Ladies and gentlemen, thank you for standing by. Welcome to the REX American Resources First 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 Mr. Doug Bruggeman, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. I’m joined on the call this morning by Stuart Rose, Chairman of the Board and Zafar Rizvi, Chief Operating Officer. We’ll get to our presentation and comments momentarily, as well as your Q&A, 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’d now like to give a brief overview of our first quarter financial performance. We’re pleased to report earnings per share of $0.50 for the first quarter during a period of lower crush margins for the industry which has since moderated. Sales declined approximately 33% due to lower ethanol and DDG pricing, gallons this year were 55.8 million versus 55.6 million last year for our two consolidated plants. Crush spreads this year were $0.11 versus $0.58 last year. When we’re talking about crush spread we’re just referring to the spread between ethanol and corn pricing. SG&A was down mostly due to lower incentive compensation cost based upon lower profitability in the first quarter this year. Equity income from non-consolidated plants decreased from $8.3 million to $1.5 million, consistent with industry conditions. [Indiscernible] all of the ethanol plants we’re involved in for the first quarter were profitable. We disposed of two former retail properties during the quarter. Since the end of the quarter, we’ve disposed an additional property which leaves us with four former retail properties, three of which we do have tenants in. We paid off our debt last year, as previously reported, so there was no interest expense in the current year. The above items contributed to our net income of $3.9 million versus $21.7 million last year and earnings per share of $0.50 versus $2.67 last year. I’d now like to turn the call over to Stuart Rose, Chairman of the Board, for his comments.

Thank you, Doug. In terms of the industry, it’s stabilizing right now after a very difficult first quarter. Other public companies lost money; we did show some profit. Oil prices are still well below what they were last year, putting pressure on our E85 sales and our export sales as an industry. There’s no finalization of blending requirements that creates demand limbo, potential demand limbo. Ethanol industry inventory levels are high creating pressure still on margins versus last year. And the positive, there’s more driving going on now, there is lower gas prices driving, in my opinion, way more competitive than it was relative to airplane travel so expect gas demand to be up over year to year. And again, if gas demand is up, ethanol should be up, ethanol demand should be up. We have higher crush spreads currently as an industry than we did in the first quarter and the Chinese is still currently in the market for our DDG product, which helps our margins there. In terms of REX, we continue to have the best plants. They are in the corn belt, great rail, they are Fagen ICM plants which as I’ve explained in the past, we consider by far the best technology and best builder, they continue to drastically outperform the other publicly traded companies in our industry. In terms of the big events in the quarter, we agreed to sell our minority interest at Patriot. Actually Patriot will be sold in total and we will be tagging along with our minority interest, we’ll receive approximately $44 million pre-tax when the transaction closes and another $5 million possible that will be in escrow for a while. Again, this is one more event validating our strategy of investing in the very, very best plants. In terms of…

[Operator Instructions] Our first question comes from the line of Katja Jancic with Sidoti & Company.

First, how many volumes of ethanol were sold in the first quarter, what was the volume?

The volume was 55.8 million gallons for the two plants that we consolidated.

55.8 million?

Yes.

That was a little below the production capacity, wasn’t it?

We have done better in the past, yes.

Last year in the first quarter we did 55.6 million gallons, so it’s pretty consistent with last year’s first quarter.

And you continue to operate at the same capacity going forward?

That’s one thing that we should talk about, but we’re trying to expand the capacity. Zafar, do you want to talk about some of the things we’re doing to try and expand that capacity in our existing plants?

I think if you look at the press release, One Earth Energy, about trailing 12 months about 110 million gallons produced and NuGen produced 116 million gallons. We’re trying to look at it like how do we make them to reach 135 million gallons on an annualized basis. We have built some ethanol storage, we have built grain storage and right now we’re looking at approximately within a year or six months starting we’ll spend about $10 million to increase their production to 135 million gallons on annualized basis. We have applied to increase their capacity from EPA permit which is we’re in process of that, we expect to receive at NuGen within a few days and we’re waiting for One Earth Energy to receive that EPA permission to increase our production.

