Q3 2025 REX American Resources Corp Earnings Call

December 4, 2025

Speaker #1: Good morning and welcome to the REX American Resources Q3, 2025 conference call. As a reminder, today's call is being recorded and at this time, all participants are on a listen-only mode.

Operator: Good morning and welcome to the REX American Resources Q4, 2025 conference call. As a reminder, today's call is being recorded, and at this time, all participants are on a listen-only mode. A brief question-and-answer session will follow the formal presentation. I would now like to turn the call over to your host, Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Operator: [inaudible] Good morning and welcome to the REX American Resources Q4, 2025 conference call. As a reminder, today's call is being recorded, and at this time, all participants are on a listen-only mode. A brief question-and-answer session will follow the formal presentation. I would now like to turn the call over to your host, Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Speaker #1: A brief question and answer session will follow the formal the call over to your host, Mr. Doug presentation. I would now like to turn Bruggeman, Chief Financial Officer of REX American.

Speaker #1: Please go

Speaker #1: Please go ahead. Good morning and thank you for joining the REX

Doug Bruggeman: Good morning, and thank you for joining the REX American Resources Q3 2025 conference call. With me on our call today are Stuart Rose, REX Executive Chairman, and Zafar Rizvi, 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. 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.

Douglas Bruggeman: Good morning, and thank you for joining the REX American Resources Q3 2025 conference call. With me on our call today are Stuart Rose, REX Executive Chairman, and Zafar Rizvi, 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.

Speaker #2: American Resources Q3, 2025 conference call. With me on our call today are Stuart Rose, REX Executive Chairman, and Zafar Rizvi, REX Chief Executive Officer.

Speaker #2: 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.

Speaker #2: 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.

Douglas Bruggeman: 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 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. 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 #2: 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 their company's reports on Form 10-K and 10-Q.

Speaker #2: 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.

Doug Bruggeman: 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: Good morning and thank you again to everyone for joining us. During the third quarter of 2025, REX American Resources continued to demonstrate the strength and operational expertise that is defined our company for over four decades.

Stuart Rose: Good morning, and thank you again to everyone for joining us. During the Q3 of 2025, REX American Resources continued to demonstrate the strength and operational expertise that has defined our company for over four decades. I'm pleased to report that we are making progress on operational milestones we set out to accomplish and continue to position REX for sustained long-term growth. Our Q3 results reflect our focus on solidifying our core business of ethanol production. Our strong results during the quarter benefited from supportive ethanol industry dynamics, especially export volumes and strong crush spreads. Our One Earth Energy facility expansion to 200 million gallons per year is continuing and is on track for completion in 2026. This expansion will significantly enhance our production capabilities and operational efficiency, contributing meaningfully to future performance.

Speaker #3: I'm pleased to report that we are making progress on operational milestones we set out to accomplish and continue to position REX for sustained long-term growth.

Speaker #3: Our third quarter results reflect our focus on solidifying our core business of ethanol production. Our strong results during the quarter benefited from supportive ethanol industry dynamics, especially export volumes and strong crush spreads.

Our One Earth Energy facility expansion to 200 million gallons per year is continuing and is on track for completion in 2026. This expansion will significantly enhance our production capabilities and operational efficiency, contributing meaningfully to future performance. Additionally, we have begun examining potential benefits we can derive in the near term from 45Z tax credits. We are actively engaged with groups to assess our operations and assign a carbon intensity score to our production operations, which we expect to be below the threshold to begin earning credits.

Speaker #3: Our one-earth energy facility expansion to 200 million gallons per year is continuing and is on track for completion in 2026. This expansion will significantly enhance our production capabilities and operational efficiency, contributing meaningfully to future performance.

Speaker #3: Additionally, we have begun examining potential benefits we can derive in the near term from 45-Z tax credits. We are actively engaged with groups to assess our operations and assign a carbon intensity score to our production operations.

Stuart Rose: Additionally, we have begun examining potential benefits we can derive in the near term from 45Z tax credits. We are actively engaged with groups to assess our operations and assign a carbon intensity score to our production operations, which we expect to be below the threshold to begin earning credits. Q3 demonstrated once again that REX's focus on operational excellence, strategic investments, and disciplined capital allocation continues to deliver superior results. Our net income per share of $0.71 represents strong performance, reflecting our team's exceptional execution in managing input costs and timely execution, leading to strong margins. Our continuing strong financial results have allowed us to maintain our strong balance sheet, including approximately $335 million in cash, cash equivalents, and short-term investments.

Speaker #3: Which we expect to be below the threshold to begin earning credits. The third quarter demonstrated once again that REX's focus on operational excellence, strategic investments, and disciplined capital allocation continues to deliver superior results.

