Company continues to reduce cost structure and improve balance sheet in order to focus on the growth of its proprietary ingredient business
Sacramento, Ca. – August 10, 2017 – RiceBran Technologies (NASDAQ: RIBT and RIBTW) (the “Company” or “RBT”), a global leader in the production and marketing of value added products derived from rice bran, announced today the Company’s financial results for the second quarter ended June 30, 2017.
- Completed the Sale of Its Healthy Natural Subsidiary for $18.3 Million – In July 2017, the Company completed the $18.3 million sale of its Healthy Natural subsidiary to an affiliate of Rosewood Private Investments. A portion of the proceeds from the sale were used to eliminate senior debt and subordinated notes with face value totaling $12.6 million. The remaining cash is expected to be invested in driving the growth of its proprietary ingredient business.
- Further Improvements in Cost Structure and Balance Sheet Provide Strong Foundation to Pursue Growth – Improved liquidity and balance sheet through the sale of Healthy Natural, removal of restrictive debt covenants related to U.S. debt, and ongoing focus on controlling corporate expenses provides a solid foundation to aggressively pursue growth in its Food, Animal Nutrition, and Specialty ingredient products including the addition of several seasoned sales professionals targeting specific market segments.
- Operating Loss Narrowed through Cost Reductions – Q2 2017 operating loss narrowed to ($1.9 million) compared to ($2.9 million) in Q2 2016, mainly due to a $1.0 million reduction in SG&A expenses reflecting the continued success of the Company’s cost cutting initiatives.
- Regained Full Compliance with Nasdaq Requirements for Continued Listing – Shareholders’ equity improvements made in Q1 enabled the Company to regain compliance with Nasdaq’s minimum equity requirement for continued listing on May 31, 2017. Subsequent to the end of Q2 2017, the Company was notified by The Nasdaq Stock Market LLC that it had also regained compliance with the minimum bid price requirement for continued listing on July 31, 2017.
- Discontinued Brazil Segment Operations – The Company made the determination in Q2 2017 that its plans to divest its investment in Nutra, SA, the Brazilian parent company of its Irgovel operations, in order to focus solely on its U.S. based ingredients business, met the criteria for presentation as discontinued operations. The Company continues to explore divestiture options for its investment in Nutra, SA.
Q2 Financial Highlights –(For reporting purposes both Healthy Natural and Nutra, SA are presented as discontinued operations in the financial statements.)
Revenues in Q2 2017 were $3.1 million compared to $3.2 million in Q2 2016. Animal Nutrition product revenues increased 17% over prior year levels driven by the supply and cooperation agreement with Kentucky Equine Research (KER). Food product revenues decreased 13% quarter over quarter, primarily attributable to decreased buying from one of our largest contract manufacturing accounts.
Q2 2017 gross profit was $798,000 compared to gross profit of $802,000 in Q2 2016. Gross profit percentage was 25% in Q2 2017, consistent with the comparable period in 2016. Raw rice bran prices were also relatively similar in both quarters.
Q2 2017 operating expenses were $2.7 million, a decrease of $1.0 million or 27.4% compared to operating expenses of $3.7 in Q2 2016. The decrease in operating expenses was primarily due to additional expenses incurred in Q2 2016 as a result of the proxy contest in connection with the 2016 Annual Shareholder Meeting as well as the Company’s corporate-wide strategic effort to manage costs and expenses. In Q2 2017 the Company made further progress in our cost cutting efforts, including substantial reductions in marketing, payroll, and travel and entertainment expenses.
Q2 2017 operating loss was $(1.9 million), a $1.0 million improvement compared to a consolidated operating loss of $(2.9 million) in Q2 2016. The decrease in operating loss was a direct result of the decrease in operating expenses stated above.
The Company recorded a Q2 2017 net loss from continuing operations of $(1.8 million) compared to a net loss from continuing operations of $(4.5 million) recorded in Q2 2016. Q2 2017 net loss attributable to common stockholders from continuing operations was $(0.18) per share on 9.8 million shares compared to $(0.48) per share on 9.2 million shares. The $2.7 million quarter over quarter decrease in net loss from continuing operations was attributable to $1.7 million of other expense in Q2 2016 related to a change in the fair value of derivative securities coupled with a $1.0 million reduction in operating expenses in Q2 2017.
