REX American Resources Reports Third Quarter Diluted EPS Loss Of $0.32

DAYTON, Ohio--()--REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2019 third quarter (“Q3 ‘19”) ended October 31, 2019. REX management will host a conference call and webcast today at 11:00 a.m. ET.

Conference Call:

212/231-2932

Webcast / Replay URL:

www.rexamerican.com/Corp/Page4.aspx

The webcast will be available for replay for 30 days.

REX American Resources’ Q3 ‘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 Q3 ‘19 net sales and revenue were $86.7 million, compared with $123.8 million in Q3 ‘18. Although ethanol and corn oil pricing strengthened on a year-to-year basis, lower Q3 ’19 ethanol production and lower distiller grain pricing resulted in a year-over-year decline in net sales and revenue. Primarily reflecting these factors and a significant year-over-year increase in corn prices, Q3 ‘19 gross profit for the Company’s ethanol and by-products segment was $28,000, compared with $11.3 million in Q3 ‘18. As a result, the ethanol and by-products segment loss before income taxes was $2.8 million in Q3 ‘19, compared to income of $8.4 million in Q3 ‘18. The Company’s refined coal operation incurred a $1.8 million gross loss and a $1.6 million loss before income taxes in Q3 ‘19, compared to a $3.5 million gross loss and a loss before income taxes of $4.2 million in Q3 ‘18. REX reported a Q3 ‘19 loss before income taxes and non-controlling interests of $4.9 million, compared with income before income taxes and non-controlling interests of $3.8 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 $2.2 million and $8.3 million for Q3 ’19 and Q3 ‘18, respectively. The year-over-year decline in the refined coal gross loss, loss before taxes and reduced year-over-year tax benefits are related to lower production levels.

Net loss attributable to REX shareholders in Q3 ‘19 was $2.1 million, compared to net income of $11.9 million in Q3 ‘18. Q3 ‘19 basic and diluted net loss per share attributable to REX common shareholders was $0.32, compared to net income per share of $1.86 in Q3 ‘18. Per share results in Q3 ‘19 and Q2 ‘18 are based on 6,319,000 and 6,388,000 diluted weighted average shares outstanding, respectively.

 

Segment Income Statement Data:

 

Three Months
Ended

 

Nine Months
Ended

($ in thousands)

October 31,

 

October 31,

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Net sales and revenue:

 

 

 

 

 

 

 

Ethanol & By-Products (1)

$

86,603

 

 

$

123,546

 

 

$

296,826

 

 

$

372,717

 

Refined coal (2) (3)

 

68

 

 

 

204

 

 

 

288

 

 

 

610

 

Total net sales and revenue

$

86,671

 

 

$

123,750

 

 

$

297,114

 

 

$

373,327

 

 

 

 

 

 

 

 

 

Gross (loss) profit:

 

 

 

 

 

 

 

Ethanol & By-Products (1)

$

28

 

 

$

11,260

 

 

$

12,312

 

 

$

38,475

 

Refined coal (2)

(1,786

)

 

(3,513

)

 

(6,420

)

 

(10,478

)

Total gross (loss) profit

$

(1,758

)

 

$

7,747

 

 

$

5,892

 

 

$

27,997

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes:

 

 

 

 

 

 

 

Ethanol & By-Products (1)

$

(2,822

)

 

$

8,405

 

 

$

3,491

 

 

$

29,491

 

Refined coal (2)

(1,648

)

 

(4,240

)

 

(6,351

)

 

(11,887

)

Corporate and other

(434

)

 

(410

)

 

(1,146

)

 

(1,341

)

Total (loss) income before income taxes

$

(4,904

)

 

$

3,755

 

 

$

(4,006

)

 

$

16,263

 

 

 

 

 

 

 

 

 

Benefit (provision) for income taxes:

 

 

 

 

 

 

 

Ethanol & By-Products

$

945

 

 

$

1,643

 

 

$

(160

)

 

$

(1,806

)

Refined coal

 

2,181

 

 

 

8,318

 

 

 

9,282

 

 

 

19,914

 

Corporate and other

 

105

 

 

 

53

 

 

 

279

 

 

 

240

 

Total benefit for income taxes

$

3,231

 

 

$

10,014

 

 

$

9,401

 

 

$

18,348

 

 

 

 

 

 

 

 

 

Segment (loss) profit:

 

 

 

 

 

 

 

Ethanol & By-Products

$

(2,330

)

 

