Good morning, and welcome to the REX American Resources Third Quarter 2024 Earnings Conference Call. As a reminder, today's call is being recorded. And at this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. I would now like to turn the call over to Mr. Doug Bruggeman, Chief Financial Officer of REX American. Please go ahead.

Good morning, and thank you for joining REX American Resources Q3 2024 conference call. With me on our call today are Stuart Rose, REX Executive Chairman; and Zafar Rizvi, the REX CEO. We'll get to our presentation and comments momentarily as well as your questions. But first, I will review the safe harbor disclosure. In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations and beliefs, but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the Company's filings with the Securities and Exchange Commission, including the Company's reports on Form 10-K and 10-Q. REX American Resources assumes no obligation to publicly update or revise any forward-looking statements. I'd now like to turn the call over to our Executive Chairman, Stuart Rose.

Good morning, and thank you again to everyone for joining us. During the third quarter, REX American Resources continued our progress on our three goals for 2024, setting the Company up for success well into the future. As a reminder, these goals were to continue profitable operations to complete the construction phase of our One Earth Energy carbon capture and compression facility and to complete the capacity expansion of our One Earth Energy ethanol production facility to 175 million gallons per year and move toward the planned further permitting of the facility to 200 million gallons per year. To the first goal, we exceeded the mark. The third quarter was REX American Resources' second most profitable quarter in the Company's history behind only the third quarter of 2023. Our net income per share of $1.38 was an improvement of 97% over the second quarter of 2024, principally reflecting better corn pricing. Gross margin improved over the third quarter of 2023 by 1% despite a 21% reduction in product revenue. As we have consistently said, we believe REX's facilities and personnel are among the best in the industry, which they proved quarter after quarter through their attention to detail and awareness of the markets. The focus on lean and efficient operations in our core ethanol business, we believe, will serve as a basis for future increases in profit levels. Once our One Earth plant expansion is up and running next year. It is this part of the business that has allowed REX to grow substantially debt-free, maintain strategic freedom and move forward independently with additive growth projects. As we always do, I want to say thank you to our team for the efforts this quarter and every day. And the second goal to complete construction of the capture and compression portion of our One Earth Energy CCS project in Gibson City, Illinois. We have substantially realized this goal. I'll let Zafar Rizvi, our CEO, discuss the specifics with regard to the remainder of this project later in the call. Our third goal was to complete construction of the One Earth ethanol production capacity expansion to 175 million gallons per year to prepare for further permitting and production levels of 200 million gallons per year. Right now, we estimate that the facility is on track for completion in the middle of 2025 based upon delays in delivery timelines for certain necessary components. As you can see, our efforts to support near- and long-term growth moving forward successfully. At the current time, the fourth quarter continues to be profitable, but trails last year's fourth quarter, which was a historically very strong quarter. I'd now like to turn things over to our CEO, Zafar Rizvi, to give further updates on our major projects.

Thank you, Stuart. The expansion of our One Earth Energy ethanol facility to 175 million gallons per year of production is estimated to be complete by the middle of 2025. Currently, the electric interconnection from our local utility is moving ahead and should be complete by the first quarter of 2025. The timeline for completion of the ethanol production expansion has been extended from our previous target to the middle of 2025 due to delays recently communicated by one of our equipment suppliers for delivery of several necessary components. After completion of the expansion and emission certification, we then expect to begin the planned further permitting of the One Earth ethanol facility to allow it to produce 200 million gallons per year. As I have said before, the regulatory steps receiving an additional permit is the only step necessary to allow for the expanded capacity from 175 million to 200 million gallons as no major additional construction or capital spending is expected. The expansion will give REX additional earnings power, allowing us to sell more product from our highly efficient consolidated plant in Gibson City. We expect that the expansion will provide even greater benefit to shareholders as well as our ability to self-fund ongoing and future growth projects. As Stuart previously said, the carbon capture and compression portion of our One Earth Energy project in Gibson City, Illinois, is substantially complete. We are excited about reaching these milestones, and we are looking forward to the other portions of the project. Just add with the expansion of our ethanol operation at the One Earth site, further work and testing in the capture and compression facilities are subject to completion of the utility interconnection to supply power to the project. Beyond waiting for power, we continue to wait on several regulatory issues to be resolved. Our permit application for Class 6 injection wells is still under review with anticipated final approval slated for July 2025 according to the EPA. As a result of these challenges and as the capture and compression portion of the projects are substantially complete, we plan to manage near-term major capital expenditure related to the CCS project in order to maintain budgetary flexibility and stay within project spend in light of the timeline for approval. Given the new permitting reality, we are confident that pursuing the several ongoing portions of this project in this way is the right path. As of quarter end, we have invested approximately $103 million into the One Earth carbon capture project and ethanol production capacity expansion combined. Spending for the carbon capture and sequestration projects stood at $52.9 million as of third quarter end, while expenditure on the ethanol expansion stood at $50.2 million as of the same date. This is compared to a total combined budgeted amount of $165 million to $175 million for both the CCS project and ethanol production expansion at Gibson City. I would like to hand the call to our CFO, Doug Bruggeman, to discuss our operational and financial results.

