Welcome to the REX American Resources Fiscal 2019 Fourth 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 now like to turn the conference over to Doug Bruggeman, Chief Financial Officer. Please go ahead.

Thank you. Good morning and thank you for joining REX American Resources fiscal 2019 fourth quarter conference call. We’ll get to our presentation and comments momentarily as well as a question-and-answer session, but first I will 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 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.

Thank you, Doug. During the current quarter, ethanol as a whole operation is running at a loss mostly caused by ethanol. Among the reasons that ethanol is running at a loss was a bad harvest in part of the country, as Doug explained, low oil prices, low ethanol prices, COVID-19 outbreak. In terms of refined coal, the plants are currently running idle. We believe that’s due to low natural gas prices and lower than expected demand. The price of coal now in our opinion is making it uneconomical to run the refined coal operation. On the good side of that, we have no need for the tax credits at this time. So it's not something that would definitely need running. In terms of our company itself, we saved our cash which currently looks like a very, very good move. Consolidated cash is about 205 million. Uses of this cash, which we are now – we’re certainly now actively looking at, include possible buybacks. About 350,000 shares remain authorized. Right now, our stock is selling at a price that possibly makes that attractive depending where it is on any given day. We’re also looking at carbon capture possibilities in Illinois. We’re still always looking at new businesses. This is the same company that 10 years ago sold TVs, so we're certainly capable if this is prolonged in the ethanol business of making a pivot. And we’re looking if an ethanol plant, a very good one comes along at a very bargain price, we would consider it. Zafar Rizvi, our Chief Executive Officer will now discuss further the ethanol business and the overall business. Thank you.

Thank you, Stuart. Good morning, everybody. As I mentioned in our previous three calls, a challenging environment has continued throughout the last year. The company faced several issues due to weather-related problems which delayed the planting of corn and resulted in an unexpected delay in the harvest. Commodity prices in 2019 was subject to significant volatility. We’re struggling to obtain an adequate supply of corn at NuGen facility in South Dakota where production has fallen off historic levels and resulted in a higher last corn basis, our production of this plant was interrupted including no operation in October due to corn availability. We entered fiscal 2020 facing continued challenges, including a recent decline in the crude and ethanol market, a decline in the price and the emergence of the COVID-19 pandemic, all of which resulted in the decrease in the fuel demand and a negative impact on the gross margins.

Thank you. In conclusion, we’re going through difficult times. It’s probably as bad as I’ve ever seen in the ethanol business. With corn prices and corn availability, oil going down, COVID-19, a lot of things hitting us at the same time, but we have an experienced management team. We know how to pivot when we have to. We have lots of cash. We have what we feel is the best people to handle these times, and we will do our best to handle these times. We hope to come out of it better than ever. We should, but we’ll see in these uncertain times. It’s like I said very difficult right now. And now, I’ll leave the floor open to questions.

Thank you. . And our first question comes from the line of Pavel Molchanov with Raymond James. Please proceed with your question.

Good morning. Thanks for taking the question. These are interesting times to say the least. Since everything seems to evolve around the pandemic these days, I thought I would ask about what several other ethanol companies have started to do, which is repurpose or at least partially begin to use their ethanol plants to supply industrial alcohol for the manufacturing of hand sanitizer as per the treasury’s emergency authorization from last week. Do you have any interest in doing that at your facilities?

Zafar, you want to answer?

Yes. Pavel, let me say that we are looking into this, but we need to make sure we follow the FDA SOP which clearly there’s a guideline and we have to register with the FDA to make sure to get the license. We are also looking at some of the pharmacy founders who can produce this under their license, but – and also we have put forward approximately 8,500 gallons to some other third party to produce sanitizers for the hands. But at this stage, I think certainly there is some demand and we are looking into it. But as far as concerns, a lot of gallons will be utilized. I don’t think there are going to be so many gallons of ethanol will be utilized, because you can see we -- One Earth Energy which we sold these gallons at this time is 150 million-gallon plant and we just sold 8,500 gallons so far. So yes, we will be looking into it but at this stage we do not know how that business is going to turn out.

We will do what we can, if needed, and we are working on talking to hand sanitizer companies. But as Zafar just said, anyone that thinks that’s going to make any difference on the bottom line I would caution them that it will be very, very minimal. We make millions and millions of gallons and we’re talking about buying hundreds of thousands of gallons at most. There is no shortage of ethanol allowing our people better to sell it. And the real problem is getting the bottles and getting the licenses and other stuff Zafar just described it. And we are – we want to do what we can to help, and we do – we will do, but don’t expect that to have any significant material change to our forecast which we just went over.

Understood. One more on kind of COVID-related question. So you guys of course are in Ohio which is one of the states under lockdown and more and more we are seeing these lockdown and stay-at-home orders at the state level. To your knowledge, are any of the ethanol production facilities, either the ones you operate or other plants, are any of them forced to shut down because of the lockdown just across the industries?

I think that basically there is some of the reason we are considering One Earth Energy because as you know Illinois has locked down, but on the same time the margins are affecting due to COVID-19 and it’s not also economically to produce ethanol at $0.99 or $0.85 when the corn is $3.51. So I think there is no margin also, but we are also starting to follow the guideline what exactly every state or even cities are issuing those. So in both the locations, we have clear-cut instructions and guideline where there should be distance they have and how close they were working and what policies are implemented, because safety of our employees is the most important than anything else and we are taking all of those steps. Yes, certainly, this is affecting but the major impact of not only COVID-19 is all of the ethanol pricing and the gasoline pricing and that leading to the shrinking margin. So that’s really happening.

Pavel, as you know, a lot of companies have announced shutdowns and many others I’m sure are considering shutdowns. At this point, whether it was the state causing the shutdown or the margins, it’s the same effect. We can’t may money at this cycle.

Yes. Last question for me about this one – on a separate topic. So it’s been about three months since the Phase 1 trade deal with China. Obviously a lot has happened since then in China and everywhere else. To your understanding, is China buying any U.S. ethanol at this point?

No. We have not seen really any even rumors in the market that China is buying any of ethanol or DDG. But we heard previously one time that China is buying DDG, but later on find out that was not Chinese who were buying that DDG. But there certainly is rumors going on that China is buying corn. That’s the reason yesterday I think the corn price was a little bit gone higher because there was – China is trying to buy 1 million metric tons. But as the corn price goes up and ethanol price is decreasing, consistent with crude, it really does not help unless we can also sell ethanol price also through the same way. But it’s really – we have not seen any ethanol purchase from China at this stage.

Thank you, guys. Stay safe.

Thank you.

Thanks, Pavel.

.

If there’s no more questions, I thank everyone for listening today and hopefully things will get better in the future. We appreciate you sticking with us, whoever is sticking with us. Thank you very much. Bye.

Thanks, everyone. Bye-bye.

Thank you. That does conclude the conference today. We thank you for your participation and ask that you please disconnect your lines. Have a great day.