REX - Earnings call transcript Q1 2021 | REX American Resources Corporation

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Operator

Greetings. And welcome to the REX American Resources Fiscal 2021 First 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

thank XXXX And joining American REX Good quarter you conference fiscal first call. Resources’ morning. for

We will will get well to our presentation and question-and-answer Harbor but Safe as comments session, first the I review disclosure. your momentarily, as

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

company’s XX-Q. vary actual results are from such, announcement and Commission, filings As report risk today’s Securities the uncertainties in with may and Chairman no on the statements Form materially forward-looking and the expectations. company’s the or the Exchange have with REX the The publicly in update statements. news assumes Executive associated any and on Zafar described joining Chief me including Officer. American Rose, to of Resources revise Stuart obligation forward-looking I Executive Board; Rizvi, today, XX-K call and

was shareholders due website to proxy. issuance this this apologize posted first during on notify the substantially preferred with in the counted XX based all broker to a XX.X release, pandemic do potential the stockholders this primarily to we and Effective had going the all incorporation we upon like by increased additional an a the noted sales proxy filed from mention stock include attention. we of proxy deleted but prompt to morning press material I this reference amongst as mailing in performance XX% amend year, allow to our shareholders. that action the to million of been of will our impact Before error Ethanol articles press to by NuGen and the to record, disclosure were supplement release. other bringing absentation versus material, proposal would shareholder quarter as After our SEC. financial this we against last so erroneously over idled company for morning’s reference supplement the Sales the non-votes We had of quarter remedy quarter taking are plant factors. of mailing the year. gallons levels due the We to production a for and higher the for last to million year the

increase ethanol $XX.X byproducts gross reported in We ethanol the also and prices year. the and $X.X We average year margin in this in million profit benefited significant segment Gross prices, million SG&A the segment. somewhat for costs versus byproduct benefited prior of in also profit by gross which being from the of contract based of a a selling corn cost. a terms and shipping recorded from upon selling volume our placement in higher benefited increased pricing. certain offset from shipping were Gross loss

primary are losses the the of to and the $X.X prior and the of respectfully, contracts. the improved the prior caused These XXXX decreased Our certain segment by shipping other provision of the increased in the first credits tax levels with based are increased loss million a million of versus to versus refined largely for gross fiscal increase the cost SG&A Interest We first recorded quarter fiscal XX tax We $X.X in period. $XXX,XXX year. again the income primarily from had from first from from to rates of versus million operating and tax benefits related $X.X reflecting a prior our $X.X million the of quarter $XX,XXX year, in losses. equity conditions. in recorded XXXX Section quarter $XX for unconsolidated a from benefit this year, year year’s increased industry loss offset rates. first XXXX, by the and ethanol $XX,XXX benefit the approximately upon Fluctuations quarter reflecting $XXX,XXX of for million versus for quarter during million reflecting $XXX,XXX prior coal for the of had a interest $X.X investment ethanol $XXX,XXX year and income refined of this first of lower in production in income prior the credits year, coal volume.

like shareholders call Chairman now net prior $X.X you there? versus the to I’d quarter Stuart in Board. REX the million turn year. of of year’s net million income attributable All to the loss the these over first in this of led Stuart, Executive to $X.X factors to of Rose, are

Stuart Rose

Sorry.

good ethanol come. to discusses reopening causing profitable be to-date refined gas coal be debt, locations, $XXX to no quarter years quarter by million is ethanol wind had it to cash good call. be benefit prices, corn the with, forward include he area It’s REX credits importantly, and business ethanol plan, exceeding opportunities we and will further higher CEO and years continues natural and in and DDG forward end think November. year’s to production had a of this quarter price. the can margin. work discuss we for with Zafar our last been this to-date a we in these looking is utility approximately and prices utility carried prices prices, Quarter also large good first prices, use and strong. the in offset change I of consolidated oil from middle -- cash higher prices, for gas by this quarter, similar when In Going second XX in for over ends more most corn Rizvi, been natural credits due we Business in is the believe uses believe must the segment. flows But higher which a cash the This call, mostly will higher business, prices

found there. have nothing we far so and these explored have We

is have few We a but opportunities nothing explored eminent.

skills. that business our in We are alternative fit would other energy looking at opportunities

again are So on buybacks dips dips. we again, Stock buy nothing on far stock authorized, although imminent.

discuss We call are capture will also in a over Rizvi call. Zafar Rizvi. the further will his serious which Zafar I to turn working on carbon now project,