Q3 demonstrated once again that REX's focus on operational excellence, strategic investments, and disciplined capital allocation continues to deliver superior results. Our net income per share of $0.71 represents strong performance, reflecting our team's exceptional execution in managing input costs and timely execution, leading to strong margins. Our continuing strong financial results have allowed us to maintain our strong balance sheet, including approximately $335 million in cash, cash equivalents, and short-term investments.

Speaker #3: Our net income per share of 71 cents represents strong performance reflecting our team's exceptional execution in managing input costs and timely execution leading to strong margins.

Speaker #3: Our continuing strong finance results have allowed us to maintain our strong balance sheet, including approximately 335 million in cash, cash equivalents, and short-term investments.

Speaker #3: Even after the two-day spend of approximately 156 million, our capital projects for plan expansion and carbon capture of one-earth energy. As we have consistently emphasized, our success stems from having great facilities, corn belt locations, and most importantly, we feel the most skilled and dedicated team in the industry.

Stuart Rose: Even after the to-date spend of approximately $156 million on our capital projects for plant expansion and carbon capture of One Earth Energy, as we have consistently emphasized, our success stems from having great facilities, Corn Belt locations, and most importantly, we feel the most skilled and dedicated team in the industry. Their attention to detail and market awareness continues to set REX apart from our competitors. I want to thank our entire team for their outstanding efforts this quarter and their unwavering commitment to excellence. Now I turn the call over to our CEO, Zafar Rizvi, to discuss our operational achievements and strategic initiatives in greater detail.

Even after the to-date spend of approximately $156 million on our capital projects for plant expansion and carbon capture of One Earth Energy, as we have consistently emphasized, our success stems from having great facilities, Corn Belt locations, and most importantly, we feel the most skilled and dedicated team in the industry. Their attention to detail and market awareness continues to set REX apart from our competitors. I want to thank our entire team for their outstanding efforts this quarter and their unwavering commitment to excellence. Now I turn the call over to our CEO, Zafar Rizvi, to discuss our operational achievements and strategic initiatives in greater detail.

Speaker #3: Your attention to detail and market awareness continues to set REX apart from our competitors. I want to thank our entire team for their outstanding efforts this quarter and their unwavering commitment to excellence.

Speaker #3: Now I turn the call over to our CEO, Zafar Rizvi, to discuss our operational achievements and strategic initiatives in greater detail.

Speaker #2: Thank you, Stuart. The expansion of ethanol production at the one-earth facility continues to progress steadily, and remains on track for completion and in operation in 2026.

Zafar Rizvi: Thank you, Stuart. The expansion of ethanol production at the One Earth facility continues to progress steadily and remains on track for completion and in operation in 2026. Alongside this project, we are advancing our evaluation of our carbon intensity score and expect favorable outcomes as we incorporate assessment from multiple independent experts. Regarding the near-term benefits available under the 45Z program, we continue to position the company to capitalize on these opportunities while we wait for final guidance from the Treasury Department. For our carbon capture and sequestration initiative, the EPA currently estimates that our Class VI injection well permit application will be finalized in June 2026. REX remains in active, constructive communication with the EPA throughout this process. As of the end of Q3, we have invested approximately $155.8 million in our carbon capture and ethanol expansion projects.

Speaker #2: Alongside this project, we are advancing our valuation of our carbon intensity score and expect favorable outcomes as we incorporate assessment from multiple independent experts.

Speaker #2: Regarding the near-term benefits available under the 45-Z program, we continue to position the company to capitalize on these opportunities while we wait final guidance from the Treasury Department.

Zafar Rizvi: For our carbon capture and sequestration initiative, the EPA currently estimates that our Class VI injection well permit application will be finalized in June 2026. REX remains in active, constructive communication with the EPA throughout this process. As of the end of Q3, we have invested approximately $155.8 million in our carbon capture and ethanol expansion projects. We remain within our revised combined budget range of $220 million to 230 million for both initiatives. I will now turn the call over to Doug Bruggeman to review our financial results. Doug?

Speaker #2: For our carbon capture and sequestration initiative, the EPA currently estimates that our Class 6 injection well permit application will be finalized in June 2026.

Speaker #2: REX remains in active constructive communication with the EPA throughout this process. As of the end of the third quarter, we have invested approximately $155.8 million in our carbon capture and ethanol expansion projects.

Speaker #2: We remain within our revised combined budget range of $220 million to $230 million for both initiatives. I will now turn the call over to Douglas Bruggeman to review our financial results.

Zafar Rizvi: We remain within our revised combined budget range of $220 million to 230 million for both initiatives. I will now turn the call over to Doug Bruggeman to review our financial results. Doug?

Speaker #2: Doug.

Speaker #4: Thanks, Zafar. During the third quarter of fiscal 2025, our ethanol sales volumes reached $78.4 million gallons compared to $75.5 million gallons Q3 2024. The average selling price for ethanol was $1.73 per gallon during the quarter, versus $1.83 in the prior year.

