Q2 2025 REX American Resources Corp Earnings Call

August 27, 2024

Speaker Change: Good morning, and welcome to the Rex American Resources 2nd Quarter 2021 for a conference call. As a reminder, today's call is being recorded, and at this time, all participants are listening to remote. A brief question and answer session will follow the form of presentation.

Operator: 2nd quarter of 2024 conference call. As a reminder, today's call is being recorded, and at this time, all participants are listening on remote. A brief question-and-answer session will follow the phone presentation.

Douglas Bruggeman: I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Doug Bruggeman: I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of Rex American. Please go ahead.

Douglas Bruggeman: Good morning, and thank you for joining REX American Resources Q2 2024 conference call. We'll get to our presentation and comments momentarily, as well as your questions.

Speaker Change: Good morning, and thank you for joining Rex American Resources Q2-20204 Conference Call. We'll get to our presentation and comments momentarily, as well as your questions. For first I'll review the safe harbor disclosure.

Douglas Bruggeman: First, I'll review the Safe Harbor Disclosure. In addition to historical facts or statements of current conditions, today's conference call contained forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risk and uncertainties associated with the forward-looking statements are described in today's news announcement and the company's filing with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q.

Speaker Change: In addition to historical facts or statements of current conditions, today's conference call contained forward-looking statements that evolved risk and uncertainties within the meaning of the private security litigation reform act of 1995.

Speaker Change: Such forward-looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance.

Speaker Change: As such, actual results may vary materiality from expectations.

Speaker Change: The Rizvian certainty, the associated with the forward-looking statements, are described in today's news announcement and the company's filing with the Securities and Exchange Commission, including the company's reports on Form 10K and 10Q.

Douglas Bruggeman: REX American Resources assumes no obligation to publicly update or revise any forward-looking statements.

Stuart Rose: Rex American resource assumes no obligation to publicly update or revise any forward-looking statements. I'd now like to turn the call over to our Executive Chairman, Stuart Rose.

Stuart Rose: I'd now like to turn the call over to our Executive Chairman, Stuart Rose. Good morning, and thank you again to everyone for joining us. During the second quarter, REX American Resources made excellent progress in the three goals for the remainder of the year that they laid out in our last call. As a reminder, these were to continue profitable operations, to complete the construction phase of our One-Earth carbon capture and compression facility, and to complete the capacity expansion of our One-Earth energy ethanol production facility to 175 million gallons per year and move toward the planned further permitting of the facility to 200 million gallons.

Stuart Rose: Good morning and thank you again to everyone for joining us. During the second quarter, Rekt American resources made excellent progress in the three goals for the remainder of the years that I laid out in our last call. Is her reminder these were, we continue profitable operations.

Stuart Rose: to complete the construction phase of our one Earth Carbon Capture and Compression Facility.

Stuart Rose: and to complete the capacity expansion of our one Earth energy as an all-production facility to 105 million gallons per year and move toward the plan further permitting of the facility to 200 million gallons.

Stuart Rose: To the first goal, we were entirely successful. REX had very profitable operations related to the prior year's comparable quarter; a team produced strong growth margin in the second quarter, improved by 37% over the first quarter, and by nearly 8% over second quarter 2023. That income per share also improved more than 20% over the first quarter of 2024, and more than 35% over second quarter 2023. While we have our eyes on the future, we continue to emphasize our core business of ethanol production, which has allowed us to accomplish three goals, as well as produce consistent, industry-leading results for our shareholders.

Stuart Rose: To the first call we were entirely successful.

Rex: Rex had very profitable operations related to the prior years comparable quarter.

Rex: Our team produced strong gross margin in the second quarter, improved by 37% of the first quarter and by nearly 8% of our second quarter, 2023.

Rex: That in-compressure awesome fruit more than 20% over the first quarter of 2024.

Rex: and more than 35% over second quarter 2020-23. While we have our eyes on the future, we continue to emphasize our core business of ethanol production, which is allowed us to accomplish three goals.

Rex: as well as produce consistent industry leading results for our shareholders. The success of this core business has allowed us to grow without burdening to company with any debt.

Stuart Rose: The success of this core business has allowed us to grow without burdening the company with any debt. Our team exit keeps at a high level every day, and I want to say thank you to them for their efforts this quarter. On the second goal to complete construction, the capture and compression portion of our One-Earth Energy CCS project in Gibson City, Illinois, we continue to make progress. The FAR will discuss this project in detail later in the call. A third goal to complete construction of the one Earth's ethanol production capacity expansion to 170 million gallons per year to prepare for further-preventing production levels and 200 million gallons per year is on track for the first quarter of 2025.

Rex: Our team executes at a high level every day, and I want to say thank you to them for their efforts this quarter.

Speaker Change: On the second goal to complete construction, the CAP term compression portion of our one-earth energy CCS project in Gibson City, Illinois, we continue to make progress The FAR will discuss this project in detail later in the call.

Speaker Change: A third goal to complete construction of the one earth ethanol production capacity expansion to 175 million gallons per year.

Speaker Change: to prepare for further permanent production levels.

Speaker Change: 200 million gallons per year is on track.

Stuart Rose: This expansion will further improve our ability to realize strong returns. We are very excited for the expansion and what it means for our business. We are making progress on all of our goals in preparing REX American to have success both now and over the long term.

Speaker Change: For the first quarter of 2025, his expansion will further improve our ability to realize strong returns.

Speaker Change: We are very excited for the expansion in what it means for our business.

Speaker Change: We are making progress on all of our goals in impreparing Rect America to have success but now and over the long term.

Zafar Rizvi: And now, like it turned things over to our CEOs, Zafar Rizvi, to get further updates on our wonders, energy CCS, and ethanol production capacity expansion projects. Thanks to our carbon capture and sequestration project in Gibson City, Illinois, we continue to progress. You can see the updated picture of the carbon capture and compression portion of the facility in our second quarter investor presentation, which was posted to our website this morning.

Zafar Rizvi: I'd now like to turn things over to our CEO Zafar Rizvi to give further updates on our one-orth energy CCS and that's an opportunity to pass it to expansion projects.

Zafar Rizvi: Thanks to our carbon capture and squestation project in Gibson City, Illinois, continue to progress.

Speaker Change: You can see updated pictures of the carbon capture and compression portion of the facility in our second quarter investor presentation which was posted to our website this morning.

Zafar Rizvi: Due to regulatory action by the state of Illinois, which is in July, imposed a moratorium on the construction of CO2. We have adjusted our construction schedule for the initial portion of the project. We believe this is the most proven part from both an operational and financial perspective. Operationally completing the capture and compression facility later in the year will mean a shorter period between completion of the construction and testing of the portion of the facility, which will require utility interconnection that is planned to be completed by the end of the first quarter of 2025. From a budgetary perspective, taking a more major approach to construction allows us to more closely monitor our spending without incurring potential extra cost to meet the accelerated deadline.

Speaker Change: Due to regulatory action by the state of Illinois which is in July imposed a moratorium.

Speaker Change: On the construction of CO2 pipelines, we have adjusted our construction schedule for the nation portion of the project. We believe this is the most important part from both on operational and financial prospect.

Speaker Change: Operationaly completing the capture and compression facility, later than the year, will mean a short-of-period beatman completion of the construction and testing of the portion of the facility.

Speaker Change: which will require utility interconnection that is planned to be completed by the end of the first quarter or 2025.

Speaker Change: from a budgetary press practice taking a more major approach to construction allow us to more closely monitor our spending without increasing potential extra cost to meet the accelerated deadline.

Zafar Rizvi: Given the new permitting reality, we are confident that pursuing the several ongoing portions of this project in this way is the right path. While pipeline permitting in Illinois is being worked out, our Class 6 injection well permit application with the US EPA is still in process. And we anticipate a draft permit being issued by 2024 calendar year end. On the timeline currently estimated by the EPA itself, we would then anticipate final approval of the project in the second quarter of 2025. As a reminder, as of last quarter, Rex had screwed, easement for enough of the surface area to allow us to capacity to squester all of our carbon emissions on the one-author energy plant for the next 15 years.

Speaker Change: Given the new permitting reality, we are confident that pursuing the several ongoing portion of this project in this way is the right path.

Speaker Change: While pipeline permitting in Alanoi is being worked out, our classics in Jacksonville format application with US EPA is feeling process.

