RIBT - Earnings call transcript Q3 2017

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Operator

Welcome to the RiceBran Technologies’ 2017 Third Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my Mr. now is to host, introduce It Partners. Richard Ascendant Galterio of Please go ahead Mr. Galterio.

Richard Galterio

and listeners. Chief Sales. call. good RiceBran Operator RiceBran of Chief you, Thank afternoon Ingredient President and and quarter are Robert of financial Michael Executive today President Officer Technologies’ Brent Welcome XXXX results Officer; us conference Rystrom, With Technologies; Dr. Smith, Financial third the to Goose,

Act Robert, remarks of Actual differ Safe I the SEC. Before contain want response remind discussed and and forward-looking the Therefore, over I discussion claims today. may turn Harbor are during today prepared the filings statements XXXX. results the forward-looking questions the from listeners and risks these the may the detailed protection we that uncertainties call statements a to management’s in more risk for in uncertainties. to may Reform call company’s forward-looking refer the that in of you to therefore make contained results under your Litigation statements Private Securities company to subject with to Management additional

RiceBran non-GAAP on of to Technologies. of over go measures to this comparable Smith, In projections include as obligation Dr. call measures market CEO today, to future XX, the reconciliations like financial Relations addition, this the webcast information assumes November I company and please conditions in these Smith, Investor and and to estimates the XXXX This www.ricebrantech.com the including future to in of page. change. available the by represented update any no projections call, ahead. turn financial GAAP would provided at Dr. performance as management company’s as certain time, financial are President Robert At

Robert Smith

you Thank XXXX. you, the Rich. quarter third afternoon call of for thank for joining conference and our Good

in initiatives. Our in the of meaningful progress provided third many performance quarter operational our

our animal compared solid to growth mainly successful nutrition nutrition was on of in XX% up this was Research. successful that of revenue partnership was from ingredient market Animal currently accelerating going our Kentucky forward. growth pursuing efforts our in a specialty revenue making its and experienced feed last marketing financial except space. it in growth the food the We further the $X.X equine encouraged ingredients. partner in markedly our as ingredient sales strong healthy million. food anticipate with areas many while up our the by RBC are in Equine Third We improved quarter segment this in with revenue near and future position penetrating year reflecting business driven in we some building growth the X% has show most of growth We're opportunities while partner

sold Eliminating business highly our we and liquidity technology in based debt was senior expanded rights. business accompanied dollars expenses us and grow sharply basis Importantly, as period important for over which our based RiceBran shareholders' improve to business. impact the our that to the to this for was SG&A an the almost progress healthy sharply million our exiting example $XX.X improved covenant U.S. Adjusted executed the several XX% immediately increases our and in with the has businesses. allowed debt quarter our the business natural with our our gross after reducing towards of sharply are to point of EBITDA that marketing term XXX felt in debt limited manage margin believe our equity. we sales our we non-core profit Early limiting eliminate gross need and critically One short we solid profit ingredient core focus of restrictive U.S. and down debt making of objectives ability strategic is plans losses. whilst narrowing in successfully We where

further our with Grain and announced the this respected realize and delighted we the we in liquidity the call SA Continental the earnings partnering investment investment quarter of capital in company. RBC's our announced Grain's RiceBran exchange in which finally connected and to with from along shareholders' for located divest improved intention Brazil we neutral second Technology exceptionally our perspectives. equity. important RiceBran shares. provided investment importantly awareness million and This outstanding market owns We're September investment hope to Most approximately XX% from our Nutra, Technology Irgovel in in multiple Continental with During $X.X access for in of

our California, recently many also achieving and footprint We improvements facility greatly are will making our that capacity Sacramento, [indiscernible] in in opportunities for than progress for new West inventory operational providing enhancement. in our market more We expanding saw that long range and efficiency objectives. milestones our plans strategic double

