Ladies and gentlemen, thank you for standing by. Welcome to the REX American Resources Second Quarter Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] 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 2015 second quarter conference call. We’ll get to our presentation and comments momentarily, as well as your Q&A 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 risk and uncertainties within the meaning 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 commentary. REX is pleased to report another strong earnings report for its fiscal 2015 second quarter relative to industry dynamics. Sales for the quarter did decline approximately 24% for the quarter, 29% for the first half of the year, primarily reflecting lower ethanol and DDG pricing. Sales for the quarter were based upon 57.9 million gallons this year versus 54.5 million gallons of ethanol in the prior year. Gross profit declined from $38.8 million to $18.3 million for the second quarter as the crush spread was approximately $0.22 in the current year versus approximately $0.61 in the prior year. Gross profit for the first half of fiscal 2015 was $27.4 million versus $75.5 million in the prior…

Thank you, Doug. On the positive side, margins improved versus the first quarter. The rise was primarily due to a larger crush spread which had to do with a little bit higher price for the ethanol that we saw during the first quarter and higher DDG pricing than the first quarter. The sale of the interest in Patriot, of course increased their earnings per share; they gained on that and also decline in natural gas prices helped us. DDG prices during the second quarter actually were above the -- on a price per ton basis above the price of corn and it benefitted from demand from China. Again, we proved as we do almost every quarter that we have the -- among the best plants in the industry, we have Fagen/ICM technology, good rail and good corn access. And it continues to allow us to outperform what other -- what a typical plant in our industry does. Going forward, our earnings per share for the next quarter are tracking slightly -- our earnings and earnings per share tracking slightly above our first quarter and below our second quarter. Crush margins are being hurt by oil prices. They continue to decline. And that puts a cap on or at least does not help the price that we can sell our ethanol for and it’s something that could be an issue as -- if oil prices continue to decline and wholesale gasoline becomes cheaper than ethanol, it’s something we worry about. We also have the political season opponents [ph] through Iowa; most Republicans aren’t adamantly against ethanol, they don’t necessarily or in most cases don’t support ethanol but aren’t adamantly against this. So, we don’t expect any legislation to come out, certainly not before Iowa and certainly not while the Democrats are…

[Operator Instructions] So, our first question comes from the line of Jeremy Hellman with Singular Research. Please proceed with your question.

Mainly wanted to touch on one of your comments there towards the end Stuart in terms of the decision to discontinue pursuit of a new build and was curious for some more color on that. And then also if that has any implications for potential purchase of existing plants that the market for those has changed favorably.

I’d add to your first question. When we first pursued a new build, margins were significantly higher than they are today. We also in the meantime have received some approvals, not all the approvals we need but some approvals. And we think we’re on track to increase the size of our existing plants. So, it’s as simple as one is significantly less, significantly less risk to our shareholders. And to be honest, buying in shares at current prices is a much more attractive option to our board and to me than building a brand new plant from scratch and all the risk involved in doing that. We can increase our earnings per share using the same capital buying in shares and expanding our plants. So, we chose at this time to go that route. In terms of opportunities, I -- we have not seen any new opportunities. Most people in the industry don’t have a lot of debt; there’s no urgency to sell plants -- sell good plants. We wouldn’t buy bad plants. No urgency to sell good plants. So, we have not seen anything on that front to-date. Nothing has been presented to us new that would be of interest. That doesn’t mean that won’t happen in the future but to-date nothing, we have nothing to report on that.

And then just to follow up on the share buyback efforts. Do you have -- trying to think of the best way to frame the question; is there kind of a point where you say yourself that the resulting illiquidity in the marketplace becomes a concern? Do you kind of have a kind of target share count level or anything like that in mind or is it more just kind of opportunistic as the days…

It’s absolutely opportunistic and it’s funny that you say that. A few years ago when our share count was much higher, our stock was trading maybe 20,000-25,000 shares a day, the day it trades 150 -- at a much, much lower price today it trades on 150,000 today and there’s a lot of liquidity out there. We’re cleaning some of it up but there’s a lot of liquidity. It has not been an issue. Even though we have less shares, it’s actually much bigger float than there was few years ago. And to answer your question directly, there’s no limit. If we look at the stock as a value and we have the cash and it’s a dip, my opinion is -- and almost always inevitably when there’s a dip like that there’s float. My opinion is it helps the shareholder, the existing shareholders to buy their shares in; it helps the people that want to sell their shares. In all ways, it’s a good thing for shareholders and we do not limit ourselves by float.

Our next question comes from the line of Katja Jancic with Sidoti & Company. Please proceed with your question.

Stuart, you mentioned upgrading your facilities to increase the capacity. Can you talk a little bit more about that? How much you can increase, how much that will cost?

Zafar, do you want to answer that question?

Yes. We plan to spend somewhere between $10 million to $20 million over next 12 months. We think we can increase our capacity somewhere 10% to 15% of capacity. So, we’re expecting that we will be able to produce close to 135 million gallon in each location.

When Zafar speaking about each location, we’re talking about consolidated.

So, this will be -- the $10 million to $20 million will be in the next 12 months, correct?

That’s correct.

Now just going -- you are able to generate very strong free cash flow even during the tough times. You have a lot of cash on the balance sheet. What’s really beyond just share buybacks? Are there any other plans beyond…?

