South Dakota Soybean Processors LLC

08/12/2026 | Press release | Distributed by Public on 08/12/2026 12:35

Quarterly Report for Quarter Ending June 30, 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 six-month period ended June 30, 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
For the six months ended June 30, 2026,we reported net income of $19.4 million, compared to net income of $3.4 million for the same period in 2025. The improvement was primarily driven by stroner processing margins, supported by higher soybean prices. Demand for soybean oil - a key feedstock for renewable fuels - strengthened following the implementation of the updated Renewable Volume Obligations (RVOs) under the Federal Renewable Fuel Standard (RFS), which included reinstated program mandates and increased volume requirements.
Offsetting these gains, our results were affected by losses at our subsidiary, High Plains Processing, which owns and operates our new facility in Mitchell, South Dakota. Although our subsidiary continued to generate a net loss for the period, favorable market conditions and expanding processing margins partially mitigated its impact on net income. In addition, net income was offset in part by non-cash mark-to-market losses on open derivative positions driven by rising board crush values. However, the derivative, which hedge crush margins, reflect favorable forward-margin opportunities rather than adverse changes in our business economics. We view these mark-to-market adjustments as temporary timing differences and expect them to be economically neutral over the life of the related positions.
Looking ahead, we expect a constructive processing margin environment through the remainder of 2026 and into 2027 resulting from sustained renewable fuel demand and favorable impact of the current RVOs. However, several operational and macroeconomic factors may impact near-term performance, including tight soybean supplies for the balance of the 2025-2026 crop year along with uncertainties surrounding the size and quality of the upcoming 2026 harvest. In addition, elevated crush processing rates across the industry may create challenges in marketing soybean meal, and ongoing geopolitical instability and macroeconomic energy price volatility will continue to increase forecasting uncertainty.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended June 30, 2026 and 2025
Three Months Ended June 30, 2026 Three Months Ended June 30, 2025
$ % of Revenue $ % of Revenue
Revenue $ 326,921,314 100.0 $ 110,640,734 100.0
Cost of revenues (290,523,744) (88.9) (110,367,359) (99.8)
Gross profit (loss) 36,397,570 11.1 273,375 0.2
Operating expenses (2,237,336) (0.7) (1,681,784) (1.5)
Interest expense (6,559,155) (2.0) (1,227,078) (1.1)
Other non-operating income (expense) 15,586 - 184,593 0.2
Net income (loss) 27,616,665 8.4 (2,450,894) (2.2)
Net income (loss) attributable to non-controlling interests in consolidated entities 3,893,578 1.2 (1,477,747) (1.4)
Net income (loss) attributable to Company $ 23,723,087 7.2 $ (973,147) (0.9)
Revenue - Revenue for the three months ended June 30, 2026, increased by $216.3 million, or 195.5%, compared to the same period in 2025. This significant growth was primarily driven by a 125.3% increase in soybean processing volumes and a 35.0% rise in the average price of soybean oil. The increase in processing volumes was directly attributed to the commencement of operations at our Mitchell facility, which began in the fourth quarter of 2025 and effectively doubled our total processing capacity. The rise in the average sales price of soybean oil was due to the implementation of the updated RVOs under the RFS, which included reinstated program mandates and increased volume requirements.
Gross Profit/Loss - For the three months ended June 30, 2026, our gross profit increased significantly by $36.1 million, compared to the same period in 2025. This sharp growth was attributed mainly to increased demand for soybean oil following the implementation of the updated RVOs and increased soybean production following commencement of operations at our Mitchell facility.
Operating Expenses - Administrative expenses, including all selling, general, and administrative expenses, increased by $0.6 million, or 33.0%, for the three months ended June 30, 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 $5.3 million, or 434.5%, during the three months ended June 30, 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, there were $0 in interest costs capitalized related to the construction of our Mitchell facility during the three months ended June 30, 2026, compared to $2.3 million in the same period of 2025.
Other Non-Operating Income - Other non-operating income (expense), including patronage dividend income, decreased $0.2 million during the three months ended June 30, 2026, compared to the same period in 2025. The decline was primarily the result of a decrease of $87,000 in interest income earned on investment proceeds held by our subsidiaries in connection with the equity financing of the Mitchell facility.
Net Income/Loss - During the three-month period ended June 30, 2026, we generated a net profit of $23.7 million compared to a net loss of $1.0 million for the same period in 2025. The $24.7 million increase was primarily attributable to an increase in gross margins.
