REX American Resources Reports Fourth Quarter Diluted EPS of $0.70
REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2019 fourth quarter (“Q4 ‘19”) ended January 31, 2020. REX management will host a conference call and webcast today at 11:00 a.m. ET.
Conference Call:
212/231-2904
Webcast / Replay URL:
www.rexamerican.com/Corp/Page4.aspx
The webcast will be available for replay for 30 days
REX American Resources’ Q4 ‘19 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 ‘19 net sales and revenue rose to $120.9 million, compared with $113.3 million in Q4 ‘18. The year-over-year net sales and revenue increase was primarily due to higher ethanol pricing on a year-to-year basis, which more than offset lower dried distillers grains pricing as well as a 9.2% decrease in ethanol gallons sold. Primarily reflecting these factors, which offset a 14.4% year-over-year increase in corn prices, Q4 ‘19 gross profit for the Company’s ethanol and by-products segment rose to $8.1 million, compared with $5.4 million in Q4 ‘18. As a result, the ethanol and by-products segment income before income taxes increased to $5.0 million in Q4 ‘19, compared to $1.4 million in Q4 ‘18. The Company’s refined coal operation incurred a $1.5 million gross loss and a $1.4 million loss before income taxes in Q4 ‘19, compared to a $3.2 million gross loss and a loss before income taxes of $3.3 million in Q4 ‘18. REX reported a Q4 ‘19 income before income taxes and non-controlling interests of $2.8 million, compared with a loss before income taxes and non-controlling interests of $1.7 million in the comparable year ago period. While the refined coal operation negatively impacted gross profit and income before income taxes, it contributed a tax benefit of $1.5 million and $4.8 million for Q4 ’19 and Q4 ‘18, respectively.
Net income attributable to REX shareholders in Q4 ‘19 increased to $4.4 million, compared to $1.1 million in Q4 ‘18. Q4 ‘19 basic and diluted net income per share attributable to REX common shareholders was $0.70, compared to net income per share of $0.17 in Q4 ‘18. Per share results in Q4 ‘19 and Q4 ‘18 are based on 6,320,000 and 6,341,000 diluted weighted average shares outstanding, respectively.
Segment Income Statement Data:
Three Months
Twelve Months
Ended
Ended
($ in thousands)
January 31,
January 31,
2020
2019
2020
2019
Net sales and revenue:
Ethanol & By-Products (1)
$
120,874
$
113,168
$
417,700
$
485,885
Refined coal (2) (3)
46
176
334
786
Total net sales and revenue
$
120,920
$
113,344
$
418,034
$
486,671
Gross (loss) profit:
Ethanol & By-Products (1)
$
8,090
$
5,381
$
20,402
$
43,856
Refined coal (2)
(1,497)
(3,163)
(7,917)
(13,641)
Total gross profit
$
6,593
$
2,218
$
12,485
$
30,215
Income (loss) before income taxes:
Ethanol & By-Products (1)
$
4,979
$
1,354
$
8,469
$
31,545
Refined coal (2)
(1,428)
(3,317)
(7,778)
(15,204)
Corporate and other
(714)
288
(1,860)
(1,753)
Total income (loss) before income taxes
$
2,837
$
(1,675)
$
(1,169)
$
14,588
Benefit (provision) for income taxes:
Ethanol & By-Products
$
1,688
$
(539)
$
1,528
$
(2,343)
Refined coal
1,546
4,759
10,828
24,674
Corporate and other
178
354
457
591
Total benefit for income taxes
$
3,412
$
4,574
$
12,813
$
22,922
Segment (loss) profit:
Ethanol & By-Products
$
4,756
$
(450)
$
5,439
$
23,346
Refined coal
182
1,597
3,391
10,148
Corporate and other
(536)
(90)
(1,403)
(1,849)
Net (loss) income attributable to REX common shareholders
$
4,402
$
1,057
$
7,427
$
31,645
(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 of fiscal 2019 saw the crush spread improve over the year-ago period primarily due to higher ethanol pricing. As a result, we were able to improve the ethanol and by-products segment gross profit by 50%, allowing us to generate $0.70 of income per share. That brings fiscal full year 2019 income per share to $1.18, marking yet another profitable year for the Company.
