REX American Resources Corporation (NYSE: REX)
(“REX” or “the Company”) today reported financial results for its
fiscal 2020 first quarter (“Q1 ’20”) ended April 30, 2020. REX
management will host a conference call and webcast today at 11:00
a.m. ET.
Conference Call: 212/271-4615
Webcast / Replay URL:
www.rexamerican.com/Corp/Page4.aspx
The webcast will be available for replay
for 30 days.
REX American Resources’ Q1 ’20 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 Q1 ’20 net sales and revenue were $83.3 million, compared
with $104.6 million in Q1 ’19. The year-over-year net sales and
revenue decline was primarily due to a decrease in ethanol gallons
sold and overall lower production due to the temporary idling of
the NuGen plant. Primarily reflecting these factors, as well as an
11.3% year-over-year increase in corn prices and a lower of cost or
net realizable value inventory valuation adjustment of
approximately $9.1 million, partially offset by a $3.1 million
hedge gain, the Company recorded a gross loss for its ethanol and
by-products segment in Q1 ’20 of $8.2 million, compared with a
gross profit of $6.1 million in Q1 ’19. As a result, the ethanol
and by-products segment loss before income taxes was $12.4 million
in Q1 ’20, compared to income of $3.2 million in Q1 ’19. The
Company’s refined coal operation incurred a $1.1 million gross loss
and a $0.8 million loss before income taxes in Q1 ’20, compared to
a $2.5 million gross loss and a loss before income taxes of $2.7
million in Q1 ’19. REX reported a Q1 ’20 loss before income taxes
and non-controlling interests of $13.7 million, compared with
income before income taxes and non-controlling interests of $0.2
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 $1.0 million and $3.9
million for Q1 ’20 and Q1 ’19, 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 Q1 20 was $7.6
million, compared to net income attributable to REX shareholders of
$2.8 million in Q1 ’19. Q1 ’20 basic and diluted net loss per share
attributable to REX common shareholders was $1.21, compared to net
income per share of $0.45 in Q1 ’19. Per share results in Q1 ‘20
and Q1 ’19 are based on 6,304,000 and 6,315,000 diluted weighted
average shares outstanding, respectively.
Segment Income Statement Data:
($ in thousands)
Three Months Ended
April 30,
2020
2019
Net sales and revenue:
Ethanol & By-Products (1)
$
83,235
$
104,453
Refined coal (2) (3)
15
122
Total net sales and revenue
$
83,250
$
104,575
Gross (loss) profit:
Ethanol & By-Products (1)
$
(8,223
)
$
6,115
Refined coal (2)
(1,107
)
(2,469
)
Total gross (loss) profit
$
(9,330
)
$
3,646
(Loss) income before income
taxes:
Ethanol & By-Products (1)
$
(12,351
)
$
3,205
Refined coal (2)
(847
)
(2,676
)
Corporate and other
(545
)
(362
)
Total (loss) income before income
taxes
$
(13,743
)
$
167
Benefit (provision) for income
taxes:
Ethanol & By-Products
$
4,161
$
(486
)
Refined coal
959
3,946
Corporate and other
193
88
Total benefit for income taxes
$
5,313
$
3,548
Segment (loss) profit:
Ethanol & By-Products
$
(7,433
)
$
1,709
Refined coal
150
1,386
Corporate and other
(352
)
(274
)
Net (loss) income attributable to REX
common shareholders
$
(7,635
)
$
2,821
(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, “The first quarter of fiscal 2020 marked one of the more
challenging periods we have encountered in ethanol production as
the onset of the Covid-19 pandemic, decline in ethanol pricing and
corn supply shortages had a significant impact on our business and
ability to operate certain production facilities. As such, we made
the strategic decision to temporarily idle operations at our NuGen
and One Earth plants in order to help preserve our strong financial
and liquidity position.
