Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2022 | Mar. 17, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 000-51277 | |
Entity Registrant Name | Granite Falls Energy, LLC | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 41-1997390 | |
Entity Address, Address Line One | 15045 Highway 23 SE | |
Entity Address, City or Town | Granite Falls | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 56241-0216 | |
City Area Code | 320 | |
Local Phone Number | 564-3100 | |
Title of 12(b) Security | None | |
Trading Symbol | N/A | |
Security Exchange Name | NONE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
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 | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 37,813,663 | $ 29,295,657 |
Restricted cash | 3,170,349 | 1,641,123 |
Accounts receivable | 7,963,806 | 12,028,397 |
Inventory | 21,748,685 | 20,749,831 |
Commodity derivative instruments | 39,076 | |
Prepaid expenses and other current assets | 1,677,822 | 1,059,604 |
Total current assets | 72,374,325 | 64,813,688 |
Property and Equipment, net | 48,840,320 | 49,716,246 |
Investments | 12,133,737 | 14,518,331 |
Operating lease right of use asset | 14,857,962 | 15,755,395 |
Other Assets | 332,254 | 333,254 |
Total Assets | 148,538,598 | 145,136,914 |
Current Liabilities | ||
Current maturities of long-term debt | 6,171,429 | 5,046,429 |
Accounts payable | 8,666,625 | 19,445,954 |
Commodity derivative instruments | 1,478,438 | 732,801 |
Accrued expenses | 1,096,651 | 1,145,326 |
Operating lease, current liabilities | 3,695,812 | 3,653,131 |
Total current liabilities | 21,108,955 | 30,023,641 |
Long-Term Debt, less current portion | 25,928,571 | 27,621,428 |
Operating lease, long-term liabilities | 11,162,150 | 12,102,264 |
Other Long-Term Liabilities | 1,479,329 | 1,467,848 |
Commitments and Contingencies | ||
Members' Equity | ||
Members' equity attributable to Granite Falls Energy, LLC consists of 30,606 units authorized, issued and outstanding at January 31, 2022 and October 31, 2021 | 88,859,593 | 73,921,733 |
Total Liabilities and Members' Equity | $ 148,538,598 | $ 145,136,914 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - shares | Jan. 31, 2022 | Oct. 31, 2021 | Jan. 31, 2021 |
Condensed Consolidated Balance Sheets | |||
Common Units Authorized | 30,606 | 30,606 | |
Common Units Issued | 30,606 | 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, 2022 | Jan. 31, 2021 | |
Condensed Consolidated Statements of Operations | ||
Revenues | $ 109,778,677 | $ 49,398,386 |
Cost of Goods Sold | 82,622,134 | 52,788,296 |
Gross Profit (Loss) | 27,156,543 | (3,389,910) |
Operating Expenses | 2,371,272 | 1,994,237 |
Operating Income (Loss) | 24,785,271 | (5,384,147) |
Other Income (Expense) | ||
Other income (expense), net | (4,582) | 143,457 |
Interest income | 2,583 | 1,311 |
Interest expense | (366,514) | (166,455) |
Investment income | 615,406 | 114,455 |
Total other income, net | 246,893 | 92,768 |
Net Income (Loss) | 25,032,164 | (5,291,379) |
Less: Net (Income) Loss Attributable to Non-controlling Interest | 2,040,525 | |
Net Income (Loss) Attributable to Granite Falls Energy, LLC | $ 25,032,164 | $ (3,250,854) |
Weighted Average Units Outstanding - Basic | 30,606 | 30,606 |
Weighted Average Units Outstanding - Diluted | 30,606 | 30,606 |
Net Income (Loss) Per Unit - Basic | $ 817.88 | $ (106.22) |
Net Income (Loss) Per Unit - Diluted | 817.88 | $ (106.22) |
Distributions Per Unit | $ 330 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Members' Equity - USD ($) | Parent [Member] | Noncontrolling Interest [Member] | Total |
Balance - at Oct. 31, 2020 | $ 52,111,525 | $ 9,780,302 | $ 61,891,827 |
Changes in Members' Equity | |||
Net income (loss) attributable to non-controlling interest | (2,040,525) | (2,040,525) | |
Net income (loss) attributable to Granite Falls Energy, LLC | (3,250,854) | (3,250,854) | |
Balance - at Jan. 31, 2021 | 48,860,671 | $ 7,739,777 | 56,600,448 |
Balance - at Oct. 31, 2021 | 73,921,733 | 73,921,733 | |
Changes in Members' Equity | |||
Member distributions | (10,094,304) | (10,094,304) | |
Net income (loss) attributable to Granite Falls Energy, LLC | 25,032,164 | 25,032,164 | |
Balance - at Jan. 31, 2022 | $ 88,859,593 | $ 88,859,593 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 25,032,164 | $ (5,291,379) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: | ||
Depreciation and amortization | 1,285,602 | 1,872,857 |
Change in fair value of derivative instruments | 1,547,362 | 5,779,920 |
Gain on equity method investments | (615,406) | (114,455) |
Loss on disposal of assets | 21,728 | |
Changes in operating assets and liabilities: | ||
Commodity derivative instruments | (762,649) | (5,356,641) |
Accounts receivable | 4,064,591 | 341,199 |
Inventory | (998,854) | (6,303,425) |
Prepaid expenses and other current assets | (617,218) | (801,288) |
Accounts payable | (10,728,407) | (2,816,836) |
Accrued expenses | (48,675) | 210,724 |
Accrued railcar rehabilitation costs | 11,481 | 11,481 |
Net Cash Provided By (Used In) Operating Activities | 18,169,991 | (12,446,115) |
Cash Flows from Investing Activities | ||
Proceeds from redemption of equity method investment | 3,000,000 | |
Payments for capital expenditures | (460,598) | (2,184,645) |
Net Cash Provided By (Used In) Investing Activities | 2,539,402 | (2,184,645) |
Cash Flows from Financing Activities | ||
Checks drawn in excess of bank balance | 1,393,581 | |
Proceeds from long-term debt | 7,587,875 | |
Payments on long-term debt | (567,857) | (911,925) |
Member distributions | (10,094,304) | |
Net Cash Provided By (Used In) Financing Activities | (10,662,161) | 8,069,531 |
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | 10,047,232 | (6,561,229) |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 30,937,780 | 13,580,121 |
Cash, Cash Equivalents and Restricted Cash - End of Period | 40,984,012 | 7,018,892 |
Cash paid during the period for: | ||
Interest expense | $ 366,094 | 168,603 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Capital expenditures and construction in process included in accounts payable | $ 751,657 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 | Jan. 31, 2021 | Oct. 31, 2020 |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | ||||
Cash and Cash Equivalents - Balance Sheet | $ 37,813,663 | $ 29,295,657 | $ 4,782,264 | |
Restricted Cash - Balance Sheet | 3,170,349 | 1,641,123 | 2,236,628 | |
