SEC Form 10-Q filed by REX American Resources Corporation

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended April 30, 2025

OR

For the transition period from                    to                   

Commission File Number 001-09097

REX AMERICAN RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

(937) 276-3931

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

At the close of business on June 3, 2025, the registrant had 16,468,859 shares of Common Stock, par value $.01 per share, outstanding.

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

INDEX

Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

Unaudited

The accompanying notes are an integral part of these unaudited consolidated financial statements.

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

Unaudited

The accompanying notes are an integral part of these unaudited consolidated financial statements.

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Equity

For the Three Months Ended April 30, 2025 and 2024

Unaudited

(In Thousands)

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Unaudited

The accompanying notes are an integral part of these unaudited consolidated financial statements.

REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2025

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Ethanol and By-Products

At April 30, 2025, we had investments in three ethanol limited liability companies, in two of which we have a majority ownership interest. The following table is a summary of ethanol entity ownership interests at April 30, 2025:

Our ethanol operations are highly dependent on commodity prices, especially prices for corn, ethanol, distillers grains, distillers corn oil and natural gas, and availability of corn. As a result of price volatility for these commodities, our operating results can fluctuate substantially. The price and availability of corn is subject to significant fluctuations depending upon several factors that affect commodity prices in general, including crop conditions, the amount of corn stored on farms, weather, federal policy, foreign trade, tariffs, and international disruptions caused by wars or conflicts. Because the market prices of ethanol and distillers grains are not always directly related to corn prices (for example, demand for crude and other energy and related prices, the export market demand for ethanol and distillers grains, soybean meal prices, and the results of federal policy decisions and trade negotiations can impact ethanol and distillers grains prices), at times ethanol and distillers grains prices may not follow movements in corn prices and, in an environment of higher corn prices or lower ethanol or distillers grains prices, reduce the overall margin structure at the plants. As a result, at times, we may operate our plants at negative or minimally positive operating margins.

We expect our ethanol plants to produce approximately 2.9 gallons of denatured ethanol for each bushel of corn processed in the production cycle. We refer to the actual gallons of denatured ethanol produced per bushel of corn processed as the realized yield. We refer to the difference between the price per gallon of ethanol and the price per bushel of corn (divided by the realized yield) as the “crush spread”. Should the crush spread decline, it is possible that our ethanol plants will generate operating results that do not provide adequate cash flows for sustained periods of time. In such cases, production at the ethanol plants may be reduced or stopped altogether in order to minimize variable costs at individual plants.

We attempt to manage the risk related to the volatility of commodity prices by utilizing forward corn and natural gas purchase contracts, forward ethanol, distillers grains and distillers corn oil sale contracts, and commodity futures agreements, as management deems appropriate. We attempt to match quantities of these sales contracts with an appropriate quantity of corn purchase contracts over a given period of time when we can obtain an adequate gross margin resulting from the crush spread inherent in the contracts we have executed. However, the market for future ethanol sales contracts generally lags the spot

market with respect to ethanol prices. Consequently, we generally execute fixed price contracts for no more than four months into the future at any given time and we may lock in our corn or ethanol price without having a corresponding locked in ethanol or corn price for short durations of time. As a result of the relatively short period of time our fixed price contracts cover, we generally cannot predict the future movements in our realized crush spread for more than four months; thus, we are unable to predict the likelihood or amounts of future income or loss from the operations of our ethanol facilities.

One Earth Energy, LLC Carbon Sequestration and Plant Expansion

One Earth Sequestration, LLC, a wholly owned subsidiary of One Earth Energy, LLC, is in the developmental stage of a carbon sequestration project near the One Earth ethanol plant. In October 2022, we applied for a Class VI injection well permit for three wells with the EPA, and we continue to provide information to the EPA upon request during the technical review of our application. We currently expect the EPA to prepare a draft permit by November 2025 and make a final permit decision by April 2026, according to the EPA’s Class VI Permit Tracker Dashboard on their website. We also need to obtain a county special-use zoning permit for the sequestration site. We have completed the construction of the capture and compression facility to capture, dehydrate, and compress carbon dioxide from the One Earth ethanol plant to a state suitable for sequestration. Testing has not yet been completed and we cannot begin construction of the pipeline or sequestration well until further permits and approvals are received.

