REX American Resources Reports Third Quarter Net Income Per Share Attributable to REX Common Shareholders Of $0.18

Rhea-AI Summary

REX American Resources Corporation (NYSE: REX) reported Q3 '22 financial results with net sales of $220.3 million, up from $203.1 million in Q3 '21. However, gross profit plummeted to $11.3 million from $25.2 million due to rising corn and natural gas prices. The company posted a net income of $3.2 million, significantly down from $13.3 million a year prior. REX completed a stock repurchase of 249,570 shares for $6.8 million, maintaining a robust cash position of approximately $290 million and no debt. Outlook includes optimism on carbon capture initiatives supported by recent legislative changes.

Positive

• Net sales increased to $220.3 million in Q3 '22, up 8.4% from Q3 '21.
• Maintained a strong cash position of approximately $290 million and no debt.
• Completed stock repurchase of 249,570 shares at a cost of about $6.8 million.
• Continued positive income for nine consecutive quarters.

Negative

• Gross profit decreased to $11.3 million, down 55% year-over-year.
• Net income declined to $3.2 million from $13.3 million in Q3 '21.
• Higher input costs for corn and natural gas impacted profit margins.

Files Class VI Permit Application Related to Carbon Sequestration Project

DAYTON, Ohio--(BUSINESS WIRE)-- REX American Resources Corporation (NYSE: REX) (“REX” or “the Company”) today reported financial results for its fiscal 2022 third quarter (“Q3 ‘22”) ended October 31, 2022. REX management will host a conference call and webcast today at 11:00 a.m. ET.

Conference Call:	212/231-2910
Webcast / Replay URL:	www.rexamerican.com
	The webcast will be available for replay for 30 days.

REX American Resources’ Q3 ‘22 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. The Company reports results for its ethanol and by-products component as continuing operations and beginning in the third quarter of fiscal 2021 its refined coal component as discontinued operations as operations have now ceased.

REX’s Q3 ‘22 net sales and revenue were $220.3 million, compared with $203.1 million in Q3 ‘21. The year-over-year net sales and revenue increase primarily reflects higher pricing for ethanol, dried distillers grains, non-food grade corn oil and modified distillers grains. Q3 ‘22 gross profit for the Company’s continuing operations decreased to $11.3 million, compared with $25.2 million in Q3 ‘21 as the higher net sales and revenue were offset by significant increases in corn and natural gas prices. This led to Q3 ‘22 income before income taxes and non-controlling interests of $6.1 million, compared with $19.2 million in the comparable year ago period.

Net income attributable to REX shareholders from continuing operations in Q3 ‘22 was $3.2 million, compared to $13.3 million in Q3 ‘21. Q3 ‘22 basic and diluted net income per share attributable to REX common shareholders from continuing operations was $0.18, compared to $0.74 per share in Q3 ‘21. Per share results for Q3 ‘22 and Q3 ‘21 are based on 17,591,000 and 17,890,000 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, “The third quarter marked a difficult operating environment as we faced significant price increases in our two largest inputs – corn and natural gas – as well as ongoing logistical constraints. Despite these challenges, we were able to post our ninth consecutive quarter of positive income along with income per share for the first nine months of fiscal 2022 of $1.10. We have maintained our robust balance sheet and liquidity position which at quarter end included approximately $290 million in cash and short-term investments and no debt. We remain confident our strong capital structure positions REX to continue to benefit our shareholders and support our ethanol businesses while strategically investing in initiatives that can yield attractive returns for our employees, partners and shareholders.

“In this regard, our team remains very excited about our carbon capture and sequestration project and is making meaningful progress on this front. We filed a Class VI injection well permit application for three wells to allow us to inject carbon dioxide into deep rock formations and recently signed a contract for a carbon compression facility for our One Earth Energy ethanol plant. The language and opportunities in the Inflation Reduction Act are encouraging, including the new clean fuel production credit under section 45Z and an increase in the 45Q credit to $85 per ton. We believe this can bring significant financial benefits to our carbon capture and sequestration initiatives and to the ethanol industry as a whole.”