Cash, Cash Equivalents and Restricted Cash | $ 40,984,012 | $ 30,937,780 | $ 7,018,892 | $ 13,580,121 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jan. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Additionally, as of October 31, 2021 and January 31, 2022, GFE has 100% ownership 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 65 million gallons, but is currently permitted to produce up to 72.3 million gallons per year of undenatured ethanol on a twelve-month rolling sum basis. Additionally, HLBE, through a wholly owned subsidiary, operates a natural gas pipeline that provides natural gas to the HLBE’s ethanol production facility and other customers. 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 accompanying condensed consolidated financial statements 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, L.L.C.) through September 29, 2021, when the remaining non-controlling interest was acquired. Given GFE’s control over the operations of HLBE and its majority voting interest, GFE consolidates the financial statements of HLBE with its consolidated financial statements. The remaining approximately 49.3% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest through September 2021. HLBE is also the sole owner Agrinatural Gas, LLC (“Agrinatural”), through its wholly owned subsidiary, HLBE Pipeline Company, LLC. Given HLBE’s control over the operations of Agrinatural and its majority voting interest, HLBE consolidates the financial statements of Agrinatural with its consolidated financial statements. 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, 2021, 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 approximately 1-2% 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, and inventory purchase and sale commitments, evaluation of rail car rehabilitation costs, and the assumptions used in the impairment analysis of long-lived assets and evaluation of going concern. Actual results may differ from previously estimated amounts, and such differences may be material to our consolidated 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, corn oil, and natural gas to our customers. Our customers primarily consist of two distinct marketing companies as described below. The consideration we receive for these products reflects an amount that the Company expects to be entitled to in exchange for those products, 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. GFE and HLBE engage another third-party marketing company, RPMG, Inc. (“RPMG”) and Gavilon Ingredients, Inc. (“Gavilon”), respectively, to sell one hundred percent of the distillers grains it produces at the plant. RPMG and Gavilon take 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, Gavilon 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. ● Natural gas. The Company sells natural gas through its wholly-owned subsidiary Agrinatural Gas, LLC. Agrinatural owns approximately 190 miles of natural gas pipeline and provides natural gas to HLBE’s ethanol plant and other commercial, agricultural and residential customers through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company. Agrinatural’s revenues are generated through natural gas distribution fees and sales. HLBE is its largest customer by volume and revenue. 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 an investment interest in a company in a related industry. The investment is 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 unaudited Statements of Operations and added to the investment account, and distributions received from the affiliates are treated as a reduction of the investment. On June 29, 2018, we subscribed to purchase 20 preferred membership units of Harvestone Group, LLC (“Harvestone”) at a price of $100,000 per unit for a total of $2,000,000. We paid the $2,000,000 in connection with our subscription, which is reflected in our investing cash flows. Harvestone is a Delaware limited liability company that provides ethanol marketing, logistics, and trading services. Harvestone’s headquarters are located in Franklin, Tennessee. Harvestone is owned by several other ethanol producers and other private investors. On November 15, 2021, Harvestone redeemed GFE’s 20 units for $3,000,000. As a result of the Harvestone redemption, GFE no longer owns any Harvestone units and has ceased to be a member of Harvestone. The Company received and recorded the $3,000,000 redemption in November 2021. No gain or loss was recognized upon redemption during the three months ended January 31, 2022. In August 2004, GFE entered an electric service agreement with Minnesota Valley Cooperative Light and Power Association (“MVCLPA”) to supply electricity to the GFE plant. The MVCLPA electric service agreement entitles GFE to receive patronage dividends in the form of a special allocation of capital credits. The capital credits are recognized as a component of other income on the consolidated statement of operations. Through the fiscal year 2021, GFE has recognized approximately $3.2 million of investment income related to the MVCLPA capital credits. Approximately $273,000 of GFE’s capital credits were redeemed in March 2021, and as a result the investment balance was approximately $2.9 million as of October 31, 2021. MVCLPA generally redeems its capital credits on a first-in, first-out basis on a 13-year |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 3 Months Ended |
Jan. 31, 2022 | |
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 further significant adverse effects 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. |
REVENUE
REVENUE | 3 Months Ended |
Jan. 31, 2022 | |
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, 2022 and 2021: Three Months Ended January 31, 2022 (unaudited) Total Ethanol $ 88,267,198 Distillers’ Grains 14,783,149 Corn Oil 5,655,922 Other 272,854 Natural Gas Pipeline 799,554 Total Revenues $ 109,778,677 Three Months Ended January 31, 2021 (unaudited) Total Ethanol $ 36,138,491 Distillers’ Grains 9,777,090 Corn Oil 2,850,199 Other 225,746 Natural Gas Pipeline 406,860 Total Revenues $ 49,398,386 Payment Terms The Company has contractual payment terms with each respective marketer that sells ethanol, distillers’ grains and corn oil. These terms are 10 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, 2022 | |
INVENTORY | |
INVENTORY | 4. INVENTORY Inventories consist of the following: January 31, October 31, 2022 2021 (unaudited) Raw materials $ 12,310,830 $ 10,742,480 Supplies 3,198,555 3,322,639 Work in process 2,112,829 2,023,966 Finished goods 4,126,471 4,660,746 Totals $ 21,748,685 $ 20,749,831 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 $37,000 and $325,000 for the three months ended January 31, 2022 and 2021, respectively. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended |
Jan. 31, 2022 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | 5. DERIVATIVE INSTRUMENTS As of January 31, 2022, the total notional amount of the Company’s outstanding corn derivative instruments was approximately 5,295,000 bushels, comprised of short corn futures positions that were entered into to hedge forecasted ethanol sales through March 2023. Additionally, there are corn options positions of 350,000 bushels through May 2022. 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, 2022, the Company had approximately $3,170,000 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, 2022, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ — $ 1,475,563 Ethanol contracts Commodity derivative instruments — 2,875 Totals $ — $ 1,478,438 As of October 31, 2021, the total notional amount of the Company’s outstanding corn derivative instruments was approximately 9,175,000 bushels, comprised of long corn futures positions on 3,180,000 bushels that were entered into to hedge forecasted ethanol sales through March 2022, and short corn futures positions on 5,995,000 bushels that were entered into to hedge its forward corn purchase contracts through December 2022. Additionally, there are corn options positions of 140,000 bushels through May 2022. 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, 2021, the Company had approximately $1,641,000 of cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company’s derivative instruments at October 31, 2021, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ — $ 732,801 Ethanol contracts Commodity derivative instruments 39,076 — Totals $ 39,076 $ 732,801 The following tables provide details regarding the gains (losses) from Company's derivative instruments in the condensed consolidated statements of operations, none of which are designated as hedging instruments: Consolidated Statement Three Months Ended January 31, of Operations Location 2022 2021 Corn contracts Cost of Goods Sold $ (1,586,235) $ (5,893,858) Ethanol contracts Revenues 38,873 113,938 Total loss $ (1,547,362) $ (5,779,920) |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Jan. 31, 2022 | |
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, 2022: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Financial Liabilities: Commodity Derivative instruments - Ethanol $ 2,875 $ 2,875 $ 2,875 $ — $ — Commodity Derivative Instruments - Corn $ 1,475,563 $ 1,475,563 $ 1,475,563 $ — $ — Accounts Payable (1) $ 308,136 $ 308,136 $ — $ 308,136 $ — (1) Accounts payable is generally stated at historical amounts with the exception of amounts in this table related to certain delivered inventory for which the payable fluctuates based on the changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option. The following table provides information on those derivative assets and liabilities measured at fair value on a recurring basis at October 31, 2021: 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 $ 39,067 $ 39,067 $ 39,067 $ — $ — Financial Liabilities: Commodity Derivative Instruments - Corn $ 732,801 $ 732,801 $ 732,801 $ — $ — Accounts Payable (1) $ 923,550 $ 923,550 $ — $ 923,550 $ — (1) Accounts payable is generally stated at historical amounts with the exception of amounts in this table related to certain delivered inventory for which the payable fluctuates based on the changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option. |
DEBT FACILITIES
DEBT FACILITIES | 3 Months Ended |
Jan. 31, 2022 | |
DEBT FACILITIES | |
DEBT FACILITIES | 7. DEBT FACILITIES Long-term debt consists of the following: January 31, 2022 October 31, 2021 (unaudited) $20 million Revolving Credit Promissory Note, see terms below $ — $ — $20 million Revolving term loan, see terms below — — $25 million Single Advance Term Promissory Note, see terms below 25,000,000 25,000,000 $2.4 million Single Advance Term Promissory Note, see terms below 2,100,000 2,400,000 Term note payable to Project Hawkeye, see terms below 5,000,000 5,267,857 Totals 32,100,000 32,667,857 Less: amounts due within one year 6,171,429 5,046,429 Net long-term debt $ 25,928,571 $ 27,621,428 Based on the most recent debt agreements, estimated maturities of long-term debt at January 31, 2022 are as follows: 2023 $ 6,171,429 2024 6,171,429 2025 6,171,429 2026 5,871,429 2027 7,714,284 Total debt $ 32,100,000 On September 27, 2021, GFE finalized loan documents for an amended credit facility (the “2021 Credit Facility”) with AgCountry Farm Credit Services, PCA, AgCountry Farm Credit Services, FLCA (“AgCountry”). CoBank FCB (“CoBank”) serves as AgCountry’s administrative agent for the 2021 Credit Facility. The 2021 Credit Facility is intended to finance GFE’s acquisition of HLBE and consolidate certain existing debts of GFE and HLBE. The loan documents include an Amended and Restated Credit Agreement (the “Credit Agreement”), which amends and replaces the Company’s credit agreement with AgCountry dated September 27, 2018. The 2021 Credit Facility contains customary financial and affirmative covenants and negative covenants for loans of this type and size to ethanol companies. Each loan from AgCountry to GFE is subject to the terms of the Credit Agreement. Pursuant to the Credit Agreement, all agreements between GFE and AgCountry and/or CoBank are secured by a first lien on all equity or personal property owned or acquired by GFE. Financial covenants under the Amended Credit Facility include (i) maintenance of working capital of at least $20.0 million, and (ii) maintenance of a debt service coverage ratio of not less than 1.75 to 1.00 at the end of each fiscal year, beginning October 31, 2022. The 2021 Credit Facility provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, the following: nonpayment of principal or interest; breach of covenants or other agreements in the Amended Credit Facility; defaults in failure to pay certain other indebtedness; and certain events of bankruptcy or insolvency. If any event of default occurs, the remaining principal balance and accrued interest on all loans subject to the Amended Credit Facility will become immediately due and payable. The 2021 Credit Facility includes the following agreements: $20 million Revolving Credit Promissory Note Under the terms of the Revolving Credit Promissory Note, GFE may borrow, repay, and reborrow up to the aggregate principal commitment amount of $20.0 million. Final payment of amounts borrowed under revolving credit promissory note is due October 1, 2022. Interest on the amended revolving term promissory note accrues at a variable weekly rate equal to the One-Month London Interbank Offered Rate (“LIBOR”) Index rate plus 3.25% and is payable monthly in arrears, which equated to 3.36% at January 31, 2022. The revolving credit promissory note is also subject to a 0.30% fee on the unused commitment. The purpose of the revolving credit promissory note is to provide for the operating needs of GFE and consolidate a $5 million revolving credit promissory note dated February 