REX American Resources Reports Fiscal 2020 Third Quarter EPS of $1.44
REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2020 third quarter (“Q3 ‘20”) ended October 31, 2020. REX management will host a conference call and webcast today at 11:00 a.m. ET.
Conference Call:
212/231-2912
Webcast / Replay URL:
www.rexamerican.com/Corp/Page4.aspx
The webcast will be available for replay for 30 days.
REX American Resources’ Q3 ‘20 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 Q3 ‘20 net sales and revenue rose 43.4% to $124.3 million, compared with $86.7 million in Q3 ‘19. The year-over-year net sales and revenue increase was primarily due to higher ethanol production levels, which led to a 56.7% increase in ethanol gallons sold and more than offset a small year-over-year decline in the average selling price per gallon of ethanol. Primarily reflecting these factors and an improved crush spread, Q3 ‘20 gross profit for the Company’s ethanol and by-products segment rose to $18.9 million, from $0.03 million in Q3 ‘19. As a result, the ethanol and by-products segment generated a profit before income taxes of $17.0 million in Q3 ‘20, compared to a loss of $2.8 million in Q3 ‘19. The Company’s refined coal operation incurred a $1.3 million gross loss and a $1.3 million loss before income taxes in Q3 ‘20, compared to a $1.8 million gross loss and a loss before income taxes of $1.6 million in Q3 ‘19. REX reported a Q3 ‘20 profit before income taxes and non-controlling interests of $15.1 million, compared with a loss before income taxes and non-controlling interests of $4.9 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 $1.0 million and $2.2 million for Q3 ‘20 and Q3 ‘19, respectively.
Net income attributable to REX shareholders in Q3 ‘20 was $8.8 million, compared to a net loss of $2.1 million in Q3 ‘19. Q3 ‘20 basic and diluted net income per share attributable to REX common shareholders was $1.44, compared to a net loss per share of $0.32 in Q3 ‘19. Per share results in Q3 ‘20 and Q3 ‘19 are based on 6,143,000 and 6,319,000 diluted weighted average shares outstanding, respectively.
Segment Income Statement Data:
Three Months
Ended
Nine Months
Ended
($ in thousands)
October 31,
October 31,
2020
2019
2020
2019
Net sales and revenue:
Ethanol & By-Products (1)
$
124,217
$
86,603
$
246,694
$
296,826
Refined coal (2) (3)
34
68
134
288
Total net sales and revenue
$
124,251
$
86,671
$
246,828
$
297,114
Gross profit (loss):
Ethanol & By-Products (1)
$
18,929
$
28
$
11,259
$
12,312
Refined coal (2)
(1,250)
(1,786)
(4,241)
(6,420)
Total gross profit (loss)
$
17,679
$
(1,758)
$
7,018
$
5,892
Income (loss) before income taxes:
Ethanol & By-Products (1)
$
17,007
$
(2,822)
$
1,397
$
3,491
Refined coal (2)
(1,270)
(1,648)
(4,235)
(6,351)
Corporate and other
(626)
(434)
(1,873)
(1,146)
Total income (loss) before income taxes
$
15,111
$
(4,904)
$
(4,711)
$
(4,006)
(Provision) benefit for income taxes:
Ethanol & By-Products
$
(5,071)
$
945
$
(17)
$
(160)
Refined coal
985
2,181
4,863
9,282
Corporate and other
34
105
461
279
Total (provision) benefit for income taxes
$
(4,052)
$
3,231
$
5,307
$
9,401
Segment profit (loss):
Ethanol & By-Products
$
9,660
$
(2,330)
$
49
$
684
Refined coal
(227)
607
821
3,209
Corporate and other
(592)
(329)
(1,412)
(868)
Net income (loss) attributable to REX common shareholders
$
8,841
$
(2,052)
$
(542)
$
3,025
(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 strength of our third quarter results highlight the resiliency and adaptability of our teams and the efficiency of our plants as our two consolidated plants returned to production during the second quarter.
“Reflecting our solid balance sheet and long-term commitment to enhance shareholder value, during the quarter we repurchased 198,173 REX shares and in fiscal 2020 to date, we have returned over $19 million to shareholders through the repurchase of 316,349 shares. We ended the fiscal 2020 third quarter in a strong financial and liquidity position with cash and cash equivalents and short-term investments in excess of $202 million and working capital of $226 million and no bank debt.”
Balance Sheet
At October 31, 2020, REX had cash, cash equivalents and short-term investments of $202.3 million, $42.4 million of which was at the parent company, and $159.9 million of which was at its consolidated production facilities. This compares with cash, cash equivalents and short-term investments at January 31, 2020, of $205.7 million, $62.3 million of which was at the parent company, and $143.4 million of which was at its consolidated ethanol production facilities.
