REX American Resources Q4 & FY2025 Earnings Call - 45Z tax credit drives record EPS, One Earth expansion near completion

Operator: Good morning, and welcome to the REX American Resources fourth quarter and full fiscal year 2025 conference call. As a reminder, today’s call is being recorded, and at this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American Resources. Please go ahead.

Doug Bruggeman, Chief Financial Officer, REX American Resources: Good morning, and thank you for joining this morning’s call. I have joining me on the call today Stuart Rose, REX Executive Chairman, and Zafar Rizvi, our Chief Executive Officer. 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 in the company’s filings with the Securities and Exchange Commission, including the company’s reports on Form 10-K 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 Stuart Rose, our Executive Chairman.

Stuart Rose, Executive Chairman, REX American Resources: Good morning, and thank you to everyone for joining us today. Fiscal 2025 was an exceptional year for REX American Resources, highlighted by outstanding operational performance and meaningful progress on our strategic growth initiatives. We demonstrated not only the resilience and scalability of our business model but also the strength and capability of our team. Our ethanol sales volume reached record levels in 2025, driven by strong export demand and favorable industry conditions. In a dynamic commodity pricing environment, our team’s operational excellence and market expertise enabled us to deliver strong financial results while maintaining our leadership position in the industry. While we expect these conditions to persist in the near term, our long-term success is rooted in disciplined execution, efficiency, and most importantly, teamwork, qualities that allow us to perform consistently, even in more challenging environments. On the strategic front, 2025 was a transformative year.

We are encouraged by the initial implementation of the 45Z tax credit with its impact of fiscal 2025 and expect it to positively impact our results going forward. We also made significant progress on our capacity expansion at the One Earth Energy facility, which is nearing completion and will allow for increased annual production capacity to 200 million gallons. In addition, we continue to work diligently on our carbon capture and sequestration initiative at the One Earth facility, reinforcing our commitment to sustainability and long-term value creation. Our financial position remains exceptionally strong after reporting record EPS for fiscal 2025. We concluded the year with a solid balance sheet, substantial cash reserves, and no bank debt. This financial flexibility, combined with our operational strength, positions us well to pursue continued growth and deliver enhanced shareholder value.

Looking ahead to the remainder of 2026 and beyond, we are confident in our ability to build on this momentum. Our expanded capacity, tax credit eligibility, and strong financial foundation provide multiple avenues for sustained growth. As always, our success is driven by our people. The dedication, market insight, and attention to detail demonstrated by the REX team truly set us apart. Whether operating our facilities at peak efficiency or strategically managing our commodity positions, our employees continue to perform at the highest level. With that, I’ll turn the call over to CEO Zafar Rizvi, who will provide additional details of our operational achievements and strategic initiatives.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Thank you, Stuart. Fiscal 2025 was a landmark year for REX American Resources, highlighted by exceptional execution across all aspects of our business and meaningful progress against our growth strategy. I’m pleased to report that we are making strong progress toward completing the capacity expansion project at our One Earth Energy ethanol production facility, which will increase capacity to 200 million gallons per year. We expect testing and commissioning to begin upon completion, with the facility becoming fully operational in Fiscal 2026. In addition to increasing potential sales volume, this expanded capacity positions us to capture greater market share and benefit from the strong export demand environment that characterized 2025 and continues into 2026. This additional production also enhanced our ability to maximize benefits under the 45Z tax credit program.

Turning to the 45Z program, as Stuart mentioned, we successfully positioned REX to capitalize on near-term opportunities under the 45Z tax credit program during 2025. We completed assessment with multiple independent experts to establish carbon intensity scores across our facilities. As anticipated, our score came in below the required threshold with the purchase of energy credits, enabling us to qualify for 45Z and began recognizing 45Z tax credit benefits. Looking ahead, our carbon capture facility would further reduce our CI scores. This would allow us to qualify for higher 45Z credits for potentially increasing the financial benefits from the program. Our carbon capture and sequestration projects continue to await permitting for the Class VI well and associated carbon dioxide connector pipeline. We remain actively engaged with the EPA and the Illinois Commerce Commission throughout this permitting process.

As of fiscal year end 2025, we have invested approximately $166 million in our carbon capture and ethanol expansion projects combined and currently remain within our previously stated total budget range of $220 million-$230 million. I will now turn the call over to our CFO, Doug Bruggeman, to discuss our operational and financial results.

