RiceBran Technologies Reports FY-2017 Financial Results

Sacramento / CA. (03.20. / 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 full year ended December 31, 2017.

Business Highlights

• Successfully exited from unprofitable operations in Brazil and completed the sale of its Healthy Natural contract manufacturing business for USD 18.3 million in cash to focus on proprietary ingredient business.
• Secured a direct USD 2.9 million equity investment from Continental Grain to fuel future sales growth.
• Expanded GPMs by over 400bps and reduced annual SG+A expenses by USD 2.5 million or 20.2 percent through cost cutting initiatives.
• Significantly improved balance sheet with year-end 2017 cash totalling USD 6.2 million and shareholders’ equity rising to USD 14.7 million compared to cash of USD 342’000 and a shareholders’ deficit of USD (632’000) at year-end 2016.
• Added key sales personnel in the second half of 2017 to help drive future ingredient sales growth.

«We are pleased with the progress we made in 2017 as we completed the work to put RBT on sound financial footing», said Dr. Robert Smith, CEO. «Our expanded salesforce is now focused on targeted customer niches, and we are seeing progress in growing those niches. We believe this will translate into accelerating revenue growth starting with the 2018 second quarter and we expect our quarterly adjusted Ebitda to improve markedly by the end of 2018».

Highlights of RBT’s 2017 results

• RiceBran Technologies reported revenue of USD 13.4 million in 2017 versus USD 13.0 million in 2016. Sales of our Animal Nutrition product sales were up 9 percent while Food product sales fell 2 percent.
• Gross profit expanded to USD 3.8 million from USD 3.1 million, and gross profit rate was 28.39 percent in 2017 versus 24.09 percent last year. Raw bran prices were a favorable impact for much of the year, while obsolete inventory costs also fell.
• SG+A costs were sharply lower at USD 9.9 million in 2017 versus USD 12.4 million in 2016, reflecting aggressive company efforts to improve profitability. Primary drivers of this decrease included lower payroll, travel and entertainment, marketing, and annual meeting expenses (the latter related to the 2016 proxy contest).
• Our loss from operations of USD (6.1) million in 2017 was improved from USD (9.3 million) as a result of higher gross profit and lower SG+A.
• Our adjusted Ebitda was USD (4.1) million in 2017, improved from USD (5.4) million in 2016.

Highlights of RBT’s 2017 fourth quarter results

• The fourth quarter saw sales decline 3 percent to USD 3.1 million from USD 3.2 million in the 2016 fourth quarter. Although we were not expecting growth in the fourth quarter, our performance was partially constrained by end of quarter customer delivery timing issues and some unexpected downtime at one of our facilities.
• Gross profit was USD 666’000 in the 2017 fourth quarter versus USD 578’000 in the 2016 fourth quarter, and gross profit rate improved to 21.15 percent from 17.87 percent. Inventory reserves helped gross profit margins, which was partially offset by higher raw bran prices.
• SG+A expenses totalled USD 2.46 million in the 2017 fourth quarter versus USD 2.96 million in the 2016 fourth quarter, declining to 78.12 percent of revenue from 91.38 percent. Lower stock option, bonus, office, and fee expenses were primary causes of the decrease.
• Operating loss of USD (1.79) million in the 2017 fourth quarter improved from USD (2.38) million in the 2016 fourth quarter, and adjusted Ebitda was USD (1.34) million compared to USD (1.69) million, respectively.

RBT’s balance sheet was substantially strengthened in 2017

• Year-end cash and cash equivalents totalled USD 6.2 million in 2017 versus USD 342’000 at the end of 2016.
• Debt was reduced to USD 16’000 at the end of 2017 from USD 9.0 million at the end of 2016.
• Shareholders’ equity totalled USD 14.7 million at year-end 2017, up from USD (632’000) a year earlier.
• Most of the improved financial condition resulted from the proceeds and gain on our sale of Healthy Natural and an amended agreement that allowed us to change the accounting treatment for many of our warrants to equity treatment versus liability.

«We are in a strong position to pursue growth opportunities», noted Brent Rystrom, COO and CFO. «Our sales team, led by Michael Goose, is making major inroads in identifying and selling to new customers as well as building volumes with existing customers. We see this leading to a progressive acceleration in revenue growth beginning in the 2018 second quarter. We plan to hold non-selling expenses flat in 2018, which should drive sharply improving profitability».

RiceBran Technologies is providing guidance for 2018

• Annual revenue exceeding USD 16.0 million compared to the USD 13.4 million we reported in 2017.
• First quarter revenue flat to down 5 percent compared to the 2017 first quarter.
• Second quarter revenue up 7 percent to 12 percent compared to the 2017 second quarter.
• Third quarter revenue up 20 percent to 30 percent compared to the 2017 third quarter.
• Fourth quarter revenue up at least 30 percent compared to the 2017 fourth quarter.
• Annual Ebitda: On revenue of USD 16.0 million in 2018 the Company expects an adjusted Ebitda loss of USD (3.0) millionto USD (3.5) million for the year, with the loss largest in the first quarter and decreasing sequentially as the year unfolds and the range determined by the mix of customer types in our overall revenue.
• Attaining positive adjusted Ebitda: provided the Company can maintain meaningful double-digit revenue growth rates into 2019 while maintaining strong controls on our costs and expenses, we believe we will reach breakeven adjusted Ebitda by mid-year 2019.