RIBT - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the RiceBran Technologies Third Quarter 2020 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorder, Thursday, November 5, 2020. I would now like to introduce our host, Mr. Richard Galterio of Ascendant Partners. Mr. ahead, go Please, Galterio.

Richard Galterio

Brand and Quarter listeners. Call. XXXX Peter of today operator, Financial Mitchell, RiceBran Officer. With again Technologies are Rice Chairman Executive Third Financial Bradley, and good you, Todd Welcome Chief afternoon, to us Technologies; Thank Results Conference

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

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

Peter Bradley

to into company. new time good the and role with when I afternoon, stepped been Rich, my short Thank quarter, since spoke we last last It's you the you, everyone.

reaccelerate And we've share However, to If can ultimately like I to transition shareholders. new I great observations in I since significant our for about accomplished to say business. positive some the personally could, have key in and our create of taking and I'm ability that learned growth my value I'd confident adjusted my a on EBITDA and lot increasingly this deal, time, a role.

review First, RiceBran's change I is senior of nature. of want capable a for size Since company to together for group cohesive operations. to in facility highlight compliment and people team. management be resource a group leadership last offering, tremendous and enhancing enhance This of options our at product a to the have to our invaluable really proving together working They're company's reinvigorate the these in and strides people the sales streamline strategic the quarter, our made come an end as our exceptional all corporate also to position. efforts efforts our and and

probably and increase RiceBran stabilized fourth next double-digit will announced marked steps But lost that in point average And higher from by saw quarter, some before I we think refocus at price Most taken SRB the the a result, year, to this as last truth, to the even Ridge from trials quarter first core higher-margin want our quarter Golden that SLB the highly derivatives the over compelling products third our selling we largest price and with our our and customer. unique business. reaffirm including and of at offer and for attributes. business a driven our into in efforts. the a for our of price management derivatives increases end customers that I several view notably, turning certain In have quarter, in the year, effect tribulations focus and strong RiceBran products, the come quarter changes here. past Second, core we results we the

XXXX. are third growth products and we MGI in to the quarter, $X.X sale we revenue we're from growth and our close positive we $X million million the new remain to quarter, to Third, SG&A remain lower results and to valid all driven by our per less the end of to from the to the XXXX. operations the now our potential improve, reductions that positive Despite EBITDA of Ridge, narrow than in the taking at losses in from the in EBITDA at right Golden and the year-over-year from mitigating EBITDA losses $X.X and generate able Ridge EBITDA foreseeable is losses in saw of even installed Ridge, And EBITDA target and should MGI balanced fourth be drag have the adjusted Ridge companies. of I of Golden quarter. second in in commodity adjusted revenue running X to exposure, both that increased continued at Fourth, on future. adjusted achieve operations quarter strong mill million third adjusted the leadership, expected on XX% Golden further operations from a capacity in positive customer SG&A. I and to from reflecting the pathway we reinvigorate rationale the think gross Golden Most of losses a now the declined believe With for in a acquisitions notably, profitability on source quarter,

on added business. anything we utilizing and that of were development capabilities continue specific existing our and indicate while we provide to grains. this ingredient strategic I solutions on options from derived I explore will the business for focused And assets can't call, our primarily value to further primary food announce Finally,

for pathway financial results. pass details forward call Our details XXXX. in in over expectation the to to our on now some be Todd? I'm of to provide Todd more going we'll is that early further a the position

Todd Mitchell

going year to cash should to losses weigh the And businesses, in overall with Ridge, $X.X reductions compared Thank core fourth and rigorous ago. a still for million EBITDA of were the in from in XXXX our process. in midst these we're worth quarter sufficient RiceBran second improved adjusted in $X.X we're ability to narrow in EBITDA call, on and transition and There Due discuss losses am million our growth outlook XXXX. Well, the our positive further think the improvements Moreover, management. in SG&A to positive the and in expectations maintain quarter Ridge to notably, MGI continued this adjusted budgeting the on Peter. liquidity quarter. Most a further while Golden EBITDA to to highlighting. I confident not Golden you, third factors, results to quarter. developments several million profitable $X.X And adjusted we company declined in

