SCOTTSDALE, AZ–(Marketwire – Aug 14, 2012) – NutraCea (OTCQB: NTRZ) (PINKSHEETS: NTRZ), a global leader in the production and marketing of value added products derived from rice bran, today announced its financial results for the first six months and the second quarter ended June 30, 2012.
W. John Short, CEO & President of NutraCea, commented, “We continued to make solid progress in all major operating aspects of our business in the first half of 2012, and the capital raise closed at the end of July provides the funds necessary to continue to execute our tactical and strategic plans for the USA segment through year end and into 2013.”
“We are especially encouraged by the nearly 20% revenue increase year-over-year for the first six months of 2012 in our USA segment. This growth was achieved in spite of a delay in the launch of our co-branded, exclusive distribution alliance with Beneo-Remy. That joint sales effort with Beneo is now on track and we expect sales by Beneo in EMEA and elsewhere to begin to contribute significantly to the growth of SRB sales in that underserved region of the world.”
“In addition, after an 18 month technical product development cycle, we became an approved vendor and introduced our stabilized rice bran as a soy replacement in new products recently launched by one of the world’s largest producers of comminuted meats. This is an exciting development that opens the door for significant market penetration in the market for hot dogs, sausages and other comminuted meat products in the coming months and years.”
“Sales in our Brazil segment increased for both the first half and the second quarter of 2012 in local currency terms, though the significant depreciation of the Brazilian Reais resulted in a drop in sales in US dollar terms. We are particularly pleased with the increase in sales on a local currency basis given that we have had several production interruptions at Irgovel as we brought on line new electrical power substations and a new animal nutrition plant in the first half of 2012. We plan to close the entire plant at Irgovel for an estimated 4 to 6 weeks in the fourth quarter to install new bran preparation and new deodorizing/refining equipment that will allow us to significantly improve both plant efficiency and product quality while broadening our range of products. In addition, during the shutdown period we will increase the production capacity of the extractor, which is the heart of the manufacturing process, to more than 100,000 metric tons of raw bran processing capacity per year. All projects, product improvements and additions, as well as the expansion of plant processing capacity, are expected to be fully online by the first quarter of 2013.”
“In the first half of 2012 we experienced a challenging sourcing market for our core raw material as both US and Brazilian prices for raw rice bran were pushed higher by drought and competition for raw bran as an animal feed component. The current drought in the US and resulting shortfalls in corn and soy crops are expected to keep upward pressure on raw rice bran prices. We expect to continue to adjust sales prices upward in response to increasing raw material costs. In spite of the pressure on our margins due to these weather driven shortages, I am pleased with our performance in the first half of 2012 and am optimistic about both our US and Brazil segments through the second half of the year and into 2013.”
Financial and Operational Highlights
- Consolidated revenues for the six months ended June 30, 2012 totaled $19.5 million,
- Revenue for the USA segment grew 19.5% for the six month period to $6.6 million.
- Brazil segment sales increased on a local currency basis despite brief periods of shutdown at Irgovel for facility upgrades.
- In June 2012, NutraCea showed at the IFT Expo in Las Vegas and attracted significant interest from major global food, supplement and pharmaceutical manufacturers seeking cost-effective ingredients and applications that can provide clean label and health claims.
- NutraCea is adding new technologies and upgrading machinery and equipment in several product processes at the Brazil segment bio-refining facility, Irgovel, to add new and upgraded product offerings and expand Irgovel’s raw rice bran processing capacity to more than 100,000 metric tons per year.
- Continued work with DSM under the Joint Development Agreement aimed at extraction and concentration of rice protein continues apace.
- The fund raising completed in the third quarter provides working capital to continue executing tactical and strategic plans through the remainder of 2012 and into 2013.
