REX American Resources' Q1 2025: Unpacking Key Contradictions in Ethanol Production and Regulatory Challenges

Ethanol production and capacity expansion, EPA permit and regulatory environment, regulatory impact on business, uncertainties surrounding 45Z guidance and its impact on business strategies, and ethanol facility construction timeline are the key contradictions discussed in REX American Resources Corporation's latest 2025Q1 earnings call.



Share Repurchase and Profitability:
- REX American Resources repurchased approximately 6.8% of outstanding shares since December 2024 through their buyback program, totaling $32.7 million in Q1 2025.
- The company reported 19th consecutive profitable quarter, driven by consistent operation management and market strategy.

Ethanol Sales and Pricing:
- Ethanol sales volumes were 70.9 million gallons in Q1 2025 compared to 74.5 million gallons in Q1 2024, with an average selling price of $1.76 per gallon.
- The decrease in sales volumes was primarily due to timing of shipments, while improved ethanol pricing partially offset lower DDG selling prices.

CAPEX Investments and Project Progress:
- Total investment in carbon capture and ethanol expansion projects stood at $122.7 million as of Q1 2025, remaining within the combined budget range of $220 million to $230 million.
- The investments are aimed at enhancing operational efficiencies and supporting organic growth initiatives.

Regulatory and Policy Developments:
- REX supports measures like Senate Bill 1723, which protects vital drinking water resources, and views amendments positively for their proposed injection well sites located outside aquifer boundaries.
- The company is closely monitoring Washington developments and potential changes to tax credit provisions (45Q and 45Z) under the Inflation Reduction Act.