Newsletter | February 2020
General Manager’s Report
Happy New Year! We look forward to seeing many of you at our annual membership meeting on March 16, 2020 at the Rupe Center in Carrollton. Doors open at 11:00 AM, lunch will be served at 11:15, and our business meeting and presentation will be held immediately afterwards. We hope you can join us!
2019 was a difficult year for many, including your ethanol plant. We are glad 2019 is in the rearview mirror, and are laserfocused on the future. Enclosed in this newsletter you will find our financial results for Q4 2019 and the full-year. While certainly not our best year, we performed admirably when compared to our peers, and are confident that we are positioned well to perform well when the margin environment improves.
There were some positive developments towards the end of the year, in 1 seven day period in December we received the following news:
• The “Phase One” Trade deal was reached with China
• EPA published the final 2020 Renewable Volume Obligation requirements with (some) Small Refinery Exemption reallocations
• EPA withdrew the problematic Renewable Fuels Standard “reset” proposal
• EPA announced it will revisit the 2016 court ordered 500 million gallon remand volume
• USDA committed to a biofuel infrastructure program and EPA promised to streamline the E15 regulatory burden
• The US House of Representatives passed the USMCA
• President Trump signed the spending bill, including biofuel tax extenders
This was all welcome news that gives as hope and positivity as we turn the calendar to 2020. Our industry priorities continue to be increasing market access for E15 fuels, lowering trade barriers for export, and providing more public awareness that ethanol use is a significant benefit to the environment.
We are confident that the return to the Roaring 20’s will be a great one. We look forward to seeing you in March!
Financial Results for Fourth Quarter Ended December 31, 2019
Total Sales were made up of $22.8 million of Ethanol, $5.8 million of Distiller Grains and $1.0 million of Corn Oil. Total Expenses include Corn costs in the amount of $21.7 million. Net Income for the fourth quarter of 2019 was $1.4 million. For 2019 Sales are $113.9 million with expenses of $113.8 million resulting in Net Income of $0.1 million. Included in year to date expenses are $88.4 million of Corn costs.
Research & Engineering Tax
The past few years, all members have received a tax credit on their K-1 forms. This credit comes through the Research & Engineering (R&E) tax credit was created in 1981 as part of the Economic Recovery Tax Act (ERTA) of 1982. The ERTA provides tax credits for expenses related to research, innovation, and process improvements. We qualify most of our expenses through process improvement trials that occur at the facility. These projects can include product development, efficiency improvement, cost reduction, and capital equipment optimization.
Expenses that qualify for tax credits include raw materials, wages, and outside feeds for engineering or external testing. The credit is then passed to members based on your economic ownership percentage. Your tax professional will be able to answer any specific questions you have about how these credits apply to your personal tax situation.
Production continues to be slightly lower than the same period last year due to the poor margin environment. We have reduced production to meet demand while meeting our target prices. We continue to focus on efficiency and cost control during this period, while keeping the equipment ready to return to maximum production rates.
Reducing costs is a primary focus, and it is paying off. We have managed reduce operating costs over 10 cents per bushel for the entire year 2019 by increasing efficiency, using new and different chemistry, and making sure our equipment is in top condition.
Annual Meeting Reminder
Show Me Ethanol, LLC Annual Meeting
Where: Rupe Center
Carrollton, MO 64633
When: Monday, March 16, 2020
Time: 11:00 am
Welcome message at 11am with meal and meeting to follow.
We look forward to seeing you!