| News Announcement | For Immediate Release |
REX AMERICAN RESOURCES REPORTS
SECOND QUARTER DILUTED EPS OF $0.45
Dayton, Ohio, (August 30, 2017) -- REX American Resources Corporation (NYSE American: REX) today reported financial results for its fiscal 2017 second quarter (“Q2 ’17”) ended July 31, 2017. REX management will host a conference call and webcast today at 11:00 a.m. ET to review the results.
| Conference Call: | (303) 223-2685 |
| | |
| Webcast / Replay URL: | www.rexamerican.com/Corp/Page4.aspx |
| | |
| | The webcast will be available for replay for 30 days |
REX American Resources’ Q2 ’17 results principally reflect its interests in six ethanol production facilities. The operations of One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) are consolidated, while those of its four remaining plants are reported as equity in income of unconsolidated ethanol affiliates.
REX’s Q2 ’17 net sales and revenue decreased 6.0% to $108.7 million, compared with $115.7 million in Q2 ’16, primarily reflecting 29.2% decline in the average sales price per ton of dried distillers grains as well as a 2.7% decrease in the average sales price per gallon of ethanol. This led to a decrease in gross profit of 37.6% to $10.8 million, compared to $17.3 million during the prior year period.
Equity in income of unconsolidated ethanol affiliates in Q2 ’17 decreased to $0.1 million, from $1.2 million in Q2 ’16. As a result, income from continuing operations before income taxes and non-controlling interests in Q2 ’17 decreased 52.2% to $6.5 million, compared with $13.5 million in Q2 ’16.
Net income attributable to REX shareholders in Q2 ’17 was $2.9 million, compared with $8.2 million in Q2 ’16, while Q2 ’17 diluted net income per share attributable to REX common shareholders was $0.45 per share, compared to $1.24 per share in Q2 ’16. Per share results in Q2 ’17 and Q2 ’16 are based on 6,593,000 and 6,586,000 diluted weighted average shares outstanding, respectively.
REX American Resources’ Chief Executive Officer, Zafar Rizvi, commented, “The second quarter presented a challengingoperating environment as both ethanol and distillers grainsprices experienced declines, which was partially offset by more favorable corn prices. In spite of these challenges, we were able to generate over $2.9 million of net income to REX shareholders, or $0.45 earnings per share, reflectingour disciplined operatingapproach and the commitment of our entire team.”
-more-
| REX American Resources Q2’ 17 Results, 8/30/17 | page 2 |
Balance Sheet and Capital Allocation
On August 10, 2017, REX, through a 95.35% owned subsidiary, purchased 100% of a refined coal facility for $12 million in cash (excluding transaction costs) in a transaction that is expected to be immediately accretive to REX’s earnings per share. The facility is in operation and will be included in REX’s financial results beginning in the third quarter of fiscal 2017. REX expects that the revenues from the sale of refined coal produced in the facility will be subsidized by federal production tax credits, subject to meeting qualified emissions reductions as governed by Section 45 of the Internal Revenue Code.
At July 31, 2017, REX had cash and cash equivalents of $186.0 million, $76.2 million of which was at the parent company and $109.8 million of which was at its consolidated ethanol production facilities. This compares with cash and cash equivalents of $188.6 million at January 31, 2017, $79.5 million of which was at the parent company and $109.1 million of which was at its consolidated ethanol production facilities.
