Q2 2025 REX American Resources Corp Earnings Call

Speaker #2: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad.

Speaker #2: 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.

Speaker #2: You may begin.

Speaker #3: Good morning and thank you for joining REX American Resources’ Q2 2025 conference call. With me on our call today are Stuart Rose, REX Executive Chairman, and Zafar Rizvi, the REX Chief Executive Officer.

Doug Bruggeman: Good morning and thank you for joining REX American Resources' Quarter Two 2025 conference call. With me on our call today are Stuart Rose, REX Executive Chairman, and Zafar Rizvi, the REX Chief Executive Officer. We'll get to our presentation and comments momentarily, as well as your questions. 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 expectations.

Speaker #3: We'll get to our presentation and comments momentarily, as well as your questions. 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 risks and uncertainties, within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker #3: 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.

Speaker #3: 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: The risk 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. REX American Resources 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.

Speaker #3: REX American Resources 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.

Speaker #4: Good morning, and thank you to everyone for joining us today. During the second quarter, REX extended our success in our core ethanol production business, moved our one-earth energy expansion project forward, and saw supportive near-term tailwinds develop for our business as we head into the second half of the year.

Stuart Rose: Good morning and thank you to everyone for joining us today. During the second quarter, REX extended our success in our core ethanol production business, moved our One Earth Energy Expansion Project forward, and saw supportive near-term tailwinds develop for our business as we head to the second half of the year. Overall, REX exited the second quarter in a great position to continue delivering value to our shareholders. The passage of the One Big Beautiful Bill Act during the quarter was very supportive of our carbon capture and sequestration project. The continuation of the 45Q tax credit, extension of the 45C tax credit through 2029, important to the economics of our project, put us in a good position. We wait on approvals from the counties, state, and EPA. We are pleased with these developments and believe they set up REX for long-term success.

Speaker #4: Overall, REX exited the second quarter in a great position to continue delivering value to our shareholders. The passage of the One Big, Beautiful Bill Act during the quarter was very supportive of our carbon capture and sequestration project.

Speaker #4: The continuation of the 45Q tax credit extension of the 45Z tax credit through 2029 is important to the economics of our project, putting us in a good position.

Speaker #4: We wait on approvals from the counties, state, and EPA. We are pleased with these developments and believe they set up REX for long-term success.

Speaker #4: During the quarter, we maintained our strong balance sheet and continued to have ample cash to complete our several growth initiatives, as well as other opportunities that could arise.

Stuart Rose: During the quarter, we maintained our strong balance sheet and continue to have ample cash to complete our several growth initiatives, as well as other opportunities which could arise. These include any potential acquisition opportunities that meet our strict operational and financial criteria or additional future organic growth. This morning, we announced that our board of directors has authorized a two-for-one stock split that would be affected by a 100% stock dividend. Our stock recently traded at all-time highs. We saw this as an opportunity to reward our loyal shareholders and increase liquidity in our shares. The split will affect shareholders of record as of September 8, 2025. Overall, the REX team executed at a high level once again, delivering value to our shareholders and moving our business forward efficiently.

Speaker #4: These include any potential acquisition opportunities that meet our strict operational and financial criteria, as well as additional future organic growth. This morning, we announced that our Board of Directors has authorized the two-for-one stock split, which would be effected by a 100% stock dividend.

Speaker #4: Their stock recently traded at all-time highs. We saw this as an opportunity to reward our loyal shareholders and increase liquidity in our shares. The split will affect shareholders of record as of September 8, 2025.

Speaker #4: Overall, the REX team executed at a high level once again, delivering value to our shareholders and moving our business forward efficiently. We are very proud of the work the team does every day to ensure our company's success and drive value for shareholders.

Stuart Rose: We are very proud of the work the team does every day to ensure our company's success and drive value for shareholders. I'll now turn the call over to CEO Zafar Rizvi to provide updates on our ongoing projects.

Speaker #4: I'll now turn the call over to CEO Zafar Rizvi to provide updates on our ongoing projects.

Speaker #5: Thank you, Stuart. The One-Earth facility expansion is progressing steadily. The previously mentioned energy efficiency initiative has been completed, with a focus on optimizing the reduction of the expanded plant's carbon intensity.

