REX - Earnings call transcript Q4 2019 | REX American Resources Corporation

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Operator

Welcome to the REX American Resources Fiscal 2019 Fourth Quarter Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions].

I would now like to turn the conference over to Doug Bruggeman, Chief Financial Officer. ahead. go Please

Doug Bruggeman

a morning Resources Good get you joining Harbor well for our will first Thank the review XXXX and fourth American Safe as as momentarily fiscal and We’ll session, quarter REX but presentation I you. disclosure. comments thank question-and-answer conference to call.

Such of statements Act In that uncertainties and involve or conditions, statements the Securities conference Reform of forward-looking meaning Litigation Private to XXXX. company's not addition and facts call the today's of risks but within current beliefs, performance. historical guarantees current contains statements reflect the forward-looking future of expectations are

results actual such, from may As expectations. vary materially

and The statements. Form no today's risks and revise filings obligation REX in and the forward-looking uncertainties Securities the any or forward-looking with company's XX-Q. assumes news Commission, reports company's statements Exchange are XX-K American including on announcement to associated described Resources the update in the publicly and with

call I Chairman the have our Rose, Board; his the first and I’ll Executive financial joining the call Zafar review performance Executive Stuart then of me Rizvi, comments. for to Officer. turn Chief on today over Stuart and

Sales for higher based ethanol year reflecting XX.X X.X%, the approximately were year this in Sales versus quarter million gallons million the primarily upon XX.X pricing. prior year-over-year quarter. increased fourth

area. upon due the reduced the plant ultimately ethanol on and wet impact The year. the corn the of impact rail that million near Sales primarily in XXX.X year gallons corn the in based spring NuGen the interrupting facility in affordable fewer for prior to the million service XXX.X gallons were the acreage planted weather and resulting full this gallons year versus at were

X.X year a of fourth X.X by-products for fourth the for million primarily versus part quarter, with to this million for segment of year's The early fell prior as spreads in gross coal facility. the ethanol segment X.X Gross due lower at the profit reflecting quarter had the quarter crush demand the quarter and improved to which off for fourth progressed. the the loss the million, refined decrease X.X increased million from

of from to recorded SG&A expense increased due terms. ethanol million for to certain The SG&A X.X freight fourth due is for from higher recorded XXX,XXX fourth contract year charges consistent during unconsolidated equity investment the This its in company largely to the income X.X of year. of versus improvement million quarter those industry this ethanol million the X quarter with loss prior in quarters. a conditions

benefit million to This X.X the year segment million the aforementioned fourth prior per benefit million this diluted fourth tax a benefit quarter. year's million recognized in million quarter net in X.X of earnings the increasing The prior million for X.X in in at refined from the X.X resulted year of quarter versus of X.X year's the We lower versus $X.XX the demand and coal increasing this X.X a share quarter fourth a from reflecting $X.XX. facility. fourth income contributed to

Stuart, you the now call your to I’ll over for comments. turn

Stuart Rose

Doug. you, Thank

outbreak. loss by at as ethanol. explained, bad is ethanol the Doug low that prices, whole part loss caused prices, running Among is at current as quarter, the country, oil operation the a was ethanol During in reasons mostly of a a low ethanol harvest running COVID-XX a

now expected run In making to uneconomical is of terms gas natural of refined to and coal currently that’s prices coal, price We refined in coal low demand. the due operation. opinion The our plants running than idle. are believe the lower it

tax need no of for this On the have that, good the we time. at credits side

it's something that So would need definitely running. not

stock a XXX very, we’re now Consolidated About a we is XXX,XXX very actively of that any now at, price possibly looking attractive day. In currently depending now, that buybacks. are on it cash terms our our – of possible selling given which where remain our about move. is which at is Right this company itself, cash include saved Uses like certainly million. shares we cash, makes good looks authorized.

