Sacramento / CA. (rbt) RiceBran Technologies, a global leader in the production and marketing of value added products derived from rice bran, announced the Company’s financial results for the third quarter ended September 30, 2017.
- Sales growth of 6 percent was driven by strength in Animal Nutrition
- Gross profit margin rate increased nearly 800 basis points to 33.1 percent
- SG+A expenses reduced by over 20 percent year-over-year
- Multiple actions have substantially improved balance sheet: more cash, U.S. debt virtually eliminated, and shareholders’ equity totaled over USD 12’000’000
- Progress on short- and long-term strategic initiatives
- Focus shifting to growing business and improving adjusted Ebitda performance
«This was an active quarter for RiceBran Technologies, and I am pleased with the progress we are making in many areas», said Dr. Robert Smith, Chief Executive Officer. «We were able to deliver an improving sales growth rate, and our continued strategic effort to manage costs and expenses delivered demonstrable benefits».
«During the third quarter we made substantial progress on building a stronger balance sheet for RiceBran Technologies. The sale of our Healthy Natural business in July helped to increase our cash levels, and improved shareholders’ equity while allowing us to virtually eliminate debt in our U.S. operations», Dr. Smith added. «Continental Grain, a leading investor in food and agribusiness companies, invested in RiceBran Technologies in September, further boosting our balance sheet. We are pleased with our major efforts to improve the balance sheet of the company in 2017 and we continue to evaluate exit strategies for our Nutra SA investment in Brazil. While we remain committed to achieving further operational improvements, we are increasingly focusing management’s time on growing the business as we are confident scale will lead to a profitable RiceBran Technologies».
Third Quarter Results
Revenue of USD 3’445’000 in the 2017 third quarter was up 6 percent from USD 3’249’000 in last year’s third quarter, with Animal Nutrition product revenue showing solid growth of 13 percent, while revenue from Food products was up 1 percent, hampered by weak orders from Specialty Ingredients customers. New customer wins included the addition of a new and respected distributor, our inclusion in a new gluten-free product hitting shelves this December and our first orders from a Companion Animal customer in September.
Gross profit margin in the 2017 third quarter improved by almost 800 basis points to 33.1 percent from 25.1 percent in last year’s third quarter, with a 6 percent increase in production helping absorption, raw bran prices decreasing year-over-year and benefitting from an ongoing focus on reducing costs.
SG+A expenses declined over 20 percent in the third quarter of 2017. Payroll was a major contributor to this, as we achieved run rate reduction over 14 percent in operations payroll when compared to the prior year same period. Offsetting this comparison were large severance expenses associated with the departure of a former employee in last year’s third quarter. Marketing expenses decreased 93 percent for the quarter, and travel and entertainment expenses decreased 28 percent from the prior year same period levels.
Our 2017 third quarter loss from operations improved to USD (1’355’000) from USD (2’325’000). We reported net income to shareholders of USD 3’299’000 in the third quarter of 2017 compared to a loss of USD (1’080’000) in last year’s third quarter. The largest factors affecting our net income in the 2017 third quarter – excluding operating loss – were a loss of USD (6’610’000) on the extinguishment of our U.S.-debt, an income tax benefit of USD 4’121’000 related to the accounting for the sale of Healthy Natural and income from discontinued operations, net of tax, of USD 6’706’000. We reported adjusted Ebitda of USD (922’000) versus USD (1’228’000) in last year’s third quarter.
Balance Sheet Highlights
RiceBran Technologies ended the 2017 third quarter with cash and cash equivalents of USD 8’187’000 and restricted cash of USD 775’000, with almost all U.S.-based debt having been eliminated. Shareholders’ equity of USD 12’392’000 was up from USD 6’860’000 on June 30, 2017, and compared to USD (632’000) on December 31, 2016. These improvements were primarily driven by the sale of Healthy Natural for USD 18’300’000, a private placement of 2’654’732 shares of common stock with Continental Grain for approximately USD 2’900’000 and the termination of roll-up rights held by the minority partner in Nutra SA that enabled the reclassification of certain warrants as equity rather than a liability. During the quarter we also issued 103’008 shares as a result of warrant exercises and 2’111’188 shares as a result of conversions of preferred stock into common stock. We ended the quarter with 16’551’350 shares of common stock outstanding.