REX American Resources Corporation

Greetings and welcome to the RECS American Resources Fiscal 2022 First 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 call over to Doug Bruggeman, Chief Financial Officer. Please go ahead.

Doug Bruggeman Good morning, and thank you for joining Rex American Resources Fiscal 2022 First 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 first review our financial performance and then turn the call over to Stuart for his comments. Sales for the first quarter increased by 18% as we experienced higher pricing for ethanol, distiller grain, and corn oil. Ethanol sales for the quarter were based upon 64.5 million gallons this year versus 70 million gallons last year. We report a gross profit of 11.9 million this year versus a gross profit of 19.5 million in the prior year. For the current year, quarter improved selling prices were offset by higher corn and natural gas pricing. Ethanol pricing improved by 27%, dried distilled grain improved by 5%, and corn oil pricing improved by 91% for this year's quarter over the prior year first quarter. Corn cost increased by 27% and natural gas pricing increased by 86% for this year's quarter compared again to the prior year first quarter. As inflationary pressures and impact on commodity pricing from the Ukraine-Russia conflict continued, Gross profit comparison between years was also impacted by lower sales prices on certain ethanol contracts in the current year when the purchaser paid the freight. SG&A decreased for the first quarter to $5.2 million from $9.9 million in the prior year. Again, this primarily represents decreased outgoing freight costs charged to SG&A in the current year based upon certain ethanol contracts. We had income of $2 million from our unconsolidated equity investments in this year's first quarter versus $570,000 in the prior year. The discontinued operations reflected in the prior year numbers are from the refined coal business as we ended those operations on November 18, 2021. There was no impact in the current year. We reported a tax provision from continuing operations of $1.8 million for this year versus the provision of $2.2 million in the prior year. These factors led to net income attributable to REC shareholders from continuing operations of 5.2 million for this year's first quarter versus 7.3 million in the prior year. Total net income per share from continuing and discontinued operations attributable to REC shareholders was 87 cents for this year's first quarter versus $1.30 in the prior year. Stuart, I'll turn the call over to you.

Thank you, Doug. Going forward, The ethanol operations for the current quarter are currently running significantly ahead of last year's corresponding quarter. We will be helped by a one-time government payment related to COVID relief and some improvement in ethanol profits quarter to date. Zafar Rizvi, our CEO, will discuss this further. Currently, we have $234 million in consolidated cash and we also have tax credits that we've carried forward that we're able to use against pre-tax earnings and continues to help our cash flow. Uses of this cash include buying the stock on dips, should the stock dip, should the market dip, should our stock go down significantly, we have the cash to buy in shares. We're also working very, very hard on a carbon capture project will discuss this also in his segment. Looking at compatible industries that currently emit large amounts of carbon, nothing imminent, but if we found something where we can make an industry less carbon intensive using our carbon capture holes, that would be something we would consider. And we continue to look for other ethanol plants that are well located, that use the same technology we use and again, that's an industry we know very, very well. Today, we have nothing imminent in that area either to report, but we continually look. I'll now turn the conference call over to our CEO, Zafar Rizvi.