RIBT - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the RiceBran Technologies 2019 Year-end Financial Results Conference call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Mr. Partners. Ascendant of Galterio, Richard Please go Mr. ahead, Galterio.

Richard Galterio

President Thank Technologies XXXX operator. today Financial Brent Officer Officer. Good Mitchell, and call. afternoon, RiceBran to are and Executive Chief again Welcome Rystrom, RiceBran year-end Chief us Technologies; Todd listeners. With you, of financial conference results

to subject prepared Before contain remarks the want forward-looking to to during uncertainties. that statements Brent, over turn listeners the are risks may and I I that call remind call, management's

your the additional questions protection of make statements Litigation forward-looking company for response to Reform Therefore, may claims today. Management under forward-looking in the statements Private Act Harbor Safe contained XXXX. in Securities

the Actual today, more company’s and the results SEC. to discussed these a from detailed you may results therefore, discussion we in risks filings differ with refer of uncertainties and

projections to company’s and in XX, these March represented In future of estimates obligation to XXXX, the include as addition, conditions the no performance update as assumes any change. management by market today, future projections the company as

certain at non-GAAP available financial This webcast comparable of including Investor page. are to measures financial call, this and Relations financial GAAP on measures reconciliations the www.ricebrantech.com in provided information

Mr. CEO like this to please Rystrom, At the RiceBran and Rystrom, ahead. Technologies. call President would turn go Brent of over time, to I

Brent Rystrom

afternoon, provide. good surreal to COVID-XX relative changes everyone. have and Rich, experiences and Thanks, been life normal to news The challenges and due what our

governmental and few activity business functions, routine, that been daily in ago. months a changes unimaginable have witnessing just are We would

thoughts Our out go everyone this. and prayers by to affected

is the issued of of RiceBran on COVID-XX and sharing. security entire much memorandum security XX despite and negative in has Homeland Department the and U.S. of leading responses so On to As and this year, regarding memorandum forward March of infrastructure the the quote a agency economies impact the worth food a U.S. Technologies a must world. manufacturer, moving keep processor cyber the Security of this the

maintain such Security by a as work you Homeland department pharmaceutical and food your and work “If supply the infrastructure of as schedule.” critical in responsibility healthcare industry normal a have to defined services you special

has of non-perishable RiceBran our we production challenges these like team the demand produce. for in those great Technologies to Our or been that efforts to grow all strong of foods businesses maintain adjusting given making

and The for diligently as to are weeks months economic will coming and and possible we crisis. challenging as all this be function, humanitarian working during well

employee this work note on hard final a we members highlight like the to all As Technologies and would difficult team their in COVID-XX, of the thank environment. for RiceBran

are results. highlight There would quarter that a from to few things our like fourth I

completed we at our from up at Rice Ridge third XX% debottlenecking was level. and Golden First, our Mill fourth that revenue quarter nearly quarter business

This the EBITDA quarter. Second, positive the results. the reported million XXXX of fourth EBITDA third our important loss our significantly EBITDA first step $X.X improved an adjusted loss in improving million quarter in adjusted in $X.X we from adjusted of was towards

plan by the of we attain to XXXX. Something second half

about We progressing are XXXX pleased how for RiceBran Technologies. is

our the Following thoughts will these. XXXX some XXXX results on I and some our on and Todd’s call close guidance, comments updates of with

update. go your please Todd, with ahead

Todd Mitchell

all for time of challenging a It’s us. Brent. you, Thank

to points. However, away if two I anything call, investors take want this from make

capacity to as foods, our non-perishable this of part do barring and possible unforeseen critical control, First, a this food supply operate through countries crisis. circumstances producer we and are we of a fullest our chain, component beyond intend our

we our believe not we really this And grow are And and we to generate well-positioned to through protect are through necessary only significant this our employees operations make improvements period, and second, in will it period. we’ve taken possibility the and steps XXXX. believe we

for quarter the the the in months sequential turnaround nearly fourth quarter quarter in fourth Revenues highlighted, of As beginning the Golden of doubled quarter. and level. in saw the Brent in we were real mills a Ridge from each third

