Sacramento / CA. (rbt) RiceBran Technologies, a global leader in the production and marketing of value added products derived from rice bran, the Company’s financial results for the first quarter ended March 31, 2018.
Business Highlights
- Revenue in the first quarter totaled USD 3.55 million, in line with our previous guidance. Net loss of USD (1.9) million and adjusted Ebitda of USD (1.4) million was also similar to our internal modeling as the Company accelerated efforts to grow sales and achieve SQF certification throughout our system footprint.
- We received USD 1.76 million of proceeds from warrant exercises during the quarter, which helped to significantly offset cash burn from operations and slightly increase shareholders’ equity. Subsequent to the end of the quarter we received proceeds from additional warrant exercises that further improved working capital.
- The Company has seen revenue accelerate to favorable levels thus far in the second quarter, but it should be noted that the Delta region is experiencing low milling volumes due to last year’s small crop that may limit our growth trajectory in the quarter and is expected to have a negative impact on second quarter Ebitda due to higher transportation and logistics costs associated with a greater mix of our production being sourced in California instead of the Delta region.
- We are excited by the anticipated growth in our sales pipeline and are working to add additional production capacity to our system to meet expected growth this year and next.
- The Company is maintaining revenue guidance of USD 16 million for the full-year of 2018, and the aforementioned warrant exercises give us confidence that our balance sheet is adequately positioned to pursue our plans in 2018 and beyond.
«The first quarter essentially met our expectations for both revenue and adjusted Ebitda loss», said Dr. Robert Smith, CEO and President. «We are gaining confidence that our growth plans will result in accelerating revenue growth as 2018 unfolds, especially in the third and fourth quarters.
Highlights for the 2018 first quarter include
- Revenue of USD 3.55 million declined 1.7 percent from USD 3.62 million. The Company experienced 4 percent positive sales growth from our Animal Nutrition products during the quarter; while sales from our Food products declined 6 percent, mainly due to a decrease in sales to one major customer.
- Gross profit of USD 954,000 was down from USD 1.19 million, primarily a result of higher bran prices, a mix shift to Animal Nutrition from Food, and lower absorption at our Dillon, MT facility due to a planned major Cap Ex project that will continue to limit production through September and the lower sales from one of our major customers.
- SG+A increased 26 percent, mainly due to growth in selling expenses, including the addition of sales representatives and personnel needed to meet SQF certification needs, as well as costs related to legal expenses and bonus accruals.
- Our financial condition remained relatively unchanged during the quarter: We ended the quarter with cash and cash equivalents of USD 5.1 million compared to USD 6.2 million and shareholders’ equity increased to USD 14.9 million from USD 14.7 million on March 31, 2018 and December 31, 2017, respectively. We received USD 1.76 million of proceeds from warrant exercises during the quarter and Cap Ex totaled USD 745,000. Subsequent to the end of the quarter we have realized substantial additional proceeds from warrant exercises.
- «We have experienced meaningful sales growth thus far in the second quarter and we are optimistic that our growth plans are poised to drive substantial growth in 2018 and beyond», said Brent Rystrom, Chief Operating Officer and Chief Financial Officer. «While growth in the quarter may be impeded by production issues from our Delta region causing our transportation and logistics costs to increase, our sales pipeline continues to grow and our system wide upgrades for certification are moving forward in earnest».
«Early expectations for the 2018 rice crop are encouraging and suggest a larger crop and with that likely lower bran prices on and after harvest; this would help RBT drive accelerating growth and better margins, especially in the second half of 2018», Rystrom continued. «We are also actively working to increase our bran supply through existing and new mill relationships to mitigate future issues associated with mill production and look forward to updating our progress in these efforts».
Guidance Updates
- First quarter revenue was consistent with our previous guidance.
- Second quarter revenue to-date has grown, but we note the next few months may be negatively impacted by lower supplies coming from the Delta.
- The new rice crop should be harvested in July-August of 2018. The USDA sees rice acre plantings up 9 percent in 2018, and the planting and growing conditions so far this season have been favorable in both the Delta and California.
- We are reiterating our annual revenue target of USD 16.0 million.
- While adjusted Ebitda was similar to internal modeling in the first quarter, the milling issues in Delta region will likely result in adjusted Ebitda falling below the first quarter results. While we expect a marked sequential improvement in revenue and adjusted Ebitda in both the third and fourth quarters, we now expect full year adjusted Ebitda in the USD (3.5) million to USD (4.0) million range.
We continue to believe our balance sheet is sufficient to support our growth plan for 2018 and beyond.
