What changed in this filing

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Item 7. Management’s Discussion and Analysis

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This section should be read in conjunction with our consolidated financial statements, accompanying notes and the risk factors contained in this report.

Green Plains is an Iowa corporation, founded in June 2004 as a producer of low carbon fuels and has grown to be a leading biorefining company maximizing the potential of existing resources through fermentation and agribusiness technologies.

Green Plains is an Iowa corporation, founded in June 2004 as a producer of low-carbon fuels and has grown to be a leading biorefining company maximizing the potential of existing resources through fermentation and patented agribusiness technologies.

We continue the transition from a commodity-processing business to a value-added agricultural technology company creating sustainable, high-value ingredients from existing resources.

To that end, we are currently executing on a number of initiatives to allow for product diversification, new market opportunities and production of additional value-added low-carbon ingredients, such as Ultra-High Protein, dextrose, renewable corn oil and more.

Our first FQT MSC™ Ultra-High Protein installation was completed at our Shenandoah plant during the first quarter of 2020.

Our Wood River plant began MSC TM operations in October 2021.

Commissioning on our MSC TM installation at our Central City plant began during the third quarter of 2022 while two additional locations began commissioning in the fourth quarter of 2022.

Installation at additional biorefineries is expected over the course of the next few years.

Through our value-added ingredients initiative, we expect to 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 distillers grains.

We began pilot scale batch operations at the 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.

In December 2020, we completed the purchase of a majority interest in FQT.

The acquisition capitalizes on the core strengths of each company to develop and implement proven, agriculture, food and industrial biotechnology systems, rapidly expand installation and production across Green Plains facilities, and offer these technologies to the biofuels industry.

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

To that end, we are currently executing on a number of initiatives to develop and implement proven agricultural, food and industrial biotechnology systems that allow for product diversification, new market opportunities and production of additional value-added low-carbon ingredients, such as Ultra-High Protein, dextrose, renewable corn oil and more, as well as offering these technologies to the broader biofuels industry.

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

The public owned the remaining 49.2% limited partner interest.

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.

On January 9, 2024, pursuant to the Merger Agreement, we completed the acquisition of all the publicly held common units of the partnership not already owned by us and our affiliates.

As a result of the Merger, the partnership common units are no longer publicly traded.

Refer to Note 5 - Acquisition and Dispositions included in the notes to the audited consolidated financial statements included herein for more information.

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™ distillers grains.

We successfully completed full scale 60% protein production runs using FQT's MSC™ system.

In 2021, we formed a 50/50 joint venture with Tharaldson Ethanol, which will own the MSC™ technology assets added adjacent to the Tharaldson Ethanol plant in North Dakota to produce Ultra-High Protein and increase renewable corn oil yields.

We anticipate these assets will be operational in early 2024.

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.

SAF is a drop-in fuel, chemically identical to petroleum-based jet fuel and can be blended into the fuel supply at varying levels.

There is an increasing focus on using this fuel to reduce the carbon footprint of air travel.

SAF can be produced from vegetable and waste oil feedstocks, such as our renewable corn oil.

Additionally, ATJ technologies are emerging and being commercialized that use low-CI ethanol as a feedstock to produce SAF.

In January 2023, Green Plains, United Airlines and Tallgrass formed a joint venture, Blue Blade Energy, to develop and then commercialize a novel ATJ SAF technology.

As part of our carbon reduction strategy, we committed our seven biorefineries in Nebraska, Iowa and Minnesota to carbon capture and sequestration projects through carbon pipeline transport, four 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.

We anticipate completion of our three Nebraska biorefinery carbon capture projects in 2025,

and the Summit Carbon Solutions projects in 2026.

In addition, we are collaborating with global partners to explore innovative options for carbon use, such as synthetic methane production at Madison and Obion.

We 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 IRA, and could position our low-carbon ethanol as a potential feedstock for ATJ pathways to produce SAF.

In July 2023, we announced a technology collaboration with Equilon Enterprises LLC, which allows us to use FQT’s precision separation and processing technology with Shell Fiber Conversion Technology.

The two technologies will combine fermentation, mechanical separation and processing, and fiber conversion into one platform.

This has the potential to create a new process to liberate all available distillers corn oil currently bound in the fiber fraction of the corn kernel, generate cellulosic sugars for production of low-carbon ethanol, and enhance and expand available high protein to produce high-quality ingredients for global animal feed diets.

Our collaboration is expected to complete the construction of a facility at Green Plains York and begin commissioning in early 2024.

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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More information about our business, properties and strategy can be found under Item 1 – Business and a description of our risk factors can be found under Item 1A – Risk Factors .

Strategic Review

The Board of Directors is initiating a formal review process to evaluate strategic alternatives for the company.

This comprehensive evaluation is intended to explore a broad range of opportunities for the company to enhance long-term shareholder value, including, but not limited to, acquisitions, divestitures, a merger or sale, partnerships and financings.

There is no deadline or definitive timetable for completion of the strategic review process, and there can be no assurances that the process will result in a transaction or any other outcome.

We do not intend to make any further public comment regarding the review until the Board has approved a specific action or otherwise determines that additional disclosure is appropriate or required.

Cooperation Agreement

On February 6, 2024, we entered into a Cooperation Agreement with a large shareholder whereby we agreed to announce our strategic review and the large shareholder agreed to certain standstill and voting obligations.

Industry Factors Affecting our Results of Operations

Ethanol Supply and Demand

According to the EIA, domestic ethanol production averaged 1.0 million barrels per day in 2022, which was 1% higher than the 0.99 million barrels per day in 2021.

