REX American Resources Corporation (REX) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Despite some positive elements like increased ethanol sales volumes and a promising strategic plan for expansion, there are significant uncertainties, particularly around the 45Z tax credits and declining distiller grain sales. The Q&A revealed management's lack of clarity on key issues, which may cause investor concerns. The overall financial performance shows mixed results, with a slight decrease in net income but an increase in earnings per share. These factors combined suggest a neutral impact on the stock price.
Key Financial Performance
Ethanol Sales Volumes 78.4 million gallons in Q3 2025 compared to 75.5 million gallons in Q3 2024, reflecting an increase in sales volume.
Average Selling Price for Ethanol $1.73 per gallon in Q3 2025 versus $1.83 in Q3 2024, showing a decrease in price.
Dried Distillers Grain Sales Volumes 160,000 tons in Q3 2025 compared to 170,000 tons in Q3 2024, with a decrease in average selling price from $147.14 per ton to $139.93 per ton.
Modified Distiller Grain Volumes 21,000 tons in Q3 2025 with an average selling price of $57.03 per ton.
Corn Oil Sales Volumes 27.4 million pounds in Q3 2025, up approximately 17% from the prior year, with an increase in average selling price of approximately 36%, leading to a 60% increase in sales revenue.
Gross Profit $36.1 million in Q3 2025 compared to $39.7 million in Q3 2024, primarily reflecting lower prices for ethanol and distiller grains.
SG&A Expenses $8.2 million in Q3 2025 compared to $8.4 million in Q3 2024, showing a slight decrease.
Interest and Other Income $3.2 million in Q3 2025 compared to $4.6 million in Q3 2024, reflecting lower rates and lower investments.
Income Before Taxes and Noncontrolling Interest $35.5 million in Q3 2025 compared to $39.5 million in Q3 2024, showing a decrease.
Net Income Attributable to REX Shareholders $23.4 million or $0.71 per diluted share in Q3 2025 compared to $24.5 million or $0.69 per diluted share in Q3 2024, reflecting a slight decrease in net income but an increase in earnings per share.
Cash, Cash Equivalents, and Short-term Investments $335.5 million at the end of Q3 2025, with no bank debt.
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Operating Highlights
Ethanol Production Expansion: The One Earth Energy facility expansion to 200 million gallons per year is on track for completion in 2026, enhancing production capabilities and operational efficiency.
Carbon Capture and Sequestration: Invested approximately $155.8 million in carbon capture and ethanol expansion projects, with a revised budget of $220-$230 million. The EPA estimates the Class VI injection well permit application will be finalized in June 2026.
Ethanol Export Growth: U.S. ethanol exports are 14% higher than the first 8 months of 2024, with 2025 expected to set a new record for U.S. ethanol exports.
Financial Performance: Net income per share of $0.71, with $335 million in cash and no bank debt. Gross profit for Q3 was $36.1 million, reflecting lower ethanol and distiller grain prices.
Corn Oil Sales: Corn oil sales volumes increased by 17%, with a 36% rise in average selling price, leading to a 60% increase in sales revenue.
Carbon Intensity and 45Z Tax Credits: Actively assessing operations to assign a carbon intensity score and capitalize on 45Z tax credits, expecting favorable outcomes.
Strategic Positioning: Positioning for long-term growth through ethanol production expansion, carbon sequestration, and leveraging 45Z tax credits.
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Risk or Challenges
Ethanol Price Volatility: The average selling price for ethanol decreased from $1.83 per gallon in Q3 2024 to $1.73 per gallon in Q3 2025, impacting gross profit.
Regulatory Delays: The EPA's estimated finalization of the Class VI injection well permit application for carbon capture is delayed until June 2026, potentially affecting project timelines.
Input Cost Variability: While corn supplies are currently favorable, any future disruptions or price increases could adversely impact margins.
Market Dependency: The company's performance is heavily reliant on sustained robust export demand for ethanol, which could be impacted by global market conditions or trade policies.
Carbon Intensity Assessment Uncertainty: The company is awaiting final guidance from the Treasury Department on the 45Z tax credit program, which could affect near-term financial benefits.
Decline in Distiller Grain Sales: Sales volumes and average selling prices for dried distillers grains and modified distillers grains have decreased compared to the prior year, impacting revenue.
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Guidance & Outlook
One Earth Energy facility expansion: The expansion to 200 million gallons per year is on track for completion in 2026, which will significantly enhance production capabilities and operational efficiency.
