RSC Rex American Resources Corp

REX Stores Corporation (NYSE: RSC) today announced improved financial results for its fiscal 2010 first quarter (“Q1 ‘10”) ended April 30, 2010.

Summary Consolidated Operating Results and Balance Sheet Review

REX reported net sales and revenue of $71.3 million in Q1 ‘10 compared with net sales and revenue of $14.2 million in Q1 ‘09. For Q1 ‘10, REX recorded income from continuing operations before income taxes and non-controlling interests of $7.4 million compared with a $2.4 million loss in the comparable prior year period. The Q1 ’10 pre-tax income from continuing operations is inclusive of $2.8 million of equity in income of unconsolidated ethanol affiliates compared with a $0.3 million loss from unconsolidated ethanol affiliates in Q1 ‘09. In the quarter ended April 30, 2010, REX generated income from continuing operations net of taxes and non-controlling interests of $3.5 million, or $0.35 per diluted share, compared with a loss net of taxes and non-controlling interests of $1.1 million, or $0.11 per diluted share, in the comparable prior year period.

For Q1 ‘10 REX generated net income attributable to common shareholders of $4.2 million, or $0.42 per diluted share, versus a net loss attributable to common shareholders of $1.7 million, or $0.19 per diluted share, in Q1 ‘09. Per share results are based on 10,045,000 and 9,298,000 diluted weighted average shares outstanding for the Q1 ‘10 and Q1 ‘09 quarters, respectively.

Stuart Rose, Chairman and Chief Executive Officer commented on the results, “REX got off to a strong start in fiscal 2010 with Q1 operating results reflecting our transition over the last several years to focus on alternative energy. Fiscal 2010 Q1 comparisons benefited from the start of ethanol production last year at the One Earth Energy facility as well as a year-over-year improvement in crush spreads for the first three months of calendar 2010.”

At April 30, 2010, REX had cash and cash equivalents of $101.4 million, including $86.1 million of cash at the parent company (exclusive of approximately $15.3 million of cash at consolidated ethanol production facilities), compared with cash and cash equivalents of $100.4 million at January 31, 2010 including $82.5 million of cash at the parent company (exclusive of approximately $17.9 million of cash at consolidated ethanol production facilities).

REX repurchased 2,000 shares of its common stock in open market transactions in Q1 ‘10. Reflecting its current repurchase authorization, REX is presently authorized to repurchase up to 481,000 shares of its common stock.

Segment Operating Results Data

REX’s financial results primarily reflect its interests in six ethanol production facilities, including the consolidation of its majority investments in two ethanol affiliates, Levelland Hockley County Ethanol, LLC (“Levelland Hockley”) and One Earth Energy, LLC (“One Earth”).

At April 30, 2010, REX had lease or sub-lease agreements, as landlord for all or parts of ten former retail store locations (including one property that REX leases and sub-leases). REX also has 30 former retail stores and one former distribution center that were vacant at April 30, 2010 which it is marketing to lease or sell. In addition one former distribution center is partially leased, partially occupied for the REX corporate office and partially vacant. The Q1 ‘10 real estate revenue reflects rental income derived from these sites.

REX exited its retail operations in fiscal 2009, and the retail operations results are classified as discontinued operations. Certain amounts differ from those previously reported as a result of retail operations and certain real estate assets being reclassified as discontinued operations. In Q1 ‘10 REX recorded $0.7 million of income from discontinued operations, net of tax compared with a $0.7 million loss from discontinued operations and disposal of discontinued operations, net of tax in Q1 ‘09.

The table below summarizes net sales and revenue from REX’s alternative energy and real estate segments and income (loss) from continuing operations for the three-month periods ended April 30, 2010 and April 30, 2009.

($ in thousands)

 

Three Months EndedApril 30,

2010   2009 Net sales and revenue: Alternative energy (1) $ 71,022 $ 14,118 Real estate   269     130   Total net sales and revenues $ 71,291   $ 14,248     Segment profit (loss): Alternative energy segment profit (loss) (1) $ 8,613 $ (1,988 ) Real estate segment (loss) profit (428 ) 29 Corporate expense (773 ) (476 ) Interest expense (49 ) (189 ) Interest income   69     230  

Income (loss) from continuing operations before incometaxes and noncontrolling interests

$

7,432

 

$

(2,394

)

(1)   Includes results attributable to non-controlling interest of approximately 44% for Levelland Hockley and 26% for One Earth Energy.

