8-K: REX American Resources Reports Record Q2 Earnings, Carbon Capture Progress

REX American Resources announced record fiscal second quarter 2026 net income per share of $1.06, a substantial increase from $0.22 in the prior year, alongside receiving draft permits for its carbon capture project.

Summary

• REX American Resources reported record fiscal second quarter 2026 net income per share of $1.06, a significant jump from $0.22 in the same period of fiscal 2025.
• Gross profit for the quarter was $53.3 million, up from $14.3 million in Q2 2025, driven by improved crush margins and production tax credits.
• Net income attributable to REX shareholders reached $34.9 million in Q2 2026, compared to $7.1 million in Q2 2025.
• The company received draft permits from the U.S. EPA for three Class VI injection wells for its carbon capture and sequestration project at the One Earth Energy facility.
• Capital expenditures for the One Earth carbon capture and expansion project total $191.2 million to date.
• As of July 31, 2026, REX had $379.5 million in cash, cash equivalents, and short-term investments with no bank debt.

Sentiment

Score: 9

Explanation: StockSavvy.ai views this as a highly positive report, driven by record earnings, significant operational improvements, and key regulatory progress on carbon capture projects.

Positives

• Record fiscal second quarter 2026 net income per share of $1.06, a substantial increase from $0.22 in fiscal 2025.
• Gross profit surged to $53.3 million in Q2 2026 from $14.3 million in Q2 2025, reflecting improved crush margins and production tax credits.
• Net income attributable to REX shareholders more than quadrupled to $34.9 million in Q2 2026 from $7.1 million in Q2 2025.
• The company's carbon capture and sequestration project received draft permits from the U.S. EPA for three Class VI injection wells, a significant regulatory milestone.
• REX achieved its 24th consecutive profitable quarter.
• Strong balance sheet with $379.5 million in cash, cash equivalents, and short-term investments and no bank debt as of July 31, 2026.
• Net sales and revenue increased to $168.5 million in Q2 2026 from $158.6 million in Q2 2025, primarily due to improved pricing.

Negatives

• Tons of dried distillers grains sold decreased slightly to 145,081 in Q2 2026 from 148,017 in Q2 2025.
• The company's cash and cash equivalents decreased from $188.7 million at January 31, 2026, to $91.3 million at July 31, 2026, largely due to investing activities.

Risks

• The impact of legislative and regulatory changes.
• Price volatility and availability of corn, distillers grains, ethanol, distillers corn oil, gasoline, and natural gas.
• Commodity market risk.
• Ethanol plants operating efficiently and according to forecasts and projections.
• Logistical interruptions.
• Success in permitting and developing the planned carbon sequestration facility near the One Earth Energy ethanol plant.
• Changes in the international, national, or regional economies.
• The impact of inflation, the ability to attract employees, weather, results of income tax audits, changes in income tax laws or regulations, the impact of U.S. foreign trade policy and tariffs, changes in foreign currency exchange rates, the effects of terrorism or acts of war, and the effect of pandemics on the Company's business operations.

Future Outlook

The company expects the One Earth Energy expansion to become operational during fiscal 2026. The carbon capture project is advancing following the receipt of draft EPA permits, with public comment period underway.

Management Comments

• "During the second quarter of 2026 REX achieved several important milestones that further support and advance our long-term growth strategy."
• "We continued to benefit from the Section 45Z tax credit program in the second quarter, which contributed $18.4 million directly to gross profit."
• "Excluding the impact from 45Z tax credits, our quarterly gross profit from our core operations increased 144% over the same period in the prior year."
• "In addition, we received notice from the U.S. EPA that our One Earth carbon capture and sequestration project had been issued draft permits on August 17th for three Class VI injection wells."
• "We are pleased to have reached this important regulatory milestone and look forward to advancing the project in coordination with the EPA and Illinois regulators."
• "The second quarter marked REXs 24th consecutive profitable quarter and represented a record second quarter on an earnings-per-share basis for the company."
• "REXs long-term prospects remain strong, supported by the continued dedication, hard work, and execution of our team across all of our operations."

Industry Context

StockSavvy.ai notes that REX American Resources' strong performance aligns with a period of improved ethanol pricing and benefits from production tax credits, a trend that could be influencing other players in the ethanol production sector. The progress on carbon capture projects is also a significant development within the industry, as companies seek to decarbonize operations and potentially access new revenue streams.

Comparison to Industry Standards

• REX's Q2 2026 net income per share of $1.06 significantly outperforms the $0.22 reported in Q2 2025, indicating a substantial improvement in profitability.
• The gross profit margin improvement, driven by crush margins and tax credits, suggests efficient operations and favorable market conditions compared to industry averages, though specific industry benchmarks are not provided in the filing.
• The company's ability to secure draft permits for Class VI injection wells for carbon capture is a notable achievement, as this is a critical and often lengthy regulatory process for carbon sequestration projects in the industry.

Stakeholder Impact

• Shareholders are likely to benefit from the record earnings and strong financial performance, potentially leading to increased shareholder value.
• Employees may see positive impacts from the company's continued profitability and growth strategy.
• Suppliers and customers may experience continued stable business operations with a financially robust partner.

Next Steps

• Testing and commissioning of the One Earth Energy expansion are expected to begin upon completion.
• The One Earth Energy expansion is expected to become operational during fiscal 2026.
• The company will continue to advance its carbon capture and sequestration project in coordination with the EPA and Illinois regulators.
• Public comments on the draft permits for the Class VI injection wells are currently being accepted by the EPA.

Key Dates

Recommendation

The filing demonstrates exceptionally strong financial performance with record earnings, significant year-over-year growth in profitability, and a robust balance sheet. The advancement of the carbon capture project, a key strategic initiative, reaching the draft permit stage is a major de-risking event. These factors collectively suggest a highly favorable outlook and potential for significant stock appreciation.

Keywords

ethanol production, carbon capture, financial results, net income, gross profit, production tax credits, EPA permits, distillers grains