Doug Bruggeman: Thanks, Zafar. During Q3 of fiscal 2025, our ethanol sales volumes reached $78.4 million compared to $75.5 million Q3 2024. The average selling price for ethanol was $1.73 per gallon during the quarter versus $1.83 in the prior year. Dried distillers grains sales volumes were approximately 160,000 tons for Q3, with an average selling price of $139.93 per ton compared to 170,000 tons and $147.14 per ton in the prior year. Modified distillers grains volumes totaled approximately 21,000 tons, with an average selling price of $57.03 per ton. Corn oil sales volumes were approximately 27.4 million pounds during the quarter, with an average selling price of $0.60 per pound. This volume was up from the prior year's sales by approximately 17% and an increase in average selling price of approximately 36%, leading to an approximately 60% increase in sales revenue for corn oil.

Douglas Bruggeman: Thanks, Zafar. During Q3 of fiscal 2025, our ethanol sales volumes reached $78.4 million compared to $75.5 million Q3 2024. The average selling price for ethanol was $1.73 per gallon during the quarter versus $1.83 in the prior year. Dried distillers grains sales volumes were approximately 160,000 tons for Q3, with an average selling price of $139.93 per ton compared to 170,000 tons and $147.14 per ton in the prior year. Modified distillers grains volumes totaled approximately 21,000 tons, with an average selling price of $57.03 per ton. Corn oil sales volumes were approximately 27.4 million pounds during the quarter, with an average selling price of $0.60 per pound.

Speaker #4: Dried distillers grain sales volumes were approximately $160,000 tons for Q3, with an average selling price of $139.93 per ton compared to $170,000 tons and $147.14 per ton in the prior year.

Speaker #4: Modified distiller grain volumes totaled approximately 21,000 tons, with an average selling price of $57.03 per ton. Corn oil sales volumes were approximately 27.4 million pounds during the quarter, with an average selling price of $0.60 per pound.

This volume was up from the prior year's sales by approximately 17% and an increase in average selling price of approximately 36%, leading to an approximately 60% increase in sales revenue for corn oil. Gross profit for Q3 was $36.1 million compared to $39.7 million in Q3 2024. This primarily reflects lower prices for ethanol and distillers grains. SG&A expenses were approximately $8.2 million for the quarter compared to $8.4 million in Q3 2024. Interest and other income totaled $3.2 million for the quarter compared to $4.6 million in Q3 2024, reflecting lower rates and lower investments.

Speaker #4: This volume was up from the prior year's sales by approximately 17%, along with an increase in average selling price of approximately $0.36. This led to an approximately 60% increase in sales revenue for corn oil.

Speaker #4: Gross profit for the third quarter was $36.1 million, compared to $39.7 million in Q3 2024. This primarily reflects lower prices for ethanol and distiller grains.

Doug Bruggeman: Gross profit for Q3 was $36.1 million compared to $39.7 million in Q3 2024. This primarily reflects lower prices for ethanol and distillers grains. SG&A expenses were approximately $8.2 million for the quarter compared to $8.4 million in Q3 2024. Interest and other income totaled $3.2 million for the quarter compared to $4.6 million in Q3 2024, reflecting lower rates and lower investments. Income before taxes and non-controlling interest was approximately $35.5 million compared to $39.5 million in Q3 2024. Net income attributable to REX shareholders was $23.4 million or $0.71 per diluted share compared to $24.5 million or $0.69 per diluted share in Q3 2024. We ended Q3 with cash, cash equivalents, and short-term investments of $335.5 million. REX continues to maintain its strong financial position with no bank debt. I'll now turn things back over to Zafar.

Speaker #4: SG&A expenses were approximately $8.2 million for the quarter, compared to $8.4 million in Q3 2024. Interest and other income totaled $3.2 million for the quarter, compared to $4.6 million in Q3 2024, reflecting lower rates and lower investments.

Income before taxes and non-controlling interest was approximately $35.5 million compared to $39.5 million in Q3 2024. Net income attributable to REX shareholders was $23.4 million or $0.71 per diluted share compared to $24.5 million or $0.69 per diluted share in Q3 2024. We ended Q3 with cash, cash equivalents, and short-term investments of $335.5 million. REX continues to maintain its strong financial position with no bank debt. I'll now turn things back over to Zafar.

Speaker #4: Income before taxes and non-controlling interest was approximately $35.5 million compared to $39.5 million in Q3 2024. Net income attributable to REX shareholders was $23.4 million or 71 cents per diluted share, compared to $24.5 million or 69 cents per diluted share in Q3 2024.

Speaker #4: We ended the third quarter with cash, cash equivalents, and short-term investments of $335.5 million. REX continues to maintain its strong financial position with no bank debt.

