Q1 2024 REX American Resources Corp Earnings Call
Operator: Good morning and welcome to the REX American Resources fiscal first quarter 2024 conference call. As a reminder, today's call is being recorded, and at this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.
Good morning, and welcome to the Rex American resources fiscal first quarter 2024 conference call.
Speaker Change: Today's call is being recorded and at this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of Rex American. Please go ahead.
Douglas L. Bruggeman: Good morning, and thank you for joining us on the REX American Resources Q1 2024 conference call. We'll get to our presentation and comments momentarily, as well as your questions. But first, I will 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 risk 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.
Douglas L. Bruggeman: Good morning, and thank you for joining Rex American Resources' Q1, 2024 conference call.
Speaker Change: Well get to our presentation and comments momentarily as well as your questions.
Speaker Change: First I'll review the Safe Harbor disclosure.
Douglas L. Bruggeman: 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 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 statement. I'd now like to turn the call over to our Executive Chairman, Stuart Rose.
Speaker Change: 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.
Speaker Change: Such forward looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance.
Speaker Change: 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 in the company's filings with the Securities and Exchange Commission.
Speaker Change: The company's reports on Form 10-K and 10-Q.
Speaker Change: Rex American resources assumes no obligation to publicly update or revise any forward looking statements.
Speaker Change: And now I'd like to turn the call over to our executive Chairman Stuart Rose.
Stuart A. Rose: Good morning, and thank you again to everyone for joining us. The first quarter saw a continuation of the strong results REX American has returned throughout its history. Once again, our core business of ethanol and co-product production was strong, with 74.5 million gallons of ethanol sold, an increase of approximately 4% over the first quarter of 2023. Instructions for the One Earth Energy Carbon Capture Facility continue to pace at their Gibson City, Illinois location. We're also on track to complete the ethanol production capacity expansion at the One Earth Energy Facility with the initial plan to run at 175 million gallons per year and then apply for an EPA permit to increase production to 200 million gallons per year.
Stuart A. Rose: Good morning, and thank you again to everyone for joining US first quarter saw a continuation of the strong results of Rex American returned over its history.
Stuart A. Rose: Once again, our core business of ethanol and co product production was strong.
Stuart A. Rose: $74 5 million gallons of bats, and also an increase of approximately 4% over first quarter of 'twenty to 'twenty three.
Stuart A. Rose: Construction of the one Earth energy carbon capture facility continue to pace, our Gibson City, Illinois location.
Stuart A. Rose: We're also on track to complete the ethanol production capacity expansion at the <unk>.
Stuart A. Rose: One Earth energy facility with initial plans to run at 175 million gallons per year.
Stuart A. Rose: And then apply for an EPA permits to increase production at 200 million gallons per year.
Stuart A. Rose: To match our operational achievements, our financial results were among the best in our history, with first quarter 2024 being the second most profitable first quarter in the company's history from a net income per share perspective. This was made possible due to lower natural gas and corn input prices and the excellent execution of our team, despite a weaker pricing environment for both ethanol and co-products.
Stuart A. Rose: Match, our operational achievements, our financial results were among the best in our history with first quarter 'twenty 'twenty four the second most profitable first quarter the company's history.
Stuart A. Rose: Net income per share perspective.
This was made possible due to well where natural gas in corn input prices near lax and the excellent execution.
Stuart A. Rose: Our team despite a weaker pricing environment for both ethanol and co products.
Stuart A. Rose: For the balance of the year, we have three goals. First, continue our streak of profitable operations, which has now reached 15 quarters in a row. Second, complete the construction phase of our One Earth Energy carbon capture and compression facility. And lastly, to complete the capacity expansion of our One Earth Energy ethanol production facility to 175 million gallons per year, and move towards the planned further permitting of the facility to 200 million gallons. Focusing on these three core priorities while remaining nimble and adjusting as appropriate to market and business conditions will keep us in a good position, both now and in the future. I'd now like to turn things over to our CEO, Zafar Rizvi, to give a further update on our One Earth project.
Stuart A. Rose: For the year, we have three goals.
Stuart A. Rose: First continue our very profitable operation, which has now reached 15 quarters in a row.
