REX REX American Resources Corporation

REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2023 second quarter (“Q2 ‘23”) ended July 31, 2023. REX management will host a conference call and webcast today at 11:00 a.m. ET.

Conference Call:

212/231-2932

Webcast / Replay URL:

www.rexamerican.com

The webcast will be available for replay for 30 days.

REX American Resources’ Q2 ‘23 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.

REX’s Q2 ‘23 net sales and revenue were $212.0 million compared with $240.3 million in Q2 ‘22. The year-over-year net sales and revenue decline primarily reflects a reduction in the quantities sold of ethanol, as well as lower prices for ethanol, dried and modified distillers grains, and corn oil. Q2 ‘23 gross profit increased 30.1% to $18.4 million, from $14.1 million in Q2 ‘22, primarily reflecting lower corn and natural gas pricing. Income before income taxes and non-controlling interests was $16.1 million, compared with $19.2 million in the comparable year-ago period; however, excluding the benefit of COVID-19 relief grants received in Q2 '22 income before income taxes and noncontrolling interest increased 64.3% to $16.1 million in Q2 '23 from $9.8 million in Q2 '22. Q2 ‘22 benefited as the Company’s two consolidated plants received COVID-19 relief grants from the U.S.D.A. totaling approximately $7.8 million recorded as other income, and approximately $1.6 million recorded as equity income in unconsolidated affiliates.

Net income attributable to REX shareholders was $9.1 million in Q2 ‘23 compared with $11.2 million in Q2 ‘22. Q2 ‘23 basic and diluted net income per share attributable to REX common shareholders was $0.52, compared to $0.63 per share in Q2 ‘22. Per share results for the Q2 ‘23 and Q2 ‘22 periods are based on 17,460,000 and 17,772,000 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, “Our focus on operational efficiency resulted in REX delivering its twelfth consecutive quarter of profitability. During the quarter we continued our efforts on the One Earth Energy carbon capture project. We believe the One Earth project has the potential to deliver compelling financial returns and will position REX to play an important role in reducing greenhouse gas emissions. Earlier this year, our NuGen Energy facility reached an agreement to be part of Summit Carbon Solutions’ carbon capture and storage pipeline, which we believe will also advance our sustainability goals. In addition, Big River Resources previously entered into an agreement with Navigator CO2 whereby Navigator is to provide Big River with turnkey carbon capture, utilization and storage services.

“Our solid financial position and balance sheet flexibility, combined with our company-wide focus on operational excellence, allows us to continue to make return-focused investments to further strengthen our plants and their operational efficiency while also moving our carbon capture and sequestration initiatives forward.”

Balance Sheet

As of July 31, 2023, REX had cash and cash equivalents and short-term investments of $284.4 million, $31.2 million of which was at the parent company and $253.2 million of which was at its consolidated production facilities. This compares with cash, cash equivalents and short-term investments at January 31, 2023, of $280.9 million, $42.1 million of which was at the parent company and $238.8 million of which was at its consolidated production facilities.

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

Three Months Ended

April 30,

2023

 

2022

Net sales and revenue

$

212,714

 

$

194,228

 

Cost of sales

 

197,685

 

 

182,316

 

Gross profit

 

15,029

 

 

11,912

 

Selling, general and administrative expenses

 

(10,632

)

 

(5,203

)

Equity in income of unconsolidated ethanol affiliates

 

1,490

 

 

1,951

 

Interest and other income, net

 

2,801

 

 

174

 

Change in Accounting Principles

For the quarter ended July 31, 2023 the Company made a change in the method of accounting to begin classifying shipping and handling costs as cost of sales, instead of within selling, general and administrative expenses (SG&A), as historically presented, in order to improve the comparability of gross profit and SG&A reported. The Company has applied a retrospective application of the new accounting policy.

The following table summarizes the impact of the Company’s retrospective change in accounting principle:

 

 

Three Months Ended

 

 

April 30, 2023

 

 

As Previously Reported

 

Effect of Change

 

As Currently Reported

 

 

 

 

 

 

 

Cost of sales

 

$

197,685

 

 

$

4,863

 

 

$

202,548

 

 

 

 

 

 

 

 

Gross profit

 

$

15,029

 

 

$

(4,863

)

 

$

10,166

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

(10,632

)

 

$

4,863

 

 

$

(5,769

)

 

 

 

 

 

 

 

Three Months Ended Six Months Ended July 31, 2022 July 31, 2022 As PreviouslyReported Effect ofChange As CurrentlyReported As PreviouslyReported Effect ofChange As CurrentlyReported   Cost of sales

$

223,744

 

$

2,481

 

$

226,225

 

$

406,060

 

$

2,485

 

$

408,545

 

  Gross profit

$

16,584

 

$

(2,481

)

$

14,103

 

$

28,496

 

$

(2,485

)

$

26,011

 

  Selling, general and administrative expenses

$

(9,148

)

$

2,481

 

$

(6,667

)

$

(14,351

)

$

2,485

 

$

(11,866

)

Second 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 212/231-2932 (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 695 million gallons of ethanol over the twelve-month period ended July 31, 2023. REX’s effective ownership of the trailing twelve-month gallons shipped (for the twelve months ended July 31, 2023) by the ethanol production facilities in which it has ownership interests was approximately 275 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, distillers 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

 

Six Months Ended

 

July 31,

 

July 31,

 

2023

 

2022

 

2023

 

2022

Net sales and revenue  

$

211,977

 

$

240,328

 

$

424,691

 

$

434,556

 

Cost of sales  

 

193,625

 

 

226,225

 

 

396,173

 

 

408,545

 

Gross profit  

 

18,352

 

 

14,103

 