Thanks, Zafar. I'll begin with our operational results. REX's ethanol sales volume during the third quarter of 2024 was 75.5 million gallons, an increase of approximately 3% versus the third quarter of 2023 sales volume of 73.2 million gallons. The average selling price for our consolidated ethanol volume was $1.83 per gallon for the third quarter compared to $2.32 per gallon in the third quarter of 2023. Dry distillers grain sales volume during the third quarter of 2024 totaled 170,116 tons, a 5% decrease over third quarter 2023 volumes. The average selling price for the dry distillers grain was $147.14 per ton for the third quarter of 2024 compared to $194.94 per ton in the third quarter of 2023. Modified distillers grain sales volumes were 18,392 tons in the third quarter of 2024 compared with approximately 13,500 tons in the third quarter of 2023. The average selling price for modified distillers grain was $63 per ton for the third quarter versus $85.86 in the prior year third quarter. Corn oil sales volume in the third quarter of 2024 was approximately 23.4 million pounds compared to 24.1 million pounds sold in the third quarter of 2023. The average selling price for REX's corn oil products was $0.44 per pound for the third quarter of 2024 compared to $0.61 per pound in the third quarter of 2023. Gross profit for the third quarter of 2024 was $39.7 million versus gross profit of $39.3 million for the third quarter of 2023. The 1% increase in gross profit was achieved despite lower average selling prices for all products, which were more than offset by lower corn and natural gas input prices. Our selling, general and administrative expenses increased to $8.4 million for the third quarter of 2024 versus $7.6 million in the third quarter of 2023. The increase was primarily due to railcar leasing cost increases and certain donations to local first responders related to the carbon capture at the One Earth facility. Interest and other income totaled $4.6 million in the third quarter of 2024 compared with $4.9 million for the third quarter of 2023. Prior year amounts included $900,000 of COVID-related grants from the USDA. Income before taxes and noncontrolling interest for the third quarter of 2024 was approximately $39.5 million compared to $41.3 million for the third quarter of 2023. Net income attributable to REX shareholders for the third quarter was $24.5 million compared to $26.1 million in the third quarter of 2023. On a per share diluted basis for the third quarter of 2024, this amounts to $1.38 per share of net income. The second best results in the history of the Company, only exceeded by net income generated in the third quarter of 2023. We ended the third quarter with total cash, cash equivalents and short-term investments of $365.1 million compared with $378.7 million as of January 31, 2024. The uses of cash during the first nine months of the fiscal year were primarily related to our ongoing construction projects at the One Earth Energy facility. REX American also ended the quarter without any bank debt. I'd now like to turn things back to Zafar.

Thanks, Doug. I would now like to discuss how we see the end of the fiscal year shaping up. As Stuart stated earlier, our plants continue to run with positive earnings into the fourth quarter, but not at the level of last year's fourth quarter. Corn input prices have improved compared to a year ago. And given the bumper crop of corn in the Midwest, we expect adequate supply for our plants for this growing season. As we have mentioned before, we do see sporting dynamics for ethanol pricing for the export market. Ethanol exports through the first nine months of the calendar year were approximately 33% higher than at the same point in calendar 2023 according to the U.S. Energy Information Administration. This level returns U.S. export to their pre-pandemic levels and puts the U.S. on pace to exceed 2018 export volumes. Currently, the all-time high year for export. Looking ahead to 2025, we are particularly excited about the completion of our ethanol production expansion and anticipated increase in profitability this will allow for. We will still expect approval of our Class 6 permit from the EPA in the near term and to continue making progress on our CCS facility, which we expect would bring additional profitability once in operation. Looking further down the road, the projects we are working on today are laying the groundwork for further potential growth into sustainable aviation fuel and third-party carbon sequestration. We are excited about the future as we grow organically and are confident in our team's ability to rise to the challenges at every turn. Now, I would like to open things up to questions. Operator?

Thank you. We will now start the question-and-answer session. Our first question comes from Jordan Levy with Truist. Please go ahead with your question.

Congratulations on the solid quarter. I wanted to get your thoughts here. There was just an article I saw from Reuters that was saying the Biden administration won't finalize 45Z guidance ahead of the January inauguration. So, I want to get your thinking as it relates to the growth initiatives on the expansion and on the CCUS effort should the incoming administration fail to finalize 45Z or just let it kind of slip to the side. How does this all look under 45Z and how do you think about that more broadly?

My opinion is that it's uncertain whether they will finalize 45Z by the end of the term, and we are unsure about the new administration's stance on it. As a result, we remain cautious about their potential actions. Securing 45Z will be extremely challenging without established regulations and an EPA permit. Currently, it seems unlikely for us to gain any advantages from 45Z in the next two years. Ideally, we would benefit from at least one year of 45Z, but the lack of finalized regulations and the uncertainty surrounding the new administration make it very difficult. Zafar?

