REX American Resources Corporation Stock

Good morning, and welcome to the REX American Resources Second Quarter Fiscal 2026 Conference Call. As a reminder, today's call is being recorded.

[Operator Instructions]

I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead, sir.

Good morning, and thank you for joining REX American Resources Q2 2026 Conference Call. With me on our call today are Stuart Rose, REX' Executive Chairman; and Zafar Rizvi, REX's Chief Executive Officer. We'll get to our presentation and comments momentarily as well as your questions. But first, I will review the safe harbor disclosure.

In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations.

The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements.

I'd now like to turn the call over to our Executive Chairman, Stuart Rose.

Good morning, and thank you all for being here. The second quarter of fiscal 2026 was another strong period for REX American Resources. We posted the highest second quarter net income per share in our company's history at $1.06 per share. Results like these reflect the discipline of our operating teams, the strength of our commercial execution and the benefits of the policy and market tailwinds that have been building for some time.

Two developments, one during and one subsequent to the quarter stand out as real markers of progress against our long-term growth agenda.

First, our ethanol production expansion at the One Earth facility remains on schedule, and we continue to expect the added capacity to come online before the end of 2026. Second, and Zafar will cover this in much more detail. We reported more 45Z credits, and we reached an important regulatory milestone on our carbon capture and sequestration project in August with the project receiving draft Class VI well permits from the U.S. EPA.

Our balance sheet remains a genuine source of strength. We closed the quarter with no bank debt and substantial cash and short-term investments, which gives us the flexibility to fund our growth initiatives internally while we continue to evaluate the best uses of our capital going forward. I want to thank our employees across every facility for the consistency and care they bring to this business each day, shows up directly in these results.

I will now turn things over to our Chief Executive Officer, Zafar Rizvi, to walk through our operational progress in more detail.

Thank you, Stuart. Our expansion project at the One Earth Energy facility in Gibson City continue to progress on schedule, and we remain on track to complete construction of the additional ethanol production capacity by the end of 2026. This expanded capacity will strengthen our operating platform and enhance our ability to capture additional value under the 45Z production tax credit program.

Turning to our carbon capture and sequestration project. We reached an important milestones just 2 weeks ago. On August 17, the U.S. Environmental Protection Agency issued draft permits for 3 Class VI injection wells associated with our One Earth carbon capture project. The EPA is now accepting public comments on those draft permits, and we continue to work closely with the agency as we move towards final approval. The issuance of these draft permits represents a major step forward for the project. And we are encouraged by the continued engagement and progress with our regulatory partners. At the state level, the Illinois moratorium on carbon sequestration expired on July 1, the Illinois Commerce Commission has initiated its rule-making process and the Illinois Environmental Protection Agency has also begun its permitting application process.

We plan to submit our application for the approximately 5-mile connector pipeline as well as the required Illinois EPA application as soon as possible. We will continue working closely with state and local regulators to obtain the remaining approvals necessary to move the project forward.

On the policy side, 45Z production tax credit continued to make a meaningful contribution to our results. During the second quarter, we recognized approximately $18.4 million in Section 45Z production tax credit income bringing the year-to-date total to approximately $26 million. The tax credit benefits flowed directly through gross profit. We believe our carbon capture project once fully permitted and operational, has the potential to further improve our carbon intensity score and increase the value we can capture under the 45Z program.

From a capital investment viewpoint, our combined investment in the ethanol expansion and carbon capture projects totaled approximately $191.2 million through the end of the second quarter.

I will now turn the call over to Doug Bruggeman to discuss our financial results in greater detail.

Thank you, Zafar. For information on this quarter's operational results, including production volumes and selling prices, please refer to our press release issued this morning.

Net sales and revenue for the second quarter were $168.5 million compared to $158.6 million in the second quarter of 2025, reflecting improved pricing across our product mix. Gross profit for the second quarter was $53.3 million compared to $14.3 million in the same period last year. This improvement reflects stronger crush margins, together with the $18.4 million of production tax credit income during the quarter, as Zafar mentioned. Even absent the benefit of 45Z tax credits, our gross profit grew approximately 144% year-over-year.

Selling, general and administrative expenses were $15.6 million for the quarter versus $6.2 million in the second quarter of 2025. The increase primarily relates to higher incentive compensation tied to the strength of our results and restricted stock awards issued during the quarter.

Equity in income of unconsolidated affiliates was $7.2 million for the quarter compared to $900,000 in the second quarter of 2025, also benefiting from stronger industry dynamics and production tax credit contributions at our nonconsolidated facilities. Interest and other income was $3.2 million for the quarter, essentially in line with the $3.1 million in the second quarter of 2025. Income before income taxes and noncontrolling interest was $48.1 million for the quarter compared to $12.1 million in the second quarter of 2025.

Net income attributable to REX shareholders was $34.9 million or $1.06 per diluted share compared to $7.1 million or $0.22 per diluted share in the second quarter of 2025. We ended the quarter with $379.5 million in cash, cash equivalents and short-term investments, and we continue to carry no bank debt. We continue to fund our growth projects entirely from our own balance sheet.

I will now turn things back over to Zafar.

Thank you, Doug. To summarize the quarter, REX delivered its 24th consecutive profitable quarter and achieved a record second quarter on an earnings per share basis. We successfully capitalized on favorable market conditions through disciplined margin management while continuing to make important progress on our strategic growth initiatives.

Looking ahead at this early stage of the third quarter, we expect to remain profitable and anticipate that third quarter results will be better than the same period last year. Operationally, One Earth expansion remains on schedule for completion by the end of 2026, and our carbon capture project has reached an important regulatory milestone with EPA issuing of our draft permit for 3 Class 6 injection wells.