Year-to-date 'XX. attributable Revenues growth X% unusually $X.X from $X.X sellout near at in high XQ derivatives, quarter, same the bit gross high $XXX,XXX was XQ losses levels partially in our to demand of for driven in excessive primarily business strong growth of to mill XXXX. almost losses rice could in was - mid decreased XX% QX losses of attributed to related decline high-margin our the in at decline $XX.X grew look ASP, combination little losses mill. Ridge $XX.X XQ bran RiceBran up year-over-year $XXX,XXX and from Gross quarter. revenues rough from the of a increased on to the at product Golden SRB to million Golden in rice 'XX downtime to losses. mid- year-to-date our year Ridges' growth Ridge. The which a XX% double-digit of the leverage or negative of much rough 'XX particular. XX% by Gross to we were $XXX,XXX gross losses $XXX,XXX as losses MGI. strong production in million to core operating and for offset was downtime. capacity SRB XQ due in Let's gross rice derivatives our by for and numbers due from $X.X other of single-digit organic in the contract And was in successful million, gross economically revenue The of in million the Golden drop X% over of Golden only the gross revenues year-over-year XXXX. detail. million XXX% 'XX. growth settlements to Well MGI's high not acquire more were Year-to-date period Ridge Revenue. hand, included compared prices, increase due are reflected

In leaner, $X which year. $X.X in the initiatives about that million 'XX our about annualized and million - expenses our or materially insurance this great consultants, 'XX, in short, a $XXX,XXX a in a front hurricane this drop service. as million 'XX, derivatives, the Lake SG&A cost-cutting XQ There mitigation reduced deductible. and become XQ demand were XXXX more specifically another nature seeing and rest begin we Given on XQ our XQ our cost We've achieve legal as from to about P&L. our overhead, and expenses we're to strong administrative in our accomplished sales XQ organization. 'XX. well accounting we've in damage MGI XQ reflects this to teams, nonrecurring $XXX,XXX We've the cut for very in $X.X $X Ridge, losses in expect Golden that across increases bulk deal and at productive restructured SRB savings. of from The Charles support price in a be higher-margin black, in we've reflects the of more the volume leverage business, million in profit and nonrecurring flexible corporate outside really was changing firmly gross in $X.X of expenses actions we've facility, for million decline SRB SG&A.

dropped were Net compared in third $XX.X that noncash adjusted D&A the in be a period in the in XXXX Despite $X.X ago quarter $X.X SG&A year-to-date, revenue, same million quarter XX% million a and the in comp. of million from will As the in due included from other approximately $X we're lower-than-expected Net and in $XX,XXX million losses year to has a losses result losses about and stock and the comparable actions, net of net period. levels. XX% income $X.X SG&A. XXXX. million about SG&A in interest $XXX,XXX million in to Year-to-date reduction $XX.X XXXX to And EBITDA. these narrowed to XX% confident

net in $XXX,XXX and year-to-date other million D&A included comp. stock and interest While $X.X losses non-cash about and in

in adjusted EBITDA losses XQ of result, were losses compared million to 'XX million $X.X $X.X a 'XX. As XQ EBITDA in adjusted

period million of While year-to-date in comparable XXXX. the million to were losses $X.X adjusted EBITDA $X.X compared

said million we've expect incremental several Liquidity. an available XXXX. in in EBITDA on XQ We borrowing call, 'XX with in cash we As ended transition to positive $X to million this adjusted capacity. times and $X.X

about drew practices During focused utilizing our transition exercising we million to raised our And and can in we adjusted Operator, loan funding ends and we the strong and operating we as through term remarks. reducing $XXX,XXX ATM. through maintaining fund facilities the EBITDA. quarter, believe down term adequate management questions. losses, loan liquidity That operations positive we by We're prepared open on about as ATM intensely let's $X means, call such until our for necessary. these time cash

Operator

from [Operator our line Instructions] Ryan first Capital Lake comes with Now continue Street the Meyers your question. question Please Markets. of with

Ryan Meyers

at you improvements Just capacity little more can wondering MGI, a give the especially color the if on us expansion.

