RiceBran Technologies: Reports Q3-2016 Financial Results

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, announced its financial results for its fiscal third quarter ended September 30, 2016.

Company Highlights

Additions to the Board of Directors. The Company strengthened its board with the addition of Brent Rosenthal, Beth Bronner, and Ari Gunderson. The new board members bring significant food industry, business management, and corporate governance experience to help guide the Company’s future growth.

Realignment of Executive Team. The Company’s Board of Directors elevated Dr. Robert Smith to the position of Interim CEO. Dr. Smith has been with the Company for over four years and has over 20 years experience managing product and business opportunities in the agricultural, nutrition, and nutraceutical industries for companies including Herbal Sciences Group and Monsanto. He also served as Research Assistant Professor at the AgBiotech Center at Rutgers University. Additionally, the Company named Michael Goose to the newly created position of President of Ingredient Sales and Marketing. Goose brings to the Company over 13 years of consumer package goods experience as a new product innovator for companies including the Hain Celestial Group and Kosher Valley Poultry.

Capital Infusion into Irgovel Operations. In October 2016, the Company’s minority partner in its Irgovel operations in Brazil, contributed 1.2 million USD in equity to be used for working capital in the Brazil segment. Additionally, Irgovel’s management has negotiated various raw bran supply agreements that will allow Irgovel to obtain rice bran on a consistent basis with set pricing. As a result of these events, the Company anticipates significant sequential quarterly improvement in operating results from its Brazil segment as Irgovel returns to more normalized operations in the fourth quarter of 2016.

Implementation of Strategic Growth Plan. During the quarter, management and the board conducted an extensive review of the business resulting in the development of a new and focused strategic plan intended to grow the Company and build shareholder value. As part of that plan, the Company intends to relocate its corporate offices and certain aspects of its business to a centralized location in California to better service its current and future customers.

Q3 Operating Results

Revenue

Consolidated revenues for Q3 2016 were 8.8 million USD compared to consolidated revenues of 8.9 million USD in Q3 2015. USA segment revenue rose to 8.3 million USD in Q3 2016, an increase of 64 percent compared to Q3 2015 revenues of 5.0 million USD. The increase in USA segment revenue was led by a 75 percent increase in sales of human nutrition products and a 44 percent increase in animal feed product sales. The USA segment’s strong performance was offset by an 86 percent year over year decline in Brazil segment revenue. Brazil segment revenue totaled 563’000 USD in Q3 2016 due to the Irgovel facility operating in an economically feasible manner due to insufficient working capital.

Gross Profit

Consolidated gross profit for Q3 2016 was 1.9 million USD compared to 2.1 million USD in Q3 2015 with consolidated gross profit percentage declining by 1.5 percentage points to 22 percent. USA segment gross profit increased by 90 percent to reach 2.5 million USD compared to 1.3 million USD in Q3 2015. USA segment gross profit percentage increased by 4 percentage points to 30 percent in Q3 2016 due to increased revenue coupled with a 6 percent decline in raw bran prices. Consolidated gross profit and gross profit percentage were negatively impacted by the Company’s Brazil segment where a shortage of working capital resulted in a severe decline in production volume leading to a significant increase in negative gross profit.

Operating Expenses

Consolidated Q3 2016 operating expenses totaled 4.0 million USD compared to 3.4 million USD in Q3 2015. The rise in operating expenses was attributable to a 700’000 USD increase in corporate selling, general and administrative expenses partially offset by a 100’000 USD decrease in depreciation expense.

Adjusted Ebitda

Consolidated Adjusted Ebitda in Q3 2016 resulted in a loss of 506’000 USD compared to an Adjusted Ebitda loss of 269’000 USD recorded in Q3 2015. USA and Corporate segment Adjusted Ebitda in Q3 2016 was 325’000 USD compared to prior year Adjusted Ebitda loss of 474’000 USD. The Company’s Brazil segment recorded an Adjusted Ebitda loss of 831’000 USD in Q3 2016, compared to an Adjusted Ebitda gain of 205’000 USD in Q3 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 third quarter of 2016 the Company recorded a net loss attributable to shareholders of 1.0 million USD or a loss of 0.11 USD per diluted share on 9.4 million weighted average shares outstanding. This compares to a loss of 0.5 million USD or 0.06 USD per diluted share on 9.2 million weighted average shares outstanding in the third quarter of 2015.

«We continue to generate positive results from our USA segment where revenue and margins have increased significantly on a year over year basis. Additionally, with the new capital infusion and supply agreements now in place in Brazil, we anticipate seeing improving results from those operations in the coming quarters», said Dr. Robert Smith, Interim CEO of RiceBran Technologies. «As we move through the remainder of 2016 and into 2017 we intend to begin the implementation of a comprehensive strategic plan, formulated by management and the board, designed improve efficiencies, expand our market opportunities, and build lasting shareholder value. This plan will include consolidating our corporate offices, extrusion operations and warehousing to one location in California, and gearing that new location to meet the standards of the Food Safety Modernization Act. This will enable us to service the needs of large CPG customers seeking ingredients that are high in nutrition, gluten free, non allergenic, and non-GMO. Our entire team is dedicated to building our RiceBran Technologies into the leading supplier of rice bran ingredients to the human and animal nutrition markets. We look forward to working diligently to achieve that goal in the coming quarters and years in order to increase the value of our Company for the benefit of our stockholders».