REX AMERICAN RESOURCES Corp (REX) FY 2025 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We have been an investor in ethanol production
facilities beginning in 2006. We currently have equity investments in three ethanol production entities, two of which are majority
ownership interests. We may make additional alternative energy investments in the future and are currently working on a carbon
sequestration project near our One Earth Energy location.

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

22

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.

We reported net income attributable to
REX common shareholders of $58.2 million in fiscal 2024 compared to approximately $60.9 million in fiscal 2023. Our ethanol business
had decreased profits in fiscal 2024 compared to fiscal 2023 primarily as a result of lower selling prices, offset partially by
a decrease in corn and natural gas prices. The two largest drivers of ethanol profitability are corn and ethanol pricing, both
of which experienced significant volatility within the year. Chicago Board of Trade corn prices per bushel ranged from a low of
$3.62 in August 2024 to a high of $4.97 in January 2025. S&P Global Platts ethanol pricing per gallon ranged from a low of
$1.38 in February 2024 to a high of $2.12 in June 2024.

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 Energy ethanol plant. A test well has been drilled to a total depth of approximately 7,100
feet, in which almost 2,000 feet of Mt. Simon Sandstone was encountered, which is the geological formation that is the region’s
primary carbon storage resource. Three-dimensional seismic testing has been performed, as well as geological modeling for predicting
the movement of injected carbon and the plume area to determine maximum injection pressure, reservoir quality and storage capacity
for the potential wells. 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 during the technical review of our application upon request. We currently expect the
EPA to prepare a draft permit by the second quarter of 2025 and make a final permit decision by late in the third quarter of 2025,
according to the EPA’s Class VI Permit Tracker Dashboard on their website. We have now secured sufficient subsurface easements
for the proposed first injection well to allow for sequestration of all the carbon emissions from the One Earth Energy ethanol
plant for a minimum of 15 years. We also need to obtain a county special-use zoning permit for the sequestration site. In 2022,
we began construction of a facility to capture, dehydrate, and compress carbon dioxide from the One Earth Energy ethanol plant
to a state suitable for sequestration. While we have completed the construction of the capture and compression facility, testing
has not yet been completed and we cannot begin construction of the pipeline or sequestration well until further permits and approvals
are received.

In October 2023, we submitted an application
to the ICC for a certificate of authority under the state’s CO2 Act to build a short pipeline to deliver
carbon dioxide from the One Earth Energy ethanol plant to the proposed sequestration site. We have obtained easements from all
of the necessary landowners for the use of their land for the pipeline for the first two wells. On May 26, 2024, however, 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 Pipeline and Hazardous
Materials Safety

23

Administration (PHMSA)
or, subject to certain other conditions, July 1, 2026. As a result of this legislation, the ICC dismissed our application without
prejudice, and we will be required to resubmit an application after rules are finalized or subsequent to July 1, 2026.

Although we have made meaningful progress
and significant investments in the carbon sequestration project at One Earth Energy, 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” on pages 25 and 26 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 200 million gallons per year.

Finally, 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.

The Company is reviewing certain aspects
of the expansion portion of the project and its impact on the previously reported expected project costs. Due to this, along with
permitting delays and the impact of inflation, we have increased the budget for both projects to approximately $220 million to
$230 million, subject to further refinement as we move forward. We plan to pay for all costs from available cash. As of January
31, 2025, we had spent $55.7 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 of the Internal Revenue Code (“45Q”), based on tons of carbon sequestered, and section 45Z of the
Internal Revenue Code (“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. As of January 31, 2025, we had spent $59.9 million since inception and were contractually committed to spend an additional
$8.7 million toward plant capacity expansion and ongoing efforts to reduce our CI scoring.

In May 2023, NuGen Energy, LLC, 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 Energy facility more difficult to materialize.

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.

Ethanol Investments

In fiscal year 2006, we entered the ethanol
industry by investing in several entities organized to construct and subsequently operate ethanol producing plants. We are invested
in three entities as of January 31, 2025, utilizing equity investments.

