Rex reports improved second quarter financial results

By Erin Voegele | August 28, 2018

On Aug. 28, Rex American Resources Corp. released second quarter 2018 financial results, reporting increased net sales, revenue and net income. The company also briefly discussed ongoing work to increase the efficiency of its plants.

Rex reported net sales and revenue of $128.8 million for the quarter, up from $108.7 million during the same period of last year. The increase is primarily attributed to higher volumes of ethanol sold and higher average selling prices for dried and modified distillers grains, which more than offset a lower average selling price for ethanol.

Gross profit for the ethanol and byproducts segment reached $13.7 million, up from $10.8 million during the second quarter of 2017. The company also operates a refined coal segment, which incurred a $4.3 million gross loss for the quarter. The company did not own the coal entity during the second quarter of last year.

Overall, Rex reported income from continuing operations before income taxes and non-controlling interests of $4.9 million, down from $6.5 million during the same period of last year.

Net income attributable to Rex shareholders reached $9.2 million during the second quarter, up from $2.9 million during the same quarter of 2017. The increase primarily reflects the year-over-year profit improvement in the ethanol and byproducts segment, as well as lower tax rates. Basic and diluted net income per share attributable to Rex common shareholders was $1.43 per share, up from 45 cents per share during the second quarter of 2017.

During an investor call, Zafar Rizvi, CEO of Rex, noted the company made approximately $5.8 million of capital investments at its ethanol plants during the first half of 2018. He said the company plans to spend up to $6 million over the year for capital improvements, excluding any maintenance or scheduled shutdown expense.

Moving into the third quarter, Rizvi said the company expects the ethanol segment to achieve lower results than the same time last year due to reduced crush spreads. He said the crush spread did improve at the end of the second quarter, but said since then it has declined, not rebounded.

Stuart Rose, chairman of the board at Rex, noted the company currently expects third quarter earnings to be positive, but below last year’s third quarter earnings. He also noted the company continues to look for acquisitions, either in ethanol or other parts of the energy industry, but stressed nothing is imminent at this time.

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 interest in Dyersville, Iowa-based Big River United Energy LLC; and 10.3 percent ownership interest in Boyceville, Wisconsin-based Big River Resources Boyceville LLC.