Q4 2025 REX American Resources Corp Earnings Call

Speaker Change: [music].

Greetings and welcome to Rex American resources.

Fourth.

Fourth quarter and full fiscal year 2024 earnings conference call.

Operator: At this time, all participants are on a listen-only mode.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded.

If anyone should require operator assistance during the conference.

Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Doug Bruggeman. Thank you you may begin.

Doug Bruggeman: I would now like to turn the conference over to your host, Mr. Doug Bruggeman. Thank you. You may begin.

Doug Bruggeman: Good morning and thank you for joining this morning's call.

Doug Bruggeman: Good morning, and thank you for joining this morning's call.

Doug Bruggeman: Joining us today is Stuart Rose, Executive Chairman and Zafar Rizvi, Chief Executive Officer. We'll get to our presentation and comments momentarily, as well as your questions.

Zafar Rizvi: Joining us today historic Roes Executive Chairman and Zafar Rizvi, Chief Executive Officer.

Doug Bruggeman: We'll get to our presentation and comments momentarily as well as your questions.

Doug Bruggeman: But first, I will review the Safe Harbor Disclosure. In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risk 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 expectation. The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports in Form 10-K and 10-Q.

Doug Bruggeman: But first I will review the safe Harbor disclosure.

Doug Bruggeman: In addition to historical facts or statements of current conditions. Today's conference call contains forward looking statements that involve risks and uncertainties within the meaning of the private Securities Litigation Reform Act of 1995.

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

Doug Bruggeman: As such actual results may vary materially from expectations.

Doug Bruggeman: The risks and uncertainties associated with the forward looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and 10-Q.

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

Doug Bruggeman: Rex American resources assumes no obligation to publicly update or revise any forward looking statements.

Stuart Rose: I would now like to turn the call over to our Executive Chairman, Stuart Rose. Good morning and thank you again to everyone for joining us. Fiscal 2024 saw a continuation of the positive results from REX's time-tested approach to our core ethanol business. Sales of ethanol grew over 2023 levels, with 289.7 million gallons of ethanol sold. Despite lower prices, our management of the overall business remained as focused as ever, and total net income and income per share remained strong, along with gross profit. REX continues to be among the best in the industry in our core ethanol business line.

Doug Bruggeman: I would now like to turn the call over to our executive Chairman Stuart Rose.

Stuart Rose: Good morning, and thank you again to everyone for joining us.

Stuart Rose: Fiscal 'twenty 'twenty four saw a continuation of the positive results from breakfast time tested approach to our core ethanol business.

Stuart Rose: Sales of ethanol grew over 2023 levels with 299.7 million gallons of ethanol sold despite lower prices our management of the overall business remain as focused as ever.

Stuart Rose: Total net income and income per share remained strong along with gross profit continues to be among the best in the industry and our core ethanol business line.

Stuart Rose: As far as our several growth projects, during 2024, we substantially completed construction of the capture and compression portions of our planned carbon capture facility. Additionally, we progressed our capacity expansion project at the One Earth Energy Ethanol Facility.

Stuart Rose: As far as our several growth projects. During 2024, we substantially completed construction of the capture and compression portions of our plant carbon capture facility.

Stuart Rose: Additionally, we progressed our capacity expansion project at the one Earth energy ethanol facility.

Stuart Rose: Our overall business saw great financial results and good operational progress during 2024. As we move forward through 2025, the REX team is bringing the same attention to detail, close management of the day-to-day as we have in the past. We are concentrating on the things we can control and acting prudently as and when conditions change.

Our overall business, so great financial results and good operational progress during 'twenty 'twenty four.

Stuart Rose: We move forward through 'twenty 'twenty five rec statements, bringing the same attention to detail close management the day to day as we have in the past we are concentrating on the things, we can control and acting prudently as and when conditions change.