 

28,518

 

 

26,011

 

Selling, general and administrative expenses  

 

(8,618

)

 

(6,667

)

 

(14,387

)

 

(11,866

)

Equity in income of unconsolidated ethanol affiliates  

 

3,047

 

 

3,598

 

 

4,537

 

 

5,549

 

Interest and other income, net  

 

3,271

 

 

8,181

 

 

6,072

 

 

8,355

 

Income before income taxes and noncontrolling interests  

 

16,052

 

 

19,215

 

 

24,740

 

 

28,049

 

Provision for income taxes  

 

(3,768

)

 

(4,330

)

 

(5,756

)

 

(6,178

)

Net income  

 

12,284

 

 

14,885

 

 

18,984

 

 

21,871

 

Net income attributable to noncontrolling interests  

 

(3,229

)

 

(3,715

)

 

(4,693

)

 

(5,519

)

Net income attributable to REX common shareholders  

$

9,055

 

$

11,170

 

$

14,291

 

$

16,352

 

    Weighted average shares outstanding - basic and diluted  

 

17,460

 

 

17,772

 

 

17,427

 

 

17,777

 

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

$

0.52

 

$

0.63

 

$

0.82

 

$

0.92

 

- balance sheets follow -

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

 

July 31,

 

January 31,

ASSETS:  

2023

 

2023

CURRENT ASSETS:   Cash and cash equivalents  

$

102,166

 

$

69,612

 

Short-term investments  

 

182,209

 

 

211,331

 

Restricted cash  

 

2,009

 

 

1,735

 

Accounts receivable  

 

31,998

 

 

25,162

 

Inventory  

 

45,960

 

 

48,744

 

Refundable income taxes  

 

5,654

 

 

2,962

 

Prepaid expenses and other  

 

17,947

 

 

13,098

 

Total current assets  

 

387,943

 

 

372,644

 

Property and equipment, net  

 

135,144

 

 

135,497

 

Operating lease right-of-use assets  

 

12,713

 

 

15,214

 

Other assets  

 

19,554

 

 

23,179

 

Equity method investment  

 

37,582

 

 

33,045

 

TOTAL ASSETS  

$

592,936

 

$

579,579

 

LIABILITIES AND EQUITY:   CURRENT LIABILITIES:   Accounts payable - trade  

$

22,100

 

$

34,091

 

Current operating lease liabilities  

 

5,095

 

 

5,180

 

Accrued expenses and other current liabilities  

 

20,346

 

 

15,328

 

Total current liabilities  

 

47,541

 

 

54,599

 

LONG-TERM LIABILITIES:   Deferred taxes  

 

1,097

 

 

1,097

 

Long-term operating lease liabilities  

 

7,605

 

 

9,855

 

Other long-term liabilities  

 

3,144

 

 

3,034

 

Total long-term liabilities  

 

11,846

 

 

13,986

 

EQUITY:   REX shareholders' equity:   Common stock  

 

299

 

 

299

 

Paid-in capital  

 

3,181

 

 

578

 

Retained earnings  

 

655,117

 

 

640,826

 

Treasury stock  

 

(192,037

)

 

(193,721

)

Total REX shareholders' equity  

 

466,560

 

 

447,982

 

Noncontrolling interests  

 

66,989

 

 

63,012

 

Total equity  

 

533,549

 

 

510,994

 

TOTAL LIABILITIES AND EQUITY  

$

592,936

 

$

579,579

 

- statements of cash flows follow -

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

Six Months Ended

July 31,

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES: Net income including noncontrolling interests

$

18,984

 

$

21,871

 

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

 

8,915

 

 

8,984

 

Amortization of operating lease right-of-use assets

 

2,671

 

 

2,835

 

Income from equity method investments

 

(4,537

)

 

(5,549

)

Interest income from investments

 

(3,967

)

 

(488

)

Deferred income taxes

 

3,947

 

 

4,153

 

Stock based compensation expense

 

3,892

 

 

856

 

Loss on sale of property and equipment - net

 

205

 

 

5

 

Changes in assets and liabilities: Accounts receivable

 

(6,836

)

 

(12,738

)

Inventories

 

2,784

 

 

(7,703

)

Refundable income taxes

 

(2,692

)

 

779

 

Other assets

 

(5,153

)

 

(2,153

)

Accounts payable - trade

 

(12,595

)

 

(11,254

)

Other liabilities

 

3,019

 

 

1,173

 

Net cash provided by operating activities

 

8,637

 

 

771

 

CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures

 

(8,173

)

 

(2,936

)

Purchase of short-term investments

 

(194,400

)

 

(189,988

)

Sale of short-term investments

 

227,490

 

 

25,882

 

Deposits

 

(20

)

 

-

 

Proceeds from sale of real estate and property and equipment

 

10

 

 

-

 

Net cash provided by (used in) investing activities

 

24,907

 

 

(167,042

)

CASH FLOWS FROM FINANCING ACTIVITIES: Treasury stock acquired

 

-

 

 

(6,193

)

Payments to noncontrolling interests holders

 

(716

)

 

(1,633

)

Net cash used in financing activities

 

(716

)

 

(7,826

)

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

 

32,828

 

 

(174,097

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of period

 

71,347

 

 

232,068

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of period

$

104,175

 

$

57,971

 

  Non-cash financing activities - Stock awards accrued

$

570

 

$

563

 

Non-cash financing activities - Stock awards issued

$

965

 

$

1,539

 

Non-cash investing activities - Accrued capital expenditures

$

1,029

 

$

260

 

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

$

312

 

$

4,507

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230830441958/en/

Douglas Bruggeman Chief Financial Officer (937) 276‑3931

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