2016 USA segment revenue increased by 40% to $32.7 million
SCOTTSDALE, Arizona, March 23, 2017 /PRNewswire/ --
RiceBran Technologies (NASDAQ: RIBT and RIBTW) (the "Company" or "RBT"), a global leader in the production and marketing of value added products derived from rice bran, announced today the Company's financial results for the full year ended December 31, 2016.
- Implemented cost cutting initiatives, including employee headcount reductions and supply chain improvements, targeting a significant reduction in expenses beginning in Q1 2017.
- Began a shift in sales focus in Q4 2016, targeting larger scale ingredient opportunities in the food and feed markets.
- Completed reconfiguration of its Board of Directors in the second half of 2016 to add significant corporate governance and food industry operations experience.
- Began management transition in the second half of 2016 with the appointment of Robert Smith as CEO and culminating with the hiring of Brent Rystrom as CFO in Q1 2017.
- In February 2017, the Company completed an $8 million debt and equity financing, repaid $4.0 million of high interest debt, and restructured $6.3 million in subordinated debt that is expected to result in an annual cash interest savings of $500,000, net of OID recognition.
Q4 Financial Highlights
Revenues: Consolidated revenues for Q4 2016 were $10.0 million compared to $9.9 million in Q4 2015. During the Q4 2016 USA segment revenue increased by $1.6 million to $7.9 million, largely offset by a $1.5 million decline in Brazil segment revenue which totaled $2.1 million. Although Brazil segment revenue declined on a year over year basis, it increased by $1.5 million sequentially. This sequential improvement was a result of the resumption of rice bran oil production at its Irgovel subsidiary following a capital contribution of $1.5 million by RBT's minority partner, enabling Irgovel's management to negotiate various raw bran supply agreements for its operations. The Company is encouraged by the improved sequential performance in Brazil but, remains committed to its strategy of providing no additional capital to support Brazil operations for the foreseeable future.
Gross Profit: Q4 2016 consolidated gross profit was $1.8 million compared to $2.7 million in Q4 2015, mainly due to a $725,000 quarter over quarter decline in gross profit at our Brazil segment. USA segment gross profit totaled $2.0 million in Q4 2016 compared to $2.2 million in Q4 2015. USA segment gross profit was negatively impacted by reserves for excess inventory of certain products and higher costs associated with the initial processing of our new organic derivative products. Brazil segment gross profit was ($202,419) in Q4 2016 compared to $522,625 in Q4 2015. The quarterly decline in gross profit in Brazil was due to inefficiencies associated with lower plant utilization rates for the majority of Q4 2016.
Operating Expenses: Q4 2016 consolidated operating expenses were $3.7 million compared to $3.2 million for the prior year. The increase is primarily attributable to additional legal fees related to debt renegotiations and severance expense related to the departure of the Company's former board member and CEO.
Net Loss: Q4 2016 consolidated net loss was ($1.4 million), consistent with a consolidated net loss of ($1.4 million) recorded in Q4 2015.
Full year Financial Highlights
Revenues: Full year 2016 consolidated revenues were $39.4 million compared to $39.9 million in 2015. Full year 2016 USA segment revenues increased by $9.3 million or 40% to reach $32.7 million. The revenue increase was broad based across food and feed. Improved USA segment performance was offset by a $9.9 million decline in full year Brazil Segment revenue which totaled $6.7 million in 2016 compared to $16.6 million in 2015. The decline in Brazil segment revenue was due to insufficient working capital, adverse weather, and competition for bran resulting in a significant decline in production volume.
Gross Profit: Full year 2016 consolidated gross profit was $8.0 million compared to $8.1 million in 2015, with gross profit margin remaining consistent at 20.2% in both periods. USA segment gross profit increased by 30.0%, reaching $9.6 million compared to $7.4 million in 2015. USA segment gross profit percentage was 29.5%, a decline of 2.3 percentage points due to a 13 week bran supply disruption in Louisiana, increased contract manufacturing costs not yet fully passed on to customers, and inventory reserves. Full year 2016 Brazil segment gross profit was ($1.7 million) compared to $0.7 million in 2015 due to insufficient working capital to support operations. As previously mentioned, performance in Brazil has improved sequentially in Q4 2017, but the outlook remains uncertain and management remains committed to its strategy of providing no additional capital to support those operations for the foreseeable future.
