REX - Earnings call transcript Q3 2020 | REX American Resources Corporation

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Operator

Good day. And welcome to the REX American Resources Fiscal 2020 Third 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]. turn over to Chief Doug like Officer. Financial would the to conference Bruggeman, I ahead. go Please

Douglas Bruggeman

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

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

$XX,XXX news I may the on or assumes with Zafar on the forward-looking company's joining announcement As Chairman Officer. primarily results comments. vary while to XX.X plant had tight Chief based Resources did We segment the the such, and the rate last associated from ethanol Ethanol in a plant NuGen filings supply with $XX.X Ethanol year. and the the the of region. expectations. actual gallons based levels. in third no Commission, from to full in reports update year. are million to consolidated The company's turn production gross to we year. obligation increase Stuart our Board, REX reduced Securities including at upon $X.XX call third statements financial the year XX-Q. and corn in American the price year to million ran the Rose, uncertainties XX% at for versus Stuart for current year then in I'll revise today's Executive run Executive versus performance statements. gallon and for Sales the and call were quarter risk Rizvi, in review large forward-looking reported byproduct in the and quarter upon today, Exchange million quarter Form that publicly in the profit current materially in prior quarter, the and We over XX-K the our increased of any gross $X.XX per have first this the due XX.X profit his me increased prior described gallons year sales decline last for capacity

was pricing crush XX%. corn corn approximately current reflecting $X.XX primarily negative the lower versus in Our approximately year between ethanol the of prior spread in $X.XX a year, and year-over-year

to recorded a current from year-over-year the share a Interest the XXXX coal as on due this a year lower sharply recorded refined in tax as lower the third year. for versus rates versus rates quarter fell rates at during from benefit and income the Our of million million tax SG&A year's million operations, of for quarter for quarter We profitable $X.X benefits for of $XXX,XXX quarters losses. offset of to above to in $X.XX lower million third the this small of led at based versus and from the the We of quarter year, current short-term year of prior of prior quarter $X.X well million had had a recorded previously in tax quarter factors losses $X.X as and the $X.X to interest was $XX,XXX fiscal respectively, per share facility. declined segment XX% losses income tax unconsolidated cash quarter million in volumes. benefit $X.X expense million the a year. third now the in $X.X the upon interest gross call in million year. this Stuart, the loss prior versus run a $X.X year. are These similar of operating REX income fiscal benefits from versus of or for $X third the and million returning or the year's prior loss million federal million and for XXXX The credits at $X.X the shareholders $X by over loss $X.X year. We in the net third recorded provision turn reversing I'll net in loss $X.X our investment third investments of XX Section based the a current refined per XXXX, attributable equity in million you of $X.XX your coal to other of prior comments. to third having primarily upon our

Stuart Rose

Thank you, Doug.

the quarter-to-date days. far last Rizvi, spreads rapidly so profitable, have the crush forward, further. will are but in Zafar CEO, On we deteriorated going discuss our XX that

people before home. it the people harder hard. the positive possible as EPA with way there's will a in are people they should vaccine for our a hopes to and Agriculture And the for – driving – COVID, see is hit right better positive before I hit even a be to hope right people cautious company. related have we That hitting more a We to soon, more be harder be coming Secretary which even vaccine Biden administration. Currently, less related vaccine ethanol to staying expect as us

credits we credits more us more, have In business. The refined did tax – it usually the of quarter utility more expect us where over or the approximately to hits, well expect tax we receive When make coal, at fourth after coal or runs gives utilities tax one refined which improve on year quarter left where on receive the more refined chance a make to run that third it to basis. terms gives cold we an to usually a chance which coal. weather

shares the In in balance have fiscal approximately on – the million. XXX,XXX cash sheet, – have approximately sheet, so short-term short-term terms of far investments short-term balance cash investments cash XXXX. we $XXX on and short-term we We've repurchased me, excuse and

plants for the We're dips. We XX,XXX field. our really will the have our also try carbon in our [indiscernible] CEO, only Rizvi, opportunities Rizvi. at very that. we looking and under we the for tend ethanol on current on hard discuss CEO, or authorization to of very, stock that. We over terms another to We're Zafar in best capture. I'll to are that consider among call working looking the to buy now authorization buy conference turn Zafar