Speaker Change: and we anticipate a draft permit being issued by 2020-4-Clander year end. On the timeline currently estimated by the EPA itself, we would then anticipate final approval of the project in the water up to 1-2-1-5.

Speaker Change: As a reminder, as of last quarter, Rex had scored, he's meant for enough of the subsurface area to allow us to capacity to squester all of our carbon formation on the one-art energy plant for the next 15 years.

Zafar Rizvi: And also screwed easement from our naval farmers for well number one and two, which will allow us to completely avoid the use of a minute domain in eventual construction of our carbon delivery pipeline. The expansion of our one-author energy ethanol facility 175 million gallons per year of production is on track for completion in the first quarter of 2025. Final testing and commissioning depends on the completion of the electric interconnection from our local utility. After necessary emission certification from the increased production levels, we then expect to begin the planned further permitting of the one-art ethanol facility to allow it to produce 200 million gallons per year.

Speaker Change: and also squared easement from our navel farmers for well number one and two which will allow us to completely avoid the use of a men and a main in eventual construction of our carbon delivery pipeline.

Speaker Change: The expansion of our one-art energy at an hour for safety, 175 million gallons per year of production is on track for completion in the first quarter of 2025.

Speaker Change: Final Tasning and Commissioning depends on the completion of the electric interconnection from our local utility.

Speaker Change: After necessary emission, dedication from the increased production levels, we then expect to begin the planned further permitting of the one earth ethanol facility.

Speaker Change: To allow it to produce 200 million gallons per year.

Zafar Rizvi: This additional permitting is the only step necessary to allow for the expanded capacity to 200 million gallons, as no additional construction or capital spending is expected. This 25 and 1250 million gallons per year expansion in production capacity added on to our current highly efficient and profitable facility, we expect will enable us to expand our already and our profitability in our core ethanol business line. As a quarter end, we have invested approximately $91 million into the one-art carbon capture project and associated ethanol production capacity expansion; pending for the carbon capture and frustration projects stood at $49.1 million as a second quarter end.

Speaker Change: This additional permitting is the only step necessary to allow for the expanded capacity to 200 million gallons as no additional construction or capital spending is expected.

Speaker Change: This 25 and went to a 50 million gallon per year expansion in production capacity. Added on to our current highly efficient and profitable facility.

Speaker Change: We expect will unable us to expand our already, then our profitability in our core ethanol business line.

Speaker Change: As of quarter and we have invested approximately 91 million dollars into the one art carbon capture project and associated ethanol production capacity expansion.

Speaker Change: Pending for the Carbon Capture and Question Project stood at $49.1 million as of 2nd quarter end.

Zafar Rizvi: While expenditure on the ethanol expansion stood at $41.7 million as of the same date, this is compared to a total combined budget amount of 165 to 175 million dollars for both the CCS project and ethanol production expansion at Gibson City.

Speaker Change: While expenditure on the ethanol expansion stood at $41.7 million as of the same date.

Speaker Change: This is compared to total combined budget amount of $165 to $175 million dollars for both the CCS project and ethanol production expansion at Gibson City.

Douglas Bruggeman: I would now like to hand the call to our CEO, Doug Brugman, to discuss our operational and financial results. Doug, thanks afar. I'll begin with our operational results. Rex ethanol sales volume during the second quarter 2024 for 65.1 million gallons, a reduction of approximately 6% versus second quarter 2023 sales volume of 69.1 million gallons. Average selling price for our consolidated ethanol volumes was $1.79 per gallon for the second quarter, compared to $2.42 per gallon in the second quarter of 2023. Dry distillers grain sales volume during the second quarter of 2024 totaled 132,850 tons at a 6% decrease over the second quarter 2023 volumes.

Douglas Bruggeman: I would now like to hand the call to our CFO, Douglas Bruggeman to discuss our operational and financial results, Douglas Bruggeman.

Douglas Bruggeman: Thanks, Zafar. I'll begin with our operational results.

Douglas Bruggeman: Rex ethanol sales volume during the second quarter of 2024 for 65.1 million gallons. A reduction of approximately 6% versus second quarter of 2023 sales volume of 69.1 million gallons.

Speaker Change: Average selling price for our consolidated ethanol volumes was $1.79 per gallon for the second quarter compared to $2.42 for gallon in the second quarter of 2023.

Speaker Change: Dry just still has grain cells volume during the second quarter of 2024, total 132,850 tons, that 6% decrease over a second quarter of 2023 volumes.

Douglas Bruggeman: Average selling price for DDGs were $164.45 per ton for the second quarter 2024, compared to $226.48 per ton in the second quarter of 2023. Modified distiller grain sales volumes were 17,650 tons in the second quarter 2024, compared with approximately 10,610 tons in the second quarter of 2023. Average selling price for modified distiller grain was $63.61 per ton for the second quarter. The average selling price for the modified distiller grain in the second quarter of 2023 was approximately $103. Corn oil sales volumes in the second quarter of 2024 were approximately 20.2 million pounds compared to 20.7 million pounds sold in the second quarter of 2023.

Speaker Change: Every selling price for DDGs were $164.45 per 10 for the second quarter, 2024, compared to $226.48 per 10, his second quarter of 2023.

Speaker Change: Modified Distillery Grane Salas volumes were 17,650 tons in the second quarter 2024, compared with a fraction of the 10,610 tons in the second quarter of 2023.

Speaker Change: Average selling price for a modified distiller grain was $63.61 for 10 for the second quarter. The average selling price for the modified distiller grain in the second quarter of 2023 was approximately $103.

Speaker Change: Cornell sales volumes, the second quarter 2020-24, were approximately 20.2 million pounds, compared to 20.7 million pounds, told in the second quarter of 2023.

Douglas Bruggeman: The average selling price for REX's corn oil product was 43 cents per pound for the second quarter of 2024 compared to 55 cents per pound in the second quarter of 2023. Gross profit for the second quarter of 2024 was 19.8 million dollars versus gross profit of approximately 18.4 million dollars for the second quarter of 2023. The 8% increase in gross profit was achieved despite lower average selling prices for all products, which was more than offset by lower corn and natural gas input prices. Our selling, general and administrative expenses decreased to $6.4 million for the second quarter of 2024 versus $8.6 million in the second quarter of 2023.

Rex: The average selling price for Rex's Corn Oil product was 43 cents per pound for the second quarter 2024 compared to 55 cents per pound in the second quarter of 2023.

Rex: Gross Profit for the second quarter 2024 was $19.8 million versus Gross Profit of Approximately $18.4 million for the second quarter of 2023.

Rex: The 8% increase in gross profit was achieved despite lower-avory sign prices for all products, which was more than offset by lower-corne and natural gas input prices.

Rex: Our selling general and administrative expenses decreased to $6.4 million for the second quarter of 2024 versus $8.6 million in the second quarter of 2023.

Douglas Bruggeman: The decrease was primarily due to the expensing of executive stock grants in the prior year, which did not recur this year. Interest and other income totaled $4.4 million in the second quarter of 2024 compared with approximately $3.3 million for the second quarter of 2023. This reflects higher balances and better earnings on our cash and short-term investments. Income before taxes and non-controlling interest for the second quarter of 2024 was approximately 19.5 million dollars and an increase of more than 21% over the second quarter of 2023. Net income attributable with direct shareholders for the second quarter was $12.4 million compared to $9.1 million in the second quarter of 2023.

Rex: The decrease was primarily due to the expensing of executive stock grants in the prior year, which did not recur this year.

Rex: Interest another income total $4.4 million in the second quarter of 2024 compared with approximately $3.3 million for the second quarter of 2023. This reflects higher balances and better earnings on our cash and short term investments.

Rex: Income before taxes and non-control and interest for the second quarter of 2024 was approximately $19.5 million and increase of more than 21% over the second quarter of 2023.

Rex: Net income attributable to wreck shareholder for the second quarter was $12.4 million compared to $9.1 million in the second quarter of 2023.

Douglas Bruggeman: On a per share diluted basis for the second quarter of 2024, this amounts to $0.7 per share of net income compared to $0.52 per share in the second quarter of 2023. We ended the second quarter with total cash, cash equivalents, and short-term investments of $346 million compared with $378.7 million as of January 31st, 2024. The uses of cash during the first half were primarily related to our ongoing construction projects at the One Earth Energy Facility. Rex American also entered the quarter without any bank debt.

