Earnings call transcript Q1 2023

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Operator

Greetings, and thank you for standing by. Welcome to the REX American Resources Fiscal 2023 First Quarter Conference Call.

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

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

Doug Bruggeman

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

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

results may actual from materially such, expectations. As vary

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

on Stuart joining Rizvi, have Board; Rose, Chief Executive call Zafar the of me and I Chairman Officer. Executive the today,

experienced the we by by were Ethanol gallon were lower for upon versus as price year from quarter first prices increased gallons the for offset XX.X grains million volume per corn went this X.X% XX.X quarter Higher sales to the dried as last million oil. year. based for and partially ethanol, Sales distiller higher $X.XX. volumes ethanol selling $X.XX

increased versus the this as to first $XX year. outlined of expense. year line We profit these a was freight vendor increased as SG&A million There profit the gross cost -- items for repay first million. million between from reported an $XX.X prior of to gross million a classify Meanwhile, $X.X between the years the currently from two SG&A we quarter the quarter $XX.X trade-off in

million price. the contracts was for of these out our charges from of and in for prior short-term in of investment equity the $X.X and of $X reported We buyer it year. fees interest $X.X million had versus cash and from prior the netted income called $XXX,XXX year income to benefited We prior interest the the incurred million our on versus investments. rates year, in In million ethanol this quarter unconsolidated $X.X this year's as that we year. more pay higher We first other

tax of this shareholders We Net quarter. the share REX attributable income was $X.X provision $X prior a net reported to year This to this a a the for million led provision versus this year million per first for $X.X year versus prior in of attributable year. REX both income $X.XX year. shareholders prior and million to of year $X.XX

turn over call now you. I'll the Stuart, to

Stuart Rose

Doug. Thank you,

earnings and Going the -- improved quarter than It's trend share of forward, quarter. been continues. great at improve. quarter, first a to the per the continues end debt higher over at rate of first running the we're business the we beginning is that and Currently, of that improvement hope

We have short-term consolidated in cash investments. $XXX million and

rate flow our cash higher -- than -- by due GAAP earnings report forward, flow rate higher the -- both a share. little we that on carried rate plans have cash Our continues tax paid rate credits a we stated first to earnings actually our with although that the tax tax so all, a by to improve than what and per we lower cash -- a we report of than is our

mentioned, from benefiting as In terms interest now of higher going rates. forward, we're Doug right

it will this what no up guarantees, company moving on we great One has carbon hopes capture previously but to a what There's and both can than about $XXX forward Summit. signed earning significantly plant We with you We're talk be Zafar are in and that will first contributor million as the or future. Earth signed see up working has he in have hard, have our quarter. at also our more the which company the on great

We come it's going a our have now, dropped. just bit, right now -- to always the chance Zafar we take and to also place. than something continue something to stabilize there's along, last be for you have cash we of, what and in see. been to And but going capture. opportunities, The have on other do the buyback when stock little we the helped I there that's should that on could believe, nothing is but this plan talk ethanol, will stock a look right continue advantage We which in and about use is in thing, not dips, carbon

I'll Zafar our Rizvi, Officer. Chief now the turn Executive call over to

Zafar Rizvi

Good everyone. Stuart, Thank morning, you,

As in of saw quarter, at later the first in previous environment. in challenging we we the a early facing were I mentioned quarter, call, improvements resulted profitable our operating But stage which quarter. the

South On a Dakota location. particularly at Marion the has other basis, drought hand, the strong created corn

the EIA of production City, in Illinois XXth to of corn area in pleased of and increase facilities downs last of are to availability dropped May gasoline. consumption ethanol of beginning blending from According Gibson our growth higher in sell. and the shut stock Illinois has export to with during planned ethanol report, is because due We because the domestic corn basis few weeks

which seen has on the financial a also price results. gas considerably, have positive natural We drop impact

source as of to all we logistical and first major at [growth] believe financial second to result, face don't results we earlier. at better mentioned have in corn we reasonable factors, corn continue (ph) than source of price problems, we XXXX, a Stuart the we any As quarter the if a will -- these quarter continue