“We entered fiscal 2020 facing continued challenges, including the recent decline in the crude market and the advent of the COVID-19 pandemic and its impact on fuel demand and the economy at large. These challenges led to further declines in recent crush spread levels which has led to the recent idling of our NuGen plant and which may warrant similar actions at the One Earth plant to help preserve our financial liquidity and flexibility. While the operating environment remains severely challenged at this time, we remain focused on creating shareholder value through our disciplined operating approach, the strength and health of our balance sheet, which includes cash and cash equivalents in excess of $205 million and working capital of $239.5 million, no bank debt and the ongoing authorization from the Board of Directors to purchase up to 350,000 common shares.”
Balance Sheet
At January 31, 2020, REX had cash and cash equivalents and short-term investment of $205.7 million, $62.3 million of which was at the parent company, and $143.4 million of which was at its consolidated production facilities. This compares with cash, cash equivalents and short-term investments at January 31, 2019, of $203.5 million, $54.8 million of which was at the parent company, and $148.7 million of which was at its consolidated ethanol production facilities.
The following table summarizes select data related to REX’s
consolidated alternative energy interests:
Three Months
Twelve Months
Ended
Ended
January 31,
January 31,
2020
2019
2020
2019
Average selling price per gallon of ethanol
$
1.43
$
1.17
$
1.37
$
1.29
Average selling price per ton of dried distillers grains
$
138.19
$
143.20
$
137.68
$
142.20
Average selling price per pound of non-food grade corn oil
$
0.24
$
0.25
$
0.25
$
0.25
Average selling price per ton of modified distillers grains
$
59.62
$
58.30
$
59.66
$
59.42
Average cost per bushel of grain
$
3.90
$
3.41
$
3.82
$
3.46
Average cost of natural gas (per mnbtu)
$
3.17
$
4.07
$
3.04
$
3.33
Supplemental data related to REX’s alternative energy interests:
REX American Resources Corporation
Ethanol Ownership Interests/Effective Annual Gallons Shipped as of January 31, 2020
(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)
140.5
75.2%
105.7
NuGen Energy, LLC (Marion, SD)
94.8
99.5%
94.3
Big River Resources West Burlington, LLC (West Burlington, IA)
111.6
10.3%
11.5
Big River Resources Galva, LLC (Galva, IL)
121.2
10.3%
12.5
Big River United Energy, LLC (Dyersville, IA)
131.8
5.7%
7.5
Big River Resources Boyceville, LLC (Boyceville, WI)
60.1
10.3%
6.2
Total
660.0
n/a
237.7
Fourth Quarter Conference Call
REX will host a conference call at 11:00 a.m. ET today. Senior management will discuss the quarterly financial results and host a question and answer session. The dial in number for the audio conference call is 212/231-2904 (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 660 million gallons of ethanol over the twelve-month period ended January 31, 2020. REX’s effective ownership of the trailing twelve-month gallons shipped (for the twelve months ended January 31, 2020) by the ethanol production facilities in which it has ownership interests was approximately 238 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 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, 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,
2020
2019
2020
2019
Net sales and revenue
$
120,920
$
113,344
$
418,034
$
486,671
Cost of sales
114,327
111,126
405,549
456,456
Gross profit
6,593
2,218
12,485
30,215
Selling, general and administrative expenses
(5,629)
(4,476)
(19,258)
(20,551)
Equity in income (loss) of unconsolidated ethanol affiliates
1,042
(646)
1,392
1,536
Interest and other income, net
831
1,229
4,212
3,388
Income (loss) before income taxes and non-controlling interests
2,837
(1,675)
(1,169)
14,588
Benefit for income taxes
3,412
4,574
12,813
22,922
Net income including non-controlling interests
6,249
2,899
11,644
37,510
