RED TRAIL ENERGY, LLC Results of Operations for the Years Ended
The following table shows the results of our operations and the percentages of
revenues, cost of goods sold, general and administrative expenses and other
items to total revenues in our statements of operations for the years ended
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Year Ended Year Ended
September 30, 2022 September 30, 2021
Statement of Operations Data Amount % Amount %
Revenues $ 217,135,121 100.00 $ 119,084,611 100.00
Cost of Goods Sold 190,828,171 87.88 104,115,501 87.43
Gross Profit 26,306,950 12.12 14,969,110 12.57
General and Administrative Expenses 3,801,583 1.75 3,239,245 2.72
Operating Income 22,505,367 10.36 11,729,865 9.85
Other Income 6,991,313 3.22 895,814 0.75
Net Income $ 29,496,680 13.58 $ 12,625,679 10.60
The following table shows additional data regarding production and price
levels for our primary inputs and products for the years ended September 30,
2022 and 2021:
Year Ended Year Ended
September 30, 2022 September 30, 2021
Production:
Ethanol sold (gallons) 66,268,466 51,893,094
Dried distillers grains sold (tons) 94,077 62,904
Modified distillers grains sold (tons) 121,043 127,718
Corn oil sold (pounds) 18,466,990 12,472,550
Revenues:
Ethanol average price per gallon (net of hedging) $ 2.52 $ 1.74 Dried distillers grains average price per ton 231.16 178.06 Modified distillers grains average price per ton 114.76 78.46 Corn oil average price per pound 0.66 0.41 Primary Inputs: Corn ground (bushels) 22,338,824 17,717,130 Natural gas (MMBtu) 1,571,101 1,261,294 Costs of Primary Inputs: Corn average price per bushel (net of hedging) $ 6.77 $ 4.46 Natural gas average price per MMBtu (net of 6.13 2.77
hedging)
Other Costs (per gallon of ethanol sold):
Chemical and additive costs $ 0.085 $ 0.083
Denaturant cost 0.051 0.035
Electricity cost 0.052 0.045
Direct labor cost 0.072 0.080
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Table of Contents Revenue For our 2022 fiscal year, ethanol sales comprised approximately 77.2% of our revenues; distillers grains sales comprised approximately 16.5% of our revenues; and corn oil sales comprised approximately 5.7% of our revenues. For our 2021 fiscal year, ethanol sales comprised approximately 76.6% of our revenues; distillers grains sales comprised approximately 18.0% of our revenues; and corn oil sales comprised approximately 4.3% of our revenues.
Ethanol
The average price we received per gallon of ethanol sold was approximately 44.8% higher during our 2022 fiscal year compared to our 2021 fiscal year. Commodity prices were higher in 2022, especially energy prices which positively impacted the market price of ethanol. During 2022, we experienced significantly higher gasoline prices which had a positive impact on ethanol demand and prices. Uncertainty related to the war inUkraine had an impact on energy prices which resulted in increased market ethanol prices. In addition, higher corn prices typically have an impact on ethanol prices. During our 2022 fiscal year, corn prices were significantly higher which correlated with higher ethanol prices. We sold approximately 27.7% more gallons of ethanol during our 2022 fiscal year compared to our 2021 fiscal year as we had fewer plant shutdowns during our 2022 fiscal year compared to our 2021 fiscal year. We experienced improved profitability during our 2022 fiscal year which provided us an incentive to maximize production. Our efficiency in converting corn to ethanol increased during our 2022 fiscal year which also positively impacted our profitability. This improved efficiency was important during our 2022 fiscal year due to the fact that our average cost per bushel of corn ground was higher during our 2022 fiscal year compared to our 2021 fiscal year.