Zafar Rizvi

Stuart. you, Thank

I in environment. a ethanol and compared reports. to improve As -- previous at shows today’s the production demand helped XXXX week to resulted week than quarter to same according lower challenging the last week and gasoline time stock the production since a According both when levels EIA beginning today’s XXXX. to pre-pandemic XX.X% The the inventories dropped its -- output ended conditions remains in XXXX of the with lower in the year. similar as But with is increase. and little report But from increasing. environment production last lowest the continued These in X.XX% report mentioned call, ahead week XXXX operating EIA, But report was improved and the -- same XXXX last remains first profitable quarter. EIA change was ethanol is and EIA started

some grade price We crush of on are of of of beginning number dried cash -- the decline see a non-food increasing corn due but the the factors grain, other price in decline price distiller the in to the hand, in corn, including margin corn increase the to oil. corn purchases, China’s

the future. under continue pressure We be in expect crush the to near margin will

driving However, rises. as more as gasoline greater to COVID-XX distance see improvement expect the of consumption increases we vaccination comfortable with people

-- EPA Appeal year District to pleased report the small U.S. are rejects hope The to billion XX the of over of XXth all USDA cancel request still the year. requests. follows XXth EPA stock but -- waiver, and refineries X.XXX EPA XXth XXXX are XXXX. the XXth law We carry Circuit a bushels granted from that requests shows for waiver disappointing We report under XXXX EPA compliance Court shows the for May out review three request exemption RFS May

XXXX. corn XXXX, XXXX, per expected stock I export XXXX -- yield expected and billion be There bushels. X.XX increase trail estimated to the decrease to XXX.X exported increase to in ethanol, million total We However, tons a of is of bushels X% to acre approximately bushels. for bushels gallons in grains approximately XXXX. to distiller was to billion grain X.X of in DDG million tons, of XXXX are dried and corn corn compared are X.XX projected XXX.X quarter export in expected XXXX. rise Exports XXXX million are ethanol the production compared X.XXX corn first XXX.X forecast billion sorry, corn prices gallons The XX am is -- continue, to to -- distiller stocks million

like discussed in as would pleased dried our ethanol project sequestration I the about progress the I previous Stuart to and to carbon calls. grains. China We share are started import distiller mentioned

Geological carbon We with completed Illinois sequestration has the drill The University of its to test are a site University Site Assessment. working pre-drilling well.

existing has using selected. of stage has been planning application The X been location EPA first information begun U.S. seismic Class been began preparing -- has notified. and identified the and has seismic contract XD permit has The

of permitted expect We COX and expect all the to be the for well working as of a well. capture FEED the the test It be and it X in into the University Class a of will to are progress. permit the be begun design design we A is monitoring well will mid-June. monitoring The and The of on planning, seismic then requirements site surveys early study is converted selection facility underway. well.

will it should and weeks in distribution weeks predict how at and the another at to six expect eventually can early is of behavior models testing. This the what drilling It be and We several drill to will simulation simulation the much determine require extensive computer modeling in the location it start COX of September when subsurface. the well take injected. to injected rate COX in approximately

still in stage project cannot we is predict be preliminary we mentioned will calls, successful. that previous yet I a this As and at

to to is quarter emission. announce is achieve profitable Our pleased In be quarter to-date profitable. target zero very second we the also ultimately expected to are and net summary,

the for work to these in are very will I the floor -- for the additional thankful appreciative Thanks, and of Rose achieve back colleagues to colleagues our comments. give results. Stuart We Stuart. back hard

Stuart Rose

last outperformed this companies of and people equal. did the to in In they the Zafar. Thank All pandemic have the conclusion, think were most beginning you, quarter. ethanol seem plants closed all country we bad at

new price, high good will generate. dreams, start The that at ethanol have someone a new the but do carry they of type as online. the at bad good anything good come off plant plants they else the that not well. The plants a but Now the the hopes, plants plants producing if bad ideas, forward profits new ethanol into can do remain and core might might

of Zafar We real There’s are project a announcing project. carbon described. which this just projects. capture are a on hard lot Again, -- carbon capture carbon working product people is very a capture

bunch a hole working will one to assembling key ground, a the their actually of we the give that which in on people not that’s carbon. carbon you are capture, the is the think We just

that’s hard that is want find So of hole where everyone to people it get in stay the into what putting the are our to and that, it we carbon on we key a rid area. a business that to we will But of pretty hole are way does. just key right doing working ahead country about is simple. in everyone The in believe and

have We locations. good

is along We he and think to to and -- just good the in in is that’s are plants. the looks the our faith best we after industry open business He really Rizvi Zafar feel what having And has detail of care heard, now the tried industry. the with interests every after the leave the best advantage get looks people -- ICM have you man. the people, our best and as people I we the key most, have will that questions. biggest success very people, the to this a we in it in CEO, people shareholders a our big detail mind

Operator

go from Jordan first [Operator Levy Instructions] Please Truist ahead. Securities. is Our line question the coming with of

Jordan Levy

nice quarter challenging against backdrop. Good clearly really morning the all and

wanted to… Just

Stuart Rose

Jordan. Hi,

Jordan Levy

if just are capture where carbon we or early of …first, knowing maybe Stuart, in still can you stage. talk the kind Zafar and process

attractive of of into behind place -- to kind that on to and a the looking option the what give explore that? thesis attract get that it area initial what’s reminder driving is is an and project just is wanted us why a Just reminder the to

Stuart Rose

Zafar?