“I am pleased to report that while we continue to face a
challenging operating environment, conditions have improved as
Covid-19 restrictions have begun to be lifted and ethanol pricing
has begun to recover. As a result, we are now in the process of
reopening the One Earth plant. As we move forward, we will remain
disciplined in our operating approach and focus on adapting our
resources to this fluid and uncertain operating dynamic to ensure
that we operate as efficiently as possible, including bringing our
NuGen plant back online when appropriate. We are well positioned to
leverage near- and long-term opportunities to enhance shareholder
value, including recent repurchases of over 108,000 REX common
shares. We believe our robust balance sheet, including cash, cash
equivalents and short-term investments in excess of $196 million,
working capital of $227 million and no bank debt positions REX well
to emerge strongly as economic and industry conditions
improve.”
Balance Sheet At April 30, 2020, REX had cash and cash
equivalents and short-term investments of $196.4 million, $59.0
million of which was at the parent company, and $137.4 million of
which was at its consolidated production facilities. This compares
with cash, cash equivalents and short-term investments at January
31, 2020, of $205.7 million, $62.3 million of which was at the
parent company, and $143.4 million of which was at its consolidated
ethanol production facilities.
During the first quarter of fiscal 2020, the Company purchased
78,140 shares at an average cost of $50.20. Subsequent to quarter
end, the Company bought an additional 30,536 at an average cost of
$54.60. REX is now authorized to repurchase up to 241,185 shares of
its common stock. The Company currently has 6,184,646 shares
outstanding.
The following table summarizes
select data related to REX’s consolidated alternative energy
interests:
Three Months Ended
April 30,
2020
2019
Average selling price per gallon of
ethanol
$
1.25
$
1.27
Average selling price per ton of dried
distillers grains
$
145.64
$
142.02
Average selling price per pound of
non-food
grade corn oil
$
0.25
$
0.25
Average selling price per ton of modified
distillers grains
$
65.82
$
65.75
Average cost per bushel of grain
$
3.93
$
3.53
Average cost of natural gas (per
mmbtu)
$
3.93
$
3.66
Supplemental data related to
REX’s alternative energy interests:
REX American Resources
Corporation Ethanol Ownership Interests/Effective Annual Gallons
Shipped as of April 30, 2020 (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)
138.3
75.2%
104.0
NuGen Energy, LLC Marion, SD)
84.0
99.5%
83.6
Big River Resources West Burlington,
LLC West Burlington, IA)
113.7
10.3%
11.7
Big River Resources Galva, LLC
(Galva, IL)
121.8
10.3%
12.5
Big River United Energy, LLC
(Dyersville, IA)
131.6
5.7%
7.5
Big River Resources Boyceville, LLC
(Boyceville, WI)
60.6
10.3%
6.2
Total
650.0
n/a
225.5
First 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 212/271-4615 (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 650 million
gallons of ethanol over the twelve-month period ended April 30,
2020. REX’s effective ownership of the trailing twelve-month
gallons shipped (for the twelve months ended January 31, 2020) by
the ethanol production facilities in which it has ownership
interests was approximately 226 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 effect of pandemics
such as COVID-19 on the Company’s business operations, including
impacts on supplies, demand, personnel and other factors, 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
April 30,
2020
2019
Net sales and revenue
$
83,250
$
104,575
Cost of sales
92,580
100,929
Gross (loss) profit
(9,330
)
3,646
Selling, general and administrative
expenses
(4,605
)
(4,732
)
Equity in (loss) income of unconsolidated
ethanol affiliates
(477
)
126
Interest and other income, net
669
1,127
(Loss) income before income taxes and
non-controlling Interests
(13,743
)
167
Benefit for income taxes
5,313
3,548
Net (loss) income including
non-controlling interests
(8,430
)
3,715
Net loss (income) attributable to
non-controlling interests
