Document and Entity Information
Document and Entity Information | 6 Months Ended |
Mar. 31, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | LINCOLNWAY ENERGY, LLC |
Entity Central Index Key | 1,350,420 |
Current Fiscal Year End Date | --09-30 |
Entity Filer Category | Non-accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2018 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 42,049 |
Balance Sheets Statement
Balance Sheets Statement - USD ($) | Mar. 31, 2018 | Sep. 30, 2016 |
CURRENT ASSETS | ||
Cash | $ 328,344 | $ 690,513 |
Derivative financial instruments (Note 7 and 8) | 763,480 | 428,666 |
Trade and other accounts receivable (Note 6) | 2,588,128 | 3,229,474 |
Inventories (Note 3) | 7,167,490 | 5,684,729 |
Prepaid expenses and other | 277,568 | 375,787 |
Total current assets | 11,125,010 | 10,409,169 |
PROPERTY AND EQUIPMENT | ||
Land and land improvements | 7,148,360 | 7,148,360 |
Buildings and improvements | 3,227,783 | 3,220,876 |
Plant and process equipment | 82,498,968 | 80,951,321 |
Office furniture and equipment | 479,896 | 473,517 |
Construction in progress | 13,469,002 | 6,178,622 |
Property, plant and equipment, gross | 106,824,009 | 97,972,696 |
Accumulated depreciation | (60,059,887) | (58,027,513) |
Property, plant and equipment, net | 46,764,122 | 39,945,183 |
OTHER ASSETS | ||
Other assets, noncurrent | 827,797 | 818,971 |
Assets | 58,716,929 | 51,173,323 |
CURRENT LIABILITIES | ||
Accounts payable | 2,323,866 | 3,276,755 |
Accounts payable, related party (Note 5) | 213,826 | 642,726 |
Accrued expenses | 923,739 | 1,313,244 |
Total current liabilities | 3,461,431 | 5,232,725 |
NONCURRENT LIABILITIES | ||
Long-term debt, less current maturities (Note 4) | 14,750,000 | 3,000,000 |
Deferred revenue | 370,370 | 444,444 |
Other | 528,905 | 498,516 |
Total noncurrent liabilities | 15,649,275 | 3,942,960 |
MEMBERS' EQUITY | ||
Member contributions, 42,049 units issued and outstanding | 38,990,105 | 38,990,105 |
Retained earnings | 616,118 | 3,007,533 |
Members' Equity | 39,606,223 | 41,997,638 |
Liabilities and Equity | $ 58,716,929 | $ 51,173,323 |
Balance Sheets Parenthetical St
Balance Sheets Parenthetical Statement - USD ($) | 9 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Sep. 30, 2016 | |
OTHER ASSETS | ||
Financing costs, net of amortization of | $ 401,823 | $ 375,522 |
MEMBER'S EQUITY | ||
Units issued and outstanding | 42,049 | 42,049 |
Statements of Operations Statem
Statements of Operations Statement - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues (Notes 2 and 6) | $ 26,788,654 | $ 27,316,985 | $ 49,258,782 | $ 55,878,701 |
Cost of goods sold (Note 6) | 26,495,320 | 26,185,059 | 49,272,643 | 51,550,023 |
Gross profit (loss) | 293,334 | 1,131,926 | (13,861) | 4,328,678 |
General and administrative expenses | 783,759 | 826,092 | 1,729,518 | 1,583,011 |
Operating income (loss) | (490,425) | 305,834 | (1,743,379) | 2,745,667 |
Other income (expense): | ||||
Interest income | 21,931 | 498 | 21,931 | 983 |
Interest expense | 0 | (6,586) | 0 | (29,374) |
Other Income | 75,325 | 0 | 381,258 | 0 |
Other income (expense) | 97,256 | (6,088) | 403,189 | (28,391) |
Net income (loss) | $ (393,169) | $ 299,746 | $ (1,340,190) | $ 2,717,276 |
Weighted average units outstanding | 42,049 | 42,049 | 42,049 | 42,049 |
Net income (loss) per unit - basic and diluted | $ (9.35) | $ 7.13 | $ (31.87) | $ 64.62 |
Distribution Made to Limited Liability Company (LLC) Member, Distributions Paid, Per Unit | $ 0 | $ 0 | $ 25 | $ 0 |
Statement of Cash Flows Stateme
Statement of Cash Flows Statement - USD ($) | 6 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net Cash Provided by (Used in) Operating Activities [Abstract] | ||
Net income (loss) | $ (1,340,190) | $ 2,717,276 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 2,055,078 | 1,894,113 |
Gain (Loss) on Disposition of Property Plant Equipment | 24,260 | 10,417 |
Retained Patronage Allocations | (7,518) | (3,614) |
Changes in working capital components: | ||
Trade and other accounts receivable | 641,346 | 192,955 |
Inventories | (1,482,761) | 451,225 |
Prepaid expenses and other | 127,300 | 121,921 |
Accounts payable | (1,811,000) | (1,436,466) |
Accounts payable, related party | (428,900) | (193,435) |
Accrued expenses and deferred revenue | (254,229) | 56,594 |
Derivative financial instruments | 334,814 | (132,971) |
Net cash provided by (used in) operating activities | (2,811,428) | 3,943,957 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (8,249,516) | (4,778,470) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from Issuance of Long-term Debt | 38,250,000 | 28,550,000 |