We experienced a gain of approximately
Distillers Grains
The average price we received for our dried distillers grains during our 2022 fiscal year was approximately 29.8% greater than the average price we received during our 2021 fiscal year primarily due to higher average corn prices during our 2022 fiscal year which typically impacts distillers grains prices. The average price we received from our modified distillers grains during our 2022 fiscal year was approximately 46.3% higher compared to our 2021 fiscal year due to stronger local demand for distillers grains along with higher corn prices. Our modified distillers grains are primarily sold in our local market. Management anticipates higher distillers grains prices during our 2023 fiscal year due to continued higher corn prices. Further,the United States experienced strong distillers grains export demand during 2022 which increased domestic distillers grains prices. If export demand for distillers grains increases during our 2023 fiscal year, it could result in significantly higher distillers grains prices. We produced approximately 49.6% more tons of dried distillers grains and approximately 5.2% fewer tons of modified distillers grains during our 2022 fiscal year compared to our 2021 fiscal year. Our overall increased production had a corresponding impact on distillers grains production. We produced fewer modified distillers grains due to supply and demand factors in our local market. We decide whether to produce dried distillers grains versus modified/wet distillers grains based on market conditions and the relative cost of producing each form of distillers grains. Management anticipates that distillers grains production will remain at its current mix during our 2023 fiscal year unless distillers grains exports increase significantly which could favor producing more dried distillers grains. Corn Oil The average price we received for our corn oil was approximately 61.0% higher during our 2022 fiscal year compared to our 2021 fiscal year primarily due to additional corn oil demand from the biodiesel and renewable diesel industries along with higher corn and soybean oil prices which both positively impact market corn oil prices. OnDecember 17, 2019 ,Congress renewed the biodiesel blenders' credit retroactively for 2019 and for a total of five years. This certainty for the biodiesel blenders' credit has positively impacted demand for corn oil during that time period which has supported market corn oil prices. If the biodiesel blenders' credit expires in the future, we anticipate that corn oil demand will be lower. Our corn oil sales increased by approximately 48.1% during our 2022 fiscal year compared to our 2021 fiscal year due to increased overall production at the ethanol plant along with higher corn oil extraction efficiency during our 2022 fiscal year 22
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due to increased market corn oil prices. Management anticipates that corn oil production will continue to be higher during our 2023 fiscal year.
Cost of Goods Sold
Our cost of goods sold is primarily made up of corn and energy expenses. Our total cost of goods sold was higher for our 2022 fiscal year compared to our 2021 fiscal year due primarily to higher corn and natural gas costs during our 2022 fiscal year, along with a larger lower of cost or market adjustment and loss on firm purchase commitments during our 2022 fiscal year.
Corn Costs
Our cost of goods sold related to corn was approximately 91.2% higher during our 2022 fiscal year compared to our 2021 fiscal year due to higher average corn costs per bushel along with more bushels of corn used during our 2022 fiscal year. Our average cost per bushel of corn used, without including our derivative instrument gains and losses, was approximately 51.8% higher during our 2022 fiscal year compared to our 2021 fiscal year. Management attributes this increase in corn costs to higher corn demand from the ethanol industry during our 2022 fiscal year along with a smaller corn crop which was harvested in the fall of 2021 which reduced corn availability. The corn crop harvested in the fall of 2022 was larger than in 2021 which may have a positive impact on corn prices during our 2023 fiscal year. Management believes that there will be sufficient corn in our local market to continue to operate the ethanol plant at capacity during our 2023 fiscal year, but we may experience higher prices in order to purchase the corn we need. Our corn use increased by approximately 26.1% during our 2022 fiscal year compared to our 2021 fiscal year due to increased overall production at the ethanol plant. Management anticipates that we will use a comparable amount of corn in the future provided operating margins remain favorable. From time to time we enter into forward purchase contracts for our commodity purchases and sales. OnSeptember 30, 2022 , we had forward corn purchase contracts for various delivery periods throughFebruary 2023 for a total commitment of approximately 2.2 million bushels of corn. We had a gain of approximately$1,616,000 related to our corn derivative instruments which decreased our cost of goods sold during our 2022 fiscal year. We had a gain of approximately$1,367,000 related to our corn derivative instruments during our 2021 fiscal year which decreased our cost of goods sold. We recognize the gains or losses that result from the changes in the value of our derivative instruments from corn in cost of goods sold as the changes occur. As corn prices fluctuate, the value of our derivative instruments is impacted, which affects our financial performance.
