REX American Resources Third Quarter Revenue Rises To $179 Million; Diluted EPS Of $0.05

REX American Resources Corporation (NYSE: REX) today reported financial results for its fiscal 2012 third quarter (“Q3 ‘12”) ended October 31, 2012. REX management will host a conference call and webcast today at 11:00 a.m. ET:

Conference Call:
    (212) 271-4657
 

Webcast / Replay URL:

www.rexamerican.com/Corp/Page4.aspx

The webcast will be available for replay for 30 days

REX’s Q3 ‘12 results principally reflect its alternative energy segment interests in seven ethanol production facilities. The operations of One Earth Energy, LLC (“One Earth”) and NuGen Energy, LLC (“NuGen”) are consolidated (NuGen was not in the comparable year-ago period), while those of its five other plants are reported as equity in income of unconsolidated affiliates. REX’s Q3 ‘12 net sales and revenue rose 111.8% to $179.0 million, from $84.5 million in Q3 ’11, primarily reflecting the consolidation of NuGen.

REX recognizes certain results from its ethanol interests on a quarterly calendar basis, and as a result, REX’s Q3 results include results from ethanol operations for the period July 1, 2012 through September 30, 2012, with the exception of NuGen, which is for the period August 1, 2012 through October 31, 2012.

Reflecting the on-going industry-wide compression of ethanol margins and lower income from discontinued operations, net income attributable to REX shareholders in Q3 ‘12 was $0.4 million, or $0.05 per diluted share, compared with $6.5 million, or $0.70 per diluted share, in Q3 ‘11. Q3 ‘12 income from continuing operations net of tax attributable to REX shareholders was $0.3 million, or $0.03 per diluted share, compared with $6.0 million, or $0.65 per diluted share, in Q3 ‘11. REX recorded income from discontinued operations net of tax, including gain on disposal of discontinued operations, of $0.1 million, or $0.02 per diluted share for Q3 ’12, compared with $0.5 million, or $0.05 per diluted share in Q3 ’11. Per share results in Q3 ‘12 and Q3 ‘11 are based on 8,258,000 and 9,239,000 diluted weighted average shares outstanding, respectively. The 10.6% reduction in the shares outstanding principally reflects the Company’s ongoing open market share repurchase program partially offset by shares exercised pursuant to options.

REX’s consolidated gross profit (inclusive of the Company’s real estate segment) declined to $3.6 million in Q3’ 12, from $9.0 million in Q3’ 11, primarily reflecting the challenging alternative energy industry conditions in the current year. In Q3 ‘12, equity in income of unconsolidated affiliates was $1.5 million, compared with income of $6.3 million in Q3 ‘11, primarily due to lower results from the Company’s unconsolidated ethanol production interests and the benefit in the prior year from the inclusion of NuGen prior to consolidation. REX’s Q3 ‘12 income from continuing operations before income taxes and non-controlling interests was $0.9 million, compared with $11.9 million in Q3 ’11.

REX CEO, Stuart Rose, commented, “Throughout fiscal 2012, the ethanol production industry’s profitability has been impacted by lower crush spread margins. Although the lower crush spreads reduced operating profits, we partially offset the challenging industry environment with rising dried distillers grains pricing and corn oil extraction.

“Looking forward, we believe our state-of-the-art ethanol plants located across the Corn Belt, along with our operating disciplines at the plant and corporate level, help to position REX as one of the leading companies in the ethanol industry.”

Balance Sheet and Share Repurchase Program

At October 31, 2012, REX had cash and cash equivalents of $68.1 million, $47.9 million of which was at the parent and $20.2 million of which was at its consolidated ethanol production facilities. This compares with cash and cash equivalents of $75.0 million at January 31, 2012, $46.1 million of which was at the parent and $28.9 million of which was at its consolidated ethanol production facilities.

REX repurchased 76,050 common shares in Q3 ‘12 at an average price per share of $17.93. In Q4 ’12 to date, the Company repurchased an additional 26,494 shares at an average price per share of $16.74, and reflecting the August 2, 2012 authorization for the Company to repurchase 500,000 additional shares, the Company is currently authorized to repurchase up to an additional 422,429 shares of common stock. Reflecting all share repurchases to date, REX has 8,157,254 shares outstanding.