Todd Mitchell

increase did investments mill was of And And at out the of second we're some sell we rather made sort the to that's basically, We And where half we significantly to getting enable year essentially the to capacity year, sides with year-over-year. capacity. same result, the will what us able staffing in capital same in the time. beginning the a MGI basically were the that the structure. run of growth which we as both were at able modest of

Ryan Meyers

are quarter. what this customer different opportunities the segments? products happened wonder customers' different to the with from cross-sell then what the MGI And I

Todd Mitchell

- think go I ahead. that

Sorry.

Peter Bradley

opportunities sell customers, cross Yes. I at least was going across And able all lines. rice MGI further the to Golden significant been Ridge volumes. the is secure say, to to at sell product just to or we've

our is companies, and got that products of of customer that stabilize Ridge. MGI from we've certainly, Golden buying So X MGI products the operating products one from major the part have focus RiceBran, operating a actually started now that is key X -

Ryan Meyers

Did lack quarter Ridge? here? guys of And you the looking fourth then quarter-to-date supply rates production issues into the see like Golden what carrying are any at

Todd Mitchell

going had forward. we And position - we're both beginning - this now work we've prior new able the September, of significantly that mill. a rough yield. operating we short long different We the book, for operating with And point, balanced a with at at commitments down we're been in terms work no. of our risk rice. at limit mean, commodity crops improvements firmly and coming of to are to supply double-digit I through. margin there, in the And paddy dynamics in at had We've a the sort in completely for

Operator

from MLK Cosman line of Management]. Instructions] [Mark comes with the [Operator Investment question Our next

Unidentified Analyst

the a planning is Todd, about call? on about your anything there about question was I just last on strategic talking divestitures talked had the that on horizon

Peter Bradley

comments the asset year the We in. strategic not - a nothing base. as change It means we're I if towards be mentioned position will is end in of or my very in when the and that plan, the in outline that we'll close a

So not add today, I I'm there's much sorry. more can

Operator

next And Please proceed comes question. the of from question line [Jason Wilson]. with our your

Unidentified Analyst

couple A guess your one notice. first I delisting of concern is stock XXX-day current and the for the questions. the just price

think frame. guys you Any time January the the up is are above $X? that I price getting concerns not

Todd Mitchell

like to stock specific XX see January above the by think then. $X I So is the And price we obviously, date. would

of be the extension another delisting the be in if to for going debt However, first to stage or an with relatively issue we significant days. have. which easy I commitments, it we get here don't of would had XXX us Most think is

the we'll So I think get stage. first through

here our year-end hopefully, reset, stage First results. will with

You and to guys whatever take the prepare $X delisting. will to above lose above for have not take XXX After $X. that would our keep that, we to actions days we stocks stock have

Unidentified Analyst

the fibers, being more value-added more organic more, a little to, RiSolubles, last driving the that that like, look that that there bit business? I've derivatives. you're And is maybe something seems are lines call, from are even sales this How And sales such the does ingredients. sales the a and that in from on on guess, like specifically second side the maybe the fiber I continue the action the Is to solubles products? that higher-margin expect as call, plan question, think, a ingredients, it your those to think, as some far coming along and specifically the to maybe more And sales - the related maybe with drive as, increase currently organic customers your sales. are a products of in? you heard, current of I really driven I that your

Peter Bradley

those Yes. key focus question Without any a ours. are of

we we we've supplement Certainly, very to availability by from reach. the of demand got short is we've organic a in of - growth very term in food out lot got continues there. to have where that work of increase the in over pent-up raw we've side, have on of we're the that on customers. materials. ensure sell the constrained tripled and now health - remain we a the somewhat are done sell And our existing got We We side And out. focused we can we've availability been - good actually coming and capacity that volume. easily to confident our availability And lot demand improve, any as feedstock,