culture comes discussing and of corporate on been and rice Michael agribusiness our secure made the food with extensive to possible term background, us to detail of realize our the The specialty facility team a strong have agribusiness. our efforts. milling Board from to certification delta and looking be across with our expansion working members Importantly is reduce to discussions forward food Sacramento industry which of of minute. our majority members recently to of us in fully also our food focus increasingly with industry. of these We've comprised nutrition, exemplified help time we progress most industry partner and aligned this plan will change on built with you and and standards Board, long the important We vast milling now necessary our our was dozens will new the area when updating addition he animal we're with visibility of current our Bob Bucklin It responsibility serves and retired and West past addition this on rice sales reliable background in We're Bob with as food to remain Board year. the -- extensively the and most also and from Rabobank a of in our further in efforts. on now partners continuing this opportunities currently cost of in of shift industry for for California and our the brand in recently region he September. Chairman to agribusiness on supply. bringing North Vice operations and prospective brings current food America variety minimum to achieve the facility Also satisfy spread benefits We're in to appreciation bid the price end to in and a is us a quarter. related with and during share the food our to requirement and past this NASDAQ's of allowed our by both We're $X location boards. excited agribusiness

to investment in Michael? RiceBran for Finally would Michael. to Rystrom We're that they Technologies. to successes company. Goose are in-depth before and their who more an update and thank would starting shareholders of to provide appreciate a that I'd I over our to the call value third of on will for over I the like thank creation turn focused our for create their sales hand effort on employees to our investment. quarter I to and our to their marketing it also analysis all like Michael performance Brent provide like With

Michael Goose

building excited meaningful making combine about we the working Thank progress awareness to our to accelerated I'm all. and the revenue. you, to our and are building Robert of hello drive in marketing sales talk and products efforts, and

past As organization as mentioned and an in the revenue. sustainable our profitable goal is

Our marketing sales and over. of result are seeing benefits make sheet direct and management improved a our efforts and balance as our Board

well-capitalized, focused customers perceived as now potential customers plan. our and and by are We on successfully executing

that team and President we our Ritter and at as Region extensive Marketing the us to and Sales Kevin Director believe During marketing and USA help the made industry Group, resume food base like Mosley Vice Conagra companies PepsiCo Senior Hain including quarter The and Mark Celestial two experience their Mark ingredient additions as Eastern Celanese, access sales of customer Brands, Kevin we joined success RBT and SunOpta. Sales. important build efforts. of Foods with combined an will to bring a

ingredients target [indiscernible] all to and provide are like being we in us to [indiscernible] It from and whole of no penetrate an to on becoming the and companion With becoming of and party where of companies have focus feed, opportunities in as focus we in The we're what also in These include are grow in opportunity. that most products marketing these inclusion term we our talents about excited aware more we market will order the better RiceBran similar space by aware categories on think intermediate preserve identified innovation in initiatives eating feel categories efforts other supplying strategically our snacks, functional are livestock baked in fire. timeframe secret help the consumers free meat, the focus producers, value. long is on they equine pursue free growth. your gluten also these near category We're include The RiceBran provides and non-GMO. is us this shelves animal, opportunity. driving categories believe sales bakery their as exploited include September in major these company a all will plenty the store the and growth. above presence successful opportunity established numerous We meets on better nutritional positioned our trends structuring an sustainable flour term the snacks, has our viewed our revenue like disruptors. distributor label, provides segments. our factors us for RiceBran companion and areas CPG this clean third attractive our to that customer grain agricultural lifestyle, growth goods, foods, causing and expect existing meat hires ingredient animal has companies, in and companies for to been and the this large trends fiber, more We in animal relationship, us in wins December. a new Recent types brand markets. first A gluten see and

I on at will are are we RiceBran key may the by inclusion. snacks, and in your over With other the areas exploratory the market are starting Technology of categories mentioned opportunities companies the meat of stabilized we and these trends new some although large for in many several test for these call above excited to pilot early of to stages looking these we running tailwinds CPG Rystrom. bring to RiceBran are Brent In turn where just including from now see are stages interest we and we these potential of from lifestyle, bakery large in the better