Financial Results for the Six Months Ending June 30, 2012
Consolidated revenues for the six months ended June 30, 2012 increased to $19.5 million as compared to $19.2 million for the same period the prior year in spite of the negative impact of foreign currency exchange rates on US dollar sales numbers.
| 2012 First Six Month Annual Revenue Breakdown By Business Segment | ||||||
| June 30, | 2012 | 2011 | CHANGE | |||
| Brazil segment | $12.9 million | $13.7 million | -5.6% | |||
| % of Revenues | 66.3% | 71.3% | ||||
| USA segment | $6.6 million | $5.5 million | +19.5% | |||
| % of Revenues | 33.7% | 28.7% | ||||
| Total Revenues | $19.5 million | $19.2 million | +1.6% | |||
Brazil segment revenues totaled $12.9 million in the first half of 2012 as compared to $13.7 million for the first half of 2011. The decline of the average US Dollar-Brazilian Real exchange rate between the periods caused a $1.8 million decline, more than the reported decline in US dollar terms.
USA segment revenues totaled $6.6 million, a 19.5% increase over the first half of 2011. Animal nutrition revenues increased $0.7 million and human nutrition revenues grew $0.6 million due to the impact of both higher volume and price increases. These gains were offset by the loss of $0.3 million in revenues resulting from the discontinuation in April 2011 of toll processing infant cereal products.
Consolidated gross profit for the first half of 2012 declined to $3.5 million from $4.8 million in the prior year period, a decrease of 7.0% in gross profit margin, due to a historic run up in raw rice bran prices caused by the global increase in commodity prices.
The Brazil segment gross profit for the first six months of 2012 totaled $1.5 million or 11.6% of sales in 2012 as compared to $2.8 million or 20.3% in 2011. The gross profit decrease resulted from a 12.1% decline in the average foreign currency exchange rate between periods, several brief shutdowns related to bringing new processes on line, higher raw bran costs and an unfavorable shift in sales mix to lower margin bulk animal feed products while the new animal nutrition plant was coming on line.
USA segment gross profit totaled $2.0 million for the first half of 2012, virtually unchanged when compared to the first half of 2011. Gross profit margin in 2012 was 30.6% as compared to 36.7% in 2011. USA segment gross profit was negatively impacted by higher raw bran prices and bran availability in the mid-south.
Consolidated net loss attributable to NutraCea shareholders for the six months ended June 30, 2012, was $9.0 million, or $0.04 per share, compared to $4.1 million, or $0.02 per share, for the six months ended June 30, 2011.
Financial Results for the Second Quarter Ending June 30, 2012
Consolidated revenues for the three months ended June 30, 2012 totaled $9.7 million as compared to $10.5 million for the same period the prior year.
| 2012 Second Quarter Revenue Breakdown By Business Segment | ||||||
| June 30, | 2012 | 2011 | CHANGE | |||
| Brazil segment | $6.6 million | $7.6 million | -13.8% | |||
| % of Revenues | 67.5% | 72.5% | ||||
| USA segment | $3.2 million | $2.9 million | +9.1% | |||
| % of Revenues | 32.5% | 27.5% | ||||
| Total Revenues | $9.7 million | $10.5 million | -7.5% | |||
Brazil segment revenue declined to $6.6 million during the second quarter of 2012 as compared to $7.6 million in the prior year period. The decline of the average US Dollar-Brazilian Real exchange rate between periods resulted in a decline of $1.5 million which exceeds the overall reported decrease.
USA segment revenues improved 9.1% during the second quarter of 2012 to $3.2 million as compared to $2.9 million during the second quarter of 2011. Animal feed product revenues decreased $0.1 million on lower volume and human nutrition product revenues increased $0.4 million due to the impact of prices increases and higher volume.
Consolidated gross profit for the three months ended June 30, 2012 totaled $1.8 million as compared to $2.6 million for the same period the prior year, a decrease in margin of 6.5 percentage points due to higher raw bran costs not offset by price increase and lack of bran in the mid-south that resulted in freight subsidies from California plants.
Brazil segment gross profit totaled $0.8 million for the 2012 second quarter as compared to $1.5 million for the 2011 second quarter as a result of the factors mentioned above including an 18.4% decline in average foreign currency exchange rate during the quarter, brief plant shutdowns related to facility upgrades, higher raw bran costs and the change in sales mix mentioned above.