Zafar Rizvi

morning, Good everyone. Thank you, Stuart.

and when we impact As about NuGen COVID-XX a relaxed, in find of two facility, shutdown decrease ethanol struggle pandemic experienced in to in and greater corn I industry. demand And during for at a a home creating fuel order. demand this late orders saw our May and demand year the including improvement crude ethanol businesses challenging calls the for COVID-XX gasoline and ethanol. environment, the quarters, shutdown the negative last in and a a price, decline started mentioned stay of We

During further margin third flow the improved. minority until profitable both steady of well owned received at majority continued and third quarter, quarter. improved as an locations. conditions owned as we a This corn Most our improved crush importantly, recently. conditions very These in a resulted

farmers resulted its a in payment to price, decline another the selling Now, threat with corn higher in in Also, wake COVID-XX. China margin lack the farmers to direct in the prices from we corn. seeing crush the up Act the a stepped of corn keep corn fail price increase purchase, that a under CARES of in interest to led of to are of higher corn of ethanol wave due When up the price.

resolved grant are threat we to continued availability we crush the of addition, consider RFS and less margin may the to continue decline of corn. trade experiencing and compliance higher EPA In expect the dispute corn from demand the uncertainty cost and improve, continue disputes refinery economic here. to and trade due ethanol Unless for small of diminishes, and the exemption continuing COVID-XX conditions to because are the

other metric XX% tons of hand, million at tons of difficulty year. are in dry XX.X South export export XXX export volume, billion under the and last first in is the the is X.X good. totaled approximately up year's corn September corn to carry metric the shows distillers this the at X.X compared gallons year excellent But DDG our crops XXXX. bushels. X.X metric last compared period. nine tons approximately during XXX,XXX during yield to year gallons, of million plant strong to nine approximately in Illinois during timeframe XXXX months grains bushels We expected XX%, this year XXXX Ethanol million and months South dropped Dakota same last for sourcing NuGen through of million to XXXX projected On crop report billion for totaled to first our had The encouraging. around the crops corn Dakota plants and corn condition USDA the X.XX

little a sequestration bit you project. our give about carbon me Let

Their is permit first and permit This the within quarter to the of half to University and perform Illinois still drilling XD test that The well. working of evaluating mentioned the yet will capture drill study As XXXX be during test to a COX we with industry. to successful the to teams facility. university design, first expects I in receive engineering very XXXX. announce the with One sequestration is plan location profitable carbon preliminary are the at drill of University front-end of The well are our environment for project of call, predict surveys spite will last stage and the a project. a the drill in well Energy a in quarter summary, we to we system. In select a difficult very seismic Illinois application a cannot this pleased very of conduct and at FEED, of Earth well our process a we

are area quarter. production over third this and profitable our year in We a draw year. the the led of helped It pleased corn last to with very crops

spite thankful hard to They for to colleagues We are quarter third of during this Stuart difficult Stuart. overall our Rose for I back give additional and appreciative a contributed in work uncertainty the pandemic. very environment. floor profitable earnings and of Thanks, will the comments. the

Stuart Rose

Thanks, Zafar.

regained as we quarter hit we where said, best All way great company during employees these importantly, we're of how the very the questions. us to of open to have and industry. among negative. Zafar And And been again that's have produce a – are times profitable among As something to best Zafar employees good shown gone our It's the the and and hard proud the in COVID numbers heroes. proud and times. to as have the said, things part among the best times, had to our have most the I'll plants and But spreads profitability. quarter continue is crush a we these the be the during considered, forum us leave industry. best work best locations plants they come allowed the in are. They've in our industry. now They've be

Operator

Instructions]. [Operator

Our line Levy first the from question Jordan is of Truist. from

Jordan Levy

quarter. nice Really

into you've a of explored kind this that the of rank that cash you about of to potential return potential capital, mentioned get something built kind lines? how material you've up or kind potential and thinking ethanol or think really wanted or through things a cash position idea about of it's thoughts, of and dividend like your if plants Stuart, uses whether now. guys maybe between special investments. buyback Just along looking those you of And maybe

