Rex discusses impact of weather, flooding on plant operations

By Erin Voegele | May 30, 2019

Rex American Resources Inc. released fiscal first quarter 2019 financial results on May 30, discussing the impact of weather-related interruptions to the company’s business and projecting continued low crush  margins into the second quarter.

During an earnings call, Doug Bruggeman, chief financial officer of Rex, said sales for the first quarter, which ended April 30, decreased 13.4 percent, primarily due to weather-related logistical issues from flooding in the Midwest. He also noted ethanol prices for the quarter were down 6 cents per gallon.

Zafar Rizvi, CEO of Rex, noted plant operations were interrupted for 18 days in March and 14 days in April due to weather-related problems.

According to Bruggeman, Rex produced 61.3 million gallons of ethanol during the quarter, down from 69.2 million gallons during the same period of the previous year. He said the company tried to minimize its lost production by moving up a planned shutdown at its NuGen plant.

Stuart Rose, executive chairman of the board, discussed the current state of the company’s operations. He said Rex is projecting either a small loss or breakeven for the second quarter, which began May 1. He said crush spreads so far during the second quarter have been low and noted wet weather in South Dakota is affecting the company’s corn supply. In addition, he cited EPA’s small refinery exemptions (SREs) as a factor causing low RIN prices, which also affects crush spreads.  Distillers dried grains (DDGs) prices are also soft, Rose added.

While Rex continues to look for opportunities for acquisitions within the ethanol industry, he said nothing is imminent at this time. The company is also looking for opportunities outside the ethanol industry, he said.

Rex reported $104.45 million in net sales and revenues for its ethanol and byproducts segment during the first quarter, down from $120.68 million during the same period of last year. Gross profit for the ethanol and byproducts segment was $6.12 million, down from $13.55 million. Profit for the segment was $1.71 million, down from $8.59 million.

Rex also operates a refined coal segment. Overall, the company reported $2.82 million in net income attributable to Rex common shareholders, down from $9.5 million during the same period of last 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 ownership interest in Boyceville, Wisconsin-based Big River Resources Boyceville LLC.