Natural Gas Costs
Our total natural gas costs to operate the ethanol plant were higher for our 2022 fiscal year compared to our 2021 fiscal year due to increased natural gas costs per MMBtu and increased natural gas consumption during the 2022 period. Our average cost per MMBtu of natural gas was approximately 121.3% higher during our 2022 fiscal year compared to our 2021 fiscal year. Management believes this increase in natural gas costs during our 2022 fiscal year was due to higher energy prices generally during our 2022 fiscal year. Natural gas exports toEurope due in part to the war inUkraine has impacted domestic natural gas prices. We used approximately 24.6% more MMBtu of natural gas during our 2022 fiscal year compared to our 2021 fiscal year due to increased overall production at the ethanol plant along with the fact that we produced more dried distillers grains which uses more natural gas. Management expects that natural gas prices will remain higher during our 2023 fiscal year due to strong energy markets and the amount of natural gas available in the market, particularly during the winter months when natural gas demand for heating needs is higher.
General and Administrative Expenses
Our general and administrative expense was higher during our 2022 fiscal year and our 2021 fiscal year due to an increase in professional fees and permitting expenses related to our CCS and USP projects during the 2022 period.
Other Income/Expense
We had less interest income during our 2022 fiscal year compared to our 2021
fiscal year due to having less cash on hand during the 2022 period. Our other
income was higher during our 2022 fiscal year compared to our 2021 fiscal year
due to the partial forgiveness of our Ethanol Recovery Loan and the receipt of a
USDA Biofuels Producers Relief Payment. We had less interest expense during our
2022 fiscal year compared to our 2021 fiscal year due to debt repayments we have
made which reduced the amount of our outstanding loans.
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Results of Operations for the Years Ended
The following table shows the results of our operations and the percentages of revenues, cost of goods sold, general and administrative expenses, and other items to total revenues in our statements of operations for the years endedSeptember 30, 2021 and 2020 Year Ended Year Ended September 30, 2021 September 30, 2020 Statement of Operations Data Amount % Amount % Revenues$ 119,084,611 100.00$ 94,175,793 100.00 Cost of Goods Sold 104,115,501 87.43 90,134,689 95.71 Gross Profit (Loss) 14,969,110 12.57 4,041,104 4.29 General and Administrative Expenses 3,239,245 2.72 4,329,824 4.60 Operating Loss 11,729,865 9.85 (288,720) (0.31) Other Income (Expense) 895,814 0.75 295,308 0.31 Net Profit (Loss)$ 12,625,679 10.60$ 6,588 0.01 The following table shows additional data regarding production and price levels for our primary inputs and products for the years endedSeptember 30, 2021 and 2020: Year Ended Year Ended September 30, 2021 September 30, 2020 Production: Ethanol sold (gallons) 51,893,094 56,510,517 Industrial ethanol sold (gallons) - 1,130,347 Dried distillers grains sold (tons) 62,904 91,073 Modified distillers grains sold (tons) 127,718 109,691 Corn oil sold (pounds) 12,472,550 15,385,430
Revenues:
Ethanol average price per gallon (net of hedging) $ 1.74 $ 1.20 Industrial ethanol average price per gallon - 3.27 Dried distillers grains average price per ton 178.06 128.63 Modified distillers grains average price per ton 78.46 59.20 Corn oil average price per pound 0.41 0.24 Primary Inputs: Corn ground (bushels) 17,717,130 21,346,380 Natural gas (MMBtu) 1,261,294 1,425,450 Costs of Primary Inputs: Corn average price per bushel (net of hedging) $ 4.46 $ 2.98 Natural gas average price per MMBtu (net of 2.77 2.06
hedging)
Other Costs (per gallon of ethanol sold):
Chemical and additive costs $ 0.083 $ 0.077
Denaturant cost 0.035 0.030
Electricity cost 0.045 0.042
Direct labor cost 0.080 0.067
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Table of Contents Revenue For our 2021 fiscal year, ethanol sales comprised approximately 76.9% of our revenues, distillers grains sales comprised approximately 17.8% of our revenues and corn oil sales comprised approximately 4.4% of our revenues. For our 2020 fiscal year, ethanol sales comprised approximately 76.1% of our revenues, distillers grains sales comprised approximately 19.4% of our revenues and corn oil sales comprised approximately 4.0% of our revenues.