Brent Rystrom

third being food the we Thank the you, orders my going well the of this growth with some our joining In posting growth quarter to call. thanks portion our performance and growing I'm overview specially the In in constrained my call X% customers. of provide of from weak an thoughts of as posted quarter Michael and those for third by up business. ingredient XX% some for trued nutrition animal revenue with plans X% on

million to occupancy to and by We million margin profit reduction being -- $X.XXX SG&A XXX focus loss gross costs third last spending. other from expense last Scottsdale with in initiatives both nearly our an of on of Our prices, reported from the many margin expenses reductions better by cost year. the absorption, quarter brand improved totalled lower driven $X.XXX profit XX% the $X.XXX continued compared in XX.X% operating quarter declined last lower in the $X.XXX Sacramento, gross change year million basis year further in reduce million West in a points items. driven and and

inventory of in we to accruals higher $XXX,XXX improvement EBITDA had with EBITDA loss fees an the the accounting of a associated healthy due of adjusted natural, other loss suppressed last reserves with and bonuses sale quarter for our Our year versus million was higher than $X.XXX estimated. and adjusted

discontinued means As our Nutra, SA a pursing to reminder exit have we classified current investment. that as operations and

ended Our $X.XXX actions many equivalents. third with million cash and of we the of strengthened cash sheet in balance our quarter metrics, quarter the

except healthy We debt cash in $XXX,XXX third equipment restricted the all related of also U.S. We to in sale quarter $XX,XXX capital for leasing. had related of related the our accounts to natural. escrow of eliminated almost

of us end a and million putting quarter negative strong Technologies end Our XX, shareholders' XXXX up to is reasonably at now XX, XXXX. from RiceBran pursue the $X.XXX liquid growth at of June position strategy. the December totaled $XX.XXX equity a in million $XXX,XXX our capitalized at the and

progress the RiceBran. quarters in make for Over substantial to base considerable we growing few the next a establishing plan

run-rate a we XXXX to [ph] revenue negative $XX rate early in enter negative million. somewhere implies we annualized of $X.X annualized As $X.X EBITDA run-rate million a believe near an million

versus we to Our analysis mix $XX breakeven. improve $XX breakeven, The revenue needed heavier our that with tells sales mix just EBITDA need $XX increase will that be nutrition us area is of million approximately to revenue our $XX the range targeted we reach said million animal sure to the to million reflective sales million of adjusted to more to our food. to to

EBITDA Our XX goal is to to achieve in positive adjusted months. XX

key focused are a areas on We to few this. achieve

are working securing by to mill and improve we relationships. existing our grain partners First, additional supplies to mill

are opportunities time grow tandem We with over that Second, we and and customer existing sales working our to sharply in customers. new to see our several combine new sales. could increase

are our closing on of the GAAP Internally by are mainly adjusted on Louisiana in where losses Third, hope to our both several tend to These to costs. customer to changes facing this have quickly the could take our seasonality grow considerably to need are quarter some cost focus volatility unfolds pursuing since if with carefully trending as new actions possible, as be hence the have the potential higher our the meaningfully offset headwinds want existing to possible we term end Cost brand higher historical EBITDA reduce been model revenue growing customers. compared opportunities our we these on California revenue these monitor and long significantly focused we some but determine XXXX transformational where success. ended. related which EBITDA business adjusted to we're year. have We higher of on will we and to some and as

that two will will Our $X projects near long as base to and to Operator? would turn and the we likely possible that needed the XXXX question year and be it our ends both for million, session. over in of in Operator $XXX,XXX call schedule is somewhere will the about now answer CapEx new it sales initiatives responses growth and cost portion production. for That additional and CapEx to CapEx prepared like term total have conference we

Operator

[Operator Instructions].

from ahead. go is question of Street Lake first The Krueger Chris Please Markets. Capital

Chris Krueger

stating that cost Brent have trending guys. been current afternoon, finished the higher, you quarter. like Good it sounds just your brand in

next it you at gross my where go? for the looking that was couple third So of by [indiscernible] margin of quarter estimate can of tell might know you well us ahead quarters

Brent Rystrom

weakened would get to too margins little a think is probably I on in to quarter Well off I then premature the its directional and it, you September. just tell ended in what started the stronger

we be the that will in necessarily it September not prudent quarter. think to be I probably consider December will improvement the saw

something So fourth trend margin. to I look at little a this lower bit at would point quarter for

Chris Krueger

pet, Okay, got pipeline you've new it. you those big in quantify existing customers those or areas? Then and looking at a of whether are your potential just new your kind customers opportunities got opportunities either business equine, can companion how of of

Brent Rystrom

that don't can why Michael then jump in. I Robert take Well quickly one and

Robert Smith

All right. Sure.

