EX-99 2 c92399_ex99.htm

Exhibit 99

 

 

News Announcement For Immediate Release

 

REX AMERICAN RESOURCES REPORTS THIRD QUARTER
DILUTED EPS OF $1.86

 

Dayton, Ohio, (November 28, 2018) — REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2018 third quarter (“Q3 ‘18”) ended October 31, 2018. REX management will host a conference call and webcast today at 11:00 a.m. ET.

 

Conference Call: (212) 231-2939
   
Webcast / Replay URL: www.rexamerican.com/Corp/Page4.aspx
   
  The webcast will be available for replay for 30 days.

 

REX American Resources’ Q3 ‘18 results principally reflect its interests in six ethanol production facilities and its refined coal operation. One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) are consolidated, while those of its four other ethanol plants are reported as equity in income of unconsolidated ethanol affiliates. REX consolidates the refined coal entity acquired by the Company in fiscal 2017. The Company reports results for its two business segments as ethanol and by-products, and refined coal.

 

REX’s Q3 ‘18 net sales and revenue increased 2.1% to $123.8 million, compared with $121.2 million in Q3 ‘17. The year-over-year net sales and revenue increase primarily reflects higher average selling prices during the current year quarter 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 an 11.7% reduction in the average selling price per gallon of ethanol. The Company’s Q3 ‘18 gross profit for its ethanol and by-products segment was $11.3 million, compared with $18.3 million in Q3 ‘17, primarily reflecting lower ethanol pricing. As a result, the ethanol and by-products segment income before income taxes was $8.4 million in Q3 ‘18, compared to $15.6 million in Q3 ‘17. The Company’s refined coal operation incurred a $3.5 million gross loss and a $4.2 million loss before income taxes in Q3 ‘18, compared to a $3.4 million gross loss and a loss before income taxes of $5.7 million in Q3 ‘17. As a result, REX reported income from continuing operations before income taxes and non-controlling interests in Q3 ‘18 of $3.8 million, compared with $9.3 million in Q3 ‘17. While the refined coal operation negatively impacted gross profit and income before income taxes, the Company’s refined coal operation contributed to a lower effective tax rate.

 

Net income attributable to REX shareholders in Q3 ‘18 was $11.9 million, compared to $13.2 million in Q3 ‘17. Q3 ‘18 basic and diluted net income per share attributable to REX common shareholders was $1.86 per share, compared to $2.00 per share in Q3 ‘17. Per share results in Q3 ‘18 and Q3 ‘17 are based on 6,388,000 and 6,597,000 diluted weighted average shares outstanding, respectively.

 

-more-

 
REX American Resources Q3 ‘18 Results, 11/28/18 page 2

 

Segment Income Statement Data:

 

($ in thousands)  Three Months
Ended
October 31,		    Nine Months
Ended
October 31,		  
   2018    2017    2018    2017  
Net sales and revenue:                    
Ethanol & By-Products (1)  $123,546   $120,971   $372,717   $342,858 
Refined coal (2) (3)   204    193    610    193 
Total net sales and revenues  $123,750   $121,164   $373,327   $343,051 
                     
Gross profit (loss):                    
Ethanol & By-Products (1)  $11,260   $18,257   $38,475   $41,527 
Refined coal (2)   (3,513)   (3,390)   (10,478)   (3,390)
Total gross profit  $7,747   $14,867   $27,997   $38,137 
                     
Income (loss) before income taxes:                    
Ethanol & By-Products (1)  $8,405   $15,554   $29,491   $31,807 
Refined coal (2)   (4,240)   (5,684)   (11,887)   (5,684)
Corporate and other   (410)   (611)   (1,341)   (2,389)
Total income (loss) before income taxes  $3,755   $9,259   $16,263   $23,734 
                     
Benefit (provision) for income taxes:                    
Ethanol & By-Products  $1,643   $(4,379)  $(1,806)  $(9,712)
Refined coal   8,318    9,918    19,914    9,918 
Corporate and other   53    196    240    837 
Total benefit (provision) before income taxes  $10,014   $5,735   $18,348   $1,043 
                     