Speaker #4: I now turn things back over to Zafar.

Speaker #2: Thanks, Doug. Our three-piece profit position.

Zafar Rizvi: Thanks, Doug. Our three Ps, profit, position, and policy, continue to guide our strategy and execution. This was evident throughout Q3. Profit: We have now delivered 21 consecutive quarters of profitability, reflecting the hard work, discipline, and operational excellence demonstrated by our team every day. Position: We believe we are strategically positioning the company for long-term organic growth, reduced carbon intensity, and enhanced value creation. Advancing our carbon sequestration project and core ethanol business will further strengthen our competitive position heading into 2026 and beyond. We also continued active engagement with the EPA regarding our Class VI well permit application. Policy: We are leveraging the near-term opportunities provided by the 45Z tax credit program to enhance earnings. We expect these benefits to increase as our ethanol production expansion and carbon sequestration facilities come online and additional gallons qualify under the program. Q3 was exceptionally strong across all key performance measures.

Speaker #1: of profit . We have now A lot delivered 21 consecutive quarters of profitability , reflecting the hard work . Discipline and operational excellence demonstrated by our team every day .

Speaker #1: Position . We believe we are strategically positioning the company for long term organic growth . Reduced intensity carbon and value enhanced creation . Advancing our carbon sequestration project and corps ethanol business further will strengthen our competitive position heading into 2026 and beyond .

Speaker #1: We also continued active engagement with the EPA regarding our Class 6 well permit application policy. We leveraged the near-term opportunities for wider acceptance of the 45Z tax credit program to enhance earnings.

We also continued active engagement with the EPA regarding our Class VI well permit application. Policy: We are leveraging the near-term opportunities provided by the 45Z tax credit program to enhance earnings. We expect these benefits to increase as our ethanol production expansion and carbon sequestration facilities come online and additional gallons qualify under the program. Q3 was exceptionally strong across all key performance measures. Our core ethanol business benefited significantly from sustained robust export demand and reliable corn supplies.

Speaker #1: We expect these benefits to increase as our ethanol production expansion and carbon sequestration facilities come online, and additional gallons qualify under the program in the third quarter.

Speaker #1: was exceptionally strong across all key performance measures . Our core ethanol business benefited significantly from sustained , robust export demand and reliable corn supplies .

Zafar Rizvi: Our core ethanol business benefited significantly from sustained robust export demand and reliable corn supplies. Last quarter, US ethanol exports were running approximately 10% ahead of the 2024 pace. By August, the momentum had strengthened, with exports 14% higher than the first eight months of 2024, according to the Renewable Fuel Association. We continue to expect 2025 to set a new record for US ethanol exports. Looking ahead, the USDA projects that corn production in South Dakota and Illinois for the 2025-2026 harvest season will be among the highest results in recent years. This will continue to favor our business, driving lower input prices. We are excited about the opportunities ahead as we close out the year and prepare for a successful 2026. We expect Q4 to generate a higher net profit than last year's profitable Q4.

Speaker #1: Last quarter, U.S. ethanol exports were running approximately 10% ahead of the 2024 pace. By August, the momentum had strengthened, with exports 14% higher than the first eight months of 2020.

Last quarter, US ethanol exports were running approximately 10% ahead of the 2024 pace. By August, the momentum had strengthened, with exports 14% higher than the first eight months of 2024, according to the Renewable Fuel Association. We continue to expect 2025 to set a new record for US ethanol exports. Looking ahead, the USDA projects that corn production in South Dakota and Illinois for the 2025-2026 harvest season will be among the highest results in recent years. This will continue to favor our business, driving lower input prices. We are excited about the opportunities ahead as we close out the year and prepare for a successful 2026.

Speaker #1: For according to the Renewable Fuel Association , we continue to expect 2025 to set a new record for US ethanol exports . Looking ahead , the USDA project that production in South Dakota and Illinois for the 2025 to 2026 harvest season will be among the highest result in recent years .

Speaker #1: will This continue to favor our business , driving lower input prices . We are excited about the opportunities ahead as we close out the year and prepare for successful 2026 .

Speaker #1: We expect the fourth quarter to generate a higher net profit than last year's profitable fourth quarter . As we move into 2026 , our strong balance sheet .

We expect Q4 to generate a higher net profit than last year's profitable Q4. As we move into 2026, our strong balance sheet, no debt, and expanding business opportunities position us well for another year of growth and improved performance. Now I would like to open things up for questions. Operator.

Speaker #1: Note that expanding business opportunities position us well for another year of growth and improved performance. Now, I would like to open things up for questions.

Zafar Rizvi: As we move into 2026, our strong balance sheet, no debt, and expanding business opportunities position us well for another year of growth and improved performance. Now I would like to open things up for questions. Operator.

