Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2020 | Mar. 16, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2020 | |
Entity Registrant Name | Granite Falls Energy, LLC | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,606 | |
Current Fiscal Year End Date | --10-31 | |
Entity Central Index Key | 0001181749 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jan. 31, 2020 | Oct. 31, 2019 |
Current Assets | ||
Cash | $ 8,426,643 | $ 13,521,774 |
Restricted cash | 42,221 | 52,516 |
Accounts receivable | 1,961,046 | 7,427,895 |
Inventory | 18,254,904 | 13,803,025 |
Commodity derivative instruments | 571,198 | 823,098 |
Prepaid expenses and other current assets | 1,060,639 | 534,948 |
Total current assets | 30,316,651 | 36,163,256 |
Property, Plant and Equipment | ||
Property and Equipment, net | 55,986,043 | 58,269,142 |
Goodwill | 1,372,473 | 1,372,473 |
Investments | 9,426,269 | 9,327,584 |
Operating lease right of use asset | 22,163,764 | |
Other Assets | 697,254 | 922,254 |
Total Assets | 119,962,454 | 106,054,709 |
Current Liabilities | ||
Current maturities of long-term debt | 1,405,406 | 1,405,406 |
Checks drawn in excess of bank balances | 724,292 | |
Accounts payable | 7,058,001 | 11,168,471 |
Commodity derivative instruments | 17,175 | |
Accrued expenses | 991,254 | 780,795 |
Operating lease, current liabilities | 3,575,612 | |
Total current liabilities | 13,771,740 | 13,354,672 |
Long-Term Debt, less current portion | 6,441,602 | 6,639,488 |
Operating Lease, long-term liabilities | 18,588,152 | |
Other Long-Term Liabilities | 1,387,481 | 1,376,000 |
Commitments and Contingencies | ||
Members' equity attributable to Granite Falls Energy, LLC consists of 30,606 units authorized, issued, and outstanding at both January 31, 2020 and October 31, 2019 | 63,889,119 | 65,468,635 |
Non-controlling interest | 15,884,360 | 19,215,914 |
Total members' equity | 79,773,479 | 84,684,549 |
Total Liabilities and Members’ Equity | $ 119,962,454 | $ 106,054,709 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - shares | Jan. 31, 2020 | Oct. 31, 2019 |
Consolidated Balance Sheets | ||
Common Units Authorized | 30,606 | 30,606 |
Common Units Issued | 30,606 | 30,606 |
Common Units Outstanding | 30,606 | 30,606 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Consolidated Statements of Operations | ||
Revenues | $ 53,356,326 | $ 49,375,097 |
Cost of Goods Sold | 54,298,819 | 52,110,622 |
Gross Loss | (942,493) | (2,735,525) |
Operating Expenses | 1,773,688 | 1,770,173 |
Operating Loss | (2,716,181) | (4,505,698) |
Other Income (Expense): | ||
Other income (expense), net | (54) | 1,459 |
Interest income | 35,478 | 73,275 |
Interest expense | (103,998) | (113,663) |
Investment income | 98,685 | |
Total other income (expense), net | 30,111 | (38,929) |
Net Loss | (2,686,070) | (4,544,627) |
Less: Net Loss Attributable to Non-controlling Interest | 1,185,371 | 967,125 |
Net Loss Attributable to Granite Falls Energy, LLC | $ (1,500,699) | $ (3,577,502) |
Weighted Average Units Outstanding - Basic and Diluted (in units) | 30,606 | 30,606 |
Net Loss Per Unit - Basic and Diluted | $ (49.03) | $ (116.89) |
Distributions Per Unit (in dollars per unit) | $ 40 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Members’ Equity - USD ($) | Members' Equity attributable to Granite Falls Energy, LLC | Non-controlling Interest | Total |
Balance - at Oct. 31, 2018 | $ 75,083,782 | $ 21,846,265 | $ 96,930,047 |
Changes in Members' Equity | |||
Member distribution | (1,196,000) | (1,196,000) | |
Net loss attributable to non-controlling interest | (967,125) | (967,125) | |
Net loss attributable to Granite Falls Energy, LLC | (3,577,502) | (3,577,502) | |
Balance - at Jan. 31, 2019 | 70,310,280 | 20,879,140 | 91,189,420 |
Balance - at Oct. 31, 2019 | 65,468,635 | 19,215,914 | 84,684,549 |
Changes in Members' Equity | |||
Acquisition of non-controlling interest | (78,817) | (2,146,183) | (2,225,000) |
Net loss attributable to non-controlling interest | (1,185,371) | (1,185,371) | |
Net loss attributable to Granite Falls Energy, LLC | (1,500,699) | (1,500,699) | |
Balance - at Jan. 31, 2020 | $ 63,889,119 | $ 15,884,360 | $ 79,773,479 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (2,686,070) | $ (4,544,627) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and amortization | 2,366,198 | 2,351,722 |
Change in fair value of derivative instruments | 370,611 | (44,228) |
Gain on equity method investments | (98,685) | |
Changes in operating assets and liabilities: | ||
Commodity derivative instruments | (101,536) | 735,556 |
Accounts receivable | 5,466,849 | 1,611,324 |
Inventory | (4,451,879) | 84,362 |
Prepaid expenses and other current assets | (525,691) | (538,574) |
Accounts payable | (3,985,284) | (5,789,620) |
Accrued expenses | 210,459 | (37,320) |
Accrued railcar rehabilitation costs | 11,481 | |
Net Cash Used In Operating Activities | (3,423,547) | (6,171,405) |
Cash Flows from Investing Activities: | ||
Payments for capital expenditures | (208,285) | (332,814) |
Net Cash Used in Investing Activities | (208,285) | (332,814) |
Cash Flows from Financing Activities: | ||
Checks drawn in excess of bank balances | 724,292 | |
Proceeds from long-term debt | 7,039,706 | |
Payments on long-term debt | (7,237,592) | (7,763) |
Acquisition of non-controlling interest | (2,000,000) | |
Member distributions paid | (1,196,000) | |
Net Cash Used in Financing Activities | (1,473,594) | (1,203,763) |
Net Decrease in Cash and Restricted Cash | (5,105,426) | (7,707,982) |
Cash and Restricted Cash - Beginning of Period | 13,574,290 | 14,901,091 |
Cash and Restricted Cash - End of Period | 8,468,864 | 7,193,109 |
Cash paid during the period for: | ||
Interest expense | $ 103,998 | 113,663 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Capital expenditures and construction in process included in accounts payable | $ 18,291 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2019 | Oct. 31, 2018 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||
Cash - Balance Sheet | $ 8,426,643 | $ 13,521,774 | $ 6,902,900 | |
Restricted Cash - Balance Sheet | 42,221 | 52,516 | 290,209 | |
Cash and Restricted Cash | $ 8,468,864 | $ 13,574,290 | $ 7,193,109 | $ 14,901,091 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jan. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Granite Falls Energy, LLC (“GFE”) is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers' grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States and on the international market. GFE's plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve-month rolling sum basis. Additionally, GFE owns a majority interest in Heron Lake BioEnergy, LLC (“HLBE”). HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers' grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE's plant has an approximate annual production capacity of 60 million gallons, but is permitted to produce approximately 72.3 million gallons of undenatured ethanol on a twelve-month rolling sum basis. Beginning December 11, 2019, HLBE owns a 100% interest in Agrinatural Gas, LLC (“Agrinatural”), which operates a natural gas pipeline that provides natural gas to HLBE's ethanol production facility and other customers. At October 31, 2019, HLBE held a 73% interest in Agrinatural. All references to “we”, “us”, “our”, and the “Company” collectively refer to GFE and its wholly-owned and majority-owned subsidiaries. Basis of Presentation and Principles of Consolidation The condensed consolidated unaudited financial statements as of January 31, 2020 consolidate the operating results and financial position of GFE, and its approximately 50.7% owned subsidiary, HLBE (through GFE's 100% ownership of Project Viking, LLC). Given the Company’s control over the operations of HLBE and its majority voting interest, the Company consolidates the condensed consolidated unaudited financial statements of HLBE with GFE's condensed consolidated unaudited financial statements. The remaining 49.3% ownership of HLBE is included in the condensed consolidated unaudited financial statements as a non-controlling interest. HLBE, through its wholly owned subsidiary, HLBE Pipeline Company, LLC, owned approximately 73% of Agrinatural as of October 31, 2019. Given HLBE’s control over the operations of Agrinatural and its majority voting interest, HLBE consolidates the financial statements of Agrinatural with its consolidated unaudited financial statements, with the equity and earnings attributed to the remaining approximately 27% noncontrolling interest through December 11, 2019 when the remaining non-controlling interest was acquired. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended October 31, 2019, contained in the Company’s annual report on Form 10-K. In the opinion of management, the condensed consolidated unaudited financial statements reflect all adjustments consisting of normal recurring accruals that we consider necessary to present fairly the Company’s results of operations, financial position and cash flows. The results reported in these condensed consolidated unaudited financial statements should not be regarded as necessarily indicative of results that may be expected for any other fiscal period or for the fiscal year. Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Therefore, in applying the criteria set forth in ASC 280, the Company determined that based on the nature of the products and production process and the expected financial results, the Company’s operations at GFE’s ethanol plant and HLBE’s plant, including the production and sale of ethanol and its co-products, are aggregated into one reporting segment. Additionally, the Company also realizes relatively immaterial revenue from natural gas pipeline operations at Agrinatural, HLBE’s owned subsidiary. Before and after accounting for intercompany eliminations, these revenues from Agrinatural represent less than less than 1% of our consolidated revenues and have little to no impact on the overall performance of the Company. Therefore, the Company does not separately review Agrinatural’s revenues, cost of sales or other operating performance information. Rather, the Company reviews Agrinatural’s natural gas pipeline financial data on a consolidated basis with the Company’s ethanol production operating segment. The Company believes that the presentation of separate operating performance information for Agrinatural’s natural gas pipeline operations would not provide meaningful information to a reader of the Company’s consolidated financial statements and would not achieve the basic principles and objectives of ASC 280. Accounting Estimates Management uses estimates and assumptions in preparing these condensed consolidated unaudited financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property and equipment, valuation of commodity derivatives, inventory, inventory purchase and sale commitments, evaluation of railcar rehabilitation costs, and the assumptions used in the impairment analysis of long-lived assets, which includes goodwill. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated unaudited financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Our contracts primarily consist of agreements with marketing companies and other customers as described below. Our performance obligations consist of the delivery of ethanol, distillers' grains, and corn oil to our customers. Our customers primarily consist of two distinct marketing companies as described below. The consideration we receive for these products is fixed or determinable based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. Our contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. We sell each of the products via different marketing channels as described below. · Ethanol. The Company sells its ethanol via a marketing agreement with Eco-Energy, Inc. Eco-Energy sells one hundred percent of the Company's ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Eco-Energy and the Company. Our performance obligations consist of our obligation to deliver ethanol to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. The marketing agreement calls for control and title to pass to Eco-Energy once a rail car is released to the railroad or a truck is released from the Company's scales. Revenue is recognized then at the price in the agreement with the end user, net of commissions, freight, and fees. · Distillers’ grains. The Company engages another third-party marketing company, RPMG, Inc., to sell one hundred percent of the distillers grains it produces at the plant. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Distillers’ corn oil (corn oil). The Company sells one hundred percent of its corn oil production to RPMG, Inc. The process for selling corn oil is the same as our distillers’ grains. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method. Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and supplies. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers' grains, and corn oil. Derivative Instruments From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives on the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated unaudited financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 5. Investments The Company has investment interests in two companies in related industries. The investments are accounted for by the equity method, under which the Company’s share of the net income of the investee is recognized as income in the Company’s Condensed Consolidated Statements of Operations and added to the investment account, and distributions received from the affiliates are treated as a reduction of the investment. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued new guidance on accounting for leases under Accounting Standards Codification 842 (ASC 842). Under the new guidance, lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted cash flow basis; and (2) a “right of use” asset, which is an asset that represents the lessee’s right to use the specified asset for the lease term. Lease expense under the new guidance is substantially the same as prior to the adoption. See Note 8 for further information. |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 3 Months Ended |
Jan. 31, 2020 | |
RISKS AND UNCERTAINTIES | |
RISKS AND UNCERTAINTIES | 2. RISKS AND UNCERTAINTIES The Company has certain risks and uncertainties that it experiences during volatile market conditions. These volatilities can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol, distillers' grains, corn oil, and natural gas to customers primarily located in the United States. Corn for the production process is supplied to our plant primarily from local agricultural producers and from purchases on the open market. Ethanol sales typically average 75% - 90% of total revenues and corn costs typically average 65% - 85% of cost of goods sold. The Company's operating and financial performance is largely driven by the prices at which they sell ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, and unleaded gasoline prices and the petroleum markets as a whole. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company’s largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, the weather, government policies and programs, and a risk management program used to protect against the price volatility of these commodities. Market fluctuations in the price of and demand for these products may have a significant adverse effect on the Company’s operations, profitability and the availability and adequacy of cash flow to meet the Company’s working capital requirements. The Company’s risk management program is used to protect against the price volatility of these commodities. The Company, and the ethanol industry as a whole, experienced significant adverse conditions throughout most of 2019 and into 2020 as a result of industry-wide record low ethanol prices due to reduced demand and high industry inventory levels. These factors resulted in prolonged negative operating margins, significantly lower cash flow from operations and substantial net losses. The Company believes its cash on hand and available debt from its lender will provide sufficient liquidity to meet its anticipated working capital, debt service and other liquidity needs through the next twelve months. |
REVENUE
REVENUE | 3 Months Ended |
Jan. 31, 2020 | |
REVENUE | |
REVENUE | 3. REVENUE Revenue by Source All revenues from contracts with customers under ASC Topic 606 are recognized at a point in time. The following table disaggregates revenue by major source for the three months ended January 31, 2020 and 2019: Three Months Ended January 31, 2020 Ethanol Production Natural Gas Pipeline Total Ethanol $ $ — $ Distillers’ Grains — Corn Oil — Other — Natural Gas — Total Revenues $ $ $ Three Months Ended January 31, 2019 Ethanol Production Natural Gas Pipeline Total Ethanol $ $ — $ Distillers’ Grains — Corn Oil — Other — Natural Gas — Total Revenues $ $ $ Payment Terms The Company has contractual payment terms with each respective marketer that sells ethanol, distillers’ grains and corn oil. These terms are 10 calendar days after the transfer of control date. The Company has contractual payment terms with natural gas customers of 20 days. Shipping and Handling Costs Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of goods sold. Accordingly, amounts billed to customers for such costs are included as a component of revenue. |