We remain focused on completing the production capacity expansion, advancing the carbon capture permitting process with the EPA and Illinois regulatories and maintaining disciplined stewardship of our balance sheet as we evaluate additional opportunities to create long-term value for our shareholders.

Market fundamentals remain constructive at this point with continued record export demand supporting the U.S. ethanol industry and the 45Z program providing an important contribution to our margins. We appreciate the continued confidence of our shareholders and the hard work and dedication of our teams across all of our facilities.

With that, I will turn the call back to the operator for questions. Operator?

[Operator Instructions]

Our first question comes from the line of Mason Bourne with AWH Capital.

To start, it sounds like you've had good progress on the expansion. When you say online by the end of the year, does that mean all 50 million gallons? And do you think that 200 million is the long-term correct level for One Earth? Or could you potentially go higher than that eventually?

Mason, I think we have a step-by-step process as I have explained several times before. We are producing at this time approximately 150 million gallon and the next step will be 175 million. Once we accomplish 175 million, then we have to apply for 200 million. That's one of the requirements for EPA and Illinois EPA requirements. So we expect, hopefully, early next year, middle of that will be close to 200 million gallons we will be producing.

So it sounds like you're in discussions with the Illinois EPA on that. It's great news to see on your draft permit on Class 6 well. Could you talk about any time line expectations? The federal EPA process is a little clearer from a time line perspective. But Illinois, I think, is -- they already have approved wells in the state. So just wondering the clarity or any thoughts you have on the time line there?

I think our time line is -- this is Stuart speaking. I think we do not have great clarity on it. The EPA permit, we believe, will be issued sometime within a reasonable period of time. The biggest thing we're waiting for is approval. We have a little pipeline connector about 5 miles, Illinois, we need the Commerce Commission or the Illinois Pipeline Commission to approve that one. And that one that just ended -- as Zafar said, they ended the moratorium at the end of June. So we're able to apply for a permit, but we do not know at this time how long that's going to take, and that is the thing that will hold us up, I believe, the longest.

And then lastly, in your slide presentation, you have a note in there about potential third-party gallons. I wondered if you could talk about that. You have significant excess capacity in your wells when they get online. So is this Class 6 draft permit, is that sort of a clearing event to open up discussions because the feasibility of your project has basically been signed hopefully.

Yes. We would love to have someone like direct air to CO2 project or something. But at this point in time, we have nothing imminent. But we will certainly, as you just mentioned, have the capacity to take on those type of projects. But we're mostly concentrated on getting our own project going, which if we do with the 45Z rules the way they are currently, that would add significantly to our bottom line.

[Operator Instructions]

Our next question comes from the line of David [indiscernible] with DJM Investments.

My question is there's been quite a bit of news this week about the RIN credits and then exemptions. And I was just wondering how that might be impacting your thinking and, I guess, the cash flows over the next 12 to 18 months.

I think at this time, certainly, there will be some impact on RINs, but I'm not sure that will be impacted so much on ethanol sale. As you know, that ethanol export has almost a 13% increase this year, first 6 months and we expect that it will be almost -- it will continue to increase the export. But there may be some impact, but I don't anticipate the major impact because most of them -- what you'll see is there is also include biodiesel RINs and also D4 and D6 both of the RINs is included in that.

So there could be some, but it's not a major -- going to be a major impact. And also, we hope that E15 will also will be in California, expected to have almost 695 million gallon consumption, and they fully approved that also at the same time.

Okay. Understood. I guess second question, given how close we are to carbon capture being approved. What is your feeling on share buybacks and capital deployment going forward is clearly most of these 45 credits are essentially based on production and don't have anything to do with the revenue lines.

We've been really, really -- I think we're one of the leaders, if not the leader in share buybacks in percentage of all the shares we've had outstanding over the years. We buy on [indiscernible]. And when we buy, we buy whatever we can buy at the price we're buying at. And that's been our method of choice in distributing capital, and we certainly are doing -- the fact that we have so much capital just shows how well we're doing, and we will look either to distribute the capital that way again, there's other ways to distribute capital, and we're always looking, and we didn't mention it in the conference call, but we're always looking for either other ethanol plants to buy or something in a similar related industry that might make some sense. So again, we're well aware that we're so lucky to have so much capital.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Rose for final comments.

Thank you. I'd like to thank everyone for listening. Again, we have great locations, very good corn growing areas. We have great plants using industry-leading technology. We just had the best quarter in our company's history. And the most important thing we have going for us, in my opinion, the best people in the industry, led by our CEO, Zafar Rizvi, and that includes all of our hard-working employees. I'd like to thank everyone for listening, and we look forward to our next conference call at the end of our current quarter. Thank you. Thank you again. Bye.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Good morning, and welcome to the REX American Resources' First Quarter 2026 Conference Call. As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Good morning, and thank you for joining REX American Resources First Quarter 2026 Conference Call. With me on our call today are Stuart Rose, REX's Executive Chairman; and Zafar Rizvi, REX's Chief Executive Officer. We'll get to our presentation and comments momentarily, as well as your questions. But first, I will review the safe harbor disclosure.

In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations.

The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements. I'd now like to turn the call over to our Executive Chairman, Stuart Rose.

Good morning, and thank you to everyone for joining us today. First quarter of 2026 continued to showcase REX's operational excellence and strategic discipline. Our team has once again demonstrated the ability to deliver outstanding results while advancing our key growth initiatives. As proof of this, the first quarter of 2026 was the most profitable first quarter on a net income per share basis in our company's history. This consistent approach provides us with the flexibility to pursue value-creating opportunities while maintaining a thoughtful approach to capital allocation.

