The Woodlands / TX. (rbt) RiceBran Technologies, a global leader in the development and production of critical nutritional and functional ingredients derived from small and ancient grains for the healthy food, nutraceutical, pet care and animal feed markets, announced financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Operating Highlights
«The first quarter’s results built upon the momentum we began to see in December and bodes well for the year to come,» said RiceBran’s Executive Chairman Peter Bradley. «We are aligned with healthy living trends and benefitting from having high quality domestically sourced products in a difficult global supply chain environment. Strong growth in the quarter for our core-SRB and milling businesses reflects improved execution, while plans to introduce new products and expand production should support continued revenue growth and a transition to sustainable profitability, validating our strategic shift to a high value-add specialty ingredients focus.»
- Company delivers strong growth and a return to positive gross profits. Total revenue of USD 10.6 million in 1Q22, was up 23 percent from 1Q21, and 31 percent from 4Q21, driven by higher core-SRB sales and strong growth for MGI and Golden Ridge. Improved results for MGI and Golden Ridge supported a return to gross profits from gross losses in 4Q21, although gross profits of USD 502,000 in 1Q22 were off from USD 672,000 a year ago due to lower Value-Add SRB derivative sales. Net losses were USD 1.5 million in 1Q22, compared to net income of USD 591,000 in 1Q21, due to a USD 1.8 million benefit in 1Q21 from the forgiveness of the Company’s PPP loan. Adjusted Ebitda losses (non-GAAP) were USD 385,000 in 1Q22, compared to USD 158,000 in 1Q21, due to lower gross profits.
- Positive momentum underpinned by strong demand and improved execution. RiceBran saw meaningful growth for its core-SRB business in 1Q22, driven by stronger customer demand and higher prices. Sales initiatives put into place last year are bearing fruit as customers increasingly turn to SRB from alternative ingredients, which are becoming progressively more expensive and more difficult to source reliably. MGI and Golden Ridge are similarly benefiting from higher demand for domestically sourced agricultural ingredients and generated strong revenue growth and improved profitability in 1Q22, both year-over-year and sequentially, supported by improved execution from the RiceBran team.
- Value-Add to offer upside to revenue and profits in coming quarters. Strong results in 1Q22 occurred despite lower sales and associated contribution margin from Value-Add SRB derivatives due to the timing of large customer orders and a tough year-over-year comparison. Results are expected to reaccelerate in the coming quarters due to strong demand, enhanced supply chain sourcing, and increased production capacity. Management is confident in its strategy of transitioning the Company to a higher value-add specialty ingredients focus and looks for stronger gains from this business in the second half of the year, supported by new product introduction and higher sales from the Company’s distribution partnership with AIDP.
- New directors to support shift to value-add ingredient strategy. RiceBran is pleased to announce that Jean Heggie and Will Black have joined the Company’s Board of Directors effective today, replacing Ari Gendason and Beth Bronner who have resigned effective today. Ms. Heggie and Mr. Black each have over 30 years of experience in the consumer food ingredient, ag-tech, and global health and nutrition industries. With their extensive relationships and experience developing consumer-oriented foods and food ingredients, Mr. Black and Ms. Heggie are well-positioned to help the Company accelerate its strategic shift to a specialty ingredient company.
«With their relevant consumer-facing food ingredient, ag-tech, and health and nutrition expertise, the addition of Ms. Heggie and Mr. Black to our Board signals the next important step in our strategic shift to a high value-add provider of specialty ingredients,» said Executive Chairman Peter Bradley. «Both Ms. Heggie and Mr. Black have extensive experience developing and commercializing new products for companion animal and human end-markets, and as we introduce new products and expand the use of stabilized rice bran as an alternative to less healthy alternatives, we expect to be able to draw from their knowledge base to more rapidly penetrate new customers and accelerate growth of higher value-add ingredients We also thank Ari and Beth for their many contributions to the Company as we transformed the organization. Their guidance was invaluable during this process, and their oversight has been important in enabling us to reach this inflection point.»
First Quarter 2022 Financial Highlights
- Revenue momentum remained strong in the first quarter. Total revenue was USD 10.6 million in 1Q22, up 23 percent from USD 8.6 million in 1Q21, and up 31 percent from USD 8.0 million in 4Q21. Strong year-over-year and sequential revenue growth in 1Q22 reflected higher core-SRB sales and strong results for both MGI and Golden Ridge, while Value-Add SRB derivative sales were unchanged from 4Q21 levels, but off against a tough comparison in 1Q21.
- Company returned to positive gross profit margins. Gross profit was USD 502,000 in 1Q22, up from gross losses of USD 107,000 in 4Q21, with margin improvement supported by higher volumes and price increases for core-SRB sales, and strong results for both MGI and Golden Ridge. Gross profit declined from USD 672,000 in 1Q21 due to the year-over-year decline in higher-margin Value-Add SRB derivative sales.
- Quarterly SG+A remains stable under USD 1.7 million. SG+A declined 3 percent year-over-year, which was less than the decline in gross profit. As a result, operating loss increased modestly to USD 1.2 million in 1Q22 from losses of USD 1.1 million in 1Q21. Net loss was USD 1.5 million, or (USD 0.03) per share, in 1Q22 versus net income of USD 591,000, or USD 0.01 per share, in 1Q21 due to a USD 1.8 million benefit in the prior period from the forgiveness of the Company’s SBA PPP loan.
- Adjusted Ebitda losses were USD 385,000. The Company continued its recent trend of quarterly improvements in cash flow. Adjusted Ebitda losses (non-GAAP) were USD 385,000 in 1Q22, down from adjusted Ebitda losses (non-GAAP) USD 806,000 in 4Q21, driven by higher revenue and the transition to positive gross profits, but off from adjusted Ebitda losses (non-GAAP) of USD 158,000 in 1Q21 due to lower sales of higher margin Value-Add SRB derivatives.
- Balance sheet strengthened with sufficient liquidity. Total cash grew to USD 5.9 million at the end of 1Q22 from USD 5.8 million at the end of 4Q21, driven by positive operating cash flow, lower capital expenditures, and an increase in short-term borrowing from the Company’s factoring facility. Management continues to believe that the Company has sufficient cash reserves to bridge the gap to positive adjusted Ebitda.
RiceBran’s CFO Todd Mitchell commented, «The Company’s strong top line growth and transition to gross profit, despite facing a difficult comparison in our Value-Add SRB derivative business, reflect a healthy demand environment and strong execution from everyone on the RiceBran team and further validation of the Company’s strategic shift to a value-add specialty ingredient focus. We still look for future improvement in our core-SRB business in the coming quarters, which with an expected return to growth from our Value-Add SRB derivatives business, should drive gross margins higher and allow the Company to transition to positive adjusted Ebitda.»