Record volumes but Q1 loss for South Dakota Soybean Processors (SDSYA) as costs rise
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
South Dakota Soybean Processors, LLC posted a net loss attributable to the company of $4.3 million for the quarter ended March 31, 2026, versus net income of $4.4 million a year earlier. Revenue nearly doubled to $225.5 million, driven by a 91.2% increase in soybean processing volumes following the startup of the Mitchell, South Dakota facility.
Despite this growth, gross margin swung to a loss as cost of revenues exceeded sales and the company recorded $43.4 million in unrealized commodity derivative losses tied to rising crush values. Interest expense rose sharply to $6.1 million on higher borrowings supporting expansion. Management attributes the weaker results to temporary regulatory delays in renewable fuels markets, start-up inefficiencies at Mitchell, and mark-to-market effects, and expects stronger performance later in 2026 as record Renewable Volume Obligations support soybean oil demand.
Positive
- Quarterly revenue increased to $225.5 million, up 91.3% year over year, driven by a 91.2% rise in soybean processing volumes after the Mitchell facility effectively doubled total capacity.
Negative
- Net income attributable to the company fell from a $4.4 million profit to a $4.3 million loss, as gross margin turned negative and interest expense rose to $6.1 million on higher debt of $327.6 million.
Insights
Q1 shows major volume growth but margin compression and higher leverage.
South Dakota Soybean Processors nearly doubled quarterly revenue to $225.5 million as its Mitchell facility ramped up, but gross margin turned negative and net income swung to a $4.3 million loss attributable to the company.
Key pressure points were non-cash derivative losses of $43.4 million, softer soybean oil demand linked to delayed Renewable Fuel Standard implementation, and start-up inefficiencies at Mitchell. Interest expense rose to $6.1 million as long-term debt reached $327.6 million, reflecting the capital-intensive expansion.
Management expects record Renewable Volume Obligations and strong soybean meal demand to support a rebound later in 2026, and notes current mark-to-market losses should reverse as forward positions settle. Actual results will depend on realized crush margins, regulatory follow-through, and the speed of efficiency gains at the new plant.
Key Figures
Revenue: $225,528,754
Net income (loss) attributable to Company: ($4,255,495)
Operating cash flow: ($82,758,258)
+5 more
8 metrics
Revenue
$225,528,754
Three months ended March 31, 2026; up 91.3% vs 2025
Net income (loss) attributable to Company
($4,255,495)
Three months ended March 31, 2026 vs $4,373,073 in 2025
Operating cash flow
($82,758,258)
Net cash used in operating activities, Q1 2026
Long-term debt
$327,560,700
Principal outstanding as of March 31, 2026
Interest expense
$6,145,937
Three months ended March 31, 2026; 434% increase vs 2025
Derivative gain (loss)
($43,390,483)
Net realized and unrealized loss on derivatives, Q1 2026
Working capital
$46.8 million
Current assets minus current liabilities as of March 31, 2026
Capital units outstanding
30,411,500 units
Units outstanding as of May 14, 2026; EPS basis
Key Terms
mark-to-market, Renewable Fuel Standard (RFS), Renewable Volume Obligations (RVOs), delayed-draw term loan, +2 more
6 terms
mark-to-market financial
"we recorded non-cash, mark-to market losses as a result of rising board crush values"
"Mark-to-market" is a method of valuing assets or investments based on their current market price, rather than their original cost or value. It helps investors see the most up-to-date worth of their holdings, much like checking the latest price of a stock before deciding to buy or sell. This approach ensures that financial statements reflect real-time value, providing a clearer picture of overall financial health.
Renewable Fuel Standard (RFS) regulatory
"mainly delayed implementation of the Renewable Fuel Standard (RFS) and the associated Renewable Volume Obligations (RVOs)"
A renewable fuel standard (RFS) is a government rule that requires a certain portion of transportation fuel to come from renewable sources like biofuels, and it creates a system of tradable compliance credits to enforce those targets. It matters to investors because the RFS changes demand, pricing and profit margins across fuel producers, refiners, farmers and makers of renewable fuels, creating both regulatory risks and market opportunities similar to a store being required to stock a fixed share of eco-friendly products.
