Earnings call transcript: REX American Resources beats Q1 2025 EPS forecasts

REX American Resources Corporation reported its financial results for the first quarter of 2025, surpassing earnings per share (EPS) expectations. The company posted an EPS of $0.51, significantly beating the forecast of $0.26. Despite this earnings beat, REX’s revenue fell short of expectations, coming in at $158.3 million versus the anticipated $161.27 million. The stock reacted negatively, with a 6.12% drop in pre-market trading, reflecting investor concerns over the revenue miss and broader market conditions. According to InvestingPro data, REX maintains strong financial health with an overall score of "GOOD" and holds more cash than debt on its balance sheet.

Key Takeaways

• REX American Resources exceeded EPS expectations by 96%.
• Revenue fell short of forecasts, impacting investor sentiment.
• Stock price decreased by 6.12% in pre-market trading.
• Ethanol sales declined year-over-year, impacting overall revenue.
• The company continues to expand its ethanol production capacity.

Company Performance

REX American Resources maintained its profitability for the 19th consecutive quarter, showcasing resilience in a competitive ethanol market. However, the company’s performance was mixed, with a decline in ethanol sales volume compared to Q1 2024. The strategic expansion of its ethanol facility in Gibson City aims to boost production capacity by 33%, positioning REX for future growth.

Financial Highlights

• Revenue: $158.3 million, down from forecasted $161.27 million.
• Earnings per share: $0.51, up from forecasted $0.26.
• Gross profit: $14.3 million, slightly down from $14.5 million in Q1 2024.
• Net income: $8.7 million.

Earnings vs. Forecast

REX American Resources reported an EPS of $0.51, significantly surpassing the forecast of $0.26, representing a 96% positive surprise. However, the company’s revenue of $158.3 million fell short of the expected $161.27 million, reflecting a 1.8% miss. This mixed performance highlights the company’s ability to manage costs effectively, despite challenges in meeting revenue targets.

Market Reaction

Following the earnings announcement, REX’s stock price experienced a 6.12% decline in pre-market trading. The stock’s movement reflects investor concerns over the revenue miss and broader market volatility. The current stock price remains within its 52-week range, suggesting potential for recovery as market conditions stabilize.

Outlook & Guidance

Looking forward, REX American Resources remains optimistic about its future performance, driven by ongoing expansion projects and favorable market conditions for ethanol. The company is closely monitoring potential policy changes affecting carbon capture credits, which could impact its strategic initiatives. REX’s commitment to share repurchases also signals confidence in its long-term growth prospects. InvestingPro analysis reveals a strong five-year return history and projects continued profitability for the current fiscal year. For deeper insights into REX’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively on InvestingPro, covering over 1,400 US stocks.

Executive Commentary

Stuart Rose, a key executive, emphasized the company’s strategic focus: "No matter what, we are expanding our plant and it’s a great plan. We’re adding roughly 33% once we finish greater capacity in that plant." This expansion is expected to enhance REX’s competitive position in the ethanol industry.

Risks and Challenges

• Potential regulatory changes affecting carbon capture credits.
• Fluctuations in ethanol demand and pricing.
• Possible trade barriers impacting export markets.
• Macroeconomic pressures and interest rate fluctuations.

Q&A

During the earnings call, analysts inquired about REX’s consistent profitability. Management attributed its success to detailed market monitoring, strong team communication, and an adaptive strategy. Regulatory uncertainties and their potential impacts on future performance were also discussed, highlighting the company’s proactive approach to navigating challenges.

Full transcript - REX American Resources Corp (REX) Q1 2026:

Conference Operator: Greetings, and welcome to the REX American Resources Corporation’s First Quarter twenty twenty five Earnings 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. It is now my pleasure to introduce Doug Bruggemann, Chief Financial Officer.

Please go ahead, sir.

