REX American Resources Corporation (NYSE: REX) (“REX” or “the
Company”) today reported financial results for its fiscal 2018
third quarter (“Q3 ‘18”) ended October 31, 2018. REX management
will host a conference call and webcast today at 11:00 a.m. ET.
Conference Call:
(212) 231-2939
Webcast / Replay URL:
www.rexamerican.com/Corp/Page4.aspxThe
webcast will be available for replay for 30 days.
REX American Resources’ Q3 ‘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 Q3 ‘18 net sales and revenue increased 2.1% to $123.8
million, compared with $121.2 million in Q3 ‘17. The year-over-year
net sales and revenue increase primarily reflects higher average
selling prices during the current year quarter for dried and
modified distillers grains as well as increased production in the
Company’s ethanol and by-products segment, which was partially
offset by an 11.7% reduction in the average selling price per
gallon of ethanol. The Company’s Q3 ‘18 gross profit for its
ethanol and by-products segment was $11.3 million, compared with
$18.3 million in Q3 ‘17, primarily reflecting lower ethanol
pricing. As a result, the ethanol and by-products segment income
before income taxes was $8.4 million in Q3 ‘18, compared to $15.6
million in Q3 ‘17. The Company’s refined coal operation incurred a
$3.5 million gross loss and a $4.2 million loss before income taxes
in Q3 ‘18, compared to a $3.4 million gross loss and a loss before
income taxes of $5.7 million in Q3 ‘17. As a result, REX reported
income from continuing operations before income taxes and
non-controlling interests in Q3 ‘18 of $3.8 million, compared with
$9.3 million in Q3 ‘17. While the refined coal operation negatively
impacted gross profit and income before income taxes, the Company’s
refined coal operation contributed to a lower effective tax
rate.
Net income attributable to REX shareholders in Q3 ‘18 was $11.9
million, compared to $13.2 million in Q3 ‘17. Q3 ‘18 basic and
diluted net income per share attributable to REX common
shareholders was $1.86 per share, compared to $2.00 per share in Q3
‘17. Per share results in Q3 ‘18 and Q3 ‘17 are based on 6,388,000
and 6,597,000 diluted weighted average shares outstanding,
respectively.
Segment Income Statement Data:
Three Months
Ended
Nine Months
Ended
($ in thousands)
October 31, October 31, 2018
2017 2018
2017 Net sales and revenue:
Ethanol & By-Products (1) $ 123,546 $ 120,971 $ 372,717
$ 342,858 Refined coal (2) (3)
204
193 610 193
Total net sales and revenues $
123,750 $ 121,164
$ 373,327 $
343,051 Gross profit (loss): Ethanol
& By-Products (1) $ 11,260 $ 18,257 $ 38,475 $ 41,527 Refined
coal (2)
(3,513) (3,390)
(10,478) (3,390) Total
gross profit $ 7,747 $
14,867 $ 27,997
$ 38,137 Income (loss) before
income taxes: Ethanol & By-Products (1) $ 8,405 $ 15,554 $
29,491 $ 31,807 Refined coal (2) (4,240) (5,684) (11,887) (5,684)
Corporate and other
(410)
(611) (1,341)
(2,389) Total income (loss) before income taxes
$ 3,755 $ 9,259
$ 16,263 $
23,734 Benefit (provision) for income
taxes: Ethanol & By-Products $ 1,643 $ (4,379) $ (1,806) $
(9,712) Refined coal 8,318 9,918 19,914 9,918 Corporate and other
53 196
240 837 Total benefit (provision)
before income taxes
$ 10,014
$ 5,735 $
18,348 $ 1,043
Segment profit (loss): Ethanol & By-Products
$
7,946
$ 9,058 $ 23,096 $ 17,665 Refined coal
4,260
4,520 8,549 4,520 Corporate and other
(331)
(410) (1,057)
(1,532) Net income attributable to REX common
shareholders
$
11,875
$ 13,168 $
30,588 $ 20,653
(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 third quarter saw a continuation of the operating
environment encountered during the first half of 2018, including
increased pressure on ethanol pricing. We were successful in
partially offsetting these challenges with increased distillers
grains pricing, compared to the prior year period, as well as the
continued benefit of our refined coal operation. As a result, REX
delivered another profitable quarter as we generated approximately
$11.9 million in net income, or $1.86 in earnings per share.
