SOURCE: NutraCea

NutraCea

April 02, 2012 08:45 ET

NutraCea Announces 2011 Year End Financial Results

SCOTTSDALE, AZ--(Marketwire - Apr 2, 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 year ending December 31, 2011.

W. John Short, Chief Executive Officer of NutraCea, stated, "In 2011, NutraCea continued to make significant strides from both a financial and operational point of view. Financially, we delivered continued improvement in all areas of our business. Consolidated revenues increased 10.7%, gross profit increased 8.8%, operating expenses decreased by $3.7 million and our net loss attributable to NutraCea shareholders improved by $5.6 million."

"These results were driven by a 24.2% increase in revenue and a 71.6% increase in gross profit in our Brazil segment. We are optimistic about the future of this segment as we continue working toward completion of the capital expansion projects currently underway at our Brazilian facility. Management is equally pleased that we have been able to increase core SRB sales in our USA segment over the last two years while divesting non-core assets related to cereal and equine brand products."

Mr. Short continued, "A key component of our business strategy is to develop strategic alliances that will help us leverage our competitive strengths to increase value for our shareholders and business partners. In 2011 we entered into two strategic alliances: a joint research and development agreement with DSM Innovation Center, a subsidiary of Royal DSM N.V.; and an exclusive, co-branded international product distribution agreement covering over 40 countries with Beneo, a subsidiary of SudZucker Group. We are working diligently with our alliance partners on both of these efforts."

2011 Operational Highlights

  • Consolidated revenues increased 10.7% to $37.0 million, driven by a 24.2% increase in the Brazil segment;
  • Total gross profit increased 8.8% to $7.6 million, driven by a 71.6% increase in the Brazil segment;
  • Consolidated gross profit margin remained stable year over year at approximately 21%;
  • Made final payment to creditors under the terms of the Amended Plan of Reorganization (the "Plan") in January 2012. All creditors were paid in full;
  • Signed co-branded sales and marketing agreement with BENEO-Remy, a world leader in functional food ingredients, covering international distribution of our products in key global markets;
  • Entered into a joint research and development agreement with DSM Innovation Center and
  • Completed the expansion of distilled fatty acid plant in Brazil.

Mr. Short concluded, "In addition to our financial improvement and operational milestones, we are particularly pleased to have made the final payment of all amounts due to creditors under the Plan. We are proud that we were able to pay all creditors in full while not impairing our equity shareholders as is typical with most bankruptcy restructuring outcomes. We are happy to put this behind us and now look forward to focusing on our business and creating the upmost value for our loyal shareholders."

Financial Results for the Year Ending December 31, 2011
Consolidated revenues for the year ending December 31, 2011 totaled $37.0 million, an increase of $3.6 million, or 10.7%, as compared to $33.4 million for the year ending December 31, 2010. The improvement is attributable to our Brazil segment revenues increasing $5.1 million, or 24.2% as shown in the table below.

Annual Revenue Breakdown By Business Segment (USD in thousands)
December 31, 2011 2010 CHANGE
Brazil segment
% of Revenues
$26.3 million
71%
$21.1 million
63.3%
+24.2%
USA segment
% of Revenues
$10.7 million
29.0%
$12.2 million
36.7%
-12.6%
Total Revenues $37.0 million $33.4 million +10.7%

The increase in Brazil segment revenues is attributable to the overall favorable pricing environment and increased volume in animal feed and oil products. Animal feed revenues benefited from higher prices in other commodity products like soy and corn, which are traditional animal feed sources. Rice bran based products provide an alternative source of animal feed. Oil revenues continue to benefit from current higher pricing trends in vegetable oil markets that began in the last quarter of 2010 and continued throughout 2011 before moderating slightly near the end of 2011.

USA segment revenues decreased $1.5 million to $10.7 million in 2011 as compared to $12.2 million in 2011. Revenues decreased due to a decline in cereal product revenues and other revenues of $1.5 million due to the March 2010 sale of the cereal product related assets and a decline in animal nutrition product revenues of $0.4 million on lower volume due to competitive pressures. This decrease was offset by an increase in human nutrition product revenues of $0.4 million, due to increased volumes from existing customers and the impact of price increases which took effect in the middle of the first and fourth quarters of 2011.