795
(894
)
Net (loss) income attributable to REX
common shareholders
$
(7,635
)
$
2,821
Weighted average shares outstanding –
basic and diluted
6,304
6,315
Basic and diluted net (loss) income per
share attributable to REX common shareholders
$
(1.21
)
$
0.45
- balance
sheets follow -
REX American Resources
Corporation and Subsidiaries Consolidated Balance Sheets (in
thousands) Unaudited
ASSETS
April 30, 2020
January 31,
2020
CURRENT ASSETS:
Cash and cash equivalents
$
163,771
$
179,658
Restricted cash
1,410
1,113
Short-term investments
32,601
26,073
Accounts receivable
2,772
12,969
Inventory
27,268
35,634
Refundable income taxes
9,689
6,029
Prepaid expenses and other
9,627
9,659
Total current assets
247,138
271,135
Property and equipment-net
163,132
163,327
Operating lease right-of-use assets
16,689
16,173
Deferred taxes
18.344
17,061
Other assets
753
342
Equity method investment
29,982
32,464
TOTAL ASSETS
$
476,038
$
500,502
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable – trade
$
7,386
$
18,900
Current operating lease liabilities
5,287
4,935
Accrued expenses and other current
liabilities
7,196
7,764
Total current liabilities
19,869
31,599
LONG TERM LIABILITIES:
Deferred taxes
3,868
4,334
Long-term operating lease liabilities
10,898
10,688
Other long-term liabilities
136
275
Total long-term liabilities
14,902
15,297
COMMITMENTS AND CONTINGENCIES EQUITY:
REX shareholders’ equity:
Common stock, 45,000 shares authorized,
29,853 shares issued at par
299
299
Paid in capital
148,821
148,789
Retained earnings
579,350
586,985
Treasury stock, 23,639 and 23,561 shares,
respectively
(338,982
)
(335,066
)
Total REX shareholders’ equity
389,488
401,007
Non-controlling interests
51,779
52,599
Total equity
441,267
453,606
TOTAL LIABILITIES AND EQUITY
$
476,038
$
500,502
- statements
of cash flows follow -
REX AMERICAN RESOURCES
CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows
(in thousands) Unaudited
Three Months Ended
April 30,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income
$
(8,430
)
$
3,715
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation
5,315
6,292
Amortization of operating lease
right-of-use assets
1,347
1,333
Stock based compensation expense
39
128
Loss (income) from equity method
investments
477
(126
)
Dividends received from equity method
investments
2,005
-
Interest income from investments
(125
)
(25
)
Deferred income tax
(1,748
)
(3,619
)
Gain on disposal of property and
equipment
(3
)
-
Changes in assets and liabilities:
Accounts receivable
10,197
(285
)
Inventory
8,366
(1,673
)
Prepaid expenses and other assets
(3,759
)
(75
)
Accounts payable-trade
(11,934
)
(760
)
Other liabilities
(2,008
)
(3,365
)
Net cash (used in) provided by operating
activities
(261
)
1,540
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(4,700
)
(632
)
Purchases of short-term investments
(19,237
)
-
Sales of short-term investments
12,834
15,000
Other
(278
)
7
Net cash (used in) provided by investing
activities
(11,381
)
14,375
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock acquired
(3,923
)
-
Payments to noncontrolling interests
holders
(35
)
(87
)
Capital contributions from minority
investor
10
146
Net cash (used in) provided by financing
activities
(3,948
)
59
NET (DECREASE) INCREASE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(15,590
)
15,974
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH-Beginning of period
180,771
188,812
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH-End of period
$
165,181
$
204,786
Non cash financing activities – Stock
awards accrued
$
-
$
91
Non cash investing activities – Accrued
capital expenditures
$
457
$
147
Initial operating lease right-of-use
assets and liabilities recorded upon adoption of ASC 842
$
-
$
20,918
Operating lease right-of-use assets
acquired and liabilities assumed upon lease execution
$
1,863
$
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200528005155/en/
Douglas Bruggeman Chief Financial Officer (937) 276‑3931
Joseph Jaffoni, Norberto Aja JCIR (212) 835-8500
rex@jcir.com
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