REX American Resources Corporation

Greetings and welcome to the RECS American Resources fiscal 2023 second quarter conference call. During the presentation, all participants will be in the listen only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. I would now like to turn the conference over to Mr. Doug Brueggemann, Chief Financial Officer. Please go ahead.

Doug Brueggemann Good morning, and thank you for joining Rex American Resources Fiscal 2023 Second 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 second quarter decreased by 11.8%, primarily due to lower unit pricing across all products, as well as slightly lower ethanol gallons sold year over year. Ethanol sales for the quarter were based upon 69.1 million gallons this year versus 71.4 million in the prior year. We reported gross profit of 18.4 million this year versus gross profit of 14.1 million in the prior year, as we benefited from lower corn and natural gas pricing over the prior year's second quarter. SG&A increased for the second quarter from $6.7 million to $8.6 million. This increase is primarily related to stock incentive executive compensation expense upon issuance during the quarter. As highlighted in the press release in the second quarter, the company made a change in the method of accounting to begin classifying shipping and handling costs as cost of sales rather than within selling general administrative expense as historically presented in order to improve the comparability of gross profit and SG&A reported. The company has applied a retrospective application of its new accounting policy. I'd like to point out this change only impacts cost of goods sold in selling general administrative expense and has no impact on earnings reported. We had income of $3 million from our unconsolidated equity investments in this year's second quarter versus 3.6 million in the prior year, as the prior year number included approximately 1.6 million of income for our share of their COVID relief grants received from the USDA in the prior year. We reported interest and other income of 3.3 million versus 8.2 million in the prior year. The prior year included approximately 7.8 million from the aforementioned USDA COVID-19 relief grants received by our consolidated plans. In the current year, the company has continued to benefit from higher interest rates on our cash and short-term investments. These items led to income-before-income taxes and non-controlling interest of $16.1 million compared with $19.2 million in the comparable year-ago period. However, excluding the benefit of the COVID-19 relief grants received in quarter two of last year, income-before-income taxes and non-controlling interest increased 64.3% to $16.1 million in Q2 of the current year versus $9.8 million in the prior year. We reported a tax provision of $3.8 million for this year versus a provision of $4.3 million in the prior year. This led to net income attributable direct shareholders with $9.1 million for this year versus $11.2 million in the prior year's second quarter. Net income for share attributable direct shareholders with $0.52 for this year versus 63 cents in the prior year. And I'll turn the call over to Stuart for his comments.

Thank you, Doug. Earnings right now are running at a rate in the third quarter that is expected to be significantly better than last year's third quarter, or excuse me, significantly better than last year's Quarter are then the quarter that we're currently in and significantly better than the 3rd quarter that we're about to go into. So far we'll discuss this further. Our cash balance is. Approximately 284Million uses include short term investments, which we expect to during the 3rd quarter to earn a higher rate in the 3rd quarter than the 2nd quarter. Ethanol expansion, which Safar Rizvi, our CEO, we'll talk about later. Stock buybacks continue, but only on dips. We have not had dips recently. So at the moment, we have not bought back stock or not buying back stock, but we'll buy back if we see dips. We're also, biggest use will also be the carbon capture stock. operation that is well on the way, which, again, Zafar will talk about later. We also have hopes, if possible, to use our carbon capture operation, not just for our operation, but for others that may come along eventually that could also be a use of our cash. I'll now turn the call over to Zafar Rizvi, who will talk more about our ethanol operation and our carbon capture operation. Thank you.