Stuart A. Rose: Second complete the construction phase of our one earth energy carbon capture and compression facility.
Stuart A. Rose: And lastly to complete the capacity expansion of our one Earth energy ethanol production facility.
Stuart A. Rose: 75 million gallons per year moved towards the plan further permitting of the fifth.
Stuart A. Rose: The 200 million gallons.
Stuart A. Rose: You can see.
Stuart A. Rose: These three core priorities, while remaining nimble and adjusting it as appropriate to market and business conditions will keep us in a good position right now and in the future.
Speaker Change: Now I'd like to turn things over to our CEO.
So far resume to get further update on our Winder project.
Speaker Change: Thank you Stuart.
Zafar A. Rizvi: As Stuart said, our carbon capture and sequestration project in Gibson City, Illinois, is progressing with construction on the capture and compression facility still on track. You can see updated pictures of the progress at this facility in the first quarter investor presentation, which was posted to our website this morning. We continue to expect that construction on the carbon capture and compression facility will be completed in July, and at that point, the facility will be ready for testing.
As Stuart said.
Stuart A. Rose: Carbon capture and sequestration project in Gibson City, Illinois.
Speaker Change: I see.
Speaker Change: Construction on the gas gathering and compression facilities still on track you can see updated because of the progress at this facility in the first quarter Investor presentation, which was posted to our website. This morning.
Speaker Change: We continue to expect that construction on the carbon capture and compression facilities will be completed in July.
Speaker Change: At that point the facility will be ready for testing.
Zafar A. Rizvi: However, given extended calendars for electric utility connections across the country and which also impacts Central Illinois, we have been made aware that power connection to the facility is not likely until the fourth quarter of 2024 at the earliest. We will provide updates on this as appropriate.
Speaker Change: However, given the extended carillon best for the electric utility connections.
Speaker Change: Across the country, and which also impact central Illinois, We had been made aware that our connection to the facility is not likely until the fourth quarter of 2024.
Speaker Change: At least we will provide updates on this as appropriate.
Zafar A. Rizvi: At the same time, we are seeing activity on the approval and permitting front for the pipeline and sequestration portion of the project. We plan to reply within weeks to several questions we received in April from the EPA regarding our class 6 well permit application, and we continue to anticipate approval of the permit by Q1 of next year. We have lately been encouraged by the progress of the EPA on other Class VI well applications.
Speaker Change: Same time, we are seeing activity on the approval and what I'm looking for.
Speaker Change: On top of the pipeline and sequestration portion of the project, we planned to reply by weeks and several questions. We received in April.
From the EPA regarding our loss fix.
Speaker Change: Jason.
Speaker Change: And we continue to anticipate approval by.
Speaker Change: By Q1 of next year, we have lately in got it right.
Speaker Change: Yes.
Speaker Change: Plastics.
Speaker Change: Locations.
Zafar A. Rizvi: For the first sequestration well, we are also pleased to report that we have now squared the easement for enough of the subsurface area to allow us the capacity to sequester all of our carbon emissions from the One Earth Energy plant for the next 15 years at a minimum. Also, as an update to the agreement we discussed on our last call, we have now secured from our farmer's neighbors 100% of the land necessary for the proposed carbon delivery pipeline, which would serve injection wells number one and two.
Speaker Change: Well the first question.
Speaker Change: We are also pleased to report that we have knowledge square easement.
Speaker Change: Sub surface area to allow us the capacity to sequester all of our carbon emissions from the one no deep plant for the next 15 years at a minimum.
Speaker Change: Also as I as an update to that agreement we discussed on our last call we have now.
Speaker Change: From our neighbors, 100% of the land necessity right after the.
Speaker Change: The Liberty pipeline.
We used the word settlement injection number one.
Zafar A. Rizvi: This is an incredibly significant achievement, as it means we are able to avoid the use of eminent domain for control of the pipeline road. This was always our preferred outcome, and one which we are happy to have achieved through discussion with our neighbors.
Speaker Change: He is an incredible achievement.
Speaker Change: Achievement as it means we are able to why they use a domain well control on the pipeline.
This was always our preferred outcome and one which we are happy to have achieved through discussion with our neighbors.
