RIBT - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the RiceBran Technologies’ First Quarter 2019 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. to host like now would introduce Mr. our I Galterio of Partners. Ascendant Richard Mr. ahead, go Please Galterio.

Richard Galterio

us Rystrom, afternoon, Thank of Officer. financial quarter With first you, RiceBran results are listeners. call. again Dykes, operator. Good Technologies; Welcome and to Chief and Executive Chief Officer RiceBran Dennis Technologies' conference today President Brent Financial XXXX

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

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

Brent Rystrom

of to call first pleased Good for Rich. you, you I quarter am Technologies conference welcome afternoon, RiceBran the Thank to XXXX. everyone.

to the Our first XXXX, due Rice was mixed recently results in up from Mills. the acquired sharply, Ridge mainly quarter revenue Golden revenue were of

of Rice and Mills that the of because of Golden at our there, carrying impact issues out limiting supply was the also due we somewhat to are production. However, rice the short debottlenecking growth Ridge our expectations efforts

the business grew bran quarter. modestly Our rice during

on remain expectation. are major several customers new this in year and We planning adding this confident

is However, consuming previously proving more penetrating had facing consumer assumed. we large than brands time

Our EBITDA this for a products of manufacturer, order the in since Animal $X.X our out Earlier a Companion large this the use these significant business we and segment. by of received our in is million. rice week, this bring flat of was first case, that the negative lot removing million major wins sequentially, want competitive our benefits We attributes because appeal bran of rice market. have for the Animal in products, our food to for interesting market pricing. adjusted won We of of contaminant $X.X bran the their manufacturers functional capabilities facilities a the Companion products application elimination the a and to in this of yeast first many appear products think that application

and our sales This basis. customer also several customer will customer X% volumes rice annualized our one an new We additional expand new adds by other next major the XXX in days segments. bran over about on expect

quality to three to of would months impact customers our and several adjusted Golden and sources of near push were Ridge Rice a despite sales economic we structure In sales Golden this Securing and our the Rice that yield profitability. the EBITDA to margins immediately it sustain drop Ridge as caused portion caused we January negative Mills February at needed operations quantity and product Mills some April. We So management supplies adding to not of had determined in supply which an a as and in to in five made took another quality gross we our of first rice the mill on large quality our would to similarly have and growth profit expectations. reject rice the complete, a XXXX, that major towards identified result. with fashion to cost sized quarter issues supply at changes rice the and monthly higher of

XXXX, of over the unfilled we're late plant. on location. allow Ridge, XX milling We third deliver adjusted were adjusted time. EBITDA Rice of with already of building EBITDA as the roles. regional We're of milling should rice Mr. the rice of at reviewing this our bran sales which stabilized He expect milling raw the markedly leadership the in XXXX. Mills catching Rice Golden that of complete quarter adding Rice help our our up this these Ward to working in for bran yields. the from for of XXXX. contracts; years and months Ridge because improve team expansion Josh and is which Golden the leadership supplies, in are meaningful rice, by to stabilized to Ridge performance making. the directly second at will sharply a than further We remaining triple, grow strengthening bran of end starting believe of sales expanding directly debottlenecking considerably capacity quarter production, and in rice more catching on all volume our for grain with plans that However, on were and General we Mills pleased Long-term, improved second addition has pool contracts products, combination up second with this efforts, overall plant and higher Ridge focused by We working million our of especially start of XXXX did near facility, of several first the Ward Mills. quarter summer mill, of and rice quarter progress rice Golden the of and should we delayed us increase better the plan site We quality a rice hired Golden farmers elevators from we variety this by of a experience with In the farmers our these relationships profitability Manager

new rice also bran believe expanded a exceeds unique plan million we new have demand that pounds. to including product We XXX SKUs in an with that footprint, that will eventual technical product aspects produce market

sales is Later total well. bran integration think our expansion of been I have a about XX business. our and to have that comments recent Given could impact the rice few in for excited we just this the processing on MGI Grain of opportunities. over had call, we're years, the these The pounds million position in

