Rex American Resources expects improved margins in 2013

By Erin Voegele | December 07, 2012

Rex American Resources Corp. recently released the financial results for its third fiscal quarter, the three months ended Oct. 31. The company’s results primarily reflect its interests in several ethanol plants, including One Earth Energy LLC, NuGen Energy LLC, Patriot Holding LLC, Big River Resources West Burlington LLC, Big River Resources Galva LLC, Big River Energy United LLC and Big River Resources Boyceville LLC. Rex American Resources’ interest in these facilities ranges from 99 percent to 5 percent.

During a call to discuss the results, Rex American Resources CEO Stuart Rose noted that profits for the quarter were $400,000, or 5 cents per share. During the same quarter of last year, the company posted a $6.5 million profit, equating to 70 cents per share.

According to Rose, his company continues to be impacted by high corn prices, relative the ethanol prices. The crush spread is currently negative, he continued.

However, he also pointed out several bright spots in his company’s operations. We benefited this quarter from higher distillers grains prices and the higher margins associated with corn oil extraction, Rose said.

While crush spread continues to be negative in the current quarter, and demand is down due to renewable identification number (RIN) carryover, Rose said his company is expecting those issues to clear up next year. With less competition due to some plants idling or reducing production, marketplace competition should be lower, he said, adding that less supply and higher demand in 2013 should improve crush spreads, resulting in better margins.

Rex American Resources currently has $68 million in cash. According to Rose, the goal is to preserve the cash, operate conservatively, keep the ethanol plants running, and look for new opportunities. Regarding new opportunities, Rose said his company is open to investing in additional ethanol plants under the right circumstances.