SOUTH DAKOTA SOYBEAN PROCESSORS LLC

Item 1. Financial Statements

Condensed Consolidated Financial Statements

March 31, 2025 and 2024

Condensed Consolidated Balance Sheets

(continued on the following page)

Condensed Consolidated Balance Sheets (continued)

Condensed Consolidated Statements of Operations (Unaudited)

For the Three-Month Periods Ended March 31, 2025 and 2024

Condensed Consolidated Statements of Changes in Members' Equity (Unaudited)

For the Three Months Ended March 31, 2025 and 2024

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2025 and 2024

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, 2024 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, 2024, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 28, 2025.

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 thirty to sixty days from invoice date. Accounts considered uncollectible are written off. Management determines the allowance for doubtful accounts 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, 2025 and December 31, 2024, respectively.

Revenue

The Company accounts for all 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.

Contract liabilities relate to advance payments from customers for goods and services the Company has yet to provide. These customer prepayments totaled $6,458,366 and $10,524,222 as of March 31, 2025 and December 31, 2024, respectively. Of the $10,524,222 balance as of December 31, 2024, the Company recognized $4,558,128 as revenues for the three months ended March 31, 2025. Of the $737,503 customer prepayments as of December 31, 2023, the Company recognized $352,355 of contract liabilities as revenues during the three months ended March 31, 2024.

The following table presents a disaggregation of revenue from contracts with customers for the three-month periods ended March 31, 2025 and 2024, by product type:

Recent accounting pronouncements

Any recent accounting pronouncements are not expected to have a material impact on our condensed financial statements.

Note 2 -Inventories

The Company’s inventories consist of the following on March 31, 2025 and December 31, 2024:

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.

Note 3 -Property and Equipment

The following is a summary of the Company's property and equipment at March 31, 2025 and December 31, 2024:

Depreciation of property and equipment was $1,855,931 and $1,504,134 for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the Company had unpaid commitments of approximately $118.6 million for construction and acquisition of property and equipment and is scheduled to be completed by the fourth quarter of 2025.

The Company capitalized interest on major construction projects in progress of approximately $1,130,000 and $0, for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and December 31, 2024, respectively, the Company has approximately $14.9 million and $15.7 million respectively, in payables related to the construction of the facility in Mitchell, South Dakota. These construction payables are classified as non-current liabilities due to management's intent and ability to settle these liabilities using the Company’s long-term credit facilities.

Note 4 -Note Payable – Seasonal Loan

The Company entered into a revolving credit agreement with a lending institution which expires on December 1, 2025. The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement, the Company could borrow up to $70 million, with all advances secured. Interest accrues at a variable rate (6.56% as of March 31, 2025). The Company pays a 0.20% annual commitment fee on any funds not borrowed. Outstanding advances totaled $7,352,079 and $0 as of March 31, 2025 and December 31, 2024, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were approximately $62.6 million as of March 31, 2025.

Beginning July 1, 2025, the credit facilities agreement will provide the Company a revolving seasonal loan which expires on September 1, 2026. The purpose of the credit agreement is to finance the operating needs of High Plains Processing, LLC. 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 (7.76% at March 31, 2025). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There wereno advances outstanding as of March 31, 2025 and December 31, 2024

Note 5 -Long-Term Debt

The following is a summary of the Company's long-term debt on March 31, 2025 and December 31, 2024:

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 South Dakota Soybean Processors, LLC.

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, 2028. 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, 2025 was 6.86%. The Company pays a 0.40% annual commitment fee on any funds not borrowed. There wereno remaining commitments available to borrow on the revolving term loan as of March 31, 2025.

The Company has a credit facilities agreement with a lending institution that includes a delayed-draw term loan, a revolving term loan, and a revolving seasonal loan. The credit facilities agreement is secured by substantially all business assets of the High Plains Processing, LLC.

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, 2025 was 7.76%. The Company pays a 0.50% annual commitment fee on any funds not borrowed. There were approximately $173.75 million available to borrow on the delayed draw term loan as of March 31, 2025.

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, 2025 was 7.76%. The Company pays a 0.50% annual commitment fee on any funds not borrowed. There were $40 million in remaining commitments available to borrow on the revolving term loan as of March 31, 2025.

Under the agreements, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios that limits distributions.

The following are minimum principal payments on long-term debt obligations for the twelve-month periods ending March 31:

Note 6 -Operating Leases

The Company has several operating leases for railcars, machinery and equipment, and storage facilities. These leases have terms ranging from 3-12 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, 2025 and 2024 were as follows:

The following summarizes the supplemental cash flow information for the three-month periods ended March 31, 2025 and 2024:

The following summarizes the weighted-average remaining lease term and weighted-average discount rate as of March 31, 2025:

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of March 31, 2025:

Note 7 -Member Distribution

On February 4, 2025, the Company’s Board of Managers declared and approved a cash distribution of approximately $7.6 million, or $0.25 per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy in February 06, 2025.

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 at of March 31, 2025 and December 31, 2024 were as follows:

During the three-month periods ended March 31, 2025 and 2024, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed consolidated statements of operations as follows:

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, 2025 and December 31, 2024:

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 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.

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

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.