Rex American Resources ((REX)) has held its Q1 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 the company’s robust financial position and ongoing share repurchase program while addressing concerns about decreased ethanol sales volume, reduced gross profit, and regulatory uncertainties. Despite these challenges, REX emphasized its strategic positioning and positive legislative developments, maintaining a cautiously optimistic outlook.
Share Repurchase Program
REX American Resources announced a significant share repurchase program, buying back approximately 822,000 shares for $32.7 million. This move, reflecting about 6.8% of shares since December 2024, underscores the company’s belief that its shares are undervalued. With 1,182,000 shares still authorized for repurchase, REX continues to focus on enhancing shareholder value.
Nineteenth Consecutive Profitable Quarter
The company celebrated its nineteenth consecutive profitable quarter, a testament to its strong financial performance and operational efficiency. This consistent profitability highlights REX’s ability to navigate market challenges effectively.
Ethanol Export Growth
REX reported a notable increase in ethanol exports, with March 2025 figures up 23% compared to March 2024. Cumulatively, U.S. ethanol exports through March 2025 rose nearly 19% year-over-year, showcasing the company’s expanding presence in international markets.
Positive Legislative Developments
Senate Bill 1723 was viewed positively by REX, as it aligns with the company’s carbon sequestration initiatives. The bill aims to protect the Mahomet Sole Source Aquifer, and REX’s sites are strategically positioned six miles outside this area, supporting their environmental goals.
Decrease in Ethanol Sales Volume
The earnings call revealed a decrease in ethanol sales volumes, dropping to 70.9 million gallons in Q1 2025 from 74 million gallons in Q1 2024. This decline was primarily attributed to the timing of shipments, reflecting a temporary challenge for the company.
Decline in Gross Profit
REX experienced a slight decline in gross profit for Q1 2025, reporting $14.3 million compared to $14.5 million in Q1 2024. This decrease was largely due to lower sales prices for dried distillers grains, impacting overall profitability.
Reduced Net Income
Net income attributable to REX shareholders decreased to $8.7 million or $0.51 per diluted share in Q1 2025 from $10.2 million or $0.58 per diluted share in Q1 2024. This reduction highlights the financial pressures faced by the company during this period.
Regulatory Uncertainty
The company acknowledged ongoing regulatory uncertainties, particularly concerning federal pipeline regulations and the issuance of the EPA permit for the Class VI injection well. These factors could potentially impact REX’s future operations and strategic planning.
Forward-Looking Guidance
Looking ahead, REX American Resources remains focused on operational excellence, strategic growth initiatives, and enhancing shareholder value. The company has invested $122.7 million in ongoing carbon capture and ethanol facility expansion projects, with a revised budget range of $220 million to $230 million. Despite reductions due to capital investments and share repurchases, REX maintains a strong financial position with $315.9 million in cash, cash equivalents, and short-term investments. The outlook for ethanol margins and exports remains positive through 2025.
In conclusion, REX American Resources’ earnings call reflected a cautiously optimistic sentiment, balancing strong financial strategies with challenges in sales volume and regulatory uncertainties. The company’s commitment to shareholder value and strategic growth initiatives positions it well for future success.