RiceBran Technologies: Reports Q3-2020 Financial Results

The Woodlands / TX. (rbt) RiceBran Technologies, a global leader in the production and marketing of value-added products derived from rice bran and a producer of rice, rice co-product, and barley and oat products, announced the Company’s financial results for the third quarter ended September 30, 2020.

«We have taken the important first steps to increase shareholder value by reinvigorating our core RiceBran business and driving strong growth at MGI, while reducing losses at Golden Ridge and further streamlining corporate overhead,» said RiceBran’s Executive Chairman Peter Bradley. «We remain in the process of a strategic review which is pointing to multiple options for further accelerating the growth of shareholder value, and in the coming quarters, we will implement initiatives to capitalize on the company’s strong core capabilities and unrecognized asset base.»

Third Quarter 2020 Operational Highlights

• Golden Ridge ramping up production after challenging period: Golden Ridge ran well below capacity for most of the third quarter as we were unable to acquire grain economically. We have balanced our commodity exposure, installed new leadership, and are reinvigorating operations. Losses mitigated toward the end of the quarter and operations continued to improve in October.
• Core SRB business returns to growth and margin expansion: Quarterly SRB revenue grew year-over-year and was up double-digits from levels in the second quarter of 2020, driven by demand for higher-ASP and higher-margin SRB derivatives. We are getting a double-digit price increase from our largest SRB customer which will be fully implemented by the beginning of the first quarter of 2021, and we are focused on accelerating growth through potential product expansion.
• MGI revenues scaling on the back of capacity expansion: Revenue from MGI was up 45 percent in the quarter compared to a year ago driven by customer growth as we leveraged prior investments in capacity expansion. Notably, incremental capacity was taken up by a customer who is now purchasing products from all three of our companies, highlighting the business’ fit with our overall strategy.
• Adjusted Ebitda losses narrow to lowest levels in two years: Despite lower than expected revenue, net losses narrowed to USD 2.8 million in the third quarter from USD 3.3 million a year ago, due to a 50 percent reduction in SG+A. As a result, adjusted Ebitda (Non-GAAP) losses of USD 1.8 million in the third quarter declined USD 1.1 million from USD 2.9 million in the second quarter. With our SG+A run -rate now under USD 2 million per quarter, and results for Golden Ridge expected to improve, adjusted Ebitda losses should narrow further in the fourth quarter.
• Company is focused on maintaining a strong balance sheet: Capital resources and operating liquidity remain solid with USD 3.9 million in cash on hand and an incremental USD 1.0 million in available borrowing capacity at the end of the third quarter. A reacceleration in commercial activity at Golden Ridge should have a positive impact on working capital and overall liquidity.

«In the third quarter of 2020, we saw positive revenue and margin trends from our core RiceBran business, and strong year-over-year growth for MGI,» said RiceBran CFO Todd Mitchell. «We also took steps to turnaround results at Golden Ridge by balancing our commodity exposure and installing new management. As a result, with further cuts in corporate overhead, adjusted Ebitda losses were reduced by over USD 1 million from the prior quarter’s levels. We expect adjusted Ebitda losses to narrow further in the fourth quarter and are in the midst of a 2021 budgeting process with the goal of driving the company to strong growth and overall positive adjusted Ebitda in 2021.»

Third Quarter 2020 Financial Highlights

• Revenue: Revenues of USD 5.2 million decreased 3 percent from USD 5.3 million in the third quarter of 2019. The year-over-year decrease in revenue included a 50 percent decline in revenues from Golden Ridge, which was only partially offset by mid-single-digit growth in core RiceBran revenue, and mid-double-digit growth at MGI. Golden Ridge’s decline was due to high levels of downtime as we could not acquire grain economically for much of the quarter. Core RiceBran growth was driven by strong demand for SRB derivatives, while MGI’s growth reflects our successful sales efforts to utilize increased capacity. Year-to-date revenues grew 8 percent to USD 19.4 million from USD 17.9 million for the same period in 2019.
• Gross Losses: Gross losses were USD 0.8 million in the third quarter of 2020 compared to gross losses of USD 0.4 million in the third quarter of 2019. The increase in gross loss was primarily attributable to Golden Ridge due to higher input commodity prices, USD 0.5 million in expenses related to the resolution of contract disputes, and the impact of higher downtime during the quarter compared to the same period a year ago. Year-to-date gross losses were USD 2.4 million up from USD 0.3 million for the same period in 2019. Over 100 percent of gross losses year-to-date is attributable to Golden Ridge.
• SG+A: SG+A expenses decreased to USD 1.9 million from USD 3.8 million in the third quarter of 2019, a decrease of USD 1.9 million. There were about USD 0.3 million in non-recurring expenses in the third quarter of 2019, and USD 0.1 million in losses in the third quarter of 2020 due to hurricane damage to our Lake Charles facility. The rest of this decline reflects cost-cutting initiatives that began in the first quarter of 2020 as well as actions in the third quarter to achieve another USD 2 million in annualized savings. Year-to-date SG+A dropped 34 percent to USD 7.0 million from USD 10.6 million for the same period in 2019.
• Net Loss and Adj. Ebitda: Net loss for the third quarter of 2020 was USD 2.8 million, compared to a net loss of USD 3.3 million in the third quarter of 2019. Adjusted Ebitda (Non-GAAP) losses were USD 1.8 million in the third quarter of 2020, compared to adjusted Ebitda losses of USD 3.4 million in the third quarter of 2019. Adjusted Ebitda losses also declined USD 1.0 million from USD 2.9 million in the second quarter of 2020. Year-to-date net losses were USD 9.8 million compared to USD 10.2 million in the comparable period, and adjusted Ebitda losses were USD 6.7 million compared to USD 8.1 million.
• Liquidity: Capital resources and operating liquidity remain adequate with USD 3.9 million in cash and an incremental USD 1.0 million in available borrowing capacity at the end of the third quarter of 2020. Management drew down USD 1.0 million in term loan funding and raised USD 0.7 million, net of issuance costs, through the sales of common shares in the third quarter of 2020. Management remains focused on maintaining adequate liquidity and expects to fund operations through a combination of activities including the utilization of our term loan and ATM equity facilities when necessary.