Zafar A. Rizvi: Illinois Commerce Commission hearings on the pipeline are proceeding. The expansion of our One Earth Energy Ethanol Facility to 175 million gallons per year of production is progressing well. Construction is ongoing, and we anticipate completion of the initial expansion in the fourth quarter. After necessary testing and permitting, we then expect to begin the planned further development of the 1-arc facility to allow it to produce 200 million gallons per year. This additional permitting is the only step necessary to allow for the expanded capacity, as no additional construction or capital spending is expected.
Speaker Change: Illinois Commerce Commission hearing on the pipeline proceeding.
The expansion of one facility.
<unk> 275 million gallons.
<unk> is progressing Brad.
Speaker Change: Construction is ongoing and we anticipate completion of the initial expansion in the fourth quarter, often necessitate testing and we.
Speaker Change: We then expect to begin to plan for the permitting of the <unk> facility to allow it to produce 200 million gallon per year.
Speaker Change: This additional permitting is the only step necessitated alongside of that expanded capacity has no additional construction capital spending is expected.
Speaker Change: As of quarter end, we have invested approximately 78.1 million into the one I've got a bunch of capture project and associated ethanol production capacity expansion.
Zafar A. Rizvi: As of quarter end, we have invested approximately $78.1 million in the One Earth Carbon Capture Project and associated ethanol production capacity expansion. This is compared to a total budget amount of $165 million to $175 million for both the CCS project and ethanol production expansion at Gibson City. I would now like to hand the call to our CFO, Doug Bruggeman, to discuss our operational and financial results.
Speaker Change: This is compared to a total amount of $165 million $275 million for both the Ccs project and.
Speaker Change: No production expansion at Gibson City.
Speaker Change: No go ahead.
Speaker Change: On the call our CFO, Doug Bruggeman to discuss all of them.
Douglas L. Bruggeman: Operational and financial results.
Speaker Change: Thanks, So far.
Douglas L. Bruggeman: I'll begin with our operational results. REX ethanol sales volumes during the first quarter of 2024 were 74.5 million gallons, an increase of approximately 4% over the first quarter 2023 sales volumes of 71.5 million gallons. Average selling price for our consolidated ethanol volumes was approximately $1.60 per gallon for the first quarter. Dry distiller grain sales volume during the first quarter 2024 totaled 163,500 tons, a slight increase over first quarter 2023 volume. The average selling price for DDG was approximately $187.64 per ton for the first quarter.
I'll begin with our operational results Rex ethanol sales volume during the first quarter of 2024 were $74 5 million gallons, an increase of approximately 4% over first quarter 2023 sales volume of 71 5 million gallons.
Speaker Change: Selling price for our consolidated ethanol volumes was approximately $1 60 per gallon for the first quarter.
Speaker Change: I just still a greater sales volume during the first quarter of 2024 totaled 163500 tons, a slight increase over first quarter 2023 volumes.
Speaker Change: Average selling price for <unk> was approximately $187.64 per ton for the first quarter.
Douglas L. Bruggeman: Modified distilled grain sales volumes were 14,500 tons in the first quarter 2024 compared with approximately 12,000 tons in the first quarter 2023. The average selling price for modified distiller grain was approximately $82.52 per ton for the first quarter. Corn oil sales volume in the first quarter 2024 were approximately 21 million pounds compared to 20.6 million pounds sold in the first quarter 2023. The average selling price for REX's corn oil product was approximately $0.47 per pound in the first quarter of 2024. I am looking forward to the second quarter.
Speaker Change: Modified distiller grain sales volumes were 14500 tonnes in the first quarter 2024, compared with approximately 12000 tonnes in the first quarter 2023.
Speaker Change: Average selling price for modified distiller grain was approximately $82 52 per ton for the first quarter.
Speaker Change: Corn oil sales volume in the first quarter 2024 were approximately 21 million pounds compared to $20 6 million pounds sold in the first quarter 2023.
Speaker Change: The average selling price for breakfast corn, where product was approximately 47 cents.
Speaker Change: Per pound for the first quarter of 2024.
