the normal course of business, our operating segments do business with each other.

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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.

When we evaluate segment performance, we review the following segment information as well as earnings before interest, income taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA.

When we evaluate segment performance, we review the following segment information as well as earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA.

The selected operating segment financial information is as follows (in thousands):

Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Ethanol production

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Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Cost of goods sold

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Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Ethanol production $ (4,207) $ 56,345 (107.5)% $ (25,660) $ 32,338 (179.3)%

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Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Operating income (loss)

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$ (42,480) $ 33,841 (225.5)% $ (99,020) $ (14,061) *

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

(1) Operating loss for ethanol production includes an inventory lower of cost or net realizable value adjustment of $9.5 million for the three and six months ended June 30, 2023.

Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Depreciation and amortization

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We use EBITDA, adjusted EBITDA, and segment EBITDA as measures of profitability to compare the financial performance of our reportable segments and manage those segments.

EBITDA is defined as earnings before interest expense, income tax expense, depreciation and amortization excluding the amortization of right-of-use assets and debt issuance costs.

Adjusted EBITDA includes adjustments related to our proportional share of EBITDA adjustments of our equity method investees.

EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization excluding the amortization of right-of-use assets and debt issuance costs.

Adjusted EBITDA includes adjustments related to other income associated with the USDA COVID-19 relief grant, and our proportional share of EBITDA adjustments of our equity method investees.

We believe EBITDA, adjusted EBITDA and segment EBITDA are useful measures to compare our performance against other companies.

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Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Net loss $ (48,320) $ 52,720 (191.7)% $ (114,569) $ (3,152) *

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EBITDA (14,972) 84,382 (117.7) (42,668) 56,562 (175.4)

Other income (2)

— (27,712) * — (27,712) *

Proportional share of EBITDA adjustments to equity method investees 45 45 — 90 90 —

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(1) Excludes amortization of operating lease right-of-use assets and amortization of debt issuance costs.

(2) Other income for the three and six months ended June 30, 2022 includes a grant received from the USDA related to the Biofuel Producer Program of $27.7 million.

The following table reconciles segment EBITDA to consolidated adjusted EBITDA (in thousands):

Three Months Ended

Variance Six Months Ended

2023 2022 2023 2022

Adjusted EBITDA

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EBITDA (14,972) 84,382 (117.7) (42,668) 56,562 (175.4)

Other income (2)

— (27,712) * — (27,712) *

Proportional share of EBITDA adjustments to equity method investees 45 45 — 90 90 —

$ (14,927) $ 56,715 (126.3)% $ (42,578) $ 28,940 (247.1)%

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

(1) Ethanol production includes an inventory lower of cost or net realizable value adjustment of $9.5 million for the three and six months ended June 30, 2023.

(2) Other income for the three and six months ended June 30, 2022 includes a grant received from the USDA related to the Biofuel Producer Program of $27.7 million.

* Percentage variance not considered meaningful.

Three Months Ended March 31, 2023 Compared with the Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 Compared with the Three Months Ended June 30, 2022

Consolidated Results

Consolidated revenues increased $51.5 million for the three months ended March 31, 2023 compared with the same period in 2022 primarily due to higher volumes sold on ethanol, distillers grains including Ultra-High Protein, and renewable corn oil, as well as higher average selling prices on distillers grains including Ultra-High Protein, offset by lower average selling prices on ethanol and renewable corn oil within our ethanol production segment as described below.

Revenues were also slightly offset by lower revenues within our agribusiness and energy services segment as a result of decreased trading volumes and margins.

Net loss increased $10.4 million for the three months ended March 31, 2023 compared with the same period last year primarily due to lower agribusiness and energy services segment trading margins as well as higher depreciation expense.

Adjusted EBITDA increased $0.1 million for the three months ended March 31, 2023.

Interest expense increased $0.9 million for the three months ended March 31, 2023 compared with the same period in 2022 primarily due to higher interest rates on floating rate debt and reduced capitalized interest as certain projects have been completed.

Income tax expense was $3.4 million for the three months ended March 31, 2023, compared with income tax benefit of $1.2 million for the same period in 2022 primarily due to an increase in the valuation allowance recorded against certain deferred tax assets for the three months ended March 31, 2023.

The following discussion provides greater detail about our first quarter segment performance.

