REX American Resources (US:REX)2025-12-04 17:45Ethanol Production and Revenue - As of October 31, 2025, the company holds majority ownership interests in two ethanol entities: One Earth Energy, LLC (76.1%) and NuGen Energy, LLC (99.7%) [107] - The company expects its ethanol plants to produce approximately 2.9 gallons of denatured ethanol for each bushel of corn processed, with the realized yield being critical for cash flow sustainability [108] - Ethanol revenue decreased by 2% in Q3 2025 compared to Q3 2024, attributed to a 5% decrease in selling price per gallon, despite a 4% increase in gallons sold [136] - Average selling price per gallon of ethanol (net of hedging) was $1.73 in Q3 2025, down from $1.83 in Q3 2024 [135] Financial Performance - Net sales and revenue for the three months ended October 31, 2025, were $175.6 million, a slight increase from $174.9 million in the same period of 2024 [134] - Gross profit for Q3 2025 decreased by approximately $3.5 million compared to Q3 2024, totaling $36.1 million [141] - Income before income taxes was approximately $35.5 million for Q3 2025, down from $39.5 million in Q3 2024 [147] - Net income for Q3 FY2025 was approximately $27.5 million, a decrease of 8.6% from $30.1 million in Q3 FY2024 [149] - Net income attributable to REX common shareholders for the first nine months of FY2025 was approximately $39.2 million, down 16.6% from $47.1 million in the same period of FY2024 [151] Capital Expenditures and Investments - The company has budgeted capital expenditures for expansion and carbon sequestration projects at One Earth to be approximately $220 million to $230 million, with $58.1 million already spent on the carbon sequestration project as of October 31, 2025 [117] - The company plans to spend an additional $25 million to $35 million on projects during the remainder of FY2025 [160] - Capital expenditures for FY2025 are expected to be between $220 million and $230 million, with $58.1 million already spent on the carbon sequestration project [160] Carbon Sequestration Initiatives - One Earth Energy, LLC is developing a carbon sequestration project and expects the EPA to prepare a draft permit by February 2026 and make a final decision by June 2026 [111] - The company has secured land easements for the construction of a CO2 pipeline for carbon sequestration, with capacity sufficient for an estimated 15 years [112] Market and Regulatory Environment - The IRA created a Clean Fuel Production Credit under Section 45Z, allowing tax credits between $0.02 and $0.20 per gallon based on GHG reduction, with the first two or ten cents earned upon achieving a CI score below 47.5 [116] - The EPA has issued Renewable Volume Obligations (RVOs) for 2023-2025, maintaining conventional biofuels volumes at 15.0 billion gallons for each year [125] Operational Metrics - Cost of sales increased by 3% in Q3 2025, with corn accounting for approximately 75% ($104.2 million) of total costs [140] - Dried distillers grains revenue fell by 11% in Q3 2025 compared to Q3 2024, due to a 6% decrease in tons sold and a 5% decrease in average price per ton [137] - Distillers corn oil revenue surged approximately 60% in Q3 2025 compared to Q3 2024, driven by a 36% increase in selling price per pound and a 17% increase in pounds sold [138] Cash Flow and Working Capital - Net cash provided by operating activities increased to $64.0 million in the first nine months of FY2025, compared to $39.1 million in the prior year [153] - Net cash provided by investing activities was $47.5 million in the first nine months of FY2025, up from $37.6 million in FY2024 [156] - Net cash used in financing activities was $35.8 million in the first nine months of FY2025, primarily for stock repurchases [158] - The current ratio as of October 31, 2025, was 7.2x, down from 8.6x in the previous year [152] - As of October 31, 2025, working capital was $354.2 million [159] Tax Credits and Audits - The company plans to vigorously defend approximately $24.5 million in research and experimentation tax credits under IRS audit [131] - Estimated decrease in pre-tax income from a 10% adverse change in ethanol prices is $47.1 million [165]