drive even to able initiatives the quarter second place corporate. level, in the putting first narrow and third full be we And to result, both overhead were from and begin of in the though initiatives quarters really as losses XXXX. efficiency, until the also at effect a field We these felt won't of

the to we quarter also was Importantly, capital, new offering. took through performance October, fourth almost X in lending weekly a support in senior successful on securing growth It cash finance in this necessary metric reaching December Ridge Golden steps a working by a raising and basis. facility equity in by million

business being SRB greater That at increasingly in improvements quarter significant our MGI of returns look and strengthening fourth detail. in and levels our and superior at confident Grain, quarter strong said, to growth from let’s we’re in A ability XXXX. fourth deliver XXXX

Fourth-quarter was flat $XX.X up quarter. revenue in progressively of Ridge from quarter XX% was Full-year month million, revenues from $X.X XX% million, of our sales fourth got XXXX. stronger fourth the Golden revenue given in Revenue: quarters. Much over each several the XXXX. months the welcome prior up the of

year well, the of that And albeit essentially seasonally core a was as year-over-year. and revenues business quarter slow fourth to our added at Grain for derivatives SRB flat business. MGI time

XXXX. compared negative XX% XX% quarter Golden Ridge shortfall XXXX. a margin: a main and margin in in Gross gross the to X% year cause positive positive Fourth of versus before. a gross margin XX% was Full-year was negative in the

better for and a was delivering in As the plan prices, hurt delayed debottlenecking, quarter. in the original delay until by to first by was the business completing in our fourth our contacted ramp quarter our yields compared attaining associated the that our production delays

capacity margin strides volumes is steady improvements mix We’ve facilities. higher as of all rationalizing considerably. labor success in and improve to in yield However, the of we’re across seeing our made and our at our us new significant business expands allowing and also prices better

and return positive second gross in in to gross margins the XXXX. As a for expect trends result, higher quarter margin sequentially we to

We have in we where SG&A: in the SG&A up fourth high from in SG&A we for relatively remains was as XX% million quarter, XX.X fourth overall on was quarter to in streamline XXXX. X.X in with an SG&A of XX.X which flat quarter, million quarter was is XXXX. the XXXX, projects XXXX. This certain million improvement. area that room in significant cut but started the invested to SG&A initiatives operations fourth working found in

we We won't are there. SG&A stopping we be first will confident the in in a deliver reduction significant quarter that and

We’re XX.X million improve and that. reducing million in the SG&A to we XX committed on materially under believe from be XXXX to to for that we year may able

Operating losses XXXX, were losses EPS losses: the compared fourth Operating versus of basic of the quarter of $X.XX fourth and quarter in million million in fully losses to of were X.X the diluted in XXXX. $X.XX X.X and quarter fourth losses

fully in full of versus compared million losses EPS operating the were losses XXXX, XX.X were $X.XX losses diluted in losses XXXX. result, and year a for $X.XX to As X.X of million

EBITDA with XXXX back of and and losses Ridge our in adjusted acquisitions any in and EBITDA: million versus off expenses losses million Adjusted million X.X associated fourth full-year reported versus XXXX. takes were MGI. adds quarter for and EBITDA Adjusted Golden the were losses of Adjusted the one-time the compensation EBITDA X.X X.X XXXX. losses in EBITDA EBITDA in million stock-based XX.X

report the throughout look the we and EBITDA to adjusted third EBITDA And fourth EBITDA adjusted expect EBITDA matrix we before EBITDA end XXXX of in will quarter and then for the and we adjusted in in We the this transition positive quarter of positive and losses improvements fall of year. first XXXX. sequential the materially quarter

million December of year facility. equity from offering less than cash X.X in successful capital million XXXX, we short-term borrowings working an result completion a As liquidity: the our the ended with and in and in X.X Cash of

our and Given balance That strong the cash means current closely we’re everywhere, sheet. uncertainties utilizing to we’re shepherding capital surround working committed us that facility. maintaining a our

facility, believe With our storm. to and balance this weather we we flexible are well-positioned capital cash large access the working current to