Payments on long-term borrowings | 26,500,000 | 27,977,571 |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid | (1,051,225) | 0 |
Net cash provided by financing activities | 10,698,775 | 572,429 |
Net (decrease) in cash and cash equivalents | (362,169) | (262,084) |
CASH AND CASH EQUIVALENTS | ||
Beginning | 690,513 | 613,139 |
Ending | 328,344 | 351,055 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW | ||
INFORMATION, cash paid for interest, including capitalized interest for 2018 of $124,157 and 2017 of none | 124,157 | 10,388 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Construction in Progress Expenditures Incurred but Not yet Paid | 1,041,111 | 295,805 |
Construction in progress included in accrued expenses | $ 13,459 | $ 19,864 |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Notes) gal in Millions | 6 Months Ended | |
Mar. 31, 2018USD ($)gal | Sep. 30, 2017USD ($) | |
Accounting Policies [Abstract] | ||
Significant Accounting Policies [Text Block] | Nature of Business and Significant Accounting Policies Principal business activity : Lincolnway Energy, LLC (the "Company"), located in Nevada, Iowa, was formed in May 2004 to build and operate a 50 million gallon annual production dry mill corn-based ethanol plant. The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006. The Company is directly influenced by commodity markets and the agricultural and energy industries and, accordingly, its results of operations and financial condition may be significantly affected by cyclical market trends and the regulatory, political and economic conditions in these industries. Basis of presentation and other information : The balance sheet as of September 30, 2017 was derived from the Company's audited balance sheet as of that date. The accompanying financial statements as of March 31, 2018 and for the three and six months ended March 31, 2018 and 2017 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2017 contained in the Company's Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. Use of estimates : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Trade accounts receivable : Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received. A receivable is considered past due if any portion of the receivable is outstanding more than 90 days. There was no allowance for doubtful accounts balance as of March 31, 2018 and September 30, 2017 . Inventories: Inventories are stated at the lower of net realizable value or actual cost using the first-in, first-out method. In the valuation of inventories and purchase commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonable predictable costs of completion, disposal and transportation. Derivative financial instruments: The Company periodically enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales. The Company does not typically enter into derivative instruments other than for hedging purposes. All the derivative contracts are recognized on the balance sheet at their fair market value. Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes. Accordingly, any realized or unrealized gain or loss related to corn and natural gas derivatives is recorded in the statement of operations as a component of cost of goods sold. Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet. Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment. Revenue recognition: Revenue from the sale of the Company’s ethanol and distillers grains is recognized at the time title and all risks of ownership transfer to the customers. This generally occurs upon the loading of the product. For ethanol, title passes at the time the product crosses the loading flange in either a railcar or truck. For distillers grain, title passes upon the loading into trucks or railcars. Shipping and handling costs incurred by the Company for the sale of distillers grain are included in costs of goods sold. Ethanol revenue is reported free on board (FOB) and all shipping and handling costs are incurred by the ethanol marketer. Commissions for the marketing and sale of ethanol and distiller grains are included in costs of goods sold. Deferred revenue: Deferred revenue represents fees received under a service agreement in advance of services being performed. The related revenue is deferred and recognized as the services are performed over the 10 year agreement. Income taxes : The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Earnings per unit | |
Principal Business Activity [Policy Text Block] | Principal business activity : Lincolnway Energy, LLC (the "Company"), located in Nevada, Iowa, was formed in May 2004 to build and operate a 50 million | |