Consolidated revenues decreased $154.8 million for the three months ended June 30, 2023 compared with the same period in 2022 primarily due to lower volumes sold on ethanol, distillers grains, and renewable corn oil, as well as lower weighted average selling prices on distillers grains and renewable corn oil, offset by higher weighted average selling prices on ethanol within our ethanol production segment as described below.

Revenues were also lower within our agribusiness and energy services segment as a result of decreased trading volumes.

Net loss increased $101.0 million for the three months ended June 30, 2023 compared with the same period last year primarily due to decreased volumes and margins in our ethanol production segment, lower trading volumes and margins in our agribusiness and energy services segment, and the $27.7 million USDA COVID-19 relief grant received in the second quarter of 2022.

Adjusted EBITDA decreased $71.6 million for the three months ended June 30, 2023 compared with the same period last year primarily due to decreased volumes and margins in our ethanol production segment and lower trading volumes and margins in our agribusiness and energy services segment.

Interest expense increased $1.9 million for the three months ended June 30, 2023 compared with the same period in 2022 primarily due to reduced capitalized interest as certain projects have been completed.

Income tax benefit was $1.0 million for the three months ended June 30, 2023 compared with income tax expense of $2.9 million for the same period in 2022 primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets for the three months ended June 30, 2023.

The following discussion provides greater detail about our second quarter segment performance.

Ethanol Production Segment

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(thousands of bushels) 67,336 80,218 (16.1)%

Revenues in our ethanol production segment increased $57.9 million for the three months ended March 31, 2023 compared with the same period in 2022, primarily due to higher ethanol, distillers grains including Ultra-High Protein, and renewable corn oil volumes sold, resulting in increased revenues of $25.9 million, $3.6 million and $6.0 million, respectively, as well as higher weighted average selling prices on distillers grains including Ultra-High Protein, resulting in increased revenues of $27.1 million, offset by lower weighted average selling prices on ethanol and renewable corn oil resulting in decreased revenues of $3.0 million and $2.6 million, respectively.

Revenues also increased as a result of hedging activities by $3.8 million.

Cost of goods sold in our ethanol production segment increased $55.4 million for the three months ended March 31, 2023 compared with the same period last year primarily due to higher weighted average corn prices and higher corn volumes processed, resulting in increased costs of $63.5 million and $17.9 million, respectively, offset by lower hedging activities resulting in decreased cost of goods sold of $59.3 million.

The remainder of the increase was primarily driven by higher utilities and freight of $21.1 million.

Operating loss in our ethanol production segment increased $2.2 million for the three months ended March 31, 2023 compared with the same period in 2022 primarily due to increased depreciation expense of $4.5 million as a result of completion of various projects, offset by increased margins as outlined above.

Depreciation and amortization expense for the ethanol production segment was $22.9 million for the three months ended March 31, 2023, compared with $18.4 million for the same period last year, with the increase primarily due to Ultra-High Protein assets placed in service.

Revenues in our ethanol production segment decreased $134.4 million for the three months ended June 30, 2023 compared with the same period in 2022, primarily due to lower ethanol, distillers grains and renewable corn oil volumes sold resulting in decreased revenues of $101.2 million, $22.7 million and $5.4 million, respectively, as well as lower weighted average selling prices on distillers grains and renewable corn oil resulting in decreased revenues of $5.4 million and $8.8 million, respectively, offset by higher weighted average selling prices on ethanol resulting in increased revenues of $14.2 million.

Revenues also decreased as a result of hedging activities by $9.5 million.

Cost of goods sold in our ethanol production segment decreased $73.9 million for the three months ended June 30, 2023 compared with the same period last year primarily due to lower volumes processed and lower weighted average prices, resulting in decreased costs of $110.7 million and $4.7 million, respectively, partially offset by hedging activities of $5.0 million and higher chemical, utilities and other costs of $31.9 million.

Operating loss in our ethanol production segment increased $63.9 million for the three months ended June 30, 2023 compared with the same period in 2022 primarily due to decreased margins as outlined above.

Depreciation and amortization expense for the ethanol production segment was $22.4 million for the three months ended June 30, 2023, compared with $19.1 million for the same period last year, with the increase primarily due to Ultra-High Protein assets placed in service.