At October 31, 2012, REX had lease agreements, as landlord for six former retail store locations. REX has 12 owned former retail stores that were vacant at October 31, 2012, which it is marketing to lease or sell (4 of which had temporary fall seasonal leases). In addition, one former distribution center is partially leased, partially occupied by the REX corporate office and partially vacant. The real estate segment revenue reflects rental income derived from these sites.

Segment Income Statement Data
   
 

Three Months Ended

Nine Months Ended
($ in thousands) October 31, October 31,
2012   2011   2012   2011
Net sales and revenue:    
Alternative energy (1) $ 178,495 $ 84,144 $ 481,938 $ 238,557
Real estate   455     380     1,184     926  
Total net sales and revenues $ 178,950   $ 84,524   $ 483,122   $ 239,483  
 
Segment gross profit (loss):
Alternative energy (1) $ 3,686 $ 8,965 $ 16,224 $ 14,694
Real estate   (39 )   53     (117 )   (1,171 )
Total gross profit (loss) $ 3,647   $ 9,018   $ 16,107   $ 13,523  
 
Segment profit (loss):
Alternative energy segment profit (1) $ 1,586 $ 12,394 $ 6,478 $ 22,827
Real estate segment (loss) profit (91 ) 7 (277 ) (1,306 )
Corporate expense (603 ) (521 ) (1,751 ) (1,738 )
Interest expense (21 ) (25 ) (65 ) (87 )
Interest income 19 74 68 289
Income from synthetic fuel investments   -     -     -     2,883  
Income from continuing operations before income taxes and non-controlling interests

$

890
 

$

11,929
 

$

4,453
 

$

22,868
 
 

(1)
 

Includes results attributable to non-controlling interests of approximately 26% for One Earth in fiscal years 2012 and 2011 and approximately 1% for NuGen in fiscal year 2012.
 

Certain amounts differ from those previously reported as a result of certain sold real estate assets being reclassified as discontinued operations.
 

Segment Assets
   
      October 31, 2012 January 31, 2012
($ in thousands)
Alternative energy $ 351,406 $ 367,029
Real estate 13,945 17,458
Corporate   52,762   53,562
Total assets $ 418,113 $ 438,049
 

Supplemental Data Related to REX’s Alternative Energy Interests
REX American Resources Corporation Ethanol Ownership Interests/Effective Annual Gallons Shipped as of October 31, 2012

Entity
 

Trailing Twelve Months Gallons Shipped
 

Current REX Ownership Interest
 

REX’s Current Effective Ownership of Trailing Twelve Month Gallons Shipped
One Earth Energy, LLC(Gibson City, IL)   109.4M   74 %   81.0M
NuGen Energy, LLC(Marion, SD)   113.0M   99 %   111.9M
Patriot Holdings, LLC

(Annawan, IL)
  117.0M   27 %   31.6M

Big River Resources West Burlington, LLC(West Burlington, IA)
  97.8M   10 %   9.8M
Big River Resources Galva, LLC

(Galva, IL)
  102.2M   10 %   10.2M
Big River United Energy, LLC

(Dyersville, IA)
  107.6M   5 %   5.4M
Big River Resources Boyceville, LLC

(Boyceville, WI) (1)
  56.6M   10 %   5.7M
Total   703.6M   n/a     255.6M
     

(1) REX’s current effective annual gallons sold represents ten months of ownership of Big River Resources Boyceville, LLC on an annualized basis.
    Three Months         Nine Months    
Ended October 31, % Ended October 31, %
Average Price/Cost     2012     2011     Change     2012     2011     Change
Ethanol – gallon $ 2.38     $ 2.70 (11.9 )% $ 2.21     $ 2.51 (12.0 )%
Dried distillers grains - ton $ 267.63 $ 203.13 31.8 % $ 227.07 $ 193.47 17.4 %
Grain – bushel $ 7.95 $ 7.05 12.8 % $ 6.96 $ 6.89 1.0 %
Natural gas – mmbtu $ 3.47 $ 4.95 (29.9 )% $ 3.63 $ 4.66 (22.1 )%
 

