管理層發言
Good morning, and welcome to the REX American Resources Third Quarter 2025 Conference Call. As a reminder, today's call is being recorded. 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 four 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 reflected 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 operation in 2026. Alongside this project, we are advancing our evaluation of our carbon intensity score and expect a favorable outcome as we incorporate assessments 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 for final guidance from the treasury department. For our carbon capture and sequestration initiative, the EPA currently estimates 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 in 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 Q3 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 a 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 excellence 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 carbon 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 come 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 exports 14% higher than the first eight 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 projects that corn production in South Dakota and Illinois for the 2025, 2026 harvest season will be among the highest results 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?
分析師問答
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. Additionally, there is a requirement for the prevailing wages and all the information needed for the CI score calculations. We want to ensure we have all the facts together and are reviewing these facts with different experts. Once we have all those numbers back, we hope to explain how much tax credit we will be receiving next quarter. However, at this time, we are not willing to provide any specific numbers.
Sure. Okay. And then if you step back and think about some of the fundamentals of the industry, I'd be curious like your view on 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 believe the tariff is just starting, and there has already been a significant impact due to concerns about exports to Mexico and Canada. Mexico is the largest buyer of DDG, while Canada is the biggest importer of ethanol. We hope those trade relationships remain stable, as that would be positive. Meanwhile, we are seeing that Europe and several other countries are beginning to import ethanol, driven by the tariff pressures, our negotiations, and other factors. This has led to ethanol exports rising from approximately $1.2 billion last year to around $1.4 billion from January to August this year, showcasing a significant positive effect on ethanol exports. However, on the flip side, some soybean and soybean oil shipments are not reaching international markets, and China is not currently purchasing. This has led to a slight decline in corn oil prices, and there are concerns regarding DDG exports. These are the weaker areas, but we are encouraged by the increase in ethanol exports and anticipate this trend continuing into 2026. Additionally, we are optimistic about corn production in Illinois and South Dakota, which appears to be at an all-time high, and we expect this will positively affect our production costs moving forward.
We do. My family has a farm in Iowa, and it's been a good year. As you consider the carbon sequestration project, how is the permitting process going with the pipeline? Also, are there any other significant challenges you foresee with the Illinois state government?
I think basically, as you know, there was a moratorium through July 1st for pipelines. But we understand that the ICC, Illinois Commerce Commission is working on pipelines, all of those requirements, and they already have held a couple of public hearings. We believe they are certainly working on it. But we at this time really have no clear guideline on when they will start taking applications. But the moratorium will be July 1, which is the last day. So we certainly will be able to apply after that, if not earlier. But you probably also know that we have all the easements for our six-mile pipeline. That pipeline was really built because we just wanted to be away from the 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 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 hard to obtain credits this year, but we are uncertain about the regulations since they have not been published yet. We will be prepared based on what the requirements are, but we currently do not know what qualifies as a carbon intensity score. Therefore, we cannot guarantee any credits for this year, but we are making diligent efforts. Zafar's team is working on this with a considerable number of people, including external resources. We hope to achieve credits this year, but we cannot know for sure at this time whether that will happen.
So that's something you could recognize retroactively. Is that your assumption?
That's our hope. Yes. Yes, that's our hope.
I understand that it’s still early, but I wanted to ask about ADM's recent agreement with Google regarding their excess capacity. I know you have plans for significant excess capacity in your carbon capture wells, potentially across all three if they are operational. Could you share your thoughts on this and any timeline for potential partnerships? I assume getting your operation up and running is the priority, but I'd appreciate any insights you might have.
Zafar, do you want to answer that?
Yes. I think, Mason, as you know, we are really trying to concentrate on well #1 first. And certainly, for wells #2 and #3, even for well #1, we will have enough capacity to have the carbon sequestration from third parties. We have been in contact with several parties and several others 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 the Class VI permit, and we have put the pipeline. All of those facts are taken care of. After that, we believe that we will be able to get those contracts in the future. But at this time, we have really not negotiated with anyone because we are not at the stage where we are supposed to be. And Mason, let me have that one answer that you asked about land use. Yes, our recent calculations, which we are looking at, as you know, there is land use in this one, and by 2026, they are not going to be looking at land use. We believe that we are already at a score, which can be really without land use, we will be able to qualify, but we have to still do a lot of calculations to make sure that the prevailing wages and many other factors and treasury guidelines are clear. Even I can tell you that even some of those accountants who are reviewing our data and information are not even sure if it's gross ethanol or net ethanol, meaning it's denatured ethanol, and undenatured ethanol will qualify. So there are several different ways we are doing all those calculations to ensure that the numbers are correct before we start talking about how many millions of dollars, etc., 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 capturing 45Z credits. It's a tribute to all our employees, starting with our CEO, Zafar Rizvi, who is recognized by many as 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.