Agribusiness and Energy Services Segment

Revenues in our agribusiness and energy services segment decreased $6.3 million while operating income also decreased $6.3 million for the three months ended March 31, 2023, compared with the same period in 2022.

The decrease in revenues was primarily due to a decrease in ethanol and renewable corn oil trading volumes as well as decreased trading margins for distillers grains.

Operating income decreased primarily as a result of lower trading margins driven by market volatility in our distillers grains flows and natural gas storage.

Revenues in our agribusiness and energy services segment decreased $21.7 million while operating income also decreased $8.1 million for the three months ended June 30, 2023 compared with the same period in 2022.

The decrease in revenues was primarily due to a decrease in ethanol and renewable corn oil trading volumes.

Operating income decreased primarily as a result of lower trading volumes driven by market volatility in our natural gas storage.

Partnership Segment

Revenues generated by our partnership segment increased $1.7 million for the three months ended March 31, 2023 compared with the same period for 2022.

Storage and throughput services revenue was consistent with the prior year.

Railcar transportation services revenue increased $1.7 million primarily due to an increase in transportation service fees charged as a result of upgrading our leased railcar fleet to comply with government regulations and higher railcar volumetric capacity.

Terminal services revenue as well as trucking and other revenue were consistent with the prior year.

Operating income increased $0.1 million for the three months ended March 31, 2023 compared with the same period in 2022.

Revenues generated by our partnership segment increased $0.9 million for the three months ended June 30, 2023 compared with the same period for 2022.

Storage and throughput services revenue and terminal services revenue were consistent with the prior year.

Railcar transportation services revenue increased $1.3 million primarily due to an increase in transportation services fees charged as a result of our partnership upgrading its leased railcar fleet to comply with DOT 117 regulations.

Trucking and other revenue decreased $0.5 million compared to the prior year primarily due to the discontinuance of trucking operations that occurred during the period.

Operating income decreased $0.7 million for the three months ended June 30, 2023 compared with the same period in 2022 primarily due to transaction costs related to our proposal to acquire all outstanding shares of the partnership.

Intersegment Eliminations

Intersegment eliminations of revenues increased by $1.8 million for the three months ended March 31, 2023, compared with the same period in 2022 primarily due to increased railcar fees paid to the partnership segment.

Intersegment eliminations of revenues decreased by $0.5 million for the three months ended June 30, 2023 compared with the same period in 2022 primarily due to decreased intersegment marketing and services fees within the agribusiness and energy services segment as a result of lower production volumes, offset by increased railcar fees paid to the partnership segment.

Corporate Activities

Corporate activities for the three months ended March 31, 2023 were consistent with the same period in 2022.

We recorded income tax expense of $3.4 million for the three months ended March 31, 2023, compared with income tax benefit of $1.2 million for the same period in 2022.

The increase in the amount of tax expense recorded for the three months ended March 31, 2023 was primarily due to an increase in the valuation allowance recorded against certain deferred tax assets.

Operating loss was impacted by an increase in corporate activities of $2.3 million for the three months ended June 30, 2023 compared to the same period in 2022, primarily due to increased personnel costs during the three months ended June 30, 2023.

We recorded income tax benefit of $1.0 million for the three months ended June 30, 2023, compared with income tax expense of $2.9 million for the same period in 2022.

The increase in the amount of tax benefit recorded for the three months ended June 30, 2023 was primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets.

Six Months Ended June 30, 2023 Compared with the Six Months Ended June 30, 2022

Consolidated Results

Consolidated revenues decreased $103.2 million for the six months ended June 30, 2023 compared with the same period in 2022 primarily due to lower volumes sold on ethanol and distiller grains, as well as lower weighted average selling prices on renewable corn oil, partially offset by higher volumes sold on renewable corn oil, as well as higher weighted average selling prices on ethanol and distillers grains within our ethanol production segment as described below.

Revenues were also lower within our agribusiness and energy services segment as a result of decreased trading volumes and margins.

Net loss increased $111.4 million for the six months ended June 30, 2023 compared with the same period last year primarily due to decreased volumes and margins in our ethanol production segment, lower trading margins in our agribusiness and energy services segment, increased depreciation expense, and the $27.7 million USDA COVID-19 relief grant received in the second quarter of 2022.