Douglas L. Bruggeman: It is important to note that we expect impacts to both maintenance expense, as well as our sales of our products given regular plan maintenance that is consolidated between Nugent and One Earth facilities. Gross profit for the first quarter of 2024 was $14.5 million versus gross profit of approximately $10.2 million for the first quarter of 2023. The 42% increase in gross profit was achieved despite lower average selling prices for all our products, which are offset by lower corn and natural gas input prices. Selling general administrative expenses increased to $6.1 million for the first quarter of 2024 versus $5.8 million in the first quarter of 2023. The increase was primarily due to higher incentive compensation related to the company's improved performance.
Speaker Change: Looking forward to the second quarter. It is important to note that we expect the impacts to both maintenance expense as well as our sales of our products given regular planned maintenance at our consolidated new Gen and one earth facilities.
Speaker Change: Yeah.
Speaker Change: Gross profit for the first quarter of 2024 was $14 five.
Speaker Change: $5 million versus gross profit of approximately $10 2 million for the first quarter of 2023.
Speaker Change: It's a 42% increase in gross profit was achieved despite lower average selling prices for all our products, which were offset by lower corn and natural gas input prices.
Speaker Change: Our selling general and administrative expenses increased to $6 1 million for the first quarter of 2024 versus $5 $8 million in the first quarter of 2023.
Speaker Change: The increase was primarily due to higher incentive compensation related to the company's improved performance.
Douglas L. Bruggeman: Interest and other income totaled $5.9 million in the first quarter of 2024, compared with approximately $2.8 million for the first quarter of 2023. This reflects better earnings on our cash and short-term investments and $1.2 million of patronage income at our Nugent facility. Income before taxes and non-controlling interest for the first quarter of 2024 was approximately $16 million, an increase of more than 83% over the first quarter of 2023. As Stuart mentioned at the beginning of the call, the first quarter of 2024 was the second best first quarter from a net income perspective in our company's history.
Speaker Change: Interest and other income totaled $5 $9 million in the first quarter of 2024, compared with approximately $2 $8 million for the first quarter of 2023.
Speaker Change: Reflects better earnings on our cash and short term investments and $1 2 million of patronage income at our new Gen facility.
Speaker Change: Income before taxes Noncontrolling interest for the first quarter 2024 was approximately $16 million, an increase of more than 83% over the first quarter of 2023.
Stuart A. Rose: Stuart mentioned at the beginning of the call first quarter 2024 was the second best first quarter from a net income perspective in our company's history.
Douglas L. Bruggeman: Net income attributable to REX shareholders for the first quarter was $10.2 million, compared to $5.2 million in the first quarter of 2023. On a per share diluted basis for the first quarter of 2024, this amounts to 58 cents per share of net income compared to 30 cents per share in the first quarter of 2023. We entered the first quarter with total cash, cash equivalents, and short-term investments of $351.8 million, compared with $378.7 million as of January 31, 2024. The uses of cash in the first quarter were primarily related to our ongoing construction projects at the One Earth Energy Facility. REX American also entered the quarter without any bank debt.
Stuart A. Rose: Net income attributable to Rex shareholders for the first quarter was $10 $2 million compared to $5 $2 million in the first quarter of 2023.
Stuart A. Rose: On a per share diluted basis for the first quarter 2024. This amounts to 58 per share of net income compared to <unk> 30 per share in first quarter 2023.
Stuart A. Rose: Yeah.
Stuart A. Rose: We ended the first quarter with total cash cash equivalents and short term investments of $351 8 million compared with $378 $7 million as of January 31, 2024.
Stuart A. Rose: Uses of cash during the first quarter were primarily related to our ongoing construction projects at the one Earth energy facility.
Stuart A. Rose: Rex American also ended the quarter without any bank debt.
Zafar A. Rizvi: I'd now like to turn things back to Zafar.
Speaker Change: I'd now like to turn things back to Zafar.
Zafar: Thanks, Doug I would now like to give some color around how we see market progressing for the second quarter and the remainder of the calendar.
Zafar A. Rizvi: Thanks, Doug. I would now like to give some color around how we see the market progressing through the second quarter and the remainder of the calendar year 2024. Looking at the ethanol and co-product market, we saw a decline in the cost spread as well as product pricing in the first quarter, as compared to the third and fourth quarters of last year, which is normal. However, again, we were able to achieve positive results despite less than ideal conditions because of our incredible team.