About REX American Resources Corporation

REX American Resources has interests in seven ethanol production facilities which in aggregate shipped approximately 704 million annualized gallons of ethanol over the twelve month period ended October 31, 2012. REX’s current effective ownership of the trailing twelve month annualized gallons shipped (for the period ended October 31, 2012) by the ethanol production facilities in which it has ownership interests is approximately 256 million gallons. Further information about REX is available at www.rexamerican.com.

This news announcement contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by use of forward-looking terminology such as “may,” “expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Readers are cautioned that there are risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. These risks and uncertainties include the risk factors set forth from time to time in the Company’s filings with the Securities and Exchange Commission and include among other things: the impact of legislative changes, the price volatility and availability of corn, dried distillers grains, ethanol, corn oil, gasoline and natural gas, ethanol plants operating efficiently and according to forecasts and projections, changes in the national or regional economies, weather, the effects of terrorism or acts of war, changes in real estate market conditions and the impact of Internal Revenue Service audits. The Company does not intend to update publicly any forward-looking statements except as required by law.

- statement of operations follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Operations

(in thousands, except per share amounts)

Unaudited
   

Three Months

Ended

Nine Months

Ended
October 31, October 31,
2012   2011 2012   2011
 
Net sales and revenue $ 178,950 $ 84,524 $ 483,122 $ 239,483
Cost of sales   175,303     75,506     467,015     225,960  
Gross profit 3,647 9,018 16,107 13,523
Selling, general and administrative expenses (2,995 ) (2,344 ) (9,190 ) (6,616 )
Equity in income of unconsolidated affiliates 1,542 6,284 1,503 15,827
Income from synthetic fuel investments - - - 2,883
Interest income 42 92 132 364
Interest expense (1,206 ) (620 ) (3,733 ) (1,923 )
Losses on derivative financial instruments, net   (140 )   (501 )   (366 )   (1,190 )
Income from continuing operations before income taxes

890

11,929

4,453

22,868
Provision for income taxes   (134 )   (4,055 )   (1,220 )   (8,233 )
Income from continuing operations 756 7,874 3,233 14,635
Income from discontinued operations, net of tax 107 186 361 856
Gain on disposal of discontinued operations, net of tax   30     267     80     425  
Net income 893 8,327 3,674 15,916
Net income attributable to non-controlling interests   (484 )   (1,845 )   (1,526 )   (2,435 )
 
Net income attributable to REX common shareholders $ 409   $ 6,482   $ 2,148   $ 13,481  
 
Weighted average shares outstanding – basic   8,226     9,205     8,311     9,385  
Basic income per share from continuing operations attributable to REX common shareholders

$

0.03

$

0.65

$

0.21

$

1.30
Basic income per share from discontinued operations attributable to REX common shareholders

0.01

0.02

0.04

0.09
Basic income per share on disposal of discontinued operations attributable to REX common shareholders  

0.01
   

0.03
   

0.01
   

0.05
 
Basic net income per share attributable to REX common shareholders

$

0.05
 

$

0.70
 

$

0.26
 

$

1.44
 
 
Weighted average shares outstanding – diluted   8,258     9,239     8,361     9,453  
Diluted income per share from continuing operations attributable to REX common shareholders

$

0.03

$

0.65

$

0.21

$

1.29
Diluted income per share from discontinued operations attributable to REX common shareholders

0.01

0.02

0.04

0.09
Diluted income per share on disposal of discontinued operations attributable to REX common shareholders  

0.01
   

0.03
   

0.01
   

0.05
 
Diluted net income per share attributable to REX common shareholders

$

0.05
 

$

0.70
 

$

0.26
 

$

1.43
 
 
Amounts attributable to REX common shareholders:
Income from continuing operations, net of tax $ 272 $ 6,029 $ 1,707 $ 12,200
Income from discontinued operations, net of tax   137     453     441     1,281  
Net income $ 409   $ 6,482   $ 2,148   $ 13,481  
 

* Certain amounts differ from those previously reported as a result of certain real estate assets being reclassified as discontinued operations.