Zafar Rizvi: Thank you, Stuart. The One Earth facility expansion is progressing steadily. The previously mentioned energy efficiency initiative has been completed with a focus on optimizing the reduction of the expanded plant's carbon intensity. Most of the previous expansion work is already complete. The initial capacity expansion, which will increase annual ethanol production capacity to 175 million gallons, is expected to be fully operational in 2026. Turning to carbon capture, the recently enacted Big Beautiful Bill Act has further strengthened the economics of REX's proposed carbon capture and sequestration project by preserving both the 45Q and 45Z tax credits. While we also extended 45Z through 2029, with this outcome, we are positioned to maximize the benefit from the tax credit program through expansion of our ethanol production capacity to 175 and then to 200 million gallons. The legislation also simplified 45Z requirements by removing mandates tied to climate-smart farming practices.

Speaker #5: Most of the previous expansion work is already complete. The initial capacity expansion, which will increase annual ethanol production capacity to 175 million gallons, is expected to be fully operational in 2026.

Speaker #5: Turning to carbon capture, the recently enacted Big Beautiful Bill act has further strengthened the economics of REX's proposed carbon capture and sequestration project by preserving both the 45Q and 45Z tax credits.

Speaker #5: While we also extended 45-Z through 2029, with this account coming, we are positioned to maximize the benefit from the tax credit program through the expansion of our ethanol production capacity to 175 million gallons and then to 200 million gallons.

Speaker #5: The legislation also simplified 45-Z requirements by removing mandates tied to climate-smart farming practices. Additionally, thanks to the legislation, clean fuels produced with feedstock sourced outside the U.S., Mexico, or Canada will not be eligible for the 45-Z credit pending final Treasury guidelines.

Zafar Rizvi: Also, thanks to the legislation, clean fuels produced with feedstock sources outside the US, Mexico, or Canada will not be eligible for the 45Z credit pending final Treasury guidelines. This supports our business as well as that of our farmers' partners. As of today, the EPA estimates that our Class 6 injection well permit application will be finalized in March 2026, which has been moved forward from April 2026 as per the EPA website. REX remains in active communication with the EPA on our application and will look forward to the final approval of this permit. As of the end of the second quarter, we have invested a total of approximately 126.7 million in carbon capture and ethanol expansion projects. We remain within our revised combined budget range of 220 million to 230 million for both projects.

Speaker #5: This supports our business, as well as that of our farmer partners. As of today, the EPA estimates that our Class 6 injection well permit application will be finalized in March 2026.

Speaker #5: Which has been moved forward from April 2026, as per the EPA website. REX remains in active communication with the EPA on our application and looks forward to the final approval of this permit.

Speaker #5: As of the end of the second quarter, we have invested a total of approximately $126.7 million in carbon capture and ethanol expansion projects. We remain within our revised combined budget range of $220 million to $230 million for both projects.

Speaker #5: I'll now hand the call over to Doug Bruggeman to discuss our financial results.

Zafar Rizvi: I'll now hand the call over to Doug Bruggeman to discuss our financial results.

Speaker #3: Thanks, Zafar. During the second quarter of fiscal 2025, our ethanol sales volumes reached 70.6 million gallons, compared to 65.1 million gallons in Q2 2024. The average selling price for ethanol was $1.75 per gallon during the quarter, versus $1.79 in the prior year.

Doug Bruggeman: Thanks, Zafar. During the second quarter of fiscal 2025, our ethanol sales volumes reached 70.6 million gallons compared to 65.1 million gallons Q2 2024. The average selling price for ethanol was $1.75 per gallon during the quarter versus $1.79 in the prior year. Dried distiller grain sales volumes were approximately 148,000 tons for Q2 with an average selling price of $143.63 per ton compared to approximately 133,000 tons and a price of $164.45 per ton in the prior year. Modified distillers' grain volumes totaled approximately 19,000 tons with an average selling price of $64.41 per ton. Corn oil sales volumes were approximately 23.1 million pounds during the quarter with an average selling price of $0.54 per pound.