Both of our major growth projects, the carbon capture and sequestration initiative and the ethanol production capacity expansion at our One Earth Energy facility continue to advance. We remain focused on executing what is within our control while adapting to external factors as they evolve. Shareholder value creation remains a top priority. REX is particularly keen to take advantage of market tailwinds driven by both domestic policy and international export markets and to maximize our profit potential. We believe that our team is incredibly well positioned and prepared to do this. I now turn the call over to our CEO, Zafar Rizvi, to provide updates on our ongoing projects.

Thank you, Stuart. Our ethanol facility expansion at Gibson City continues to progress on schedule, and we remain on track for completion by the end of 2026. This expansion represents an important step in strengthening our production capabilities and positioning the company for long-term growth. We are pleased to announce a record profitable first quarter on a net income per share basis. Regarding our carbon capture and sequestration initiative, we continue to work closely with the EPA on our Class VI injection well permit application. The permitting process remains ongoing, and we are addressing all regulatory requirements to move the project forward efficiently.

At the state level, the Illinois moratorium on carbon pipeline permitting is scheduled to expire on July 1, 2026. We have maintained engagement with the Illinois Commerce Commission and plan to submit our application shortly following the expiration of the moratorium. We are also closely monitoring ongoing federal policy discussions related to carbon capture incentives under Section 45Z. We began recognizing 45Z production tax credits in the fourth quarter of 2025. And during the first quarter of 2026, we recorded an additional $7.5 million in production tax credit.

For the first quarter, we maintained booking the credit at $0.10 per gallon at the consolidated plants as we continue to monitor the 45Z regulations. As of the end of the first quarter of 2026, our total investment in the carbon capture and ethanol expansion projects was approximately $176.3 million. We continue to operate within our combined project budget range of $220 million to $230 million, subject to potential adjustments related to inflation and other market factors as the projects advance. I will now turn the call over to Doug Bruggeman to discuss our financial results.

Thanks, Zafar. During the first quarter of fiscal 2026, our ethanol sales volumes reached 71.1 million gallons compared to 70.9 million gallons in the first quarter of 2025. The average selling price for ethanol was $1.66 per gallon during the quarter compared to $1.76 in the prior year's first quarter. Dry Distillers Grain sales volumes were approximately 155,000 tons for Q1 with an average selling price of $155.86 per ton versus $145.65 in the prior year. Modified Distillers Grains volumes totaled approximately 13,427 tons with an average selling price of $76.94 per ton. Corn oil sales volumes were approximately 23.9 million pounds during the quarter with an average selling price of $0.54 per pound compared to $0.46 in the prior year.

The company reported $7.5 million in 45Z production tax credit income in the first quarter of fiscal 2026. Reflecting our change in accounting principles, we now report that as operating income from our consolidated plants. Gross profit for the first quarter was $29.1 million compared to $14.3 million in Q1 2025. This improvement primarily reflects the benefit of 45Z tax credits and reduced corn pricing. Selling, general and administrative expenses were approximately $9.7 million for the quarter compared to $5.9 million in Q1 2025. The increase was primarily due to higher incentive compensation and recording unpaid stock bonuses from 2025 at fair value.

Our equity in income of unconsolidated affiliates increased from $1 million to $3.6 million with approximately $1.8 million of the increase due to income from 45Z tax credits. Interest and other income totaled $3.2 million for the quarter compared to $4.2 million in Q1 2025. Income before taxes and noncontrolling interest was approximately $26.1 million compared to $13.6 million in Q1 2025.

Net income attributable to REX shareholders was $18.5 million or $0.56 per diluted share compared to $8.7 million or $0.26 per diluted share in Q1 2025. This represents our 23rd consecutive profitable quarter. We ended the first quarter with cash, cash equivalents and short-term investments of $364.3 million. The reduction from the previous quarter primarily reflects our ongoing capital investments in our growth projects. REX continues to maintain its strong financial position with no bank debt. I'll now turn things back to Zafar.

Thank you, Doug. The REX team continues to execute successfully against our long-term strategic objectives. Our core focus remains on building and operating a consistently profitable business. The first quarter of 2026 marked the strongest first quarter earnings per share in our company's history and represented our 23rd consecutive profitable quarter. This performance reflects our team's ability to capitalize on opportunities, navigate changing market conditions and consistently deliver value for our shareholders. We continue to position REX for sustainable long-term growth through disciplined organic expansion initiatives, all funded through our strong balance sheet with no debt.

Our ethanol capacity expansion and carbon capture projects continue to advance as planned despite permitting delays and certain regulatory headwinds. We remain focused on optimizing these investments, expecting to drive future operational excellence and enhanced financial performance for our shareholders. We also plan to continue to evaluate the best use of our cash, including investments that complement our existing platform.

In addition, we continue to closely monitoring policy developments at both the federal and state levels. The anticipated expiration of the Illinois Carbon Pipeline moratorium in July represents an important regulatory milestone. While policy outcomes remain outside our control, we believe we were -- we are well informed and working diligently to respond effectively to regulatory developments.

Market fundamentals for the ethanol industry remain constructive. Domestic demand continues to be stable, while export markets remain strong, according to the Renewable Fuel Association, 2026 ethanol export through March increased by 20% compared to the same period last year. As we move through the second quarter, we continue to see stable operating conditions and remain confident in our ability to deliver another profitable quarter for our shareholders. With that, I would now like to open the call for questions. Operator?

[Operator Instructions] Thank you. There are no questions at this time. I would like to hand the floor back over to Stuart Rose for any closing comments.

Thank you. Anyway, sorry, there's no questions, but I want to reiterate, we have great plants, great locations, and I feel the best employees in the business led by our CEO, Zafar Rizvi. Again, I think they're better than anyone else in the industry and our earnings prove it. We've been public for over 40 years, and we had our greatest first quarter in earnings per share in our public history. Again, best people, best plants, in my opinion. We're optimistic for future growth, both in ethanol and receiving Section 45 tax credits, Z and Q. We look forward to talking to everyone at the next call. And again, thank you for listening. Bye.