Doug Bruggemann, Chief Financial Officer, REX American Resources: Good morning, and thank you for joining REX American Resources Q1 twenty twenty five conference call. With me on our call today are Stuart Rose, REX Executive Chairman and Zafar Rizvi, REX CEO. We’ll 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, 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 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’d 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. First quarter of twenty twenty five demonstrated REX’s continued operational excellence and strategic execution. We maintained our position as one of the industry’s most consistent performers in the face of uncertain and evolving regulatory and market conditions. During the quarter, we saw stable ethanol demand and managed our production as we have in the past to capitalize on market conditions as we see them. The strength of our balance sheet continues to provide us with flexibility to pursue strategic opportunities while maintaining our disciplined approach to capital allocation.

As always, we continue to evaluate potential acquisition opportunities that meet our strict operational and financial criteria. Both of our organic growth initiatives, carbon capture and expansion of ethanol production capacity at One Earth continue to progress. For the remainder of the year, we anticipate moving these projects forward, controlling what we can. Beyond operations, one of the duties we take very seriously at REX is delivering consistent value to our shareholders. To this end, we have continued the share buybacks that we’ve talked about on our last call.

During the first quarter, we repurchased approximately 822,000 shares for a total consideration of $32,700,000 during a period when our share price we believe was undervalued. Average purchase price for the repurchase shares was $39.8 This brings our buyback activity to approximately 6.8% of our outstanding shares since reinitiating purchases in December 2024. Currently, we have approximately 1,182,000 shares remaining on the buyback authorization, which represents an additional approximately 7% of outstanding shares. We plan to continue executing on the remaining share purchase authorizations when and where we see value. I’ll now turn the call over to our CEO, Zafar Rizvi, to provide updates on our ongoing projects.

Zafar Rizvi, CEO, REX American Resources: Thank you, Stuart. Regarding our ethanol facility expansion in Gibson City, we are continuing a technical review of several key project components. This ongoing evaluation has already yielded valuable insights that we believe will enhance the long term operational efficiencies of the expanded facility when materialized. During the first quarter, we maintained close coordination with the EPA regarding our Class six injection well permit. The EPA currently anticipates issuing a final permitting decision on our application by January 2026.

In parallel, we are closely monitoring potential changes to the Inflation Reduction Act, particularly regarding tax credit provision for carbon capture projects, specifically 45Q and 45Z, which is related to a low carbon fuel. The Big Beautiful bill includes several proposed amendment that could impact our planning and future economic decisions. In the twenty twenty five Illinois legislative session, Senate Bill seventeen twenty three was introduced with an amendment defining the term sole source aquifer. Under this definition, the bill would prohibit carbon sequestration activities above, below, or through such aquifer. The legislation is now under consideration by the Governor.

But most importantly, our proposed injection well sites, including our initial well and two additional locations are situated approximately six miles outside the mapped boundary of the Mohammad Source Aquifer, as defined in the bill. We view this positive development for our project. From the beginning, we have supported measures to protect vital drinking water resources and are committed to ensure safety for our operations and the broader community. As of the end of Q1, our total investment in the carbon capture and ethanol expansion projects stand at approximately $122,700,000 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 Brauchman to discuss our financial results.

Doug Bruggemann, Chief Financial Officer, REX American Resources: Thanks, Zafar. During the first quarter of fiscal twenty twenty five, our ethanol sales volumes reached 70,900,000 gallons compared to 74,500,000 gallons in the first quarter of twenty twenty four. The average selling price for ethanol was $1.76 per gallon during the quarter. Lower ethanol sales volumes in Q1 twenty twenty five were mostly attributable to timing of shipments as our production was relatively stable between periods. Dry distiller grain sales volumes were approximately 153,000 tons for Q1 with an average selling price of $145.65 per ton.

Modified distillery grain volumes totaled approximately 22,000 tons with an average selling price of $73.44 per ton. Corn oil sales volumes were approximately 21,400,000 pounds during the quarter with an average selling price of $0.46 per pound. Gross profit for the first quarter was $14,300,000 compared to $14,500,000 in Q1 twenty twenty four. This primarily reflects lower sales prices for dry distiller grains, somewhat offset by improved ethanol pricing. Selling, general and administrative expenses were approximately $5,900,000 for the quarter compared to $6,100,000 in Q1 twenty twenty four.