Brent fully throughout both food, we nonperishable crisis. highlighted, As of and supplier as I to this expect remain operational a

same crisis. we’re the getting on guidance a planned the result, we As before

annual in XXXX expect We $XX $XX of approximately million revenue to million.

transition quarterly XXXX anticipate from will half positive in EBITDA quarter second year. the and sequentially of We the to EBITDA fourth improve losses level

over in XX% year. with to of we continue the gains the approximately amortization total expect depreciation to to for in less sequential million total total and non-cash SG&A X.X in than look Ridge X.X throughout anticipate We year X.X to revenue We compensation. million revenue XX Golden and and million be attributable of million for

remarks. turn to closing it will back over I Brent for now

Brent Rystrom

grain in foods Thanks outbreak in has Todd. is for ways Technologies nonperishable The the been several COVID-XX impacting by RiceBran that caused like extraordinary XXXX. demand

We are seeing strong interest products. in particular for and rice barley

demand. meet aggressively this working to are We

remain our We progress Ridge pleased will Golden Mills. Rice at with

finished mentioned our New I growth debottlenecking Golden previously, growth We the fourth XX% has levels quarter in the As Ridge near third over saw holiday. quarter strong. been since Eve Year's then revenue and from

Our hit we and been first Ridge milestones important have at growing Golden in monthly some revenues the sequentially quarter. have

January, late weekly saw at $XXX,XXX. First, hit we Golden in Ridge sales

weekly experienced sales late by Second, we near February, $XXX,XXX. had

are this Golden by Fourth, $XXX,XXX XX% had week as of are fourth sales on grow and just of result quarter Third, nearly from level. growing a Ridge first XX% in we $XXX,XXX quarter track targeting quarter at over revenue week. one third we This quarter fourth to the level. after from sales over we nearly recently

are from our Fifth, leverage system. we cross-selling seeing

Ridge, sales fast-growing sold this traditional customer and prior rice is Ridge Golden company. finished that are SRB that at customer to one RiceBran with example, our buying Technologies Golden company For rapidly growing a the extremely us now was packaged derivative rice finished

We Golden improve EBITDA quarter. plan second to at revenues the and in Ridge keep building improving

May, expect further large plan diversify stabilized volumes there, XXXX. growth, to continue starting we in improvements of and of shipping through profitability and expect and significant the we As RiceBran build customer activity substantial on revenue end

our potential stabilized locations. to Grain by derivatives also business the growth our and are barley on and California, and working Montano RiceBran and Louisiana, We build from oats excited are business our MGI at

on focused controlling We’re expenses. cost and

want this since our are are markedly unfolds. Finally, that going XXXX we healthy results environment, as we improve to sheet a to especially in confident financial balance maintain

effort the look Technologies on unfolds. by second our our of progress to drive part year XXXX. half forward positive RiceBran as is EBITDA of the We this of All updating to to you

for are we question-and-answer Operator, session. now ready our

Operator

coming Instructions] Thank question Street first you. Mark Our today Lake from Smith is from Capital. [Operator

Your line now live. is

Mark Smith

guys. afternoon good Hi,

at Brent with today? as off, of today look color seeing you into your kind a what the pricing as us customers, on can First color just new we little products environment you're in as of current update give an well more

Brent Rystrom

Sure. We’ve both by and what Thanks excited we’re hope seeing and with you Mark well. development pricing. customer been customer

got customers are that much, delivering So, here, several really quarter new with volumes large we’ve pricing. much higher during involved the and first

a pricing working $X.XX, year lot think the $X.XX last you $X.XX], we we’ve $X.XX, been the was range. So business Ridge, Golden are when off $X.XX, this of recently $X.XX at $X.XX, and at pricing in [$X.XXX, of seeing

customers had of in. the come pricing. So, diversifying we’re customers getting We’ve very much large in higher a couple

showing in of now U.S. the a couple biggest also we’ve the in in largest with packagers and products involved Our got of U.S. up retailers are the some the rice

progress. with the pleased we're So,

Mark Smith

and look of kind of the end a Okay. talking especially a oat look managing were at where to of into MGI Great. is of kind at us at a update give today grains quarter that you business especially then little may and and of – just time kind weak, And year and here seasonally of you here, we quarter more of comments and about we bit Can kind the your business. on and fourth seasonally as off be we as move as coming April? better March MGI

