Q3 2021 REX American Resources Corp Earnings Call

December 1, 2021

Okay.

Yeah.

Greetings and welcome to the Rex American resources fiscal 2021 third quarter conference call.

During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session.

At that time, if you have a question. Please press the one followed by the four on your telephone.

If at any time during the conference you need to reach an operator. Please press star Zero I would now like to turn the conference over to Doug Bruggeman, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining Rex American Resources' fiscal 2021 third quarter conference call.

We'll get to our presentation and comments momentarily as well as your question and answer 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 that involve risks and uncertainties within the meaning of 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 forward looking statements are described in todays news announcement and in 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 Zafar Rizvi Chief Executive Officer.

I will first review our financial performance and then turn the call over to Stuart for his comments.

Rex is very pleased to report on our strong third quarter results as you will note in our press release, we have now discontinued the refined coal operations as we are no longer able to earn tax credits beginning on November 18th 2021, now classified as discontinued operations. We now have just one.

<unk> segment of ethanol and byproducts.

Sales for the quarter increased by 63% as we experienced higher pricing for ethanol distiller grains and corn oil.

Ethanol sales for the quarter were based upon 69 million gallons this year versus $74 6 million last year.

The reduced gallons were primarily due to limited corn supply at the beginning of the quarter, which abated once the current your corn harvest began.

We reported gross profit of $25 2 million from continuing operations versus a gross profit of $18 9 million in the prior year for.

For the current year quarter improved selling prices were offset somewhat by higher corn and natural gas pricing.

Ethanol pricing improved by 76% dry distiller grain improved by 43% in corn oil pricing improved by 146% for this year's quarter over the prior year quarter.

Corn cost increased by 97% and natural gas pricing increased by 119% for this year's quarter compared to the prior year.

SG&A increased for the third quarter to $6 3 million from $4 3 million in the prior year.

Primarily represents increased incentive compensation based upon higher earnings in the current year and increased railcar lease costs.

We had income of 349000 from our unconsolidated equity investment in this year's third quarter versus income of $1 2 million in the prior year.

Interested in another income decreased to approximately 35000 from five versus 537000 in the prior year, primarily reflecting the lower interest rate environment.

As mentioned above since refined coal operation is now classified as discontinued operations its results in historically.

And historical resorts now reflected on one line on the income statement, including the tax benefits from this business we.

We reported $2 million of net income reportable direct shareholders from discontinued operations for the third quarter.

This also resulted in us reporting a tax provision of $4 3 million for the third quarter of this year versus a provision of 5 million in the prior year from our continuing operations.

These factors led to net income attributable to Rex shareholders from continuing operations of $13 3 million for this year's third quarter versus $9 million in the prior year, a 47% improvement.

Our net income per share from continuing operations attributable to Rex shareholders was $2 23 for this year versus $1 47 in the prior year.

Total net income per share attributable to Rex shareholders, including the discontinued operations was $2.56 for the quarter versus $1 44 in the prior year.

Stuart I'll now turn the call over to you.

[laughter].

Yeah.

Doug it's still a business.

To far why don't you go ahead, I'm, sorry, I'm on I'm, an yep going forward. We're currently running at a significantly higher rate of earnings per share.

Or would we then the quarter that we're currently reported.

Crush spreads have risen greatly.

Even with higher input prices of corn and natural gas, so far which we will discuss this later in his section, but find cooperations instead upset and didn't have them in the middle of November after tax it was profitable all the way up to the tax credits that they havent debt.

We have not used that yeah. It will carry forward or up to 20 years will help our cash flow significantly up in the next next few years, assuming we continue to make good earnings.

Quite station project is moving forward a carbon sequestration, so far which Jim will discuss that in his section cash balance right now has risen to 219 million up significantly from year end up a hunter and $8 7 billion.

We currently are based on current operations, we again expect that to rise.

Over the next over the next couple of mine over this quarter uses include buybacks. We bought back 60, almost 67000 shares in the quarter were working on our carbon capture project, which support and we'll talk about we continue to look for top quality ethanol.