Segment profit (loss):                    
Ethanol & By-Products  $7,946   $9,058   $23,096   $17,665 
Refined coal   4,260    4,520    8,549    4,520 
Corporate and other   (331)   (410)   (1,057)   (1,532)
Net income attributable to REX common shareholders  $11,875   $13,168   $30,588   $20,653 

 

  (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 third quarter saw a continuation of the operating environment encountered during the first half of 2018, including increased pressure on ethanol pricing. We were successful in partially offsetting these challenges with increased distillers grains pricing, compared to the prior year period, as well as the continued benefit of our refined coal operation. As a result, REX delivered another profitable quarter as we generated approximately $11.9 million in net income, or $1.86 in earnings per share.

 

“Looking ahead, while the challenging environment continues to persist, we remain focused on the long-term prospects for our businesses. In addition, our debt free balance sheet and strong liquidity position, including cash, cash equivalents and short-term investments of $193 million and working capital of $228 million, allow us to continue to opportunistically repurchase shares and to remain well positioned to evaluate other near- and long-term opportunities to enhance shareholder value.”

 

Balance Sheet and Share Repurchase Program

At October 31, 2018, REX had cash and cash equivalents and short-term investments of $193.1 million, $49.9 million of which was at the parent company, and $143.2 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.

 

-more-

 
REX American Resources Q3 ‘18 Results, 11/28/18 page 3

 

On March 20, 2018, REX’s Board of Directors approved an increase in the share repurchase plan providing the Company with the authority to repurchase up to an additional 500,000 shares of its common stock. During the third quarter of fiscal 2018, the Company purchased 24,561 shares at an average cost of $72.12. REX is now authorized to repurchase up to 402,620 shares of its common stock. The Company had 6,327,178 shares outstanding at October 31, 2018.

 

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
Ended
October 31,		   Nine Months
Ended
October 31,
   2018   2017   2018   2017 
Average selling price per gallon of ethanol  $1.28   $1.45   $1.33   $1.45 
Average selling price per ton of dried distillers grains  $139.67   $108.34   $141.90   $101.44 
Average selling price per pound of non-food grade corn oil  $0.25   $0.30   $0.24   $0.29 
Average selling price per ton of modified distillers grains  $46.67   $41.64   $59.96   $41.53 
Average cost per bushel of grain  $3.32   $3.35   $3.47   $3.39 
Average cost of natural gas (per mmbtu)  $2.90   $3.22   $3.07   $3.41 

 

Supplemental data related to REX’s alternative energy interests:

 

REX American Resources Corporation
Ethanol Ownership Interests/Effective Annual Gallons Shipped as of October 31, 2018
(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)		   137.2    75.1%   103.0 
NuGen Energy, LLC
(Marion, SD)		   141.0    99.5%   140.3 
Big River Resources West Burlington, LLC
(West Burlington, IA)		   108.4    10.3%   11.2 
Big River Resources Galva, LLC
(Galva, IL)		   128.3    10.3%   13.2 
Big River United Energy, LLC
(Dyersville, IA)		   129.8    5.7%   7.4 
Big River Resources Boyceville, LLC
(Boyceville, WI)		   57.4    10.3%   5.9 
Total   702.1    n/a    281.0 
 
REX American Resources Q3 ‘18 Results, 11/28/18 page 4

 

Third 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 212/231-2939 (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 702 million gallons of ethanol over the twelve month period ended October 31, 2018. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended October 31, 2018) by the ethanol production facilities in which it has ownership interests was approximately 281 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 changes, the price volatility and availability of corn, dried and modified distillers grains, ethanol, 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 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.