Doug Bruggeman, Chief Financial Officer, REX American Resources: Thank you, Zafar. I’ll begin with our operational results. REX ethanol sales volumes during fiscal year 2025 were 290 million gallons, a slight increase over fiscal year 2024 sales volumes of 289.7 million gallons and represented an all-time high for REX. Volumes in the fourth quarter of 2025 were 70.1 million gallons versus 74.6 million gallons in the fourth quarter of 2024. Average selling price for our consolidated ethanol volumes were approximately $1.74 per gallon for the full fiscal year 2025 and $1.72 for the fourth quarter. Dried distillers grains sales volumes during fiscal 2025 totaled 612,000 tons, a 3% decrease over fiscal 2024 volumes of 632,000 tons.

Volumes during the fourth quarter were approximately 151,000 tons, a decrease of approximately 9% over fourth quarter of 2024. Average selling price for dried distillers grains was approximately $144.06 per ton for the full year and $147.25 per ton for the fourth quarter. Modified distillers grains sales volumes were 81,900 tons in fiscal 2025, compared with approximately 70,000 tons in fiscal year 2024. For the fourth quarter, modified distillers grains volumes totaled approximately 19,700 tons, an increase of approximately 1% over the same period in 2024. The average selling price for modified distillers grains was approximately $65.82 per ton for the full year and $67.92 per ton for the fourth quarter.

Corn oil sales volumes in fiscal year 2025 were particularly strong, coming in at approximately 97 million pounds compared to 88.1 million pounds sold in fiscal year 2024, an increase of approximately 10%. For the fourth quarter, corn oil sales volumes totaled approximately 25.2 million pounds, an increase of 7% over fourth quarter 2024. Average selling price for REX’s corn oil per pound was approximately $0.54 per pound for the full year and fourth quarter of 2025. Gross profit for fiscal year 2025 was $93.7 million versus gross profit of approximately $91.5 million for fiscal year 2024. Gross profit in Q4 2025 was $28.9 million compared to $17.6 million in Q4 2024.

The fourth quarter benefited from both improved ethanol pricing and reduced corn cost, the two largest drivers of gross profit. Our SG&A expense increased to $32.6 million for FY 2025 versus $27.1 million in FY 2024. SG&A in the fourth quarter increased to approximately $12.3 million versus $6.2 million in the fourth quarter of 2024. The fourth quarter increase was primarily due to increased incentive bonus based on company profitability levels. Interest and other income was $15 million in 2025, down from $19.2 million in FY 2024.

Reported interest and other income for the fourth quarter of approximately $4.5 million versus $4.2 million for the same period in 2024. Income before taxes and non-controlling interest for 2025 was approximately $88.6 million, a 5% decrease from $92.9 million in 2024. During the fourth quarter, we reported approximately $27.4 million in this metric versus $17.9 million during the same period during the previous year. Net income attributable to REX shareholders for the year was $83 million compared to $58.2 million in fiscal year 2024. For the fourth quarter 2025, this equaled $43.7 million compared with $11.1 million for the fourth quarter 2024.

The fourth quarter benefited from the recognition of approximately $28 million in 45Z tax credits as the regulations became more clear. On a per-share diluted basis for the full year, this amounts to an all-time high of $2.50 per share of net income in 2025 compared to $1.65 per share in 2024. For the fourth quarter 2025, diluted net income per share was $1.32 compared to $0.31 per share for the same period the previous year. We ended the fiscal year with total cash equivalents, and short-term investments of $375.8 million, compared with $359.1 million for fiscal year-end 2024.

This net build in cash was primarily due to cash from operations offset by capital expenditures, primarily related to the plant expansion project at the One Earth Energy facility. REX American ended the year without any bank debt. I’d now like to turn things back to Zafar.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Thank you, Doug. I would now like to provide additional context around our priorities for 2026 and the key factors expected to influence our business throughout the year. We are well-positioned as we enter fiscal 2026 with expanded production capacity expected to come online this year, contributions from the 45Z tax credit expected to benefit our bottom line, and favorable market tailwinds so far. We anticipate another year of strong performance and continued growth. Our strategy and execution remain guided by our three Ps: profit, position, and policy. Profit. We have now delivered 22 consecutive quarters of profitability, a testament to our team’s discipline, operational excellence, and market expertise. We expect a profitable first quarter. Earnings of 2026 are expected to benefit from expanded capacity, a continued laser focus on our core business, and expected contribution from the 45Z tax credit. Position.