24

The following table is a summary of our
ethanol entity ownership interests at January 31, 2025:

The three entities own a total of six ethanol
production facilities, which in aggregate shipped approximately 727 million gallons of ethanol over the twelve-month period ended
January 31, 2025. REX’s effective ownership of ethanol gallons shipped for the twelve-month period ended January 31, 2025,
was approximately 294 million gallons.

Trends and Uncertainties

Renewable Fuel
Standard II (“RFS 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 renewable identification numbers (“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 and has continued that stance in the proposed volumes
for 2023-2025. 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 has 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 March 2025, there were 156 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 the administration, at that time, indicated on July 8, 2024 an
intention to propose RVOs for 2026 and beyond in March 2025, and finalize them in December 2025. The new administration has not
yet provided an updated timeline for these rules.

The IRA may impact
our business by creating a new Clean Fuel Production Credit, section 45Z of the Internal Revenue Code (“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 of the Internal Revenue Code (“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

25

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 IRA was enacted
under the Biden Administration and there has been discussion of amending or reducing the benefits under the current administration.

In January 2025, the U.S. Department of Agriculture (“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 climate-smart agriculture (“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 to create
climate-smart crops include practices such as no-till planting, cover crops and nitrogen inhibitors, which may be measured individually
under the interim rule, 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, which was introduced into the
Illinois Senate and assigned to the Executive Senate Committee, would, if eventually enacted, ban carbon sequestration
projects if they overlie, underlie, or pass through a sole-source aquifer, including the aquifer’s upstream areas that
are part of the aquifer’s project review area, as identified by the U.S. EPA. On November 14, 2024, the Executive
Senate Committee paused the bill until the Committee can gather additional information. Under the new legislative session in
2025, Illinois House Bill 3614 and Illinois Senate Bill 1723 were introduced using similar language as Senate Bill 3968 and
were passed out of their respective subcommittees on March 18, 2025 and March 20, 2025, respectively. The first well for our
proposed carbon sequestration project is located inside, but near the edge of, the Mahomet Sole Source Aquifer Project Review
Area, within the Sangamon River near Fisher Upstream Area. It is approximately five miles north of the Sangamon River and
nearly six miles outside of the mapped boundary of the Mahomet Aquifer, which has been designated as a sole source or
principal aquifer by the U.S. EPA. We believe our second and third sequestration well sites are outside the Mahomet Sole
Source Aquifer Project Review Area. The Company is closely monitoring this bill and any impact it would have on our
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 federal production tax credits received through
ownership of this facility, approximately $58.2 million, 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.

Should these trends and uncertainties continue,
our future operating results could be impacted.

26

Results of Operations

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:

Comparison of Fiscal Years 2024 and
2023 (Consolidated Results)

Net Sales and Revenue –
Ethanol and distillers corn oil quantities were relatively consistent between periods. We did have a change in mix between dried
and modified distillers grains. However, weaker selling prices across all our products in fiscal year 2024 led to the overall decrease
in sales of 23% between the two fiscal years.

Ethanol sales decreased in fiscal year
2024 compared to fiscal year 2023 as the average price per gallon decreased 23%, offset partially by an increase in gallons sold
of 1%. The decrease in ethanol selling price resulted primarily from a decrease in corn prices as the market price for ethanol
often correlates with the market price for corn.

27

Dried distillers grains sales decreased
in fiscal year 2024 compared to fiscal year 2023, decreasing 27% year-over-year, as the average price per ton sold decreased
25%, as well as a decrease in tons sold of 3%. The decrease in the dried distillers grains
selling price resulted primarily from a decrease in corn prices as dried distillers grains prices often correlate with corn pricing.
The decrease in tons sold was offset by an increase in tons of modified distillers grains sold. Our consolidated plants’
decisions to sell modified or dried distillers grains fluctuate from time to time based upon market conditions.

Distillers corn oil sales decreased 26%
in fiscal year 2024 compared to fiscal year 2023 as the average selling price per pound decreased approximately 27%. 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. The price decrease was partially offset by a negligible increase in pounds sold.

