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
$
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190829005150/en/
Douglas Bruggeman Chief Financial Officer (937) 276‑3931
Joseph Jaffoni, Norberto Aja JCIR (212) 835-8500
rex@jcir.com
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