Rice Bran Technologies exits Brazil in effort to stem losses

By Hank Schultz

- Last updated on GMT

Related tags Rice bran Stock market

Rice Bran Technologies exits Brazil in effort to stem losses
Rice Bran Technologies has exited the Brazilian market and will concentrate on growing its ingredients business in North America, the company announced recently.

It’s part of a strategy of shedding debt and paring the firm back to its core competencies.  The company has been struggling with continued losses and underperforming divisions.

RBT concentrates on deriving value added ingredients from rice bran, including its ProRyza line of proteins, rice bran fiber ingredients, and lipid ingredients.  The company was known in the past as NutraCea.  The company’s products are marketed for smoothies, bars and other protein-added applications. The most important recent market has been in equine nutrition, where stabilized rice bran has become a trendy ingredient for owners of high performance horses in disciplines such as eventing, dressage, etc.

Brazilian operation a consistent loser

RBT had entered into an investment with a partner to form an entity known as Nutra SA which operated a processing facility in Brazil.  While activity at that facility had grown, it continued to operate at a substantial loss. As of early December, that partnership is dissolved, the company announced.

 The refocus was part of the company’s plan to cut back on debt and exit businesses beyond its core US-based food ingredients segment.  That push included sale of a contract manufacturing arm, called Healthy Natural, earlier this year.  That $18 million transaction helped the company improve the balance sheet, CEO Robert Smith said.

“We have recently concluded a series of actions to end our ownership in Nutra SA," ​Smith said in a statement.  "As previously expressed, we are increasingly focused on growing our U.S.-based ingredients business, and the exit of this investment following the sale of our Healthy Natural subsidiary in the third quarter are major steps in this effort." 

When we finish the accounting review related to this exit, we expect that this transaction will have a positive effect on our shareholders' equity,​ Smith added.

Another part of the refocus has been to move into a new facility in Sacramento that enables the company to do more of its own milling steps, some of which were being done by contractors in the past, Smith said.

The facility will not only duplicate our and expand our current warehouse and distribution facilities but more importantly it also allows us to take charge of more of the process and control the quality of the product that we make,​ Smith said during a recent third quarter earnings call.

Shareholder value down

The imperative for the company to pare debt comes during a time of repeated losses and pressure from longtime stockholders. In its third quarter of fiscal 2017, RBT lost $1.36 million on revenue of $3.45 million.  In a bit of positive news, that was 6% higher revenue than the year previously and a smaller loss.  The company reported a loss of $2.33 million in the third quarter of 2016.  But overall, the company has been on a severe downward slide since it went public in 2013.  The all time stock price high—$20 a share—was recorded in that year. Recently, the company’s share value had fallen so low that it was in danger of being delisted from the NASDAQ exchange for falling below the $1 minimum bid price.  The company’s shares were trading at about $1.47 today.