REX REX American Resources Corporation

Diluted EPS for the Nine Months Ended October 31, 2014 Rise 250% to $8.20

Repays All Bank Debt on Consolidated Plants and Authorizes Repurchase of Additional 500,000 Shares

REX American Resources Corporation (NYSE: REX) today reported record financial results for its fiscal 2014 third quarter (“Q3 ‘14”) ended October 31, 2014. The Company also announced that its Board of Directors approved a 500,000 share increase in the number of shares in its common stock repurchase plan. REX management will host a conference call and webcast today at 11:00 a.m. ET.

     

Conference Call:

  212/231-2907  

Webcast / Replay URL:

www.rexamerican.com/Corp/Page4.aspx

    The webcast will be available for replay for 30 days  

REX American Resources’ Q3 ‘14 results principally reflect its alternative energy segment interests in seven ethanol production facilities. The operations of One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) are consolidated, while those of its five remaining plants are reported as equity in income of unconsolidated ethanol affiliates.

REX’s Q3 ‘14 net sales and revenue were $138.5 million, compared with $166.2 million in Q3 ‘13, principally reflecting reduced ethanol and distillers grains pricing. As a result of lower corn prices and strong ethanol crush spread margins in Q3 ‘14, the Company’s gross profit rose to $36.5 million, from $18.0 million in the prior year period. Reflecting the continued strength of ethanol industry metrics, Q3 ‘14 equity in income of unconsolidated ethanol affiliates increased to $8.8 million, compared with $3.3 million in Q3 ‘13, leading to net income from continuing operations before income taxes and non-controlling interests in Q3 ‘14 of $40.6 million, compared with $15.9 million in Q3 ‘13.

Net income attributable to REX shareholders in Q3 ‘14 rose to $23.3 million, compared with $9.9 million in Q3 ‘13, while Q3 ‘14 diluted net income per share attributable to REX common shareholders rose to a record $2.86 per share, compared to $1.21 per share in Q3 ‘13. Per share results in Q3 ‘14 and Q3 ‘13 are based on 8,170,000 and 8,179,000 diluted weighted average shares outstanding, respectively.

REX CEO, Stuart Rose, commented, “REX’s consolidated ethanol plants and minority interests in ethanol production facilities continue to benefit from the positive industry environment, the efficiency of our plants, and our operating disciplines. These factors drove record third quarter net income and diluted EPS, which further strengthened our already solid financial foundation. At October 31, 2014, cash and cash equivalents rose 56% to approximately $164.3 million, compared to the fiscal 2013 year-end levels, even as we allocated approximately $8.3 million to share repurchases during the quarter.

“During the third quarter, we also continued to allocate cash from operations to reduce consolidated plant-level debt. At the end of the fiscal third quarter, consolidated plant-level debt was $33.5 million, marking a $28.5 million, or 46% decrease, compared to 2014 Q2 consolidated plant level debt of $62.0 million. As a result, interest expense declined by 53%, compared to Q3 ‘13, while our debt-to-capital ratio dropped to 9% from 16% at the end of Q2 and 21% at January 31, 2014. Subsequent to the end of fiscal third quarter, we paid off the $33.5 million debt balance on our two consolidated plants.”

Balance Sheet

At October 31, 2014, REX had cash and cash equivalents of $164.3 million, $48.5 million of which was at the parent company and $115.8 million of which was at its consolidated ethanol production facilities. This compares with cash and cash equivalents of $105.1 million at January 31, 2014, $63.3 million of which was at the parent company and $41.8 million of which was at its consolidated ethanol production facilities.

REX repurchased 121,200 common shares in Q3 ‘14 at an average price of $68.58. In Q4 ‘14 to date, the Company repurchased an additional 57,610 common shares at an average price of $68.19. Combining the 500,000 common share repurchase authorization announced today with the 101,096 shares remaining from the prior authorization, the Company now has the authority to repurchase up to 601,096 shares of its common stock. Reflecting all common share repurchases to date, REX has 8,003,221 shares outstanding.

At October 31, 2014, REX had lease agreements, as landlord for four former retail store locations. REX also has a seasonal (temporary) lease agreement, as landlord, for one former retail store location. In addition, REX has four owned former retail stores that were vacant at October 31, 2014, which it is marketing to either lease or sell. The current net book value for the Company’s remaining real estate holdings is approximately $3.6 million. The real estate segment revenue reflects rental income derived from these sites.