Operating Expenses: Consolidated operating expenses for the full year 2016 were $19.1 million compared to $14.3 million in 2015. The increase in operating expenses in 2016 was primarily related to a $3.0 million impairment charge to goodwill related to the Company's Irgovel operations, a $1.1 million expense related to the 2016 proxy contest, and $0.7 million in severance expense.
Net Loss: The Company recorded a net loss attributable to common shareholders of $9.1 million for the full year 2016 compared to a loss attributable to common stockholders of $8.3 million in 2015. The Company's operations resulted in a loss of ($.97) per share in 2016 on 9.3 million weighted average shares outstanding compared to a loss of ($.90) per share on 9.2 million weighted average shares outstanding in 2015.
Adjusted EBITDA: For the full year 2016, the Company recorded a Consolidated Adjusted EBITDA loss of ($2.0 million) compared to an Adjusted EBITDA loss of ($1.2 million) in 2015. USA and Corporate segment Adjusted EBITDA improved to $789,000 compared to a loss of ($67,000) in 2015. The Company's Brazil segment recorded a 2016 Adjusted EBITDA loss of ($2.8 million) compared to a loss of ($1.1 million) in 2015. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into the Company's operating results (see reconciliation of non-GAAP measures below).
Additional information can be found in the Company's Form 10-K filed with the United States Securities and Exchange Commission (SEC) on March 23, 2017.
Robert Smith, CEO commented, "Our full year results reflect a strengthening performance in our core USA segment.. The results are also beginning to reflect the significant corporate evolution that has taken place at our Company in the second half of 2016 that continues to gain momentum as we move into 2017. With a significantly strengthened corporate leadership team now fully in place and a much improved balance sheet resulting from our recent debt and equity refinancing in February 2017, we are now poised to fully unlock the vast potential of our proprietary technology and products. We have implemented strategic initiatives to reduce costs while we build on a growing USA segment revenue base and look to expand into larger more profitable market opportunities. We are confident that this will enhance our operating leverage in the coming years to improve operating results. As industry trends for products that are non-GMO, organic, gluten free and organic continue to move in our favor, we are positioning our company for large scale opportunities with CPG and specialty animal nutrition companies to accelerate future sales growth. We believe the measures we have taken in 2016 and early in 2017, place our Company on the right track for success and will enable us to build significant future value for the benefit of our stockholders."
The Company will hold a conference call to discuss its 2016 full year results and financial guidance on March 23, 2017 at 4:30 PM EDT. Call-in information is as follows:
- Date: March 23, 2017
- Time: 4:30 p.m. Eastern Daylight Savings Time
- Direct Dial-in number for US/Canada: (201) 493-6780
- Toll Free Dial-in number for US/Canada: (877) 407-3982
- Dial-In number for international callers: (201) 493-6780
- Participants will ask for the RiceBran Technologies 2016 Full Year Financial Results Call
This call is being webcast by ViaVid and can be accessed at http://public.viavid.com/index.php?id=123463.
The call will also be available for replay by accessing http://public.viavid.com/index.php?id=123463.
About RiceBran Technologies
RiceBran Technologies is a food and animal feed ingredient company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. RiceBran Technologies has proprietary and patented intellectual property that allows us to convert rice bran, one of the world's most underutilized food sources, into a number of highly nutritious food and feed ingredient products. Our global target markets are food and feed manufacturers and retailers, as well as specialty food, functional food and nutritional supplement manufacturers and retailers. More information can be found in the Company's filings with the SEC and by visiting our website at http://www.ricebrantech.com .
This release contains forward-looking statements, including, but not limited to, statements about RiceBran Technologies' expectations regarding financial performance, financial support of Brazil operations, cost reductions, product demand and future growth. These statements are made based upon current expectations that are subject to known and unknown risks and uncertainties. RiceBran Technologies does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause results to differ from those set forth in the forward-looking information can be found in this press release and in RiceBran Technologies' filings with the Securities and Exchange Commission, including its most recent periodic reports.