Speaker #3: Dried distilled grain sales volumes were approximately 148,000 tons for Q2, with an average selling price of $143.63 per ton, compared to approximately 133,000 tons at a price of $164.45 per ton in the prior year.

Speaker #3: Modified distilled grain volumes totaled approximately 19,000 tons, with an average selling price of $64.41 per ton. Foreign oil sales volumes were approximately 23.1 million pounds during the quarter, with an average selling price of $0.54 per pound.

Speaker #3: Compared to the prior year, we sold approximately 14% more pounds in the second quarter and also experienced approximately a 26% increase in prices, which led to approximately a 46% increase in sales dollars.

Doug Bruggeman: Compared to the prior year, we sold approximately 14% more pounds in the second quarter and also experienced approximately a 26% increase in prices, which led to approximately a 46% increase in sales dollars. Gross profit for the second quarter was $14.3 million compared to $19.8 million in Q2 2024. This primarily reflects lower sales prices for dried distiller grains as the average price dropped from $164.45 to $143.63. We also paid higher shipping costs, which is recorded as cost of goods sold and impacts gross profit but does not impact sales. Selling general administrative expenses were approximately $6.2 million for the quarter compared to $6.4 million in Q2 2024. Interest and other income totaled $3.1 million for the quarter compared to $4.4 million in Q2 2024, reflecting lower rates and lower investments. Income before taxes and non-controlling interest was approximately $12.1 million compared to $19.5 million in Q2 2024.

Speaker #3: Gross profit for the second quarter was $14.3 million, compared to $19.8 million in Q2 2024. This primarily reflects lower sales prices for dried distilled grains, as the average price dropped from $164.45 to $143.63.

Speaker #3: We also paid higher shipping costs, which are recorded as cost of goods sold and impact gross profit but do not impact sales. Selling general and administrative expenses were approximately $6.2 million for the quarter, compared to $6.4 million in Q2 2024.

Speaker #3: Interest and other income totaled $3.1 million for the quarter, compared to $4.4 million in Q2 2024, reflecting lower rates and lower investments.

Speaker #3: Income before taxes and non-controlling interest was approximately 12.1 million dollars, compared to 19.5 million dollars in Q2 2024. Net income attributable to REX shareholders was 7.1 million dollars or 43 cents per diluted ed share, compared to 12.4 million dollars or 70 cents per diluted share in Q2 2024.

Doug Bruggeman: Net income attributable to REX shareholders was $7.1 million or $0.43 per diluted share compared to $12.4 million or $0.70 per diluted share in Q2 2024. We ended the first quarter with cash, cash equivalents, and short-term investments of $310.5 million. REX continues to maintain a strong financial position with no bank debt. I'll now turn things back to Zafar.

Speaker #3: We entered the first quarter with cash, cash equivalents, and short-term investments of $310.5 million. REX continues to maintain a strong financial position with no bank debt.

Speaker #3: I'll now turn things back to Zafar.

Speaker #5: Thanks, Doug. REX's strategy continued to be guided by the three Ps: Profit, Position, and Policy. Profit: our dedicated team has delivered 20 consecutive quarters of profitability.

Zafar Rizvi: Thanks, Doug. REX strategy continues to be guided by the three P's: profit, position, and policy. Profit, our dedicated team has delivered 20 consecutive quarters of the profitability, reflecting strength, discipline, and commitment. Our third quarter for 2025 is on pace to outperform the second quarter, but will not be as strong as our last year's third quarter, which was our second-best quarter on record. I'm particularly pleased with the increased yield of corn oil production, which reflects the consistent and efficient operation of the overall plants. This improvement demonstrates not only the effectiveness of our process but also the dedication of the team in maintaining a high standard of performance. Position, ethanol expansion, and carbon capture initiative remain moving forward and within budget, positioning REX for sustainable long-term organic growth.

Speaker #5: Reflecting strength, discipline, and commitment, our third quarter for 2025 is on pace to outperform the second quarter. However, it will not be as strong as last year's third quarter, which was our second-best quarter on record.

Speaker #5: I'm particularly pleased with the increased yield of corn oil production, which reflects the consistent and efficient operation of the overall plants. This improvement demonstrates not only the effectiveness of our process, but also the dedication of the team in maintaining high standards of performance.