- balance sheet follows -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Condensed Balance Sheet

(in thousands) Unaudited
   
October 31, January 31,
Assets 2012 2012
Current assets:
Cash and cash equivalents $ 68,105 $ 75,013
Accounts receivable 17,765 12,784
Inventories 28,304 30,349
Refundable income taxes 895 1,816
Prepaid expenses and other 4,335 3,987
Deferred taxes, net   2,530     3,090  
Total current assets 121,934 127,039
Property and equipment, net 227,811 240,084
Other assets 6,793 7,884
Equity method investments 61,072 61,679
Restricted investments and deposits   503     1,363  
Total assets $ 418,113   $ 438,049  
Liabilities and equity:
Current liabilities:
Current portion of long-term debt, alternative energy (1) $ 12,567 $ 14,972
Current portion of long-term debt, other 267 250
Accounts payable, trade 10,108 6,985
Deferred income 950 1,864
Accrued real estate taxes 1,310 2,750
Accrued payroll and related items 740 2,882
Derivative financial instruments 1,843 1,694
Other current liabilities   5,029     5,844  
Total current liabilities   32,814     37,241  
Long-term liabilities:
Long-term debt, alternative energy (1) 95,117 107,706
Long-term debt, other 619 821
Deferred taxes 5,201 4,642
Deferred income 250 552
Derivative financial instruments 1,383 2,541
Other long-term liabilities   2,530     2,703  
Total long-term liabilities   105,100     118,965  
Equity:    
REX shareholders’ equity:
Common stock 299 299
Paid-in capital 143,667 142,994
Retained earnings 326,471 324,323
Treasury stock   (219,011 )   (215,105 )
Total REX shareholders' equity 251,426 252,511
Noncontrolling interests   28,773     29,332  
Total equity   280,199     281,843  
Total liabilities and equity $ 418,113   $ 438,049  
 

(1) Long-term debt, alternative energy reflects non-recourse ethanol plant debt at REX’s consolidated ethanol production subsidiaries.

- statement of cash flows follow -

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

(in thousands) Unaudited
 
Nine Months Ended
October 31,
2012   2011
Cash flows from operating activities:
Net income including noncontrolling interests $ 3,674 $ 15,916

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 12,430 8,206
Impairment charges and other 279 1,164
Income from equity method investments (1,503 ) (15,827 )
Income from synthetic fuel investments - (2,883 )
Loss (gain) on disposal of real estate and property and equipment 424 (634 )
Dividends received from equity method investees 2,005 2,316
Deferred income (1,429 ) (3,273 )
Derivative financial instruments (1,009 ) (738 )
Deferred income tax 1,111 8,177
Changes in assets and liabilities:
Accounts receivable (4,981 ) 2,318
Inventories 2,045 (2,266 )
Other assets 1,513 9,486
Accounts payable, trade 3,030 (1,475 )
Other liabilities   (4,357 )   2,031  
Net cash provided by operating activities   13,232     22,518  
Cash flows from investing activities:
Capital expenditures (2,533 ) (720 )
Proceeds from sale of synthetic fuel investment - 2,883
Restricted investments 860 -
Proceeds from sale of real estate and property and equipment   2,272     3,436  
Net cash provided by investing activities   599     5,599  
Cash flows from financing activities:
Payments of long-term debt (15,179 ) (8,160 )
Repayments of contingent consideration - (1,313 )
Stock options exercised 358 317
Noncontrolling interests distribution and other (2,085 ) (1,988 )
Treasury stock acquired   (3,833 )   (21,224 )
Net cash used in financing activities   (20,739 )   (32,368 )
Net decrease in cash and cash equivalents (6,908 ) (4,251 )
Cash and cash equivalents, beginning of period   75,013     91,019  
Cash and cash equivalents, end of period $ 68,105   $ 86,768  
 

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