REX American Resources Corporation Q3 FY2025 earnings call

• During 2025, REX continued to demonstrate strength and operational expertise. Third-quarter results reflected focus on solidifying ethanol production core business, benefited from supportive ethanol industry dynamics like export volumes and strong crush spreads. One Earth Energy facility expansion to 200 million gallons per year is on track for completion in 2026, enhancing production capabilities and efficiency. Examining potential benefits from 45Z tax credits and assessing carbon intensity score for production operations. Maintained strong balance sheet with ~$335 million in cash, cash equivalents, and short-term investments despite capital project spends. Team's execution in managing input costs and margins contributed to strong results.

Ethanol sales volumes in Q3 2025 reached 78.4 million gallons, with an average selling price of $1.73 per gallon. Dry distillers grain sales volumes were approximately 160,000 tons with an average selling price of $139.93 per ton. Modified distiller grain volumes totaled approximately 21,000 tons with an average selling price of $57.03 per ton. Corn oil sales volumes were approximately 27.4 million pounds during the quarter with an average selling price of $0.60 per pound, up 17% in volume and 36% in average selling price compared to prior year, leading to a ~60% increase in sales revenue for corn oil. Gross profit for the third quarter was $36.1 million compared to $39.7 million in Q3 2024. SG&A expenses were approximately $8.2 million for the quarter compared to $8.4 million in Q3 2024. Net income attributable to REX shareholders was $23.4 million or $0.71 per diluted share compared to $24.5 million or $0.69 per diluted share in Q3 2024. REX ended the third quarter with cash, cash equivalents, and short-term investments of $335.5 million.

• Expect fourth quarter to generate higher net profit than last year's profitable fourth quarter. Anticipate 2025 to set new record for U.S. ethanol exports. USDA projects high corn production in South Dakota and Illinois for 2025/2026 harvest season, favoring lower input prices for the business.

• Uncertainty regarding final guidance from the Treasury Department for 45Z tax credit program. Permitting process uncertainty for carbon sequestration project, including Illinois state government-related hurdles and pipeline moratorium and approval progress.

Q: Thoughts on key hurdles and timing as you look forward to the 45Z tax credit program and any incremental color on updates?

A: As Zafar mentioned, waiting for Treasury guidelines. Working on assessing facts with experts, but no clear numbers yet on tax credits.

Q: On carbon sequestration project permitting process with pipeline and key hurdles with Illinois state government?

A: Moratorium on pipeline until July 1, Illinois Commerce Commission working on pipelines with public hearings, but no clear timeline on application start after moratorium.

Q: On recognizing benefits under 45Z and land use change?

A: Working diligently to obtain credits this year, but regulations not published, cannot guarantee credits this year but hope to achieve them.

Q: On carbon capture wells excess capacity and potential partnerships?

A: Concentrating on well number one first, will have excess capacity for third-party carbon sequestration, but not negotiating partnerships until Class VI permit received and pipeline in place.