Brent Rystrom

customer perspective, business our mostly little customer normal is Sure, that the had customer It a with that pretty but And at a it’s customer. reference a little this product, right in Mark. use, quarter. impacts large it second outside now. for at good a and first our large relatively a mainstream season we’ve use aggressively of working has we’re that the and is through unusual From

through our of of truckloads second We’ve lot and more having happening partially XX them. now, we is and up what’s groups with doing this business the wrapping feel impact right of confident another products just We done bigger anticipate on a for that order theme the about when which we first get working you is favorable food quarter. that The we’re what look else be about at that most here and pretty does. company for did

is barley soup the into of types there pearled that buying that people right important and the are think major company foods, goes is And the of U.S. in manufacturer a different nonperishable this when about now, one all food soups one out you

those of we’re So, because big nice seeing products trends. some activity those in two

Mark Smith

RiceBran us little And from it coming your inside off Excellent. you like looks Ridge QX kind last a more I think in up, and about press into talks the a Okay. of stabilized give one can just Golden ramp release bit me, that? any

Brent Rystrom

Yes.

progress a making stabilized producer great in become RiceBran Ridge a Golden getting We’re us. for of to major

the We're XX, from a Our now from of XX of Golden middle kind of target in target hoping to Ridge. Ridge to get May. starting large-scale shipping into XX, right summer SRB is month trucks shipments be Golden and

confident can We’re do it. we

have doing for think We’re impact RiceBran. for going it’s We it. Ridge looking forward to profitability big on and to and Golden revenue a

Mark Smith

Thank Excellent. Okay. you.

Brent Rystrom

Mark. Thanks

Operator

you. Thank

Brett question Our Levy next today is coming Arrowsight. from from

is line Your live. now

Brett Levy

Arrowsight. Hi guys. From

margin? on you talk about XX plus, you high kind progress Ridge. is in incremental regular Let's is, with higher even processing margin but some will and it’s as Arkansas different talk getting the of or profit like numbers, volumes those wherever It RiceBran’s good about on high-technology start there, margin it XX year the try where just XQ the from get Montana Golden progress into can to and XX very XQ sounds SKUs, like SKUs XQ can much really you rice or of there this whether are but are and and

Brent Rystrom

that then with and from we're here. are I start and both if Todd like, then you Todd would and I’ll – Sure.

team] So, finish. [take will likely Todd on we but it, will

So, have. couple I that thoughts of there

of margins will the as side we this we very the First way the business. think milling the it forward to part I all, minority of do profitability we’re about we easiest can mill. Ridge be make of profitability think of go think at large the the and in actually Golden think be what traditional stabilized we with the you healthy is, look of majority of milling When will the that a business with business, able RiceBran the to

something the on the business as just trying margins business at So, that not that SRB core charity into at something milling to the good some itself. become part really make do get good do and to we’re we of is it

to MGI RiceBran fairly Gain. frankly lot related some areas. It’s then a higher and on of to in as that going healthy we business, have getting business derivative be far As stabilized into or margin the our of most at going in two any is be that the we products, margins of do

make we So, California, think and be you cost. Louisiana, going about is when now to by in Arkansas. Arkansas location, stabilized lowest RiceBran far our

margin. related Minnesota. our of SKUs Grain and largest out good have which products to that very derivative are then to going We it’s in MGI the So, make come Montano, products margin are

are on to like going much, you they X it’s X products So, be across Todd, to derivative in there anything higher is Margins much to the larger then but times and brand are system. scale milling. on times would milling, add?