This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

Good morning, and welcome to the REX American Resources Fourth Quarter and Full Fiscal Year 2025 Conference Call. As a reminder, today's call is being recorded. [Operator Instructions]

I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Good morning, and thank you for joining this morning's call. I have joining me on the call today, Stuart Rose, REX' Executive Chairman; and Zafar Rizvi, our Chief Executive Officer. We'll get to our presentation and comments momentarily as well as your questions. But first, I will review the safe harbor disclosure.

In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements.

I'd now like to turn the call over to Stuart Rose, our Executive Chairman.

Good morning, and thank you to everyone for joining us today. Fiscal 2025 was an exceptional year for REX American Resources highlighted by outstanding operational performance and meaningful progress on our strategic growth initiatives. We demonstrated not only the resilience and scalability of our business model, but also the strength and capability of our team. Our ethanol sales volume reached record levels in 2025, driven by strong export demand and favorable industry conditions. In a dynamic commodity pricing environment, our team's operational excellence and market expertise enabled us to deliver strong financial results, while maintaining our leadership position in the industry. While we expect these conditions to persist in the near term, our long-term success is rooted in disciplined execution, efficiency and most importantly, teamwork qualities that allow us to perform consistently even in more challenging environments.

On the strategic front, 2025 was a transformative year. We are encouraged by the initial implementation of the 45Z tax credit with this impact of fiscal 2025, and expect it to positively impact our results going forward. We also made significant progress on our capacity expansion at the One Earth Energy facility, which is nearing completion and will allow for increased annual production capacity to 200 million gallons. In addition, we continue to work diligently on our carbon capture and storage initiative at the One Earth facility, reinforcing our commitment to sustainability and long-term value creation. Our financial position remains exceptionally strong after reporting record EPS for fiscal 2025. We concluded the year with a solid balance sheet, substantial cash reserves and no bank debt. This financial flexibility, combined with our operational strength positions us well to pursue continued growth and deliver enhanced shareholder value.

Looking ahead to the remainder of 2026 and beyond, we are confident in our ability to build on this momentum. Our expanded capacity tax credit eligibility and strong financial foundation provides multiple avenues for sustained growth. As always, our success is driven by our people. The dedication, market insight and attention to detail demonstrated by the REX team truly set us apart, whether operating our facilities at peak efficiency or strategically managing our commodity positions, our employees continue to perform at the highest level.

With that, I'll turn the call to CEO, Zafar Rizvi, who will provide additional details of our operational achievements and strategic initiatives.

Thank you, Stuart. Fiscal 2025 was a landmark year for REX American Resources, highlighted by exceptional execution across all aspects of our business and meaningful progress against our growth strategy. I'm pleased to report that we are making strong progress towards completing the capacity expansion project at our One Earth and at the ethanol production facility, which will increase capacity to 200 million gallons per year. We expect testing and commissioning to begin upon completion with the facility becoming fully operational in fiscal 2026. In addition to increasing potential sales volume, this expanded capacity, positions us to capture greater market share and benefit from the strong export demand environment that characterized 2025 and continues into 2026. This additional production also enhanced our ability to maximize benefits under the 45Z tax credit program.

Turning to the 45Z program. As Stuart mentioned, we successfully positioned REX to capitalize on near-term opportunities under the 45Z tax credit program during 2025. We completed assessment with multiple independent experts to establish carbon intensity scores across our facilities. As anticipated, our score came in below the required threshold with the purchase of energy credits, enabling us to qualify for and began recognizing 45Z tax credit benefits. Looking ahead, our carbon capture facility would further reduce our CI scores. This would allow us to qualify for higher-tier credits for potentially increasing the financial benefits from the program. Our carbon capture and sequestration projects continue to await of permitting from the Class VI well and associated carbon dioxide connector pipeline. We remain actively engaged with the EPA and the Illinois Commerce Commission throughout this both process. As of fiscal year and 2025, we have invested approximately $166 million in our carbon capture and ethanol expansion projects combined, and currently remain within our previously stated total budget range of $220 million to $230 million.

I will now turn the call over to our CFO, Doug Bruggeman, to discuss our operational and financial results.

Thank you, Zafar. I'll begin with our operational results. REX ethanol sales volumes during fiscal year 2025 were 290 million gallons, a slight increase over fiscal year 2024 sales volumes of 289.7 million gallons and represented an all-time high for REX. Volumes in the fourth quarter of 2025 were 70.1 million gallons versus 74.6 million gallons in the fourth quarter of 2024. Average selling price for our consolidated ethanol volumes were approximately $1.74 per gallon for the full fiscal year 2025 and $1.72 for the fourth quarter. Dried distiller grain sales volumes during fiscal 2025 totaled 612,000 tons, a 3% decrease over fiscal 2024 volumes of 632,000 tons. Volumes during the fourth quarter were approximately 151,000 tons, a decrease of approximately 9% over fourth quarter of 2024. Average selling price for dried distiller grains was approximately $144.06 per ton for the full year and $147.25 per ton for the fourth quarter. Modified distiller grain sales volumes were 81,900 tons in fiscal 2025 compared with approximately 70,000 tons in fiscal year 2024.

For the fourth quarter, modified distiller grain volumes totaled approximately 19,700 tons, an increase of approximately 1% over the same period in 2024. The average selling price for modified distiller grain was approximately $65.82 per ton for the full year and $67.92 per ton for the fourth quarter. Corn oil sales volumes in fiscal year 2025 were particularly strong, coming in at approximately 97 million pounds compared to 88.1 million pounds sold in fiscal year 2024, an increase of approximately 10%. For the fourth quarter, corn oil sales volumes totaled approximately 25.2 million pounds, an increase of 7% over fourth quarter 2024. Average selling price for REX' corn oil product was approximately $0.54 per pound for the full year and fourth quarter of 2025.

