Good afternoon, ladies and gentlemen, and welcome to the RiceBran Technologies third quarter 2022 earnings call and webcast. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mr. Rob Fink. Rob, the floor is yours.
Thank you, operator, and good afternoon and welcome to the RiceBran Technologies third quarter 2022 financial results conference call. Hosting the call today are Peter Bradley, Executive Chairman, and Todd Mitchell, RiceBran's Chief Operating Officer and Chief Financial Officer. I wanna remind participants that during this call, management's prepared remarks may contain forward-looking statements that are subject to risks and uncertainties. Management may also make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today and therefore, we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC.
In addition, any projections of the company's future performance represented by management include estimates as of today, November third, twenty twenty-two, and the company assumes no obligation to update these projections in the future as market conditions change. This webcast and certain financial information provided on the call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures, are available at ricebrantech.com on the Investor Relations page. With that said, I'd now like to turn the call over to Peter. Peter, the call is yours.
Thank you, Rob, and good afternoon to everyone. RiceBran continues to see strong demand for our products. As a result, we were able to deliver another $10 million revenue quarter with year-over-year revenue up 48%. Our specialty milling businesses are running very well and capitalizing on strong demand for high-quality, domestically sourced grains, and we saw double-digit growth in our core SRB sales for the third quarter in a row. We are pushing hard to get to our core SRB growth targets and re-accelerate our value add business, but both are underperforming the levels we would like them to be at. To be clear, all of the initiatives we are undertaking and which we discussed last quarter, necessary to get the company to profitability, continue to move forward. It's just taking a little longer than we expected.
Of note, significant progress was made in the third quarter at both our milling businesses. At Golden Ridge, we signed an agreement in September that put sourcing, selling, and the day-to-day operations of the mill in the hands of a local agent who owns a very well-run mill down the road. With his extensive network of local farmers to buy grain from, ability to drive even further operating efficiencies, and to better segment the sales book, we believe he will be able to generate significantly better spread than we've been able to achieve on our own. Importantly, our agreement with him is for him to be compensated in common stock on a performance basis, aligning him directly with shareholders.
At MGI, which has always generated positive cash flow for us and which is experiencing strong demand growth this year, we are all but one segment away from completing a major mechanical upgrade to the mill, which will add 50% throughput capacity and significantly resolve the plant's deferred maintenance issue which we inherited. As a result of these initiatives, we expect to significantly improve contribution from both businesses. We look for this to begin at Golden Ridge in the fourth quarter with greater impact going into the first quarter of 2023, and we expect a very similar dynamic for MGI with our capacity expansion largely already booked through 2023. Elsewhere, we continue to push forward with the initiatives related to our Core SRB and Value-Add SRB derivatives business, albeit at a bit slower pace than we'd expected.
At our Core-SRB business, we began shipping to our new pet food customer in the third quarter, but as we highlighted in the press release, overall volumes for fourth quarter will fall short of our expectations. This is due to a technical issue that both parties knew had to be resolved when we entered into this agreement, which it turns out needs to be resolved sooner rather than later. At our Value-Add SRB derivatives business, production issues have been fixed, and we are rebuilding sales momentum with our core customers. Sales to our distribution partner fell short of expectations for the third quarter, and we're still having issues with imported feedstock. We're addressing both issues, but both are weighing on our sales and contribution margin.
Notably, problems with obtaining imported feedstock could delay the initial ramp of our new SKUs, which we had expected in the fourth quarter. These factors temper our near-term outlook for sales and profitability for both these business, although we continue to expect to generate sales in the fourth quarter that are on par with the prior quarters of 2022. We look for incremental improvement in overall profitability as evidence of real movement forward on all of our initiatives to achieve profitability. Let me now turn the call over to Todd for a review of the quarter in more detail.
Thank you, Peter. Good afternoon, everyone. To reiterate the point Peter made, there's very strong demand for our products. We've delivered another quarter of revenue in excess of $10 million, with year-over-year growth of 48%. Both Golden Ridge and MGI are executing very well and generating strong top-line growth, and we saw double-digit growth in core SRB sales for the third quarter in a row. We also continue to move the ball down the field on all of our initiatives, which will get the company to profitability. While it's taking us longer than expected, we remain confident that goal is achievable. With that, let's look at the third quarter's numbers in greater detail. Revenue. Total revenue was $10.3 million in the third quarter, up 48% from $6.9 million a year ago.
As I mentioned, strong growth in the quarter was underpinned by Golden Ridge and MGI, as well as the third quarter in a row of double-digit growth in core SRB sales. Gross losses were $697,000 in the third quarter, compared to a gross loss of $276,000 a year ago. We fell short on this metric for two reasons. First, after several quarters of progressive improvement, Golden Ridge swung hard in the other direction and was responsible for a significant portion of gross losses in the third quarter.
