REX American Resources Corporation — Form 10-Q Summary
Reporting period: Three months ended April 30, 2024 (REX fiscal 2025 first quarter; comparative period ended April 30, 2023). The filing is unaudited and reports one segment: ethanol and by-products.
Financial performance
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Net sales and revenue | $161.2 million | $212.7 million | Down 24% |
| Gross profit | $14.5 million | $10.2 million | Up $4.3 million |
| Gross margin | 9.0% | 4.8% | Improved |
| Income before taxes | $16.0 million | $8.7 million | Up |
| Net income | $12.3 million | $6.7 million | Up |
| Net income attributable to REX shareholders | $10.2 million; $0.58 per diluted share | $5.2 million; $0.30 per diluted share | Up |
| Net cash used in operating activities | $2.3 million | $14.0 million | Lower cash use |
Amounts above are rounded. Revenue and cost of sales both fell, but cost of sales declined faster, supporting higher gross profit and margin. Management attributed lower sales largely to reduced commodity selling prices: ethanol’s average price fell 28%, dried distillers grains 23%, and distillers corn oil 25%. Ethanol gallons sold rose 4%; sales volumes for other major products were broadly steady or higher.
Interest and other income was $5.9 million, versus $2.8 million, including $1.2 million of cooperative patronage income and higher interest income on cash and investments. Equity-method income from Big River was $1.7 million, versus $1.5 million. The filing reports no impairment charges in the quarter and no inventory write-down at April 30, 2024. Prior-year cost of sales and SG&A were retrospectively reclassified for shipping and handling costs; the filing says this presentation improves gross-margin comparability.
Liquidity, cash flow, and obligations
- Cash and cash equivalents were $231.2 million; short-term U.S. Treasury investments were $120.6 million. Combined, these totaled $351.8 million at April 30, 2024.
- Working capital was $358.9 million, down from $385.8 million at January 31, 2024. The current ratio was 6.7 to 1.
- Operating cash outflow was $2.3 million. Investing activities provided $11.9 million, including Treasury bill maturities net of purchases; capital expenditures were $24.8 million. Financing cash outflow was $1.8 million, principally distributions to noncontrolling-interest holders.
- Total liabilities were $72.6 million, including $11.5 million of operating lease liabilities. The balance sheet reports no borrowings or other conventional debt.
- Capital project commitments included $14.3 million for One Earth projects ($9.2 million for carbon sequestration and $5.1 million for plant expansion). Management estimated total One Earth project costs at $165–175 million and planned to fund them from available cash.
Outlook, commentary, and risks
- Management expected to spend $85–110 million on the One Earth carbon sequestration, capacity expansion, and carbon-intensity projects during the remainder of fiscal 2024. The filing gives no earnings or revenue guidance.
- One Earth’s permitted capacity increased from 150 million to 175 million gallons annually; management planned to reach that level in fiscal 2025’s first quarter, then seek a permit for 200 million gallons annually.
- A major project risk emerged after quarter-end: Illinois lawmakers passed Senate Bill 1289 on May 26, 2024. The company expects its pending pipeline-authority application may have to be dismissed and refiled; the law imposes additional requirements and a moratorium on new pipeline certificates until federal safety standards are finalized or, subject to conditions, July 1, 2026. Project timing and success remain uncertain; the company is examining alternative delivery methods.
- The company had applied for EPA Class VI permits for three injection wells and still needed permits and approvals, including county zoning approval. It reported that capture/compression facility construction was underway, with completion expected by July 31, 2024, subject to other infrastructure.
- Results remain sensitive to corn, ethanol, distillers grains, corn oil, and natural gas prices and availability. Management noted that crush spreads can weaken and plants could reduce or stop production to limit losses. The company uses forward contracts and derivatives, but hedging may not eliminate exposure and can itself generate losses.
- REX reported approximately $19.0 million of unrecognized tax benefits and said it is undergoing a federal tax examination for fiscal years 2015–2022 concerning claimed tax credits. Management did not expect possible changes in uncertain tax positions over the next 12 months to materially affect results or financial position.
- The company identified no material changes to the risk factors in its latest Form 10-K. It reported no material legal contingencies and no share repurchases during the quarter; 876,786 shares remained authorized for repurchase.
Most important facts for investors to verify
- Progress, permitting, revised schedule, total cost, and potential tax-credit eligibility for the One Earth carbon sequestration and plant expansion projects, particularly following Illinois Senate Bill 1289.
- Whether improved gross margin and earnings persist as commodity prices and crush spreads change; note that higher interest and other income also contributed to quarterly earnings.
- Cash generation and funding needs as planned capital spending accelerates, including the effect of working-capital movements.
- Outcome and potential financial impact of the federal tax-credit audit and the company’s unrecognized tax positions.
- Actual timing and achievement of the planned 175-million-gallon production level and any later 200-million-gallon permit.