Stuart Rose: Aside from our headstand focus on efficient and profitable operations, REX has had a longstanding commitment to delivering value to our shareholders through a well-considered share repurchase program. We are selective in how we apply this authorization from our board of directors and act when we see value in our share price. to this way of thinking, we're active in the fiscal fourth quarter, repurchasing approximately 373,000 shares, and we've been active in fiscal quarter one with repurchases totaling 282,000 shares. As of yesterday, REX's board of directors authorized an additional 1.5 million shares to be available for repurchase. These are in addition to the remaining 222,510 shares still available for repurchase under the previous buyback authorization.

Stuart Rose: Aside from our heads down focus on efficient and profitable operations Rex has had a long standing commitment to delivering value to our shareholders through a well considered share repurchase program.

Stuart Rose: We are selective in how we apply this authorization from our board of Directors and act when we see value in our share price.

Stuart Rose: So that's why you think you were active in the fiscal fourth quarter repurchasing approximately 373000 shares and we've been active in fiscal quarter, one with repurchases totaling 282000 shares.

Stuart Rose: As of yesterday breakfast board of directors authorized an additional one 5 million shares to be available for repurchase.

Stuart Rose: These are in addition to the remaining 222510 shares still available for repurchase under the previous buyback authorization.

Stuart Rose: As far as additional avenues for growth, we are always looking for facilities that come on the market that meet our operational and financial criteria. Our ability to do so is always thanks to the incredible team we have at REX, whether operating the facilities and our plants to a high efficiency or monitoring corn and natural gas markets and taking advantage of beneficial conditions to lower our cost base. The people we have at REX are second to none in the industry and I want to take a moment as always to thank them for the work they do on a daily basis.

Stuart Rose: As far as additional avenues for growth were always looking for facilities that come on the market that meet our operational and financial criteria, our ability to do so as always thanks to the incredible team we have a rex whether were operating the facilities their plants to high efficiency.

Stuart Rose: Modern rig corn and natural gas markets and taken advantage of.

Stuart Rose: Beneficial conditions to lower our cost base. The people we have at Rex are second to none in the industry and I wanted to take a moment as always to thank them for the work they do on a daily basis.

Stuart Rose: All of this is to say that REX is in good position to make progress in our strategic goals during 2025, delivering value to our shareholders.

Stuart Rose: All of this is to say that Rex is in good position to make progress on our strategic goals during 'twenty twenty-five delivering value to our shareholders.

Zafar Rizvi: I'd now like to turn things over to our CEO, Zafar Rizvi, to discuss the progress of our growth projects at REX. Thank you, Stuart. During fiscal year 2024, we made steady progress on our carbon capture and sequestration project in Gibson City, Illinois. During the year, we substantially completed construction on the capture and compression portion of the facility. During 2025, we anticipated moving forward in the sequestration portion of the project. Currently, we are awaiting approval of Class 6 injection well permit from the EPA. The EPA currently projects issuing of this permit in October. We are hopeful that once we have obtained this permit, that we will be able to move forward with other required state and local permits.

Speaker Change: Now I'd like to turn things over to our C. O. So far with me to discuss the progress of our growth projects at Rex.

Speaker Change: Thank you Stuart during fiscal year 2024, we've made steady progress on carbon capture and sequestration project in Gibson City, along the way.

Speaker Change: What's up.

We completed construction on the capture and compression portion of the facility.

Speaker Change: 2025, we anticipate it moving forward in the western portion of the project. Currently we are waiting approval of six injection wells from.

Speaker Change: From the EPA. The EPA currently project is showing up this month in October.

Speaker Change: We are hopeful that once we have a ban just one month that we will be able to move forward with other required state and local funding.

Zafar Rizvi: Given proposed rulemaking earlier in the year by the Pipeline and Hazard Materials Safety Administration, we are closely monitoring potential action to accelerate the updating rules and regulations for the CO2 pipeline from the Trump Administration. and towards getting the project moving forward. Once all approvals are received and the facility is operational, the One Earth Carbon Capture and Sequestration Facility should contribute to REX's bottom line through both 45Z and 45Q tax credits. These tax credit impacts would be maximized through the related expansion of our Gapsan City Ethanol production facility's capacity once it is completed and in operation.

