Good day. And welcome to the REX American Resources Fiscal 2020 Third Quarter Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. I would like to turn the conference over to Doug Bruggeman, Chief Financial Officer. Please go ahead.

Good morning and thank you for joining REX American Resources fiscal 2020 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 risks and uncertainties within the meanings 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 risks 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. Sales for the quarter increased 43% primarily due to increased production levels. Ethanol sales for the quarter were based upon 74.6 million gallons this year versus 47.6 million gallons last year. We ran our consolidated plant at full capacity in the current year third quarter, while last year we had reduced the run rate at the NuGen plant based upon tight corn supply in that region. Ethanol price per gallon did decline from $1.39 in the prior year to $1.31 in the current year. We reported a large increase in gross profit to $18.9 million in the third quarter for the ethanol and byproduct segment versus gross profit of $28,000 in the prior year. Our crush spread between ethanol and corn was approximately $0.19 in the current year versus approximately a negative $0.04 in the prior year, primarily reflecting year-over-year lower corn pricing of 21%. Our refined coal segment had a gross loss of $1.3 million for the third quarter of fiscal 2020 versus $1.6 million in the prior year based upon lower volumes. These losses are offset by tax benefits of $1 million and $2.2 million for the third quarters of fiscal 2020 and 2019, respectively, recorded from the Section 45 credits and the tax benefit from operating losses. SG&A was similar for the third quarter at $4.3 million versus $4.1 million in the prior year. We recorded income of $1.2 million from our unconsolidated equity investment in this year's third quarter versus a small loss of $15,000 in the prior year. Interest and other income declined year-over-year from $1 million to $537,000 primarily due to lower interest rates on our cash and short-term investments as interest rates fell sharply during the current year. We recorded a tax provision of $4.1 million for the third quarter of this year versus a benefit of $3.2 million in the prior year. We had a tax expense in the current quarter based upon returning to profitable operations, reversing in the third quarter previously recorded federal benefits of losses at 35% for the current year, as well as having lower run rates at the refined coal facility. The above factors led to net income attributable to REX shareholders of $8.8 million or $1.44 per share in this year's third quarter versus a net loss of $2.1 million or a loss of $0.32 per share in the prior year. Stuart, I'll turn the call over to you now for your comments.

Thank you, Doug. On the quarter-to-date going forward, we so far are profitable, but crush spreads have deteriorated rapidly in the last 30 days. Zafar Rizvi, our CEO, will discuss that further. We have hopes for a possible better EPA and Agriculture Secretary related to ethanol in the Biden administration. That should be a positive—we hope to be a positive for our company. Currently, there's less driving which is related to COVID, hitting people hard. And I expect it to hit people even harder right before the vaccine—as people are more cautious as they see a vaccine coming soon, with way more people staying home. In terms of refined coal, we have approximately one year left where we receive tax credits or expect to receive tax credits on that business. The fourth quarter did well or we expect it to improve over the third quarter on an after-tax basis. When cold weather hits, the utilities usually run more, which gives us a chance to make more refined coal—at the utility where it usually runs more which gives us a chance to make more refined coal. In terms of short-term cash on the balance sheet, we have approximately—short-term cash and short-term investments—excuse me, short-term investments and cash on the balance sheet, we have approximately $202 million. We've repurchased 316,349 shares so far in fiscal 2020. We have authorization for another 33,512 under our current authorization and we tend to or try to buy the stock on dips. We're also looking for opportunities in the ethanol field. We are only really looking at plants that we consider among the very, very best in terms of carbon capture. We're working hard on that. Zafar Rizvi, our CEO, will discuss that. I'll now turn the conference call over to our CEO, Zafar Rizvi.

Thank you, Stuart. Good morning, everyone. As I mentioned during calls about the last two quarters, this year started in a challenging environment, including a decline in crude and ethanol demand and price, COVID-19 pandemic shutdown of businesses and stay-at-home orders. And a struggle to find corn for the NuGen facility, we saw a decrease in fuel demand and the negative impact on the ethanol industry. We experienced improvement in late May when the COVID-19 shutdown orders relaxed, creating greater demand for our gasoline and ethanol. During the third quarter, conditions further improved. Most importantly, we received a steady flow of corn at both our majority-owned as well as minority-owned locations. This resulted in an improved crush margin and a very profitable third quarter. These improved conditions continued until recently. Now, we are seeing a decline in the crush margin due to higher corn prices; the price of ethanol failed to keep up with the increase in corn prices in the wake of the threat of another wave of COVID-19. Also, direct payments to farmers under the CARES Act resulted in a lack of interest from farmers in selling corn. When China stepped up its corn purchases, that led to a higher corn price. In addition, we are experiencing continued uncertainty because of the trade dispute and the EPA continuing to consider and grant small refinery exemptions from RFS compliance here. Unless economic conditions and the availability of corn continue to improve, trade disputes are resolved, and the COVID-19 threat diminishes, we expect the crush margin may continue to decline due to less demand for ethanol and the higher cost of corn. On the other hand, the USDA corn report shows corn condition in South Dakota is at 79%, excellent to good. We had difficulty sourcing corn at our NuGen plant during the last crop year. But this year, the crops around our plants in South Dakota and Illinois are strong and encouraging. The corn crops for the 2021 year are projected to yield approximately 14.5 billion bushels and are expected to carry 1.7 billion bushels. DDG export dropped approximately under 111,000 metric tons in the first nine months of 2020 compared to last year where exports of dry distillers grains through September 2020 totaled approximately 8.24 million metric tons compared to 8.3 million metric tons for the first nine months of 2019. Ethanol export during this timeframe totaled 983 million gallons, 89% of last year's volume, up 1.1 million gallons during the same period. Let me give you a little bit about our carbon sequestration project. As I mentioned during our last call, we are working with the University of Illinois to drill a carbon sequestration well at our One Earth Energy facility. The University of Illinois is in the process of evaluating a permit application to drill a test well. Their teams will perform 2D seismic surveys to select the location and conduct a front-end engineering and design, FEED, study of the CO2 capture system. The university expects to receive a well-drilling permit in the first quarter of 2021 and plans to drill the test well within the first half of 2021. This project is still at a very preliminary stage and we cannot predict yet that we will be successful with this project. In summary, we are pleased to announce a very profitable quarter in spite of a very difficult environment for the industry. We are pleased with the production of the corn crops in our draw area this year over last year. It helped and led to a very profitable third quarter. We are very appreciative and thankful for the hard work of our colleagues during this pandemic. They contributed to profitable third quarter earnings in spite of the uncertainty and a difficult overall environment. I will give the floor back to Stuart Rose for additional comments. Thanks, Stuart.

