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REX: NYSE www.rexamerican.com One Earth Energy, LLCGibson City, IL Stuart Rose, Chairman & CEO Doug Bruggeman, CFO May 11, 2011
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements can be identified by use of forward-looking terminology such as “project,”“may,”“expect,”“estimate,”“anticipate” or “continue” or the negative thereof or other variations thereon or comparable terminology. You are cautioned that there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. These risks and uncertainties are described in our filings with the Securities and Exchange Commission. Safe Harbor
REX Overview • Successful alternative energy investor since 1998 • Synfuel investments of $6M yielded ~$178M return over 10 years • Ethanol investments initiated in 2006 • REX earned profit of $24M in FY’07 on a $14M investment an early ethanol investment • 2010 alternative energy revenues grew 77.5% to $300.4M • Discontinued retail operations in FY ’09 to focus on alternative energy • Changed name and stock symbol in June 2010 • Ownership interests in six operating ethanol production facilities • $140.9M carrying value of six ethanol production facility investments • Ownership of 169.2M gallons of annual operating production • Robust balance sheet (as of 1/31/11) • Unrestricted cash of $72.7M (~$7.40/share*) • Net book value of retail real estate $19.9M (~$2.03/share*) • Net deferred tax assets of $11.0M (~$1.12/share*) • $7.2M Tax refund received Q1 ’11 (~$0.73/share*) *9.8M diluted shares~$11.28/share* • ROE-focused asset allocation discipline • 11.2% average ROE since 1993 • Ongoing share repurchase program • Insider ownership of approximately 30%
Alternative Energy Investments • Entered alternative energy sector in FY ‘98 investing in two synthetic fuel limited partnerships • Earned federal income tax credits based on the tonnage and content of solid synthetic fuel produced and sold to unrelated parties • REX sold its interests in both partnerships and received quarterly income subject to production levels and phase-outs through calendar 2007 • Purchased 3rd synthetic fuel facility in FY ‘02; was sold in FY ‘04 • Total investment income ~$130M from sale of partnership interests(FY ’98-FY ’08) • Plus allocated income tax credits of approximately $48M • Entered ethanol sector in FY ’06 with initial investment commitments • Today REX has interests in six operating ethanol production facilities representing ownership of approximately 169.2mgy of ethanol production • Acquired 48% equity interest in 100mgy NuGen Energy facility in 7/10 • Wrote off Levelland-Hockley at 1/31/11 and halted operations in Jan 2011
Big River Resources West Burlington, IA (1) 92 $34.1 10% 9.2 Big River Resources $29.4 Galva, IL (1) 100 $63.1 10% 10.0 Big River United Energy Dyersville, IA (1) 100 $84.6 5% 5.0 REX Ethanol Portfolio at 1/31/11 Nameplate REXNon-Recourse % Entity/Location Capacity Carrying Plant Debt (3) Ownership RSC Capacity (mgy) Value (millions)(millions)(millions) Owned (mgy) One Earth Energy Gibson City, IL 100 $73.6 $78.7 74% 74.0 NuGen Energy, LLC Marion, SD 100 $16.1 $92.4 48% 48.0 Patriot Renewable Fuels Annawan, IL 100 $21.8 $70.7 23% 23.0 TOTAL 592 $140.9 n/a n/a 169.2 Levelland Hockley (2) Hockley County, TX 40 $0.00 $43.1 49% 19.6 • REX has a 10% ownership interest in Big River Resources, LLC which owns 100% of the West Burlington and Galva plants and acquired a 50.5% interest in the Dyersville plant in August 2009. • REX wrote off its entire investment of $18.4M in Levelland Hockley County Ethanol, LLC at year-end 2010; LHCE temporarily ceased production in January 2011. • Plant debt figures are as of 12/31/10.
