On November 30, 2023, REX American Resources Corp (REX, Financial) released its 8-K filing, announcing a record-setting fiscal 2023 third quarter, which ended on October 31, 2023. The company reported a remarkable increase in net income attributable to REX common shareholders, reaching $26.1 million, compared to $3.2 million in the same quarter of the previous year. This translates to a historic high of $1.49 in basic and diluted net income per share, a significant leap from $0.18 per share in Q3 2022.
Financial Performance Highlights
REX's financial achievements in Q3 2023 were driven by its interests in six ethanol production facilities. The company experienced a modest increase in net sales and revenue, which rose to $221.1 million from $220.3 million in Q3 2022. This was primarily due to a 10.4% increase in the quantities of ethanol sold, despite lower prices for ethanol and related by-products. The gross profit saw a substantial increase to $39.3 million, up from $9.3 million in the prior year's quarter, reflecting decreased input costs, including lower corn and natural gas pricing.
Operational Efficiency and Strategic Initiatives
REX's CEO, Zafar Rizvi, expressed pride in the company's best quarterly net income and earnings per share results in its 39-year history as a public company.
The substantial increase in income before taxes to $41.3 million underscores the efficiency of our operations and our ability to capitalize on favorable industry conditions,"Rizvi stated. He also highlighted REX's commitment to sustainability and the progress on carbon sequestration initiatives, including the construction of a carbon capture facility and capacity expansion at the One Earth plant location.
Robust Balance Sheet
As of October 31, 2023, REX's balance sheet remained strong with cash, cash equivalents, and short-term investments totaling $332.0 million. This is an increase from $280.9 million at the beginning of the fiscal year. The company's consolidated alternative energy interests also showed positive trends, with increased ethanol gallons sold and strategic pricing adjustments across its product lines.
Impact of Accounting Changes
REX has retrospectively changed its accounting policy, now classifying shipping and handling costs as cost of sales rather than selling, general, and administrative expenses (SG&A). This change aims to improve the comparability of gross profit and SG&A reported. The impact of this accounting principle change has been summarized in a table within the filing, reflecting adjustments to previously reported figures for cost of sales, gross profit, and SG&A.
Looking Forward
With a disciplined operating approach and a focus on profitability, Rizvi is confident in REX's ability to continue leading in ethanol industry operating results and advancing carbon capture and sequestration initiatives. The company anticipates that these efforts will lead to incremental cash generation and added shareholder value creation.
REX's commitment to a sustainable future and its strategic initiatives to enhance operational efficiency and expand capacity are expected to support the company's continued success. The full financial details and additional commentary can be found in REX's 8-K filing, providing investors with a comprehensive view of the company's strong performance in the third quarter of fiscal 2023.
Explore the complete 8-K earnings release (here) from REX American Resources Corp for further details.
