REX American Resources Reports Second Quarter Diluted EPS of $0.36

DAYTON, Ohio--()--REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2019 second quarter (“Q2 ‘19”) ended July 31, 2019. REX management will host a conference call and webcast today at 11:00 a.m. ET.

Conference Call:

212/231-2930

Webcast / Replay URL:

www.rexamerican.com/Corp/Page4.aspx

 

The webcast will be available for replay for 30 days.

REX American Resources’ Q2 ‘19 results principally reflect its interests in six ethanol production facilities and its refined coal operation. The One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) ethanol production facilities are consolidated, as is the refined coal entity, while those of its four other ethanol plants are reported as equity in income of unconsolidated ethanol affiliates. The Company reports results for its two business segments as ethanol and by-products, and refined coal.

REX’s Q2 ‘19 net sales and revenue were $105.9 million compared with $128.8 million in Q2 ‘18. While ethanol and corn oil pricing remained stable on a year-to-year basis, lower Q2 ’19 ethanol production and lower distiller grain pricing led to the decline in year-over-year net sales and revenue. Primarily reflecting these factors and higher corn prices, the Company’s Q2‘19 gross profit for its ethanol and by-products segment was $6.2 million, compared with $13.7 million in Q2 ‘18. As a result, the ethanol and by-products segment income before income taxes was $3.1 million in Q2 ‘19, compared to $10.1 million in Q2 ‘18. The Company’s refined coal operation incurred a $2.2 million gross loss and a $2.0 million loss before income taxes in Q2 ‘19, compared to a $4.3 million gross loss and a loss before income taxes of $4.8 million in Q2 ‘18. REX reported Q2 ‘19 income before income taxes and non-controlling interests of $0.7 million, compared with $4.9 million in the comparable year ago period. While the refined coal operation negatively impacted gross profit and income before income taxes, it contributed a tax benefit of $3.2 million and $7.6 million for Q2 ’19 and Q2 ‘18, respectively. The year-over-year decline in the refined coal gross loss, loss before taxes and the lower year-over-year tax benefits are related to lower production levels.

Net income attributable to REX shareholders in Q2 ‘19 was $2.3 million, compared to $9.2 million in Q2 ‘18. Q2 ‘19 basic and diluted net income per share attributable to REX common shareholders was $0.36, compared to $1.43 per share in Q2 ‘18. Per share results in Q2 ‘19 and Q2 ‘18 are based on 6,318,000 and 6,466,000 diluted weighted average shares outstanding, respectively.

Segment Income Statement Data:

 

Three Months

Ended

Six Months

Ended

($ in thousands)

July 31,

July 31,

 

2019

 

2018

 

2019

 

2018

 

Net sales and revenue:

 

 

 

 

Ethanol & By-Products (1)

$

105,770

 

$

128,491

 

$

210,223

 

$

249,171

 

Refined coal (2) (3)

 

98

 

 

266

 

 

220

 

 

406

 

Total net sales and revenue

$

105,868

 

$

128,757

 

$

210,443

 

$

249,577

 

 

 

 

 

 

Gross profit (loss):

 

 

 

 

Ethanol & By-Products (1)

$

6,169

 

$

13,669

 

$

12,284

 

$

27,215

 

Refined coal (2)

 

(2,165

)

 

(4,270

)

 

(4,634

)

 

(6,965

)

Total gross profit

$

4,004

 

$

9,399

 

$

7,650

 

$

20,250

 

 

 

 

 

 

Income (loss) before income taxes:

 

 

 

 

Ethanol & By-Products (1)

$

3,111

 

$

10,077

 

$

6,313

 

$

21,086

 

Refined coal (2)

 

(2,028

)

 

(4,788

)

 

(4,703

)

 

(7,647

)

Corporate and other

 

(352

)

 

(430

)

 

(712

)

 

(931

)

Total income before income taxes

$

731

 

$

4,859

 

$

898

 

$

12,508

 

 

Benefit (provision) for income taxes:

Ethanol & By-Products

$

(619

)