Basis of Accounting, Policy [Policy Text Block] | Basis of presentation and other information : The balance sheet as of September 30, 2017 was derived from the Company's audited balance sheet as of that date. The accompanying financial statements as of March 31, 2018 and for the three and six months ended March 31, 2018 and 2017 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2017 contained in the Company's Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. | |
Use of Estimates, Policy [Policy Text Block] | Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents. | |
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Trade accounts receivable : Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received. A receivable is considered past due if any portion of the receivable is outstanding more than 90 days. There was no allowance for doubtful accounts balance as of March 31, 2018 and September 30, 2017 | |
Inventory, Policy [Policy Text Block] | Inventories: Inventories are stated at the lower of net realizable value or actual cost using the first-in, first-out method. In the valuation of inventories and purchase commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonable predictable costs of completion, disposal and transportation. | |
Financial Instruments Disclosure [Text Block] | Derivative financial instruments: The Company periodically enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales. The Company does not typically enter into derivative instruments other than for hedging purposes. All the derivative contracts are recognized on the balance sheet at their fair market value. Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes. Accordingly, any realized or unrealized gain or loss related to corn and natural gas derivatives is recorded in the statement of operations as a component of cost of goods sold. Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet. Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment. | |
Revenue Recognition, Policy [Policy Text Block] | Revenue recognition: Revenue from the sale of the Company’s ethanol and distillers grains is recognized at the time title and all risks of ownership transfer to the customers. This generally occurs upon the loading of the product. For ethanol, title passes at the time the product crosses the loading flange in either a railcar or truck. For distillers grain, title passes upon the loading into trucks or railcars. Shipping and handling costs incurred by the Company for the sale of distillers grain are included in costs of goods sold. Ethanol revenue is reported free on board (FOB) and all shipping and handling costs are incurred by the ethanol marketer. Commissions for the marketing and sale of ethanol and distiller grains are included in costs of goods sold. | |
Deferred Revenue [Policy Text Block] | Deferred revenue: Deferred revenue represents fees received under a service agreement in advance of services being performed. The related revenue is deferred and recognized as the services are performed over the 10 year agreement. | |
Income Tax, Policy [Policy Text Block] | Income taxes: The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. | |
Earnings Per Share, Policy [Policy Text Block] | Earnings per unit : Basic and diluted net income (loss) per unit have been computed on the basis of the weighted average number of units outstanding during each period presented. Recently Issued Accounting Pronouncements : In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The new standard will be effective for the Company on October 1, 2018. The Company is currently evaluating the potential impact that Topic 606 may have on the financial position and results of operations, however at this time we do not believe the adoption will have a material effect on the financial statements. In February 2016, FASB issued ASU No. 2016-2 "Leases" ("ASU 2016-02"). ASU 2016-02 requires the recognition of operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the impact it will have on the financial statements. | |
Allowance for Doubtful Accounts Receivable | $ | $ 0 | $ 0 |
Annual ethanol production | gal | 50 | |
Number of days outstanding for a past due trade receivables | 90 days |
Revenue
Revenue | 6 Months Ended |
Mar. 31, 2018 | |
Revenue by product [Abstract] | |
Revenue | Revenues Components of revenues are as follows: Three Months Ended Six Months Ended March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 Ethanol, net of hedging gain (loss) $ 20,251,712 $ 21,988,544 $ 37,126,033 $ 45,120,148 Distillers Grains 4,759,804 3,388,441 8,435,280 6,989,357 Other 1,777,138 1,940,000 3,697,469 3,769,196 Total $ 26,788,654 $ 27,316,985 $ 49,258,782 $ 55,878,701 |
Inventories
