REX REX American Resources Corporation

Full Year Diluted EPS of $4.91

REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2018 fourth quarter (“Q4 ‘18”) ended January 31, 2019. 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’ Q4 ‘18 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 Q4 ‘18 net sales and revenue increased 3.5% to $113.3 million, compared with $109.5 million in Q4 ‘17. The year-over-year net sales and revenue increase was primarily due to higher average selling prices 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 a 7.9% reduction in the average selling price per gallon of ethanol. The Company’s Q4 ‘18 gross profit for its ethanol and by-products segment was $5.4 million, compared with $10.0 million in Q4 ‘17, primarily resulting from lower ethanol crush spreads. As a result, the ethanol and by-products segment income before income taxes was $1.4 million in Q4 ‘18, compared to income of $6.5 million in Q4 ‘17. The Company’s refined coal operation incurred a $3.2 million gross loss and a $3.3 million loss before income taxes in Q4 ‘18, compared to a $4.0 million gross loss and a loss before income taxes of $4.3 million in Q4 ‘17. As a result, REX reported a loss from continuing operations before income taxes and non-controlling interests in Q4 ‘18 of $1.7 million, compared with income of $1.7 million in Q4 ‘17. While the refined coal operation negatively impacted gross profit and income before income taxes, it contributed to a lower effective tax rate.

Net income attributable to REX shareholders in Q4 ‘18 was $1.1 million, compared to $19.1 million in Q4 ‘17. Q4 ‘18 basic and diluted net income per share attributable to REX common shareholders was $0.17 per share, compared to $2.89 per share in Q4 ‘17. The prior year results reflected a $14.4 million tax benefit as a result of the remeasurement of the Company’s deferred tax liabilities in connection with the passage of the 2017 Tax Cuts and Job Act. Per share results in Q4 ‘18 and Q4 ‘17 are based on 6,341,000 and 6,604,000 diluted weighted average shares outstanding, respectively.

Segment Income Statement Data:

    Three Months Twelve Months Ended Ended ($ in thousands) January 31, January 31,   2019       2018       2019       2018   Net sales and revenue:     Ethanol & By-Products (1) $ 113,168 $ 109,295 $ 485,885 $ 452,153 Refined coal (2) (3)   176     240     786     433   Total net sales and revenue $ 113,344   $ 109,535   $ 486,671   $ 452,586     Gross profit (loss): Ethanol & By-Products (1) $ 5,381 $ 9,981 $ 43,856 $ 51,509 Refined coal (2)   (3,163 )   (3,957 )   (13,641 )   (7,348 ) Total gross profit $ 2,218   $ 6,024   $ 30,215   $ 44,161     Income (loss) before income taxes: Ethanol & By-Products (1) $ 1,354 $ 6,545 $ 31,545 $ 38,352 Refined coal (2) (3,317 ) (4,336 ) (15,204 ) (10,021 ) Corporate and other   288     (550 )   (1,753 )   (2,938 ) Total income (loss) before income taxes $ (1,675 ) $ 1,659   $ 14,588   $ 25,393     Benefit (provision) for income taxes: Ethanol & By-Products $ (539 ) $ 13,004 $ (2,343 ) $ 3,245 Refined coal 4,759 5,250 24,674 15,168 Corporate and other   354     222     591     1,106   Total benefit (provision) for income taxes $ 4,574   $ 18,476   $ 22,922   $ 19,519     Segment profit (loss): Ethanol & By-Products $ (450 ) $ 18,261 $ 23,346 $ 35,880 Refined coal 1,597 1,108 10,148 5,628 Corporate and other   (90 )   (316 )   (1,849 )   (1,802 ) Net income attributable to REX common shareholders $ 1,057   $ 19,053   $ 31,645   $ 39,706  

(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 fourth quarter proved to be the most challenging period of the year, as weak ethanol pricing significantly impacted margins. Despite these headwinds, stronger distillers grains pricing, coupled with our ability to efficiently increase output across our ethanol and by-products segment and the benefit of our refined coal operation, resulted in our ability to continue to operate profitably and generate $31.6 million of net income for the fiscal full year 2018.

“As we enter fiscal 2019, we remain focused on near- and long-term opportunities to enhance shareholder value as we look to leverage our robust balance sheet, including cash, cash equivalents and short-term investments in excess of $200 million and working capital of $234 million. While conditions have remained challenging so far in fiscal 2019, we remain confident in our disciplined operating approach and the value of ethanol as a worldwide fuel supply.”

Balance Sheet and Share Repurchase Program

At January 31, 2019, REX had cash and cash equivalents and short-term investments of $203.5 million, $54.8 million of which was at the parent company, and $148.7 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.

During the fourth quarter of fiscal 2018, the Company purchased 52,759 shares at an average cost of $65.14. REX is now authorized to repurchase up to 349,861 shares of its common stock. The Company had 6,274,419 shares outstanding at January 31, 2019.