Refiner and blender input volume increased 1% to 884 thousand barrels per day for 2022, compared with 875 thousand barrels per day in 2021.

Gasoline demand decreased 0.2 million barrels per day, or 3%, in 2022 compared to the prior year.

domestic ethanol ending stocks increased by approximately 3.2 million barrels compared to the prior year, or 15%, to 24.6 million barrels as of December 31, 2022.

As of this filing, according to Prime the

Pump, there were approximately 2,923 retail stations selling E15 in 31 states, up from 2,555 at the beginning of the year, and approximately 386 suppliers at 113 pipeline terminal locations now offering E15 to wholesale customers.

According to the EIA, domestic ethanol production averaged 1.0 million barrels per day for both 2023 and 2022.

Refiner and blender input volume increased to 888 thousand barrels per day for 2023, which was consistent compared with the 884 thousand barrels per day in 2022.

Gasoline demand increased approximately 0.1 million barrels per day, or 1%, in 2023 compared to the prior year.

domestic ethanol ending stocks decreased by approximately 0.9 million barrels compared to the prior year, or 4%, to 23.6 million barrels as of December 31, 2023.

As of this filing, according to Prime the Pump, there were approximately 3,244 retail stations selling E15 year-round, up from 2,923 at the beginning of the year.

Global Ethanol Supply and Demand

According to the USDA Foreign Agriculture Service, domestic ethanol exports through November 30, 2022, were approximately 1,277 mmg, up 13% from 1,126 mmg for the same period of 2021.

According to the USDA Foreign Agriculture Service, domestic ethanol exports through November 30, 2023, were approximately 1,274 mmg, which was consistent with the 1,277 mmg for the same period of 2022.

Canada was the largest export destination for U.S.

ethanol accounting for 36% of domestic ethanol export volume, driven in part by their national clean fuel standard.

South Korea, Netherlands, India and United Kingdom accounted for 12%, 8%, 7% and 5%, respectively, of U.S.

ethanol accounting for approximately 47% of domestic ethanol export volume, driven in part by their national clean fuel standard.

The United Kingdom, the Netherlands, South Korea, and India accounted for approximately 11%, 8%, 7% and 6%, respectively, of U.S.

ethanol exports.

We currently estimate that net ethanol exports will range from 1.1 to 1.3 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 recent strengthening of the U.S.

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

ethanol competitiveness in the global market, which could also impact domestic ethanol prices.

We currently estimate that net ethanol exports will range from 1.4 to 1.6 billion gallons in 2024, 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.

Fluctuations in currencies relative to the U.S.

Dollar could impact the U.S.

ethanol competitiveness in the global market.

Protein and Vegetable Oil Supply and Demand

Our dried distillers grains and high protein ingredients compete against other ethanol producers domestically and abroad, as well as with soybean meal, canola meal, and other protein feed ingredients.

Likewise our distillers corn oil, which is a feedstock for producing biodiesel, renewable diesel and to some extent SAF, competes against other vegetable oils such as soybean oil, canola oil, and to some extent palm oil, as well as against waste oils such as used cooking oils, animal fats and tallow.

Soybean processing capacity in the U.S.

has been expanding to meet the rising demand for vegetable oils to produce renewable fuels.

According to the National Oilseed Processors Association, as of December 31, 2023, soybean crush was 195.3 million bushels, up from the 177.5 million bushels as of December 31, 2022.

Legislation and Regulation

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.

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

Consumer acceptance of FFVs and higher ethanol blends in non-FFVs may be necessary before ethanol can achieve further growth in U.S.

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 it is structured.

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 $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 refueling 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;

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 U.S.

farmers and reducing the country’s dependence on foreign oil.

Consumer acceptance of FFVs and increased use of higher ethanol blends in non-FFVs may be necessary before ethanol can achieve further growth in the U.S.

light duty surface transportation fleet market share.

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 EVs represent two-thirds of vehicles sold by 2032.

Sales of EVs in the U.S.

were approximately 1.2 million vehicles during 2023, which represented approximately 7.6% of new vehicles sales, up from 5.9% in 2022.

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

The IRA, 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 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.

There are numerous additional clean energy credits included in this law, including investment tax credits for construction of clean energy infrastructure, that could impact us and our overall competitiveness.

Regulatory rulemaking for the administration of these programs is underway, and the final regulations could impact many aspects of our business.

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

When the RFS was established in 2010, the required volume of conventional, or corn-based, ethanol to be blended with gasoline was to increase each year until it reached 15 billion gallons in 2015, which left the EPA to address existing limitations in both supply and demand.

As of December 31, 2022, 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.

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

In June 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 finalized cellulosic volumes, and could move to approve registrations that have been languishing for years at the agency.

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

Under the RFS, RINs impact supply and demand.

The EPA assigns individual refiners, blenders, and importers the volume of renewable fuels they are obligated to use in each annual RVO based on their percentage of total production of domestic transportation fuel sales.

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

As it relates to SREs, a small refinery is defined as one that processes fewer than 75,000 barrels of petroleum per day.

Small refineries can petition the EPA for a SRE which, if approved, waives their portion of the annual RVO requirements.

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.

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.

The EPA, under the current administration, 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, a stance they have reiterated in the proposed 2023, 2024 and 2025 RVO rulemaking.

SREs can reduce or waive entirely the obligation for a refinery, which has the practical effect of reducing the RVO, and by extension the amount of RINs that need to be retired, which can impact their values and ultimately blending levels of renewable fuels.

There are multiple on-going legal challenges to how the EPA has handled SREs and RFS rulemakings.

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The Supreme Court declined to hear a challenge to this ruling.

