REX American Resources (US:REX)2024-08-27 23:15Financial Data and Key Metrics Changes - REX American Resources reported a net income per share improvement of more than 20% over Q1 2024 and more than 35% over Q2 2023 [4][13] - Gross profit for Q2 2024 was $19.8 million, an increase of 8% compared to approximately $18.4 million in Q2 2023 [12] - Total cash, cash equivalents, and short-term investments at the end of Q2 2024 were $346 million, down from $378.7 million as of January 31, 2024 [14] Business Line Data and Key Metrics Changes - Ethanol sales volume decreased by approximately 6% to 65.1 million gallons in Q2 2024 compared to 69.1 million gallons in Q2 2023 [11] - Average selling price for ethanol was $1.79 per gallon in Q2 2024, down from $2.42 per gallon in Q2 2023 [11] - Dry distillers grain sales volume decreased by 6% to 132,850 tons in Q2 2024, with an average selling price of $164.45 per ton, down from $226.48 per ton in Q2 2023 [11] Market Data and Key Metrics Changes - Ethanol exports increased by 36.5% through June compared to the same period last year, positively impacting the industry [15] - Corn crop conditions in the Midwest are expected to be strong, leading to favorable corn input pricing [15] Company Strategy and Development Direction - The company aims to complete the construction of the One Earth carbon capture and compression facility and expand ethanol production capacity to 175 million gallons per year, with plans for further permitting to reach 200 million gallons [4][5] - REX American Resources focuses on profitability over product pricing or production numbers, as evidenced by improved gross margin performance despite lower ethanol pricing [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong results in Q3 2024, expecting to exceed Q2 performance due to favorable market conditions [15] - The company is focused on maintaining profitability and has not incurred any debt, allowing for continued investment in core operations [4][14] Other Important Information - As of the end of Q2 2024, REX had invested approximately $91 million into the One Earth carbon capture project and associated ethanol production capacity expansion [10] - The company ended the quarter without any bank debt, reflecting a strong financial position [14] Q&A Session Summary Question: Timeline for carbon capture and pipeline build-out - Management indicated that the EPA permit is expected in Q2 2025, with construction of the carbon sequestration facility progressing [17][20] Question: Allocation of cash reserves - The first priority for cash allocation is the carbon capture and expansion of the Gibson City plant, with potential expansion of the South Dakota plant as a second priority [29] Question: Thoughts on sustainable aviation fuel - Management stated that low carbon fuel production is necessary, and they are awaiting clear guidelines for tax credits before proceeding [31] Question: Capital expenditures compared to budget - Management confirmed that capital expenditures are on track and no major increases are anticipated at this time [32]