REX
#Good morning, and thank you for joining REX American Resources' Fiscal 2017 First Quarter Conference Call.
We'll get to our presentation and comments momentarily as well as your Q&<UNK>
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 meanings of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements reflect the company's current expectations and believes, but are not guarantees of future performance.
As such, actual results may vary materially from expectations.
The risk 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 statements.
I have joining me on the call today, <UNK> <UNK>, the Executive Chairman of the Board; and <UNK> <UNK>, Chief Executive Officer.
I will first review our financial performance and then turn the call over to <UNK> for his comments.
Sales for the quarter increased 12.9%, primarily due to increased ethanol pricing and production.
Sales were based upon 63.3 million gallons this year versus 58.7 million gallons in the prior year first quarter.
Dried distiller grains sales were down $1.9 million or approximately 11%, reflecting a $25 per ton decrease in pricing.
Gross profit increased 48% on a quarter-over-quarter basis.
The crush spread was approximately $0.23 in the current year versus approximately $0.10 in the prior year.
The gross profit was positively impacted by ethanol pricing and volume, but negatively impacted by DDG pricing as well as natural gas pricing.
SG&A increased in the first quarter from $4 million to $5.4 million, primarily reflecting increased railcar repair costs as well as higher professional fees and incentive comp.
Equity method income for the first quarter increased from $233,000 to $700,000, primarily reflecting improved industry dynamics for the first quarter over the prior-year first quarter.
Our tax rate for the first quarter was approximately 34.5% net of minority interests, which approximates to prior year first quarter rate.
Our net income for the quarter increased 60% to $4.5 million versus $2.8 million in the prior year.
Diluted earnings per share for the quarter was $0.69 versus $0.43.
I'll now turn the call over to <UNK> for his comments.
Good morning, everybody.
During the first quarter 2017, we made total capital investment of approximately $5.9 million and to date approximately $9.3 million.
We added ferm tanks, boiler, cooling towers, centrifuge and energy-saving equipment.
These are the main capital investments we had.
The construction work is now rapidly progressing and is expected to be completed by the beginning of fourth quarter.
As we continue to increase ethanol production, we will continue to monitor crush margin.
NuGen is also producing export-grade ethanol.
NuGen sold more than 19 million gallons of export-grade ethanol this year, compared to last year, we sold about 8 plus million.
So as the construction will increase, and I think it also depends on the weather and how the weather, rain, continues, but we expect that by the end ---+ by the fourth quarter, construction will be completed, and at that time we will start producing close to a 150 million gallon rate.
I think as <UNK> mentioned about the exports, since I said we are exporting it, we expect the ethanol export will increase to Brazil, Canada, Mexico and India.
Mexico will be potentially replacing MTBE.
Ethanol export for the first quarter of 2017 was 387 million gallons, according to Renewable Fuel Association.
Export to Brazil for first 4 months of this year totaled 220 million gallons compared to only 59.2 million gallons during the last ---+ during last year in the same period.
So we expect that this year export will be approximately 1.3 billion gallon or more.
<UNK>.
Yes, that's right.
First quarter, we spent about $5.9 million.
But I think to date, we have $9.3 million.
So construction work continues.
And we expect by the fourth quarter, we will be able to start full production.
And as you know, again, it depends on a lot of things, also on weather and some of the equipment delays.
So ---+ but that's what we're hoping, by that time we will complete.
I think we have ---+ as we said previously, it will about $10 million to $15 million for each location.
So we are expecting somewhere $20 million to $30 million for the both of them.
And I think that will lead us to production of growth of to 150 million gallon.
Correct.
Each, yes.
Not really.
I think that what we have done this ---+ this is also our shutdown month because with both locations, we shut down in the month of May.
When we shut down during that period, we added extra tie-ins, and when you try to do a tie-in, and then some equipment was added this month, so it took a little bit longer for us to come back into full production than normally, after the shutdown we come back.
So that certainly affected some in this month.
But we try to do all this tie-in during the shutdown.
But otherwise, no, it does not affect overall our production.
Thanks you, operator.
Thank you, everyone, and we very much appreciate your listening to us.
And we'll talk to you again at the end of next quarter.
Thank you so much.
Bye.