Gross profit for fiscal year 2025 was $93.7 million versus gross profit of approximately $91.5 million for fiscal year 2024. Gross profit in quarter Q4 2025 was $28.9 million compared to $17.6 million in Q4 of 2024. The fourth quarter benefited from both improved ethanol pricing and reduced corn cost, the two largest drivers of gross profit.

Our SG&A expense increased to $32.6 million for fiscal year 2025 versus $27.1 million in 2024. SG&A in the fourth quarter increased to approximately $12.3 million versus $6.2 million in the fourth quarter of 2024. The fourth quarter increase was primarily due to increased incentive bonus based on company profitability levels. Interest and other income was $15 million in 2025, down from $19.2 million in fiscal year 2024. We reported interest and other income for the fourth quarter of approximately $4.5 million versus $4.2 million for the same period in 2024. Income before taxes and noncontrolling interest for 2025 was approximately $88.6 million, a 5% decrease from $92.9 million in 2024.

During the fourth quarter, we reported approximately $27.4 million in this metric versus $17.9 million during the same period during the previous year. Net income attributable to REX shareholders for the year was $83 million compared to $58.2 million in fiscal year 2024. For the fourth quarter 2025, this equaled $43.7 million compared with $11.1 million for the fourth quarter 2024. The fourth quarter benefited from the recognition of approximately $28 million in 45Z tax credits as the regulations became more clear. On a per share diluted basis, for the full year, this amounts to an all-time high of $2.50 per share of net income in 2025 compared to $1.65 per share in 2024. And for the fourth quarter 2025, diluted net income per share was $1.32 compared to $0.31 per share for the same period the previous year.

We ended the fiscal year with total cash, cash equivalents and short-term investments of $375.8 million compared with $359.1 million for fiscal year-end 2024. This net build in cash was primarily due to cash from operations, offset by capital expenditures primarily related to the plant expansion project at the One Earth Energy facility. REX American ended the year without any bank debt.

I'd now like to turn things back to Zafar.

Thank you, Doug. I would now like to provide additional contacts around our priorities for 2026 and the key factors expected to influence our business throughout the year. We are well positioned as we enter fiscal 2026 with expanded production capacity expected to come online this year. Contribution from the 45Z tax credit expected to benefit our bottom line and favorable market tailwinds so far. We anticipated another year of strong performance and continued growth. Our strategy and execution remain guided by our 3Ps: Profit, position and policy.

Profit. We have now delivered 22 consecutive quarters of profitability, a testament to our teams discipline, operational excellence and market expertise. We expect a profitable first quarter. Earning of 2026 are expected to benefit from expanded capacity, our continued laser focus on our core business and expected contribution from the 45Z tax credit.

Position. We expect to complete the Monarch Energy expansion this year, while continuing to advance our carbon capture initiative. These projects will enable us to increase production at lower carbon intensity, strengthen our competitive position and allowing us to capture additional value from both the 45Z tax credit and our core business.

Policy. The policy environment remains favorable. The 45Z tax credit program provides meaningful near-term benefits, which would further increase our -- with our carbon capture facility at One Earth. We also continue to monitor developments related to year around E15 blending, which could drive incremental ethanol demand while reducing gasoline prices at emission.

Ethanol export demand remains exceptionally strong throughout 2025, with U.S. export reaching record levels once again. We expect this strength to continue into 2026, supported by growing global demand for lower carbon fuel, increased fuel blending and the cost competitiveness of U.S. production. On the input side, corn supplies remain favorable, which should support manageable input cost and expected healthy gross margin.

Looking ahead, as we progress through 2026, we remain focused on maximizing the performance of core business, capturing the benefits of expanded production capacity and continue efforts of our carbon capture facility. At the same time, we will continue to drive operational excellence across all aspects of our business. Our strong balance sheet, zero bank debt and multiple growth drivers position us well for another year of value creation for our shareholders.

In closing, I would like to thank our dedicated team for their hard work innovation and commitment to excellence, which continue to drive our success. We are excited about the opportunities ahead and confident in our ability to deliver sustained strong performance.

Thank you to all of our stakeholders for your continued support. With that, I will turn it over for questions. Operator?

[Operator Instructions] Our first question comes from the line of Peter Gastreich with Water Tower Research.

Congratulations on yet another quarter of better-than-expected results at REX. It's also great to see the One Earth expansion is fully on track, and you've continued with the strong share buyback. But my first questions are regarding 45Z. For that $28 million, is that just for Q4, or does that represent a catch-up on previous periods? And also, how should we think about 45Z in terms of the future run rate?

That is for the full fiscal year of 2025. Going forward, this is good through 2029. So we remain optimistic that we'll continue to be able to claim these 45Z tax credits in the future years.

Also, if we get the carbon capture project completed, that will significantly increase the amount of 45Z credits that we will receive over and above this.

Okay. Great. And just a follow-up on that. Are you able to disclose how -- by how much that would improve your CI score with the CCS?

I think that this time, we have not disclosed that publicly, and maybe in the future, if it's required, we will.

It will be significant. Let's just leave it here, it will be significant if we can get it. And that's why we're working so hard on it.

Okay. Great. Very good. And regarding the CCS permitting, so the Illinois pipeline moratorium, I believe, was set to expire July 1st. Just wanted to confirm where we are on the Class VI injection permit? I recall it was expected to be finalized in June. Is that still the case?

Yes. We have several -- well, it's been moved to September on the EPA website at this point.