Our total revenue for our 2021 fiscal year was approximately 24.4% more compared to our 2020 fiscal year, which resulted in higher net income during the 2021 period compared to the 2020 period.
Ethanol
The average price we received per gallon of ethanol sold was approximately 42.5% higher during our 2021 fiscal year compared to our 2020 fiscal year. Following reduced gasoline demand in 2020 due to the effects of the COVID-19 pandemic, travel restrictions were lifted and gasoline demand rebounded. During 2021, ethanol stocks remained lower which resulted in increased ethanol demand and prices. In addition to the lower ethanol stocks, gasoline prices were higher during our 2021 fiscal year which positively impacted ethanol demand and prices. Our ethanol revenue during our 2020 fiscal year was supported by industrial ethanol sales. We did not have any industrial ethanol sales during our 2021 fiscal year. We sold approximately 7.3% fewer gallons of ethanol during our 2021 fiscal year compared our 2020 fiscal year as we worked to maximize the amount of ethanol we produced per bushel of corn we ground along with longer plant shutdowns which impacted production. Our efficiency in converting corn to ethanol increased significantly during our 2021 fiscal year which positively impacted our profitability. This improved efficiency was important during our 2021 fiscal year due to the fact that our average cost per bushel of corn ground was higher during our 2021 fiscal year compared to our 2020 fiscal year.
We experienced a gain of approximately
Distillers Grains
The average price we received for our dried distillers grains during our 2021 fiscal year was approximately 38.4% greater than the average price we received during our 2020 fiscal year primarily due to higher average corn prices during our 2021 fiscal year which typically impacts distillers grains prices. The average price we received from our modified distillers grains during our 2021 fiscal year was approximately 32.5% higher compared to our 2020 fiscal year due to stronger local demand for distillers grains along with higher corn prices. Our modified distillers grains are primarily sold in our local market. We produced approximately 28.5% fewer tons of dried distillers grains and approximately 14.2% more tons of modified distillers grains during our 2021 fiscal year compared to our 2020 fiscal year. Our overall decreased production had a corresponding impact on distillers grains production. We produced more modified distillers grains due to strong local demand for distillers grains which favors the modified distillers grains product. In addition, we produced less corn oil per bushel of corn used during the 2021 period which resulted in more total distillers grains we produced during the 2021 fiscal year. When we produce more corn oil, it results in fewer tons of distillers grains produced.
Corn Oil
The average price we received for our corn oil was approximately 73.9% higher during our 2021 fiscal year compared to our 2020 fiscal year primarily due to additional corn oil demand from the biodiesel industry along with higher corn and soybean oil prices which positively impact market corn oil prices. Our corn oil sales decreased by approximately 27.2% during our 2021 fiscal year compared to our 2020 fiscal year due to reduced overall production at the ethanol plant along with lower corn oil extraction efficiency during our 2021 fiscal year.
Carbon Capture and Sequestration
During our 2022 fiscal year, the Company completed construction and startup of
carbon dioxide capture and sequestration equipment. This equipment allows us to
capture and sequester up to 165,000 tons of carbon dioxide per year. This
equipment allows our ethanol to reduce its carbon intensity score which could
open additional higher value ethanol markets. In addition, we anticipate
receiving tax credits associated with the carbon dioxide we are capturing and
sequestering.
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We expect these tax credits to be issued starting in our 2023 fiscal year. Currently, we plan to distribute these tax credits to our members.
