REX American Resources (US:REX)2025-12-04 17:00Financial Data and Key Metrics Changes - The net income per share for Q3 2025 was $0.71, an increase from $0.69 in Q3 2024, reflecting strong performance despite lower prices for ethanol and distillers grains [11] - Gross profit for Q3 2025 was $36.1 million, down from $39.7 million in Q3 2024, primarily due to lower prices [11] - Cash, cash equivalents, and short-term investments totaled approximately $335 million, maintaining a strong financial position with no bank debt [5][11] Business Line Data and Key Metrics Changes - Ethanol sales volumes reached 78.4 million gallons in Q3 2025, up from 75.5 million gallons in Q3 2024, while the average selling price decreased to $1.73 per gallon from $1.83 [10] - Dried distillers grains sales volumes were approximately 160,000 tons, with an average selling price of $139.93 per ton, down from 170,000 tons and $147.14 per ton in the prior year [10] - Corn oil sales volumes increased by approximately 17% to 27.4 million pounds, with an average selling price rising by approximately 36%, leading to a 60% increase in sales revenue for corn oil [10] Market Data and Key Metrics Changes - U.S. ethanol exports were approximately 10% ahead of the 2024 pace, with exports 14% higher than the first eight months of 2024 [13] - The USDA projects that corn production in South Dakota and Illinois for the 2025-2026 harvest season will be among the highest in recent years, favoring lower input prices [13] Company Strategy and Development Direction - The company is focused on solidifying its core business of ethanol production and expanding its One Earth Energy facility to 200 million gallons per year, expected to be completed in 2026 [4][5] - REX is actively engaged in evaluating potential benefits from the 45Z tax credits and is working on its carbon intensity score to qualify for these credits [5][12] - The company aims to leverage near-term opportunities provided by the 45Z tax credit program to enhance earnings as its ethanol production expansion and carbon sequestration facilities come online [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fourth quarter, expecting to generate a higher net profit than the previous year's fourth quarter [14] - The company anticipates continued growth and improved performance in 2026, supported by a strong balance sheet and expanding business opportunities [14] - Management highlighted the importance of operational excellence and strategic investments in driving superior results [5][12] Other Important Information - The company has invested approximately $155.8 million in carbon capture and ethanol expansion projects, remaining within a combined budget range of $220 million to $230 million for both initiatives [8][9] - REX has maintained profitability for 21 consecutive quarters, reflecting the team's discipline and operational excellence [12] Q&A Session Summary Question: Thoughts on key hurdles and timing for the 45Z tax credit program - Management is awaiting guidelines from the Treasury and is reviewing facts with experts to determine potential tax credits, with updates expected next quarter [17] Question: Impact of tariffs and crush spreads on the industry - Management noted that tariffs initially impacted exports but have led to increased ethanol exports to Europe and other countries, with expectations for continued growth in 2026 [19][20] Question: Status of the carbon sequestration project and permitting process - Management indicated that the Illinois Commerce Commission is working on pipeline requirements, and the moratorium will end on July 1, allowing applications to proceed [21][22] Question: Potential for partnerships in carbon capture - Management is focusing on the first well's operation before negotiating contracts for carbon sequestration with third parties [30]