REX American Resources Corporation (NYSE:REX) Q3 2019 Earnings Conference Call - Final Transcript

Dec 04, 2019 • 11:00 am ET


REX American Resources Corporation (NYSE:REX) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the REX American Resources Fiscal 2019 Third Quarter Conference Call. [Operator Instructions]

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

Douglas L. Bruggeman

Good morning, and thank you for joining REX American Resources fiscal 2019 third quarter conference call.

We'll get to our presentation and comments momentarily as well as a question-and-answer 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 meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements reflect the Company's current expectations and beliefs, but 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 report 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 will first review our financial performance and then turn the call over to Stuart for his comments.

Sales for the quarter declined 30% primarily due to reduced ethanol gallons sold offset by an $0.11 increase in per-gallon ethanol pricing. Sales for the quarter were based upon 47.6 million gallons this year versus 71.4 million last year. The reduced production also resulted in lower unit sales for the ethanol by-products. The lower ethanol production was primarily at the NuGeN South Dakota plant, as we experienced reduced availability of affordable corn, largely in response to the wet spring conditions, which has led to uncertainty on current year corn production in that area. We also experienced a lower distiller grain pricing on a year-over-year basis.

Our consolidated corn cost per bushel rose 25% compared to the prior year, again, largely reflecting the concern for corn availability. Combining these factors led to gross profit for the ethanol and by-product segment decreasing from $11.3 million in the prior year to $25,000 for the current year. The refined coal segment had a gross loss of $1.8 million for the third quarter of fiscal 2019 versus $3.5 million for the prior year, reflecting lower production levels in the current year. These losses are offset by tax benefits recorded under Section 45 credits.

SG&A decreased for the third quarter from $5.4 million to $4.1 million, primarily due to reduced incentive compensation associated with corporate profitability and reduced commission fees associated with the lower refined coal production. Equity and income of unconsolidated ethanol affiliates decreased from $611,000 [Phonetic] to a small loss of $15,000 for the quarter. Interest and other income increased from $809,000 to $1 million, primarily reflecting higher interest rates in the current year.

We booked a tax benefit of $3.2 million for the third quarter