Interest and other income totaled $4,200,000 for the quarter compared to $5,900,000 in the first quarter of the prior year. Income before taxes, non controlling interest was approximately $13,600,000 compared to $16,000,000 in Q1 twenty twenty four. Net income attributable to REX shareholders was $8,700,000 or $0.51 per diluted share compared to $10,200,000 or $0.58 per diluted share in Q1 twenty twenty four. The reduction was primarily attributable to lower cash balances and interest income rather than operations. We ended the first quarter with cash, cash equivalents and short term investments of $315,900,000 The reduction for the previous quarter primarily reflects our ongoing capital investments in growth projects and share repurchases.

As previously announced, we remained active in our share repurchase program during Q1, acquiring approximately 822,000 shares for total consideration of $32,700,000 This reflects our ongoing commitment to delivering shareholder value and our confidence in REX future prospects. REX continues to maintain a strong financial position with no bank debt. I’ll now turn things back to Zafar.

Zafar Rizvi, CEO, REX American Resources: Thank you, Doug. The REX team continued to execute on the three Ps I discussed on our last call. First, profit. Our ongoing goal is to run a profitable business. Despite market ups and downs, our team has consistently demonstrated their ability to overcome challenges and deliver strong financial results quarter after quarter for our shareholders.

Notably, the first quarter marked RAC’s nineteenth consecutive profitable quarter. Second position, we have strategically positioned ourselves for organic growth, funded entirely by our own strong balance sheet, our ethanol expansion and carbon capture and sequestration projects. We are focusing on what we can control and making investment to optimize our future operation. We are committed to building REX long term strength. Finally, policy.

On the policy front, we continue to monitor developments closely at both the federal and state levels. While many outcomes remain uncertain and outside our control, we believe we are well informed and well prepared to respond to any policy shifts that do arise. Our overall market conditions, particularly those that supported the ethanol sector in 2024, remain favorable. Ethanol export in March 2025 were up 23% compared to March 2024. Cumulatively, U.

S. Ethanol export through March 2025 were nearly 19% higher than during the same period in 2024, according to the Renewable Fuel Association. Following a strong first quarter, we are seeing stable performance in the second quarter and expected another profitable result. Now I would like to open things up for questions. Operator?

Conference Operator: Thank And And our first question comes from the line of Peter Gastrich with Water Tower Research. Please proceed.

Peter Gastrich, Analyst, Water Tower Research: Good morning, and thanks for taking my questions. It’s great to hear the progress on the share repurchase program. For starters, congratulations on your results and on your nineteenth consecutive quarter profitability. That consistent profitability is something that has eluded some of your peers, and it’s not just profit. You’ve been generating superior returns on capital as well.

I’d just like to ask what drives REC’s ability to consistently deliver this performance? And could you please discuss what it is about your strategy? Is it the cost control, logistics or other factors at play? Thank you.

Stuart Rose, Executive Chairman, REX American Resources: Do you want me to answer that? Our CEO has a lot to do with this. We have the top CEO in my opinion. This is Stuart talking in the industry who watches everything very, very closely. He watches the the corn prices.

He watches the ethanol. Very few CEOs or very few people at his level get down to the details that he does. Then on top of that, we have good locations and very, very good people that we have set up in each of our plants that have, I think, separated us from the past. I’ll let Zafar expand on what I’m saying. But the big difference is our people.

Zafar Rizvi, CEO, REX American Resources: Yes, I agree. I think the big difference is our people. We have a team. We communicate well. We exactly know what’s happening day to day.

We have spreadsheet to monitor how the market is moving up and down, and we try to reach on our targets. When we meet our targets, we will try to lock in profit. That’s basically it, but I think we cannot be successful without the great people and without the great team, and we are very fortunate that we have those people who support us, our ideology and mission, and we continue to produce for our shareholders.

Peter Gastrich, Analyst, Water Tower Research: Okay, thank you. My second question is a regulatory question. Could you talk about what specific deregulation measures you’d like to see from the Trump administration that could help to smooth your runway? For example, where are we on federal pipeline regulations or other relevant areas?

Zafar Rizvi, CEO, REX American Resources: Stu, do you want to answer that or you want me to, you know that?