$

(2,029

)

$

(1,105

)

$

(3,449

)

Refined coal

 

3,155

 

 

7,597

 

 

7,101

 

 

11,596

 

Corporate and other

 

86

 

 

63

 

 

174

 

 

187

 

Total benefit for income taxes

$

2,622

 

$

5,631

 

$

6,170

 

$

8,334

 

 

Segment profit (loss):

Ethanol & By-Products

$

1,305

 

$

6,561

 

$

3,014

 

$

15,150

 

Refined coal

 

1,216

 

 

3,018

 

 

2,602

 

 

4,289

 

Corporate and other

 

(265

)

 

(362

)

 

(539

)

 

(726

)

Net income attributable to REX common shareholders

$

2,256

 

$

9,217

 

$

5,077

 

$

18,713

 

(1)

 

Includes results attributable to non-controlling interests of approximately 25% for One Earth and approximately 1% for NuGen.

(2)

 

Includes results attributable to non-controlling interests of approximately 5%.

(3)

 

Refined coal sales are reported net of the cost of coal.

REX American Resources’ Chief Executive Officer, Zafar Rizvi, commented, “Challenging industry conditions persisted in the fiscal 2019 second quarter as we began to be impacted by the rise in corn prices and tightening corn supply related to unfavorable spring planting conditions which led to lower ethanol production. Higher input expenses combined with the decline in DDG pricing and lower ethanol and refined coal production resulted in quarterly earnings per share of $0.36. The industry continues to face headwinds related to small refinery waivers decreasing the Refined Fuel Standard obligations as well as current crop conditions pacing behind historical trends.

“While conditions in fiscal 2019 to date have been challenging, we remain confident in our disciplined operating approach and the value of ethanol as a worldwide fuel supply. We remain focused on near- and long-term opportunities to enhance shareholder value as we seek to leverage our robust balance sheet, including cash, cash equivalents and short-term investments in excess of $212 million and working capital of $237 million.”

Balance Sheet

At July 31, 2019, REX had cash and cash equivalents and short-term investments of $212.2 million, $59.8 million of which was at the parent company, and $152.4 million of which was at its consolidated production facilities. This compares with cash and cash equivalents at January 31, 2019, of $203.5 million, $54.8 million of which was at the parent company, and $148.7 million of which was at its consolidated ethanol production facilities.

The following table summarizes select data related to REX’s

consolidated alternative energy interests:

 

Three Months

Ended

Six Months

Ended

 

July 31,

July 31,

 

2019

2018

2019

2018

Average selling price per gallon of ethanol

$

1.38

$

1.38

$

1.32

$

1.35

Average selling price per ton of dried distillers grains

$

135.46

$

148.98

$

138.92

$

143.28

Average selling price per pound of non-food

grade corn oil

 

$

 

0.25

 

$

 

0.24

 

$

 

0.25

 

$

 

0.24

Average selling price per ton of modified distillers grains

$

53.01

$

63.72

$

60.12

$

67.81

Average cost per bushel of grain

$

3.80

$

3.60

$

3.65

$

3.55

Average cost of natural gas (per mmbtu)

$

2.63

$

2.86

$

3.16

$

3.16

Supplemental data related to REX’s alternative energy interests:

REX American Resources Corporation
Ethanol Ownership Interests/Effective Annual Gallons Shipped as of July 31, 2019

(gallons in millions)

Entity

Trailing

Twelve

Months

Gallons

Shipped

Current

REX

Ownership Interest

REX’s Current Effective

Ownership of Trailing Twelve

Month Gallons Shipped

One Earth Energy, LLC (Gibson City, IL)

141.5

75.2%

106.4

NuGen Energy, LLC (Marion, SD)

124.2

99.5%

123.6

Big River Resources West Burlington, LLC
(West Burlington, IA)

109.1

10.3%

11.2

Big River Resources Galva, LLC (Galva, IL)

127.6

10.3%

13.1

Big River United Energy, LLC (Dyersville, IA)

132.3

5.7%

7.5

Big River Resources Boyceville, LLC
(Boyceville, WI)

58.2

10.3%

6.0

Total

692.9

n/a

267.8

Second Quarter Conference Call

REX will host a conference call at 11:00 a.m. ET today. Senior management will discuss the quarterly financial results and host a question and answer session. The dial in number for the audio conference call is 212/231-2930 (domestic and international callers).