Zafar: 2024.
Zafar: Looking at the ethanol and co product markets, we saw a decline in spreads as well as product.
Speaker Change: Are you seeing in the first quarter as compared to the third and fourth quarter of last year.
Speaker Change: Normal options again, we were able to achieve positive despite less than ideal conditions.
Speaker Change: And credible team in.
Zafar A. Rizvi: In the second quarter, we have begun to see a pricing recovery, although not to previous levels. For the second quarter, we continue to see positive margins and earnings. Though, as Doug mentioned, we will see the effects of planned plant maintenance during the second quarter of the year. This will impact production and increase associated expenses for the New Dean and One Earth Energy Plants. Finally, I want to point out that last week we posted our second ESG report on our website, highlighting the work we are already doing in reducing our environmental impact. I would encourage everyone listening to take a look. Now I would like to open things up to questions.
Speaker Change: In the second quarter, we have to begin to see it but I think of the company.
Speaker Change: Not to previous levels.
Speaker Change: For the second quarter, we continued to see positive margins and earnings.
As Doug mentioned, we will see effects are planned.
Speaker Change: And then during the second quarter update yet this will impact both reduction and then the associated expenses for the new game and one deep launch.
Speaker Change: Finally, I want to point out that last week, we bolstered our second ESG report well website.
Speaker Change: Hi.
Speaker Change: We are already doing.
Speaker Change: Seeing out in Nevada.
Speaker Change: Thanks.
Speaker Change: I would encourage everyone listening to take a look now I would like to open things up to questions operator.
Speaker Change: Thank you if you'd like to ask a question. Please press star one I know telephone keypad, a confirmation tone will indicate your line is in the question queue you.
Operator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from Jordan Levy with Truist Securities. Please proceed with your question.
Speaker Change: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question comes from the line of Jordan Levy with curious Securities. Please proceed with your question.
Speaker Change: Hi, Julien.
Henry Stephen Roberts: Hey, all. It's Henry.
Henry: It's Henry on for John here, Congrats on the quarter I think just to start with a quick follow up on the timeline for the EPA well approval.
Speaker Change: So you guys are now kind of in the cumulative portion of Tech review based on the latest data from EPA, alright, well that phase is completed should we be thinking about a six to seven month runway.
Henry Stephen Roberts: I'm for Jordan here. Congratulations on the quarter. I think I'd start with a quick follow-up on the timeline for the EPA well approval. So you guys are now kind of in the cumulative portion of the technical review based on the latest kind of data from the EPA. When that phase is completed, should we be thinking about a six to kind of seven month runway to get through the remaining phases and get to final approval in the first quarter?
Speaker Change: To get through the remaining phases and get the final approval in the first quarter.
Speaker Change: So far.
Zafar A. Rizvi: Yeah, Jordan, as we mentioned, we recently received some approximately 25 to 26 questions from EPA, which are due by this Friday. So we plan to answer those questions by this Friday. And those are basically technical reviews related to the software and other questions about how to operate because EPA apparently was not very familiar with that software. So we have to send them all the guidelines on how that works.
Speaker Change: Yes.
Jordan Alexander Levy: Jordan as we mentioned that we received recently some about approximating 25% 26 questions from EPA, which are fueled by this Friday. So we plan to answer those quick question.
By this Friday and there wasn't much basically technical review about.
Jordan Alexander Levy: Related with the software and other question how to operate because EPA.
Jordan Alexander Levy: EPA apparently was not ready.
Jordan Alexander Levy: With that software so we have to spend send them to the all the guidelines how that works.
Zafar A. Rizvi: And we will be submitting this by this Friday. And after that, the technical review will continue. We expect that not later than the first quarter of 2025, and it may be earlier, depending on how the technical review goes.
Jordan Alexander Levy: And we will be submitting this by this Friday and after that the technical review will continue we expect that.
Jordan Alexander Levy: Not later than first quarter of 2025 and wouldn't be ugly it depends on how the technical review will proceed.
Jordan Alexander Levy: Are we expecting that should be the latest would be the first quarter of 'twenty to 'twenty five.
