Earnings call transcript: REX American Resources beats EPS forecast in Q2 2025

REX American Resources Corporation reported its Q2 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.43, compared to the forecasted $0.38, marking a 13.16% surprise. Despite this positive EPS result, the company’s revenue of $158.56 million fell short of the anticipated $165 million, a 3.9% miss. The pre-market stock price reacted with a decline of 1.26%, trading at $60.21, down from the previous close of $60.98. According to InvestingPro data, REX maintains strong financial health with an overall score of "GREAT," and holds more cash than debt on its balance sheet. The company’s market capitalization stands at approximately $996 million.

Key Takeaways

• EPS exceeded forecasts by 13.16%, showcasing strong profitability.
• Revenue missed expectations by 3.9%, indicating potential challenges in sales.
• Pre-market stock price fell by 1.26% following the earnings announcement.
• Ethanol sales volumes increased, but gross profit and net income declined year-over-year.

Company Performance

REX American Resources demonstrated a mixed performance in Q2 2025. While the company achieved a higher EPS than expected, its revenue fell short of forecasts. The company sold 70.6 million gallons of ethanol, up from 65.1 million gallons in Q2 2024. However, the average selling price of ethanol decreased to $1.75 per gallon from $1.79, impacting overall profitability. The company’s gross profit declined to $14.3 million from $19.8 million in the same quarter last year, and net income dropped to $7.1 million from $12.4 million.

Financial Highlights

• Revenue: $158.56 million, a decrease from the forecasted $165 million.
• Earnings per share: $0.43, down from $0.70 in Q2 2024.
• Gross profit: $14.3 million, down from $19.8 million in the previous year.
• Ethanol sales volume: 70.6 million gallons, up from 65.1 million gallons.

Earnings vs. Forecast

REX American Resources reported an EPS of $0.43, surpassing the forecasted $0.38, resulting in a 13.16% positive surprise. However, the company’s revenue fell short of expectations, coming in at $158.56 million against the forecast of $165 million, a 3.9% miss. The positive EPS surprise reflects effective cost management despite revenue challenges.

Market Reaction

Following the earnings release, REX American Resources’ stock price decreased by 1.26% in pre-market trading, reaching $60.21. The decline reflects investor concerns over the revenue miss, despite the positive EPS performance. The stock remains near its 52-week high of $61.7, indicating overall market confidence in the company’s long-term prospects. InvestingPro analysis shows the stock has delivered impressive returns, with a 56.6% gain over the past six months and a beta of 0.58, suggesting lower volatility than the broader market. However, technical indicators suggest the stock is currently in overbought territory. For deeper insights into REX’s valuation and 13 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking ahead, REX American Resources anticipates improved performance in Q3 2025, although not matching last year’s record Q3. The company is focused on margin expansion through year-end and continues to invest in capacity expansion and carbon capture initiatives. Future earnings projections suggest growth, with an EPS forecast of $1.64 for FY2026 and $3.22 for FY2027. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels. The company maintains a healthy current ratio of 9.37, with liquid assets significantly exceeding short-term obligations, positioning it well for planned expansions. Want to discover more undervalued opportunities? Check out our Most Undervalued Stocks list on InvestingPro.

Executive Commentary

CEO Zafar Rizvi highlighted the company’s strategic focus on "profit, position, and policy," emphasizing sustainable growth through efficient operations. Executive Chairman Stuart Rose noted the company’s strengthened community presence and commitment to environmental initiatives. Rizvi also expressed optimism about margin expansion supported by favorable market dynamics.

Risks and Challenges

• Revenue shortfall highlights potential sales challenges.
• Declining ethanol prices could pressure future profitability.
• Market volatility may impact stock performance.
• Regulatory changes in ethanol production could pose risks.
• Supply chain disruptions may affect operational efficiency.

Q&A

During the earnings call, analysts inquired about the progress of the One Earth Energy facility expansion and carbon capture initiatives. Management addressed utility interconnection issues and provided updates on the carbon capture pipeline, highlighting ongoing efforts to improve efficiency and reduce carbon intensity.

Full transcript - REX American Resources Corp (REX) Q2 2026:

Conference Operator: Greetings, and welcome to REX American Resource Corporation Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.

Doug Brageman. Thank you. You may begin.

Doug Brageman, CFO, REX American Resources: Good morning and thank you for joining REX American Resources quarter two twenty twenty five conference call. With me on our call today are Stuart Rose, REX Executive Chairman and Zafar Rizvi, the REX Chief Executive Officer. We will get to our presentation and comments momentarily as well as your questions. 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, 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 ks and 10 Q. REX American Resources assumes no obligation to publicly update or revise any forward looking statements. I would now like to turn the call over to our Executive Chairman, Stuart Rose.