Inventories | 6 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: March 31, September 30, Raw materials, including corn, chemicals and supplies $ 5,055,548 $ 4,166,618 Work in process 743,673 773,978 Ethanol and distillers grains 1,368,269 744,133 Total $ 7,167,490 $ 5,684,729 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Mar. 31, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
Long-Term Debt | Long-Term Debt The Company has a revolving term loan, with a bank, available for up to $21,000,000 . Borrowings will be reduced by $3,600,000 every year starting July 1, 2019 until July 1, 2024 when the loan expires. The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.15% . The Company also pays a commitment fee on the average daily unused portion of the loan at the rate of .50% annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master agreement. There were outstanding borrowings of $14,750,000 and $3,000,000 |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Purchase Commitment, Excluding Long-term Commitment [Table Text Block] | Corn Commitment: March 31, 2018 Corn Forward Purchase Commitment Basis Corn Commitment (Bushels) Commitment Through Amount Due Related Parties $ 1,707,326 1,630,000 April 2019 $ 213,826 |
Schedule of Related Party Transactions [Table Text Block] | Corn Purchased: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Six Months Ended March 31, 2018 Six Months Ended March 31, 2017 Related Parties $ 11,992,132 $ 10,015,232 $ 19,921,289 $ 19,651,606 |
Related-Party Transactions | Related-Party Transactions The Company had the following related-party activity with members during the three and six months ended March 31, 2018 and 2017: Corn Commitment: March 31, 2018 Corn Forward Purchase Commitment Basis Corn Commitment (Bushels) Commitment Through Amount Due Related Parties $ 1,707,326 1,630,000 April 2019 $ 213,826 Corn Purchased: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Six Months Ended March 31, 2018 Six Months Ended March 31, 2017 Related Parties $ 11,992,132 $ 10,015,232 $ 19,921,289 $ 19,651,606 |
Commitments and Major Customer
Commitments and Major Customer | 6 Months Ended |
Mar. 31, 2018 | |
Commitments and Major Customer [Abstract] | |
Commitments and Major Customer | Commitments and Major Customers The Company has an agreement with an unrelated entity for marketing, selling and distributing all of the ethanol produced by the Company. Revenues from this entity were $20,313,536 and $37,139,032 , respectively, for the three and six months ended March 31, 2018. Revenues with this entity were $21,915,972 and $45,272,635 , respectively for the three and six months ended March 31, 2017. Trade accounts receivable of $1,369,872 were due from this entity as of March 31, 2018 . As of March 31, 2018 , the Company had ethanol unpriced sales commitments with this entity of approximately 11.6 million gallons through June 2018. The Company has an agreement with an unrelated entity for marketing, selling and distributing all of the distillers grains produced by the Company. Revenues from this entity including both distillers grains and corn oil were $4,759,804 and $8,435,280 , respectively, for the three and six months ended March 31, 2018. Revenues with this entity were $3,388,441 and $7,148,895 , respectively, for the three and six months ended March 31, 2017. The Company sells corn oil to this entity as a third party broker independent of its agreement with the entity relating to distillers grain sales. Trade accounts receivable of $658,522 were due from this entity as of March 31, 2018 . The Company had distillers grain sales commitments with this entity of approximately 4,758 tons, for a total sales commitment of approximately $694,104 . As of March 31, 2018 , the Company had purchase commitments for corn forward contracts with various unrelated parties, totaling approximately $5.4 million . These contracts mature at various dates through June 2019. The Company also had basis contract commitments with unrelated parties to purchase 81,000 bushels of corn. These contracts mature at various dates through December 2018. The Company has an agreement with an unrelated party for the transportation of natural gas to the Company's ethanol plant. Under the agreement, the Company is committed to future monthly usage fees totaling approximately $3.6 million over the 10 year term which commenced in November 2014. The Company assigned an irrevocable standby letter of credit to the counter-party to stand as security for the Company's obligation under the agreement maturing May 2021. The letter of credit will be reduced over time as the Company makes payments under the agreement. At March 31, 2018, the remaining commitment was approximately $1.9 million . As of March 31, 2018, the