REX's Profit Plunges 42% Amid Rising Costs, Despite Revenue Growth

TL;DR

**REX's profit dive is a red flag; rising costs are eating into revenue, making it a tough hold for now.**

AI Summary

REX AMERICAN RESOURCES Corp reported a net income attributable to REX common shareholders of $7.11 million for the three months ended July 31, 2025, a significant decrease from $12.38 million in the same period of 2024, representing a 42.5% decline. For the six months ended July 31, 2025, net income attributable to REX common shareholders was $15.79 million, down from $22.57 million in 2024, a 30.1% decrease. Net sales and revenue increased to $158.56 million for the three months ended July 31, 2025, up from $148.16 million in 2024, an increase of 7.0%. However, cost of sales rose more sharply, from $128.38 million to $144.24 million, a 12.3% increase, leading to a gross profit decline of 27.6% from $19.77 million to $14.32 million. The company's cash and cash equivalents increased to $240.96 million as of July 31, 2025, from $196.26 million at January 31, 2025. Total assets decreased from $720.01 million to $700.60 million over the same period. The company also acquired $33.38 million in treasury stock during the six months ended July 31, 2025.

Why It Matters

REX's significant drop in net income, despite a rise in revenue, signals margin compression that could concern investors. The ethanol industry faces volatile commodity prices for corn and natural gas, directly impacting REX's cost of sales and profitability. This trend could affect REX's ability to fund future growth initiatives, including potential investments in Sustainable Aviation Fuel (SAF) or carbon capture technologies, and may influence dividend policies or share buyback programs. Competitors in the renewable fuels sector might gain an advantage if REX struggles to manage its input costs effectively, potentially shifting market dynamics and impacting the broader agricultural and energy markets.

Risk Assessment

Risk Level: medium — The company experienced a 42.5% decrease in net income attributable to REX common shareholders for the three months ended July 31, 2025, falling to $7.11 million from $12.38 million. This significant decline, coupled with a 12.3% increase in cost of sales to $144.24 million, indicates substantial margin pressure despite a 7.0% revenue increase, highlighting operational challenges in a volatile commodity market.

Analyst Insight

Investors should closely monitor REX's next earnings report for signs of margin stabilization or further erosion. Consider reducing exposure if cost of sales continues to outpace revenue growth, as this trend indicates fundamental profitability challenges in their ethanol and by-products segment.

Financial Highlights

debt To Equity

N/A

revenue

$158.56M

operating Margin

N/A

total Assets

$700.60M

total Debt

$37.09M

net Income

$7.11M

eps

$0.24

gross Margin

9.0%

cash Position

$240.96M

revenue Growth

+7.0%

Key Numbers

• $7.11M — Net income attributable to REX common shareholders (Decreased 42.5% for the three months ended July 31, 2025, from $12.38M in 2024)
• $15.79M — Net income attributable to REX common shareholders (Decreased 30.1% for the six months ended July 31, 2025, from $22.57M in 2024)
• $158.56M — Net sales and revenue (Increased 7.0% for the three months ended July 31, 2025, from $148.16M in 2024)
• $144.24M — Cost of sales (Increased 12.3% for the three months ended July 31, 2025, from $128.38M in 2024)
• $14.32M — Gross profit (Decreased 27.6% for the three months ended July 31, 2025, from $19.77M in 2024)
• $240.96M — Cash and cash equivalents (Increased from $196.26M at January 31, 2025)
• $33.38M — Treasury stock acquired (Amount acquired during the six months ended July 31, 2025)
• 16,528,787 — Shares of Common Stock outstanding (As of August 29, 2025)

Key Players & Entities

• REX AMERICAN RESOURCES Corp (company) — Registrant
• NuGen Energy, LLC (company) — REX owns 99.7%
• One Earth Energy, LLC (company) — REX owns 76.1%
• Big River, LLC (company) — REX owns 10.3%
• New York Stock Exchange (regulator) — Exchange where REX Common Stock is registered
• United States Environmental Protection Agency (regulator) — EPA
• Internal Revenue Service (regulator) — IRS
• Financial Accounting Standards Board (regulator) — FASB