Zafar Rizvi

Yeah.

location, sequestration to are only we at mentioned seismic done also we other we own carbon I not that the which previously also for time do COX location Earth pipeline. think, same and same in produce the with our I we as you Energy, Simon. XD the discovered the location One also few Mount can the right calls, Energy we at -- And know, bring the the are One can from previous and testing have as we location at can Earth

Illinois -- is Our producing goal facilities to our is to it to other to COX facilities most that our who that at other bring location. at ethanol ethanol cover look

have already land. we So the

have We the already surveys. done

process setting take how have the how and there can can we the last do in now local carbon was at that the and up week are we it can of we like area are of set compress we We and COX the facility look to far where how we facility people sequestration. operate will and trying then some to

So, in a location area. proven have we location a I that think word, best the simple around and

done As area. you already know, those very successfully has in ADM is

have our to sure have we we goals. and we have the we supply of the can also funds and So achieve that COX location make that

Jordan Levy

Perfect.

Stuart Rose

what To lot Zafar people… add said a to of

Jordan Levy

are… there And

Stuart Rose

going a the -- a right to carbon, and very very something because a in very business. think long can ground capture hole lot serious And and people why process. a COX announcing the of people a it hole working To few are just of put ground a announce, easy a it’s it -- in and the not to complicated hole add very, they but in It’s stay will difficult lot of reason that’s hard joke. stay serious to legitimate it’s really to and it’s the any It’s complete that where the said to and it’s find what now will the doing be like harder Zafar very ground. will we people a the put just that’s the you stay it time have Zafar a part just for rightly, said, period at very, it taken been business

to think of of we working the a close everyone where will in We and have if stay be have will ground. project this COX And to a the do make the sure are we area are plants project ahead an carbon we one we business. our legitimate identified in -- it that hard again virtually

Jordan Levy

of you Thank side, great. follow pretty the in capital That’s up for share And a more a buybacks. as just that. allocation all been on consistent you’ve

where quarter free some you but Just strong curious, flow cash ethanol also your knowing volatility, had position and the really cash this is.

other to payout dividend all curious you versus some kind potential some sectors as have in think of dividends have share about do buybacks? either Just and curious you how thought we that or fixed of started the dividend for how kind have Just seen variable about some structure?

Stuart Rose

dividends The small count, The stock company. are giving money. share opinion the do that’s is to are and some per the our when there on own huge which not a we or hoping floor putting the Board decision, distributing on the shareholders at earnings Again way always dividends increases a of or and you been a report a dips my reducing share have but we of either share our and when floor company earnings back personal is share buybacks. we to do least put a buybacks can or advantage are

cash. lot generating are a of We

for We have fairly of that cash, have are lot company. do size, fairly cash. for our uses rich we a but We

to said One call, when the of someone my dips stock -- in in I the when the do there stock. and buybacks uses, are as was support

We for have over a for of well years. us the and that it’s worked years done number pretty

question. that So with plan. I imagine this your will keep Hope answers Board the

Jordan Levy

that mentioned at, If always quick nothing that, of are looking I you one that if would I Absolutely. alternative you Stuart within last mentioned, kind and with Yeah. attractive? certain you am Yeah. attractive how potential. am one some look versus that or most are at you energy are of the business there could are curious opportunities fit you think other sneak aspects the just and at attractive just looking I curious alternative imminent. you guys -- just

Stuart Rose

was or ethanol the the the out, looked out Well, but we have work either price high. too at some we mostly didn’t very at have the and didn’t closely, looked plant location business work

-- but that They we time. out are know there but at change So, any if looking. could

wind of In there’s energy, the other terms and always usual solar.

and -- the over best at opportunities in us that -- us the we We relate do very, focused We and focusing ethanol to to we ethanol looked are business country that in to opportunity -- us the world are moment is best of and for have the years. we to but and the to case. the that businesses are could our large. do in but in the just going capture be have plan monetize, it opinion need business and what But good tax done at receive this credits Zafar terms we very for not at carbon to we inexpensive my company focusing a how on large business, to not on it’s that is will situation very and business -- an know it’s what which the that past be that’s and something in the from -- we expanding and for

are we doing for the right. could we can very be it if and right thing business most us we be very and So now for probably important that’s that hopeful do it profitable

Jordan Levy

Thank Makes all. a sense. ton you of

Stuart Rose

Thank you.

Operator

[Operator are further over There you. I the back Instructions] to no call questions. turn will

Stuart Rose

forward and like thank would Thank We will to talking next to look you for Bye. very listening our you to quarter. much. call to Okay. everyone we

Operator

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

REX American Resources (REX) 26 May 212021 Q1 Earnings call transcript