Speaker #1: Operator .

Speaker #2: 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 .

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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. 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 keys. One moment, please, while we poll for questions. Our first question comes from Chris Degner with Water Tower Research. Please proceed with your question.

Speaker #2: 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 .

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please.

Speaker #2: While we poll for questions . Our first question comes from Chris Degner with Water Tower Research . Please proceed with your question .

Speaker #3: Hi. Good morning, and thanks for your time. It looks like a great quarter. I have a couple of questions for you and am kind of curious about your thoughts on key hurdles and timing as you look forward to the 45 tax credit program.

Chris Degner: Hi, good morning, and thanks for your time. It looks like a great quarter. I just wanted a couple of questions for you and kind of curious on your thoughts on key hurdles and timing as you look forward to the 45Z tax credit program. If you can give us any incremental color on when we can expect some more updates on that.

Christopher Degner: Hi, good morning, and thanks for your time. It looks like a great quarter. I just wanted a couple of questions for you and kind of curious on your thoughts on key hurdles and timing as you look forward to the 45Z tax credit program. If you can give us any incremental color on when we can expect some more updates on that.

Speaker #3: And if you can give us any incremental color on when we can expect some more updates on that.

Speaker #4: Front .

Speaker #1: Yes , Chris . As you know , the Treasury has not issued a guideline so far . We certainly waiting for the guideline then also , there is a requirement for the prevailing wages and all those information calculation CI , ci score .

Zafar Rizvi: Zafar? Yes, Chris. As you know, the Treasury has not issued a guideline so far. We're certainly waiting for the guideline. Then also, there is a requirement for the prevailing wages and all those information calculations of CI score. We just wanted to make sure we have all the facts together, and we are reviewing these facts with different experts. And once we have all those numbers back, we will be able to, next quarter, hopefully, we will be able to explain how much tax credit we will be receiving. But at this time, we are not willing to really give any numbers.

Stuart Rose: Zafar?

Zafar Rizvi: Yes, Chris. As you know, the Treasury has not issued a guideline so far. We're certainly waiting for the guideline. Then also, there is a requirement for the prevailing wages and all those information calculations of CI score. We just wanted to make sure we have all the facts together, and we are reviewing these facts with different experts. And once we have all those numbers back, we will be able to, next quarter, hopefully, we will be able to explain how much tax credit we will be receiving. But at this time, we are not willing to really give any numbers.

Speaker #1: We just want to make sure we have all the facts together . And we are reviewing these facts with different experts . And once we have all those numbers back , we will be able to , you know , next quarter , hopefully we will be able to able to explain that how much tax credit we will be receiving .

Speaker #1: But at this time , we are not willing to really give any numbers .

Speaker #3: Sure .

Speaker #5: Okay .

Speaker #3: Thanks . And then if you step back and think about some of the fundamentals of the industry , like it's I'd be curious .

Chris Degner: Sure. Okay. Thanks. And then if you step back and think about some of the fundamentals of the industry, I'd be curious your view on the impact of tariffs and then crush spreads as you look forward into 2026. I know it's hard to forecast, but just curious on your view.

Christopher Degner: Sure. Okay. Thanks. And then if you step back and think about some of the fundamentals of the industry, I'd be curious your view on the impact of tariffs and then crush spreads as you look forward into 2026. I know it's hard to forecast, but just curious on your view.

Speaker #3: Like your your view on like the impact of tariffs and then , you know , crack spreads as you , as you look forward into 2026 .

Speaker #3: I know it's hard to forecast , but just curious if curious on your view .

Speaker #1: I think the tariff is in the beginning . Certainly if there's a huge impact , because we were concerned about Mexico and Canada export , you know , Mexico is the largest importer of DDG and Canada is the largest importer of ethanol .

Zafar Rizvi: I think the tariff in the beginning certainly was a huge impact because we were concerned about Mexico and Canada export. Mexico is the largest importer of DDG, and Canada is the largest importer of ethanol. So hopefully, those relations stay the same. I think that will be great. But certainly, on the other side, we can see that Europe and several other countries are beginning to buy ethanol due to pressure from the tariff, our negotiation, and others. So that's why we can see that ethanol certainly has January to August is approximately $1.4 billion compared to last year, $1.2 billion. So certainly, there is a great, positive impact on export of ethanol at this time. But on the other hand, I think we see some of those soybeans are not soybean or soybean oils are not shipped abroad, or China is not buying.

Speaker #1: So hopefully relations those stay the same . I think that will be great . And but certainly on the other side , we can see that Europe and several other countries are beginning to buy ethanol due to pressure from the tariff on and others .

Speaker #1: So that's why we can see that ethanol certainly has January to August is approximately 1.4 billion compared to last year , 1.2 billion .

