SOURCE: NutraCea

November 15, 2011 08:00 ET

NutraCea Gross Profit Increases 25.9% to $6.7 Million and Gross Profit Margin Improves for First Nine Months of 2011

SCOTTSDALE, AZ--(Marketwire - Nov 15, 2011) - 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 third quarter and nine month period ended September 30, 2011.

W. John Short, Chief Executive Officer of NutraCea, stated, "Our financial results for the first nine months of 2011 showed continued improvement over the same period in 2010. Consolidated revenues increased 13.4%, driven by a 32.4% increase from our Bio-Refining unit, gross profit increased by 25.9%, consolidated gross profit margin improved to 25.6% and consolidated loss from operations improved by $4.4 million. We remain focused on improving cash flow and moving toward profitability in all segments of our business.

"Our operation in Brazil, through our Irgovel facility, continues to perform well. During the third quarter our partners at Alothon exercised their rights to increase their ownership interest in Nutra SA, the holding company for Irgovel, from 45% to 49%. Capital expansion and improvement projects at Irgovel remain on schedule and within budget. In the third quarter, we completed expansion of our distilled fatty acids plant during this quarter and have seen a better than planned 50% increase in both production and high value sales. The lecithin project is expected to be completed in January with initial sales of another high value product -- rice lecithin -- starting in the first quarter of 2012. The capacity expansion of our extractor and the other technology projects, including a new deodorizer are expected to be completed on time and within budget in the second quarter of 2012.

"Our SRB operations continue to show significant growth both domestically and internationally in human ingredient sales. However, SRB gross profit was negatively impacted by an unforeseen spike in raw bran prices that was exacerbated by rising global grain prices, lower forecast rice plantings and production in the mid-south, and the drought in Texas. We will be responding to this cost increase with necessary price adjustments in the fourth quarter."

Key Highlights

  • Signed a co-branded sales and marketing agreement with BENEO-Remy, a world leader in functional food ingredients. NutraCea will produce stabilized rice bran (SRB) for exclusive distribution by BENEO-Remy in over 40 countries in Western Europe, the Middle East and Africa (EMEA) as well as Russia, India, Australia and New Zealand;
  • Entered into a Joint Research and Development Agreement with DSM Innovation Center. NutraCea and DSM will share existing patented and proprietary intellectual property and know-how to investigate extraction and modification of high quality vegetable proteins from rice bran;
  • Consolidated revenues increased 13.4% to $26.2 million for the nine months ended September 30, 2011;
  • Bio-Refining revenues increased 32.4% to $18.3 million, or 69.8% of total revenues, for the nine months ended September 30, 2011; and,
  • Gross profit increased 25.9% to $6.7 million.

Mr. Short continued, "Development of rice protein continues under the JDA signed with DSM in August and we are encouraged by the results produced in the DSM laboratories. Together with our colleagues at DSM, we are now turning our attention to development of an initial 'fast-to-market' product.

"Our exclusive, co-branded distribution agreement with Beneo-Remy is set to launch at the FI Europe trade show in Paris at the end of November and we expect to see initial orders under that new agreement in the first quarter of 2012."

Financial Results for the Nine Months Ended September 30, 2011
Consolidated revenues for the nine months ended September 30, 2011 totaled $26.2 million, an increase of $3.1 million, or 13.4%, as compared to $23.1 million for the nine months ended September 30, 2010. Bio-Refining segment revenues increased 32.4%, or $4.5 million, to $18.3 million for the first nine months of 2011 as compared to $13.8 million for the same period in the previous year.

Nine Month Revenue Breakdown By Business Segment (USD in thousands)
2011 2010 CHANGE
Bio-Refining
% of Revenues
$18.3 million
69.8%
$13.8 million
59.8%
+32.4%
SRB Segment
% of Revenues
$7.9 million
30.2%
$9.3 million
40.2%
-14.8%
Total Revenues $26.2 million $23.1 million +13.4%

Bio-Refining revenues for the nine months ended September 30, 2011 increased due 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 such as soy and corn. Rice bran products provide an alternative source of animal feed. Oil revenues continue to benefit from the current higher pricing trend in the premium vegetable oil markets.

