REX American Resources Corporation

Greetings and welcome to the REX American Resources Fiscal 2023 Third 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 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 Mr. Doug Brueggemann, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining RECS American Resources Fiscal 2023 Third 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 meetings 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. We are very pleased to report these record net income and earnings per share quarterly results. Sales for the third quarter increased slightly compared to the prior year. Ethanol sales for the quarter were based upon 73.2 million gallons this year versus 66.3 million last year. The increase in sales volume were offset by lower pricing across all categories, largely reflecting commodity pricing for this time period. We reported a $30 million increase in third quarter gross profit to $39.3 million this year versus $9.3 million in the prior year as we benefited from lower corn and natural gas pricing over the prior year third quarter. SG&A increased for the third quarter from $5.8 million to $7.6 million, primarily due to incentive compensation linked to the large increase in earnings. As mentioned 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 instead of within selling general and 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. This change only impacts cost of goods sold and selling general administrative expense and has no impact on the earnings reported. We had income of $4.7 million from our unconsolidated equity investment in this year's third quarter versus $661,000 in the prior year primarily reflecting improved industry operating conditions for this time period. We reported interest and other income of $4.9 million versus $2 million in the prior year. The increase primarily reflects increased interest rates as well as $862,000 from COVID relief grants received from the USDA during this quarter. Income before income taxes and non-controlling interest was $41.3 million for the third quarter compared with $6.1 million in the comparable year-ago period. We reported a tax provision of $9.6 million versus a provision of $1.2 million in the prior year. These factors led to net income attributable to REC shareholders of $26.1 million for this year versus $3.2 million in the prior year's third quarter. Net income per share attributable to REC shareholders was an all-time record, $1.49 for this year's third quarter versus $0.18 in the prior year. Stuart, I now turn the call over to you.

Thank you, Doug. Going forward, the business has continued to be strong, and we expect our fourth quarter to be significantly better than last year's corresponding quarter. We're working hard on our carbon capture project and also increasing the capacity of our One Earth plant. Zafar will discuss the ethanol business and carbon capture business in his segment. We have cash of $332 million, consolidated cash in our balance sheet of $332 million. We're earning interest on that, which should be significantly better, or we hope it should be significantly better than last year. The ethanol plants expansion will use some of that cash. The carbon capture project will also use some of that cash. Ginza Farr will discuss this on his part of the call. We're always looking for other ethanol carbon capture businesses and other entities that could benefit from our expertise. So far, we have nothing imminent on the acquisition front. We have our buybacks still available. We buy back on dips, and currently we are not purchasing any shares. I'll now turn the conference call over to Zafar Rizvi.