Cost of Goods Sold
Our cost of goods sold is primarily made up of corn and energy expenses. Our total cost of goods sold was approximately 10.7% higher for our 2021 fiscal year compared to our 2020 fiscal year due primarily to higher corn and natural gas costs during our 2021 fiscal year, partially offset by lower corn and natural gas consumption. Corn Costs Our cost of goods sold related to corn was approximately 18.8% higher during our 2021 fiscal year compared to our 2020 fiscal year due to higher average corn costs per bushel partially offset by fewer bushels of corn used during our 2021 fiscal year. Our average cost per bushel of corn used, without including our derivative instrument gains and losses, was approximately 49.7% higher during our 2021 fiscal year compared to our 2020 fiscal year. Management attributes this increase in corn costs to higher corn demand from the ethanol industry during our 2021 fiscal year along with a smaller corn crop which was harvested in the fall of 2020 which reduced corn availability. Our corn use decreased by approximately 17.0% during our 2021 fiscal year compared to our 2020 fiscal year due to decreased overall production at the ethanol plant. From time to time we enter into forward purchase contracts for our commodity purchases and sales. OnSeptember 30, 2021 , we had forward corn purchase contracts for various delivery periods throughMarch 2022 for a total commitment of approximately$34.5 million for a total of approximately 5.7 million bushels of corn. We had a gain of approximately$1,367,000 related to our corn derivative instruments which decreased our cost of goods sold during our 2021 fiscal year. We had a loss of approximately$455,000 related to our corn derivative instruments during our 2020 fiscal year which increased our cost of goods sold. We recognize the gains or losses that result from the changes in the value of our derivative instruments from corn in cost of goods sold as the changes occur. As corn prices fluctuate, the value of our derivative instruments is impacted, which affects our financial performance. Our total natural gas costs to operate the ethanol plant were higher for our 2021 fiscal year compared to our 2020 fiscal year due primarily to increased natural gas costs per MMBtu during the 2021 period partially offset by decreased natural gas consumption. Our average cost per MMBtu of natural gas was approximately 34.5% higher during our 2021 fiscal year compared to our 2020 fiscal year. Management believes this increase in natural gas costs during our 2021 fiscal year was due to higher energy prices generally during our 2021 fiscal year. We used approximately 11.5% fewer MMBtu of natural gas during our 2021 fiscal year compared to our 2020 fiscal year due to reduced overall production at the ethanol plant.
General and Administrative Expenses
Our general and administrative expense was lower during our 2021 fiscal year and our 2020 fiscal year due to less labor and consulting costs during the 2021 period. During our 2020 fiscal year we had increased labor and consulting costs associated with our carbon capture and storage project which is designed to decrease the carbon intensity of our ethanol, making it more valuable in theCalifornia fuel market. Other Income/Expense We had less interest income during our 2021 fiscal year compared to our 2020 fiscal year due to having less cash on hand during the 2021 period. Our other income was higher during our 2021 fiscal year compared to our 2020 fiscal year due to a gain on the sale of used equipment no longer needed for operations and the PPP loan forgiveness. Changes in Financial Condition for the Year EndedSeptember 30, 2022 and 2021 Current Assets. We had more cash and equivalents on our balance sheet onSeptember 30, 2022 compared toSeptember 30, 2021 due increased revenue and improved profitability onSeptember 30, 2022 compared toSeptember 30, 2021 . We had more restricted cash onSeptember 30, 2022 compared toSeptember 30, 2021 as a result of having more cash deposited in our margin account with our commodities broker related to our risk management positions. We had more accounts receivable onSeptember 30, 2022 compared toSeptember 30, 2021 due primarily to the timing of payments from our product marketers at the end of our 2022 fiscal year compared to the end of our 2021 fiscal year. We had more inventory on hand onSeptember 30, 2022 compared toSeptember 30, 2021 due to more raw material inventory onSeptember 30, 2022 due in part to higher market corn prices which are used to value our inventory. 26
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Property, Plant and Equipment. The gross value of our property, plant and equipment was higher onSeptember 30, 2022 compared toSeptember 30, 2021 due primarily to placing into service our carbon capture and storage project during our 2022 fiscal year. The gross value of our property, plant and equipment is offset by our accumulated depreciation. Other Assets. Our other assets were higher onSeptember 30, 2022 than atSeptember 30, 2021 due primarily to an increase in our patronage equity withRoughrider Electric Cooperative . The net right of use asset related to our operating leases was lower onSeptember 30, 2022 than atSeptember 30, 2021 due to amortization of our operating leases during our 2022 fiscal year. Current Liabilities. We had no disbursements in excess of our bank balances onSeptember 30, 2022 and approximately$1.3 million onSeptember 30, 2021 . When