Plants, we tried but nothing thats eminent at this time, we know what we know nothing that's top quality.

That is up for sale at a price we would consider buying it for.

We are open to considering other alternative energy projects in carbon capture opportunities. So, let's see what happens in those areas again, our cash balance.

You can see on the balance sheet $219 million, so far well will now discuss the operations.

Thank you Stuart.

Good morning, everyone.

As I mentioned in our previous quarterly calls the operating environment in 2021 improved in the first and second quarter.

We saw a decline in the crush margin in the beginning of the third quarter. You would just have load factors, but then the operating environment began to change.

And early harvest.

Resulted in an increase in the availability of the gone, but it will ethanol and corn oil prices do increase the crush margin.

Availability of phone, we were able to increase the production at our plants, which has resulted in a very profitable quarter as Doug and Stuart mentioned earlier.

We continued to see pay whatever plan as Stuart just mentioned and crush margin, which could result in the profitable guaco.

Both of them thought a majority owned plants currently.

We're seeing at near capacity or the logistic problems are continued to be very challenging and are beginning to get the books due to slow down up the railroad and the availability of the bvd containers and blocks.

We expect this trend may continue into the next year or maybe longer.

Adversely impact, but a reduction in net income.

Let me give you a little bit but August about carbon sequestration project. We are as you know we are working with the University of Illinois.

Rail Godman sequestration, we have received a bottleneck.

Department of natural resources towards.

<unk> asked well decide for the building has been put to bed the eggs and other materials and equipment have arrived at the site. We expect the lingual stock per day, we hope do we convert that test well into cloud six well.

You know in the monitoring granted the first stage of preparing the classics Paramount application had been using existing inflammation and the U S. EPA has been notified the completion of the application process will continue.

We will continue as we began to receive more information after the best well is completed in January 2022.

It will require another several weeks up testing its extensive modeling and computer stimulation to predict the behavior of CEO to when it's injected it is a very slow process.

These stimulation model will determine how much CEO, who can be injected at the location at what rate and when.

Actual distribution in the sub surface area.

To do this estimate process processing is just finished and currently preliminary reports looks good and the proposed site.

Process, absolutely testing has started but meeting.

I'm wondering fertility usually takes more than more time, then do these as there is more land in law, the PDD required us to enter in the fields and linear grades of glass.

Okay.

After receiving permission from the landlord landowners.

The first study of the capture of CEO do and the design of the facilities are underway at the design of the gap just Youtube facility is expected to be completed soon.

As I have mentioned in the previous calls this project is still at a very preliminary stage and we cannot predict yet that we will be successful and somebody.

We are pleased to announce once again, a very profitable quarter and progress without government sequestration project.

We are very appreciative and thankful for the hard work of our colleagues.

<unk>.

I'll get back I'll give the floor back to Stuart rose for additional comments.

Thank you thanks, so fun and good.

In closing we had a very very good quarter as we both mentioned we're in the midst of an even better quarter, a significantly better quarter crush spreads have risen.

We have continued to outperform the industry significantly good plants. Good good locations Zafar mentioned, we believe we have the best people in the industry and the much capable people in the industry. That's really what sets apart from what the average plan. That's currently doing amount and leave the floor open to questions.

<unk>.

Yeah.

Thank you if you would like to register a question. Please press the one followed by the four on your telephone.

You will hear a three tell them prompt to acknowledge or request.

If your question has been answered and you would like to withdraw your registration. Please press the one followed by the free.

One moment please for the first question.

And our first question comes from the line of Jordan Levy with true gained here and he's very much.

Please proceed.

Good morning, Stuart is the power of Doug.

I'm sure you all could hey, thanks for all the commentary and nice quarter I wanted to start out on more of a macro front and see if I could get your thoughts on the activity we've seen as it relates to the significant move higher in ethanol prices, we've seen recently and especially relative to gasoline prices that have come down.

In the last couple of weeks.