Adjusted EBITDA decreased $71.5 million for the six months ended June 30, 2023 compared with the same period last year primarily due to decreased volumes and margins in our ethanol production segment and lower margins in our agribusiness and energy services segment.

Interest expense increased $2.9 million for the six months ended June 30, 2023 compared with the same period in 2022 primarily due to higher interest rates on floating rate debt and reduced capitalized interest as certain projects have been completed.

Income tax expense was $2.4 million for the six months ended June 30, 2023, compared with income tax expense of $1.7 million for the same period in 2022 primarily due to an increase in the valuation allowance recorded against increases in certain deferred tax assets for both the six months ended June 30, 2023 and 2022.

The following discussion provides greater detail about our year-to-date segment performance.

Ethanol Production Segment

Key operating data for our ethanol production segment is as follows:

Six Months Ended

2023 2022 % Variance

(thousands of gallons) 401,633 427,761 (6.1)%

Distillers grains sold

(thousands of equivalent dried tons) 940 1,080 (13.0)

Ultra-High Protein sold

(thousands of tons) 96 29 231.0

Renewable corn oil sold

(thousands of pounds) 132,700 131,527 0.9

Corn consumed

(thousands of bushels) 138,571 148,522 (6.7)%

Revenues in our ethanol production segment decreased $76.5 million for the six months ended June 30, 2023 compared with the same period in 2022, primarily due to lower ethanol and distillers grains volumes sold resulting in decreased revenues of $68.4 million and $16.6 million, respectively, as well as lower weighted average selling prices on renewable corn oil resulting in decreased revenues of $11.7 million, offset by higher renewable corn oil volumes sold resulting in increased revenues of $0.8 million, as well as higher weighted average selling prices on ethanol and distillers grains resulting in increased revenues of $4.3 million and $19.2 million, respectively.

Revenues also decreased as a result of hedging activities by $5.7 million .

Cost of goods sold in our ethanol production segment decreased $18.5 million for the six months ended June 30, 2023 compared with the same period last year primarily due to lower volumes processed resulting in decreased costs of $76.8 million and hedging activities of $54.3 million, offset by higher weighted average prices of $98.0 million, as well as higher utilities and freight costs of $19.9 million.

Operating loss increased $66.1 million for the six months ended June 30, 2023 compared with the same period in 2022 primarily due to decreased margins on ethanol production as outlined above.

Depreciation and amortization expense for the ethanol production segment was $45.4 million for the six months ended June 30, 2023, compared with $37.5 million for the same period last year, with the increase primarily due to Ultra-High Protein assets placed in service.

Agribusiness and Energy Services Segment

Revenues in our agribusiness and energy services segment decreased $28.1 million while operating income decreased $14.4 million for the six months ended June 30, 2023, compared with the same period in 2022.

The decrease in revenues was primarily due to a decrease in ethanol, distillers grains, and renewable corn oil trading margins.

Operating income decreased primarily as a result of lower trading margins driven by market volatility in our natural gas storage and distillers grains.

Partnership Segment

Revenues generated by our partnership segment increased $2.5 million for the six months ended June 30, 2023 compared with the same period for 2022.

Storage and throughput services revenue and terminal services revenue were consistent with the prior year.

Railcar transportation services revenue increased $2.9 million primarily due to an increase in transportation service fees charged as a result of our partnership upgrading its leased railcar fleet to comply with DOT 117 regulations.

Trucking and other revenue decreased $0.5 million primarily due to the discontinuance of trucking operations that occurred during the period.

Operating income decreased $0.6 million for the six months ended June 30, 2023 compared with the same period in 2022 primarily due to transaction costs related to our proposal to acquire all outstanding shares of the partnership.

Intersegment Eliminations

Intersegment eliminations of revenues increased by $1.2 million for the six months ended June 30, 2023 compared with the same period in 2022 primarily due to increased railcar fees paid to the partnership segment, offset by decreased intersegment marketing and service fees within the agribusiness and energy services segment as a result of lower production volumes.

Corporate Activities

Operating loss was impacted by an increase in corporate activities of $2.5 million for the six months ended June 30, 2023 compared to the same period in 2022, primarily due to increased personnel and insurance costs during the six months ended June 30, 2023.