Speaker #5: Position: The ethanol expansion and carbon capture initiative continue to move forward and remain within budget, positioning REX for sustainable long-term organic growth. Policy: The continuation of the 45-Q tax credit and the extension of the 45-Z tax credit through 2029, enhanced the economics of our operations and strengthened our future earning potential.

Zafar Rizvi: Policy, forwarding policies measure particularly the continuation of the 45Q tax credit and the extension of 45Z tax credit through 2029, enhancing the economics of our operation and strengthening future earning potential. Looking ahead, REX anticipates better performance in the third quarter of 2025 compared to the first two quarters of the year. Supported by favorable corn supply trends and steady demand, particularly from rising ethanol exports, exports are running about 10% ahead of 2024 levels through June, according to the Renewable Fuels Association. With 2024 already a record year, REX expects 2025 to set a new export record. As far as feedstock supply, early estimates also suggest the US corn crop is on track for a potential record harvest, which would further benefit REX. We believe this favorable market dynamic supports margin expansion through year-end with additional export upside once tariff-related trade issues are resolved.

Speaker #5: Looking ahead, REX anticipates better performance in the third quarter of 2025, compared to the first two quarters of the year. Supported by favorable corn supply trends and steady demand, particularly from rising ethanol exports, exports are running above 10% ahead of 2024 levels through June, according to the Renewable Fuels Association. With 2024 already a record year, REX expects 2025 to set a new export record.

Speaker #5: As far as feedstock supply, early estimates also suggest the U.S. corn crop is on track for a potential record harvest, which should further benefit REX.

Speaker #5: We believe these favorable market dynamics support margin expansion through year-end, with additional export upside once tariff-related trade issues are resolved. REX remains confident in the outlook for its core business, and we are committed to executing our growth strategy while continuing to deliver long-term value to our shareholders.

Zafar Rizvi: REX remains confident in the outlook for its core business, and we are committed to executing our growth strategy while continuing to deliver long-term value to our shareholders. Now, I would like to open things up for questions. Operator.

Speaker #5: Now I would like to open things up for questions. Operator?

Speaker #1: Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press *1 on your telephone keypad.

Conference Operator: Thank you. 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 queue. You may press star two 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 keys. One moment, please, while we poll for questions. Our first question comes from Peter Gastrite with Water Tower Research. Please proceed with your question.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press *2 if you'd like to remove your question from the queue.

Speaker #1: For 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.

Speaker #1: Our first question comes from Peter Gastry with Watertower Research. Please proceed with your question.

Speaker #6: Good morning, and thanks for taking my questions. For starters, congratulations on the results and another consecutive quarter of profitability. I've said it before, but that's something that's eluded pretty much all of your peers, so congratulations on that.

Peter Gastrite: Good morning, and thanks for taking my questions. For starters, congratulations on the results in another consecutive quarter of profitability. I've said it before, but that's something that's eluded pretty much all of your fears, so congratulations on that. It's also great to see the regulatory tailwinds that are coming through in your favor. Just a few questions from me. The first one is just regarding an event that you held this summer at your Rare Earth, or excuse me, at your Earth Energy Facility. It looks like it was very well attended with a couple hundred of people. Could you talk about who turned up for that event and any implications for your state and local support for your growth projects, particularly for CCF?

Speaker #6: It's also great to see the regulatory tailwinds that are coming through in your favor. Just a few questions for me. The first one is just regarding an event that you held this summer at your Aware Earth, or excuse me, your Earth Energy facility.

Speaker #6: Looks like it was very well attended, with a couple hundred people. Could you talk about who turned up for that event and any implications for your state and local support for your growth projects, particularly for CCS?

Speaker #4: I was at the event, so I guess I'll answer that. This is Stuart. The people that turned up were mostly local people, and it was the first time we did it at the One Earth facility.

Stuart Rose: I was at the event, so I guess I'll answer that. This is Stuart. The people that turned up were mostly local people, and it was the first time we did it at the One Earth Facility. And it was, again, we're doing our best to be a good citizen in the community, and almost all the local or many local officials turned up. Our many shareholders, we only own 75% of One Earth, so many shareholders turned up. A few government officials, statewide, a few government officials, our state representative, and things like that, people like that showed up. Overall, it was a big success. I think we accomplished what we were trying to do, which is to get some gratitude in our have some favor, have more favor in the local community.