It has moved on the website, but we have several different conversations with EPA over the last few months and even in last few weeks, and we are at the final stage of technical review at this time. We have all the documents, which they requested, we have provided them. But as you know that the government agencies moved little bit slower than expected. And that's what they posted it on their website, but that does not mean that will be the latest we will get, but we are having regular meetings with them.

Okay. Great. Just a couple of questions before I get back in the queue. Just regarding tariffs and the geopolitical situation. So the first one on tariffs. How would you characterize the impact that tariffs are having on your operations for both ethanol and corn oil in the fourth quarter and looking into this year?

As far as tariff impact, we are pleased to see that there is no impact on our export of ethanol, as you know, that last year 2025 export was the best export ever. And even we have great relationship with Canada at this time. Canada imported approximately 792 million gallons. And so there seems to be no impact whatsoever at this time. Actually, the tariff may help us to really -- to export because we can see that Brazil is back in the business now. Last year, they only exported 49.6 million -- yes, 49.6 million gallons. And this year, first month of the year, it's January 2026, they imported about 36.4 million. So -- and also the export of the January was the best 5 months of the -- since a long time. So we certainly see the export is increasing, and there is no other impact on -- whatsoever on our business at this time.

Adding on to that the high oil prices that we're currently experiencing should only be good for our business, both export and domestically. We're much greater value than we ever were the differential as far as I can recall anyway. The differential between the price of ethanol and the price of gasoline made from oil. So we should by all -- assuming that oil prices stay high, that should be very, very good for the ethanol business.

[Operator Instructions] Our next question comes from the line of Mason Bourne with AWH Capital.

A couple of questions for me. I guess to start on 45Z, a nice surprise there. Could you talk about on a per gallon basis, what you're recognizing now? It seems like it's roughly $0.10 if you -- per gallon, if you think about it in terms of your total gallons. Is there a mix within that where some are more and some are less? And what's you're currently...

Yes, your estimate is correct at this time.

Okay. So it's $0.10 on all of your gallons?

Correct.

And then are there other things within 45Z outside of carbon capture that you view as opportunity for increased credits or carbon capture?

I think as you can see, as Stuart mentioned, is I think once the carbon capture facility is completed, and that will reduce further our CI score at least 30 to 35 points more. So that will really will make a significant effect on us.

Do you still view the full dollar is achievable on any of your plants, or is that more aspirational?

I think if it is possible, once we have the carbon sequestration facility is completed and our construction is completed at the One Earth Energy level, it is possible that we may be able to achieve $1 a gallon at that location.

And then it seems like your language and your commentary around carbon capture being operational in 2026 is maybe different than last time. So are you more optimistic now? Is that fair to say as you've gotten further into discussions with EPA?

No. I think my conversation is about completing of the construction of our facility at One Earth Energy. Carbon capture facility is already complete. It all depends on the permits when we receive from EPA and IEPA and ICC, Illinois commerce commission. So it depends on the permits. But as long as -- as far as facility for the carbon capture, it is complete.

But to be clear, we do not expect to capture 45Z credits due to carbon capture in 2026 if that was construed that way, that would not be correct.

Yes.

Okay. I guess, just last thing for me. So on the E15 front, there's been a lot of commentary there, speculation that maybe you could see some progress. I know there was a waiver just, I think, this week on a temporary basis. But what are your thoughts, higher level on the possibilities or likelihood of a nationwide E15 in a more sustainable manner?

Nationwide E15 would be great. It would be great, but I don't expect that to happen. The oil companies are too powerful. But I do expect more and more independents to put in E15 pumps and E15 -- at least in our areas, I think in the whole country, significantly less, the price to the consumer, significantly less than E10, and also the retailers have a chance to make more money. So I expect that to happen. It should happen. And more pumps of E15, I believe more consumers will use them, and it will benefit us in that way. I do not expect a national E15. That would be great, but I do not think that's going to happen.

It appears we have no further questions at this time. Mr. Rose, I'd like to turn the floor back over to you for closing comments.

Well, I'd like to thank everyone for listening. And as always, I'd like to attribute a record year, and it is a record year in both earnings per share and after-tax earnings, and I'd like to contribute that to having the very, very best people starting with our CEO, Zafar Rizvi, and all the way down the plant level, all the way, we just have excellent people, and our results speak for that. And I think we're among the top, if not the top in the industry, and it's truly due to having the best people. We feel the best people in the industry. Again, I'd like to thank everyone for listening, and we'll talk to you next quarter. Bye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Good morning, and welcome to the REX American Resources Third Quarter 2025 Conference Call. As a reminder, today's call is being recorded. [Operator Instructions]

I would now like to turn the call over to your host, Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Good morning, and thank you for joining REX American Resources' Q3 2025 Conference Call. With me on our call today are Stuart Rose, REX's Executive Chairman; and Zafar Rizvi, REX's Chief Executive Officer. We'll get to our presentation and comments momentarily as well as your questions. But first, I will review the safe harbor disclosure.

In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations.

The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements.

I'd now like to turn the call over to our Executive Chairman, Stuart Rose.

Good morning, and thank you again to everyone for joining us. During the third quarter of 2025, REX American Resources continued to demonstrate the strength and operational expertise that has defined our company for over 4 decades. I'm pleased to report that we are making progress on operational milestones we set out to accomplish and continue to position REX for sustained long-term growth.

Our third quarter results reflect our focus on solidifying our core business of ethanol production. Our strong results during the quarter benefited from supportive ethanol industry dynamics, especially export volumes and strong crush spreads.

Our One Earth Energy facility expansion to 200 million gallons per year is continuing and is on track for completion in 2026. This expansion will significantly enhance our production capabilities and operational efficiency, contributing meaningfully to future performance.