Didn’t One Earth receive expansion already the permission, I think that was in one of the newspapers?

NuGen received last year, but we also re-applied to make sure we are able to use milo also, because in that area we can use milo and grain together. So we re-applied to make sure we have that. But we have started the process already. So we are running much higher rate at this time compared to last year.

Again, it’s our hope that we’re spending this money that we can get the capacity in the 130 million gallon range which would be big.

So that means you would spend about $10 million in the next six months for the expansions?

No, I think we are going little bit slower process, because there are several steps we have to take to make it there. We don’t want to hurry up to reach right away to 135 million gallon. We want to take step by step. I think by the end of this year or beginning of next year, we should be at that rate.

Again, there is no guarantee we’ll hit that rate, but we’re going to work really hard to try to do that.

Our next question comes from the line of Pavel Molchanov with Raymond James.

So I suppose next month we’re finally going to get the EPA target for last year as well as this year and I’m curious what your internal expectations are for the corn ethanol numbers?

I can give you my opinion and that’s all it is, this is my opinion because I have no inside information from the EPA and they’ve been so slow. But I don’t think it’s going to be any different than my own opinion than the 10% that they pretty much indicated for last year and then backtracked on or wouldn’t put that officially. But last year is over, it’s really hard to say after the fact to people that they have to buy more when they were led to believe that that was the number. And I think going forward, they’d probably say 10% too, which isn’t the end of the world because with the increased driving, I think that gets us up there. It should get us up there significantly over last year if that’s what they come up with. That’s my personal opinion of what it will be. It won’t be a number of gallons, it will be a percentage, but I don’t have no more information than anyone, you probably have every bit as much as I do.

I agree that it’s a black box. And then obviously we’ve seen very favorable corn pricing over the past six to nine months. Are you guys locking in any forward-pricing using hedging or collars, or anything like that?

We do very little, we don’t really do hedging. Zafar, do you want to talk about how we normally do it?

I think, no, we’re not doing any hedging at this time. If you look forward ethanol pricing and corn pricing, there is not enough margin to lock in. So what we are really trying to do is look at most of ethanol on OPUS index basis and that’s what we’re really doing at this time.

There is still downwardization of the curve in ethanol. So if you look at the commodity market, it really is never – in this industry, I shouldn’t say never, there has been times when it would have been worthwhile, but very seldom is it worthwhile to go very long in your hedging. That being said, one of our – we’re just talking about the two plants we control, there is some hedging that is done by the Big River operation, but we’re only talking about the ones we control.

Our next question comes from the line of Jeremy Hellman with Singular Research.

Particularly have my ears pricked at your comments on the new build part of things, in particular to my ears it seems like an incremental step down the road and I think you kind of advertise it as such, so two questions on that. At what point do you expect to have bids back if you’re actually going to a bid process?

I would think the decision, we’re getting bids and I would think the decision will be made by year-end of go or no go, a lot depends on what the spread is, how much financing we can get, whether last year’s numbers are going to come back, or whether first quarter numbers are what the industry we are in, so we look at all that stuff and then you make your best decision. Good news is we do believe it can be built at this point in time, which was a question I believe in the last call.

And when you say year-end, you’re speaking calendar year, not fiscal?

Calendar year-end, we should have an answer by then. We should be able to tell shareholders whether we’re going to do it. Again, an indication is that we were outbid on the Patriot plant, so logic tells you that we’re not going to spend more than that.

Do you get any intelligence that other operators are chasing the new build as aggressively as they chased buying Patriot?

I don’t think anyone is chasing the new build like they did buying Patriot. I think other people are looking at expanding and adding large capacity as we are to their existing plants. But there is one other new build that I know of up in I believe it’s in North Dakota, but other than that – and there may be more of the margins, now that we’ve proved that there is a pathway, someone else might be interested, but I don’t know of any – I only know us and that other one where people are even working on it.