the of in the at incremental about this only starting leverage second business. generating is sales in it for line and year. selling at is X products and Our meaningful of its The XXXX be EBITDA Cross-selling despite our now capacity. half production sales and expect product as team we focus for sales Grain this us leverage and force as million utilizing opportunity substantial XX% would growth MGI a will

three We Ridge and have ingredients, a of customers RiceBran our SKUs over products of legacy limited businesses a bran not not a prospective and team rice a our typically with single facilities Mills we stabilized is Golden of our our customers. to more has bran, rice XXXs RiFiber. Historically, force, rice but and portfolio from our the now MGI XXX dozen an Rice our There had three, Ridge, working just recently overlapping team also only Grain six The operating, Grain. salespeople business, sell offering another customer our cross-selling dozen. the leverage MGI to In XXX will added or business, SKUs. been over and customers. Golden contrast a valuables particularly people of handful of production two sales

to turn in second. Dykes the starting success quarter to call realize will now the update. our are in cross-selling first efforts over We to the more and provide I financial in substantially the modestly Dennis

Dennis Dykes

XXXX, primarily to in Thank quarter while in in compared business bran revenues XX%, Ridge period you, to from Mills first revenues Brent. the Revenue Golden had same the single-digit XXXX. growth consolidated of when due addition grew the Rice our of

narrowed profit period The Golden in decrease for in for of Mills XX.X% profit the the drivers quarter has XXXX. when margin to primary same lower Ridge in Rice Our to change results the first, X.X% gross product from compared first margins. include XXXX gross considerably the mix;

Rice challenges difficult previously Mills as transition described. Golden Ridge including Brent rice during milling margins the Second

increased the timing Third, to And plant finally, of project. of dryer increase X.X%. the an raw bran in due our CapEx our Dillon cost drum at production costs

related quarter compared and acquisition-related non-capitalized We share-based in the to XXXX. the first $X.X additional expenses. $X.X in first incurred million million $X.X The same approximately Our period expenses increase to to XXXX. SG&A expanded or in first of million quarter XXXX an in from to an million, corporate of primarily compared XX.X% in quarter $X.X of was XXXX approximately increase compensation million the the expenses $X.X of

when Our in to first approximately XXXX compared same to loss XXXX. period the increased of the million operations from XX% in quarter $X.X

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

we reminder, to use on our EBITDA as on which within measure of our and a Investor non-GAAP is reconciliation the means portion performance. Company's our website. loss adjusted Relations a We include EBITDA, the a a measure to press adjusted As full net release

and $XX.X issued X was we sheet. compared XXXX. bringing shares quarter $X.XX sold in for in common approximately million balance the $X at December result balance of exercisable net XX and million shares by to Now XXXX million per X approximately of common end million where stock and balance onto into the a XXXX, March to proceeds. $X in primarily Cash offering increase warrant pre-funded first stock per an for equity in of equivalents million $XX.X $X.X share, cash million our share of cash the of at increased The

at offsetting we of of had cash approximately quarter during in million of XXX,XXX which addition, brought in our for burn. warrants share $X.XX additional shares cash, purchase more cash XXXX, per of common exercises than $X first the the stock In

I equity end additional of March our mentioned. offering how was the to $XX.X and XXXX. XX level, our Rystrom million, call positioned we're the exercise have to back $XX.X first successfully believe the Our our equity related to increase the some previously business is to primarily we at shareholders December XXXX turn strategy Brent stockholders. position, equity of from see strong and debt up XXXX. at balance in value The we we to now in equity cash will shareholders' provide execute of in build well on quarter a thoughts the and operating our Considering million balance to the continue for sheet our warrants