INVENTORY
INVENTORY | 3 Months Ended |
Jan. 31, 2020 | |
INVENTORY | |
INVENTORY | 4. INVENTORY Inventories consist of the following: January 31, 2020 October 31, 2019 (unaudited) Raw materials $ 6,152,060 $ 3,253,361 Supplies 3,288,976 3,330,513 Work in process 1,434,157 1,434,552 Finished goods 7,379,711 5,784,599 Totals $ 18,254,904 $ 13,803,025 The Company performs a lower of cost or net realizable value analysis on inventory to determine if the net realizable values of certain inventories are less than their carrying value, which is attributable primarily to decreases in market prices of corn and ethanol. Based on the lower of cost or net realizable value analysis, as a component of cost of goods sold, the Company recorded a loss on ethanol inventories of approximately $1,202,000 and $1,488,000 for the three months ended January 31, 2020 and 2019, respectively. Based on the lower of cost or net realizable value analysis, as a component of cost of goods sold, the Company recorded a loss on corn inventories of approximately $126,000 and $24,000 for the three months ended January 31, 2020 and 2019, respectively. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended |
Jan. 31, 2020 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | 5. DERIVATIVE INSTRUMENTS As of January 31, 2020, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 8,120,000 bushels, comprised of long corn futures positions on 675,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn futures positions on 3,445,000 bushels that were entered into to hedge forecasted corn purchases through December 2022. Additionally, there are corn options positions of 4,000,000 bushels through July 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of January 31, 2020, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 5,528,000 bushels, comprised of long futures positions on 391,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020 and short corn futures positions on 1,607,000 bushels that were entered into to hedge forecasted corn purchases through December 2021. Additionally, there are corn options positions of 3,530,000 bushels through July 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of January 31, 2020, GFE did not have any cash collateral (restricted cash) related to derivatives held by a broker. As of January 31, 2020, HLBE had approximately $42,000 of cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company's derivative instruments at January 31, 2020, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ 426,788 $ — Corn contracts - HLBE Commodity derivative instruments 144,410 — Ethanol contracts - GFE Commodity derivative instruments — 4,263 Ethanol contracts - HLBE Commodity derivative instruments — 12,912 Totals $ 571,198 $ 17,175 As of October 31, 2019, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 7,495,000 bushels, comprised of long corn futures positions on 3,345,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn futures positions on 4,150,000 bushels that were entered into to hedge forecasted corn purchases through December 2022. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, GFE did not have any cash collateral (restricted cash) related to derivatives held by a broker. As of October 31, 2019, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 5,398,000 bushels, comprised of long corn futures positions on 2,131,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn futures positions on 3,267,000 bushels that were entered into to hedge forecasted corn purchases through December 2021. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, HLBE had approximately $52,000 in cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company's derivative instruments at October 31, 2019, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ 612,713 $ — Corn contracts - HLBE Commodity derivative instruments 20,060 — Ethanol contracts - GFE Commodity derivative instruments 114,562 — Ethanol contracts - HLBE Commodity derivative instruments 75,763 — Totals $ 823,098 $ — The following tables provide details regarding the gains (losses) from Company's derivative instruments in the consolidated statements of operations, none of which are designated as hedging instruments: Consolidated Statement Three Months Ended January 31, of Operations Location 2020 2019 Corn contracts Cost of Goods Sold $ (160,218) $ 44,228 Ethanol contracts Revenues (210,393) — Total gain $ (370,611) $ 44,228 |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Jan. 31, 2020 | |
FAIR VALUE | |
FAIR VALUE | 6. FAIR VALUE The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis at January 31, 2020: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Corn $ 571,198 $ 571,198 $ 571,198 $ — $ — Financial Liabilities: Commodity Derivative Instruments - Ethanol $ 17,175 $ 17,175 $ 17,175 $ — $ — The following table provides information on those derivative assets and liabilities measured at fair value on a recurring basis at October 31, 2019: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Corn $ 632,773 $ 632,773 $ 632,773 $ — $ — Commodity Derivative Instruments - Ethanol $ 190,325 $ 190,325 $ 190,325 $ — $ — The Company determines the fair value of commodity derivative instruments by obtaining fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade market and New York Mercantile Exchange. We determine the fair value of ethanol, corn, and natural gas Level 2 instruments by model-based techniques in which all significant inputs are observable in the markets noted above. |
DEBT FACILITIES
DEBT FACILITIES | 3 Months Ended |
Jan. 31, 2020 | |
DEBT FACILITIES | |
DEBT FACILITIES | 7. DEBT FACILITIES Debt financing consists of the following: January 31, 2020 October 31, 2019 (unaudited) GRANITE FALLS ENERGY: Seasonal revolving loan, see terms below. — — Term note payable to Project Hawkeye, see terms below. 7,142,857 7,410,714 HERON LAKE BIOENERGY: Amended revolving term note payable to lending institution, see terms below. 69,971 — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. HLBE made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 634,180 634,180 Totals 7,847,008 8,044,894 Less: amounts due within one year 1,405,406 1,405,406 Net long-term debt $ 6,441,602 $ 6,639,488 Granite Falls Energy Seasonal Revolving Loan GFE has a credit facility with a lender. This credit facility was originally a revolving term loan facility with an aggregate principal commitment amount of $18,000,000 that reduced by $2,000,000 semi-annually beginning September 1, 2014, until final payment at maturity on March 1, 2018. On September 8, 2017, the revolving term loan was converted to a seasonal revolving loan in the amount of $6,000,000. GFE had no outstanding balance on the revolving term loan at the time of conversion. There was no outstanding balance on the seasonal revolving loan at January 31, 2020. Therefore, the aggregate principal amount available for borrowing by GFE under this seasonal revolving loan at January 31, 2020 was $6,000,000. The interest rate on the seasonal revolving loan is based on the bank’s One Month London Interbank Offered Rate (“LIBOR”) Index Rate, plus 2.75%, which was 4.41% and 4.52% at January 31, 2020 and October 31, 2019, respectively. The credit facility also requires GFE to comply with certain financial covenants, at various times calculated monthly, quarterly, or annually, including restriction of the payment of dividends and maintenance of certain financial ratios including minimum working capital, minimum net worth, and a debt service coverage ratio as defined by the credit facility. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and/or the imposition of fees, charges or penalties. For the fiscal year ended October 31, 2019, GFE had an event of non-compliance with the debt service coverage ratio as defined in the credit facility. In December 2019, GFE received a waiver from its lender waiving this event of non-compliance. The credit facility is secured by substantially all assets of GFE. There are no savings account balance collateral requirements as part of this credit facility. Project Hawkeye Loan On August 2, 2017, GFE entered into a credit facility with Project Hawkeye to finance its investment in Ringneck. Pursuant to this credit facility, GFE borrowed $7.5 million from Project Hawkeye using the Ringneck investment as collateral. The Project Hawkeye loan bears interest from the date funds are first advanced on the loan through maturity, at a rate per annum equal to the sum of the One Month LIBOR Index Rate plus 3.05% per annum, with an interest rate floor of 3.55%, which equated to 4.78% and 4.82% at January 31, 2020 and October 31, 2019 respectively. The Project Hawkeye loan requires annual interest payments only for the first two years of the loan and monthly principal and interest payments for years three through nine based on a seven-year amortization period. The monthly amortized payments will be re-amortized following any change in interest rate. The entire outstanding principal balance of the loan, plus any accrued and unpaid interest thereon, is due and payable in full on August 2, 2026. GFE is permitted to voluntarily prepay all or any portion of the outstanding balance of this loan at any time without premium or penalty. Pursuant to a pledge agreement entered into in connection with the Project Hawkeye loan, GFE’s obligations are secured by all of its right, title, and interest in its investment in Ringneck, including the 1,500 units subscribed for by GFE. The loan is non-recourse to all of GFE’s other assets, meaning that in the event of default, the only remedy available to Project Hawkeye will be to foreclose and seize all of GFE’s right, title and interest in its investment in Ringneck. Heron Lake BioEnergy Amended Credit Facility The 2020 Credit Facility includes an amended and restated revolving term loan with an $8,000,000 principal commitment. This loan replaces the amended revolving term note and seasonal revolving loan made under the 2018 Credit Facility. The loan is secured by substantially all of HLBE’s assets, including a subsidiary guarantee. The 2020 Credit Facility contains customary covenants, including restrictions on the payment of dividends and loans and advances to Agrinatural, and maintenance of certain financial ratios including minimum working capital, minimum net worth and a debt service coverage ratio as defined by the credit facility. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and seasonal line of credit and/or the imposition of fees, charges, or penalties. As part of the 2020 Credit Facility closing, HLBE entered into an amended administrative agency agreement with CoBank, ACP (“CoBank”). As a result, CoBank will continue act as the agent for the lender with respect to the amended credit facility. HLBE agreed to pay CoBank an annual fee of $2,500 for its services as administrative agent. Under the terms of the amended revolving term loan, HLBE may borrow, repay, and reborrow up to the aggregate principal commitment amount of $8,000,000. Final payment of amounts borrowed under the amended revolving term loan is due December 1, 2022. Interest on the amended revolving term loan accrues at a variable weekly rate equal to 3.10% above the One-Month London Interbank Offered Rate (“LIBOR”) Index rate, which totaled 4.76% at January 31, 2020. HLBE also agreed to pay an unused commitment fee on the unused available portion of the amended revolving term loan commitment at the rate of 0.500% per annum, payable monthly in arrears. Estimated annual maturities of debt at January 31, 2020, are as follows based on the most recent debt agreements: 2021 $ 1,405,406 2022 1,371,632 2023 1,141,400 2024 1,071,428 2025 1,071,428 Thereafter 1,785,714 Total debt $ 7,847,008 |
LEASES
LEASES | 3 Months Ended |
Jan. 31, 2020 | |
LEASES | |
LEASES | 8. LEASES Adoption of ASC 842 As discussed in Note 1, on November 1, 2019, the Company adopted the provisions of ASC 842 using the modified retrospective approach, which applies the provisions of ASC 842 upon adoption, with no change to prior periods. This adoption resulted in the Company recognizing initial right of use assets and lease liabilities of approximately $23.6 million at November 1, 2019. The adoption did not have a significant impact on the Company’s statement of operations. Upon the initial adoption of ASC 842, the Company elected the following practical expedients allowable under the guidance: not to reassess whether any expired or existing contracts are or contain leases; not to reassess the lease classification for any expired or existing leases; not to reassess initial direct costs for any existing leases. Additionally, the Company elected the short-term lease exemption policy, applying the requirements of ASC 842 to only long-term (greater than one year) leases. The Company leases rail cars for its facility to transport ethanol and dried distillers’ grains to its end customers. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate, unless an implicit rate is readily determinable, as the discount rate for each lease in determining the present value of lease payments. For the three months ended January 31, 2020, the Company’s weighted average discount rate was 4.87%. Operating lease expense is recognized on a straight-line basis over the lease term. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining terms of approximately one to seven years. For the three months ended January 31, 2020, the weighted average remaining lease term was four years. The Company elected to use a portfolio approach for lease classification, which allows for an entity to group together leases with similar characteristics provided that its application does not create a material difference when compared to accounting for the leases at a contract level. For railcar leases, the Company elected to combine the railcars within each rider and account for each rider as an individual lease. The following table summarizes the remaining annual maturities of the Company’s operating lease liabilities as of January 31, 2020: 2021 $ 4,537,800 2022 4,410,300 2023 4,315,800 2024 3,949,800 2025 3,293,400 Thereafter 5,019,700 Totals 25,526,800 Less: Amount representing interest 3,363,036 Lease liabilities $ 22,163,764 For the three months ended January 31, 2020, GFE recorded operating lease costs of approximately $778,000 in cost of goods sold in the Company’s statement of operations, which approximates cash paid for the period. For the three months ended January 31, 2020, HLBE recorded operating lease costs of approximately $575,000 in cost of goods sold in the Company’s statement of operations, which approximates cash paid for the period. |
MEMBERS' EQUITY
MEMBERS' EQUITY | 3 Months Ended |
Jan. 31, 2020 | |
MEMBERS' EQUITY | |
MEMBERS' EQUITY | 9. MEMBERS' EQUITY Granite Falls Energy GFE has one class of membership units. The units have no par value and have identical rights, obligations and privileges. Income and losses are allocated to all members based upon their respective percentage of units held. As of January 31, 2020 and October 31, 2019, GFE had 30,606 membership units authorized, issued, and outstanding. In December 2018, GFE’s Board of Governors declared a cash distribution of $40 per unit or approximately $1,224,000 for GFE unit holders of record as of December 20, 2018 and was paid by GFE in January 2019. Heron Lake BioEnergy On December 11, 2019, HLBE Pipeline Company acquired the remaining non-controlling interest of Agrinatural for a total price of $2.225 million. A deposit of $225,000 was paid in October 2019 and recorded within other assets at October 31, 2019, and the remaining amount was paid on December 11, 2019. The change of interest is recorded as an equity transaction in accordance with ASC 805. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jan. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES Corn Purchases - Members GFE purchased corn from board members of approximately $314,000 and $1,439,000 for the three months ended January 31, 2020 and 2019, respectively. HLBE purchased corn from board members of approximately $5,065,000 and $1,949,000 for the three months ended January 31, 2020 and 2019, respectively. Corn Forward Contracts At January 31, 2020, GFE had cash and basis contracts for forward corn purchase commitments for approximately 4,863,000 bushels for deliveries through December 2022. At January 31, 2020, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 7,966,000 bushels for deliveries through December 2021. Ethanol Forward Contracts At January 31, 2020, GFE had fixed and basis contracts to sell approximately $11,045,000 of ethanol for various delivery periods through March 2020, which approximates 82% of its anticipated ethanol sales for that period. At January 31, 2020, HLBE had fixed and basis contracts to sell approximately $11,566,000 of ethanol for various delivery periods through March 2020, which approximates 85% of its anticipated ethanol sales for that period. Given the uncertainty of future ethanol and corn prices, the Company could incur a loss on the outstanding corn purchase contracts in future periods. Management has evaluated these forward contracts using the lower of cost or net realizable value evaluation, similar to the method used on its inventory, and has determined that no impairment losses existed at GFE or HLBE at January 31, 2020 or October 31, 2019. Distillers' Grain Forward Contracts At January 31, 2020, GFE had forward contracts to sell approximately $877,000 of distillers’ grain for deliveries through February 2020, which approximates 40% of its anticipated distillers’ grain sales during that period. At January 31, 2020, HLBE had forward contracts to sell approximately $2,211,000 of distillers’ grains for delivery through March 2020, which approximates 55% of its anticipated distillers’ grain sales during that period. Corn Oil Forward Contracts At January 31, 2020, GFE had forward contracts to sell approximately $495,000 of corn oil for various delivery periods through February 2020, which approximates 100% of its anticipated corn oil sales for that period. At January 31, 2020, HLBE had forward contracts to sell approximately $289,000 of corn oil for various delivery periods through February 2020, which approximates 75% of its anticipated corn oil sales for that period. Rail Car Rehabilitation Costs GFE leases 75 hopper rail cars under a multi-year agreement which ends in November 2025. Under the agreement, GFE is required to pay to rehabilitate each car for “damage” that is considered to be other than normal wear and tear upon turn in of the car(s) at the termination of the lease. Prior to the year ending October 31, 2019, GFE believed ongoing repairs resulted in an insignificant future rehabilitation expense. During the year ending October 31, 2019, based on new information, we re-evaluated our assumptions and believe that it is probable that we may be assessed for damages incurred. At January 31, 2020 and October 31, 2019 GFE has recorded an estimated liability totaling $825,000. GFE accrues the estimated cost of railcar damages over the term of the lease as the cost of damages are incurred. HLBE leases 50 hopper rail cars under a multi-year agreement which ends in May 2027. Under the agreement, HLBE is required to pay to rehabilitate each car for “damage” that is considered to be other than normal wear and tear upon turn in of the car(s) at the termination of the lease. Prior to the year ending October 31, 2019, the Company believed ongoing repairs resulted in an insignificant future rehabilitation expense. During the year ending October 31, 2019, based on new information, we re-evaluated our assumptions and believe that it is probable that we may be assessed for damages incurred. At January 31, 2020 and October 31, 2019 HLBE has recorded an estimated liability totaling $562,000 and $551,000, respectively. HLBE accrues the estimated cost of railcar damages over the term of the lease as the damages are incurred. Company management has estimated total costs to rehabilitate the cars at January 31, 2020 to be approximately $562,000. During the quarter ended January 31, 2020, HLBE has recorded an expense in cost of goods of approximately $11,000. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Business | Nature of Business Granite Falls Energy, LLC (“GFE”) is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers' grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States and on the international market. GFE's plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve-month rolling sum basis. Additionally, GFE owns a majority interest in Heron Lake BioEnergy, LLC (“HLBE”). HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers' grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE's plant has an approximate annual production capacity of 60 million gallons, but is permitted to produce approximately 72.3 million gallons of undenatured ethanol on a twelve-month rolling sum basis. Beginning December 11, 2019, HLBE owns a 100% interest in Agrinatural Gas, LLC (“Agrinatural”), which operates a natural gas pipeline that provides natural gas to HLBE's ethanol production facility and other customers. At October 31, 2019, HLBE held a 73% interest in Agrinatural. All references to “we”, “us”, “our”, and the “Company” collectively refer to GFE and its wholly-owned and majority-owned subsidiaries. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated unaudited financial statements as of January 31, 2020 consolidate the operating results and financial position of GFE, and its approximately 50.7% owned subsidiary, HLBE (through GFE's 100% ownership of Project Viking, LLC). Given the Company’s control over the operations of HLBE and its majority voting interest, the Company consolidates the condensed consolidated unaudited financial statements of HLBE with GFE's condensed consolidated unaudited financial statements. The remaining 49.3% ownership of HLBE is included in the condensed consolidated unaudited financial statements as a non-controlling interest. HLBE, through its wholly owned subsidiary, HLBE Pipeline Company, LLC, owned approximately 73% of Agrinatural as of October 31, 2019. Given HLBE’s control over the operations of Agrinatural and its majority voting interest, HLBE consolidates the financial statements of Agrinatural with its consolidated unaudited financial statements, with the equity and earnings attributed to the remaining approximately 27% noncontrolling interest through December 11, 2019 when the remaining non-controlling interest was acquired. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended October 31, 2019, contained in the Company’s annual report on Form 10-K. In the opinion of management, the condensed consolidated unaudited financial statements reflect all adjustments consisting of normal recurring accruals that we consider necessary to present fairly the Company’s results of operations, financial position and cash flows. The results reported in these condensed consolidated unaudited financial statements should not be regarded as necessarily indicative of results that may be expected for any other fiscal period or for the fiscal year. |
Reportable Operating Segments | Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Therefore, in applying the criteria set forth in ASC 280, the Company determined that based on the nature of the products and production process and the expected financial results, the Company’s operations at GFE’s ethanol plant and HLBE’s plant, including the production and sale of ethanol and its co-products, are aggregated into one reporting segment. Additionally, the Company also realizes relatively immaterial revenue from natural gas pipeline operations at Agrinatural, HLBE’s owned subsidiary. Before and after accounting for intercompany eliminations, these revenues from Agrinatural represent less than less than 1% of our consolidated revenues and have little to no impact on the overall performance of the Company. Therefore, the Company does not separately review Agrinatural’s revenues, cost of sales or other operating performance information. Rather, the Company reviews Agrinatural’s natural gas pipeline financial data on a consolidated basis with the Company’s ethanol production operating segment. The Company believes that the presentation of separate operating performance information for Agrinatural’s natural gas pipeline operations would not provide meaningful information to a reader of the Company’s consolidated financial statements and would not achieve the basic principles and objectives of ASC 280. |