One last one from me, you mentioned financing and that was actually going to be my question, whether you would effectively write a check or look to bring in any sort of financing partner as such, and can you just – since I was…

We would only use bank debt, we would only use debt, I don’t which type of debt, but we would not bring an equity partner in if we built the plant we’re working on right now.

And since I wasn’t in this position when you previously, did you build One Earth and NuGen or did you acquire those?

We built One Earth and NuGen was [inaudible], we built it, we were minority interest in at that time, so we were part of building it, excuse me, this is NuGen. One Earth we built, NuGen we were part of building it, but we were not the majority interest when it was built, that came through a convoluted series of transactions that came later.

Our next question comes from the line of [George Stein with Core Partners].

Maybe this question is for Stuart, I guess looking at your balance sheet basically pro forma for the Patriot transaction and with a little bit of factors included, it looks like you guys have roughly $20 a share in cash. And I guess I’m trying to reconcile that with a really improved operating environment, you did about $0.17 a gallon, you’re probably crocking north of $0.30 on an EBITDA basis for this quarter. I guess I’m really surprised that you guys weren’t more aggressive in buying shares back, I mean, I guess could you help me understand?

It was in our situation because we’re bidding on Patriot at that time and could very well have had to write – ended up selling close to $200 million on that and we were prepared to write $200 million check, but we had to be able to have the ability to close quickly should we have got, we were outbid and actually that’s not the end of the world since we owned 26%, a little over 26%, we got higher than we were willing to pay for the majority interest or a minority interest. So from our shareholders perspective, it’s a great transaction. I suspect we will be much more aggressive in the current quarter in buying in shares. I think that we can buy our own shares cheaper than we sold our minority interest in the Patriot transaction. So because of that, we look at our shares as terrific investment period.

Yeah, you took the words right from my mouth, I guess, you guys are trading certainly significantly below that $1.90 nameplate that you guys sold, but I guess is that in your mind the new normal for corn belt ICMs?

Yeah, why wouldn’t it be, Patriot was a good plant, the two plants we have left in our opinion better plants, they made more money last year. So we think the new normal might even be higher than that, which who knows, I don’t know. The company buying it, it’s a great company, they know what they’re doing, they spotted this plant and saw what we knew that it’s a terrific plant and the difference is they were willing to pay more than we were for it. But CHS, who is a very, very reputable operator in the ethanol business, so certainly people look at them as wise purchasers and we do also. The new normal could very well be this or maybe even higher.

And last question just when you go through the process of looking at the new build versus I guess expansion versus your own shares, I guess, given where the price is today on a per gallon, does that play a role in, at least your own stock reflecting that, does that play a role when you think about the new build, whether it’s...

We’re always trying, sure. Whether we can buy our own shares versus – we look at gallons per share basically and whether we can buy our own share – if we can buy our own company cheaper than build, that’s certainly a factor that goes into what we look at. Not the only factor, but a factor.

[Operator Instructions] And our next question comes from the line of Bob Johnson with Satuit Capital Management.

I wondered if you might just be able to give us a sense of proportion between or the spread between your bidding area and the final price on Patriot and did that have a bearing on your decision to proceed possibly towards a new plant?

We were significantly outbid, I don’t want to disclose what the number was, but we were – it was not close. Keep in mind though we were bidding at a time when others in the industry were losing money and we were making what we made this quarter that we just reported, so things have changed in a positive direction. But at the time we were bidding things were what they were.

And have you been considering a new plant prior to that outbid by the other people?

Yes, absolutely we were considering, we’ve been working on that, on this for a while now.

Mr. Rose, there are no further questions at this time. I will turn the call back to you. Please continue with your closing remarks.

Okay. Again, we want to thank everyone for being a shareholder. And it was a difficult first quarter, but things are looking up for the second quarter. And again, thank you for being a shareholder. Bye.