RiceBran Technologies: Reports Q4 and Full Year 2021 Results

The Woodlands / 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 and year ended December 31, 2021.

Fourth Quarter Highlights

• Revenue grew 18 percent year-over-year to USD 8.0 million.
• Net loss increased by 174 percent to USD 5.4 million including a USD 3.9 million charge for goodwill impairment.
• Adjusted Ebitda loss narrowed by 53 percent to USD 437,000.
• Company delivered sequential improvements in monthly performance, supported by price increases and operational strategies to overcome supply chain challenges.

2021 Full Year Highlights

• Revenue grew 19 percent year-over-year to USD 31.1 million.
• Company transitioned to positive gross profits, for a 24 percent reduction in net loss to USD 9 million in 2021.
• Adjusted Ebitda loss narrowed by 66 percent to USD 2.6 million.
• Supply chain pressure on agricultural feedstocks drove increased interest and demand for SRB and SRB-based ingredients across a wide variety of applications.

Operational Milestones

«We overcame a challenging environment in 2021 to successfully expand our addressable market and deliver significant improvement in every financial metric,» said Executive Chairman Peter Bradley. «We enhanced our value-add presence in the nutraceutical and wellness markets and made significant inroads for our core-SRB products in the companion animal market. These accomplishments will support accelerated growth, improved capacity utilization, and margin expansion in 2022, and with sustainable operating improvements in our milling operations, gives us optimism that we will transition to positive adjusted Ebitda in 2022.»

• Transition to Higher Added Value Ingredients Accelerating – Our value-add SRB derivative ingredients continue to enjoy strong demand, and our strategy to emphasize this business was validated by over 30 percent growth in sales from these products in 2021. We introduced new SRB products targeting the health and wellness markets and enhanced our reach in this growth category with the AIDP relationship. These actions should support growth in 2022, with upside offered by new product introductions in these and other markets.
• Disruptions Provide Opportunity to Expand Addressable Market – Market and supply chain disruptions provided opportunities to accelerate the adoption of SRB in a wider range of applications. In particular, the company enhanced its position in the companion animal market by displacing other ingredients as the base for new flavor systems. Prolonged market disruption from overseas conflict would place further emphasis on alternative and domestically sourced feedstocks across a broad range of applications.
• Enhanced Capacity Utilization Offers Potential for Gross Margin Expansion – In 2021 core-SRB demand was unmet due to logistics challenges. In 2022 our largest companion animal and equine customers will be supported by a new dedicated freight partnership. New business in the companion animal category and a properly supported equine franchise should enhance core-SRB production volumes, capacity utilization and operating leverage, providing the opportunity for meaningful gross margin expansion from this business.
• Milling Operations Demonstrating Improved Performance – Following unplanned downtime in the third quarter, MGI returned to growth in the fourth quarter, and operational upgrades will support new customer wins and drive revenue growth and gross margin expansion in 2022. Operational improvements at Golden Ridge significantly reduced its drag on overall performance in 2021, and further improvement is likely in 2022, providing the opportunity to evaluate the strategic contribution of this business.

Financial Results

• Revenue trends re-accelerated in the fourth quarter. Total revenue was USD 8.0 million in the fourth quarter of 2021, up from second and third quarter levels, and an 18 percent increase from USD 6.8 million in the fourth quarter of 2020. Total revenue was USD 31.1 million in 2021, a 19 percent increase from USD 26.2 million in 2020. Growth was broad-based and organic across all businesses, led by SRB derivatives and Golden Ridge, with core-SRB sales held back in the second and third quarter by logistical challenges which were mitigated in the fourth quarter offering the opportunity for better sales trends in 2022.
• Company transitioned to positive gross profits for the year. Gross losses were USD 107,000 in the fourth quarter of 2021, up from gross losses of USD 47,000 a year ago, as input inflation and a slow start to the quarter offset higher volumes and price increases later in the quarter. Gross profits were USD 442,000 for the full year 2021, a USD 2.9 million improvement from gross losses of USD 2.5 million in 2020. The transition to positive gross profits was driven by lower losses for Golden Ridge and over 30 percent growth in SRB derivatives, leaving the opportunity for further margin expansion from higher core-SRB capacity utilization.
• SG+A dropped to 23 percent of sales in 2021 from 30 percent of sales in 2020. SG+A in the fourth quarter rose 20 percent to USD 1.6 million from USD 1.3 million a year ago, primarily due to positive non-recurring items in the prior period. Total SG+A for the year declined 11 percent to USD 7.1 million, from USD 8.0 million in 2020, driven by reductions in corporate headcount and outside consultants. Absent non-recurring items, in 2021 SG+A stabilized in the range of USD 1.7-USD 1.8 million per quarter as was expected.
• Losses narrowed due to transition to positive gross profits and lower SG+A. Operating losses declined 6 percent in 2021 to USD 10.6 million, from USD 11.3 million in 2020, despite a USD 3.9 million charge against goodwill in the fourth quarter. Net losses declined 24 percent in 2021 to just under USD 9 million, or USD 0.19 per share, from nearly USD 12 million, or USD 0.29 per share, in 2020. Net losses in 2021 included a gain of USD 1.8 million in the first quarter for the forgiveness of the company’s SBA PPP loan, and of USD 389,000 in the fourth quarter for the revaluation of a warrant liability.
• Adjusted Ebitda losses drop 66 percent in 2021 to USD 2.6 million. Adjusted Ebitda losses were USD 437,000 in the fourth quarter of 2021, a 53 percent decline from losses of USD 932,000 in the fourth quarter of 2020. Adjusted Ebitda losses for 2021 were USD 2.6 million, a 66 percent decline from losses of USD 7.6 million in 2020. For the second year in a row, the company converted over 100 percent of incremental revenue into incremental adjusted Ebitda, reflecting improved execution and revealing the potential for operating leverage.
• Balance sheet strengthened with sufficient liquidity. RiceBran ended 2021 with USD 5.8 million in total cash, up from USD 5.3 million at the end of 2020. Cash burn was approximately USD 4 million in 2021. RiceBran raised USD 4.7 million in capital in 2021, USD 171,000 in the second quarter from the exercise of warrants, USD 3.4 million in the third quarter from the sale of common stock, and USD 1.1 million in the fourth quarter from refinancing Golden Ridge’s term loan, which should provide sufficient liquidity to complete its business transformation in 2022 with adequate cash reserves.

«We enter 2022 with a growing portfolio of differentiated products, a broader addressable market, and greater opportunities,» added Peter Bradley. «Combined with sustainable operating improvements in our milling operations, this provides us with the foundation for a structurally profitable company. In the fourth quarter we made significant progress in addressing logistics challenges, which with price increases helped reinvigorate top-line growth and margin expansion. We expect to build on these successes in 2022 with new customers helping to drive volume and margin expansion, and ultimately a transition to positive adjusted Ebitda.»

About RiceBran Technologies

RiceBran Technologies is a specialty ingredient company focused on the development, production, and marketing of products derived from traditional and ancient small grains. Notably, we are global leader in the production and marketing of stabilized rice bran (SRB), and high value-added derivative products derived from SRB, as well as a processor of rice, rice co-products, and barley and oat products. We create and produce products utilizing proprietary processes to deliver improved nutrition, ease of use, and extended shelf-life, while addressing consumer demand for all natural, non-GMO and organic products. The target markets for our products include food and animal nutrition manufacturers and retailers, as well as specialty food, functional food and nutritional supplement manufacturers and retailers, both domestically and internationally.