Rex reports profitable Q3, announces progress with CCS project
December 12, 2022
BY Erin Voegele
Rex American Resources Inc. released fiscal third quarter results on Dec. 1, reporting increased sales for the three-month period ending Oct. 31. Executive Chairman Stuart Rose said the company remains profitable moving into the fourth quarter despite challenging crush spreads.
During an earnings call, Rex CEO Zafar Rizvi said that the company’s operations continued to be negatively impacted by railroad logistics issues and corn availability during the fiscal third quarter. The company benefitted, however, from higher corn oil prices and increased ethanol and distillers grains exports. As long as Rex is able to continue to source corn at a reasonable price and railroad logistics improve, the company expects the fourth quarter to be profitable, according to Rizvi.
Rizvi also briefly discussed the company’s ongoing carbon capture and storage (CCS) project under development at the One Earth Energy facility in Illinois. He said the first test well has been successfully drilled and 3D seismic testing and water movement tests are now complete. Several other tests and modeling have also been completed, showing that “the location is a very good target for carbon sequestration,” Rizvi said. He also noted that design of the compression facility is complete and the contract to build the compression portion of the facility has been signed, with long-lead-time equipment ordered. Work on the pipeline FEED study is expected to be complete in January, and the Class VI permit for three injection wells with a capacity to store 90 million metric tons of carbon has been submitted, Rizvi continued.
Rex currently holds ownership interest in six ethanol plants, including 75.8 percent ownership interest in Gibson City, Illinois-based One Earth Energy LLC and a 99.7 percent ownership interest in Marion, South Dakota-based NuGen Energy LLC. The company also holds 10.3 percent ownership interest in Rig River Resources LLC, a company that owns four ethanol plants, including West Burlington, Iowa-based Big River Resources West Burlington LLC; Galva, Illinois-based Big River Resources Galva LLC; Dyersville, Iowa-based Big River United Energy LLC; and Boyceville, Wisconsin-based Big River Resources Boyceville LLC.
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Rex reported third quarter net sales and revenue of $220.3 million, compared to $203.1 million reported for the same period of last year. The company attributed the increase to higher pricing for ethanol, dried distillers grains, non-food grade corn oil and modified distillers grains. Gross profit was $1.3 million, down from $25.2 million. Net income attributable to Rex shareholders from continuing operations was $3.2 million, compared to $13.3 million. Basic and diluted net income per share attributable to Rex common shareholders from continuing operations was 18 cents compared to 74 cents during the third fiscal quarter of 2021.
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