Annual Gross Profit Breakdown By Business Segment (USD in thousands)
December 31, 2011 2010 CHANGE (Gross Profit)
Brazil Segment
Gross Profit Margin %
$4.4 million
16.9%
$2.6 million
12.2%
+71.6%
USA Segment
Gross Profit Margin %
$3.1 million
29.3%
$4.4 million
35.7%
-28.4%
Total Gross Profit
Gross Profit Margin %
$7.6 million
20.5%
$7.0 million
20.9%
+8.8%

Brazil segment gross profit percentage improved from 12.2% to 16.9%. The improvement in margin from the 24.2% increase in revenues and resulting improvement in plant efficiency was partially offset by the impact of lower margin shipping and handling revenue. Revenue related to shipping and handling increased 77.6 % between 2011 and 2010 as international customer sales rose. In addition, the shift in sales mix from fully refined oil to crude oil resulted in lower cost of goods sold. Crude oil requires less production costs than refined oil. In 2011, because of the favorable pricing environment in crude oil markets, a significant portion of production was sold as crude oil in comparison to 2010.

The 2011 USA segment gross profit percentage was negatively impacted by higher 2011 raw bran prices and the impact of recording depreciation on the Dillon, Montana facility in 2011. Average raw bran prices continued to rise throughout 2011 and as of December 31, 2011, were approximately 52% higher, on average, than prices as of the end of 2010. These higher bran prices resulted in approximately a 7% decline in gross profit. To offset the higher raw bran cost, the Company implemented a price increase in the first quarter of 2011 for certain customers and additional sales price increases in the fourth quarter of 2011 to offset higher bran costs. The Company also experienced USA segment margin erosion of 4 percentage points associated with the $0.5 million increase in depreciation expense recognized in cost of goods sold on the Dillon, Montana facility in 2011. No depreciation was recognized on the facility in 2010 while the facility was an asset held for sale.

Conference Call Details
Date: Thursday, April 5th, 2012
Time: 1:00 p.m. Eastern
Participant Dial-In: (480) 629-9664
Live Webcast: http://viavid.net/dce.aspx?sid=000095A6

It is recommended that participants dial in approximately 10 minutes prior to the start of the 1:00 p.m. Eastern call. A telephonic replay of the conference call may be accessed approximately two hours after the call through April 12th, 2012. Please dial 1-877-870-5176 for U.S. or 1-858-384-5517 for international callers and enter the access code 4529241.

Forward-Looking Statements
This release contains forward-looking statements, including, but not limited to, statements about NutraCea's expectations regarding future sales prospects, profitability, price adjustments and the completion of capital projects in Brazil. 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
Consolidated Balance Sheets
December 31, 2011 and 2010
(in thousands, except share amounts)
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 3,329 $ 537
Restricted cash 2,118 1,917
Accounts receivable, net of allowance for doubtful accounts of $323 and $277 3,702 3,502
Inventories 2,297 2,738
Note receivable, current portion 700 1,200
Deferred tax asset 159 292
Income and operating taxes recoverable 1,659 851
Deposits and other current assets 1,049 1,237
Assets held for sale - property, plant and equipment - 3,598
Total current assets 15,013 15,872
Note receivable, net of current portion - 600
Property, plant and equipment, net 27,995 24,054
Intangible assets, net 3,928 6,296
Goodwill 5,240 5,835
Other long-term assets 56 144
Total assets $ 52,232 $ 52,801
LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current liabilities:
Accounts payable $ 2,995 $ 2,573
Accrued expenses 4,202 5,095
Pre-petition liabilities 1,615 6,406
Long-term debt, current portion 6,792 2,908
Total current liabilities 15,604 16,982
Long-term liabilities:
Long-term debt, net of current portion 7,933 6,440
Deferred tax liability 3,767 4,361
Warrant liability 1,296 1,628
Other long-term liabilities - 1,000
Total liabilities 28,600 30,411
Commitments and contingencies
Redeemable noncontrolling interest in Nutra SA 9,918 -
Equity:
Equity attributable to NutraCea shareholders:
Preferred stock, 20,000,000 authorized and none issued - -
Common stock, no par value, 500,000,000 shares authorized,201,264,622 and 195,359,109 shares issued and outstanding
209,613

