South Dakota Soybean Processors LLC
05/14/2026 | Press release | Distributed by Public on 05/14/2026 13:33
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
The information in this quarterly report on Form 10-Q for the three-month period ended March 31, 2026, (including reports filed with the Securities and Exchange Commission (the "SEC" or "Commission"), contains "forward-looking statements" that deal with future results, expectations, plans and performance, and should be read in conjunction with the financial statements and Annual Report on Form 10-K for the year ended December 31, 2025. Forward-looking statements may include statements which use words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "predict," "hope," "will," "should," "could," "may," "future," "potential," or the negatives of these words, and all similar expressions. Forward-looking statements involve numerous assumptions, risks and uncertainties. Actual results or actual business or other conditions may differ materially from those contemplated by any forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements are identified in our Form 10-K for the year ended December 31, 2025.
We are not under any duty to update the forward-looking statements contained in this report, nor do we guarantee future results or performance or what future business conditions will be like. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report.
Executive Overview and Summary
During the three months ended March 31, 2026, we recognized a net loss of $4.3 million, compared with net income of $4.4 million for the same period in 2025. The decrease was is primarily attributable to temporary regulatory delays affecting the renewable fuels market and non-cash, mark-to-market accounting adjustments.The primary driver of the quarterly loss was softened demand for soybean oil, which was mainly delayed implementation of the Renewable Fuel Standard (RFS) and the associated Renewable Volume Obligations (RVOs). The lack of timely regulatory clarity temporarily reduced demand from the biofuel sector, compressing oil values and operational margins. In addition, we recorded non-cash, mark-to market losses as a result of rising board crush values. While these monthly adjustments negatively impacted reported earnings this quarter, they reflect favorable forward main opportunities. Notable, we view these as timing differences that are expected to be economically neutral over the life of the underlying positions. Our performance was additionally impacted by order subsidiary, High Plains Processing, Mitchell, South Dakota, which experienced losses, as it was impacted by similar market pressures including soft oil demand and unfavorable timing of margin recognition as well as startup inefficiencies.
We anticipate a strong recovery in financial performance for the remainder of 2026. The EPA's recent release of record-level RVOs is expected to drive substantial demand for soybean oil, specifically within the renewable diesel sector. Soybean meal demand is also expected to remain strong, supported by robust domestic and export markets. Finally, as current forward margin positions mature, we expect to capture margins previously deferred by mark-to-market accounting.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 2026 and 2025
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||
| $ | % of Revenue | $ | % of Revenue | ||||||||||||||||||||
| Revenue | $ | 225,528,754 | 100.0 | $ | 117,913,309 | 100.0 | |||||||||||||||||
| Cost of revenues | (231,065,750) | (102.5) | (112,007,005) | (95.0) | |||||||||||||||||||
| Gross profit (loss) | (5,536,996) | (2.5) | 5,906,304 | 5.0 | |||||||||||||||||||
| Operating expenses | (2,299,968) | (1.0) | (1,724,966) | (1.5) | |||||||||||||||||||
| Interest expense | (6,145,937) | (2.7) | (1,150,926) | (1.0) | |||||||||||||||||||
| Other non-operating income (expense) | 1,994,885 | 0.9 | 1,059,984 | 0.9 | |||||||||||||||||||
| Net income (loss) | (11,988,016) | (5.3) | 4,090,396 | 3.4 | |||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidated entities | (7,732,521) | (3.4) | (282,677) | (0.3) | |||||||||||||||||||
| Net income (loss) attributable to Company | $ | (4,255,495) | (1.9) | $ | 4,373,073 | 3.7 | |||||||||||||||||
Revenue - Revenue increased by $107.6 million, or 91.3%, for the three months ended March 31, 2026, compared to the same period in 2025. This significant growth was primarily driven by a 91.2% increase in soybean processing volumes, partially offset by a moderate decline in average selling prices for soybean products. The volume increase was directly attributable to the commencement of operations at our Mitchell facility, which began operations in the fourth quarter of 2025. The completion of this facility effectively doubled our total processing capacity, representing a material shift in operational scale. The increase in volume was slightly offset by a 2.9% decrease in average soybean meal prices compared to the first quarter of 2025. This pricing pressure resulted from expanded industry-wide crushing capacity across the U.S. that entered the market in 2024 and 2025.
