THE WOODLANDS, TEXAS — RiceBran Technologies sustained a loss for the second quarter and first half of the year ended June 30, which it mostly attributed to an unfavorable contract entered into in the fourth quarter of 2018 and a debottlenecking project at Golden Ridge Rice Mills.
“We have largely worked through the operational and financial challenges resulting from our debottlenecking project and the unfavorable rice contract at Golden Ridge,” said Todd Mitchell, chief financial officer. “As we begin to see the benefits from securing better contracts and improved efficiencies at the mill, we expect to reverse the trends we have experienced with this business in the first half of 2019, leading to stronger revenue growth and a reduction in adjusted EBITDA losses in the second half of 2019.”
Gross losses in the second quarter were $244,000, which compared with gross profits of $663,000 a year ago and $343,000 in the first quarter of 2019.
Adjusted EBITDA (Non-GAAP) loss totaled $2.8 million in the second quarter, which compared with a loss of $1.8 million a year ago, and a loss of $1.8 million in the first quarter of 2019.
“During the second quarter, we made significant progress in positioning RiceBran for both improved results in the second half of the year and sustainable long-term growth,” said Brent Rystrom, president and chief executive officer. “Our core rice bran business generated nearly 20% growth, driven by large customer wins, which will lead to higher sales in the second half of the year. We are also beginning to see the advantages of broadening our product line through the acquisitions of MGI Grain at the beginning of the quarter and Golden Ridge Rice Mills in November of 2018. Once our debottlenecking project at Golden Ridge is completed in the third quarter, we expect to recognize the benefits from these additional products and the synergies these new operations bring to our proprietary ingredient platform. We are confident this will drive positive trends in new customer wins, overall revenue and EBITDA in the second half of 2019.”
Revenue of $6.2 million was up 94% from $3.2 million in the second quarter of 2018, with the acquisitions of Golden Ridge Rice Mills and MGI Grain driving most of the growth, along with double-digit growth in sales of core rice bran products.
Core rice bran operations generated double-digit growth in the second quarter, and trends remain positive with an acceleration of new customer wins in the early part of the third quarter and an increase in the scale of the business being pursued. Initial benefits are appearing from the expanded product offerings from Golden Ridge and MGI Grain, and the integration of a significant portion of rice bran production into a company owned mill will improve operating models and offers another source of EBITDA expansion.
On July 30, RiceBran entered into a settlement agreement with the sellers of Golden Ridge Rice Mills, L.L.C. to settle all disputes pending between the parties that related to the lawsuit filed by RiceBran on July 3. The settlement agreement provides for, among other things: dismissal of the litigation, the release and cancellation of 340,000 shares of common stock previously held in escrow in connection with the transaction, and the discharge of the final payment of $358,000.