Additionally, we have begun examining potential benefits we can derive in the near term from 45Z tax credits. We are actively engaged with groups to assess our operations and assign a carbon intensity score to our production operations, which we expect to be below the threshold to begin earning credits.

The third quarter demonstrated once again that REX's focus on operational excellence, strategic investments and disciplined capital allocation continues to deliver superior results. Our net income per share of $0.71 represents strong performance reflect in our team's exceptional execution and managing input costs and timely execution leading to strong margins.

Our continuing strong financial results have allowed us to maintain our strong balance sheet, including approximately $335 million in cash, cash equivalents and short-term investments, even after the to-date spend of approximately $156 million on our capital projects for plant expansion and carbon capture of One Earth Energy. As we have consistently emphasized, our success stems from having great facilities, corn belt locations and most importantly, we feel the most skilled and dedicated team in the industry. Their attention to detail and market awareness continues to set REX apart from our competitors.

I want to thank our entire team for their outstanding efforts this quarter and their unwavering commitment to excellence.

Now I'll turn the call over to our CEO, Zafar Rizvi, to discuss our operational achievements and strategic initiatives in greater detail.

Thank you, Stuart. The expansion of ethanol production at the One Earth facility continues to progress steadily and remains on track for completion and in operation in 2026. Alongside this project, we are advancing our evaluation of our carbon intensity score and expect favorable outcome as we incorporate assessment from multiple independent experts.

Regarding the near-term benefits available under the 45Z program, we continue to position the company to capitalize on these opportunities while we wait final guidance from the treasury department.

For our carbon capture and sequestration initiative, the EPA currently estimate that our Class VI injection well permit application will be finalized in June 2026. REX remains in active constructive communication with the EPA throughout this process.

As of the end of the third quarter, we have invested approximately $155.8 million in our carbon capture and ethanol expansion projects. We remain within our revised combined budget range of $220 million to $230 million for both initiatives.

I will now turn the call over to Doug Bruggeman to review our financial results. Doug?

Thanks, Zafar. During the third quarter of fiscal 2025, our ethanol sales volumes reached 78.4 million gallons compared to 75.5 million gallons Q3 2024. The average selling price for ethanol was $1.73 per gallon during the quarter versus $1.83 in the prior year.

Dried distillers grain sales volumes were approximately 160,000 tons for Q3 with an average selling price of $139.93 per ton compared to 170,000 tons and $147.14 per ton in the prior year.

Modified distiller grain volumes totaled approximately 21,000 tons with an average selling price of $57.03 per ton.

Corn oil sales volumes were approximately 27.4 million during the quarter with an average selling price of $0.60 per pound. This volume was up from the prior year sales by approximately 17% and an increase in average selling price of approximately 36%, leading to an approximately 60% increase in sales revenue for corn oil.

Gross profit for the third quarter was $36.1 million compared to $39.7 million in Q3 2024. This primarily reflects lower prices for ethanol and distiller grains.

SG&A expenses were approximately $8.2 million for the quarter compared to $8.4 million in Q3 2024.

Interest and other income totaled $3.2 million for the quarter compared to $4.6 million in quarter 3 2024, reflecting lower rates and lower investments.

Income before taxes and noncontrolling interest was approximately $35.5 million compared to $39.5 million in Q3 2024. Net income attributable to REX shareholders was $23.4 million or $0.71 per diluted share compared to $24.5 million or $0.69 per diluted share in Q3 2024.

We ended the third quarter with cash, cash equivalents and short-term investments of $335.5 million. REX continues to remain in strong financial position with no bank debt.

I'll now turn things back over to Zafar.

Thanks, Doug. Our 3Ps: profit, position and policy continue to guide our strategy and execution. This was evident throughout the third quarter.

Profit. We have now delivered 21 consecutive quarters of profitability, reflecting the hard work, discipline and operational accidents demonstrated by our team every day.

Position. We believe we are strategically positioning the company for long-term organic growth, reduced carbon intensity and enhanced value creation. Advancing our carbons sequestration project and core ethanol business will further strengthen our competitive position heading into 2026 and beyond. We also continued active engagement with the EPA regarding our Class VI well permit application.

Policy. We're leveraging the near-term opportunities provided by the 45Z tax credit program to enhance earnings. We expect these benefits to increase as our ethanol production expansion and carbon sequestration facilities comes online and additional gallons qualify under the program.

The third quarter was exceptionally strong across all key performance measures. Our core ethanol business benefited significantly from sustained robust export demand and reliable corn supplies. Last quarter, U.S. ethanol exports were running approximately 10% ahead of the 2024 pace. By August, the momentum has strengthened with export 14% higher than the first 8 months of 2024. According to the Renewable Fuel Association, we continue to expect 2025 to set a new record for U.S. ethanol exports.

Looking ahead, the USDA project that corn production in South Dakota and Illinois for the 2025, 2026 harvest season will be among the highest result in recent years. This will continue to favor our business driving lower input prices. We are excited about the opportunities ahead as we close out the year and prepare for a successful 2026. We expect the fourth quarter to generate a higher net profit than last year's profitable fourth quarter.

As we move into 2026, our strong balance sheet, no debt and expanding business opportunities position us well for another year of growth and improved performance.

Now I would like to open things up for questions. Operator?

[Operator Instructions] Our first question comes from Chris Degner with Water Tower Research.

Good morning, and it looks like a great quarter. I just wanted a couple of questions for you. And kind of curious of your thoughts on key hurdles and timing as you look forward to the 45Z tax credit program. And if you can give us any incremental color on when we could expect some more updates on that?

Zafar?