We expect to complete the One Earth Energy expansion this year while continuing to advance our carbon capture initiative. These projects will enable us to increase production at lower carbon intensity, strengthen our competitive position, and allowing us to capture additional value from both the 45Z tax credit and our core business policy. The policy environment remains favorable. The 45Z tax credit program provides meaningful near-term benefits, which would further increase with our carbon capture facility at One Earth. We also continue to monitor developments related to year-round E15 blending, which could drive incremental ethanol demand while reducing gasoline prices and emissions. Ethanol export demand remains exceptionally strong throughout 2025, with U.S. export reaching record levels once again. We expect this strength to continue into 2026, supported by growing global demands for lower carbon fuel, increased fuel blending, and the cost competitiveness of U.S. production.

On the input side, corn supplies remain favorable, which should support manageable input cost and expected healthy crush margins. Looking ahead, as we progress through 2026, we remain focused on maximizing the performance of our core business, capturing the benefits of expanded production capacity, and continued efforts of our carbon capture facility. At the same time, we will continue to drive operational excellence across all aspects of our business. Our strong balance sheet, zero bank debt, and multiple growth drivers position us well for another year of value creation for our shareholders. In closing, I would like to thank our dedicated team for their hard work, innovation, and commitment to excellence, which continue to drive our success. We are excited about the opportunities ahead and confident in our ability to deliver sustained strong performance. Thank you to all of our stakeholders for your continued support.

With that, I will turn it over for questions. Operator?

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Pavel Molchanov with Water Tower Research. Please proceed with your question.

Pavel Molchanov, Analyst, Water Tower Research: Thank you. Good morning, gentlemen, and thanks for taking my questions. Congratulations on yet another quarter of better than expected results at REX. It’s also great to see the OneEarth expansion fully on track, and you’ve continued with the strong share buybacks. My first questions are regarding 45Z. For that $28 million, is that just for Q4, or does that represent a catch-up on previous periods? And also how should we think about, you know, 45Z in terms of the future run rate?

Doug Bruggeman, Chief Financial Officer, REX American Resources: That is for the full fiscal year of 2025. You know, going forward, you know, this is good through 2029, so we remain optimistic that we’ll continue to be able to claim these 45Z tax credits in the future years.

Stuart Rose, Executive Chairman, REX American Resources: Also, if we get the carbon capture project completed, that will significantly increase the amount of 45Z credits that we will receive over and above this.

Pavel Molchanov, Analyst, Water Tower Research: Okay, great. Just to follow up on that, are you able to disclose how by how much that would improve your CI score with the CCS?

Zafar Rizvi, Chief Executive Officer, REX American Resources: I think that this time we have not disclosed that publicly. Maybe in the future if it’s required, we will.

Pavel Molchanov, Analyst, Water Tower Research: Okay, great. Thank you.

Stuart Rose, Executive Chairman, REX American Resources: It will be significant. Let’s just leave it that it will be significant if we can get it. That’s why we’re working so hard on it.

Pavel Molchanov, Analyst, Water Tower Research: Okay, great. Very good. And regarding the CCS permitting, so the Illinois pipeline moratorium, I believe, was set to expire July first. Just wanted to confirm where we are on the Class VI injection permit. I recall it was expected to be finalized in June. Is that still the case?

Zafar Rizvi, Chief Executive Officer, REX American Resources: Yes. We have several.

Doug Bruggeman, Chief Financial Officer, REX American Resources: Well, it’s been moved to September on the EPA website at this point.

Zafar Rizvi, Chief Executive Officer, REX American Resources: It has moved on the website, but we have several different conversations with EPA over the last few months and even last few weeks. We are at the final stage of technical review at this time. We have all the documents which they requested. We have provided them. As you know, the government agencies moved a little bit slower than expected, and that’s what they posted it on their website. That does not mean that will be the latest we will get. We are having regular meetings with them.

Pavel Molchanov, Analyst, Water Tower Research: Okay, great. Thank you. Just a couple of questions before I get back in the queue, just regarding you know, tariffs and the geopolitical situation. The first one on tariffs, how would you characterize the impact that tariffs are having on your operations for both you know, ethanol and corn oil in the fourth quarter and looking into this year?

Zafar Rizvi, Chief Executive Officer, REX American Resources: As far as tariff impact, we are pleased to see that there is no impact on our exports of ethanol. As you know, that last year, 2025 export was the best export ever. We have great relationship with Canada at this time. Canada imported approximately 792 million gallons. There seems to be no impact whatsoever at this time. Actually, the tariff may help us to really export because we can see that Brazil is back in the business now. Last year, they only exported 49.6 million gallons. This year, first month of the year, it’s January 2026, they imported about 36.4 million.

Also, the export for January was the best five months in a long time. We certainly see the export is increasing, and there is no other impact whatsoever on our business at this time.