The decrease in SRB segment revenues was comprised of a $1.3 million decline in infant cereal product revenues 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 decline was offset by a $0.3 million increase in human nutrition products due to increased existing customer sales volume and the impact from price increases which took effect in the middle of the first quarter of 2011.

Nine Month Gross Profit Breakdown By Business Segment (USD in thousands)
2011 2010 CHANGE
Bio-Refining
% of Revenues
$4.0 million
21.6%
$1.6 million
11.7%
+143.8%
+84.6%
SRB Segment
% of Revenues
$2.8 million
34.9%
$3.7 million
40.0%
-25.6%
-12.8%
Total Gross Profit
% of Revenues
$6.7 million
25.6%
$5.3 million
23.1%
+25.9%
+10.8%

Consolidated gross profit for the nine months ended September 30, 2011 totaled $6.7 million, an increase of $1.4 million, or 25.9%, as compared to $5.3 million for the nine months ended September 30, 2010. Gross profit margin improved to 25.6% during the 2011 nine month period as compared to 23.1% for the same period in 2010.

Bio-Refining gross profit margin improved to 21.6% during the first nine months of 2011 as compared to 11.7% for the same period in 2010. Cost of goods sold in this segment increased 17.6%, while revenues increased 32.4%. Plant efficiencies associated with a shift in sales mix from fully refined oil to crude oil and higher plant production throughput driven by volume contributed to the margin expansion.

Consolidated operating expenses decreased $3.1 million totaling $12.3 million for the first nine months of 2011 as compared to $15.4 million during the same period in 2010. These results yielded an improved loss from operations of $5.6 million for the first nine months of 2011 as compared to $10.0 million for the same period in 2010.

Net loss attributable to NutraCea shareholders for the period ended September 30, 2011 was $5.6 million as compared to a net loss of $10.9 million for the same period in 2010.

Financial Results for the Three Months Ended September 30, 2011
Consolidated revenues for the three months ended September 30, 2011 totaled $8.6 million, an increase of 2.2%, as compared to $8.4 million for the three months ended September 30, 2010. Bio-refining segment revenues increased 7.4% to $6.1 million as compared to $5.6 million for the same period of the prior year.

Third Quarter Revenue Breakdown By Business Segment (USD in thousands)
2011 2010 CHANGE
Bio-Refining
% of Revenues
$6.1 million
70.6%
$5.6 million
67.1%
+7.4%
SRB Segment
% of Revenues
$2.5 million
29.4%
$2.8 million
32.9%
-8.4%
Total Revenues $8.6 million $8.4 million +2.2%
Third Quarter Gross Profit Breakdown By Business Segment (USD in thousands)
2011 2010 CHANGE
Bio-Refining
% of Revenues
$1.2 million
19.5%
$0.9 million
15.5%
+34.9%
+25.8%
SRB Segment
% of Revenues
$0.7 million
29.4%
$1.3 million
45.6%
-41.0%
-35.5%
Total Gross Profit
% of Revenues
$1.9 million
22.4%
$2.1 million
25.4%
-9.9%
-11.8%

Consolidated gross profit for the three months ended September 30, 2011 totaled $1.9 million as compared to $2.1 million for the three months ended September 30, 2010. Gross profit margin decreased to 22.4% during the 2011 three months as compared to 25.4% for the same period in 2010.

Bio-Refining gross profit percentage increased to 19.5% for the third quarter of 2011 as compared to 15.5% for the same period in 2010. Bio-Refining segment cost of goods sold increased 2.3%, while revenues increased 7.4%. SRB gross profit percentage was negatively impacted by an unforeseen spike in raw bran prices as mentioned above.

Consolidated operating expenses totaled $4.3 million for the third quarter of 2011 as compared to $5.1 million during the same period in 2010, a decrease of $0.9 million. These results yielded an improved loss from operations to $2.4 million for the third quarter of 2011 as compared to $3.0 million for the same period in 2010.

Net loss attributable to NutraCea shareholders for the third quarter ending September 30, 2011 totaled $1.5 million as compared to a net loss of $3.1 million for the same period in 2010.

Liquidity and Capital Resources
Cash and cash equivalents for the period ended September 30, 2011 totaled $0.2 million. Total current assets and total assets were $13.0 million and $52.0 million respectively. Total current liabilities and total liabilities were $14.0 million and $23.6 million respectively. Total equity was $17.2 million as of September 30, 2011.