Gross Profit/Loss - Gross profit decreased by $11.4 million, or 193.7%, for the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily driven by mark-to-market losses and initial operation costs associated with our Mitchell facility. The mark-to-market adjustments were attributed to unrealized, non-cash losses resulting from rising board crush values. These monthly accounting adjustments, reflect forward margin opportunities that require the deferral of profit recognition into future periods. Results were further impacted by losses at our Mitchell facility, where initial operations experienced ramp-up inefficiencies, lower utilization rates and higher pressures, all while being subject to broader market pressures including softened demand for oil.
Operating Expenses - Administrative expenses, including all selling, general, and administrative expenses, increased by $0.6 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily due to higher payroll, professional, and related costs associated with the start-up of the Mitchell facility.
Interest Expense - Interest expense increased by $4,995,000, or 434.0%, during the three months ended March 31, 2026, compared to the same period in 2025. The increase in interest expense was principally due to an increase in borrowings under our credit facilities. Additionally, approximately $0.0 million in interest costs related to the construction of our Mitchell facility were capitalized during the three months ended March 31, 2026, compared to $1.1 million in the same period of 2025.
Other Non-Operating Income - Other non-operating income (expense), including patronage dividend income, increased $0.9 million during the three months ended March 31, 2026, compared to the same period in 2025. This increase was primarily driven by a $1.0 million rise in patronage dividend income from prior investments in cooperatives during the year ended December 31, 2025, compared to the year ended December 31, 2024.
Net Income/Loss - During the three-month period ended March 31, 2026, we generated a net loss of $4.3 million compared to a net income of $4.4 million for the same period in 2025. The $8.7 million decrease was primarily attributable to a decrease in gross margins.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash generated from operations and borrowings from our two revolving lines of credit, which are discussed in the section titled "Indebtedness." As of March 31, 2026, we had working capital, defined as current assets less current liabilities, of approximately $46.8 million, compared to $36.9 million on March 31, 2025. Working capital decreased primarily due to expenditures related to the construction and development of our Mitchell facility, of which we have a controlling ownership interest through our subsidiaries.
Comparison of the Three Months Ended March 31, 2026 and 2025
| 2026 | 2025 | ||||||||||
| Net cash used for operating activities | $ | (82,758,258) | $ | (39,947,126) | |||||||
| Net cash used for investing activities | (15,001,589) | (60,803,453) | |||||||||
| Net cash provided by financing activities | 95,746,523 | 67,574,347 | |||||||||
Cash Flows Used For Operations
The $42.8 million increase in cash flows used for operating activities between periods was largely due to a $76.0 million change in current operating assets and liabilities, offset by a $43.5 million change in net loss recognized on derivative instruments.
Cash Flows Used For Investing Activities
The $45.8 million increase in cash flows used for investing activities between periods was due to a $45.9 million decrease in expenditures for purchases of various property and equipment used for the construction and development of our Mitchell facility, which was completed during the fourth quarter of 2025.
Cash Flows Provided By Financing Activities
The $28.2 million increase in cash flows provided by financing activities between periods was principally due to a $26.9 million increase in net proceeds from seasonal borrowings with our lender.
Indebtedness
We hold various credit facilities with CoBank, our primary lender, to meet the short and long-term needs of our operations. The first credit line is a revolving long-term loan. Under this loan, we may borrow funds, as needed, up to the credit line maximum, or $65.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. The available credit line decreases by $3.25 million every six months until the credit line's maturity on March 20, 2030, at which time a balloon payment for the remaining balance is due. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $55.3 million and $19.7 million as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, there were no additional funds available for borrowing under this loan.