Speaker Change: You won't put almost all making nearing the ear by the pipeline and hazardous materials safety administration. We are closely monitoring potential action holidayed updating to rules and regulations, what's your pipeline from the Trump administration.

Speaker Change: And the work getting the project moving forward.

Speaker Change: Once all the pool was.

Speaker Change: Themed and the facility is operational the one carbon capture and sequestration facilitates what country due to less bottom line through both 45 and 45 you tax guidance.

Speaker Change: His desk that impacts would be maximized through debt related to expansion of our Gibson city ethanol.

Speaker Change: <unk> facilities capacity once it is completed and in operation.

Zafar Rizvi: During 2024, REX moved forward on construction of the ethanol facility expansion project and made substantial progress. Currently, management is undertaking a review of certain elements of the project plan. This review is in keeping with our priority of maintaining efficiency and a higher production level at our facility. And we believe we will ultimately benefit the long-term operation and profitability of the capacity expansion.

Speaker Change: During 2024, that's moved forward on construction of the ethanol facility expansion project and made substantial progress currently management is undertaking a review of certain elements of the project plan.

Speaker Change: The view is in keeping with our board maintaining ever since he and the higher production levels at our facilities and we believe we will ultimately benefit the long term operation and profitability of that.

Speaker Change: The expansion.

Zafar Rizvi: However, as a result of the review, we do anticipate the timeline for the completion of the expansion to extend past the previous target of the middle of 2025. As of fiscal year end, we have invested approximately $115.6 million into the One Earth Carbon Capture Project and associated ethanol production capacity expansion . Due to the anticipated impacts of the ongoing review of certain elements of the expansion projects and inflation, we have now budgeted a total of $222-$230 million for both projects combined.

Speaker Change: As a result of that.

Speaker Change: We do anticipate the timeline for the completion of the expansion will extend past the previous.

Speaker Change: 1025.

Speaker Change: As our fiscal year end, we have invested approximately $115.6 million into the one not a carbon capture project and associated ethanol production capacity expansion.

Speaker Change: Due to the anticipated impacts of the ongoing review of certain elements of the expansion projects and inflation, we had no budget at a total of $220 million to $130 million for both products combined.

Doug Bruggeman: I would like to hand the call to our CFO, Doug Bruggeman, to discuss our operational and financial results. Thank you, Zafar. I'll begin with our operational results. REX's ethanol sales volume during fiscal year 2024 were 289.7 million gallons. Slight increase over fiscal year 2023 sales volumes of 285.9 million gallons. Volumes in the fourth quarter of 2024 were 74.7 million gallons versus 72.1 million gallons in the fourth quarter of 2023. Average selling prices for our consolidated ethanol volumes was approximately $1.71 per gallon for the full year 2024 and $1.64 for the fourth quarter. Dry distillers grain sales volumes during fiscal year 2024 totaled 632,000 tons, a 3% decrease over fiscal 2023 volumes of 652,000 Volumes during the fourth quarter were approximately 166,000 tons, a decrease of approximately 2% over the fourth quarter of 2023.

Speaker Change: I would like to hand, the golf ball, our CFO, Doug Bruggeman, who'll discuss our operational and financial results.

Speaker Change: Yeah.

Speaker Change: Thank you so far.

Speaker Change: I'll begin with our operational results Rhexis ethanol sales volume during fiscal year 2024 were $289 7 million gallons, a slight increase over fiscal year 2023 sales volumes up $285 9 million gallons.

Speaker Change: Volumes in the fourth quarter of 2024 were $74 7 million gallons versus $72 1 million gallons in the fourth quarter of 2023 average selling prices for our consolidated ethanol volumes was approximately $1 71 per gallon for the full year 2024, and $1 64 for the fourth.

Speaker Change: Quarter.

Dry distillers grain sales volumes during fiscal year 2024 totaled 632000 tons, a 3% decrease over fiscal 2023 volumes of 652000 tons.

Speaker Change: Volumes during the fourth quarter were approximately 166000 tons a decrease of approximately 2% over the fourth quarter of 2023.

