Rex American Resources ((REX)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Rex American Resources presented a mixed sentiment, highlighting significant achievements in sales volume growth and legislative support for carbon capture. The company maintains a strong financial position, yet it faces challenges with decreased gross profit, net income, and weak DDG prices. Overall, the sentiment remains optimistic due to strategic expansions and legislative tailwinds, albeit tempered by financial declines.
Record Ethanol Sales Volumes
Ethanol sales volumes reached an impressive 70.6 million gallons in Q2 2025, up from 65.1 million gallons in Q2 2024. This increase showcases Rex American Resources’ strong performance and growth potential in the ethanol market.
Legislative Support for Carbon Capture
The passage of the Big Beautiful Bill Act, which includes the continuation of the 45Q tax credit and the extension of the 45Z tax credit through 2029, provides substantial support for REX’s carbon capture and sequestration project. This legislative backing is expected to enhance the company’s long-term success.
Two-for-One Stock Split
The board of directors authorized a two-for-one stock split, a move that increases liquidity and rewards shareholders as the stock recently traded at all-time highs.
Strong Financial Position
REX maintained a robust financial position with cash, cash equivalents, and short-term investments totaling $310.5 million, and no bank debt. This positions the company well for future opportunities.
Expansion Projects on Track
The One ARC facility expansion is progressing steadily, with the plant expected to increase annual ethanol production capacity to 175 million gallons by February 2026, further boosting the company’s production capabilities.
Decline in Gross Profit
Gross profit for Q2 2025 was $14.3 million, down from $19.8 million in Q2 2024. This decline is primarily attributed to lower sales prices for dried distiller grains and higher shipping costs.
Decrease in Net Income
Net income attributable to REX shareholders decreased to $7.1 million or $0.43 per diluted share, compared to $12.4 million or $0.70 per diluted share in Q2 2024, reflecting lower profitability.
Weak DDG Prices
Dried distiller grains (DDG) prices have been weak relative to corn prices, with export levels dropping compared to last year, particularly to Mexico.
Forward-Looking Guidance
During the second quarter of 2025, REX American Resources outlined several key metrics and initiatives that underscore their strategic progress and financial performance. Ethanol sales volumes increased, although the average selling price decreased. The One Earth energy expansion project is on track to boost ethanol production capacity, and the company’s carbon capture project is advancing with a revised budget range. Despite challenges, REX’s strong financial position positions the company well for future opportunities and continued shareholder value delivery.
In summary, the earnings call for Rex American Resources reflected a cautiously optimistic outlook. While the company faces financial challenges, strategic expansions and legislative support provide a positive trajectory for future growth. The company’s strong financial position and ongoing projects suggest a promising path forward.