Ladies and gentlemen, thank you for standing by. Welcome to the REX American Resources Fiscal 2018 Fourth Quarter Conference Call. I would now like to turn the conference over to Doug Bruggeman, Chief Financial Officer. Please go ahead, sir..

Good morning and thank you for joining REX American Resources' fiscal 2018 fourth 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..

Thank you, Doug. Going forward we expect to current the current quarter to remain profitable with ethanol running about breakeven and refined coal remaining profitable on an after-tax basis.

As Doug mentioned earlier, refined coal losses money on an operating basis but because of tax credits is profitable -- losses money on a pre-tax basis but because of tax credits is profitable on an after tax basis. The cash we expect to continue to grow. Crush spreads during the current quarter were low at the beginning of the quarter.

They've recovered nicely in the last couple of weeks or so. But we worry this is temporary due to flooding in Nebraska which is affecting the industry and the industry's ability to get ethanol to the market.

The Nebraska flooding is also affected our South Dakota plant and our ability to transport ethanol which Zafar will talk a little bit about later. Corn supply has been stable; gas prices have been stable. Potential problems going forward is the biggest one I see is crush spreads.

Once Nebraska opens up we will fall back to the level that they were prior to the floods which were very, very historically low level, very tough to make money. It does crush spreads.

Also the EPA is talking E15, we don't look at that as a great benefit and at the same time they're talking about limiting training in RINs and putting -- which could hurt RIN prices significantly also there's still waivers being given out, I am afraid there they'll continue to be given out that also hurts RIN prices which has an indirect effect on our margins.

We have a large cash balance approximately $200 million that continues to grow as I mentioned earlier as we make after-tax profits..

Good morning, everyone. While we saw some crush margin improved during 2018 but most of the year particularly in the fourth quarter was challenging. That challenging environment has continued in the first quarter of 2019. The first quarter ethanol income is close to breakeven as Stuart mentioned.

But the company is facing a number of logistic issues due to heavy snow floods and the unpredictable performance of the railroad company in our location in South Dakota. For all those reasons, we could be facing ethanol loss.

We also decided to use this time to correct the bad logistics situation at NuGen and shutdown the plant now for regular maintenance instead of in late April. We plan to be back in operation by Friday evening.

On top of that, we are experiencing continued uncertainty because of the trade dispute with other nation in addition to small refinery; refinery exemptions have resulted in a decline in the RINs price. The overproduction of ethanol has led to a decline in the crush margin. We have seen some crush margin improved for second quarter of 2019.

Ethanol producer produced over 16 billion gallons in 2018 according to EIA. Ethanol export was a very healthy 1.7 billion gallons. The EPA granted 53 smaller refineries exemption totaling an estimated 2.26 billion gallons. Because of that move, the price of RINs continues to go down resulting in a drop in the plant rate for the first time since 2009.

In 2017, 14.5 billion gallons of ethanol were blended..

Thanks, Zafar. In conclusion, we feel we have amongst the best plants, great location, great rail, crush spreads. As Zafar mentioned, were challenging in the fourth quarter, continued to be challenged and improved lately. We will see if stays improved in Nebraska. Flooding was a recent, the improvement and it goes back to the way it was.

But most important and I think that allows us to be especially in the fourth quarter, one of the few profitable companies in the industry on an overall after tax basis is we are feeling, feel very strongly about this we have the best.

Our people are among the best in the industry that I think I would say I feel they're the best and that's really what separates us most from the competition, allows us to standout in our numbers to be well above the average that you see in our industry. I'll leave the floor open to questions..

Our first question comes from Pavel Molchanov with Raymond James. Please proceed. Your line is open..

Thanks for taking the question. Always appreciate getting on your call. We're obviously all watching with bated breath what happens between Washington and Beijing in the trade talks. None of us can predict the politics but suppose for a moment that a trade deal were to be reached on a sustainable basis.

If and when that happens how quickly do you think before China reopens the import window to US ethanol gallons?.

Zafar do you want to answer?.

I'm not sure but I think as you know, China is an authoritarian government and they can open it in as quickly as possible. It all depends on the government whatever steps they will take, but I believe that will be very quickly..

Okay..

And a little bit also, again China was a big importer prior to them shutting us out. If they go back to where they were and everyone else and I think this could happen. If ethanol stays price below wholesale gasoline that the export market could be a real driver for our industry.

But again there's no guarantees that China's going to open up and when they do open up there's no guarantees they're going to purchase our product that's for sure. They do whatever they choose to do. And it's very erratic..

Right. .

There is also customer for DDGS, I'm sorry to interrupt. They are very good customer for DDGS which also --it's a big -- it's a big, big product that we sell. I'm sorry. Go ahead..

Right, no, in that context given the uncertainty over the Chinese situation. The industry still got to record export volumes last year even with the loss of China.

Do you expect kind of all else being equal ignoring China for the moment, you think exports will be up or down in 2019?.

I believe I think it will be almost same as we had last year, but export is not major problem at this time. It's a small industry exemption. As you know that they have given 2.26 billion gallons exemption and that is basically is causing a major problem for the industry, industries and farmers.

And if that continue that can be really not healthy for them, overall for the ethanol industries. End of Q&A.

If there are no other questions I will thank everyone for being on the call. And we'll talk to everyone next quarter and your support is very much appreciated. Thank you very much..

Thank you, everyone. .

Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation. And ask that you please disconnect your line..