Speaker #1: So certainly certainly there is great impact , positive impact on export of ethanol at this time . But on the other hand , I think we see of some some those soybeans are not soybean or soybean oils are not shipped or abroad China is not buying .

So certainly, there is a great, positive impact on export of ethanol at this time. But on the other hand, I think we see some of those soybeans are not soybean or soybean oils are not shipped abroad, or China is not buying. There is some impact on the corn oil prices, which has dropped a little bit. There is some concern about the DDG export.

Speaker #1: There is some impact on the corn oil prices , which has dropped a little bit . And also there is some concern about the DDG export .

Zafar Rizvi: There is some impact on the corn oil prices, which has dropped a little bit. There is some concern about the DDG export. Those are the weak side, but we certainly are very happy to see that ethanol export is increasing, and we believe that will continue to increase in 2026. We are very pleased with, as you know, the corn production in Illinois and South Dakota. That seems to be all-time high, and we believe that will be a positive impact on our cost of production moving forward.

Speaker #1: So those are the weak side . But we certainly is very happy to see that ethanol export is increasing . And we believe that will continue to increase in 2026 .

Those are the weak side, but we certainly are very happy to see that ethanol export is increasing, and we believe that will continue to increase in 2026. We are very pleased with, as you know, the corn production in Illinois and South Dakota. That seems to be all-time high, and we believe that will be a positive impact on our cost of production moving forward.

Speaker #1: And also we are very pleased with the , you know , the corn production in Illinois and South Dakota is that seems to be all time high .

Speaker #1: And we believe that there will be a positive impact on our cost of production moving forward.

Speaker #3: We do . My family has a farmer in Iowa , and it's been a good year . So it's thank you for that .

Speaker #3: Do you think like the carbon sequestration project that you're looking at like how's like the permitting process going with the with the pipeline and like , is there I don't want to put you on the spot , but is there any like key hurdles that that you can that are had that you could see through with the Illinois state government ?

Chris Degner: We do. My family has a farm in Iowa, and it's been a good year. So thank you for that. As you think through the carbon sequestration project that you're looking at, how's the permitting process going with the pipeline? And I don't want to put you on the spot, but are there any key hurdles that are ahead that you could see through with the Illinois state government?

Christopher Degner: We do. My family has a farm in Iowa, and it's been a good year. So thank you for that. As you think through the carbon sequestration project that you're looking at, how's the permitting process going with the pipeline? And I don't want to put you on the spot, but are there any key hurdles that are ahead that you could see through with the Illinois state government?

Speaker #1: I think the basically , as you know , there was moratorium through July 1st . Yeah , pipeline . And but we understand it IC Illinois Commerce Commission is working on a pipelines of those requirements and they already have a couple of public hearings .

Zafar Rizvi: I think basically, as you know, there was a moratorium through 1 July for pipelines. But we understand ICC, Illinois Commerce Commission, is working on pipelines, all of those requirements, and they already have a couple of public hearings. And we believe they are certainly working on it. But at this time, we really have no clear guideline when they will start taking the application. But the moratorium will be 1 July is the last day, so we certainly will be able to apply after that, if not earlier. But you probably also know that we have all the easements for our six-mile pipeline. That pipeline was really a six-mile pipeline. We built it because we just wanted to be away from the Mahomet Aquifer, Mahomet Aquifer. And that's the only reason. Otherwise, we really didn't need that pipeline.

Speaker #1: And we we believe they are certainly working on it . But we at this time , we really have no clear get guideline when they will start taking the application .

Speaker #1: But moratorium will be , you know , July 1st is the last day . So we certainly will be able to apply after that .

Zafar Rizvi: But the moratorium will be 1 July is the last day, so we certainly will be able to apply after that, if not earlier. But you probably also know that we have all the easements for our six-mile pipeline. That pipeline was really a six-mile pipeline. We built it because we just wanted to be away from the Mahomet Aquifer, Mahomet Aquifer. And that's the only reason. Otherwise, we really didn't need that pipeline.

Speaker #1: If if not the earliest . Okay . But you probably know that also we have all the easements for our six mile pipeline that pipeline was really six mile by mile line .

Speaker #1: We built it because we just wanted to be away from the aquifer . Mohammad aquifer . that's And the only reason . Otherwise , we did really didn't need that pipeline .

Speaker #3: Oh , okay . Well , thank you for the update . And it looks like a great quarter . I appreciate your time .

Speaker #1: Thanks , Chris .

Chris Degner: Oh, okay. Well, thank you for the update. And it looks like a great quarter. I appreciate your time.

Christopher Degner: Oh, okay. Well, thank you for the update. And it looks like a great quarter. I appreciate your time.

Speaker #2: next Our question comes from Mason born with capital . Please proceed with your question .

Zafar Rizvi: Thanks, Chris.

