REX REX American Resources Corporation

REX American Resources Corporation (NYSE American: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2017 third quarter (“Q3 ‘17”) ended October 31, 2017.

REX American Resources’ Q3 ‘17 results principally reflect its interests in six ethanol production facilities and its refined coal operation. One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) are consolidated, while those of its four remaining plants are reported as equity in income of unconsolidated ethanol affiliates. REX’s financial results for the fiscal 2017 third quarter also reflect the refined coal entity acquired by the Company on August 10, 2017. REX expects revenues from the sale of refined coal produced at the facility will be subsidized by federal production tax credits, subject to meeting qualified emissions reductions as governed by Section 45 of the Internal Revenue Code. Beginning in the third quarter of fiscal 2017, the Company will report results for its two business segments, ethanol and by-products and refined coal.

REX’s Q3 ‘17 net sales and revenue increased 4.2% to $121.2 million, compared with $116.3 million in Q3 ‘16, primarily attributable to higher revenues from the Company’s ethanol and by-products segment. Ethanol sales increased 6.2% primarily due to a 5.7% increase in gallons of ethanol sold, which was partially offset by 14.6% reduction in dried distillers grains sales primarily due to an 11.4% decline in pricing.

Gross profit decreased to $18.3 million from $20.2 million related to the Company’s ethanol and by-products operations during the third quarter. Additionally, the Company reported a $3.4 million gross loss from the Company’s refined coal operations. While gross profit was negatively impacted, the Company recognized benefits related to its refined coal operations in the form of a lower effective tax rate. Equity in income of unconsolidated ethanol affiliates in Q3 ‘17 decreased to $1.1 million, from $1.8 million in Q3 ‘16. As a result of these factors, income before income taxes and non-controlling interests in Q3 ‘17 decreased to $9.3 million from $17.2 million in Q3 ‘16. Primarily reflecting the company’s recent investment in refined coal operations, REX recorded a $5.7 million income tax benefit in Q3 ‘17, versus a provision for income taxes of $5.7 million in Q3 ‘16.

Net income attributable to REX common shareholders in Q3 ‘17 rose to $13.2 million or $2.00 per basic and diluted share compared to $8.9 million or $1.36 per share in Q3 ‘16. Net income attributable to non-controlling interests in Q3 ‘17 was $1.8 million, compared with $2.5 million in Q3 ‘16. Per share results in Q3 ‘17 and Q3 ‘16 are based on 6,597,000 and 6,590,000 diluted weighted average shares outstanding, respectively.

       

Segment Income Statement Data:

Three Months

Ended

Nine Months

Ended

($ in thousands) October 31, October 31, 2017   2016   2017   2016 Net sales and revenue:   Ethanol & By-Products (1) $ 120,971 $ 116,283 $ 342,858 $ 332,212 Refined coal (2) (3)   193   -   193   - Total net sales and revenues $ 121,164 $ 116,283 $ 343,051 $ 332,212   Gross profit (loss): Ethanol & By-Products (1) $ 18,257 $ 20,162 $ 41,527 $ 45,868 Refined coal (2)   (3,390)   -   (3,390)   - Total gross profit $ 14,867 $ 20,162 $ 38,137 $ 45,868   Income (loss) before income taxes: Ethanol & By-Products (1) $ 15,554 $ 17,682 $ 31,807 $ 37,294 Refined coal (2) (5,684) - (5,684) - Corporate and other   (611)   (468)   (2,389)   (1,554) Total income (loss) before income taxes $ 9,259 $ 17,214 $ 23,734 $ 35,740  

Benefit (provision) for income taxes:

Ethanol & By-Products $ (4,379) $ (5,917) $ (9,712) $ (12,331) Refined coal (4) 9,918 - 9,918 - Corporate and other   196   177   837   560 Total benefit (provision) before income taxes $ 5,735 $ (5,740) $ 1,043 $ (11,771)  

Segment profit (loss):

Ethanol & By-Products $ 9,058 $ 9,209 $ 17,665 $ 20,901 Refined coal 4,520 - 4,520 - Corporate and other   (410)   (271)   (1,532)   (949) Net income attributable to REX common shareholders $ 13,168 $ 8,938 $ 20,653 $ 19,952     (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. (4) We record our tax provision/benefit based on an estimated annual rate adjusted for items recorded discretely. This estimate was significantly reduced beginning in the third quarter of the current year, as we began operating our recently acquired refined coal facility. This resulted in a disproportionate tax benefit recognized in the third quarter of fiscal year 2017 as the cumulative effect of the reduced annual rate was recorded in the third quarter of fiscal year 2017.  