The following table summarizes select data related to the Company’s consolidated alternative energy interests:
| | | Three Months
Ended July 31, | | | Six Months
Ended July 31, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
| Average selling price per gallon of ethanol | | $ | 1.45 | | | $ | 1.49 | | | $ | 1.45 | | | $ | 1.41 | |
| Average selling price per ton of dried distillers grains | | $ | 95.39 | | | $ | 134.81 | | | $ | 97.81 | | | $ | 130.12 | |
| Average selling price per pound of non-food grade corn oil | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.28 | | | $ | 0.27 | |
| Average selling price per ton of modified distillers grains | | $ | 41.00 | | | $ | 56.60 | | | $ | 41.47 | | | $ | 58.54 | |
| Average cost per bushel of grain | | $ | 3.38 | | | $ | 3.73 | | | $ | 3.47 | | | $ | 3.63 | |
| Average cost of natural gas (per mmbtu) | | $ | 3.30 | | | $ | 2.71 | | | $ | 3.52 | | | $ | 2.96 | |
Supplemental Data Related to REX’s Alternative Energy Interests:
REX American Resources Corporation
Ethanol Ownership Interests/Effective Annual Gallons Shipped as of July 31, 2017
(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) | | | 120.5 | | | | 75.0 | % | | | 90.4 | |
NuGen Energy, LLC
(Marion, SD) | | | 131.4 | | | | 99.5 | % | | | 130.7 | |
Big River Resources West Burlington, LLC
(West Burlington, IA) | | | 107.1 | | | | 9.7 | % | | | 10.4 | |
Big River Resources Galva, LLC
(Galva, IL) | | | 123.7 | | | | 9.7 | % | | | 12.0 | |
Big River United Energy, LLC
(Dyersville, IA) | | | 129.2 | | | | 5.4 | % | | | 7.0 | |
Big River Resources Boyceville, LLC
(Boyceville, WI) | | | 57.2 | | | | 9.7 | % | | | 5.5 | |
| Total | | | 669.1 | | | | n/a | | | 256.0 | |
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| REX American Resources Q2’ 17 Results, 8/30/17 | page 3 |
About REX American Resources Corporation
REX American Resources has interests in six ethanol production facilities, which in aggregate shipped approximately 669 million gallons of ethanol over the twelve month period ended July 31, 2017. REX’s effective ownership of the trailing twelve month gallons shipped (for the twelve months ended July 31, 2017) by the ethanol production facilities in which it has ownership interests was approximately 256 million gallons. Further information about REX is available atwww.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 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 Q2’ 17 Results, 8/30/17 | page 4 |
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, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
| | | | | | | | | | | | | |
| Net sales and revenue | | $ | 108,744 | | | $ | 115,707 | | | $ | 221,887 | | | $ | 215,929 | |
| Cost of sales | | | 97,963 | | | | 98,423 | | | | 198,617 | | | | 190,223 | |
| Gross profit | | | 10,781 | | | | 17,284 | | | | 23,270 | | | | 25,706 | |
| Selling, general and administrative expenses | | | (4,779 | ) | | | (5,206 | ) | | | (10,181 | ) | | | (9,233 | ) |
| Equity in income of unconsolidated ethanol affiliates | | | 137 | | | | 1,186 | | | | 837 | | | | 1,419 | |
| (Loss) gain on sale of investment | | | (13 | ) | | | - | | | | (13 | ) | | | 192 | |
| Gain on disposal of property and equipment, net | | | 13 | | | | 185 | | | | 13 | | | | 185 | |
| Interest and other income | | | 334 | | | | 97 | | | | 549 | | | | 257 | |
| Income before income taxes | | | 6,473 | | | | 13,546 | | | | 14,475 | | | | 18,526 | |
| Provision for income taxes | | | (2,302 | ) | | | (4,517 | ) | | | (4,692 | ) | | | (6,031 | ) |
| Net income | | | 4,171 | | | | 9,029 | | | | 9,783 | | | | 12,495 | |
| Net income attributable to non-controlling interests | | | (1,230 | ) | | | (853 | ) | | | (2,298 | ) | | | (1,481 | ) |
| Net income attributable to REX common shareholders | | $ | 2,941 | | | $ | 8,176 | | | $ | 7,485 | | | $ | 11,014 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding – basic and diluted | | | 6,593 | | | | 6,586 | | | | 6,592 | | | | 6,590 | |
| | | | | | | | | | | | | | | | | |
| Basic and diluted net income per share attributable to REX common shareholders | | | $0.45 | | | | $1.24 | | | | $1.14 | | | | $1.67 | |
- balance sheet follows -
| REX American Resources Q2’ 17 Results, 8/30/17 | page 5 |
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands) Unaudited
| ASSETS: | | July 31,
2017 | | | January 31,
2017 | |
