HIGHWATER ETHANOL LLC
Highwater Ethanol LLC filed its 10-Q for the quarter ended July 31, 2026. Revenue rose 12.1% YoY to $39.1M, gross profit nearly tripled to $7.5M (19.1% margin vs 7.0%), and net income reached $10.8M — including $5.0M in Section 45Z federal tax credits. For the nine-month period, net income was $24.8M on $111.9M in revenue, with $11.7M in tax credits recognized.
- Q3 FY2026 net income of $10.8M vs $1.7M in Q3 FY2025, a 546% increase.
- Revenue rose 12.1% YoY to $39.1M, driven by 11% higher ethanol prices per gallon.
- Gross margin expanded to 19.1% from 7.0% a year ago; operating margin reached 14.5%.
- $5.0M in Section 45Z federal tax credits recognized in Q3; $11.7M recognized over nine months.
- Cash and equivalents grew to $34.9M from $23.5M at fiscal year-end, with no debt beyond a small finance lease.
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A small private ethanol producer tripled its gross margin and posted a 546% net income surge in one quarter, almost entirely from federal clean-fuel subsidies and commodity price tailwinds.
Ethanol producers are benefiting from elevated ethanol prices and Section 45Z clean-fuel tax credits, which provide a direct federal subsidy. Highwater's 19.1% gross margin reflects strong industry tailwinds relative to the 7.0% margin a year ago.
The company warns that unfavorable operating conditions in the ethanol industry could force it to seek additional funding. Military conflict is cited as a factor affecting input costs and ethanol prices.
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