Stuart Rose, Executive Chairman, REX American Resources: I don’t know. I think we’re, I’ll answer it, but everything’s in limbo right now until this bill passes. We’ve worked with, we definitely have contacts in Washington that we’re working with. And we have very, very good contacts in Illinois. But right now we’re trying to know exactly what the target is.

It’s a moving target every day with what’s going on in Washington. So I can’t, it’s very hard right now to give anyone any indication of when or if we’ll ever, or and hopefully it’s not if, but it could be if we ever get our carbon capture project going. Things in Washington are in great limbo right now.

Zafar Rizvi, CEO, REX American Resources: But I think I add to that is big beautiful bill at this stage still includes 45Q extended to up to 2,031, and I think that’s very positive. And recently, Illinois passed this bill seventeen twenty three, which is, we believe, also very positive for our ethanol location because we are six miles away from Aquafire, to some other facilities, maybe very close to Aquafire, and they banned that over, under any pipeline or any carbon sequestration of where is Aquafire is close to that area. So we believe that’s very positive. As Stuart mentioned, FSMA rules are still under review. We have some contact with them and they are still saying they are trying to review and that will that rules may Trump administration may just leave it as it is, as those were passed two days before Biden administration left.

And if that’s the case, then I think we should get to those rules very soon. As Stuart mentioned, that some of these behind our control, as you can see my prepared remarks, I mentioned that January 31, we’ll be issuing EPA permit and today, this morning, they extended that date to 04/31. So some of these things are behind our control, how the government move forward and when they finalize their reviews. So those are just moving target. So we are watching them very closely.

Peter Gastrich, Analyst, Water Tower Research: Okay, thanks again. That sounds generally some good momentum on the regulatory side. Just a final

Stuart Rose, Executive Chairman, REX American Resources: question, I’m thing that

you should remember is no matter what we are expanding our plan and it’s a great plan And we’re adding roughly 33% once we finish greater capacity in that plant. So no matter what we will be growing.

Peter Gastrich, Analyst, Water Tower Research: Okay, that’s great. Thank you very much. Just one final question, just a macro question. It’d be great to hear your thoughts on the industry fundamentals. Where are ethanol margins trending as we approach this summer and what are the drivers and outlook

Zafar Rizvi, CEO, REX American Resources: second quarter, we see it still is a positive, as I mentioned in our prepared remarks, and we expect the record corn is expected this year, thanks to strong planting in a state like South Dakota and Illinois and good weather so far. If this continue, it could boost our profit for the rest of the year. We are also pleased with our export at this time. Ethanol, as I mentioned previously, it’s approximately 19% up compared to last year. And also, if the dust settled with Canada and Mexico and there is no tariff, then we believe that Trump’s administrations may help us to eliminate those tariffs on the different countries which they have on ethanol or DDG, And if that market open up, we believe that will be great for ethanol industries.

But on the same time, we’re constantly looking at natural gas. If natural gas is exported greater than we expect, then it can be negatively affected on our business. But because natural gas and corn and those are the major expenses we have in our ethanol business, so we are monitoring very closely, but we believe at this time, there is a positive outlook toward 2025.

Peter Gastrich, Analyst, Water Tower Research: Okay, thank you very much. Appreciate it. I’ll get back in the queue.

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

Conference Operator: Thank you. There are no further questions at this time. I’d like to turn the call back to Stuart Rose for closing remarks.

Stuart Rose, Executive Chairman, REX American Resources: Okay. I’d like to thank everyone for listening. Again, we feel we have among the best plants in the industry. We have great locations in the Corn Belt. We have what we feel is the best technology.

But most importantly, as I said during the call, we, in my opinion, have the best people in the industry, and that’s what sets us apart. We have very, very high hopes that these same people and the other people that we’ve hired will do the exact same thing in carbon capture that we’ve done in ethanol. Very much look forward to the future. Thank you very much for listening and we’ll talk to you at the conference call for next quarter. Thank you, bye.

Conference Operator: This concludes today’s conference. You may disconnect your lines at this time. Enjoy the rest of your day.

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