South Dakota Soybean Processors LLC
11/12/2026 | Press release | Distributed by Public on 11/12/2026 09:26
Quarterly Report for Quarter Ending September 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 nine-month period ended September 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 three months ended September 30, 2026, consolidated net income was $12.5 million, compared to $10.8 million for the same period in 2025. Year-to-date consolidated net income was $31.9 million, compared with $14.1 million in 2025. The improvement in net income was primarily driven by stronger processing margins, supported by several favorable market factors. Most notably, record export volumes of soybean meal to the Pacific Northwest region, a key destination for our product, served as a primary catalyst for margin expansion during the period.
Demand for soybean oil remained steady throughout the period, though below expectations. Market dynamics in the renewable fuel sector continue to change in response to updated Renewable Volume Obligations (RVOs) established under the federal Renewable Fuel Standard (RFS), which reinstated specific program mandates and elevated overall volumetric requirement thresholds.
We anticipate processing margins to remain favorable for the remainder of the fiscal year, supported by sustained demand for soybean meal and soybean oil. However, near-term performance remains subject to several external and market risks. Sustained elevated energy and fuel prices may increase domestic and export freight and related expenses. Record soybean crush rates, particularly across the Western Corn Belt, could adversely affect supply, potentially narrowing crushed product margins and heightening competition. Ongoing geopolitical instability and volatility in energy prices could also affect financial performance.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended September 30, 2026 and 2025
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||||||||
| $ | % of Revenue | $ | % of Revenue | ||||||||||||||||||||
| Revenue | $ | 330,877,005 | 100.0 | $ | 129,821,885 | 100.0 | |||||||||||||||||
| Cost of revenues | (306,962,993) | (92.8) | (116,036,034) | (89.4) | |||||||||||||||||||
| Gross profit (loss) | 23,914,012 | 7.2 | 13,785,851 | 10.6 | |||||||||||||||||||
| Operating expenses | (2,212,003) | (0.7) | (1,873,597) | (1.4) | |||||||||||||||||||
| Interest expense | (5,608,857) | (1.7) | (1,214,645) | (0.9) | |||||||||||||||||||
| Other non-operating income (expense) | 85,800 | - | 267,274 | 0.2 | |||||||||||||||||||
| Net income (loss) | 16,178,952 | 4.8 | 10,964,883 | 8.5 | |||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidated entities | 3,700,182 | 1.1 | 211,074 | 0.1 | |||||||||||||||||||
| Net income (loss) attributable to Company | $ | 12,478,770 | 3.7 | $ | 10,753,809 | 8.3 | |||||||||||||||||
Revenue - Revenue for the three months ended September 30, 2026, increased $201.1 million, or 154.9%, compared with the same period in 2025. This growth was primarily driven by a 78.3% increase in soybean processing volumes and a 39.2% increase in the average soybean oil price. Higher processing volumes continued to be and positively affected by our new Mitchell facility, which effectively doubled our total processing capacity. The higher average soybean oil sales price reflected the implementation of updated RVOs under the RFS, including the reinstatement of program mandates and increased volume requirements.
Gross Profit/Loss - For the three months ended September 30, 2026, our gross profit increased significantly by $10.1 million, or 73.5%, compared with the same period in 2025. This increase was driven mainly by higher demand for soybean oil, improved soybean meal values, and increased soybean production resulting from the new Mitchell facility. Demand for soybean oil rose following implementation of the updated RVOs, while soybean meal values improved as supply tightened due to lower U.S. crushing volumes caused by a soybean shortage before this fall's harvest.
Operating Expenses - Administrative expenses, including all selling, general, and administrative expenses, increased by $0.3 million, or 18.1%, for the three months ended September 30, 2026, compared to the same period in 2025. The increase was primarily due to higher payroll, professional, and related costs associated with the Mitchell facility's start-up.
Interest Expense - Interest expense increased by $4.4 million, or 361.8%, for the three months ended September 30, 2026, compared to the same period in 2025. The increase was primarily due to higher borrowings under our credit facilities resulting from the start-up of the Mitchell facility. Additionally, there were $0 in interest costs capitalized related to the construction of our Mitchell facility during the three months ended September 30, 2026, compared to $3.3 million in the same period of 2025.
Other Non-Operating Income - Other non-operating income (expense), including patronage dividend income, decreased by $0.2 million for the three months ended September 30, 2026, compared with the same period in 2025. The decline was primarily due to a $100,000 decrease in profit on the disposal of equipment and a $49,000 decrease 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 September 30, 2026, we generated a net profit attributable to the Company of $12.5 million compared to $10.8 million for the same period in 2025. The $1.7 million increase was primarily attributable to higher gross margins.
