RiceBran Technologies: Reports Q1 2017 Financial Results

Scottsdale / AZ. (rbt) RiceBran Technologies (up to 2012 NutraCea), a global leader in the production and marketing of value added products derived from rice bran, announced the Company’s financial results for the first quarter ended March 31, 2017.

Business Highlights

  • USA Segment delivered 92 percent Improvement in Operating Income – USA segment operating income of 1.5 million USD compared to 771’000 USD on revenue growth, stronger gross profit margin, and expense reductions, including a 355’000 USD reduction in quarterly SG+A expenses.
  • Liquidity Improved through Completion of Financing and Debt Restructuring – Company’s cash position improved to 3.4 million USD on March 31, 2017, up from 451’000 USD on December 31, 2016, through the completion of an 8 million USD financing in February 2017. The financing coupled with the subsequent repayment and restructuring of debt is expected to reduce annual cash interest expense by 500’000 USD.
  • Balance Sheet Strengthened to Meet Equity Requirement for Continued Nasdaq Listing – Shareholders’ equity improved to 7.9 million USD from a deficit of (632’000) USD on December 31, 2016, as a result of the termination of rollup rights held by its minority co-investor in Nutra SA.
  • Corporate Headquarters Relocation Will Yield Additional Cost Savings – The Company completed the relocation of its corporate headquarters to West Sacramento, and expects this will result in an annualized savings of approximately 250’000 USD which will become fully realized beginning in Q2 2017. Further expense reductions will be realized from the consolidation of our West Sacramento facilities into one location in Q2 2017.
  • Improvements in Operations and Balance Sheet Provide Foundation to Pursue Growth – Improved liquidity, strengthened equity, stronger margins in our USA segment, and ongoing focus on controlling corporate expenses provides a solid foundation to support growth in its Food, Animal Nutrition, and Specialty ingredient products.

Robert Smith, CEO commented, «Our first quarter results demonstrate the substantial progress we have made in our strategic initiatives to improve operating results, especially in reducing costs, controlling expenses, and strengthening our balance sheet. As we further these efforts and work to generate additional revenue opportunities, we believe we can create greater value for the benefit of our stockholders».

First Quarter Financial Highlights

Revenues: Consolidated revenues in Q1 2017 were 11.4 million USD, a 13.8 percent increase compared to consolidated revenues of 10.1 million USD in Q1 2016. USA segment revenue in Q1 2017 increased by 0.3 million USD to 8.0 million USD as a result of a 1.7 percent increase in food product revenue and a 4.2 percent increase in animal nutrition product revenue. Brazil segment revenue increased by 1.1 million USD or 48.1 percent quarter over quarter to reach 3.4 million USD. The quarter over quarter increase in Brazil segment revenues was a result of a 24 percent improvement in the average Brazilian real to US Dollar exchange rate, a 14 percent increase in raw bran processed and a more favorable sales mix. The Company continues to be encouraged by the improved performance in Brazil but, remains committed to its strategy of providing no additional capital to support Brazil operations for the foreseeable future.

Gross Profit: Q1 2017 consolidated gross profit was 2.5 million USD, a 0.3 million USD increase compared to consolidated gross profit of 2.2 million USD in Q1 2016. Gross profit percentage remained relatively constant at 22.0 percent compared to 22.3 percent in the prior year quarter. USA segment gross profit percentage in Q1 2017 was 32.2 percent compared to 31.7 percent in Q1 2016, aided by an 11 percent quarter over quarter decline in raw bran prices. The Brazil segment recorded negative gross profit of (72’000) USD in Q1 2017 compared to (223’000) USD in Q1 2016 with gross profit percentage improving by 7.6 percentage points to (2.1 percent).

Operating Expenses: Q1 2017 consolidated operating expenses were 3.0 million USD, a decrease of 0.7 million USD or 18.8 percent compared to consolidated operating expenses of 3.7 USD in Q1 2016. The decrease in operating expenses was a result of a corporate-wide strategic effort to manage costs and expenses. That effort resulted in a 0.4 million USD reduction in USA segment SG+A expenses and a 0.2 million USD reduction in Brazil segment SG+A expenses. Corporate SG+A expenses increased by 0.1 million USD primarily due to fees related to the Nasdaq listing compliance hearing and expenses accrued for retention program related to the corporate office relocation.

Operating Income/Loss: Q1 2017 consolidated operating loss was (0.5 million) USD, a 1.0 million USD improvement compared to a consolidated operating loss of (1.5 million) USD in Q1 2016. The USA segment recorded operating income of 1.5 million USD, a 92 percent quarter over quarter improvement compared to operating income of 0.8 million USD in Q1 2016. Brazil segment loss in Q1 2017 narrowed to (0.6 million) USD compared to (1.0 million) USD in the prior year quarter. Corporate operating loss increased by 0.1 million USD to (1.4 million) USD due to the increase in operating expenses stated above.

Net Loss: The Company recorded a Q1 2017 consolidated net loss attributable to shareholders of (3.1 million) USD or (0.32) USD on 9.6 million shares versus a consolidated net loss of (0.3 million) USD recorded in Q1 2016 or (0.03) USD on 9.2 million shares. The quarter over quarter increase in net loss was largely attributable to 2.1 million USD of other expense in Q1 2017 related to the extinguishment and replacement of debt compared to 1.6 USD of other income in Q1 2016 resulting from a gain on the favorable resolution of Irgovel purchase litigation.

Adjusted Ebitda: For Q1 2017, the Company recorded Consolidated Adjusted Ebitda 405’000 USD compared to an Adjusted Ebitda loss of (218’000) USD in Q1 2016. USA and Corporate segment Adjusted Ebitda improved to 731’000 USD, a 94 percent increase compared to 376’000 USD in Q1 2016. The Company’s Brazil segment recorded a Q1 2017 Adjusted Ebitda loss of (326’000) USD compared to a loss of (594’000) USD in Q1 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 March 31, 2017, cash and cash equivalents was 3.4 million USD and shareholders’ equity was 7.9 million USD. This compares to cash and cash equivalents of 451’000 USD and shareholders’ equity of (632’000) USD on December 31, 2016. The significant improvement in liquidity was a result of the completion of an 8.0 million USD financing in February 2017, consisting of debt, preferred stock, and warrants. The completion of this financing enabled the Company to pay off certain high interest debt and restructure other existing debt. The net effect of these transactions is expected to reduce annual cash interest expense by 500’000 USD. The substantial improvement in equity resulted from the removal of a condition of a contract with the Company’s minority co-investor in Nutra SA that enabled the reclassification of certain warrants as equity rather than a liability. As a result of this improvement in shareholders’ equity, the Company now exceeds Nasdaq’s minimum shareholders’ equity requirement of 2.5 million USD for continued listing. The Company remains focused on making further improvements to liquidity and balance sheet in 2017.

Brent Rystrom, CFO commented, «The first quarter delivered many favorable improvements across all aspects of our business. We saw significant progress in reducing costs in our USA segment, and expect that further corporate cost reduction efforts will visibly improve results starting in the second quarter of 2017. Finally, we sharply improved our liquidity and shareholders’ equity during the first quarter, placing our Company on more sound financial footing to achieve our long term growth plans».

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