RiceBran: Reports 2012 Year End Financial Results

Scottsdale / AZ. (rbt) RiceBran Technologies (up to October 2012 NutraCea), a global leader in the production and marketing of value added products derived from rice bran, reported consolidated revenues of 37,7 million USD for the year ended December 31, 2012.

Executive Vice President and CFO J. Dale Belt: «During 2012, we achieved consolidated revenue growth despite dealing with all time high raw rice bran prices while also expanding and improving our bio-refining facility in Brazil. In addition, we continued working with our strategic alliance partners relative to international distribution of our products and research and development efforts on concentrating protein from rice bran. Looking forward, we believe we are well positioned to continue growing revenues as we move toward positive cash flow results and ultimately profitability».

Financial Results for the Year Ending December 31, 2012:

USA segment revenues increased 18,1 percent to 12,6 million USD in 2012 as compared to 10,7 million USD in 2011. Animal feed product revenues increased 0,7 million USD or 12,5 percent, due to the impact of price increases. Human nutrition product revenues increased 1,5 million USD or 34,8 percent due to the impact of price increases and 9,6 percent higher volume. The 1,9 million USD increase in revenues is net of a 0,3 million USD decline in revenues from toll processing infant cereal products which ceased in April 2011.

Brazil segment revenues decreased 4,4 percent to 25,1 million USD in 2012 as compared to 26,3 million USD in 2011. Revenues decreased 4,3 million USD as a result of the 14,4 percent decline in the average exchange rate between these periods. Offsetting this 4,3 million USD decline was a 3,1 million USD net increase in revenues comprised of the following: a 2,4 million USD increase in bulk de-fatted rice bran (DRB) revenues, a 2,0 million USD increase in refined oil and derivative product revenues, a 0,2 million USD increase in bagged animal feed product revenues; offset by, a 1,5 million USD decline in crude rice bran oil revenues.

Brazil revenues experienced a shift from bagged animal feed products to bulk DRB and oil revenues experienced a shift from crude oil to fully refined oil. Production disruptions during the capital expansion at Irgovel necessitated the shift to bulk DRB sales while the animal feed plant was coming on line. We do not expect this level of disruption in 2013, however the plant is expected to shut-down near the end of the year while certain new equipment is brought on line. The shift from crude oil sales to refined oil sales is part of a strategy to shift revenues to higher margin refined oil and derivative product sales. A U.S. drought caused demand pressure for Brazilian soybean and corn which increased animal feedstock prices generally and bran prices specifically, in 2012. As a result, the Brazil segment passed along higher prices for DRB and bagged animal feed products during 2012.

Consolidated gross profit for 2012 was 6,1 million USD compared to 7,6 million USD in 2011, a decrease of 4,4 percentage points to 16,1 percent for 2012. The USA segment gross profit improved 0,6 million USD to 3,7 million USD and gross profit margin remained relatively unchanged at 29,2 percent. The USA segment gross profit was negatively impacted 1,3 million USD by higher raw bran prices in 2012 compared to 2011. Raw bran costs were on a continually escalating trend starting in early 2011 and continued to rise through the first quarter of 2012, before moderating slightly during the second quarter of 2012 and rising again after the third quarter of 2012. The impact of higher raw bran prices was offset by stabilized rice bran (SRB) selling price increases in the first and fourth quarters of 2011. The full impact of those SRB selling price increases impacted 2012.

The Brazil segment gross profit decreased 7,4 percent to 2,4 million USD. Gross profit decreased 0,4 million USD as a result of the 14,4 percent decline in the average foreign currency exchange rate between periods. The remaining margin reduction was attributable to higher raw bran costs, an unfavorable shift in sales mix to lower margin bulk animal feed products and decreased plant efficiency during the implementation of capital improvements. Raw bran costs were approximately 17 percent higher as of December 31, 2012 compared to December 31, 2011. Only a portion of these higher costs could be offset with higher selling prices.

Consolidated operating expenses were 14,8 million USD in 2012, compared to 17,2 million USD in 2011, an improvement of 2,4 million USD or 14,0 percent.

Corporate segment selling, general and administrative expenses (SG+A) improved 0,5 million USD. The favourable impacts of a reduction in payroll related costs and a broad reduction in other expenses due to cost containment efforts were offset by the unfavourable impacts of a 0,2 million USD increase in share-based compensation expense and income of 0,4 million USD in 2011 associated with a settlement with a former officer.

Consolidated other expense increased to 4,4 million USD in 2012, compared to 1,6 million USD for 2011. Consolidated other expense increased 7,1 million USD as a result of the financing expense and loss on extinguishment recognized in connection with the 2012 issuances of convertible debt and related warrants. Interest expense increased 0,2 million USD as a result of increases in average outstanding debt between periods. Foreign currency exchange losses increased 0,5 million USD in the Brazil segment. The losses relate to certain Irgovel debt and to a smaller extent Irgovel export-related accounts receivable, which are denominated and settled in US Dollars.

Consolidated net loss attributable to RiceBran Technologies shareholders for 2012 was 9,5 million USD or 0,05 USD per share, compared to 10,1 million USD or 0,05 USD per share for 2011. Loss from operations improved to 8,7 million USD in 2012 from 9,6 million USD in 2011. Results for 2012 include 4,4 million USD of Other Expense, an increase of 2,7 million USD compared to 2011. This increase in Other Expense was primarily the result of the 7,1 million USD of financing expense and loss on extinguishment related to the 2012 issuances of convertible debt and related warrants and a 0,5 million USD increase in foreign currency exchange loss. These expenses were offset by a 5,1 million USD increase in other income from the change in fair value of derivative warrant and conversion liabilities.