Peter Bradley to Take on Role of Executive Chairman, Brent Rystrom to Leave
Company has Engaged BMO Capital Markets to Conduct a Review of Strategic Alternatives
THE WOODLANDS, Texas, Aug. 12, 2020 /PRNewswire/ — RiceBran Technologies (Nasdaq: RIBT), a global leader in the production and marketing of value-added products derived from rice bran and a producer of rice, rice co-products, and barley and oat products, announced financial results today for the quarter ended June 30, 2020.
“The surge in demand for rice driven by COVID-19 that we saw at the end of the first quarter extended into the second quarter depleting rough rice supply and rapidly escalating prices. As a result of diminishing rice supply, production at Golden Ridge was severely impacted in the latter half of the quarter resulting in weaker than expected results for RiceBran as a whole,” said Brent Rystrom, President and CEO. “Rice prices have now fallen about 50% from peak levels, the harvest in Louisiana is about half complete and looks strong, and harvest in Arkansas should start in a few weeks on what also looks like a large, high-quality crop. This should help RiceBran Technologies return to a trajectory of improving financial performance.”
Second Quarter 2020 Operational Highlights:
- Shortage of rough rice leads to significant slowdown at Golden Ridge: Revenues from our Golden Ridge Rice Mill decreased over 50% in the second quarter of 2020 from the first quarter as the mill was unable to acquire rough rice at economical prices in the latter half of the second quarter. Negative operating leverage from lower production was exacerbated by penalties paid on unfulfilled customer commitments.
- Demand for SRB remains resilient in a challenging environment: Revenues from the company’s core stabilized rice bran (SRB) business grew sequentially in the second quarter of 2020 as demand from animal feed end markets remained resilient. Nevertheless, profitability for the business declined from the first quarter due to a shift in mix away from higher margin derivative products for human consumption.
- Company is focused on maintaining a strong balance sheet: Capital resources and operating liquidity remain solid with over $3.3 million in cash on hand and an incremental $2.0 million in borrowing capacity added after the end of the second quarter. Overall liquidity was negatively impacted in the quarter by the slow down at Golden Ridge in as it drove a reduction in borrowing capacity and forced a reduction in commodities payables.
- Further cost cuts identified ahead of strategic advisor engagement: The successful implementation of cost cutting initiatives has resulted in a significant reduction in SG&A, and an incremental $2 million in annualized cuts have been identified and are expected to be put in place by year end. The company has retained BMO Capital Markets to undertake a strategic review of opportunities to transform the business in 2021.
- Peter Bradley appointed Executive Chairman: Effective August 14, 2020, Mr. Rystrom will be stepping down as CEO, President, and a member of the Board of Directors, and Peter G. Bradley, who joined RiceBran’s board in 2019, will be assuming Mr. Rystrom’s duties upon his departure as Executive Chairman. Current Chairman, Brent Rosenthal, has been appointed Lead Independent Director.
“On behalf of the Company, I want to thank Mr. Rystrom for his commitment and dedication to the Company during these challenging times” Mr. Bradley stated. “I believe we have built a valuable ingredients platform at RiceBran Technologies. I hope to bring my decades of experience as an executive in consumer foods, dietary supplements, food ingredients and specialty chemicals to work with the entire team to maximize that value through streamlining our operations and focusing on our core competencies. I also look forward to working with our strategic advisors to help us review opportunities to further improve profitability in 2021.”
Second Quarter 2020 Financial Highlights
- Revenue: Revenues of $5.9 million decreased 5% from $6.2 million in the second quarter of 2020. The year over year decrease in revenue was due primarily to lower revenues from RiceBran’s core stabilized rice bran business, and to a lesser extent from lower volumes from our Golden Ridge operations, partially offset by an increase in revenue from MGI Grain. Animal feed product revenues increased 4% from the prior year, while revenues from products intended for human consumption decreased by 9%. The latter decline reflected a shift in product mix at RiceBran combined with lower production volumes at Golden Ridge.
- Gross Losses: Gross losses were $1.2 million in the second quarter of 2020 compared to gross losses of $0.2 million in the second quarter of 2019. The increase in gross losses was primarily attributable to greater losses from Golden Ridge due to low production volumes and higher input commodity prices. Gross profits were also negatively impacted by a year-over-year decline in revenue from RiceBran operations as well as the shift in RiceBran’s sales mix away from more profitable products from human consumption. Gross loss for the quarter included $0.2 million in expenses incurred to settle penalties for unmet delivery commitments.
- SG&A: SG&A expenses decreased to $2.6 million from $3.4 million in the second quarter of 2019, a decrease of $0.8 million, primarily related to benefits from initiatives enacted in the first quarter of 2020 to reduce overall SG&A costs. SG&A in the second quarter of 2020 was also negatively impacted by approximately $300,000 in non-cash losses on the disposal of assets. Management remains confident in its ability to drive overall SG&A to $9-10 million for the full year before taking into account newly identified savings which should have a positive impact on reducing overall SG&A in the second half of 2020 and 2021.
- Net Loss, EBITDA, and Adj. EBITDA: Net loss for the second quarter of 2020 was $3.9 million compared to a net loss of $3.7 million in the second quarter of 2019. EBITDA (Non-GAAP) losses were $3.2 million in the second quarter of 2020, in line with EBITDA losses of $3.2 million in the second quarter of 2019. EBITDA losses were flat with a year ago as reductions in SG&A have been offset by higher gross losses from operations. Adjusted EBITDA (Non-GAAP) losses were $2.9 million in the second quarter of 2020, compared to Adjusted EBITDA losses of $2.8 million in the second quarter of 2019, after adding back $394,000 in stock comp and other expenses.
- Liquidity: Capital resources and operating liquidity remains adequate with over $3.3 million in cash on hand and an incremental $2.0 million in borrowing capacity added after the end of the second quarter. Overall liquidity was negatively impacted in the second quarter by the slow down at Golden Ridge in as it drove a reduction in borrowing capacity under the Company’s factoring facility, which was exacerbated by a reduction in commodities payable as Golden Ridge completed raw material sourcing contracts without the ability to enter into new agreements.
Conference Call Information
RiceBran Technologies will host a conference call today, Wednesday, August 12, at 4:30 p.m. Eastern Time to discuss these results. The conference call information is as follows:
- 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 2020 Financial Results Call
This call is being webcast by ViaVid and can be accessed at http://public.viavid.com/index.php?id=141130.
The call will also be available for replay by accessing http://public.viavid.com/index.php?id=141130.
About RiceBran Technologies
RiceBran Technologies is a global leader in the production and marketing of value-added products derived from rice bran as well as a producer of rice, rice co-product, and barley and oat products. The target markets for our products include food and animal nutrition manufacturers and retailers, as well as specialty food, functional food and nutritional supplement manufacturers and retailers. Our highly nutritious and clean label ingredient products derived from rice bran, one of the world’s most underutilized food sources, are produced utilizing our proprietary and patented stabilization technology. 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 its future financial results, sales growth, EBITDA improvements, and SG&A. These statements are made based upon current expectations that are subject to known and unknown risks and uncertainties, including the risks that RBT operations are disrupted by the COVID-19 pandemic. 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.
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. 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. 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).
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, 2020. 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.
Investor Relations Contact:
Ascendant Partners, LLC