Release Date: May 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- REX American Resources Corp (REX, Financial) maintained its position as one of the industry's most consistent performers despite uncertain regulatory and market conditions.
- The company continued its share buyback program, repurchasing approximately 822,000 shares for $32.7 million, reflecting confidence in its undervalued stock.
- REX's ongoing projects, including carbon capture and ethanol production capacity expansion, are progressing well, with investments totaling $122.7 million.
- The company reported its 19th consecutive profitable quarter, demonstrating strong financial performance and operational efficiency.
- REX remains debt-free, maintaining a strong financial position with cash, cash equivalents, and short-term investments totaling $315.9 million.
Negative Points
- Ethanol sales volumes decreased to 70.9 million gallons in Q1 2025 from 74.5 million gallons in Q1 2024, primarily due to shipment timing.
- Net income attributable to REX shareholders declined to $8.7 million from $10.2 million in Q1 2024, impacted by lower cash balances and interest income.
- The company's gross profit slightly decreased to $14.3 million from $14.5 million in Q1 2024, reflecting lower sales prices for dried distiller grains.
- Regulatory uncertainties, particularly regarding carbon capture projects and federal pipeline regulations, pose potential challenges to future operations.
- Natural gas price volatility could negatively impact REX's business, as it is a major expense in ethanol production.
Q & A Highlights
Q: What drives REX's ability to consistently deliver superior returns on capital and profitability?
A: Stuart Rose, Executive Chairman, attributes REX's success to the leadership of CEO Zafar Rizvi, who closely monitors market conditions and operational details. Additionally, REX benefits from strategic plant locations and a strong team that supports the company's mission and operational goals.
Q: What specific deregulation measures could help REX, and what is the status of federal pipeline regulations?
A: Stuart Rose explains that regulatory developments are currently uncertain, with ongoing discussions in Washington. However, the inclusion of 45Q and 45Z tax credits in the Big Beautiful Bill is seen as positive. Zafar Rizvi adds that Illinois legislation is favorable for REX's ethanol location, as it is situated away from restricted aquifer areas.
Q: What are the current industry fundamentals and outlook for ethanol margins as we approach summer?
A: Zafar Rizvi notes that ethanol margins remain positive, with expectations of a strong corn harvest boosting profitability. Ethanol exports are up 19% compared to last year, and potential tariff eliminations could further benefit the industry. However, natural gas prices are a concern and are being monitored closely.
Q: How is REX progressing with its carbon capture and ethanol expansion projects?
A: Zafar Rizvi reports ongoing technical reviews and coordination with the EPA for the Class 6 injection well permit, expected by January 2026. The projects are within budget, with a total investment of $122.7 million so far, and are expected to enhance long-term operational efficiencies.
Q: Can you provide an update on REX's share repurchase program?
A: Stuart Rose highlights that REX repurchased approximately 822,000 shares in Q1 2025 for $32.7 million, reflecting confidence in the company's future prospects. The buyback program aims to deliver shareholder value, with 1,182,000 shares remaining authorized for repurchase.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
