THE WOODLANDS, Texas, Nov. 7, 2019 /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 today the Company’s financial results for the quarter ended September 30, 2019.
“We are excited to complete various projects and we look forward to improving sales and margins in the fourth quarter and beyond,” said Brent Rystrom, President and Chief Executive Officer. “We lost a month of production at Golden Ridge in the third quarter while completing our debottlenecking project, but we are now seeing sharply improved production volumes and a significant improvement in unit-level economics. Golden Ridge is important to RBT’s long-term future as it will lower our costs for stabilized rice bran and is located in Arkansas, the largest rice producing state in the U.S. where it provides us with strong access to customers in the Midwest and Eastern U.S. Our core rice bran business showed modest growth in the third quarter but did not include the on-boarding of half a dozen new customers that will favorably impact our results starting with the fourth quarter. Additionally, we are about to ship to our first major new customer addition at MGI Grain in the fourth quarter as well, an important step in leveraging that business.”
Third Quarter 2019 Operational Highlights:
- We completed the vast majority of our debottlenecking project at Golden Ridge Rice Mills, which has increased our production capacity for rice products and stabilized rice bran (SRB). This project took longer than we expected, negatively impacting third quarter results. Golden Ridge is now generating the strongest performance we have seen since its acquisition and we expect a sharp improvement in the mill’s contribution to overall revenue and EBITDA.
- The integration of new products from Golden Ridge and MGI Grain into our sales team is now substantially complete, and we are realizing new sales and customer additions from the expanded product offering, providing a broader base of revenue with greater leverage of SG&A expenses that we expect will lead to positive EBITDA. SRB revenues grew modestly in the third quarter, but recent sales wins will impact on our results beginning in the fourth quarter.
- In the third quarter of 2019, we executed on a plan to reduce our cash burn and strengthen our balance sheet after the substantial completion of a significant capital investment cycle to upgrade our rice bran and milling facilities. As part of that plan, in October we secured a $7.0 million credit facility which should provide us with the working capital necessary to leverage these investments and the capacity expansion at Golden Ridge until we transition to positive EBITDA.
Third Quarter 2019 Financial Highlights:
- Revenue of $5.3 million was up 53% from $3.5 million in the third quarter of 2018, driven by growth in our core rice bran products and the acquisitions of Golden Ridge Rice Mills and MGI Grain. Revenue was down from $6.2 million in the second quarter of 2019 due to a lower contribution from Golden Ridge stemming from reduced productivity and increased downtime due to our debottlenecking project.
- Gross losses were $359,000 compared to gross profits of $754,000 a year ago, and gross losses of $244,000 in the second quarter of 2019. Gross profit margin for the core rice bran business was stable versus comparable periods, but overall gross profit margin was negatively impacted by higher gross losses at Golden Ridge due to the completion of a large unfavorable contract and increased downtime due to the debottlenecking project.
- Adjusted EBITDA (Non-GAAP) losses were $3.4 million in the third quarter, versus losses of $1.3 million a year ago, and losses of $2.8 million in the second quarter of 2019. Adjusted EBITDA (non-GAAP) losses increased in the third quarter due to negative gross profits and an increase in total SG&A in the third quarter to $3.8 million from $3.4 million in the second quarter.
“Third quarter results were constrained by our debottlenecking of Golden Ridge as well as the continued effects of an unfavorably priced contract entered into by previous management at the mill. With both of these issues now behind us, we expect the higher levels of productivity at Golden Ridge, as well as the materialization of large new deals for our core rice bran operations and MGI Grain, will lead to sequential increase in revenue in the fourth quarter. Additionally, our new credit facility gives us substantial financial flexibility to fuel future growth while we manage costs to achieve a progressive improvement in our operating results in the coming quarters,” said Todd Mitchell, Chief Financial Officer.
Conference Call Information
RiceBran Technologies will host a conference call today, Thursday, November 7th, 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: (785) 424-1743
- Toll Free Dial-in number for US/Canada: (877) 830-2596
- Dial-In number for international callers: (785) 424-1743
- Participants will ask for the RiceBran Technologies Q3 2019 Financial Results Call
This call is being webcast by ViaVid and can be accessed at http://public.viavid.com/index.php?id=136914.
The call will also be available for replay by accessing http://public.viavid.com/index.php?id=136914.
About RiceBran Technologies
RiceBran Technologies is a specialty ingredient company servicing the food, animal nutrition and specialty products markets. We utilize our proprietary processes to convert rice bran, one of the world’s most underutilized food source, into a number of highly nutritious and clean label ingredient products. The global 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. More information can be found in our filings with the SEC and by visiting our website.
This release contains forward-looking statements, including, but not limited to, statements about RiceBran Technologies’ expectations regarding its planned expansion of its rice milling operations, the sufficiency of its cash position to pursue its plans, its execution of strategic and financial plans, the price of rice bran and its growth opportunities, customer expansion, revenue, profit margin and adjusted EBITDA. 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.
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 and six months ended September 30, 2019 and September 30, 2018. 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