REX American Resources Corporation (NYSE:REX) Q2 2020 Earnings Conference Call - Final Transcript

Aug 26, 2020 • 11:00 am ET


REX American Resources Corporation (NYSE:REX) Q2 2020 Earnings Conference Call - Final Transcript


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Welcome to the REX American Resources Fiscal 2020 Second 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 2020 Second Quarter Conference Call.

We'll get to our presentation and comments momentarily, as well as your questions and answers. 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 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 for his comments.

Sales for the quarter decreased 63% primarily due to lower production levels as we had idled our One Earth and NuGen ethanol plants in March. We reopened the One Earth plant in late May and the NuGen plant in late June, which resulted in approximately one month of production for each of the plants in the second quarter. Ethanol sales for the quarter were based upon 26.5 million gallons this year versus 60.4 million last year. Sales for the quarter were also impacted by 11% decline on ethanol pricing year-over-year. We reported a gross profit of $553,000 in the second quarter for the ethanol and by-products segment versus a gross profit of $6.2 million in the prior year. The decrease in gross profit was primarily caused by the same factors that impacted sales.

Our refined coal segment had a gross loss of $1.8 million for the second quarter of fiscal 2020 versus $2.2 million for the prior year, based upon lower volume. These losses are offset by tax benefit of $2.9 million and $3.2 million for the second quarters of fiscal 2020 and 2019 respectively, recorded from the Section 45 credits and the tax benefits from operating losses. SG&A was similar between quarters at $4.4 million this year versus $4.8 million in the prior year. We had a loss of $507,000 from our unconsolidated equity investment in this year's second quarter versus income of $239,000 in the prior year, reflecting overall ethanol industry conditions.

Interest and other income declined year-over-year from $1.3 million to $197,000, primarily due to lower interest rates on our cash and short-term investments as interest rates fell sharply during the current year. We recorded a tax benefit of $4.1 million