We recorded income tax expense of $2.4 million for the six months ended June 30, 2023 compared with income tax expense of $1.7 million for the same period in 2022 primarily due to an increase in the valuation allowance recorded against certain deferred tax assets for both the six months ended June 30, 2023 and 2022.

Liquidity and Capital Resources

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We believe that our ability to obtain financing at reasonable rates based on these factors remains sufficient and provides a solid foundation to meet our future liquidity and capital resource requirements.

On March 31, 2023, we had $354.2 million in cash and cash equivalents and $54.1 million in restricted cash.

On June 30, 2023, we had $312.9 million in cash and cash equivalents and $46.9 million in restricted cash.

We also had $128.0 million available under our committed revolving credit agreement, subject to restrictions or other lending conditions.

Funds at certain subsidiaries are generally required for their ongoing operational needs and restricted from distribution.

At March 31, 2023, our subsidiaries had approximately $118.7 million of net assets that were not available to use in the form of dividends, loans or advances due to restrictions contained in their credit facilities.

Net cash used in operating activities was $117.0 million for the three months ended March 31, 2023, compared with net cash used in operating activities of $162.5 million for the same period in 2022.

Net cash used in operating activities compared to the prior ye ar were primarily affected by increases in cash used related to accounts payables, offset by decreases in cash used related to accounts receivable and inventories.

Net cash used in investing activities was $35.4 million for the three months ended March 31, 2023, compared with net cash provided by investing activities of $37.9 million for the same period in 2022.

Investing activities compared to the prior year were primarily affected by the proceeds from the sale of marketable securities during the first quarter of 2022, offset by increased cash provided by lower purchases of fixed assets compared to the same period in the prior year.

Net cash provided by financing activities was $60.5 million for the three months ended March 31, 2023, compared with net cash provided by financing activities of $167.9 million for the same period in 2022, primarily due to higher debt proceeds as a result of changes in our debt structure in the first quarter of 2022.

At June 30, 2023, our subsidiaries had approximately $119.4 million of net assets that were not available to use in the form of dividends, loans or advances due to restrictions contained in their credit facilities.

Net cash used in operating activities was $168.4 million for the six months ended June 30, 2023, compared with net cash used in operating activities of $106.6 million for the same period in 2022.

Net cash used in operating activities compared to the prior year were primarily affected by a higher net loss as well as increases in cash used related to higher payments of accounts payables, partially offset by higher derivative financial instruments as well as decreases in cash used related to accounts receivable and inventory when compared to the same period of the prior year.

Net cash used in investing activities was $57.6 million for the six months ended June 30, 2023 compared with net cash used in investing activities of $35.3 million for the same period in 2022.

Investing activities compared to the prior year were primarily affected by the proceeds from the sale of marketable securities during the same period in 2022, offset by increased cash provided by lower purchases of fixed assets compared to the same period in the prior year.

Net cash provided by financing activities was $85.5 million for the six months ended June 30, 2023 compared with net cash provided by financing activities of $160.3 million for the same period in 2022, primarily due to higher debt proceeds as a result of changes in our debt structure during the same period in 2022.

Additionally, Green Plains Finance Company, Green Plains Trade, Green Plains Grain and Green Plains Commodity Management use revolving credit facilities to finance working capital requirements.

We frequently draw from and repay these facilities, which results in significant cash movements reflected on a gross basis within financing activities as proceeds from and payments on short-term borrowings.

We incurred capital expenditures of approximately $32.6 million during the three months ended March 31, 2023, primarily for Ultra-High Protein expansion projec ts at Mount Vernon and Obion, the clean sugar expansion project at Shenandoah and for various other capital projects.

We incurred capital expenditures of approximately $48.9 million during the six months ended June 30, 2023, primarily for Ultra-High Protein expansion projects at Mount Vernon and Obion, the clean sugar expansion project at Shenandoah and for various other capital projects.

Capital spending for the remainder of 2023 is expected to be between $100.0 million and $150.0 million, which is subject to review prior to the initiation of any project.

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We use derivative financial instruments to reduce the market risk associated with fluctuations in commodity prices.

Sudden changes in commodity prices may require cash deposits with brokers for margin calls or significant liquidity with little advanced notice to meet margin calls, depending on our open derivative

Sudden changes in commodity prices may require cash deposits with brokers for margin calls or significant liquidity with little advanced notice to meet margin calls, depending on our open derivative positions.