207,432
Accumulated deficit (194,911 ) (184,812 )
Accumulated other comprehensive loss (988 ) (74 )
Total equity attributable to NutraCea shareholders 13,714 22,546
Noncontrolling interest - (156 )
Total equity 13,714 22,390
Total liabilities, temporary equity and equity $ 52,232 $ 52,801
NutraCea
Consolidated Statements of Operations
Years Ended December 31, 2011 and 2010
(in thousands, except per share amounts)
2011 2010
Revenues $ 36,957 $ 33,378
Cost of goods sold 29,386 26,418
Gross profit 7,571 6,960
Operating expenses:
Selling, general and administrative 14,441 15,995
Professional fees 2,922 2,027
Recoveries from former customers (1,800 ) -
Impairment of property, plant and equipment 906 1,900
Impairment of intangible assets 686 -
Loss on disposal of property, plant and equipment - 943
Total operating expenses 17,155 20,865
Loss from operations (9,584 ) (13,905 )
Other income (expense):
Interest income 126 84
Interest expense (1,763 ) (1,406 )
Loss on acquisition of controlling interest in Rice Rx (140 ) -
Warrant liability income (expense) 332 (349 )
Foreign currency exchange, net (99 ) (64 )
Other income 232 148
Other expense (324 ) (78 )
Total other income (expense) (1,636 ) (1,665 )
Reorganization expenses:
Professional fees - 1,033
Total reorganization expenses - 1,033
Loss before income taxes (11,220 ) (16,603 )
Income tax benefit 345 935
Net loss (10,875 ) (15,668 )
Net loss attributable to noncontrolling interest in Nutra SA 776 -
Net loss attributable to NutraCea shareholders $ (10,099 ) $ (15,668 )
Loss per share attributable to NutraCea shareholders
Basic $ (0.05 ) $ (0.08 )
Diluted $ (0.05 ) $ (0.08 )
Weighted average number of shares outstanding
Basic 198,370 193,196
Diluted 198,370 193,196
NutraCea
Consolidated Statements of Cash Flows
Years Ended December 31, 2011 and 2010
(in thousands)
2011 2010
Cash flow from operating activities:
Net loss $ (10,875 ) $ (15,668 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 4,980 4,774
Provision for doubtful accounts receivable 162 153
Stock and share-based compensation 1,475 2,141
Impairment of intangibles, property, plant and equipment 1,592 1,900
Loss on disposal of intangibles, property, plant and equipment - 943
Recovery from former customer (1,000 ) -
Settlement with former officer (267 ) -
Warrant liability expense (income) (332 ) 349
Deferred tax benefit (345 ) (935 )
Reorganization expenses - 1,033
Other 772 42
Changes in operating assets and liabilities:
Accounts receivable (577 ) (63 )
Inventories 343 334
Other current assets (807 ) 173
Accounts payable and accrued expenses 517 (1,130 )
Pre-petition liabilities (4,790 ) (552 )
Net cash used in operating activities, before reorganization items (9,152 ) (6,506 )
Reorganization items:
Reorganization expenses - (1,033 )
Change in accounts payable for reorganization items - 198
Net cash used for reorganization items - (835 )
Net cash used in operating activities (9,152 ) (7,341 )
Cash flows from investing activities:
Receipts on notes receivable 1,100 1,200
Purchases of property, plant and equipment (6,867 ) (772 )
Proceeds from sale of trademarks, property, plant and equipment - 8,872
Acquisition of additional interests in Rice Science and Rice Rx (150 ) -
Restricted cash (200 ) -
Other (60 ) (26 )
Net cash provided by (used in) investing activities (6,177 ) 9,274
Cash flows from financing activities:
Proceeds from sale of membership interests in Nutra SA, net of costs 11,625 -
Proceeds from issuance of warrants and note conversion feature 506 -
Payments of debt (8,818 ) (5,716 )
Proceeds from issuance of debt 15,056 3,399
Net cash provided by (used in) financing activities 18,369 (2,317 )
Effect of exchange rate changes on cash and cash equivalents (248 ) (31 )
Net change in cash and cash equivalents 2,792 (415 )
Cash and cash equivalents, beginning of year 537 952
Cash and cash equivalents, end of year $ 3,329 $ 537
Supplemental disclosures:
Cash paid for interest $ 1,551 $ 990
Cash paid for income taxes - 6

Contact Information

  • Investor Contact:
    Alliance Advisors, LLC
    Alan Sheinwald
    President & Founder
    (914) 669-0222
    Email Contact