“Looking ahead, while the challenging environment continues to
persist, we remain focused on the long-term prospects for our
businesses. In addition, our debt free balance sheet and strong
liquidity position, including cash, cash equivalents and short-term
investments of $193 million and working capital of $228 million,
allow us to continue to opportunistically repurchase shares and to
remain well positioned to evaluate other near- and long-term
opportunities to enhance shareholder value.”
Balance Sheet and Share Repurchase Program
At October 31, 2018, REX had cash and cash equivalents and
short-term investments of $193.1 million, $49.9 million of which
was at the parent company, and $143.2 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 third quarter of fiscal 2018, the Company
purchased 24,561 shares at an average cost of $72.12. REX is now
authorized to repurchase up to 402,620 shares of its common stock.
The Company had 6,327,178 shares outstanding at October 31,
2018.
Repurchases by the Company are 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 private
transactions in accordance with applicable securities laws and
regulations and other legal requirements. There is no minimum
number of shares 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 REX’s
consolidated alternative energy
interests:
Three Months
Ended
Nine Months
Ended
October 31, October 31,
2018
2017
2018
2017
Average selling price per gallon of ethanol $ 1.28 $ 1.45 $ 1.33 $
1.45 Average selling price per ton of dried distillers grains $
139.67 $ 108.34 $ 141.90 $ 101.44 Average selling price per pound
of non-food
grade corn oil
$
0.25
$
0.30
$
0.24
$
0.29
Average selling price per ton of modified distillers grains $ 46.67
$ 41.64 $ 59.96 $ 41.53 Average cost per bushel of grain $ 3.32 $
3.35 $ 3.47 $ 3.39 Average cost of natural gas (per mmbtu)
$ 2.90 $ 3.22 $ 3.07
$ 3.41
Supplemental data related to REX’s
alternative energy interests:
REX American Resources CorporationEthanol
Ownership Interests/Effective Annual Gallons Shipped as of October
31, 2018
(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)
137.2 75.1% 103.0
NuGen Energy, LLC
(Marion, SD)
141.0 99.5% 140.3
Big River Resources West Burlington,
LLC(West Burlington, IA)
108.4 10.3% 11.2
Big
River Resources Galva, LLC
(Galva, IL)
128.3 10.3% 13.2
Big
River United Energy, LLC
(Dyersville, IA)
129.8 5.7% 7.4
Big
River Resources Boyceville, LLC
(Boyceville, WI)
57.4 10.3% 5.9
Total 702.1 n/a
281.0
Third 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 212/231-2939 (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 702 million
gallons of ethanol over the twelve month period ended October 31,
2018. REX’s effective ownership of the trailing twelve month
gallons shipped (for the twelve months ended October 31, 2018) by
the ethanol production facilities in which it has ownership
interests was approximately 281 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
SUBSIDIARIES
Consolidated Statements of
Operations
(in thousands, except per share
amounts) Unaudited
Three Months
Ended
Nine Months
Ended
October 31, October 31,
2018
2017
2018
2017
Net sales and revenue $ 123,750 $ 121,164 $ 373,327 $ 343,051 Cost
of sales
116,003 106,297
345,330 304,914 Gross
profit 7,747 14,867 27,997 38,137 Selling, general and
administrative expenses (5,412) (7,347) (16,075) (17,528) Equity in
income of unconsolidated ethanol affiliates 611 1,094 2,182 1,931
Interest and other income
809
645 2,159
1,194 Income from continuing operations before income
taxes and non-controlling interests
3,755
9,259
16,263
23,734
Benefit for income taxes
10,014
5,735 18,348
1,043 Net income including non-controlling interests
13,769 14,994 34,611 24,777 Net income attributable to