45Z tax credits: The company is actively assessing operations to assign a carbon intensity score, expecting to qualify for credits below the threshold. Final guidance from the treasury department is awaited.
Carbon capture and sequestration initiative: The EPA estimates the Class VI injection well permit application will be finalized in June 2026. The company remains within the revised budget range of $220 million to $230 million for ethanol expansion and carbon capture projects.
Ethanol export demand: U.S. ethanol exports are expected to set a new record in 2025, with export volumes running 14% higher than the first 8 months of 2024.
Corn production outlook: The USDA projects high corn production in South Dakota and Illinois for the 2025-2026 harvest season, which is expected to drive lower input prices and benefit the business.
Fourth quarter 2025 expectations: The company expects the fourth quarter to generate a higher net profit than the profitable fourth quarter of the previous year.
2026 outlook: The company anticipates another year of growth and improved performance, supported by a strong balance sheet, no debt, and expanding business opportunities.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What are the key hurdles and timing for the 45Z tax credit program?
A:The treasury has not issued guidelines yet. The company is waiting for guidelines, prevailing wage requirements, and CI score calculations. They are reviewing facts with experts and hope to provide updates next quarter but are not ready to give specific numbers at this time.
Q:What is the impact of tariffs and crack spreads on the industry looking forward to 2026?
A:Initially, tariffs had a significant impact, especially concerning exports to Mexico and Canada. However, ethanol exports have increased, with January to August exports reaching approximately $1.4 billion compared to $1.2 billion last year. Corn production in Illinois and South Dakota is at an all-time high, positively impacting production costs. On the downside, soybean oil prices have dropped, and there are concerns about DDG exports.
Q:How is the permitting process for the carbon sequestration pipeline progressing?
A:The Illinois Commerce Commission (ICC) is working on pipeline requirements and has held public hearings. The moratorium on the pipeline ends on July 1, after which applications can be submitted. The company has easements for a 6-mile pipeline built to avoid the Mahomet Aquifer.
Q:Will the company generate 45Z credits before the indirect land use change occurs on January 1?
A:The company is working diligently to obtain credits this year but cannot guarantee them due to the lack of published regulations and clarity on carbon intensity scores. They hope to achieve credits retroactively but cannot confirm at this time.
Q:What are the company's plans for excess capacity in carbon capture wells and potential partnerships?
A:The company is focusing on Well #1 first and has enough capacity for third-party carbon sequestration in all three wells. They have been contacted by several parties but will not negotiate contracts until they receive the Class VI permit and complete the pipeline. They are also calculating factors like prevailing wages and treasury guidelines to ensure accuracy before making commitments.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers or lacked clarity on several topics, including the exact timing and amount of 45Z tax credits, the specifics of carbon intensity score qualifications, and potential partnerships for carbon capture wells. They emphasized ongoing calculations and the need for regulatory clarity before providing detailed information.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
American VP
CEO achievement
CFO Treasurer
Conference reminder
Development REX
EPA process
Earth Energy
Energy success
Finance CFO
Instructions host
Mr Chief
REX competitor
REX focus
Resources Conference
Resources strength
SGA Interest
Stuart expansion
Treasurer REX
Treasurer Zafar
VP Finance
achievement detail
allocation result
application REX
assessment expert
attention detail
benefit
capital
carbon intensity
excellence
increase
intensity score
track completion
REX Transcript
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Positive5-28
The earnings call presented strong financial performance with revenue and net income growth, improved gross margins, and increased operating cash flow. Although there were concerns about risks in forward-looking statements, the financial results and strategic initiatives like capacity expansion and carbon capture projects suggest a positive outlook. With no major negative factors discussed, a positive stock price movement is likely.
REX American Resources Corporation (REX) Q4 2025 Earnings Call Transcript
Positive3-26
The earnings call reveals strong financial performance with significant increases in net income and EPS driven by 45Z tax credits. The expansion and carbon capture initiatives, despite some uncertainties, suggest future growth. The Q&A indicates optimism about continued tax credits and strong ethanol demand, though some lack of clarity on carbon capture impact. Overall, the positive financial results and future growth prospects outweigh the uncertainties, leading to a positive sentiment.
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Positive3-26
The earnings call and Q&A indicate positive sentiment, driven by increased net income, improved gross profit, and promising future tax credits. The strategic expansion plans and anticipated record ethanol exports add to the optimism. Despite some uncertainties, such as the CCS project's impact and regulatory timelines, the overall outlook is positive due to strong financial performance and future growth prospects.
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Frequently Asked Questions
Where does this earnings call transcript come from?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