$

7,946

 

 

$

684

 

 

$

23,096

 

Refined coal

 

607

 

 

 

4,260

 

 

 

3,209

 

 

 

8,549

 

Corporate and other

(329

)

 

(331

)

 

(868

)

 

(1,057

)

Net (loss) income attributable to REX common
shareholders

$

(2,052

)

 

$

11,875

 

 

$

3,025

 

 

$

30,588

 

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, “Net sales for the quarter declined approximately 30%, primarily due to reduced ethanol gallons sold as the NuGen Energy facility in South Dakota faced difficulties sourcing corn. Also, the crush spread declined as our consolidated corn costs increased approximately 25% compared to the prior year as demand outstripped reduced supply levels related to the heavy rain and floods, which delayed or prevented spring planting. In addition, we experienced lower distiller grain pricing on a year-over-year basis.

“Notwithstanding the challenges faced year-to-date, our balance sheet remains strong and includes cash and cash equivalents in excess of $196 million and working capital of $236.1 million. Given the quality of our plants, we remain confident in our disciplined operating approach and in the value of ethanol’s octane, carbon and costs benefits as a worldwide fuel supply.”

Balance Sheet

At October 31, 2019, REX had cash and cash equivalents of $196.3 million, $59.1 million of which was at the parent company, and $137.2 million of which was at its consolidated production facilities. This compares with cash, cash equivalents and short-term investments 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

Nine Months
Ended

 

October 31,

October 31,

 

 

2019

 

2018

 

2019

 

2018

Average selling price per gallon of ethanol

$

1.39

$

1.28

$

1.34

$

1.33

Average selling price per ton of dried distillers grains

$

134.57

$

139.67

$

137.48

$

141.90

Average selling price per pound of non-food

grade corn oil

 

$

 

0.26

 

$

 

0.25

 

$

 

0.25

 

$

 

0.24

Average selling price per ton of modified distillers grains

$

56.56

$

46.67

$

59.67

$

59.96

Average cost per bushel of grain

$

4.15

$

3.32

$

3.79

$

3.47

Average cost of natural gas (per mmbtu)

$

2.51

$

2.90

$

2.98

$

3.07

Supplemental data related to REX’s alternative energy interests:

REX American Resources Corporation
Ethanol Ownership Interests/Effective Annual Gallons Shipped as of October 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)

140.0

75.2%

105.3

NuGen Energy, LLC (Marion, SD)

101.9

99.5%

101.4

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

111.4

10.3%

11.5

Big River Resources Galva, LLC (Galva, IL)

126.7

10.3%

13.1

Big River United Energy, LLC (Dyersville, IA)

132.6

5.7%

7.6

Big River Resources Boyceville, LLC

(Boyceville, WI)

59.0

10.3%

6.1

Total

671.6

n/a

245.0

Third 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 212/231-2932 (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 672 million gallons of ethanol over the twelve month period ended October 31, 2019. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended October 31, 2019) by the ethanol production facilities in which it has ownership interests was approximately 245 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

Nine Months
Ended

 

October 31,

October 31,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales and revenue

$

86,671

 

$

123,750

 

$

297,114

 

$

373,327

 

Cost of sales

 

88,429

 

 

116,003

 

 

291,222

 

 

345,330

 

Gross (loss) profit

 

(1,758

)

 

7,747

 

 

5,892

 

 

27,997

 

Selling, general and administrative expenses

 

(4,133

)

 

(5,412

)

 

(13,629

)

 

(16,075

)

Equity in (loss) income of unconsolidated ethanol affiliates

 

(15

)

 

611

 

 

350

 

 

2,182

 

Interest and other income, net

 

1,002

 

 

809

 

 

3,381

 

 

2,159

 

(Loss) income before income taxes and non-controlling interests

 

(4,904

)

 

3,755

 

 

(4,006

)

 

16,263

 

Benefit for income taxes

 

3,231

 

 

10,014

 

 

9,401

 

 

18,348

 

Net (loss) income including non-controlling interests

 

(1,673

)

 

13,769

 

 

5,395

 

 

34,611

 

Net income attributable to non-controlling interests

 

(379

)

 

(1,894

)

 

(2,370

)

 

(4,023

)

Net (loss) income attributable to REX common shareholders

$(2,052

)

$11,875

 

$3,025

 

$30,588

 

 

 

 

 

 

Weighted average shares outstanding – basic and diluted

 

6,319

 

 

6,388

 

 