Renewable Volume Obligations (RVOs) regulatory
"The EPA’s recent release of record-level RVOs is expected to drive substantial demand for soybean oil"
delayed-draw term loan financial
"The delayed-draw term loan provides borrowing up to $254.0 million until March 31, 2026"
A delayed-draw term loan is a loan arrangement where a lender agrees in advance to provide a fixed amount of money that the borrower can take out at one or more later dates, rather than receiving the cash all at once. It matters to investors because it gives a company a guaranteed source of funding when needed, affecting its short-term cash security, future interest costs and overall debt load—similar to having a reserved line of credit for planned expenses or deals.
Secured Overnight Financing Rate financial
"Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin"
A secured overnight financing rate (SOFR) is a daily benchmark interest rate that reflects the cost of borrowing cash overnight using U.S. Treasury securities as collateral. Think of it as the market price to “rent” cash for a day with a very safe pledge, similar to paying a short-term rental fee for money backed by government bonds. Investors track SOFR because it underpins pricing for loans, bonds and derivatives, so movements change borrowing costs, interest income and the valuation of interest-rate–linked positions.
commodity derivative instruments financial
"The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts"
Contracts whose value is tied to physical goods like oil, metals, grain or natural gas, allowing parties to agree now on prices or payouts for those goods to be delivered or settled later. Think of them like a price lock or an agreed bet on the future cost of a commodity: businesses use them to protect against big swings in input costs, while investors use them to gain exposure or speculate. They matter because they can reduce or increase portfolio risk quickly and often involve leverage, magnifying gains or losses.
Earnings Snapshot
Revenue: $225,528,754 · Guidance included
Q1 2026
Revenue
$225,528,754
+91.3% YoY
Net income (loss) attributable to Company
($4,255,495)
from $4,373,073 YoY
Gross profit (loss)
($5,536,996)
from $5,906,304 YoY
Interest expense
$6,145,937
+434.0% YoY
Guidance
Management expects stronger results for the remainder of 2026, citing record Renewable Volume Obligations supporting soybean oil demand, continued strong soybean meal markets, and reversal of current mark-to-market derivative losses as forward positions mature.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2026
For the transition period from to
☒ COMMISSION FILE NO. 000-50253
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On May 14, 2026, the registrant had 30,411,500 capital units outstanding.
Table of Contents
| Page | |||||||||||
Part I. | FINANCIAL INFORMATION | 3 | |||||||||
Item I. | Consolidated Financial Statements (Unaudited) | 3 | |||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | |||||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 21 | |||||||||
Item 4. | Controls and Procedures | 22 | |||||||||
Part II. | OTHER INFORMATION | 22 | |||||||||
Item 1. | Legal Proceedings | 22 | |||||||||
Item 1A. | Risk Factors | 22 | |||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 22 | |||||||||
Item 3. | Defaults among Senior Securities | 22 | |||||||||
Item 4. | Mine Safety Disclosures | 22 | |||||||||
Item 5. | Other Information | 22 | |||||||||
Item 6. | Exhibits | 23 | |||||||||
Signatures | 23 | ||||||||||
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
South Dakota Soybean Processors, LLC
Condensed Consolidated Financial Statements
March 31, 2026 and 2025
3
South Dakota Soybean Processors, LLC
Condensed Consolidated Balance Sheets
| March 31, 2026 | December 31, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Trade accounts receivable | |||||||||||
| Inventories | |||||||||||
| Commodity derivative instruments | |||||||||||
| Prepaid expenses | |||||||||||
| Total current assets | |||||||||||
| Property and equipment | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Total property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Investments | |||||||||||
| Right-of-use lease asset, net | |||||||||||
| Other assets | |||||||||||
| Total other assets | |||||||||||
| Total assets | $ | $ | |||||||||
(continued on the following page)
4
South Dakota Soybean Processors, LLC
Condensed Consolidated Balance Sheets (continued)
| March 31, 2026 | December 31, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Liabilities and Members' Equity | |||||||||||
| Current liabilities | |||||||||||
| Excess of outstanding checks over bank balance | $ | $ | |||||||||
| Note payable - seasonal loans | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Accounts payable | |||||||||||