We have secured land easements from all necessary landowners to allow the construction of a pipeline on their land to the first two injection wells. We also have landowner subsurface easements for the first injection well with the capacity to allow for carbon sequestration for our One Earth plant for 15 years. The Illinois General Assembly passed the Safety and Aid for the Environment in Carbon Capture and Sequestration Act (Senate Bill 1289), which was signed by the Governor in July 2024. The new legislation imposes additional safety, environmental and other requirements on obtaining permits and approvals for carbon capture and sequestration facilities in Illinois, including CO2 pipelines. Further, the new legislation imposes a moratorium on the issuance of new certificates of authority for the construction of CO2  pipelines until the earlier of the date federal CO2  pipeline safety standards are finalized by the federal PHMSA or, subject to certain other conditions, July 1, 2026.

Although we have made meaningful progress and significant investments in the carbon sequestration project at One Earth, we continue to work with the various government agencies involved to obtain all required permits and approvals, with no assurance of the ultimate success or timing of the project. Also see the discussion under “Trends and Uncertainties” of certain recently proposed legislation that, if enacted, could impact our carbon sequestration project.

We also intend to concurrently expand the One Earth ethanol plant. We received a construction permit from the EPA to increase production from 150 million gallons of ethanol per year to 175 million gallons of ethanol per year. Once we achieve that level of production, we intend to apply for another permit to increase production to 200 million gallons per year.

We continue to work to identify ways to reduce our CI score at the One Earth plant with the intention of maximizing tax credits available under the IRA. The IRA created a new Clean Fuel Production Credit, available for calendar years 2025 – 2027, which established a credit of approximately $0.02 per ethanol gallon per CI point reduction below a 50 CI score threshold to incentivize further increases in plant efficiencies within the industry. The U.S. Department of the Treasury has not yet issued final rules on qualification for 45Z tax credits.

We currently budget capital expenditures for both projects to be approximately $220 million to $230 million, subject to further refinement as we move forward. We plan to pay for all expenditures from available cash. As of April 30, 2025, we had spent $56.3 million since inception and were contractually committed to spend an additional $0.9 million toward the carbon sequestration project. If the carbon sequestration project is successful, we believe we will qualify for tax credits under section 45Q, based on tons of carbon sequestered, and section 45Z, based on gallons of ethanol produced, as outlined in the IRA. However, 45Z credits are only available for calendar years 2025 – 2027 and the regulations have not yet been finalized by the U.S. Department of the Treasury. Companies may elect either the 45Q credit or the 45Z credit in periods in which both tax credits are available. As of April 30, 2025, we had spent $66.4 million since inception and were contractually committed to spend an additional $8.3 million toward plant capacity expansion and ongoing efforts to reduce our CI scoring.

In May 2023, NuGen, our majority owned ethanol plant in Marion, South Dakota, signed an agreement to be part of Summit Carbon Solutions’ carbon capture and storage pipeline. Should Summit Carbon Solutions be able to obtain all necessary permits and approvals, the agreement would allow NuGen to share in the economic benefits of tax credits through the sale of the carbon dioxide output of its ethanol production facility for sequestration, as well as reduce its net carbon emissions. In March 2025, South Dakota signed a bill into law that bans the use of eminent domain in connection with carbon dioxide pipelines. This act could make the sequestration project for the NuGen facility more difficult to complete.

We plan to seek and evaluate various investment opportunities including ethanol and/or energy related, carbon sequestration, agricultural or other ventures we believe fit our investment criteria. We can make no assurances that we will be successful in our efforts to find such opportunities.

Refined Coal

On August 10, 2017, we purchased, through a 95.35% owned subsidiary, the entire ownership interest of an entity that owned a refined coal facility. We began operating the refined coal facility immediately after the acquisition. Using licensed technology, our plant applied two separate chemicals to convert feedstock coal into refined coal, which was sold to the end user of the refined coal. The refined coal operating results were subsidized by federal production tax credits through November 18, 2021, subject to meeting qualified emissions reductions as governed by Section 45 of the IRC. We ceased operating the facility on November 18, 2021 and subsequently sold the facility. The approximately $58.2 million of federal production tax credits received through the ownership of this facility remain under IRS audit.

Critical Accounting Policies and Estimates

During the three months ended April 30, 2025, we did not change any of our critical accounting policies as disclosed in our 2024 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2025.

