REX American Resources Corporation (NYSE:REX) Q4 2019 Earnings Conference Call - Final Transcript

Mar 26, 2020 • 11:00 am ET


REX American Resources Corporation (NYSE:REX) Q4 2019 Earnings Conference Call - Final Transcript


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Douglas L. Bruggeman

lower demand at the facility. This resulted in net income for the fourth quarter increasing from $1.4 million to $4.4 million and the diluted earnings per share increasing from $0.17 to $0.70.

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

Stuart A. Rose

Thank you, Doug. During the current quarter, ethanol, the whole operation is running at a loss, mostly caused by ethanol. Among the reasons that ethanol is running at a loss was a bad harvest in part of the country, as Doug explained. Low oil prices, low ethanol prices, COVID-19 outbreak -- resulting in low crush spread. In terms of refined coal, the plants are running -- currently running idle. We believe that's due to low natural gas prices and lower-than-expected demand. The price of coal now in our opinion is making it uneconomical to run the refined coal operation.

On the good side of that, we have no need for the tax credits at this time. So, it's not something that would definitely need running. In terms of our Company itself, we saved our cash, which currently looks like a very, very good move. Consolidated cash is about $205 million. Uses of this cash, which we're now -- we're certainly now actively looking at include possible buybacks, about 350,000 shares remain authorized. Right now, our stock is selling at a price that possibly makes that attractive, depending where it is on any given day.

We're also looking at carbon capture possibilities in Illinois. We're still always looking at new businesses. This is the same company that 10 years ago sold TVs. So, we're certainly capable if this is prolonged in the ethanol business of making a pivot. And we're looking if an ethanol plant -- a very good word comes along at a very bargain price, we would consider it.

Zafar Rizvi, our Chief Executive Officer, will now discuss further the ethanol business and the overall business. Thank you.

Zafar A. Rizvi

Thank you, Stuart. Good morning, everybody. As I mentioned in our previous three calls, a challenging environment has continued throughout the last year. The Company faced several issues due to weather-related problems, which delayed the planting of corn and resulted in an unexpected delay in the harvest. Commodity prices in 2019 was subject to significant volatility. We've struggled to obtain an adequate supply of corn at NuGen facility in South Dakota, where production has fallen off historic levels and resulted in the higher last corn basis. Our production at this plant was interrupted, including no operation in October due to corn availability.

We entered fiscal 2020 facing continued challenges, including the recent decline in the crude and ethanol market, a decline in the price, and the emergence of the COVID-19 pandemic, all of which resulted in decrease in the fuel demand and the negative impact on the crush margins. The federal government and various state governments are issuing advisory for social distance and working remotely from home, if possible. We are taking every steps to keep our