Rex: On a per share diluted basis for the second quarter 2024, this amounts to 70 cents per share of net income compared to 52 cents per share in the second quarter of 2023.

Rex: We ended this second quarter with total cash, cash equivalents and short-term investments of $346 million, compared with $378.7 million as of January 31st, 2024.

Rex: The uses of cash to the first half were primarily related to our ongoing construction projects at the one earth energy facility.

Rex: Rex American also entered the court without any bank debt.

Zafar Rizvi: And now I'd like to turn the call back to Zafar. Thank you, Doug.

Rex: I'd now like to turn the call back to Zafar.

Zafar Rizvi: I would now like to give some color around how we see markets progressing through the reminder of the year. For the third quarter, we are up to a strong start and we expect to see the same corn corn market drivers that were supporting to this point in the year continue to play out. With this, we expect to see the result of the third quarter exceeds those of the second quarter of this year. Additionally, we believe in increasing ethanol per export, which on a volume basis for 36.5 percent higher through June than at the same point last year, according to the USDA, have had a positive impact across the industry.

Zafar Rizvi: Thank you, Doug. I would now like to give some fellow around how we see markets while passing through the reminder of the year.

Speaker Change: For the third quarter, we are up to a strong start and we expect to see the same con-one market drivers.

Speaker Change: That was for you to this point in the year continue to play out.

Speaker Change: With this we expect to see the result of the third quarter exceeds those of the second quarter of this year.

Speaker Change: Additionally, we believe in creating the ethanol port export, which on a volume basis was 36.5% higher through June than at the same point last year, according to the USDA. I have had a positive impact across the industry.

Zafar Rizvi: As far as own inputs at the current time, we are looking toward harvest and what is expected to be a bumper crop. For corn in the Midwest, crop condition near our two consolidated plants are expected to be strong. We are anticipating the robust harvest coupled with the current corn in the farm inventories will lead to a continued favourable corn input pricing.

Speaker Change: As far as cone inputs at the current time, we are looking towards harvest and what is practice to be a bumper crop for cone in the mid-west.

Speaker Change: Carp Condition near our two consolidated plants are expected to be strong, we are anticipating that robust harvest coupled with the current cone in the farm inventory will lead to a continued favorable cone input price.

Zafar Rizvi: Above all, we are focused on profitability over product pricing or production numbers. As evidence for by our improved growth margin, performance this quarter, despite lower ethanol pricing and volume sold, it is this focus and the people in our plants will live it every day that continue to make us the successful, profitable company we are.

Speaker Change: Above all, we have focused on profitability over product pricing for production numbers. As evidenced by our improved growth margin, performance this quarter despite lower ethanol pricing and volume sold.

Speaker Change: It is this focus and the people in our plants who live it every day that continue to make us the successful profitable company we are.

Operator: Now I would like to open things up to the questions operator. Thank you.

Speaker Change: Now, I would like to open things up to the questions operator.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please first start one on your telephone key. A confirmation told will indicate your line is in the question queue. You may first start to, if you would like to remove yourself from the queue.

Operator: For participants, use the speaker equipment and may be necessary to pick up and enhance it before pressing these star keys. One moment, please, while we pull for questions.

Speaker Change: for participating as usually speaker equipment and maybe necessary to pick up the handset before pressing these start keys. One moment please while we pull for questions.

Speaker Change: I'll be back with you in the next video.

Jordan Levy: Our first question comes from the line of joy and levied with true securities. Please proceed with your question. Good morning all, and thanks for all the updates. I just wanted to talk first on the carbon capture sequestration side of things. You guys did a good job calling out in the press release kind of the various external forces that you have to think through when you go through this process. But maybe just help us think about in the event and in the timeframe that assuming you do get the permit approval that you need. Can you just talk to the timeline around the build-out of the pipeline and then any remaining necessary equipment at that point?

Speaker Change: Our first question comes from the line of Jordan Levitt with true insecurities. Please receive a true request.

Jordan Levitt: Morning all and thanks for all the updates. I just wanted to talk first on the carbon capture, sequestration side of things. You guys did a good job calling out in the press release, the various external forces that you have to think through when you're going through this process, but maybe just help us think about any event in the timeframe that assuming you do get the line around the build out of the...

Speaker Change: Pipeline in any remaining necessary equipment at that point.

Zafar Rizvi: Yes. I think if you look at that information, which we provided, the EPA permit is expected to be in sometime in 2nd quarter of 2025. But in the meantime, our construction is in full swing. We are already taking care of a carbon sequestration facility which will be perhaps ready by the end of this year depending on the utility connection, interconnection with to provide that utility to the FCCS and also to ethanol facilities. So once we have this utility is received and then construction of the one not energy, ethanol facility is completed. We're going to concentrate on ethanol facility to be start as soon as possible.

Speaker Change: The Fart.

Speaker Change: Yes, I think if you look at that information which we provided, the EPA format is expected to be in some time in second quarter of 2025.

Speaker Change: But on the meantime, our construction is in a full swing.

Speaker Change: We are already taking care of a carbon squestation facility which will be flux ready by the end of this year depending on the...

Speaker Change: Utility Connection Interconnection with.

Speaker Change: To provide that utility to the IPCCS.

Speaker Change: and also do ethanol facility.

Speaker Change: So, once we have this utility received

Operator: 2nd quarter of 2024 conference call. As a reminder, today's call is being recorded, and at this time, all participants are listening on remote. A brief question and answer session will follow the phone presentation.

Speaker Change: and then construction of one or not energy.

Speaker Change: Atonal Facility is completed, we are going to concentrate on Athanol Facility to be starred as an as possible, as you know, one Rthener G has produced over the last 15 years, I can say with confidence.

Zafar Rizvi: As you know, one not energy has produced over the last 15 years, I can say, confidence. No, not a single year they lost that money, and that application is very important to us, and that facility will produce much better profit moving forward once we complete that facility. And the second, we will certainly continue to do construction work and try to reach as soon as possible when we will receive all these permits and then ICC permit and other permits as we received, and construction will be completed, and once the electric connection is connected, we will start the testing.

Douglas Bruggeman: I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead. Good morning, and thank you for joining REX American Resources Q2 2024 conference call. We'll get to our presentation and comments momentarily as well as your questions.

Douglas Bruggeman: I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Douglas Bruggeman: Good morning, and thank you for joining REX American Resources Q2 2024 conference call. We'll get to our presentation and comments momentarily as well as your questions.

Speaker Change: No, not a single ear they lost that money and that's an opposite.

Speaker Change: Look, this location is very important to us, and that facility will produce.

Douglas Bruggeman: First, I'll review the Safe Harbor Disclosure. In addition to historical facts or statements of current conditions, today's conference call contained forward-looking statements that involve risk and uncertainties within the meaning of the private security litigation reform act of 1995. Such forward-looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risk and uncertainties associated with the forward-looking statements are described in today's news announcement and the company's filing with the Securities and Exchange Commission, including the company's reports on form 10K and 10Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements.

Speaker Change: Much better profit moving forward once we complete that facility.

Speaker Change: and the second we will certainly continue to do construction work and try to reach.

Speaker Change: As soon as possible when we receive all these vermurs and then ICC vermurs and other vermurs as we receive and construction will be completed and once the electric connection is connected, we will start the testing. So, I will say sometime probably

Zafar Rizvi: So I will say sometime, probably once we receive the permit from EPA, we will start the operation. But that's just expected to, depending on all of those permits we receive. Otherwise, you know, we are waiting for all those permits. So, but it depends on the permits. But facilities.

Speaker Change: Once we receive the permit from EPA, we will start the construction of the van. So we will say probably sometime August or September next year, we should be in operation. But that's just expected.

Stuart Rose: I'd now like to turn the call over to our executive chairman Stuart Rose. Good morning, and thank you again to everyone for joining us. During the second quarter, REX American Resources made excellent progress in the three goals for the remainder of the year that they laid out in our last call. As a reminder, these were to continue profitable operations, to complete the construction phase of our one-earth carbon capture and compression facility, and to complete the capacity expansion of our one-earth energy ethanol production facility to 175 million gallons per year and move toward the planned further permitting of the facility to 200 million gallons.

Speaker Change: expected to be depending on all of those permits we receive, otherwise we are waiting for all those permits.

