RiceBran Technologies makes dietary fiber and protein products derived from rice bran. The rice market has been a relatively stable and quiescent one over the years, which has helped the company in planning its raw material flows and arranging its manufacturing capacity.
But like the markets for toilet paper, home sanitizing and cleaning products, flour, yeast and other commodities, the rice market has been stretched into an unrecognizable shape by unprecedented demand. In the pantry stock up period earlier this year, rice was one of the commodities shoppers were buying, many of whom had probably bought little to no rice in the months previously.
Rush to stock pantries distorted supply chain
RiceBran CEO Brent Rystrom, who announced he’s leaving the company today, said because so much rice had been hurriedly milled for sale in supermarkets the amount of unmilled, ‘rough’ rice, the bran from which the company used to make its products, fell precipitously in the second quarter of 2020. And the price of that raw material, otherwise referred to as ‘paddy rice,’ almost doubled.
Rystrom said the pandemic hurt in other ways, too. The company struggled to acquire new customers because many companies shut down their R&D operations and many of those are still closed, so trying to incorporate a new ingredient is a non starter.
“As a result of these top-line challenges, financial results for the second quarter were weaker than we expected with adjusted EBITDA losses of $2.9 million, compared to losses of $2.8 million in the second quarter of 2019 and losses of $2 million in the first quarter of 2020,” Rystrom said. He made his comments as part of an earnings call with stock analysts. The call was posted as a transcript on the site seekingalpha.com.
The company reported second quarter revenues of $5.9 million, which was down from $6.2 million in the same period a year previously.
Stock traders have been unimpressed with the company’s recent trajectory. RiceBran’s stock was trading at more than $3.89 a share in mid March 2019, but the price sank to less than 60 cents a share today.