| Accrued commodity purchases | |||||||||||
| Commodity derivative instruments | |||||||||||
Current portion - operating leases | |||||||||||
| Accrued expenses | |||||||||||
| Contract liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total long-term liabilities | |||||||||||
| Commitments and contingencies (Notes 4, 5, 6, and 10) | |||||||||||
Members' equity ( | |||||||||||
| Non-controlling interests in consolidated entities | |||||||||||
| Total members' equity | |||||||||||
| Total liabilities and members' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
South Dakota Soybean Processors, LLC
Condensed Consolidated Statements of Operations (Unaudited)
For the Three-Month Periods Ended March 31, 2026 and 2025
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Revenues | $ | $ | ||||||||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||||||||
| Cost of product sold | ||||||||||||||||||||||||||
| Production | ||||||||||||||||||||||||||
| Freight and rail | ||||||||||||||||||||||||||
| Total cost of revenues | ||||||||||||||||||||||||||
| Gross profit (loss) | ( | |||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Administration | ||||||||||||||||||||||||||
| Operating income (loss) | ( | |||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||
| Other non-operating income (expense) | ||||||||||||||||||||||||||
| Patronage dividend income | ||||||||||||||||||||||||||
| Total other income (expense) | ( | ( | ||||||||||||||||||||||||
| Net income (loss) | ( | |||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidating entities | ( | ( | ||||||||||||||||||||||||
| Net income (loss) attributable to Company | $ | ( | $ | |||||||||||||||||||||||
Basic and diluted earnings per capital unit | $ | ( | $ | |||||||||||||||||||||||
Weighted average number of capital units outstanding for calculation of basic and diluted earnings per capital unit | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
South Dakota Soybean Processors, LLC
Condensed Consolidated Statements of Changes in Members' Equity (Unaudited)
For the Three-Month Periods Ended March 31, 2026 and 2025
| Class A Units | Noncontrolling | Total | |||||||||||||||||||||
| Units | Amount | Interests | Equity | ||||||||||||||||||||
Balances, December 31, 2024 | $ | $ | $ | ||||||||||||||||||||
| Net income (loss) | — | ( | |||||||||||||||||||||
Distributions to members | — | ( | — | ( | |||||||||||||||||||
Balances, March 31, 2025 | $ | $ | $ | ||||||||||||||||||||
Balances, December 31, 2025 | $ | $ | $ | ||||||||||||||||||||
| Net loss | — | ( | ( | ( | |||||||||||||||||||
| Distributions to members | — | ( | — | ( | |||||||||||||||||||
Balances, March 31, 2026 | $ | $ | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
South Dakota Soybean Processors, LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2026 and 2025
| 2026 | 2025 | ||||||||||
| Operating activities | |||||||||||
| Net income (loss) | $ | ( | $ | ||||||||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Net (gain) loss recognized on derivative activities | ( | ||||||||||
| Loss (gain) on sale of property and equipment | ( | ||||||||||
| Non-cash patronage dividends | ( | ( | |||||||||
| Change in current operating assets and liabilities | ( | ( | |||||||||
| Net cash (used in) provided by operating activities | ( | ( | |||||||||
| Investing activities | |||||||||||
| Increase in other assets | ( | ||||||||||
| Proceeds from sales of property and equipment | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Change in excess of outstanding checks over bank balances | ( | ( | |||||||||
| Net proceeds from seasonal borrowings | |||||||||||
| Distributions paid to members | ( | ( | |||||||||
| Payments for debt issue costs | ( | ||||||||||
| Proceeds from long-term debt | |||||||||||
| Principal payments on long-term debt | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net change in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest | $ | $ | |||||||||
| Noncash investing and financing activities: | |||||||||||
| Soybean meal contributed as investment | $ | $ | |||||||||
| Property and equipment included in accrued expenses and other long-term liabilities | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Note 1 - Principal Activity and Significant Accounting Policies
The unaudited condensed consolidated financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although South Dakota Soybean Processors, LLC (the “Company”, “LLC”, “we”, “our”, or “us”) believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full year due in part to the seasonal nature of some of the Company’s businesses. The balance sheet data as of December 31, 2025 has been derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.