 

Contact:  
Douglas Bruggeman Joseph Jaffoni, Norberto Aja
Chief Financial Officer JCIR
(937) 276-3931 (212) 835-8500
  rex@jcir.com

 

- statements of operations follow -

 
REX American Resources Q3 ‘18 Results, 11/28/18 page 5

 

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share amounts) Unaudited

 

   Three Months
Ended
October 31,		   Nine Months
Ended
October 31,		 
   2018   2017   2018   2017 
Net sales and revenue  $123,750   $121,164   $373,327   $343,051 
Cost of sales   116,003    106,297    345,330    304,914 
Gross profit   7,747    14,867    27,997    38,137 
Selling, general and administrative expenses   (5,412)   (7,347)   (16,075)   (17,528)
Equity in income of unconsolidated ethanol affiliates   611    1,094    2,182    1,931 
Interest and other income   809    645    2,159    1,194 
Income from continuing operations before income taxes and non-controlling interests   3,755    9,259    16,263    23,734 
Benefit for income taxes   10,014    5,735    18,348    1,043 
Net income including non-controlling interests   13,769    14,994    34,611    24,777 
Net income attributable to non-controlling interests   (1,894)   (1,826)   (4,023)   (4,124)
Net income attributable to REX common shareholders  $11,875   $13,168   $30,588   $20,653 
                     
Weighted average shares outstanding – basic and diluted   6,388    6,597    6,473    6,594 
                     
Basic and diluted net income per share attributable to REX common shareholders  $1.86   $2.00   $4.73   $3.13 

 

- balance sheets follow -

 
REX American Resources Q3 ‘18 Results, 11/28/18 page 6

 

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

 

   October 31,   January 31, 
  2018   2018 
ASSETS:        
CURRENT ASSETS:          
Cash and cash equivalents  $178,229   $190,988 
Short-term investments   14,891    — 
Restricted cash   434    354 
Accounts receivable   15,732    12,913 
Inventory   21,636    20,755 
Refundable income taxes   8,339    6,612 
Prepaid expenses and other   8,111    7,412 
Total current assets   247,372    239,034 
Property and equipment-net   186,458    197,827 
Other assets   8,562    7,454 
Equity method investments   33,724    34,549 
TOTAL ASSETS  $476,116   $478,864 
LIABILITIES AND EQUITY          
CURRENT LIABILITIES:          
Accounts payable – trade  $9,387   $8,149 
Accrued expenses and other current liabilities   10,225    13,716 
Total current liabilities   19,612    21,865 
LONG TERM LIABILITIES:          
Deferred taxes   123    21,706 
Other long term liabilities   7,947    3,367 
Total long term liabilities   8,070    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   148,242    146,923 
Retained earnings   578,501    547,913 
Treasury stock, 23,527 and 23,287 shares, respectively   (331,763)   (313,643)
Total REX shareholders’ equity   395,279    381,492 
Non-controlling interests   53,155    50,434 
Total equity   448,434    431,926 
TOTAL LIABILITIES AND EQUITY  $476,116   $478,864 

 

- statements of cash flows follow -

 
REX American Resources Q3 ‘18 Results, 11/28/18 page 7

 

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

 

   Nine Months Ended
October 31,		 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $34,611   $24,777 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation   18,673    15,695 
Income from equity method investments   (2,182)   (1,931)
Dividends received from equity method investments   3,007    4,009 
Interest income from investments   (993)   — 
Deferred income tax   (22,146)   (5,682)
Stock based compensation expense   730    881 
Loss (gain) on disposal of property and equipment   104    87 
Loss on sale of investment   —    13 
Changes in assets and liabilities:          
Accounts receivable   (2,819)   2,023 
Inventory   (881)   (7,039)
Other assets   (2,996)   (222)
Accounts payable-trade   1,682    2,195 
Other liabilities   2,079    (746)
Net cash provided by operating activities   28,869    34,060 
CASH FLOWS FROM INVESTING ACTIVITIES:          
Capital expenditures   (7,954)   (19,315)
Acquisition of business, net of cash acquired   —    (12,049)
Sale of short-term investments   112,091    — 
Purchase of short-term investments   (125,989)   — 
Other   25    275 
Net cash used in investing activities   (21,827)   (31,089)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Treasury stock acquired   (18,419)   — 
Payments to non-controlling interests holders   (1,734)   (1,725)
Capital contributions from minority investor   432    738 
Net cash used in financing activities   (19,721)   (987)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   (12,679)   1,984 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of period   191,342    188,706 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of period  $178,663   $190,690 
Non cash investing activities – Accrued capital expenditures  $603   $1,049 
Non cash financing activities – Stock awards accrued  $585   $768 
Non cash investing activities – Stock awards issued  $1,473   $1,195 

 

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