Doug Bruggeman: Average selling price for DDGs was approximately $160.37 per ton for the full year and $143.81 per ton for the fourth quarter. Modified distillers grain sales volumes were 70,000 tons in fiscal 2024, compared with approximately 54,000 tons in fiscal year 2023. For the fourth quarter, modified distiller grain volumes totaled approximately 19,510s, an increase of approximately 11% over the same period in 2023. The average selling price for modifies was approximately $69.93 per ton for the full year and $72.84 per ton for the fourth quarter. Coronary sales volume in fiscal 2024 were approximately 88.1 million pounds compared to 87.5 million pounds sold in fiscal year 2023, an increase of approximately 1%.

Speaker Change: Average selling price for <unk> was approximately $160.37 per ton for the full year and $143 and Eddie one cents per ton for the fourth quarter.

Speaker Change: Modified distiller grain sales volumes were 70000 tons in fiscal 2024, compared with approximately 54000 tonnes in fiscal year 2023.

Speaker Change: For the fourth quarter modified distiller grain volumes totaled approximately 19500 tonnes, an increase of approximately 11% over the same period in 2023, the average selling price for modifies was approximately $69 93 per ton for the four year and 72.

Speaker Change: Dollars and 84 cents per ton for the fourth quarter.

Speaker Change: Corn oil sales volume in fiscal 2024 were approximately $88 1 million pounds compared to $87 5 million pounds sold in fiscal year 2023, an increase of approximately 1%.

Doug Bruggeman: For the fourth quarter, corn oil sales volumes totaled approximately 23.5 million pounds, an increase of 7% over the fourth quarter of 2023. The average selling price for REX's corn oil product was approximately 44 cents per pound for the full year and the fourth quarter of 2024. Gross profit for fiscal year 2024 was $91.5 million versus gross profit of approximately $98.2 million for fiscal year 2023. Gross profit in Q4 2024 was $17.6 million compared to $30.4 million in the fourth quarter of 2023. The decrease was due to lower selling prices across all categories, slightly offset by lower corn and natural gas prices.

Speaker Change: For the fourth quarter corn oil sales volumes totaled approximately $23 5 million pounds, an increase of 7% over the fourth quarter of 2023.

Speaker Change: The average selling price for breakfast corn, our product was approximately 44 cents per pound for the full year and the fourth quarter of 2024.

Speaker Change: Gross profit for fiscal year, 2024 was $91 $5 million versus gross profit of approximately $98 $2 million from fiscal year 2023.

Speaker Change: Gross profit in Q4, 2024 was $17 $6 million compared to $34 million in the fourth quarter of 2023.

Speaker Change: The decrease was due to lower selling prices across all categories slightly offset by lower corn and natural gas prices.

Doug Bruggeman: Our selling general administrative expenses decreased to $27.1 million for fiscal year 2024 versus $29.4 million in 2023. SG&A in the fourth quarter decreased to approximately $6.2 million versus $7.4 million in the fourth quarter of 2023. The fourth quarter decrease was primarily due to lower incentive bonuses based on company profitability levels. Interest and other income grew by approximately 22% in 2024, totaling $19.2 million compared with approximately $15.7 million for fiscal year 2023. We reported the interest and other income for the fourth quarter of approximately $4.2 million versus $4.8 million for the same period in 2023. Income before taxes of non-controlling interest for 2024 was approximately $92.9 million, a 6% decrease from $98.5 million in 2023.

Speaker Change: Our selling general and administrative expenses decreased to $27 $1 million for fiscal year 2024 versus $29 $4 million in 2023.

Speaker Change: SG&A in the fourth quarter decreased to approximately $6 $2 million versus $7 $4 million in the fourth quarter of 2023, the fourth quarter decrease was primarily due to lower incentive bonuses based on company profitability levels.

Speaker Change: Interest and other income grew by approximately 22% in 2024 totaling $19 $2 million compared with approximately $15 $7 million for fiscal year 2023.

Speaker Change: We reported interest and other income for the fourth quarter of approximately $4 $2 million versus $4 $8 million for the same period in 2023.