On April 12, 2022, the President announced that he has 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, E15 is sold year-round at approximately 2,923 stations in 31 states.

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.

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.

In October 2019, the White House directed the USDA and EPA to move forward with rulemaking to expand access to higher blends of biofuels.

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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 IRA, 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.

In July 2023, the USDA distributed supplemental program funds to us in the amount of $3.4 million.

Environmental and Other Regulation

Our operations are subject to environmental regulations, including those that govern the handling and release of ethanol, crude oil and other liquid hydrocarbon materials.

Compliance with existing and anticipated environmental laws and regulations may increase our overall cost of doing business, including capital costs to construct, maintain, operate, and

upgrade equipment and facilities.

Compliance with existing and anticipated environmental laws and regulations may increase our overall cost of doing business, including capital costs to construct, maintain, operate and upgrade equipment and facilities.

Our business may also be impacted by government policies, such as tariffs, duties, subsidies, import and export restrictions and outright embargos.

We employ maintenance and operations personnel at each of its facilities, which are regulated by the Occupational Safety and Health Administration.

We employ maintenance and operations personnel at each of our facilities, which are regulated by the Occupational Safety and Health Administration.

ethanol industry relies heavily on tank cars to deliver its product to market.

In 2015, the DOT finalized the Enhanced Tank Car Standard and Operational Controls for High-Hazard and Flammable Trains, or DOT specification 117, which established a schedule to retrofit or replace older tank cars that carry crude oil and ethanol, braking standards intended to reduce the severity of accidents and new operational protocols.

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

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

Additionally, existing railcars may be out of service for a period of time while upgrades are made, tightening supply in an industry that is highly dependent on railcars to transport product.

We are strategically managing our leased railcar fleet to comply with the new regulations and have commenced transition of our fleet to DOT 117 compliant railcars.

As of December 31, 2022, approximately 87% of our railcar fleet was DOT 117 compliant.

We anticipate that our entire railcar fleet will be DOT 117 compliant by the 2023 deadline.

The rule has increased the lease costs for railcars in the short term and may increase the lease costs long term.

Our partnership's fleet is DOT 117 compliant.

Variability of Commodity Prices

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- Qualitative and Quantitative Disclosures About Market Risk, Commodity Price Risk in this report.

We maintained an average utilization rate of approximately 91% of capacity during 2022, compared with 77% of capacity for the prior 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 MVC 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 three locations, and began commissioning FQT’s MSC TM technology at two additional locations in the fourth quarter of 2022.

We also anticipate deploying FQT MSC™ technology at various locations across our platform to help meet growing global demand for protein feed ingredients and renewable corn oil.

Effects of Inflation

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Derivative Financial Instruments

We use various derivative financial instruments, including exchange-traded futures and exchange-traded and over-the-counter options contracts, to attempt to minimize risk and the effect of commodity price changes, including but not limited to, corn, ethanol, natural gas, soybean meal, soybean oil and other agricultural and energy products.

We monitor and manage this exposure as part of our overall risk management policy to reduce the adverse effect market volatility may have on our operating results.

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Changes in fair value are recorded in operating income unless the contracts qualify for, and we elect, cash flow hedge accounting treatment.

Certain qualifying derivatives related to ethanol production and agribusiness and energy services segments are designated as cash flow hedges.

Certain qualifying derivatives related to ethanol production and agribusiness and energy services are designated as cash flow hedges.

We evaluate the derivative instrument to ascertain its effectiveness prior to entering into cash flow hedges.

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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.

Please refer to Note 11 - Derivative Financial Instruments to the consolidated financial statements for further details.

Please refer to Note 11 - Derivative Financial Instruments included in the notes to the audited consolidated financial statements included herein for further details.

Accounting for Income Taxes

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To account for uncertainty in income taxes, we gauge the likelihood of a tax position based on the technical merits of the position, perform a subsequent measurement related to the maximum benefit and degree of likelihood, and determine the benefit to be recognized in the financial statements, if any.

Please refer to Note 16 - Income Taxes to the consolidated financial statements for further details.

Impairment of Goodwill

Our goodwill is related to certain acquisitions within our ethanol production and partnership segments.

We review goodwill for impairment at least annually, as of October 1, or more frequently whenever events or changes in circumstances indicate that an impairment may have occurred.

Circumstances that may indicate impairment include a decline in future projected cash flows, a decision to suspend plant operations for an extended period of time, a sustained decline in our market capitalization, a sustained decline in market

prices for similar assets or businesses or a significant adverse change in legal or regulatory matters, or business climate.

Significant management judgment is required to determine the fair value of our goodwill and measure impairment, including projected cash flows.

Fair value is determined through various valuation techniques, including discounted cash flow models utilizing assumed margins, cost of capital, inflation and other inputs, sales of comparable properties and third-party independent appraisals.

Changes in estimated fair value as a result of declining ethanol margins, loss of significant customers or other factors could result in an impairment of goodwill.

Please refer to Note 10 – Goodwill and Intangible Assets to the consolidated financial statements for further details.

Please refer to Note 16 - Income Taxes included in the notes to the audited consolidated financial statements included herein for further details.

Recently Issued Accounting Pronouncements

For information related to recent accounting pronouncements, see Note 2 – Summary of Significant Accounting Policies included as part of the notes to consolidated financial statements in this report.

For information related to recent accounting pronouncements, see Note 2 – Summary of Significant Accounting Policies included in the notes to the audited consolidated financial statements included herein.

Off-Balance Sheet Arrangements

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For our ethanol production segment, our revenues are derived primarily from the sale of ethanol, distillers grains, Ultra-High Protein and renewable corn oil.

