REX American Resources Corporation Q4 FY2025 earnings call

Fiscal 2025 was exceptional for RECS American Resources with outstanding operational performance and progress on strategic growth initiatives. Ethanol sales volume reached record levels driven by strong export demand. The 45Z tax credit was initially implemented with positive impact. Progress on capacity expansion at One Earth Energy Facility nearing completion to increase annual production capacity to 200 million gallons. Carbon capture and storage initiative at One Earth Facility ongoing. Financial position strong with record EPS, solid balance sheet, no bank debt. 2026 outlook includes building on momentum with expanded capacity, tax credit eligibility, and strong financial foundation. Strategy guided by profit, position, and policy with 22 consecutive quarters of profitability, expected profitable first quarter of 2026, and focus on maximizing core business performance and carbon capture facility efforts.

Ethanol sales volume in fiscal 2025 reached record levels at 290 million gallons, slightly up from 289.7 million gallons in 2024. Fourth quarter 2025 ethanol volumes were 70.1 million gallons. Average selling price of consolidated ethanol volumes was approximately $1.74 per gallon for full fiscal 2025 and $1.72 for fourth quarter. Dried distilled grain sales volumes in fiscal 2025 totaled 612,000 tons, a 3% decrease from 632,000 tons in 2024. Fourth quarter dried distiller grains volumes were approximately 151,000 tons, a 9% decrease. Average selling price was $144.06 per ton for full year and $147.25 per ton for fourth quarter. Modified distiller grain sales volumes were 81,900 tons in fiscal 2025 compared with approximately 70,000 tons in 2024. Fourth quarter modified distiller grain volumes totaled approximately 19,700 tons, a 1% increase. Average selling price was $65.82 per ton for full year and $67.92 per ton for fourth quarter. Corn oil sales volumes in fiscal 2025 were approximately 97 million pounds, an increase of approximately 10% from 88.1 million pounds in 2024. Fourth quarter corn oil sales volumes totaled approximately 25.2 million pounds, a 7% increase. Average selling price was approximately 54 cents per pound for full year and fourth quarter of 2025.

Expect profitable first quarter of 2026. Earnings of 2026 expected to benefit from expanded capacity, 45Z tax credit contribution, and focus on core business. Anticipate completing Monarch Energy expansion and advancing carbon capture initiative in 2026. Policy environment favorable with 45Z tax credit providing near-term benefits and ethanol export demand expected to continue strong in 2026.

Uncertainty regarding CCS permitting as government agencies move slower than expected. Geopolitical tariffs and trade situations could potentially impact operations, although currently no impact on ethanol exports observed.

Q: Regarding 45Zs, is the $28 million for Q4 or catch-up on previous periods and future run rate?

A: The $28 million in Q4 2025 was due to 45Z tax credits recognition as regulations became clearer, and 45Z is good through 2029 with potential for more with carbon capture completion.

Q: Can you disclose by how much carbon capture project would improve CI score?

A: Not publicly disclosed yet but will be significant if completed.

Q: On CCS permitting, status of Class 6 injection permit?

A: Moved to September on EPA website but in final technical review stage with regular meetings with EPA.

Q: Impact of tariffs on operations?

A: No impact on ethanol exports currently, with export demand strong and Brazil's export situation affecting positively.

Q: Per gallon basis of 45Z recognition and other opportunities?

A: Approximately $0.10 per gallon currently, mainly carbon capture for increased credits, and possible $1 per gallon at One Earth Energy with carbon sequestration facilities completed.

Q: Thoughts on nationwide E15?

A: Do not expect nationwide E15 but expect more independents to put in E15 pumps as it benefits consumers and retailers