These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2025, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 31, 2026.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries, High Plains Partners, LLC, HPP SD Holdings, LLC, and High Plains Processing, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of estimates
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Receivables and Credit Policies
Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms, which are generally fifteen to thirty days from invoice date. Accounts considered uncollectible are written off. Management determines the allowance for credit losses by regularly evaluating individual customer receivables and considering customers' financial condition, credit history, current and future economic conditions, and unusual circumstances, if any. The valuation allowance was determined to be immaterial as of March 31, 2026 and December 31, 2025, respectively.
Revenue
The Company accounts for all of its revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers.
The Company principally generates revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy, and industrial products. Revenue is measured based on the consideration specified in the contract with a customer and excludes any amounts collected on behalf of third parties (e.g. - taxes). The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for the sale of goods are accounted for as a fulfillment activity and are included in the cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.
9
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Contract liabilities relate to advance payments from customers for goods and services the Company has yet to provide. These customer prepayments totaled $9,028,469 and $14,114,940 as of March 31, 2026 and December 31, 2025, respectively. Of the $14,114,940 balance as of December 31, 2025, the Company recognized $7,009,483 as revenues for the three months ended March 31, 2026, respectively. Of the $10,524,222 customer prepayments as of December 31, 2024, the Company recognized $4,558,128 of contract liabilities as revenues during the three months ended March 31, 2025, respectively.
The following table presents a disaggregation of revenue from contracts with customers for the three-month periods ended March 31, 2026 and 2025, by product type:
| 2026 | 2025 | ||||||||||||||||||||||
| Soybean meal and hulls | $ | $ | |||||||||||||||||||||
| Soybean oil and oil byproducts | |||||||||||||||||||||||
| Totals | $ | $ | |||||||||||||||||||||
Recent accounting pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which provides for more detailed information about the types of expenses aggregated in common expense captions in the statement of operations. ASU 2024-03 is effective for the Company for the year ended December 31, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU.
Note 2 - Inventories
The Company’s inventories consist of the following on March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Finished goods | $ | $ | |||||||||
| Raw materials | |||||||||||
| Supplies & other inventories | |||||||||||
| Totals | $ | $ | |||||||||
Finished goods and raw materials are valued at estimated market value, which approximates net realizable value. Supplies and other inventories are stated at the lower of cost or net realizable value.
10
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Note 3 - Property and Equipment
The following is a summary of the Company's property and equipment at March 31, 2026 and December 31, 2025:
| 2026 | 2025 | ||||||||||||||||||||||
| Cost | Accumulated Depreciation | Net | Net | ||||||||||||||||||||
| Land | $ | $ | $ | $ | |||||||||||||||||||
| Land improvements | ( | ||||||||||||||||||||||
| Buildings and improvements | ( | ||||||||||||||||||||||
| Machinery and equipment | ( | ||||||||||||||||||||||
| Railroad cars | ( | ||||||||||||||||||||||
| Company vehicles | ( | ||||||||||||||||||||||
| Furniture and fixtures | ( | ||||||||||||||||||||||
| Construction in progress | |||||||||||||||||||||||
| Totals | $ | $ | ( | $ | $ | ||||||||||||||||||
The High Plains Processing facility was completed in the fourth quarter of 2025 and placed into service in December 2025.
Depreciation of property and equipment was $7,674,611 and $1,855,931 for the three months ended March 31, 2026 and 2025, respectively.
The Company capitalized interest on major construction projects in progress of approximately $0 and $1.1 million, for the three months ended March 31, 2026 and 2025, respectively. Upon placing the project into service, the Company ceased capitalizing interest costs related to the project.
