Rex expects improved corn prices, ethanol demand in third quarter

By Erin Voegele | August 31, 2017

Rex American Resources has released financial results for the second quarter ended July 31, reporting net sales and revenues of $108.7 million, down 6 percent compared to the $115.7 million reported during the second quarter of last year. The decrease is attributed to a 29.2 percent decline in the average sales price per ton of distillers grains and a 2.7 percent decrease in the average sales price per gallon of ethanol. Gross profits reached $10.8 million, down 37.6 percent from the $17.3 million reported for the same three-month period of 2016.

Net income attributable to REX shareholders was $2.9 million, compared to $8.2 million during the second quarter of last year. Diluted net income per share attributable to REX common shareholders was 45 cents per share, compared to $1.45 per share during the second quarter of 2016.

“The second quarter presented a challenging operating environment as both ethanol and distillers grains prices experienced declines, which was partially offset by more favorable corn prices,” said Zafar Rizvi, CEO of Rex. “In spite of these challenges, we were able to generate over $2.9 million of net income to REX shareholders, or 45 cents earnings per share, reflecting our disciplined operating approach and the commitment of our entire team.”

During an investor call, Stuart Rose, executive chairman of Rex, noted conditions seem to be improving moving into the third quarter. Corn prices have declined in recent weeks, he said. In addition, a good corn crop is expected this fall. Natural gas has been steady he added, noting that the U.S. EPA is also expected to finalize the renewable volume obligation (RVO) under the 2018 Renewable Fuel Standard at 15 billion gallons. In addition, Rose said Rex expects to see increased demand for ethanol from refiners as they work to meet their renewable identification number (RIN) obligations.

According to Rose, Rex is continuing to look for opportunities to acquire ethanol plants. However, the company has no imminent acquisitions at this time, he said.

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