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RiceBran Technologies (RIBT)·Q1 2023 Earnings Summary

Executive Summary

  • Revenue declined to $9.27M, down 12% year over year and 13% sequentially, driven by continued weakness in Value-add SRB derivatives; mills (Golden Ridge, MGI) operated well with MGI’s capacity expansion completed late in the quarter .
  • Gross margin was -3% (vs. -1% in Q4 and 5% in 1Q22), and adjusted EBITDA loss widened to $1.14M from $0.65M in Q4 and $0.39M in 1Q22, reflecting the gross loss impact from derivatives and a sequential decline at Golden Ridge tied to a supplier quality issue (subsequently credited) .
  • The Board advanced a strategic review with “active interest” in the company’s assets; interim CFO appointed with M&A and restructuring expertise, and management declined Q&A given process sensitivity—potential near-term stock catalysts hinge on strategic alternatives .
  • Wall Street consensus (S&P Global) for RIBT was unavailable, so no beat/miss vs. estimates can be assessed; investors should anchor on sequential/YoY trends and strategic review milestones .

What Went Well and What Went Wrong

What Went Well

  • “MGI capacity expansion enhancements were complete late in the quarter,” adding ~50% capacity and a broader manufacturing range; as of the call, “production at MGI…is fully online,” establishing a platform for growth .
  • “The operating partnership with Gander Foods at Golden Ridge continues to deliver performance improvement,” underpinning mill operating execution despite a temporary supplier issue .
  • Strategic review progress: “There is active interest in the assets of the Company and a variety of potential outcomes are being evaluated,” creating optionality for value realization .

What Went Wrong

  • Value-add SRB derivatives revenue and contribution declined due to increased competition and prior processing challenges, turning the quarter to a gross loss of $0.28M (vs. $0.50M gross profit in 1Q22) and pressuring margins .
  • Golden Ridge’s revenue fell $1.6M sequentially from Q4 due to a rice supplier quality issue (subsequently credited), contributing to the sequential revenue decline .
  • Operating loss increased to $2.01M and net loss to $2.03M ($0.31/share) from 1Q22, reflective of the derivatives weakness; adjusted EBITDA loss expanded to $1.14M YoY and sequentially .

Financial Results

Quarterly Trend Comparison

MetricQ3 2022Q4 2022Q1 2023
Revenue ($USD Millions)$10.252 $10.616 $9.269
Gross Margin (%)-7.0% -1.0% -3.0%
Net Loss ($USD Millions)$(2.042) $(1.679) $(2.028)
Diluted EPS ($USD)$(0.38) $(0.28) $(0.31)
Adjusted EBITDA ($USD Millions)$(1.404) $(0.654) $(1.143)

Q1 2023 vs. Q1 2022 (YoY)

MetricQ1 2022Q1 2023YoY Change
Revenue ($USD Millions)$10.559 $9.269 -12%
Gross Profit (Loss) ($USD Millions)$0.502 $(0.282) NM
Gross Margin (%)5.0% -3.0% Declined
SG&A ($USD Millions)$1.692 $1.731 +2%
Operating Loss ($USD Millions)$(1.190) $(2.013) +69%
Net Loss ($USD Millions)$(1.516) $(2.028) +34%
Diluted EPS ($USD)$(0.29) $(0.31) +7%
Adjusted EBITDA ($USD Millions)$(0.385) $(1.143) +197%

Balance Sheet and Cash Flow Highlights (Q1 2023)

  • Cash and equivalents: $3.41M (vs. $3.94M at 12/31/22) .
  • Net cash (debt): $(3.81)M (vs. $(3.52)M at 12/31/22) .
  • Net cash flow from operations: $(0.06)M in Q1 2023 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q2 2023——No formal guidance provided
MarginsFY/Q2 2023——No formal guidance provided
OpExFY/Q2 2023——No formal guidance provided
EPS/EBITDAFY/Q2 2023——No formal guidance provided
Segment-specificFY/Q2 2023——No formal guidance provided