yet. expected go to also earnings, realize, as be and if XXXX and happened, if positive. bushels to as long was billion we bushels will XXX.X impact this is very have as you per positive acre on we report see and all have USDA a It it that future XX.XX but we could -- very The know, May this way

quarter. dropped this was export Ethanol

year. XXXX period were to compared tons period tons, metric March approximately of through million metric DDG XXXX. million to XXX XXX compared of X.XX X.X First quarter the gallons to XXXX were compared same XXX,XXX gallons, tons, decrease export metric million million a same last

me update an sequestration the on and Let carbon report. you project sustainability provide

are large. our responsibilities have highlighting social We sustainability pleased economy, sustainability, at we inaugural and what while our report accomplished very to announce addressing

are We to Carbon of partner with NuGen Summit carbon delighted Solutions largest in the part Dakota. for pipeline world's South the facility

greenhouse reduce to perfectly Carbon goal Summit Solutions Our gas align with emission expertise.

the technical, is than would on federal time are reached location very so Earth approval. like Class meant, and carbon we for But depends state, far. we to paperwork while forward VI local, One in we we to pleased about approve bit and Those At different the we has control, are the it project of for however continued the and which EPA several complete requirements for permit consuming City, permits government waiting Gibson a moving sequestration we highly injection. This decisions agencies’ behind slower are to. the our big have are agency, milestone

Class in the permit long will VI to will We expect modular compressor wells three equipment, build construction plant, XXXX the modular submitted start lead unit order XXXX. be with around a for end by the of delivered

one-off approximately the process, XXX capacity energy to million previous year. year whether mentioned in the as instead We of gallons the also XXX evaluating capacity gallons XXX ethanol increase as in call. to City, That is previously, million I of a current Illinois, million, in a in the Gibson mentioned I

continue Section could a production and fuel score, XXZ, produced clean as intensity much carbon to to ethanol as the position is our fuel could The the dollar depending That on sold. which strong carbon related of of the credit company. provide reduce gallon intensity enhance

project that by other believe Congress. to Act reduce benefit improve continue carbon We this would efficiency the greater Inflation under and will lead evaluate passed also completion intensity. of to We Reduction energy project a

to we maximize to progress good and NuGen benefit XXX plan with Solutions. at sequestration announce quarter, One assigned increase Summit agreement production carbon summary, carbon Earth pleased In are million to to gallons a the offtake our ethanol Carbon on XXZ project, facility profitable a a energy

provide of If in shareholders. the and reducing ready make carbon -- company impact to financial performance improved atmosphere ethanol carbon that make will and for the progress, continue empowered we be we with company to impact social that continue byproducts to the low our

this colleagues. we could milestone achieve our work the hard Once dedication and without of not again,

very -- positive these achieving their results. of appreciative achieve are efforts on We

to will Rose for the comments. Stuart give additional floor back Thanks, I Stuart.

Stuart Rose

Thanks, Zafar. In plans. conclusion, we have great

outperformed which a we plant. also public in As other our as shown companies including drastically we locations, our Summit the for project, partnership location great industry Dakota as in own far numbers, I carbon capture have a our and will be now by South the know. Great with possible Illinois,

world in his to people that things things it towards now in that's advantage in can have going do team have our most We I carbon the go we're every we hopefully the thing the talked important right, great Zafar the And and responsible our people socially as all but about business if and towards and in a and works capture, great that great we that business for the of ethanol those goal. day. time capture. can is leveraging great work also carbon returns have and we opportunities shareholders, best opportunities be forward, take And best

floor the open to leave now questions. I'll

Operator

from open. Thank go Please have Instructions] with your now you. [Operator Jordan line a Levy question is And we Securities. ahead, Truist

Unidentified Analyst

can results. into should my questions. maybe year. that? about talk Thanks. you visibility How Yes, season for for how And the corn morning, is pricing, presumably better Mou about pricing, taking It's good summer-fall on its Hey, pricing on guys. tracking the Jordan. think your to is Thanks solid what congrats we recently. for so harvest the pivot Well,

Stuart Rose

that just you properly. I repeat I'm I'm hear could sorry, it again? sorry, didn't

Unidentified Analyst

Oh yes.

how you about corn trending four pricing, into Thank think pricing maybe months? about you. summer talk the can we the So the should

Zafar Rizvi

Okay.

know, and Takeda you Illinois, that even Kansas exporting as in some I strengthen including corn Western are is States, think mentioned sides. to they other are -- to as other on continue which and I and prices

we be, -- to price it's as reason still So very on dropped, seems orders the canceled the China increase I to some we seen of strong. basis going the those but hand, the think probably and are it's but if other -- then price the have that's it

seen have $X.XX $X.XX answer plus somewhere your to question? that Does We basis.