Net income attributable to non-controlling interests
(1,847)
(1,842)
(4,217)
(5,865)
Net income attributable to REX common shareholders
$
4,402
$
1,057
$
7,427
$
31,645
Weighted average shares outstanding – basic and diluted
6,320
6,341
6,318
6,440
Basic and diluted net income per share attributable to REX common shareholders
$0.70
$
0.17
$
1.18
$
4.91
- balance sheets follow -
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
Unaudited
January 31,
January 31,
ASSETS
2020
2019
CURRENT ASSETS:
Cash and cash equivalents
$
179,658
$
188,531
Restricted cash
1,113
281
Short-term investments
26,073
14,975
Accounts receivable
12,969
11,378
Inventory
35,634
18,477
Refundable income taxes
6,029
7,695
Prepaid expenses and other
9,659
9,284
Total current assets
271,135
250,621
Property and equipment-net
163,327
182,521
Operating lease right-of-use assets
16,173
-
Other assets
17,403
6,176
Equity method investment
32,464
32,075
TOTAL ASSETS
$
500,502
$
471,393
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable – trade
$
18,900
$
7,463
Current operating lease liabilities
4,935
-
Accrued expenses and other current liabilities
7,764
9,546
Total current liabilities
31,599
17,009
LONG TERM LIABILITIES:
Deferred taxes
4,334
4,185
Long-term operating lease liabilities
10,688
-
Other long-term liabilities
275
4,928
Total long-term liabilities
15,297
9,113
COMMITMENTS AND CONTINGENCIES EQUITY:
REX shareholders’ equity:
Common stock, 45,000 shares authorized, 29,853 shares issued at par
299
299
Paid in capital
148,789
148,273
Retained earnings
586,985
579,558
Treasury stock, 23,561 and 23,580 shares, respectively
(335,066)
(335,193)
Total REX shareholders’ equity
401,007
392,937
Non-controlling interests
52,599
52,334
Total equity
453,606
445,271
TOTAL LIABILITIES AND EQUITY
$
500,502
$
471,393
- statements of cash flows follow -
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Fiscal Years Ended
January 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
11,644
$
37,510
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation
23,007
24,828
Amortization of operating lease right-of-use assets
6,304
-
Stock based compensation expense
397
669
Income from equity method investments
(1,392)
(1,536)
Dividends received from equity method investments
1,003
4,010
Interest income from investments
(73)
(1,077)
Deferred income tax
(11,070)
(23,364)
Loss on disposal of property and equipment
-
104
Changes in assets and liabilities:
Accounts receivable
(1,591)
1,535
Inventory
(17,157)
2,278
Prepaid expenses and other assets
(752)
5,217
Income taxes refundable
1,666
(1,083)
Accounts payable-trade
11,400
339
Other liabilities
(13,043)
(1,499)
Net cash provided by operating activities
10,343
47,931
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(3,776)
(10,775)
Purchases of short-term investments
(26,025)
(125,989)
Sales of short-term investments
15,000
112,091
Restricted investments and deposits
-
5
Loan receivable repayments
369
27
Net cash used in investing activities
(14,432)
(24,641)
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock acquired
-
(21,855)
Payments to noncontrolling interests holders
(4,264)
(4,489)
Capital contributions from minority investor
312
524
Net cash used in financing activities
(3,952)
(25,820)
NET DECREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
(8,041)
(2,530)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of period
188,812
191,342
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of period
$
180,771
$
188,812
Non cash financing activities – Stock awards issued
$
487
$
1,473
Non cash financing activities – Stock awards accrued
$
241
$
487
Non cash investing activities – Accrued capital expenditures
$
37
$
-
Initial operating lease right-of-use assets and liabilities recorded upon adoption of ASC 842
$
20,918
$
-
Operating lease right-of-use assets acquired and liabilities assumed upon lease execution
$
432
$
-
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