0000930413-25-003566
SEC filingProfitability declined in Q3 and nine months due to lower ethanol and distillers grains margins, partially offset by higher distillers corn oil revenue and volumes.
In the third quarter of fiscal 2025, net sales were essentially flat at $175.6M versus $174.9M in the prior year, while gross profit decreased $3.5M to $36.1M, and net income attributable to REX common shareholders declined from $24.5M to $23.4M. For the first nine months, revenue increased 2% to $492.5M, but gross profit fell 12% to $64.8M and net income dropped 17% to $39.2M. The margin compression was driven by lower ethanol and distillers grains prices, partially offset by a strong performance in distillers corn oil. Cost of sales increased 3% in Q3 and 4% year-to-date, with corn accounting for ~75% of costs.
Ethanol revenue was down 2% in Q3 due to a 5% decline in average selling price ($1.73 vs $1.83), but volumes rose 4% to 78.4 million gallons. For the nine months, ethanol revenue increased 3% as volumes grew 2% while prices held steady at $1.74. Dried distillers grains revenue declined 11% in Q3 and 15% year-to-date, reflecting lower average prices ($139.93/ton vs $147.14) and reduced tons sold. Distillers corn oil was the standout, with Q3 revenue up 60% driven by a 36% price increase ($0.60/lb vs $0.44) and 17% higher volume. Nine-month corn oil revenue rose 35% as yields improved. Modified distillers grains revenue increased modestly on higher volume but lower prices. Overall, the product mix shifted toward higher-margin corn oil, but not enough to offset pressure on ethanol and distillers grains.
Management highlighted ongoing capital projects at the One Earth facility, including carbon sequestration and plant expansion, with total expected spending of $220-230M. As of October 31, 2025, $58.1M had been spent on sequestration and $97.7M on expansion, with an additional $17.0M committed. The company plans to fund expenditures from available cash and expects $25-35M in remaining capital outlays for fiscal 2025. The outlook for ethanol economics remains uncertain due to commodity price volatility, SRE petitions affecting RIN values, and trade policy risks. However, the extension of 45Z tax credits through 2029 and potential carbon sequestration tax credits offer long-term opportunities. The company continues to evaluate investments in ethanol, energy, and carbon sequestration.