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REX American Resources (REX) - 2026 Q2 - Earnings Call Transcript
2025-08-27 16:02
Financial Data and Key Metrics Changes - Ethanol sales volumes increased to 70.6 million gallons in Q2 2025 from 65.1 million gallons in Q2 2024, while the average selling price decreased to $1.75 per gallon from $1.79 [12] - Gross profit for Q2 2025 was $14.3 million, down from $19.8 million in Q2 2024, primarily due to lower sales prices for dry distiller grains [13] - Net income attributable to REX shareholders was $7.1 million or $0.43 per diluted share, compared to $12.4 million or $0.70 per diluted share in Q2 2024 [14] Business Line Data and Key Metrics Changes - Dry distiller grain sales volumes were approximately 148,000 tons with an average selling price of $143.63 per ton, down from 133,000 tons at $164.45 per ton in the prior year [12] - Modified distillers grain volumes totaled approximately 19,000 tons at an average selling price of $64.41 per ton [12] - Foreign oil sales volumes increased by approximately 14% year-over-year, with a 26% increase in prices leading to a 46% increase in sales dollars [13] Market Data and Key Metrics Changes - The U.S. corn crop is on track for a potential record harvest, which is expected to benefit REX [18] - Ethanol exports are running about 10% ahead of 2024 levels through June, with expectations for 2025 to set a new export record [17] Company Strategy and Development Direction - REX's strategy is guided by profit, position, and policy, focusing on sustainable long-term organic growth through ethanol expansion and carbon capture initiatives [15] - The company is positioned to maximize benefits from the 45Q and 45Z tax credits, which have been extended through 2029 [10][15] Management's Comments on Operating Environment and Future Outlook - Management anticipates better performance in the second half of 2025 compared to the first half, supported by favorable corn supply trends and steady demand [17] - The company remains confident in its core business outlook and is committed to executing its growth strategy while delivering long-term value to shareholders [18] Other Important Information - REX has invested approximately $126.7 million in carbon capture and ethanol expansion projects, remaining within a combined budget range of $220 million to $230 million [11] - The Board of Directors has authorized a two-for-one stock split, effective for shareholders of record as of September 8, 2025 [5] Q&A Session Summary Question: Can you discuss the event held at the One Earth Energy facility and its implications for local support? - The event was well attended by local officials and shareholders, enhancing community relations and support for growth projects [21][22] Question: Was the issue with the interconnection from the local utility resolved? - Yes, the issue has been resolved, and the company can now obtain utility directly from Amarin [23] Question: What is the outlook for co-products and ethanol margins in the second half? - The third quarter is expected to outperform the second quarter, with favorable feedstock availability and increasing ethanol exports [26][27] Question: What is the status of the CI score and potential credits without a carbon pipeline? - The company has not publicly disclosed its CI score due to unclear guidelines but is optimistic about potential tax credits [32][34] Question: Will the company be able to build the carbon pipeline soon after the expiration of the Illinois moratorium? - The goal is to proceed with construction after receiving necessary approvals, which could allow operations in 2026 [35][36] Question: What is the expected build time for the pipeline once approvals are received? - The pipeline is approximately 6.5 miles long, and construction would take a couple of months once permissions are granted [37][38]