For our agribusiness and energy services segment, our primary sources of revenue include sales of ethanol, distillers grains and renewable corn oil that we market for our ethanol plants, in which we earn a marketing fee, sales of ethanol we market for a third-party and sales of grain and other commodities purchased in the open market.

The vast majority of our revenues are from forward contracts accounted for as derivatives under ASC 815 as disclosed in the tables within Note 4 - Revenue and Note 11 - Derivative Financial Instruments .

Revenues include net gains or losses from derivatives related to products sold.

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Cost of Goods Sold.

For our ethanol production segment, cost of goods sold includes direct labor, materials and plant overhead costs.

Direct labor includes compensation and related benefits of non-management personnel involved in ethanol plant operations.

Plant overhead consists primarily of plant utilities and outbound freight charges.

Corn is the most significant raw material cost followed by natural gas, which is used to power steam generation in the ethanol production process and dry distillers grains.

Cost of goods sold also includes net gains or losses from derivatives related to commodities purchased.

For our ethanol production segment, Cost of goods sold includes materials, direct labor, shipping and plant overhead costs.

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.

Direct labor includes all compensation and related benefits of personnel

involved in ethanol production.

Shipping costs incurred by the company, including railcar costs, are also reflected in cost of goods sold.

Plant overhead consists primarily of plant utilities, repairs and maintenance, and outbound freight charges.

For our agribusiness and energy services segment, purchases of ethanol, distillers grains, renewable corn oil and grain are the primary component of cost of goods sold.

Grain inventories held for sale and forward purchase and sale contracts are valued at market prices when available or other market quotes adjusted for differences, such as transportation, between the exchange-traded market and local markets where the terms of the contracts are based.

Fair value hedged inventories and forward purchase and sale contracts are valued at market prices when available or other market quotes adjusted for differences, such as transportation, between the exchange-traded market and local markets where the terms of the contracts are based.

Changes in the market value of grain inventories, forward purchase and sale contracts, and exchange-traded futures and options contracts are recognized as a component of cost of goods sold.

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Transportation expense includes rail car leases, shipping and freight and costs incurred for storing ethanol at destination terminals.

Loss (Gain) on Sale of Assets, Net.

We completed the sale of the ethanol plant located in Ord, Nebraska in March 2021 and the sale of the ethanol plant located in Hereford, Texas during the fourth quarter of 2020.

Gain on Sale of Assets.

We completed the sale of the ethanol plant located in Atkinson, Nebraska in September 2023.

The sale of Atkinson resulted in a pretax gain of $4.1 million recorded at the corporate level.

We also completed the sale of the ethanol plant located in Ord, Nebraska in March 2021.

The sale of Ord resulted in a pretax gain of $35.9 million recorded at the corporate level.

The sale of Hereford resulted in a loss of $18.5 million recorded at the corporate level, a loss of $3.9 million recorded at the ethanol production level and the gain on the assignment of operating leases of $2.7 million recorded at the partnership level.

Selling, General and Administrative Expense.

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Other Income (Expense).

Other income (expense) includes interest earned, interest expense and other non-operating items, as well as a $27.7 million grant received from the USDA related to the Biofuel Producer Program authorized as part of the CARES Act to offset market losses as a result of the COVID-19 pandemic for the year-ended December 31, 2022.

Income from Equity Method Investees, Net of Income Taxes.

Income from equity method investees, net of income taxes, represents our proportional share of earnings from our equity method investees.

Other income (expense) includes interest earned, interest expense and other non-operating items, as well as $3.4 million and $27.7 million grants received from the USDA for the year-ended December 31, 2023 and 2022, respectively, related to the Biofuel Producer Program.

Income from Equity Method Investees.

Income from equity method investees represents our proportional share of earnings from our equity method investees.

Results of Operations

We maintained an average utilization rate of approximately 89% of capacity during 2023, compared with 91% of capacity for the prior 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 fluctuate 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.

Comparability

The following summarizes various events that affect the comparability of our operating results for the past three years:

• October 2020

Our remaining 50% membership interest in GPCC was sold.

• December 2020

Hereford, Texas ethanol plant was sold and certain storage assets of this plant were acquired from the partnership prior to being sold.

• December 2020

Acquired a majority interest in FQT.

• September 2023

Atkinson, Nebraska ethanol plant was sold and certain storage assets of this plant were acquired from the partnership prior to being sold.

Received a $27.7 million grant from the USDA as part of the Biofuel Producer Program.

An additional $3.4 million was received in July 2023.

Ord, Nebraska ethanol plant was sold and certain storage assets of this plant were acquired from the partnership prior to being sold.

Received a $27.7 million grant from the USDA as part of the CARES Act.

The year ended December 31, 2020, includes approximately nine months of operations of the GPCC joint venture being accounted for using the equity method of accounting.

A discussion regarding our financial condition and results of operations for the year ended December 31, 2022, compared to the year ended December 31, 2021, can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 10, 2023.

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2023 2022 2021

Gross margin:

Ethanol production $ 64,581 $ 1,826 $ 90,085

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$ (61,578) $ (98,948) $ 25,508

(1) Operating loss for ethanol production includes an inventory lower of cost or net realizable value adjustment of $12.3 million for the year-ended December 31, 2022, and a goodwill impairment charge of $24.1 million and $3.9 million loss on sale of assets from the sale of the Hereford, Texas ethanol plant for the year-ended December 31, 2020.

(2) Corporate activities for the year-ended December 31, 2021 include a $29.6 million net gain on sale of assets primarily from the sale of the Ord, Nebraska ethanol plant.