Accounting Estimates | Accounting Estimates Management uses estimates and assumptions in preparing these condensed consolidated unaudited financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property and equipment, valuation of commodity derivatives, inventory, inventory purchase and sale commitments, evaluation of railcar rehabilitation costs, and the assumptions used in the impairment analysis of long-lived assets, which includes goodwill. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated unaudited financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Our contracts primarily consist of agreements with marketing companies and other customers as described below. Our performance obligations consist of the delivery of ethanol, distillers' grains, and corn oil to our customers. Our customers primarily consist of two distinct marketing companies as described below. The consideration we receive for these products is fixed or determinable based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. Our contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. We sell each of the products via different marketing channels as described below. · Ethanol. The Company sells its ethanol via a marketing agreement with Eco-Energy, Inc. Eco-Energy sells one hundred percent of the Company's ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Eco-Energy and the Company. Our performance obligations consist of our obligation to deliver ethanol to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. The marketing agreement calls for control and title to pass to Eco-Energy once a rail car is released to the railroad or a truck is released from the Company's scales. Revenue is recognized then at the price in the agreement with the end user, net of commissions, freight, and fees. · Distillers’ grains. The Company engages another third-party marketing company, RPMG, Inc., to sell one hundred percent of the distillers grains it produces at the plant. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Distillers’ corn oil (corn oil). The Company sells one hundred percent of its corn oil production to RPMG, Inc. The process for selling corn oil is the same as our distillers’ grains. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method. Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and supplies. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers' grains, and corn oil. |
Derivative Instruments | Derivative Instruments From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives on the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated unaudited financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 5. |
Investments | Investments The Company has investment interests in two companies in related industries. The investments are accounted for by the equity method, under which the Company’s share of the net income of the investee is recognized as income in the Company’s Condensed Consolidated Statements of Operations and added to the investment account, and distributions received from the affiliates are treated as a reduction of the investment. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued new guidance on accounting for leases under Accounting Standards Codification 842 (ASC 842). Under the new guidance, lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted cash flow basis; and (2) a “right of use” asset, which is an asset that represents the lessee’s right to use the specified asset for the lease term. Lease expense under the new guidance is substantially the same as prior to the adoption. See Note 8 for further information. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
REVENUE | |
Schedule of disaggregated revenue by source | Three Months Ended January 31, 2020 Ethanol Production Natural Gas Pipeline Total Ethanol $ $ — $ Distillers’ Grains — Corn Oil — Other — Natural Gas — Total Revenues $ $ $ Three Months Ended January 31, 2019 Ethanol Production Natural Gas Pipeline Total Ethanol $ $ — $ Distillers’ Grains — Corn Oil — Other — Natural Gas — Total Revenues $ $ $ |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
INVENTORY | |
Schedule of Inventory | January 31, 2020 October 31, 2019 (unaudited) Raw materials $ 6,152,060 $ 3,253,361 Supplies 3,288,976 3,330,513 Work in process 1,434,157 1,434,552 Finished goods 7,379,711 5,784,599 Totals $ 18,254,904 $ 13,803,025 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
DERIVATIVE INSTRUMENTS | |
Schedule of derivative instruments in Statements of Financial Position | The following tables provide details regarding the Company's derivative instruments at January 31, 2020, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ 426,788 $ — Corn contracts - HLBE Commodity derivative instruments 144,410 — Ethanol contracts - GFE Commodity derivative instruments — 4,263 Ethanol contracts - HLBE Commodity derivative instruments — 12,912 Totals $ 571,198 $ 17,175 As of October 31, 2019, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 7,495,000 bushels, comprised of long corn futures positions on 3,345,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn futures positions on 4,150,000 bushels that were entered into to hedge forecasted corn purchases through December 2022. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, GFE did not have any cash collateral (restricted cash) related to derivatives held by a broker. As of October 31, 2019, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 5,398,000 bushels, comprised of long corn futures positions on 2,131,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn futures positions on 3,267,000 bushels that were entered into to hedge forecasted corn purchases through December 2021. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, HLBE had approximately $52,000 in cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company's derivative instruments at October 31, 2019, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ 612,713 $ — Corn contracts - HLBE Commodity derivative instruments 20,060 — Ethanol contracts - GFE Commodity derivative instruments 114,562 — Ethanol contracts - HLBE Commodity derivative instruments 75,763 — Totals $ 823,098 $ — |
Schedule of gains (losses) from derivative instruments | Consolidated Statement Three Months Ended January 31, of Operations Location 2020 2019 Corn contracts Cost of Goods Sold $ (160,218) $ 44,228 Ethanol contracts Revenues (210,393) — Total gain $ (370,611) $ 44,228 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
FAIR VALUE | |
Schedule of derivative assets and liabilities measured at fair value | The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis at January 31, 2020: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Corn $ 571,198 $ 571,198 $ 571,198 $ — $ — Financial Liabilities: Commodity Derivative Instruments - Ethanol $ 17,175 $ 17,175 $ 17,175 $ — $ — The following table provides information on those derivative assets and liabilities measured at fair value on a recurring basis at October 31, 2019: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Corn $ 632,773 $ 632,773 $ 632,773 $ — $ — Commodity Derivative Instruments - Ethanol $ 190,325 $ 190,325 $ 190,325 $ — $ — |
DEBT FACILITIES (Tables)
DEBT FACILITIES (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
DEBT FACILITIES | |
Schedule of debt financing | January 31, 2020 October 31, 2019 (unaudited) GRANITE FALLS ENERGY: Seasonal revolving loan, see terms below. — — Term note payable to Project Hawkeye, see terms below. 7,142,857 7,410,714 HERON LAKE BIOENERGY: Amended revolving term note payable to lending institution, see terms below. 69,971 — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. HLBE made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 634,180 634,180 Totals 7,847,008 8,044,894 Less: amounts due within one year 1,405,406 1,405,406 Net long-term debt $ 6,441,602 $ 6,639,488 |
Schedule of annual maturities of debt | 2021 $ 1,405,406 2022 1,371,632 2023 1,141,400 2024 1,071,428 2025 1,071,428 Thereafter 1,785,714 Total debt $ 7,847,008 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
LEASES | |
Summary of remaining annual maturities of operating lease liabilities | 2021 $ 4,537,800 2022 4,410,300 2023 4,315,800 2024 3,949,800 2025 3,293,400 Thereafter 5,019,700 Totals 25,526,800 Less: Amount representing interest 3,363,036 Lease liabilities $ 22,163,764 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - gal gal in Millions | 3 Months Ended | ||
Jan. 31, 2020 | Dec. 11, 2019 | Oct. 31, 2019 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||
Summary of significant accounting policies | |||
Plant production capacity | 60 | ||
Production volume permitted | 70 | ||
Heron Lake BioEnergy, LLC | |||
Summary of significant accounting policies | |||
Plant production capacity | 60 | ||
Production volume permitted | 72.3 | ||
Heron Lake BioEnergy, LLC | |||
