REX American Resources (NYSE:REX) reported record second-quarter earnings per share for fiscal 2026, supported by stronger ethanol margins, improved product pricing and contributions from the Section 45Z production tax credit program.
Net income attributable to REX shareholders rose to $34.9 million, or $1.06 per diluted share, from $7.1 million, or $0.22 per diluted share, in the second quarter of 2025. Executive Chairman Stuart Rose said the result marked the company’s highest second-quarter net income per share in its history.
Revenue, Margins and 45Z Credits
Second-quarter net sales and revenue increased to $168.5 million from $158.6 million a year earlier. Chief Financial Officer Doug Bruggeman attributed the increase to improved pricing across the company’s product mix.
Gross profit climbed to $53.3 million from $14.3 million in the prior-year quarter. The increase reflected stronger crush margins as well as approximately $18.4 million in Section 45Z production tax credit income recognized during the quarter.
Bruggeman said gross profit would still have increased approximately 144% year over year without the 45Z credits. The credits flowed directly through gross profit, management said.
- Second-quarter 45Z production tax credit income: approximately $18.4 million
- Year-to-date 45Z production tax credit income: approximately $26 million
- Income before income taxes and non-controlling interest: $48.1 million, compared with $12.1 million a year earlier
- Equity in income of unconsolidated affiliates: $7.2 million, compared with $900,000 in the prior-year quarter
Selling, general and administrative expense increased to $15.6 million from $6.2 million. Bruggeman said the increase primarily stemmed from higher incentive compensation tied to company performance and restricted stock awards issued during the quarter.
One Earth Expansion Remains on Schedule
REX said its ethanol-production expansion at the One Earth Energy facility in Gibson City, Illinois, remains on track for construction completion by the end of 2026. Rizvi said the additional capacity is intended to strengthen the operating platform and increase the company’s ability to capture value under the 45Z tax-credit program.
During the question-and-answer session, Rizvi said One Earth is currently producing approximately 150 million gallons. The next planned step is to reach 175 million gallons, after which the company will need to seek permits to reach 200 million gallons. He said the company expects it could be near 200 million gallons of production early or around the middle of next year, subject to the permitting process.
REX’s combined investment in the ethanol expansion and carbon capture projects totaled approximately $191.2 million through the end of the second quarter.
Carbon Capture Project Advances Through Permitting
Management highlighted regulatory progress for its One Earth carbon capture and sequestration project. On Aug. 17, the U.S. Environmental Protection Agency issued draft permits for three Class VI injection wells associated with the project. The EPA is accepting public comments on the draft permits, and REX said it continues to work with the agency toward final approval.
Rizvi said the company believes the carbon capture project could improve its carbon-intensity score once permitted and operational, potentially increasing the value it can receive under the 45Z program.
At the state level, the Illinois moratorium on carbon sequestration expired July 1. The Illinois Commerce Commission has begun its rulemaking process, while the Illinois Environmental Protection Agency has initiated its permitting application process. REX plans to submit applications for an approximately five-mile connector pipeline and for the required Illinois EPA approval as soon as possible.
Rose said the timing of final EPA approval was not fully clear, while describing approval of the five-mile pipeline connector by the Illinois Commerce Commission as the process most likely to take the longest. The company said it is focused primarily on advancing its own project, though Rose noted that available capacity could potentially accommodate third-party carbon dioxide projects in the future. He said no such arrangement was imminent.
Cash Position and Capital Allocation
REX ended the quarter with $379.5 million in cash equivalents and short-term investments and no bank debt. Bruggeman said the company continues to fund its growth projects entirely from its balance sheet.
Rose said the company has historically used share repurchases as a method of returning capital, buying shares on price declines. He added that REX is also evaluating other capital-allocation options, including potential acquisitions of ethanol plants or businesses in related industries.
On ethanol market conditions, Rizvi said export demand has remained supportive, noting that ethanol exports increased nearly 13% during the first six months of the year. He said the company did not expect recent developments involving RIN credits and exemptions to have a major effect on ethanol sales, though he acknowledged there could be some impact.
Management said market fundamentals remain constructive, citing record export demand for U.S. ethanol and the contribution of the 45Z program to margins.
About REX American Resources (NYSE:REX)
REX American Resources Corp. is a diversified agribusiness and renewable energy company headquartered in Kansas City, Missouri. Founded in 2005 through a reorganization of existing agricultural interests, the company focuses on two primary business segments: fuel ethanol production and specialty ingredient solutions. REX American Resources leverages its integrated operations to supply clean-burning fuel, animal feed co-products and sweetener ingredients to a broad customer base in North America and beyond.
In its alcohol fuels segment, the company operates an anhydrous ethanol production facility in Colwich, Kansas.