Unidentified Analyst

on to February And XXXX. then the one tailwind since been off kind a in, I challenge think sales question just tell final Obviously, of COVID has side. here it

out or see on getting seeing guys Do and development. the actually customers? sales guys PD? driving new does develop for the new the sales there new guys and you product your look turn pipeline to NPD out like pipeline Are with getting and like a forward, How Moving seeing that? customers

Peter Bradley

I I think their of Unfortunately, restricting lot a of to access site. still to a the in are that terms change. expect of lot don't - customers on

done. months one for recognizing worked salespeople be we've stop customers XXXX. or X the you're that technical using can't And our they they'll Lifestyles, to a is over Zoom, live of have I of out working able are lot Teams, Every us way remotely. last on like what's think and rest people of happened, whichever remotely. to though, a nothing of have I the the think customers work development And have version technology started

remotely So we're just a we're starting that virtually. to activity. doing see pickup that a It's in of lot and

So but we a activity, seeing just way. are different in

Todd Mitchell

day, day a to did talk the And sales could no I today. came There's calls done add. guy just the sales sales had us, remote. he he single I before X just the X I I in actually sales other had calls said, - way being I actually would have and

people think moving quicker. are I just

Unidentified Analyst

Yes. Exactly.

of question, and maybe question. animal regards is future in more business guys, way combination? are here macro. Have where one Kind you seen or just now. focus pet nutrition going or more of you one like the drivers, your at right looking see Okay, macro quick maybe to Again, in more human guys a kind companion customers versus maybe and/or a more another as that in, companion forthcoming what potential human, pet potential coming more of

Peter Bradley

higher human the It level on is certainly value, supplement. derivatives the of see But blend. and I more and a food that's

SRB, on animal feed. think that On pet I food focused bulk there, more will the be and

it's in but So there, derivatives human mix value nutrition. a lot of for a the have

the certainly focusing. where into animal. And obviously pet that's And so is bulk we're then and

Operator

Our next Instructions] with Schmidt, your Hello question. [Operator line the open. of Dan Please [Dan line question comes your from is proceed Schmidt].

proceed question of comes with line MKH Melt [George Management]. with Please question. the next your from Our

Unidentified Analyst

This Todd? for is question a Todd.

bit a a Ridge, of sort about rice better price. little of of economics availability talked better You Golden at about the

the about you margins at Help remind can what how have us are the paddy margin. Golden - balanced of operating, paddy Now have - said business? us your the up about you're cost. us a in model? The you Help us various remind you Ridge the a book. margins, economics and - is yield of you You double-digit have overhead the

Todd Mitchell

Yes.

run the cost the it paddy - of the can of that margin sales the you generates. the rice obviously that products and think is I price

a seeing high are SRB higher with that now even margin sales. teens, than We modest sometimes the in paddy relatively

on drive that of to up, of potential a all sits the and OpEx. So I think that we top have then

our we've limited As I exposure. commodity now, said, right

paddy we're can OpEx rough of components. price means running of and maintenance you that mill, labor, higher utilities, say which into completely margin. paddy is solid how inbound that, we with to rice better doing have below terms that supplies. the where more we're turning our we're covering operating throughput, the logistics. looked I speed that, managing downtime, at the in We expense, a have of the And are we comes But double-digit would not that volumes be at much milling now, the yield, is a that's that point amount we're generating the at - outbound margin. the basically well Where down which which the and Right and

we margin visible all level of XX%, at to I And X call a than I those that the mill's digits. goes see XXX% the improve up to think call, of a path firm, generating you're bottom you quarters basis D&A, on efficiency let's solid you X would question pick the single-digit things. it, XXX what a XXX of with low capacity, points line wanted efficiency, Is probably double slightly that. addressed? that At or

Unidentified Analyst

Yes, yes, very much.