Speaker Change: Income before taxes and Noncontrolling interest for 2024 was approximately $92 $9 million, a 6% decrease from $98 $5 million in 2023.

Doug Bruggeman: During the fourth quarter, we reported approximately $17.9 million in this metric versus $32.5 million during the same period during the previous year. Net income attributable to REX shareholders for the year was $58.2 million compared to $60.9 million in fiscal year 2023. For the fourth quarter of 2024, this equaled $11.1 million compared with $20.6 million for the fourth quarter of 2023. On a per share diluted basis for the full year, this amounts to $3.30 per share of net income in 2024 compared to $3.47 per share in 2023. And for the fourth quarter 2024, diluted net income per share was $0.63 per share compared to $1.16 per share for the same period the previous year.

Speaker Change: During the fourth quarter, we reported approximately $17 $9 million in this metric versus $32 $5 million during the same period during the previous year.

Speaker Change: Net income attributable to Rex shareholders for the year was $58 $2 million compared to $69 million in fiscal year 2023.

Speaker Change: For the fourth quarter of 2024, this equaled $11 $1 million compared with $26 million for the fourth quarter of 2023.

Speaker Change: On a per share diluted basis for the four year. This amounts to $3 30 per share of net income in 2024 compared to $3 47 per share in 2023 and for the fourth quarter 2024 diluted net income per share was <unk> 63 per share compared to $1 six.

Speaker Change: <unk> per share for the same period the previous year.

Doug Bruggeman: During the fourth quarter of 2024, REX repurchased approximately 373,000 shares of our common stock for total consideration of approximately $15.5 million. So far during the fiscal first quarter of 2025, REX has repurchased an additional 281,709 shares of our stock for total consideration of $11.9 million. Total share repurchases equaled 654,276 shares, or approximately 3.7% of REX's outstanding shares. We ended the fiscal year with total cash, cash equivalents, and short-term investments of $359.1 million, compared with $378.7 million for fiscal year-end 2023. This net reduction in cash was primarily due to capital expenditures related to the projects at the One Earth Energy Facility, as well as the share repurchases mentioned earlier.

Speaker Change: During the fourth quarter of 2024, <unk> repurchased approximately 373000 shares of our common stock for total consideration of approximately $15 $5 million.

Speaker Change: So far during the fiscal first quarter of 2025 Rex has repurchased an additional.

Speaker Change: 281709 shares of our stock for total consideration of 11 $9 million.

Speaker Change: Total share repurchases equaled 654276 shares or approximately three 7% of Rex as outstanding shares.

Speaker Change: We ended the fiscal year with total cash cash equivalents and short term investments of $359 $1 million compared with $378 $7 million for fiscal year end 2023.

Speaker Change: Net reduction in cash was primarily due to capital expenditures related to the projects at the one Earth energy facility as well as the share repurchases mentioned earlier.

Doug Bruggeman: REX American ended the year without any bank debt.

Speaker Change: Rex American ended the year without any bank debt.

Zafar Rizvi: I'd now like to turn things back over to Zafar. Thanks, Doug. I would like to give some color around our priorities for 2025 and the several factors that will influence our business for the reminder of the calendar year. Overall, we are pleased with Q4 and how we managed through some challenges and are now focused on profitable 2025. Q1 is already off to a good start and we are expecting a profitable Q1, which would be our 19th consecutive profitable quarter for a net income process. Against this positive current financial and operational backdrop, we are maintaining a focus on properly positioning our business for the future.

Zafar Rizvi: I'd now like to turn things back over to Zafar.

Zafar Rizvi: Thanks, Doug I would like to give some color around up R&D, it's 4000.

Speaker Change: 25, and the several factors that will influence out of business, but reminded of the blender here or what all we are pleased with the Q4 and how we managed through some challenges and are now focused on profitable without them 25, Q1 is already off to a good start and we are expecting a profit.

Zafar Rizvi: Q1.

Zafar Rizvi: It would be our 19th consecutive profitable quarter for a net income perspective.

