RIBT - Earnings call transcript Q2 2018

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Operator

Welcome, good day, ladies and gentlemen, and thank you for standing by. Welcome to the RiceBran Technologies Second Quarter 2018 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce our host, Mr. Richard Galterio of Ascendant Partners. sir. ahead, go Please

Richard Galterio

and And Dykes, quarter listeners. call. XXXX Dr. Mosley, Chief Officer. Executive today Operator. Rystrom, Revenue Technologies; RiceBran Operating Chief Accounting Chief With to Officer, Technologies’ are and Officer Chief Smith, second financial Officer; Robert of good you, RiceBran Welcome Brent Dennis afternoon, Financial the us President Chief Thank results Kevin conference and

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

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

Dr. Robert Smith

conference good Thank welcome I'd call. XXXX afternoon, quarter second everyone to you, to the RiceBran Technologies Rich, like and everyone.

sales quarter - modestly. second Our

with supply Our and benefited entered balance mills agreement into a - Arkansas. from rice a we sheet new exercises in

progress future. favorable received quarter, during benefit efforts, make that we second regarding we dietary fiber future. call we're positioning issues growth the Operating Despite to and improving the FDA turn brand I'd in and on our claims the Financial Company to sustained various in details. like shareholder Officer quarter improved news supply capabilities, to progress Brent in Rystrom, returns from certification Officer, the making some the continue for should the and confident Chief the We over and are for us Chief more on the sourcing

Brent Rystrom

Golden good build our and second and a Thank complete Robert, with afternoon. the better progress, We now to deliver quarter you, working substantial Ridge business with growth. of Mills, are making bran Rice supply them. to agreement positioning spent negotiating much room help build We're them

certification this we're we that projects we mentioned, revenue we making CapEx expectations assumption improving certification in came our in most have existing sales And growth given quarter production and capabilities. and revenue to with quarter, We base. of new from the the are also development. we complete pipeline which several customers forecast year. completing efforts, meaningful on would have based also large what see were we into our build by Robert, progress late for growth are second the the disappointed related with several have undertaking As our both We to

unplanned However, downtime largest grow. ability at limited our to partner, sharply mill our

in XXXX breaks. July XX. this this day each call brand quarter, with until to delay in discuss second individual confident bran later typically in period in of to June and markets decided addition in less We partner impacted until available. the last Dennis of supply. down and at during year, are this new to of production started one larger breaks excluding - these five intermittent, lasting Usually, the as multiple more difficult Our for several mill customers this export experiences we're the late In our RiceBran room, Monday, six July, weeks normally in less Technologies than our time rights downtimes April periods will of milling in typically periodic mid-April those become between strength ways. crop in And the downtime

have product or from Golden or at result Golden But and cost supply between July room Ridge, production to best soon. bran impact a new will of This we mill we should we like, production is existing transportation small sourced reduced sourcing opted base continues the from to Rice - added Rice will Second, resume to not rate - customers mill, our XXXX. important third supplies for profitability completed supply mid-August. scalable new that possible from the in benefits we as recently of installation costs. producing at newest our substantially on in in as rice for our a from agreement but Mills, the California lower hopeful the in the rice SRB. this the customers facilities as that Ridge issue - look state the that quarter. production ready we're stabilized begun the We're mill production with Ridge seeing Arkansas, with higher which state the SRB the has an country, - rice location from help bran pleased be a lower rice Golden forward supply a Ridge business meaningful Eastern us that supply X, in previously runs. more quality test Golden We operating U.S. announced new full-scale is growth a initial by other is of and --. and largest provide This Midwest

secured that Company mills several makes future. month option expires sense to Golden for like in We of rice think Ridge also the Ridge, six our January XXXX. a Golden reasons have purchase We only in are why there

when First, it production to control allow production order in needed. would the fully us bran to process maximize

sort we lack risk lessen all and that our to help of would have operations where of our of it lease, having permanence. Second, some facilities

to opportunity would our it us and quickly efficiently produce provide. do progress. downstream to evaluate plan products position look we to that you allow on updating this to not forward currently We Third,

I to we're slow brand are We capabilities sales and quarter, a pipeline he's where sheet and very also possesses - - marketing the improving mentoring up going. staffing our our experience provides excited and impressive person. balance and Kevin from strong Mosley, since team to is driving supply demonstrated business and skills Officer. a clearly like joining is, existing about our where our role. last the fresh like He summer. responses but few as wealth are new our and product Kevin's Revenue from his specialty strong sounds team planning, management is development. efforts thoughts know We perspectives and Company senior - that would we're introduce on members, difficult excited strong, Kevin after Kevin, recently I of lead to promoted Chief sales ingredients Kevin? things our leadership give has our a recruiting -

