REX American Resources Corporation recently reported financial results for its fiscal 2016 second quarter (“Q2 ‘16”) ended July 31, 2016. REX management will host a conference call and webcast today at 11:00 a.m. ET. to review the results.
REX American Resources’ Q2 ‘16 results principally reflect its interests in six ethanol production facilities. The operations of One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) are consolidated, while those of its four remaining plants are reported as equity in income of unconsolidated ethanol affiliates. During the fiscal 2015 second quarter the Company sold its interest in Patriot Holdings, LLC (“Patriot”). As such, subsequent to June 1, 2015, equity in income of unconsolidated ethanol affiliates includes contributions from four ethanol production facilities, compared with five in the comparable year-ago period.
REX’s Q2 ‘16 net sales and revenue were $115.7 million, compared with $113.5 million in Q2 ‘15, principally reflecting volume increases in ethanol and dried distillers grains (“DDG”), which was partially offset by a decrease in their average selling prices. Primarily due to the decrease in DDG pricing and year-over-year increase in grain costs, the Company’s Q2 ’16 gross profit was $17.3 million, compared with $18.3 million in the prior year period.
Equity in income of unconsolidated ethanol affiliates in Q2 ‘16 was $1.2 million, compared with $5.1 million in Q2 ’15, partially as a result of a $2.5 million pre-tax contribution from the Company’s interest in Patriot that did not recur this quarter. In addition, during the year ago period the Company recorded a $10.4 million pre-tax gain related to the June 2015 sale of its 26.6% interest in Patriot. Reflecting the factors above, income before income taxes and non-controlling interests in Q2 ‘16 totaled $13.5 million, compared with $27.4 million in Q2 ‘15. Excluding Patriot’s Q2 ’15 contribution to income of unconsolidated ethanol affiliates, REX’s gain on the sale of its interest in Patriot and related items, income before income taxes and non-controlling interests in Q2 ‘15 totaled $15.4 million versus the aforementioned $13.5 million in the current year.
Net income attributable to REX shareholders in Q2 ‘16 was $8.2 million, compared with $16.4 million in Q2 ‘15, while Q2 ‘16 diluted net income per share attributable to REX common shareholders was $1.24 per share, compared to $2.16 per share in Q2 ‘15.
Per share results in Q2 ‘16 and Q2 ‘15 are based on 6,586,000 and 7,580,000 diluted weighted average shares outstanding, respectively.
REX Chief Executive Officer, Zafar Rizvi, commented, “Industry fundamentals improved during the second quarter and our employees did a great job efficiently operating and increasing the production at our ethanol plants, leading to a 5% increase in the number of gallons of ethanol sold during the quarter. In addition, during the quarter we neared the completion of our capital investment projects to further expand production at our consolidated plants which will leave us better positioned for future ethanol demand.”
Balance Sheet
At July 31, 2016, REX had cash and cash equivalents of $134.7 million, $63.5 million of which was at the parent company and $71.2 million of which was at its consolidated ethanol production facilities. This compares with cash and cash equivalents of $135.8 million at January 31, 2016, $57.2 million of which was at the parent company and $78.6 million of which was at its consolidated ethanol production facilities.
The Company is currently authorized to repurchase up to an additional 155,334 shares of common stock and has 6,582,029 shares outstanding.