REX Ethanol Strategy • Disciplined investment criteria • Invest only if project meets strategic and financial risk and return criteria • Align with farmers, farm cooperatives and farming communities as co-investors and owners of ethanol production facilities • Facilitates access to grain supply, local community support • Locate plants close to rail access • Utilize state-of-the-art ethanol production technology • Dry mill corn-processing method • All plants are Fagen, Inc. and/or ICM, Inc. design and construction • Fagen is a large, respected U.S. green energy design-builder • ICM engineers, builds, and supports renewable fuel bio-refineries. ICM process technology produces ~6.6 billion gallons of ethanol • Fagen/ICM plants are highly efficient • Attempt to match grain prices with ethanol and DDG sales on most plants • Forward grain purchases and ethanol sales contracts generally two month duration • Derivative contracts are generally not employed to hedge commodity price risks
$0.45 per gallon VEETC (blender’s credit) extended to Dec. 31, 2011 Federal EPA ethanol purchasing mandates continue to rise, requiring refiners to purchase more ethanol each year: 2011 target is 12.6 BGY 2012 target is 13.2 BGY 2013 target is 13.8 BGY 2014 target is 14.4 BGY 2015 target is 15.0 BGY (and for subsequent years) Ethanol Demand/Pricing Drivers
Crush Spread & DDG Pricing • Crush Spread = price of 1 gallon of ethanol - cost of corn to produce it • One bushel of corn makes ~2.8 gallons of ethanol… • …crush spread = Ethanol price – (Corn bushel price / 2.8) • Crush spread excludes other production, transportation costs, etc. • Dried distiller grain (DDG) pricing has offset to weak crush spreads • REX’s average realized DDG prices per quarter are reflected below in green line. 2009 2011 2010 Calculated using CBOT monthly average prices
2010 Operating Results Year Ended January 31, $ in millions, except per share data 20112010 Net sales and revenue: Alternative energy (1) $300.4 $169.2 Real estate 1.3 0.9 Total net sales and revenue $301.7 $170.1 Gross profit $30.4 $20.7 Segment profit (loss): Alternative energy (1) $13.4 $17.8 Real estate (1.0) (1.4) Corporate expense (2.7) (1.9) Interest expense (0.2) (0.4) Investment income 0.4 0.3 Income from continuing operations including non-controlling interests $6.8 $10.0 Net income excluding impairment charge (2) $16.3 $8.7 Diluted EPS excluding impairment charge (2) $1.66 $0.91 Net income attributable to shareholders $5.1 $8.7 Diluted EPS attributable to shareholders $0.52 $0.91 Weighted average diluted shares outstanding 9.8 9.6 • Includes results attributable to non-controlling interest of Levelland Hockley (44%) and One Earth Energy (26%). • Excludes one-time after-tax charge of $11.2 million, or $1.14 per diluted share, in January 31, 2011, resulting in a non-GAAP measure.
Strong Balance Sheet $ in millions1/31/111/31/10 Cash and Cash Equivalents $ 91.0 $ 100.4 Total Current Assets $ 125.8$ 140.1 Property & Equipment, net 169.8 246.9 Deferred Taxes, net 11.0 14.8 Equity Method Investments 67.3 44.1 Other Investments 1.6 3.1 Total Assets $375.7$451.5 Current Debt $ 10.0 $ 13.3 Total Current Liabilities 24.6 38.9 Deferred Income 6.4 14.2 Long term debt - non recourse (ethanol plants) 69.0 124.1 Long-term debt - recourse 1.9 2.6 Total REX Equity (excludes non-controlling interests) $244.9 $246.6
Real Estate Assets • Previously operated 260+ store consumer electronics chain • Built significant portfolio of store locations and 2 warehouse/distribution centers • Fully discontinued retail operations in FY ’09 • Continue to recognize deferred income from retail service contracts in discontinued operations • Monetized real estate as industry dynamics challenged retail operations • Reduced store count using disciplined financial criteria for each location • Sold 86 company-owned retail sites in 2007 for $74.5M in cash • $14.8M gain; paid off $16.1M in mortgages • Real estate holdings as of 1/31/11: • 30 owned store locations: • 22 vacant (281,000 sq.ft.) • 8 leased or partially leased (88,000 sq.ft. leased, 10,000 sq.ft. vacant) • 1 warehouse/distribution center (266,000 sq.ft. leased, 190,000 sq.ft. vacant, 10,000 sq.ft. used for REX corporate) • Carrying value $19.9M at 1/31/11, net of $2.3M of debt
Ethanol plants and other industrial investments Share repurchases below book value 3.4M shares repurchased over the last 3 fiscal years – $12.21 avg. price Repurchased 515,000 shares in FY 2010 at an average price of $15.99 Repurchase authorization for 468,000 shares at 1/31/11 Capital Allocation Priorities