Summary of significant accounting policies | |||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 49.30% | ||
Heron Lake BioEnergy, LLC | Project Viking, LLC | |||
Summary of significant accounting policies | |||
Ownership percentage | 50.70% | ||
Project Viking, LLC | |||
Summary of significant accounting policies | |||
Ownership percentage | 100.00% | ||
Agrinatural, LLC | |||
Summary of significant accounting policies | |||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 27.00% | ||
Agrinatural, LLC | HLBE Pipeline Company, LLC | |||
Summary of significant accounting policies | |||
Ownership percentage | 100.00% | 73.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Other (Details) | 3 Months Ended |
Jan. 31, 2020segment | |
Reportable Operating Segments | |
Number of reportable segments | 1 |
Agrinatural, LLC | Maximum | |
Reportable Operating Segments | |
Revenues of subsidiary, percentage | 1.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) | 3 Months Ended |
Jan. 31, 2020company | |
CONCENTRATIONS | |
Number of distinct marketing companies | 2 |
Ethanol | Eco-Energy, Inc. | Revenue from product line | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
Distillers grains | RPMG, Inc. | Revenue from product line | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
Corn oil | RPMG, Inc. | Revenue from product line | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
RISKS AND UNCERTAINTIES Narrati
RISKS AND UNCERTAINTIES Narrative (Details) - Product | 3 Months Ended |
Jan. 31, 2020 | |
Minimum | Total revenues | Ethanol | |
Concentration Risk | |
Concentration percentage | 75.00% |
Minimum | Cost of goods sold | Corn | |
Concentration Risk | |
Concentration percentage | 65.00% |
Maximum | Total revenues | Ethanol | |
Concentration Risk | |
Concentration percentage | 90.00% |
Maximum | Cost of goods sold | Corn | |
Concentration Risk | |
Concentration percentage | 85.00% |
REVENUE (Details)
REVENUE (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Revenue Recognition | ||
Total Revenues | $ 53,356,326 | $ 49,375,097 |
Payment terms | 10 days | |
Ethanol Production | ||
Revenue Recognition | ||
Total Revenues | $ 52,667,049 | 48,789,798 |
Natural Gas Pipeline | ||
Revenue Recognition | ||
Total Revenues | 689,277 | 585,299 |
Ethanol | ||
Revenue Recognition | ||
Total Revenues | 40,851,988 | 35,965,285 |
Ethanol | Ethanol Production | ||
Revenue Recognition | ||
Total Revenues | 40,851,988 | 35,965,285 |
Distillers grains | ||
Revenue Recognition | ||
Total Revenues | 9,631,292 | 10,566,874 |
Distillers grains | Ethanol Production | ||
Revenue Recognition | ||
Total Revenues | 9,631,292 | 10,566,874 |
Corn oil | ||
Revenue Recognition | ||
Total Revenues | 1,887,852 | 1,993,336 |
Corn oil | Ethanol Production | ||
Revenue Recognition | ||
Total Revenues | 1,887,852 | 1,993,336 |
Other | ||
Revenue Recognition | ||
Total Revenues | 295,917 | 264,303 |
Other | Ethanol Production | ||
Revenue Recognition | ||
Total Revenues | 295,917 | 264,303 |
Natural Gas | ||
Revenue Recognition | ||
Total Revenues | $ 689,277 | 585,299 |
Payment terms | 20 days | |
Natural Gas | Natural Gas Pipeline | ||
Revenue Recognition | ||
Total Revenues | $ 689,277 | $ 585,299 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | 3 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Oct. 31, 2019 | |
Inventory | |||
Raw materials | $ 6,152,060 | $ 3,253,361 | |
Supplies | 3,288,976 | 3,330,513 | |
Work in process | 1,434,157 | 1,434,552 | |
Finished goods | 7,379,711 | 5,784,599 | |
Totals | 18,254,904 | $ 13,803,025 | |
Ethanol | |||
Inventory | |||
Loss on inventories | 1,202,000 | $ 1,488,000 | |
Corn | |||
Inventory | |||
Loss on inventories | $ 126,000 | $ 24,000 |
DERIVATIVE INSTRUMENTS - Assets
DERIVATIVE INSTRUMENTS - Assets And Liabilities (Details) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2020USD ($)bu | Oct. 31, 2019USD ($)bu | Jan. 31, 2019USD ($) | |
Derivatives, Fair Value | |||
Cash collateral (restricted cash) | $ 42,221 | $ 52,516 | $ 290,209 |
Financial Assets | 571,198 | $ 823,098 | |
Derivative liabilities | $ 17,175 | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 8,120,000 | 7,495,000 | |
Additional nonmonetary notional amount | bu | 4,000,000 | 4,000,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Derivatives held by a broker | |||
Derivatives, Fair Value | |||
Cash collateral (restricted cash) | $ 0 | $ 0 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Long/Purchase position | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 675,000 | 3,345,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Short/Sale position | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 3,445,000 | 4,150,000 | |
Heron Lake BioEnergy, LLC | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 5,528,000 | 5,398,000 | |
Additional nonmonetary notional amount | bu | 3,530,000 | 4,000,000 | |
Heron Lake BioEnergy, LLC | Derivatives held by a broker | |||
Derivatives, Fair Value | |||
Cash collateral (restricted cash) | $ 42,000 | $ 52,000 | |
Heron Lake BioEnergy, LLC | Long/Purchase position | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 391,000 | 2,131,000 | |
Heron Lake BioEnergy, LLC | Short/Sale position | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 1,607,000 | 3,267,000 | |
Not Designated as Hedging Instruments | |||
Derivatives, Fair Value | |||
Financial Assets | $ 571,198 | $ 823,098 | |
Derivative liabilities | 17,175 | ||
Not Designated as Hedging Instruments | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | |||
Derivatives, Fair Value | |||
Financial Assets | 426,788 | 612,713 | |
Not Designated as Hedging Instruments | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Contracts | |||
Derivatives, Fair Value | |||
Financial Assets | 114,562 | ||
Derivative liabilities | 4,263 | ||
Not Designated as Hedging Instruments | Heron Lake BioEnergy, LLC | Corn Contracts | |||
Derivatives, Fair Value | |||
Financial Assets | 144,410 | 20,060 | |
Not Designated as Hedging Instruments | Heron Lake BioEnergy, LLC | Ethanol Contracts | |||
Derivatives, Fair Value | |||
Financial Assets | $ 75,763 | ||
Derivative liabilities | $ 12,912 |
DERIVATIVE INSTRUMENTS - Income
DERIVATIVE INSTRUMENTS - Income Statement (Details) - Not Designated as Hedging Instruments - USD ($) | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Derivative Instruments, Gain (Loss) | ||
Total gain | $ (370,611) | $ 44,228 |
Cost of Goods Sold | Corn Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Total gain | (160,218) | $ 44,228 |
Revenues | Ethanol Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Total gain | $ (210,393) |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) | Jan. 31, 2020 | Oct. 31, 2019 |
Fair value | ||
Financial Assets | $ 571,198 | $ 823,098 |
Financial Liabilities | 17,175 | |
Corn Contracts | Carrying Amount | ||
Fair value | ||
Financial Assets | 571,198 | 632,773 |
Corn Contracts | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 571,198 | 632,773 |
Corn Contracts | Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 571,198 | 632,773 |
Ethanol Contracts | Carrying Amount | ||
Fair value | ||
Financial Assets | 190,325 | |
Financial Liabilities | 17,175 | |
Ethanol Contracts | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 190,325 | |
Financial Liabilities | 17,175 | |
Ethanol Contracts | Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | $ 190,325 | |
Financial Liabilities | $ 17,175 |
DEBT FACILITIES - Granite Falls
DEBT FACILITIES - Granite Falls Energy (Details) - USD ($) | Sep. 08, 2017 | Aug. 02, 2017 | Sep. 01, 2014 | Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2019 | Aug. 31, 2014 |
Line of Credit Facility | |||||||
Proceeds from long-term debt | $ 7,039,706 | ||||||
Cash collateral (restricted cash) | 42,221 | $ 52,516 | $ 290,209 | ||||
Revolving term loan facility | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Credit facility maximum | $ 18,000,000 | ||||||
Line of credit future reduction amounts | $ 2,000,000 | ||||||
Seasonal revolving term loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Credit facility maximum | $ 6,000,000 | ||||||
Amounts outstanding under the credit facility | 0 | ||||||
Aggregate principal amount available for borrowing | $ 6,000,000 | ||||||
Interest rate (as a percent) | 4.41% | 4.52% | |||||
Seasonal revolving term loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Proposed plan | |||||||
Line of Credit Facility | |||||||
Cash collateral (restricted cash) | $ 0 | ||||||
Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Proceeds from long-term debt | $ 7,500,000 | ||||||
Interest rate (as a percent) | 4.78% | 4.82% | |||||
Interest rate floor (as a percent) | 3.55% | ||||||
Maximum period of annual interest payments only | 2 years | ||||||
Debt instrument amortization period after first two years | 7 years | ||||||
One Month LIBOR | Seasonal revolving term loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 2.75% | ||||||
One Month LIBOR | Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 3.05% | ||||||
Ringneck Energy and; Feed, LLC | Term note payable to Project Hawkeye | Equity securities | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Units purchased | 1,500 |
DEBT FACILITIES - Heron Lake Bi
DEBT FACILITIES - Heron Lake BioEnergy (Details) - Heron Lake BioEnergy, LLC - 2020 Credit Facility | 3 Months Ended |
Jan. 31, 2020USD ($) | |
Amended revolving term note payable to lending institution | |
Line of Credit Facility | |
Credit facility maximum | $ 8,000,000 |
Interest rate (as a percent) | 4.76% |
Line of credit unused commitment fee (as a percent) | 0.50% |
Amended revolving term note payable to lending institution | One Month LIBOR | |
Line of Credit Facility | |
Spread above variable interest rate | 3.10% |
CoBank | |
Line of Credit Facility | |
Annual fee | $ 2,500 |
DEBT FACILITIES (Details)
DEBT FACILITIES (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Jan. 31, 2020 | Oct. 31, 2019 | |
Line of Credit Facility | ||
Long-term Debt | $ 7,847,008 | $ 8,044,894 |
Less: amounts due within one year | 1,405,406 | 1,405,406 |
Net long term debt | 6,441,602 | 6,639,488 |
Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||
Line of Credit Facility | ||
Long-term Debt | 7,142,857 | 7,410,714 |
Amended revolving term note payable to lending institution | ||
Line of Credit Facility | ||
Long-term Debt | 69,971 | |
Assessments payable as part of water treatment agreement, with interest at 6.55%, due in 2021 | Heron Lake BioEnergy, LLC | ||
Line of Credit Facility | ||
Long-term Debt | $ 634,180 | $ 634,180 |
Frequency of payment | semi-annual | semi-annual |
Payment | $ 189,393 | $ 189,393 |
Interest rate (as a percent) | 6.55% | 6.55% |
Period of worth of debt | 1 year | 1 year |
Deposit on debt service payments | $ 364,000 | $ 364,000 |
DEBT FACILITIES - Estimated Ann
DEBT FACILITIES - Estimated Annual Maturities (Details) - USD ($) | Jan. 31, 2020 | Oct. 31, 2019 |
DEBT FACILITIES | ||
2021 | $ 1,405,406 | |
2022 | 1,371,632 | |
2023 | 1,141,400 | |
2024 | 1,071,428 | |
2025 | 1,071,428 | |
Thereafter | 1,785,714 | |
Long-term Debt | $ 7,847,008 | $ 8,044,894 |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2020 | Nov. 01, 2019 | |
Leases | ||
Right of use assets | $ 22,163,764 | |
Lease liabilities | $ 22,163,764 | |
Lease, Practical Expedients, Package [true false] | true | |
Weighted average discount rate | 4.87% | |
Weighted average remaining lease term | 4 years | |
Minimum | ||
Leases | ||
Remaining term | 1 year | |
Maximum | ||
Leases | ||
Remaining term | 7 years | |
ASU 2016-02 | Restatement | ||
Leases | ||
Right of use assets | $ 23,600,000 | |
Lease liabilities | $ 23,600,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Cost of Goods Sold | ||
Leases | ||
Operating lease costs | $ 778,000 | |
Heron Lake BioEnergy, LLC | Cost of Goods Sold | ||
Leases | ||
Operating lease costs | $ 575,000 |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) | Jan. 31, 2020USD ($) |
Remaining annual maturities of operating lease liabilities | |
2021 | $ 4,537,800 |
2022 | 4,410,300 |
2023 | 4,315,800 |
2024 | 3,949,800 |
2025 | 3,293,400 |
Thereafter | 5,019,700 |
Totals | 25,526,800 |
Less: Amount representing interest | 3,363,036 |
Lease liabilities | $ 22,163,764 |
MEMBERS' EQUITY (Details)
MEMBERS' EQUITY (Details) | Dec. 11, 2019USD ($) | Dec. 31, 2018USD ($)$ / shares | Jan. 31, 2020USD ($)item$ / sharesshares | Jan. 31, 2019USD ($)$ / shares | Oct. 31, 2019USD ($)shares |
Number of classes of membership units | item | 1 | ||||
Membership Units, Par value | $ / shares | $ 0 | ||||
Common Units Authorized | shares | 30,606 | 30,606 | |||
Common Units Issued | shares | 30,606 | 30,606 | |||
Common Units Outstanding | shares | 30,606 | 30,606 | |||
Distribution per unit declared (in dollars per unit) | $ / shares | $ 40 | ||||
Amount of distribution declared | $ 1,196,000 | ||||
Remaining non-controlling interest | $ 2,225,000 | ||||
Non-controlling Interest | |||||
Remaining non-controlling interest | $ 2,146,183 | ||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||
Distribution per unit declared (in dollars per unit) | $ / shares | $ 40 | ||||
Amount of distribution declared | $ 1,224,000 | ||||
Heron Lake BioEnergy, LLC | |||||
Remaining non-controlling interest | $ 2,225,000 | ||||
Heron Lake BioEnergy, LLC | Other assets | |||||
Deposit Assets | $ 225,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2020USD ($)itembu | Jan. 31, 2019USD ($) | Oct. 31, 2019USD ($)bu | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||
Commitments and contingencies | |||
Rail Car Rehabilitation Liability | $ 825,000 | $ 825,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 8,120,000 | 7,495,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | Short/Sale position | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 3,445,000 | 4,150,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | Long/Purchase position | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 675,000 | 3,345,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | Board Members | |||
Commitments and contingencies | |||
Amount of corn purchased | $ 314,000 | $ 1,439,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Contracts | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 11,045,000 | ||
Anticipated sales (as a percent) | 82.00% | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Contracts | Long/Purchase position | |||
Commitments and contingencies | |||
Asset impairment charges | $ 0 | $ 0 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Distillers' Grains | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 877,000 | ||
Anticipated sales (as a percent) | 40.00% | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn oil | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 495,000 | ||
Anticipated sales (as a percent) | 100.00% | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Hopper rail cars | |||
Commitments and contingencies | |||
Equipment Lease, Quantity | item | 75 | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Forward Cash and Basis Contracts Purchase Commitments | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 4,863,000 | ||
Heron Lake BioEnergy, LLC | |||
Commitments and contingencies | |||
Rail Car Rehabilitation Costs | $ 562,000 | ||
Rail Car Rehabilitation Liability | 562,000 | $ 551,000 | |
Heron Lake BioEnergy, LLC | Cost of Goods Sold | |||
Commitments and contingencies | |||
Rehabilitation Cost | $ 11,000 | ||
Heron Lake BioEnergy, LLC | Corn Contracts | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 5,528,000 | 5,398,000 | |
Heron Lake BioEnergy, LLC | Corn Contracts | Short/Sale position | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 1,607,000 | 3,267,000 | |
Heron Lake BioEnergy, LLC | Corn Contracts | Long/Purchase position | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 391,000 | 2,131,000 | |
Heron Lake BioEnergy, LLC | Corn Contracts | Board Members | |||
Commitments and contingencies | |||
Amount of corn purchased | $ 5,065,000 | $ 1,949,000 | |
Heron Lake BioEnergy, LLC | Ethanol Contracts | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 11,566,000 | ||
Anticipated sales (as a percent) | 85.00% | ||
Heron Lake BioEnergy, LLC | Ethanol Contracts | Long/Purchase position | |||
Commitments and contingencies | |||
Asset impairment charges | $ 0 | $ 0 | |
Heron Lake BioEnergy, LLC | Distillers' Grains | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 2,211,000 | ||
Anticipated sales (as a percent) | 55.00% | ||
Heron Lake BioEnergy, LLC | Corn oil | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 289,000 | ||
Anticipated sales (as a percent) | 75.00% | ||
Heron Lake BioEnergy, LLC | Hopper rail cars | |||
Commitments and contingencies | |||
Equipment Lease, Quantity | item | 50 | ||
Heron Lake BioEnergy, LLC | Corn Forward Cash and Basis Contracts Purchase Commitments | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 7,966,000 |