Balance Sheet

As of October 31, 2022, REX had cash and cash equivalents and short-term investments of $289.8 million, $30.5 million of which was at the parent company, and $259.3 million of which was at its consolidated production facilities. This compares with cash, cash equivalents and short-term investments at January 31, 2022, of $255.7 million, $42.9 million of which was at the parent company, and $212.8 million of which was at its consolidated ethanol production facilities.

During the fiscal third quarter ended October 31, 2022, the Company repurchased 249,570 shares of its common stock at a cost of approximately $6.8 million. The Company is currently authorized to repurchase up to an additional 876,786 shares of common stock and has approximately 17,390,469 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,
	2022		2021			2022		2021
Average selling price per gallon of ethanol	$	2.49	$	2.31		$	2.48	$	2.12
Average selling price per ton of dried distillers grains	$	230.29	$	184.85		$	232.51	$	200.02
Average selling price per pound of non-food grade corn oil	$	0.74	$	0.59		$	0.70	$	0.47
Average selling price per ton of modified distillers grains	$	116.49	$	92.10		$	120.23	$	83.97
Average cost per bushel of grain	$	7.52	$	6.45		$	7.28	$	6.05
Average cost of natural gas (per MmBtu)	$	7.15	$	4.58		$	6.69	$	3.69

Third 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 212/231-2910 (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 699 million gallons of ethanol over the twelve-month period ended October 31, 2022. REX’s effective ownership of the trailing twelve-month gallons shipped (for the twelve months ended October 31, 2022) by the ethanol production facilities in which it has ownership interests was approximately 277 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, non-food grade 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								Nine Months Ended
	October 31,								October 31,
		2022				2021				2022				2021
Net sales and revenue	$	220,277			$	203,066			$	654,833			$	562,786
Cost of sales		208,941				177,914				615,001				504,003
Gross profit		11,336				25,152				39,832				58,783
Selling, general and administrative expenses		(7,886	)			(6,310	)			(22,237	)			(22,444	)
Equity in income of unconsolidated ethanol affiliates		661				349				6,210				2,763
Interest and other income, net		1,983				35				10,338				117
Income before income taxes and noncontrolling interests		6,094				19,226				34,143				39,219
Provision for income taxes		(1,196	)			(4,338	)			(7,374	)			(8,329	)
Net income from continuing operations		4,898				14,888				26,769				30,890
Net income attributable to noncontrolling interests (continuing operations)		(1,714	)			(1,562	)			(7,233	)			(4,585	)
Net income attributable to REX common shareholders (continuing operations)		3,184				13,326				19,536				26,305
Net income from discontinued operations, net of tax		-				1,815				-				4,263
Net loss attributable to noncontrolling interests (discontinued operations)		-				137				-				370
Net income attributable to REX common shareholders (discontinued operations)		-				1,952				-				4,633
Net income attributable to REX common shareholders	$	3,184			$	15,278			$	19,536			$	30,938
Weighted average shares outstanding - basic and diluted		17,591				17,890				17,714				17,983
Basic and diluted net income per share from continuing operations attributable to REX common shareholders	$	0.18			$	0.74			$	1.10			$	1.46
Basic and diluted net income per share from discontinued operations attributable to REX common shareholders		-				0.11				-				0.26
Basic and diluted net income per share attributable to REX common shareholders	$	0.18			$	0.85			$	1.10			$	1.72

 