During the fiscal third quarter ended October 31, 2020 the Company repurchased 198,173 shares of its common stock at a cost $13.3 million, and subsequent to the end of the third quarter the Company purchased an additional 9,500 shares. As a result, the Company can repurchase approximately 33,512 additional shares under its current repurchase authorization. Reflecting all purchases to date, REX presently has approximately 5,992,002 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,
2020
2019
2020
2019
Average selling price per gallon of ethanol
$
1.31
$
1.39
$
1.28
$
1.34
Average selling price per ton of dried distillers grains
$
129.38
$
134.57
$
136.49
$
137.48
Average selling price per pound of non-food grade corn oil
$
0.24
$
0.26
$
0.25
$
0.25
Average selling price per ton of modified distillers grains
$
56.68
$
56.56
$
52.44
$
59.67
Average cost per bushel of grain
$
3.28
$
4.15
$
3.57
$
3.79
Average cost of natural gas (per MmBtu)
$
2.09
$
2.51
$
2.87
$
2.98
Supplemental data related to REX’s alternative energy interests:
REX American Resources Corporation
Ethanol Ownership Interests/Effective Annual Gallons Shipped as of October 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
119.5
75.3%
90.0
NuGen Energy, LLC
Marion, SD
95.9
99.5%
95.4
Big River Resources West Burlington, LLC
West Burlington, IA
103.1
10.3%
10.6
Big River Resources Galva, LLC
Galva, IL
113.7
10.3%
11.7
Big River United Energy, LLC
Dyersville, IA
117.9
5.7%
6.7
Big River Resources Boyceville, LLC
Boyceville, WI
55.2
10.3%
5.7
Total
605.3
n/a
220.1
Third 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 212/231-2912 (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 605 million gallons of ethanol over the twelve-month period ended October 31, 2020. REX’s effective ownership of the trailing twelve-month gallons shipped (for the twelve months ended October 31, 2020) by the ethanol production facilities in which it has ownership interests was approximately 220 million gallons. In addition, the Company acquired a refined coal operation in August 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
Ended
Nine Months
Ended
October 31,
October 31,
2020
2019
2020
2019
Net sales and revenue
$
124,251
$
86,671
$
246,828
$
297,114
Cost of sales
106,572
88,429
239,810
291,222
Gross profit (loss)
17,679
(1,758)
7,018
5,892
Selling, general and administrative expenses
(4,257)
(4,133)
(13,300)
(13,629)
Equity in income (loss) of unconsolidated ethanol affiliates
1,152
(15)
168
350
Interest and other income, net
537
1,002
1,403
3,381
Income (loss) before income taxes and
non-controlling interests
15,111
(4,904)
(4,711)
(4,006)
(Provision) benefit for income taxes
(4,052)
3,231
5,307
9,401
Net income (loss) including non-controlling interests
11,059
(1,673)
596
5,395
Net income attributable to non-controlling interests
(2,218)
(379)
(1,138)
(2,370)
Net income (loss) attributable to REX common shareholders
$
8,841
$
(2,052)
$
(542)
$
3,025
Weighted average shares outstanding – basic and diluted
6,143
6,319
6,221
6,318
Basic and diluted net income (loss) per share attributable to REX common shareholders
$
1.44
($
0.32)
($
0.09)
$
0.48
- balance sheets follow -
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
Unaudited
October 31,
January 31,
ASSETS
2020
2020
CURRENT ASSETS:
Cash and cash equivalents
$
173,075
$
179,658
Short-term investments
29,216
26,073
Restricted cash
884
1,113
Accounts receivable
12,496
12,969
Inventory
21,616
35,634
Refundable income taxes
5,947
6,029
Prepaid expenses and other
9,771
9,659
Total current assets
253,005
271,135
Property and equipment-net
154,401
163,327
Operating lease right-of-use assets
14,054
16,173
Deferred taxes
22,297
17,061
Other assets
1,278
342
Equity method investment
30,126
32,464
TOTAL ASSETS
$
475,161
$
500,502
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable – trade
$
15,588
$
18,900
Current operating lease liabilities
5,105
4,935
Accrued expenses and other current liabilities
6,049
7,764
Total current liabilities
26,742
31,599
LONG TERM LIABILITIES:
Deferred taxes
4,138
4,334
Long-term operating lease liabilities
8,548
10,688
Other long-term liabilities
282
275
Total long-term liabilities
12,968
15,297
COMMITMENTS AND CONTINGENCIES
EQUITY:
REX shareholders’ equity:
Common stock, 45,000 shares authorized, 29,853 shares issued at par
299
299
Paid in capital
149,077
148,789
Retained earnings
586,443
586,985
Treasury stock, 23,852 and 23,561 shares, respectively
(353,910)
(335,066)
Total REX shareholders’ equity
381,909
401,007
Non-controlling interests
53,542
52,599
Total equity
435,451
453,606
TOTAL LIABILITIES AND EQUITY
$
475,161
$
500,502
- statements of cash flows follow -
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Nine Months Ended
October 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
596
$
5,395
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation
15,697
17,682
Amortization of operating lease right-of-use assets
3,982
4,648
Income from equity method investments
(168)
(350)
Dividends received from equity method investments
2,506
1,003
Interest income from investments
(200)
(25)
Deferred income tax
(5,431)
(9,828)
Stock based compensation expense
122
215
Gain on disposal of property and equipment
(58)
-
Changes in assets and liabilities:
Accounts receivable
473
(5,013)
Inventory
14,018
(12,561)
Refundable income taxes
82
473
Prepaid expenses and other assets
(517)
(583)
Accounts payable-trade
(4,302)
5,618
Other liabilities
(5,301)
(9,010)
Net cash provided by (used in) operating activities
21,499
(2,336)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(6,610)
(2,643)
Purchases of short-term investments
(68,225)
-
Sales of short-term investments
65,282
15,000
Other
(474)
369
Net cash (used in) provided by investing activities
(10,027)
12,726
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock acquired
(18,089)
-
Payments to noncontrolling interests holders
(283)
(2,598)
Capital contributions from minority investor
88
258
Net cash used in financing activities
(18,284)
(2,340)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
(6,812)
8,050
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of period
180,771
188,812
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of period
$
173,959
$
196,862
Non cash investing activities – Accrued capital expenditures
$
198
$
272
Non cash financing activities – Stock awards accrued
$
-
$
99
Non cash financing activities – Stock awards issued
$
240
$
487
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
$
1,863
$
432
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