Ohio-based REX American Resources' Q3 net income increases 87% to US$4.3M year-over-year, net sales and revenue grow 14% to US$70.3M on expanded ethanol production interests, improved volumes and pricing

DAYTON, Ohio , December 8, 2010 (press release) – Q3 ‘10 Financial Growth Reflects REX’s Expanded Ethanol Production Interests, Improved Volumes and Pricing

Repurchased 225,387 Shares in Q3 ’10 at Average Price of $14.88


REX American Resources Corporation (NYSE: REX) today announced financial results for its fiscal 2010 third quarter (“Q3 ‘10”) ended October 31, 2010.

REX’s Q3 ’10 net sales and revenue rose 14% to $70.3 million from $61.7 million in Q3 ‘09. The increase is attributable to the continued growth and improved performance of the Company’s alternative energy segment, including ethanol volume and pricing increases related to year over year production efficiencies being achieved at One Earth Energy LLC (“One Earth”) which became fully operational in Q3 ’09. REX recognizes results from its ethanol interests on a quarterly calendar basis, and as a result, REX’s Q3 ‘10 includes ethanol results from July 1, 2010 through September 30, 2010. REX’s Q3 ’10 results primarily reflect its interests in seven ethanol production facilities (alternative energy segment). REX consolidates the revenue and results of Levelland Hockley County Ethanol and One Earth Energy facilities in which it is the majority owner. The remaining five facilities are reported as equity in income of unconsolidated ethanol affiliates.

REX’s Q3 ’10 income from continuing operations before income taxes and non-controlling interests rose 83% to $6.9 million from $3.8 million in Q3 ‘09. Q3 ‘10 pre-tax income from continuing operations benefited from $3.7 million of equity in income of unconsolidated ethanol affiliates compared with $1.2 million in Q3 ’09, an increase of over 200%. Q3 ‘10 pre-tax income from continuing operations is inclusive of other income of $0.1 million while the comparable year ago quarter included $0.8 million of other income. In addition, Q3 ‘10 pre-tax income from continuing operations reflects a $0.5 million loss on derivative financial instruments related to two interest rate swaps at One Earth compared to a $0.9 million loss in Q3 ’09.

In the quarter ended October 31, 2010, income from continuing operations net of taxes and inclusive of non-controlling interests rose 66% to $4.4 million, or $0.36 per diluted share, compared with $2.7 million, or $0.17 per diluted share, in Q3 ‘09. Reflecting income and gains from discontinued operations totaling $0.7 million, or $0.08 per diluted share, REX’s Q3 ‘10 net income attributable to common shareholders rose 87% to $4.3 million, or $0.44 per diluted share. Net income attributable to common shareholders in Q3 ‘09 of $2.3 million, or $0.24 per diluted share, included income and gains from discontinued operations totaling $0.6 million, or $0.07 per diluted share.

Per share results are based on 9,682,000 and 9,464,000 diluted weighted average shares outstanding for the Q3 ‘10 and Q3 ‘09 quarters, respectively.

REX repurchased 225,387 shares of its common stock in open market transactions in Q3 ’10 at an average price of $14.88. In October, REX’s Board of Directors increased the Company’s share repurchase authorization by an additional 500,000 shares. REX is presently authorized to repurchase up to 568,044 shares of common stock.

At October 31, 2010, REX had cash and cash equivalents of $87.6 million, $73.4 million of which was cash at the parent company and approximately $14.2 million of which was cash at consolidated ethanol production facilities. This compares with cash and cash equivalents of $100.4 million at January 31, 2010, comprised of $82.5 million of cash at the parent company and $17.9 million of cash at consolidated ethanol production facilities. The decrease in cash reflects fiscal 2010 share repurchases totaling $6.7 million and ethanol investments totaling $9.2 million in the fiscal year to date period.

Stuart Rose, Chairman and Chief Executive Officer commented, “REX’s Q3 financial growth reflects our expanded portfolio of ethanol production facilities including the acquisition on July 1 of a 48% equity ownership interest in NuGen Energy which operates a nameplate 100 million gallon, ethanol plant in Marion, South Dakota, and production efficiencies being achieved at One Earth Energy which was in the early stages of production in Q3 ’09. One Earth is a nameplate 100 million gallon ethanol plant in Gibson City, Illinois in which REX has a 74% interest. In addition to higher volumes, the increase in Q3 ’10 net sales and revenue reflects higher average ethanol and dried distiller grain prices, which more than offset a decline in wet distiller grain pricing. The increase in Q3 ’10 alternative energy segment profits reflects the higher net sales and revenue which more than offset increases in grain and natural gas prices.

“While the growth of our alternative energy segment has been impressive, the elimination or reduction of ethanol industry tax incentives such as the VEETC, or blender’s credit available to gasoline refiners and blenders, which is unless extended, set to expire on December 31, 2010, could impact demand and therefore our future operating performance.

“Importantly, REX remains very well positioned from a balance sheet standpoint as we have $73.4 million of cash at the parent company level, in addition to significant real estate assets that we plan to monetize on an opportunistic basis. We look to deploy this capital in attractively valued renewable resource or industrial project opportunities as well as in the repurchase of additional shares at prices below book value as market opportunities permit.”

Real Estate Assets

At October 31, 2010, REX had lease agreements, as landlord for all or parts of 15 former retail store locations (including six temporary seasonal leases). REX also has 19 former retail stores that were vacant at October 31, 2010 which it is marketing to lease or sell. In addition, one former distribution center is partially leased, partially occupied by the REX corporate office and partially vacant. The Q3 ‘10 real estate revenue reflects rental income derived from these sites.

REX exited its retail operations in fiscal 2009, and the retail operations results are classified as discontinued operations. Certain amounts differ from those previously reported as a result of retail operations and certain sold real estate assets being reclassified as discontinued operations.

The table below summarizes net sales and revenue from REX’s alternative energy and real estate segments and income (loss) from continuing operations for the three- and nine-month periods ended October 31, 2010 and October 31, 2009.


      Three Months Ended     Nine Months Ended  
($ in thousands)     October 31,     October 31,  
      2010   2009     2010   2009  
Net sales and revenue:                      
Alternative energy (1)     $69,974   $61,368     $205,797   $92,296  
Real estate     369   311     941   765  
Total net sales and revenues     $70,343   $61,679     $206,738   $93,061  
                       
Segment profit (loss):                      
Alternative energy segment profit (1)     $7,929   $4,569     $18,599   $2,222  
Real estate segment (loss)     (392)   (54)     (896)   (11)  
Corporate expense     (605)   (740)     (2,099)   (1,592)  
Interest expense     (81)   (60)     (231)   (192)  
Investment income     86   82     355   230  
Income from continuing operations before income taxes and noncontrolling interests    

$6,937

 

$3,797

   

$15,728

 

$657

 
                       

(1) Includes results attributable to non-controlling interests of approximately 44% for Levelland Hockley and 26% for One Earth.

 
 
About REX American Resources Corporation

REX American Resources has interests in seven ethanol production facilities representing ownership of approximately 191 million gallons per year of annual nameplate capacity. The total annual nameplate capacity of ethanol production facilities in which REX has ownership interests is approximately 632 million gallons per year. Further information about REX is available at www.rexamerican.com.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.