Comparison of the Nine Months Ended September 30, 2026 and 2025
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||
| $ | % of Revenue | $ | % of Revenue | ||||||||||||||||||||
| Revenue | $ | 883,327,073 | 100.0 | $ | 358,375,928 | 100.0 | |||||||||||||||||
| Cost of revenues | (828,552,487) | (93.8) | (338,410,398) | (94.4) | |||||||||||||||||||
| Gross profit | 54,774,586 | 6.2 | 19,965,530 | 5.6 | |||||||||||||||||||
| Operating expenses | (6,749,307) | (0.8) | (5,280,347) | (1.5) | |||||||||||||||||||
| Interest expense | (18,313,949) | (2.1) | (3,592,649) | (1.0) | |||||||||||||||||||
| Other non-operating income (expense) | 2,096,271 | 0.2 | 1,511,851 | 0.4 | |||||||||||||||||||
| Net income | 31,807,601 | 3.5 | 12,604,385 | 3.5 | |||||||||||||||||||
| Net income attributable to non-controlling interests in consolidated entities | (138,761) | - | (1,549,350) | (0.4) | |||||||||||||||||||
| Net income attributable to Company | $ | 31,946,362 | 3.6 | $ | 14,153,735 | 3.9 | |||||||||||||||||
Revenue - Revenue for the nine months ended September 30, 2026, increased by $525.0 million, or 146.5%, compared to the same period in 2025. This growth was primarily driven by a 101.0% increase in soybean processing volumes and a 32.0% increase in the average soybean oil price. Higher processing volumes continued to be directly and positively affected by our new Mitchell facility, which effectively doubled our total processing capacity. The higher average soybean oil sales price reflected the implementation of updated RVOs under the RFS, including the reinstatement of program mandates and increased volume requirements.
Gross Profit/Loss - For the nine months ended September 30, 2026, gross profit increased significantly by $34.8 million, compared to the same period in 2025. This sharp growth was mainly driven by 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 $1.5 million, or 27.8%, for the nine months ended September 30, 2026, compared with the same period in 2025. The increase was primarily due to higher payroll, professional, and related costs associated with the Mitchell facility's start-up.
Interest Expense - Interest expense increased by $14.7 million, or 409.8%, during the nine months ended September 30, 2026, compared to the same period in 2025. The increase was primarily due to higher borrowings under our credit facilities resulting from the start-up of the Mitchell facility. We also had $0 in interest costs capitalized related to the construction of our Mitchell facility during the nine months ended September 30, 2026, compared to $6.7 million in the same period of 2025.
Other Non-Operating Income - Other non-operating income (expense), including patronage dividend income, increased $0.6 million during the nine months ended September 30, 2026, compared with 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 nine-month period ended September 30, 2026, we generated a net profit attributable to the Company of $31.9 million compared to $14.2 million for the same period in 2025. The $17.7 million increase was primarily attributable to higher gross profit and other non-operating income, partially offset by higher 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 September 30, 2026, we had working capital, defined as current assets less current liabilities, of approximately $53.0 million, compared to $34.2 million on
September 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 Nine Months Ended September 30, 2026 and 2025
| 2026 | 2025 | ||||||||||
| Net cash provided by (used for) operating activities | $ | 56,742,624 | $ | (17,116,213) | |||||||
| Net cash used for investing activities | (11,827,558) | (158,613,570) | |||||||||
| Net cash provided by (used for) financing activities | (24,622,403) | 148,747,945 | |||||||||
Cash Flows Used For Operations
The $73.9 million improvement in cash flows provided by (used for) operating activities between periods was largely due to a $45.2 million change in net loss recognized on derivative instruments, and a $19.2 million increase in net income, and a $16.7 million increase in depreciation and amortization, partially offset by a $7.2 million change in current operating assets and liabilities.
Cash Flows Used For Investing Activities
The $146.8 million decrease in cash flows used for investing activities between periods was due to a $139.3 million decrease in expenditures for purchases of property and equipment used in the construction and development of our Mitchell facility, which was completed during the fourth quarter of 2025, and a $7.4 million increase in grants received.
Cash Flows Provided By Financing Activities
The $173.4 million change in cash flows provided by financing activities between periods was principally due to a $166.3 million decrease in borrowings mostly attributed to the financing of our Mitchell facility.
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 of $65.0 million and 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 $0 and $19.7 million as of September 30, 2026 and December 31, 2025, respectively. As of September 30, 2026, $52.0 million in additional funds were 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 September 30, 2026 and December 31, 2025. As of September 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 $249.5 million until March 31, 2026. Starting on September 20, 2026, our subsidiary will make quarterly principal payments of $4.5 million. The quarterly principal payments will increase by $1.0 million every September until the loan's maturity on 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 $249.5 million and $221.5 million as of September 30, 2026 and December 31, 2025, respectively. As of September 30, 2026, no additional funds were 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 September 30, 2026 and December 31, 2025. As of September 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 December 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 $0 and $27.4 million as of September 30, 2026 and December 31, 2025, respectively. As of September 30, 2026, an additional $85.0 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 from one day to the end of the commitment period. The annual interest rate on the loans was between 6.12% and 7.32% as of September 30, 2026.
In 2025, the State of South Dakota Department of Transportation agreed to loan the Davison Regional Railroad Authority $18.3 million to improve the railway infrastructure at our Mitchell facility. In consideration of this secured loan, we agreed to guarantee the State of South Dakota Department of Transportation for the full loan amount, plus interest. This guarantee became 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. The principal balance outstanding on this loan was $17.3 million and $12.6 million as of September 30, 2026 and December 31, 2025, respectively.
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) | $ | 322,680,000 | $ | 37,993,000 | $ | 83,082,000 | $ | 189,956,000 | $ | 11,649,000 | ||||||||||||||||||||||
| Operating Lease Obligations | 96,505,000 | 11,181,000 | 21,667,000 | 20,364,000 | 43,293,000 | |||||||||||||||||||||||||||
| Totals | $ | 419,185,000 | $ | 49,174,000 | $ | 104,749,000 | $ | 210,320,000 | $ | 54,942,000 | ||||||||||||||||||||||
(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 November 12, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 12, 2026 at 15:26 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]