Fiscal Year

All references in this report to a particular fiscal year are to REX’s fiscal year ended January 31. The Company refers to its fiscal year by reference to the year immediately preceding the January 31 fiscal year end date. For example, “fiscal year 2025” means the period February 1, 2025 to January 31, 2026. The Company includes the results of operations of One Earth in its Consolidated Statements of Operations on a delayed basis of one month as One Earth has a fiscal year end of December 31.

Results of Operations

Trends and Uncertainties

Renewable Fuel Standard II, established in October 2010, has been an important factor in the growth of ethanol usage in the United States. In recent years, there has been much uncertainty in the enforcement of RFS II. When it was originally established, RFS II required the volume of “conventional” or corn derived ethanol to be blended with gasoline to increase each year until it reached 15.0 billion gallons in 2015 and required that it remain at that level through 2022. There are no established congressional target volumes beginning in 2023. The EPA has the authority to waive the biofuel mandate, in whole or in part, if there is inadequate domestic renewable fuel supply or the requirement severely harms the domestic economy or environment. In addition, under RFS II, a small refiner that processes less than 75,000 barrels of oil per day can petition the EPA for a waiver of their requirement to submit RINs. The EPA, through consultation with the Department of Energy and the Department of Agriculture, can grant the refiner a full or partial waiver, or deny the waiver. The EPA issued 88 refinery exemptions for 2016-2018 compliance years, undercutting the statutory renewable fuel volumes by a total of 4.3 billion gallons. The EPA has not granted any small refinery waivers for 2019-2022. There remain multiple ongoing legal challenges on how the EPA has handled the small refinery waivers. In July 2024, the U.S. Court of Appeals for the District of Columbia Circuit vacated many of the EPA’s 2022 SRE denials. The EPA had denied 105 SREs in 2022. As a result of this Court ruling, the EPA voluntarily moved to rescind the agency’s 2023 denial of 26 SREs. During the previous Trump administration, the EPA granted more SREs than under other administrations. These and additional SREs could lead to decreased RIN values and ethanol pricing. As of May 2025, there were 169 SRE petitions pending.

The EPA has issued Renewable Fuel Standard volume obligations for calendar years 2023-2025. The volumes from conventional biofuels (which includes corn-based ethanol) were 15.0 billion gallons for 2023 through 2025. Additionally, in 2023, the EPA restored 250 million gallons previously waived. The EPA was required to propose RVOs for 2026 by November 2024, but that deadline was missed. The EPA delivered the proposed 2026 RVOs to the White House Office of Management and Budget on May 14, 2025, which is the final step before being released to the public for comments.

The EPA has issued emergency waivers for the sale of E-15 gasoline for the 2025 summer months. This is the fourth consecutive year for these emergency waivers. The EPA has not granted E-15 the same Reid vapor pressure waiver as E-10, so absent the emergency waivers, E-15 may not be sold in most states from June 1 to September 15.

The IRA may impact our business by creating a new Clean Fuel Production Credit, section 45Z, available for years 2025 to 2027. The Clean Fuel Production Credit is established at approximately $0.02

per ethanol gallon per CI point reduction below a 50 CI score threshold. The Act also raises the carbon capture tax credit from $50 per metric ton to $85 per metric ton, under section 45Q. Taxpayers may elect to be treated as making a payment against tax for 100% of the value of the 45Q credit (“direct pay”) for the first five years, starting with the year a qualifying carbon sequestration facility is placed in service, but not beyond December 31, 2032. Companies may elect either the 45Q credit or the 45Z credit in periods in which both tax credits are available. Other potential impacts include (a) extending the biodiesel tax credit, which could impact our renewable corn oil values, as this co-product serves as a low-carbon feedstock for renewable diesel and biomass based diesel production; (b) creating a new tax credit for synthetic aviation fuel; (c) funding biofuel refueling infrastructure which could impact the availability of higher level ethanol blended fuel; and (d) provision for production and purchase credits for electric vehicles, which could impact the amount of internal combustion engines on the road over time, and ultimately reduce the demand for gasoline, diesel fuels and ethanol.

