American Resources 2025 Q1 Earnings Narrowed Net Loss by 5.2%

American Resources (AREC) reported its fiscal 2025 Q1 earnings on May 28th, 2025. The company experienced a significant decline in total revenue, dropping by 66.0% from $94,019 in 2024 Q1 to $31,927 in 2025 Q1. Despite this, American Resources managed to reduce its net loss by 5.2% compared to the previous year, showcasing a focused effort to stabilize its financial situation. Looking forward, REX American Resources has provided guidance indicating stable ethanol margins, supported by promising corn yields and increased ethanol exports. The company aims to complete its carbon capture and ethanol expansion projects within a budget of $220 million to $230 million, with ongoing investments totaling $122.7 million.

Revenue

American Resources reported a total revenue of $31,927 in Q1 2025, marking a 66.0% decrease from the previous year. Notably, revenue from metal recovery and sales amounted to $1,050, while service fee revenue contributed $30,305. Additionally, rare earth oxide revenue reached $572, culminating in the overall revenue figure.

Earnings/Net Income

American Resources narrowed losses to $0.09 per share in 2025 Q1, maintaining the same loss per share as in 2024 Q1, representing a 5.0% improvement. The company reduced its net loss to $-6.66 million, a 5.2% reduction from the $-7.02 million loss reported in 2024 Q1. Despite ongoing financial headwinds, American Resources has shown progress in minimizing its losses, indicating a stable yet challenging earnings performance.

Price Action

The stock price of American Resources experienced a sharp decline, tumbling 9.72% during the latest trading day, plummeting 26.82% during the most recent full trading week, and dropping 37.50% month-to-date.

Post-Earnings Price Action Review

The post-earnings strategy of buying AREC shares following a revenue miss and holding for 30 days resulted in poor performance, yielding a return of -42.98%. The strategy demonstrated a significant risk, reflected by a negative Sharpe ratio of -0.09, indicating unfavorable returns. The maximum drawdown was a staggering -95.06%, underscoring the substantial losses incurred. Volatility was recorded at 118.81%, reinforcing the high-risk nature of this approach. Investors faced considerable challenges, as the strategy carried substantial risk and resulted in significant financial setbacks. Despite attempts to capitalize on potential post-earnings recovery, the strategy proved detrimental, highlighting the importance of cautious and informed investment decisions.

CEO Commentary

Zafar Rizvi, CEO, expressed confidence in REX's operational performance, noting, "Our ongoing goal is to run a profitable business," emphasizing the company’s 19th consecutive profitable quarter. He highlighted the importance of a skilled team and effective communication in achieving targets and locking in profits. Rizvi discussed the strategic focus on organic growth through investments in ethanol expansion and carbon capture projects, stating, "We are focusing on what we can control." He conveyed a cautiously optimistic outlook for the ethanol margins, citing strong corn planting and export growth, and the potential for favorable regulatory changes that could benefit the industry.

Guidance

REX American Resources anticipates maintaining stable ethanol margins into the second quarter, supported by projected record corn yields and a 19% increase in ethanol exports year-over-year. The company aims to complete its carbon capture and ethanol expansion projects within a combined budget of $220 million to $230 million, with total investments to date reaching approximately $122.7 million. The CEO indicated that these initiatives are on track, and the company is prepared for potential policy shifts that could impact its operations and market positioning.

Additional News

American Resources has expanded its long-term antimony refining contract with ReElement Technologies. This new agreement involves refining stibnite ore at ReElement's Indiana facilities, producing highly pure antimony sulfide or oxide for both domestic defense and commercial sectors. The partnership ensures long-term supply consistency with automatic renewals. Initial tolling stages are projected to generate over $29 million in annual revenue, with potential for increased volumes as market demands evolve. Additionally, ReElement Technologies appointed Anthony Carroll to the Board of Directors of its Africa Ltd. subsidiary, leveraging Carroll's extensive experience in U.S.-Africa trade, policy, and investment. Moreover, American Infrastructure Corporation provided an update on the share exchange related to its sale to CGrowth Capital, Inc., outlining the distribution of common and preferred shares to its shareholders.