Stuart Rose, Executive Chairman, REX American Resources: Good morning and thank you to everyone for joining us today. During the second quarter, REX extended our success in our core ethanol production business, moved our One Earth Energy expansion project forward and saw supportive near term tailwinds develop for our business as we head to the second half of the year. Overall, REX exited the second quarter in a great position to continue delivering value to our shareholders. Passage of the One Big Beautiful Bill Act during the quarter was very supportive of our carbon capture and sequestration project, The continuation of the 45Q tax credit extension of the 45Z tax credit through 2029 important to the economics of our project put us in good position. We wait on approvals from the county, state and EPA.

We are pleased with these developments and believe they set up REX for long term success. During the quarter, we maintained our strong balance sheet and continue to have ample cash to complete our several growth initiatives as well as other opportunities which could arise. These include any potential acquisition opportunities that meet our strict operational and financial criteria or additional future organic growth. This morning, we announced that our Board of Directors has authorized a two for one stock split that would be affected by a 100% stock dividend. Their stock recently traded at all time highs.

We saw this as an opportunity to reward our loyal shareholders and increase liquidity in our shares. Split will affect shareholders of record as of 09/08/2025. Overall, the REX team executed at a high level once again, delivering value to our shareholders and moving our business forward efficiently. We are very proud of the work the team does every day to ensure our company’s success drive value for shareholders. I’ll now turn the call over to CEO, Tafar Rizvi to provide updates on our ongoing projects.

Thank you, Stuart.

Zafar Rizvi, Chief Executive Officer, REX American Resources: The one ARC facility expansion is progressing steadily. The previously mentioned energy efficiency initiative has been completed with a focus on optimizing the reduction of the expanded plants carbon intensity. Most of the previous expansion work is already complete, the initial capacity expansion, which will increase annual ethanol production capacity to 175,000,000 gallons is expected to be fully operational in 2026. Turning to carbon capture, the recently enacted Big Beautiful Bill Act has further strengthened the economics of REX proposed carbon capture and sequestration project by preserving both the 45Q and 45Z tax credits. While we also extended 45Z through 2029, with this outcome, we are positioned to maximize the benefit from the tax credit program through expansion of our ethanol production capacity to 175 and then to 200,000,000 gallons.

The legislation also simplified 45Z requirements by removing mandates tied to climate smart farming practice. Also, thanks to the legislation, lean fuels produced with feedstock source outside The U. S, Mexico or Canada will not be eligible for the 45 credit pending final treasury guidelines. This supports our business as well as that of our former partners. As of today, the EPA estimate that our Class six injection well permit application will be finalized in March 2026, which has been moved forward from April 2026 as per the EPA website.

Rex remains in active communication with the EPA on our application and we look forward to the final approval of this permit. As of the end of the second quarter, we have invested a total of approximately $126,700,000 in carbon capture and ethanol expansion projects. We remain within our revised combined budget range of $220,000,000 to $230,000,000 for both projects. I’ll now hand the call over to Doug Bergman to discuss our financial results.

Doug Brageman, CFO, REX American Resources: Thanks, Zafar. During the 2025, our ethanol sales volumes reached 70,600,000 gallons compared to 65,100,000 gallons Q2 twenty twenty four. The average selling price for ethanol was $1.75 per gallon during the quarter versus $1.79 in the prior year. Dry distiller grain sales volumes were approximately 148,000 tons for Q2 with an average selling price of $143.63 per ton compared to approximately 133,000 tons at price of $164.45 per ton in the prior year. Modified distillers grain volumes totaled approximately 19,000 tons, an average selling price of $64.41 per ton.

Foreign oil sales volumes were approximately 23,100,000 pounds during the quarter with an average selling price of $0.54 per pound. Compared to the prior year, we sold approximately 14% more pounds in the second quarter and also experienced approximately a 26% increase in prices, which led to approximately a 46% increase in sales dollars. Gross profit for the second quarter was $14,300,000 compared to $19,800,000 in Q2 twenty twenty four. This primarily reflects lower sales prices for dry distiller grains as the average price dropped from $164.45 to $143.63 We also paid higher shipping cost, which is recorded as cost of goods sold and impacts gross profit, but does not impact sales. Selling, general and administrative expenses were approximately $6,200,000 for the quarter compared to $6,400,000 in Q2 twenty twenty four.