4, 2021, between AgCountry and HLBE. $20 million Amended and Restated Revolving Term Promissory Note Under the terms of the Amended and Restated Revolving Term Promissory Note, GFE may borrow, repay, and reborrow up to the aggregate principal commitment amount of $20.0 million. Final payment of amounts borrowed under the note is due October 1, 2026. Subject to GFE’s selection, interest on the note accrues at either a variable weekly rate of the LIBOR Index rate plus 3.50%, which equated to 3.61% at January 31, 2022, or an annual fixed rate determined by CoBank. The note is subject to an overadvance fee, an amendment fee, and a 0.50% unused commitment fee. The purposes of the note are to providing working capital to GFE, to finance GFE’s acquisition of the non-controlling interest of HLBE, and to terminate and transfer to GFE the existing indebtedness on a $13 million amended and restated revolving term promissory note dated June 11, 2020, between HLBE and AgCountry. $25 million Single Advance Term Promissory Note Under the terms of the $25.0 million Single Advance Term Promissory Note, AgCountry agrees to make a single advance loan to GFE in the amount of $25.0 million for the purpose of financing GFE’s acquisition of the non-controlling interest of HLBE and refinancing existing indebtedness. GFE agrees to repay the note in eighteen quarterly installments of $1.125 million, beginning March 2022, plus a final installment of any unpaid balance. Subject to GFE’s selection, the amounts borrowed bear interest at either a variable weekly rate equal to the LIBOR Index Rate plus 3.50%, which equated to 3.61% at January 31, 2022, or an annual fixed rate set by CoBank, with a minimum period of one year and minimum amount of $100,000. $2.4 million Single Advance Term Promissory Note Under the terms of the $2.4 million Single Advance Term Promissory Note, AgCountry made a single advance loan to GFE in the amount of $2.4 million loan for the purpose of financing GFE’s acquisition of the non-controlling interest of HLBE and to terminate and transfer GFE’s existing indebtedness pursuant to a HLBE’s single advance term promissory note dated June 19, 2020. Amounts borrowed under the note bear interest at a fixed rate of 3.80%. The note is to be repaid in seven semi-annual installments of $300,000, beginning December 2021 and the final installment of the unpaid balance in June 2025. HLBE’s single advance term promissory note dated June 19, 2020 provided a commitment of $3.0 million to HLBE for the purpose of constructing a new grain bin and reducing a revolving term promissory note. Project Hawkeye Loan On August 2, 2017, GFE entered into a replacement credit facility with Project Hawkeye. The terms of the replacement credit facility allow GFE to borrow up to $7.5 million of variable-rate, amortizing non-recourse debt from Project Hawkeye using the GFE’s $7.5 million investment in Ringneck Energy & Feed, LLC (“Ringneck”), as collateral. The Project Hawkeye loan bears interest from 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 3.55% at January 31, 2022. 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. |
LEASES
LEASES | 3 Months Ended |
Jan. 31, 2022 | |
LEASES. | |
LEASES | 8. 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 twelve months ended January 31, 2022, 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 two 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, 2022: 2023 $ 4,315,800 2024 3,917,400 2025 3,261,000 2026 2,870,100 2027 1,983,000 Thereafter 100,000 Totals 16,447,300 Less: Amount representing interest 1,589,338 Lease liabilities $ 14,857,962 For the three months ended January 31, 2022 and 2021, the Company recorded operating lease costs of approximately $1,611,000 and $1,444,000 respectively, in cost of goods sold in the condensed consolidated unaudited statement of operations, which approximates cash paid for the period. |
MEMBERS' EQUITY
MEMBERS' EQUITY | 3 Months Ended |
Jan. 31, 2022 | |
MEMBERS' EQUITY | |
MEMBERS' EQUITY | 9. MEMBERS' EQUITY The Company 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, 2022 and October 31, 2021, the Company had 30,606 membership units authorized, issued, and outstanding. On December 22, 2021, the Board of Governors of the Company declared a cash distribution of $330.00 per membership unit to the holders of record of the Company’s units at the close of business on December 22, 2021, for a total distribution of $10,099,980. The Company paid the distribution in January 2022. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Jan. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 10. RELATED PARTY TRANSACTIONS Corn Purchases - Members The Company purchased corn from board members of approximately $2,998,000 and $4,719,000 for the three months ended January 31, 2022 and 2021, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jan. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Corn Forward Contracts At January 31, 2022, the Company had cash and basis contracts for forward corn purchase commitments for approximately 9,012,000 bushels for deliveries through October 2023. 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 and its inventories using the lower of cost or net realizable value evaluation, similar to the method used on its inventory, and has determined that no impairment existed for the forward corn purchase commitments at January 31, 2022 and October 31, 2021. Ethanol Forward Contracts At January 31, 2022, the Company had fixed and basis contracts to sell approximately $40,094,000 of ethanol for various delivery periods through March 2022, which approximates 95% of its anticipated ethanol sales for this that period. Distillers' Grain Forward Contracts At January 31, 2022, the Company had forward contracts to sell approximately $4,708,000 of distillers’ grain for deliveries through March 2022, which approximates 60% of its anticipated distillers’ grain sales during that period. Corn Oil Forward Contracts At January 31, 2022, the Company had forward contracts to sell approximately $2,439,000 of corn oil for delivery through February 2022, which approximates 70% 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 November 2025. HLBE leases 50 hopper rail cars under a multi-year agreement which ends in May 2027. Under the agreements, the Company 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. During the three months ended January 31, 2022 and 2021, GFE has recorded a corresponding estimated long-term liability totaling $825,000. During the three months ended January 31, 2022 and 2021, HLBE has recorded a corresponding estimated long-term liability totaling approximately $654,000. The Company accrues the estimated cost of rail car damages over the term of the leases as the damages are incurred as a component of cost of goods sold. During the three months ended January 31, 2022 and 2021, the Company recorded an expense in cost of goods of approximately $11,000 and $12,000, respectively. Letter of Credit Promissory Note The 2021 Credit Facility includes an amended and restated letter of credit promissory note. Under the terms of the note, the Company may borrow, repay, and reborrow up to the aggregate principal commitment of $500,000 until its maturity on December 1, 2023. Amounts borrowed under the note bear interest at a variable weekly rate equal to 3.25% above the rate quoted by LIBOR Index rate, which was 3.36% at January 31, 2022 The aggregate principal amount available under the letter of credit promissory note was $500,000 at January 31, 2022 and October 31, 2021. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Business | Nature of Business Additionally, as of October 31, 2021 and January 31, 2022, GFE has 100% ownership 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 65 million gallons, but is currently permitted to produce up to 72.3 million gallons per year of undenatured ethanol on a twelve-month rolling sum basis. Additionally, HLBE, through a wholly owned subsidiary, operates a natural gas pipeline that provides natural gas to the HLBE’s ethanol production facility and other customers. 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 accompanying condensed consolidated financial statements 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, L.L.C.) through September 29, 2021, when the remaining non-controlling interest was acquired. Given GFE’s control over the operations of HLBE and its majority voting interest, GFE consolidates the financial statements of HLBE with its consolidated financial statements. The remaining approximately 49.3% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest through September 2021. HLBE is also the sole owner Agrinatural Gas, LLC (“Agrinatural”), through its wholly owned subsidiary, HLBE Pipeline Company, LLC. Given HLBE’s control over the operations of Agrinatural and its majority voting interest, HLBE consolidates the financial statements of Agrinatural with its consolidated financial statements. 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, 2021, 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 approximately 1-2% 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, and inventory purchase and sale commitments, evaluation of rail car rehabilitation costs, and the assumptions used in the impairment analysis of long-lived assets and evaluation of going concern. Actual results may differ from previously estimated amounts, and such differences may be material to our consolidated 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, corn oil, and natural gas to our customers. Our customers primarily consist of two distinct marketing companies as described below. The consideration we receive for these products reflects an amount that the Company expects to be entitled to in exchange for those products, 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. GFE and HLBE engage another third-party marketing company, RPMG, Inc. (“RPMG”) and Gavilon Ingredients, Inc. (“Gavilon”), respectively, to sell one hundred percent of the distillers grains it produces at the plant. RPMG and Gavilon take 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, Gavilon 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. ● Natural gas. The Company sells natural gas through its wholly-owned subsidiary Agrinatural Gas, LLC. Agrinatural owns approximately 190 miles of natural gas pipeline and provides natural gas to HLBE’s ethanol plant and other commercial, agricultural and residential customers through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company. Agrinatural’s revenues are generated through natural gas distribution fees and sales. HLBE is its largest customer by volume and revenue. |
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 an investment interest in a company in a related industry. The investment is 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 unaudited Statements of Operations and added to the investment account, and distributions received from the affiliates are treated as a reduction of the investment. On June 29, 2018, we subscribed to purchase 20 preferred membership units of Harvestone Group, LLC (“Harvestone”) at a price of $100,000 per unit for a total of $2,000,000. We paid the $2,000,000 in connection with our subscription, which is reflected in our investing cash flows. Harvestone is a Delaware limited liability company that provides ethanol marketing, logistics, and trading services. Harvestone’s headquarters are located in Franklin, Tennessee. Harvestone is owned by several other ethanol producers and other private investors. On November 15, 2021, Harvestone redeemed GFE’s 20 units for $3,000,000. As a result of the Harvestone redemption, GFE no longer owns any Harvestone units and has ceased to be a member of Harvestone. The Company received and recorded the $3,000,000 redemption in November 2021. No gain or loss was recognized upon redemption during the three months ended January 31, 2022. In August 2004, GFE entered an electric service agreement with Minnesota Valley Cooperative Light and Power Association (“MVCLPA”) to supply electricity to the GFE plant. The MVCLPA electric service agreement entitles GFE to receive patronage dividends in the form of a special allocation of capital credits. The capital credits are recognized as a component of other income on the consolidated statement of operations. Through the fiscal year 2021, GFE has recognized approximately $3.2 million of investment income related to the MVCLPA capital credits. Approximately $273,000 of GFE’s capital credits were redeemed in March 2021, and as a result the investment balance was approximately $2.9 million as of October 31, 2021. MVCLPA generally redeems its capital credits on a first-in, first-out basis on a 13-year |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
REVENUE | |
Schedule of disaggregated revenue by source | Three Months Ended January 31, 2022 (unaudited) Total Ethanol $ 88,267,198 Distillers’ Grains 14,783,149 Corn Oil 5,655,922 Other 272,854 Natural Gas Pipeline 799,554 Total Revenues $ 109,778,677 Three Months Ended January 31, 2021 (unaudited) Total Ethanol $ 36,138,491 Distillers’ Grains 9,777,090 Corn Oil 2,850,199 Other 225,746 Natural Gas Pipeline 406,860 Total Revenues $ 49,398,386 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
INVENTORY | |
Schedule of Inventory | January 31, October 31, 2022 2021 (unaudited) Raw materials $ 12,310,830 $ 10,742,480 Supplies 3,198,555 3,322,639 Work in process 2,112,829 2,023,966 Finished goods 4,126,471 4,660,746 Totals $ 21,748,685 $ 20,749,831 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