6,318

 

 

6,473

 

 

 

 

 

 

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

 

 

 

$(0.32

 

)

 

 

 

$1.86

 

 

 

 

 

$0.48

 

 

$4.73

 

 

 

 

- balance sheets follow -

 

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

Unaudited

October 31,

January 31,

ASSETS

 

2019

 

 

 

2019

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

196,339

 

 

$

188,531

 

Restricted cash

 

523

 

 

 

281

 

Short-term investments

 

-

 

 

 

14,975

 

Accounts receivable

 

16,391

 

 

 

11,378

 

Inventory

 

31,038

 

 

 

18,477

 

Refundable income taxes

 

7,222

 

 

 

7,695

 

Prepaid expenses and other

 

9,017

 

 

 

9,284

 

Total current assets

 

260,530

 

 

 

250,621

 

Property and equipment-net

 

167,754

 

 

 

182,521

 

Operating lease right-of-use assets

 

17,603

 

 

 

-

 

Other assets

 

16,263

 

 

 

6,176

 

Equity method investment

 

31,422

 

 

 

32,075

 

TOTAL ASSETS

$

493,572

 

 

$

471,393

 

LIABILITIES AND EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable – trade

$

13,122

 

 

$

7,463

 

Current operating lease liabilities

 

5,080

 

 

 

-

 

Accrued expenses and other current liabilities

 

6,231

 

 

 

9,546

 

Total current liabilities

 

24,433

 

 

 

17,009

 

LONG TERM LIABILITIES:

 

 

 

Deferred taxes

 

3,963

 

 

 

4,185

 

Long-term operating lease liabilities

 

11,937

 

 

 

-

 

Other long-term liabilities

 

4,310

 

 

 

4,928

 

Total long-term liabilities

 

20,210

 

 

 

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

 

148,756

 

 

 

148,273

 

Retained earnings

 

582,583

 

 

 

579,558

 

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

 

(335,073

)

 

 

(335,193

)

Total REX shareholders’ equity

 

396,565

 

 

 

392,937

 

Non-controlling interests

 

52,364

 

 

 

52,334

 

Total equity

 

448,929

 

 

 

445,271

 

TOTAL LIABILITIES AND EQUITY

$

493,572

 

 

$

471,393

 

- statements of cash flows follow -

 

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

Nine Month Ended
October 31,

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

Net income

$

5,395

 

$

34,611

 

Adjustments to reconcile net income to net cash

 

 

(used in) provided by operating activities:

 

 

Depreciation

 

17,682

 

 

18,673

 

Amortization of operating lease right-of-use assets

 

4,648

 

 

-

 

Income from equity method investments

 

(350

)

 

(2,182

)

Dividends received from equity method investments

 

1,003

 

 

3,007

 

Interest income from investments

 

(25

)

 

(993

)

Deferred income tax

 

(9,828

)

 

(22,146

)

Stock based compensation expense

 

215

 

 

730

 

Loss on disposal of property and equipment

 

-

 

 

104

 

Changes in assets and liabilities:

 

 

Accounts receivable

 

(5,013

)

 

(2,819

)

Inventory

 

(12,561

)

 

(881

)

Other assets

 

(110

)

 

(2,996

)

Accounts payable-trade

 

5,618

 

 

1,682

 

Other liabilities

 

(9,010

)

 

2,079

 

Net cash (used in) provided by operating activities

 

(2,336

)

 

28,869

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Capital expenditures

 

(2,643

)

 

(7,954

)

Purchases of short-term investments

 

-

 

 

(125,989

)

Sales of short-term investments

 

15,000

 

 

112,091

 

Loan receivable repayments

 

369

 

 

25

 

Net cash provided by (used in) investing activities

 

12,726

 

 

(21,827

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Treasury stock acquired

 

-

 

 

(18,419

)

Payments to noncontrolling interests holders

 

(2,598

)

 

(1,734

)

Capital contributions from minority investor

 

258

 

 

432

 

Net cash used in financing activities

 

(2,340

)

 

(19,721

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS

 

 

AND RESTRICTED CASH

 

8,050

 

 

(12,679

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of period

 

188,812

 

 

191,342

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of period

$

196,862

 

$

178,663

 

Non cash financing activities – Stock awards issued

$

487

 

$

1,473

 

Non cash financing activities – Stock awards accrued

$

99

 

$

585

 

Non cash investing activities – Accrued capital expenditures

$

272

 

$

603

 

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