Interest and other income totaled $3,100,000 for the quarter compared to $4,400,000 in quarter two twenty twenty four, reflecting lower rates and lower investments. Income before taxes and non controlling interest was approximately $12,100,000 compared to $19,500,000 in Q2 twenty twenty four. Net income attributable to REX shareholders was $7,100,000 or $0.43 per diluted share compared to $12,400,000 or $0.70 per diluted share in Q2 twenty twenty four. We ended the first quarter with cash, cash equivalents and short term investments of $310,500,000 REX continues to maintain the strong financial position with no bank debt. I’ll now turn things back to Zafar.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Thanks, Doug. REX strategy continued to be guided by the three Ps profit, position and policy. Profit, our dedicated team has delivered 20 consecutive quarters of the profitability, reflecting strength, discipline and commitment. Our third quarter for 2025 is on pace to outperform the second quarter, but will not be as strong as our last year’s third quarter, which was our second best quarter on record. I’m particularly pleased with the increased yield of corn oil production, which reflects the consistent and efficient operation of the overall plants.

This improvement demonstrate not only the effectiveness of our process, but also the dedication of the team in maintaining high standard of the performance. Position ethanol expansion and carbon capture initiative remains moving forward and within budget positioning REX for sustainable long term organic growth. Policy, 40 policies measures particularly the continuation of the 45Q tax credit and the extension of 45 gs tax credit through 2029, enhance the economics of our operation and strengthen future earning potential. Looking ahead, REX anticipates better performance in the 2025 compared to the first February of the year, supported by favorable corn supply trends and steady demand, particularly from rising ethanol exports. Exports are running about 10% ahead of 2024 levels through June, according to the Renewable Fuels Association, with 2024 already a record year, that expects 2025 to set a new export record.

As far as feedstock supply, early estimates also suggest The U. S. Corn crops is on track for a potential record harvest, which should further benefit REX. We believe this favorable market dynamic sports margin expansion through year end with additional export upside once tariff related trade issues are resolved. Rex remains confident in the outlook for its core business and we are committed towards executing our growth strategy while continuing to deliver long term value to our shareholders.

Now I would like to open things up for questions. Operator?

Conference Operator: Thank you. At this time, we’ll be conducting a question and answer you. Our first question comes from Peter Gastrich with Water Tower Research. Please proceed with your question.

Peter Gastrich, Analyst, Water Tower Research: Good morning and thanks for taking my questions. For starters, congratulations on the results and another consecutive quarter of profitability. I’ve said it before, that’s something that’s alluded pretty much all of your peers. So congratulations on that. It’s also great to see the regulatory tailwinds that are coming through in your favor.

Just a few questions from me. The first one is just regarding an event that you held this summer at your rare earth or excuse me, your earth energy facility. It looks like it was very well attended with a couple of 100 of people. Could you talk about who turned up for that event and any implications for your state and local support for your growth projects, particularly for CCS?

Stuart Rose, Executive Chairman, REX American Resources: I was at the event, so I guess I’ll answer that. This is Stuart. People that turned up were mostly local people, and it was the first time we did it at the One Earth facility. And it was, again, we’re doing our best to to be a good citizen in the community. And almost all the local our many local officials turned up.

Our, many shareholders we only own 75% of One Earth, so many shareholders turned up. A few government officials, representative and things like that, people like that showed up. Overall, it was a it was a big success. I think we accomplished what we were trying to do, which is to get some gratitude in our our have some favor have more favor in the local community. I think we’re already a a major citizen of Gibson City, but this just made us a little bit better.

Peter Gastrich, Analyst, Water Tower Research: Okay, thank you. Just in relation to the CCS component of the Earth Energy project, something that came up toward the end of last year was an issue with an interconnection from local utility. I may have missed the update, but can I just confirm whether that was resolved?

Zafar Rizvi, Chief Executive Officer, REX American Resources: Yes. That is resolved and now we are able to get the utility directly from Amarin and it’s no problem anymore.

Peter Gastrich, Analyst, Water Tower Research: Okay, that’s great. Thank you. So thanks for the update in terms of the ethanol margins. It looks like we’re in a better place today versus earlier this year. But going into the second half, it’d be great to hear your thoughts on the outlook for your co products as well.

Thank you.

Zafar Rizvi, Chief Executive Officer, REX American Resources: As you know, already mentioned that we believe that our third quarter will be better than second quarter, but it will not be as good as last year because last year was our second best quarter. But as we also see the bumper crops not only in the South Dakota, but also pretty good crops in Illinois, particularly in McLean County is the record corn this year in Illinois and we see that will be very beneficial to our both of our locations. And we also see a bumper crops in Iowa where we have minority shareholders company Big River, which we own approximately 10%. So they have also the record crops this year. So we certainly see that there are going to be plenty feedstock available.

And also as you know the export is increasing of ethanol and we are very pleased with that. And not only Britain is buying plan to buy ethanol from U. S, but also Japan also plan to buy this year also due to the tariff negotiation. So we certainly see that if this continue, we will be really in a pretty good shape in our core business.