In short, we ran the mill hard in the quarter to prove that we could execute on the sort of volumes our new operating partner is looking for, but we did it at a pretty narrowing margin, and we spent a significant amount to address some deferred maintenance issues in order to get the mill in top shape before handing it off to our new operating partner. We feel pretty good about this relationship, and from where we're sitting, we think it will be transformative to this part of our business. Second, our Value-Add SRB derivatives business, while resolving the production issues we saw in the second quarter and beginning to catch up on its sales backlog, generated another quarter of negative contribution margin for the reasons Peter highlighted in his remarks.
This is a business we know well, and one which we think will be transformative to the company once it's back up and running strong, and we can fully execute on our plans for new product introductions. SG&A. SG&A was $1.8 million in the third quarter, down 2% from a year ago. We are running lean at corporate, and the team continues to find efficiencies. We're seeing inflationary pressures on virtually everything, but we're holding our own through careful expense management. Notably, during the quarter, our non-executive directors took an overall reduction in compensation and shifted the composition of their compensation to all stock, mitigating cash outlay. We were also finally able to execute a sublet of our corporate headquarters, which will also have a materially positive impact on both expenses and cash outlays going forward.
These are just two items out of a number of things we've been doing to increase our efficiencies and watch our costs. Operating losses grew 19% in the third quarter to $2.5 million from operating losses of $2.1 million a year ago. The increase in operating losses in the quarter was a result of the increase in gross losses. Net losses for the third quarter were $2 million, or $0.38 per share, compared to net losses of $2.2 million or $0.47 per share a year ago. Net losses in the second quarter included a $600,000 non-cash benefit from the revaluation of a warrant liability. Adjusted EBITDA.
Adjusted EBITDA losses were $1.4 million in the third quarter compared to Adjusted EBITDA losses of $1.1 million a year ago. This decline reflected the increase in gross losses due to the negative contributions from Golden Ridge and our Value-Add SRB derivatives business during the quarter. Cash and liquidity. Total cash was $4.4 million at the end of the third quarter, down from $5.1 million at the end of the second quarter. Cash reserves were $3.6 million, while total borrowing, excluding our factoring agreement, was $4.3 million. Cash reserves and total borrowing included $900,000 in liquidity that was provided in advance of a restructuring of our term loan under Golden Ridge, which should be completed this month.
After the end of the quarter, we raised net proceeds of $1.3 million from the issuance of common stock and warrants in a direct placement managed by H.C. Wainwright & Co. With these two items, we believe we've created the security of a liquidity bridge to profitability in an increasingly insecure capital market environment. With that, I'll turn the call back to Peter Bradley for some closing comments.
Thanks, Todd. We continue to believe we have successfully put the company on the pathway to sustainable success. Progress is taking longer than we anticipated, but all the pieces are in place and we're moving forward. Demand for our products is strong, and in the past two years, we have nearly doubled revenue organically by operating better and bolstering our sales channels for Core SRB and milling. It's been a long haul, but continuous improvements in operations, the completion of capital upgrades, and most notably, the installation of the new operating partner for Golden Ridge, who can execute the primary book of business, should turn these businesses collectively into a solid source of Adjusted EBITDA that was envisaged when they were acquired.
While we have faced setbacks, we have been successful in opening new high-margin markets for both core SRB and value-added derivatives. We are progressing with the introduction of new rice-derived products, which will expand our value-added business and accelerate our shift to a higher value add specialty ingredient company. We continue to be optimistic about the future, and we appreciate your patience and your support. With that, we will be happy to answer your questions.
Thank you very much, Peter. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press Star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold while we poll for questions. Okay, our first question is coming from. Just bear with me. It's just polling. Joel Rosenfeld from Kensington Capital Corp. Joe, your line is live.
Yeah. Yeah. Hi. Good afternoon. I'm listening to the conference call. I'm fairly, you know, I'm basically following the company for the past year and a half. The shareholders, I believe, are not sleeping well at night. The directors, you know, I really appreciate the fact that you put them on stock-only based compensation, but somehow the compensation compared to how the company is doing earnings-wise, not sales-wise, they seem to be turning around, hopefully. The past 20 years has been on promises and promises and promises. Then after everything you've said and done, the rug gets pulled out and we do a heavily diluted offering to raise $1.2 million. Something is, I don't know, explain to me what's going on here. I mean, it looks very strange to me.
Joe, this is Todd. We hear your comments. We appreciate your concerns. You know, I think that we have been marching forward with this transition of this company, and in the arc of the last three years or so when it's been under the current management, we've made progress. I think we've had some setbacks here in the last couple of quarters, and, you know, but we want to complete what we've started. I think we felt that there was a need to have sort of a liquidity bridge to ensure that we could complete what we've started and get through to the next phase of this company.
You know, I think that given where the capital markets have gone, decisions were made that was costly, but gives the security to complete what we've started.
Thank you very much, Todd. Your next question is coming from David Core. David, your line is live.
Yeah. Hi, Todd and Peter. Question, couple of questions for you. This Mr. Ferguson has taken over Golden Ridge. When did he start, and has he broken even since he started?