The U.S. Congress is considering a budget and policy bill which, as initially passed by the House of Representatives, includes proposed amendments to the Inflation and Reduction Act. While there is no certainty at this time as to what will be included in any final legislation that actually becomes law, we are closely monitoring any changes to sections 45Q and 45Z of the Internal Revenue Code that could impact the economics of our carbon capture and sequestration project.

In January 2025, the USDA released an interim rule on 45Z tax credits titled “Technical Guidelines for Climate-Smart Agriculture Crops Used as Biofuel Feedstocks”, or “CSA rule”. The rule helps to connect CSA practices used in the production of feedstock crops with reductions in the carbon footprint of the biofuels industries, laying out how practices that reduce greenhouse gas emissions or sequester carbon will be scored, on a county-by-county basis. These practices include no-till planting, cover crops and nitrogen inhibitors, which may be measured individually, rather than requiring bundling of practices. The interim rule is subject to a 60-day comment period with final resolution to be determined by the Trump administration.

Illinois Senate Bill 3968 was introduced during the 2024 legislative session and assigned to the Senate Executive Committee. The bill proposed banning carbon sequestration projects located over, under, or through a sole-source aquifer, including the three adjacent watersheds that make up the Mahomet Sole Source Aquifer Project Review Area, a designation established by the EPA in March 2015. However, SB 3968 did not advance and was not enacted during that session. In the 2025 legislative session, Senate Bill 1723 was introduced with an amendment that defined the term “sole-source aquifer” to specifically refer to the Mahomet Sole Source Aquifer Area, as defined by the EPA. Under this definition, SB 1723 would prohibit carbon sequestration activities over, under, or through the aquifer as defined in the bill. The Illinois Senate passed SB 1723 on April 10, 2025 and on May 20, 2025, the Illinois House of Representatives approved the bill. The legislation now awaits the Governor’s consideration and potential signature into law. The first proposed injection well for our carbon sequestration project is located in the northern portion of the Sangamon River near Fisher Upstream Area watershed, and it lies outside the mapped boundary of the Mahomet Sole Source Aquifer as defined in SB 1723, approximately five miles north of the Sangamon River and about six miles beyond the aquifer’s mapped boundary. The second and third proposed injection well sites are also located outside the areas designated as part of the Mahomet Sole Source Aquifer Project Review Area. The Company continues to closely monitor the progress of SB 1723 and is actively evaluating any potential implications it may have for the development and permitting of our carbon sequestration project.

Additionally, see “One Earth Energy, LLC Carbon Sequestration and Plant Expansion” above for a discussion of certain other uncertainties associated with our Illinois carbon sequestration and plant expansion projects.

On August 10, 2017, we purchased, through a 95.35% owned subsidiary, the entire ownership interest of an entity that owned a refined coal facility. We began operating the refined coal facility immediately after the acquisition. As the plant was no longer eligible to receive federal production tax credits beginning on November 18, 2021, we ceased operations on that date and subsequently sold the facility. The approximately $58.2 million of federal production tax credits received through ownership of this facility remain under IRS audit.

The United States exported an estimated 1.9 billion gallons of ethanol in 2024, up from approximately 1.4 and 1.3 billion gallons in 2023 and 2022, respectively. In 2024 and 2023, an estimated 12.2 and 10.8 million metric tons, respectively, of distillers grains were exported from the United States, which represented approximately 37% and 34% in 2024 and 2023, respectively, of U.S production. There has been much discussion around proposed and recently enacted tariffs by the United States and counter-tariffs and other trade restriction involving countries which have been large purchasers from our industry in the United States which could affect future demand for these products.

The trends and uncertainties mentioned above could impact our future operating results in both positive and negative ways.

Comparison of Three Months Ended April 30, 2025 and 2024

The following table summarizes our results from operations (amounts in thousands):

The following table summarizes net sales and revenue by product group (amounts in thousands):

The following table summarizes selected operating data:

Net sales and revenue in the quarter ended April 30, 2025 decreased 2% compared to the prior year first quarter.

Ethanol revenue increased 4% in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024 as the selling price per gallon sold increased 10% during the first quarter of fiscal year 2025 compared to the prior year comparable period, partially offset by a 5% decrease in gallons of ethanol sold, impacted by lower production levels. The ethanol pricing increase was primarily driven by overall market supply and demand.