What what do you think is really driving this dynamic right now and then going forward. How do you see cross margin set up heading into 'twenty two.

So far.

I think that there is several factors.

See that originally the price of ethanol.

Going up the most important I think the fact that loves it.

There's a lot of ethanol was not able to reach to east and then also in the Chicago market and due to transportation and logistic problems and demand was still dead and supply was not able to reach at the location where the people needed most.

That's helped to increase that.

At the metal price and as you have seen that yesterday and today's so littered with ethanol price dropped since that time.

But logistic problems as I've mentioned is still really up continuously problem happening due to that reason.

Just two days report shows that the.

Production has dropped but our stock is.

Still high and because a lot of people were not able to ship their little gods.

The other by transportation.

That was causing the price of ethanol was also going up.

I think as far as concern looking at 'twenty to 'twenty two I think as you know we are in a commodity market and previously I've mentioned in my call that we were being there.

Beginning to see.

The decline in the crush margin at the end.

For the third quarter, but the things change so rapidly and you can see that we ended up in a much better at.

Profit margin for the third quarter than we.

Anticipated so it's very hard to say really what happened in 2020 and going forward.

It depends on several factors, including the Covid support.

The high end demand and.

And at the non corn pricing and then in supply.

Blending granted and all those things so it's very hard to predict anything on commodity market.

One other thing I wanted to add Jordan is our people have done really well in getting the goods out. We're one of the few companies that actually concentrates on ethanol and not this other stuff that they that other people are looking at because of that I think we are eyes on the ball for these type of time since so far especially at <unk>.

Working with getting that I mean, we were he works really hard and our people work really hard at delivering what.

It's a big part of it.

Right now, it's a big part of the hole bore hole.

And all business. So again this is something turn needs, we're able to separate ourselves during these times by just being bigger.

And on the ball by concentrating on the main product.

Absolutely I appreciate that color and certainly so then your results maybe just a quick follow up on the carbon capture side of things.

I don't want to get too far ahead of it.

This project is but I just wanted to step back and think big picture and get your thoughts on you know.

Assuming this all goes in the direction that you wanted to go in what are the larger scale sort of investment or a larger scale business minded carbon capture would look like to you all.

So far.

Yeah, I think that the project, which we have starting at the whatnot.

We estimate close to $35 million to $50 million dollar will cost probably about.

One ought to not close to that number but as our ultimate goal is to have this area.

Have a hub for carbon sequestration, and we can bring to us from other.

People bought one also.

First question, but it's all depends really that how this first well will be able to define that how much carbon sequestration weekend.

In that particular area, which we are located we are ready.

It looks very promising and we have great results at this time, but I think.

Once the well is start digging and that will define exactly how much more carbon we can bring in that area, but.

So preliminary somewhere $35 million to $50 million and then if it is.

This is successful then we will probably will spend more money to have more more well around on that area. We have.

Plenty of land at this time and we are also trying to get more sub surface area options too.

Use that land.

Jordan taken the optimistic case, taking the optimistic case on this which I I I want you to understand that's the optimistic case.

$219 million in cash right now our earnings are earnings are looking good this quarter, the cash and and it generates significant cash flow, especially because we attach tax credits.

There there is the potential to maybe do and again I'm, taking the optimistic case, but to store if everything went perfect them wherever they get the land and get the approval if they get there and there's a lot of ifs in there, but there's a potential there.

Store a couple of million.

Up to 2 million tons, a year of C. O two in the ground or that would be our ultimate goal, if everything works right and again in keeping going on the optimistic case in the Bill right now on the outside that just passed there talking $80 a ton.

So I don't need it.

So far we know there'll be significantly more we're taking other people and there'll be some didn't get significantly more expense, but we have the cash flow for it but you can figure out the numbers at $80.

We're actually able to do 2 million tons in the ground and again, a millionaire ups in this and we're very clear we're not the type of company that floats are worn and says this will happen, but we are working really hard to try and make it happen and that's that's our calls.

Okay.

So I think I will add to that we also we have no debt. So we have $200 million cash and no debt and.