Zafar Rizvi: Against this positive financial and operational backdrop, we are maintaining our focus on properly positioning our business for the future.

Zafar Rizvi: and Executing on our several growth projects during the year. Importantly, we are carefully watching the policy forces that could impact our business and the overall market for our products. Chief among these is the possibility of tariffs on ethanol and co-product exports. which could be imposed by foreign governments. During 2024, total ethanol exports from the U.S. reached a record high of 1.9 billion gallons. Exporting pricing throughout the year, we are particularly mindful of tariff impact of the Canadian and Mexican markets as Canada represents approximately 36% of U.S. ethanol exports. and Mexico represent approximately 21% of U.S.

Zafar Rizvi: And particularly on our several growth projects building the ear.

Zafar Rizvi: Importantly, we are carefully watching the policy forces that could impact our business and the overall market for our products.

Zafar Rizvi: Among these is the possibility of data on ethanol and co product.

Zafar Rizvi: Exports.

Zafar Rizvi: Which could be onboard by foreign governments.

Zafar Rizvi: During 2024.

Zafar Rizvi: At another export from the U S reached a record high of 119 billion gallons.

Zafar Rizvi: Boring, but I think throughout that year, we are particularly mindful of that of impact of the Canadian and Mexican market as it represented approximately 36% of U S ethanol exports.

Zafar Rizvi: In Mexico to present, approximately 21, what percent of U S. DDG exports in 2024.

Zafar Rizvi: DDG export in 2024. Both of these were the top export markets for the respective products.

Zafar Rizvi: Both of these was the top export markets for the respective products.

Zafar Rizvi: Second is the debate around year-round E15 blending. We believe this proposed policy change, part of the nationwide Consumer and Fuel Retailer Choice Act introduced to Congress in February, would be beneficial not just to ethanol producers but to U.S. consumers as well, creating increased demand while also lowering fuel price for drivers. We are closely monitoring developments in the market, as well as on Capitol Hill, to continue making informed and prudent decisions for our business.

Zafar Rizvi: Second is the debate around E E.

Zafar Rizvi: If you've been blending we believe this proposed policy change part of the nationwide consumer and fuel retailer Choice Act.

Zafar Rizvi: To Congress in February.

Zafar Rizvi: Would it be beneficial not just do ethanol producer, but the U S consumer ASIC that creating increased demand while also lowering fuel, but I used to put drivers. We are closely monitoring developments in the market as well as on Capitol Hill to continue making informed and broaden this isn't part of our business.

Zafar Rizvi: In closing, I want to say that the entire REX team looks forward to what is to come for our business in 2025. Thank you to all our stakeholders for your continued support.

Zafar Rizvi: In closing I want to say is that the entire <unk> team looks forward to what is to come but our business in 2025.

Zafar Rizvi: To all our stakeholders for your continued support.

Doug Bruggeman: Now I'd like to open things up to questions. Operator. Thank you.

Zafar Rizvi: I would like to open things up.

Zafar Rizvi: Yes.

Zafar Rizvi: Operator.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session.

Operator: At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2.

Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad and.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: One moment, please, while we poll for questions.

Jordan Levy: Our first question comes from Jordan Levy with Truist Securities. Please proceed with your question. Morning all and thanks for taking my questions, nice quarter again.

Speaker Change: Our first question comes from Jordan Levy with true with Securities. Please proceed with your question.

Jordan Levy: Good morning, all and thanks for taking my questions and nice quarter again.

Jordan Levy: Can you maybe just provide a little detail Zafar around what went into the higher capital budget? https://www.youtube.com Zafar. Yeah, so Jordan, as you know, we always concentrate on One is number one is we can look at what is our profit. We have able to produce 18 constructive profit. Able Quarters. We also have decided to see how we can position our company towards growth and particularly organically. And we looked at that.

Speaker Change: Can you maybe just provide a little details around what went into the higher capital budget on the expansion project recognizing that the timeline kind of.

Speaker Change: Is in flux as you kind of a wait that approval for from the EPA.