Brent Rystrom

the year, with the a operates the us of well. From probably We've opportunities RiceBran currently and the lot to some a with out basically I different things that's into food success think and for to ingredient market has with starting summarized term as relationships Michael maximum some there's that a simplistic pursue most and I his it and business. I and is right near building science, that think far are there good servicing couple have and opportunities many grow opportunity of perspective a particularly will I is many team now the companion then think the lot Michael couple intermediate different meaningful There got going paths this a opportunities. lead I business, market, care believe you've we've his as very the I and lot successful to historical think that a to to so area good a that and of be opportunity equine next path team term businesses history, of got think dogs there's other is of I think grow most access

and that Most that the may substantially in maybe build path about probably to two the we're year of So market perspective the animal to million that now horse with market doing think maybe market our revenue areas a builds business, of is year. large a X/Xrd in to as a right build have, going $X little awareness we equine there builds area, share, the equine. the easiest From basically is the a and market in be large more, less and the into majority is we We follow into market style English little think related Western over science well. Horse a as [ph]

you So the kind that just we can a business of the sense gives substantially. equine grow

Chris Krueger

it. got Okay,

a know of of agreement supply a last for lot the a kind we of one is country mean center I are of Just lot Arkansas the customers, part in there region? protected grows I customers rice. know question, in that that potential and

Robert Smith

Robert Hi, this Smith. is

we You're important just Arkansas absolutely rice region the mean the a some certainly at the also grown the of center only on look east of correct. part proximity that our in in of very as coast. I that’s of not to region but in customers volume of U.S. terms

bit of terms growth as continued of for As just I'm have to that happy with going includes certainly but say brand time distributing a California forward Arkansas previous in brand region, Arkansas done in delta some number terms in but surprises, we we calls, quite in have not region stated securing to been we the our coast. security our customers on mills we the region the building active and and that of potential in of in in very spending that courting in also both call this a so have a see future east the

Chris Krueger

and year all the up I All right. Good that’s luck wrapping got.

Robert Smith

you. Thank

Brent Rystrom

Chris. Thanks,

Operator

question Instructions]. Sonz, Paul is Paul The next D. from [Operator

ahead. go Please Partners. Sonz

Paul Sonz

of of to the what is know sensitivity bran? price to [indiscernible] Sure. afternoon. just customers Good want I

Robert Smith

that? want start to with Brent, do you

Brent Rystrom

the it. you Paul repeat could I'm I Yes, didn’t question, sorry hear

Paul Sonz

I'm sorry.

Okay, Do are utility So not too price. your that for the bran changer and that’s went they it's get of how -- customer the bran game price just in up well a they raise sensitivity instead customers for changing X%? such up goes them is does so basically see if to of much to your that changes price or you're sensitivity of [indiscernible] -- bran? that that price bran does the X%,

Brent Rystrom

have a in is the the actually reasonably thing is are should think probably not course a right see or seasonally say the problem bran have noting we there of higher, we that bran I just it's prices. map to respond. that so. all to. will huge or in we're developing first We're They seeing, We're I over volatility prices year we watching bit for if are and we react accordingly people a now little

think perspective and the is would business like in I with for is area, everything agro As else a you have else. something issue the from bran philosophical food a bran prices it’s substitute

was way, all got wheat priced way that’s So opposite beans, protein, bran going job things corn, don’t and available be got you work make you other they pricing the brings the our if you our to relative we higher whatever to work that to and got these and we have it if see prices. for fiber, same more what to has raise difficult are product so substitutes

working higher. environmental seeing you're now, not right you're So in where [ph] or corn an soybean

it’s are global fairly got we're declining in coming corn a market. you've and stocks corn beans the shape say robust got up really full shrinking but to carry-out year, tightening for You've no on supply, a for probably

right now are. what we the on based substitute markets say do would we I would in where be can So limited

X, months an are develops its where said just it X having that if being we out issue. Now X, X, depends

Paul Sonz

extent that adjust company, the just -- equine to the a long contract what I you've with built-in ability have -- the relationship the you've you with to prices? contracts term wanted market that in that

Brent Rystrom

don’t talk or specific contracts. We about customers

Paul Sonz

All Okay. right.

of so question, the it of the most Next and what drives mean seems the drive bran lot you've—I on it's of price product what way, would [ph]? like higher? a not it's Because useful a bringing up that people

