REX American Resources (US:REX)2025-03-28 17:54Financial Performance - Net income attributable to REX common shareholders was $58.2 million in fiscal 2024, a decrease from approximately $60.9 million in fiscal 2023, primarily due to lower selling prices despite a decrease in corn and natural gas prices [161]. - Net sales and revenue for fiscal year 2024 decreased to $642.5 million, down 23% from $833.4 million in fiscal year 2023 [184]. - Ethanol sales decreased by 23% in average price per gallon, resulting in a total revenue of $496.4 million in fiscal year 2024 compared to $635.4 million in fiscal year 2023 [186]. - Gross profit for fiscal year 2024 was approximately $91.5 million, a decrease of 7% from $98.2 million in fiscal year 2023, representing 14.2% of net sales [192]. - SG&A expenses for fiscal year 2024 were approximately $27.1 million, a decrease of 8% from $29.4 million in fiscal year 2023 [194]. - Net cash provided by operating activities for fiscal year 2024 was approximately $64.2 million, a decrease from approximately $128.0 million in fiscal year 2023 [210][211]. - Net cash used in financing activities was approximately $18.5 million during fiscal year 2024, compared to approximately $4.3 million in fiscal year 2023 [215][216]. Production and Operations - Ethanol production yield is expected to be approximately 2.9 gallons of denatured ethanol per bushel of corn processed, with the "crush spread" being a critical factor for profitability [159]. - The One Earth ethanol plant is set to expand production from 150 million gallons per year to 175 million gallons per year, with plans to apply for a permit to increase to 200 million gallons per year thereafter [166]. - The company has secured sufficient subsurface easements for the first injection well to allow for carbon sequestration for a minimum of 15 years [162]. - The company is reviewing its investment opportunities in ethanol and energy-related ventures, with no assurances of success in finding such opportunities [170]. - The three entities owned by the company shipped approximately 727 million gallons of ethanol over the twelve-month period ended January 31, 2025, with REX's effective ownership of ethanol gallons shipped being approximately 294 million gallons [172]. Market Conditions - Chicago Board of Trade corn prices fluctuated between a low of $3.62 per bushel in August 2024 and a high of $4.97 in January 2025, while S&P Global Platts ethanol prices ranged from $1.38 per gallon in February 2024 to $2.12 in June 2024 [161]. - The EPA has issued Renewable Fuel Standard volume obligations for 2023-2025, maintaining the volume of conventional biofuels at 15.0 billion gallons [174]. Capital Expenditures and Investments - The budget for the carbon sequestration project has increased to approximately $220 million to $230 million due to permitting delays and inflation, with $55.7 million already spent as of January 31, 2025 [168]. - The company plans to spend $50 million to $70 million during fiscal year 2025 on various projects, including carbon sequestration and plant expansion [207]. - Capital expenditures in fiscal year 2024 totaled approximately $71.3 million, primarily for capital projects at ethanol plants, compared to approximately $37.7 million in fiscal year 2023 [212][214]. - The company recognized income of approximately $9.4 million from its equity investment in Big River Resources, LLC for fiscal year 2024 [195]. - The company is investigating various uses of excess cash, with a budget of approximately $220 million to $230 million for carbon sequestration and plant expansion projects [206]. Financial Position and Commitments - Accounts receivable decreased approximately $1.7 million in fiscal year 2024, while inventory increased approximately $4.7 million [210]. - The company had purchase commitments for approximately 24.4 million bushels of corn and 0.8 million MmBtu of natural gas as of January 31, 2025 [230]. - Long-term taxes payable increased by $4.3 million, reflecting uncertain tax positions exceeding remaining unused credits [210]. - Approximately 2.7% of net assets are restricted due to loan agreements as of January 31, 2025 [218]. - Aggregate minimum lease payments under operating lease agreements total $24.0 million, with $6.8 million payable in the next twelve months [219]. - Management believes cash flow from operating activities will be sufficient to meet liquidity needs, barring any material adverse changes [217]. Risk Assessment - Estimated decrease in pre-tax income from a 10% adverse change in ethanol price is approximately $48.9 million, based on a volume of 295,000 gallons for the next 12 months [230]. Stock and Shareholder Actions - The company has a stock buyback program, purchasing 372,567 shares for $15.5 million in fiscal year 2024, with an additional 281,709 shares repurchased for approximately $11.9 million post-January 31, 2025 [208].