Corporate activities for the year-ended December 31, 2020 include an $18.5 million loss on sale of assets from the sale of the Hereford, Texas ethanol plant and a $1.5 million net gain from the sale of GPCC.

(1) Operating loss for ethanol production includes an inventory lower of average cost or net realizable value adjustment of $2.6 million and $12.3 million for the year-ended December 31, 2023 and 2022, respectively.

(2) Corporate activities for the year-ended December 31, 2023 and 2021 includes a $4.1 million and $29.6 million net gain on sale of assets, respectively.

Year Ended December 31,

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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, including related tax expense of equity method investments, 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, gains or losses on sale of assets, our proportional share of EBITDA adjustments of our equity method investees and noncash goodwill impairment.

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 grants, gains on sale of assets, 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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Other income (3)

Loss (gain) on sale of assets, net — (29,601) 20,860

(3,440) (27,712) —

Gain on sale of assets, net (5,265) — (29,601)

Proportional share of EBITDA adjustments to equity method investees 180 180 184

Noncash goodwill impairment — — 24,091

Adjusted EBITDA $ 45,506 $ (822) $ 87,378

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

(3) Other income for the year-ended December 31, 2022 includes a grant received from the USDA related to the Biofuel Producer Program of $27.7 million.

(3) Other income for the year-ended December 31, 2023 and 2022, includes a grant received from the USDA related to the Biofuel Producer Program of $3.4 million and $27.7 million, respectively.

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

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Other income (3)

Loss (gain) on sale of assets, net — (29,601) 20,860

(3,440) (27,712) —

Gain on sale of assets, net (5,265) — (29,601)

Proportional share of EBITDA adjustments to equity method investees 180 180 184

Noncash goodwill impairment — — 24,091

Adjusted EBITDA $ 45,506 $ (822) $ 87,378

(2) Corporate activities for the year-ended December 31, 2021 include a $29.6 million net gain on sale of assets primarily from the sale of the Ord, Nebraska ethanol plant.

Corporate activities for the year-ended December 31, 2020 include an $18.5 million loss on sale of assets from the sale of the Hereford, Texas ethanol plant and a $1.5 million gain from sale of GPCC.

(3) Other income for the year-ended December 31, 2022 includes a grant received from the USDA related to the Biofuel Producer Program of $27.7 million.

(2) Corporate activities for the year-ended December 31, 2023 and 2021 includes a $4.1 million and $29.6 million net gain on sale of assets, respectively.

(3) Other income for the year-ended December 31, 2023 and 2022, includes a grant received from the USDA related to the Biofuel Producer Program of $3.4 million and $27.7 million, respectively.

Total assets by segment are as follows (in thousands):

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Consolidated Results

Consolidated revenues increased $835.7 million in 2022 compared with 2021 primarily due to higher average selling prices and higher volumes sold on ethanol, distillers grains and renewable corn oil within our ethanol production segment as described below, slightly offset by lower revenues within our agribusiness and energy services segment as a result of decreased trading volumes.

Net loss increased $59.2 million and adjusted EBITDA decreased $88.2 million in 2022 compared with 2021 primarily due to decreased margins within our ethanol production segment.

Interest expense decreased $34.5 million in 2022 compared with 2021 primarily due to the loss upon settlement of convertible notes of $31.6 million recorded during 2021, as well as higher capitalized interest and decreased amortization of debt issuance costs, partially offset by increased interest as a result of higher rates and a higher average debt balance.

Income tax expense was $4.7 million in 2022 compared to an income tax expense of $1.8 million in 2021 primarily due to an increase in the valuation allowance recorded against certain deferred tax assets.

Consolidated revenues decreased $367.1 million in 2023 compared with 2022 primarily due to lower average selling prices and lower volumes sold on ethanol, distillers grains and renewable corn oil within our ethanol production segment as described below.

Additionally, we had lower revenues within our agribusiness and energy services segment as a result of decreased trading margins.

Net loss decreased $27.1 million in 2023 compared with 2022 primarily due to higher margins in our ethanol production segment, partially offset by lower margins in our agribusiness and energy services segment.

Adjusted EBITDA increased $46.3 million in 2023 compared with 2022 primarily due to higher margins in our ethanol production segment, partially offset by lower margins in our agribusiness and energy services segment and lower other income from the grants received from the USDA related to the Biofuel Producer Program.

Interest expense increased $5.1 million in 2023 compared with 2022 primarily due to a decrease in the amount of capitalized interest.

Income tax benefit was $5.6 million in 2023 compared to an income tax expense of $4.7 million in 2022 primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets.

The following discussion provides greater detail about our segment performance.

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(thousands of equivalent dried tons) 1,933 2,213

Ultra-High Protein Sold

(thousands of tons) 223 67

Renewable corn oil sold

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(thousands of bushels) 289,267 301,868

Revenues in our ethanol production segment increased $916.8 million in 2022 compared with 2021 primarily due to higher ethanol, distillers grains and renewable corn oil volumes sold resulting in increased revenues of $295.7 million, $57.3 million and $31.9 million, respectively, as well as higher weighted average selling prices on ethanol, distillers grains and renewable corn oil resulting in increased revenues of $168.2 million, $90.2 million and $50.0 million, respectively.

also increased as a result of ethanol hedging activities by $233.3 million.

Cost of goods sold in our ethanol production segment increased $1,005.1 million for 2022 compared with 2021 due to higher weighted average corn prices, higher corn volumes processed and hedging activities, resulting in increased costs of $400.2 million, $248.3 million and $151.3 million, respectively, as well as an increase of $178.8 million driven by higher utilities, freight and chemical costs.

Operating loss in our ethanol production segment increased $89.8 million in 2022 compared with 2021 primarily due to decreased margins as outlined above.

