REX American Resources Corporation (NYSE: REX) (“REX” or “the
Company”) today reported financial results for its fiscal 2018
second quarter (“Q2 ‘18”) ended July 31, 2018. REX management will
host a conference call and webcast today at 11:00 a.m. ET.
Conference Call:
(212) 231-2910
Webcast / Replay URL:
www.rexamerican.com/Corp/Page4.aspx
The webcast will be available for
replay for 30 days
REX American Resources’ Q2 ‘18 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 other
ethanol plants are reported as equity in income of unconsolidated
ethanol affiliates. REX consolidates the refined coal entity
acquired by the Company in fiscal 2017. The Company reports results
for its two business segments as ethanol and by-products, and
refined coal.
REX’s Q2 ‘18 net sales and revenue were $128.8 million, compared
with $108.7 million in Q2 ‘17, primarily reflecting higher volumes
of ethanol gallons sold as well as higher average selling prices
for dried and modified distillers grains during the quarter, which
more than offset lower average selling prices for ethanol. The
Company’s Q2 ‘18 gross profit for its ethanol and by-products
segment increased to $13.7 million, from $10.8 million in the
comparable prior year period. In Q2 ’18, equity in income of
unconsolidated ethanol affiliates rose to $0.9 million, from $0.1
million in Q2 ’17. As a result, the ethanol and by-products segment
income before income taxes rose to $10.1 million in Q2 ‘18,
compared to $7.3 million in Q2 ‘17. The Company’s refined coal
operation incurred a $4.3 million gross loss and a $4.8 million
loss before income taxes in Q2 ’18 (the Company did not own the
refined coal entity in Q2’ 17). As a result, REX reported income
from continuing operations before income taxes and non-controlling
interests in Q2 ‘18 of $4.9 million, compared with $6.5 million in
Q2 ‘17. While the refined coal operation impacted gross profit and
income before income taxes, the Company recognized a lower
effective tax rate related to its refined coal operation.
Net income attributable to REX shareholders in Q2 ‘18 rose more
than three-fold to $9.2 million, from $2.9 million in Q2 ‘17,
primarily reflecting the year-over-year profit improvement in the
ethanol and by-products segment as well as lower tax rates related
to the Company’s refined coal operation and the December 2017
passage of the 2017 Tax Cuts and Jobs Act. Q2 ‘18 basic and diluted
net income per share attributable to REX common shareholders was
$1.43 per share, compared to $0.45 per share in Q2 ‘17.
Per share results in Q2 ‘18 and Q2 ‘17 are based on 6,466,000
and 6,593,000 diluted weighted average shares outstanding,
respectively.
Segment Income Statement Data:
Three Months Ended
Six MonthsEnded
($ in thousands)
July 31, July 31, 2018
2017 2018
2017 Net sales and revenue:
Ethanol & By-Products (1) $ 128,491 $ 108,744 $ 249,171
$ 221,887 Refined coal (2) (3)
266
- 406
- Total net sales and revenues
$ 128,757 $
108,744 $ 249,577
$ 221,887 Gross
profit (loss): Ethanol & By-Products (1) $ 13,669 $ 10,781
$ 27,215 $ 23,270 Refined coal (2)
(4,270
) -
(6,965 ) -
Total gross profit $ 9,399
$ 10,781 $
20,250 $ 23,270
Income (loss) before income taxes: Ethanol
& By-Products (1) $ 10,077 $ 7,330 $ 21,086 $ 16,253 Refined
coal (2) (4,788 ) - (7,647 ) - Corporate and other
(430 ) (857
) (931 )
(1,778 ) Total income (loss) before
income taxes
$ 4,859
$ 6,473 $
12,508 $ 14,475
Benefit (provision) for income taxes: Ethanol
& By-Products $ (2,029 ) $ (2,675 ) $ (3,449 ) $ (5,380 )
Refined coal 7,597 - 11,596 - Corporate and other
63 373
187 688 Total
benefit (provision) for income taxes
$
5,631 $ (2,302
) $ 8,334
$ (4,692 ) Segment
profit (loss): Ethanol & By-Products $ 6,561 $ 3,419 $
15,150 $ 8,561 Refined coal 3,018 - 4,289 - Corporate and other
(362 ) (478
) (726 )
(1,076 ) Net income attributable to REX
common shareholders
$ 9,217
$ 2,941 $
18,713 $ 7,485
(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, “Although challenging ethanol crush spread trends
prevailed in the fiscal second quarter, we generated 18.2%
year-over-year growth in net sales and revenue, a 26.8% rise in
gross profit and a 37.5% increase in income before taxes from our
ethanol and by-products segment. These gains reflect an increase in
distillers grain pricing, the quality and efficiencies of our
plants and people, and our investments in expanding the output of
our consolidated plants which enabled us to increase the volume of
ethanol sold by 18.6% over last year’s second quarter. The growth
of our ethanol and by-products segment, combined with tax benefits
related to our refined coal operations and the enactment of the Tax
Cuts and Jobs Act, resulted in 213.4% growth in fiscal 2018 second
quarter net income attributable to REX common shareholders and a
217.8% rise in EPS attributable to REX common shareholders.