Kevin Mosley

you, I I'm extremely want convey everyone the Brent. at Appreciate be Thank to excited here on it. Technology. to RiceBran phone, that

want with of peek and our in the we at derivatives, receiving. to on pipeline. I - little I response About give just under a rice products over bran a for phone, the at that opportunities able everyone been the the the look our I'm are overwhelmed weak within XX million marketplace to past year best. months to In our we've the the ago future. of plan the on when I was pipeline new joined Xx closing near we the $XX pipeline Company, business As

the that on well-rounded to Accounting individuals business have we go Xst. September joining did would asked to in next fold? areas yourself, that this probably Dennis on team offers time, our focused in expertise it to us Chief protein, well two point the Officer. efforts companion like key have to fiber. focused the food our turn the simply, will ingredients that Dykes, over we animal, sales expertise will we how all pleased on, X from accepted I two on the personnel bring you step. a in in seasoned I'm At two that give veterans Very today, technical and we You the focus and customer announce to These be us bringing

Dennis Dykes

products issues previously in indicative an orders, we the food of of related by we by base, in level believe increase strength by for of in We XXXX, of million. second overview XXXX, This with like the quarter. that do - Brent. achieved quarter second of is the begin supply net this customer driven bran total existing growth our Kevin. - comparison financial progress in not Thank growth pipeline. We growth our and X.X% an period to I results you, would see modest revenue sales while growth mentioned $X.X had primarily providing despite to our revenues was to

to Our The - in quarter basis idling bran first, Mermentau decreased the in plant, same gross gross of decrease shortage rice primary the XXXX. period supply the XXX the XXXX second compared previously our results profit points drivers to -- for due of discussed. for when

Dillon, SQF our utilization. CapEx investment the reduction drum in additional plant related ingredients in project the Montana, production Second, plant refurbishment plant of in obtain at to dryers resulted lower specialty certification, to which

to the period depreciation of related finally, also nutrition increased These consulting team, million, facilities animal of operations primarily of in the but the along obtain were for when same Louisiana. located maintain increase bran, in the customers our quality and a to and general certification. assurance hence increase end cost increase customers, amortization, headcount with in our an certification, production substantial, shipments the Third, building warehouse compared their related related of necessary California up professional and with our $X.X in products. to SQF raw to disruptions selling rice decision and any business SQF with The our XXXX. out our Including increase sales X% expenses to was for Rockies, fees, cost and supplying an to XX.X% expenses a administrative East instead freight relationships supply costs

a loss negative same Our to period - to $X.X operations the XXXX. from million, when in increased compared

EBITDA same of million compared a quarter negative For to $X.X period XXXX. of the second adjusted negative was $X.X a million, our XXXX, in

our sheet. Now, balance on to

second cash our the up equivalents quarter $X.X end of first ending the and of balance million. This was quarter $X.X cash of from is balance Our million. at XXXX,

at [Indiscernible] flows XXXX, in operating $X.XX we - of to the used have activities X.X X.X - continue second per million operation brought quarter additional cash from million cash share, million. cash. negative We share was $X were in in

quarter of have positioned well are a to shareholders equity, level, we mentioned. Considering previously up strategy. believe from Our The to equity the end XXXX. end is of equity million, the first increase of quarter balance the related debt $XX.X at warrants to execute and strong of million successfully the continue the cash we the negligible shareholders sheet and exercise our at primarily we second $XX.X was position, in balance our

thoughts some guidance. Finally, on

months now Our supply Mermentau producing past - strong with Golden position Ridge. supply again now a pursue is plant our ability shortage from these - limited growth. to in We're soon our starting

half We revenue and in quarter. modest the the growth in the second of substantial third growth expect fourth quarter

For the to full of of $XX year revenue $XX we million see XXXX, million.

should the adjusted expect adjusted improve in modestly to turn the sequentially now quarter breakeven substantial losses We more third I the Robert. call focused Our EBITDA to from mid-XXXX. improvement third. And back a the quarter. attaining we EBITDA compared by will quarter second remain on fourth