Stuart Rose

as think, ethanol plants. looking always Well, we're I for you mentioned,

that shareholders our not dividend, cash So, know giving to this always good time, to like We'd would good to at going be – buybacks. pretty going is back been much a it's And through – – large beginning we really at a We've our special cost. do take capture the I of choice. how we, pretty venture. have carbon the hopes the that's about our first high venture. not to large, good, We're

we our away within be Probably, to our may – big. not shareholders' our it's nothing, that something of the a But when share dividend people go maybe shares, is a years it shares, when it in of of lower the dips, that who very going significantly. to we're It we so, money, do market. on start want buy supports of the out number feel stock making And last a couple And interest. take but hope very, to the like is per be a takes quarter also up interest. and in at having we stock much when We the something earnings certain special to the it's did do hope flexibility sell we level.

company shares for bought a over of is we've almost to So, by back shares of any which well X% a lot this our buy. measure year,

of the to carbon part isn't questions? So, going some happen. change at we we'll for other I Any strategy, unless that least think find don't that reason not – capture

Jordan Levy

into of of Just on markets quarter, a the well seen high of wanted DDG, of and grade, you change how Zafar, a get as looking protein some mentioned to Stuart as just playing out follow-up. some couple and the last but of monitoring… that's side we've different or including the things, one as thoughts those your well,

Stuart Rose

Zafar, answer you question? to want that

Zafar Rizvi

Yeah.

something always – I for long from looking if and think we also that short are the term the can we for term. benefit

We have looked several it, last recently. protein, the including at years, over

I at get think earlier. quicker in your investment this not than on to our or to four enough five opinion, there's time, return really market years

join there. is develop, will if can handle – have our really don't market market why and these plants. But this as So, this we we think we we on keep that we developed, that will if cash many protein will will that. certainly the time, market that's see eyes at And And that the it.

Operator

the of next question Chris Sakai Singular Our is from line Research. from

Christopher Sakai

to about wanted international sales. Did idea Just go China? an your get to any

Stuart Rose

Zafar?

Zafar Rizvi

Yeah. to is have we this little DDG, not the the But and some person actively have China. gone they Yes, can This a the as is purchased in then bit, at XXXX. it know, not sell they very but market to time. we in you export and year the China. active China since China even market local this we to year, say,

Christopher Sakai

countries then, were other as what as And the far go, largest?

Zafar Rizvi

of anybody on Then step really South And we Turkey. the Korea, Vietnam, Mexico, always is else. they is have to Mexico think compared then top up Indonesia, Thailand, and I the list.

Korea, are those XXXX, the look Indonesia. in you top really Vietnam, And people if So, who's South year, last was back buying. also at Mexico, also

people in DDG XX% time, the XXXX. they – And – same last Last list. were in of of consistently XXXX, purchased So, bought the are they the time, list top Since top still these basically X%. are of to XXXX by that year. are on who the the that, China in dropped was disappeared. they China after They

the September year, of million this purchased million last they countries And But So, other actually – January up. year rest year. about this behind X.X purchased approximately. – tons, the X.X They stepped Mexico tons. was was was to about

Christopher Sakai

Another question. are How about enthusiastic a Biden guys presidency? you

Stuart Rose

was presidency. have We the much us. been of And an by the as industry Obama friendly helped not more Trump the to EPA EPA

an ethanol to to enthusiastic. out we're exemptions make So, ethanol so difference if continues guardingly administrator and to who after answer and your question, EPA And a likes that grant of big it's have we years two the going program longer goes its not forth. way and

So, that which not a to this least we talked everyone, did for being friendly law they the though last billion even administration, have what reality, lot Trump blending. required, follow, ethanol, not I can't did about in was of a with The – felt administration, I was us give gallons chance I we feel, but speak at – not feel we feel the and administration. XX

we'll out Biden of that So, administration. the hopefully, get

Operator

no there phone the Thank further line. from showing questions you. that I'm are

Stuart Rose

you, of to everyone, quarter at Bye. quarter. you for much. And it conference the quarter. the Or – next talk next Very Thank listening. next at Thank call very good. end you. Appreciate we'll

Zafar Rizvi

everyone. Thanks, Bye-bye.

Operator

a good please Thank your does the you day. everyone, participation conclude today. call and you that you. and Thank ask thank That lines. we you, your conference have for disconnect all We for

REX American Resources (REX) 3 Dec 202020 Q3 Earnings call transcript