REX — REX American Resources Corporation

REX American Resources Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: $23.4 million, or $0.71 per diluted share, compared to $24.5 million, or $0.69 per diluted share in Q3 2024.
• Ethanol Sales Volume: 78.4 million gallons, up from 75.5 million gallons year-over-year.
• Average Selling Price for Ethanol: $1.73 per gallon, down from $1.83 in Q3 2024.
• Gross Profit: $36.1 million, down from $39.7 million in Q3 2024, primarily due to lower prices for ethanol and distiller grains.
• Cash Position: Approximately $335 million in cash, cash equivalents, and short-term investments, with no bank debt.
• SG&A Expenses: Approximately $8.2 million, slightly down from $8.4 million in Q3 2024.

2. Strategic Updates and Business Highlights

• Ethanol Production Expansion: The One Earth Energy facility is on track to expand to 200 million gallons per year by 2026, enhancing production capabilities and operational efficiency.
• Carbon Intensity Score Assessment: REX is evaluating its carbon intensity score to qualify for potential benefits under the 45Z tax credit program, with expectations of a favorable outcome.
• Carbon Capture Initiative: The EPA's Class VI injection well permit application is expected to be finalized by June 2026, with ongoing communication with the EPA regarding the project.

3. Forward Guidance and Outlook

• REX anticipates a stronger fourth quarter in 2025 compared to the previous year, driven by robust export demand and favorable corn production forecasts.
• The company expects to set a new record for U.S. ethanol exports in 2025, with projections indicating high corn production in key states, which should lower input costs.

4. Bad News, Challenges, or Points of Concern

• Declining Prices: The average selling price for ethanol and distiller grains has decreased compared to the previous year, impacting gross profit margins.
• Regulatory Uncertainty: The lack of published guidelines for the 45Z tax credit program creates uncertainty regarding potential benefits and timing.
• Market Pressures: Concerns regarding tariffs affecting exports to Mexico and Canada, as well as fluctuating prices for corn oil and distiller grains, pose risks to profitability.

5. Notable Q&A Insights

• 45Z Tax Credit Program: Management is awaiting Treasury guidelines to assess potential credits but remains optimistic about qualifying. They emphasized the complexity of calculations involved in determining the carbon intensity score.
• Industry Fundamentals: Management acknowledged the impact of tariffs on exports but noted increasing demand from Europe and other countries as a positive offset.
• Carbon Sequestration Pipeline: The permitting process is ongoing, with a moratorium on applications lifted post-July 1. REX is prepared to apply for permits once the moratorium is lifted but is cautious about making commitments until the Class VI permit is secured.

Overall, REX American Resources reported solid financial performance in Q3 2025, with a focus on strategic growth initiatives in ethanol production and carbon capture, despite facing challenges related to pricing and regulatory uncertainties.