USE OF NON-GAAP FINANCIAL INFORMATION
We utilize "Adjusted EBITDA" as a supplemental measure in our ongoing analysis of short term and long term cash requirement and liquidity needs. Adjusted EBITDA does not represent cash flows from operations as defined by generally accepted accounting principles ("GAAP"), is not a measure derived in accordance with GAAP and should not be considered as an alternative to net income (the most comparable GAAP financial measure to EBITDA). Management uses Adjusted EBITDA as an indicator of our current financial performance. By eliminating the impact of all material non-cash charges as well as items that do not regularly occur, we believe that Adjusted EBITDA provides a more accurate and informative indicator of our cash requirements.
The table below contains a reconciliation of net income (GAAP) and Adjusted EBITDA (Non-GAAP) for the three months ended December 31, 2016 and 2015 and the twelve months ended December 31, 2016 and 2015. We do not provide a reconciliation of forward-looking net income (GAAP) to Adjusted EBITDA (non-GAAP). Due to the nature of certain reconciling items, it is not possible to predict with any reliability what future outcomes may be with regard to the expense or income that may ultimately be recognized in future periods. Any forward-looking Adjusted EBITDA information that we may provide from time to time consistently excludes the same items from projected net income that are excluded from actual net income in the table below.
Adjusted EBITDA Reconciliation
For the three months ended December 31, 2016 (in thousands)
Corp. & USA Brazil Consolidated Net loss $ (549) $ (897) $(1,446) Interest expense 998 456 1,454 Interest income - (6) (6) Income tax expense 41 - 41 Depreciation & amortization 506 275 781 Unadjusted EBITDA $ 996 $ (172) $ 824 Add Back Other Items: Change in fair value of derivative liabilities (1,311) - (1,311) Gain on resolution of Irgovel purchase litigation - - - Loss on extinguishment of debt - - - Foreign currency exchange, net - 26 26 Other income/expense (430) (143) (573) Goodwill impairment - - - Severance payments - - - Proxy contest expense (390) - (390) Share-based compensation 656 - 656 CEO Employment Agreement Settlement 47 - 47 Other 95 - 95 Adjusted EBITDA $ (337) $ (289) $ (626)
Adjusted EBITDA Reconciliation
For the three months ended December 31, 2015 (in thousands)
Corp. & USA Brazil Consolidated Net loss $ (823) $ (579) $ (1,402) Interest expense 405 262 667 Interest income - (16) (16) Income tax benefit (157) - (157) Depreciation & amortization 658 209 867 Unadjusted EBITDA $ 83 $ (124) $ (41) Add Back Other Items: Change in fair value of derivative liabilities 210 - 210 Loss on extinguishment of debt - - - Foreign currency exchange, net - 89 89 Other income/expense 1 161 162 Severance payments - - - Share-based compensation 217 13 230 Adjusted EBITDA $ 511 $ 139 $ 650
Adjusted EBITDA Reconciliation
For the twelve months ended December 31, 2016 (in thousands)
Corp. & USA Brazil Consolidated Net loss $ (2,915) $ (8,335) $ (11,250) Interest expense 2,484 1,548 4,032 Interest income - (100) (100) Income tax expense 41 - 41 Depreciation & amortization 2,048 989 3,037 Unadjusted EBITDA $ 1,658 $ (5,898) $ (4,240) Add Back Other Items: Change in fair value of derivative liabilities (1,625) - (1,625) Gain on resolution of Irgovel purchase litigation (1,598) - (1,598) Loss on extinguishment of debt - - - Foreign currency exchange, net - (85) (85) Other income/expense (562) 16 (546) Goodwill impairment - 3,024 3,024 Severance payments - 153 153 Proxy contest expense 667 - 667 Share-based compensation 1,240 35 1,275 CEO Employment Agreement Settlement 747 - 747 Other 262 - 262 Adjusted EBITDA $ 789 $ (2,755) $ (1,966)
Adjusted EBITDA Reconciliation
For the twelve months ended December 31, 2015 (in thousands)