FAQ

Risk Factors

• Changes in Renewable Fuel Standards [high — regulatory]: The company's financial performance is significantly tied to government mandates like the Renewable Fuel Standard (RFS II) and state-level programs. Changes or expirations of these programs, or the RVOs (Renewable Volume Obligations) associated with them, could negatively impact demand and pricing for ethanol, a key product. For instance, the RFS II has been subject to adjustments and waivers, creating uncertainty.
• Commodity Price Volatility [high — market]: REX American Resources is exposed to fluctuations in the prices of corn, a primary feedstock for ethanol production, and the market price of ethanol itself. Significant increases in corn prices or decreases in ethanol prices can compress margins. For the three months ended July 31, 2025, cost of sales increased by 12.3% to $144.24 million, while net sales only rose by 7.0% to $158.56 million, indicating margin pressure from input costs.
• Plant Operations and Maintenance [medium — operational]: The company operates ethanol production facilities, which require ongoing maintenance and are subject to operational risks. Unforeseen plant shutdowns, equipment failures, or accidents could lead to production disruptions and increased costs. The company reported depreciation of $7.101 million for the six months ended July 31, 2025, reflecting the capital-intensive nature of its assets.
• Interest Rate Sensitivity [low — financial]: While the company has a strong cash position, it also utilizes debt and leases. Changes in interest rates could affect the cost of financing for new projects or existing debt, as well as the valuation of lease liabilities. The company has $18.507 million in finance lease right-of-use assets as of July 31, 2025.
• Environmental Regulations [medium — regulatory]: Ethanol production is subject to environmental regulations concerning emissions, waste disposal, and water usage. Stricter regulations or increased enforcement could lead to higher compliance costs or require capital expenditures for upgrades. The company's operations are indirectly impacted by climate change policies and carbon intensity (CI) metrics.
• Competition and Ethanol Blending Mandates [medium — market]: The ethanol market is competitive, and demand is influenced by mandates for blending ethanol into gasoline (e.g., E-10, E-15). Changes in fuel standards, consumer preferences, or the availability of alternative fuels could impact ethanol demand. The company's revenue is directly tied to the success of these blending programs.
• Impact of Inflation Reduction Act (IRA) [medium — financial]: The Inflation Reduction Act (IRA) introduces new tax credits and incentives related to clean fuels and carbon capture (e.g., Section 45Z, Section 45Q). While potentially beneficial, the interpretation, implementation, and long-term stability of these credits create both opportunities and uncertainties for the company's future profitability and investment decisions.

Industry Context

REX American Resources operates in the ethanol production industry, a sector heavily influenced by government mandates such as the Renewable Fuel Standard (RFS) and state-level blending requirements. The industry is characterized by its reliance on agricultural commodities like corn as feedstock and is subject to price volatility for both inputs and finished products. Competition exists among ethanol producers, and the market is also navigating evolving environmental regulations and the push for sustainable fuels.

Regulatory Implications

The company's operations are significantly impacted by regulatory frameworks like the RFS II and potential future legislation. Changes in Renewable Volume Obligations (RVOs), tax credits (such as those under the Inflation Reduction Act), and environmental standards can materially affect profitability and investment decisions. Compliance with EPA regulations and state mandates is crucial for market access and operational viability.

What Investors Should Do

1. Monitor regulatory developments closely.
2. Analyze margin trends and cost of sales.
3. Evaluate the impact of treasury stock repurchases.
4. Assess the company's cash generation and liquidity.

Key Dates

• 2025-07-31: End of Second Quarter and Six-Month Period — Reporting period for the 10-Q, showing a significant decline in net income despite revenue growth, highlighting margin pressures.
• 2025-01-31: Beginning of Fiscal Year — Baseline for comparison of cash and cash equivalents, which increased to $240.96 million from $196.26 million.
• 2025-08-29: Date of Report — Indicates the most recent information available regarding outstanding shares (16,528,787).

Glossary

RIN(s)

Renewable Identification Number(s). These are unique serial numbers assigned to each gallon of biofuel produced or imported into the United States, used to track compliance with the Renewable Fuel Standard (RFS). (REX's operations are heavily influenced by the RFS program, and RINs are a key component of its revenue and profitability.)

RVOs

Renewable Volume Obligations. These are the annual targets set by the EPA under the RFS program, requiring obligated parties to blend a specified volume of renewable fuels into the nation's transportation fuel supply. (The level of RVOs directly impacts the demand and price of ethanol, a core product for REX.)

Treasury stock

Shares of a company's own stock that it has repurchased from the open market. These shares are no longer outstanding and do not have voting rights. (REX acquired $33.38 million in treasury stock during the six months ended July 31, 2025, indicating a capital allocation strategy to return value to shareholders or manage share count.)

Equity method investment

An accounting method used when an investor has significant influence, but not control, over an investee. The investment is initially recorded at cost and adjusted for the investor's share of the investee's net income or loss. (REX has equity method investments, contributing $891 thousand in income for the three months ended July 31, 2025, which impacts its overall profitability.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership interest of outside shareholders in the consolidated entity. (REX has noncontrolling interests, which affect the net income attributable to REX shareholders. Net income attributable to noncontrolling interests was $2.217 million for the three months ended July 31, 2025.)

Gross profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (REX's gross profit declined by 27.6% to $14.32 million for the three months ended July 31, 2025, indicating significant pressure on its core operations.)