DERIVATIVE INSTRUMENTS | |
Schedule of derivative instruments in Statements of Financial Position | Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ — $ 1,475,563 Ethanol contracts Commodity derivative instruments — 2,875 Totals $ — $ 1,478,438 Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ — $ 732,801 Ethanol contracts Commodity derivative instruments 39,076 — Totals $ 39,076 $ 732,801 |
Schedule of gains (losses) from derivative instruments | Consolidated Statement Three Months Ended January 31, of Operations Location 2022 2021 Corn contracts Cost of Goods Sold $ (1,586,235) $ (5,893,858) Ethanol contracts Revenues 38,873 113,938 Total loss $ (1,547,362) $ (5,779,920) |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
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, 2022: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Financial Liabilities: Commodity Derivative instruments - Ethanol $ 2,875 $ 2,875 $ 2,875 $ — $ — Commodity Derivative Instruments - Corn $ 1,475,563 $ 1,475,563 $ 1,475,563 $ — $ — Accounts Payable (1) $ 308,136 $ 308,136 $ — $ 308,136 $ — (1) Accounts payable is generally stated at historical amounts with the exception of amounts in this table related to certain delivered inventory for which the payable fluctuates based on the changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option. The following table provides information on those derivative assets and liabilities measured at fair value on a recurring basis at October 31, 2021: 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 $ 39,067 $ 39,067 $ 39,067 $ — $ — Financial Liabilities: Commodity Derivative Instruments - Corn $ 732,801 $ 732,801 $ 732,801 $ — $ — Accounts Payable (1) $ 923,550 $ 923,550 $ — $ 923,550 $ — (1) Accounts payable is generally stated at historical amounts with the exception of amounts in this table related to certain delivered inventory for which the payable fluctuates based on the changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option. |
DEBT FACILITIES (Tables)
DEBT FACILITIES (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
DEBT FACILITIES | |
Schedule of debt financing | January 31, 2022 October 31, 2021 (unaudited) $20 million Revolving Credit Promissory Note, see terms below $ — $ — $20 million Revolving term loan, see terms below — — $25 million Single Advance Term Promissory Note, see terms below 25,000,000 25,000,000 $2.4 million Single Advance Term Promissory Note, see terms below 2,100,000 2,400,000 Term note payable to Project Hawkeye, see terms below 5,000,000 5,267,857 Totals 32,100,000 32,667,857 Less: amounts due within one year 6,171,429 5,046,429 Net long-term debt $ 25,928,571 $ 27,621,428 |
Schedule of annual maturities of debt | 2023 $ 6,171,429 2024 6,171,429 2025 6,171,429 2026 5,871,429 2027 7,714,284 Total debt $ 32,100,000 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
LEASES. | |
Summary of remaining annual maturities of operating lease liabilities | 2023 $ 4,315,800 2024 3,917,400 2025 3,261,000 2026 2,870,100 2027 1,983,000 Thereafter 100,000 Totals 16,447,300 Less: Amount representing interest 1,589,338 Lease liabilities $ 14,857,962 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - gal gal in Millions | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2022 | Oct. 31, 2021 | Jul. 31, 2021 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||
Summary of significant accounting policies | |||
Plant production capacity | 63 | ||
Production volume permitted | 70 | ||
Heron Lake BioEnergy, LLC | |||
Summary of significant accounting policies | |||
Plant production capacity | 65 | ||
Production volume permitted | 72.3 | ||
Heron Lake BioEnergy, LLC | |||
Summary of significant accounting policies | |||
Ownership percentage | 100.00% | 100.00% | 50.70% |
Non-controlling interest ownership percentage | 49.30% | ||
Project Viking, LLC [Member] | |||
Summary of significant accounting policies | |||
Ownership percentage | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Other (Details) | 3 Months Ended |
Jan. 31, 2022segment | |
Reportable Operating Segments | |
Number of reportable segments | 1 |
Agrinatural, LLC | Minimum | |
Reportable Operating Segments | |
Revenues of subsidiary, percentage | 1.00% |
Agrinatural, LLC | Maximum | |
Reportable Operating Segments | |
Revenues of subsidiary, percentage | 2.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) | 3 Months Ended |
Jan. 31, 2022companymi | |
CONCENTRATIONS | |
Number of distinct marketing companies | company | 2 |
Agrinatural, LLC | |
CONCENTRATIONS | |
Length of natural gas pipeline owned | mi | 190 |
Ethanol | Eco-Energy, Inc. | Revenue from product line | Product concentration risk | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
Distillers' Grains Product | RPMG, Inc. | Revenue from product line | Product concentration risk | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
Corn oil product | RPMG, Inc. | Revenue from product line | Product concentration risk | Agrinatural, LLC | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Investments (Details) - USD ($) | Nov. 15, 2021 | Jun. 29, 2018 | Aug. 02, 2017 | Mar. 31, 2021 | Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2022 | Oct. 31, 2021 |
Investment | ||||||||
Investment income | $ 615,406 | $ 114,455 | ||||||
Investments | 12,133,737 | $ 12,133,737 | $ 14,518,331 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Harvestone Group, LLC | ||||||||
Investment | ||||||||
Units purchased | 20 | |||||||
Price per unit (in dollars per unit) | $ 100,000 | |||||||
Total cost | $ 2,000,000 | |||||||
Payment for equity method investment | $ 2,000,000 | |||||||
Number of units transferred | 20 | |||||||
Gain (Loss) on Investments | $ 0 | |||||||
Proceeds from sale of equity method investments | $ 3,000,000 | |||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Minnesota Valley Cooperative Light and Power Association [Member] | ||||||||
Investment | ||||||||
Proceeds from sale of equity method investments | $ 273,000 | |||||||
Investment income | $ 3,200,000 | |||||||
Investments | $ 2,900,000 | |||||||
Rotation period | 13 years | |||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Term note payable to Project Hawkeye | Ringneck Energy and; Feed, LLC | ||||||||
Investment | ||||||||
Units purchased | 1,500 |
RISKS AND UNCERTAINTIES, Narrat
RISKS AND UNCERTAINTIES, Narrative (Details) - Product concentration risk | 3 Months Ended |
Jan. 31, 2022 | |
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, 2022 | Jan. 31, 2021 | |
Revenue Recognition | ||
Total Revenues | $ 109,778,677 | $ 49,398,386 |