Brent Rystrom

Dennis. you, Thank

at projects Our in help several debottlenecking our Ridge Golden the in XXXX. results starting quarter of third should ways

eliminate the various mill the projects as will First, working. we're the disruption, caused completion have around

least increase Second, a XX% both on capacity projects, our as rates. in terms of we the throughput will believe of by production and at result stream

costs Third, it leverage margins. and better improve should sharply

MGI of Grain $X that in acquisition are the previously generates communicated sales early annual April have Grain positive that and EBITDA. We has that and MGI noting also we completed we near million

modeling the that their largest of XX% purposes, all about and second note customer quarter. For first Grain’s we MGI sales does in would

So typically the in Ridge help Rice of the the performance our rice end Mills adjusted first quarters the XXXX. second. sales and EBITDA with Golden actions sharply third which as growth MGI the are smaller rate believe will above progresses, bran addition combined that us accelerate our year Grain improve products and should We than the by of fourth and mentioned the

remained for by million $XX XXXX adjusted the $XX We positive and the on EBITDA focused of end to We transformation. sales of for are excited million this year. attaining

that on quick we our Ridge. Finally, close for expectations I capacity planned overview to Golden the add will a at with

revenue our $XX this session. a we market adjusted believe yield pricing to annual capacity Our ready rice would high million and to bran for once triple now this expansion that $XX and value processing than $X the of fully of of of is production business more planned are new We applying $XX capacity the utilized. expansion EBITDA facility. will million capacity incremental current production million million this to Operator, Q&A add

Operator

now Instructions] Please Smith [Operator go you. ahead. will Lake Thank our first take Mark of Street. We question from

Mark Smith

Hi, guys.

process you work where debottlenecking the that you us is can Brent, just in off, at the kind process insight proceeding? give of how and more into kind just any are looking of First here,

Brent Rystrom

Mark you, Thank Sure. and hello.

project major capacity product. a first The we worked to hold on that creating was finished

holds of four had them to and putting we of start So of Prior product. the truckloads filling had in, eight basically to three put each mill truckloads in outbound tanks, then product about product it trucks. these about

trucks happen people would all of what have example, long. you'd mill risk to run you'd overnight, have Otherwise to is the unload So up. for the there filling night

So that's one. the first

is a we're Sheller a one paddy metal We the using process working project what's metal in are where arrived it, week and medical it's detector one and The next part, part, waiting and on Husker get detector, line that's what's the new called additional milling which rice. called of the for – rough that's today next we'll – or installed a actually additional but two. we're in that front process this on is the the or that the rice something that

mill, That's and and probably into part that to now and something too As the whole, mainly be it We're operations. complete. that disruptive kernel. the off it to break week starts take on comes outside half rice will a of shouldn't a the happening the week, that's weekends to so it doing

efficient. in are of either those backend and couple We'll more Fourth, have months our The a the probably a another is which don't this of third to although July both screener grader, doing piece products. will kind that we of equipment going at break at This We're here. make take probably faster to we're have. our looking the capacity early timing. on is processing screener do a also new new we our have site, sectors installing The of June, and we the do to thing or system length late of for a replace get to really three is to a most break. of then adding that looking; lift we will

furthest that necessary the project capacity on So get to increase. out considering. now that's the that's it's this another But one we're XX%

Mark Smith

that through walked that back June or does push the then the you're timing on like far do And expansion or of you Ridge at the schedule that Golden anything of as you here, Okay. project? on as feel things looking just still maybe for July

Brent Rystrom

Yes. Good question.

going existing is likely or the of the it So be attached building to in will the attached, a if expansion be to separate east building. it's

milling, of fine the impact the operations on have under expansion operate no should should we're So the just while day-to-day construction.