non-controlling interests
(1,894)
(1,826) (4,023)
(4,124) Net income attributable to REX common
shareholders
$ 11,875 $
13,168 $ 30,588
$ 20,653 Weighted average shares
outstanding – basic and diluted
6,388
6,597 6,473
6,594 Basic and diluted net income per share
attributable to REX common shareholders
$
1.86
$
2.00
$
4.73
$
3.13
- balance sheets follow -
REX AMERICAN RESOURCES CORPORATION AND
SUBSIDIARIES
Consolidated Balance Sheets
(in thousands) Unaudited
October 31,
January 31,
ASSETS:
2018
2018
CURRENT ASSETS: Cash and cash equivalents $ 178,229 $ 190,988
Short-term investments 14,891 - Restricted cash 434 354 Accounts
receivable 15,732 12,913 Inventory 21,636 20,755 Refundable income
taxes 8,339 6,612 Prepaid expenses and other
8,111 7,412 Total current assets
247,372 239,034 Property and equipment-net 186,458 197,827 Other
assets 8,562 7,454 Equity method investments
33,724 34,549 TOTAL ASSETS
$ 476,116 $
478,864 LIABILITIES AND EQUITY CURRENT
LIABILITIES: Accounts payable – trade $ 9,387 $ 8,149 Accrued
expenses and other current liabilities
10,225
13,716 Total current liabilities
19,612 21,865 LONG TERM
LIABILITIES: Deferred taxes 123 21,706 Other long term liabilities
7,947 3,367 Total long term
liabilities
8,070 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 148,242 146,923 Retained earnings 578,501
547,913 Treasury stock, 23,527 and 23,287 shares, respectively
(331,763) (313,643) Total
REX shareholders’ equity 395,279 381,492 Non-controlling interests
53,155 50,434 Total equity
448,434 431,926 TOTAL
LIABILITIES AND EQUITY
$ 476,116
$ 478,864
- statements of cash flows follow -
REX AMERICAN RESOURCES CORPORATION AND
SUBSIDIARIES
Consolidated Statements of Cash
Flows
(in thousands) Unaudited
Nine Months Ended
October 31,
2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 34,611 $ 24,777
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 18,673 15,695 Income from equity
method investments (2,182) (1,931) Dividends received from equity
method investments 3,007 4,009 Interest income from investments
(993) - Deferred income tax (22,146) (5,682) Stock based
compensation expense 730 881 Loss (gain) on disposal of property
and equipment 104 87 Loss on sale of investment - 13 Changes in
assets and liabilities: Accounts receivable (2,819) 2,023 Inventory
(881) (7,039) Other assets (2,996) (222) Accounts payable-trade
1,682 2,195 Other liabilities
2,079
(746) Net cash provided by operating activities
28,869 34,060 CASH FLOWS FROM
INVESTING ACTIVITIES: Capital expenditures (7,954) (19,315)
Acquisition of business, net of cash acquired - (12,049) Sale of
short-term investments 112,091 - Purchase of short-term investments
(125,989) - Other
25 275
Net cash used in investing activities
(21,827)
(31,089) CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock acquired (18,419) - Payments to non-controlling
interests holders (1,734) (1,725) Capital contributions from
minority investor
432 738
Net cash used in financing activities
(19,721)
(987) NET (DECREASE) INCREASE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH (12,679) 1,984 CASH, CASH
EQUIVALENTS AND RESTRICTED CASH-Beginning of period
191,342 188,706 CASH, CASH
EQUIVALENTS AND RESTRICTED CASH-End of period
$
178,663 $ 190,690 Non cash
investing activities – Accrued capital expenditures
$
603 $ 1,049 Non cash
financing activities – Stock awards accrued
$
585 $ 768 Non cash investing
activities – Stock awards issued
$ 1,473
3 $ 1,195
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181128005147/en/
Douglas BruggemanChief Financial Officer(937) 276-3931Joseph
Jaffoni, Norberto AjaJCIR(212) 835-8500rex@jcir.com
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