REX American Resources (REX) 3 Dec 24 2025 Q3 Earnings call transcript

In the third quarter of 2024, REX American Resources reported a significant financial milestone with a second most profitable quarter in the company's history, showcasing the company's operational efficiency and strategic focus. During the earnings call, the management team, led by CFO Douglas Bruggeman, Executive Chairman Stuart Rose, and CEO Zafar Rizvi, provided insights into REX American Resources' financial performance, strategic initiatives, and future outlook.

Financial Performance and Strategic Focus

The third quarter of 2024 saw REX American Resources exceed expectations with a net income per share of $1.38, an improvement of 97% over the second quarter of 2024, largely attributed to better corn pricing. The company's gross margin also improved by 1% despite a 21% reduction in product revenue, highlighting the operational efficiency and financial discipline of the organization. The management team emphasized the importance of lean and efficient operations in the core ethanol business, which has enabled the company to grow debt-free and maintain strategic freedom for future growth projects.

Strategic Initiatives and Future Outlook

REX American Resources is aggressively moving forward with its strategic initiatives, including the construction of the One Earth Energy carbon capture and compression facility in Gibson City, Illinois, and the expansion of its ethanol production facility to 175 million gallons per year. The company is confident that these initiatives will set it up for long-term success and position it at the forefront of the industry.

The management team expressed optimism about the future, with CEO Zafar Rizvi highlighting the potential benefits of the ethanol production expansion and the planned further permitting of the facility to produce 200 million gallons per year. The company's carbon capture project, which is substantially complete, is expected to bring additional profitability once in operation, further enhancing REX American Resources' position in the market.

Regulatory Environment and Policy Landscape

During the call, there was a discussion on the potential impact of regulatory changes on REX American Resources' strategic initiatives, particularly regarding the Inflation Reduction Act and carbon capture tax credits. The management team expressed cautious optimism about the future of these policies, acknowledging the uncertainty surrounding the incoming administration's stance on 45Q and 45Z. Despite this uncertainty, REX American Resources remains committed to its carbon capture project, believing that it will still be profitable even without government incentives.

Investor and Shareholder Perspectives

The earnings call also provided insights into the perspective of key shareholders and investors, with Jordan Levy of Truist and Pavel Molchanov of Raymond James asking questions about the company's growth initiatives and future prospects. These interactions highlighted the investors' concerns about regulatory policies and the company's strategic approach to managing its cash reserves and potential growth opportunities.

Conclusion

REX American Resources' third quarter 2024 earnings call underscored the company's financial strength, operational efficiency, and strategic focus. The management team's confidence in the company's ability to navigate regulatory uncertainty and capitalize on growth opportunities positions REX American Resources well for the future. As the company continues to execute on its strategic initiatives, investors and stakeholders will be closely watching for updates on the One Earth Energy carbon capture project and the expansion of the ethanol production facility. With a solid financial foundation and a clear vision for the future, REX American Resources is well-positioned to continue its growth trajectory.