0000930413-26-001786
SEC filingRevenue slipped 1% but gross profit more than doubled on lower corn costs and $7.5M in 45Z tax credits.
Net sales for Q1 FY26 (three months ended April 30, 2026) declined 1% year-over-year to $156.5M from $158.3M. The top-line dip was driven by lower ethanol pricing (average selling price fell 6% to $1.66/gal) despite slightly higher volumes (71.1M vs 70.9M gallons). However, gross profit surged 102.7% to $29.1M from $14.3M, representing a margin expansion from 9.1% to 18.6%. The primary driver was a 6% reduction in cost of sales ($135.0M vs $144.0M), as corn costs decreased (75% of COGS vs 74% in prior year, dollar amount down $4.6M). Additionally, the company recognized $7.5M in Section 45Z clean fuel production tax credits, with no comparable item in the prior year. Income before income taxes nearly doubled to $26.1M (vs $13.6M), and net income attributable to REX common shareholders rose 112.6% to $18.5M ($8.7M in Q1 FY25).
Ethanol revenue fell 4% to $119.9M, pressured by lower selling prices, though volumes remained resilient. Distillers grains performed well: dried distillers grains revenue grew 8% to $24.2M on higher prices and steady volume; distillers corn oil posted a 31% surge to $13.0M, benefiting from improved yields and higher biodiesel demand. Modified distillers grains revenue dropped 36% to $1.0M as the plants shifted production toward dried distillers grains. Derivative losses of $1.6M contrasted with slight gains a year ago. SG&A expenses increased 64% to $9.7M (6.2% of sales vs 3.8%), largely due to a $3.2M rise in performance bonuses tied to stronger earnings. Equity income from Big River Resources rose to $3.6M (including $1.8M from 45Z credits) compared to $1.0M in the prior year.
Management's outlook emphasizes continued investment in the One Earth carbon sequestration and plant expansion projects, with total capital expenditures estimated between $220M and $230M, of which $70M-$80M is planned for the remainder of fiscal 2026. The company holds ample liquidity with $376.2M in working capital and a 6.8x current ratio, and has 2.36M shares authorized for buyback. Key uncertainties include the timing of EPA permits for the carbon sequestration project (final permit decision expected by November 2026), the impact of trade tariffs and export demand, corn price volatility, and the legislative environment for renewable fuel credits (45Q and 45Z). No explicit revenue or earnings guidance is provided, but the crush spread dynamics remain a critical factor for near-term margins.
As of April 30, 2026, REX has a robust liquidity position with $117.7M in cash and equivalents and $246.6M in short-term U.S. Treasury Bills, totaling $364.3M. The company has no interest-bearing debt; only lease liabilities ($19.5M) exist. Shareholders' equity stands at $629.2M, up from $610.7M at January 31, 2026, driven by net income. Inventory decreased slightly to $26.5M.
Note 13 discloses purchase commitments for corn (23.7M bushels) and natural gas (1.5M MmBtu) through forward contracts, but dollar amounts are not specified. A 15-year natural gas pipeline agreement requires monthly payments of $29,250. More notably, One Earth has non-cancelable capital project contracts with $12.5M remaining. Sales commitments exist for 63.5M gallons of ethanol, 120,700 tons of distillers grains, and 20.4M pounds of corn oil.
In Q1 2026, the company did not repurchase any shares (vs. $32.7M in Q1 2025). No dividends were paid. Capital expenditures totaled $11.6M, primarily for plant improvements. The company has no debt, so no repayment activity. The only financing activity was $0.1M in finance lease principal payments.
REX operates a single reportable segment: ethanol and by-products, including two consolidated plants (One Earth and NuGen) and an equity method investment in Big River (10.3% ownership). Segment net sales and revenue were $426.2M, down 1% YoY. Production tax credit income added $27.4M at the segment level. Operating income is not separately reported; segment income before taxes was $68.8M, including $42.7M from Big River (equity method). The reconciling item removes the equity method to arrive at consolidated income before taxes of $26.1M.
Net income was $21.7M, yet cash from operations was negative (-$2.1M), indicating significant working capital outflows. Key drivers: increases in accounts receivable (-$6.9M) and decreases in accounts payable (-$8.6M) and accrued expenses (-$8.6M). Capex of $11.6M exceeded operating cash flow, requiring external financing or cash reserves. No free cash flow is calculable due to negative CFO. No dividends were paid; share repurchases were absent after $32.7M in prior year. The improvement in CFO from -$3.5M to -$2.1M was primarily due to a smaller swing in inventory and other liabilities. Investing cash flow was heavily negative due to net purchases of short-term investments ($57.6M net outflow). Overall, cash position decreased by $71.1M.
Capex rose 69% to $11.6M, reflecting investment in property and equipment. Financing activities were minimal with only $62K in lease payments. The company used cash reserves and investment maturities to fund operations and capex.