Mr. Ferguson's agreement began at the end of September. He has become very much engaged. I would tell you, though, that it's going to take a couple of months to fully transfer as complex of a book as a mill has. You know, you have extended arrangements with people that you buy from and extended arrangements that you sell from. That has to be transitioned. I can tell you from where I sit that he's engaged in both addressing better ways to buy and better ways to sell rice and also better ways to operate the mill. I feel very positive about that, and I think we will see transition and improvement in the coming months and certainly in the coming quarters.
Is he going to be milling at non-profits?
Is he going to be milling at nonprofits?
Yes.
Margins. I mean, what's the cost in it from just milling? It's not his pocket.
It is his pocket.
It is?
Yeah. The one thing here is his compensation is tied to the margin. You know, our big issue with Golden Ridge when, you know, we've, you know, Todd and I first got involved, is we had three issues. Right. The first issue was we didn't know how to operate a mill. The second issue was we didn't know how to buy rice effectively. The third issue was we didn't know how to sell rice effectively, which is not a recipe for success. What we've gone and done is fixed operating the mill, and then we brought this agreement in place really to accentuate that further, but also to cover the two issues. The way he's compensated, which is just through stock, you know, it's all about, you know, that margin. Will we be milling at negative margins? No.
You know, it's not about volume, it's about turning that site into profitability. J.T.'s only really been involved for a month, I've been personally impressed by firstly, his level of engagement, and sense of urgency to make that happen.
He's got a book that he can buy cheaper than he's going to sell after it's milled. That's the understanding here?
Yeah. Yes. Two things. First of all, his incentive is tied to Adjusted EBITDA for Golden Ridge as we measure it. He is only gonna be compensated if there is positive Adjusted EBITDA, and he will be considered compensated as a percentage of that. It's not only increasing the commodity spread between buying and selling, it's covering all of his operating expense underneath it as well.
He's running another mill. What's to stop him from, like, giving us the bad contracts and him taking the better ones for his mill?
The agreement is. There's a strong reason why two smaller mills would want to get together and operate as a bigger entity. There is significant advantages to scale to both parties. The way it is structured is such that, you know, he already operates a very good mill. He's not gonna give us the bad business and take the good business. What he's gonna do is use the scale of both mills to get better business for both mills.
Okay. Next question, if you'll allow me. The rice you're importing for the derivatives, I guess that's coming from Thailand or India or something. This is specialty rice. You're not able to buy it cheaper than you're selling it currently?
The issue there is that we've had. Frankly, Thailand had a drought, and the rice that we're getting does not produce products that is acceptable from our perspective to sell to our customers. It comes down to the fact that the crop was stressed, so it's not being processed as we would like it. Then as we highlighted that, you know, that was exacerbated by the fact that what we're doing with it is fractionating it in an enzyme process, and we had to swap out and find a new enzyme at the same time. We have largely-
Well, that was the deal last quarter. What's different this quarter? We're still importing the same bad rice.
We are working with this importer on some of our new SKUs, and we're finding that we're having sort of similar feedstock issues as a result of that. It's not disabling our production process, but it's causing us to pause before we get aggressive in terms of taking it to market.
Is there no way we can do this domestically?
I think the other thing I should point out as well is that the crop change in Thailand, you know, we can't change the climatic conditions in Thailand or anywhere else. They will start processing. We don't buy rice from them. We buy an organic SRB. They will start moving to new crop, and so we'll see that new crop come through, probably in, because of shipping, transit times, probably in the first quarter. At the moment, we've learned how to use what we can in a very bad crop year, and then we'll get back to more historic norms as we move into the first quarter.
Is there any way to just buy it domestically so we can taste it before we buy it?
There isn't enough organic rice available and organic SRB available to support our facility. I wish there was, but there isn't at the moment.
And, and-
We're not able to sample the rice before we buy it from Thailand. That's the problem.
We have implemented a pre-shipment sample program to make sure we can test them, but obviously, that does delay the shipping time. Remember, this is supply we've dealt with for over a decade, and, you know, this is the first time we've had, you know, a major issue. We're coming to the end of it as they switch over to new crop. You are. We have put pre-shipment samples now. It's not just a question of taste here, it's a question of how it works through our fractionation process in Dillon. That's difficult to predict.
Most of the losses came from this bad rice derivative you're getting from Thailand and from Golden Ridge.
In the quarter?
Yes.
Yes, most of the losses were isolated to those two facilities.
We can look forward to this quarter to breaking even with Golden Ridge, with this guy Ferguson running it, I would imagine. Is that what you expect?
I would expect significantly better results.
Okay. Well, thanks, guys.
Okay, there appears to be no further questions in the queue. I'll now hand back over to the management for any closing remarks.
Well, thank you again. I just want to reiterate, you know, we are on a pathway forward, you know, moving this business towards EBITDA positive performance. Yeah, we get some bumps in the road, along the way, but I think with Golden Ridge, we have high hopes for that new agreement. I think we're getting our hands around the operating issues and raw material feedstock issues we've had at Dillon. I reiterate that we continue to be on a pathway forward to success. Thank you, everyone.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.