Payment terms | 10 days | |
Ethanol | ||
Revenue Recognition | ||
Total Revenues | $ 88,267,198 | 36,138,491 |
Distillers' Grains Product | ||
Revenue Recognition | ||
Total Revenues | 14,783,149 | 9,777,090 |
Corn oil product | ||
Revenue Recognition | ||
Total Revenues | 5,655,922 | 2,850,199 |
Other | ||
Revenue Recognition | ||
Total Revenues | 272,854 | 225,746 |
Natural Gas Pipeline | ||
Revenue Recognition | ||
Total Revenues | $ 799,554 | $ 406,860 |
Payment terms | 20 days |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | 3 Months Ended | |||
Jan. 31, 2022 | Jan. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
INVENTORY | ||||
Raw materials | $ 12,310,830 | $ 10,742,480 | ||
Supplies | 3,198,555 | 3,322,639 | ||
Work in process | 2,112,829 | 2,023,966 | ||
Finished goods | 4,126,471 | 4,660,746 | ||
Totals | 21,748,685 | $ 20,749,831 | $ 20,749,831 | |
Loss on inventories | $ 37,000 | $ 325,000 |
DERIVATIVE INSTRUMENTS - Assets
DERIVATIVE INSTRUMENTS - Assets And Liabilities (Details) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2022USD ($)bu | Oct. 31, 2021USD ($)bu | Jan. 31, 2021USD ($) | |
Derivatives, Fair Value | |||
Cash collateral (restricted cash) | $ 3,170,349 | $ 1,641,123 | $ 2,236,628 |
Financial Assets | 39,076 | ||
Derivative liabilities | $ 1,478,438 | $ 732,801 | |
Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 5,295,000 | 9,175,000 | |
Additional nonmonetary notional amount | bu | 350,000 | 140,000 | |
Derivatives held by a broker | |||
Derivatives, Fair Value | |||
Cash collateral (restricted cash) | $ 3,170,000 | $ 1,641,000 | |
Long/Purchase position | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 3,180,000 | ||
Short/Sale position | Corn Contracts | |||
Derivatives, Fair Value | |||
Total nonmonetary notional amount outstanding | bu | 5,995,000 | ||
Not Designated as Hedging Instruments | |||
Derivatives, Fair Value | |||
Financial Assets | $ 39,076 | ||
Derivative liabilities | 1,478,438 | 732,801 | |
Not Designated as Hedging Instruments | Corn Contracts | |||
Derivatives, Fair Value | |||
Derivative liabilities | 1,475,563 | 732,801 | |
Not Designated as Hedging Instruments | Ethanol Contracts | |||
Derivatives, Fair Value | |||
Financial Assets | $ 39,076 | ||
Derivative liabilities | $ 2,875 |
DERIVATIVE INSTRUMENTS - Income
DERIVATIVE INSTRUMENTS - Income Statement (Details) - Not Designated as Hedging Instruments - USD ($) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Derivative Instruments, Gain (Loss) | ||
Total loss | $ (1,547,362) | $ (5,779,920) |
Cost of Goods Sold. | Corn Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Total loss | (1,586,235) | (5,893,858) |
Revenues | Ethanol Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Total loss | $ 38,873 | $ 113,938 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 |
Fair value | ||
Financial Assets | $ 39,076 | |
Financial Liabilities | $ 1,478,438 | 732,801 |
Accounts Payable | Carrying Amount | ||
Fair value | ||
Financial Liabilities | 923,550 | |
Fair Value, Measurements, Recurring | Accounts Payable | Carrying Amount | ||
Fair value | ||
Financial Liabilities | 308,136 | |
Fair Value, Measurements, Recurring | Accounts Payable | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Liabilities | 308,136 | 923,550 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring | Accounts Payable | ||
Fair value | ||
Financial Liabilities | 308,136 | 923,550 |
Corn Contracts | Carrying Amount | ||
Fair value | ||
Financial Assets | 39,067 | |
Financial Liabilities | 732,801 | |
Corn Contracts | Fair Value, Measurements, Recurring | Carrying Amount | ||
Fair value | ||
Financial Liabilities | 1,475,563 | |
Corn Contracts | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 39,067 | |
Financial Liabilities | 1,475,563 | 732,801 |
Corn Contracts | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring | ||
Fair value | ||
Financial Assets | 39,067 | |
Financial Liabilities | 1,475,563 | $ 732,801 |
Ethanol Contracts | Fair Value, Measurements, Recurring | Carrying Amount | ||
Fair value | ||
Financial Liabilities | 2,875 | |
Ethanol Contracts | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Liabilities | 2,875 | |
Ethanol Contracts | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring | ||
Fair value | ||
Financial Liabilities | $ 2,875 |
DEBT FACILITIES - Granite Falls
DEBT FACILITIES - Granite Falls Energy (Details) | Jun. 19, 2021USD ($) | Aug. 02, 2017USD ($)shares | Jan. 31, 2022USD ($)installment | Oct. 31, 2021USD ($) | Feb. 04, 2021USD ($) | Jan. 31, 2021USD ($) | Jun. 11, 2020USD ($) |
Line of Credit Facility | |||||||
Long-term Debt | $ 32,100,000 | $ 32,667,857 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Minimum maintenance of working capital | $ 20,000,000 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Maximum | |||||||
Line of Credit Facility | |||||||
Minimum Debt service coverage ratio | 1.75% | ||||||
$25 million Single Advance Term Promissory Note | |||||||
Line of Credit Facility | |||||||
Long-term Debt | $ 25,000,000 | 25,000,000 | |||||
$25 million Single Advance Term Promissory Note | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Maximum amount | $ 25,000,000 | ||||||
Interest rate (as a percent) | 3.61% | ||||||
Principal installment amount | $ 1,125,000 | ||||||
Number of quarterly installments | installment | 18 | ||||||
Term of interest payment | 1 year | ||||||
Amount of interest payment | $ 100,000 | ||||||
$2.4 million Single Advance Term Promissory Note | |||||||
Line of Credit Facility | |||||||
Long-term Debt | 2,100,000 | 2,400,000 | |||||
$2.4 million Single Advance Term Promissory Note | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Maximum amount | 2,400,000 | ||||||
Principal installment amount | $ 300,000 | ||||||
Number of quarterly installments | installment | 7 | ||||||
Interest rate, stated percentage | 3.80% | ||||||
Commitment amount | $ 3,000,000 | ||||||
Term note payable to Project Hawkeye | |||||||
Line of Credit Facility | |||||||
Interest rate (as a percent) | 3.55% | ||||||
Long-term Debt | $ 5,000,000 | $ 5,267,857 | |||||
Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Maximum amount | $ 7,500,000 | ||||||
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 | ||||||
Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ringneck Energy and; Feed, LLC | |||||||
Line of Credit Facility | |||||||
Maximum amount | $ 7,500,000 | ||||||
One Month LIBOR | $25 million Single Advance Term Promissory Note | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 3.50% | ||||||
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 | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Units purchased | shares | 1,500 | ||||||