Modified distillers grains sales decreased
12% in fiscal year 2024 compared to fiscal year 2023 as the average selling price per ton sold decreased 32%, offset partially
by an increase in tons sold of 30%. The decrease in the modified distillers grains selling price resulted primarily from a decrease
in corn prices as distillers grain pricing often correlates with corn pricing. Our consolidated
plants’ decisions to sell modified or dried distillers grains fluctuate from time to time based upon market conditions.

Gains on derivative financial instruments
were $0.4 million in fiscal year 2024, compared to insignificant losses in fiscal year 2023. Gains
and losses are related to our risk management activities and were impacted by the price movements and types of contracts entered
into at our consolidated ethanol plants.

Cost of Sales – Cost
of sales for fiscal year 2024 decreased approximately $184.2 million, or 25%, over fiscal year 2023. Corn accounted for approximately
76% ($416.4 million) of our cost of sales during fiscal year 2024 compared to approximately 80% ($584.2 million) during fiscal
year 2023. The cost of corn decreased due to lower corn prices, primarily attributable to two successive strong harvest seasons.
These decreases were offset by a slight increase in the amount of corn used between the two periods. Natural gas accounted for
approximately 4% ($22.6 million) of our cost of sales during fiscal year 2024 compared to approximately 4% ($31.7 million) during
fiscal year 2023. The natural gas cost decrease was primarily attributable to a decrease in the cost per unit.

Gross Profit – As a
result of the foregoing, gross profit for fiscal year 2024 decreased approximately $6.7 million, or 7%, from fiscal year 2023.
Gross profit in fiscal year 2024 was approximately 14.2% of net sales and revenue, versus approximately 11.8% of net sales and
revenue in fiscal year 2023.

We attempt to match quantities of ethanol,
distillers grains and distillers corn oil sale contracts with an appropriate quantity of grain purchase contracts over a given
period of time when we can obtain an adequate 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 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. We utilize derivative financial instruments, primarily exchange traded commodity future
contracts and swaps, in conjunction with our grain procurement and commodity marketing activities.

Selling, General and Administrative
(“SG&A”) Expenses – SG&A expenses for fiscal year 2024 were approximately $27.1 million (4.2%
of net sales and revenue), a decrease of approximately $2.2 million or 8% from approximately $29.4 million (3.5% of net sales and
revenue) for fiscal year 2023. The dollar decrease compared to the prior year is primarily related to restricted stock awards granted
to certain executive officers in the second quarter of 2023, which were expensed upon issuance.

Equity in Income of Unconsolidated
Ethanol Affiliates – During fiscal years 2024 and 2023, we recognized income of approximately $9.4 million and $13.9
million, respectively, from our equity investment in Big River Resources, LLC (“Big River”). Our investment in Big
River, which has interests in four ethanol production plants, represents an effective ownership of approximately 39.0 million gallons
of ethanol shipped in the trailing twelve months ended January 31, 2025.

28

We expect the operating experience of Big
River to be generally consistent with the trends in crush spread margins described in the “Overview” section as Big
River’s results are dependent on the same key drivers as our other ethanol investments (ethanol, corn, dried distillers grains
and natural gas pricing).

Interest and Other Income
– Interest and other income for fiscal year 2024 was approximately $19.2 million compared to approximately $15.7 million
for fiscal year 2023. One of our consolidated ethanol plants recognized $1.2 million in patronage income from an investment in
a cooperative in the first quarter of 2024. During 2023, the Company’s consolidated
plants received COVID-19 relief grants from the USDA of approximately $1.0 million that did not repeat in 2024. The remaining change
between the periods related to increased interest income in the current year based upon higher balances and yields on our
excess cash and short-term investments in fiscal year 2024, compared to 2023.

Income Before Income Taxes
– As a result of the foregoing, income before income taxes was approximately $92.9 million for fiscal year 2024 versus approximately
$98.5 million for fiscal year 2023.

Provision for Income Taxes –
Our effective tax rate was a provision of 23.0% and 22.9% for fiscal years 2024 and 2023, respectively. Our effective rate is impacted
by the noncontrolling interests of the companies we consolidate, as we recognize 100% of their income or loss before income taxes
and noncontrolling interests and only provide an income tax provision or benefit for our portion of the subsidiaries’ income or
loss. During both fiscal years 2024 and 2023, our effective tax rate increased 2.2% (approximately $2.1 million and $2.2 million,
respectively), as a result of section 162M compensation limitations.

