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Rice Bran Technologies' revenue grows despite production gaps caused by plant expansion, World Cup

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By Hank Schultz

22-Aug-2014
Last updated on 22-Aug-2014 at 16:25 GMT

Rice Bran Technologies posted strong earnings growth in its second quarter of 2014 despite having to shut down a major production plant for three weeks as part of a planned expansion and having to absorb the effect on productivity of the World Cup on its plant in Brazil.  

Consolidated revenues rose 21% year over year during the quarter, driven by a 115% increase in the company’s US segment, attributable mostly to growth at the company’s Healthy Natural contract manufacturing subsidiary in Texas.

During the quarter RBT also annoujnced engaged the services of Teak Media + Communication, LLC and MarketPlace, the Food Marketing Agency to launch a comprehensive branding and marketing initiative for the company. MarketPlace, a St. Louis-based brand development firm specializing in the food, beverage, and ingredient industries, will work on building a B2B branding and marketing strategy while Teak Media will implement a communications strategy for investors.

Plant expansions

RBT shut down its main production plant in Dillon, Montana for three weeks to prepare for an expansion of the plant. That project is moving forward more rapidly than originally planned, said CEO John Short.

“I’m pleased to report that the project is on budget, and barring any unforeseen surprises, we expect to meet the accelerated Q4 completion date and have the new capacity fully available as we move into 2015,” Short told analysts during a conference call transcribed by the site seekingalpha.com .

Short also said that capacity is being increased at the company’s Healthy Natural contract manufacturing plant in Texas and that capacity increases in Brazil are now coming online after the disruptions caused by the televising of World Cup games.

“I don’t know if you guys have ever been to the World Cup in Brazil, but the country shuts down. And the rice milling produced, in June and July, about 40% of what they normally run, because nobody went to work. We actually put televisions in different parts of the plant, to try to get people to come to work. And we got most of our people to come to work, but it didn’t matter that much, because the mills weren’t running,” Short said.

Order for rice protein

Robert Smith, senior vice president for sales, said a joint project with DSM that took two years and $3 million to develop a branded rice protein is now coming to fruition. The company’s Proryza rice protein brand, which was formally launched at the IFT trade show in June 2013, garnered its first commercial orders during the second quarter.

“Consumers are demanding non-allergenic, non-GMO, minimally processed, natural, and in some cases vegetarian or vegan protein sources. Our products meet all of these important criteria, which put us in the right place at the right time to drive sales well into the future,” Smith said.

Earnings details

All of that news made company officials bullish on the future.  But expansion comes at a cost, and after consolidating debt and other charges, the company reported a hefty increase in its net loss for the quarter.

Consolidated revenues in the second quarter were $11.3 million, a 21% increase as compared to $9.4 million recorded in the same period in 2013.  USA segment revenue increased by 116% to $6.7 million compared to the 2nd quarter of 2013.  This also represented a 35% increase over the first quarter of 2014. 

In Brazil, revenues were up 71% year over year despite the World Cup interrruption as the company’s Irgovel sudiary ramps up production.  Rice bran production at the plant now tops 300 tons daily.

But the company recorded a net loss of $15.1 million for the quarter, or $3.52 per share.  Short was adamant in a response to a question from an analyst that the company has sufficient cash to continue to operate for the near future without having to issue more equity.

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