Dried distillers grains revenue decreased 27% in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024 as the average price per ton sold decreased 22%, coupled with a 6% decrease in tons sold. The decrease in the dried distillers grains selling price is consistent with recent quarters and reflects an extended period of lower corn pricing as dried distillers grains prices often correlate with corn pricing. The decrease in tons sold was partially offset by an increase in tons of modified distillers grains sold, but also impacted by lower production levels. Our consolidated plants’ decisions to sell modified or dried distillers grains fluctuate from time to time based upon market conditions.

Distillers corn oil revenue increased approximately 1% in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024 as the amount of pounds sold increased 2%, offset by a 2% decrease in the average price per pound. The decrease in the distillers corn oil selling price resulted primarily from fluctuations in demand in the renewable biodiesel market which often reflects the price of soybean oil.

Modified distillers grains revenue increased 36% in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024 as the amount of pounds sold increased by 52%, offset partially by a decrease in the average selling price per ton sold of 11%. The decrease in the modified distillers grains selling price resulted primarily from an extended period of lower corn prices as prices tend to move in the same direction. Our consolidated plants’ decisions to sell modified or dried distillers grains fluctuate from time to time based upon market conditions.

Cost of sales decreased 2% in the quarter ended April 30, 2025, compared to the prior year first quarter. Corn accounted for approximately 74% ($106.3 million) of our cost of sales during the first quarter of fiscal year 2025 compared to approximately 75% ($110.6 million) during the first quarter of fiscal year 2024. Natural gas accounted for approximately 6% ($8.1 million) of our cost of sales during the first quarter of fiscal year 2025 and 5% ($7.1 million) in the first quarter of fiscal year 2024.

As a result of the foregoing, gross profit for the first quarter of fiscal year 2025 decreased approximately $0.1 million compared to the prior year first quarter.

We attempt to match quantities of ethanol, distillers grains and distillers corn oil sales contracts with an appropriate quantity of corn purchase contracts over a given time period when we can obtain a satisfactory margin resulting from the crush spread inherent in the contracts we have executed. However, the market for future ethanol sales contracts generally lags the spot market with respect to ethanol price. Consequently, we generally execute fixed price sales contracts for no more than four months into the future at any given time and we may lock in our corn or ethanol price without having a corresponding locked in ethanol or corn price for short durations of time. As a result of the relatively short period of time our contracts cover, we generally cannot predict the future movements in our realized crush spread for more than four months. We utilize derivative financial instruments, primarily exchange traded commodity future contracts and swap contracts, in conjunction with certain of our corn procurement activities and commodity marketing activities.

SG&A expenses were approximately $5.9 million for the first quarter of fiscal year 2025, compared to approximately $6.1 million of expenses for the first quarter of fiscal year 2024. The decreases compared to the prior year first quarter are due primarily to a decrease in performance bonus expense of $0.2 million and a decrease in stock compensation expense of $0.3 million subsequent to the completion of the restricted stock units performance period on December 31, 2024. These decreases were partially offset by an increase in rail car lease expense due to higher rates realized upon lease renewals.

During the first quarter of fiscal year 2025, we recognized income from our equity investment in Big River of approximately $1.0 million compared to income of approximately $1.7 million for the first quarter of fiscal year 2024. Our investment in Big River, which has interests in four ethanol production plants, represents an effective ownership of approximately 39.2 million gallons of ethanol shipped in the trailing twelve months ended April 30, 2025. Due to the inherent volatility of commodity prices within the

ethanol industry, we cannot predict the likelihood of future operating results from Big River being similar to historical results.

Interest and other income was approximately $4.2 million for the first quarter of fiscal year 2025 versus approximately $5.9 million for the first quarter of fiscal year 2024. The decrease is primarily related to decreased interest income of $1.3 million in the current year based upon lower balances and yields on our excess cash and short-term investments in fiscal year 2025, compared to 2024. One of our consolidated ethanol plants recognized $0.5 million less in patronage income from an investment in a cooperative in the first quarter of 2025 ($0.7 million) compared to the first quarter of 2024 ($1.2 million). We do not expect patronage income from this investment in a cooperative to be significant in future periods.

As a result of the foregoing, income before income taxes was approximately $13.6 million and $16.0 million for the first quarters of fiscal year 2025 and 2024, respectively.