Speaker #6: Hi , guys . Thanks for the questions . Just a couple from me , Stuart . I guess you in your prepared remarks , you mentioned recognizing benefits under 45 , and it you're sounds like and not yet still sort assessing of where that can where that score is to start and then where it can go from there .

Operator: Our next question comes from Mason Born with AWH Capital. Please proceed with your question.

Mason Born: Hi, guys. Thanks for the questions. Just a couple for me. Stuart, I guess in your prepared remarks, you mentioned recognizing benefits under 45Z, and it sounds like you're not yet and still sort of assessing where that score is to start and then where it can go from there. But is it fair to say that you believe you're going to be positively generating credits before the indirect land use change occurs at 1 January, and then that would be an incremental step after that, or is it still too early to say?

Mason Bourne: Hi, guys. Thanks for the questions. Just a couple for me. Stuart, I guess in your prepared remarks, you mentioned recognizing benefits under 45Z, and it sounds like you're not yet and still sort of assessing where that score is to start and then where it can go from there. But is it fair to say that you believe you're going to be positively generating credits before the indirect land use change occurs at 1 January, and then that would be an incremental step after that, or is it still too early to say?

Speaker #6: But is it say that fair to you're going to be positively generating credits before the the indirect land use change occurs at January 1st , and then that would be an incremental step after that .

Speaker #6: Or is it still too early to say .

Speaker #7: It's aforementioned ? We're we are working diligently on trying to obtain credits . This year , but we don't know what the regulations are yet .

Stuart Rose: As Zafar mentioned, we are working diligently on trying to obtain credits this year, but we don't know what the regulations are yet. They have not published them. But we will be prepared depending on what the regulations, and they have not actually, the land use change is correct, but they have not come out with what qualifies as a carbon intensity score yet. So we cannot guarantee any credits for this year, but we are working on it diligently. Zafar's team, I don't know how many people he has working on it, including outside people, but a lot. And we hope, and I emphasize hope, to achieve credits this year, but we have no way of knowing whether we will or will not at this time.

Speaker #7: They have not published them, but we will be prepared depending on what the regulations are. They have not actually addressed the land use change, which is correct, but they have not come out with what qualifies as a carbon intensity score yet.

Speaker #7: So we cannot guarantee any credits for this year . But we are we are working on it diligently as far as team , I don't know how many people he has working on it , including outside people , but a lot .

Speaker #7: And we hope, and I emphasize hope, to achieve credits this year. But we have no way of knowing whether we will or will not at this time.

Speaker #6: So, that's something you could recognize retroactively, is that your assumption?

Speaker #7: our That's hope . Yes , yes , that's our hope .

Mason Born: So that's something you could recognize retroactively. Is that your assumption whenever it's finalized?

Mason Bourne: So that's something you could recognize retroactively. Is that your assumption whenever it's finalized?

Speaker #6: And then for me , on , I know it's early on in this as but well , Adam recently entered into an agreement with Google on some of their excess capacity .

Stuart Rose: That's our hope. Yes. Yes, that's our hope.

Mason Born: And then second for me, I know it's early on this as well, but ADM recently entered into an agreement with Google on some of their excess capacity. I know you guys are planning to have plenty of excess capacity in your carbon capture wells, even on one alone, but potentially on all three if you have them operating. Just wondered if you could provide any thoughts there on your thinking there and any timeline around, obviously, I assume you get your operation online first, but just any thoughts on potential for partnerships or what that could look like?

Mason Bourne: And then second for me, I know it's early on this as well, but ADM recently entered into an agreement with Google on some of their excess capacity. I know you guys are planning to have plenty of excess capacity in your carbon capture wells, even on one alone, but potentially on all three if you have them operating. Just wondered if you could provide any thoughts there on your thinking there and any timeline around, obviously, I assume you get your operation online first, but just any thoughts on potential for partnerships or what that could look like?

Speaker #6: I know you guys are planning to have excess plenty of capacity in your carbon capture wells . Even on one alone . But potentially on all three if you have them operating .

Speaker #6: I just wondered if you could provide any thoughts there on your thinking there and any timeline around . Obviously , I assume you get your operation online first , but thoughts on just any potential for partnerships or what that could look like .

Speaker #7: So far ? You want to answer .

Speaker #4: That ?

Speaker #1: Yeah , I think Mason , as you we know , are really trying to concentrate on the well , number one , first and certainly for the well , number two , three , even for the well , number one , we will have enough capacity to have the carbon sequestration from the third party .

Zafar Rizvi: Zafar, you want to answer that? Yeah. I think, Mason, as you know, we are really trying to concentrate on the well number one first. And certainly, for the well number two or three, even for the well number one, we will have enough capacity to have the carbon sequestration from the third party. And we have been in contact with several people, and several people have reached out to us recently and even in the past. But we don't want to make some commitment or contract up to the time we have received a Class VI permit and we have the pipeline. All of those facts are taken care of. After that, we believe that we will be able to get still those contracts in the future.