Revolving Credit Promissory Note | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Maximum amount | $ 20,000,000 | ||||||
Interest rate (as a percent) | 3.36% | ||||||
Line of credit unused commitment fee (as a percent) | 0.30% | ||||||
Amounts outstanding under the credit facility | $ 5,000,000 | ||||||
Revolving Credit Promissory Note | One Month LIBOR | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 3.25% | ||||||
Letter of Credit Promissory Note | |||||||
Line of Credit Facility | |||||||
Maximum amount | $ 500,000 | ||||||
Interest rate (as a percent) | 3.36% | ||||||
Aggregate principal amount available for borrowing | $ 500,000 | $ 500,000 | |||||
Letter of Credit Promissory Note | LIBOR | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 3.25% | ||||||
Amended and Restated Revolving Term Promissory Note | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Maximum amount | $ 20,000,000 | ||||||
Interest rate (as a percent) | 3.61% | ||||||
Line of credit unused commitment fee (as a percent) | 0.50% | ||||||
Amounts outstanding under the credit facility | $ 13,000,000 | ||||||
Amended and Restated Revolving Term Promissory Note | LIBOR | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 3.50% |
DEBT FACILITIES (Details)
DEBT FACILITIES (Details) - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 |
Line of Credit Facility | ||
Long-term Debt | $ 32,100,000 | $ 32,667,857 |
Less: amounts due within one year | 6,171,429 | 5,046,429 |
Net long term debt | 25,928,571 | 27,621,428 |
Term note payable to Project Hawkeye | ||
Line of Credit Facility | ||
Long-term Debt | 5,000,000 | 5,267,857 |
$25 million Single Advance Term Promissory Note | ||
Line of Credit Facility | ||
Long-term Debt | 25,000,000 | 25,000,000 |
$2.4 million Single Advance Term Promissory Note | ||
Line of Credit Facility | ||
Long-term Debt | $ 2,100,000 | $ 2,400,000 |
$2.4 million Single Advance Term Promissory Note | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||
Line of Credit Facility | ||
Interest rate (as a percent) | 3.80% |
DEBT FACILITIES - Estimated Ann
DEBT FACILITIES - Estimated Annual Maturities (Details) - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 |
DEBT FACILITIES | ||
2023 | $ 6,171,429 | |
2024 | 6,171,429 | |
2025 | 6,171,429 | |
2026 | 5,871,429 | |
2027 | 7,714,284 | |
Long-term Debt | $ 32,100,000 | $ 32,667,857 |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Oct. 31, 2021 | |
Leases | |||
Weighted average discount rate | 4.87% | ||
Operating Lease, Right-of-Use Asset | $ 14,857,962 | $ 15,755,395 | |
Operating Lease, Liability | $ 14,857,962 | ||
Weighted average remaining lease term | 3 years | ||
Cost of Goods Sold. | |||
Leases | |||
Operating lease costs | $ 1,611,000 | $ 1,444,000 | |
Minimum | |||
Leases | |||
Remaining term | 2 years | ||
Maximum | |||
Leases | |||
Remaining term | 6 years |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) | Jan. 31, 2022USD ($) |
Remaining annual maturities of operating lease liabilities | |
2023 | $ 4,315,800 |
2024 | 3,917,400 |
2025 | 3,261,000 |
2026 | 2,870,100 |
2027 | 1,983,000 |
Thereafter | 100,000 |
Totals | 16,447,300 |
Less: Amount representing interest | 1,589,338 |
Lease liabilities | $ 14,857,962 |
MEMBERS' EQUITY (Details)
MEMBERS' EQUITY (Details) | Dec. 22, 2021USD ($)$ / shares | Jan. 31, 2022item$ / sharesshares | Oct. 31, 2021$ / sharesshares | Jan. 31, 2021shares |
MEMBERS' EQUITY | ||||
Number of classes of membership units | item | 1 | |||
Membership Units, Par value | $ / shares | $ 0 | $ 0 | ||
Common Units Authorized | 30,606 | 30,606 | ||
Common Units Issued | 30,606 | 30,606 | 30,606 | |
Common Units Outstanding | 30,606 | 30,606 | ||
Distribution per unit declared (in dollars per unit) | $ / shares | $ 330 | |||
Amount of distribution declared | $ | $ 10,099,980 |
RELATED PARTY TRANSACTIONS - (D
RELATED PARTY TRANSACTIONS - (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Board Members | ||
Related party transactions | ||
Purchased from related party | $ 2,998,000 | $ 4,719,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2022USD ($)itembu | Jan. 31, 2021USD ($) | Oct. 31, 2021bu | |
Cost of Goods Sold. | |||
Commitments and contingencies | |||
Rehabilitation Cost | $ 11,000 | $ 12,000 | |
Corn Contracts | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 5,295,000 | 9,175,000 | |
Corn Contracts | Short/Sale position | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 5,995,000 | ||
Corn Contracts | Long/Purchase position | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 3,180,000 | ||
Ethanol Contracts | |||
Commitments and contingencies | |||
Value of commitment | $ 40,094,000 | ||
Anticipated sales (as a percent) | 95.00% | ||
Distillers' Grains | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 4,708,000 | ||
Anticipated sales (as a percent) | 60.00% | ||
Corn oil | Short/Sale position | |||
Commitments and contingencies | |||
Value of commitment | $ 2,439,000 | ||
Anticipated sales (as a percent) | 70.00% | ||
Corn Forward Cash and Basis Contracts Purchase Commitments | |||
Commitments and contingencies | |||
Quantity of commitment | bu | 9,012,000 | ||
Letter of Credit Promissory Note | |||
Commitments and contingencies | |||
Credit facility maximum | $ 500,000 | ||
Remaining borrowing capacity | $ 500,000 | 500,000 | |
Interest rate (as a percent) | 3.36% | ||
Letter of Credit Promissory Note | LIBOR | |||
Commitments and contingencies | |||
Spread above variable interest rate | 3.25% | ||
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 | Hopper rail cars | |||
Commitments and contingencies | |||
Equipment Lease, Quantity | item | 75 | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Revolving Credit Promissory Note | |||
Commitments and contingencies | |||
Credit facility maximum | $ 20,000,000 | ||
Interest rate (as a percent) | 3.36% | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Revolving Credit Promissory Note | One Month LIBOR | |||
Commitments and contingencies | |||
Spread above variable interest rate | 3.25% | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Amended and Restated Revolving Term Promissory Note | |||
Commitments and contingencies | |||
Credit facility maximum | $ 20,000,000 | ||
Interest rate (as a percent) | 3.61% | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Amended and Restated Revolving Term Promissory Note | LIBOR | |||
Commitments and contingencies | |||
Spread above variable interest rate | 3.50% | ||
Heron Lake BioEnergy, LLC | |||
Commitments and contingencies | |||
Rail Car Rehabilitation Liability | $ 654,000 | $ 654,000 | |
Heron Lake BioEnergy, LLC | Hopper rail cars | |||
Commitments and contingencies | |||
Equipment Lease, Quantity | item | 50 |