Speaker #4: And it was, again, we're doing our best to be a good citizen in the community, and almost all the local, or many local, officials turned up, our many shareholders.

Speaker #4: We only owned 75% of One Earth, so many shareholders turned up, along with a few government officials. A few government officials are state representatives and things like that.

Speaker #4: People like that showed up. Overall, it was a big success. I think we accomplished what we were trying to do, which is to get some gratitude and have more favor in the local community. I think we're already a major citizen of Gibson City, but this just made us a little bit better.

Stuart Rose: I think we're already a major citizen of Gibson City, but this just made us a little bit better.

Speaker #6: Okay, thank you. Just in relation to the CCS component of the Earth Energy project, something that came up toward the end of last year was an issue with an interconnection from the local utility.

Peter Gastrite: Okay. Thank you. Just in relation to the CCF component of the Earth Energy Project, something that came up toward the end of last year was an issue with an interconnection from the local utility. I may have missed the update, but can I just confirm whether that was resolved?

Speaker #6: I may have missed the update, but can I just confirm whether that was resolved?

Speaker #4: Yes, that is resolved, and now we are able to get the utility directly from Ameren, and it's no problem anymore.

Zafar Rizvi: Yes, that is resolved, and now we are able to get the utility directly from Ameren, and it's no problem anymore.

Speaker #6: Okay, that's great. Thank you. So, you know, thanks for the, you know, update in terms of the, you know, ethanol margins it looks like we're, you know, in a better place today.

Peter Gastrite: Okay. That's great. Thank you. So, you know, thanks for the, you know, update in terms of the, you know, ethanol margins. It looks like we're, you know, in a better place today versus earlier this year. But, you know, going into the second half, it'd be great to hear your thoughts on the outlook for your co-products as well. Thank you.

Speaker #6: Versus earlier this year. But, you know, going into the second half, it'd be great to hear your thoughts on the outlook for your co-products as well.

Speaker #6: Thank you.

Speaker #4: As you know, I already mentioned that we believe our third quarter will be better than the second quarter, but it will not be as good as last year because last year was our second-best quarter.

Zafar Rizvi: As you know, I already mentioned that we believe that our third quarter will be better than the second quarter, but it will not be as good as last year because last year was our second-best quarter. But as we also see the bumper crops, not only in the South Dakota, but also pretty good crops in Illinois, particularly in McLean County, is the record corn this year in Illinois. And we see that will be very, very beneficial to both of our locations. And we also see bumper crops in Iowa, where we have minority shareholders, a company, Big River, which we own approximately 10%. So they have also the record crops this year. So we certainly see that there's going to be plenty of feedstock available. And also, as you know, the export is increasing of ethanol, and we are very pleased with that.

Speaker #4: But as we also see the bumper crops, not only in South Dakota but also pretty good crops in Illinois. Particularly in McLean County, there is record corn.

Speaker #4: This year in Illinois, we see that it will be very, very beneficial to both of our locations. We also anticipate a bumper crop in Iowa, where we have minority shareholders in the company Big River, of which we own approximately 10%.

Speaker #4: So, they have also the record crops this year. We certainly see that there's going to be plenty of feedstock available. Also, as you know, the export of ethanol is increasing, and we are very pleased with that.

Speaker #4: And not only is Britain planning to buy ethanol from the U.S., but Japan is also planning to buy this year, also due to the tariff negotiation.

Zafar Rizvi: And not only Britain is buying, planning to buy ethanol from the US, but also Japan also plans to buy this year, also due to the tariff negotiation. So we certainly see that if this continues, we will be really in pretty good shape in our core business.

Speaker #4: So we certainly see that if this continues, we will be in pretty good shape in our core business.

Speaker #6: In terms of the byproduct,

Stuart Rose: In terms of the byproducts, in terms of the corn oil continues to be very strong. DDG is a little weak relative to corn prices. And with the bumper crop, I don't know if that's going to continue or not, but DDG has not been as strong relative to corn prices as it has in the past. Hopefully, that'll turn around.