Zafar Rizvi: Jordan, to further answer your question, the biggest delay is in receiving permits. We call it a pipeline, but it's really just a 3-4 mile connector: the pipe itself. But we have to wait for Illinois to give us a permit on that, which is not easy. But building the pipeline and building the whole itself are not nearly as time-consuming as waiting for these permits. And that's, I think, your question is: once we get to the permits, how long will it take? That will not be nearly as long as waiting for the permits. And if I give you a pretty good time schedule of that.

Speaker Change: but it depends on the farmers.

Speaker Change: but facility is all mirror.

Jordan Levitt: A Jordan to further answer your question, the biggest delay is in receiving permits.

Speaker Change: We call it a pipeline, but it's really just a three-four-mile connector by the pipe itself, but we have to wait for it.

Illinois: Illinois to give us a permit on that, which is not easy, but building the pipeline and building a whole

Speaker Change: or not nearly as time-consuming as waiting for these permits and that's, I think, was your question, as once we get the permits that long will take. That will not be nearly as long as waiting for the permits in Zafar give you a pretty good time schedule of that.

Stuart Rose: To the first goal, we were entirely successful. REX had very profitable operations related to the prior year's comparable quarter, a team produced strong growth margin in the second quarter, improved by 37% over the first quarter, and by nearly 8% over second quarter 2023. That income per share also improved more than 20% over the first quarter of 2024, and more than 35% over second quarter 2023. While we have our eyes on the future, we continue to emphasize our core business of ethanol production, which has allowed us to accomplish three goals, as well as produce consistent industry leading results for our shareholders.

Jordan Levy: Absolutely.

Jordan Levy: No, I appreciate all those details, and certainly you all have been, you know, done an impressive job with how much you've been able to get on on your own. And now, just waiting on the pipelines.

Speaker Change: I hope that's all you.

Speaker Change: I appreciate all those details and certainly you all have done an impressive job of how much you've been able to get on on your own, and now it's...

Speaker Change: Just waiting on the pipelines and maybe just to clarify in question once you on the pipeline may not be the There's more than the pipeline we're also waiting on the EPA which is

Speaker Change: In a lot of local permits too. There's lots of permanent in the office.

Zafar Rizvi: But I'll take my main thing, which I really want to emphasize is, ethanol facility itself does not need any pipeline. And we are in full swing on the construction of the ethanol facilities from 150 million to 175, and then moved to 200 million gallon facility. And that should be completed by the co-op first quarter of 2025, depending on the utility, providing the electric connections. So once that facility is completed, we will be able to produce ethanol at that kind of rate. And also, as you know, our core business is very important to us. And we have produced greater result on our core core business.

Speaker Change: but I think some of my main things which I really want to emphasize is that.

Speaker Change: Atonal facility itself does not need any pipeline.

Speaker Change: and we are in a full surveying on the construction of the ethanol facilities from 150 million to 175 and then move towards 200 million gallons facility.

Speaker Change: and that should be completed by the co-op first quarter of 2025 depending on a utility providing the electric connections.

Speaker Change: So, once that facility is completed, we will be able to produce.

Speaker Change: Atonol at that kind of rate and also, as you know, our core business is very important to us and we have produced.

Stuart Rose: A third goal to complete construction of the one Earth's ethanol production capacity expansion to 170 million gallons per year to prepare for further-perventing production levels and 200 million gallons per year is on track for the first quarter of 2025. This expansion will further improve our ability to realize strong returns. We are very excited for the expansion and what it means for our business. We are making progress on all of our goals in preparing REX American to have success both now and over the long term.

Zafar Rizvi: And one art energy is the star student of our, all of our facilities. And we hope that that will continue to produce that profit as it's produced from the law. could be used.

Speaker Change: Great result on our core business and one art energy is the star student of our all of our facilities and we hope that will continue to produce that profit as it produces from the last 15 years.

Stuart Rose: One other one other thing that Jafar is not mentioning, Jordan, is we hope that by with the and we're it's our hope in our plans that the construction to expand our plans will also lower our CI score. We have not been told how to measure CI score exactly by the federal government, but depending on how they measure it, we hope that that in itself will lower our CI score the construction.

Speaker Change: One other thing that Jeff Harz is not mentioning in Jordan is we hope that by with the unambiguous it's our hope in our plans.

Speaker Change: that the construction to expand our plans will also lower our CI score. We have not been told.

Speaker Change: How to measure CI score exactly by the federal government, but depending on how they measure it, we hope that that in itself will lower our CI score.

Zafar Rizvi: And now, like it turned things over to our CEOs, Zafar Rizvi to get further updates on our wonders, energy CCS, and ethanol production capacity expansion projects. Thanks to our carbon capture and sequestration project in Gibson City, Illinois, continue to progress. You can see updated picture of the carbon capture and compression portion of the facility in our second quarter investor presentation, which was posted to our website this morning. Due to regulatory action by the state of Illinois, which is in July imposed a moratorium on the construction of CO2.

Jordan Levy: Yeah, that's actually a good segue to my follow-up question, which is just going to be steward. So far, your thoughts going into the election with some of the main guidance items still outstanding for as it relates to CCUS and ethanol. Just wanted to get your high-level thoughts there. My opinion is it's a bipartisan CCA. A carbon capture was a bipartisan issue, and I don't think that one party or the other will do will affect the current law. What happens if there are some proposals out there to extend certain things and that may be affected by one party or the other? I think it's a good thing the Democrats nominated a minister to person for vice president; he certainly is from a farm state, from an ethanol state, and understands the issue. But otherwise, I don't think that it really one party or the other is really taking a firm stand on expanding the CCS tax credit amount that are out there.

Speaker Change: Yeah, that's actually a good segue to my follow-up question, which is just going to be Stewart's afar. Your thoughts going into the election with some of the main guidance items that are outstanding for as it relates to CCUS and ethanol just just wanted to get your high level thoughts there.

Speaker Change: My opinion is that it's a bipartisan CC cover capture was a bipartisan issue and I don't think that one party or the other will affect the current law.

Zafar Rizvi: Due to regulatory action by the state of Illinois, which is in July imposed a moratorium on the construction of CO2. We have adjusted our construction schedule for the initial portion of the project. We believe this is the most proven part from both on operational and financial perspective. Operationally completing the capture and compression facility later in the year will mean a shorter period between completion of the construction and testing of the portion of the facility, which will require utility interconnection that is planned to be completed by the end of the first quarter of 2025.

Zafar Rizvi: We have adjusted our construction schedule for the initial portion of the project. We believe this is the most proven part from both on operational and financial perspective. Operationally completing the capture and compression facility later in the year will mean a shorter period between completion of the construction and testing of the portion of the facility, which will require utility interconnection that is planned to be completed by the end of the first quarter of 2025.

Speaker Change: What happens if there are some proposals out there to extend certain things?

Speaker Change: That may be affected by one party or the other. I take it to good things. The Democrats nominated a Minnesota person for Vice President. He certainly is from a farm state from an ethanol state and understands the issue.

Speaker Change: But otherwise I don't think that it really, one part of the other is really taking a firm stand on expanding DCCS tax credit.

Zafar Rizvi: From a budgetary perspective, taking a more major approach to construction allows us to more closely monitor our spending without incurring potential extra cost to meet the accelerated deadline. Given the new permitting reality, we are confident that pursuing the several ongoing portion of this project in this way is the right path. While pipeline permitting in Illinois is being worked out, our Class 6 injection well permit application with US EPA is still in process. And we anticipate a draft permit being issued by 2024 calendar year end. On the timeline currently estimated by the EPA itself, we would then anticipate final approval of the project in the second quarter of 2025.

Jordan Levy: Absolutely, thank you all so much, and next job with the continued strong results. Thank you, Jordan. Thank you.

Speaker Change: Amounts at a route there.

Speaker Change: Absolutely. Thank you all so much for being here with the continued strong results.

John: Thank you, John.

Pavel Molchanov: Our next question comes from the line of the bell of Baltimore with Raymond James. See if we see with your question. Thanks for taking the question. So even with, or I suppose particularly with, the slowdown in the carbon capture construction, you are going to be stockpiling even more cash on the balance sheet beyond the sizable amount that you already have. What is the kind of allocation? What's the current priority for using the, you know, 350 million of cash that you already have and, you know, even more that you're going to be putting on? Well, first priority is the carbon capture and expansion of the Gibson City plant.

Maltsumov: Thank you. Our next question comes from the line of the well, Maltsumov with Raymond James. Do you foresee what you're a question?

Speaker Change: Thanks for taking the question.