REX American Resources’ Chief Executive Officer, Zafar Rizvi, commented, “REX delivered healthy third quarter results, including net income attributable to REX shareholders of over $13.2 million, or $2.00 per share, marking a 47% year-over-year increase. We are pleased to report an increase in sales based upon a 5.7% increase in our consolidated gallons of ethanol sold, offset by lower distillers grains pricing. As expected, our recent investment in refined coal operations enabled us to recognize income tax benefits and was significantly accretive to our earnings per share.”

Balance Sheet and Capital AllocationAt October 31, 2017, REX had cash and cash equivalents of $190.5 million, $63.5 million of which was at the parent company and $127.0 million of which was at its consolidated ethanol production facilities. This compares with cash and cash equivalents of $188.6 million at January 31, 2017, $79.5 million of which was at the parent company and $109.1 million of which was at its consolidated ethanol production facilities.

     

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

        Three Months

Ended October 31,

  Nine Months

Ended October 31,

    2017   2016   2017   2016 Average selling price per gallon of ethanol     $ 1.45   $ 1.44   $ 1.45   $ 1.42 Average selling price per ton of dried distillers grains     $ 108.34   $ 122.34   $ 101.44   $ 127.27 Average selling price per pound of non-food grade corn oil     $ 0.30   $ 0.29   $ 0.29   $ 0.27 Average selling price per ton of modified distillers grains     $ 41.64   $ 45.17   $ 41.53   $ 54.49 Average cost per bushel of grain     $ 3.35   $ 3.30   $ 3.39   $ 3.51 Average cost of natural gas (per mmbtu)     $ 3.22   $ 3.31   $ 3.41   $ 3.08    

 

Supplemental Data Related to REX’s Ethanol & By-Products Interests:

REX American Resources CorporationEthanol Ownership Interests/Effective Annual Gallons Shipped as of October 31, 2017(gallons in millions)

Entity

   

TrailingTwelveMonthsGallonsShipped

 

CurrentREXOwnershipInterest

 

REX’s CurrentEffective Ownershipof Trailing TwelveMonth GallonsShipped

One Earth Energy, LLC(Gibson City, IL)

    123.6   75.0%   92 .7

NuGen Energy, LLC(Marion, SD)

    131.9   99.5%   131 .2

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

    106.8   10.3%   11 .0

Big River Resources Galva, LLC(Galva, IL)

    124.6   10.3%   12 .8

Big River United Energy, LLC(Dyersville, IA)

    129.4   5.7%   7 .4

Big River Resources Boyceville, LLC(Boyceville, WI)

    57.1   10.3%   5 .9 Total     673.4   n/a   261 .0        

Third Quarter Conference CallREX will host a conference call at 11:00 a.m. ET today. Senior management will discuss the financial results and host a question and answer session. The dial in number for the audio conference call is (212) 231-2935 (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 CorporationREX American Resources has interests in six ethanol production facilities, which in aggregate shipped approximately 673 million gallons of ethanol over the twelve month period ended October 31, 2017. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended October 31, 2017) by the ethanol production facilities in which it has ownership interests was approximately 261 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 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 international, national or regional economies, weather, results of income tax audits, changes in income tax laws or regulations 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,

2017

 

2016

2017

 