Note 4 - Notes Payable – Seasonal Loan
Prior to the amendment to the credit agreement as described in Note 11 - Subsequent events, the Company maintained a revolving credit agreement with a lending institution which expires on December 1, 2026 . The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement and subsequent amendment, the Company could borrow up to $30 million, with advances on the revolving credit agreement are secured. Interest accrues at a variable rate (5.88 % as of March 31, 2026). The Company pays a 0.20 % annual commitment fee on any funds not borrowed. There were $17.8 million and $0 advances outstanding at March 31, 2026 and December 31, 2025, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were approximately $12.2 million as of March 31, 2026.
The Company maintains a separate revolving seasonal credit facility that expires on September 1, 2026. The purpose of the credit agreement is to finance the operating needs of a subsidiary. Under this agreement, the Company could borrow up to $85 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (6.78% at March 31, 2026). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were $43.9 million and $27.4 million advances outstanding as of March 31, 2026 and December 31, 2025. The remaining available funds to borrow under the terms of the revolving credit agreement were approximately $41.1 million as of March 31, 2026.
11
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
Note 5 - Long-Term Debt
The following is a summary of the Company's long-term debt on March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Revolving term loans | $ | $ | |||||||||
| Delayed-draw term loan | |||||||||||
Promissory note | |||||||||||
| Less current maturities | ( | ( | |||||||||
| Less unamortized debt issuance costs | ( | ( | |||||||||
| Totals | $ | $ | |||||||||
The Company has a credit agreement with a lending institution that includes a revolving term loan and a seasonal loan. The credit agreements are secured by substantially all business assets of Company.
The revolving term loan provides for a maximum borrowing of $65.0 million and the amount available for borrowing on the revolving term loan will decrease by $3.25 million every six months until the loan's maturity date of March 20, 2030 . Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of March 31, 2026 was 6.67 %. The Company pays a 0.40 % annual commitment fee on any funds not borrowed. There were no remaining commitments available to borrow on the revolving term loan as of March 31, 2026.
The Company has a credit facilities agreement with a lending institution that includes a delayed-draw term loan, a revolving term loan, and a seasonal loan. The credit facilities agreement is secured by substantially all business assets of a subsidiary.
The delayed-draw term loan provides borrowing up to $254.0 million until March 31, 2026 to finance the construction of the operating facility in Mitchell, South Dakota. The Company will make quarterly principal payments of $4.50 million plus interest beginning six months after the outside completion date as defined within the agreement. The quarterly principal payments will increase each year by $1.0 million on the anniversary date. The delayed-draw term loan matures on December 31, 2029 . Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of March 31, 2026 was 7.08 %. The Company pays a 0.50 % annual commitment fee on any funds not borrowed. There were no available funds to borrow on the delayed draw term loan as of March 31, 2026.
The revolving term loan provides for a maximum borrowing of $40.0 million. The revolving term loan matures on December 31, 2029 . Interest accrues under the agreement at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin. The interest rate as of March 31, 2026 was 6.78 %. The Company pays a 0.50 % annual commitment fee on any funds not borrowed. As of March 31, 2026 and December 31, 2025, there were no advances outstanding on this loan. There were $40.0 million in remaining commitments available to borrow on the revolving term loan as of March 31, 2026.
Under the agreements, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios that limits distributions.
Effective March 2025 and subsequent amendment, 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 the operating facility near Mitchell, South Dakota. In consideration of this secured loan, the Company 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 the Company's in May 2025, when the Company received the entire loan proceeds and assumed responsibility for paying the annual principal and interest payments.
12
South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
The note bears interest at a fixed rate of 2% per annum. Beginning in October 2026, the Company will make annual principal and interest payments of $1.43 million. These payments will continue through October 1, 2032, at which time a final balloon payment will be due for the remaining unpaid principal and any accrued interest.
The following are minimum principal payments on long-term debt obligations for the twelve-month periods ending March 31:
| 2027 | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 6 - Operating Leases
The Company has several operating leases for railcars, machinery and equipment, and storage facilities. These leases have terms ranging from 3 -15 years and most do not have renewal terms provided. The Company does not have lease arrangements with residual value guarantees, sale-leaseback terms or material restrictive covenants. The Company does not have any material finance lease obligations nor sublease agreements.
Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our condensed consolidated statements of operations for the three-month periods ended March 31, 2026 and 2025 were as follows:
| 2026 | 2025 | ||||||||||||||||||||||
| Cost of revenues - Freight and rail | $ | $ | |||||||||||||||||||||
| Cost of revenues - Production | |||||||||||||||||||||||
| Administration expenses | |||||||||||||||||||||||
| Total operating lease costs | $ | $ | |||||||||||||||||||||
The following summarizes the supplemental cash flow information for the three-month periods ended March 31, 2026 and 2025:
| 2026 | 2025 | ||||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | |||||||||||||||||||||
| Supplemental non-cash information: | |||||||||||||||||||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | $ | |||||||||||||||||||||
The following summarizes the weighted-average remaining lease term and weighted-average discount rate as of March 31, 2026:
| Weighted-average remaining lease-term - operating leases (in years) | ||||||||
| Weighted-average discount rate - operating leases | % | |||||||
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South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of March 31, 2026:
| Railcars | Other | Total | ||||||||||||||||||
Twelve-month periods ended March 31: | ||||||||||||||||||||
| 2027 | $ | $ | $ | |||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2030 | ||||||||||||||||||||
| 2031 | ||||||||||||||||||||
| Thereafter | ||||||||||||||||||||
| Total lease payments | ||||||||||||||||||||
| Less amount of lease payments representing interest | ( | ( | ( | |||||||||||||||||
| Total present value of lease payments | $ | $ | $ | |||||||||||||||||
Note 7 - Member Distribution
On February 10, 2026 , the Company’s Board of Managers declared and approved a cash distribution of approximately $8.5 million, or $0.28 per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy on February 12, 2026 .
Note 8 - Derivative Instruments and Hedging Activities
In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices and, occasionally, foreign exchange and interest rates. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts, and interest rate swaps, caps and floors. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. Futures and options contracts, along with margin deposit, are with a single counterparty and are subject to a right of offset. As a result, these items are netted on the balance sheet, regardless of their position. In contrast, forward contracts are with multiple counterparties and do not have a right of offset. Therefore, these contracts are reported at their gross amounts on the balance sheet. These contracts are recorded on the Company’s consolidated balance sheets at fair value as discussed in Note 9, Fair Value.
Derivatives not designated as hedging instruments as of March 31, 2026 and December 31, 2025 were as follows:
| Balance Sheet Classification | March 31, 2026 | December 31, 2025 | |||||||||||||||
| Forward contracts in gain position | $ | $ | |||||||||||||||
| Futures and options in gain position | |||||||||||||||||
| Futures and options in loss position | ( | ( | |||||||||||||||
| Total forward, futures and options contracts | (23,061,126) | 6,859,549 | |||||||||||||||
| Margin deposit | |||||||||||||||||
Current assets | $ | $ | |||||||||||||||
| Forward contracts in loss position | $ | $ | |||||||||||||||
| Interest rate swap | |||||||||||||||||
| Current liabilities | $ | $ | |||||||||||||||
During the three-month periods ended March 31, 2026 and 2025, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed consolidated statements of operations as follows:
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South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
| 2026 | 2025 | ||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Commodity contracts | $ | ( | $ | ||||||||||||||||||||
| Foreign exchange contracts | ( | ( | |||||||||||||||||||||
| Interest rate swaps, caps and floors | ( | ( | |||||||||||||||||||||
| Totals | $ | ( | $ | ||||||||||||||||||||
Note 9 - Fair Value
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures that are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The three levels of hierarchy and examples are as follows:
•Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Board of Trade (“CBOT”).
•Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs, such as commodity prices using forward future prices.
•Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
The following tables set forth financial assets and liabilities measured at fair value in the condensed balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of March 31, 2026 and December 31, 2025:
Fair Value as of March 31, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets (liabilities): | |||||||||||||||||||||||
| Inventory | $ | $ | $ | $ | |||||||||||||||||||
| Commodity derivative instruments | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Provisionally priced contracts | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Fair Value as of December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets (liabilities): | |||||||||||||||||||||||
| Inventory | $ | $ | $ | $ | |||||||||||||||||||
| Commodity derivative instruments | $ | $ | $ | $ | |||||||||||||||||||
| Provisionally priced contracts | $ | $ | ( | $ | $ | ( | |||||||||||||||||
The Company enters into various commodity derivative instruments, including futures, options, swaps and other agreements. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the CBOT. The Company estimates the fair market value of their finished goods and raw
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South Dakota Soybean Processors, LLC
Notes to Condensed Consolidated Financial Statements
materials inventories using the market price quotations of similar forward futures contracts listed on the CBOT and adjusts for the local market adjustments derived from other grain terminals in our area.