Todd Mitchell

is pretty of No, what we’re I in think that terms thinking. concise

think the only it out also components more do what through we milling tremendous ASP higher XXX it improvement pounds our turn go more you I process. seeing back going rough you and this of think, made though what It's yield, the into of rice, means within which yield, our may the is remarks. just comments the be in getting referring in throughput, what were not about also to if It’s is consistently mill into? we’ve of percentage the prepared it’s about not system, and about of larger we’re but I higher turning

Brett Levy

the one, based credit you liquidity. whatever to know factoring, relates second it a on credit line, guys brought call and I want And is receivables to line then the this it. last question, you

you whether context and that a guys think want at the changed do not mind look out about have I to The plan? thing. into as or in that XXXX into coronavirus path the see even as of you it, were this you the moment of enough and your what deepest moment, will kind line do of go you be whole we have your you

Brent Rystrom

decide like and pay we itself take take of We It loan is refer I’ll don't you we factoring So, it against pay out mind, borrowing customers It's sort a when line, our just our back. down. and can right? it to not as a pays we're out if then So, us, AR. that. it

is draw I the velocity most on think increasing, seeing mill what where of is frankly line in that So of you the us because now right. the see will the we're is the kind volumes

going revenues mills so buy to commodity again, AR I’m and borrow also to are to get me the giving go mills. up. more And to needing into That’s more

when what that at, working once that Ridge see And scaling, you line. truly line. of as arc use Golden think doing then out I the the line because down of running now as call XX a will business So, pay capital our It’s will it's line that's XX scale then it, customers all. or pay we'll is you we itself just the it

So, it for. it really is and line a working use I that’s what think we’ll capital

Brett Levy

you this line best And, the line tell, I the mean as even coronavirus finish in as undrawn will world; you you year? will can finish

Brent Rystrom

It on Probably want and but the and the line You of to could. what really back year know. to. know, not, I capital depends half the drawn? like kind Will be allocate we finish of looks what don't we

Brett Levy

another there Is of source capital?

Brent Rystrom

balance we amount after the on in too? a December our offering sitting cash of Well, significant have sheet

Brett Levy

your what’s mean I trough cash?

Brent Rystrom

cash? What is lower that free the cash to the I have. I'm I down flow of going of in kind selling would and If do of be profitability than inversely trough cash take My but I’m I’m my related trough profitable levels is, interim. would to cash not it cash

Brett Levy

Alright. done that I promised I that. on was

Brent Rystrom

Nice to talking you.

Operator

from from is The next question you. Solomon Thank Maxim. coming Michael

live. Your line now is

Michael Solomon

in and under as Hi things but they guys. well it can are as I little I going sounds out have bit, like a the apologize, been circumstances. be

like sounds would So, margin just the gross say? then catching other favorable to contract your on to and Golden up you're clarify it you on impacts Ridge Thanks.

Brent Rystrom

Yes. you, Michael. Thank

question. important an that’s think I

we issues but hurt contracts. as the problem issues margin. our behind lot had, with So, our it them, was debottlenecking our we not work we it up negative a with didn't a that rice and experienced keep last caused we of a problem some worked just prices one customers, that fell through year on higher, of was as It we that

old have have impact Targeting right working retiring impact, gross contracts. the as favorable and our it’s contracts significant oldest happens through are on and not the most We to rapidly that in of retired a to going margins. profit April

Michael Solomon

Well, going you. and great. Thank know keep it it. so hard it’s appreciate time That’s I deeply a

Brent Rystrom

Michael. Thanks

Operator

with Paul Our Thank [Operator is from Instructions] Sonz Sonz you. coming next question Partners.