Yeah go ahead, Stuart I was going to say that 200 million that's on a consolidated basis, but virtually all of that it's available for this project.

Correct.

That's great insight.

The comments guys and looking forward to hearing more as this moves along.

Yeah.

And our next question comes from the line of Graham price with Raymond James. Please proceed with your question.

Hi, and thanks for taking my question.

The first one I had was on M&A in.

In your prepared remarks, you mentioned that you could potentially consider other types of alternative energy projects or assets. So just wanted to.

Get a little more detail on what that could look like.

Well, there's so many things in this house bill that.

Related to carbon capture for example, they're tuck in a large number if you can pull carbon out of the air now when it's been able to do that but if that we're gonna.

If you can pull out carbon out of the are you still going to need a place to put the carpet and so there's just a small example of what could be what could be done there is people in the industry.

And we look at them doing other things that may be successful it may not be successful or not currently making money, but they plan to make money if they do make money in the industry. We could we could license their product, they're anxious to license that product. So there's things out there.

Many things that are potential horse, but to us the biggest potential and the biggest.

We're pretty we're already R.

Ethanol plant Carpenter's already considered acquaintance C O two coming from our plan.

Sitting right in our backyard at one of our plants. So that's work in sports.

That's the biggest thing we're working towards.

Got it.

And then for for my follow up I guess.

Now that were in December.

Or anything you can say that the epa's RVO targets.

Won't be coming out here until after the end of the year.

Given that it's such a strange situation what are your views on the legal status of Rins for a point in 'twenty one.

So far.

I think as you know that the extended.

The test without us there so they extended that 2020 and 21.

The compliance.

So I think as you can see that from last year.

Last few days at <unk>.

Enterprise continue to drop and is now traded yesterday, a $1 $700 eight so.

So really it's hard to say what the EPA is going to do but at least they're not giving more exemptions and.

And they may have extended our other debt.

Let them extended them to give them a good assumption so that's.

So I.

Don't know what else I can add to it.

Got it understood.

That's it for me. Thank you for taking my questions.

Thank you.

Any other questions.

Theres no other questions I think you've Oh, here's another go ahead any other questions.

Pardon me, Sir we have no further questions at this time.

Okay, well, we thank everyone for listening to our call and we'll look forward to the call at the end of the next actually at the end of the fiscal year. Thank you so much bye.

Thanks, everybody bye.

Yeah.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your line.

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Greetings and welcome to the Rex American resources fiscal 2021 third quarter conference call. During the presentation, all participants will be in a listen only mode.

Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone if at any time during the conference you need to reach an operator. Please press star Zero I would now like to turn the conference over to Doug Bruggeman, Chief Financial Officer.

Please go ahead.

Good morning, and thank you for joining Rex American Resources' fiscal 2021 third quarter conference call.

We'll get to our presentation and comments momentarily as well as your question and answer session, but first I'll review the safe Harbor disclosure.

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.

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 Zafar Rizvi Chief Executive Officer, I will first review our financial performance and then turn the call over to Stuart for his comments.

Segment of ethanol and byproducts.

Sales for the quarter increased by 63% as we experienced higher pricing for ethanol distiller grains and corn oil.

Ethanol sales for the quarter were based upon 69 million gallons this year versus $74 6 million last year.

The reduced gallons were primarily due to limited corn supply at the beginning of the quarter, which abated once the current your corn harvest began.

We reported gross profit of $25 2 million from continuing operations versus a gross profit of $18 9 million in the prior year.

For the current year quarter improved selling prices were offset somewhat by higher corn and natural gas pricing ethanol.

Ethanol pricing improved by 76% dry distiller grain improved by 43% in corn oil pricing improved by 146% for this year's quarter over the prior year quarter.

Corn cost increased by 97% and natural gas prices increased by 119% for this year's quarter compared to the prior year.

SG&A increased for the third quarter to $6 3 million from $4 3 million in the prior year.

Primarily represents increased incentive compensation based upon higher earnings in the current year and increased railcar lease costs.