2016

Net sales and revenue $ 121,164 $ 116,283 $ 343,051 $ 332,212 Cost of sales   106,297   96,121   304,914   286,344 Gross profit 14,867 20,162 38,137 45,868 Selling, general and administrative expenses (7,347) (5,082) (17,528) (14,315) Equity in income of unconsolidated ethanol affiliates 1,094 1,838 1,931 3,257 (Loss) gain on sale of investment - - (13) 192 (Loss) gain on disposal of property and equipment, net (100) 179 (87) 364 Interest and other income   745   117   1,294   374 Income before income taxes 9,259 17,214 23,734 35,740 Benefit (provision) for income taxes   5,735   (5,740)   1,043   (11,771) Net income 14,994 11,474 24,777 23,969 Net income attributable to non-controlling interests   (1,826)   (2,536)   (4,124)   (4,017) Net income attributable to REX common shareholders $ 13,168 $ 8,938 $ 20,653 $ 19,952   Weighted average shares outstanding – basic and diluted   6,597   6,590   6,594   6,591   Basic and diluted net income per share attributable to REX common shareholders

$

2.00

$

1.36

$

3.13

$

3.03

 

- balance sheet follows -

     

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands) Unaudited

 

October 31,

January 31,

ASSETS:

2017

2017

CURRENT ASSETS: Cash and cash equivalents $ 190,460 $ 188,576 Restricted cash 230 130 Accounts receivable 9,801 11,901 Inventory 24,145 17,057 Refundable income taxes 977 1,070 Prepaid expenses and other 6,828 6,959 Deferred taxes-net

-

824

Total current assets 232,441 226,517 Property and equipment-net 198,959 182,761 Other assets 7,190 6,913 Equity method investments   35,755   37,833 TOTAL ASSETS $ 474,345 $ 454,024 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable – trade $ 11,778 $ 9,171 Accrued expenses and other current liabilities

11,223

13,348

Total current liabilities

23,001

22,519

LONG TERM LIABILITIES: Deferred taxes 34,629 41,135 Other long term liabilities   3,343   2,096 Total long term liabilities

37,972

43,231

COMMITMENTS AND CONTINGENCIES EQUITY: REX shareholders’ equity: Common stock, 45,000 shares authorized, 29,853 shares issued at par 299 299 Paid in capital 146,887 145,767 Retained earnings 528,860 508,207 Treasury stock, 23,287 and 23,292 shares   (313,650)   (313,838) Total REX shareholders’ equity 362,396 340,435 Non-controlling interests   50,976   47,839 Total equity

413,372

388,274

TOTAL LIABILITIES AND EQUITY $ 474,345 $ 454,024  

- statements of cash flows follow -

 

     

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands) Unaudited

 

Nine Months Ended

October 31,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 24,777 $ 23,969 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,695 14,567 Income from equity method investments (1,931) (3,257) Dividends received from equity method investee 4,009 4,010 Loss (gain) on disposal of property and equipment 87 (364) Loss (gain) on sale of investment 13 (192) Deferred income tax (5,682) (1,019) Stock based compensation expense 881 68 Changes in assets and liabilities: Accounts receivable 2,023 (1,686) Inventories (7,039) (2,305) Other assets (222) 2,758 Accounts payable-trade 2,195 1,653 Other liabilities   (746)   3,157 Net cash provided by operating activities   34,060   41,359 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (19,315) (11,836) Acquisition of business, net of cash acquired (12,049) - Restricted cash (100) 8 Restricted investments and deposits 150 460 Proceeds from sale of investment 64 2,275 Proceeds from sale of property and equipment 42 1,510 Other   19   17 Net cash used in investing activities   (31,189)   (7,566) CASH FLOWS FROM FINANCING ACTIVITIES: Dividend payments to and purchases of stock from non-controlling interests holders (1,725) (2,096) Capital contributions from minority investor 738 - Treasury stock acquired   -   (4,709) Net cash used in financing activities   (987)   (6,805) NET INCREASE IN CASH AND CASH EQUIVALENTS 1,884 26,988 CASH AND CASH EQUIVALENTS-Beginning of period   188,576   135,765 CASH AND CASH EQUIVALENTS-End of period $ 190,460 $ 162,753 Non cash investing activities – Accrued capital expenditures $ 1,049 $ 1,183 Non cash financing activities – Stock awards accrued $ 768 $ - Non cash financing activities – Stock awards issued $ 1,195 $ 1,095  

View source version on businesswire.com: http://www.businesswire.com/news/home/20171129005234/en/

REX American Resources CorporationDouglas Bruggeman, 937-276-3931Chief Financial OfficerorJCIRJoseph Jaffoni, Norberto Aja212-835-8500rex@jcir.com