Stuart Rose, Executive Chairman, REX American Resources: Terms of the byproducts, corn oil continues to be very strong. DDG is a little weak relative to corn prices. And with the bumper crop, I don’t know if that’s going to continue or not. But DDG has not been as strong relative to corn prices as it has in the past. Hopefully that will turn around.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Yes. I think that’s correct, Stuart, because I think the export of DDG has dropped compared to last year. So that’s the one of the things which we can see even Mexico is buying less than last year. So first six months, so that’s certainly some concern.

Peter Gastrich, Analyst, Water Tower Research: Okay. That’s great. Thank you very much. Congratulations again and I’ll get back in the queue.

Conference Operator: Our next question comes from Jared Ellin with South Dakota Investment Office. Please proceed with your question.

Jared Ellin, Analyst, South Dakota Investment Office: Hey guys, thanks very much for the opportunity to ask question and great quarter. I just wanted to see if you could comment on the overall CI score of your two main plants given the change in the recent legislation relating to 45Z and if you would qualify for any credits without a carbon pipeline?

Zafar Rizvi, Chief Executive Officer, REX American Resources: Subhana, do you want me to take that?

Stuart Rose, Executive Chairman, REX American Resources: Yes, why don’t you take it, Subhana?

Zafar Rizvi, Chief Executive Officer, REX American Resources: Yes, I think we have not really compared to other few companies have declared their CI score. As you know, there is no clear guideline at this time. So that’s the one of the reason we have not really discussed publicly what exactly is our CI score at this time until we have clear guideline that what will be our CI score. But we’re certainly very happy to see that Smart Farming is no longer is part the calculation and that will give us four to six points and that could help us to really able to go below 50 or close to that number where we will be able to get some CI score reduction without CI score and will be beneficial to us.

Stuart Rose, Executive Chairman, REX American Resources: Also as part of the One Earth project, we also are doing things to make our plant more energy efficient, which should help our CI score. And there’s a chance even without carbon capture, but like so far said, we can’t get we don’t know the guidelines, so we’re not gonna say that it’s gonna happen. But there’s a chance we could get some some tax credits even without carbon cap even before our carbon capture project is ready to go. But we are not we don’t feel we’re in a position to say anything about that right now.

Jared Ellin, Analyst, South Dakota Investment Office: Excellent. Thank you. And given the Illinois moratorium on carbon pipelines which appears to expire in July, if your Class six well is approved, would you believe that you’d be able to build that soon after that expiration?

Zafar Rizvi, Chief Executive Officer, REX American Resources: That’s what our goal is. But as you know, we still have after we that’s approved, we plan to get from the local county special use permit and then we also have to have IEPA permit. And we have discussion with Illinois EPA and we also have discussion with ICC, Illinois Commerce Commission. They are also working on legislations or the guideline, whichever they wanted to have to, we should follow that. So we certainly if those guidelines are issued and all those approvals are received, then we certainly will be able to operate in 2026.

But naturally this depends on all of those permits once we receive those.

Jared Ellin, Analyst, South Dakota Investment Office: Excellent. And my final question is related to the short distance that the pipeline is, what’s the build time once approvals come to first carbon injection?

Zafar Rizvi, Chief Executive Officer, REX American Resources: I think once we receive we have to apply it’s less than 6.5 miles pipeline. The honest answer is we built that pipeline. The reason because we from the very beginning we wanted to make sure that we are away from Aqua fire. Otherwise we can have built that well right next to our ethanol facility, but we decided we want to be away from the aqua fire. So that way in future there is no concern about the drinking water.

And that’s what exactly happened later on. The legislation was issued that there should not be any over or under that carbon sequestration where the aquifer is. So we are 6.5 miles away from aquifer and that’s what that. So it depends how quickly we can get permission from ICC. Once we receive the permission from ICC that takes about couple of months to build the pipeline.

Jared Ellin, Analyst, South Dakota Investment Office: Great. Thanks so much guys.

Stuart Rose, Executive Chairman, REX American Resources: Thank you.

Conference Operator: We have reached the end of the question and answer session. I’d now like to turn the call back over to Stuart Rose for closing comments.

Stuart Rose, Executive Chairman, REX American Resources: I’d like to thank everyone for listening. Again, we outperformed most in the industry this quarter, and we currently expect an even better quarter next quarter. It’s all due to having great locations for our plants, great plants, most importantly, the top people in the industry. And that goes from our CEO all the way to Everett to all the teams in our plants. And that’s really what makes us special and what makes us outperform the industry quarter after quarter.

We look forward to talking to everyone after the end of our next quarter, and thank you again for listening.

Conference Operator: This concludes today’s conference. You may disconnect your lines at this time and we thank you for your participation.

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