Your line is live. now

Paul Sonz

to Hi. Brent, given but XXXX that this just a as had looking into a what question as looks from company. past of ingredient viewing to cash XXXX, forward the like, market a of company company to special is I a something not here get changes into good kind products is, the like breakeven, of we more that What would growth how picture but for I'm and sees you. milling you

I think if to that’s see could and SRB. profitability coming from, from a able XX/XX change that for more specifically bit that to about milling the and where where you're know you wondered be I you going. you profitability might demand in you increase the than address more little the from SRB, talking is

Brent Rystrom

actually Alright. start that half next Thank do we Couple of of Ridge second Arkansas in sense then the come of to back assets couple you. with I’ll Golden kind over thoughts. the could Paul. a years. of quick what the and with of

structure focuses lot disadvantages and a warehousing the control had a a that business inventory. in So, competitive are of of we a very we of really heavily a we’ve on manufacturing company didn't so and one been we as is have where structure that our

into What assets raw to an revenue and cash. Golden allows more focus Ridge is materials assets turning on our ability and production

significant next couple the next of over scales years business. that’s unfolds the change that the of and over a in as quarters So couple

of the east that in it southern you north, Corn coming The importantly to More down Ohio of is now call the call west, the when end the Minnesota would basically it’s Belt Corn in located. the to Belt. would spreading where think people Arkansas scale in south. the at in is Arkansas is is most for people what Nebraska the

percent points when some of because that you U.S., region, been region to at the percent that some the at want food at we’re XX And into that ship people the of operations majority because near the in to of soybean grown located look the mass and Historically, in that are cost are very we’ve and that’s corn, freight expensive. that area price food XX in of California, keep manufacturing their trying region Louisiana, low.

business a cost By more compete past. that products we significantly with that in to we Arkansas with location it very yeast, and will getting with significant has able will the much physical the scalable in region corn, effectively other and be cost reduced than wheat, in make and freight soy, this

next push the are itself, do far more tweaking there we’ve to some to do we as a things higher, a couple small, months we the invasive year really As the physical and facility little number smaller that got the up. volume then and can but next of now year, half the over could production that of over things keep

couple the areas. inbound volume some in modest and we’re us we tanks We the storage, we front could would to put of material better on where the give be, greater by take considerably at mill. side of flexibility where really business how from could One making a investments inbound raw

production take more water is more second to to The more models shellers, things to process help us add of existing and that basically graters, length and the the polishers, whiteners, mill rice. the the make more footprint the more basically

then and much, to that do do makes the something year. than XXXX bigger And overwhelming step, we like is would this much is are between we combined brand a business only build it facility a planning food to now us location, timeframe. to at big necessarily which what not but grade Those the

Paul Sonz

Golden Ridge, From do you how the what – control aside from are guys and at you could cycle how for are demand your see the SRB for going, sales can sales is and it manufacturing what how doing more side SRB? generating demand growing incremental do, on the the

Brent Rystrom

pound roadblock biggest $X.XX flour to $X.XX, is price trying $X.XX $X.XX. meal, the been we’ve $X.XX soy in and know so years the We’ve a against you XXXX, for against price we’ve in the yeast and soy, had wheat big. trying that demand been trying price The to against been and demand over add the wheat to pretty of is we’ve couple is The profile substantial. at

our don't is those has close. but high after Our be to been We need too be to cost we have markets. at those go prices, to problem

be looking upwards and application where of XX could that X talking had about an today single pounds. X We can million million, million. We’re right be opportunities a at now discussion applications at application

and are us sales is is large seeing So, have this coming The markets, always we along. positioned. to cycle I get there critical this us before, get it’s said there.

a lot product though cycle. around education, into doesn't time basically we’re a a lot but pricing of know cycle long about a RiceBran that there work that I like starting converting there compress a It’s anything that’s missionary who feel is Even for is been of that. a long somebody will to compress customer. is has to again us to becoming some, help go

Paul Sonz

Thank Good. Alright. you.

Brent Rystrom

Thanks, Paul.

Operator

you. comments. reached to would of further our end any floor the back for to I Thank our management like session. the turn closing or question-and-answer We've

Brent Rystrom

first you operator. updating you, be will We our look forward We results, we involvement stay today. talking to our you. quarter in look appreciate intention thank the on Thank hope in everybody's you which and to to We you and attending early call Thank you and forward and future. yours for May. conference healthy

Operator

does That you. teleconference. Thank conclude today's

your You you this wonderful for have line thank participation today. We a your time may disconnect at day. and

RiceBran Technologies (RIBT) 24 Mar 202019 Q4 Earnings call transcript