REX American Resources Reports Full Fiscal Year 2023 Net Income Per Share Attributable to REX Common Shareholders of $3.47, the Second Highest in Company History

Rhea-AI Summary

REX American Resources reported strong financial results for Q4 and Full Fiscal Year '23, with net income per share of $1.16 and $3.47, respectively. The company achieved the second-highest net income per share in its history. Despite a decrease in net sales and revenue, gross profit increased by over 100% for both periods. REX also saw growth in consolidated ethanol sales volumes. The One Earth Energy carbon capture facility construction is underway, with expected completion in Q2 '24.

Insights

Market Research Analyst

The reported financial outcomes for REX American Resources Corporation indicate a nuanced performance in fiscal year 2023. Despite a decrease in net sales and revenue, the company achieved a significant increase in gross profit and net income per share. This suggests a successful management of operational costs and an efficient production process, particularly given the context of decreased corn and natural gas prices.

From a market perspective, the increase in ethanol production volumes is critical. It reflects the company's capacity to scale operations and meet market demand. However, the decrease in net sales and revenue could be indicative of broader market pricing pressures or a potential saturation in the ethanol market. This dichotomy of increased production and decreased revenue is a trend worth monitoring for future implications on the company's financial health.

Environmental Policy Analyst

The initiation of the One Earth Energy carbon capture and sequestration (CCS) project represents a strategic investment in sustainability. CCS technology is increasingly relevant as industries seek to reduce carbon footprints and comply with environmental regulations. The capital expenditure of $38.6 million, with a budget of $165-$175 million, is a substantial commitment to this initiative.

Investors should be aware of the potential long-term benefits of such projects, including improved regulatory compliance and potential access to government incentives. Additionally, the project may enhance the company's public image and brand value among environmentally conscious consumers and investors. However, the dependency on regulatory approvals, such as the EPA Class VI injection well permitting process, introduces a degree of uncertainty and risk that must be factored into the project's timeline and financial projections.

Financial Analyst

REX's strong balance sheet, highlighted by $378.7 million in cash and cash equivalents and no bank debt, positions the company favorably for future growth and investment. This is a robust indicator of financial health and provides the company with a solid foundation for navigating market volatility and funding ongoing projects like the CCS initiative.

Furthermore, the company's decision to retrospectively apply a change in accounting principles for shipping and handling costs improves the transparency of financial reporting. This change enhances the comparability of gross profit and operational expenses, allowing for a clearer assessment of operational efficiency. Investors and analysts should consider this change positively, as it aligns with industry norms and facilitates a more accurate evaluation of the company's financial performance.

• Generated $1.16 and $3.47 of net income per share in Q4 and Full Fiscal Year ‘23, respectively; Full Fiscal Year net income per share was the second highest in company history
• Reported gross profit of $30.4 million and $98.2 million for Q4 and Full Fiscal Year ‘23, respectively, an increase of more than 100% over each of the respective periods for 2022
• Reported net sales and revenue of $187.6 million and $833.4 million for Q4 and Full Fiscal Year ’23, respectively, a decrease of approximately 6% and 3% from each of the respective periods for 2022
• Reported consolidated ethanol sales volumes of 72.1 million gallons and 285.9 million gallons for Q4 and Full Fiscal Year ’23, respectively, an increase of approximately 13% and 8% over each of the respective periods for 2022
• Commenced site construction on the One Earth Energy carbon capture facility at the Gibson City, Illinois facility during Q3; expect completion of the compression facility during Q2 ‘24

DAYTON, Ohio--(BUSINESS WIRE)-- 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 full year and fiscal fourth quarter 2023.

REX American Resources’ Q4 and full fiscal year 2023 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.

Full Fiscal Year 2023 Results

For the full fiscal year 2023, REX reported net sales and revenue of $833.4 million, compared with $855.0 million for full fiscal year 2022. The year-over-year net sales and revenue decrease primarily reflects reduced pricing for ethanol and co-products. Full fiscal year 2023 gross profit for the Company was $98.2 million, compared with $48.6 million in full fiscal year 2022, reflecting decreased corn and natural gas prices and increased production levels. This led to full fiscal year 2023 income before income taxes and non-controlling interests of $98.5 million, compared with $47.5 million in the prior year period.

Net income attributable to REX shareholders in full fiscal year 2023 was $60.9 million, compared to $27.7 million in full fiscal year 2022. Full fiscal year diluted net income per share attributable to REX common shareholders was $3.47, compared to $1.57 per share in full fiscal year 2022. Per share results for full fiscal years 2023 and 2022 are based on 17,576,000 and 17,638,000 diluted weighted average shares outstanding, respectively, reflecting the Company’s 3-for-1 common stock split effected August 5, 2022.

