REX American Resources Plans Stock Split

REX American Resources(NYSE:REX) reported results for its fiscal second quarter ended in July 2025 on August 27, 2025, posting net income of $7.1 million, or $0.43 per diluted share, a 43% year-over-year decline. Despite lower sales prices for dried distiller grains and higher shipping costs, the company advanced its ethanol capacity and carbon capture projects on schedule and within budget, and announced a two-for-one stock split following record share prices.

Stock split boosts REX American Resources liquidity

REX American Resources' board approved a 2-for-1 stock split via a 100% stock dividend for shareholders of record as of September 8, 2025, after shares reached all-time highs. The company ended the first quarter with $310.5 million in cash and equivalents, supporting future growth and acquisition opportunities.

"This morning, we announced that our board of directors has authorized a two-for-one stock split that would be effected by a 100% stock dividend. We saw this as an opportunity as our stock recently traded at all-time highs, to reward our loyal shareholders and increase liquidity in our shares. This will affect shareholders of record as of 09/08/2025."
-- Zafar Rizvi, Chief Executive Officer

The stock split is designed to enhance share liquidity and broaden the investor base, while the strong cash position provides flexibility for strategic initiatives.

REX American Resources advances capacity and efficiency

The One ARC (One Earth) plant completed its energy efficiency initiative on schedule, setting the stage for a February 2026 completion of its ethanol capacity expansion from 135 million to 175 million gallons annually. Year-to-date, the company has invested $126.7 million in expansion and carbon capture, remaining within the revised $220 million to $230 million budget range.

"The One ARC facility expansion is progressing steadily. The energy efficiency initiative has been completed, with a focus on optimizing the reduction of the expanded plant's carbon intensity. Most of the expansion work is already complete. The initial capacity expansion, which will increase annual ethanol production capacity to 175 million gallons, is expected to be fully operational in February 2026."
-- Zafar Rizvi, Chief Executive Officer

Timely execution of these upgrades should improve the company's cost structure and environmental profile, supporting export competitiveness as demand for low-carbon fuels grows.

Legislation and tax credits strengthen REX project returns

Congress passed the "One Big Beautiful Bill Act," extending the 45Q (carbon sequestration) and 45Z (clean fuel production) tax credits through 2029 and simplifying qualification criteria. REX American Resources reported progress on its EPA Class VI carbon sequestration permit, which management says will materially improve returns on its carbon capture and ethanol expansion projects.

"Passage of the One Big Beautiful Bill Act during the quarter was very supportive of our carbon capture and sequestration project. The continuation of the 45Q tax credit and extension of the 45Z tax credit through 2029 are important to the economics of our project. We are in a good position as we wait on approvals from the counties, state, and EPA."
-- Stuart Rose, Executive Chairman

These legislative changes reduce execution risk and enhance the long-term economics of the company's carbon capture investments, positioning REX American Resources to benefit from government incentives.

Looking Ahead

Management expects third quarter 2025 results to improve sequentially but remain below the prior year's third quarter, with full-year 2025 ethanol export volumes projected to set a new record. The company anticipates completing its capacity expansion in February 2026 and expects the EPA to finalize a Class VI well permit for carbon injection by March 2026. No specific quantitative forward-looking earnings or margin guidance was provided in the transcript.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.