REX - Earnings call transcript Q2 2020 | REX American Resources Corporation

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Operator

Welcome to the REX American Resources Fiscal 2020 Second 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. Please go ahead.

Doug Bruggeman

you conference REX call. thank XXXX Resources and quarter second morning for American joining fiscal Good We'll momentarily, your as to well get our as questions presentation and and comments answers. the disclosure. I'll Safe first, review But Harbor

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

I'll year As results no Board, the XX-K and Exchange performance news and over filings actual XX-Q. production of for by quarter reopened had and million upon Earth for I late to described sales forward-looking may in such, million for XX% Rizvi, profit plants plant also Chief company's million expectations. have Executive vary production Resources Securities on The Form last or were the gross update profit publicly ethanol We decrease gross Rose, year-over-year. comments. One $X.X were was today's to joining gross the the Chairman The Sales of late the in the uncertainties month Earth in impacted caused statements Commission, the One by reported forward-looking Officer. quarter XX.X this resulted and REX American which review same for to due in materially XX.X in $XXX,XXX as including me quarter. June, ethanol sales. in primarily factors risks quarter idled revise in announcement in year. March. in obligation year. the the any the the from NuGen of and the the that in based Ethanol associated assumes Stuart decreased gallons statements. and levels on NuGen plant company's ethanol with with and on a for approximately are we pricing the the Sales for segment call by-products versus Zafar today, a his primarily then decline second impacted versus and the plants turn call each first our second the quarter profit of of Stuart the We XX% May lower prior Executive our one and financial reports

the $X.X million Our offset benefit These volume. versus losses versus year. conditions. in the our million investment unconsolidated at year versus segment prior quarter for prior other calculated lower from $X.X a $X.X XX of recorded as losses. similar second quarters had quarter lower to to Act. to the $XXX,XXX in of $X.X tax shareholders second second loss million million and this factors XXXX declined of tax than recorded five year's million gross and These the million $X.X losses upon interest on SG&A the tax quarters prior million REX the this to the XX% second tax currently between cash XXXX $X.X quarter $X.X million current based overall led coal versus from due short-term net tax million and Interest from fell a prior a losses year the recorded reflecting refined the at We a the interest by benefit We rather fiscal due XXXX are year. of equity $X.X the for in of our of rates income of primarily credits loss carry prior from upon benefit $X.X income million $X.X year. the had loss current fiscal We the in in of rate our million year-over-year respectively, $XXX,XXX, tax was based Section our the for benefits and quarter to year, second of operating year, during federal for ethanol $X.X income attributable back investments industry XX% year. current-year $XXX,XXX from this and in net ability sharply Stuart? rates CARES of to years versus

Stuart Rose

Doug. Thank you,

biggest plentiful see with up XX are prices The if And our the Going all have could is, law, applied impact on excuse over have negative forward, impact XX, we appears are our that last to business. ethanol Or, a ethanol is quarter. not an harvest this only given our -- negative good is in at me, business. see or for current sight. government the that currently be is, or profitable I I would refineries the they follow RINs were exemptions. open. that does if with there low on an hopefully have see Corn time, The RIN that plants --

$XXX had terms basis. on over a million we In cash, consolidated of

to back which to work We another work stock. dips which the be on buying -- carbon later. XXX,XXX, will our if during stock our a Zafar we CEO, on levels are for to or again, We attractive continue buy the to back shares little the Rizvi, think that XX,XXX bought dips discuss we company the quarter. last capture will potential site, We're authorized

anything quality ethanol not We've nothing's for and plants at We found reasonable there. prices. imminent looking continue

Zafar carbon capture. that further that than ethanol ancillary investment byproducts. ethanol business still our CEO its continue We now an imminent abilities. would products But Rizvi, to consider of that discuss could other nothing you. or our our and can something We look Thank made use again, in ethanol be will in out area. at is

Zafar Rizvi

the thank second morning, for joining us earning and quarter for Thank today Stuart. you you, Good XXXX calls.

in ethanol impacted shut That price, a of business industry. environment, resulted Several we including majority-owned crude and negatively ethanol in year note, pandemic government. As and our ethanol decrease stay-at-home decline were orders of fiscal plants. the XXXX demand the both country all the started the and in by including COVID-XX down a facilities and fuel in across shut down, a demand challenging

to to and XX. decision idled down had One we April As quarter challenging plant of the in By XXXX, March led XX NuGen shut I our that mentioned at Earth both March majority-owned environment the first on plants. call,

We some gasoline May at late relaxed. shutdown in as activity COVID-XX the improvements That ethanol. business in have and for order experienced created increase demand

one As of reason, to late second ended and location. second demand ended June reopening the One each NuGen's Energy's Energy quarter to of for in on NuGen Earth approximately of Energy financial activities production results quarter late that May Since quarter XX that XX, ethanol increased, and One led due second in June. July on month Earth have

usual We these through production but behind restart-up are also problem, problems gone us now.

