Files Class VI Permit Application Related to Carbon Sequestration Project

REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2022 third quarter (“Q3 ‘22”) ended October 31, 2022. 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

 

The webcast will be available for replay for 30 days.

REX American Resources’ Q3 ‘22 results principally reflect its interests in six ethanol production facilities. The One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) ethanol production facilities are consolidated, while the four other ethanol plants are reported as equity in income of unconsolidated ethanol affiliates. The Company reports results for its ethanol and by-products component as continuing operations and beginning in the third quarter of fiscal 2021 its refined coal component as discontinued operations as operations have now ceased.

REX’s Q3 ‘22 net sales and revenue were $220.3 million, compared with $203.1 million in Q3 ‘21. The year-over-year net sales and revenue increase primarily reflects higher pricing for ethanol, dried distillers grains, non-food grade corn oil and modified distillers grains. Q3 ‘22 gross profit for the Company’s continuing operations decreased to $11.3 million, compared with $25.2 million in Q3 ‘21 as the higher net sales and revenue were offset by significant increases in corn and natural gas prices. This led to Q3 ‘22 income before income taxes and non-controlling interests of $6.1 million, compared with $19.2 million in the comparable year ago period.

Net income attributable to REX shareholders from continuing operations in Q3 ‘22 was $3.2 million, compared to $13.3 million in Q3 ‘21. Q3 ‘22 basic and diluted net income per share attributable to REX common shareholders from continuing operations was $0.18, compared to $0.74 per share in Q3 ‘21. Per share results for Q3 ‘22 and Q3 ‘21 are based on 17,591,000 and 17,890,000 diluted weighted average shares outstanding, respectively, reflecting the Company’s 3-for-1 common stock split effected August 5, 2022.

REX American Resources’ Chief Executive Officer, Zafar Rizvi, commented, “The third quarter marked a difficult operating environment as we faced significant price increases in our two largest inputs – corn and natural gas – as well as ongoing logistical constraints. Despite these challenges, we were able to post our ninth consecutive quarter of positive income along with income per share for the first nine months of fiscal 2022 of $1.10. We have maintained our robust balance sheet and liquidity position which at quarter end included approximately $290 million in cash and short-term investments and no debt. We remain confident our strong capital structure positions REX to continue to benefit our shareholders and support our ethanol businesses while strategically investing in initiatives that can yield attractive returns for our employees, partners and shareholders.

“In this regard, our team remains very excited about our carbon capture and sequestration project and is making meaningful progress on this front. We filed a Class VI injection well permit application for three wells to allow us to inject carbon dioxide into deep rock formations and recently signed a contract for a carbon compression facility for our One Earth Energy ethanol plant. The language and opportunities in the Inflation Reduction Act are encouraging, including the new clean fuel production credit under section 45Z and an increase in the 45Q credit to $85 per ton. We believe this can bring significant financial benefits to our carbon capture and sequestration initiatives and to the ethanol industry as a whole.”

Balance Sheet

As of October 31, 2022, REX had cash and cash equivalents and short-term investments of $289.8 million, $30.5 million of which was at the parent company, and $259.3 million of which was at its consolidated production facilities. This compares with cash, cash equivalents and short-term investments at January 31, 2022, of $255.7 million, $42.9 million of which was at the parent company, and $212.8 million of which was at its consolidated ethanol production facilities.

During the fiscal third quarter ended October 31, 2022, the Company repurchased 249,570 shares of its common stock at a cost of approximately $6.8 million. The Company is currently authorized to repurchase up to an additional 876,786 shares of common stock and has approximately 17,390,469 shares of common stock outstanding.

The following table summarizes select data related to REX’s consolidated alternative energy interests:

  Three Months Ended   Nine Months Ended   October 31, October 31,  

2022

2021

2022

2021

Average selling price per gallon of ethanol

 $

         2.49

 $

         2.31

 $

         2.48

 $

         2.12

Average selling price per ton of dried distillers grains

 $

     230.29

 $

     184.85

 $

     232.51

 $

     200.02

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

 $

         0.74

 $

         0.59

 $

         0.70

 $

         0.47

Average selling price per ton of modified distillers grains

 $

     116.49

 $

       92.10

 $

     120.23

 $

       83.97

Average cost per bushel of grain

 $

         7.52

 $

         6.45

 $

         7.28

 $

         6.05

Average cost of natural gas (per MmBtu)

 $

         7.15

 $

         4.58

 

 $

         6.69

 $

         3.69

Third Quarter Conference Call REX will host a conference call at 11:00 a.m. ET today to discuss the quarterly results and will 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 at, www.rexamerican.com. A webcast replay will be available for 30 days following the live event.