Pavel Molchanov, Analyst, Water Tower Research: Okay. Thank you.

Stuart Rose, Executive Chairman, REX American Resources: Adding on to that, the high oil prices that we’re currently experiencing should only be good for our business, both export and domestically. We’re much greater value than we ever were. The differential, as far as I can recall anyway, between the price of ethanol and the price of gasoline made from oil. Assuming that oil prices stay high, that should be very, very good for the ethanol business.

Pavel Molchanov, Analyst, Water Tower Research: Okay. That’s great. Actually, that was exactly what my fourth question was gonna be about. Thank you very much, and I’ll get back in the queue.

Stuart Rose, Executive Chairman, REX American Resources: Thank you. Thanks for this question.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Thanks, Pavel.

Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Mason Bourne with AWH Capital. Please proceed with your question.

Mason Bourne, Analyst, AWH Capital: Good morning. A couple questions from me. I guess to start on 45Z, a nice surprise there. Could you talk about on a per gallon basis what you’re recognizing now? It seems like it’s roughly $0.10 per gallon, if you think about it in terms of your total gallons. Is there a mix within that where some are more, some are less, than what you’re currently?

Zafar Rizvi, Chief Executive Officer, REX American Resources: Yeah, your estimate is correct at this time.

Mason Bourne, Analyst, AWH Capital: Okay, it’s $0.10 on all of your gallons.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Correct.

Mason Bourne, Analyst, AWH Capital: Okay. Are there other things within 45Z outside of carbon capture that you view as opportunity for increased credits? Or is it mainly just carbon capture?

Zafar Rizvi, Chief Executive Officer, REX American Resources: I think as you can see, as Stuart mentioned, I think once the carbon capture facility is completed and that will reduce further our CI score at least 30-35 points more. That will really make a significant effect on our...

Mason Bourne, Analyst, AWH Capital: Do you still view the full dollar as achievable on any of your plans, or is that more aspirational?

Zafar Rizvi, Chief Executive Officer, REX American Resources: I think, if it is possible, once we have the carbon sequestration facility is completed and our construction is completed at the One Earth Energy level, it is possible that we may be able to achieve $1 a gallon at that location.

Mason Bourne, Analyst, AWH Capital: It seems like your language and your commentary around carbon capture being operational in 2026 is may be different than last time. Are you more optimistic now? Is that fair to say as you’ve gotten further into discussions with EPA?

Zafar Rizvi, Chief Executive Officer, REX American Resources: No, I think my conversation is about the completing of the construction of our facility at One Earth Energy. You know, carbon capture facility is already complete. It all depends on the permits when we receive from EPA and IEPA and ICC, Illinois Commerce Commission. It depends on the permits. As far as facility for the carbon capture is complete.

Stuart Rose, Executive Chairman, REX American Resources: To be clear, we do not expect to capture 45Z credits due to carbon capture in 2026. If that was construed that way, that would not be correct.

Zafar Rizvi, Chief Executive Officer, REX American Resources: Yeah.

Mason Bourne, Analyst, AWH Capital: Okay. I guess just last thing for me. On the E15 front, there’s been a lot of commentary there or speculation that maybe you could see some progress. I know there was a waiver just, I think, this week, on a temporary basis. What are your thoughts, higher level, on the possibilities or likelihood of a nationwide E15 in a more sustainable manner?

Stuart Rose, Executive Chairman, REX American Resources: Nationwide E15 would be great. Would be great, but I don’t expect that to happen. The oil companies are too powerful. I do expect more and more independents to put in E15 pumps and the E15 at least in our areas, I think in the whole country, is significantly less, the price to the consumer, significantly less than E10. And also the retailers have a chance to make more money. I expect that to happen. It should happen. More pumps of E15, I believe more consumers will use them, and it’ll benefit us in that way. I do not expect a national E15. That would be great, but I do not think that’s gonna happen.

Mason Bourne, Analyst, AWH Capital: Great. Thank you.

Operator: Thank you. It appears we have no further questions at this time. Mr. Rose, I’d like to turn the floor back over to you for closing comments.

Stuart Rose, Executive Chairman, REX American Resources: Well, I would like to thank everyone for listening. As always, I’d like to attribute our record year, and it is a record year in both earnings per share and after-tax earnings. I like to attribute that to having the very, very best people starting with our CEO, Zafar Rizvi, and all the way down to the plant level, all the way. We just have excellent people and our results speak for that. I think we’re among the top, if not the top in the industry, and it’s truly due to having the best people. We have the best people in the industry. Again, I’d like to thank everyone for listening, and we’ll talk to you next quarter. Bye.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.