Speaker Change: Sure.

Speaker Change: So far.

Speaker Change: Sure Jordan.

Speaker Change: As you know, we always concentrate on things.

Speaker Change: One is number one is we can send it.

Speaker Change: Look at what is out profit, we have able to produce 18 consecutive profit.

Speaker Change: Waters, we also have decided to see how we can position our what our company at the towards the growth and particularly organically grow and.

Speaker Change: And we looked at that number pretty we always look at the policies so coming back to the growth when we looked at it our.

Zafar Rizvi: Number three, we always look at the policy. Coming back to the growth, when we looked at our Equipment, equipment, different kind of equipment, which was. energy efficient equipment, which we looked at it, we realized that some of those equipment is not be able to handle 200 to 200 million gallon product. because we wanted to position our plants so that way if we in future we try to grow further from 200 million gallons to 225 million and we don't have to spend extra money. So we decided to evaluate those, and we decided to have equipment which can manage 200 to 200 million gallon production.

Speaker Change: Okay from a different kind of equipment.

Speaker Change: No.

Speaker Change: Equipment, which we've looked at it we realized that some of those equipment is not be able to handle.

Speaker Change: $100 million to $200 million gallon production.

Speaker Change: Because we wanted to.

Speaker Change: To position our plants, so that we a week if we in the future we try to grow further from $200 million Gatlin for 225 billion and we don't have to spend extra money in future. So we decided.

Speaker Change: Value add doors, and we decided to have.

Speaker Change: Shipment, which can manage 200 to 200 million gallon.

Zafar Rizvi: So when we looked at that, so that's one of the major reasons that we have to spend extra money for the future. And that's the main reason that we have, really, our budget is. And also, due to that same reason, the timeline is also.

Speaker Change: So when we looked at that so thats one of the major reason that we have to spend extra money, but the future growth.

Speaker Change: And that's the main reason that we have really the budget is increased.

Speaker Change: And also due to that families on the timeline has also increased.

Speaker Change: Yeah.

Jordan Levy: and I appreciate that transparency. I think it makes a lot of sense.

Speaker Change: And then I appreciate the transparency you think it makes a lot of sense, maybe just moving over to the regulatory side of the permitting side of things could.

Jordan Levy: Maybe just moving over to the regulatory side, the permitting side of things.

Jordan Levy: Can you just talk, you guys, this is your first update since the new. I'm sorry. Jordan, you were cut off. Could you repeat that question again, please? We lost Jordan somehow.

Speaker Change: Can you just talk you guys. This is their first update since the new administration.

Speaker Change: I'm sorry.

Speaker Change: You were cut off could you repeat that question again please.

Jordan Levy: Oh, My Gosh Jordan somehow.

Zafar Rizvi: I think if I understood correctly, probably you were talking about FISMA rules. So as you know, FISMA issued new regulation two days before the end of the Biden administration. These were not posted for the required 60 days public comments period and are currently under review by the new administration, making them invalid for implementation. We are waiting for Trump administration to review those and then reposted it, either eliminate some of the new rules. So that's where we are at this time for the PRISMA rules, if that's what your question was. Yeah, can you hear me now?

Jordan Levy: I think if I understood correctly, but I believe you were talking about Prisma rules. So as you know <unk> issued new regulations two days before the end of the by the administration.

Jordan Levy: All right.

Jordan Levy: These were not boosted further required 60 days public comment period and are currently under review by the New administration, making them invalid.

Jordan Levy:

Jordan Levy: We are waiting for.

Jordan Levy: This system.

Jordan Levy: So those and then reposted it either eliminated some of the new rules.

Jordan Levy: So that's where we are at this time for the Prisma rules if thats what your question was.

Speaker Change: Yes can you hear me now.

Jordan Levy: Yes, we can hear you. Okay, yeah, yeah, no, I appreciate that.

Jordan Levy: Yes.

Speaker Change: Oh, Okay, Yeah, Yeah, no I appreciate that and then just lastly, I just wanted to see if you've had any direct dialogue with the EPA on classics well permitting since the new administration took over if there's been any change in that dialogue.

