REX American Resources Corporation (“REX” or the “Company”) (NYSE: REX), a leading ethanol production company, today announced financial and operational results for the Company’s fiscal third quarter 2024.
REX American Resources’ fiscal third quarter 2024 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.
Fiscal Third Quarter 2024 Results
For fiscal third quarter 2024, REX reported net sales and revenue of $174.9 million, compared with $221.1 million for fiscal third quarter 2023. The year-over-year net sales and revenue decrease primarily reflects reduced pricing for ethanol and co-products. Fiscal third quarter 2024 gross profit for the Company was $39.7 million, compared with $39.3 million in fiscal third quarter 2023, reflecting decreased corn and natural gas prices. Interest and other income for the third fiscal quarter 2024 was $4.6 million, compared to $4.9 million for third fiscal quarter 2023. Income before income taxes and non-controlling interests for the third fiscal quarter 2024 was $39.5 million, compared with $41.3 million in the prior year period.
Net income attributable to REX shareholders in fiscal third quarter 2024 was $24.5 million, compared to $26.1 million in fiscal third quarter 2023. Fiscal third quarter 2024 diluted net income per share attributable to REX common shareholders was $1.38, compared to $1.49 per share in fiscal third quarter 2023. Per share results for fiscal third quarters 2024 and 2023 are based on 17,723,000 and 17,531,000 diluted weighted average shares outstanding, respectively.
Update on One Earth Energy Ethanol Production Expansion and Carbon Capture Projects
REX is progressing on the expansion of its ethanol production facility at the One Earth Energy facility in Gibson City, IL. REX expects to complete the expansion of the facility in the middle of 2025, which will increase production capacity from 150 million gallons per year to 175 million gallons per year. Once this is achieved, REX plans to initiate further permitting of the facility to produce 200 million gallons per year of ethanol, which the Company expects will require no additional material capital expenditures.
At this time, the necessary utility interconnection work required for the ethanol production expansion and carbon capture and compression facility remains on track. The Illinois utility carrying out the interconnection work anticipates the new interconnection will be complete by first quarter 2025.
REX has substantially completed work on the carbon capture and compression portion of the One Earth Energy carbon capture and sequestration project. Currently, REX is focused on managing further near-term costs for the project as the Company awaits the approval of its Class VI injection well applications to the EPA, approval of other state and local permits, completion of interconnection work at the site previously mentioned, and the resolution of issues around the Illinois CO2 pipeline moratorium.
Through the end of fiscal third quarter 2024, capital expenditures related to the One Earth Energy carbon capture and sequestration project totaled $52.9 million, and expenditures for expansion of ethanol production capacity totaled $50.2 million. The combined capital spending of $103.1 million remains on plan, with the Company still budgeting a total spend of $165-$175 million for these projects.
Balance Sheet
At the end of fiscal third quarter 2024 on October 31, 2024, REX had $365.1 million of cash, cash equivalents, and short-term investments available and no bank debt.
Management Commentary
“REX American continues to produce outsized positive results across market conditions thanks to our employees and management team and focused ethanol production operations,” said Zafar Rizvi, REX Chief Executive Officer. “Quarter after quarter, the REX team consistently demonstrates our ability to produce industry-leading results – and the third quarter was no exception. We delivered a year-over-year increase in gross margin by maximizing the production at our consolidated plants and carefully managing costs. As we look ahead to the future, and our planned increased production capacity coming online next year, we are excited for the anticipated step up in earnings potential from our expanded ethanol production operations.
“As we await permitting of the One Earth Energy carbon capture and sequestration facility, we remain positive about the eventual approval of our EPA Class VI injection well permit, as well as resolution of Illinois’ moratorium on CO2 pipeline construction. We are working with our government partners and other stakeholders to make sure carbon capture and sequestration operations in the state are among the safest in the country. We look forward to further updates as things progress,” concluded Mr. Rizvi.
Conference Call Information
REX will host a conference call at 11:00 a.m. ET today to discuss the Company’s quarterly results and will also host a question and answer session. To access the conference call, interested parties may dial (877) 269-7751 (US) or (201) 389-0908 (international). Participants can also view an updated presentation, as well as listen to a live webcast of the call by going to the Investors section on the REX website at www.rexamerican.com. A replay will be available shortly after the live conference call and can be accessed by dialing (844) 512-2921 (US) or (412) 317-6671 (international). The passcode for the replay is 13749929. The replay will be available for 30 days after the call.
About REX American Resources Corporation
REX American Resources Corporation has interests in six ethanol production facilities, which in aggregate have production capacity totaling approximately 730 million gallons per year. REX’s effective ownership of annual volumes is approximately 300 million gallons. Further information about REX is available at www.rexamerican.com.