About REX American Resources Corporation REX American Resources has interests in six ethanol production facilities, which in aggregate shipped approximately 699 million gallons of ethanol over the twelve-month period ended October 31, 2022. REX’s effective ownership of the trailing twelve-month gallons shipped (for the twelve months ended October 31, 2022) by the ethanol production facilities in which it has ownership interests was approximately 277 million gallons. 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 effect of pandemics such as COVID-19 on the Company’s business operations, including impacts on supplies, demand, personnel and other factors, the impact of legislative and regulatory changes, the price volatility and availability of corn, distillers grains, ethanol, non-food grade corn oil, commodity market risk, gasoline and natural gas, ethanol plants operating efficiently and according to forecasts and projections, logistical interruptions, changes in the international, national or regional economies, the impact of inflation, the ability to attract employees, 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.

 

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,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales and revenue

 $

  220,277

 

 $

  203,066

 

 $

  654,833

 

 $

  562,786

 

Cost of sales

 

     208,941

 

 

     177,914

 

 

     615,001

 

 

     504,003

 

Gross profit

 

       11,336

 

 

       25,152

 

 

       39,832

 

 

       58,783

 

Selling, general and administrative expenses

 

       (7,886

)

 

       (6,310

)

 

     (22,237

)

 

     (22,444

)

Equity in income of unconsolidated ethanol affiliates

 

            661

 

 

            349

 

 

         6,210

 

 

         2,763

 

Interest and other income, net

 

         1,983

 

 

              35

 

 

       10,338

 

 

            117

 

Income before income taxes and noncontrolling interests

 

         6,094

 

 

       19,226

 

 

       34,143

 

 

       39,219

 

Provision for income taxes

 

       (1,196

)

 

       (4,338

)

 

       (7,374

)

 

       (8,329

)

Net income from continuing operations

 

         4,898

 

 

       14,888

 

 

       26,769

 

 

       30,890

 

Net income attributable to noncontrolling interests (continuing operations)

 

       (1,714

)

 

       (1,562

)

 

       (7,233

)

 

       (4,585

)

Net income attributable to REX common shareholders (continuing operations)

 

         3,184

 

 

       13,326

 

 

       19,536

 

 

       26,305

 

  Net income from discontinued operations, net of tax

 

               -

 

 

         1,815

 

 

               -

 

 

         4,263

 

Net loss attributable to noncontrolling interests (discontinued operations)

 

               -

 

 

            137

 

 

               -

 

 

            370

 

Net income attributable to REX common shareholders (discontinued operations)

 

               -

 

 

         1,952

 

 

               -

 

 

         4,633

 

  Net income attributable to REX common shareholders

 $

      3,184

 

 $

    15,278

 

 $

    19,536

 

 $

    30,938

 

  Weighted average shares outstanding - basic and diluted

 

       17,591

 

 

       17,890

 

 

       17,714

 

 

       17,983

 

  Basic and diluted net income per share from continuing operations attributable to REX common shareholders

 $

        0.18

 

 $

        0.74

 

 $

        1.10

 

 $

        1.46

 

Basic and diluted net income per share from discontinued operations attributable to REX common shareholders

 

               -

 

 

           0.11

 

 

               -

 

 

           0.26

 

Basic and diluted net income per share attributable to REX common shareholders

 $

        0.18

 

 $

        0.85

 

 $

        1.10

 

 $

        1.72

 

 

- balance sheets follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) Unaudited

October 31, January 31, ASSETS:

 

2022

 

 

2022

 

CURRENT ASSETS: Cash and cash equivalents

 $

      135,986

 

 $

      229,846

 

Short-term investments

 

         153,819

 

 

           25,877

 

Restricted cash

 

             1,308

 

 

             2,222

 

Accounts receivable

 

           22,675

 

 

           25,821

 

Inventory

 

           42,045

 

 

           42,225

 

Refundable income taxes

 

             6,611

 

 

             6,677

 

Prepaid expenses and other

 

           11,576

 

 

           12,499

 

Total current assets

 

         374,020

 

 

         345,167

 

Property and equipment, net

 

         131,235

 

 

         137,554

 

Operating lease right-of-use assets

 

           14,748

 

 

           11,221

 

Deferred taxes and other assets

 

           21,267

 

 

           25,853

 

Equity method investment

 