The Company applies an effective tax rate to interim periods that is consistent with the Company’s estimated annual tax rate as adjusted for discrete items impacting the interim periods. Our income tax provision was approximately $3.0 million and $3.7 million for the three months ended April 30, 2025 and 2024, respectively.

As a result of the foregoing, net income was approximately $10.7 million for the first quarter of fiscal year 2025 compared to approximately $12.3 million for the first quarter of fiscal year 2024.

Net income attributable to non-controlling interests was approximately $2.0 million for the first quarter of fiscal year 2025 and $2.1 million for the first quarter of 2024. These amounts represent the other owners’ share of the income of NuGen and One Earth.

As a result of the foregoing, net income attributable to REX common shareholders for the first quarter of fiscal year 2025 was approximately $8.7 million, compared to net income attributable to REX common shareholders of approximately $10.2 million for the first quarter of fiscal year 2024.

Liquidity and Capital Resources

Net cash used in operating activities was approximately $3.5 million for the first quarter of fiscal year 2025, compared to net cash used in operating activities of approximately $2.3 million for the first quarter of fiscal year 2024. For the first quarter of fiscal year 2025, cash was provided by net income of approximately $10.7 million, adjusted upward for non-cash items of approximately $4.4 million, which consisted of depreciation, amortization of operating lease right-of-use assets, income from equity method investments, interest income from short-term investments, the deferred income tax provision, and stock-based compensation expense. An increase in the balance of accounts receivable used cash of approximately $6.5 million, primarily as a result of the timing of products shipped and the receipt of customer payments at One Earth and NuGen. Inventories decreased over the first quarter of fiscal year 2025, providing cash of approximately $1.2 million. A decrease in the balance of other assets of approximately $0.1 million primarily related to decreases in prepaid insurance as well as by changes in the carrying value of forward purchase contracts and commodity futures positions recorded at fair value, offset by increases in spare parts inventory and other prepaid balances. An increase in the balance of refundable income taxes of approximately $0.9 million primarily relates to the accrual of the federal taxes currently payable being less

than estimated federal tax payments made to date. While the Company has tax credits available to offset all amounts owed, the Company is limited to using tax credits for only 75% of federal taxes owed. A decrease in the balance of accounts payable used cash of approximately $8.9 million, which was primarily a result of the timing of inventory receipts and vendor payments. A decrease in the balance of other liabilities used cash of approximately $3.8 million, which was primarily caused by a decrease in accrued payroll which used cash of approximately $5.2 million, due to the timing of annual bonus payments. Additionally, a decrease in the lease liability used cash of $1.5 million based on payments made during the quarter. These decreases are partially offset by an increase in other current liabilities of $3.0 million.

Net cash used in operating activities was approximately $2.3 million for the first quarter of fiscal year 2024. For the first quarter of fiscal year 2024, cash was provided by net income of approximately $12.3 million, adjusted upward for non-cash items of approximately $5.6 million, which consisted of depreciation, amortization of operating lease right-of-use assets, income from equity method investments, interest income from short-term investments, the deferred income tax provision, and stock-based compensation expense. A decrease in the balance of accounts receivable provided cash of approximately $1.7 million, primarily a result of the timing of products shipped and the receipt of customer payments at One Earth and NuGen. Inventories were nearly flat over the first three months of fiscal year 2024. An increase in the balance of other assets of approximately $3.8 million primarily related to prepayments on certain executed lease agreements, offset by changes in the carrying value of forward purchase contracts and commodity futures positions recorded at fair value. A decrease in the balance of refundable income taxes of approximately $1.1 million primarily relates to the accrual of the federal taxes currently payable for first quarter of 2024. While the Company has tax credits available to offset all amounts owed, the Company is limited to using tax credits for only 75% of federal taxes owed. A decrease in the balance of accounts payable used cash of approximately $12.7 million, which was primarily a result of the timing of inventory receipts and vendor payments. A decrease in the balance of other liabilities used cash of approximately $6.2 million, which was primarily caused by a decrease in accrued payroll of approximately $5.4 million following the payment of fiscal year 2023 bonuses.

At April 30, 2025, working capital was approximately $356.2 million, compared to $385.4 million at January 31, 2025. The ratio of current assets to current liabilities was 9.4 to 1 at April 30, 2025 and 8.6 to 1 at January 31, 2025.