Yes. I think the only hope we see in the Midwest comes from the farmers and corn growers. There's a lot of support from them as they look for ways to benefit from 45Z for their crops, which they plan to approach using a different method. They can also gain advantages from 45Z. We certainly notice some support from these states, and we hope that will make a difference once the Trump administration takes over. However, the timeframe is quite short, only from 2025 to 2027, and we see some momentum to extend it to 12 years. At this moment, we do not have solid information on what will actually unfold.

One other thing, Jordan, 45Q is currently in effect at $85 a ton, as it has passed through legislation. If we do not receive 45Z in its current legal form, we would still be able to take advantage of 45Q, which is $85 a ton, making our project quite profitable as long as I maintain that.

Yes, I would like to add that, as you know, Jordan, we need to be in service by 2032. Actually, we have until 2034, which gives us ample time to be operational before the deadline. The key difference between 45Q and 45Z is that 45Z only offers three years, whereas 45Q provides us more time to leverage its benefits.

Got it. And then, you all have always been very prudent allocators of capital. Stuart, Zafar looking at the incoming whatever you expect for the incoming policy landscape and recognizing that you've got a significant amount of cash on the balance sheet right now that saw a nice uptick from last quarter. If you look at the areas of opportunity for you all in terms of deploying that cash, I think you noted managing costs on the CCUS side of things as you figure out kind of what things look like. But where do you see the most attractive opportunities for allocating the cash at this point?

One thing we've always done, Jordan, when the stock drops is to focus on buybacks. We have bought back a higher percentage of shares than most companies. Additionally, we continuously look for opportunities, such as new ethanol plants. We are considering a few, but they are in very preliminary stages and it’s uncertain if anything will materialize. Usually, the prices being asked are significantly higher than what we're willing to pay, which is a challenge. However, we are open to exploring other avenues that are either related or sometimes unrelated to our business, where we believe our management skills can be applied. We haven't ventured into that territory for a while, but we previously operated as retailers before becoming ethanol producers. We are capable of seizing great opportunities if they arise.

Our next question comes from Pavel Molchanov at Raymond James. Please go ahead with your question.

Following up on the discussion you just had about kind of future federal policy. It's probably going to be three months, six months before Congress moves forward with tax reform, which may well include some changes to the Inflation Reduction Act, for example, Section 45Q. Are you going to postpone any kind of decisions on the carbon capture project until you get clarity that 45Q will remain in place?

At this point, Pavel, if 45Q is discontinued, this is just my personal view—and not a decision made by the Board of Directors. I believe we would proceed with carbon capture because if others aren't engaging in it, we would take the lead and likely secure a better price for ethanol. I also believe there will still be demand for us to sell our credits to companies aiming for carbon neutrality. Therefore, I do not think we would abandon the project. Currently, we do not anticipate the end of 45Q; however, we recognize that circumstances could change with the Trump administration. In my personal opinion, we should continue with the project. It remains a viable initiative, despite lacking government support. There is a market for low-carbon jet fuel, particularly in California and other regions, and we would be among the few producers. So, I would advocate for moving forward with this. Zafar, do you have anything to add?

Yes, I think I will add to that. We started this project in 2018, before the Inflation Reduction Act was in place. At that time, the tax credit was around $50, but it was eliminated during the Trump administration. Therefore, I do not foresee any significant changes to 45Q. Additionally, several other facilities are already engaged in 45Q carbon sequestration, including a project valued between $7 billion and $8 billion for a carbon pipeline. These companies have made substantial investments in these projects, so abrupt changes are unlikely since the projects are already underway. While changes can occur, I personally do not expect any modifications to 45Q.

Okay. Maybe a follow-up on the ethanol front. You have a long history of operating ethanol plants, including, of course, under Trump's first term. Can you just give some historical perspective on how the EPA went about setting the blending mandates between kind of 2017 and 2021 and how you managed around that?

At that time, Pavel, it was set by legislation, and there were specific gallons required by the RFS in the law. Nowadays, I believe the EPA has the authority to set that level as they choose, which could be a concern moving forward. If they decide to set it lower, that could create issues. On the other hand, if they genuinely aim for energy independence as stated, they could opt for a higher level. We have no certainty about their decisions, but I believe they currently have the power to determine the level at their discretion.

We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

I want to thank everyone for listening. We had another very good quarter, outperforming most, if not all, of the industry. We have the best plants and great locations, including one that is ideal for a carbon capture project, which we hope to implement in the next couple of years, hopefully sooner. Most importantly, we believe we have the best people in the industry, and that distinguishes us. With our CEO, whom I consider the best in the field, we are well positioned for the future. Thank you again for listening to the call. Goodbye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.