Speaker Change: Even um

Speaker Change: with our experts, particularly with the slowdown in carbon capture construction.

Zafar Rizvi: And we anticipate a draft permit being issued by 2024 calendar year end. On the timeline currently estimated by the EPA itself, we would then anticipate final approval of the project in the second quarter of 2025. As a reminder, as of last quarter, Rex had screwed, easement for enough of the surface area to allow us to capacity to squester all of our carbon emissions on the one-author energy plant for the next 15 years.

Speaker Change: I, you are gonna be...

Speaker Change: Stockpile and even more cash on the balance sheet beyond.

Speaker Change: The sizable amount that you already have.

Speaker Change: What is the kind of allocation, what's the current priority for using the, you know, 350 million of cash that you already have.

Zafar Rizvi: As a reminder, as of last quarter, Rex had screwed, easement for enough of the surface area to allow us to capacity to squester all of our carbon emissions on the one-author energy plant for the next 15 years. And also screwed easement from our naval farmers for well number one and two, which will allow us to completely avoid the use of a minute domain in eventual construction of our carbon delivery pipeline.

Speaker Change: You know, even more that you're going to be putting on.

Speaker Change: Well, first priority is the carbon capture and expansion of the Gibson City plant.

Stuart Rose: Second priority is possibly looking at expansion of our South Dakota plant. That's a possibility, especially if we can lower our carbon capture scoring, get some tax credits. That would be a possibility. We're always looking for acquisitions. We've looked at a couple this year; they weren't for us, but you never know what's going to come up. We would consider stuff in related to the tax credits and related to energy outside of ethanol, but nothing's come along that we think is better than ethanol, so it's stuck to our field. And the last thing that we've been really good at over the years, and you never know where the stock market is.

Speaker Change: Second priority is possibly looking at expansion of our South Dakota plant, that's a possibility.

Speaker Change: especially if we can lower our carbon capture score and get some tax credits.

Zafar Rizvi: The expansion of our one-author energy ethanol facility 175 million gallons per year of production is on track for completion in the first quarter of 2025. Final testing and commissioning depends on the completion of the electric interconnection from our local utility. After necessary emission certification from the increased production levels, we then expect to begin the planned further permitting of the one-art ethanol facility to allow it to produce 200 million gallons per year.

Speaker Change: That would be a possibility. We're always looking for acquisitions. We've looked at a couple of this year that they want for us, but you never know what's going to come up.

Speaker Change: We would consider stuff.

Speaker Change: Damning.

Speaker Change: Related to the tax credits and related energy outside of ethanol, but nothing's come along that we think is better than ethanol.

Speaker Change: So we're stuck to our field in the last thing that we've been really good at over the years and you never know where the stock market is we didn't buy shares this quarter.

Zafar Rizvi: After necessary emission certification from the increased production levels, we then expect to begin the planned further permitting of the one-art ethanol facility to allow it to produce 200 million gallons per year. This additional permitting is the only step necessary to allow for the expanded capacity to 200 million gallons as no additional construction or capital spending is expected. This 25 and 1250 million gallons per year expansion in production capacity added on to our current highly efficient and profitable facility, we expect will enable us to expand our already and our profitability in our core ethanol business line.

Stuart Rose: We didn't buy shares this quarter, but over the years we're probably the buyback kings and percentage of shares bought back. And we're really, really, and we know what we're doing there. And we buy our dips, which is important. We don't just buy because to lower the share count, and we don't buy at the stock highs. We'd buy low to protect our shareholders when it stops down, and that's been very, very successful. It's that's been a very successful strategy for us and that's still there we still have buyback authorization but we have not used it. We did not use it in the last quarter. What's the latest on your thinking about sustainable aviation fuel?

Speaker Change: But over the years, we're probably the buyback kings and percentage of shares bought back.

Speaker Change: and we know what we're doing there and we buy out gifts which is important. We don't just buy to lower the share count and then we don't buy at the stock highs with my load of protect our shareholders when the stock's down.

Zafar Rizvi: This additional permitting is the only step necessary to allow for the expanded capacity to 200 million gallons as no additional construction or capital spending is expected. This 25 and 1250 million gallons per year expansion in production capacity added on to our current highly efficient and profitable facility, we expect will enable us to expand our already and our profitability in our core ethanol business line. As a quarter end, we have invested approximately $91 million into the one-art carbon capture project and associated ethanol production capacity expansion, pending for the carbon capture and frustration projects stood at $49.1 million as a second quarter end.

Speaker Change: and that's been very, very successful strategy for us and that's still there, we're still there by back afterization, but we did not use it in the last quarter.

Speaker Change: What's the latest on your thinking about?

Zafar Rizvi: I think for that, we have to have low carbon at fuel produced. We believe that we certainly will need carbon sequestration for that location. And also, as you know, there's no clear guideline for 45Z at this time. So, once the 45Z clearly guideline is issued, then we can certainly look into it. But at this time, we certainly believe that we need to further reduce our CI score so that we can qualify for 45Z.

Speaker Change: Sustainable Aviation Fuel.

Zafar Rizvi: Zafar Rizvi.

Zafar Rizvi: As a quarter end, we have invested approximately $91 million into the one-art carbon capture project and associated ethanol production capacity expansion, pending for the carbon capture and frustration projects stood at $49.1 million as a second quarter end. While expenditure on the ethanol expansion stood at $41.7 million as of the same date, this is compared to total combined budget amount of 165 to 175 million dollars for both the CCS project and ethanol production expansion at Gibson City.

Zafar Rizvi: I think good.

Zafar Rizvi: For that we have to have low carbon fuel produced. We believe that we certainly will need carbon squestation for that location and also as you know there is no clear guideline for 45z at this time.

Zafar Rizvi: So, once the 45Z clearly guideline is issued, then we can certainly can look into it, but at this time we certainly believe that we need to further reduce our CI score so that we can qualify for 45Z. Thanks, guys.

Zafar Rizvi: While expenditure on the ethanol expansion stood at $41.7 million as of the same date, this is compared to total combined budget amount of 165 to 175 million dollars for both the CCS project and ethanol production expansion at Gibson City.

Pavel Molchanov: And then move to SAF. Got it. Thank you very much. Thanks, Pavel. Thank you.

Speaker Change: and then move to World 2 SES.

Speaker Change: Got it. Thank you very much.

Zafar Rizvi: I would now like to hand the call to our CEO Doug Brugman to discuss our operational and financial results. Doug, thanks afar.

Douglas Bruggeman: I would now like to hand the call to our CEO Doug Brugman to discuss our operational and financial results. Doug, thanks afar.

Speaker Change: Thanks for the, thank you.

Chris Satai: Our next question comes from the line of Chris Satai with Singular Research. Please receive a true question.

Speaker Change: and thank you. Our next question comes from the line of Chris Sittai with Singular Research. Please receive a short question.

Chris Satai: I have a question on capital expenditures. How are you doing compared to your budget amount for capital expenditures? So far. I think we at this time, we are right on track. Are you seeing any possible need for more to spend more there? No, not at this time, but as you know, it depends on the inflation factor in the future. But at this time, we do not see any major increase. The main things we have seen is delay in receiving a lot of equipment and components of electric components that is causing some delay of our completion of these facilities.

Douglas Bruggeman: I'll begin with our operational results. Rex ethanol sales volume during the second quarter 2024 for 65.1 million gallons, a reduction of approximately 6% versus second quarter 2023 sales volume of 69.1 million gallons. Average selling price for our consolidated ethanol volumes was $1.79 per gallon for the second quarter, compared to $2.42 per gallon in the second quarter of 2023. Dry distillers grain sales volume during the second quarter of 2024 totaled 132,850 tons at 6% decrease over the second quarter 2023 volumes.

Chris Sittai: If I have a question on Capitol expenditures, how are you doing compared to your budgeted amount for Capitol expenditures?

Speaker Change: I think we at this time, we are right on track.

Speaker Change: Are you seeing any possible?

Speaker Change: Need for more to spend more there.

Speaker Change: And no, not at this time, but as you know, the depends on inflation factor in the future, but at this time we do not see any major increase or the.

Speaker Change: The main thing we have seen is delay in a little saving.

Speaker Change: Lot of equipments and components of electric components that is causing some delay of our completion of these facilities.

Zafar Rizvi: But we are overall on right on budget. Okay, thanks.

Speaker Change: But we are overall on right on budget.