Participants can also listen to a live webcast of the call on the Company’s website, www.rexamerican.com/Corp/Page4.aspx. A webcast replay will be available for 30 days following the live event at www.rexamerican.com/Corp/Page4.aspx.

About REX American Resources Corporation

REX American Resources has interests in six ethanol production facilities, which in aggregate shipped approximately 693 million gallons of ethanol over the twelve month period ended July 31, 2019. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended July 31, 2019) by the ethanol production facilities in which it has ownership interests was approximately 268 million gallons. In addition, the Company acquired a refined coal operation on August 10, 2017. Further information about REX is available at www.rexamerican.com.

This news announcement contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by use of forward-looking terminology such as “may,” “expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Readers are cautioned that there are risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. These risks and uncertainties include the risk factors set forth from time to time in the Company’s filings with the Securities and Exchange Commission and include among other things: the impact of legislative and regulatory changes, the price volatility and availability of corn, distillers grains, ethanol, non-food grade corn oil, gasoline and natural gas, ethanol and refined coal plants operating efficiently and according to forecasts and projections, changes in the international, national or regional economies, weather, results of income tax audits, changes in income tax laws or regulations, the impact of U.S. foreign trade policy, changes in foreign currency exchange rates and the effects of terrorism or acts of war. The Company does not intend to update publicly any forward-looking statements except as required by law.

- statements of operations follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share amounts)

Unaudited

 

Three Months

Ended

Six Months

Ended

 

July 31,

July 31,

 

2019

2018

2019

2018

Net sales and revenue

$105,868

$128,757

$210,443

$249,577

Cost of sales

101,864

119,358

202,793

229,327

Gross profit

4,004

9,399

7,650

20,250

Selling, general and administrative expenses

(4,764)

(6,110)

(9,496)

(10,663)

Equity in (loss) income of unconsolidated ethanol affiliates

239

874

365

1,571

Interest and other income, net

1,252

696

2,379

1,350

Income before income taxes and non-controlling interests

731

4,859

898

12,508

Benefit for income taxes

2,622

5,631

6,170

8,334

Net income including non-controlling interests

3,353

10,490

7,068

20,842

Net income attributable to non-controlling interests

(1,097)

(1,273)

(1,991)

(2,129)

Net income attributable to REX common shareholders

$2,256

$9,217

$5,077

$18,713

 

 

 

 

 

Weighted average shares outstanding – basic and diluted

6,318

6,466

6,317

6,517

 

 

 

 

 

Basic and diluted net income per share attributable to REX common shareholders

$0.36

$1.43

$0.80

$2.87

- balance sheets follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

Unaudited

July 31,

January 31,

ASSETS

2019

 

2019

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

212,232

 

 

$

188,531

 

Restricted cash

 

222

 

 

 

281

 

Short-term investments

 

-

 

 

 

14,975

 

Accounts receivable

 

7,682

 

 

 

11,378

 

Inventory

 

22,071

 

 

 

18,477

 

Refundable income taxes

 

7,683

 

 

 

7,695

 

Prepaid expenses and other

 

9,102

 

 

 

9,284

 

Total current assets

 

258,992

 

 

 

250,621

 

Property and equipment-net

 

171,550

 

 

 

182,521

 

Operating lease right-of-use assets

 

18,974

 

 

 

-

 

Other assets

 

12,749

 

 

 

6,176

 

Equity method investment

 

32,440

 

 

 

32,075

 

TOTAL ASSETS

$

494,705

 

 

$

471,393

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable – trade

$

8,877

 

 

$

7,463

 

Current operating lease liabilities

 

5,275

 

 

 

-

 