Mark Smith

about for generating added, kind Okay. start some you Excellent. customer and take that was When from new things before there these time. And you Animal do generate immediate is a of Companion inbound to start I talked then you know a that lag revenue pretty RiceBran shipping? still to some Is that? or expect

Brent Rystrom

The first truckload ships, Monday. I believe on

Mark Smith

one last then me. And Excellent. for

any like going the in at substitute been you lots that we with just look Meat, of market, that the beyond feel in talk guys space. you it's about that news As segment? have you the Meat lately market, talking announcements entering in Tyson on Can opportunities about

Brent Rystrom

Yes.

the Our those is into greatest traditional rice what mix bran business, going probably the of be opportunity of products. as a types part of will

attributes the that and good works of one a So it's rice bran water physical that binder of carrier. a it's very well good is

hold be Grain. overall you into based ingredients typically and that us looking area, for supplying a it's heavy the plant-based believe meat. very something real which ancient grain be you're a those X.X% to to area put And to going into MGI and good need Montana, through a would really Meat ingredients to like big leverage be North hold not something X% market. be learn have the help creating that something inclusion for types that weight need starting just opportunity. plant-based located when be be It Grand a a heart opportunity supply like together Dakota, in product or you high. we So analog, of going of a got will Grain second in East of And and then that at assets think in it into particularly, in MGI products the is together. wet about, to our that Meat that we flow solution part Minnesota to Dakota. the The going A of we would that U.S. South Forks, up a production the we'll Minnesota we're is we to to pulses, there's right

market. two that are those So will think we access ways that to able different be we

Mark Smith

you. Thank Great.

Brent Rystrom

Mark. Thanks

Operator

Mr. ahead, from Sonz Our Please Paul next Partners. question Sonz comes of sir. go

Paul Sonz

is of in first kind customers? think you question increase the sales, My what you can in crossover Hi. get do

Brent Rystrom

What tell question. is difficult good would little by really it's It's that, answer. going you to customer. a to I vary a It's

the has every had in happy a And with of a now to a to basically opposed we've benefit customer first couple we the quarter that gone getting market, focused creates truck really that we're week. had, most been Golden that of has first to on wholesale market. from The the truck we've is that is customer into reaching down a one the Ridge almost supplying customers been really historically by that's wholesale better And pricing. as the been

significant it's opportunity but capture partially growth, us margin. also partially for a it's So to

Paul Sonz

I Yes. advantage? customers out and without just new you if great good having can that's current because to customers, was just a thinking organically sales mean grow I that's exposing get go and

Brent Rystrom

XX, the And more. we to and XX we're have hoping of over certainly these X, next year could have

Paul Sonz

about wasn't trying $X.X you talked that increasing thinking this to – X%, wrong? When number? just X% to Okay. is was million quite of that X% I think, I new which So sure the am I customer it revenue, equal

Dennis Dykes

was so – bran Paul to of the Kind making, I was our reference business. core

Paul Sonz

Okay.

Dennis Dykes

in by about on customer that pounds shipped that then So let's increase some last by X% in $XX about would bran year, last business, X% this customer million business, This revenue we our that million base. will and or XX again, had itself. call increase represent that And it a we've year.

Paul Sonz

I cost; do going transitory? higher put expect what to – be labor That's to was you Okay. on those the

Dennis Dykes

Yes.

a… there's So

Paul Sonz

supply? the product with the So rice

Brent Rystrom

about dryer we're we're doing. drum getting Dillon, dryers, a put causes And in There amount need of couple with in project shortage Montana one have his facility to with projects that to dryer to run have capacity. the back in One close to our Dennis more the final per get Actually we use we talked refurbishment get where back finishing drum then is that very until do in us to there's Well particular we to was comments. it and products of has more, we labor full actually it CapEx. that produce that way. if to of their labor you CapEx have our issues two

Paul Sonz

Okay.

Brent Rystrom

now labor but rates higher a the with business normal amount with growing, to business. the Actually than do is we're of right labor running done. match not have to So rates similar the

four be labor all on rate we'll drum and As the system, and to the we normal there. dryers see back scale get a run running up back in that able

is has side at impacted that other delay Golden find we The basically rate rice mill. the labor until sales negatively Ridge, better to to which been we by can chose quality

Paul Sonz

Right.

Brent Rystrom

cycling And we're that. million, back into of absorption better that we're seen as

Paul Sonz

Okay.