Speaker #4: In terms of the byproducts, corn oil continues to be very strong. DDG is a little weak relative to corn prices. And with the bumper crop, I don't know if that's going to continue or not, but DDG has not been as strong relative to corn prices as it has been in the past.

Speaker #4: Hopefully, that'll turn around. Yeah, I think that's correct, Stuart, because I think the export of DDG has dropped compared to last year. So that's one of the things we can see; even Mexico is buying less than last year.

Zafar Rizvi: Yeah, I think that's what I thought because I think the export of DDG has dropped compared to last year. So that's the one of the things which we can see. Even Mexico is buying less than last year. So the first six months, so that certainly is some concern.

Speaker #4: So, the first six months, that’s certainly some concern.

Speaker #6: Okay, that's great. Thank you very much. Congratulations again, and I'll get back in the queue.

Peter Gastrite: Okay. That's great. Thank you very much. Congratulations again, and I'll get back in the queue.

Speaker #1: Our next question comes from Jared Edeline with the South Dakota Investment Office. Please proceed with your question.

Conference Operator: Our next question comes from Jared Edeline with South Dakota Investment Office. Please proceed with your question.

Speaker #7: Hey guys, thanks very much for the opportunity to ask a question, and great quarter. I just wanted to see if you could comment on the overall CI score of your two main plants, given the change in the recent legislation relating to 45-Z, and if you would qualify for any credits without a carbon pipeline?

Jared Edeline: Hey, guys. Thanks very much for the opportunity to ask a question and great quarter. I just wanted to see if you could comment on the overall CI score of your two main plants, given the change in the recent legislation related to 45Z, and if you would qualify for any credits without a carbon pipeline.

Speaker #4: Stuart, do we want to take that?

Zafar Rizvi: Stuart, do you want me to take that?

Speaker #2: Oh, yeah, I wanted to take it, Zafar.

Jared Edeline: Yeah, why don't you take it, Zafar?

Speaker #4: Yeah, I think we have not really compared to a few other companies that have declared their CI score. As you know, there is no clear guideline at this time.

Zafar Rizvi: Yeah, I think we have not really, compared to other few companies that have declared their CI score, as you know, there is no clear guideline at this time. So that's the one of the reasons we have not really discussed publicly what exactly is our CI score at this time until we have a clear guideline that what will be our CI score. But we're certainly very happy to see that smart farming is no longer part of the part of the calculation, and that will give us four to four to six points, and that could could help us to really be able to go below 50 or close to that number where we will be able to get some CI score reduction without CI score and will be beneficial to us.

Speaker #4: So that's one of the reasons we have not really discussed publicly what exactly our CI score is at this time, until we have clear guidelines that will define what our CI score will be.

Speaker #4: But we certainly are very happy to see that Smart Farming is no longer part of the part of the calculation and that will give us four to four to six points and that could help us to really be able to go below 50s 50 or close to that number where we will be able to get some CI score reduction without CI score and will be beneficial to us.

Speaker #2: Also, as part of the One Earth as part of the One Earth project, one we also are doing things to make our to make our plant enter more energy efficient, which will which should help our CI score and there's a chance even without carbon capture but like Zafar said, we can't get we don't know the guidelines, so we're not going to say that it's going to happen.

Stuart Rose: Also, as part of the One Earth project, we also are doing things to make our plant more energy efficient, which should help our CI score. And there's a chance, even without carbon capture, but like Zafar said, we can't get, we don't know the guidelines, so we're not going to say that it's going to happen. But there's a chance we could get some some tax credits even without carbon capture, even before a carbon capture project is ready to go. But we are not, we don't feel we're in a position to say anything about that right now.

Speaker #2: But there's a chance we could get some tax credits even without carbon capture, even before the carbon capture project is ready to go. However, we don't feel we're in a position to say anything about that right now.

Speaker #4: Excellent, thank you.

Jared Edeline: Excellent. Thank you. And given the Illinois moratorium on carbon pipelines, which appears to expire in July of next year, if your Class 6 well is approved, would you believe that you'd be able to build that soon after that expiration?