Note: Management did not issue quantitative guidance in the Q1 press release or on the call and did not take Q&A due to the strategic review .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2023)Trend
Strategic review / AlternativesNot discussed in Q3/Q4 releases; operational turnaround focus Board made “substantial progress”; “active interest” in assets; no Q&A Emerging strategic options
Mill operations (Golden Ridge)Turnaround driven by Gander Foods; Q4 contribution improved Operating partnership “continues to deliver performance improvement”; sequential revenue hit from supplier quality issue (credited) Improving operations; transient supplier issue
Mill operations (MGI)Capacity expansion +50% throughput; booked through 2023; some 4Q benefit despite supply chain delays Capacity enhancements completed late Q1; “fully online” by call; solid platform for growth Capacity increased; ramping
Core SRB businessDouble-digit growth noted across 2022; tempered by technical issues Demand robust for domestically sourced staples; overall results offset by derivatives decline Stable demand; contribution offset
Value-add SRB derivativesDeclines and processing issues; new competition; negative contribution Continued revenue decline; market share pressure from new entrant and prior operational challenges Deteriorating; competitive pressure
Supply chain / MacroQ3: delays in key equipment due to supply chain issues Demand robust for domestically sourced staple foods Mixed: demand strong, some supply frictions

Management Commentary

  • “There is an active interest in the assets of the company, a number of opportunities that are being evaluated and with that a variety of potential outcomes.” — Executive Chairman Peter Bradley .
  • “MGI capacity expansion enhancements were complete late in the quarter… Production at MGI as of this month is fully online and so we believe we have a solid platform for future growth.” — Peter Bradley .
  • “The operating partnership with Gander Foods at Golden Ridge continues to deliver performance improvement… Gains at both mills though, were offset by continuing declines in the SRB derivatives business.” — Peter Bradley .
  • “Adjusted EBITDA losses were $1.2 million… compared to $400,000 in the first quarter of 2022… cash and equivalents… declined $500,000… due to cash used in operations and capital expenditure.” — Interim CFO William Keneally .

Q&A Highlights

  • Management did not take Q&A due to the sensitive nature of the ongoing strategic review; no additional details provided beyond prepared remarks .
  • Other income of ~$0.30M recognized from restitution payments from a former employee, partially offsetting higher operating losses in the quarter .

Estimates Context

  • S&P Global Wall Street consensus for RIBT was unavailable for Q1 2023 and the prior two quarters; therefore, no beat/miss analysis vs. consensus can be provided at this time .
  • Investors should rely on sequential and YoY trends, margin trajectory, and qualitative updates around the strategic review and mill performance until coverage/estimates resume .

Estimates Comparison (Unavailable)

MetricQ3 2022Q4 2022Q1 2023
Revenue Consensus Mean ($USD Millions)— (Consensus unavailable via S&P Global) — (Consensus unavailable via S&P Global) — (Consensus unavailable via S&P Global)
Primary EPS Consensus Mean ($USD)— (Consensus unavailable via S&P Global) — (Consensus unavailable via S&P Global) — (Consensus unavailable via S&P Global)

Key Takeaways for Investors

  • Strategic review progress and “active interest” in assets are near-term catalysts; monitor filings and press for transaction or restructuring updates .
  • Mills are the bright spot: MGI’s 50% capacity expansion is online, and Golden Ridge’s operational partnership continues to improve performance; a sequential supplier quality issue was credited, suggesting transience .
  • Value-add SRB derivatives remain the core headwind due to competition and prior processing issues; turning this segment is pivotal for restoring gross margins .
  • Margin trajectory worsened sequentially and YoY (gross margin -3% vs. -1% in Q4 and 5% in 1Q22); adjusted EBITDA loss widened, underscoring execution required in derivatives and pricing/mix .
  • Liquidity manageable but constrained: cash $3.41M, net debt $(3.81)M; limited cash burn from operations in Q1 ($0.06M) but capex and debt service require discipline and/or strategic action .
  • With estimates unavailable, stock narrative may be driven by sequential trends and strategic review headlines rather than quarterly beats/misses; positioning should consider event risk around potential asset sales, partnerships, or capital structure moves .

Appendix: Additional Data Points

  • Sequential Golden Ridge revenue decline of $1.6M tied to supplier quality issue (subsequently credited) .
  • Restitution-related other income of ~$0.30M recognized in Q1 .
  • Weighted average shares outstanding increased to 6.568M (from 5.253M in 1Q22), impacting per-share metrics .