REX Summary • Successful alternative energy investor since 1998 • Interests in six operating ethanol production facilities • 169.2M gals of production capacity/year • Alternative energy segment profit of $13.4M in FY ‘10 • Growth opportunities in ethanol and other industrial sectors • Expand ownership of existing facilities • Consider other industrial projects requiring similar skill sets • Proven management team with asset allocation discipline • 11.2% average ROE since 1993 • Long-term program of share repurchases below book value • Insider ownership of ~30% • Strong asset base at 1/31/11: • Shareholders‘equity $244.9M (~$24.93 share) • Unrestricted cash of ~$73.0M • Net real estate of ~$19.9M • Net deferred tax asset of $11.0M • ~9.8M diluted shares outstanding
REX AMERICAN RESOURCES CORPORATION REX: NYSE rexamerican.com Investor Relations Joseph Jaffoni/David Collins Jaffoni & Collins 212-835-8500 or firstname.lastname@example.org
One Earth Energy, LLC Summary • REX has a 74% ownership interest in One Earth • Operates dry mill corn-processing ethanol plant in Gibson City, IL • 100 mgy ethanol capacity; 320,000 tons of dried distiller grains • Plant capital costs: ~$153.5M • 10/07: REX funded $50.8M to secure a 74% ownership • 7/09: Plant commenced operation • Fagen and ICM provided construction, process design and engineering • Strong partners, location and corn supply • Alliance Grain and Cooperative is a farmer-owned elevator system established in 1991 located directly in front of the ethanol plant • Five operational elevators near the plant all of which are rail load-out accessible via Alliances Bloomer Line Rail Company, offering transportation savings for corn and feed • Two major rail services available: Canadian National and Norfolk Southern • ~54M bushels of grain can be stored at three of the nearest elevator locations • ~200M bushels of corn are produced annually in surrounding counties
NuGen Energy, LLC Summary • REX has a 48% ownership interest in NuGen Energy, LLC • Acquired effective 6/30/10 • Operates dry mill corn processing ethanol plant in Marion, SD • In partnership with Central Farmers Cooperative, LLC, one of the largest and most successful grain and corn procurement entities and grain terminals in the region. • REX previously owned 33.92% interest in plant acquired for $14M • REX sold its interests in the plant in 2007 to U.S. BioEnergy for ~$24M profit • 100 mgy ethanol capacity; and 320,000 tons of dried distiller grains • Plant commenced construction October 2006; commenced production Feb. 2008 • 6/30/10: REX re-acquired 48% interest for $9.2M and commitment to pay up to an additional $6.5M based on future profitability • $1.8M received and funded through January 31, 2011 • Fagen, Inc. and ICM, Inc. provided construction, process design and engineering services
Patriot Renewable Fuels Summary • REX has a 23% ownership interest in Patriot • Operates dry mill corn-processing ethanol plant in Annawan, Illinois • 100 mgy ethanol capacity; 320,000 tons of dried distiller grains • Capital costs: ~ $155M • 12/06: Acquired 23% of Patriot for $16.0M • 9/08: Plant commenced operation • Fagen and ICM provided construction, process design and engineering • Plant strategically located near rail access, in heart of Illinois corn production • Access to ample grain supplies at competitive prices • REX has received dividends of $1.6M through 1/31/11
Big River Resources, LLC Summary • Big River was formed to develop/acquire ethanol facilities • Big River is a holding company for several entities • Owns 5 elevators with ~10,000,000 bushels of grain storage • REX acquired a 10% ownership interest in Big River for $20M • Big River Facilities: • 92 mgy plant in West Burlington, IA (expanded from 52 mgy) • Commenced operation in 2004 (REX interest is 10%) • 100 mgy plant in Galva, IL • Commenced operation 5/09 (REX interest is 10%) • Acquired 50% stake in 100 mgy plant in Dyersville, IA in 8/09 • (REX interest is 5%) • Fagen/ICM provided construction, process design and engineering for all plants • All plants in close proximity to rail and highway transportation • REX has received dividends of $3.7M through 1/31/11
Levelland Hockley County Ethanol, LLC Summary • REX has a 49% ownership interest in Levelland Hockley • Reduced ownership from 56% and deconsolidated effective 1/31/11 • Wrote investment off and recorded pre-tax charge of $18.4M at 1/31/11 • Facility temporarily ceased operations in January 2011 due to unfavorable commodity prices • Dry mill corn/sorghum processing ethanol plant in Hockley County, Texas; south edge of massive cattle feedlot industry • Interchangeable design allows use of sorghum crop in region • 40 mgy ethanol capacity; and 130,000 tons of dried distiller grains • Plant capital costs: ~$70M • 9/06: Acquired 47.1% of membership units for $11.5M • 12/06: Purchased $5M conv. secured promissory note; converted to equity 7/07 • 2/08: Purchased $5M conv. secured promissory note • 3/08: Plant commenced operation • 09-10: Provided $4M line of credit of which $3.8M was advanced • 1/11: Wrote-down investment to zero, reduced ownership to 49% and de-consolidated investment
REX: NYSE rexamerican.com One Earth Energy, LLCGibson City, IL Stuart Rose, Chairman & CEO Doug Bruggeman, CFO May 11, 2011