The second credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. We may borrow up to $30.0 million until the loan's maturity on December 1, 2026. We pay a 0.20% annual commitment fee on any funds not borrowed; however, we have the option to reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. The principal balance outstanding on this note was $17.8 million and $0 as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, an additional $12.2 million was available for borrowing under this loan.
The third line of credit is a delayed-draw term loan. Under this loan, our subsidiary may borrow funds, as needed, up to $254.0 million until March 31, 2026. Principal payments of $4.5 million are made quarterly beginning six months after the Mitchell facility's completion date. The quarterly principal payments will increase by $1.0 million on
the anniversary date and continue until the maturity date of December 31, 2029. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on this note was $254.0 million and $221.5 million as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, there were no additional funds available for borrowing under this loan.
The fourth credit line is a revolving long-term loan. Under this loan, our subsidiary may borrow funds, as needed, up to the credit line maximum of $40.0 million and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line until the credit line's maturity on December 31, 2029, at which time a balloon payment for the remaining balance is due. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on this revolving term loan was $0 as of March 31, 2026 and December 31, 2025. As of March 31, 2026, an additional $40.0 million was available for borrowing under this loan.
The last credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance the operating needs of our Mitchell facility. Beginning July 1, 2025, our subsidiary may borrow up to $85.0 million until the loan's maturity on September 1, 2026. A 0.20% annual commitment fee is charged on any funds not borrowed; however, we may reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. The principal balance outstanding on this credit line was $43.9 million and $27,372,787 as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, an additional $41.1 million was available for borrowing under this loan.
The revolving, seasonal, and delayed-draw term loans with CoBank are set up with a variable rate option. The variable rate is set daily by CoBank. We also have a fixed-rate option on all five loans, allowing us to lock in rates for any period between one day and the entire commitment period. The annual interest rate on the loans was between 5.88% and 6.78% as of March 31, 2026.
In 2025, the State of South Dakota Department of Transportation agreed to loan the Davison Regional Railroad Authority $18.3 million for purposes of making improvements to the railway infrastructure at our Mitchell facility. In consideration of this secured loan, we agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus interest. This guarantee was converted into a direct obligation of ours in May 2025, when we received the loan proceeds and assumed responsibility for paying the annual principal and interest payments. The note bears interest at a fixed rate of 2% per annum. Beginning in October 2026, we will make annual principal and interest payments of $1.43 million. These payments will continue through maturity on October 1, 2032, at which time a final balloon payment will be due for the remaining unpaid principal and any accrued interest.
OFF BALANCE SHEET FINANCING ARRANGEMENTS
We do not utilize variable interest entities or other off-balance sheet financial arrangements.
Contractual Obligations
The following table shows our contractual obligations for the periods presented:
| Payment due by period | ||||||||||||||||||||||||||||||||
|
CONTRACTUAL OBLIGATIONS |
Total |
Less than 1 year |
1-3 years | 3-5 years |
More than 5 years |
|||||||||||||||||||||||||||
| Long-Term Debt Obligations (1) | $ | 394,894,000 | $ | 42,233,000 | $ | 98,169,000 | $ | 241,124,000 | $ | 13,368,000 | ||||||||||||||||||||||
| Operating Lease Obligations | 101,307,000 | 11,456,000 | 21,365,000 | 20,440,000 | 48,046,000 | |||||||||||||||||||||||||||
| Totals | $ | 496,201,000 | $ | 53,689,000 | $ | 119,534,000 | $ | 261,564,000 | $ | 61,414,000 | ||||||||||||||||||||||
(1) Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 of our Financial Statements under Part I, Item 1, for a discussion on the impact, if any, of the recently pronounced accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes to our critical accounting policies and estimates from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.
South Dakota Soybean Processors LLC published this content on May 14, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 14, 2026 at 19:33 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]