Dr. Robert Smith

Dennis. you, Thank

you the CEO, September. and a as Member of my and from I'll most As retiring at Board President know, be of position end as

its through lead Technologies have assume Brent will Rystrom of perhaps I again, shareholders. some -- delivering remarks. our to like new Company I'd Company and promising over after business become would departure, you they value the success intend September, CEO; proud President in our this the to the term portion earnings a that two and will and very to role thank and our shareholders on future, Dykes, for our possible, questions. prepared addressing our the the every - this the development investment my and years, will each to I'm last employee, step assist even in be a now and of support. their the through concludes efforts. can Dennis of with who CFO, significant remain in confident will CEO capable to together as and open Company conference very like wherever future project dollars thank And our work call our transformation to the continue my year. Company corporate who all RiceBran call, hands Board, stockholders. long So, will I the towards Company. past to for development end our shareholders product Once down of entrusting their And, After for Operator, of I

Operator

will a ahead. Instructions] first Investor. from go Goldsholl], Please [Operator be The question [Harry Private

Unidentified Analyst

investor in an you to we've the bought years, corporate of - shutdown I've we supply headquarters moved say years you as would years, instead time know, yet these them may As burn years, after expire about to astonished again what the continue virtually money, for continue issue are worthless? and in the we we warrants who Thank end and I'm I'm to from and third and still tandem. a that that which Company our wondering many all ago, investors have working surprised your I'm also to to you. tradable this have also of virtually many in year, to at update facilities quite been

Dr. Robert Smith

the in speak market. really that The warrants. trading whether - to Can't the warrants are

about where to get in to going the Company the rice is. the Company X% industry being U.S. some Phoenix, to is what rice is in growth for we - Texas, But of to the Houston, oversee about XX% Arkansas, as conducive close reason in think rice is Louisiana, be. the As XX% the almost in and far place was, us really is not of half we industry of moved where XX% the to was to industry company,

think well. So, Ridge to XX Company move to - great location with from get for a Louisiana, our we access to to facilities is us and Arkansas, on us starting more work - area, flight Golden Houston headquarters going very perspective, this from - suburban gives we're existing minute as work it's this in the up easy to a

as in in some third there's things now. the that we're year, cash. considerably his for down to in for working As level the had the substantially them cash - see will plans year, will favorable lot that considerably, investment that money we're certification, that we be our the of that far we're our adjusted we we Dennis of a the other to comments confident exit shape on we will financial and as burn, this stuff execute and CapEx - fully EBITDA we that pretty fourth, we see have spending year, down solid noted come we're quarter think as come exit on

with So, in four cash very from we cash over and to the next think to solid generation burn transition quarters. shape we're growth no growth

Operator

Sonz will Paul The next Please from Partners. question be of Sonz go ahead.

Paul Sonz

one bran was and look if from I comment down I [CGOT] on out when the May. of was I surprised the April so - I rice of gentlemen wondered futures the saw pretty could why were at that very because for you up price they rough it - the sharply into substantially of especially

to of much? So, up so enlighten could sort us someone that why was

Dr. Robert Smith

the the the the been completely has comes that it's way at so, various there and levels rice offshoot crop opinion, milling - don't down bran a year the know small - an Obviously, Yes, XXXX roughly this is of bran as was crop. prior if rice is typical my a this Paul, to in is the I the I and this look It part is are that for it, process, was our from markets crop. bran. XX% business roughly up levels. And way

Over to for is year, for market had market market before. bran, bran the really export been China. last developed that a an our And particularly significant that has

smaller bran we'd raw a it for and in crop had a we supply, put new shipping use had China. time, to same the which containers at so, And with it the less bran,

Long supply more that personal new see pricing think those states, a we'll on may Arkansas, It's expansion to -- - all for two large than bran at the the slows, Arkansas. lower compared shortage out focus to Arkansas is term, some . bran - see comes crop belief, bran combine bit take my things there. as it you'll reason in Louisiana but the Because $XX-$XX states. typically, is pricing bran bran that I and those two little a belief, other So, of in,

affordable a supply. So, - Arkansas bran is

Paul Sonz

in so it talk a within China? be you use couple ramping raw about raw bran, what for of bran When the is would hours,

Dr. Robert Smith

would to, And us we you're have using that we sure. not a entirely preservative about right. at XX very generally People bran's facilities, keep not to told attempt export probably and We're work that hours. they're It be around those talked go within spoiling. we joke that a potent want are from to But to that these containers do have when have open.

