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, announces financial results for Q2 2016.
Financial Highlights
Revenues: USA segment revenues increased by 27 percent quarter over quarter and by 13 percent sequentially to reach a record 8.8 million USD. Overall consolidated revenues for Q2 2016 were 10.5 million USD compared to 11.4 million USD in Q2 2015 due to Brazil segment revenue declining by 61 percent to 1.8 million USD in Q2 2016. Brazil segment revenues were negatively impacted by decreased throughput and a 12 percent decline in the value of the Brazilian currency.
Gross Profit: Consolidated Q2 2016 gross profit was 2.0 million USD compared to 2.2 million USD in Q2 2015. USA segment gross profit increased by 17 percent compared to Q2 2015 with margins remaining strong at 30 percent.
Adjusted Ebitda: The Company’s USA and Corporate segment Adjusted Ebitda was 425’000 USD in Q2 2016 compared to Adjusted Ebitda of 543’000 USD in Q2 2015. The Brazil segment recorded an Adjusted Ebitda loss of (1.0 million USD) in Q2 2016 compared to an Adjusted Ebitda loss of (530’000 USD) in Q2 2015. Overall consolidated Adjusted Ebitda loss in Q2 2016 was (616’000 USD) compared to an Adjusted Ebitda gain of 13’000 USD recorded in Q2 2015.
Net Loss: Q2 2016 consolidated net loss was (8.1 million USD) compared to a consolidated net loss of (4.0 million USD) recorded in Q2 2015. The quarterly loss includes a non-cash charge of 3.0 million USD for impairment of Brazil segment goodwill and expense of 1.1 million USD related to the proxy contest. Net loss attributable to RBT common shareholders was (6.6 million USD) in Q2 2016 compared to (3.5 million USD) in Q2 2015.
W. John Short, CEO and President, commented: «In the second quarter of 2016 we achieved record revenue in our USA segment for the second straight quarter. The increase in revenue, both quarter over quarter and sequentially, was derived from functional food ingredients and human ingredients as well as animal nutrition products. We continue to see favorable growth trends in our customer base from both established and new customers. Animal nutrition sales continue to grow as a result of our recent distribution agreement with Kentucky Equine Research. With strong customer demand and adequate supplies of bran, we believe we are well positioned to continue the positive revenue growth trend in our USA segment for the remainder of 2016. We expect to see initial revenues in Q3 from the sale of organic bran purchased from the Narula Group as we work to build additional momentum in the second half of 2016 to take advantage of the capacity investments we have made in our USA Segment plants over the past two years. We believe that we have strengthened our sales team by adding leadership and realigning responsibilities. With these changes, we intend to work diligently to build lasting value in this segment for years to come for the benefit of our stockholders».
Short continued, «The situation in Brazil remains extremely challenging with economic recession and adverse weather conditions continuing to weigh heavily on the segment. High costs for bran due to a poor harvest combined with working capital availability challenges have resulted in significantly reduced production levels at Irgovel. We continue to work with our private equity partner in Brazil to explore a full range of tactical and strategic alternatives for Irgovel with the aim of maximizing value for our shareholders. We are also excited to work closely with our newly elected board of directors to update our strategic plan for the USA Segment. We see continued strong demand in our USA segment and are confident we can drive improved performance for the remainder of 2016».
Revenues
Consolidated revenues for Q2 2016 were 10.5 million USD compared to Q2 2015 consolidated revenues of 11.4 million USD. The decrease in consolidated revenue was due to a 61 percent quarter over quarter decline in revenue from our Brazil segment, partially offset by a 27 percent increase in revenue from our USA segment which rose to a record 8.8 million USD in Q2 2016. USA segment revenues were bolstered by a 30.1 percent increase in human ingredient and functional food revenues as well as a 16 percent increase animal nutrition revenues. Brazil Segment revenue was negatively impacted by a decrease in bran processing levels as well as a 12 percent quarter over quarter decline in the average Brazilian Real versus US Dollar exchange rate. The Company expects the business environment in Brazil to remain challenging throughout 2016.
Gross Profit
Consolidated gross profit for Q2 2016 was 2 million USD compared to gross profit of 2.2 million USD in Q2 2015 with gross profit percentage declining by 0.8 percentage points to 18.8 percent. USA segment gross profit reached 2.6 million USD, a 17.5 percent increase compared to 2.3 million USD in Q2 2015. Gross profit percentage from our USA segment declined by 2.6 percentage points to 30.1 percent due to an increase in lower margin animal nutrition sales coupled with a temporary bran supply issue at the Company’s Mermentau facility that resulted in products being delivered out of California at a higher cost during the quarter. The decline in consolidated gross profit and gross profit percentage is attributable to the Company’s Brazil segment where a decrease in access to raw bran caused a decline in production volume leading to a significant increase in negative gross profit.
Operating Expenses
Consolidated Q2 2016 operating expenses totaled 7.7 million USD compared to 3.8 million USD in Q2 2015. The increase was attributable to an estimated 3.0 million USD goodwill impairment charge related the Company’s Brazil segment and 1.1 million USD of costs related to the proxy contest and subsequent settlement in July 2016.
Adjusted Ebitda
On a fully consolidated basis, the Company recorded a consolidated Adjusted Ebitda loss of (616’000 USD) in Q2 2016 compared to an Adjusted Ebitda gain of 13’000 USD recorded in Q2 2015. USA and Corporate segment Adjusted Ebitda in Q2 2016 was 425’000 USD compared to prior year Adjusted Ebitda of 543’000 USD. Brazil segment Adjusted Ebitda loss increased to (1.0 million USD) in Q2 2016, compared to an Adjusted Ebitda loss of (530’000 USD) in Q2 2015. 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).
Net Loss
For the second quarter of 2016 the Company recorded a net loss attributable to shareholders of (6.6 million USD) or a loss of (0.72 USD) per diluted share on 9.2 million weighted average shares outstanding. This compares to a loss of (3.5 million USD) or (0.38 USD) per diluted share on 9.2 million weighted average shares outstanding in the first quarter of 2015.
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