Depreciation and amortization expense for the ethanol production segment was $81.5 million for 2022 compared with $83.0 million during 2021.

Revenues in our ethanol production segment decreased $254.3 million in 2023 compared with 2022 primarily due to lower ethanol, distillers grains and renewable corn oil volumes sold driven partially by the disposition of our Atkinson, Nebraska plant resulting in decreased revenues of $82.3 million, $28.4 million and $1.3 million, respectively, as well as lower weighted average selling prices on ethanol, distillers grains and renewable corn oil resulting in decreased revenues of $96.8 million, $32.4 million and $14.4 million, respectively.

Revenues increased as a result of hedging activities by $10.9 million.

Cost of goods sold in our ethanol production segment decreased $317.1 million for 2023 compared with 2022 due to lower weighted average corn prices, lower corn volumes processed and hedging activities, resulting in decreased costs of $300.2 million, $91.1 million and $46.3 million, respectively, as well as lower chemicals and other costs of $26.8 million and lower utility costs of $6.4 million, partially offset by higher ethanol volumes purchased of $150.2 million, as well as higher freight costs of $7.9 million.

Operating loss in our ethanol production segment decreased $50.8 million in 2023 compared with 2022 primarily due to increased margins on ethanol production as outlined above.

Depreciation and amortization expense for the ethanol production segment was $89.5 million for 2023 compared with $81.5 million during 2022, 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 $75.9 million while operating income increased $19.0 million in 2022 compared with 2021.

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

Operating income increased primarily as a result of higher trading margins.

Revenues in our agribusiness and energy services segment decreased $114.7 million while operating income also decreased $8.3 million in 2023 compared with 2022.

The decrease in revenues was primarily due to a decrease in ethanol, natural gas and distillers grains trading margins, partially offset by an increase in renewable corn oil trading volumes.

Operating income decreased primarily as a result of lower distillers grains trading margins.

Partnership Segment

Revenues generated by our partnership segment increased $1.3 million in 2023 compared with 2022.

Railcar transportation services revenue increased $2.4 million primarily due to an increase in railcar volumetric capacity and associated fees.

Storage and throughput services revenue decreased $0.7 million primarily due to a reduction in contracted minimum volume commitments as a result of the sale of our parent’s Ord ethanol plant in the first quarter of 2021.

Trucking and other revenue decreased $0.3 million primarily as a result of lower non-affiliate freight volume.

Terminal services revenue remained consistent with the prior year.

Operating income decreased $1.0 million in 2022 compared with 2021 primarily due to higher railcar lease expenses.

Railcar transportation services revenue increased $3.5 million primarily due to an increase in transportation service fees charged as a result of the partnership upgrading its leased railcar fleet to comply with DOT 117 regulations.

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

Terminal services revenue increased $0.3 million primarily due to higher throughput at our partnership's terminals.

Trucking and other revenue decreased $2.5 million due to the discontinuance of trucking operations, which occurred in May 2023.

Operating income decreased $0.8 million in 2023 compared with 2022 primarily due to transaction costs related to the Merger Agreement, partially offset by gains realized on the sale of trucking assets.

Intersegment Eliminations

Intersegment eliminations of revenues increased by $6.6 million for 2022 compared with 2021 due to increased intersegment marketing and commodity service fees within the agribusiness and energy services segment as a result of higher production volumes as well as increased storage and throughput fees paid to the partnership segment.

Intersegment eliminations of revenues decreased by $0.6 million for 2023 compared with 2022 primarily due to decreased intersegment marketing and commodity service fees within the agribusiness and energy services segment as a result of lower production volumes, partially offset by increased storage and throughput fees paid to the partnership segment.

Corporate Activities

Operating loss was impacted by an increase in corporate activities of $56.8 million for 2022 compared with 2021, primarily due to the net gain on sale of assets recorded during 2021 of $29.6 million, as well as increased personnel costs, professional fees and travel costs during 2022.

We recorded income tax expense of $4.7 million for 2022 compared to an income tax expense of $1.8 million in 2021.

The increase in the amount of tax expense recorded for 2022 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 $0.8 million for 2023 compared with 2022, primarily due to increased personnel costs and transaction costs related to the Merger Agreement, partially offset by the gain on the sale of assets during 2023.

We recorded income tax benefit of $5.6 million for 2023 compared to an income tax expense of $4.7 million in 2022.

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

Liquidity and Capital Resources

Our principal sources of liquidity include cash generated from operating activities and bank credit facilities.

Our principal sources of liquidity include cash generated from operating activities and credit facilities.

We fund our operating expenses and service debt primarily with operating cash flows.

Capital resources for maintenance and growth expenditures are funded by a variety of sources, including cash generated from operating activities, borrowings under bank credit facilities, or issuance of senior notes or equity.

Capital resources for maintenance and growth

expenditures are funded by a variety of sources, including cash generated from operating activities, borrowings under credit facilities, or issuance of public or private debt or equity securities.

Our ability to access capital markets for debt under reasonable terms depends on our financial condition, credit ratings and market conditions.

We believe that our ability to obtain financing at reasonable rates and our history of positive cash flow from operating activities, which have been positive for eight of the previous ten years, provide a solid foundation to meet our future liquidity and capital resource requirements.

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 December 31, 2023, we had $349.6 million in cash and cash equivalents and $29.2 million in restricted cash.

We also had $251.0 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.

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

At December 31, 2023, our subsidiaries had approximately $126.8 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 provided by operating activities was $56.3 million in 2023 compared to $69.7 million in 2022.