Fourth Quarter 2023 Results

REX reported Q4 ’23 net sales and revenue of $187.6 million, compared to Q4 ‘22 net sales and revenue of $200.2 million. The year-over-year net sales and revenue decrease primarily reflects lower product pricing. Q4 ‘23 gross profit for the Company was $30.4 million, compared with $13.3 million in Q4 ’22, a result of decreases in corn and natural gas prices, and increased production levels. This led to Q4 ‘23 income before income taxes and non-controlling interests of $32.5 million, compared with $13.3 million in Q4 ’22.

Net income attributable to REX shareholders in Q4 ‘23 was $20.6 million, compared to $8.2 million in Q4 ’22. Q4 ‘23 diluted net income per share attributable to REX common shareholders was $1.16, compared to $0.47 per share in Q4 ’22. Per share results for Q4 ’23 and Q4 ’22 are based on 17,657,000 and 17,416,000 diluted weighted average shares outstanding, respectively, reflecting the Company’s 3-for-1 common stock split effected August 5, 2022.

One Earth Energy Carbon Capture Project

REX commenced site construction operations for its One Earth Energy carbon capture and sequestration project during Q3 2023, at the Company’s Gibson City, Illinois location. Construction of the capture and compression facility is expected to be completed during the second quarter of 2024.

The Environmental Protection Agency (EPA) Class VI injection well permitting process is ongoing. Approval of REX’s Class VI injection well application is necessary to begin construction on the sequestration portion of the project and to begin operations. Permitting for a 6-mile carbon transport pipeline to deliver carbon from the compression facility to the sequestration facility, is also ongoing with the Illinois Commerce Commission.

To-date capital expenditures related to the One Earth Energy carbon capture and sequestration project and related expansion of ethanol production capacity at the Gibson City location total $38.6 million. The Company is currently budgeting $165-$175 million for this project.

Balance Sheet

At the end of fiscal year 2023 on January 31, 2024, REX had $378.7 million of cash, cash equivalents, and short-term investments available and no bank debt.

Management Commentary

“REX American’s strong results for 2023 reflect our company’s ongoing commitment to efficient operations and a laser focus on profitability,” said Mr. Zafar Rizvi, REX Chief Executive Officer. “Achieving the second highest net income per share in the Company’s history in 2023 is an incredible outcome, and one which we are very proud of. Day in and day out, our team evaluates our outlook for the ethanol market, monitoring and managing our exposure to meet our goals. We plan to continue this focus on profitable, sustainable operations through all market conditions, and as we grow our operations into additional areas, like carbon capture and sequestration.

“We continue to make progress on our One Earth Energy CCS project at the Gibson City facility, with installation of the compression facility still slated for completion in the second quarter of 2024. We are at the same time working on the previously announced expansion of ethanol production at our Gibson City facility to 200 million gallons per year. While we await all required approvals, we expect both of these projects will be additive to REX’s bottom line, and support continued profitable operations,” concluded Mr. Rizvi.

Change in Accounting Principles

As previously discussed, during the fiscal 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.

Conference Call Information

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 13745209. 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						Year Ended
		January 31,						January 31,
		2024			2023			2024			2023
Net sales and revenue		$	187,614		$	200,167		$	833,384		$	855,000
Cost of sales			157,204			186,849			735,166			806,398
Gross profit			30,410			13,318			98,218			48,602
Selling, general and administrative expenses			(7,383)			(5,138)			(29,379)			(22,827)
Equity in income of unconsolidated ethanol affiliates			4,646			2,535			13,921			8,745
Interest and other income, net			4,789			2,621			15,724			12,959
Income before income taxes and noncontrolling interests			32,462			13,336			98,484			47,479
Provision for income taxes			(7,164)			(2,168)			(22,560)			(9,542)
Net Income			25,298			11,168			75,924			37,937
Net Income attributable to noncontrolling interests			(4,730)			(3,007)			(14,989)			(10,240)
Net income attributable to REX common shareholders		$	20,568		$	8,161		$	60,935		$	27,697
Weighted average shares outstanding – basic			17,548			17,416			17,482			17,638
Basic net income per share attributable to REX common shareholders		$	1.17		$	0.47		$	3.49		$	1.57
Weighted average shares outstanding – diluted			17,657			17,416			17,576			17,638
Diluted net income per share attributable to REX common shareholders		$	1.16		$	0.47		$	3.47		$	1.57

