RiceBran Technologies: Reported Q4 and FY 2020 Results

The Woodlands / TX. (rbt) RiceBran Technologies, a global leader in the production and marketing of value-added products derived from rice bran and a producer of rice, rice co-product, and barley and oat products, announced financial results in late February for the fourth quarter and year ended December 31, 2020.

RIBT Results (USD 000’s) Q4-2020 Q4-2019 Change FY-2020 FY-2019 Change
Revenue USD 6,806 USD 5,831 +17% USD 26,199 USD 23,713 +10%
Gross (Loss) (47) (600) -92% (2,471) (861) +187%
Operating (Loss) (1,825) (3,699) -51% (11,289) (14,557) -22%
Net (Loss) – Cont. Ops. (1,974) (3,739) -47% (11,730) (13,735) -15%
Adjusted Ebitda (Loss) (932) (2,705) -66% (7,610) (10,759) -29%

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Fourth Quarter 2020 Operational Highlights

«Over past six months, the leadership team has successfully implemented the first phase of our turnaround strategy, stabilizing and cutting losses at Golden Ridge, expanding SRB derivatives, and delivering strong growth from MGI,» said RiceBran’s Executive Chairman Peter Bradley. «With a strong balance sheet, compelling market position, and a renewed focus on delivering high value-add ingredients, RiceBran is well positioned for accelerated growth and a rapid transition to profitability in 2021.»

  • Refocused on high value-add ingredient strategy. RiceBran renewed its strategy to be a supplier of high value-add differentiated ingredients and took steps to enhance this business by securing an increase in organic feedstock and greenlighting a pathway for new product introductions.
  • Revitalized growth and narrowed losses at Golden Ridge. Golden Ridge’s commodity exposure was rebalanced, unprofitable delivery contracts were settled, and a new management team drove steady improvement in productivity, with losses narrowing progressively in each month of 4Q20.
  • Reinvigorated core SRB and derivatives businesses. A mid-year refocus of sales and operations efforts for core RBT operations paid off, delivering another quarter of double-digit revenue growth, driven by SRB price increases and strong demand for higher ASP, higher margin, SRB derivatives.
  • Enhanced support capabilities while lowering cost. Management reduced the run rate for SG+A by approximately 40 percent from 2019 levels through cuts in headcount, outside services, and consultants, while achieving higher productivity due to investments in technology, processes, and people.

Fourth Quarter 2020 Financial Highlights

«Positive revenue trend in all our businesses, lower losses from Golden Ridge, and a structural reduction in SG+A, drove significantly improved financial results in 4Q20,» said RiceBran’s CFO Todd Mitchell. «Overall revenue was up 17 percent in 4Q20 compared to 3Q20, and gross losses narrowed to near breakeven. Importantly, lower gross losses and lower SG+A reduced operating losses, for Adjusted Ebitda (non-GAAP) losses of USD 0.9 million in 4Q20, down from Adjusted Ebitda losses of USD 1.8 million in 3Q20, and USD 2.9 million in 2Q20.»

  • Positive revenue trends for all businesses. Total revenue grew 17 percent year-over-year in 4Q20 to USD 6.8 million, with positive trends for all businesses. Golden Ridge production stabilized in 4Q20, with monthly gains in productivity, RBT revenue grew double digits year-over-year, and MGI was up over 50 percent from 4Q19.
  • Gross losses narrowed to USD 47,000 in 4Q20. Golden Ridge losses declined progressively in each month of 4Q20, and 4Q20 losses in total were about the half the levels of the prior three quarters of 2020. As RiceBran’s gross losses in 2020 were entirely from Golden Ridge, this reduction was enough for overall gross losses to approach breakeven in 4Q20.
  • SG+A reductions position company for profitability. SG+A was USD 1.3 million in 4Q20 and USD 1.9 million in 3Q20. With narrowing gross losses accompanied by lower SG+A, net losses were reduced to USD 2.0 million in 4Q20, down from USD 2.8 million in 3Q20. SG+A reductions are sustainable, with quarterly SG+A expected to be below USD 2.0 million in 2021.
  • Adjusted Ebitda losses reduced USD 0.9M from 3Q20. Adjusted Ebitda (non-GAAP) losses were USD 0.9 million in 4Q20, compared to Adjusted Ebitda losses of USD 1.8 million in 3Q20, and USD 2.9 million in 2Q20. The reduction in Adjusted Ebitda losses reflected progressively lower gross losses and SG+A over the past three quarters.
  • Ended 2020 with USD 5.3 million in cash. Net cash used was USD 3.2 million in 2020. Operating and investing outflows of USD 8.8 million in 2020 were offset by USD 5.7 million in cash inflows from financing activities, including a USD 1.8 million SBA PPP loan, USD 2.0 million term loan, and USD 2.3 million from share sales. The PPP loan was forgiven in January 2021.

2021 Outlook and Objectives

«We enter 2021, embarking on the second phase of our turnaround strategy, which will be focused on expanding our line-up of high value-add ingredients, revitalizing sales initiatives, and expanding access to feedstock by enhancing our partnerships and strengthening our milling operations,» Bradley added. «With a reacceleration in top-line growth, expanding gross margins, and a full year of SG+A cuts, RiceBran is expected to generate positive Adjusted Ebitda (non-GAAP) in 2021.»

  • Accelerating RBT growth with an expanding line-up. Supplement market demand and enhanced capacity is expected to accelerate SRB derivative growth. The launch of a new variety of SRB will increase end-use applications and should drive ASPs higher by allowing SRB to be used as a natural excipient in tablets and capsules. Other launches of high value-add ingredients are planned for 2021.
  • Revitalizing sales and enhancing go-to-market strategy. Enhanced commodity management should have a materially positive impact on milling revenue and profits. New products, increased feedstock, a revitalized sales team, and greater pricing discipline should drive growth and margin expansion in 2021. RiceBran could look to enhance its sales initiatives with partner agreements in 2021.
  • Enhancing supply and manufacturing partnerships. RiceBran alone has SRB manufacturing partnerships in multiple rice growing regions, as well as internal SRB production at Golden Ridge. This diversity mitigates supply chain risk and enhances the operating flexibility of RiceBran operations. Enhancing these partnerships is a critical objective of the second phase of turnaround.
  • Recognizing the full potential of Golden Ridge and MGI. Golden Ridge should generate strong revenue growth and positive Ebitda in 2021. MGI performed well in the second half of 2020 and is expected to make a meaningful contribution to growth in 2021. The second phase of RiceBran’s turnaround includes leveraging both businesses to enhance its specialty ingredient strategy.
  • Accelerating growth and positive Adjusted Ebitda. Positive revenue trends are anticipated for all businesses in 2021, with Golden Ridge and MGI growth expected to be particularly strong. A transition to profitability at Golden Ridge should support positive gross profits in 2021. With SG+A expected to fall below 2020 levels, RiceBran should generate positive Adjusted Ebitda (non-GAAP) in 2021.