Peter Bradley

could right while we've when management in If just quarter. process right in that I place, people, Subsequently as through right made was the managed we're quarter. improvement throughput add see end not upgrades changes, well, and in the did we fourth at yield the by which a get third is some both some that rice put the to the available you - steady to expecting of

Unidentified Analyst

the progressive of higher? of let's specific is hurdle? sort What getting sort capacity I way, just capacity? success after increasing external plant to is a is XX% get the - path Or and mean, in of what of getting it of a say, up to success sort a there utilization, no, of ramping of matter of that's, a level efficiency of or so sort - And

Todd Mitchell

I it's think from perspective, walk run. my crawl,

a do high is to mill thing that need first you at to yield. The rice

which And is process. And up. velocity have sort what need mill, We're point. moving now components we of X think mill as there's the You do the through that to increase well. past that to commodity we we're basically how running we're brought gradually that the at it that, need to I speed I at said, of that

downtime at machines. another take then at the just of you And will something well That's here I milling two you mill we or you have and step was, because the we all is were think that's think running the this we balance to then that. and you're And those because in velocity. in that the once - that of the with perfect And selling a right our a now we're cutting week, repairing improving tackling. productivity away. the up processes next strategy is dance got of book - forward and those think so better once are plan the it's that manage months level and we we which And have those same bringing it's I getting the buying I to processes couple team gradually - that is the right, the of simple new amount things working have rice. managing and of at just next - don't - a time. - increase those that's and place clear over blocking And of rate then that's were

Unidentified Analyst

Okay. this to the in of And feedstock you support sort volume? have pickup then

Peter Bradley

Yes.

Todd Mitchell

do. we Yes,

Unidentified Analyst

Another last of, the question Dillon there, Dillon. seems company. I if of sell understand of were in one revenue capacity in the you And they part be now? the years. the to you the of and right and Are operations all of the liquid the drums of business? the couple what both that of refurbished the drums of have X fiber all is pearls sort X Dillon sort quick And on sort

Todd Mitchell

Right now, out drums. X running we're X of

production be close of selling notably game, It's the quantify think to online. the it'd I We at have of that stage don't to fiber could think be think then I of I a component but think to - large do better overall out this component. think the most pretty I bring that capacity certainly And overall it, doubling. could production can revenue-generating hard the at but plan it - fourth double, I could we one

a larger increase turn increase XX% - X-quarter a roughly in in into capacity just revenue. could So

Unidentified Analyst

the there the operational Dillon any new ask want Are to working is operations - don't the I operational with drums? how issues. And

On the how whole, it is operating?

Todd Mitchell

that well. I think is very operating facility

all facilities are I think of well. in our general, operating very

Operator

line And Smith]. of our Please [Dan comes the question your with proceed from question. next

line Your open. is

Unidentified Analyst

I being dozen to. My you number the for years I've background about earlier. Bradley, I've calls and on in selling now. look muted CEOs to company? were listening of just apologize for lost listened I'm wondering, Mr. board sir, to brought I for with acquisitions, these been is a question count the your to at mergers

Peter Bradley

I strategic think here No, of XX core remarks And days confident I really I how the we review better increasingly we that to a forward. could this the move assets that my can was in said do move only be in business forward. utilized. And my as the I'm that business business of

been As saw very improvement in ingredient than will and continue in the derivatives Ridge, do in with well done the so. MGI I and months, over food Ridge in a rice the more we've Golden SRB there. seen which And much third then quarter. fixes has quarter, and the Golden you've think has think I put focus, that, that obviously, XX I challenging to And right the mill, third we MGI business I in said, the last and the think

XXXX. is we improvement will business again I overall you the as sequential in think into moved - good think I will and shape, So see it a

Operator

There I'll are no to call time. this now questions back turn the you. further at

Todd Mitchell

look support. results. We you our when year-end next report your This all is our to for to Todd. updating forward I'd we shareholders like year thank of

Peter Bradley

for everyone. very much Thanks

Operator

today. I call conference that conclude you thank for our ask That your and We for your disconnect please you line. does participation,

RiceBran Technologies (RIBT) 7 Nov 202020 Q3 Earnings call transcript