   

Segment Income Statement Data:

 

Three MonthsEnded

Nine MonthsEnded

($ in thousands) October 31, October 31, 2014   2013   2014   2013 Net sales and revenue:     Alternative energy (1) $ 138,363 $ 166,039 $ 444,323 $ 519,653 Real estate (2)   91   149   299   348 Total net sales and revenues $ 138,454 $ 166,188 $ 444,622 $ 520,001   Gross profit (loss): Alternative energy (1) $ 36,506 $ 18,002 $ 111,940 $ 37,918 Real estate (2)   (9)   26   17   6 Total gross profit $ 36,497 $ 18,028 $ 111,957 $ 37,924   Segment profit (loss): Alternative energy segment (1) $ 41,412 $ 16,491 $ 121,797 $ 34,231 Real estate segment (2) (34) (35) (63) (179) Corporate expense, net   (801)   (604)   (2,319)   (2,010)

Income from continuing operations beforeincome taxes and non-controlling interests (2)

$

40,577

$

15,852

$

119,415

$

32,042

 

(1)

 

Includes results attributable to non-controlling interests of approximately 26% for One Earth and approximately 1% for NuGen.

(2)

Certain amounts differ from those previously reported as a result of certain sold real estate assets being reclassified as discontinued operations.

   

The following table summarizes select data related to the Company’s consolidated alternative energy interests:

   

Three Months Ended

Nine Months Ended

October 31, October 31,

2014

 

2013

2014

 

2013

Average selling price per gallon of ethanol

$

1.89

$

2.25

$

2.06

$

2.32

Average selling price per ton of dried distillers grains

$

145.87

$

228.00

$

181.54

$

244.29

Average selling price per ton of modified distillers grains

$

41.78

$

93.50

$

68.19

$

117.47

Average cost per bushel of grain $ 3.64 $ 6.24 $ 4.14 $ 6.95 Average cost of natural gas (per mmbtu)

$

4.69

$

4.02

$

6.41

$

4.24

   

Segment Balance Sheet Data:

    October 31, 2014 January 31, 2014 Assets: Alternative energy $416,703 $356,589 Real estate 4,145 4,722 Corporate 49,530 66,557 Total assets $470,378 $427,868    

Supplemental Data Related to REX’s Alternative Energy Interests:

REX American Resources CorporationEthanol Ownership Interests/Effective Annual Gallons Shipped as of October 31, 2014(gallons in millions)

Entity

 

TrailingTwelveMonthsGallonsShipped

 

CurrentREXOwnershipInterest

 

REX’s Current EffectiveOwnership of Trailing TwelveMonth Gallons Shipped

One Earth Energy, LLC(Gibson City, IL)

  112.2   74%   83.0

NuGen Energy, LLC(Marion, SD)

  115.0   99%   113.9

Patriot Holdings, LLC (Annawan, IL)

  122.7   27%   33.1

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

  109.2   10%   10.9

Big River Resources Galva, LLC (Galva, IL)

  120.1   10%   12.0

Big River United Energy, LLC (Dyersville, IA)

  124.8   5%   6.2

Big River Resources Boyceville, LLC(Boyceville, WI)

  57.2   10%   5.7 Total   761.2   n/a   264.8      

About REX American Resources Corporation

REX American Resources has interests in seven ethanol production facilities, which in aggregate shipped approximately 761 million gallons of ethanol over the twelve month period ended October 31, 2014. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended October 31, 2014) by the ethanol production facilities in which it has ownership interests was approximately 265 million gallons. 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 changes, the price volatility and availability of corn, dried and modified distillers grains, ethanol, corn oil, gasoline and natural gas, ethanol plants operating efficiently and according to forecasts and projections, changes in the national or regional economies, weather, transportation delays, the effects of terrorism or acts of war, changes in real estate market conditions and the impact of Internal Revenue Service audits. 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 MonthsEnded

Nine MonthsEnded

October 31,

October 31,

2014

 

2013

2014

 

2013

Net sales and revenue $138,454 $166,188 $444,622 $520,001 Cost of sales 101,957 148,160 332,665 482,077 Gross profit 36,497 18,028 111,957 37,924 Selling, general and administrative expenses (4,353) (4,589) (15,369) (12,530) Equity in income of unconsolidated ethanol affiliates 8,780 3,331 24,322 9,558 Interest and other income 103 69 243 158 Interest expense (454) (964) (1,737) (3,039) Gains (losses) on derivative financial instruments, net 4 (23) (1) (29)

Income from continuing operations before income taxes andnon-controlling interests

40,577

15,852

119,415

32,042

Provision for income taxes (12,126) (5,261) (40,049) (11,034)

Income from continuing operations including non-controllinginterests

28,451

10,591

79,366

21,008

Income from discontinued operations, net of tax - 287 5 556 Gain on disposal of discontinued operations, net of tax

138

600 136 732

Net income including non-controlling interests

28,589 11,478 79,507 22,296 Net income attributable to non-controlling interests

(5,249)