Unidentified Analyst

Yes, Okay. the appreciate Thanks. Yes. color.

Doug Bruggeman

at can South If or still we season, get has -- base good price we if It's plants his paying get corn and drought a good year managing and But over tough. to over last done Dakota. we normal get in other normal we're basis, ethanol was under a going a back can rainy but it and where presently rainy in basis. an team corn --get the to Any to excellent paying significantly job to be be questions? season, is get back can get and to tough the Hopefully, profitable. going be Zafar get corn

Operator

ahead, go Please do line We Research. your from question with have Robert Maltbie is a open. Singular

Unidentified Analyst

Great quarter. space so in guys. on who here. the for Hey, Chris, to small and interest us micro-cap overflow XXX had be at of our conference, with moment that's from the We investors the call. can't see I'm Sami about had an we how good much

given I market he's he's Congrats to up to So and bit it's me tied here, small and the of, big is up some a the am, quarter, tape good notes a the see dominated cap dominated here by here cap. on kind wide day follow-up.

on congrats So that.

accretion, are you be? opportunity two-fold. little that per and carbon term the earnings and bit growth more will One, much longer over revenue of contributor a questions the how capture My on a elucidate could as the

in still of you is return capital about large some type you my calculations if consider are And that or the my you. what a Thank cash. second part shareholders question point of to at And share would have well, $XX is, dividend cash? a a -- -- of quick

Zafar Rizvi

the for Robert. questions, Thanks. Thanks

we of for, government no hoped, capture, the and gallon. terms could a $X direct be allows ton it's from have believe but in I First in carbon guarantees pay XXZ a $XX there's

doing the will, plant, we're produce of gallons. summit our So after expansion, million that about independent one XXX plant

This at half So earliest. you off maybe the a of can a no two is year there's do but couple arithmetic, a guarantees and the years years, anything. of

great But you So numbers want we that. see with there's anything go potential to can you there. or your crazy don't like

our do -- think and buying I In cash and the followed and us terms that -- time. long we We spending you are stock. a probably and of back the of cash we kings

you New have has back I usually cap their Exchange And again, stock. So Stock like larger think -- we one and a of the generate a no a know small a don't you're buyback of on when company that of or choices stock. bought cash percent small stock pay to two I dividend York do,

or doesn't money share, reduces, and and because a smarter buying increase the making per drastically the a if earnings the per we're earnings lot potential it It's goes the potential and me, outstanding, always back the of just excuse have share. been to drastically per stock it dividend, my shares it is earnings has feeling increase -- share, reduces to whereas number

method have our that's preferred Any what do and to question? So with other cash. chosen that's we our

Operator

a Please Investments. We is David question go have from with ahead, open. line Mammoth your Locke Old

David Locke

Hey, morning. you? guys. Good How are

Zafar Rizvi

morning. Good

Doug Bruggeman

Thank Good. you.

David Locke

So couple questions. completely unrelated

guys going expansion need is, and much to given carbon The any project? the for capital you have how plant you're first for one for the capture guidance

Zafar Rizvi

you to to $XXX think realize we to we expand better people instead to are different $XXX I million. when beds are and my the getting previously $XXX and million of mentioned trying that in $XXX I as from million just remarks, Information. now to be will still you that do and $XXX evaluating then those it million prepared put And million

So I really this But pin on. are analyzing those still budgeting it time, and at cannot we numbers.