Stuart Rose: Zafar, you want to answer that?

Zafar Rizvi: Yeah. I think, Mason, as you know, we are really trying to concentrate on the well number one first. And certainly, for the well number two or three, even for the well number one, we will have enough capacity to have the carbon sequestration from the third party. And we have been in contact with several people, and several people have reached out to us recently and even in the past. But we don't want to make some commitment or contract up to the time we have received a Class VI permit and we have the pipeline.

Speaker #1: And we been have in contact with several people and several people have reached out to us recently . And even in the past .

Speaker #1: But we don't want to make some commitment or contract up to the time we have received class six permit , and we have the pipeline .

Speaker #1: All of those facts are taken care of . It . After that , we we believe that we will be able to get those still , those contracts with in the future .

Zafar Rizvi: All of those facts are taken care of. After that, we believe that we will be able to get still those contracts in the future. But at this time, we have really not negotiated with anyone because we are not there where we are supposed to be at this stage.

Speaker #1: But at this time , we have really not negotiating with anyone because we are not there where we are supposed to be at this stage .

Zafar Rizvi: But at this time, we have really not negotiated with anyone because we are not there where we are supposed to be at this stage.

Speaker #6: Great . Thank you .

Speaker #1: And thank you . Let me have that that one answer to ask about the land use . Yes , the our recent calculation , which we are looking at it as you know , there is land use in this one and the next 2026 , they're not going to be land use .

Mason Born: Great. Thank you.

Mason Bourne: Great. Thank you.

Zafar Rizvi: And Mason, let me have that one answer that you asked about the land use. Yes, our recent calculation, which we are looking at it, as you know, there is land use in this one, and the next 2026, there's not going to be land use. We believe that we are already at a score which can be really without land use. We will be able to qualify it, but we have to still do a lot of calculation to make sure the prevailing wages, other a lot of factors, and Treasury guidelines is clear. Even I can tell you that even some of those accountants who are reviewing our data and information, they are not even sure if that gross ethanol or it's net ethanol. That means it's a denatured ethanol or undenatured ethanol will qualify.

Speaker #1: We believe that we are already at a score which can be really without land use. We will be able to qualify it, but we have to still do a lot of calculations to make sure the prevailing wage is and a lot of other factors, and Treasury guidelines are clear.

Speaker #1: Even I can tell you that even some of those accountant who's reviewing our data and they are not even sure is that a gross ethanol or is a net ethanol .

Zafar Rizvi: Even I can tell you that even some of those accountants who are reviewing our data and information, they are not even sure if that gross ethanol or it's net ethanol. That means it's a denatured ethanol or undenatured ethanol will qualify.So there are several different ways we are doing all those calculations to make sure that the numbers are correct before we start talking about how many millions of dollars, etc., we are going to get that tax credit.

Speaker #1: I think that it's a denatured ethanol or undenatured ethanol that will qualify. So there are several different ways we are doing all those calculations to make sure that the numbers are correct before we start talking about how many millions of dollars are, etc.

Zafar Rizvi: So there are several different ways we are doing all those calculations to make sure that the numbers are correct before we start talking about how many millions of dollars, etc., we are going to get that tax credit.

Speaker #1: We are going to get that tax credit.

Speaker #6: That's helpful . And we appreciate your conservatism . So thank you for the the details .

Mason Born: That's helpful, and we appreciate your conservatism. Thank you for the details.

Mason Bourne: That's helpful, and we appreciate your conservatism. Thank you for the details.

Speaker #2: 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 #7: Thank you . A quarter was very good and we expect next quarter ethanol to to outperform last year's fourth quarter . And we're continuing to make further progress as we just talked about on credits capturing 45 Z , it's a tribute to all our employees , starting with our CEO Zafar Rizvi , who we who is recognized by by many the , if as not the one of the top CEOs in the ethanol industry .

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.

Stuart Rose: Thank you. Our quarter was very good, and we expect next quarter ethanol to outperform last year's fourth quarter. We're continuing to make further progress, as we just talked about, in capturing 45Z credits. It's a tribute to all our employees, starting with our CEO, Zafar Rizvi, who is recognized by many as the, if not the, one of the top CEOs in the ethanol industry, including all of our employees who we consider the best in the industry. We want to thank everyone for listening, and we look forward to talking to you after next quarter. Thank you. Bye.

Speaker #7: And including all of our employees, whom we consider the best in the industry. We want to thank everyone for listening, and we look forward to talking to you after next quarter.

Speaker #7: Thank you . Bye .

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

Q3 2025 REX American Resources Corp Earnings Call

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