Paul Sonz

Arkansas export? excess for Once - why is in where because this they - be for we continuing they of demand wouldn't it the Arkansas, that export have they're is with located that potential won’t physically be have facility which can't why should

Dr. Robert Smith

Yes, is like and to place to a Mexico, to barge on put car or it going trainload you because truck cost the some or Arkansas like from like but the it barge, rail going in might a you that. it, in Panamax a overseas, it's expensive down so them it keep have the to to vessel for typically port, something export a into ocean more put ship we’d

Brent Rystrom

The way X.X much XX.X as essentially we're minimum pounds. I of from supply last is we take million XX and would year look pounds of adding million that sourced at much a pounds. sub as Golden about would million us And Ridge, it

issue. proportion I So look Arkansas, that at expand derisking supply we would and of in this as our price

Operator

question Joshua will of be next The Maxim Group. Please from Goltry go ahead.

Joshua Goltry

to expect don't you level right? remain of it clarify, as to CapEx is, this Just

Dr. Robert Smith

Ridge, X drop any at than drop about should Given of making just that. considerably - assumptions acquiring more form the so Technologies, below XX% current RiceBran Golden it probably CapEx and million by the looking not business, should

Joshua Goltry

not? or it Louisiana at - Now, have resumed you has production the your supplier

Dr. Robert Smith

XX. going shutdown to pretty started plan they this through to production has. essentially they Production resume August on, next a And producing weekend. from then that much solid be They plan planned on on XX. point Monday, It rank. And Monday, are into March

Joshua Goltry

with prices. positive understand there all? discounted I bran that impact any deal you to allowed Now, from that Is cost-to-goods Ridge, on the get Golden at arranged rice you that

Dr. Robert Smith

Golden what that we pound produced price The And the Ridge, per the for a price at agreement of in per pound. to supply priced is similar facilities. bran is our

cost bit that than that little a have at and one produces two a have pound produce higher that. we We actually little cheaper, per

we paying the Ridge, the average, considerable costs we on we - If of consummate pick that. in And Golden of will Ridge not where manufacture would be be bran us. for So, are. production to acquisition then in our to kind were to doing would this the second, that margin margin Golden up

Joshua Goltry

you are So, expecting revenue more or animal? from food contribution

Kevin Mosley

we look we're As the growing segments, at amongst equally them.

Our accelerated growth with fibers. dietary nutritional is on product segment FDA showing the some announcement

business show and segments couple we're being equine continuing heavily up, companion growth is are Our starting pick good the that to participating in, new of animal. that to

of it's segments. So we're our - all crossed major

Joshua Goltry

And the quarter? the facility, production LA what have there issues this been

Brent Rystrom

that the shutdown five only Mermentau, So, and so and between April, July XXrd. Louisiana in facility mid-April the is operated that's days

Operator

The [Operator Instructions] question Private ahead.. be a Bradley] will next Investor. from Please [Gary go

Unidentified Analyst

number I've XXXX, increase to Are of of been in reverse previous it. - of appreciate about of there since your and the owner be - plans spec, in have a question. Appreciate the would negate XXXX, stocks RiceBran the buyback a form I impact negative your company a point what possibly XXX equity to information, and split in invest

Dr. Robert Smith

I'm phone. You breaking up sorry. you repeat little our Could a the on were question?

Unidentified Analyst

equity the do the in there going bit, of [indiscernible]. move is impact RiceBran increase, invest a form of the I'm stock the plans previously buyback the to little me, plans have Excuse or to negative to

Dr. Robert Smith

business, think of and to not in would given stock. in business, use We that's our and a to this to profitable And at back intend make focus do plan operations. capital. strong we Yes, best buy our point, to growing the I transition growth invest the we the say

Unidentified Analyst

increase that hopefully and investor appreciate, I the equity, Well, correct? will

Dr. Robert Smith

sir. Yes,

Operator

would and hand I his And Smith conclude this conference ladies to our remarks. Robert gentlemen, like Dr. closing the back will question-and-answer session. to over for

Dr. Robert Smith

your looking - in the your the of investment in today, forward other you reports thank to and you on being Good bye. thank company the time give time side all Company. the and future. today, you, I'm - Thank and Dennis I all for

Operator

conference the has gentlemen, and you for attending today's presentation. Thank Ladies sir. concluded. you, Thank

now You may line. disconnect your

RiceBran Technologies (RIBT) 5 Aug 182018 Q2 Earnings call transcript