Comparison of the Six Months Ended June 30, 2026 and 2025
Six Months Ended June 30, 2026 Six Months Ended June 30, 2025
$ % of Revenue $ % of Revenue
Revenue $ 552,450,068 100.0 $ 228,554,043 100.0
Cost of revenues (521,589,494) (94.4) (222,374,364) (97.3)
Gross profit 30,860,574 5.6 6,179,679 2.7
Operating expenses (4,537,304) (0.8) (3,406,750) (1.5)
Interest expense (12,705,092) (2.3) (2,378,004) (1.0)
Other non-operating income (expense) 2,010,471 0.4 1,244,577 0.5
Net income 15,628,649 2.9 1,639,502 0.7
Net income attributable to non-controlling interests in consolidated entities (3,838,943) (0.7) (1,760,424) (0.8)
Net income attributable to Company $ 19,467,592 3.5 $ 3,399,926 1.5
Revenue - Revenue for the six months ended June 30, 2026, increased by $323.9 million, or 141.7%, compared to the same period in 2025. This significant growth was primarily driven by a 113.9% increase in soybean processing volumes and a 27.7% rise in the average price of soybean oil. The increase in processing volumes was directly attributed to the commencement of operations at our Mitchell facility, which has effectively doubled our total processing capacity. The rise in the average sales price of soybean oil was due to the implementation of the updated RVOs under the RFS, which included reinstated program mandates and increased volume requirements.
Gross Profit/Loss - For the six months ended June 30, 2026, gross profit increased significantly by $24.7 million, compared to the same period in 2025. This sharp growth was attributed mainly to increased demand for soybean oil following the implementation of the updated RVOs and increased soybean production following the commencement of operations at our Mitchell facility.
Operating Expenses - Administrative expenses, including all selling, general, and administrative expenses, increased by $1.1 million, or 33.2%, for the six months ended June 30, 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 $10.3 million, or 434.3%, during the six months ended June 30, 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. We also had $0 in interest costs capitalized related to the construction of our Mitchell facility during the six months ended June 30, 2026, compared to $3.4 million in the same period of 2025.
Other Non-Operating Income - Other non-operating income (expense), including patronage dividend income, increased $0.8 million during the six months ended June 30, 2026, compared to the same period in 2025. This increase was primarily driven by a $1.0 million increase 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 six-month period ended June 30, 2026, we generated a net profit of $19.5 million compared to a net income of $3.4 million for the same period in 2025. The $16.1 million increase was primarily attributable to increases in gross profit and other non-operating income, partially offset by increases in operating and interest expenses.
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 June 30, 2026, we had working capital, defined as current assets less current liabilities, of approximately $78.8 million, compared to $38.1 million on June 30, 2025. Working capital increased primarily due to higher net income and long-term borrowings, partially
offset by capital expenditures related to the construction and development of our Mitchell facility, in which we have a controlling ownership interest.
Comparison of the Six Months Ended June 30, 2026 and 2025
2026 2025
Net cash used for operating activities $ (50,981,839) $ (38,054,353)
Net cash used for investing activities (17,771,898) (123,247,693)
Net cash provided by financing activities 66,519,324 128,886,639
Cash Flows Used For Operations
The $12.9 million increase in cash flows used for operating activities between periods was largely due to a $72.6 million change in current operating assets and liabilities, offset by a $34.3 million change in net loss recognized on derivative instruments and a $14.0 million increase in net income.
Cash Flows Used For Investing Activities
The $105.5 million decrease in cash flows used for investing activities between periods was due to a $105.3 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 $62.4 million decrease in cash flows provided by financing activities between periods was principally due to a $73.6 million decrease in borrowings.
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 $50.8 million and $19.7 million as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, there were $4.5 million in 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 $45.0 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. There was no balance outstanding on this note as of June 30, 2026 and December 31, 2025. As of June 30, 2026, an additional $45.0 million was available for borrowing under this loan.
The third line of credit is a 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 June 30, 2026 and December 31, 2025, respectively. As of June 30, 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 June 30, 2026 and December 31, 2025. As of June 30, 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. Since 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 $26.0 million and $27.4 million as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, an additional $59.0 million was available for borrowing under this loan.
The revolving, seasonal, and 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 5.87% and 7.07% as of June 30, 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, and 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) $ 388,965,000 $ 41,859,000 $ 99,352,000 $ 234,386,000 $ 13,368,000
Operating Lease Obligations 98,975,000 11,244,000 21,372,000 20,249,000 46,110,000
Totals $ 487,940,000 $ 53,103,000 $ 120,724,000 $ 254,635,000 $ 59,478,000
(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 August 12, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 12, 2026 at 18:35 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]