Supplemental Data Related to REX’s Alternative Energy Interests

At April 30, 2010 REX had interests in the following ethanol production facilities:

 

 

Entity

 

NameplateProductionCapacity(annualgallons)

 

REX’sCapitalInvestment(millions)

 

 

REX’sOwnershipInterest

 

 

DebtInvestment(millions)

 

REXEffectiveNameplateCapacityOwned(gallons)

Levelland Hockley County Ethanol, LLC – Texas (1)   40M   $16.5   56%   $6.7   22.4M Patriot Renewable Fuels, LLC – Annawan, IL   100M   $16.0   23%   $0.5   23.0M One Earth Energy, LLC – Gibson City, IL   100M   $50.8   74%   -   74.0M Big River Resources, LLC - W. Burlington, IA   92M  

$20.0

  10%   -   9.2M Big River Resources, LLC – Galva, IL   100M     10%   -   10.0M Big River United Energy, LLC – Dyersville, IA (2)   100M     5%   -   5.0M Total   532M   $103.3   n/a   $7.2   143.6M (1)   REX has a contingent funding commitment of $1.1 million for the Levelland Hockley Facility (2) REX has a 10% ownership interest in Big River Resources, LLC which owns 100% of the West Burlington and Galva plants and acquired a 50.5% interest in the Dyersville plant in August 2009.

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

  Three Months Ended ($ in thousands) April 30,

2010

   

2009

Sales of Products:Alternative Energy Segment

Ethanol $ 59,529 84 % $ 10,452 74 % Dried distiller grains 9,258 13 % 1,633 12 % Wet distiller grains 2,031 3 % 1,938 14 % Other   204 - %   95 - %

TOTAL ALTERNATIVEENERGY SALES

$

71,022

100

%

$

14,118

100

%

The following table summarizes selected operating data from Levelland Hockley and One Earth, the Company’s consolidated ethanol production facilities:

  Three Months Ended April 30,

2010

 

2009

Average selling price per gallon of ethanol $ 1.73 $ 1.55 Average selling price per ton of dried distiller grains $ 121.32 $ 160.10 Average selling price per ton of wet distiller grains $ 31.56 $ 47.82 Average cost per bushel of grain $ 3.67 $ 3.26 Average cost of natural gas (per mmbtu) $ 5.65 $ 5.47

Segment Balance Sheet Data

 

April 30,2010

 

January 31,2010

Assets: Alternative energy $ 295,166 $ 302,228 Real estate 31,567 31,796 Corporate   112,743   117,481 Total assets $ 439,476 $ 451,505

Conference Call, Webcast and Replay Details:

REX is hosting a conference call and simultaneous webcast at 11:00 am ET today, both of which are open to the general public. The conference call number is 212/231-2915; please call five minutes in advance to ensure that you are connected prior to the presentation. Questions will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.rextv.com/Corp/Page4.aspx; allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for 30 days at www.rextv.com/Corp/Page4.aspx.

Planned Name Change

As previously announced, REX plans to change the Company’s name to REX American Resources Corporation and its stock symbol to “REX.” The name change is subject to shareholder approval at REX’s Annual Meeting on June 9, and if approved, the symbol change will occur shortly thereafter.

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, sorghum, dried distiller grains, ethanol, gasoline and natural gas, ethanol plants operating efficiently and according to forecasts and projections, changes in the national or regional economies, weather, 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.

