RiceBran Technologies: Reports Q1-2020 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 quarter ended March 31, 2020.

«The outbreak of Covid-19 in 2020 has driven strong demand for non-perishable consumer food staples like the rice, oat, and barley products that we offer. This combined with recent capital investments drove a significant acceleration in growth at Golden Ridge and MGI in the first quarter of 2020,» said Brent Rystrom, President and Chief Executive Officer. «We are pleased with how our business is operating in this environment, but we are also carefully managing through the challenges this crisis creates for our operations. With Golden Ridge now running at higher levels, we have also started production of stabilized rice bran at the mill, which should have increasingly positive impacts on our financial results as 2020 progresses. As a result, we are excited for the opportunity to drive substantial sales growth and Ebitda improvements for RiceBran Technologies in 2020 and beyond.»

First Quarter 2020 Operational Highlights

• Golden Ridge revenue up over 80 percent from 4Q19: Revenues from our Golden Ridge Rice Mill facility increased over 80 percent in the first quarter of 2020 from the December quarter benefiting from increased capacity due to the completion of our debottlenecking project, strong underlying demand, and positive trends in finished rice prices.
• MGI Grain revenue more than doubled from 4Q19: Revenues from MGI Grain more than doubled in the first quarter of 2020 from the December quarter buoyed by robust demand from an expanding customer base which led to increases in capacity utilization and was supported by improved execution.
• SG+A reduced on successful cost cutting initiatives: The successful implementation of cost cutting initiatives resulted in a significant reduction in SG+A both on a year-over-year basis and from fourth quarter of 2019 levels. Further reductions are likely as initiatives put in place in the first quarter become fully effective.
• Focused on maintaining a strong balance sheet: Capital resources and operating liquidity remain strong with over USD 5.5 million in cash on hand and a significant portion of our accounts receivable facility unused at the end of the first quarter of 2020.

First Quarter 2020 Financial Highlights

• Accelerating topline growth: Revenues of USD 8.3 million reflected an increase of 31 percent from USD 6.4 million in the first quarter of 2019 and a 43 percent increase from USD 5.8 million in the fourth quarter of 2019. The increase was due to higher revenues from Golden Ridge and from MGI Grain, which was acquired in the second quarter of 2019. Animal feed product revenues increased 32 percent year-over-year, while food product revenues increased 30 percent, primarily due to higher sales of finished rice from Golden Ridge and increased buying from our existing customer base.
• Gross profit margins improving from 4Q19 lows: While our gross profit margin was negative 5 percent in the first quarter of 2020 compared to positive 5 percent in the first quarter of 2019, it improved from a negative 10 percent in the fourth quarter of 2019. The year-over-year decline was due to losses at Golden Ridge related to delays in the completion of debottlenecking at the mill which required us to catch up on lower priced sales contracts in the first quarter of 2020, while the sequential increase in profitability was the result of higher gross profit margin from the Company’s core SRB operations and improved profit trends at MGI vis-a-vis the fourth quarter.
• Focus on expense reduction driving SG+A lower: SG+A expenses decreased to USD 2.6 million from USD 3.3 million in the first quarter of 2019, due to the absence of additional costs associated with the acquisition of Golden Ridge, lower legal and outside accounting fees as well as cost cutting initiatives in the first quarter of 2020. SG+A expenses also decreased from USD 3.1 million in the fourth quarter of 2019, due to a reduction in operation administration and sales costs which were part of the aforementioned cost cutting initiatives.
• Favorable trends in adjusted Ebitda continue: Adjusted Ebitda (Non-GAAP) losses were USD 2.0 million in the first quarter of 2020, a progressive improvement compared to losses of USD 2.7 million reported in the fourth quarter of 2019 and losses of USD 3.4 million reported in the third quarter of 2019. First quarter 2020 adjusted Ebitda losses were modestly higher than losses of USD 1.9 million in the first quarter of 2019. However, adjusted Ebitda included USD 0.4 million in the first quarter of 2020 in add backs of non-cash compensation and expenses related to acquisition and financing activities, down from USD 0.7 million a year ago. As such, Ebitda losses of USD 2.4 million in the first quarter of 2020 were down from USD 2.6 million in the first quarter of 2019.

«We entered 2020 with accelerating momentum at both Golden Ridge and MGI,» said Todd Mitchell, Chief Financial Officer. «We also were able to achieve a significant reduction in SG+A through cost cutting initiatives. Both trends give us confidence that we should be able to generate improving Ebitda in the coming quarters.»