REX sees significantly higher ethanol, distillers grains prices

For its third quarter, from July 1 to Sept. 30, REX American Resources Corp. reported a 20.3 percent increase in net sales and revenues compared to the previous quarter. The numbers went from $84.5 million from $70.3 million thanks to jumps in prices for ethanol and distillers grains.

Ethanol prices, which represent more than 80 percent of the company’s alternative energy segment sales, increased nearly 58 percent from the three month period ending Oct. 31 compared to the same time period in 2010. However, price increases were most dramatic for dried distillers grains with solubles (DDGS) and wet distillers grains (WDG). Looking at the average price of DDGS for the three month period ending Oct. 31, prices increased nearly 71 percent compared to the same time period in 2010. WDG went up about 83 percent. At the same time, input costs for corn were an average of $7.05 per bushel, an 85 percent increase.

(SOURCE: REX)

REX, a former appliance retailer, recently increased its ethanol volumes by 30 percent after acquiring an additional 50 percent equity ownership interest in NuGen Energy LLC, a 100 MMgy ethanol plant in Marion, S.D., said REX CEO Stuart Rose. The company now has a 98 percent ownership in that plant, the largest percentage ownership of the six ethanol plants it has interests in. That’s followed by a 74 percent ownership interest in One Earth Energy LLC, a 100 MMgy ethanol plant in Gibson City, Ill. The company plans to add corn oil extraction at both plants, which should help increase profitability, he added.

REX is also an investor in Levelland Hockley County Ethanol LLC a 40 MMgy Texas plant that has been idle since January and written off by REX shortly after. Not having figures on the books for that plant also had an impact on the positive third quarter for REX. “The increases came from basically two things, more ethanol earnings and not having to go against our comparisons with the written-off L H plant in Texas,” Rose said.

The company continues to look for opportunities to purchase ethanol plants as well as to increase investments in plants it already has ownership stake in. The company has particular interest in Fagen Inc./ICM Inc. ethanol plants in the Midwest. The company has an optimistic outlook on the future of its ethanol business and firmly believes in its many benefits for the United States, especially farmers. “We see a potential for our earnings per share to explode going forward and that’s exactly what we are seeing in the fourth quarter that’s going on right now,” Rose said.

REX shareholders saw net income of $6.5 million, or 70 cents per diluted share in the third quarter of 2011. That compares to $4.3 million or 44 cents per diluted share during the same time period last year. The company recently completed a repurchase of more than 10 percent of its shares, buying back more than 1 million shares, bringing the share count to roughly 8.3 million shares. The company was able to take advantage of “opportunistic purchases” at roughly two-thirds of book price, Rose said. Although the company will continue to buy back shares the rate will decrease to more typical levels. Buying back shares increases the company’s earnings per share and increases the book value per share. “We have looked at other industry opportunities but to date we have found nothing better than buying our own stock and buying bigger positions in our own ethanol plants, but we do continue to look at these other opportunities and they may or may not come up over the next year,” he said.