Rex American 2026 Q1 Earnings Decline in Net Income by 13%

Rex American Resources (REX) reported its fiscal 2026 Q1 earnings on June 4th, 2025. The company experienced a decline in revenue and net income compared to the previous year. Revenue decreased by 1.8% to $158.34 million, slightly below expectations. Guidance for upcoming quarters indicates stabilization with earnings per share targets remaining ambitious. The company anticipates strategic investments and cost management to support profitability amidst fluctuating market conditions.

Revenue
In the first quarter of 2026, Rex American Resources experienced a 1.8% decline in total revenue, amounting to $158.34 million compared to the previous year. Revenue from the ethanol segment was the most substantial, contributing $124.40 million. Dried distillers grains generated $22.29 million, while distillers corn oil added $9.88 million. The modified distillers grains segment accounted for $1.62 million, derivative financial instruments reported losses of $17,000, and other segments contributed $138,000.

Earnings/Net Income
Rex American's earnings per share (EPS) fell 12.1% to $0.51 in 2026 Q1 from $0.58 in 2025 Q1, alongside a 13.0% decrease in net income to $10.67 million. The decline in EPS reflects the challenges faced by the company in maintaining profitability.

Post-Earnings Price Action Review
The strategy of purchasing Rex American Resources shares following a revenue drop on the financial report release date and holding them for 30 days has historically delivered strong returns over the past three years. This approach has achieved a total return of 66.35%, notably surpassing the benchmark return of 38.41% by 27.94%. Despite experiencing a significant maximum drawdown of -47.45%, the strategy maintained a relatively high Sharpe ratio of 0.42, indicating favorable risk-adjusted returns. Investors have found value in the strategy, capitalizing on short-term market reactions to the earnings report and benefiting from the stock's subsequent recovery. This demonstrates the potential for tactical investments in the wake of earnings announcements, emphasizing the importance of timing and market sentiment in optimizing returns.

CEO Commentary
In the Q1 2025 earnings call, REX American Resources' CEO highlighted the company's focus on maintaining cost control despite a challenging market environment. He noted that the decline in revenue was a result of external pressures and emphasized the company’s commitment to operational efficiency. The CEO expressed optimism about future growth opportunities, underscoring strategic investments in alternative energy and the importance of adapting to market dynamics. He acknowledged the need for ongoing innovation and operational excellence to enhance shareholder value, reflecting a cautious yet determined outlook for the company moving forward.

Guidance
For the upcoming quarters, REX American Resources expects revenue to stabilize around $656.93 million for the full year 2025, with an EPS target of $1.55. The company anticipates continued focus on cost management to support profitability amid fluctuating market conditions. Additionally, the guidance indicates a slight decline in revenue estimates for 2026, projecting an EPS of $3.00, while maintaining a commitment to strategic investments that will enhance long-term growth potential.

Additional News
Within the three weeks leading up to June 4th, 2025, Rex American Resources announced significant share buyback activities. The company repurchased approximately 822,000 shares during Q1 2025, totaling $32.7 million, marking a strategic move to enhance shareholder value. This buyback represents about 4.7% of outstanding shares, contributing to a cumulative repurchase of 6.8% since December 2024. Additionally, Rex American Resources reported continued progress on its One Earth Energy ethanol production expansion and carbon capture projects. The company anticipates project completion in 2026, with ongoing efforts to optimize equipment efficiency and long-term value. These developments reflect Rex American's commitment to strengthening its market position and pursuing growth opportunities in the renewable energy sector.