Rex reports increased net sales, revenue

By Erin Voegele | November 28, 2018

On Nov. 28, Rex American Resources Inc. released financial results for its fiscal third quarter, which ended Oct. 31. The company reported a year-over-year increase in net sales and revenue.

The company reported net sales and revenue reached $123.8 million for the quarter, up 2.1 percent when compared to the third quarter of 2017. Rex attributed the increase to higher average selling prices for dried and modified distillers grains, as well as increased production in the company’s ethanol and byproducts segment, which was partially offset by a 11.7 percent reduction in the average per-gallon selling price for ethanol.

The company reported $11.3 million in gross profit for its ethanol and byproducts segment, down from $18.3 million during the third quarter. The reduction is primarily attributed to lower ethanol pricing. Rex also has a refined coal operation that incurred a $3.5 million gross loss for the quarter, compared to a $3.4 million gross loss during the same period of last year.

Net income attributable to Rex shareholders for the quarter was $11.9 million, down from $31.2 million during the same quarter of last year. Basic and diluted net income per share attributable to Rex common shareholders was $1.86 per share, down from $2 per share during the third quarter of 2017.

During an investor call, Stuart Rose, executive chairman of Rex, briefly discussed the potential for acquisitions. He said that while profits have come down in the ethanol industry, the plants that are currently for sale are either too expensive or not the right plants for the company to acquire.

Zafar Rizvi, CEO of Rex, said that while crush margins improved near the end of the second quarter, the crush spread has since declined and is currently “very challenging.” He also provided a brief update of capital projects Rex is completing at its plants. He said that during the past three quarters of 2018, the company has made approximately $8 million in capital investments at its plants, with plans to spend $2 million to $3 million more by the end of the year.

Rex currently holds 75.1 percent ownership interest in Gibson City, Illinois-based One Earth Energy LLC; 99.5 percent ownership interest in Marion, South Dakota-based NuGen Energy LLC; 10.3 percent ownership interest in West Burlington, Iowa-based Big River Resources West Burlington LLC; 10.3 percent ownership interest in Galva, Illinois-based Big River Resources Galva LLC; 5.7 percent ownership interest in Dyersville, Iowa-based Big River United Energy LLC; and 10.3 percent interest in Boyceville, Wisconsin-based Big River Resources Boyceville LLC.