Zafar Rizvi: And then, have you seen any weather-related issues over the last quarter? No, we have not seen any major weather-related issue. There was some issue in South Dukera area with there was a heavy rain and there was some railroad track was washed out for few days, but not a major problem. We are expecting very good crops this year. The crops are very expected, very good, not only in Illinois. Illinois is expecting the bumper crops, which will be record crops this year. And the same time, South Dukera is 73% to excellent to good crops, which is also near record crops for that area.

Speaker Change: Okay, thanks, and then have you seen any weather related issues of the last quarter?

Speaker Change: No, we have not seen any major weather related issue. There was some issue in South Gera area with the heavy rain and there was some railroad track washed out for few days, but not a major problem.

Speaker Change: We are expecting very good crops this year.

Speaker Change: What are you?

Douglas Bruggeman: Corn Oil sales volumes in the second quarter of 2024 were approximately 20.2 million pounds compared to 20.7 million pounds sold in the second quarter of 2023. The average selling price for REX's corn oil product was 43 cents per pound for the second quarter of 2024 compared to 55 cents per pound in the second quarter of 2023.

Speaker Change: Yes, the crops is a very expected, very good, not only in Alanoi, Alanoi is expecting the bumper crops which will be record.

Speaker Change: Corops this year and the same time South Dakar is a 73% to excellent to good crops which is also near record crops for that area.

Chris Satai: Okay, great, thanks. Thank you, Chris. Thank you.

Douglas Bruggeman: Gross profit for the second quarter of 2024 was 19.8 million dollars versus gross profit of approximately 18.4 million dollars for the second quarter of 2023. The 8% increase in gross profit was achieved despite lower average selling prices for all products, which was more than offset by lower corn and natural gas input prices.

Speaker Change: Okay, great, thanks.

Chris Sittai: Thank you, Chris.

Jordan Levy: All right, the next question comes from the line of Jordan Levy, which was secured. Please proceed with your question. Hey guys, just a follow up for me as far. I think you mentioned, or Stuart, maybe with you on Pavel's question, the potential for a new gem expansion at some point in the future. Maybe just talk to what you'd need to see whether it relates to Summit or something else there in order to kind of warrant that investment. At this time, summit, the investment would not be because of the summit pipeline. It may be later, but at this time that the code is, in my opinion, this is my opinion, some eminent domain issues.

Chris Sittai: Thank you.

Speaker Change: Our next question comes from the line of Jordan Notty, which you will secure these people see with your question.

Jordan Notty: Hi guys, it's just a followup for me. As far as I think you mentioned, or Stuart maybe maybe with you on Pavals' question, the potential for a new gen expansion at some point in the future. Maybe just talk to what you'd need to see whether it relates to the summit or something else there in order to kind of warrant that investment.

Douglas Bruggeman: Our selling general and administrative expenses decreased to $6.4 million for the second quarter of 2024 versus $8.6 million in the second quarter of 2023. The decrease was primarily due to the expensing of executive stock grants in the prior year, which did not recur this year.

Speaker Change: It is time, it was the investment would not be because of the summit pipeline.

Speaker Change: It may be later, but at this time, throughout the code, it has my opinion, this is my opinion, to eliminate the main issues.

Douglas Bruggeman: Interest and other income totaled $4.4 million in the second quarter of 2024 compared with approximately $3.3 million for the second quarter of 2023. This reflects higher balances and better earnings on our cash and short-term investments. Income before taxes and non-controlling interest for the second quarter of 2024 was approximately 19.5 million dollars and increase of more than 21% over the second quarter of 2023. Net income attributable with direct share holders for the second quarter was $12.4 million compared to $9.1 million in the second quarter of 2023. On a per share diluted basis for the second quarter of 2024, this amounts to $0.7 per share of net income compared to $0.52 per share in the second quarter of 2023.

Stuart Rose: And so if we were to invest in the next year, it would probably not be in the summit pipeline; it will be in advantage. We hope someday, but we would just do it because it would be more efficient to have a larger a larger plan. And if the corn supports it, we would consider it. So that's the biggest issue is always corn, and whether a bigger plant would raise corn prices. So we have to be very careful on that. The third thing is we do not have the 45-Z regulations, but if we can lower our CI score below 50, there are some tax credits involved.

Speaker Change: and so if we were to invest in the next year, it would not.

Speaker Change: So being in the summit pipeline will be in advantage, we hope someday.

Douglas Bruggeman: Income before taxes and non-controlling interest for the second quarter of 2024 was approximately 19.5 million dollars and increase of more than 21% over the second quarter of 2023. Net income attributable with direct share holders for the second quarter was $12.4 million compared to $9.1 million in the second quarter of 2023. On a per share diluted basis for the second quarter of 2024, this amounts to $0.7 per share of net income compared to $0.52 per share in the second quarter of 2023.

Speaker Change: But we would just do it because it would be more efficient to have a larger plant.

Speaker Change: and if the corn supports, we would consider it. So that's the biggest issue is always corn, whether a bigger plant would raise a corn prices. So it'd be very careful on that. The third thing is we do not have the 45 Z regulations.

Speaker Change: But if we can lower our CI score below 50, there are some tax credits involved.

Stuart Rose: So, simultaneously as we did in one earth, we will, if we do invest and make and expand that plant, we will make sure that we're doing it to bring our CI score, or try our best to bring our CI score down at the same time. Again, we don't know the regulations. And say they've not come out of what even defines your CI score, but that would be the bigger goal is just bring it down and maybe get maybe get it below 50 without the pipeline. And then when the pipeline comes in, we would, we would probably qualify for, or we would, and if it and when it does start capturing us here too, we would follow, we will qualify for 45Q or 45Z.

Speaker Change: It's time for Tainerswears. We did in one Earth. We will, if we do invest to make and expand that plan.

Speaker Change: We will make sure that we're doing it to bring our C.I. or a try or best to bring our C.I. score down.

Douglas Bruggeman: We ended the second quarter with total cash, cash equivalents, and short-term investments of $346 million compared with $378.7 million as of January 31st, 2024. The uses of cash during the first half were primarily related to our ongoing construction projects at the One Earth Energy Facility. Rex American also entered the quarter without any bank debt.

Speaker Change: At the same time, again, we don't know the regulations, they've not come out of what even defined your CI score.

Speaker Change: but that would be the bigger goal is just bring it down.

Speaker Change: and maybe get it below 50 without the pipeline and then when the pipeline comes in.

Speaker Change: We would properly qualify for, or we would, and if it, and when it does start capturing our sea at two, we would qualify for a 45 Q or 45 Z.

Zafar Rizvi: And now I'd like to turn the call back to Zafar. Thank you, Doug.

Jordan Levy: Thank you, sir.

Jordan Levy: Thank you.

Operator: And we have reached the end of the question-and-answer session.

Speaker Change: Thank you.

Stuart Rose: I'll now turn the call back over to Stuart Rose for close remarks. I'd like to thank everyone for listening. Again, corn crops are good right now. As the part said, we're running at a rate currently better than the second quarter. Things seem to be going moving along with our carbon capture project. We have great plants, great locations, but the biggest thing that we have and the reason we're doing, we're ahead of most people in carbon capture and doing better than virtually everyone in ethanol as we feel we have the best people in the industry. And that includes our CEO, and it includes the people that work for them all the way down the line.

Speaker Change: We have received the question in the next session. I'll now turn the call back over to Stuart Rose for Close Remarks.

Stuart Rose: Alright, I'd like to thank everyone for listening again. Corn crops are good right now. Zafar said we're running it right. Currently better than the second quarter things seem to be going moving along with our carbon capture project. We have great plants, great locations.

Zafar Rizvi: Additionally, we believe in increasing ethanol per export, which on a volume basis for 36.5 percent higher through June than at the same point last year, according to the USDA, have had a positive impact across the industry. As far as own inputs at the current time, we are looking toward harvest and what is expected to be a bumper crop. For corn in the Midwest, crop condition near our two consolidated plants are expected to be strong.

Stuart Rose: But the biggest thing that we have in the reason we're doing, we're ahead of most people in carbon capture and doing better than virtually everyone in Athens, all this we feel we have the best people in the industry.

Stuart Rose: and that includes our CEO and an includes the people that work for them all the way down the line. We have very, very good people and that's really what separates us. Again, thank you for listening and we'll talk to everyone next quarter. Bye.