Zafar Rizvi: And then just lastly, I just wanted to see if you've had any direct dialogue with the EPA on Class 6 well permitting since the new administration took over, if there's been any change in that dialogue. Yes, actually what happened is originally when Trump administration took over on January 20th, by January 28th, all the communication was stopped and later on now the communication is started already. We have in March. to conversation with EPA and then we believe that we will be able to answer all those questions which previously they were asking and so there is communication is starting.

Jordan Levy: Yes actually.

Speaker Change: Originally when dump and consistent.

Speaker Change: Sure.

Speaker Change: John one yet by January 28, we eat all the communication was stopped and data on the communication is started already we have.

Speaker Change: In March.

Speaker Change: The conversation with the EPA and then we believe that we will be able to.

Speaker Change: Answer all those questions with the pre release previously they were asking and so there is communication is started.

Stuart Rose: Jordan, I was going to say we can't control the administration, but with the Biden administration, they were very, very slow on everything. It appears the Trump administration at least is responsive, and we'll see how fast they are, but we don't know yet. We don't know what the legislation is going to include. It may be more favorable, maybe less favorable when they come out with the tax bill. In terms of responsiveness, it seems like we're getting, or the communications have opened up and they seem to be going very well at this moment, at least with the EPA.

Speaker Change: Jordan.

Speaker Change: Can't control.

Speaker Change: Jordan I was going to say, we can't control the administration put up with the patent administration that were very very slow on everything.

Speaker Change: It appears the Cup administration at least it's responsive and we'll see how fast they are but we.

Speaker Change: We don't know yet we don't know what the legislation is going to include it might be more favorable might be less favorable when they come out with a tax bill but in terms of responsiveness. It seems like we're getting our the communications have opened up and they seem to be going very well at this moment at least with the E. P. A.

Zafar Rizvi: Yeah, exactly. You know, you know, as I mentioned, we're watching all these policies very closely. So that's what Stuart is saying that these are some of these are behind our control, but we are watching them how we can really. make sure that we stay ahead of that.

Speaker Change: Yeah exactly.

Speaker Change: Yes.

Speaker Change: As I mentioned, we are watching the August policies very closely so thats, what Stuart is saying that the DS.

Speaker Change: These are some of these that are behind our control, but we are watching them, how we can really.

Speaker Change: Make sure that we are staying.

Speaker Change: Ahead of that.

Operator: Yeah, totally appreciate all the context. Thanks so much. Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. There are no further questions at this time.

Speaker Change: Yeah totally I appreciate all the context, thanks, so much.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.

Speaker Change: There are no further questions at this time at this point I'd like to turn the call back over to Stuart Rose for closing comments.

Stuart Rose: At this point, I'd like to turn the call back over to Stuart Rose for closing comments. Thank you. We had another great year. I think it was third best in our history and really a terrific year. We have great plants. We're in great areas of the country with our plants. We have great growth prospects, which Zafar outlined. But most importantly, we have, in my opinion, the best people in the industry, including our CEO. There's no one that knows the ethanol business, better than Zafar. Between Zafar and the people he's assembled and the rest of the team, that's what makes REX so much better, I believe, than the rest of the industry.

Speaker Change: Thank you.

Stuart Rose: We had another great year I think it was third best in our history and.

Stuart Rose: Really a terrific year, great. We have great plants, we have great. We're in great areas of the country with our plants, we have great growth prospects, which so far outline, but most importantly, we have in my opinion, the best people in the industry, including our CEO. There's no one that knows the ethanol business in my opinion better than so far.

Stuart Rose: And that in between so far and the people he's assembled in the rest of the team. That's what makes Rex so much so much better I believed in the rest of the industry.

Stuart Rose: And again, we thank you for listening and we'll talk to you when we have our first quarter conference call. Bye. Thank you.

Mike: And again, we thank you for listening and we'll talk to you when we have our first quarter conference call Mike. Thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Stuart Rose: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.

Stuart Rose: Yeah.

Stuart Rose: Okay.