0000930413-26-000937
SEC filingREX reported net income of $83.0M in fiscal 2025 vs $58.2M in fiscal 2024, driven by higher crush spreads and 45Z tax credits.
REX American Resources Corporation is a holding company incorporated in Delaware in 1984. Its primary business is investing in ethanol production facilities. The company owns majority interests in two ethanol entities – One Earth Energy, LLC (76.1%) and NuGen Energy, LLC (99.7%) – and a minority interest in Big River Resources, LLC, which itself owns four plants. In total, the three entities operate six ethanol production facilities located in Illinois, South Dakota, Iowa, and Wisconsin. The company also previously owned a refined coal facility that was acquired in 2017, ceased operations in November 2021, and has since been sold. The company’s corporate headquarters is in Dayton, Ohio.
The filing does not explicitly define reporting segments, but the business consists of ethanol production (the core ongoing operation) and a refined coal facility that is now discontinued. The ethanol segment includes the production of ethanol, distillers grains (DDGS and wet distillers grains), and distillers corn oil. No revenue share percentages are provided for these segments.
The primary product is denatured ethanol, produced through the dry milling process. Key by-products include Dry Distillers Grains with Solubles (DDGS) used as animal feed protein, modified (wet) distillers grains, and distillers corn oil sold to animal feed, biodiesel, and other chemical markets. The refined coal facility (now sold) produced chemically treated coal.
The company manages commodity price risk through forward purchase and sale contracts and futures agreements. It executes fixed-price ethanol contracts for up to four months forward. No specific customer concentration or channel mix is disclosed. The ethanol is sold into the blending market, with demand driven by the Renewable Fuel Standard and state regulations.
The business section does not name specific competitors but describes the ethanol industry as consisting of 198 plants in 24 states with annual capacity of about 18.5 billion gallons. The industry is highly dependent on federal and state legislation, and the company’s profitability is driven by crush spreads (ethanol price minus corn cost divided by yield). Volatility in corn, ethanol, distillers grains, and natural gas prices creates significant fluctuations in operating results.
The company’s strategic priorities include pursuing carbon sequestration and plant expansion projects to leverage federal 45Z and 45Q tax credits. It also plans to evaluate investment opportunities in energy, agriculture, and other ventures. Additionally, REX maintains a stock buyback program to repurchase shares when the stock price trades at a discount to the underlying net asset value.
As of January 31, 2026, REX employed 132 people across its two consolidated ethanol plants and corporate headquarters. None are unionized. The company emphasizes safety through regular meetings, training, independent audits, and safety-related incentive compensation. Compensation includes competitive base wages, incentive programs, a 401(k) plan with company match, healthcare benefits, and paid time off.
In fiscal 2025 (year ended January 31, 2026), REX American Resources reported net sales of $650.5M, up 1% from $642.5M in fiscal 2024. Gross profit grew 2% to $93.7M, with gross margin expanding to 14.4% from 14.2%, driven by improved crush spreads. Net income attributable to REX common shareholders surged 43% to $83.0M, benefiting from a lower effective tax rate of -7.3% versus 23.0% in the prior year, primarily due to $28.1M in 45Z tax credits earned under the Inflation Reduction Act.
Revenue growth was led by distillers corn oil, which jumped 34% to $52.4M on higher prices and volumes. Ethanol sales increased 1.6% to $504.4M as average selling prices rose 2% while volumes held steady. Dried distillers grains revenue declined 13% to $88.2M due to lower selling prices and volumes, while modified distillers grains revenue rose 10% to $5.4M on higher volumes. Cost of sales increased 1% to $556.8M, driven by higher natural gas costs, partially offset by lower corn costs. SG&A expenses rose 20% to $32.6M, reflecting higher performance bonuses, railcar lease costs, and costs associated with 45Z tax credits. Equity in income of unconsolidated affiliates (Big River) increased to $12.5M from $9.4M. Interest and other income decreased to $15.0M from $19.2M due to lower cash balances and yields. Income before income taxes was $88.6M, down from $92.9M, as higher SG&A and lower interest income offset the gross profit improvement.
Ethanol remains the largest revenue contributor, stable in volume but slightly higher pricing. The distillers corn oil segment showed strong momentum, with yields improving and demand from renewable biodiesel driving prices. Dried distillers grains faced headwinds from lower corn prices and competition from other by-products. The 45Z tax credit program, extended through 2029 by the OBBBA, provides a significant tailwind for ethanol production profitability, especially as plants improve carbon intensity scores.
Management expects total capital expenditures of $70M-$80M in fiscal 2026, primarily for the One Earth expansion and carbon sequestration project. The sequestration project faces regulatory hurdles, including permitting delays and state legislation, but progress continues. The company plans to fund all capital needs from available cash, which stood at $375.8M at year-end. No explicit revenue or earnings guidance was provided, but the outlook depends on commodity prices, crush spreads, and successful execution of strategic projects.