Stuart Rose: We have very, very good people, and that's really what separates us.

Stuart Rose: Again, thank you for listening, and we'll talk to everyone next quarter. Bye. Thank you.

David Locke: This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation. David Locke, unknown executive, John

Speaker Change: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Zafar Rizvi: We are anticipating the robust harvest coupled with the current corn in the farm inventories will lead to a continued favourable corn input pricing. Above all, we are focused on profitability over product pricing or production numbers. As evidence for by our improved growth margin, performance this quarter, despite lower ethanol pricing and volume sold, it is this focus and the people in our plants will live it every day that continue to make us the successful profitable company we are.

Operator: Now I would like to open things up to the questions operator. Thank you.

Speaker Change: [inaudible]

Operator: Now I would like to open things up to the questions operator. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please first star one on your telephone key bag. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove yourself from the queue. For participants, use the speaker equipment and may be necessary to pick up and enhance it before pressing these star keys. One moment please while we pull for questions.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please first star one on your telephone key bag. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove yourself from the queue. For participants, use the speaker equipment and may be necessary to pick up and enhance it before pressing these star keys. One moment please while we pull for questions.

Jordan Levy: Our first question comes from the line of joy and levied with true securities. Please proceed with your question. Good morning all and thanks for all the updates. I just wanted to talk first on the carbon capture sequestration side of things. You guys did a good job calling out in the press release kind of the various external forces that you have to think through when you go through this process. But maybe just help us think about in the event and in the timeframe that assuming you do get the permit approval that you need.

Jordan Levy: Our first question comes from the line of joy and levied with true securities. Please proceed with your question. Good morning all and thanks for all the updates.

Jordan Levy: I just wanted to talk first on the carbon capture sequestration side of things. You guys did a good job calling out in the press release kind of the various external forces that you have to think through when you go through this process. But maybe just help us think about in the event and in the timeframe that assuming you do get the permit approval that you need.

Jordan Levy: Can you just talk to the timeline around the build out of the pipeline and then any remaining necessary equipment at that point? Yes. I think if you look at that information, which we provided, the EPA permit is expected to be in sometime in 2nd quarter of 2025. But on the meantime, our construction is in a full swing. We are already taking care of a carbon sequestration facility which will be perhaps ready by the end of this year depending on the utility connection, interconnection with to provide that utility to the FCCS and also to ethanol facilities.

Zafar Rizvi: Can you just talk to the timeline around the build out of the pipeline and then any remaining necessary equipment at that point? Yes. I think if you look at that information, which we provided, the EPA permit is expected to be in sometime in 2nd quarter of 2025. But on the meantime, our construction is in a full swing. We are already taking care of a carbon sequestration facility which will be perhaps ready by the end of this year depending on the utility connection, interconnection with to provide that utility to the FCCS and also to ethanol facilities.

Jordan Levy: So once we have this utility is received and then construction of the one not energy, ethanol facility is completed. We're going to concentrate on ethanol facility to be start as soon as possible. As you know, one not energy has produced over the last 15 years, I can say, Confidence. No, not a single year they lost that money and that application is very important to us and that facility will produce much better profit moving forward once we complete that facility.

Zafar Rizvi: So once we have this utility is received and then construction of the one not energy, ethanol facility is completed. We're going to concentrate on ethanol facility to be start as soon as possible. As you know, one not energy has produced over the last 15 years, I can say, Confidence. No, not a single year they lost that money and that application is very important to us and that facility will produce much better profit moving forward once we complete that facility.

Jordan Levy: And the second, we will certainly continue to do construction work and try to reach as soon as possible when we will receive all these permits and then ICC permit and other permits as we received and construction will be completed and once the electric connection is connected, we will start the testing. So I will say sometime probably once we receive the permit from EPA, we will start the operation. But that's just expected to, depending on all of those permits we receive, otherwise, you know, we are waiting for all those permits.

Zafar Rizvi: And the second, we will certainly continue to do construction work and try to reach as soon as possible when we will receive all these permits and then ICC permit and other permits as we received and construction will be completed and once the electric connection is connected, we will start the testing. So I will say sometime probably once we receive the permit from EPA, we will start the operation. But that's just expected to, depending on all of those permits we receive, otherwise, you know, we are waiting for all those permits. So, but it depends on the permits. But facilities.

Jordan Levy: So, but it depends on the permits. But facilities. Jordan, to further answer your question, the biggest delay is in receiving permits. We call it a pipeline, but it's really just a 3-4 mile connector, the pipe itself. But we have to wait for Illinois to give us a permit on that which is not easy. But building the pipeline and building the whole itself are not nearly as time-consuming as waiting for these permits.

Jordan Levy: And that's, I think, your question is once we get to the permits, how long will it take? That will not be nearly as long as waiting for the permits. And if I give you a pretty good time schedule of that. Absolutely. No, I appreciate all those details and certainly you all have been, you know, done an impressive job with how much you've been able to get on on your own. And now, just waiting on the pipelines.

Zafar Rizvi: Jordan, to further answer your question, the biggest delay is in receiving permits. We call it a pipeline, but it's really just a 3-4 mile connector, the pipe itself. But we have to wait for Illinois to give us a permit on that which is not easy. But building the pipeline and building the whole itself are not nearly as time-consuming as waiting for these permits. And that's, I think, your question is once we get to the permits, how long will it take?

Zafar Rizvi: That will not be nearly as long as waiting for the permits. And if I give you a pretty good time schedule of that. Absolutely. No, I appreciate all those details and certainly you all have been, you know, done an impressive job with how much you've been able to get on on your own. And now, just waiting on the pipelines. And maybe just a clarifying question. Once you on the pipeline may not be the, there's more than the pipeline we're also waiting on the EPA, which is exactly in a lot of local permits, too. There's lots of permuriting about that.

Jordan Levy: And maybe just a clarifying question. Once you on the pipeline may not be the, there's more than the pipeline we're also waiting on the EPA, which is exactly in a lot of local permits, too. There's lots of permuriting about that. But I'll take my main thing which I really want to emphasize is, ethanol facility itself does not need any pipeline. And we are in a full swing on the construction of the ethanol facilities from 150 million to 175, and then moved to 200 million gallon facility.

Zafar Rizvi: But I'll take my main thing which I really want to emphasize is, ethanol facility itself does not need any pipeline. And we are in a full swing on the construction of the ethanol facilities from 150 million to 175, and then moved to 200 million gallon facility. And that should be completed by the co-op first quarter of 2025, depending on the utility, providing the electric connections. So once that facility is completed, we will be able to produce ethanol at that kind of rate.

Jordan Levy: And that should be completed by the co-op first quarter of 2025, depending on the utility, providing the electric connections. So once that facility is completed, we will be able to produce ethanol at that kind of rate. And also, as you know, our core business is very important to us. And we have produced greater result on our core core business. And one art energy is the star student of our, all of our facilities.

Zafar Rizvi: And also, as you know, our core business is very important to us. And we have produced greater result on our core core business. And one art energy is the star student of our, all of our facilities. And we hope that that will continue to produce that profit as it's produced from the law, could be used. One other one other thing that Jafar is not mentioning Jordan is we hope that by with the and we're it's our hope in our plans that the construction to expand our plans will also lower our CI score. We have not been told how to measure CI score exactly by the federal government but we but depending on how they measure it we hope that that in itself will lower our CI score the construction.

Jordan Levy: And we hope that that will continue to produce that profit as it's produced from the law, could be used. One other one other thing that Jafar is not mentioning Jordan is we hope that by with the and we're it's our hope in our plans that the construction to expand our plans will also lower our CI score. We have not been told how to measure CI score exactly by the federal government but we but depending on how they measure it we hope that that in itself will lower our CI score the construction.

Stuart Rose: Yeah that's actually a good segue to my follow-up question which is just going to be steward so far your thoughts going into the election with some of the main guidance items still outstanding for as it relates to CCUS and ethanol just just wanted to get your your high level thoughts there. My opinion is it's a bipartisan CCA a carbon capture was a bipartisan issue and I don't think and that one party or the other will do will affect the current law.

Stuart Rose: What happens if there are some proposals out there to extend certain things and that may be affected by one party or the other I think it's a good thing the Democrats nominated a minister to person for vice president he certainly is from a farm state from an ethanol state and understands the issue but otherwise I don't think that it really one party or the other is really taking a firm stand on on expanding the CCS tax credit amount that are out there.