We had income of 349000 from our unconsolidated equity investment in this year's third quarter versus income of $1 2 million in the prior year.

Interesting in another income decreased to approximately 35000 from five versus 537000 in the prior year, primarily reflecting the lower interest rate environment.

As mentioned above since the refined coal operation is now classified as discontinued operations its results in historically.

And historical resorts now reflected on one line on the income statement, including the tax benefits from this business.

We reported $2 million of net income reportable direct shareholders from discontinued operations for the third quarter.

It's also resulted in us reporting a tax provision of $4 3 million for the third quarter of this year versus a provision of 5 million in the prior year from our continuing operations.

These factors led to net income attributable to Rex shareholders from continuing operations of $13 3 million for this year's third quarter versus nine nine in the prior year, a 47% improvement.

Our net income per share from continuing operations attributable to Rex shareholders was 223 for this year versus $1 47 in the prior year.

Total net income per share attributable to Rex shareholders, including the discontinued operations was $2.56 for the quarter versus the $1 44 in the prior year.

Stuart I'll now turn the call over to you.

Going forward. We're currently running at a significantly higher rate of earnings per share in the quarter with where we then the quarter that we're currently reported.

Our spreads have risen greatly even with higher input.

Rice's of corn and natural gas, so far which we will discuss this later in his section, but find cooperations and stopped setup and didn't know Pam in the middle of November.

After tax it was profitable all the way up to the AD Tech.

Tax credits that debt that we have not used yet will carry forward for up to 20 years will help our cash flow significantly up in the next next few years, assuming we continue to make good earnings.

Quest station project is moving forward carbon sequestration, so far risky gamble, if it's got Saturn his section cash balance right now its ways into 219 million up significantly from year end up a hunter at an $8 7 million a.

We currently are based on current operations, we again expect that to rise.

Over the next over the next couple of mine over this quarter uses include buybacks.

<unk> bought back 60, almost 67000 shares in the quarter were working on our carbon capture project, which support and we'll talk about we continue to look for top quality ethanol plants, we tried but nothing thats eminent at this time, we know we went no nothing that's top quality.

That is up for sale at a price we would consider buying it for.

We are open to considering other alternative energy projects in carbon capture opportunities. So, let's see what happens in those areas again, our cash balance.

You can see on the balance sheet 219 million, so far well will now discuss the operations.

Thank you Stuart.

Good morning, everyone.

As I mentioned in our previous quarterly calls the operating environment in 2021 improved in the first and second quarter.

We saw a decline in the crush margin in the beginning of the third quarter due to several factors, but then the operating environment began to change.

And early harvest.

Relative to an increase in the availability of the cone pay but it will ethanol and corn oil prices helped to increase the crush margin.

Availability of phone, we were able to increase the production at our plants.

It resulted in a very profitable quarter as Doug and Stuart mentioned earlier, we continued to see favorable plan as Stuart just mentioned and crush margin, which could result into another profitable quarter on.

Both of our majority owned plants currently.

Using at near capacity or the logistic problems continue to be very challenging and are beginning to get what to do with the slowdown of the railroad and availability of the BD containers and trucks. We expect this trend may continue into the first quarter of next year or maybe longer.

Could adversely impact or a reduction in net income.

Let me give you a little bit of progress.

Sequestration project. We are as you know we are working with the University of Illinois to drill a carbon sequestration van we have received a bottleneck.

Illinois Department of natural resources to.

To drill a test well decide for the drilling has been prepared rigs in other materials and equipment have arrived at the site. We expect drilling will start today, we hope we convert that test well into cloud six well on it.

In the monitoring granted the first stage of preparing the classics Paramount application had been using existing inflammation and the U S. EPA has been notified the completion of the application process will continue.

We will continue as we began to receive more information after the well is completed in January of 2022.

It will require another several weeks up testing extensive modeling and computer stimulation to predict the behavior of CEO to when it's injected. It is just very slow process.