checks are presented for payment which exceed our cash balances, we use our revolving loan to pay the amounts owed. Our accounts payable was less onSeptember 30, 2022 compared toSeptember 30, 2021 due to fewer deferred corn payments and fewer construction payables related to the CCS project. Our accrued expenses were higher onSeptember 30, 2022 compared toSeptember 30, 2021 due to having more accrued compensation and benefits for our employees onSeptember 30, 2022 compared toSeptember 30, 2021 . The current maturities of our long-term debt was higher onSeptember 30, 2022 compared toSeptember 30, 2021 because we had more debt which matures within 12 months of the end of our 2022 fiscal year. The current portion of our operating lease liability was less onSeptember 30, 2022 compared toSeptember 30, 2021 due to amortization of our leases during the 2022 fiscal year. Long-term Liabilities. We had less long-term liabilities onSeptember 30, 2022 compared toSeptember 30, 2021 due to debt payments we made during our 2022 fiscal year along with the Ethanol Recovery Program forgiveness received. We had a smaller long-term liability related to operating leases onSeptember 30, 2022 compared toSeptember 30, 2021 due to regular amortization of our operating leases.
Critical Accounting Policies
Management uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Of the significant accounting policies described in the notes to our financial statements, we believe that the following are the most critical.
Inventory
Corn is the primary raw material and, along with other raw materials and supplies, is stated at the lower of cost or net realizable value on a first-in, first-out (FIFO) basis. Work in process and finished goods, which consists of ethanol, distillers grains, and corn oil produced, is stated at the lower of average cost or net realizable value. Spare parts inventory is valued at lower of cost or net realizable value on a FIFO basis.
Allowance for Doubtful Accounts
Management's estimate of the Allowance for Doubtful Accounts is based on management's estimate of the collectability of identified receivables, as well as the aging of customer accounts. A 10% change in management's estimate regarding the Allowance for Doubtful Accounts as ofSeptember 30, 2022 could impact net income by approximately$8,000 for our 2023 fiscal year.
Revenue Recognition
The Company sells ethanol and related products pursuant to marketing
agreements. The Company recognizes revenue from sales of ethanol and co-products
at the point in time when the performance obligations in the contract are met,
which is when the customer obtains control of such products and typically occurs
upon shipment depending on the terms of the underlying contracts. Revenue is
measured as the amount of consideration expected to be received in exchange for
transferring goods or providing services. In some instances, the Company enters
into contracts with customers that contain multiple performance obligations to
deliver volumes of co-products over a contractual period of less than 12 months.
The Company allocates the transaction price to each performance obligation
identified in the contract based on relative standalone selling prices and
recognizes the related revenue as control of each individual product is
transferred to the customer in satisfaction of the corresponding performance
obligation. Revenues are shown net of any fees incurred under the terms of the
Company's agreements for the marketing and sale of ethanol and related products.
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Table of Contents Long Lived Assets Property, plant, and equipment are stated at cost. Depreciation is provided over estimated useful lives by use of the straight line method. Maintenance and repairs are expensed as incurred. Major improvements and betterments are capitalized. The present values of finance lease obligations are classified as long-term debt and the related assets are included in property, plant and equipment. Amortization of equipment under finance leases is included in depreciation expense. Management does not believe it is reasonably likely that the valuation of its property, plant and equipment will change in any material manner in future estimates.
Liquidity and Capital Resources
Based on financial forecasts performed by our management, we anticipate that we will have sufficient cash from our expected credit facilities and cash from our operations to continue to operate the ethanol plant for the next 12 months. Should we experience unfavorable operating conditions in the future, we may have to secure additional debt or equity sources for working capital or other purposes. We do not have any planned capital projects for which we anticipate requiring additional borrowing. The following table shows cash flows for the years endedSeptember 30, 2022 and 2021: 2022 2021 Net cash provided by operating activities$ 24,059,078
Net cash (used in) investing activities (20,328,018)
(23,053,910)
Net cash provided by (used in) financing activities 2,205,711
(2,565,171)
Net increase (decrease) in cash$ 5,936,771
Cash and equivalents, end of period$ 11,152,015 $ 5,215,244 Cash Flow from Operations Our operations provided more cash during our 2022 fiscal year compared to our 2021 fiscal year due primarily to a larger net income we generated during the 2022 period compared. We had a significant change in accounts payable and accrued expenses which used more cash during our 2022 fiscal year.