David Locke

Okay. -- could that -- just And is aviation or on in can of you extent up the supply or soak of guys fuel participate what something production? any question do demand up U.S. the soak some to that's then second opinion sustainable you that some and REX for ethanol might thoughts if have

Doug Bruggeman

we that that that's think things time way are find talking SAF. I I Energy we research have and some technology process plant will always then once gallon carbon have a say for developed XXX sequestration XXZ companies to are gone -- NuGen. one are be looking will by at to more and and of we we the Zs, the and can different trying XXX that some million and out of done One we about And in reason also Earth about this new

produce. of of research, approximately gallon -- gallon And SAF two is one two from for can it's understand as I each gallon my ethanol you

will trying we are and convert also how doing at to analyze this to on all those, have so at much lot immediate it. those be evaluate we but So the of no return things investment are and investment plans, looking on we stage, certainly research needed a

David Locke

then… and Okay

Doug Bruggeman

do the huge of we any on is have at it, tell to-date of eye guarantees, see is -- interest we income I in no laser-focused that area, no someone whereas there but else are can like capture carbon take off a ball we before into want our aviation can lot it. looking fuel we you it, but of money If in some there's we there don't at potential see things we it, we to we're jump money. it, don't one, do and is amount and it a can right to lot we make want if

David Locke

use it feedstock? essentially do you passively you should to you think would it agree of amount that a substantial in participate sort Right. as -- you could extent guys market the that But a that ethanol just would of because developed,

Doug Bruggeman

companies are -- these, to our going ethanol successful, every they're We’re highest trying going ethanol players source ethanol to we anyone that a need absolutely, at successful. so the to are aviation price, is developing to that someone lot big they're fuel, of sell are If if will -- us someone not that, to from sure. benefit have chance develop of these

David Locke

Yes.

Doug Bruggeman

ours. some other And their -- just sell we're have contracts people more uses to we're ethanol likely for more --

month we -- we year two don't and go little but kind very have have we or We have might contracts. a like don't out,

perfect them for a If be place it we'd near to are on people they So would [Technical to buy be perfect ethanol. supply successful that, Difficulty]. place a

David Locke

at that how existing regularly might every very in I'm it's of on than about looking call that just overall increasing just always is for somebody's for and at point the be to assuming you allocation buy capacity sale. around plant on of to much terms And you're expand guys talk then company? your cheaper plants footprint capital it plants this existing

Doug Bruggeman

tried at very any know plants buying today bought that and before of before, price. to close a plants plants come reasonable can really don't good buy I to we've have Yes, but hard be

to right. It's today's to is I in think expand what what Zafar doing. market exactly cheaper much and capacity that's is saying you're So try

David Locke

plant Okay. And here anybody kind XX million just of everything there is that's greenfield of there? and other thinking or out there gallons XX is building million a gallons

Stuart Rose

be. if of but this know you no We know anyone one, there considering do Zafar, it at could that's time?

Zafar Rizvi

I'm not really of that. aware

Doug Bruggeman

know, if don't don't. I -- I anyone and

other -- but as than So industry us. it's we've done the of for been a so tough years, market -- better going investment most it it's hasn't over to been industry, for the of we not the has done good players everything it think else way as the

I So not to-date, ethanol, if at else. money out But other of the -- we're new what does of ways never doing plants. new and no we the to we ethanol will players are don't know That have doing is look I on anyone we ethanol think concentrating mean plans, other most opening of make don't instead opening plants.

Zafar Rizvi

we CI also are sure are I several And our we which projects. I at mentioned, concentrating to looking we other as make think reduce Yes. that is, score,

on spend So XXZ possible. be benefit our more beneficial also need those, and to low investment goal very -- practically sequestration quick. our CI will as rather And and further some investment for we as which carbon is somehow will money score our reduce on be and that return

David Locke

gentlemen. and Okay, perfect. job Hey, thanks good for the with your quarter, time,

Doug Bruggeman

you. Thank for call. the Thanks Thanks.

Operator

no turn the are at back this further there Rose. will Stuart I questions call And to time.

Stuart Rose

being to very at the We'd next you Bye. talk of end on we'll like you for quarter. to Thank much. you. thank everyone and Thank the call

Operator

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

REX American Resources (REX) 25 May 232023 Q1 Earnings call transcript