SCOTTSDALE, ARIZ. — RiceBran Technologies wants to continue shifting its rice bran-based product mix toward higher value, higher margin ingredient and functional food sales. First, the company must have access to enough rice bran.
The U.S. Department of Agriculture on March 31 said 2015 intended plantings for rice in California was 408,000 acres, which would be down from 434,000 acres in 2014 and 567,000 acres in 2013.
“Looking back on our performance in 2014 by segment, while the demand picture for our U.S.A. segment remains strong, we experienced supply chain disruptions in the second half of the year largely related to California's now 1,000-year drought where rice plantings in the region were down 25%,” said John Short, chief executive officer and president of Scottsdale-based RiceBran Technologies, in an April 1 earnings call. “Reduced rice for milling meant less raw bran availability and higher raw bran prices that resulted in delayed shipment and some canceled orders in the second half of 2014.
“Despite those supply chain challenges, net sales in our U.S.A. segment increased 92% in 2014 compared to 2013. More importantly, gross margins in the U.S.A. segment increased to 30.2%, up nearly 6 points from 24.5% in 2013. Gross margin dollars in the U.S.A. segment rose by 137% to $7 million in 2014, up from $2.9 million in 2013. The significant margin improvement reflects the potential of our business model as we continue to shift our product mix toward higher value, higher margin human ingredient, functional food ingredient and packaged functional food sales.”
Continuing drought conditions in California will require further de-risking of the company’s raw rice bran supply chain, said Robert Smith, senior vice-president of operations.
“As such, we have planned additional measures to ensure access to sufficient raw rice bran supplies in 2015 and into the coming years based on the following initiatives: increasing raw rice bran availability from one of our current bran suppliers in California, building of strategic product inventory reserves, securing additional warehouse space in California and Louisiana to support increases in production and inventory, and ongoing discussions with raw rice bran suppliers in California and the mid-South to take on additional bran supplies and increase stabilization capacity in those regions.”
RiceBran Technologies in 2014 recorded a net loss attributable to common shareholders of $23 million, which compared with a loss of $15 million in 2013. Consolidated revenues were $40.4 million, a 14.4% increase from $35.1 million in 2013. A 92.1% increase in revenues at the company’s USA segment primarily was from the acquisition of H&N Distribution, Inc., a formulator and co-packer of healthy and natural products.
Revenues from the Brazil segment in 2014 were $17 million, a 26.1% decline from 2013. The decline largely was due to production interruptions caused by upgrades and repairs at an Irgovel plant, shortages in bran, and a $1.7 million negative impact associated with the Brazilian foreign currency exchange rate decline.
On April 1, RiceBran Technologies said it had received an award of 3.6 million Brazilian reals ($1.1 million) from a Brazilian arbitration panel related to the company’s 2008 acquisition of Irgovel.“Since the date of acquisition, $1.9 million of restricted cash has been held in an escrow account at a U.S. bank pending resolution of a number of pre-purchase lawsuits,” said Dale Belt, chief financial officer. “That arbitration was recently found in our favor and the arbitration panel awarded 3.6 million Brazilian reals to our company, to RBT. While there are still some legal issues to overcome, this award in our favor allows us to begin the process of recovering those funds, which will be used at Irgovel to support ongoing operations.”