Speaker #6: And given the Illinois moratorium on carbon pipelines, which appears to expire in July of next year, if your Class 6 well is approved, would you believe that you'd be able to build that soon after that expiration?

Speaker #4: That's what our goal is, but as you know, we still have, after we get that approved, we plan to obtain a special use permit from the local county, and then we also have to have an IEPA permit.

Zafar Rizvi: That's what our goal is. But as you know, we still have, after that's approved, we plan to get from the local county special use permit, and then we also have to have IEPA permit. And we have discussion with the Illinois EPA, and we also have a discussion with the ICC, Illinois Commerce Commission. They are also working on legislations or the guideline, whichever they want to have, which would follow that. So we certainly, if those guidelines are issued and all those approvals are received, then we certainly will be able to operate in 2026. But naturally, this depends on all of those permits once we receive those.

Speaker #4: And we have discussions with the Illinois EPA, and we also have discussions with the ICC (Illinois Commerce Commission). They are also working on legislation or the guidelines, whichever they want to implement, to which we would follow.

Speaker #4: So we certainly, if those guidelines are issued and all those approvals are received, then we certainly will be able to operate in 2026. But naturally, this depends on all of those permits once we receive those.

Speaker #6: Excellent. And my final question, just related to the short distance that the pipeline is, what's the build time, once approvals come, to first carbon injection?

Jared Edeline: Excellent. And my final question, just related to the short distance that the pipeline is, what's the build time once approvals come to first carbon injection?

Speaker #4: I think once we receive we have to apply it's less than six and a half miles pipeline. The owner's answer is we that pipeline the reason because we from the very beginning we wanted to make sure that we are away from aquifier.

Zafar Rizvi: I think once we receive, we have to apply, it's a less than six and a half miles pipeline. The honest answer is we have built that pipeline. The reason is because we, from the very beginning, we wanted to make sure that we are away from aquifer. Otherwise, we can have built that well right next to our ethanol facility, but we decided we want to be away from the aquifer, so that way, in the future, there is no concern about the drinking water. And that's what exactly happened later on. The legislation was issued that there should not be any over or under that carbon sequestration where the aquifer is. So we are six and a half miles away from aquifer, and that's what the that. So it depends how quickly we can get permission from ICC.

Speaker #4: Otherwise, we could have built that well right next to our ethanol facility, but we decided we wanted to be away from the aquifer so that, in the future, there is no concern about the drinking water.

Speaker #4: And that's exactly what happened later on. The legislation was issued that there should not be any over or under carbon sequestration where the aquifer is.

Speaker #4: So we are six and a half miles away from the aquifer, and that's what that is. It depends on how quickly we can get permission from the ICC. Once we receive the permission from the ICC, that takes about a couple of months to build the pipeline.

Zafar Rizvi: Once we receive the permission from ICC, that takes about a couple of months to build the pipeline.

Speaker #6: Great. Thanks so much, guys.

Jared Edeline: Great. Thanks so much, guys.

Speaker #2: Thank you.

Zafar Rizvi: Thank you.

Speaker #1: We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Stuart Rose for closing comments.

Conference Operator: We have reached the end of the question and answer session. I'd now like to turn the call back over to Stuart Rose for closing comments.

Speaker #2: I'd like to thank everyone for listening. Again, we outperformed most in the industry this quarter, and we currently expect an even better quarter next quarter.

Stuart Rose: I'd like to thank everyone for listening. Again, we outperformed most in the industry this quarter, and we currently expect an even better quarter next quarter. It's all due to having great locations for our plants, great plants, most importantly, the top people in the industry. And that goes from our CEO all the way to all the teams in our plants. And that's really what makes us special and what makes us outperform the industry quarter after quarter. We look forward to talking to everyone after the end of our next quarter, and thank you again for listening.

Speaker #2: It's all due to having great locations for our plants, great plants, and, most importantly, the top people in the industry. That goes from our CEO all the way to all the teams in our plants.

Speaker #2: And that's really what makes us special and what makes us outperform the industry quarter after quarter. We look forward to talking to everyone after the end of our next quarter, and thank you again for listening.

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