Rex reports improved net sales, gross profit

By Erin Voegele | May 26, 2017

Rex American Resources Corp. recently released financial results for its fiscal 2017 first quarter, reporting net sales grew 12.9 percent and gross profit increased 48.3 percent during the three-month period, which ended April 30.

First quarter net sales and revenue reached $113.1 million, up 12.9 percent when compared to the $100 million reported for the first quarter of last year. The increase is attributed to a 9.1 percent increase in the average per-gallon sales price for ethanol, along with initiatives to increase plant-level production. The increases were partially offset by a decline in distillers grains and modified distillers grains prices.

Gross profit reached $12.5 million, up 48.3 percent from the $8.4 million reported during the first fiscal quarter of 2016. The increase is attributed to improved crush spread margins, offset by lower distillers grains pricing.

Net income attributable to Rex shareholders reached $4.5 million, up from $2.8 million during the first quarter of 2016. Diluted net income per share attributable to Rex common shareholders increased 60.5 percent, reaching 69 cents per share, up from 43 cents per share during the same quarter of last year.

“We achieved both top and bottom-line growth in the first quarter, compared to the prior year’s first quarter, highlighting our disciplined approach to ensure operating excellence throughout the organization,” said Zafar Rizvi, CEO of Rex. “Our operating strategies led to significant year over year growth across key financial metrics, including gross profit, net income, diluted earnings per share and operating cash flow generation. We are particularly pleased with the early success of efforts to increase production at our plants, as reflected in the nearly 8 percent increase in ethanol gallons sold during the period, compared to last year’s first quarter.”

During an investor call, Stuart Rose, executive chairman of Rex, noted crush spreads have been narrowing during the second quarter, with ethanol prices coming down. There is currently a lot of ethanol in storage, he said, which is negatively impacting second quarter earnings so far. Rose also spoke about positive potential that could be associated with efforts to pass legislation benefiting E15 and improved export opportunities to China.

Razvi discussed capital improvement efforts, noting Rex made $5.9 million in capital investments during the first quarter of the year, including the addition of fermentation tanks, a boiler, cooling towers and other equipment. Construction work on the improvements is expected to be complete by the beginning of the fourth quarter.

Rex currently holds ownership interest in six ethanol plants, including 75 percent in One Earth Energy LLC, 99.5 percent in NuGen Energy LLC, 9.7 percent in Big River Resources West Burlington LLC, 9.7 percent in Big River Resources Galva LLC, 5.4 percent in Big River United Energy LLC, and 9.7 percent in Big River Resources Boyceville LLC.