HomeMarket NewsSmall CapsREX American Resources Surpasses Q2 Revenue Expectations, Falls Below EPS Estimates

REX American Resources Surpasses Q2 Revenue Expectations, Falls Below EPS Estimates

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REX American Resources Corp, trading as REX on the NYSE, announced that its net sales and revenue for the second quarter of FY23 declined by 11.8% year-over-year to reach $211.98 million, surpassing the consensus expectation of $195.14 million.

This decline in net sales and revenue was primarily due to reduced quantities sold of ethanol and lower prices for ethanol, dried and modified distillers grains, and corn oil.

On a positive note, gross profit increased by 30.1% YoY to $18.4 million, driven by lower corn and natural gas pricing. This led to a gross margin expansion of 280 basis points to 8.7%.

However, REX’s earnings per share (EPS) fell short of expectations, coming in at $0.52 compared to the consensus estimate of $0.66 per share for the quarter, down from $0.63 per share in the same period last year.

Cash provided by operating activities for the quarter amounted to $8.64 million, a significant increase from $771 thousand in the previous year.

As of July 31, 2023, REX reported a strong financial position with cash and cash equivalents and short-term investments totaling $284.4 million.

During the quarter, the company implemented changes in accounting principles related to shipping and handling costs. These costs, which were previously classified as selling, general, and administrative expenses (SG&A), are now considered part of the cost of sales.

Additionally, REX’s two consolidated plants received COVID-19 relief grants from the U.S.D.A., totaling around $7.8 million, which were recognized as other income. Another $1.6 million was recorded as equity income in unconsolidated affiliates.

Zafar Rizvi, the Chief Executive Officer of REX American Resources, acknowledged the company’s focus on operational efficiency, resulting in its twelfth consecutive quarter of profitability. Rizvi also highlighted the ongoing efforts on the One Earth Energy carbon capture project, emphasizing its potential to deliver both financial returns and contribute to greenhouse gas emissions reduction.

In premarket trading on Wednesday, REX shares are slightly up by 0.02% at $41.35.

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