REX American Resources Corporation

Greetings and welcome to the RECS American Resources Fiscal 2021 Fourth 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 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. I would now like to turn the conference over to Doug Brueggemann, Chief Financial Officer. Please go ahead.

Doug Brueggemann Good morning, and thank you for joining REX American Resources Fiscal 2021 Fourth 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 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. 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 Stuart Rose, Executive Chairman of the Board and Zafar Rizvi, Chief Executive Officer. I'll review our financial performance and then turn the call over to Stuart for his comments. Sales for the fourth quarter increased by 68% as we experienced higher pricing for ethanol, distiller grains, and corn oil. Ethanol sales for the quarter were based upon 69.9 million gallons this year versus 67.7 million last year. We reported gross profit of 38.7 million from continuing operations versus a gross profit of 8.3 million in the prior year. For the current year quarter, improved selling prices were offset somewhat by higher corn and natural gas pricing. Ethanol pricing improved by 74%, dried distilled grain improved by 19%, and corn oil pricing improved by 122% for this year's quarter over the prior year fourth quarter. Corn cost increased by 44%, and natural gas pricing increased by 80% for this year's quarter. SG&A increased for the fourth quarter to $6 million from $4.2 million in the prior year. This primarily represents increased incentive compensation based upon higher earnings in the current year. We had income of $3.9 million from our unconsolidated equity investment in this year's fourth quarter versus income of $332,000 in the prior year, again representing strong fourth quarter industry fundamentals. Interest and other income decreased to approximately $13,000 versus $415,000 in the prior year, primarily reflecting lower interest rates. We expect to begin to see some improvement in this area in the current year as rates increase on short-term investments. As mentioned last quarter, the refined coal operation is now classified as discontinued operations, and its results and historical results are now reflected on one line on the income statement. including the tax benefits from this business. We reported $159,000 of net income reportable to REC shareholders from discontinued operations in the fourth quarter as we ended operations on November 18, 2021. We reported tax provision from continuing operations of $10.7 million for the fourth quarter of this year versus a benefit of $102,000 the prior year. Tax provisions and rates will be impacted from time to time based upon levels of income Permanent tax items and uncertain tax position adjustments. These factors led to net income attributable to REC shareholders from continuing operations of $21.3 million for this year's fourth quarter versus $3.3 million in the prior year. Our net income per share from continuing operations attributable to REC shareholders was $3.58 for this year's fourth quarter versus $0.56 in the prior year. Total net income per share attributable to direct shareholders was $3.61 for this year's fourth quarter versus 59 cents in the prior year. Stuart, I'll now turn the call over to you.

Thank you, Doug. We had a very good fiscal 2021, but now business has become a little bit, I'd say much tougher. We're projecting for this quarter possible losses tied to higher corn prices. George Munro, Ph.D.: : Gas prices and ethanol prices not rising as fast, cutting into our crush margins. Corn could be an issue for the for the rest of the year, especially relating to Ukraine, along with normal seasonal issues. Rins could be an issue next year. It'll be up to the EPA to decide what that RIN level is. It won't be legislative anymore. So a lot will depend on what happens with the EPA chief, and that could affect this year's rents, and sometimes they allow the current year rents to be spread out. Another issue that we're having is logistical issues, inflation, labor shortages could be issues. So we have a number of things that we are worried about. The positive side, our product is American-made. We need more. U.S., we're going to need more U.S. fuel as the rest of the world does not seem to be willing to help us as much as we would like in that area. And we are a more green fuel than oil, and it could be used up to 15%. So our blending rate could go up. We are hopeful blending rate would go up to 15%, and that, of course, would increase demand. We now have over 250 million on a consolidated basis, 250 million cash on a consolidated basis. In terms of uses of cash, we will be talking to you. So far, we'll be talking to you about carbon capture. We'll also talk to you more about our ethanol plants and what we expect to happen there. We also, in terms of spending the cash, are looking for other ethanol plants that are successful. We have not found anything in our price range as of this time. There's ancillary businesses in ethanol, like high protein, a number of different techniques to make that high protein. No one to date has shown great earnings, so we're waiting to see who's the most successful before we decide whether or not to get into that business. But, again, other people are looking at it. We also are looking at other industries that might fit our skills, especially commodity-driven industries, where we might be able to potentially turn them more green. We continue to buy back our stock on dips, and last year we bought some of the stock dips significantly. We have the cash available to buy more. We have exited the refined coal business, but we still carry forward a large amount of tax credits. which can be used to lower our taxes paid and increase our cash flow. I'll now turn the call over to Zafar, who will talk more about the ethanol business and the carbon capture business. Zafar.