One think well quarter? I XXX adding of that's to within by opposed that five funny thought picked and to you the a the or talked end year the of new of take reason the by days, as about Any the customers end number you just months. of questions a days XXX kind why particular third

Brent Rystrom

I we working been we throughout say large have of to the mean, some opportunities expect to of that conclusion Yes. year, and we've of end targeting but every of the come on customers that a series targeted let's have by them sort one of we're end the we is September. that almost

Paul Sonz

thing. forcing Has are you last the And there and one issues changed the to some still you've Okay. of had with that China prices and the here. going people seeing China? bran over shipments then or material taking past rice In

Brent Rystrom

about country too tariffs bran out or data think on as bran added. raw some have this an there's because don't coming question in rice rice – ingredient of some the into I has that good of now tariffs, a how get it's some diminished exporting much. will the there products So bran tariffs

don't is countries as a have maybe Some of it's we large China, to it But Latin if much? I really believe or to the how amount of going it visibility, going well. American

Paul Sonz

Right.

Brent Rystrom

I see don't that And changing.

those exports weeks prices up going diminishment have Louisiana, not prices that but the stabilized, We months. last coming have we've the see in or from. over of seen in in not Prices so main seen which substantial or prices are the were, any the bran any decrease like we couple don't of are places they couple California

Paul Sonz

then in little past on issue know has that customers. caused now been this Has the – And latest orders? is delay orders Okay. the in bit a – irritation an to I delays fulfilling fulfill some with

Brent Rystrom

for pretty issues And after experience we've actually our stock What been of safety we've a California our We're having in inventory. lot both shape with there. last a in time good you're partners plants. then and production mill year our asking actually developing We've strategy really facilities and our us. this building Paul, if of working at for done spent year, Louisiana

weeks today the like of a So facilities. going season really mandatory from during shutdown safety overview we And part our summer management electric savings, with because in In excess stock there we season. that four having where of day of went the we three felt into both the stuff last would brownouts, of are kind summer is as through the to the safety mills an inventory. stock that. the our call, just weekly California, we of We have risk year benefited the those need of

three in four today, excellent end at we're the at inventory. by think the be I shape. of of time week’s and will get weeks we'll be excess we hopefully to we about think We June, As about

a very over looks going year. we that cost and business per in get to be $X,XXX at Last trucks over message minimal next, to to to we're it any avoid this have feel like a like We've to that of year. they're we in ship excess we're the good added truckloads. to this our have over shutdowns got More through XX the very from cost of And weeks call probably seven, getting we Louisiana, think truck. XX that build eight importantly It us suffice about that California next market from in going that the partner inventory XX was to on XXX year, they up it shape We had hand there downtime the plan summer. good well should to truckloads. significant to

Paul Sonz

orders the time gotten, So the on fulfilled customers said disappointed to aren't haven't or you that that not that's up a – you catch on might…? haven't delays, current current problem have you for because

Brent Rystrom

No with the Golden at thing quickly our there orders But we milling the were can and get we like behind Paul, we're as and done mill works customers us doing but Ridge. specifications. to seeing we're way that the where And that. as orders to you're rice that right the on working quality rice going is out wasn't milling it to were the rice their of grade they'd

And and so for. the last quality thing they to the get because meet trucks they're want us mill to rejected doesn't do XXX what all them is have looking

way So order that. we've they that and was but rapidly and customer, large delay taken the our now a understand we're we're working shipping it to through

We’re else probably question. think XXX in we I trucks if the his into last know may I queue. XXX, truck don't that Operator, been have anybody have orders. XX

Operator

Yes.

take question We from next will go now our [indiscernible]. ahead. Please

Unidentified Analyst

for after this was time. we're could I people call is employed it's up conference but I’ve with lack is you I company the pleased information understanding no the felt Thank know, believe and are XX there's give very us the the with that over in And was sells shares been through years, because XX% that further direction, the it you. on pleased as so few forthcoming product, pleased seven new the going, position though last for new with somebody as the stockholder developing? past your the lack company on to can you're a you not one period I right with stock, I've you at or teasing time in of this that six you ascendancy I'm weeks. almost have Can information of product of angst The Brent, your of because been a new out imagine that in drops two of the lack this I must for take buying, of I $X.XX. know, information, gone so that say you with product. interest the every way any