Estimated fair values of inventories and provisionally priced contracts stated at market are based on exchange-quoted prices, adjusted for differences in local markets and quality, referred to as basis. Market valuations for the Company’s inventories are adjusted for location and quality (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade.
The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions and are considered observable. Basis adjustments are impacted by specific local supply and demand characteristics at each facility and the overall market. Factors such as substitute products, weather, fuel costs, contract terms, and futures prices also impact the movement of these basis adjustments.
The Company considers the carrying amount of significant classes of financial instruments on the condensed consolidated balance sheets, including cash, accounts receivable, and accounts payable, to be reasonable estimates of fair value due to their length or maturity. The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.
The Company has patronage investments in other cooperatives and common and preferred stock holdings in privately held entities. There is no market for their patronage credits or the entity’s common and preferred holdings, and it is impracticable to estimate the fair value of the Company’s investments. These investments are carried on the balance sheet at the original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.
Note 10 - Commitments and Contingencies
From time to time in the ordinary course of our business, the Company may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. The Company carries insurance that provides protection against general commercial liability claims, claims against our directors, officers and employees, business interruption, automobile liability, and workers' compensation. The Company is not currently involved in any material legal proceedings and is not aware of any potential claims.
Note 11 - Subsequent Event
Except to the events listed below, the Company evaluated all of its activities and concluded that no subsequent events have occurred that would require recognition in its financial statements or disclosed in the notes to its financial statements.
On May 11, 2026, the Company entered into an Amended and Restated Revolving Credit Promissory Note (the "Restated Note") with our lender, CoBank, ACB, which amends and restates our existing Revolving Credit Promissory Note dated November 24, 2025. The principal available under the Company's seasonal loan increases from $30 million to $45 million. All other material items and conditions under the Credit Agreement dated March 17, 2025, and subsequent amendments to such agreement, remain the same following the Restated Note.
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Item 2. 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.
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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.
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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
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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.
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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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Commodities Risk & Risk Management. To reduce the price change risks associated with holding fixed-price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight or options futures contract) on a regulated commodity futures exchange, the Chicago Board of Trade. While hedging activities reduce the risk of loss from changing market prices, such activities also limit the gain potential which otherwise could result from these significant fluctuations in market prices. Our policy is generally to maintain a hedged position within limits, but we can be long or short at any time. Our profitability is primarily derived from margins on soybeans processed, not from hedging transactions. Our management does not anticipate that hedging activities will have a significant impact on future operating results or liquidity. Hedging arrangements do not protect against the nonperformance of a cash contract.
At any one time, our inventory and purchase contracts for delivery to our facility may be substantial. We have risk management policies and procedures that include net position limits. They are defined by commodity and include both trader and management limits. This policy and procedure trigger a review by management when any trader is outside of position limits. The position limits are reviewed at least annually with the board of managers. We monitor current market conditions and may expand or reduce the limits in response to changes in those conditions.
An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.
Foreign Currency Risk. We conduct essentially all of our business in U.S. dollars and have minimal direct risk regarding foreign currency fluctuations. Foreign currency fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of and demand for U.S. agricultural products compared to the same products offered by foreign suppliers.
An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.
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Interest Rate Risk. We manage exposure to interest rate changes by using variable-rate loan agreements with fixed-rate options. Long-term loan agreements can utilize the fixed option through maturity; however, the revolving ability to pay down and borrow back would be eliminated once the funds were fixed.