Cash of approximately $1.8 million was provided by investing activities for the first quarter of fiscal year 2025, compared to cash provided by investing activities of approximately $11.9 million during the first quarter of fiscal year 2024. During the first quarter of fiscal year 2025, the Company had capital expenditures of approximately $6.9 million, primarily for various capital projects at our consolidated ethanol plants, including $5.1 million for expansion and CI scoring reduction projects at the One Earth facility and $0.7 million for the carbon sequestration project. During the first quarter of fiscal year 2025, we purchased short-term U.S. Treasury Bills of approximately $41.4 million, while U.S. Treasury Bills of approximately $50.0 million matured. The U.S Treasury Bills had maturities of less than one year and we classified them as short-term investments. Depending on the investment options available, we may elect to retain the funds, or a portion thereof, in cash, short-term investments or long-term investments.

Cash of approximately $11.9 million was provided by investing activities for the first quarter of fiscal year 2024. During the first quarter of fiscal year 2024, we had capital expenditures of approximately $24.8 million, primarily for various capital projects at our consolidated ethanol plants, including $10.1

million for expansion and CI scoring reduction projects at the One Earth facility and $11.0 million for the carbon sequestration project. During the first quarter of fiscal year 2024, we purchased U.S. Treasury Bills of approximately $85.0 million. During the first quarter of fiscal year 2024 U.S. Treasury Bills of approximately $121.5 million matured. The U.S Treasury Bills had maturities of less than one year and we classified them as short-term investments.

Cash of approximately $32.7 million was used in financing activities in the first quarter of fiscal year 2025 for the repurchase of the Company’s stock. There were no repurchases of Company stock in the first quarter of 2024. Additionally, $2.0 million was used in the first quarter of fiscal year 2025 for payments to non-controlling interests holders, compared to approximately $1.8 million for the first quarter of fiscal year 2024.

We are investigating various uses for our excess cash and short-term investments. We expect total capital expenditures related to the construction at the One Earth facilities to approximate $220 million to $230 million, inclusive of the carbon sequestration project and plant capacity expansion and ongoing efforts to reduce CI scoring, which we currently plan to pay from our available cash. This estimate is subject to further refinement as the project progresses. As of April 30, 2025, we had spent $56.3 million since inception and were contractually committed to spend an additional $0.9 million toward the carbon sequestration project. As of April 30, 2025, we had spent $66.4 million since inception and were contractually committed to spend an additional $8.3 million toward plant capacity expansion and CI scoring reduction efforts. For all projects, we plan to spend $60 million to $80 million during the remainder of fiscal year 2025.

We have a stock buyback program with 1,181,963 shares remaining authorized at April 30, 2025. We typically repurchase our common stock when our stock price is trading at a price we deem to be a discount to the underlying value of our net assets. We continue to seek investment opportunities, including ethanol and/or energy related, carbon sequestration related, agricultural or other ventures, we believe meet our investment criteria.

Forward-Looking Statements

This Form 10-Q contains or may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements can be identified by use of forward-looking terminology such as “may,” “expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Readers are cautioned that there are risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. These risks and uncertainties include the risk factors set forth from time to time in the Company’s filings with the Securities and Exchange Commission and include among other things: the impact of legislative and regulatory changes, the 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, including

impacts on supplies, demand, personnel and other factors. The Company does not intend to update publicly any forward-looking statements except as required by law. Other factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025 (File No. 001-09097).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to the impact of market fluctuations associated with commodity prices as discussed below.

We manage a portion of our risk with respect to the volatility of commodity prices inherent in the ethanol industry by using forward fixed-price purchase and fixed-price sale contracts and exchange traded commodity futures contracts. Our remaining exposure to market risk, which includes the impact of our risk management activities resulting from our fixed-price purchase and sale contracts and derivatives, is based on the estimated effect on pre-tax income for the twelve months following April 30, 2025 is as follows, assuming normal operating capacity (amounts in thousands):

Item 4. Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are, from time to time, involved in various legal proceedings incidental to the conduct of our business. We believe that any current proceedings will not have a material adverse effect on our financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes to the risk factors discussed in our Annual Report on Form 10-K for the year ended January 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to the Company’s repurchase of its common stock during the period covered by this report:

Item 3. Defaults upon Senior Securities

Not Applicable

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

The following exhibits are filed with this report:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.