Ricebran Technologies Inc. (NASDAQ: RIBT) is a special ingredients company producing food products derived mainly from rice, stabilized rice bran (SRB) and other small grains like oats and barley. With a diversified product line, their food applications can be incorporated into everything from sports nutritional beverages to animal feed, non-GMO soups and pastas. The company is tapping into multiple food trends with its core rice-based lines, organics, nutraceuticals, and dietary supplements/enhancements for food producers.
The rice we eat is void of nutrients compared to the nutrient rich bran and germ; Ricebran unlocks the value of this nutrient rich layer to expand its uses. The bran and germ are non-GMO and allergen free which aligns with many of the healthy living trends and products in the market today. The company states the addressable market in wellness foods and supplements is north of $880 million.
Ricebran sits in a unique greenfield area of the competitive landscape versus the other major feedstock – corn, soy and wheat. Those verticals are dominated by mega cap producers and are highly competitive with low margin structures; whereas the small and ancient grains vertical is underpenetrated and poised for higher growth rates.
Global Food Price Inflation a Tailwind
The strong demand for US domestic-based grain products should continue into 2023, as production costs increase, and grain-stock is diminished due to the Russian/Ukraine conflict. Globally food and agriculture prices are 60% higher from the start of the pandemic, a big hit on the wallet for consumers.
Q1 2022 Earnings
In April, Ricebran Technologies announced Q1 2022 results and outcomes were overall positive. Total revenue was $10.6 million in Q1 2022, an increase of 23% from Q1 2021, which was driven by higher sales of SRB and strong sales growth for their derivative brands MGI and Golden Ridge. The increase reflects revenue growth within their customer base; the company is benefiting from post-pandemic tailwinds in the food processing (18%), alcoholic beverages (+22%) and agriculture (24%) industries, respectively.
Both revenue and EBITDA had strong beats versus consensus estimates, +21% and +33% respectively – highlighting the operational momentum in the business.
They were able to avoid some of the supply chain constraints that many of their industry peers suffered via domestic production – their operations and partner mills reside in California, Louisiana, Montana, Arkansas, and Minnesota.
“We are aligned with healthy living trends and benefitting form having high quality domestically sourced products in a difficult global supply chain environment.”
– Peter Bradley, Executive Chair, Ricebran Technologies
Ricebran recently announced a capacity expansion of their MGI Grain facility in East Grand Forks, Minnesota. The expansion is expected to double the capacity of the pearling mill, enabling the company to meet increasing demand for North American-sourced, grain-based ingredients. The investment totaled less than half-a-million dollars and is expected to be completed in mid-summer 2022.
The company states the expansion plans will have a minimal capital investment and a limited increase in labor, giving Ricebran an opportunity to continue to improve its margin in the coming quarters.