Brent Rystrom

mills of overall overseas areas amount capabilities, activity small you're Right a sales and a say to actually containers for are markets. amount that fair shipping located shipped but have it's the brand overseas a ocean export that in now when supply, amount we're you're in fair bran still and seeing seeing seeing actually been I put

Paul Sonz

If bran is within hour, how goes that possible? [indiscernible] an

Brent Rystrom

a having that’s impact We're right sure there for market not is an quite bit and a rice. now on it but little of

Robert Smith

that throughout bran case just that not increasing the U.S. me Let commentary it's prices to the add the are

seeing Part forward. think an I fluctuations we are able we Arkansas. ago Arkansas prices by strong, to about still is that we where increase diversify be these going will for minute instance spoke bran in handle our a not just strategy of and in locations are state state we're

at these So if now forward. source can changes we planning, how looking we going secure bran our overall are our strategies, and and certainly accommodate the we

Paul Sonz

Great. Thank you very much.

Operator

question is Please Private The from Investor. Harry ahead. next go Goldsholl,

Harry Goldsholl

Good Brazilian Is assume this time? correct that to totally it Hi. walked at operation the away you have afternoon. from

Robert Smith

We certainly you would bring it down, want but Brent but that? answer to how

Brent Rystrom

we say have have year and intend was quarter. the within business that that operation done the Yes, which of means at second that we exit is what of made when I end one designation we is we to what of classified that would results discontinued

explicate So to ourself at we're possible looking from ownership [indiscernible]. of ways

Harry Goldsholl

time? so you this not for anything generating Okay, it's at

Brent Rystrom

it's not I'm you what? sorry Harry, said

Harry Goldsholl

this time? not revenue at it any Is generating

Brent Rystrom

it's generating losses. is a at functioning, it's is but it company producing, operate revenue, No continues operating fairly the to substantial it

XXQ then couple revenue copy page $XXX,XXX basically operations versus last and from year. had of versus $X.X million want reported loss $X.X of a loss go of or a a million you year and a quarter had million it it versus million if it last It our year. $X.XXX in loss last So $X.X of had $X.XXX to to of nine look you've highlights, of of later a the million at our XXQ

operating business continues it money. So to the but lose is

Harry Goldsholl

call, that. I see to prior see didn’t so didn’t released I Yes. being that the XXQ

Brent Rystrom

there only line. you it's income later the area within Q it's call, is discontinued up that when but possible today the tomorrow out shows at will usually look go a the few in statement or operations it of And the hours

Robert Smith

clear, committed operations into committed we remain throughout putting Let to have it we for year not we any puts additional the and Irgovel said that me statement and make that. to

Harry Goldsholl

your of do to or bran you the current that shipping not and moving own it not is back to there for any the equipment suitable plans of to any closer various it worth basically maybe even Is or forward more? distribute source expand here locations

Brent Rystrom

Technically the and be to and owned by Nutra, that to Yes. so Nutra, is would equipment if SA equipment it of own that is is to Irgovel Irgovel owned there we equipment. a get want portion we by come equipment have to agreement SA have then we an

Harry Goldsholl

All right.

You that way new opened mentioned seemingly in doing anything there better that beyond the -- modern, the that's versus simply of Are about Sacramento is locations expand you needs. modern. you cost continuing just consolidating a a and facility current the more you've to and multiple bigger

Robert Smith

I will question. take that

my to certifications into facility comply [indiscernible] compliance a processors very age built [indiscernible] need terms us that all one quality. in of when We food and this important is and are that and safety day moving the and in structurally facility respects is in food which helps

set some that quality us it we product the say cost see on have over facility reduce importantly to in us for production. of operations will to of us, and operational that the being are done we on activity oversight enabling other that we produce that because the allows our more with Beyond operational take this some improve at mills more currently

current of of make. process our take expand the us we that and to facilities allows charge and our product it the more of distribution duplicate control but only not and will importantly the more also warehouse quality facility the So

Harry Goldsholl

Montana, Then Okay. you are consolidated? Those operating Arizona, in Louisiana in areas and in still have or? been

Robert Smith

into activities Houston, within consolidating are happening that happen Arizona space facility year. some into activity hope in we California. That’s next in to we and first that of as speak of quarter it office in the consolidated and We're being the new have completed