Net Income – As a result
of the foregoing, net income was approximately $71.5 million for fiscal year 2024 versus approximately $75.9 million for fiscal
year 2023.

Net income Attributable to Noncontrolling
Interests – Income attributable to noncontrolling interests was approximately $13.3 million and $15.0 million during
fiscal years 2024 and 2023, respectively, and represents the other owners’ share of the income of NuGen and One Earth.

Net Income Attributable to REX Common
Shareholders – As a result of the foregoing, net income attributable to REX common shareholders was approximately
$58.2 million for fiscal year 2024 compared to $60.9 million for fiscal year 2023.

Comparison of Fiscal Years 2023 and
2022

See “Item 7 Management’s discussion
and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January
31, 2024.

Liquidity and Capital Resources

Our primary sources of cash have been income
from operations. Our primary uses of cash have been capital expenditures at our ethanol plants and carbon sequestration project,
stock repurchases, and payments to noncontrolling interests holders.

Outlook – Our cash
and short-term investments balance of approximately $359.1 million at January 31, 2025 included approximately $322.7 million held
by One Earth and NuGen. We expect that One Earth and NuGen will use a majority of their cash for working capital needs, capital
expenditures, general corporate purposes and dividend payments. We expect our equity method investee to limit
the payment of dividends based upon their working capital and capital expenditure needs.

We are investigating various uses of
our excess cash. One Earth Energy is currently working on carbon sequestration and plant expansion projects and is expected
to have related capital expenditure needs. Our current budget for both projects is approximately $220 million to
$230 million, subject to further refinement as we move forward. We plan to pay for all
costs from available cash As of January 31, 2025, we have spent $55.7 million since inception and are contractually committed
to spend an additional $0.9 million

29

toward
the carbon sequestration project. As of January 31, 2025, we have spent $59.9 million since inception and are contractually committed
to spend an additional $8.7 million toward plant capacity expansion and CI scoring reduction efforts. For all projects, we plan
to spend $50 million to $70 million during fiscal year 2025.

We have a stock buyback program in place.
During fiscal year 2024, we purchased 372,567 shares for $15.5 million. Subsequent to January 31, 2025 the
Company repurchased 281,709 shares for approximately $11.9 million through open market transactions. After these repurchases,
a total of 222,510 shares remained available to purchase under existing board authorization. On
March 25, 2025, the Board of Directors authorized the repurchase from time to time of
up to an additional 1,500,000 shares through open market transactions, privately negotiated transactions, or
transactions by other means in accordance with applicable securities laws. We typically repurchase our
common stock when our stock price is trading at prices we deem to be a discount to the underlying value of our net assets.

We plan to seek and evaluate various investment
opportunities including ethanol and/or energy related, carbon sequestration related, agricultural or other ventures we believe
fit our investment criteria.

Operating Activities –
Net cash provided by operating activities was approximately $64.2 million for fiscal year 2024 compared to approximately $128.0
million in fiscal year 2023. During fiscal year 2024, operating cash flow was provided by net income of approximately $71.5 million
and adjustments of approximately $20.2 million, which consisted of depreciation, amortization of operating lease right-of-use assets,
stock-based compensation expense, income from equity method investments, interest income from investments, loss on sale of property
and equipment, and the deferred income tax provision. Big River paid dividends to REX of approximately $8.5 million during fiscal
year 2024. Accounts receivable decreased approximately $1.7 million, primarily a result of the timing of products shipped and the
receipt of customer payments at One Earth and NuGen. Inventory increased approximately $4.7 million, primarily a result of an increase
in the bushels of corn in stock at January 31, 2025 compared to January 31, 2024, offset by a decrease in the amount of ethanol
finished goods in storage over the same period. Prepaid expenses and other assets increased approximately $14.9 million, primarily
related to prepayments on certain executed utility equipment agreements, offset by a decrease in property taxes refundable due
to the timing of payments, and decreases in spare parts inventory. Accounts payable decreased approximately $14.7 million, primarily
a result of the timing of inventory receipts and vendor payments. Refundable income taxes increased $0.7 million as a result of
the timing of estimated tax payments. Long-term taxes payable increased $4.3 million to reflect the amount the recorded uncertain
tax positions exceeded the remaining unused credits they are recorded against. Accrued expenses and other liabilities decreased
approximately $7.0 million, which was primarily a result of operating lease payments of approximately $5.5 million and a decrease
in accrued payroll and related items of $0.4 million, and other decreases of approximately $1.1 million.