As of March 31, 2026, we had $18.3 million in fixed-rate debt outstanding and $464.3 million of variable-rate lines of credit. Interest rate changes impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other variables remain constant, a 1.0% increase in interest rates on our variable-rate debt could have an estimated impact on profitability of approximately $4.6 million per year.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
Changes in Internal Control Over Financial Reporting. There were no changes to our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting during the quarter ended March 31, 2026.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time in the ordinary course of our business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We carry insurance that provides protection against general commercial liability claims, claims against our directors, officer and employees, business interruption, automobile liability, and workers' compensation. We are not currently involved in any material legal proceedings and are not aware of any potential claims.
Item 1A. Risk Factors.
During the quarter ended March 31, 2026, there were no material changes to the Risk Factors disclosed in Item 1A (Part I) of our 2025 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
Insider Adoption or Termination of Trading Arrangements
During the three months ended March 31, 2026, none of our managers or officers adopted terminated
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Item 6. Exhibits.
| Exhibit Number | Description | |||||||
10.1 | Amended and Restated Revolving Credit Promissory Note dated April 9, 2026* | |||||||
10.2 | Amended and Restated Revolving Credit Promissory Note dated May 11, 2026* | |||||||
31.1 | Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer* | |||||||
31.2 | Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer* | |||||||
32.1 | Section 1350 Certification by Chief Executive Officer* | |||||||
32.2 | Section 1350 Certification by Chief Financial Officer* | |||||||
| 101.INS | XBRL Instance Document | |||||||
| 101.SCH | XBRL Schema Document | |||||||
| 101.CAL | XBRL Calculation Document | |||||||
| 101.LAB | XBRL Labels Linkbase Document | |||||||
| 101.PRE | XBRL Presentation Linkbase Document | |||||||
| 101.DEF | XBRL Definition Linkbase Document | |||||||
| 104 | The cover page from this Current Report on Form 10-Q formatted as Inline XBRL | |||||||
____________________________________________________________________________
* Filed herewith.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SOUTH DAKOTA SOYBEAN PROCESSORS, LLC | |||||||||||
| Dated: | May 14, 2026 | By | /s/ Thomas Kersting | ||||||||
| Thomas Kersting, Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
| Dated: | May 14, 2026 | By | /s/ Mark Hyde | ||||||||
| Mark Hyde, Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
23
FAQ
How did South Dakota Soybean Processors (SDSYA) perform financially in Q1 2026?
South Dakota Soybean Processors reported a net loss attributable to the company of $4.3 million for Q1 2026, compared with net income of $4.4 million in Q1 2025. The loss came despite revenue nearly doubling to $225.5 million as margins weakened.
What drove the revenue growth for South Dakota Soybean Processors in Q1 2026?
Revenue rose to $225.5 million, a 91.3% increase from Q1 2025, mainly due to a 91.2% jump in soybean processing volumes. The ramp-up of the Mitchell, South Dakota facility effectively doubled total processing capacity, offsetting modest declines in average soybean meal prices.
Why did South Dakota Soybean Processors’ margins and earnings decline in Q1 2026?
Gross profit swung to a $5.5 million loss and net income attributable to the company moved to a $4.3 million loss. Management cites non-cash mark-to-market derivative losses of $43.4 million, soft soybean oil demand from delayed Renewable Fuel Standard implementation, and start-up inefficiencies at the Mitchell facility.
How much debt does South Dakota Soybean Processors carry, and what is the impact?
Long-term debt totaled about $327.6 million at March 31, 2026, up from $253.8 million year-end. Related interest expense increased to $6.1 million in Q1 2026 from $1.2 million a year earlier, reflecting greater borrowing to fund capacity expansion projects.
What is South Dakota Soybean Processors’ liquidity position as of March 31, 2026?
Working capital was approximately $46.8 million as of March 31, 2026, compared with $36.9 million a year earlier. The company also had unused availability on its revolving credit facilities, including $12.2 million on the main seasonal line and $41.1 million on the Mitchell seasonal line.
How is the Mitchell facility affecting South Dakota Soybean Processors’ results?
The Mitchell facility, completed in late 2025, significantly increased processing volumes and helped drive revenue growth. However, it contributed to Q1 2026 losses through start-up inefficiencies, lower utilization, and exposure to soft soybean oil demand, while also adding to overall debt and interest expense.