| CURRENT ASSETS: | | | | | | | | |
| Cash and cash equivalents | | $ | 185,997 | | | $ | 188,576 | |
| Restricted cash | | | 379 | | | | 130 | |
| Accounts receivable | | | 10,938 | | | | 11,901 | |
| Inventory | | | 22,091 | | | | 17,057 | |
| Refundable income taxes | | | 1,527 | | | | 1,070 | |
| Prepaid expenses and other | | | 7,535 | | | | 6,959 | |
| Deferred taxes-net | | | - | | | | 824 | |
| Total current assets | | | 228,467 | | | | 226,517 | |
| Property and equipment-net | | | 187,545 | | | | 182,761 | |
| Other assets | | | 6,720 | | | | 6,913 | |
| Equity method investments | | | 36,665 | | | | 37,833 | |
| TOTAL ASSETS | | $ | 459,397 | | | $ | 454,024 | |
| LIABILITIES AND EQUITY | | | | | | | | |
| CURRENT LIABILITIES: | | | | | | | | |
| Accounts payable – trade | | $ | 11,251 | | | $ | 9,171 | |
| Accrued expenses and other current liabilities | | | 7,442 | | | | 13,348 | |
| Total current liabilities | | | 18,693 | | | | 22,519 | |
| LONG TERM LIABILITIES: | | | | | | | | |
| Deferred taxes | | | 40,848 | | | | 41,135 | |
| Other long term liabilities | | | 2,260 | | | | 2,096 | |
| Total long term liabilities | | | 43,108 | | | | 43,231 | |
| COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| EQUITY: | | | | | | | | |
| REX shareholders’ equity: | | | | | | | | |
| Common stock, 45,000 shares authorized, 29,853 shares issued at par | | | 299 | | | | 299 | |
| Paid in capital | | | 146,851 | | | | 145,767 | |
| Retained earnings | | | 515,692 | | | | 508,207 | |
| Treasury stock, 23,287 and 23,292 shares | | | (313,658 | ) | | | (313,838 | ) |
| Total REX shareholders’ equity | | | 349,184 | | | | 340,435 | |
| Non-controlling interests | | | 48,412 | | | | 47,839 | |
| Total equity | | | 397,596 | | | | 388,274 | |
| TOTAL LIABILITIES AND EQUITY | | $ | 459,397 | | | $ | 454,024 | |
- statements of cash flows follow -
| REX American Resources Q2’ 17 Results, 8/30/17 | page 6 |
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands) Unaudited
| | | Six Months Ended
July 31, | |
| | | 2017 | | | 2016 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net income | | $ | 9,783 | | | $ | 12,495 | |
| Adjustments to reconcile net income to net cash | | | | | | | | |
| provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 9,955 | | | | 9,748 | |
| Income from equity method investments | | | (837 | ) | | | (1,419 | ) |
| Dividends received from equity method investments | | | 2,005 | | | | 1,504 | |
| Gain on disposal of property and equipment | | | (13 | ) | | | (185 | ) |
| Loss (gain) on sale of investment | | | 13 | | | | (192 | ) |
| Deferred income tax | | | 537 | | | | - | |
| Stock based compensation expense | | | 350 | | | | 40 | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts receivable | | | 886 | | | | (4,250 | ) |
| Inventories | | | (5,034 | ) | | | (6,455 | ) |
| Other assets | | | (953 | ) | | | 2,989 | |
| Accounts payable-trade | | | 1,678 | | | | (3,087 | ) |
| Other liabilities | | | (4,828 | ) | | | 169 | |
| Net cash provided by operating activities | | | 13,542 | | | | 11,357 | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Capital expenditures | | | (14,366 | ) | | | (9,334 | ) |
| Restricted cash | | | (249 | ) | | | (56 | ) |
| Restricted investments and deposits | | | 100 | | | | 409 | |
| Proceeds from sale of investment | | | 64 | | | | 2,275 | |
| Proceeds from sale of property and equipment | | | 42 | | | | 1,028 | |
| Other | | | 13 | | | | 12 | |
| Net cash used in investing activities | | | (14,396 | ) | | | (5,666 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Dividend payments to and purchases of stock from non-controlling interests | | | (1,725 | ) | | | (2,096 | ) |
| Treasury stock acquired | | | - | | | | (4,709 | ) |
| Net cash used in financing activities | | | (1,725 | ) | | | (6,805 | ) |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | | | (2,579 | ) | | | (1,114 | ) |
| CASH AND CASH EQUIVALENTS-Beginning of period | | | 188,576 | | | | 135,765 | |
| CASH AND CASH EQUIVALENTS-End of period | | $ | 185,997 | | | $ | 134,651 | |
| Non cash investing activities – Accrued capital expenditures | | $ | 744 | | | $ | 1,350 | |
| Non cash financing activities – Stock awards accrued | | $ | 281 | | | $ | - | |
| Non cash financing activities – Stock awards issued | | $ | 1,195 | | | $ | 1,095 | |
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