Net cash provided by operating activities
was approximately $128.0 million for fiscal year 2023. During fiscal year 2023, operating cash flow was provided by net income
of approximately $75.9 million and adjustments of approximately $20.2 million, which consisted of depreciation, amortization of
operating lease right-of-use assets, stock-based compensation expense, income from equity method investments, interest income from
investments, loss on sale of property and equipment, and the deferred income tax provision. Big River paid dividends to REX of
approximately $12.0 million during fiscal year 2023. Accounts receivable decreased approximately $2.0 million, primarily a result
of the timing of products shipped and the receipt of customer payments at One Earth and NuGen. Inventory decreased approximately
$21.8 million, primarily a result of smaller quantities of work-in-process materials and lower per unit costs at January 31, 2024.
Prepaid expenses and other assets increased approximately $4.5 million, primarily a result of increases in spare parts of approximately
$1.3 million, prepaid insurance of $0.3 million, refundable property taxes of approximately $0.5 million, hedging of $1.8 million
and the fair values of forward purchase contracts of approximately $0.5 million. Accounts payable increased approximately $7.9
million, primarily a result of the timing of inventory receipts and vendor payments. Refundable income taxes increased $2.8 million
as a result of the timing of estimated tax payments. Accrued expenses and other liabilities decreased approximately $4.5 million,
which was primarily a result of operating lease payments of approximately $5.4 million and a decrease in accrued income taxes of
$2.0 million, partially offset by an increase in accrued payroll of approximately $3.8 million.

Investing Activities –
Net cash used in investing activities was approximately $72.9 million during fiscal year 2024 compared to net cash provided by
investing activities of approximately $28.4 million during fiscal year 2023. Capital expenditures in fiscal year 2024 totaled approximately
$71.3 million, primarily for various capital projects at our consolidated ethanol plants, including $34.9 million for expansion
and CI scoring reduction projects at the One Earth

30

facility and $26.6
million for the carbon sequestration project. During fiscal year 2024, we used cash of approximately $372.3 million for purchases
of short-term investments and received cash of approximately $370.4 million related to the maturity of these types of these investments.

Net cash provided by investing activities
was approximately $28.4 million during fiscal year 2023. Capital expenditures in fiscal year 2023 totaled approximately $37.7 million,
primarily for various capital projects at our consolidated ethanol plants, including $14.4 million for expansion and CI scoring
reduction projects at the One Earth facility and $15.5 million for the carbon sequestration project. During fiscal year 2023, we
used cash of approximately $448.5 million for purchases of short-term investments and received cash of approximately $514.6 million
related to the maturity of these types of these investments.

Financing Activities –
Net cash used in financing activities was approximately $18.5 million during fiscal year 2024 compared to approximately $4.3 million
for fiscal year 2023. During fiscal year 2024, we purchased approximately 373,000 shares of our common stock for approximately
$15.5 million in open market transactions, of which $0.8 million was paid for subsequent to January 31, 2025. During fiscal year
2024, we used cash of approximately $3.7 million to purchases shares from and pay dividends to noncontrolling members of the consolidated
entities.

Net cash used in financing activities was
approximately $4.3 million during fiscal year 2023, which was used to pay dividends to noncontrolling members of the consolidated
entities.

Based on our forecasts, which are primarily
based on estimates of plant production, prices of ethanol, corn, distillers grains, distillers corn oil and natural gas as well
as other assumptions, management believes that cash flow from operating activities together with working capital will be sufficient
to meet One Earth’s and NuGen’s respective liquidity needs. However, if a material adverse change in the financial
position of One Earth or NuGen should occur, or if actual sales or expenses are substantially different than what has been forecasted,
One Earth’s and NuGen’s liquidity, and ability to fund future operating and capital requirements could be negatively
impacted.