Harry Goldsholl

Why in are Houston? you

Robert Smith

as to number in [indiscernible]. believe country have rice in the of in Louisiana, where delta said past significant mills for a and is another we the region country area the in for it's a within again Houston, rice RBT Houston we Arkansas foot Houston and in located way print important

So going Houston is important forward. us to

of We a number area. in that have met with mills

ahead. -- Montana So go

Harry Goldsholl

the sort very be low I'm was the around in was it reason would topic, new I the be seems the primary No, focus, area that? the abandoned a company to why thus past nutrition past in profitability going area jumping and the of equine just you animal now say to set to had was it address and much how it to pretty a

Robert Smith

I don’t we was leading to market abandon, marketplace think one as and there. [indiscernible] today. ever have into definitely equine share certainly that we're already wanted we growth business The provides we ingredient companies of that rice opportunity that significant prominent very and the our on something bran that is for that

the the I within market. speciality have past the We talked opportunities in think always about significant market and that also exist the ingredient ingredient food

with but base our you opportunities that market customers, customer discounted exist I'm really we those but than more yes about that in selling that margin, to the excited that the need with never very can understand the and so equine, our inventory a animal other what lead discussions So we're we companion in in have opportunities tests that also into companies into the very companion customer that have are set. with equine and that already divisions [ph] current significant of respective lot right those base

the can the at growth excited So quite time equine about leads do the but companion that growing we're on set. in terms of same what into we

Harry Goldsholl

Okay.

and to really significant are doing as shareholder are I guys yet you're having excited you guys to do People excited I'm purchased because who say going out so into don’t you investor wind and what worthless an As about what abysmal. try company expire them to me have here realize of to the amounts to -- goal you increase doing. you primary money not to value what past, warrants going up figure in its about your may make can is what my are invested they

Robert Smith

I significant Well the the growth seen you I'm we're in extremely tell extremely we are can and place general the putting not a and is understand and in appreciate results tell year I I've I'm in of definitely pleased, changes can but growth perhaps not within we're in-line, revenue lot [indiscernible] by changes the that's seen the is usually building we're that I last with interest you what think that in work but product can of blocks today. on change interest this and the and confident everything extends in their tell our displays, major and base forward. and company the doing is down that we're lot there something in people overnight place putting already this customer ingredients there companies, a putting and the going key not seen development that side I millers, the is rice that They but have who in food incidence animal by and only CPGs significant [indiscernible] to

one think a give past certain items company our unsinked our in was the [ph] terms gating degree security as of favourable in the of balance of sheet. ability continue I to

to base Now lot the put that that will development into been go we future will among in that’s makes there be from brand our delta that the only but California that supply the not to our able position by is and customer have so to into that from to region multiple a locations security much product be going confidence able we provide impaired out sense. develop as of them there, we ingredient

and an today is we're from the revenue sit ago a So feel to I position that immediate change growth of where grow I business. in really on good I terms but here not the extensive a the very year from that confident it's understand turnaround

Harry Goldsholl

produced may or margins to products and or don’t one at are that lastly like for the know oil doing. Okay, any are you time where into you've retail the there be marketplace expand may but still and significant the maybe plans we

Michael Goose

always is mind our of Goose to one. is the Michael this back It’s going There in answer plan.

term the is much on plan overall Our and short resources of build to right our now and part. as that focus to side business our entire energy devote ingredient

towards cost showing side the behind business our the the So setup in the extremely momentum great in retail real focus. lowest XX to prove you than there is right possibly hanging go the no significant, retail that’s some two, from after now. after that there ingredient ingredient now going reason that Once is there fruit our months but know is can and feel we we're the we right brand next where know and one is retail is is no you term there in short strategy side that

Harry Goldsholl

Okay, very luck. good. Good

Michael Goose

you. Thank

Operator

session. Instructions]. Smith questions like any are this This the for concludes Dr. turn further [Operator to at question-and-answer remarks. Robert to no time. There the conference over I back closing would

Robert Smith

reporting on Thank all and successes very again our call. appreciate Technologies We Thank call much you listeners next on much look and RiceBran the forward your you. you in our today. interest we and on to very thank time

Operator

This conference call. concludes today's

Thank pleasant You you may and disconnect lines. for participating your have day. a

RiceBran Technologies (RIBT) 9 Nov 172017 Q3 Earnings call transcript