refinery Dakota and USDA corn profitable of third further quarter to further in availability corn per crush year shows in than the our The year, threat believe to lead we the better consider Export on exemption. crops could draw excellent metric margin, blending improve the so the progress from to compared million condition, last seen dropped NuGen in -- last COVID-XX improvements condition ethanol June first quarter condition grant year. corn earlier, have and good hand, refinery XXXX. this six lead X XX% to are here, RFS ethanol threat still small better majority-owned to as Marion XXXX tons approximately ethanol corn the lead is But uncertainty to of ethanol XX% demand six results. as through during could Stuart and months August totaled located, third our reduced. distiller of of Illinois less and continued plants' Compared The of and last to period same could XXX grain million export harvest last year. lead to continues XX% compared South and mentioned The gallons and first locations compliance margin. continued plant also of of the to of plant, which and export good XXX around steady provided XXXX. report of compared to DDG XX% flow a improved on the compared corn of XX. where early The and small less year, economic COVID-XX dry crush to yield, other for exemption better to a tons We EPA because X.XX million We in South is of corn ethanol. is last at far could gallons is Dakota both looks ethanol USDA future a months disputes and economic report experiencing area which a excellent our trade

progress Let also I me previous -- give the in sequestration on you you call. our which give some discussed project, carbon

Department to couple US One capture of to safe expect explore during Illinois the will of system. the the previous the University start performing Energy and of front-end with through ethanol COX seismic has a test call, be and mentioned award project. to we received test study develop I well, a are programs months The Earth with The work sequestration a storage university carbon Illinois As within Energy and contact it associated service, carbon carbon facility. engineering working University site design, drilling of of

we cannot Stuart project excellent characterization for thankful our As that to and To have we -- this and And for and last in every vicinity profitable the crush testing give -- quarter. demonstrated the at appreciative completed of in – and storage better feasibility for we Simon further third facility. guidelines. a year. very have call, margin expect Stuart. will comments. predict our our with exists you, CDC land and the project. be in this during were seismic employees year, This geological step is federal have we that lead back this keep hard study, I One modeling Thank storage date, I we improvements safe mapping, complex purchased In than and We follow we previous Mt. Earth still that corn crops the area and of project. some successful the floor will are stage, could his state give pandemic, seen have Energy work dry taking mentioned have the and during Rose to some preliminary employees the to summary, of back potential extra

Stuart Rose

is business is now currently Thanks, like looks The worst ethanol us. the profitable. In Zafar. behind it conclusion,

and us that's it We locations, that again. to great biggest Most the among have I'll navigate the profitable thing great industry. and open time allowed become have people, best this now to important, great questions. difficult the we in leave plants,

Operator

line Instructions] Securities. first you. the from Jordan Our question Truist with Thank with your Levy [Operator proceed comes question. of Please

Jordan Levy

Morning, and Stuart, Zafar. Doug

Stuart Rose

Hi.

Jordan Levy

subsequently on demand just ethanol then the to in just the here go level ethanol, or that, fronts. discipline And production bounce sort better could however on you nice get of can the start seen industry more US? your industry yourself whole, of position buffer overall guys to you as see on the kind to thoughts back how a gasoline through And it. in that and to a and the Just volatility, things with you view volatility do just we your that versus off, peers? view curious the we've What given corporate of at

Stuart Rose

seem or in away seem maybe Even ever permanently. they They - if there's plants, got When profitable, they produces Well, discipline. for they very ethanol back. while. no come two, to there's they're virtually everyone to plants And but yeah, very, a real it's down none just industry. discipline close - very little - inefficient go People crazy. one little - never the like never

we're if where little very we at very, the that's - think at really of and I really and try think [ph] We industry. the be most good work price in there's in Zafar corn, we what have among low-cost the is And so depending do efficient industry, hard and the plants What discipline. to is we do we're on their among better - the the allowed that. we We, And we us years producer if Many negative have way, of the other to course, always try to way year for companies statement, we'll none is retained be outperform us This their you we expected. made retained very industry. over earnings very, the feel But okay. earnings. year. every producer, look low-cost we're at - virtually we income have, of the on year difficult a money something have they

And for well I so that answers that's question. us. hope far, worked your

Jordan Levy

footprint, thought, costs Yeah. handle just those quarter kind guys briefly would the and for look the same does. make you crush something about right Or, or you low discussed there of ability right price? and I getting trying something the to Along for those think or to price. market drive the right margin is your the as look it a Absolutely that showed just ethanol the you that cost expanding plant of is Is at signal this side? ethanol well. you - of investments kind comfortable price on there that down And - lines would the

Stuart Rose

I our think, we're better at own would off sure, whether plants. it's we for - look buying

share plants Our valued $XX have we in are at cash. a very -

plants at low Our feel, we a by market very, the are price. valued, very

plants what next… So it to our we - would can the if what don't pay that think selling market. - we're or would would unless But certainly we we - something it, help plant be compared pay not our plants are you our to us. buying the would shareholders, a trigger there we Do we back better would we want for than for off buying that unless if on much or plants want ours, not and than have better than be to we shares call are was more a our - would, better

Jordan Levy

of I I makes a If absolutely. think just more. Yeah, that could, one lot sense.