Brent Rystrom

I and out million information. a would give for like It's want to we concerned we I'd detail market very I proprietary a people you, to and question be XXX in with can don't your much things product large, eventually I with alert understand opportunity interest open competition. a product what XXX give more actually think say, I up few very could it. the and we're start want don't appreciate million a about and I to it could too this going. pound when for because us. it where talking I'm about competition too to no early I other it's

what is certain capabilities do. products for It with tech told going to that they're and we that have a of of have version they higher what So attributes say dozens will certain other I it's alternative and us feel delivers really functional a that compete well companies substantial need this product.

Unidentified Analyst

of place? or this out there on when take might new give shipments original product you project the projection can anyway Is a

Brent Rystrom

Sure.

this to not capability we we expansion. So complete product will have the the produce until

available targeting that of we're product have will the to quarter time. So in complete XXXX at and second the be the expansion

Unidentified Analyst

late. for little All the Was right, I came in any a for XXXX? sales there forecast

Brent Rystrom

million we call. that had previous that XX XX to reiterated focused the in discussed on million We we're

Unidentified Analyst

explanation. is in aspect upon There's to to the Bear RiceBran of I've all dozens is – always is of kind dozens mind, Okay. listened about to I Conference which position word I’ll is, NutraCea Company a consistent met? just Calls. Do why Why Why explanation talked you sales shipments something what in feel than an met? There this different seems met? them, weren't earnings use and word Why I for the historically? weren't be and won't wasn't met? which use that weren't

Brent Rystrom

of had you're I limited a company been that's and saying understand actually would there's – I success. believe what and it’s to Yes. trying long perform some a history

primary think I the at two years a things. been five is than ago. company now of different year-ago, is where the ago, difference And couple had we're a years significantly

all, significant have of ago. that team access when I not years company did has First market a two the actually we large sales joined to that have we opportunities

still They're so couple us good difference. that's quite built We with had been we've more has doing visibility. so So a much the major access out, well. salespeople and of more as But gained time. very that a at team and much

to I The scale that in second Arkansas particularly will will greater thing build be help, think it there.

agricultural So the to But of in we Rice wheat, we much reflect of sorghum in have more competing or or then the is control, lot corn a also particularly California substitute customers against to to sometimes supply. things. where closer is against competitively We're are in we're productions the have rice bran business price in lot our Louisiana, most market in of that of distance. soybeans, the a industry. when the bran that against against other produced or And geographic products. Midwest, our

I think and controlling from bran our amount supply. simply capture really poised we're geography to getting a So better of as better into well business

Unidentified Analyst

their I participate Everything the background we to understand. Company for the will that to future. and call, you that, years conference of good I've we and next just come which previous again, what your know, to history discussed, the ascendancy the not will hope I not sounds equity. certainly and and in exactly questioning off of produce, producing. about there. some too rise been the phone. I'm going talking you're see say Hopefully with thank in a produce I'll people the you as many I intend And over in shareholders But for has will all

Brent Rystrom

is are the going as year We well. producing. and appreciate show improvements, to management growth see the question. quarter to and we'll progresses, some forward second looking I we as also your significant think And

you. thank So

Operator

like concludes remarks. the to any to closing question-and-answer Mr. session. additional today's Rystrom This would hand Brent for call now I back or

Brent Rystrom

time everybody's you Thank very We attention appreciate and today. much.

New reporting we the quarter results and have to in York. Then We Meeting forward you. in in August. June, Oppenheimer Annual next Conference Thank Tuesday our will Growth week, early be second we attending look our Emerging

Operator

Ladies and your Thank concludes gentlemen, conference this call. today's you for participation.

may now You disconnect.

RiceBran Technologies (RIBT) 11 May 192019 Q1 Earnings call transcript