REX American Resources Corporation

Greetings and thank you for standing by. Welcome to the REX American Resources Fiscal 2023 First Quarter Conference Call. During your presentation, all participants will be in a listen-only mode and afterwards we'll 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. And now I'd like to turn the conference over to Doug Brueggemann, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining REC's American Resources Fiscal 2023 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 filing 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. Sales for the first quarter increased by 9.5% as we experienced higher volume for ethanol, dried distiller grains, and corn oil. Ethanol sales for the quarter were based upon 71.5 million gallons this year versus 64.5 million last year. Higher volumes were partially offset by lower ethanol selling prices as the price per gallon went from $2.28 to $2.21. We report a gross profit of $15 million this year versus a gross profit of $11.9 million in the prior year. Meanwhile, the SG&A increased from the first quarter increased for the first quarter from $5.2 million to $10.6 million. There was a tradeoff between these two line items between the years, as we currently classify freight costs we pay to an outside vendor as SG&A expense. We incurred charges of $5.1 million for that this year. In the prior year, more contracts called for the buyer to pay these fees, and it was netted out of the ethanol price. We had income of $1.5 million from our unconsolidated equity investment in this year's first quarter versus $2 million in the prior year. We reported interest and other income of $2.8 million versus $174,000 in the prior year as we benefited from higher interest rates on our cash and short-term investments. We reported a tax provision of $2 million this year versus a provision of $1.8 million in the prior year. This led to net income attributable to REC shareholders of $5.2 million for both this year and the prior year first quarter. Net income per share attributable to REC shareholders was 30 cents for this year versus 29 cents in the prior year. Stuart, I'll now turn the call over to you.

Thank you, Doug. Going forward, business improved at the end of the quarter and continues to improve. Currently, we're running at a rate of earnings per share that is higher than the first quarter. And we hope that trend continues. It's been a great improvement over the beginning of the first quarter. We have $270 million in consolidated cash and short-term investments. Our plans with that cash, first of all, our cash flow is, although we report a tax rate higher, we actually report a tax rate higher than our than what we paid due to tax credits that we've carried forward. So our cash flow continues to improve both by earnings and by a lower rate than the stated rate on the GAAP earnings per share. In terms of going forward, as Doug mentioned, we're benefiting right now from higher interest rates. We have the $270 million earning significantly more than previously. As you can see in the first quarter, We're also working hard, which so far we'll talk about, on carbon capture, both at our One Earth plant and what he has signed up or what our company has signed up with Summit. There's no guarantees, but we are moving forward on this and have great hopes that it will be a great contributor to our company in the future. We also continue to have our buyback plan in place. We use this on dips. And it's been something that's helped stabilize the stock a little bit, I believe, when the stock has dropped. And the last thing, we continue to look for opportunities, not just in ethanol, but in carbon capture. And we have nothing other than what Zafar is going to talk about going on right now. But there's always a chance that something will come along. And we do have the cash right now to take advantage of it, should we see it. I'll now turn the call over to Zafar Rizvi, our Chief Executive Officer.