For Q2 2017, the Company recorded an Adjusted EBITDA loss of $(1.29 million) compared to an Adjusted EBITDA loss of $(1.34 million) in Q2 2016. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into the Company's operating results (see reconciliation of non-GAAP measures below).
Balance Sheet and Liquidity:
As of June 30, 2017, cash and cash equivalents was $3.2 million and shareholders' equity was $6.9 million. This compares to cash and cash equivalents of $342,000 and shareholders' equity of $(632,000) on December 31, 2016. The significant improvement in liquidity and equity was a result of the completion of an $8.0 million financing in February 2017 coupled with the termination of roll-up rights held by the minority partner in Nutra, SA.. The Company expects further significant improvement in its balance sheet resulting from the $18.3 million sale of its Healthy Natural subsidiary to be reflected in Q3 2017.
Brent Rystrom, CFO commented, "We have made significant strides in improving shareholder equity and liquidity in order to position RBT for future success. In addition to the substantial reductions we have made to our cost structure, the sale of Healthy Natural has enabled us to repay all of our recourse debt and eliminate all associated interest expense moving forward. As a result, we enter the second half of 2017 with a much stronger balance sheet and sufficient working capital to move forward with our aggressive long term growth plans to deliver substantial value for our stockholders."
Additional information will be set forth in the Company's Form 10-Q for the quarter ended June 30, 2017.
The Company will hold a conference call to discuss its Q2 2017 results on August 10, 2017 at 4:30 PM EDT. Call-in information is as follows:
- Date: August 10, 2017
- Time: 4:30 p.m. Eastern Daylight Savings Time
- Direct Dial-in number for US/Canada: (201) 493-6780
- Toll Free Dial-in number for US/Canada: (877) 407-3982
- Dial-In number for international callers: (201) 493-6780
- Participants will ask for the RiceBran Technologies Q2 2017 Financial Results Call
This call is being webcast by ViaVid and can be accessed at http://public.viavid.com/index.php?id=125875.
The call will also be available for replay by accessing http://public.viavid.com/index.php?id=125875.
About RiceBran Technologies
RiRiceBran Technologies is a food, animal nutrition, and specialty ingredient company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. RiceBran Technologies has proprietary and patented intellectual property that allows us to convert rice bran, one of the world's most underutilized food sources, into a number of highly nutritious food, animal nutrition and specialty ingredient products. Our global target markets are food and animal nutrition manufacturers and retailers, as well as specialty food, functional food and nutritional supplement manufacturers and retailers. More information can be found in the Company's filings with the SEC and by visiting our website at http://www.ricebrantech.com.
This release contains forward-looking statements, including, but not limited to, statements about RiceBran Technologies' expectations regarding the sufficiency of its cash position and working capital, its use of cash, the addition of sales personnel, the divestment of its investment in Nutra SA, its business plans and its future growth. These statements are made based upon current expectations that are subject to known and unknown risks and uncertainties. RiceBran Technologies does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause results to differ from those set forth in the forward-looking information can be found in RiceBran Technologies' filings with the Securities and Exchange Commission, including its most recent periodic reports.
Investor Relations Contact:
Ascendant Partners, LLC
USE OF NON-GAAP FINANCIAL INFORMATION
We utilize “Adjusted EBITDA” as a supplemental measure in our ongoing analysis of short term and long term cash requirement and liquidity needs. Adjusted EBITDA does not represent cash flows from operations as defined by generally accepted accounting principles (“GAAP”), is not a measure derived in accordance with GAAP and should not be considered as an alternative to net income (the most comparable GAAP financial measure to EBITDA). Management uses Adjusted EBITDA as an indicator of our current financial performance. By eliminating the impact of all material non-cash charges as well as items that do not regularly occur, we believe that Adjusted EBITDA provides a more accurate and informative indicator of our cash requirements.
The table below contains a reconciliation of net income (GAAP) and Adjusted EBITDA (Non-GAAP) for the three months and six months ended June 30, 2017 and 2016. We do not provide a reconciliation of forward-looking net income (GAAP) to Adjusted EBITDA (non-GAAP). Due to the nature of certain reconciling items, it is not possible to predict with any reliability what future outcomes may be with regard to the expense or income that may ultimately be recognized in future periods. Any forward-looking Adjusted EBITDA information that we may provide from time to time consistently excludes the same items from projected net income that are excluded from actual net income in the table below.