REX American Resources Corporation (NYSE:REX) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 23, 2018 • 11:00 am ET

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REX American Resources Corporation (NYSE:REX) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

(Starts Abruptly) and welcome to the REX American Resources Fiscal 2018 First Quarter Conference Call. (Operator Instructions). Now I would like to turn the call over to Doug Bruggeman, Chief Financial Officer. Please go ahead, sir.

Executive
Douglas Bruggeman

Good morning, and thank you for joining REX American Resources fiscal 2018 first quarter conference call. We'll get to our presentation and comments momentarily as well as your Q&A session, but first, I'll review the safe harbor disclosure.

In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meanings of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs that are not guarantees of future performance. As such, actual results may vary materially from expectations.

The risks and uncertainties associated with the forward looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements.

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

I'll first review our financial performance and then turn the call over to Stuart Rose for his comments.

Sales for the quarter increased approximately 6.8%, primarily due to higher ethanol gallons sold and higher distiller grain pricing offset by $0.11 reduction in per gallon ethanol pricing. Sales for the quarter were based upon 69.2 million ethanol gallons this year versus 63.3 million last year. The same factors led to gross profit for the ethanol and by-products segment, increasing for the first quarter from $12.5 million to $13.5 million.

The refined coal segment had a gross loss of $2.7 million for the first quarter of fiscal 2018 versus nothing in the prior year based upon beginning operations upon its acquisition in August of '17. The loss is more than offset by tax benefits recorded from the Section 45 credits.

SG&A was down for the first quarter from $5.4 million to $4.6 million with the largest decrease resulting from reduced incentive compensation, reflecting a one-time earnings adjustment in the current fiscal year and lower railcar repair costs.

Equity and income of unconsolidated ethanol affiliates was flat at approximately $700,000. Interest and other income moved up from $215,000 to $654,000, reflecting higher interest rates on our cash and short-term investments.

We booked a tax benefit of $2.7 million for the first quarter of this year versus a tax provision of $2.4 million in the prior year. This primarily is a result of the Section 45 credits from the refined coal operation as well as lower federal tax rates and recording certain R&D credits from our ethanol plant operations.

Our net income and earnings per share more than doubled for the first quarter from $4.5 million to $9.5 million and from $0.69 per share to $1.45 per share, respectively.

Stuart, I'll