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   Twelve Months Ended Ended January 31, January 31,

2019

 

2018

2019

 

2018

Average selling price per gallon of ethanol $ 1.17 $ 1.27 $ 1.29 $ 1.40 Average selling price per ton of dried distillers grains $ 143.20 $ 119.20 $ 142.20 $ 105.89

Average selling price per pound of non-food grade corn oil

$

0.25

$

0.28

$

0.25

$

0.29

Average selling price per ton of modified distillers grains $ 58.30 $ 57.03 $ 59.42 $ 45.87 Average cost per bushel of grain $ 3.41 $ 3.18 $ 3.46 $ 3.35 Average cost of natural gas (per mmbtu)   $ 4.07   $ 4.65   $ 3.33   $ 3.75    

Supplemental data related to REX’s alternative energy interests:

  REX American Resources Corporation Ethanol Ownership Interests/Effective Annual Gallons Shipped as of January 31, 2019 (gallons in millions)

Entity

 

TrailingTwelveMonthsGallonsShipped

 

CurrentREXOwnershipInterest

 

REX’s Current EffectiveOwnership of Trailing TwelveMonth Gallons Shipped

One Earth Energy, LLC (Gibson City, IL)   141.9   75.1%   106.6 NuGen Energy, LLC (Marion, SD)   143.9   99.5%   143.2

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

  109.8   10.3%   11.3 Big River Resources Galva, LLC (Galva, IL)   128.8   10.3%   13.3 Big River United Energy, LLC (Dyersville, IA)   131.7   5.7%   7.5

Big River Resources Boyceville, LLC (Boyceville, WI)

  58.3   10.3%   6.0 Total   714.4   n/a   287.9      

Fourth 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 212/271-4615 (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 714 million gallons of ethanol over the twelve month period ended January 31, 2019. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended January 31, 2019) by the ethanol production facilities in which it has ownership interests was approximately 288 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 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   Twelve Months Ended Ended January 31, January 31,

2019

 

2018

2019

 

2018

Net sales and revenue $ 113,344 $ 109,535 $ 486,671 $ 452,586 Cost of sales   111,126     103,511     456,456     408,425   Gross profit 2,218 6,024 30,215 44,161 Selling, general and administrative expenses (4,476 ) (6,532 ) (20,551 ) (24,060 ) Equity in (loss) income of unconsolidated ethanol affiliates (646 ) 1,301 1,536 3,232 Interest and other income, net   1,229     866     3,388     2,060   (Loss) Income from continuing operations before income taxes and non-controlling interests

(1,675

)

1,659

14,588

25,393

Benefit for income taxes   4,574     18,476     22,922     19,519   Net income including non-controlling interests 2,899 20,135 37,510 44,912 Net income attributable to non-controlling interests   (1,842 )   (1,082 )   (5,865 )   (5,206 ) Net income attributable to REX common shareholders $ 1,057   $ 19,053   $ 31,645   $ 39,706     Weighted average shares outstanding – basic and diluted   6,341     6,604     6,440     6,596     Basic and diluted net income per share attributable to REX common shareholders

$

0.17

 

$

2.89

 

$

4.91

 

$

6.02

   

- balance sheets follow -

  REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets

(in thousands)

Unaudited

   

January 31,

January 31,

ASSETS

2019

2018

CURRENT ASSETS: Cash and cash equivalents $ 188,531 $ 190,988 Restricted cash 281 354 Short-term investments 14,975 - Accounts receivable 11,378 12,913 Inventory 18,477 20,755 Refundable income taxes 7,695 6,612 Prepaid expenses and other   9,284     7,412   Total current assets 250,621 239,034 Property and equipment-net 182,521 197,827 Other assets 6,176 7,454 Equity method investments   32,075     34,549   TOTAL ASSETS $ 471,393   $ 478,864   LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable – trade $ 7,463 $ 8,149 Accrued expenses and other current liabilities   9,546     13,716   Total current liabilities   17,009     21,865   LONG TERM LIABILITIES: Deferred taxes 4,185 21,706 Other long term liabilities   4,928     3,367   Total long term liabilities   9,113     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 148,273 146,923 Retained earnings 579,558 547,913 Treasury stock, 23,580 and 23,287 shares, respectively   (335,193 )   (313,643 ) Total REX shareholders’ equity 392,937 381,492 Non-controlling interests   52,334     50,434   Total equity   445,271     431,926   TOTAL LIABILITIES AND EQUITY $ 471,393   $ 478,864    

- statements of cash flows follow -

  REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows

(in thousands)

Unaudited

    Fiscal Years Ended January 31,

2019

 

2018

CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 37,510 $ 44,912 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,828 21,462 Stock based compensation expense 669 1,641 Income from equity method investments (1,536 ) (3,232 ) Dividends received from equity method investments 4,010 6,516 Interest income from investments (1,077 ) - Loss on sale of investment - 13 Loss on disposal of real estate and property and equipment 104 192 Deferred income tax (23,364 ) (18,605 ) Changes in assets and liabilities: Accounts receivable 1,535 (1,089 ) Inventory 2,278 (3,649 ) Prepaid expenses and other assets 5,217 (1,170 ) Income taxes refundable (1,083 ) (5,542 ) Accounts payable-trade 339 (1,705 ) Accrued expenses and other liabilities   (1,499 )   1,225   Net cash provided by operating activities   47,931     40,969   CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (10,775 ) (24,017 ) Acquisition of business, net of cash acquired - (12,049 ) Purchases of short-term investments (125,989 ) - Sales of short-term investments 112,091 - Repayment of note receivable 27 26 Proceeds from sale of investment - 64 Proceeds from sale of real estate and property and equipment - 104 Restricted investments and deposits   5     150   Net cash used in investing activities   (24,641 )   (35,722 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payments to non-controlling interests holders (4,489 ) (3,529 ) Capital contributions from minority investor 524 918 Treasury stock acquired   (21,855 )   -   Net cash used in financing activities   (25,820 )   (2,611 ) NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (2,530 ) 2,636 CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of year   191,342     188,706   CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of year $ 188,812   $ 191,342   Non cash financing activities – Equity awards issued $ 1,473   $ 1,195   Non cash financing activities – Equity awards accrued $ 487   $ 1,485   Non cash investing activities – Accrued capital expenditures $ -   $ 1,149    

View source version on businesswire.com: https://www.businesswire.com/news/home/20190321005148/en/

Douglas BruggemanChief Financial Officer(937) 276-3931

Joseph Jaffoni, Norberto AjaJCIR(212) 835-8500rex@jcir.com