Year-Over-Year Comparison

Compared to the same period last year, REX American Resources experienced a notable decline in profitability, with net income attributable to common shareholders falling by 42.5% for the quarter and 30.1% for the six months. This occurred despite a 7.0% increase in net sales and revenue for the quarter, indicating significant margin compression as cost of sales rose by 12.3%. Gross profit consequently decreased by 27.6%. While cash and cash equivalents saw a healthy increase, total assets slightly decreased, and the company actively repurchased treasury stock, suggesting a shift in capital allocation priorities amidst declining earnings.

Key Financial Figures

• $0.01 — nge on which registered Common stock, $0.01 par value REX New York Stock Exchange

Filing Documents

• c113856_10q-ixbrl.htm (10-Q) — 733KB
• c113856_ex10h.htm (EX-10.(H)) — 9KB
• c113856_ex31.htm (EX-31) — 15KB
• c113856_ex32.htm (EX-32) — 3KB
• x2_c113856x1x1.jpg (GRAPHIC) — 12KB
• x2_c113856x1x2.jpg (GRAPHIC) — 6KB
• x2_c113856x1x3.jpg (GRAPHIC) — 40KB
• 0000930413-25-002856.txt ( ) — 5119KB
• rex-20250731.xsd (EX-101.SCH) — 57KB
• rex-20250731_cal.xml (EX-101.CAL) — 56KB
• rex-20250731_def.xml (EX-101.DEF) — 219KB
• rex-20250731_lab.xml (EX-101.LAB) — 443KB
• rex-20250731_pre.xml (EX-101.PRE) — 248KB
• c113856_10q-ixbrl_htm.xml (XML) — 646KB

Financial Statements

Financial Statements Consolidated Balance Sheets 4 Consolidated Statements of Operations 5 Consolidated Statements of Equity 6 Consolidated Statements of Cash Flows 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 39 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 40 Item 1A.

Risk Factors

Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults upon Senior Securities 40 Item 4. Mine Safety Disclosures 41 Item 5. Other Information 41 Item 6. Exhibits 41 2 Commonly Used Defined Terms Corporate Structure: REX/the Company REX American Resources Corporation, and its majority and wholly owned subsidiaries NuGen NuGen Energy, LLC – REX owns 99.7% One Earth One Earth Energy, LLC and subsidiaries – REX owns 76.1% Big River Big River, LLC, and subsidiaries – REX owns 10.3% Industry Terms: CI Carbon Intensity CO 2 Carbon dioxide E-10 Gasoline blended with up to 10% ethanol by volume E-15 Gasoline blended with up to 15% ethanol by volume EPA United States Environmental Protection Agency FEOC Foreign Entity of Concern GHG Greenhouse Gas IRA Inflation Reduction Act IRC Internal Revenue Code of 1986, as amended IRC Section 41 Internal Revenue Code 41 - Credit for Increasing Research Activities IRC Section 45/Section 45 Internal Revenue Code 45 - Electricity Produced from Certain Renewable Resources, etc. IRS Internal Revenue Service OBBBA One Big Beautiful Bill Act PHMSA Pipeline and Hazardous Materials Safety Administration RFS II Renewable Fuel Standard II RIN(s) Renewable Identification Number(s) RVOs Renewable Volume Obligations Section 45Q/45Q Section 45Q of the Internal Revenue Code Section 45Z/45Z Section 45Z of the Internal Revenue Code SB Illinois Senate Bill SAF Sustainable Aviation Fuel SRE(s) Small Refinery Exemption(s) USDA United States Department of Agriculture USMCA United States-Mexico-Canada Agreement Accounting and General Business Terms: ASC Accounting Standards Codification ASC 280 ASC 280, "Segment Reporting" ASC 815 ASC 815, " Derivatives and Hedging " ASC 820 ASC 820, " Fair Value Measurements and Disclosures " ASU Accounting Standards Update FASB Financial Account

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets Unaudited (In Thousands) July 31, 2025 January 31, 2025 Assets Current assets: Cash and cash equivalents $ 240,962 $ 196,255 Short-term investments 69,490 162,820 Accounts receivable 24,828 21,511 Inventory 31,632 31,676 Refundable income taxes 8,466 6,445 Prepaid expenses and other 15,138 17,112 Total current assets 390,516 435,819 Property and equipment, net 232,412 210,683 Operating lease right-of-use assets 20,956 20,985 Finance lease right-of-use assets 18,507 - Other assets 3,014 16,721 Equity method investment 35,191 35,800 Total assets $ 700,596 $ 720,008 Liabilities and equity Current liabilities: Accounts payable – trade (includes $ 1.8 million and $ 1.4 million with related parties at July 31, 2025 and January 31, 2025, respectively) $ 17,595 $ 28,337 Current operating lease liabilities 6,767 5,746 Current finance lease liabilities 469 - Accrued expenses and other current liabilities 12,254 16,360 Total current liabilities 37,085 50,443 Long-term liabilities: Deferred taxes 7,855 3,562 Long-term operating lease liabilities 14,490 15,367 Long-term finance lease liabilities 2,853 - Long-term taxes payable 4,560 4,334 Other long-term liabilities 2,763 2,700 Total long-term liabilities 32,521 25,963 Equity REX shareholders' equity: Common stock 299 299 Paid-in capital 8,037 6,470 Retained earnings 775,717 759,928 Treasury stock ( 238,287 ) ( 206,360 ) Total REX shareholders' equity 545,766 560,337 Noncontrolling interests 85,224 83,265 Total equity 630,990 643,602 Total liabilities and equity $ 700,596 $ 720,008 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations

financial statements

financial statements. 5 REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Equity For the Three and Six Months Ended July 31, 2025 and 2024 Unaudited (In Thousands) REX Shareholders Common Shares Issued Treasury Paid-in Retained Noncontrolling Total Shares Amount Shares Amount Capital Earnings Interests Equity Balance at January 31, 2025 29,853 $ 299 12,659 $ ( 206,360 ) $ 6,470 $ 759,928 $ 83,265 $ 643,602 Net income 8,678 1,994 10,672 Treasury stock acquired 822 ( 32,727 ) ( 32,727 ) Noncontrolling interests distribution and other ( 2,005 ) ( 2,005 ) Issuance of equity awards and stock-based compensation expense - - ( 100 ) 32 62 - - 94 Balance at April 30, 2025 29,853 299 13,381 ( 239,055 ) 6,532 768,606 83,254 619,636 Net income 7,111 2,217 9,328 Treasury stock acquired 4 ( 132 ) ( 132 ) Noncontrolling interests distribution and other ( 247 ) ( 247 ) Issuance of equity awards and stock-based compensation expense - - ( 60 ) 900 1,505 - - 2,405 Balance at July 31, 2025 29,853 $ 299 13,325 $ ( 238,287 ) $ 8,037 $ 775,717 $ 85,224 $ 630,990 Continued on the following page 6 REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Statements of Equity Unaudited (In Thousands) Continued from the previous page REX Shareholders Common Shares Issued Treasury Paid-in Retained Noncontrolling Total Shares Amount Shares Amount Capital Earnings Interests Equity Balance at January 31, 2024 29,853 $ 299 12,350 $ ( 191,911 ) $ 3,769 $ 701,761 $ 73,679 $ 587,597 Net income 10,191 2,082 12,273 Noncontrolling interests distribution and other ( 1,829 ) ( 1,829 ) Issuance of equity awards and stock-based compensation expense - - - 63 295 - - 358 Balance at April 30, 2024 29,853 299 12,350 ( 191,848 ) 4,064 711,952 73,932 598,399 Net income 12,378 2,

financial statements

financial statements. 7 REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Unaudited (In Thousands) Six Months Ended July 31, 2025 2024 Cash flows from operating activities: Net income including noncontrolling interests $ 20,000 $ 27,280 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,101 8,824 Amortization of operating lease right-of-use assets 3,197 3,153 Amortization of finance lease right-of-use assets 475 - Income from equity method investments ( 1,897 ) ( 3,465 ) Dividends received from equity method investments 2,506 - Interest income from investments ( 2,999 ) ( 3,292 ) Deferred income tax 4,293 5,495 Stock-based compensation expense 1,022 1,772 Loss on disposal of property and equipment – net 172 78 Changes in assets and liabilities: Accounts receivable ( 3,317 ) ( 1,077 ) Inventories 44 ( 2,178 ) Refundable income taxes ( 2,022 ) 456 Other assets ( 583 ) ( 12,344 ) Accounts payable, trade ( 9,896 ) ( 14,009 ) Long-term taxes payable 226 - Other liabilities ( 5,514 ) ( 4,985 ) Net cash provided by operating activities 12,808 5,708 Cash flows from investing activities: Capital expenditures ( 28,924 ) ( 40,219 ) Purchase of short-term investments ( 90,671 ) ( 156,125 ) Maturity of short-term investments 187,000 229,735 Proceeds from sale of real estate and property and equipment - 178 Deposits 128 203 Net cash provided by investing activities 67,533 33,772 Cash flows from financing activities: Treasury stock acquired ( 33,382 ) - Payments to noncontrolling interests holders ( 2,252 ) ( 1,837 ) Net cash used in financing activities ( 35,634 ) ( 1,837 ) Net increase in cash and cash equivalents 44,707 37,643 Cash and cash equivalents, beginning of period 196,255 223,397 Cash and cash equivalents, end of period $ 240,962 $ 261,040 Non-ca

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