You've by-products mentioned of that kind ability some into. of of more realize peers looking the value are your the from to some

seen - and stream high-protein players couple ethanol sort that of the we've in Just investment. industry of a DDG kind discuss the from of

potential Just something of be? what of for the of investment pursuing kind like might see the thinking kind that and and upside is, what downside you about that

Stuart Rose

before things and and it, We'd made there's investment, looking something well Well, rather do are where places we're things very, We got early, seen two a a weren't became sanitizer, that but have see it was both the both. other done we corn good in be the people watching - that it and by-product we - fairly we've we'd make people it's high-protein follow first rather at other are a oil, corn good in it the We're if us. And people or is for doing. but very good in oil closely. example. and - the

everything. anything else and you that want And think are up, we and - studying want say that definitely watch So it have see, on Zafar. sums I much we'll to you Zafar, do pretty you unless to

Zafar Rizvi

going enough million of to on longer investment Only too. is, add it bit market. Yeah. will And market at that it mature, how thing million to that a not a and is the mature will to as and believe bit see to that time, period protein gets yet, evaluate we that I take mature become $XX that quickly there investment little we return $XX little will is

shifting thing and shrinking market So actually this - that - the the DDG also of other the is amount. that as protein is supply are same to people also market, at

evaluating going are higher we certainly price the to But that a not But at DDG million not time will $XX this - as time, that that's hopefully, this most to bit mature is importantly, little of to invest the - we DDG be particular Stuart not be result, since million. really market yet $XX So think enough goes mentioned. available. will

Jordan Levy

in think more. I that If makes total squeeze I could just sense. one No, Right.

entities? how you at of at moving are mentioned, improved, the things they curious out operated on kind and into in both directionally the where plants, online, you just your plants the of rest of have crush back volumes of and kind of year back in and trend the or half the are margins, and Just general, year now see non-operated the as from terms looking just playing production guys

Stuart Rose

Zafar?

Zafar Rizvi

Yeah.

we I be the as mentioned profitable. can third - I quarter think, will be expected you as see, earlier, see to

threat, months, to or improved something of see compared or this mentioned COVID-XX like of certainly this that like improve, and the year. last at as if through - forward think these profitable availability conditions conditions, I believe it's seems with then stay going at happened corn see we I any we any to corn if six and continued further don't we time, be, will have be we - this, the that, look kind that to So things to

Jordan Levy

Great. answers, I really appreciate the guys.

Stuart Rose

you. Thanks. Thank

Operator

from of question. comes line Please Research. question Chris of next a proceed with Sakai Our your Singular

Chris Sakai

everyone. Hi

countries Just currently sales how an these the why? for and - you which regarding ethanol, countries? affected and countries your and have - has And increased which globally seeing I globally, not are had a question demand pandemic

Zafar Rizvi

to want you me do Stuart, to…

Stuart Rose

Zafar…

Zafar Rizvi

As last always year's million to dropped the top - compared Korea, last I dropped were have and has Canada, They year. compared Brazil in are mentioned year export it dropped. XXX top. but countries, is South Brazil, - export this ethanol, to Canada gallons the Last I about XXXX, And previously, last is also were think they compared was these dropped XXX still Canada they And the India, to think also is million. I million, year, four gallons million four top XXX year, XXX to countries.

think the I - there is, April When during we enough So to other mostly plants there enough hard export also was not were reason were and not something March, down production, Also, impacted. certainly there's it's was shut that production. also. May, the or

in who's affected top US. So these countries really are But ways. that's from both four certainly the importing always

Stuart Rose

one And thing…

Chris Sakai

Okay…

Stuart Rose

I'll COVID, affected ethanol quarter. world, COVID-XX many of because throughout the of at or aren't spread using for as because driving or gallons the least were [ph] add of gasoline in second they weren't they is driving the people as

Chris Sakai

say so is fair, would so are and sales? so guess ethanol then for is be a assumption in I demand increasing, but it that your driving a the is to Right, it as fair -

Stuart Rose

wholesale low have we're is, to driving that of basis a to we still In been with if latest low, price but the with the fairly know have issue deal export fair that - an compete demand has But too. is don't last attention And we on hope driving that - because year. I figures, up other the might. think that's that we Zafar against US, that and that increases, pay don't I gasoline I

that's So wholesale export of business low. another when that price is hurts thing gasoline

Chris Sakai

Right.

that. for thanks Well, it. Okay. Appreciate

Stuart Rose

Thanks for thank the question. Yeah, you.

Operator

no registered at There time. further questions this are Instructions] [Operator

Stuart Rose

everyone you to If that's months. Thank to in attending Bye. it. few like for I’ll our thank you talk a call much. I’d very and

Operator

call ask the conclude lines. please your today. does you that you conference disconnect your for thank That and for We participation

REX American Resources (REX) 26 Aug 202020 Q2 Earnings call transcript