REX American Resources Exceeds Q2 Revenue Expectations, Falls Short On EPS

REX American Resources Corp REX reported second-quarter FY23 net sales and revenue decline of 11.8% Y/Y to $211.98 million, beating the consensus of $195.14 million.

The year-over-year net sales and revenue decline reflect a reduction in the quantities sold of ethanol and lower prices for ethanol, dried and modified distillers, grains, and corn oil.

Gross profit increased 30.1% YoY to $18.4 million, reflecting lower corn and natural gas pricing. Gross margin expanded by 280 bps to 8.7%.

EPS of $0.52, compared to $0.63 per share in 2Q23, missed the consensus of $0.66.

Cash provided by operating activities stood at $8.64 million, compared to $771 thousand a year ago.

As of July 31, 2023, REX had cash and cash equivalents and short-term investments of $284.4 million. 

The company announced changes in accounting principles in the quarter ending on July 31, 2023, altering how it accounts for shipping and handling costs. These costs were previously included in selling, general, and administrative expenses (SG&A), but now they are considered part of the cost of sales.

In the quarter, REX's two consolidated plants received COVID-19 relief grants from the U.S.D.A. totaling ~$7.8 million recorded as other income and ~$1.6 million recorded as equity income in unconsolidated affiliates.

REX American Resources' Chief Executive Officer, Zafar Rizvi, commented, "Our focus on operational efficiency resulted in REX delivering its twelfth consecutive quarter of profitability. During the quarter, we continued our efforts on the One Earth Energy carbon capture project. We believe the One Earth project has the potential to deliver compelling financial returns and will position REX to play an important role in reducing greenhouse gas emissions."

Price Action: REX shares are trading higher by 0.02% at $41.35 premarket on Wednesday.