This stimulation model will determine how much CEO, who can be injected at the location at what rate and eventual distribution and a sub surface area.

To do this assessment process processing is just finished and currently put up preliminary reports it looks good and the proposed site.

Russell Subtility testing has started but meeting.

Infertility, usually takes more than more time, then do these add there is a more land in what could indeed required us to enter in the fields and linear across the property.

After receiving permission from the landlord landowners.

Its study of the capture of CEO to and the design of the facilities are underway at the design of the Gulf Just Youtube facility is expected to be completed soon.

As I have mentioned in the previous calls this project is still at a very preliminary stage and we cannot predict yet that we will be successful in summary, we are pleased to announce once again, a very profitable quarter and progress without carbon sequestration project, where we are very appreciative and thankful for the hard work.

Our colleagues who are <unk>.

Get back I'll give the floor back to Stuart rose for the additional comments. Thanks Stuart. Thank you. Thanks, so far.

Conclusion, we had a very very good quarter as we both mentioned.

In the midst of an even better quarter, a significantly better quarter as crush spreads have risen.

We have continued to outperform the industry significant way we have good plans. Good good locations Zafar mentioned, we believe we have the best people in the industry and the much capable people in the industry, that's really what sets us apart.

But what the average plan. It's currently doing a mountain leave the floor open to questions.

Yeah.

Thank you if you would like to register a question. Please press the one followed by the four on your telephone you will hear a three telling prompt to acknowledge or request.

If your question has been answered and you would like to withdraw your registration. Please press the one followed by the free.

One moment please for the first question.

And our first question comes from the line of Jordan Levy with true gained here and he's very much.

Please proceed.

Good morning, Stuart Doug.

In the last couple of weeks.

What do you think is really driving this dynamic right now and then going forward. How do you see crush margin set up heading into 'twenty two.

So far.

I think that there is several factors, which we saw.

See that recently the price of ethanol.

Going up the most important thing I think the fact that loves it.

There's a lot of ethanol was not able to reach to east and then also in the Chicago market and due to transportation.

Jason and logistic problems and demand was still dead and supply was not able to reach at the location, where the people needed most and that's helped to increase the ethanol price and as you have seen that yesterday and today's so a little bit of ethanol price dropped since that time.

But logistic problems at Madison is still really up continuously problem happening and due to that reason.

Just two days aboard shows that.

Production has dropped but our stock is still.

Still high and because a lot of people were not able to ship their real gods.

Don't bother by transportation.

That was causing the price of ethanol was also going up.

I think as far as concern looking at 'twenty to 'twenty two I think as you know we are in a commodity market and previously I mentioned in my call that we were being met.

Beginning to see.

The decline in the crush margin at the end of the call for the third quarter, but the things change so rapidly and you can see that we end up in a much better at Danone.

Profit margin for the third quarter than we anticipated. So it's very hard to say really what happened in 2020 and going forward. It depends on several factors, including the COVID-19 supply and demand and.

And at the Cowen.

Cone pricing and then the supply.

Blending and all those things so it's very hard to predict anything on commodity market.

One other thing I wanted to add Jordan is our people have done really well and getting the goods out. We're one of the few companies that actually concentrates on ethanol and not this other stuff that they that other people are looking at because of that I think we are eyes on the ball for these type of time since so far especially at work.

King with getting that I mean, we were he works really hard and our people work really hard at delivering which is a big part of it.

Right now, it's a big part of the whole the whole ethanol business.

Again, this is something darn needs, we're able to separate ourselves during these times, but I just be then on the ball by concentrating on the main product.

Absolutely I appreciate that color and certainly shows in your results maybe just a quick follow up on the carbon capture side of things.

I don't want to get too far ahead of it.

This project is.

I just wanted to step back Big picture and get your thoughts on.

This all goes in the direction that you wanted to go in what is a larger scale sort of investment or a larger scale business lines and carbon capture would look like to you all.

So far.

Yeah, I think that the project, which we have starting at the whatnot.