“The fiscal second quarter again demonstrated the value of our
ethanol operations and disciplined operating practices and we
remain confident that our refined coal investment will continue to
benefit our financial results. With our debt-free balance sheet and
healthy liquidity position, including cash and short-term
investments of $185.7 million, we allocated approximately $7.5
million to share repurchases during the quarter and we continue to
evaluate other near- and long-term opportunities to enhance
shareholder value.”
Balance Sheet and Share Repurchase Program
At July 31, 2018, REX had cash and cash equivalents and
short-term investments of $185.7 million, $54.0 million of which
was at the parent company, and $131.7 million of which was at its
consolidated production facilities. This compares with cash and
cash equivalents at January 31, 2018, of $191.0 million, $74.1
million of which was at the parent company, and $116.9 million of
which was at its consolidated ethanol production facilities.
On March 20, 2018, REX’s Board of Directors approved an increase
in the share repurchase plan providing the Company with the
authority to repurchase up to an additional 500,000 shares of its
common stock. During the second quarter of fiscal 2018, the Company
purchased 102,012 shares at an average cost of $73.72. REX is now
authorized to repurchase up to 427,181 shares of its common stock.
The Company had 6,351,739 shares outstanding at July 31, 2018.
Repurchases by the Company will be subject to available
liquidity, general market and economic conditions, alternate uses
for the capital and other factors. Share repurchases may be made
from time to time in open market transactions, block trades or in
private transactions in accordance with applicable securities laws
and regulations and other legal requirements. There is no minimum
number of shares that the Company is required to repurchase and the
repurchase program may be suspended or discontinued at any time
without prior notice. All shares purchased will be held in the
Company’s treasury for possible future use.
The following table summarizes select
data related to theCompany’s consolidated alternative energy
interests:
Three Months Ended
Six MonthsEnded
July 31, July 31,
2018
2017
2018
2017
Average selling price per gallon of ethanol $ 1.38 $ 1.45 $ 1.35 $
1.45 Average selling price per ton of dried distillers grains $
148.98 $ 95.39 $ 143.28 $ 97.81 Average selling price per pound of
non-food
grade corn oil
$
0.24
$
0.29
$
0.24
$
0.28
Average selling price per ton of modified distillers grains $ 63.72
$ 41.00 $ 67.81 $ 41.47 Average cost per bushel of grain $ 3.60 $
3.38 $ 3.55 $ 3.47 Average cost of natural gas (per mmbtu)
$ 2.86 $ 3.30 $ 3.16
$ 3.52
Supplemental Data Related to REX’s
Alternative Energy Interests:
REX American Resources CorporationEthanol
Ownership Interests/Effective Annual Gallons Shipped as of July 31,
2018
(gallons in millions)
Entity
Trailing TwelveMonths
GallonsShipped
Current
REXOwnershipInterest
REX’s Current Effective
Ownership of Trailing Twelve Month Gallons
Shipped
One Earth Energy, LLC(Gibson City,
IL)
134.8 75.1% 101.2
NuGen Energy, LLC(Marion, SD)
138.4 99.5% 137.7
Big River Resources West Burlington,
LLC(West Burlington, IA)
108.6 10.3% 11.2
Big River Resources Galva, LLC
(Galva, IL)
128.5 10.3% 13.2
Big River United Energy, LLC
(Dyersville, IA)
129.8 5.7% 7.4
Big River Resources Boyceville,
LLC(Boyceville, WI)
57.3 10.3% 5.9
Total 697.4 n/a
276.6
Second Quarter Conference Call
REX 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 212/231-2910 (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 697 million
gallons of ethanol over the twelve month period ended July 31,
2018. REX’s effective ownership of the trailing twelve month
gallons shipped (for the twelve months ended July 31, 2018) by the
ethanol production facilities in which it has ownership interests
was approximately 277 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 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 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
SUBSIDIARIESConsolidated Statements of Operations(in
thousands, except per share amounts)Unaudited
Three Months Ended
Six Months Ended
July 31, July 31,
2018
2017
2018
2017
Net sales and revenue $ 128,757 $ 108,744 $ 249,577 $ 221,887 Cost
of sales
119,358
97,963 229,327
198,617 Gross profit 9,399 10,781 20,250
23,270 Selling, general and administrative expenses (6,110 ) (4,779
) (10,663 ) (10,181 ) Equity in income of unconsolidated ethanol
affiliates 874 137 1,571 837 Interest and other income
696 334
1,350 549 Income
from continuing operations before income taxes and non-controlling
interests
4,859
6,473
12,508
14,475
Benefit (provision) for income taxes
5,631
(2,302 )
8,334 (4,692 )
Net income including non-controlling interests 10,490 4,171 20,842
9,783 Net income attributable to non-controlling interests
(1,273 ) (1,230
) (2,129 )
(2,298 ) Net income attributable to REX
common shareholders
$ 9,217
$ 2,941 $
18,713 $ 7,485
Weighted average shares outstanding – basic and diluted
6,466 6,593
6,517 6,592
Basic and diluted net income per share attributable to REX
common shareholders
$
1.43
$
0.45
$
2.87
$
1.14
- balance sheets follow -
REX AMERICAN RESOURCES CORPORATION AND
SUBSIDIARIESConsolidated Balance Sheets(in
thousands) Unaudited
July 31, Jan.