Cash Flow from Investing Activities
We used less cash for capital expenditures during our 2022 fiscal year compared to our 2021 fiscal year. During our 2022 fiscal year, we completed our carbon sequestration project which we started during our 2021 fiscal year.
Cash Flow from Financing Activities
Our financing activities provided cash during our 2022 fiscal year due primarily to loan proceeds we received partially offset by a larger dividend we paid during our 2022 fiscal year.
Our liquidity, results of operations and financial performance will be impacted by many variables, including the market price for commodities such as, but not limited to, corn, ethanol and other energy commodities, as well as the market price for any co-products generated by the facility and the cost of labor and other operating costs. Assuming future relative price levels for corn, ethanol and distillers grains remain consistent, we expect operations to generate adequate cash flows to maintain operations.
The following table shows cash flows for the years ended
2021 2020
Net cash provided by operating activities
Net cash (used in) investing activities (23,053,910) (8,871,441)
Net cash (used in) financing activities (2,565,171) 6,168,912
Net increase (decrease) in cash $ (5,897,245) $ 590,420
Cash and equivalents, end of period $ 5,215,244 $
11,112,489
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Table of Contents Cash Flow from Operations Our operations provided more cash during our 2021 fiscal year compared to our 2020 fiscal year due primarily to a larger net income we generated during the 2021 period compared. We had a significant increase in accounts payable and accrued expenses related to deferred corn payments which provided more cash during our 2021 fiscal year.
Cash Flow from Investing Activities
We used more cash for capital expenditures during our 2021 fiscal year compared to our 2020 fiscal year. During our 2021 fiscal year, we had capital expenditures primarily related to our carbon sequestration project. During our 2020 fiscal year, we also had capital expenditures related to our carbon sequestration project and our industrial alcohol project.
Cash Flow from Financing Activities
Our financing activities used cash during our 2021 fiscal year due primarily to a dividend we paid during our 2021 fiscal year. We also used more cash for debt and lease repayments during our 2021 fiscal year compared to our 2020 fiscal year. Capital Expenditures We had approximately$1.2 million in construction in progress as ofSeptember 30, 2022 related to construction to repair the roof on one corn silo and DCS computer system upgrades needed for the CCS equipment. During our fiscal year endedSeptember 30, 2022 , we placed in service approximately$48.3 million in capital projects, primarily related to our carbon capture and sequestration project. Capital Resources OnJanuary 22, 2020 , we entered into a series of loans withCornerstone Bank ("Cornerstone"), described below. OnFebruary 1, 2021 we renewed our$10 million Revolving Loan withCornerstone Bank . In addition, onFebruary 1, 2021 we entered into a$28 million construction loan withCornerstone Bank for the carbon capture and storage project described below.
Revolving Loan
OnJanuary 22, 2020 , we entered into a$10 million revolving loan (the "Revolving Loan") withCornerstone Bank ("Cornerstone"). Interest accrues on any outstanding balance on the Revolving Loan at a rate of 1.2% less than the prime rate as published by theWall Street Journal , adjusted monthly. The Revolving Loan has a minimum interest rate of 3.0%. The maturity date of the Revolving Loan wasJanuary 31, 2022 . OnFebruary 3, 2022 , the Revolving Loan was renewed, and the new maturity date wasMarch 31, 2022 . OnApril 8, 2022 , the Revolving Loan maturity date was extended toApril 7, 2023 . The Revolving Loan is secured by a lien on substantially all of our assets. AtSeptember 30, 2022 , we had$10 million available on the Revolving Loan. The variable interest rate onSeptember 30, 2022 was 4.75%.