We estimate close to $35 to 50 million dollar will cost probably but one cannot use close to that number but as our ultimate goal is to have this area.

Have a hub for God bunch sequestration, and we can bring to us from other.

People bought one also.

First question, but it's all depends really that how this first well will be able to define that how much carbon sequestration weekend.

In that particular area, which we are located we are ready.

It looks very promising and we have great results at this time, but I think.

Once the well is start digging and that will define exactly how much more carbon we can bring in that area, but so preliminary somewhere $35 million to $50 million and then if it is.

This is successful then we will probably will spend more money to have more more well around growing that area we have.

Plenty of land at this time and we are also trying to get more sub surface area options too.

You know to use that land.

Jordan, taking the optimistic case, taking the optimistic case on this which I I I want you to understand that's the optimistic case.

We have 219 million in cash right now our earnings are earnings are looking good this quarter, the cash and and it generates significant cash flow, especially because we attach tax credits.

There there is the potential to maybe do and again I'm, taking the optimistic case, but to store if everything went perfect and we were able to get the land and get the approval if they get there and there's a lot of ifs in there, but there's a potential that store a couple of million.

A couple of them.

Up to 2 million tonnes a.

At year up.

C O two in the ground or that would be our ultimate goal if everything works right.

And again in keeping going on the optimistic case in the Bill right now on the outside that just passed their tuck in $80 a ton so I don't need it.

When all of them there'll be significant more we're taking other people and there'll be some didn't get significantly more expense, but we have the cash flow for it but you can figure out the numbers at $80.

We're actually able to do 2 million tons in the ground and again a millionaire fs in this and we're very clear we're not the type of company that loves our warning says this will happen, but we are working really hard to try and make it happen and that's that's our calls.

Okay.

So I think I will add to that we also we have no debt. So we have $200 million cash and no debt.

Yeah.

Go ahead, Stuart I was going to say that 200 million that's on a consolidated basis, but virtually all of that it's available for this project.

Right.

That's great insight.

The comments guys and looking forward to hearing more as a cause moves along.

Yeah.

And our next question comes from the line of Graham price with Raymond James. Please proceed with your question.

Hi, good.

Thanks for taking my question.

The first one I had was on M&A.

In your prepared remarks, you mentioned that you could potentially consider other types of alternative energy projects or assets. So just wanted to.

Get a little more detail on what that could look like.

Well, there's so many things in this house bill that.

Related to carbon capture for example, they're talking a large number if you can pull carbon out of the air now when it's been able to do that but that if that we're gonna.

If you can't pull out carbon and how busy are you still going to need a place to put the carbon and so there's just a small example of what could be what could be done there is people in the industry.

Many things that are potential horse, but to us the biggest potential and the biggest.

We're pretty we're already our ethanol plant Carpenter's already considered acquaintance CEO.

Ought to come in from a plant it sitting right in our backyard. It at one of our plants. So that's work in sports.

That's the biggest thing we're working towards.

Got it understood.

And then for for my follow up I guess.

Now that we're in December it's pretty safe to say that the epa's RVO targets won't be coming out here until after the end of the year.

Given.

It's a strange situation what are your views on the legal status of brands for a point in 'twenty one.

So far.

I think as you know.

Extended up.

The test and without US there so they extended that 2020 and 21.

Yeah.

I think that as you can see that from last few we thought from the last few days.

The enterprise continue to drop and is not traded yesterday at dollars that $1 eight so.

So really it's hard to say what the EPA is going to do but at least they're not giving more exemptions and at the end of.

They may have extended.

Let them extended them to give them a good assumption so that's.

So I.

Don't know what that I think I can add to it.

Got it understood.

It for me. Thank you for taking my questions.

Thank you.

Any other questions.

Theres no other questions I think you've Oh, here's another go ahead any other questions no pardon me, Sir we have no further questions at this time.

Okay, well, we thank everyone for listening to our call and we'll look forward to the call at the end of the next actually at the end of the fiscal year. Thank you so much bye.

Thanks, everybody bye.

Yeah.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your line.

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