Accrued expenses and other current liabilities

 

8,115

 

 

 

9,546

 

Total current liabilities

 

22,267

 

 

 

17,009

 

LONG TERM LIABILITIES:

 

 

 

Deferred taxes

 

4,141

 

 

 

4,185

 

Long-term operating lease liabilities

 

13,137

 

 

 

-

 

Other long-term liabilities

 

4,670

 

 

 

4,928

 

Total long-term liabilities

 

21,948

 

 

 

9,113

 

COMMITMENTS AND CONTINGENCIES EQUITY:

 

 

 

REX shareholders’ equity:

 

 

 

Common stock, 45,000 shares authorized, 29,853 shares issued at par

 

299

 

 

 

299

 

Paid in capital

 

148,724

 

 

 

148,273

 

Retained earnings

 

584,635

 

 

 

579,558

 

Treasury stock, 23,561 and 23,580 shares, respectively

 

(335,080

)

 

 

(335,193

)

Total REX shareholders’ equity

 

398,578

 

 

 

392,937

 

Non-controlling interests

 

51,912

 

 

 

52,334

 

Total equity

 

450,490

 

 

 

445,271

 

TOTAL LIABILITIES AND EQUITY

$

494,705

 

 

$

471,393

 

- statements of cash flows follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

Six Months Ended

July 31,

 

2019

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

Net income

$

7,068

 

$

20,842

 

Adjustments to reconcile net income to net cash

 

 

provided by operating activities:

 

 

Depreciation

 

12,425

 

 

12,033

 

Amortization of operating lease right-of-use assets

 

2,992

 

 

-

 

Income from equity method investments

 

(365

)

 

(1,571

)

Dividends received from equity method investments

 

-

 

 

1,003

 

Interest income from investments

 

(25

)

 

(815

)

Deferred income tax

 

(6,294

)

 

(7,938

)

Stock based compensation expense

 

248

 

 

443

 

Loss on disposal of property and equipment

 

-

 

 

104

 

Changes in assets and liabilities:

 

 

Accounts receivable

 

3,696

 

 

(1,735

)

Inventory

 

(3,594

)

 

(4,416

)

Other assets

 

(141

)

 

(2,443

)

Accounts payable-trade

 

1,409

 

 

4,002

 

Other liabilities

 

(4,927

)

 

(1,262

)

Net cash provided by operating activities

 

12,492

 

 

18,247

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Capital expenditures

 

(1,449

)

 

(5,813

)

Purchases of short-term investments

 

-

 

 

(111,154

)

Sales of short-term investments

 

15,000

 

 

-

 

Other

 

12

 

 

18

 

Net cash provided by (used in) investing activities

 

13,563

 

 

(116,949

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Treasury stock acquired

 

-

 

 

(16,648

)

Payments to noncontrolling interests holders

 

(2,598

)

 

(1,699

)

Capital contributions from minority investor

 

185

 

 

246

 

Net cash used in financing activities

 

(2,413

)

 

(18,101

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS

 

 

AND RESTRICTED CASH

 

23,642

 

 

(116,803

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of year

 

188,812

 

 

191,342

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of year

$

212,454

 

$

74,539

 

Non cash financing activities – Equity awards issued

$

487

 

$

1,473

 

Non cash financing activities – Equity awards accrued

$

171

 

$

335

 

Non cash investing activities – Accrued capital expenditures

$

5

 

$

469

 

Initial right-of-use assets and liabilities recorded upon adoption of ASC 842

$

20,918

 

$

-

 

Right-of-use assets acquired and liabilities assumed upon lease execution

$

432

 

$

-

 

 

Contacts

Douglas Bruggeman
Chief Financial Officer
(937) 276‑3931

Joseph Jaffoni, Norberto Aja
JCIR
(212) 835-8500
rex@jcir.com

Contacts

Douglas Bruggeman
Chief Financial Officer
(937) 276‑3931

Joseph Jaffoni, Norberto Aja
JCIR
(212) 835-8500
rex@jcir.com