Company had purchase commitments for natural gas basis contracts with an unrelated party totaling 309,600 MMBtu's maturing at various dates through October 2018. The Company signed contracts with unrelated parties for the installation of a grain drying and cooling system. The total commitments are for $11.6 million plus a potential performance bonus of $450,000 . The Company made progress payments of $9.7 million under this contract through March 31, 2018. The remaining payments will be made as invoiced throughout the life of the project. The project is estimated to be completed in the third quarter of fiscal year 2018. The Company has an agreement with an unrelated party for fermentation expansions. The total commitment is for $2.5 million . Through March 31, 2018, the Company made progress payments of $.6 million |
Risk Management
Risk Management | 6 Months Ended |
Mar. 31, 2018 | |
Risk Management [Abstract] | |
Risk Management | Risk Management The Company's activities expose it to a variety of market risks, including the effects of changes in commodity prices. These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program. The Company's risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations. The Company's specific goal is to protect the Company from large moves in the commodity costs. To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchase and sale contracts. Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives. The Company treats all contracts with the same counterparty on a net basis on the balance sheet. Derivatives not designated as hedging instruments are as follows: March 31, 2018 September 30, 2017 Derivative assets - corn contracts $ 74,163 $ 506,187 Derivative assets - ethanol contracts 8,631 — Derivative liabilities - corn contracts (214,738 ) (275 ) Derivative liabilities - ethanol contracts — (12,310 ) Derivative liabilities - natural gas contracts — (1,980 ) Cash held by (due to) broker 895,424 (62,956 ) Total $ 763,480 $ 428,666 The effects on operating income from derivative activities are as follows: Three Months Ended Six Months Ended March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 Gains (losses) in revenues due to derivatives related to ethanol sales: Realized (loss) $ (54,180 ) $ (124,170 ) $ (21,630 ) $ (213,672 ) Unrealized gain (loss) (7,644 ) 196,742 8,631 61,185 Total effect on revenues (61,824 ) 72,572 (12,999 ) (152,487 ) Gains (losses) in cost of goods sold due to derivatives related to corn costs: Realized gain 45,525 589,775 420,725 1,184,481 Unrealized (loss) (681,838 ) (451,025 ) (646,488 ) (1,012,163 ) Total effect on corn cost (636,313 ) 138,750 (225,763 ) 172,318 Gains in cost of goods sold due to derivatives related to natural gas costs: Realized gain (loss) (11,840 ) (16,620 ) 30,939 2,990 Unrealized gain (loss) (7,010 ) — 14,290 — Total effect on natural gas cost (18,850 ) (16,620 ) 45,229 2,990 Total effect on cost of goods sold (655,163 ) 122,130 (180,534 ) 175,308 Total gain (loss) due to derivative activities $ (716,987 ) $ 194,702 $ (193,533 ) $ 22,821 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. Level 3 - Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company's financial assets and financial liabilities carried at fair value. Derivative financial instruments : Commodity futures and exchange-traded commodity options contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains 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 CME and NYMEX markets. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2018 and September 30, 2017 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: March 31, 2018 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 82,794 $ 82,794 $ — $ — Liabilities, derivative financial instruments $ 214,738 $ 214,738 $ — $ — September 30, 2017 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 506,187 $ 506,187 $ — $ — Liabilities, derivative financial instruments $ 14,565 $ 14,565 $ — $ — |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Revenue by product [Abstract] | |
Revenue from External Customers by Products and Services | Components of revenues are as follows: Three Months Ended Six Months Ended March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 Ethanol, net of hedging gain (loss) $ 20,251,712 $ 21,988,544 $ 37,126,033 $ 45,120,148 Distillers Grains 4,759,804 3,388,441 8,435,280 6,989,357 Other 1,777,138 1,940,000 3,697,469 3,769,196 Total $ 26,788,654 $ 27,316,985 $ 49,258,782 $ 55,878,701 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consist of the following: March 31, September 30, Raw materials, including corn, chemicals and supplies $ 5,055,548 $ 4,166,618 Work in process 743,673 773,978 Ethanol and distillers grains 1,368,269 744,133 Total $ 7,167,490 $ 5,684,729 |