Corp. & USA Brazil Consolidated Net loss $ (5,387) $ (5,189) $ (10,576) Interest expense 1,404 1,697 3,101 Interest income - (107) (107) Income tax benefit (176) - (176) Depreciation & amortization 2,538 1,525 4,063 Unadjusted EBITDA $ (1,621) $ (2,074) $ (3,695) Add Back Other Items: Change in fair value of derivative liabilities (1,001) - (1,001) Loss on extinguishment of debt 1,904 - 1,904 Foreign currency exchange, net - 370 370 Other income/expense (154) 363 209 Severance payments - 180 180 Share-based compensation 805 53 858 Adjusted EBITDA $ (67) $ (1,108) $ (1,175)
Consolidated Balance Sheets
December 31, 2016 and 2015
(in thousands, except share amounts)
2016 2015 ASSETS Current assets: Cash and cash equivalents $ 451 $ 1,070 Restricted cash - 1,921 Accounts receivable, net of allowance for doubtful accounts of $491 and $512 (variable interest entity restricted $398 and $1,003) 2,085 2,169 Inventories 3,773 3,857 Operating taxes recoverab 6 809 Deposits and other current assets 1,213 895 Total current assets 7,528 10,721 Property and equipment, net (variable interest entity restricted $2,481 and $2,102) 18,933 18,328 Goodwill 790 3,258 Intangible assets, net 242 1,225 Operating taxes recoverable 1,241 - Other long-term assets 111 103 Total assets 28,845 33,635 LIABILITIES, TEMPORARY EQUITY AND (DEFICIT) EQUITY Current liabilities: Accounts payable 3,710 2,514 Accrued salary, wages and benefits 3,828 2,325 Accrued expenses 3,945 4,789 Current maturities of debt (variable interest entity nonrecourse $6,816 and $2,750) 9,878 5,050 Total current liabilities 21,361 14,678 Long-term debt, less current portion (variable interest entity nonrecourse $0 and $3,553) 6,009 10,908 Derivative warrant liabilities 1,527 678 Deferred tax liability 29 34 Total liabilities 28,926 26,298 Commitments and contingencies Temporary Equity Preferred stock, Series F, convertible, 20,000,000 shares authorized, 3,000 convertible shares issued and outstanding at December 31, 2016 551 - Redeemable noncontrolling interest in Nutra SA - 69 Total temporary equity 551 69 (Deficit) Equity: (Deficit) Equity attributable to RiceBran Technologies shareholders: Common stock, no par value, 25,000,000 shares authorized, 10,790,351 and 9,537,415 shares issued and outstanding at December 31, 2016 and 2015, respectively 264,232 262,895 Accumulated deficit (259,819) (250,738) Accumulated deficit attributable to noncontrolling interest in Nutra SA (699) - Accumulated other comprehensive loss (4,346) (4,889) Total (deficit) equity attributable to RiceBran Technologies shareholders (632) 7,268 Total liabilities, temporary equity and (deficit) equity $ 28,845 $ 33,635
Consolidated Statements of Operations
Years Ended December 31, 2016 and 2015
(in thousands, except share and per share amounts)
2016 2015 Revenues $ 39,405 $ 39,896 Cost of goods sold 31,436 31,826 Gross profit 7,969 8,070 Operating expenses: Selling, general and administrative 14,808 12,567 Depreciation and amortization 1,268 1,779 Goodwill impairment 3,024 - Total operating expenses 19,100 14,346 Loss from operations (11,131) (6,276) Other income (expense): Interest income 100 107 Interest expense - accreted (639) (455) Interest expense - other (3,393) (2,646) Change in fair value of derivative warrant liabilities 1,625 1,001 Gain on resolution of Irgovel purchase litigation 1,598 - Foreign currency translation gain (loss) 85 (370) Loss on extinguishment of debt - (1,904) Other income (expense) 546 (209) Total other expense (78) (4,476) Loss before income taxes (11,209) (10,752) Income tax (expense) benefit (41) 176 Net loss (11,250) (10,576) Net loss attributable to noncontrolling interest in Nutra SA 2,720 2,308 Net loss attributable to RiceBran Technologies shareholders (8,530) (8,268) Dividends on preferred stock--beneficial conversion feature (551) - Net loss attributable to RiceBran Technologies common shareholders $ (9,081) $ (8,268) Loss per share attributable to RiceBran Technologies common shareholders Basic $ (0.97) $ (0.90) Diluted $ (0.97) $ (0.90) Weighted average number of shares outstanding Basic 9,338,370 9,187,983 Diluted 9,338,370 9,187,983
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