Rex discontinued its retail operations in 2009 because of competition from both big-box and Internet retailers. The company sold most of its stores and instead focused on alternative energy, rebranding itself in 2010.
“We looked at a number of things and ethanol turned out to be the thing that we chose. Based on the last few years it has been a wise choice for the company and our shareholders,” Rose said.
Rex has ownership in six ethanol production facilities in Illinois, Iowa, South Dakota and Wisconsin with annualized sales of about 631.7 million gallons. With revenues diversified across ethanol, distillers grains and corn oil, Rex reported profit of $87.3 million in fiscal 2014.
Rose said it was time to “give credit” to Rizvi, who joined Rex in 1991 and for the last 17 years has overseen the company’s alternative energy interests.
“What has happened in the last few years is ethanol has just become our company. Zafar has run the ethanol division since we started in this business,” Rose said.
Rizvi has been Rex’s president and chief operating officer since 2010, and will continue to serve as president.
Rose will serve as the board’s executive chairman and focus on strategic development and investor relations.
In January, Rose made headlines with the announcement of a $4 million naming rights deal with the Stuart Rose Family Foundation for Huber Heights’ new $19.3 million music center. The Stuart & Mimi Rose Music Center at the Heights, a 4,200-seat covered outdoor concert venue, opened in May.
“I just wanted to do my part to continue to make southwest Ohio a better place to live. I look at this as a draw for all of southwest Ohio, not just Huber Heights,” Rose said.
In May, Rose attended his first concert at the venue — teen singer-songwriter Shawn Mendes, with his daughter.
“I was the only one above 18 in the whole place that day, other than some mothers,” he said. “To see the excitement and how happy those young kids were was great.”
Rex, headquartered at 7720 Paragon Road in Washington Twp., is one of the few remaining publicly traded companies in the Dayton region. The firm has six employees at its corporate headquarters, including Rizvi and Rose, and about 50 workers at each of its ethanol production facilities.
Rex’s shares have traded at a 52-week high of $110.65 and a low of $51.63.
Last month, the company’s board approved approved a 500,000 share increase in the number of shares in its common stock repurchase plan. When combined with the 31,138 shares remaining from a previous authorization, the company now has the authority to repurchase up to 531,138 shares of its common stock.
Rex is using a cash payment of about $45.5 million from the sale of the company’s interest in Patriot Holdings LLC to buy in shares, to increase the earnings per share for investors, Rose said.
In May, Rex reported first-quarter profits of $3.9 million, or $.50 a share, compared to $21.7 million, or $2.67 a share, for the same period last year. That represented a 82 percent drop in earnings from the first quarter of 2014.
Rex’s earnings are tied to oil, corn and ethanol prices, among other factors. When oil prices plummeted, so did those for ethanol, which is mainly used as a biofuel additive for gasoline.
“It is a commodity market, so it fluctuates very quickly,” Rizvi said.
Rose said oil prices have since stabilized and he expects the company to do “considerably better” in its second-quarter earnings, to be announced in late August.
Rex receives no government subsidies. “The only thing the government does is require the refiners to buy a certain amount of product from us, and that changes from year to year,” Rose said.
Rex continues to look at other alternative energy opportunities, including a $1.5 million investment for a 60 percent equity stake in a patented technology with the potential to create steam at depths below 2,000 feet to produce deep heavy oil.
Rose said the technology is at the trial stage and they hope to open a pilot well in the next 12 months.
However, he cautioned people against buying shares because of the new technology: “It’s a long shot. If it comes in it could be great, but not to count on it.”
Rex could consider anything in alternative energy that has the potential to be profitable.
“As you can see by our history, we’ve never been too limited. We were retailers 10 years ago,” Rose said.
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