We’re capture at in also Illinois. carbon looking possibilities

businesses. XX it. we're at certainly one always years a a ethanol we’re bargain along the is would new TVs, consider still ethanol we good this price, in company an so business making very sold that a This ago same capable prolonged if is looking looking pivot. very of And comes We’re the at if plant,

business Zafar will you. and Chief further Thank our the Rizvi, business. Officer discuss now overall ethanol Executive the

Zafar Rizvi

you, morning, everybody. Good Stuart. Thank

As the in weather-related an calls, environment to faced a corn challenging in company unexpected last several which continued The I mentioned issues three of previous delayed the delay planting our problems year. due in has throughout resulted the and harvest.

XXXX in to subject prices was volatility. significant Commodity

an obtain availability. facility of off this of plant in a to was corn where due fallen production South and NuGen production resulted at corn Dakota supply adequate in including last struggling We’re October levels historic corn basis, higher in to no operation has our interrupted

in XXXX a of all which impact crude gross the margins. and market, decline negative fiscal the in in emergence pandemic, entered in the resulted continued decrease the the fuel on decline and the challenges, a including COVID-XX and price facing recent We a of the ethanol demand

possible. The social federal governments government advisory are and home, state distancing and various remotely if working from issuing

Center Prevention safe We following steps and guidelines. employees are to state every taking and Disease federal and are for and keep Control our

response faced environment, plant threat the plant the NuGen fiscal margin is our idle [indiscernible] COVID-XX increases. to last gross many reduced to challenging decided last previously, we In keep of COVID-XX year. challenges until the the mentioned and and week I industry As

segment declined. since orders is of market of expecting for second first XXXX the One the are We improve. Energy gross issued and and margin are if COVID-XX threat evaluating further Thus of and loss the in not stay-at-home in similar a has we the will largely, process Governor Illinois of has take conditions probably diminished quarter to the the ethanol steps in not Earth

production to the billion small trade in exemptions. refineries XXXX, billion decreased XX.XX down tons, and these compared On ethanol XXXX. ethanol XX.X in top dispute gallons X.XX% uncertainty export billion are gallons of from continued billion in XXXX. we XXXX U.S. because metric export challenges, in of experiencing In XXXX Total of X.X million XX.X compared was the grains distiller to XXXX. X.X was

me little about Let are as what mentioned else doing, bit earlier. discuss we Stuart a

Illinois [ph]. explore XXX,XXX working University with at sequestration very The a carbon approximately clean are One the of to of side tons produces project We Earth carbon Energy. that plant

University of Mt. Storage facility excellent proven Earth Geologically in mapping, that reservoir characterization is One density storage Mt. Simon quality. Energy Sandstones the demonstrated Illinois a analysis. according reservoir expected the potential to and modeling Simon in The storage have been are Complex [ph] the the of have to

seismic completed contact [indiscernible] land We for feasibility testing and study, have project. the a have

we be However, in cannot this state we for will the [ph] University of stage, whether federal of removing that project. sequestration very At Illinois process project. early are the we predict in we applied implement grant laws. this beginning carbon stage this and has able the and of very to are The

In floor summary, segment. in we quarter year his the to and profit for as back net for spite will environment, the Stuart Stuart? for still well a of difficult the ethanol challenging comments. were give produce to as additional Rose I very able the fourth

Stuart Rose

things business. but as we team. bad the Thank same management corn oil going and conclusion, us down, ethanol at an time, With availability, COVID-XX, It’s as I’ve corn hitting the times. we’re In seen have going ever lot prices difficult you. probably experienced through of in a

how we to We have know when pivot to.

We cash. have lots of

It’s than have better best hope handle very will ever. out times, we it our to in come like of We handle is these these we We now. feel but said We best see what difficult the right I to and should, we’ll times. people uncertain to do these times.

And now, floor to open I’ll the leave questions.