Yes, Chris. As you know, the treasury has not issued a guideline so far. We're certainly waiting for the guidelines. Then also, there is a requirement for the prevailing wages and all those information calculation of CI score. We just want to make sure we have all the facts together, and we are reviewing these facts with different experts. And once we have all those numbers back, we will be able to -- next quarter, hopefully, we will be able to explain that how much tax credit we will be receiving. But at this time, we are not willing to really give any numbers.

Sure. Okay. And then if you step back and think about some of the fundamentals of the industry, like it -- I'd be curious like your view on like the impact of tariffs and then crack spreads as you look forward into 2026. I know it's hard to forecast, but just curious on your view?

I think the tariff is in the beginning, certainly there was a huge impact because we were concerned about Mexico and Canada export. Mexico is the largest importer of DDG and Canada is the largest importer of ethanol. So hopefully, those relations stay the same. I think that will be great. And -- but certainly, on the other side, we can see that Europe and several other countries are beginning to buy ethanol due to pressure from the tariff, our negotiation and others.

So that's why we can see that ethanol certainly has -- January to August is approximately $1.4 billion. compared to last year, $1.2 billion. So certainly, there is a great impact -- positive impact on export of ethanol at this time. But on the other hand, I think we see some of those soybeans are not -- soybean or soybean oils are not shipped abroad or China is not buying. There is some impact on the corn oil prices, which has dropped a little bit and also there is some concern about the DDG export.

So those are the weak side, but we certainly are very happy to see that ethanol export is increasing and we believe that will continue to increase in 2026. And also, we are very pleased with the, as you know, the corn production in Illinois and South Dakota. It seems to be all-time high, and we believe that will be a positive impact on our cost of production moving forward.

We do. My family has a farm in Iowa, and it's been a good year. So it's -- as you think through like the carbon sequestration project that you're looking at, like -- how is like the permitting process going with the pipeline? And like is there -- I don't want to put you on the spot, but is there any other key hurdles that you can -- that had -- that you could see through with the Illinois state government?

I think basically, as you know, there was moratorium through July 1st pipeline. And -- but we understand ICC, Illinois Commerce Commission is working on pipelines, all of those requirements, and they already have a couple of public hearings, and we believe they are certainly working on it.

But we -- at this time, we really has no clear get guideline when they will start taking the application. But moratorium will be July 1 is the last day. So we certainly will be able to apply after that, if not the earlier. But you probably also know that we have all the easements for our 6-mile pipeline. That pipeline was really 6-mile pipeline. We built it because we just wanted to be away from the aquifer, Mahomet Aquifer. And that's the only reason otherwise, we really didn't need that pipeline.

Our next question comes from Mason Bourne with AWH Capital.

Just a couple for me. Stuart, I guess, in your prepared remarks, you mentioned recognizing benefits under 45Z and it sounds like you're not yet still sort of assessing where that -- where that score is to start and then where it can go from there. But is it fair to say that you believe you're going to be positively generating credits before the indirect land use change occurs at January 1, and then that would be an incremental step after that? Or is it still too early to say?

As Zafar mentioned, we are working diligently on trying to obtain credits this year, but we don't know what the regulations are yet. They have not published them, but we will be prepared depending on what the -- they have not actually -- the land us change is correct, but they have not come out with a what qualifies as a carbon intensity score yet. So we cannot guarantee any credits for this year, but we are working on it diligently. Zafar's team, I don't know how many people he has working on it, including outside people, but a lot. And we hope, and I emphasize, hope to achieve credits this year, but we have no way of knowing whether we will or will not at this time.

So that's something you could recognize retroactively. Is that your assumption?

That's our hope. Yes. Yes, that's our hope.

And then second for me on -- I know it's early on this as well, but ADM recently entered into an agreement with Google on some of their excess capacity. I know you guys are planning to have plenty of excess capacity in your carbon capture wells even on one alone, but potentially in all 3, if you have them operating. Just wondering if you could provide any thoughts there on your thinking there and any time line around -- obviously, I assume you get your operation online first. But just any thoughts on potential for partnerships or what that could look like?

Zafar, do you want to answer that?

Yes. I think, Mason, as you know, we are really trying to concentrate on the well #1 first. And certainly, for the well #2, #3, even for the well #1, we will have enough capacity to have the carbon sequestration from the third party. And we have been in contact with several people and several people have reached out to us recently and even in the past. But we don't want to make some commitment or contract up to the time we have received Class VI permit, and we have put the pipeline. All of those facts are taken care of it. After that, we believe that we will be able to get those -- still those contracts in the future.

But at this time, we have really not negotiating with anyone because we are not there where we are supposed to be at this stage. And Mason, let me have that one answer that to you asked about the land use. Yes, our recent calculation, which we are looking at it, as you know, there is land use in this one and the next 2026, they're not going to be land use. We believe that we are already at a score, which can be really without land use, we will be able to qualify it, but we have to still do a lot of calculation to make sure the prevailing wages and other lot of factors and treasury guidelines is clear.

Even I can tell you that even some of those accountants who is reviewing our data and information, they are not even sure is that a gross ethanol or is a net ethanol, that means it's a denatured ethanol, and undenatured ethanol will qualify. So there is several different ways we are doing all those calculations to make sure that the numbers are correct before we start talking about how many millions of dollars, et cetera, we are going to get that tax credit.

That's helpful. And we appreciate your conservatism. So thank you for the details.

We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Stuart Rose for closing comments.

Thank you. Our quarter was very good, and we expect next quarter ethanol to outperform last year's fourth quarter, and we're continuing to make further progress as we just talked about and capturing 45Z credits. It's a tribute to all our employees, starting with our CEO, Zafar Rizvi, who is recognized by many of the, if not the, one of the top CEOs in the ethanol industry, including all of our employees, who we consider the best in the industry. We want to thank everyone for listening, and we look forward to talking to you after next quarter. Thank you. Bye.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.