Q1 2020 Earnings Call
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Greetings and welcome to the Rex American resources fiscal 2021st quarter Conference call. During the presentation. All participants will be in listen only mode. Later, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the.
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I would now like to turn the conference over to Doug Hoffman Chief Financial Officer. Please go ahead.
Good morning, Thank you for joining Rex American resources fiscal 2021st quarter Conference call.
We hope everyone and their family and friends have remained shape and healthy sense, we've lost spoke.
Well get to our presentation a call much momentarily as well as your Q in a session, but first I'll review the safe Harbor disclosure.
In addition to historical facts or statements of current conditions. Today's conference call contains forward looking statements involve risks and uncertainties. We didn't immediately meaning that the private Securities Litigation Reform Act of 1995.
Such forward looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance as such actual results may vary materially from expectations.
The risks and uncertainties associated with the forward looking statements are described in today's news announcement and the company's filings with the Securities and Exchange Commission, including the company's reports on form 10-K and 10-Q.
Rex American resources assumes no obligation to publicly update or revise any forward looking statements.
I have joining me on the call today Stuart Rose Executive Chairman of the board and so far risky Chief Executive Officer.
Let me first review our financial performance.
Sales for the quarter decreased 20.4%, primarily due to lower production levels, how should we idled or nugen plant mid first quarter. After crush margin for for this plant was affected by local corn availability.
At 19, pandemic and lower oil pricing in the impact on ethanol demand in pricing.
That's all sales for the quarter based upon 48.3 million gallons this year versus 61.3 million last year.
Although we idled to one Earth plant it occurred that had its quarter and so there was no significant impact on its volume for the first quarter.
We reported a gross loss of 8.2 million for the ethanol and byproduct segment versus the gross profit of 6.19 in the prior year.
Gross margin the current year with not only impacted by the lower volume and negative ethanol corn crush spread but also by the 9.1 million lower cost or net realizable value Charles charge.
Corn ethanol valley values fell sharply due in part to the slowdown in demand from the cobot 19 impact.
All of which was offset somewhat by hedge gain of 3.1 million.
Our refined coal segment had a gross loss of 1.1 million for the first quarter fiscal 2020 versus 2.5 million for the prior year based upon lower volume.
These losses are offset by tax benefits of 959000, and 3.9 million for the first quarter fiscal 2020 in 2019, respectively recorded for the section 45 credits and the tax benefits from operating losses.
We had a loss of 477000 from our unconsolidated equity investment in this year's first quarter versus income of 126 for the prior year, reflecting ethanol industry conditions.
Interest and other income declined from 1.1 million to 669000, primarily due to lower interest rates on our cash and short term investments as interest rates fell sharply during the quarter.
We recorded a tax benefit of 5.3 million for the fourth first quarter of this year versus 3.5 million in the prior year.
We recorded our federal tax benefits from losses at 35% rather than the current 21% federal tax rate based upon our ability to carry back losses five years Jude due to the cares act passed in the first quarter.
The above factors led to a net loss attributable to Rex shareholders of $7.6 million in this year's first quarter versus net income of 2.8 million in prior year.
Let me now I'll turn the call over to Stewart for his comments.
Hi.
Thank you Doug going forward, our ethanol business is currently losing money and we expect to lose money in the second quarter, but we do not expect a lost.
As much as a first quarter.
When prices in ethanol prices have risen, allowing us to reopen Mark Gibson said a plant hopefully we can they have all plants operational by the fall.
Harvest looks good.
And the cares that certainly helped us is losses can carry back five years.
There's also some other benefits in the cares so certainly looks like if you want to Jeff word applies to us terms of refined call. It continues to be down as coal use for electricity has declined and especially the utility where we help our where we help our operations.
In terms of.
Quarter, and we had 195 million roughly honor.
Cash on a consolidated basis, we plan on investing and the potential carbon capture site, which apart our c., so far risk PRC I'll discuss.
Following may we continue to buying shares on dips.
Opportunistic way, we bought in Entre 8706 shares during the first quarter and since first quarter around were authorized to by 241195 more we continue to look for quality ethanol plants, we still believe in the industry.
But we'd have to have very very good prices and certainly we have nothing imminent at this time, we will consider outside of investments.
We've done that in the past that's how we got into the ethanol business. We said, if we feel it would be profitable and whats fit our our skill set getting there is nothing imminent like to turn this over so far now to talk a little but about the ethanol business in the carbon capture said that that we've just initiated carbon tax.
Sure project, we've just initiated thank you.
Thanks, Good morning, everyone.
I will keep my remarks brief as I mentioned in our previous call. We entered fiscal 2020 facing continued challenges, including the recent declines in the crude and add another markets declined in the price and over 19 endemic the fee it up over 19 sped up the widest that bullish on going up.
Businesses and stay at home order by the gluttonous.