We continuously monitor our exposure to margin calls and believe we will continue to maintain adequate liquidity to cover margin calls from our operating results and borrowings.

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The program may be suspended, modified or discontinued at any time without prior notice.

We did not repurchase any shares of common stock during the first quarter of 2023.

We did not repurchase any shares of common stock during the second quarter of 2023.

To date, we have repurchased 7.4 million shares of common stock for approximately $92.8 million under the program.

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We may sell additional assets or equity or borrow capital to improve or preserve our liquidity, expand our business or acquire businesses.

For additional information related to our debt, see Note 7 – Debt included as part of the notes to consolidated financial statements and Note 12 – Debt included as part of the notes to consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2022.

We were in compliance with our debt covenants at March 31, 2023.

For additional information related to our debt, see Note 7 – Debt included as part of the notes to the unaudited consolidated financial statements included herein and Note 12 – Debt included as part of the notes to consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2022.

We were in compliance with our debt covenants at June 30, 2023.

Based on our forecasts, we believe we will maintain compliance at each of our subsidiaries for the next twelve months or have sufficient liquidity available on a consolidated basis to resolve noncompliance.

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We may settle the 2.25% notes in cash, common stock or a combination of cash and common stock.

At March 31, 2023, the outstanding principal balance on the 2.25% notes was $230.0 million.

At June 30, 2023, the outstanding principal balance on the 2.25% notes was $230.0 million.

In June 2019, we issued $115.0 million of 4.00% convertible senior notes due in 2024, or the 4.00% notes.

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The initial conversion rate was 64.1540 shares of our common stock per $1,000 principal amount of the 4.00% notes, which is equivalent to an initial conversion price of approximately $15.59 per share of our common stock.

During May 2021, the company entered into a privately negotiated agreement with certain noteholders of the company's 4.00% notes.

Under this agreement, 3.6 million shares of the company's common stock were exchanged for $51.0 million in aggregate principal amount of the 4.00% notes.

During May 2021, we entered into a privately negotiated agreement with certain noteholders of our 4.00% notes.

Under this agreement, 3.6 million shares of our common stock were exchanged for $51.0 million in aggregate principal amount of the 4.00% notes.

On May 25, 2022, we gave notice calling for the redemption of our outstanding 4.00% notes, totaling an aggregate principal amount of $64.0 million.

The final conversion rate was increased to 66.4178 shares of common stock per $1,000

of principal.

The final conversion rate was increased to 66.4178 shares of common stock per $1,000 of principal.

From July 1, 2022 through July 8, 2022, the remaining $64.0 million of the 4.00% notes were converted into approximately 4.3 million shares of common stock.

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In August 2016, we issued $170.0 million of 4.125% convertible senior notes due in 2022, or 4.125% notes, which were senior, unsecured obligations with interest payable on March 1 and September 1 of each year.

Prior to March 1, 2022, the 4.125% notes were not convertible unless certain conditions were satisfied.

The initial conversion rate was 35.7143 shares of common stock per $1,000 of principal, which was equal to a conversion price of approximately $28.00 per share.

In March 2021, concurrent with the issuance of the 2.25% notes, we used approximately $156.5 million of the net proceeds of the 2.25% notes to repurchase approximately $135.7 million aggregate principal amount of its 4.125% notes due 2022, in privately negotiated transactions.

In March 2021, concurrent with the issuance of the 2.25% notes, we 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 due 2022, in privately negotiated transactions.

During August 2022, we entered into four privately negotiated exchange agreements with certain noteholders of the 4.125% notes to exchange approximately $32.6 million aggregate principal amount for approximately 1.2 million shares of our common stock.

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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.

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.

At March 31, 2023, the outstanding principal balance was $125.0 million on the loan and the interest rate was 11.75%.

Green Plains Wood River and Green Plains Shenandoah, wholly-owned subsidiaries of us, have a $75.0 million loan agreement, which matures on September 1, 2035.

At March 31, 2023, the outstanding principal balance was $74.3 million on the loan and the interest rate was 6.52%.

These 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.

At June 30, 2023, the outstanding principal balance was $125.0 million on the loan and the interest rate was 11.75%.

Green Plains Wood River and Green Plains Shenandoah, wholly-owned subsidiaries of the company, have a $75.0 million delayed draw loan agreement, which matures on September 1, 2035.