Operating activities compared to the prior year were primarily affected by fluctuations in working capital, including cash provided by higher accounts payable and lower accounts receivable, offset by higher net loss when compared to the prior year.

Net cash used in investing activities was $105.3 million in 2022 compared to $236.3 million in 2021 primarily due to the purchases of marketable securities in the prior year.

Net cash used in financing activities was $25.1 million in 2022 compared to net cash provided by financing activities of $518.2 million in 2021 primarily due to proceeds from the issuance of common stock and debt offerings during 2021.

Operating activities compared to the prior year were primarily affected by higher cash provided by lower inventory and lower net loss compared to the prior year, partially offset by higher cash used related to lower accounts payables.

Net cash used in investing activities was $106.9 million in 2023 compared to $105.3 million in 2022 primarily due to higher cash provided by lower capital expenditures and proceeds from the sale of assets in 2023, offset by the proceeds from the sale of marketable securities in the prior year.

Net cash used in financing activities was $71.0 million in 2023 compared to $25.1 million in 2022 primarily due to higher debt proceeds in 2022 as a result of changes in our debt structure.

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 $212.4 million in 2022 primarily for Ultra-High Protein expansion projects at Central City, Mount Vernon and Obion and for various other capital projects, which were funded from our restricted cash accounts.

We incurred capital expenditures of $108.5 million in 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.

The current projected estimate for capital spending for 2024 is approximately $125 million to $150 million, which is subject to review prior to the initiation of any project.

The estimate includes additional expenditures to deploy FQT’s MSC™ and CST™ technology, as well as expenditures for various other maintenance projects, which are expected to be financed with cash on hand and by cash provided by operating activities.

Our business is highly sensitive to the price of commodities, particularly for corn, ethanol, distillers grains, renewable corn oil and natural gas.

The estimate includes additional expenditures for various capital projects, which are expected to be financed with cash on hand and with cash provided by operating activities.

Our business is highly sensitive to the price of commodities, particularly for corn, ethanol, distillers grains, Ultra-High Protein, renewable corn oil and natural gas.

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

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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.

Available cash generally means all cash and cash equivalents on hand at the end of that quarter less cash reserves established by the general partner, including those for future capital expenditures, future acquisitions and anticipated future debt service requirements, plus all or any portion of the cash on hand resulting from working capital borrowings made subsequent to the end of that quarter.

Our board of directors authorized a share repurchase program of up to $200.0 million of our common stock.

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

We did not repurchase any common stock in 2022 and 2021.

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

We did not repurchase any common stock in 2023, 2022 or 2021.

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

We believe we have sufficient working capital for our existing operations.

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In the event a subsidiary is unable to comply with its debt covenants, the subsidiary’s lenders may determine that an event of default has occurred, and following notice, the lenders may terminate the commitment and declare the unpaid balance due and payable.

As outlined in Note 12 - Debt , we use LIBOR as a reference rate for certain credit facilities.

The administrator of LIBOR ceased the publication of the one week and two month LIBOR settings immediately following the LIBOR publication on December 31, 2021, and will cease the remaining USD LIBOR settings immediately following the LIBOR publication on

June 30, 2023.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.

dollar LIBOR with a new reference rate, the SOFR, calculated using short-term repurchase agreements backed by Treasury securities.

The potential effect of any such event on interest expense is not expected to be material.

Corporate Activities

In March 2021, we issued $230.0 million of 2.25% convertible senior notes due in 2027, or the 2.25% notes.

In March 2021, we issued $230.0 million of unsecured 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.

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 our common stock), representing an approximately 37.5% premium over the offering price of our common stock.

The initial conversion rate is 31.6206 shares of our common stock per $1,000 principal amount of 2.25% notes (equivalent to an initial conversion price of approximately $31.62 per share of our common stock), representing an approximately 37.5% premium over the offering price of our common stock.

The conversion rate is subject to adjustment upon the occurrence of certain events, including but not limited to;

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

The 4.00% notes were senior, unsecured obligations, 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 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.

We increased the final conversion rate to 66.4178 in connection with calling the 4.00% notes for redemption on May 25, 2022.

In May 2021, we entered into a privately negotiated agreement with certain noteholders of the company’s 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.

Common stock held as treasury shares were exchanged for 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, approximately 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 conversion rate was 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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The 4.00% notes were retired effective July 8, 2022.

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 are 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 August 2016, we issued $170.0 million of 4.125% convertible senior notes due in 2022, or the 4.125% notes, which were senior, unsecured obligations.

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.

Pursuant to the guidance within ASC 470, Debt , we recorded a loss upon extinguishment of $22.1 million in interest expense.

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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 with BlackRock

for the purchase of all notes issued.

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 December 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 delayed draw loan agreement, which matures on September 1, 2035.

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

At December 31, 2023, the outstanding principal balance was $73.1 million on the loan and the interest rate was 5.02%.

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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.

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.

Green Plains Finance Company, Green Plains Grain and Green Plains Trade have total senior secured 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.

The facility matures in March 2027.

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.

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At December 31, 2023, the outstanding principal balance was $99.0 million on the facility and the interest rate was 9.41%.

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

We expect to refinance or extend this facility prior to maturity.

Green Plains Commodity Management has an uncommitted $40.0 million revolving credit facility to finance margins related to its hedging programs, which is secured by cash and securities held in its brokerage accounts.

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%.

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

The company has accounted for the agreements as short-term notes, rather than revenues, and has elected the fair value option to offset fluctuations in market prices of the inventory.

The company has accounted for the agreement as short-term notes, rather than revenues, and has elected the fair value option to offset fluctuations in market prices of the inventory.

This agreement is subject to negotiated variable interest rates.