Unknown Executive: To answer your question also a little bit further, we still need and are working on pipeline approval and local permits. There's a number of different permits, local permits that need to be approved, that we need to receive before we're in operation. So at this time, I don't think we can give you an exact date. And just because EPA gives us approval, that doesn't mean we have the other approvals. And at this time, I don't think we're in a position to give you the exact date of when we expect to open.
Jordan Alexander Levy: To answer your question also a little bit further we still need to eat and are working on pipeline approval and local permit there is a number of different permits local permits that need to be.
Jordan Alexander Levy: That we need to receive before we're in operation. So at this time I don't think we can give you an exact date just because EPA gives us approval of that that's something we have together our protocols and at this time I don't think we're in a position to give you. The exact date, that's what we expect to open we expect our plant to be finished.
Unknown Executive: We expect our plant to be finished at the plant level and be able to make or be able to capture our CO2 gas as soon as the power is ready, which should be by the end of the year. But in terms of putting it in the ground, I don't think we're ready to give you a date yet.
Jordan Alexander Levy: At the plant level and be able to.
Jordan Alexander Levy: I'll be able to capture our C O two gas.
Jordan Alexander Levy: Power's sporadic, which should be by the end of the year, but in terms of putting in the ground I don't think we're ready to give you a date at this time.
Alright.
Henry Stephen Roberts: That should make sense. Thanks for that.
Speaker Change: And so it makes sense. Thanks for that and then just a quick follow up for me.
Henry Stephen Roberts: And then just a quick follow-up for me. Going back to the One Earth facility, the expansion, you know, plan for it to come online at the end of the year to 175 million gallons. Could you just provide any color on the timeline for the permit submission for 200? How long do you expect that to take once the permit is submitted? Thank you.
Speaker Change: Going back to the one Earth facility the expansion plan for to come on line and the year to 175 million gallons.
Speaker Change: Youll just provide any color on the timeline for that permit submission to 200, how long do you set that to take once.
Speaker Change: The permitted submitted.
Zafar A. Rizvi: Zafar? Yeah, the process basically works. We already have 175 million gallon production per month at this time. But since the production facility is in the process of increasing production from 150 to 175 million, once the facility is completed, then we're required to do some stack testing, which is basically related to greenhouse gases. So we will have to do the testing. And once we qualify after those testing, then right after that, we can apply for the 200 million gallons.
Speaker Change: Goodbye.
Speaker Change: Yes, the process basically what we already have 175 million gallon production per month at this time, but the since the production facility is in the process to increase production from 150 to 175 million. Once the facility is completed then we.
Speaker Change: Well I had to do some stack testing, which is basically related with the greenhouse gases. So.
Speaker Change: So we will have to do the testing and once a week qualify after those testing then right. After that we can apply for that $200 million gallon.
Speaker Change: Butler from EPA.
Zafar A. Rizvi: [inaudible] So this is a step-by-step process, as I mentioned in the previous two calls, so we are following those steps-by-step processes. But the facility will be able to produce 200 million gallons, but the only thing that will be required at that time will be once we complete 175. Then the next step will be to apply for 200 million gallons.
Speaker Change: So this is a step by step process as I've mentioned in previous calls. So we are far along those steps by step process, but the facility will be ready to be able to produce 200 million gallon, but the only thing we will be required at that time once we complete Sunday 75.
Speaker Change: The next step will be up life at 400 million gallon.
Speaker Change: Thanks for that color congrats again.
Henry Stephen Roberts: Thanks for that color. Congratulations.
Speaker Change: Thank you.
Thank you. Our next question comes from the line of Pablo Hello, Milton off with Raymond James. Please proceed with your question.
Pavel S. Molchanov: Thank you. Our next question comes from the line of Pavel Molchanov with Raymond James. Please proceed with your question. Good morning. Thanks for taking the question. Whenever you get the EPA approval, so recognizing the timetable is uncertain, do you have a sense of how long it will take before injection gets to the kind of run rate nameplate capacity, so to speak, that you're anticipating?
Speaker Change: Thanks.
Speaker Change: Good morning, Thanks for taking the question.
Speaker Change: Whenever you get the EPA approval, so recognizing the timetable is is uncertain.
Speaker Change: Do you have a sense of how long it will take before injection.
Speaker Change: To the right.