As of January 31, 2026, REX holds $188.7M in cash and $187.0M in short-term U.S. Treasury bills, totaling $375.7M in liquid assets. The company has no debt, with only $20.0M in operating lease liabilities and $3.2M in finance lease liabilities. Total shareholders' equity stands at $702.0M, including $91.3M of noncontrolling interests. Inventory of $28.4M is down from $31.7M a year ago, reflecting lower grain and raw material levels.
REX has signed capital projects commitments of $16.2M at its consolidated plants (One Earth and NuGen). Additionally, forward purchase contracts cover 18.4M bushels of corn and 1.7M MmBtu of natural gas (volume only, no dollar amount disclosed). Sales commitments total 54.8M gallons of ethanol, 107,000 tons of distillers grains, and 17.0M lbs of distillers corn oil. Lease obligations include $20.0M in operating leases (railcars) and $4.3M in a finance lease for an electrical substation, with payments extending to 2035.
During fiscal 2025, REX repurchased 1.65M shares for $32.9M, and as of year-end, board authorization remains for an additional 2.36M shares. No dividends are paid. Capital expenditures totaled $68.4M, up from $71.3M in the prior year, representing 10.6% of consolidated revenue. The company maintains a clean balance sheet with no debt, funding capex and buybacks from operating cash flow of $117.8M.
REX operates a single reportable segment: ethanol and by-products. Segment revenue was $1,658.4M for fiscal 2025 (down 0.3% from $1,664.1M), with operating income (income before taxes) of $229.1M, yielding a 13.8% margin. The segment includes the consolidated plants and an equity method investment in Big River Resources (10.3% stake). The equity method contributed $12.5M in income and $10.5M in dividends. No geographic breakdown is provided.
REX's ethanol business is heavily dependent on the Renewable Fuel Standard (RFS). The EPA has set conventional renewable fuel volumes at 15.0 billion gallons for 2023-2025 and recently for 2026-2027. However, excess industry capacity (18.5 BGY) above mandates creates pricing pressure. Waivers granted to small refineries reduce mandated blending, lowering ethanol demand. Legal challenges to EPA's handling of SREs add uncertainty. Additionally, state-level LCFS programs in California and others may disadvantage corn-based ethanol if CI scores are not improved.
Trade tensions pose significant risks. In 2025, 36% of U.S. ethanol exports went to Canada and 20% of distillers grains to Mexico. The Trump administration's tariff threats could trigger retaliation, making exports uneconomical. Past trade disputes have already impacted international demand.
Financial returns are highly sensitive to commodity prices. Corn is the primary raw material, and its price is influenced by weather, global supply/demand, and geopolitical conflicts. Natural gas prices also affect production costs. The company uses hedging to mitigate volatility, but mismatches can lead to losses. Inflation is increasing labor and material costs, which may not be passed through.
The carbon sequestration project near One Earth Energy is critical for improving CI scores and accessing tax credits. With $58.9M invested, permitting delays due to Illinois' new legislation (moratorium until July 2026) and legal challenges in South Dakota and North Dakota threaten completion. If unsuccessful, REX could be at a competitive disadvantage. Expansion projects also face inflationary cost overruns.
Competition from larger integrated grain and oil companies, as well as foreign producers (e.g., Brazilian sugarcane ethanol), pressures margins. The rise of electric vehicles and potential bans on internal combustion engines could structurally reduce gasoline demand, indirectly harming ethanol demand. Technological advances in cellulosic ethanol or alternative fuels may also reduce corn ethanol's relevance.
Operating cash flow (CFO) of $117.8M exceeded net income of $95.1M, indicating high quality earnings. The primary adjustments include $15.3M depreciation, $6.4M noncash lease expense, and $4.2M stock-based compensation. However, income from equity method investments of $12.5M and dividends received of $10.5M partially offset. Working capital provided a net inflow of $6.5M, driven by accounts receivable ($6.8M) and inventory ($3.3M) decreases, partially offset by a $5.9M increase in income taxes refundable and a $2.5M decrease in accrued expenses.
Capex of $68.4M represents 58% of CFO, indicating high reinvestment intensity. Free cash flow (not explicitly stated) would be CFO minus capex, approximately $49.4M. Share repurchases of $33.4M consume 68% of this estimated FCF, leaving limited room for other uses. The company maintains a strong cash position with $188.7M in cash and cash equivalents at year-end.
Notable changes include a $4.3M decrease in long-term taxes payable and a $8.4M increase in trade payables. Overall, cash generation is robust and supports both investment and shareholder returns.