           33,769

 

 

           30,566

 

TOTAL ASSETS

 $

      575,039

 

 $

      550,361

 

LIABILITIES AND EQUITY: CURRENT LIABILITIES: Accounts payable - trade

 $

        40,271

 

 $

        32,266

 

Current operating lease liabilities

 

             4,902

 

 

             4,600

 

Accrued expenses and other current liabilities

 

           12,109

 

 

           13,617

 

Total current liabilities

 

           57,282

 

 

           50,483

 

LONG-TERM LIABILITIES: Deferred taxes

 

             3,132

 

 

             3,132

 

Long-term  operating lease liabilities

 

             9,883

 

 

             6,390

 

Other long-term liabilities

 

             2,997

 

 

             2,794

 

Total long-term liabilities

 

           16,012

 

 

           12,316

 

EQUITY: REX shareholders' equity: Common stock

 

                299

 

 

                299

 

Paid-in capital

 

                278

 

 

                   -

 

Retained earnings

 

         632,665

 

 

         611,607

 

Treasury stock

 

        (193,770

)

 

        (181,114

)

Total REX shareholders' equity

 

         439,472

 

 

         430,792

 

Noncontrolling interests

 

           62,273

 

 

           56,770

 

Total equity

 

         501,745

 

 

         487,562

 

TOTAL LIABILITIES AND EQUITY

 $

      575,039

 

 $

      550,361

 

 - statements of cash flows follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Unaudited

Nine Months Ended October 31,

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES Net income including noncontrolling interests

 $

   26,769

 

 $

   35,153

 

Net income from discontinued operations, net of tax

 

             -

 

 

        4,263

 

Net income from continuing operations

 

      26,769

 

 

      30,890

 

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation

 

      13,503

 

 

      13,505

 

Amortization of operating lease right-of-use assets

 

        4,105

 

 

        4,128

 

Income from equity method investments

 

      (6,210

)

 

      (2,763

)

Dividends received from equity method investments

 

        3,007

 

 

        1,504

 

Interest income from investments

 

      (1,098

)

 

           (36

)

Deferred income taxes

 

        4,964

 

 

        5,840

 

Stock based compensation expense

 

        1,295

 

 

        1,100

 

Gain on sale of property and equipment - net

 

           (91

)

 

             (1

)

Changes in assets and liabilities: Accounts receivable

 

        3,146

 

 

    (20,313

)

Inventories

 

           180

 

 

        7,673

 

Refundable income taxes

 

             66

 

 

         (332

)

Other assets

 

           649

 

 

        1,912

 

Accounts payable - trade

 

        7,990

 

 

      10,916

 

Other liabilities

 

      (4,281

)

 

        2,776

 

Net cash provided by operating activities from continuing operations

 

      53,994

 

 

      56,799

 

Net cash used in operating activities from discontinued operations

 

             -

 

 

      (6,368

)

Net cash provided by operating activities

 

      53,994

 

 

      50,431

 

CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures

 

      (7,182

)

 

      (4,245

)

Purchase of short-term investments

 

  (307,371

)

 

    (67,412

)

Sale of short-term investments

 

    180,527

 

 

      82,022

 

Other

 

             -

 

 

             40

 

Net cash (used in) provided by investing activities

 

  (134,026

)

 

      10,405

 

CASH FLOWS FROM FINANCING ACTIVITIES: Treasury stock acquired

 

    (13,012

)

 

      (6,627

)

Payments to noncontrolling interests holders

 

      (1,730

)

 

      (1,515

)

Net cash used in financing activities from continuing operations

 

    (14,742

)

 

      (8,142

)

Net cash provided by financing activities from discontinued operations

 

             -

 

 

           280

 

Net cash used in financing activities

 

    (14,742

)

 

      (7,862

)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

    (94,774

)

 

      52,974

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of period

 

    232,068

 

 

    146,158

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of period

 $

137,294

 

 $

199,132

 

  Non-cash financing activities - Stock awards accrued

 $

        679

 

 $

        972

 

Non-cash financing activities - Stock awards issued

 $

     1,539

 

 $

        100

 

Non-cash investing activities - Accrued capital expenditures

 $

          93

 

 $

          34

 

Right-of-use assets acquired and liabilities incurred upon lease execution

 $

     7,632

 

 $

     3,267

 

 

Douglas Bruggeman Chief Financial Officer (937) 276‑3931

Joseph Jaffoni, Norberto Aja JCIR (212) 835-8500 / rex@jcir.com

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