We’re always looking at other alternative energy things to look at but with oil prices where they are, it’s hard to find anything that’s great today. We have our heavy oil business that we’ve been trying to get permitted in California and hope to have that permitted, and we have a made little progress on that; hope to have that permitted. But again, that won’t be a money maker. The best thing that we can see, if the industry stays tough, there might be that opportunity to buy an existing plant at a price that we consider reasonable. If that happens, we have the money to do it; we have the liquidity to do it. Other than that expanding our plants and buying in shares really gives you the same effect. We took basically money that we received on selling the minority interest in Patriot and reinvested it in REX. And certainly as we’re making money, we expect it to increase our earnings per share forever basic one.

Is there a chance you could create an MLP?

I have seen other people create MLPs and I would say -- to answer your question, I think the buyback is our way of returning. I’m not saying it’s good or bad in MLP but buyback in my mind is a best way to return capital to shareholders when you are a small company. You can’t do 50 different things and this is -- you better off focusing on one thing whether it’s paying dividends, buyback or doing an MLP whatever. We look at this as the best. The board has historically looked at this as a best way of spending our excess capital. And it may change in the future, but that’s where we are today.

[Operator Instructions] Our next question comes from the line of Clayton Vernon [ph] with Vector Capital. Please proceed.

Mr. Rose, going forward, where we can we expect the SG&A expenses on a quarterly basis today? They were up $2 million this quarter as you explained, hitting some performance bounces. But on a consolidated basis, the company is a bit smaller than it was last quarter. Can we expect these to be under $4 million on a quarterly basis?

Doug, do you want to answer that?

Yes. They should be relatively stable throughout the year. The only thing that -- only variability you really get in that of any significance is when we book that incentive compensation. So, it should be relatively consistent subject to company profitability.

And second question, you mentioned excellent rail Mr. Rose. But by one metric, the basis the price you’re receiving for the ethanol versus the swaps that are created on the stream, that is continued to drift down a bit. Are you facing increased costs from the rail or any other logistical difficulties or does this simply reflect some form of the a premium that’s built into the stream that’s available to producers as yourself?

Zafar, do you want to answer that?

I think it certainly depends on also which location we are shipping from. It is the transportation involved. So, that’s the reason -- if we’re shipping from new NuGen plant, certainly there is a transportation involved. And if we’re shipping from One Earth Energy, at Illinois, transportation is very cheap. That’s the reason it reflects that way.

Our next question comes from the line of David Koenig with Candlewood Investment Group. Please proceed.

I had a quick question. You guys have sold an asset at a $1.65 on a per gallon basis. You guys are trading significantly below that which I see why you guys are doing the share buybacks. But where would you be interested in acquiring assets, what sort of context? And secondly, looking at some of your competitors, they seem to be trading at a significant discount to your stock. So, is your stock the right thing to be buying or is it some of the competitors?

We feel we have by far the -- relative to the public competitors, our plants are -- we consider our plants premium, we consider ourselves to be best of breed in ethanol and are -- depends on what metric you use on an earnings per share basis. I don’t think we are -- I think we’re probably -- I don’t think we’re -- I don’t know their stocks are well on that closely but I believe historically and probably now on an earnings per share basis, we sell at a lower -- we’re the best company and I believe our earnings per share basis is probably lower than theirs. So, I don’t know what metric maybe on a per gallon basis, we sell at a little higher price. But again we showed we have really, really good gallons and our earnings show that we have great plants. The question on what price we would pay for a plant. Historically, we’ve always been bargain hunters in this industry; it’s tendency to also react and on the downside. So, the opportunity comes up. I can’t tell you what price the board would authorize paying for a plant. I just don’t know. But again, we felt on the selling side that we received a very good price for a minority interest; what price we would pay on the buying side, I can’t tell you today.

And do you always look at things on earnings per share basis? Because we tend to look at things just on a per gallon basis of what you’re paying for the plants and that’s the discount that I am looking at…

Yes, and we, because we -- so if I were other people who had a lot of gallons not making much money, I would look it as a per gallon basis but since our plants make really -- relative to the industry do very well and always have done very well, we look at it on an earnings per share basis. I think most financial people in the general financial community probably look at it on an earnings per share basis whereas analysts dig a little deeper, use per gallon as one of their metrics, certainly not their only metric, but one of their metric. Another thing that we look at is book value per share. And like you mentioned earlier, we were able to buy our shares at significantly below replacement value for these plants and have done so.

And on earnings per share basis and this is the final question. But on earnings per share basis, you’re including the gain on sale of investment. Obviously that’s not going to be recurring sort of business, so there is no sort of multiple applied to it. So, doesn’t it seem a little bit high right with a 2.16 per share because you’re including that?

Again that’s up for you guys to decide. So, we put the numbers on the table. And if you want to be in the ethanol industry, we strongly feel we have a great company, great plants, great people and have done very, very well relative to the industry consistently.

I agree with you completely. I see some of the public comps out there trading at $0.70 per gallon. So, it’s attractive at these levels. Thank you for the time.

There are no further questions at this time. I’ll turn the call back over to you. Please continue with your presentation or closing remarks.

We’d like to thank everyone for their support and we appreciate it very much. And thank you for listening. Bye.