- balance sheets follow -

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

			October 31,				January 31,
ASSETS:				2022				2022
CURRENT ASSETS:
Cash and cash equivalents			$	135,986			$	229,846
Short-term investments				153,819				25,877
Restricted cash				1,308				2,222
Accounts receivable				22,675				25,821
Inventory				42,045				42,225
Refundable income taxes				6,611				6,677
Prepaid expenses and other				11,576				12,499
Total current assets				374,020				345,167
Property and equipment, net				131,235				137,554
Operating lease right-of-use assets				14,748				11,221
Deferred taxes and other assets				21,267				25,853
Equity method investment				33,769				30,566
TOTAL ASSETS			$	575,039			$	550,361
LIABILITIES AND EQUITY:
CURRENT LIABILITIES:
Accounts payable - trade			$	40,271			$	32,266
Current operating lease liabilities				4,902				4,600
Accrued expenses and other current liabilities				12,109				13,617
Total current liabilities				57,282				50,483
LONG-TERM LIABILITIES:
Deferred taxes				3,132				3,132
Long-term  operating lease liabilities				9,883				6,390
Other long-term liabilities				2,997				2,794
Total long-term liabilities				16,012				12,316
EQUITY:
REX shareholders' equity:
Common stock				299				299
Paid-in capital				278				-
Retained earnings				632,665				611,607
Treasury stock				(193,770	)			(181,114	)
Total REX shareholders' equity				439,472				430,792
Noncontrolling interests				62,273				56,770
Total equity				501,745				487,562
TOTAL LIABILITIES AND EQUITY			$	575,039			$	550,361

 - statements of cash flows follow -

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

			Nine Months Ended
			October 31,
				2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests			$	26,769			$	35,153
Net income from discontinued operations, net of tax				-				4,263
Net income from continuing operations				26,769				30,890
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation				13,503				13,505
Amortization of operating lease right-of-use assets				4,105				4,128
Income from equity method investments				(6,210	)			(2,763	)
Dividends received from equity method investments				3,007				1,504
Interest income from investments				(1,098	)			(36	)
Deferred income taxes				4,964				5,840
Stock based compensation expense				1,295				1,100
Gain on sale of property and equipment - net				(91	)			(1	)
Changes in assets and liabilities:
Accounts receivable				3,146				(20,313	)
Inventories				180				7,673
Refundable income taxes				66				(332	)
Other assets				649				1,912
Accounts payable - trade				7,990				10,916
Other liabilities				(4,281	)			2,776
Net cash provided by operating activities from continuing operations				53,994				56,799
Net cash used in operating activities from discontinued operations				-				(6,368	)
Net cash provided by operating activities				53,994				50,431
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures				(7,182	)			(4,245	)
Purchase of short-term investments				(307,371	)			(67,412	)
Sale of short-term investments				180,527				82,022
Other				-				40
Net cash (used in) provided by investing activities				(134,026	)			10,405
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock acquired				(13,012	)			(6,627	)
Payments to noncontrolling interests holders				(1,730	)			(1,515	)
Net cash used in financing activities from continuing operations				(14,742	)			(8,142	)
Net cash provided by financing activities from discontinued operations				-				280
Net cash used in financing activities				(14,742	)			(7,862	)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH				(94,774	)			52,974
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of period				232,068				146,158
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of period			$	137,294			$	199,132
Non-cash financing activities - Stock awards accrued			$	679			$	972
Non-cash financing activities - Stock awards issued			$	1,539			$	100
Non-cash investing activities - Accrued capital expenditures			$	93			$	34
Right-of-use assets acquired and liabilities incurred upon lease execution			$	7,632			$	3,267

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221201005197/en/

Douglas Bruggeman

Chief Financial Officer

(937) 276‑3931

Joseph Jaffoni, Norberto Aja

JCIR

(212) 835-8500 / rex@jcir.com

Source: REX American Resources Corporation

FAQ

What were REX's Q3 2022 net sales and revenue figures?

REX reported Q3 '22 net sales of $220.3 million, compared to $203.1 million in Q3 '21.

How much did REX's net income decline in Q3 2022 compared to Q3 2021?

Net income for Q3 '22 was $3.2 million, down from $13.3 million in Q3 '21.

What challenges did REX face in Q3 2022?

The company encountered significant price increases in corn and natural gas, along with logistical constraints.

What is REX's current cash position?

As of October 31, 2022, REX had approximately $290 million in cash and short-term investments.

What recent initiative is REX excited about for carbon capture?

REX filed a Class VI injection well permit application for carbon sequestration and signed a contract for a carbon compression facility.