Construction Loan
OnJanuary 22, 2020 , we entered into a new$7 million construction loan (the "First Construction Loan") with Cornerstone to finance our carbon capture and storage project. Interest accrues on any outstanding balance on the First Construction Loan at a rate of 1.2% less than the prime rate as published by theWall Street Journal , adjusted monthly. The original maturity date of the First Construction Loan wasJune 1, 2021 . OnJune 3, 2021 the maturity date was extended toFebruary 1, 2022 . OnApril 8, 2022 , the First Construction Loan was extended toOctober 8, 2022 . AtSeptember 30, 2022 , we had$7 million available under the First Construction Loan. The variable interest rate onSeptember 30, 2022 was 4.30%. OnFebruary 1, 2021 , we entered into a$28 million construction loan (the "CCS Construction Loan") with Cornerstone to finance our carbon capture and storage project. Interest accrues on any outstanding balance on theCCS Construction Loan at a rate of 1.2% less than the prime rate as published by theWall Street Journal , adjusted monthly. The CCS Construction Loan has a minimum interest rate of 3.0%. The maturity date of the CCS Construction Loan wasJanuary 31, 2022 . OnFebruary 17, 2022 , the CCS Construction Loan was extended toMarch 15, 2022 . OnApril 8, 2022 , the CCS Construction Loan was again extended toOctober 8, 2022 . The CCS Construction Loan is secured by a lien on substantially all of our assets. AtSeptember 30, 2022 , we had drawn$10 million on the loan and had$18 million available under the CCS Construction Loan. The variable interest rate onSeptember 30, 2022 was 4.30%. 29
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OnOctober 28, 2022 , we entered into a$25 million loan to replace theFirst Construction Loan and CCS Construction Loan. Interest accrues on any outstanding balance on the Loan at a fixed rate of 4.65%. The maturity date of the Loan isJanuary 31, 2032 . The Loan is secured by a lien on substantially all of our assets.
Paycheck Protection Program Loan
OnApril 16, 2020 , we entered into a new$873,400 Paycheck Protection Program Loan (the "PPP Loan) with Cornerstone. Interest accrued on any outstanding balance on the PPP Loan at a rate of 1.0%. The maturity date of the PPP Loan wasApril 16, 2022 . Under the terms of the loan, the Company applied for forgiveness of the entire amount of the PPP Loan onOctober 31, 2020 , in accordance with PPP regulations, which provided for the possibility of loan forgiveness because the Company used all the proceeds of the PPP Loan for qualifying expenses in accordance with PPP requirements. The entire amount of the PPP Loan was forgiven onJanuary 20, 2021 . The forgiven amount was recorded as other income.
Ethanol Recovery Program
OnJuly 13, 2020 , we entered into a loan with theBank of North Dakota Ethanol Recovery Program and Cornerstone for$5.41 million . The Ethanol Recovery Program was developed by theNorth Dakota Ethanol Producers Association and theBank of North Dakota to use the existing Biofuels Pace program and value-added loan guarantee program to help ethanol production facilities weather the pandemic economic challenges. Ethanol producers could qualify for up to$15 million dollars of a low interest loan of 1% based on the amount of annual corn grind. The maturity date of the loan isJuly 13, 2025 . The fixed interest rate as ofSeptember 30, 2022 was 3.75% with an interest rate buy down through theBank of North Dakota to 1%. We make monthly payments of approximately$74,000 per month with the balance outstanding onSeptember 30, 2022 of approximately$1.16 million .
Contractual Obligations and Commercial Commitments
We have the following contractual obligations as of
Contractual Obligations: Total Less than 1 Yr
1-3 Years 3-5 Years
Long-term debt obligations *$ 19,160,917 $ 18,747,058 $ 413,859 $ - Corn purchases * 14,195,255 14,195,255 - - Water purchases 1,484,000 424,000 1,060,000 - Operating lease obligations 405,631 271,968 130,546 3,117 Finance leases 9,867 4,576 5,291 - Total$ 35,255,670 $ 33,642,857 $ 1,609,696 $ 3,117
* - Amounts determined assuming prices, including freight costs, at which corn
had been contracted for cash corn contracts and current market prices as of
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