Rex American 2026 Q3 Earnings Mixed Results as Net Income Declines 8.7% Despite Revenue Growth

Rex American (REX) reported fiscal 2026 Q3 earnings on Dec 4, 2025, with revenue rising 0.4% to $175.63 million. While EPS increased 1.4% to $0.71, net income fell 8.7% to $27.47 million. The company expects Q4 2025 profits to exceed the prior year’s, citing ethanol export momentum and corn production trends.

Revenue

Ethanol production led the revenue increase, contributing $136.03 million. Dried distillers grains added $22.36 million, while distillers corn oil sales reached $16.35 million. Modified distillers grains and other segments accounted for $1.18 million and $32,000, respectively. Derivative financial instruments resulted in a $328,000 loss, slightly offsetting gains.

Earnings/Net Income

Despite a 1.4% EPS increase to $0.71, net income declined 8.7% to $27.47 million, reflecting lower ethanol and distillers grain pricing. The EPS growth highlights operational efficiency, but the net income contraction underscores margin pressures.

Price Action

The stock edged down 0.43% in the latest trading day but gained 6.27% weekly and 8.68% month-to-date.

Post-Earnings Price Action Review

A strategy of buying REX shares after revenue growth quarters and holding for 30 days showed mixed results. In 2024Q1, the strategy returned 117.49% versus a 30.69% benchmark, but over three years, it underperformed with a 15.30% return versus a 71.33% benchmark. High volatility and low Sharpe ratios (0.06) suggest risk-reward imbalances.

CEO Commentary

CEO Zafar Rizvi highlighted progress on the One Earth Energy expansion, on track for 2026 completion, and carbon capture permit applications expected by June 2026. He emphasized ethanol export growth, driven by strong corn supplies, and optimism about 2026 despite 45Z program uncertainties.

Guidance

REX expects Q4 2025 net profit to exceed the prior year’s, with ethanol exports and corn production trends favoring performance. The company remains within its $220–$230 million budget for expansion and carbon capture projects, maintains $335.5 million in cash reserves, and anticipates 45Z tax credit benefits post-permitting.

Additional News

REX’s stock hit an all-time high of $32.83 on Nov 11, 2025, and $32.48 on Oct 14, reflecting investor confidence in expansion plans. The company advanced its carbon capture project, with a $155.8 million investment and $220–$230 million budget. CEO Zafar Rizvi reiterated leveraging 45Z tax credits to enhance shareholder value, though regulatory clarity remains pending.

Appendices

Backtest Analysis:

The 30-day post-earnings strategy underperformed over three years despite short-term gains, indicating market skepticism about long-term execution risks. Investors should weigh volatility and regulatory uncertainties against ethanol demand tailwinds.

Regulatory Risks:

Delays in 45Z tax credit guidance and carbon intensity score calculations could hinder near-term profitability. The EPA’s June 2026 permit decision for carbon capture remains a critical milestone.

Liquidity Position:

REX’s $335.5 million cash reserves and debt-free balance sheet provide flexibility for capital expenditures and shareholder returns. However, capital outlays for expansion and carbon capture projects may strain liquidity if delayed.