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) Unaudited
		January 31,			January 31,
		2024			2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	223,397		$	69,612
Short-term investments			155,260			211,331
Restricted cash			-			1,735
Accounts receivable			23,185			25,162
Inventory			26,984			48,744
Refundable income taxes			5,728			2,962
Prepaid expenses and other			17,549			13,098
Total current assets			452,103			372,644
Property and equipment, net			155,587			135,497
Operating lease right-of-use assets			13,038			15,214
Other assets			9,138			23,179
Equity method investment			34,936			33,045
TOTAL ASSETS		$	664,802		$	579,579
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable – trade		$	42,073		$	34,091
Current operating lease liabilities			4,469			5,180
Accrued expenses and other current liabilities			19,717			15,328
Total current liabilities			66,259			54,599
LONG-TERM LIABILITIES:
Deferred taxes			1,598			1,097
Long-term operating lease liabilities			8,378			9,855
Other long-term liabilities			970			3,034
Total long-term liabilities			10,946			13,986
EQUITY:
REX shareholders’ equity:
Common stock			299			299
Paid-in capital			3,769			578
Retained earnings			701,761			640,826
Treasury stock			(191,911)			(193,721)
Total REX shareholders’ equity			513,918			447,982
Noncontrolling interests			73,679			63,012
Total equity			587,597			510,994
TOTAL LIABILITIES AND EQUITY		$	664,802		$	579,579

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Unaudited
		Year Ended
		January 31,			January 31,
		2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income including noncontrolling interest		$	75,924		$	37,937
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			17,794			17,976
Amortization of operating lease right-of-use assets			5,245			5,328
Income from equity method investments			(13,921)			(8,745)
Dividends received from equity method investments			12,030			6,266
Interest income from investments			(10,008)			(2,839)
Deferred income taxes			14,627			915
Stock based compensation expense			6,209			1,930
Loss (gain) on sale of property and equipment – net			243			(102)
Changes in assets and liabilities:
Accounts receivable			1,977			659
Inventories			21,760			(6,519)
Income taxes refundable			(2,766)			3,715
Prepaid expenses and other assets			(4,495)			(452)
Accounts payable – trade			7,868			1,478
Accrued expense and other liabilities			(4,517)			(2,752)
Net cash provided by operating activities			127,970			54,795
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(37,663)			(15,578)
Purchase of short-term investments			(448,507)			(399,350)
Maturities of short-term investments			514,586			216,735
Deposits			(43)			(319)
Proceeds from sale of real estate and property and equipment			29			5
Net cash provided by (used in) investing activities			28,402			(198,507)
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock acquired			-			(13,012)
Capital contributions from minority investor			22			-
Payments to noncontrolling interests holders			(4,344)			(3,997)
Net cash used in financing activities			(4,322)			(17,009)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			152,050			(160,721)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – Beginning of year			71,347			232,068
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – End of year		$	223,397		$	71,347
Non-cash financing activities – Stock awards accrued		$	2,172		$	965
Non-cash financing activities – Stock awards issued		$	965		$	1,539
Non-cash investing activities – Accrued capital expenditures		$	918		$	425
Right-of-use assets acquired and liabilities incurred upon lease execution		$	3,210		$	9,321

The following table summarizes the impact of the Company’s retrospective change in accounting principle:
	Three Months Ended
	January 31, 2023
	As Previously Reported			Effect of Change			As Currently Reported
Cost of Sales	$	185,268		$	1,581		$	186,849
Gross Profit	$	14,899		$	(1,581)		$	13,318
Selling, general and administrative expenses	$	(6,719)		$	1,581		$	(5,138)

	Year Ended
	January 31, 2023
	As Previously Reported			Effect of Change			As Currently Reported
Cost of Sales	$	800,269		$	6,129		$	806,398
Gross Profit	$	54,731		$	(6,129)		$	48,602
Selling, general and administrative expenses	$	(28,956)		$	6,129		$	(22,827)

 

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Investor Contacts

Douglas Bruggeman

Chief Financial Officer

Caldwell Bailey

ICR, Inc.

rexamerican@icrinc.com

Source: REX American Resources Corporation

FAQ

What was REX's net income per share for Q4 '23 and Full Fiscal Year '23?

REX reported net income per share of $1.16 for Q4 '23 and $3.47 for Full Fiscal Year '23.

What was the gross profit for REX in Q4 and Full Fiscal Year '23?

REX reported gross profit of $30.4 million for Q4 '23 and $98.2 million for Full Fiscal Year '23.

What were the net sales and revenue for REX in Q4 and Full Fiscal Year '23?

REX reported net sales and revenue of $187.6 million for Q4 '23 and $833.4 million for Full Fiscal Year '23.

What is the status of the One Earth Energy carbon capture facility construction?

REX commenced site construction on the One Earth Energy carbon capture facility in Q3 '23 at the Gibson City, Illinois location. The compression facility is expected to be completed in Q2 '24.

How much is REX budgeting for the One Earth Energy carbon capture project?

REX is currently budgeting $165-$175 million for the One Earth Energy carbon capture project.