Risk Management (Tables)
Risk Management (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Risk Management [Abstract] | |
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Derivatives not designated as hedging instruments are as follows: March 31, 2018 September 30, 2017 Derivative assets - corn contracts $ 74,163 $ 506,187 Derivative assets - ethanol contracts 8,631 — Derivative liabilities - corn contracts (214,738 ) (275 ) Derivative liabilities - ethanol contracts — (12,310 ) Derivative liabilities - natural gas contracts — (1,980 ) Cash held by (due to) broker 895,424 (62,956 ) Total $ 763,480 $ 428,666 |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The effects on operating income from derivative activities are as follows: Three Months Ended Six Months Ended March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 Gains (losses) in revenues due to derivatives related to ethanol sales: Realized (loss) $ (54,180 ) $ (124,170 ) $ (21,630 ) $ (213,672 ) Unrealized gain (loss) (7,644 ) 196,742 8,631 61,185 Total effect on revenues (61,824 ) 72,572 (12,999 ) (152,487 ) Gains (losses) in cost of goods sold due to derivatives related to corn costs: Realized gain 45,525 589,775 420,725 1,184,481 Unrealized (loss) (681,838 ) (451,025 ) (646,488 ) (1,012,163 ) Total effect on corn cost (636,313 ) 138,750 (225,763 ) 172,318 Gains in cost of goods sold due to derivatives related to natural gas costs: Realized gain (loss) (11,840 ) (16,620 ) 30,939 2,990 Unrealized gain (loss) (7,010 ) — 14,290 — Total effect on natural gas cost (18,850 ) (16,620 ) 45,229 2,990 Total effect on cost of goods sold (655,163 ) 122,130 (180,534 ) 175,308 Total gain (loss) due to derivative activities $ (716,987 ) $ 194,702 $ (193,533 ) $ 22,821 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2018 and September 30, 2017 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: March 31, 2018 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 82,794 $ 82,794 $ — $ — Liabilities, derivative financial instruments $ 214,738 $ 214,738 $ — $ — September 30, 2017 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 506,187 $ 506,187 $ — $ — Liabilities, derivative financial instruments $ 14,565 $ 14,565 $ — $ — |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||
Allowance for Doubtful Accounts Receivable | $ 0 | $ 0 |
Number of days outstanding for a past due trade receivables | 90 days |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 6) | $ 26,788,654 | $ 27,316,985 | $ 49,258,782 | $ 55,878,701 |
Ethanol [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 6) | 20,251,712 | 21,988,544 | 37,126,033 | 45,120,148 |
Distillers' Grains [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 6) | 4,759,804 | 3,388,441 | 8,435,280 | 6,989,357 |
Other Products [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 6) | $ 1,777,138 | $ 1,940,000 | $ 3,697,469 | $ 3,769,196 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
Inventory Disclosure [Abstract] | |||
Raw materials, including corn, chemicals and supplies | $ 5,055,548 | $ 4,166,618 | |
Work in process | 743,673 | 773,978 | |
Ethanol and distillers grains | 1,368,269 | 744,133 | |
Total | $ 7,167,490 | $ 5,684,729 | $ 5,684,729 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2018 | Sep. 30, 2017 | |
Debt Instrument [Line Items] | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt instrument, basis spread on variable rate | 3.15% | |
Line of credit facility, unused capacity, commitment fee percentage | 0.50% | |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 21,000,000 | |
Line of Credit Facility, Maximum Borrowing Capacity Annual Reduction | 3,600,000 | |
Line of Credit Facility, Fair Value of Amount Outstanding | $ 14,750,000 | $ 3,000,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018USD ($)bu | Mar. 31, 2017USD ($) | Mar. 31, 2018USD ($)bu | Mar. 31, 2017USD ($) | |
Related Party Transaction [Line Items] | ||||
Interest paid | $ 124,157 | $ 10,388 | ||
Corn [Member] | Other Members [Member] | ||||
Related Party Transaction [Line Items] | ||||
Supplies Purchased, Materials for Production | $ 11,992,132 | $ 10,015,232 | 19,921,289 | $ 19,651,606 |
Purchase Commitment, Minimum Amount Committed, Forward Contracts | $ 1,707,326 | $ 1,707,326 | ||
Supply Commitment, quantity, unpriced contracts | bu | 1,630,000 | 1,630,000 | ||
Purchase Commitment, Remaining Minimum Amount Committed | $ 213,826 | $ 213,826 |
Commitments and Major Customer
Commitments and Major Customer (Details) gal in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018USD ($)Tgal | Mar. 31, 2017USD ($) | Mar. 31, 2018USD ($)Tgal | Mar. 31, 2017USD ($) | |