(1,611) (12,518) (3,097) Net income attributable to REX common shareholders $23,340 $ 9,867 $66,989 $19,199   Weighted average shares outstanding – basic 8,170 8,140 8,157 8,154   Basic income per share from continuing operations $2.84 $1.10 $8.19 $2.19 Basic income per share from discontinued operations - 0.04 - 0.07

Basic income per share on disposal of discontinuedoperations

0.02

0.07

0.02

0.09

Basic net income per share attributable to REX commonshareholders

$2.86

$1.21

$8.21

$ 2.35

  Weighted average shares outstanding – diluted 8,170 8,179 8,168 8,197   Diluted income per share from continuing operations $2.84 $1.10 $8.18 $2.18 Diluted income per share from discontinued operations - 0.04 - 0.07

Diluted income per share on disposal of discontinuedoperations

0.02

0.07

0.02

0.09

Diluted net income per share attributable to REX commonshareholders

$2.86

$1.21

$8.20

$2.34

Amounts attributable to REX common shareholders: Income from continuing operations, net of tax $ 23,202 $ 8,980 $66,848 $17,911 Income from discontinued operations, net of tax

138

887

141 1,288 Net income $ 23,340 $ 9,867 $66,989 $19,199  

Certain amounts differ from those previously reported as a result of certain real estate assets being reclassified as discontinued operations.

   

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands) Unaudited

   

ASSETS:

October 31,2014

January 31,2014

CURRENT ASSETS: Cash and cash equivalents $ 164,267 $ 105,149 Restricted cash - 500 Accounts receivable 10,586 16,486 Inventory 11,496 19,370 Refundable income taxes - 268 Prepaid expenses and other 5,029 4,891 Deferred taxes-net  

-

 

2,146

Total current assets 191,378 148,810 Property and equipment-net 197,645 202,258 Other assets 5,831 5,388 Equity method investments 75,524 71,189 Restricted investments and deposits   -   223 TOTAL ASSETS $ 470,378 $ 427,868 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of long term debt $ 19,000 $ 12,226 Accounts payable – trade 9,066 6,626 Deferred taxes 3,400 - Derivative financial instruments - 1,141 Accrued expenses and other current liabilities  

19,511

 

12,147

Total current liabilities  

50,977

 

32,140

LONG TERM LIABILITIES: Long term debt 14,500 63,500 Deferred taxes 19,597 19,613 Other long term liabilities   1,904   1,862 Total long term liabilities  

36,001

 

84,975

COMMITMENTS AND CONTINGENCIES EQUITY: REX shareholders’ equity: Common stock, 45,000 shares authorized, 29,853 shares issued at par 299 299 Paid in capital 144,791 144,051 Retained earnings 424,090 357,101 Treasury stock, 21,793 and 21,753 shares, respectively  

(229,731)

 

(222,170)

Total REX shareholders’ equity 339,449 279,281 Non-controlling interests   43,951   31,472 Total equity  

383,400

 

310,753

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 470,378 $ 427,868  

- statements of cash flows follow -

 

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands) Unaudited

 

Nine Months Ended

October 31,

2014

 

2013

CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 79,507 $ 22,296 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, impairment charges and amortization 12,480 13,178 Income from equity method investments (24,322) (9,558) Gain on disposal of real estate and property and equipment (209) (989) Dividends received from equity method investments 19,881 200 Deferred income - (590) Derivative financial instruments (1,141) (1,249) Deferred income tax 5,323 8,241 Excess tax benefit from stock option exercises (441) - Changes in assets and liabilities: Accounts receivable 5,900 293 Inventories 7,874 8,613 Other assets 728 1,933 Accounts payable-trade 2,075 2,589 Accrued expenses and other liabilities   7,406   (1,529)

Net cash provided by operating activities

  115,061   43,428 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (8,107) (2,159) Restricted cash 500 (500) Repayment of loan receivable - 681 Restricted investments and deposits 273 280 Proceeds from sale of real estate and property and equipment   596   3,406 Net cash (used in) provided by investing activities   (6,738)  

1,708

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of long term debt

(42,226) (18,520) Stock options exercised 931 794 Payments to noncontrolling interests holders (39) (5) Excess tax benefit from stock option exercises 441 - Treasury stock acquired   (8,312)   (3,079) Net cash used in financing activities   (49,205)   (20,810) NET INCREASE IN CASH AND CASH EQUIVALENTS 59,118 24,326 CASH AND CASH EQUIVALENTS-Beginning of period   105,149   69,073

CASH AND CASH EQUIVALENTS-End of period

$ 164,267 $ 93,399 Non cash investing activities – Accrued capital expenditures $ 615 $ 198

Non cash investing activities – Loan receivable granted inconnection with sale of real estate

$

475

$

-

 

REX American Resources CorporationDouglas Bruggeman, 937-276-3931Chief Financial OfficerorJCIRJoseph Jaffoni / Norberto Aja, 212-835-8500rex@jcir.com