Speaker Change: Kind of a run rate nameplate capacity so to speak that you are anticipating.
So far.
Zafar A. Rizvi: The process basically works, you know; we have ordered all the equipment and other basic things which we need for the value, and those will be available once we get the approval from the EPA. And then it takes approximately two to two to three months to have the well start, you know, start digging, and then complete to make it to seven thousand feet down. So altogether, the process may take somewhere three to three to four months after that.
Speaker Change: The process basically.
Speaker Change: We have all the equipment and the other basic things, which we need for that.
Speaker Change: Got it.
Speaker Change: And those are.
Speaker Change: We'll be available once we get the approval from the EPA and then it takes approximately two two.
Speaker Change: Two to three months.
Speaker Change: Have the stock.
Digging and then complete to make it to 7000 feet Don So altogether process may be spec somewhere.
Speaker Change: Two for me.
Speaker Change: Months after that.
Speaker Change: Keep in mind that we also need other things like pipeline approval, so that which could delay things that theres no guarantees at this time, but assuming we hit all our approvals, but that's exactly what so far has said it's exactly right.
Unknown Executive: Keep in mind that we also need other things like pipeline approval, which could delay things. So there's no guarantees at this time. But assuming we have all our approvals, that's exactly how long. What Zafar said is exactly right.
Speaker Change: Right.
Zafar A. Rizvi: Right. And in the meantime, while you're waiting, kind of on the regulatory roadmap, what is the status of your dialogue with Perspective about CO2 injectors for the plant, in other words, you know, other than your own facility?
Speaker Change: In the meantime, while you're waiting kind of on the regulatory road map.
Speaker Change: What is the status of your dialogue with Chris.
Speaker Change: Perspective.
Speaker Change: Oh, two injector spread a plant in other words other than your own facility.
Right.
Zafar A. Rizvi: The honest answer is, at this time, we are really trying to laser focus what exactly is happening in our facility because that's the most important project we have. Once we are in production, then certainly we can think about it wherever other emitters are available in that area, or we can have some conversation with the University of Illinois talking about DECA units and others, but that's a long way to go yet. But our laser focus is the facility, to complete the facility, get all those permits from ICC, EPA, and our special use permit from the county. So those are our main focus, and most importantly, the completion of the facility at this time.
Speaker Change: The onus on Saturdays at this time, we are really trying to put laser focus what's exactly happening happening on our facility because that's the most important project. We have once we are in a production then suddenly we can think about it really what it is other.
Speaker Change: Amit.
Speaker Change: The label in that area that we can have some conversations with the university of Illinois talking about <unk> and others, but that's the long way to go yet, but our laser focus is.
Speaker Change: <unk> to complete the facility get Aldo spun much from ICC EPA, especially was spun out from the county. So those are our main focus and complete most importantly completion of the facility at this time.
Unknown Executive: Maybe I'll just squeeze in a question on the ethanol side of the business. You know, we keep seeing EPA headlines about year-round E15. I mean, it seems like it's been going on forever now.
Maybe I'll just squeeze in a question on the on the ethanol side of the business.
Speaker Change: We keep seeing EPA headlines about a year round E 15, I mean, it seems like it's been going on forever now.
Speaker Change: What are your kind.
Speaker Change: Our latest thoughts on that.
Unknown Executive: I think we have seen some improvement in, you know, demand; there's a lot of conversations going on, but at the same time, we have not really seen tremendous improvements in demand at this time, and this is also dry.
Speaker Change: I think we have seen some improvement.
Speaker Change: Demand there is a lot of conversations going on but on the same time, we have not really seen tremendous improvements of the demand at this time.
Speaker Change: And but I would say.
Speaker Change: This is also driving season, so we will see that what happen in the next couple of months.
Speaker Change: Also keep in mind, just because there is E 15 approved that doesn't mean, there's eat 15 pumps and.
Unknown Executive: Also, keep in mind that just because E15 is approved doesn't mean that E15 is pumped. And that's still a big issue, that the pumps are not out there, even if it was approved for year-round sales.
Speaker Change: Yes, that's still a big issue that the pumps are not out there even if it was approved for year round sales.
Pavel S. Molchanov: Okay, thanks very much.
Speaker Change: Okay. Thanks very much.