-tables follow-

REX STORES CORPORATION AND SUBSIDIARIESConsolidated Condensed Statements of Operations(in thousands, except per share amounts)Unaudited

 

 

Three Months Ended April 30,

2010

 

2009

Net sales and revenue $ 71,291 $ 14,248 Cost of sales   63,194     13,923   Gross profit 8,097 325 Selling, general and administrative expenses (2,093 ) (1,194 ) Interest income 115 230 Interest expense (1,367 ) (878 ) Loss on early termination of debt - (61 ) Equity in income (loss) of unconsolidated ethanol affiliates 2,847 (260 ) Losses on derivative financial instruments, net   (167 )   (556 ) Income (loss) from continuing operations before income taxes and noncontrolling interests

7,432

(2,394

)

(Provision) benefit for income taxes   (2,484 )   715   Income (loss) from continuing operations including noncontrolling interests

4,948

(1,679

)

Income (loss) from discontinued operations, net of tax 657 (545 ) Loss on disposal of discontinued operations, net of tax   -     (129 ) Net income (loss) including noncontrolling interests 5,605 (2,353 ) Net (income) loss attributable to noncontrolling interests   (1,417 )   622   Net income (loss) attributable to REX common shareholders $ 4,188   $ (1,731 )   Weighted average shares outstanding - basic  

9,840

    9,298     Basic income (loss) per share from continuing operations attributable to REX common shareholders

$

0.36

$

(0.11

)

Basic income (loss) per share from discontinued operations attributable to REX common shareholders

0.07

(0.06

)

Basic loss per share from disposal of discontinued operations attributable to REX common shareholders  

-

   

(0.02

)

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

$

0.43

 

$

(0.19

)

  Weighted average shares outstanding – diluted   10,045     9,298     Diluted income (loss) per share from continuing operations attributable to REX common shareholders

$

0.35

$

(0.11

)

Diluted income (loss) per share from discontinued operations attributable to REX common shareholders

0.07

(0.06

)

Diluted loss per share from disposal of discontinued operations attributable to REX common shareholders  

-

   

(0.02

)

Diluted net income (loss) per share attributable to REX common shareholders

$

0.42

 

$

(0.19

)

  Amounts attributable to REX common shareholders: Income (loss) from continuing operations, net of tax

 

$3,531

 

$(1,057

) Income (loss) from discontinued operations, net of tax   657     (674 ) Net income (loss)

 

$4,188

 

 

$(1,731

)

Amounts differ from those previously reported as a result of retail operations and certain real estate assets being reclassified as discontinued operations.

- balance sheet follows -

REX STORES CORPORATION AND SUBSIDIARIESConsolidated Condensed Balance Sheets(in thousands) Unaudited

    April 30, January 31,

2010

2010

Assets Current assets: Cash and cash equivalents $ 101,420 $ 100,398 Accounts receivable, net 7,460 9,123 Inventory, net 7,430 8,698 Refundable income taxes 6,240 12,813 Prepaid expenses and other 2,751 2,691 Deferred taxes, net   5,138     6,375   Total current assets 130,439 140,098 Property and equipment, net 242,345 246,874 Other assets 9,517 8,880 Deferred taxes, net 8,480 8,468 Equity method investments 46,081 44,071 Investments in debt instruments 514 1,014 Restricted investments   2,100     2,100   Total assets $ 439,476   $ 451,505   Liabilities and equity Current liabilities:

Current portion of long-term debt and capital lease obligations, alternative energy

$

13,397

$

12,935

Current portion of long-term debt, other 323 371 Accounts payable, trade 5,642 6,976 Deferred income 6,772 7,818 Accrued restructuring charges 502 511 Accrued real estate taxes 1,815 2,968 Derivative financial instruments 1,749 1,829 Other current liabilities   5,324     5,442   Total current liabilities   35,524     38,850   Long-term liabilities:

Long-term debt and capital lease obligations, alternative energy

110,716 124,093 Long-term debt, other 2,182 2,596 Deferred income 5,122 6,396 Derivative financial instruments 3,946 4,055 Other   575     419   Total long-term liabilities   122,541     137,559   Equity: REX shareholders’ equity: Common stock 299 299 Paid-in capital 142,120 141,698 Retained earnings 295,172 290,984 Treasury stock (186,097 ) (186,407 ) Accumulated other comprehensive income, net of tax   27     49   Total REX shareholders' equity 251,521 246,623 Noncontrolling interests   29,890     28,473   Total equity   281,411     275,096   Total liabilities and equity $ 439,476   $ 451,505