USA segment gross profit totaled $1.0 million for the 2012 second quarter as compared to $1.1 million for the 2011 second quarter with the decrease attributable to higher raw bran prices during the quarter that were only partially offset by price increases.
During the second quarter of 2012, machinery and equipment at the idle Lake Charles plant was written down $1.1 million to estimated net realizable value. The estimate of net realizable value is subject to change.
Consolidated net loss attributable to NutraCea shareholders for the three months ended June 30, 2012, was $0.2 million compared to $0.0 million, for the three months ended June 30, 2011.
Conference Call Details:
Date: Wednesday, August 15th 2012
Time: 4:15 p.m. Eastern
Participant Dial-In: (480) 629-9713
Live Webcast: http://www.nutracea.com/InvestorRelations or http://public.viavid.com/index.php?id=101449
It is recommended that participants dial in approximately 10 minutes prior to the start of the 4:15 p.m. Eastern call. There will also be a simultaneous live webcast of the conference call which can be accessed through the following audio feed link and archived recording of the conference call available under the Investor Relations section of the company website at http://www.nutracea.com/InvestorRelations or by clicking on the following link, http://public.viavid.com/index.php?id=101449.
Forward-Looking Statements
This release contains forward-looking statements, including, but not limited to, statements about NutraCea’s expectations regarding the adequacy of working capital, the revenue impact of our relationship with Beneo-Remy, our penetration in the market for comminuted meat products, the completion date and impact on plant efficiency, production capacity and product offerings resulting from upgrades to our Irgovel plant and our ability to increase sales prices for our products. These statements are made based upon current expectations that are subject to known and unknown risks and uncertainties. The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause results to differ from those set forth in the forward-looking information can be found in NutraCea’s filings with the Securities and Exchange Commission, including NutraCea’s most recent periodic reports.
About NutraCea
NutraCea is a human food ingredient and animal nutrition company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. NutraCea has proprietary and patented intellectual property that allows us to convert rice bran, one of the world’s most underutilized food sources, into a number of highly nutritious human food and animal nutrition products. Our target markets are human food and animal nutrition manufacturers and retailers, as well as natural food, functional food and nutraceutical supplement manufacturers and retailers, both domestically and internationally. More information can be found in the Company’s filings with the SEC and by visiting our website at www.nutracea.com.
| NutraCea | ||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||
| Three and Six Months Ended June 30, 2012 and 2011 | ||||||||||||||||||
| (Unaudited) (in thousands, except per share amounts) | ||||||||||||||||||
| Three Months | Six Months | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Revenues | $ | 9,711 | $ | 10,502 | $ | 19,457 | $ | 19,150 | ||||||||||
| Cost of goods sold | 7,948 | 7,915 | 15,953 | 14,357 | ||||||||||||||
| Gross profit | 1,763 | 2,587 | 3,504 | 4,793 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Selling, general and administrative | 3,058 | 3,764 | 6,703 | 7,241 | ||||||||||||||
| Professional fees | 516 | 798 | 987 | 1,600 | ||||||||||||||
| Impairment of property, plant and equipment | 1,069 | – | 1,069 | – | ||||||||||||||
| Recovery from former customer | – | – | – | (800 | ) | |||||||||||||
| Total operating expenses | 4,643 | 4,562 | 8,759 | 8,041 | ||||||||||||||