Operator

Molchanov Instructions]. proceed with Raymond James. of your question first [Operator from our you. the question. And Please line Thank comes with Pavel

Pavel Molchanov

about for I These several Do the Good everything as thought to least times any question. you for to supply ask doing industrial plants emergency hand least. your say morning. to at manufacturing at are these the other companies Thanks in their have do, treasury’s taking I authorization the ethanol from pandemic which interest of would to or repurpose to started around the begin seems evolve the week. last ethanol facilities? partially alcohol use is interesting what per have Since that sanitizer days,

Stuart Rose

you answer? want to Zafar,

Zafar Rizvi

me to register have let need are SOP to we sure into FDA FDA looking and but the follow guideline that we we this, make Pavel, we the the a with make sure license. say which get Yes. to clearly there’s to

at gallons we of have One million-gallon put I of produce utilized. lot looking utilized, think so we some and under approximately time sanitizers gallons the sold are also looking is this X,XXX far. will is ethanol to [ph] are going far But third and these some X,XXX gallons produce at But gallons are forward don’t -- concerns, We Energy a and for as plant so sold to other their we as can think into some to the founders be there you because but be I we who hands. this stage, license, it. XXX be this certainly see gallons we party at can also demand of which will just many Earth there – pharmacy

at yes, it out. is business into looking that do stage to we but know be going this how will we turn So not

Stuart Rose

material would it. of the that it. of real about going make our and line will which it talking bottles we we do don’t I most. working is just needed, have to the went just to over. minimal. do And to talking stuff to can millions described that’s will them no the licenses just Zafar problem help, make people on we getting hand any we we’re we And – as We hundreds and want Zafar can, gallons caution that of shortage very if gallons expect we any other sanitizer and We we buying at but to do, our change and bottom and very, be to are significant ethanol on the sell is what getting There to that and better will are – But of we allowing do anyone forecast difference what companies. millions thousands said, thinks

Pavel Molchanov

of Understood. COVID-related question. more on One kind

any because lockdown the guys of other shut the under any forced you of are course state we or are one level. of states the them to at production lockdown in ones orders To these the more across and of So seeing down industries? operate either is stay-at-home and the knowledge, lockdown of plants, which the are just more you are and Ohio facilities, your ethanol

Zafar Rizvi

basically COVID-XX due to has and produce are down, Earth know it’s ethanol that you same the we locked is there some Illinois reason $X.XX. as margins corn think are the affecting of but at Energy economically $X.XX when I to $X.XX also time because the is considering the not on One or

we but even also starting also, So to cities I issuing the are are margin think there every exactly what or follow state is no guideline those.

taking the both in instructions anything distance clear-cut close So should and the were are and they affecting guideline shrinking is margin. have and policies of important is pricing most this locations, that and ethanol certainly, of where safety of leading all we is our the working implemented, major the and of because else only what those we steps. and all the there gasoline employees have how COVID-XX than Yes, they are the be impact not pricing but to

happening. really that’s So

Stuart Rose

at We you this the effect. it others I’m are shutdowns shutdown shutdowns. companies have can’t cycle. many margins, as may a causing Pavel, know, or At was state the considering the and of the money lot announced whether it’s same this point, sure

Pavel Molchanov

Yes. one for a this about Last question topic. – on separate me

buying three it’s Obviously your ethanol trade a China at U.S. X everywhere been any months China. in understanding, then else. since the since and deal lot To with about this China Phase happened point? has is So

Zafar Rizvi

No.

the was a but any DDG, think out We who was is DDG. China corn even we that rumors reason is were China later have buying was Chinese of buying time there not on yesterday buying ethanol metric – ethanol really rumors to China sell price seen not it’s also is any the can China But previously as seen is ethanol way. DDG. purchase this on But price or that the tons. little find corn. I same decreasing, higher up not and China – any crude, certainly going the is from have with we because But at bit is stage. consistent corn we price gone unless million help through goes ethanol really not buy also price really X it there heard that That’s in one But market that that trying does buying the

Pavel Molchanov

guys. Stay Thank safe. you,

Zafar Rizvi

Thank you.

Stuart Rose

Thanks, Pavel.

Operator

[Operator Instructions].

Stuart Rose

with in get the hopefully you whoever If Bye. us, more questions, you us. there’s listening Thank very thank will for future. better appreciate no today much. sticking I We with is everyone and things sticking

Zafar Rizvi

Thanks, everyone. Bye-bye.

Operator

does your Have for thank a that conclude today. please conference disconnect great That you the you participation your day. We ask you. and Thank lines.

REX American Resources (REX) 26 Mar 202019 Q4 Earnings call transcript