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Partnership Segment

Green Plains Partners, through a wholly owned subsidiary, has a term loan to fund working capital, capital expenditures and other general partnership purposes.

On July 20, 2021, the partnership’s prior credit facility was amended in the Amended and Restated Credit Agreement (“Amended Credit Facility”) with BlackRock and TMI Trust Company as administrative agent.

The Amended Credit Facility decreased the total amount available to $60.0 million, extended the maturity from December 31, 2021 to July 20, 2026, and converted the balance to a term loan.

Green Plains Partners, through a wholly owned subsidiary, has a secured term loan to fund working capital, capital expenditures and other general partnership purposes.

The term loan has a maturity date of July 20, 2026.

The term loan does not require any principal payments;

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

Under the terms of the Amended Credit Facility, BlackRock purchased the outstanding balance of the existing notes from the previous lenders.

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, with the first interest payment being September 15, 2021.

The Amended Credit Facility is secured by substantially all of the assets of the partnership.

During the year ended December 31, 2021, prior to the amendment, principal payments of $50.0 million were made on the previous credit facility, including $19.5 million of scheduled repayments, $27.5 million related to the sale of the storage assets located adjacent to the Ord, Nebraska ethanol plant and a $3.0 million prepayment made with excess cash.

On February 11, 2022, the Amended Credit Facility was modified to allow Green Plains Partners and its affiliates to repurchase outstanding notes.

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

The partnership repurchased $1.0 million of the outstanding notes during 2022.

Prepayments totaling $3.0 million were made during the year ended December 31, 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 15th day of each March, June, September and December.

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

As of December 31, 2023, the term loan had a balance of $56.0 million and an interest rate of 13.65%.

Refer to Note 12 – Debt included as part of the notes to consolidated financial statements for more information about our debt.

Refer to Note 12 – Debt included in the notes to the audited consolidated financial statements included herein for more information about our debt.

Contractual Obligations and Commitments

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Aggregate minimum lease payments under the operating lease agreements for future fiscal years as of December 31, 2023 totaled $86.9 million .

As of December 31, 2022, we had contracted future purchases of ethanol, grain, natural ga s, a nd distillers grains valued at approximately $389.1 million and future commitments for storage and transportation valued at approximately $23.6 million.

As of December 31, 2023, we had contracted future purchases of grain, ethanol, distillers grains, and natural gas valued at approximately $166.4 million and future commitments for storage and transportation valued at approximately $27.0 million .

Refer to Note 17 – Commitments and Contingencies included in the notes to consolidated financial statements for more information.

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We are exposed to interest rate risk through our loans which bear interest at variable rates.

Interest rates on our variable-rate debt are based on the market rate for the lender’s prime rate, SOFR or LIBOR.

Interest rates on our variable-rate debt are based on the market rate for the lender’s prime rate or SOFR.

At December 31, 2023, we had $604.7 million in debt, $161.9 million of which had variable interest rates.

A 10% increase in interest rates would affect our interest cost by approximately $1.7 million per year.

Refer to Note 12 – Debt included as part of the notes to consolidated financial statements for more information about our debt.

Refer to Note 12 – Debt included in the notes to the audited consolidated financial statements included herein for more information about our debt.

Commodity Price Risk

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Other factors include North American energy exploration and production, and the amount of natural gas in underground storage during injection and withdrawal seasons.

During 2022, we locked in natural gas purchases above current market rates, which adversely impacted our 2023 margins.

To reduce the risk associated with fluctuations in the price of ethanol, corn, distillers grains, Ultra-High Protein, renewable corn oil and natural gas, at times we use forward fixed-price physical contracts and derivative financial instruments, such as futures and options executed on the Chicago Board of Trade, the New York Mercantile Exchange and the Chicago Mercantile Exchange.

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Our results are impacted by a mismatch of gains or losses associated with the derivative instrument during a reporting period when the physical commodity purchases or sale has not yet occurred.

For the year ended December 31, 2022, revenues included net losses of $1.6 million and cost of goods sold included net losses of $66.2 million associated with derivative instruments.

For the year ended December 31, 2023, revenues included net gains of $4.8 million and cost of goods sold included net gains of $30.2 million associated with derivative instruments.

Ethanol Production Segment

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Our results are impacted when there is a mismatch of gains or losses associated with the derivative instrument during a reporting period when the physical commodity purchases or sale has not yet occurred.

Our exposure to market risk, which includes the impact of our risk management activities resulting from our fixed-price

purchase and sale contracts and derivatives, is based on the estimated net income effect resulting from a hypothetical 10% change in price for the next 12 months starting on December 31, 2022, are as follows (in thousands):

Our exposure to market risk, which includes the impact of our risk management activities resulting from our fixed-price purchase and sale contracts and derivatives, is based on the estimated net income effect resulting from a hypothetical 10% change in price for the next 12 months starting on December 31, 2023, are as follows (in thousands):

Commodity Estimated Total Volume

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Corn 310,000 Bushels $114,315

Distillers grains 2,700 Tons (2)

Distillers grains (2)

2,200 Tons (3)

Renewable corn oil 300,000 Pounds $10,279

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(1) Estimated volumes assume production at full capacity.

(2) Includes Ultra-High Protein

(3) Distillers grains quantities are stated on an equivalent dried ton basis.

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In the agribusiness and energy services segment, our inventories, physical purchase and sale contracts and derivatives are marked to market.

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

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

To reduce commodity price risk caused by market fluctuations for purchase and sale commitments of grain and grain held in inventory, we enter into exchange-traded futures and options contracts that serve as economic hedges.

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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-K

Item 7. Management’s Discussion and Analysis