Jordan Levy: What happens if there are some proposals out there to extend certain things and that may be affected by one party or the other I think it's a good thing the Democrats nominated a minister to person for vice president he certainly is from a farm state from an ethanol state and understands the issue but otherwise I don't think that it really one party or the other is really taking a firm stand on on expanding the CCS tax credit amount that are out there. Absolutely thank you all so much and next job with the continued strong results. Thank you Jordan. Thank you.

Jordan Levy: Absolutely thank you all so much and next job with the continued strong results. Thank you Jordan. Thank you.

Pavel Molchanov: Our next question comes from the line of the bell of Baltimore with Raymond James. See if we see with your question. Thanks for taking the question. So even with or I suppose particularly with the slowdown in the carbon capture construction you are going to be stockpiling even more cash on the balance sheet beyond the sizable amount that you already have what is the kind of allocation what's the current priority for using the you know 350 million of cash that you already have and you know even more that you're going to be putting on.

Pavel Molchanov: Our next question comes from the line of the bell of Baltimore with Raymond James. See if we see with your question. Thanks for taking the question.

Stuart Rose: So even with or I suppose particularly with the slowdown in the carbon capture construction you are going to be stockpiling even more cash on the balance sheet beyond the sizable amount that you already have what is the kind of allocation what's the current priority for using the you know 350 million of cash that you already have and you know even more that you're going to be putting on. Well first priority is the carbon capture and expansion of the Gibson City plant.

Pavel Molchanov: Well first priority is the carbon capture and expansion of the Gibson City plant. Second priority is possibly looking at expansion of our South Dakota plant that's a possibility especially if we can lower our carbon capture scoring gets some tax credits that would be a possibility. We're always looking for acquisitions. We've looked at a couple this year they they weren't for us but you never know what's going to come up. We would consider stuff in related to the tax credits and related to energy outside of ethanol but nothing's come along that we think is better than ethanol so it's stuck to our field.

Stuart Rose: Second priority is possibly looking at expansion of our South Dakota plant that's a possibility especially if we can lower our carbon capture scoring gets some tax credits that would be a possibility. We're always looking for acquisitions. We've looked at a couple this year they they weren't for us but you never know what's going to come up. We would consider stuff in related to the tax credits and related to energy outside of ethanol but nothing's come along that we think is better than ethanol so it's stuck to our field. And the last thing that we've been really good at over the years and you never know where the stock market is.

Pavel Molchanov: And the last thing that we've been really good at over the years and you never know where the stock market is. We didn't buy shares this quarter but over the years we're probably the buyback kings and percentage of shares bought back and we're really really and we know what we're doing there and we buy our dips which is important we don't just buy because to lower the share count and we don't buy at the stock highs would buy low to protect our shareholders when it stops down and that's been very very successful.

Stuart Rose: We didn't buy shares this quarter but over the years we're probably the buyback kings and percentage of shares bought back and we're really really and we know what we're doing there and we buy our dips which is important we don't just buy because to lower the share count and we don't buy at the stock highs would buy low to protect our shareholders when it stops down and that's been very very successful.

Pavel Molchanov: It's that's been very successful strategy for us and that's still there we still have buyback authorization but we have not used it we did not use it in the last quarter What's the latest on your thinking about sustainable aviation fuel? I think for that, we have to have low carbon at fuel produced. We believe that we certainly will need carbon sequestration for that location. And also, as you know, there's no clear guideline for 45Z at this time.

Zafar Rizvi: It's that's been very successful strategy for us and that's still there we still have buyback authorization but we have not used it we did not use it in the last quarter What's the latest on your thinking about sustainable aviation fuel? I think for that, we have to have low carbon at fuel produced. We believe that we certainly will need carbon sequestration for that location. And also, as you know, there's no clear guideline for 45Z at this time.

Pavel Molchanov: So, once the 45Z clearly guideline is issued, then we can certainly look into it. But at this time, we certainly believe that we need to further reduce our CI score so that we can qualify for 45Z. And then move to SAF. Got it. Thank you very much. Thanks, Pavel. Thank you.

Zafar Rizvi: So, once the 45Z clearly guideline is issued, then we can certainly look into it. But at this time, we certainly believe that we need to further reduce our CI score so that we can qualify for 45Z. And then move to SAF. Got it.

Pavel Molchanov: Thank you very much. Thanks, Pavel. Thank you.

Chris Satai: Our next question comes from the line of Chris Satai with singular research.

Zafar Rizvi: Please receive a true question. I have a question on capital expenditures. How are you doing compared to your budget amount for capital expenditures? So far. I think we at this time, we are right on track. Are you seeing any possible need for more to spend more there? No, not at this time, but as you know, it depends on inflation factor in the future. But at this time, we do not see any major increase.

Chris Satai: Please receive a true question. I have a question on capital expenditures. How are you doing compared to your budget amount for capital expenditures? So far. I think we at this time, we are right on track. Are you seeing any possible need for more to spend more there? No, not at this time, but as you know, it depends on inflation factor in the future. But at this time, we do not see any major increase.

Zafar Rizvi: The main things we have seen is delay in receiving a lot of equipment and components of electric components that is causing some delay of our completion of these facilities. But we are overall on right on budget.

Chris Satai: The main things we have seen is delay in receiving a lot of equipment and components of electric components that is causing some delay of our completion of these facilities. But we are overall on right on budget.

Zafar Rizvi: Okay, thanks. And then, have you seen any weather-related issues over the last quarter? No, we have not seen any major weather-related issue. There was some issue in South Dukera area with there was a heavy rain and there was some railroad track was washed out for few days, but not a major problem. We are expecting very good crops this year. The crops are very expected, very good, not only in Illinois, Illinois is expecting the bumper crops, which will be record crops this year. And the same time, South Dukera is 73% to excellent to good crops, which is also near record crops for that area.

Chris Satai: Okay, great, thanks. Thank you, Chris.

Operator: Thank you.

Jordan Levy: All right, next question comes from the line of Jordan Levy, which was secured. Please proceed with your question. Hey guys, just a follow up for me as far. I think you mentioned, or Stuart, maybe with you on Pavel's question, the potential for a new gem expansion at some point in the future. Maybe just talk to what you'd need to see whether it relates to summit or something else there in order to kind of warrant that investment.

Jordan Levy: At this time summit, the investment would not be because of the summit pipeline. It may be later, but at this time that the code is in my opinion, this is my opinion, some eminent domain issues. And so if we were to invest in the next year, it would probably it would not be in the summit pipeline will be in advantage. We hope someday, but we would just do it because it would be more efficient to have a larger a larger plan.

Jordan Levy: And if the corn supports it, we would consider it. So that's the biggest issue is always corn, and whether a bigger plant would raise a corn prices. So we have to be very careful on that. The third thing is we do not have the 45-Z regulations, but if we can lower our CI score below 50, there are some tax credits involved. So simultaneously as we did in one earth, we will, if we do invest and make and expand that plant, we will make sure that we're doing it to bring our CI score or try our best to bring our CI score down at the same time.

Jordan Levy: Again, we don't know the regulations. And say they've not come out of what even defines your CI score, but that would be the bigger goal is just bring it down and maybe get maybe get it below 50 without the pipeline. And then when the pipeline comes in, we would, we would probably qualify for, or we would, and if it and when it does start capturing us here too, we would follow, we will qualify for 45 Q or 45 Z. Thank you, sir. Thank you.

Operator: And we have reached the end of the question and answer session.

Stuart Rose: I'll now turn the call back over to Stuart Rose for close remarks. I'd like to thank everyone for listening. Again, corn crops are good right now. As the part said, we're running at a rate currently better than the second quarter. Things seem to be going moving along with our carbon capture project. We have great plants, great locations, but the biggest thing that we have and the reason we're doing, we're ahead of most people in carbon capture and doing better than virtually everyone in ethanol as we feel we have the best people in the industry. And that includes our CEO and it includes the people that work for them all the way down the line. We have very, very good people and that's really what separates us.

Stuart Rose: And that includes our CEO and it includes the people that work for them all the way down the line. We have very, very good people and that's really what separates us. Again, thank you for listening and we'll talk to everyone next quarter. Bye. Thank you.

Operator: Again, thank you for listening and we'll talk to everyone next quarter. Bye. Thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation. David Locke, Unknown Executive, John

David Locke: This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation. David Locke, Unknown Executive, John

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