Tomball / 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 fourth quarter ended December 31, 2022. Summary:
|(Results in USD 000s)||4Q-2022||4Q-2021||Change||Qual||FY-2022||FY-2021||Change||Qual|
|Gross Profit (Loss)||(87)||(107)||(19%)||Improved||(759)||442||NM||Declined|
|Adjusted Ebitda Loss||(654)||(806)||(19%)||Improved||(3,766)||(2,927)||29%||Declined|
Fourth Quarter and Full Year 2022 Financial Highlights
RiceBran generated a 34 percent increase in revenue in 2022, driven by strong growth in specialty milling and higher core-SRB sales. Gross losses for the year, compared to gross profits in 2021, were due to a decline in Value-add SRB derivatives sales and profit contribution which offset improvements in all other businesses. Operating and net losses declined for the year due to non-cash charges in 2021, excluding these benefits, adjusted Ebitda losses increased for the year due to lower gross profit contributions. Favorable trends in the fourth quarter were driven by significant operational improvements at Golden Ridge and efforts to reduce SG+A.
- Revenue grew 34 percent in 2022 to nearly USD 42 million. Total revenue was USD 10.6 million in the fourth quarter of 2022, a 32 percent increase from USD 8 million in the fourth quarter of 2021. Total revenue was USD 41.6 million in 2022, a 34 percent increase from USD 31.1 million in 2021. Growth for the quarter, and for the year, was led by MGI and Golden Ridge, and helped by growth in core-SRB sales, offset by a decline in Value-add SRB derivative sales.
- Company returns to gross losses for the year. Gross losses were USD 87,000 in the fourth quarter of 2022, versus gross losses of USD 107,000 a year ago. Gross losses were USD 759,000 for the full year 2022, a USD 1.2 million decline from gross profits of USD 442,000 in 2021. Losses for the quarter, and for the year, were driven by a decline in Value-add SRB derivative sales, offset by improved results from Golden Ridge and MGI.
- SG+A fell to 14 percent of sales in 2022 from 20 percent in 2021. SG+A in the fourth quarter declined 5 percent to USD 1.5 million from USD 1.6 million a year ago. Total SG+A for the year declined 6 percent to USD 6.7 million, from USD 7.1 million in 2021. Lower SG+A for the quarter, and for the year, was driven by reductions in director compensation and lower corporate overhead expenses, principally lower compensation expenses.
- Operating and net losses widen due to gross losses. Operating losses for the year fell 31 percent to USD 7.3 million from USD 10.6 million in 2021, while net losses declined 12 percent in 2022 to USD 7.9 million, or USD 1.42 per share, from USD 9 million, or USD 1.87 per share, in 2021. Net losses in 2021 included a gain of USD 1.8 million in the first quarter for the forgiveness of the SBA PPP loan, and a USD 3.9 million charge in the fourth quarter for goodwill impairment.
- Adjusted Ebitda losses fall in fourth quarter. Adjusted Ebitda losses were USD 654,000 in the fourth quarter of 2022, a 19 percent decrease from losses of USD 806,000 in the fourth quarter of 2021. Adjusted Ebitda losses for 2022 were USD 3.8 million, a 29 percent increase from losses of USD 2.9 million in 2021. Lower losses in the fourth quarter stemmed from a significant improvement in contribution from Golden Ridge, while the decline for the year reflected the decline in contribution from our Value-Add SRB derivatives business.
- Company ends 2022 with USD 3.9 million in cash. RiceBran ended 2022 with USD 3.9 million in total cash, down from USD 5.8 million at the end of 2021. The year-over-year decline in total cash was due to higher operating losses in 2022 than 2021. RiceBran raised USD 2.1 million in the fourth quarter of 2022, USD 1.3 million in net proceeds from the sale of common stock, and USD 0.9 million from refinancing Golden Ridge’s term loan.
Fourth Quarter and Full Year 2022 Operating Highlights
RiceBran operations saw mixed results in 2022. The milling businesses generated strong growth and an improved profit contribution. The core-SRB business continued to deliver double digit revenue growth, but the SRB derivatives business continued to face market and operational challenges.
- Golden Ridge turnaround realized in the fourth quarter. After being a significant drag on RiceBran results since its acquisition, Golden Ridge delivered its first full-quarter positive contribution to adjusted Ebitda in the fourth quarter as the benefits of continued improvement in operations coalesced with strong sourcing and sales execution under the new operating agreement with Gander Foods.
- MGI grew profit contribution and expanded operations. MGI delivered robust sales growth and more than doubled its contribution to adjusted Ebitda in 2022. Strong execution from the local team supported continuation of these trends in the fourth quarter despite the disruption from capital improvements. This project increased capacity by 50 percent and broadened MGI’s capabilities to provide a solid growth platform.
- Core SRB business generated double digit growth. RiceBran was able to accelerate growth in its core-SRB business through strong execution, although results fell short of expectations due to technical issues with new applications. The benefits of higher volumes and solid pricing trends were largely offset by higher input and operating costs resulting in little change in the business’s contribution to adjusted Ebitda.
- Setbacks in Value-add SRB derivatives weigh on overall results. RiceBran’s Value-add SRB derivatives business saw a significant decline in revenue and contribution to adjusted Ebitda in 2022 that offset gains elsewhere. Setbacks in this business were driven by raw material and processing issues which led to inadequate production and resulted in customer losses in the face of new competition.
In light of RiceBran’s challenges in achieving its operating and financial targets in 2022, the Company is currently undergoing a strategic review of all the possible alternatives to generate improved returns to its shareholders.