Thanks, Zafar. As Zafar said, we had a good quarter where we regained profitability. But hard times have hit us again as the crush spreads have gone negative. All things considered, a profitable quarter during these times is something to be proud of, and our plants are among the best locations and best plants in the industry. And as Zafar said, most importantly, and the best part of our company is during these COVID times, our employees have shown how great they are. They've been heroes. They've come to work and we're very proud of the way we have the best employees in the industry. And that's allowed us to produce among the best numbers in the industry. I'll now leave the forum open to questions.

Our first question is from the line of Jordan Levy from Truist.

Really nice quarter. Just kind of wanted to get your thoughts, you've built up this really material cash position now. And kind of thinking about how you guys maybe rank or think about potential uses of that cash between potential investments. Stuart, you mentioned looking into potential ethanol plants and things like that and return of capital, whether it's kind of through a buyback or maybe if you've explored the idea of a special dividend or something along those lines?

Well, I think, as you mentioned, we're always looking for ethanol plants. So, that's always our first choice. We've been pretty good—not pretty good, really good about giving our cash back to our shareholders through buybacks. And a special dividend, I would take—we, at this time, do not know how much the carbon capture is going to cost. We're at the beginning of the venture. We'd like to—we have high hopes that it's going to be a large, large venture. And so, to do a special dividend and take away our flexibility when we're within maybe a couple of years of having something that we hope is—it may be nothing, but we hope it's going to be something very, very big. Probably, it's not in our interest. But it is in our shareholders' interest. We feel that when the stock dips, to buy the shares, takes the people who want to sell out of the market. It also supports the stock at a certain level. And when we do start making money, like we did last quarter on a much lower number of shares, the earnings per share go up significantly. So, we've bought back almost well over 5% of our shares this year, which by any measure is a lot of shares for a company to buy. So, I don't think we'll change that part of the strategy, at least not—unless we find that carbon capture for some reason isn't going to happen. Any other questions?

Just a follow-up. Stuart or Zafar, one of you mentioned last quarter, looking into a couple of different things, including some of the protein side of the DDG, as well as some of the high grade, and we've seen those markets change as well, but just wanted to get your thoughts on how that's playing out and monitoring…

Zafar, you want to answer that question?

Yeah. I think we are always looking for something if we can benefit from that—the long term and also for the short term. We have looked at it, protein, over the last several years, including recently. I think in our opinion, at this time, there's not enough market to really get your return on investment quicker than four or five years earlier. So, as the market will develop, we will keep our eyes on it. And that's why we have this cash and we will see if that market is there. And if developed, we certainly will join that. But at this time, we really don't think that the market can handle that many—these protein plants.

Our next question is from the line of Chris Sakai from Singular Research.

Just wanted to get an idea about your international sales. Did any go to China?

Zafar?

Yeah. Yes, we can say, we sell it to the local person and then they export to China. DDG, we have some gone to China. But as you know, China is not actively in the market this year and even since 2016. This year, they have purchased a little bit, but China is not very active in the market at this time.

And then, as far as other countries go, what were the largest?

I think Mexico is always on the top of the list. And they really have stepped up compared to anybody else. Then we have Mexico, and then South Korea, Vietnam, Thailand, Indonesia, Turkey. So, those are the top countries who are really buying. And if you look back last year, also in 2019, the same countries were at the top of the list. They are consistently still at the top. Last time, China bought—in 2016, they were—21% of the DDG was purchased by China in 2016. Since then, they dropped in 2017 to 4%. After that, they basically disappeared. So, the rest of the other countries stepped up. But Mexico was—this year was—actually was behind last year. They purchased January to September about 1.5 million tons. And this year, they purchased about 1.2 million tons, approximately.

Another question. How enthusiastic are you guys about a Biden presidency?

We have not been helped as an industry by the EPA of the Trump presidency. And the Obama EPA was much friendlier to us. So, to answer your question, we're guardingly enthusiastic. And it's going to make a big difference if we have an EPA administrator that likes ethanol and who goes out of their way not to grant exemptions and continues the ethanol program for two years longer and so forth. So, we feel—I feel, and I can't speak for everyone, but I feel that at least we have a chance with this administration. The last administration, we felt was not—the Trump administration, even though they talked a lot about being friendly to ethanol, in reality, did not follow, did not give us what the law required, which was 15 billion gallons of blending. So, hopefully, we'll get that out of the Biden administration.

Thank you. I'm showing that there are no further questions from the phone line.

Very good. Thank you, everyone, for listening. Appreciate it very much. And we'll talk to you next quarter—at the end of next quarter. Or at the conference call next quarter. Thank you. Bye.

Thanks, everyone. Bye-bye.

Thank you. That does conclude the conference call for today. We thank you all for your participation and we ask that you please disconnect your lines. Thank you, everyone, and have a good day.