Nine Months Ended September 30, 2011
Corporate and SRB Bio-Refining Consolidated
Net loss $ (5,062 ) $ (826 ) $ (5,888 )
Adjustments to reconcile net loss to net cash provided by (used in) operations:
Warrant liability income (775 ) - (775 )
Other adjustments, net 3,180 1,333 4,513
Changes in operating asset and liabilities:
Pre-petition liabilities (4,807 ) - (4,807 )
Other changes, net (208 ) (99 ) (307 )
Net cash provided by (used in) operating activities $ (7,672 ) $ 408 $ (7,264 )
Three Months Ended September 30, 2011
Corporate and SRB Bio-Refining Consolidated
Net loss $ (1,168 ) $ (601 ) $ (1,769 )
Adjustments to reconcile net loss to net cash used in operations:
Warrant liability income (916 ) - (916 )
Other adjustments, net 1,463 484 1,947
Changes in operating asset and liabilities:
Pre-petition liabilities (1,276 ) - (1,276 )
Other changes, net (143 ) (363 ) (506 )
Net cash used in operating activities $ (2,040 ) $ (480 ) $ (2,520 )

The Bio-Refining segment generated cash from operations of $0.4 million for the first nine months of 2011. The Corporate and SRB segments continue to use cash operationally. During the first nine months of the year and the quarter, the Corporate and SRB segments used $4.8 million and $1.3 million, respectively, to pay prepetition liabilities which were incurred in 2009 and earlier.

Conference Call Details
Date: Tuesday, November 15, 2011
Time: 4:15 p.m. Eastern
Dial-In: (480) 629-9762
Live Webcast: http://viavid.net/dce.aspx?sid=0000908C

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://viavid.net/dce.aspx?sid=0000908C.

Forward-Looking Statements
This release contains forward-looking statements, including statements about NutraCea's expectations regarding cash flow, profitability, price adjustments, orders for new products and the completion of projects at Irgovel. 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 world leader in production and marketing of value added products derived from rice bran. NutraCea holds many patents for processed rice bran (SRB) production technology and proprietary products derived from SRB. NutraCea's proprietary technology enables the creation of food and nutrition products to be unlocked from rice bran, normally an underutilized co-product of rice milling. NutraCea also produces rice based consumer health supplements which can be found at http://www.nutraceaonline.com. More information can be found in the Company's filings with the SEC and by visiting our website at http://www.NutraCea.com.

Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2011 and 2010
(Unaudited) (in thousands, except per share amounts)
Three Months Nine Months
2011 2010 2011 2010
Revenues $ 8,586 $ 8,403 $ 26,229 $ 23,126
Cost of goods sold 6,663 6,269 19,508 17,788
Gross profit 1,923 2,134 6,721 5,338
Operating expenses:
Selling, general and administrative 3,666 3,929 11,004 11,800
Professional fees 610 668 2,118 1,632
Settlement with former customer - - (800 ) -
Impairment of property, plant and equipment - - - 1,000
Loss on disposal of property, plant and equipment - 540 - 943
Total operating expenses 4,276 5,137 12,322 15,375
Loss from operations (2,353 ) (3,003 ) (5,601 ) (10,037 )
Other income (expense):
Interest income 25 26 105 43
Interest expense (302 ) (416 ) (1,114 ) (997 )
Warrant liability income 916 250 775 63
Loss on acquisition of additional interests in Rice Rx - - (140 ) -
Gain on extinguishment of debt - - 265 -
Foreign currency exchange, net (321 ) (23 ) (268 ) (30 )
Other income 46 54 119 261
Other expense (24 ) (10 ) (281 ) (31 )
Total other income (expense) 340 (119 ) (539 ) (691 )
Reorganization expenses - professional fees - 111 - 847
Loss before income taxes (2,013 ) (3,233 ) (6,140 ) (11,575 )
Income tax benefit 244 143 252 687
Net loss (1,769 ) (3,090 ) (5,888 ) (10,888 )
Net loss attributable to noncontrolling interest in Nutra SA 276 - 315 -
Net loss attributable to NutraCea shareholders $ (1,493 ) $ (3,090 ) $ (5,573 ) $ (10,888 )
Loss per share attributable to NutraCea shareholders
Basic $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.06 )
Diluted $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.06 )
Weighted average number of shares outstanding
Basic 199,381 193,028 197,651 193,016
Diluted 199,381 193,028 197,651 193,016
Condensed Consolidated Balance Sheets
September 30, 2011 and December 31, 2010
(Unaudited) (in thousands, except share amounts)
September 30, 2011 December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents $ 167 $ 537
Restricted cash 2,397 1,917
Accounts receivable, net 3,864 3,502
Inventories 2,904 2,994
Note receivable, current portion 900 1,200
Deferred tax asset 283 292
Deposits and other current assets 2,506 2,255
Assets held for sale - property, plant and equipment - 3,598
Total current assets 13,021 16,295
Long-term assets:
Note receivable, net of current portion - 600
Property, plant and equipment, net 28,562 24,054
Intangible assets, net 5,068 6,296
Goodwill 5,345 5,835
Other long-term assets 49 144
Total assets $ 52,045 $ 53,224
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,120 $ 2,573
Accrued expenses 4,082 4,266
Pre-petition liabilities 2,198 6,406
Long-term debt, current portion 5,569 3,235
Total current liabilities 13,969 16,480
Long-term liabilities:
Long-term debt, net of current portion 4,140 7,365
Deferred tax liability 3,614 4,361
Warrant liability 853 1,628
Other long-term liabilities 1,000 1,000
Total liabilities 23,576 30,834
Commitments and contingencies
Redeemable noncontrolling interest in Nutra SA 11,310 -
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, 201,129,624 and 195,359,109 shares issued and outstanding 209,194 207,432
Accumulated deficit (190,385 ) (184,812 )
Accumulated other comprehensive loss (1,650 ) (74 )
Total equity attributable to NutraCea shareholders 17,159 22,546
Noncontrolling interest in Rice Science - (156 )
Total equity 17,159 22,390
Total liabilities and equity $ 52,045 $ 53,224
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2011 and 2010
(Unaudited) (in thousands)
2011 2010
Cash flows from operating activities:
Net loss $ (5,888 ) $ (10,888 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 3,827 3,471
Provision for doubtful accounts 96 209
Impairment of property, plant and equipment - 1,000
Loss on disposal of property, plant and equipment - 943
Stock and share-based compensation 1,118 872
Warrant liability income (775 ) (63 )
Deferred tax benefit (441 ) (691 )
Reorganization expenses - 847
Settlement with former officer (267 ) -
Gain on extinguishment of debt (265 ) -
Other 445 31
Changes in operating assets and liabilities:
Accounts receivable (656 ) 11
Inventories (102 ) 332
Other current assets (361 ) 178
Accounts payable and accrued expenses 812 (911 )
Pre-petition liabilities (4,807 ) -
Net cash used in operating activities, before reorganization items (7,264 ) (4,659 )
Reorganization items:
Reorganization expenses - (847 )
Change in accounts payable for reorganization items - 109
Net cash used for reorganization items - (738 )
Net cash used in operating activities (7,264 ) (5,397 )
Cash flows from investing activities:
Receipts on note receivable 900 900
Purchases of property, plant and equipment (5,216 ) (415 )
Restricted cash (480 ) -
Proceeds from sale of property, plant and equipment - 8,872
Acquisition of additional interests in Rice Science and Rice Rx (150 ) -
Other (49 ) (16 )
Net cash provided by (used in) investing activities (4,995 ) 9,341
Cash flows from financing activities:
Proceeds from sale of membership interests in Nutra SA, net of costs 11,625 -
Proceeds from (payments of) debt, net (175 ) (3,595 )
Proceeds from issuance of warrants and note conversion feature 444 -
Net cash provided by (used in) financing activities 11,894 (3,595 )
Effect of exchange rate changes on cash and cash equivalents (5 ) (28 )
Net change in cash and cash equivalents (370 ) 321
Cash and cash equivalents, beginning of period 537 952
Cash and cash equivalents, end of period $ 167 $ 1,273
Supplemental disclosures:
Cash paid for interest $ 723 $ 812
Cash paid for taxes 14 -

Contact Information

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