Approximately 2.7% of our net assets are
restricted pursuant to the terms of various loan agreements of Big River, our equity method investee, as of January 31, 2025. None
of our consolidated subsidiaries or the parent company have restricted net assets related to loan agreements at January 31, 2025.

Contractual Obligations and Commitments

In the ordinary course of business, we
enter into agreements under which we are legally obligated to make future cash payments. These agreements include obligations related
to purchasing inventory and natural gas and leasing rail cars. Aggregate minimum lease payments under the operating lease agreements
for future fiscal years as of January 31, 2025 totaled $24.0 million, with $6.8 million payable in the next twelve months. Refer
to Note 7 – Leases included in the notes to consolidated financial statements for more information. As of January 31, 2025,
we had contracted future purchases of corn, natural gas, natural gas pipeline lease and other contracts for capital expenditures
at our ethanol plants valued at approximately $131.7 million, with $124.4 million payable in the next twelve months. Refer to Note
11 – Commitments included in the notes to consolidated financial statements for more information.

Seasonality and Quarterly Fluctuations

Our business is directly affected by the
supply and demand for ethanol. The demand for ethanol typically increases during the spring and summer months and during holiday
travel.

Critical Accounting Policies

We believe the application of the following
accounting policies, which are important to our financial position and results of operations, require significant assumptions,
judgments and estimates on the part of management. We base our assumptions, judgments, and estimates on historical experience,
current trends and other factors that management believes to be relevant at the time our consolidated financial statements are
prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our
financial statements are presented in accordance with generally accepted accounting principles (GAAP). However, because future
events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and
such differences

31

could be material.
Further, if different assumptions, judgments and estimates had been used, the results could have been different and such differences
could be material. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note
1 to the Consolidated Financial Statements.

Management believes that the following
accounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they
require management’s most difficult, subjective, or complex judgments, resulting from the need to make estimates about the
effect of matters that are inherently uncertain.

Revenue Recognition –
We recognize sales of ethanol, distillers grains and distillers corn oil when obligations under the terms of the respective contracts
with customers are satisfied; this occurs with the transfer of control of products, generally upon shipment from the ethanol plant
or upon loading of the rail car used to transport the products.

Impairment of Long-Lived Assets –
We review our long-lived assets, consisting of property and equipment, equity method investments and operating lease right-of-use
assets, for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable.
We assess long-lived assets for impairment by first determining the forecasted, undiscounted cash flows the asset group is expected
to generate. If this total is less than the carrying value of the asset, we will then determine the fair value of the asset group.
An impairment loss would be recognized in the amount by which the carrying amount of the asset exceeded the fair value of the asset.
Significant management judgement is required to determine the fair value of long-lived assets, which includes discounted cash flows.
Such estimates could be significantly affected by future changes in market conditions. We recorded no impairment charges in fiscal
year 2024, 2023, or 2022.

Income Taxes – Income
taxes are recorded based on the current year amounts payable or refundable, as well as the consequences of events that give rise
to deferred tax assets and liabilities based on differences in how those events are treated for tax purposes, net of valuation
allowances. We base our estimate of deferred tax assets and liabilities on current tax laws and rates and other expectations about
future outcomes. Changes in existing regulatory tax laws and rates and future business results may affect the amount of deferred
tax liabilities or the valuation of deferred tax assets over time. We have established valuation allowances for certain state net
operating loss carryforwards. We assessed all available positive and negative evidence to determine whether we expect sufficient
future taxable income will be generated to allow for the realization of existing federal deferred tax assets. We believe there
is sufficient objectively verifiable income for management to conclude that it is more likely than not that the Company will utilize
available federal deferred tax assets prior to their expiration. However, realization of these deferred tax assets is not certain.
Changes in our current estimates for factors such as unanticipated market conditions and legislative developments could have a
material effect on our ability to utilize deferred tax assets.

New Accounting Pronouncements

For information related to recent accounting pronouncements,
see Note 1 of the Notes to the Consolidated Financial Statements.

32