| Loss from operations | (2,880 | ) | (1,975 | ) | (5,255 | ) | (3,248 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||
| Interest income | 16 | 67 | 63 | 80 | ||||||||||||||
| Interest expense | (387 | ) | (424 | ) | (805 | ) | (812 | ) | ||||||||||
| Foreign currency exchange, net | (576 | ) | 9 | (782 | ) | 53 | ||||||||||||
| Change in fair value of derivative warrant and conversion liabilities | 2,868 | 2,435 | 506 | (141 | ) | |||||||||||||
| Loss on extinguishment | – | – | (2,986 | ) | – | |||||||||||||
| Financing expense | (20 | ) | – | (1,544 | ) | – | ||||||||||||
| Other income | 3 | 309 | 7 | 367 | ||||||||||||||
| Other expense | (23 | ) | (401 | ) | (117 | ) | (426 | ) | ||||||||||
| Total other income (expense) | 1,881 | 1,995 | (5,658 | ) | (879 | ) | ||||||||||||
| Income (loss) before income taxes | (999 | ) | 20 | (10,913 | ) | (4,127 | ) | |||||||||||
| Income taxes | 369 | (52 | ) | 911 | 8 | |||||||||||||
| Net loss | (630 | ) | (32 | ) | (10,002 | ) | (4,119 | ) | ||||||||||
| Net loss attributable to noncontrolling interest in Nutra SA | 429 | 11 | 972 | 39 | ||||||||||||||
| Net loss attributable to NutraCea shareholders | $ | (201 | ) | $ | (21 | ) | $ | (9,030 | ) | $ | (4,080 | ) | ||||||
| Loss per share attributable to NutraCea shareholders | ||||||||||||||||||
| Basic | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.04 | ) | $ | (0.02 | ) | ||||||
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.04 | ) | $ | (0.02 | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||||||||
| Basic | 204,589 | 198,310 | 203,634 | 196,767 | ||||||||||||||
| Diluted | 204,589 | 198,310 | 203,634 | 196,767 | ||||||||||||||
| NutraCea | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| June 30, 2012 and December 31, 2011 | ||||||||||
| (Unaudited) (in thousands, except share amounts) | ||||||||||
| June 30, | December 31, | |||||||||
| 2012 | 2011 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 533 | $ | 3,329 | ||||||
| Restricted cash | 1,918 | 2,118 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $472 and $323 | 3,875 | 3,702 | ||||||||
| Inventories | 1,686 | 2,297 | ||||||||
| Note receivable | 100 | 700 | ||||||||
| Deferred tax asset | 293 | 159 | ||||||||
| Income and operating taxes recoverable | 1,364 | 1,659 | ||||||||
| Deposits and other current assets | 1,116 | 1,049 | ||||||||
| Total current assets | 10,885 | 15,013 | ||||||||
| Property, plant and equipment, net | 28,868 | 27,995 | ||||||||
| Intangible assets, net | 3,117 | 3,928 | ||||||||
| Goodwill | 4,701 | 5,240 | ||||||||
| Other long-term assets | 404 | 56 | ||||||||
| Total assets | $ | 47,975 | $ | 52,232 | ||||||
| LIABILITIES, TEMPORARY EQUITY AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 4,243 | $ | 2,995 | ||||||
| Accrued expenses | 4,729 | 4,202 | ||||||||
| Long-term debt, current portion | 7,437 | 6,792 | ||||||||
| Pre-petition liabilities | – | 1,615 | ||||||||
| Total current liabilities | 16,409 | 15,604 | ||||||||
| Long-term liabilities: | ||||||||||
| Long-term debt, net of current portion | 9,917 | 7,933 | ||||||||
| Deferred tax liability | 2,721 | 3,767 | ||||||||
| Derivative warrant liabilities | 6,221 | 1,296 | ||||||||
| Total liabilities | 35,268 | 28,600 | ||||||||
| Commitments and contingencies | ||||||||||
| Redeemable noncontrolling interest in Nutra SA | 8,340 | 9,918 | ||||||||
| Equity: | ||||||||||
| Preferred stock, 20,000,000 authorized and none issued | – | – | ||||||||
| Common stock, no par value, 500,000,000 shares authorized, 204,833,937 and 201,264,622 shares issued and outstanding | 209,927 | 209,613 | ||||||||
| Accumulated deficit | (203,941 | ) | (194,911 | ) | ||||||
| Accumulated other comprehensive loss | (1,619 | ) | (988 | ) | ||||||
| Total equity | 4,367 | 13,714 | ||||||||
| Total liabilities, temporary equity and equity | $ | 47,975 | $ | 52,232 | ||||||
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