Revenue, Major Customer [Line Items] | ||||
Revenues (Notes 2 and 6) | $ 26,788,654 | $ 27,316,985 | $ 49,258,782 | $ 55,878,701 |
Ethanol [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Ethanol receivable | $ 1,369,872 | $ 1,369,872 | ||
Supply Commitment, quantity, unpriced contracts | gal | 11.6 | 11.6 | ||
Entity-wide, major customer, unrelated party, amount | $ 20,313,536 | 21,915,972 | $ 37,139,032 | 45,272,635 |
Distillers' Grains [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Supply Commitment, Remaining Minimum Amount Committed | 694,104 | 694,104 | ||
Entity-wide, major customer, unrelated party, amount | 4,759,804 | $ 3,388,441 | 8,435,280 | $ 7,148,895 |
Distillers grains receivable | $ 658,522 | $ 658,522 | ||
Supply Commitment, quantity, Priced Contracts | T | 4,758 | 4,758 | ||
Corn [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Long-term Purchase Commitment, Amount | $ 5,400,000 |
Commitments and Major Custome24
Commitments and Major Customer Purchase committments (Details) | 6 Months Ended |
Mar. 31, 2018USD ($)MMBTUTbu | |
Corn [Member] | |
Long-term Purchase Commitment [Line Items] | |
Long-term Purchase Commitment, Amount | $ 5,400,000 |
purchase commitment , remaining quantity | bu | 81,000 |
Natural Gas [Member] | |
Long-term Purchase Commitment [Line Items] | |
Purchase Commitment, Transportation Fees | $ 3,600,000 |
Long-term Purchase Commitment, Period | 10 years |
Purchase Commitment, Remaining Minimum Amount Committed | $ 1,900,000 |
Long-term Purchase Commitment, Minimum Energy Volume Required | MMBTU | 309,600 |
Grain drying and cooling system [Member] | |
Long-term Purchase Commitment [Line Items] | |
Long-term Purchase Commitment, Amount | $ 11,600,000 |
Performance Fees | 450,000 |
Payments for Construction in Process | 9,700,000 |
Fermentation Equipment [Member] | |
Long-term Purchase Commitment [Line Items] | |
Long-term Purchase Commitment, Amount | 2,500,000 |
Payments for Construction in Process | $ 600,000 |
Distillers Grains [Member] | |
Long-term Purchase Commitment [Line Items] | |
Supply Commitment, quantity, Priced Contracts | T | 4,758 |
Risk Management (Details)
Risk Management (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Cash held by (due to) broker | $ 895,424 | $ 895,424 | $ (62,956) | |||
Trading Activity, Gains and Losses, Net | (716,987) | $ 194,702 | (193,533) | $ 22,821 | ||
Derivative Liability, Current | 763,480 | 763,480 | 428,666 | $ 428,666 | ||
Cost of Goods, Total [Member] | ||||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Trading Activity, Gains and Losses, Net | (655,163) | 122,130 | (180,534) | 175,308 | ||
Corn [Member] | ||||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Derivative assets - corn contracts | 74,163 | 74,163 | 506,187 | |||
Derivative liabilities - corn contracts | (214,738) | (214,738) | (275) | |||
Corn [Member] | Cost of Goods, Total [Member] | ||||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Gain (Loss) on Sale of Derivatives | 45,525 | 589,775 | 420,725 | 1,184,481 | ||
Unrealized Gain (Loss) on Derivatives | (681,838) | (451,025) | (646,488) | (1,012,163) | ||
Trading Activity, Gains and Losses, Net | (636,313) | 138,750 | (225,763) | 172,318 | ||
Ethanol [Member] | ||||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Derivative assets - corn contracts | 8,631 | 8,631 | 0 | |||
Derivative liabilities - corn contracts | 0 | 0 | $ (12,310) | |||
Ethanol [Member] | Sales [Member] | ||||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Gain (Loss) on Sale of Derivatives | (54,180) | (124,170) | (21,630) | (213,672) | ||
Unrealized Gain (Loss) on Derivatives | (7,644) | 196,742 | 8,631 | 61,185 | ||
Trading Activity, Gains and Losses, Net | (61,824) | 72,572 | (12,999) | (152,487) | ||
Natural Gas [Member] | Cost of Goods, Total [Member] | ||||||
Trading Activity, Gains and Losses, Net [Line Items] | ||||||
Gain (Loss) on Sale of Derivatives | (11,840) | (16,620) | 30,939 | 2,990 | ||
Unrealized Gain (Loss) on Derivatives | (7,010) | 0 | 14,290 | 0 | ||
Trading Activity, Gains and Losses, Net | $ (18,850) | $ (16,620) | $ 45,229 | $ 2,990 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | $ 82,794 | $ 506,187 |
Assets, derivative financial instruments | (214,738) | (14,565) |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | 82,794 | 506,187 |
Assets, derivative financial instruments | (214,738) | (14,565) |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | 0 | 0 |
Assets, derivative financial instruments | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | 0 | 0 |
Assets, derivative financial instruments | $ 0 | $ 0 |