31, ASSETS: ASSETS
2018
2018
CURRENT ASSETS: Cash and cash equivalents $ 73,761 $ 190,988
Short-term investments 111,969 - Restricted cash 778 354 Accounts
receivable 14,648 12,913 Inventory 25,171 20,755 Refundable income
taxes 8,371 6,612 Prepaid expenses and other
7,716 7,412 Total
current assets 242,414 239,034 Property and equipment-net 190,823
197,827 Other assets 7,816 7,454 Equity method investments
35,117 34,549 TOTAL
ASSETS
$ 476,170 $
478,864 LIABILITIES AND EQUITY
CURRENT LIABILITIES: Accounts payable – trade $ 11,595 $
8,149 Accrued expenses and other current liabilities
10,555 13,716 Total
current liabilities
22,150
21,865 LONG TERM LIABILITIES: Deferred taxes
13,768 21,706 Other long term liabilities
4,004
3,367 Total long term liabilities
17,772 25,073
COMMITMENTS AND CONTINGENCIES EQUITY: REX shareholders’ equity:
Common stock, 45,000 shares authorized, 29,853 shares issued at par
299 299 Paid in capital 148,212 146,923 Retained earnings 566,626
547,913 Treasury stock, 23,502 and 23,287 shares, respectively
(329,999 )
(313,643 ) Total REX shareholders’ equity
385,138 381,492 Non-controlling interests
51,110 50,434 Total
equity
436,248
431,926 TOTAL LIABILITIES AND EQUITY
$ 476,170 $
478,864
- statements of cash flows follow -
REX AMERICAN RESOURCES CORPORATION AND
SUBSIDIARIESConsolidated Statements of Cash Flows(in
thousands) Unaudited
Six Months Ended July 31,
2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 20,842 $ 9,783
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 12,033 9,955 Income from equity
method investments (1,571 ) (837 ) Dividends received from equity
method investments 1,003 2,005 Accrued interest income (815 ) -
Deferred income tax (7,938 ) 537 Stock based compensation expense
443 350 Loss (gain) on disposal of property and equipment 104 (13 )
Loss on sale of investment - 13 Changes in assets and liabilities:
Accounts receivable (1,735 ) 886 Inventory (4,416 ) (5,034 ) Other
assets (2,443 ) (953 ) Accounts payable-trade 4,002 1,678 Other
liabilities
(1,262 )
(4,828 ) Net cash provided by operating
activities
18,247
13,542 CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,813 ) (14,366 ) Purchase of short-term
investments (111,154 ) - Other
18
219 Net cash used in investing activities
(116,949 )
(14,147 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Treasury stock acquired (16,648 ) - Payments to
non-controlling interests holders (1,699 ) (1,725 ) Capital
contributions from minority investor
246
- Net cash used in financing activities
(18,101 )
(1,725 ) NET DECREASE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH (116,803 ) (2,330 ) CASH, CASH
EQUIVALENTS AND RESTRICTED CASH-Beginning of year
191,342 188,706
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of year
$ 74,539 $
186,376 Non cash investing activities – Accrued
capital expenditures
$ 469
$ 744 Non cash financing
activities – Stock awards accrued
$ 335
$ 281 Non cash investing
activities – Stock awards issued
$
1,473
$ 1,195
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180828005128/en/
For REX American Resources CorporationDouglas Bruggeman,
937-276-3931Chief Financial OfficerorJCIRJoseph Jaffoni, Norberto
Aja, 212-835-8500rex@jcir.com
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