Speaker Change: Thank you.
Speaker Change: Thank you as a reminder, its star one to join the question Kim.
Operator: Thank you. As a reminder, it's star number one to join the question queue. Our next question comes from the line of B.J. Cook with Singular Research. Please proceed with your question.
Speaker Change: Our next question comes from the line of Vijay <unk> with singular research. Please proceed with your question.
Speaker Change: Hey, guys. This is vijay cooking for Chris Sakai.
B.J. Cook: Hey guys, this is BJ Cookin' for Chris Sakai. Just a couple questions. One kind of build on the last caller. There'll be a point where all the... How do you expect that to affect industry capacity as a whole? Is there a demand to absorb all the additional capacity?
Vijay: Just a couple of questions one kind of build on the last caller.
Speaker Change: There'll be a point where all of that.
Speaker Change: Expansion.
Speaker Change: <unk> project is complete.
Speaker Change: <unk> been running.
Speaker Change:
Speaker Change: How do you expect that.
Speaker Change: Effect.
Speaker Change: St capacity as a total.
Is there a demand to absorb the additional capacity.
Speaker Change: Uh huh.
Unknown Executive: I think while production is planned, we plan to have production up to 200 million gallons. As you know, all these plants are in different locations and do different sides of supply. You know, for One Earth Energy, mostly, our plant supply is to work to the south or east. So it probably depends on which railroad, you know, the plants are located on, but I don't.
Speaker Change: I think rod production as well.
Speaker Change: We plan to have production up to 200 million gallon as you know all these plants are different location.
Speaker Change: Sorry.
Speaker Change: Supply.
Speaker Change: For one not to know more.
Speaker Change: Lastly, our plant supplies towards the south east so, but it's got probably depends on which is enrolled.
Speaker Change: The plants are located but I don't really know how much that will affect overall supply of them.
Of the ethanol facilities.
Speaker Change: Okay. Thanks, I appreciate that.
B.J. Cook: Okay, thanks. I appreciate that. Just one more. Great quarter on the unconsolidated affiliates also. I just wanted to make sure, are similar factors affecting those investments as well, or are there some idiosyncratic factors?
Speaker Change: One more.
Speaker Change: Alright, great quarter on that.
Speaker Change: Really it's also just wanted to make sure.
Speaker Change: Similar factors affecting those.
Speaker Change: Investments as well or is there some idiosyncratic factors worked in there.
Speaker Change: Oh, I'm, sorry, I didn't understand your question will you please repeat that.
B.J. Cook: I'm sorry, I didn't understand your question. Will you please repeat that? OK. Other in-
Speaker Change: Other income.
Speaker Change:
B.J. Cook: All interest and other income. See you there.
Speaker Change: Interest and other income.
Speaker Change: Yeah.
Douglas L. Bruggeman: Yeah, yeah, I mean, yeah, we obviously had an increased interest rate on our cash and cash equivalents. And then, you know, somewhat of a not a one-time, but a rare occurrence of a $1.2 million patronage income at Nugent. You know, that's not a recurring thing and not something to count on coming.
Speaker Change: Yeah, Yeah I mean.
Yes.
Speaker Change: Obviously increased interest rate on our cash and cash equivalents.
Speaker Change: And then.
Speaker Change: Somewhat of a not a one time, but a rare occurrence of a $1 $2 million patronage income at Neogen.
Speaker Change: It's not a recurring thing and not something to count on going forward.
Speaker Change: Perfect Great quarter, guys I appreciate your time.
B.J. Cook: Great quarter, guys.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Rhodes for any final comments.
Stuart A. Rose: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Rose for any final comments.
Stuart A. Rose: Again, we outperformed most of our public peers last quarter, and we did it with what we consider great plans, great locations, but most importantly, we feel we have the best people in the industry, and that's what separates us. Hopefully, we'll continue to do this, and we look forward to talking to everyone next quarter. Thank you very much.
Mr. Rhodes: Thank you again, we outperformed most of most of our public peers last quarter and we get it with what we consider great plants, great locations, but most importantly, we feel we have the best people in the industry and that's what separates us.
Mr. Rhodes: We will continue to do this and we look forward to talking to everyone next quarter. Thank you very much.
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.