REX American Resources Corp (REX) Q4 2024 Earnings Call Highlights: Navigating Challenges and ...

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Thu, Mar 27, 2025, 1:02 AM 4 min read

Ethanol Sales Volume: 289.7 million gallons in fiscal year 2024, up from 285.9 million gallons in 2023.
Average Ethanol Selling Price: $1.71 per gallon for the full year 2024; $1.64 for Q4 2024.
Dried Distillers Grain (DDG) Sales Volume: 632,000 tons in 2024, down 3% from 652,000 tons in 2023.
Average DDG Selling Price: $160.37 per ton for the full year; $143.81 per ton for Q4 2024.
Modified Distillers Grain Sales Volume: 70,000 tons in 2024, up from 54,000 tons in 2023.
Corn Oil Sales Volume: 88.1 million pounds in 2024, up 1% from 87.5 million pounds in 2023.
Average Corn Oil Selling Price: $0.44 per pound for the full year and Q4 2024.
Gross Profit: $91.5 million in 2024, down from $98.2 million in 2023.
SG&A Expenses: $27.1 million in 2024, down from $29.4 million in 2023.
Interest and Other Income: $19.2 million in 2024, up 22% from $15.7 million in 2023.
Net Income Attributable to Shareholders: $58.2 million in 2024, down from $60.9 million in 2023.
Diluted Net Income Per Share: $3.30 in 2024, down from $3.47 in 2023.
Share Repurchases: 654,276 shares repurchased, approximately 3.7% of outstanding shares.
Cash and Cash Equivalents: $359.1 million at fiscal year-end 2024, down from $378.7 million in 2023.

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Release Date: March 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

REX American Resources Corp (NYSE:REX) achieved a slight increase in ethanol sales volume, reaching 289.7 million gallons in fiscal year 2024 compared to 285.9 million gallons in 2023.
The company completed construction of the capture and compression portions of its carbon capture facility, marking significant progress in its growth projects.
REX repurchased approximately 373,000 shares in the fourth quarter of 2024 and an additional 281,709 shares in the first quarter of 2025, demonstrating a commitment to delivering value to shareholders.
The company ended the fiscal year with a strong cash position of $359.1 million and no bank debt, providing financial stability and flexibility.
REX has maintained 18 consecutive profitable quarters, showcasing consistent financial performance and effective management.

Negative Points

Gross profit for fiscal year 2024 decreased to $91.5 million from $98.2 million in 2023, primarily due to lower selling prices across all categories.
The timeline for the completion of the ethanol facility expansion project has been extended beyond the previous target of mid-2025 due to ongoing reviews and inflation.
Dried distillers grain sales volumes decreased by 3% in fiscal year 2024 compared to 2023, indicating a decline in this segment.
Net income attributable to REX shareholders decreased to $58.2 million in 2024 from $60.9 million in 2023, reflecting a decline in profitability.
The company faces potential regulatory challenges, including the possibility of tariffs on ethanol and co-product exports, which could impact future performance.

Q & A Highlights

Q: Can you provide details on the higher capital budget for the expansion project, considering the timeline is in flux due to awaiting EPA approval? A: Zafar Rizvi, CEO, explained that the increase in the capital budget is due to the decision to invest in energy-efficient equipment capable of handling future production increases from 200 to 225 million gallons. This foresight aims to avoid additional future expenses and is the main reason for the budget and timeline adjustments.

Q: Has there been any change in dialogue with the EPA regarding Class VI well permitting since the new administration took over? A: Zafar Rizvi, CEO, noted that communication with the EPA had resumed in March after a halt when the Trump administration took over. The company has had two conversations with the EPA and is working to address their questions, indicating improved responsiveness compared to the previous administration.

Q: Can you discuss the impact of regulatory changes on your operations, particularly regarding FISMA rules? A: Zafar Rizvi, CEO, mentioned that FISMA rules issued at the end of the Biden administration were not posted for the required public comment period and are under review by the new administration. The company is awaiting further developments and potential changes to these rules.

Q: What are the company's priorities for 2025, and how do you plan to navigate potential policy impacts? A: Zafar Rizvi, CEO, stated that the company is focused on maintaining profitability and executing growth projects. They are closely monitoring policy developments, such as potential tariffs on ethanol exports and the debate around year-round E15 blending, to make informed decisions.

Q: How did REX perform financially in 2024, and what are the expectations for 2025? A: Douglas Bruggeman, CFO, reported that REX achieved strong financial results in 2024, with a slight increase in ethanol sales volume. The company expects a profitable first quarter in 2025, marking the 19th consecutive profitable quarter, and is focused on positioning the business for future growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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