REX American Resources (US:REX)2019-12-05 14:39Ethanol Operations - Ethanol operations shipped a total of 671.6 million gallons, with One Earth Energy, LLC contributing 140.0 million gallons and NuGen Energy, LLC contributing 101.9 million gallons[94]. - Ethanol and by-products segment net sales for Q3 2019 were approximately $86.6 million, a decrease of 30% from $123.5 million in Q3 2018[128]. - Average selling price per gallon of ethanol increased to $1.39 in Q3 2019 from $1.28 in Q3 2018, despite a 33% decrease in gallons sold[128]. - Ethanol sales for the first nine months of fiscal year 2019 were approximately $227.0 million, a decrease of 20% from $283.7 million in the same period of 2018[130]. - A 10% adverse change in ethanol prices could decrease pre-tax income by approximately $36,717,000[167]. - Estimated total volume for ethanol over the next 12 months is 242,000 gallons[167]. Financial Performance - Net sales and revenue for the quarter ended October 31, 2019, were approximately $86.7 million, a decrease of approximately $37.1 million compared to $123.8 million in the prior year's third quarter[111]. - Gross loss for the third quarter of fiscal year 2019 was approximately $1.8 million, representing 2.0% of net sales and revenue, compared to a gross profit of approximately $7.7 million (6.3% of net sales and revenue) in the third quarter of fiscal year 2018[112]. - Loss before income taxes was approximately $4.9 million for the third quarter of fiscal year 2019, compared to income of approximately $3.8 million for the same quarter in fiscal year 2018[117]. - Net loss for the third quarter of fiscal year 2019 was approximately $1.7 million, compared to net income of approximately $13.8 million for the same quarter in fiscal year 2018[120]. - Total net sales and revenue for Q3 2019 were approximately $86.7 million, down 30% from $123.8 million in Q3 2018[125]. - Net loss attributable to REX common shareholders for Q3 2019 was approximately $2.1 million, a decrease of $13.9 million from a net income of approximately $11.9 million in Q3 2018[122]. Costs and Expenses - SG&A expenses were approximately $4.1 million for the third quarter of fiscal year 2019, a decrease of approximately $1.3 million compared to $5.4 million for the same quarter in fiscal year 2018[114]. - SG&A expenses for Q3 2019 were approximately $3.6 million, down from $4.0 million in Q3 2018, primarily due to decreased incentive compensation[137]. - SG&A expenses were approximately $(0.1) million in Q3 2019, down from approximately $0.7 million in Q3 2018, with expectations to remain below $1.0 million per quarter[148]. - Grain accounted for approximately 78% of the cost of sales in Q3 2019, totaling $67.7 million, compared to 76% and $84.9 million in Q3 2018[132]. Production and Sales - The refined coal facility's production and sales amounts are expected to vary based on demand fluctuations from the utility plant, which is the sole customer[99]. - Refined coal sales were approximately $0.1 million in Q3 2019, down from $0.2 million in Q3 2018, and approximately $0.3 million for the first nine months of 2019 compared to $0.6 million in 2018, with expectations of lower future demand[145]. - One Earth and NuGen have forward purchase contracts for approximately 4.4 million bushels of corn, expected delivery through January 2020[167]. - Combined sales commitments include approximately 18.9 million gallons of ethanol, 48,500 tons of distillers grains, and 6.1 million pounds of non-food grade corn oil, with majority delivery expected through December 2019[167]. Cash Flow and Investments - Net cash used in operating activities was approximately $2.3 million for the first nine months of 2019, a significant decrease from cash provided of approximately $28.9 million in the same period of 2018[154]. - Cash provided by investing activities was approximately $12.7 million for the first nine months of 2019, compared to cash used of approximately $21.8 million in the same period of 2018[158]. - The company is exploring various uses for excess cash, including a stock buyback program with authorization to repurchase approximately 350,000 shares[163]. Market Risks - A 10% adverse change in corn prices could decrease pre-tax income by approximately $32,781,000[167]. - A 10% adverse change in distillers grains prices could decrease pre-tax income by approximately $8,256,000[167]. - A 10% adverse change in non-food grade corn oil prices could decrease pre-tax income by approximately $1,639,000[167]. - A 10% adverse change in natural gas prices could decrease pre-tax income by approximately $1,295,000[167]. Technology Development - The company has funded approximately $2.2 million cumulatively for the development of eSteam technology, which has not yet proven commercial feasibility[102]. - The company has faced a weak margin environment in its ethanol segment due to higher corn costs and lower availability, impacting production volumes at the NuGen ethanol plant[106].