REX American Resources (REX) - 2025 Q3 - Quarterly Report

Ethanol Production and Capacity - As of October 31, 2024, the company holds majority ownership interests in two ethanol entities, with One Earth Energy, LLC at 75.9% and NuGen Energy, LLC at 99.7%[110] - The company expects its ethanol plants to produce approximately 2.9 gallons of denatured ethanol per bushel of corn processed, with the realized yield being critical for cash flow sustainability[111] - The company received a construction permit to increase ethanol production from 150 million gallons per year to 175 million gallons per year, with plans to apply for a further increase to 200 million gallons[119] - The Renewable Fuel Standard volume obligations for conventional biofuels are set at 15.0 billion gallons for each year from 2023 to 2025[128] - The company is facing uncertainties regarding the enforcement of the Renewable Fuel Standard II, which may impact future ethanol production volumes[126] Financial Performance - Net sales and revenue for the three months ended October 31, 2024, decreased by 21% to $174.9 million compared to $221.1 million in the same period of 2023[136] - Ethanol revenue decreased by 19% in Q3 2024, driven by a 21% decrease in average selling price, despite a 3% increase in gallons sold[139] - Dried distillers grains revenue fell by 28% in Q3 2024, attributed to a 25% decrease in average selling price and a 5% decrease in tons sold[140] - Distillers corn oil revenue decreased approximately 31% in Q3 2024, with a 28% drop in average price per pound sold[141] - Gross profit for Q3 2024 increased by approximately $0.4 million compared to Q3 2023, totaling $39.7 million[146] - Income before income taxes for Q3 2024 was approximately $39.5 million, compared to $41.3 million in Q3 2023[153] - Net income for Q3 FY 2024 was approximately $30.1 million, a decrease from $31.6 million in Q3 FY 2023, while net income for the first nine months of FY 2024 was approximately $57.4 million, up from $50.6 million in the same period last year[156] - Net income attributable to REX common shareholders for Q3 FY 2024 was approximately $24.5 million, compared to $26.1 million in Q3 FY 2023, with a nine-month total of approximately $47.1 million, up from $40.4 million[158] Expenses and Costs - Cost of sales decreased approximately 26% in Q3 2024, with corn accounting for 76% of the cost, down from 80% in Q3 2023[145] - SG&A expenses for Q3 2024 were approximately $8.4 million, an increase from $7.6 million in Q3 2023, primarily due to higher railcar lease expenses[150] - The company recognized income from its equity investment in Big River of approximately $3.6 million in Q3 2024, down from $4.7 million in Q3 2023[151] Cash Flow and Capital Expenditures - Net cash provided by operating activities for the first nine months of FY 2024 was approximately $39.1 million, down from $65.5 million in the same period of FY 2023[159] - Capital expenditures for the first nine months of FY 2024 were approximately $55.4 million, primarily for projects at consolidated ethanol plants, including $24.5 million for expansion and CI scoring reduction at One Earth[163] - The company plans total capital expenditures of approximately $165 million to $175 million for construction at One Earth facilities, including ongoing carbon sequestration and capacity expansion projects[167] Carbon Sequestration and Environmental Initiatives - The total cost for the carbon sequestration and plant expansion projects is estimated to be between $165 million and $175 million, with $52.9 million already spent as of October 31, 2024[121] - The company is working on a carbon sequestration project, with a test well drilled to approximately 7,100 feet and a Class VI injection well permit application submitted to the EPA[115] - The Illinois General Assembly passed legislation imposing additional requirements for carbon capture and sequestration facilities, affecting the company's project timelines[116] - The Inflation Reduction Act introduces a Clean Fuel Production Credit of approximately $0.02 per ethanol gallon per carbon intensity point reduction, applicable from 2025 to 2027[129] Shareholder Returns and Dividends - The company has a stock buyback program with 876,786 shares remaining authorized as of October 31, 2024[168] - The company received dividends from Big River of approximately $3.0 million in FY 2024, down from $5.5 million in FY 2023[161] Working Capital and Financial Position - Working capital as of October 31, 2024, was approximately $392.5 million, an increase from $385.8 million at January 31, 2024, with a current assets to current liabilities ratio of 9.9 to 1[162] - A decrease in accounts payable used cash of approximately $21.6 million in FY 2024, primarily due to timing of inventory receipts and vendor payments[159] Future Projections - Estimated total volume for ethanol for the next 12 months is 300,000 gallons, with a potential decrease in pre-tax income of $49,091 from a 10% adverse price change[172]