REX American Resources Corporation Q2 FY2025 earnings call

• During the second quarter, REX extended success in core ethanol production, moved the One Earth energy expansion project forward, and saw supportive near-term tailwinds. - Passage of the One Big Beautiful Bill Act was supportive of the carbon capture and sequestration project, with continuation and extension of 45Q and 45Z tax credits. - Maintained a strong balance sheet with ample cash for growth initiatives. - Board of directors authorized a two-for-one stock split effective for shareholders of record as of 09/08/2025. - One ARC facility expansion is progressing steadily, with energy efficiency initiative completed and initial capacity expansion to 175 million gallons expected to be fully operational in February 2026. - Class VI injection well permit application finalized in March 2026 (moved forward from April). - Strategy guided by Profit, Position, Policy; 20 consecutive quarters of profitability.

In the second quarter of 2025, ethanol sales volumes reached 70.6 million gallons compared to 65.1 million gallons in Q2 2024. The average selling price of ethanol was $1.75 per gallon versus $1.79 in the prior year. Dry distiller grain sales volumes were approximately 148,000 tons with an average selling price of $143.63 per ton, down from $164.45 per ton in the prior year. Modified distillers grain volumes totaled 19,000 tons with an average selling price of $64.41 per ton. Corn oil sales volumes were approximately 23.1 million pounds during the quarter with an average selling price of $0.54 per pound, with a 14% increase in pounds sold and a 26% price increase leading to a 46% increase in sales dollars. Gross profit for the second quarter was $14.3 million compared to $19.8 million in Q2 2024. Selling, general, and administrative expenses were approximately $6.2 million for the quarter, compared to $6.4 million in Q2 2024. Net income attributable to REX shareholders was $7.1 million or $0.43 per diluted share compared to $12.4 million or $0.70 per diluted share in Q2 2024.

• The third quarter of 2025 is on pace to outperform the second quarter but will not be as strong as last year's third quarter. - Anticipates better performance in 2025 compared to the first two quarters, aided by favorable corn supply trends and steady demand, particularly rising ethanol exports. - Expects 2025 to set a new export record.

• Uncertainties regarding regulatory approvals for the carbon capture and sequestration project from counties, state, and EPA. - Illinois moratorium on carbon pipelines, though plans to proceed after approvals once guidelines are in place. - Uncertainties regarding tax credit guidelines and utility interconnection (though interconnection issue was resolved).

Q: About the event at One Earth Energy facility and local support for growth projects, especially for CCS A: Stuart Rose said people at the event were mostly local, many local or state officials, and shareholders attended, and it was a success to gain local favor Q: CDTS component interconnection with local utility A: Zafar Rizvi said it is resolved, now connected directly with Ameren Q: Outlook for co-products A: Zafar Rizvi said the third quarter is on pace to outperform the second quarter but not as strong as last year's third quarter; bumper crops in Illinois and Iowa are beneficial; corn oil is strong, but DDG is weak relative to corn prices Q: CI score and tax credits without carbon pipeline A: Zafar Rizvi said there are no clear guidelines yet, but Smart Farming no longer being part of the calculation could help; Stuart Rose mentioned energy efficiency helps the CI score and there is a chance of tax credits without carbon capture before the project is ready Q: Illinois carbon pipeline moratorium and Class VI well approval A: Zafar Rizvi said the goal is to build soon after the moratorium expires, but need local county special use permit, IEPA permit, and discussions with ICC; once approvals are received, plan to operate in February 2026 Q: Build time for carbon pipeline once approvals A: Zafar Rizvi said it is less than 6.5 miles of pipeline, and once permission from ICC is received, it takes a couple of months to build