That does that resulted in a degree than a fuel demand and negatively impacted at cannot industry. Several cloud facilities across the countries shutdown, including both the majority on loans.
We're taking steps to keep out implies save Ana and our fallen Cdcs state and federal guidelines as I mentioned previously our new implant continue to suffer negatively throughout the last year do forward into loan in that area, but the challenging environments and very severe economic impact of global length.
Let the season for shut down the Nugen plant on March 17th and one not to not do you on what my starting caused by April 2020, we had idle bullet on bottom majority on plants.
We have experienced some improvements in business active activities as recently as well were 19 shut down our does relaxed estimate dimension level, yet that created on increasing demand for gasoline and ethanol an impact impacted the price as it is that as we began the process hopefully opening one not can now do you.
Starting production yesterday.
All these reasons, we are expecting a loss into ethanol segment in the second quarter up 2020.
If market conditions will not continue to improve and the picked up over 19 is not lean. We noted we will generate a loss.
On top of that we're experiencing continued uncertainty because of the trade disputes and the small to foundry exemptions. The EPA has received 27th small refinery exemption for 2019, new will fuel extended the EPA has granted 31 exemption for the 2018 audit compliance.
Yes.
On a positive note. We are pleased that tunnel and DGX board for the last first quarter from 20 to 20 increase compared to 2019 ethanol exports totaled 485 million gallons compared to 50 on the 2 million gallons during the same quarter last year.
Florida dry distiller grains for the first quarter up 20.17 million metric tons compared to 2.4 to five metric tons for the first quarter 2019.
The bulk offices, but when adjusted for yield approximately 16 million bushels 2020.
Only 21 and expected to Cardiovert PD, one PD, one 8 billion bushels that will be the log just the casual.
Automotive planted about 997 million it goes up loan and estimated loan yield is is 178.
Well since about it going according to the made dwell Usdfour cost report.
For the full 2019, and 20 is ethanol launch expected to conceal important 4.95 billion bushels, which is down 1.98.
From last month, and 7.9 cents lawyer than forecasted in January 2020, due to recent shut going on slowdown of ethanol plants, approximately 70% of the ethanol plants will shut down the slowdown during the last few months.
Let me give you a little bit.
As Stuart mentioned, let me also give you some progress on the bottom on sequestration or product I discussed in our previous costs.
As I mentioned, then we are working with the University of Illinois explored a carbon sequestration project.
The University has received the U.S. departments.
Through the Gautam unsafe broke down.
Correct lies and well have gotten storage site associated with one not to note at the non facility.
The University of Illinois, we'll evaluate the greenhouse gas storage potential beneath the site of the drilling.
Yes, well performing assessed mix headwinds and decent Soc Gen will conduct a front end engineering and design feed study for the CEO to just system.
Adam unsafe project seeks to us a solid commercial development of carbon capture and store within the LNG storage guarded goal our region, which has proven.
Liquid storage capability.
Geology, Matt mapping correct utilization and modeling have demonstrated that accelerate storage potential existent amount Simon so what is complex and density Upto, one not cannot do facility.
We have completed the feasibility study SMIC testing and a half bunch of excess land. This project.
By the way the by the way the video is a section 45, you, which put a wide $50.
Thanks, Good added.
I just want to mentioned that also I want to caution that this project is still a very early but I'm I'm going to these days and we cannot predict.
That we will be successful yet with this project.
In summary, we cannot predict how long this don't plan in economic activity will continue but we have seen some improvement in demand of gasoline, which could help the ethanol demand at the not we also have seen the corn planting overall, so far is a making excellent progress at the center of the bonus plan.
Compared.
Ascent last year at this time in that.
The gone.
The gold blending last year in South Dakota was 23% compared.
6% DC.
Okay.
Going to emerge, 44% compared to 1% last year at Intel gala around.
Area. This plant the planting of the cone around our plants draw 80 draw area, and Salgado, Illinois, and I realize almost completed which could lead to better yields oddly harvest and better economic subs.
I will get back the floor back to store growth for the comments Stuart.
Thank you and conclusions we had a rough quarter, we expect at least one more rough quarter, but hopefully thanks returned to normal we're opening one of our clothes plants and the harvest. So far let's cut we still have great plants, great locations and when things normalize we shared and hope to do well again.
Hi hopes for carbon capture all of those parts that nothing is guaranteed in that area, but we are certainly working on it more to into University of Illinois. Most important is we feel we have to best people in the industry. So when things do get back to normal.
Our people know what they're doing they've done well in the past.
And we know about what it takes to bring us back to the way we were.
Bring these plants back.
To what they're capable up about leave the floor open to questions.
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If there are no questions are there any questions. If there are no questions I'd like to thank everyone for listening to our call. We're very much appreciate your loyalty and hopefully things will get better.
The next three or four months. Thank you so much.
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Thank you.
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