Forward-Looking Statements
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, success in permitting and developing the planned carbon sequestration facility near the One Earth Energy ethanol plant, 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, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Net sales and revenue | $ | 174,877 | $ | 221,079 | $ | 484,263 | $ | 645,770 | |||
Cost of sales | 135,196 | 181,789 | 410,358 | 577,962 | |||||||
Gross profit | 39,681 | 39,290 | 73,905 | 67,808 | |||||||
Selling, general and administrative expenses | (8,426) | (7,609) | (20,977) | (21,996) | |||||||
Equity in income of unconsolidated ethanol affiliates | 3,621 | 4,738 | 7,086 | 9,275 | |||||||
Interest and other income, net | 4,629 | 4,863 | 14,950 | 10,935 | |||||||
Income before income taxes and noncontrolling interests | 39,505 | 41,282 | 74,964 | 66,022 | |||||||
Provision for income taxes | (9,402) | (9,640) | (17,581) | (15,396) | |||||||
Net Income | 30,103 | 31,642 | 57,383 | 50,626 | |||||||
Net Income attributable to noncontrolling interests | (5,603) | (5,566) | (10,314) | (10,259) | |||||||
Net income attributable to REX common shareholders | $ | 24,500 | $ | 26,076 | $ | 47,069 | $ | 40,367 | |||
Weighted average shares outstanding – basic | 17,595 | 17,531 | 17,550 | 17,461 | |||||||
Basic net income per share attributable to REX common shareholders | $ | 1.39 | $ | 1.49 | $ | 2.68 | $ | 2.31 | |||
Weighted average shares outstanding – diluted | 17,723 | 17,531 | 17,673 | 17,461 | |||||||
Diluted net income per share attributable to REX common shareholders | $ | 1.38 | $ | 1.49 | $ | 2.66 | $ | 2.31 | |||
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES | |||||
Consolidated Balance Sheets | |||||
(in thousands) | |||||
Unaudited | |||||
October 31, | January 31, | ||||
2024 | 2024 | ||||
ASSETS: | |||||
CURRENT ASSETS: | |||||
Cash and cash equivalents | $ | 298,249 | $ | 223,397 | |
Short-term investments | 66,826 | 155,260 | |||
Accounts receivable | 22,331 | 23,185 | |||
Inventory | 29,127 | 26,984 | |||
Refundable income taxes | 5,556 | 5,728 | |||
Prepaid expenses and other | 14,408 | 17,549 | |||
Total current assets | 436,497 | 452,103 | |||
Property and equipment, net | 200,496 | 155,587 | |||
Operating lease right-of-use assets | 22,580 | 13,038 | |||
Other assets | 17,074 | 9,138 | |||
Equity method investment | 39,015 | 34,936 | |||
TOTAL ASSETS | $ | 715,662 | $ | 664,802 | |
LIABILITIES AND EQUITY: | |||||
CURRENT LIABILITIES: | |||||
Accounts payable – trade | $ | 22,220 | $ | 42,073 | |
Current operating lease liabilities | 5,857 | 4,469 | |||
Accrued expenses and other current liabilities | 15,883 | 19,717 | |||
Total current liabilities | 43,960 | 66,259 | |||
LONG-TERM LIABILITIES: | |||||
Deferred taxes | 5,694 | 1,598 | |||
Long-term operating lease liabilities | 16,761 | 8,378 | |||
Other long-term liabilities | 2,647 | 970 | |||
Total long-term liabilities | 25,102 | 10,946 | |||
EQUITY: | |||||
REX shareholders’ equity: | |||||
Common stock | 299 | 299 | |||
Paid-in capital | 6,254 | 3,769 | |||
Retained earnings | 748,830 | 701,761 | |||
Treasury stock | (190,892) | (191,911) | |||
Total REX shareholders’ equity | 564,491 | 513,918 | |||
Noncontrolling interests | 82,109 | 73,679 | |||
Total equity | 646,600 | 587,597 | |||
TOTAL LIABILITIES AND EQUITY | $ | 715,662 | $ | 664,802 | |
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES | |||||
Consolidated Statements of Cash Flows | |||||
(in thousands) | |||||
Unaudited | |||||
Nine Months Ended | |||||
October 31, | October 31, | ||||
2024 | 2023 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net Income including noncontrolling interest | $ | 57,383 | $ | 50,626 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation | 12,433 | 13,371 | |||
Amortization of operating lease right-of-use assets | 4,192 | 3,766 | |||
Income from equity method investments | (7,086) | (9,275) | |||
Dividends received from equity method investments | 3,007 | 5,513 | |||
Interest income from investments | (4,219) | (6,950) | |||
Deferred income taxes | 11,934 | 10,048 | |||
Stock based compensation expense | 2,980 | 5,146 | |||
Loss on disposal of property and equipment – net | 45 | 205 | |||
Changes in assets and liabilities: | |||||
Accounts receivable | 854 | (4,976) | |||
Inventories | (2,143) | 11,229 | |||
Refundable income taxes | 172 | (1,486) | |||
Other assets | (12,639) | (1,312) | |||
Accounts payable – trade | (21,629) | (5,622) | |||
Other liabilities | (6,178) | (4,819) | |||
Net cash provided by operating activities | 39,106 | 65,464 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Capital expenditures | (55,428) | (22,359) | |||
Purchase of short-term investments | (210,328) | (378,381) | |||
Maturity of short-term investments | 302,981 | 337,490 | |||
Proceeds from sale of real estate and property and equipment | 210 | 10 | |||
Deposits | 195 | (27) | |||
Net cash provided by (used in) investing activities | 37,630 | (63,267) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Payments to noncontrolling interests holders | (1,884) | (716) | |||
Net cash used in financing activities | (1,884) | (716) | |||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 74,852 | 1,481 | |||
CASH AND CASH EQUIVALENTS – Beginning of period | 223,397 | 71,347 | |||
CASH AND CASH EQUIVALENTS – End of period | $ | 298,249 | $ | 72,828 | |
Non-cash investing activities – Accrued capital expenditures | $ | 3,275 | $ | 722 | |
Non-cash investing activities – Capital additions transferred from prepaid expenses | $ | 188 | $ | - | |
Non-cash financing activities – Stock awards accrued | $ | 1,648 | $ | 1,467 | |
Non-cash financing activities – Stock awards issued | $ | 2,172 | $ | 965 | |
Right-of-use assets acquired and liabilities incurred upon lease execution | $ | 13,734 | $ | 3,210 | |
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