At June 30, 2023, the outstanding principal balance was $73.9 million on the loan and the interest rate was 6.52%.

We also have small equipment financing loans, finance leases on equipment or facilities, and other forms of debt financing.

Agribusiness and Energy Services Segment

Green Plains Finance Company, Green Plains Grain and Green Plains Trade have total revolving commitments of $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, due 2027.

The Facility matures in March 2027.

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.

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

At March 31, 2023, the outstanding principal balance was $191.0 million on the facility and the interest rate was 7.64%.

At June 30, 2023, the outstanding principal balance was $222.0 million on the facility and the interest rate was 8.48%.

Green Plains Commodity Management has an uncommitted $40.0 million revolving credit facility to finance margins related to its hedging programs.

During the three months ended March 31, 2023, this revolving credit facility was extended five years to mature on April 30, 2028.

During the first quarter of 2023, this revolving credit facility was extended five years to mature on April 30, 2028.

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

At March 31, 2023, the outstanding principal balance was $21.7 million on the facility and the interest rate was 6.57%.

At June 30, 2023, the outstanding principal balance was $25.1 million on the facility and the interest rate was 6.81%.

Green Plains Grain has a short-term inventory financing agreement with a financial institution.

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This agreement is subject to negotiated variable interest rates.

The company had no outstanding short-term notes payable related to the inventory financing agreement as of March 31, 2023.

The company had no outstanding short-term notes payable related to the inventory financing agreement as of June 30, 2023.

Partnership Segment

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however, the partnership has the option to prepay $1.5 million per quarter.

Interest on the term loan is based on 3-month LIBOR plus 8.00%, with a 0% LIBOR floor and is payable on the 15 th day of each March, June, September and December, during the term.

The partnership repurchased $1.0 million of the outstanding notes during the six months ended June 30, 2022.

Prepayments totaling $1.5 million were made during the three and six months ended June 30, 2023.

On April 19, 2023, the term loan was amended to change the underlying floating interest rate to a SOFR-based rate from a LIBOR-based rate.

The impact of the amendment was not material to interest expense.

Interest on the term loan is based on 3-month SOFR plus 8.26%, and is payable on the 15 th day of each March, June, September and December.

The term loan is secured by substantially all of the assets of the partnership.

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 the lenders and subsequently retired the notes.

As of March 31, 2023, the term loan had a balance of $59.0 million and an interest rate of 13.14%.

On April 19, 2023, the term loan was amended to change the underlying floating interest rate to the three-month term SOFR rate plus a 0.26161% credit spread adjustment from three-month LIBOR, with a 0% floor.

The impact of the amendment is not material to interest expense.

As of June 30, 2023, the term loan had a balance of $57.5 million and an interest rate of 13.52%.

Effects of Inflation

We have experienced inflationary impacts on labor costs, wages, components, equipment, other inputs and services across our business and inflation and its impact could escalate in future quarters, many of which are beyond our control.

Moreover, we have fixed price arrangements with our customers and are not able to pass those costs along in most instances.

Moreover, we have fixed price arrangements with some of our customers and are not able to pass those costs along in most instances.

As such, inflationary pressures could have a material adverse effect on our performance and financial statements.

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In addition to debt, our material future obligations include certain lease agreements and contractual and purchase commitments related to commodities, storage and transportation.

Aggregate minimum lease payments under the operating lease agreements for future fiscal years as of March 31, 2023 totaled $99.0 million.

As of March 31, 2023, we had contracted future purchases of grain, ethanol, distillers grains, natural gas, and renewable corn oil valued at approximately $364.2 million and future commitments for storage and transportation valued at approximately $24.8 million.

Refer to Note 12 – Commitments and Contingencies included in the notes to consolidated financial statements for more information.

Aggregate minimum lease payments under the operating lease agreements for future fiscal years as of June 30, 2023 totaled $100.3 million.

As of June 30, 2023, we had contracted future purchases of grain, ethanol, distillers grains, and natural gas valued at approximately $335.2 million and future commitments for storage and transportation valued at approximately $26.8 million.

Refer to Note 12 – Commitments and Contingencies included in the notes to the unaudited consolidated financial statements included herein for more information.

Critical Accounting Policies and Estimates

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis