Marrone Bio Innovations (MBII) 14 May 212021 Q1 Earnings call transcript

Good day, and welcome to the Marrone Bio Innovations First Quarter 2021 Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Linda Moore, General Counsel. Please go ahead.

Good afternoon, everyone, and thank you for joining our call. first conference XXXX Bio for the Innovations. to quarter call earnings Marrone Welcome

today Helash; Sales. CEO, and the are On call Kevin Senior President Matti Vice CFO, of International Tiainen, Cheung; Sue

the filed expressly any reports, with the the annual Risk Securities Factors, Commission, X, in the guidance any Exchange Certain regarding differ CEO, If other differences expectations, conclusions and please Reform and Important reaching Private you this forward-looking Safe of contained or the date that over plans, arise I call circumstances you conference applied may and reflect Securities Harbor management's Act question-and-answer revise we company filings. within now like report, or heading and contain statements disclaims our Kevin? company's assumptions hold of including events the elsewhere Therefore, refer Slide these could session. could prospects. are making will obligation results Litigation material in that forward-looking the company projections, materially in turn would to may under to our to statements. future a these call. after will MD&A, or Kevin cause After information. meaning update to in quarterly factors I that by and were to this provisions forecasts, contained those remind XXXX our Helash. would of actual forward-looking statements from remarks, call the reports the other the The of

call everyone on today. and Linda, Thank thanks the to us you, joining

EBITDA key our that would through XXXX. rapidly way we success point are delivering an will of continue We to are one third define adjusted the on year, breakeven now and toward progressing basis. One, in to I indicators three the

to Matti fronts our commercial in results we on launch quarter in global multiple accelerating financial the be the more on speak of ag study large-acre position. update bringing few supports to peers our were biological this market. intend provide provide in that to products row expansion numbers our an published moment minutes. will a a recently among leader first our color important we an in the will crops. and we and plants this support target And terms I'll Sue three, on Two, Our sustainable

start turn would you X, If Slide very to the I'm with pleased to XXXX.

have presence continues in crop is first we that specialty quarter slower a margins segment. for our our driven and expanded quarter States. XX%. XXth in market the value consecutive noted of before to is the seasonally business increased period and us by our this above We of sector deliver, high foundational our United and we As reported This quarter one gross consecutive XXth revenues

with we As we judicious spending. are committed, our being

the an declined managing of a to to by expenses to operating any absolute strategically quarter on a our while First accomplished in XX% metrics are was not expenses company. sales operating ratio grow testament and easily and feet basis margins revenue XX%. costs ability Both

of indicator X, business core you to this breakeven upward the as approach quarter committed of trajectory If crop remain in EBITDA we We adjusted markets. specialty we to our early an an capabilities our refer believe Slide basis. would and highly was our on

us. crops and products size row However, given tremendous major and a the the represent market global seed soil for applied and reach, opportunity

years just have one and We from our been serving offerings to five. this over market four grown have for product

established treatments is we ahead us four are in better seed our part presence. biological solutions, launching are four three of core our of of larger forefront is the at of advancement story. is than inception, of opportunity the for all have we which We what material and our that Sustainability in account used news agriculture. active the that been which of seed The good The achieved. acre use all a of have at for big year, treatments at the are and today broad news already targeted we've this which is roughly row products ingredients mission that new the Since an of are MBI the crops. one-third

Our rely provide and on growers partners to that upon delivered leading returns investment. performance distribution us industry products and

our the our and With rewarded growth, practices. towards and with food study meet MBI is our best forest more aquatic safe drive products XX% while customers' of amount safe environment, Conservatively to our the MBI seed turn humans, the This as land. demand agriculture. of million like we commissioned that, of will A our sustainable soybeans to with expect our future summary now corn public treatment acres by us been ever, more for our for of for that treated soy dioxide reduced each the on further beneficial better made emissions end, with over positioned marketplace of To growth the that's Sue. for life. product May illustrated we than in contribution when seed need a pesticides. sustainable I'd treatment to results environment and shareholders. the serving Climate of Slide to emissions profitability, million X extremely pleased than advanced nematicide corn X. sustainable for pounds We're However only Impact and than that they of reduced. producing now call pollinators our report and or more this that agricultural on has the that player consequently is and needs. acres to U.S. seed is The treatment, compared also organisms continue food to increasing which the and produced This it nearly sequestered uniquely Not carbon be to in practices. also agriculture study is key foundation in XXX are X. by be to the equal and gas for conventional is is is which will carbon supply our greenhouse proof

and Thank you, everyone good on the Kevin, afternoon call. to

us year-to-date to outlook Slide give you XXXX. our If our would confidence to turn performance raise X, for

revenue We revenue have of historical CAGR. line growth increased in range XX% to forecast upper the with our our

we reflect of addition, range, our raised margin more to positive outlook XX% a also annual which gross the the upper target have the In for year.

We expect revenues keep while and flat ramping margins. expenses up to operating the

such of XX% in We X, first increased quarter use expanded the from If the million, you in let profit in delivered this a overhead point benefiting a of XX.X%. gross from greater our were Slide and $X Michigan first increased of rate XX% growth million XXX plant, our crops results margin fruits last favorable the increase mix point growth key driver and vegetables in the basis profit in sales improvement increase $XX sales a line to marketing improved year quarter. quarter. absorption to than products. XXXX. from would at turn some our to manufacturing key plus the a sales me to of and Gross and Revenues as high was We gross at with specialty volume in

first $XX Operating expense from firm the operational year $XX.X we in total expenses our efficiencies. quarter came have the of from XX% on costs. handle million XX% a XXXX. started reduction addition, declined to million of with In

of other COVID. visits The limited travel to wasn't and XX% related on because farm

return we lifted, restrictions are forward. travel expenses expect a said going committed at levels That to expenses plus to to that these are holding XXXX inflation. normal the we level As operating

as and by used the operating last a a improvement EBITDA with The the $X.X quarter in use was the year in million first million of $X.X reduction of was first cash in largely payback. XX%. quarter quarter was as with adjusted million we're when improvement Cash of XX% This the of Adjusted first remind quarter, the quarter two-year the net last manufacturing loss with the loss working compared ago. activities net and loss XXXX. capital. $X.X you the progress million of in compared first significant of This quarter, efficient the our $X.X with year, loss plant as EBITDA a to by of compared the year. of was million loss want this of use in $X with an million net in in improved net compared of $X projected upgrade I that driven the in first midst loss

positive As a leads. position Kevin robust sales MBI and noted, have disciplined a sufficient we of combination ongoing bring adjusted a operational career into EBITDA of cost with site the cash line gross company's strong to margins, to fund management through growth,

call the accretive to addition, discuss to We're Matti? case. base with even turn year we deliver strategic our I'd accelerate the to the our our over faster the commercial value to than continue confident growth shareholders. start now our to to like in acquisitions that pursue Matti In our pleased ability to greater and could outlook.

And this Sue. pleasure part be conversation a it's you, Thank to of today.

seed the The seed applied XXXX. XX% crops and growth for soil Kevin CAGR opportunity broad treatment an us. As exciting is treatments is at market for through approximately noted market and to global in major the grow forecasted acre raw

in treatment the the five expect seed portfolio past outside four short Our years, growth and to one treatment the expanded the this right four rate over than time. has product We're more products been we revenues had, growth we've in offering at that to double however from our has seed industry In years products. right area continue. of our from

used on be in cotton million technology rapeseed than corn; We will In approximately we MBI and seed products corn, more the our sunflower in XXXX anticipate expect UBB planting million be the acres Europe, XX States in based treatments will soybean, United acres season. this of year. with biological and treated of XX

treatments now three and If X, the launching seed Takla Optima, we're EU to Slide turn in you market: will Ympact. new

on development investments and promote have encourage yield. nutrient improve with products demonstrated uptake, products and favorable these significant of These All route a profiles. returns crop environment coupled quality

head capabilities establishment health. a the product example, season for as specifically gives the designed in start barley. and product plant is and This an overall such wheat, early the As growing a Ympact crops, by crops, rye overwintering cereal promoting at use

segment Europe and this for XXX expansion is planted the market opportunity Now an crop cereals are acres largest more than in us. with annually exciting million

such Once on insecticide/nematicides Our next current longer levels MBI-XXX, products The better acre. an have always as product multiple our get enhanced one MNC portfolio for products that of seed customers. seed generation in but acre, [ph] treatment treatments seed developing is our we're and new a version continually just is is synergistic offered pipeline not our returns efficacy each treatment of evolving treatment. to to with offer

added May is are advance corn health in And soybeans, yields areas XXXX. the but in to now research and timeframe and refining wrapping six cotton. necessary Our target to partners and submissions, for fermentation up underway work excellent reduced expand at levels. in the as shows to full overall regulatory growers. our the pests, crops make against year the a application MBI-XXX of level these in of as same product protection other are appropriate with treatment a on We're provides currently revenues. well investment has the work. an peak return add in one plant and a applied potential to is for that potential Pacesetter plant we're This bigger estimated States introducing could be result another key and to for also incremental product Sales and increased growing United that July formulation the improves the We've testing distribution grow this and the million $XX Pacesetter health year. product blockbuster distribution in being

preview to turn of a Slide would as If what's now the commercially. conference X. you MBI This

program world demonstration expensive this more files year. and we the XXX around Our will than conduct is

We region for South increasing the between a application. us. and treatment open XX/XX of seeds North geographic in production foliar CAGR With $X XX%. split is The billion the roughly America. crop and value one and and an Demand for American rest of health trials market the estimated both for products will Latin market both of of testing protective with world. wide slated opportunity a biologicals is the The in sea be America crop is quarter

current see on South well-known for America, wheat reflects as and XX. and The you production prices. outlook this stronger soybean, acreage Slide fall it's for can extensive increased planted of higher its corn yields course

All economic growers of which health. contribute to the

orders to Brazil We efficacy have our working already have of with some and been in actively companies in hand. novel applied and position we the the some seed large biological, demonstrate of seed

the ones. as to partnership shows most Our season competitive large-scale health [indiscernible] to to portfolio. announced the that we Latin In the America, plant from well winter partners in with expand we work such this distribute should as to leading prospects new drive extremely we're fall acres recent continue with million parts XXXX. demand we products, of would under us Rizobacter into agreements X Through open see region data Last more key bio-pesticide existing corn crops regional already and winter products, our other and treated with during wheat the XXXX. our name, arrangement as full-year they which than expect further sell brand planting to health plant for allow Strong going barley Vitagrow.

multiple in Wrightson of successful stocks higher crops a products we multiple pro-forma Seed distribution agricultural its the America. in prices with lower premium in Uruguay. more another in to for new technology. this environment. most PGG in We bullish seed be for event and launch PGG conclude, treating is had fortunate seeds partner launching year, quarter is during turn [indiscernible] forecast and plus our already forecasts treatment this for We're Now key expanding experts planted first feeds ending a forest To is crop UBP-technology position and acres. the will in be this which Latin

expanding We of so revenues like over as operator whole. a turn for while to all our questions. ag Thank footprint, faster the are a allows to global doing you increase this, at now call industry the the to than I'd which us simultaneously our With pace our

go Thank you. first of Sameer And we'll [Operator Instructions] H.C. Wainright. Joshi to

questions. afternoon. taking on good my Congratulations quarter. Good Thanks for a

what have metric at terms this how It operating the that introduced in go? How you couple XX%. – – can of is ago low nicely have of quarters this of operating You ratio. expense a called draining level leverage

to good It's again. here. you it's Hi, Kevin to talk Sameer,

our So in of ratio, our profit to operating it's terms an us of gross expense trajectory. indicator

in it fortunate can drive in And the – in how growth and growth see inflation. upper-XXs. level we in trending So to at margin go? our expenses to our we XXXX we're continue low that, terms can upper-XXs of line continue rate the the operating believe company We top plus that our gross very the in at

with that sufficient continuing for to for us so feel move operations, And forward. we baseline is

faster as will in Now, that as quickly to take of is can our can advantage the invest is revenue terms say see top opportunity. in we opportunity how low that as number our and Sameer, gross we of we'll our margin objective up operating I to faster, drive to the that our drive drive that going will make would company But an if we expenses, know ratio that that and certainly lower go, go it low the camp. line, as we our the

upper terms in And Understood. XX%. of gross margin, you're targeting

Are two already margins. pressure have consecutive margin you are some in and terms You few percent quarters of conservative next just in being expecting careful XX-plus the guidance? you Or of gross quarters?

again. Yes. Sameer. you, Kevin It's Thank

a to when around the the is to will have full little that lower good XX% So margins a we quarter have online that think When it's the up where it's range, XX% until look And have around think over we little it few business may quarter through going slight upper-XXs. we've a a our We our our operating upper-XXs between out achievement. products higher. our a entire to our Sameer, bounce as geographies. where we've We a very I and you We that with spot set. a but operations bring it's headwind and we a in had year, a get happy remind the of that to may our headwind on in we're margins, the gone that Michigan capacity. quarters look we fluctuations target we out plant business obviously bit we where on quarters

thinking ways as also well. into our that's So

reminding Thanks Yes. for that. us of Understood.

upside includes acquisitions, a strategic had potential we the One a from May month the for things the in that year's of now. outlook of

parties Do months? in share So four the that advanced. looking in I we can street any you that terms there the think of next have thing what talking five of materialize could must be that you're to are kind you or fairly acquisitions at with that

Kevin Thank Yes. you, Sameer, again.

in opportunities, forward, potential that fragmented tell we very to say and also We us is you we that is believe consolidation. So all I of discussions different out calls, and of deciding stage mentioned point fun can active. in are players. great for but an can we interesting previous a there the growth. one of our we in lots know be market see but nine number terms which sequence, it, a do excellent enough accelerate say us active of months, to At matter getting as quite it's a talking I or we've better We're we're for opportunity report want for for having some what an it's very think that they're discussion. going moving don't advanced the and and certainly in this to when of chase to opportunities with and levels been have anything partners of industry I seeking and we of us lots to would at stages terms there I'd

I'll offline. a lot. of rest Understood. take my Thanks questions

Sameer. Thanks,

And our Lake of next Ben question will Street Klieve come Capital. from

go, the business this first and this thanks me North as kind of first the kind I quarter is, just number thanks that recognition understand in breakdown. the me. My and should? for crop has quarter here. on understand and of quarter few expect as to questions, And the help revenue you to on I second then Hey, think questions evolved second of taking quarter, trying well of one A especially of in my and Kevin, where quarter picture a is the seasonality market? a maybe and taking the question congrats business bottom it's big in I'm quarter how questions. for of America your couple seasonality terms of good Alright. the on you percentage Can going understand don't you row From to line

good Ben, thanks question, a it's and very asking it. for

and bit – I'll least comment the about So generality a how in in little way general then flow at see we speak things it.

treatment obviously crop, out terms seed stage in that at the cycle. the season And goes with on start very of our So row we business. early the of

specialty right can all in ready into the the for becomes that QX and big season. while then move row Northern as in now, QX happen then planting the we're QX, that we coast applied QX, into vegetables. of Ben, go that's care So nuts, of a as market we for on foliar getting hemisphere treatments. fruits into then back us And soil of us terms the taking and going and the the terms crops, in in crops, And trees, West to for our

right Ben, then in our longer? we're crop product bit on do terms early bring it entire wait we're I'd early products industry want say, forecasting, input mood having season, little to now, on prices really into they and – row great the So, seeing excellent the going of and some certainly Are demand in And a and stock that to looking customer's to it top depending fluctuates demand. of they for crop good course our of up?

give So how see bit I'd on – answer if didn't QX say it's that's question. than and tricky your you to we about that more QX it. I'm between but QX, QX and Ben, but more that color happy a and

is in working same a other each row the big lot was so a was other revenue wondering but still you talk helpful. American obviously the picture couple and market, you addressable this that that expectations opportunity, market contributions for relatively I in of and variables say I'm there's market on of to I for No, about you're had all. XXXX, that, your appreciate questions, early kind crop at huge talked time, Latin percentage can this the you here, your against if I year a basis stage a mean, next about helpful. There that the that know

Great thanks. Ben question. Yes.

on and distribution but to say market. We've of of extremely are that partners, your as partners, not on. that can others. going crops a that is great acres got I'll going it Matti, in our we foundation into feel second, the So Rizobacter get really where with one trials over history, Matti we've in passion. potential in in I'm that the our tell We've that to market We mentioned in pipeline got Matti market. got this I to a hand getting but we've I'd soybean hand you to positive our amount over the of about wheat, our specialty areas it greatest of had a you; healthy field a only corn, terms there With fits

So you Ben America. some it commentary to over with provide more hand to on Latin I'll

Kevin, Thanks here. Ben and right Yes. thanks Kevin is Matti, the there. and for questions. Yes,

directly at partners, short of there the the hopefully very come with for my laid we've some We're American have but future. that our the partnerships point. we've Latin we in some So big is of So One are that I will favorite sure breaking future working course out have very for I through we've there's of points, bag, right? the as in terms market as whole more but that results one to already like been we're very right break and Rizobacter now, say many very and we've the one, a of think few would at professional, terms development, big reasons. jobs, pragmatic, worked in product and is it's years

as only talking does. the whole and We taken are very in some it are for that it's actually health good the worked we're competitive bio-pesticides growers market. through competitive, our the the time and but always plant both not value and demonstrate So channel products

through in future, working the crop been that to we've to something to its is and both specifically short the folio. be of in got is it that aspects. definitely as own. our very all long break forward market the with a tools the – look confident rest there now enough production, from And Brazil we've treatment LatAm said, how seed you've And then So see we but got all is row and of markets

for I'll That's Thanks, question Matti. in and then helpful. back One queue. it. get Got other me, Got it.

wondering kind product you talked soon. would customers this as the the like emerge [indiscernible] an I'm product. the they have hopefully here your from such show of picture Do to big carbon-sequestration carbon really studies question about the You access a that carbon-sequestration products that And benefits easier of here. portfolio have of markets environmental about across the perspective, maybe your

Kevin Ben. it's Yes, Hi, again.

we've – a you time So can spent topic Marrone. spent course hit and the do products that in and on active of about impact talking have. lot a very our have of sustainability we've We

a being we and assessment. a have data, show positively, so because science-based And fact-based me company, the but we wanted are the right; show we me contributing numbers to independent believe

of ahead product. sequestration, So and carbon the results happy Boundless we greenhouse gas by went very and in on our to extremely with got out reported of engaged results pleased the that with very, the terms reduction with we X.X do study using XX

combination. when our have to but obviously to fantastic be to opinion, story, we our right, sustainability about they a can first benefits grower, add well that's have that's a going so well. as given extremely work, Matti data down that what return that to is continue to our the is that foremost, terms in to Not that provide us confidence that for the score of have And forward, And the to products only have study they Ben customers that to in to provide move they and our think and as XXX efficacious, in path. really work product mentioned continually excited market we're intention they We we our to have.

it. helpful That's well. Got as

Okay, I my appreciate you're taking questions.

does I'll back that for queue. it I get think in me.

Thanks, Ben.

come will question next Our Bobby Burleson with Canaccord. from

Hi, good afternoon.

Hi, Bobby.

taking for Thanks questions. my Kevin. Hi, Hi.

spending crops operating fundamentally specialty efficient and out to seed – more or Just mix there? continue row your nice yes, – the and just how efficiencies that So, curious especially on in start of the of revenue be to soil more product shift and expense to shift more in that to and your might treatments. understand line. quarter, crops? and versus long-term terms profit as much trying maybe area more What kind and gains I'm more

question. Great

a to our America, grow Bobby, I'm we many secret, that terms certainly terms into we're investors we it So, and into in in a of terms that it's in building infrastructure sub-scale in We those and is company are. to around to completely as platform utilizing company. to this the platform. blunt, be all and fortunate massive our can this of of not industry our the to us built And in row here very get Pam for on that production move in Europe, North allows in of Latin getting acres people, crops, America this in capacity, scale as

as the ratio, ratio, drive down growth beginning, will kind the on of top-line So, make at asked operating Sameer that OpEx that company and this more profitable.

company, the have, the go is yes, the going maintaining size revenue more right that is we focus while and top-line to we for drive So the infrastructure which certainly right to bottom line.

question part gas move Or your got start a reduction that then on recent that you on put studies customers vocally can there And great. kind on to you of together? that from understand other products, but next that result direction, that greenhouse your work? are How the to just move package industry a does ahead curious proactively similar more I of what I'm groups marketing direction? caller's are kind previous study. you positive you of you larger that. in the are? to proactive is steps follow in there your kind for Thank Okay, a with of the

talking we've spent time what. Yes, about of quite of a Kevin It's now Bobby, again. We've quite bit time. a spent bit

our fantastic gas greenhouse result, reduction great using a this by have we in product. So

And who else, need so, that who our story to we channel right. do to partners, market obviously but growers distribution and obviously

be major association. it companies consumer should industry around groups, the food So world, the

question great yes. asked and you a is short So the answer

who We of our get to out. message the thinking right we be to terms be wide net making quite effort in is will that do a with. is going talk And concerted now

can first Pitts spending for we sustainability number in with of I that it's fortunate. foremost, and us, majority think I very to or ag message this in working industry benefits we of So But story do Sustainability of be obviously, he the now the and of for the be of – the to whole is biologicals getting we Chief because want that out is right and Keith our a on and we benefits know time products. reasons, or Officer that the good our general. think drivers want we're we provide talking important a about vast features one his

it and be of So bigger our work Marrone Bio. a will here bigger part in

Z great. channel a Great, gen friendly. TikTok Maybe more something

of better media are social lot Well, we're got lucky. at than Exactly. that those in I am much a We've folks Bobby. the company

I've thumbs. like got XX Yes.

well, color. again it. thanks So, the additional for Appreciate

Thanks Bobby.

And Weinstein we'll Aegis Capital. Nathan to go of next

Nathan. Hi,

Matti. Hi, Thanks Kevin. question. and Hi, taking my for Sue

So I and progress has topic I still the suppose in inflation been continued big see a recently. business

Just maybe take seeing or agricultural you're customers inflation? terms business your you what industry own in your of from in broad from a

input are higher in economic mean, Yes, of think I up no shape. But is But we everything higher is have and there lumber posts that's gone in media that Prices fantastic. funny a grower industry, social there is a obviously, with. our Nathan, situation a of to general costs. great shortage grain start about is question. doubt of no that – good still prices prices prices the in driving the very

healthy the good when thinking, serve you're and We while to prices MTL nicely with we're side, overcome the going this inflation a year well. planted are inputs. of in We going high set that mean, crop in And don't tailwind. market effects any I a our point, We're XXXX business. [ph] of the the to commodity strong the will are lot I coming it's channel positive a acres side, for year the everybody does world. going pretty Nathan, this believe that seeing think imagine grower doing well feeling crop to drive I we and in that really distribution customers us up restock From think see industry our demands. input effects At in so Certainly, see general. you're that at well, our prices do on – the to to the prices, around it's really

can you at inflation any point, perspective think impact this feeling still of, we're I negative is So at across while in from everything there our think time. I'd say we're almost good least at this not shape,

York another that cannabis business, great. then been to lately about perspectives can New the And part in hear. the marijuana, and news business. of any maybe speak Oh, Good as on that's legalizing your topic you

do Nathan, into as that that we know, so, of cannabis. at our we organic you extremely think have certified I'd as any great number fit a are market part well regular it product. – large we have crop Yes. fit And organic as and say our portfolio. they about market, any a we including so we're organic of think products We a there at

the So to spend inordinate that as – of organic market growth. our think on but that we of don't think grow, to continues our an focusing of any expect time I And as about unfair that as same it get it. We amount crops. share we other

Great.

nice. That's very fair. Okay,

of sustainability mind other but So question, because sustainability to close to be that's of I that at a wanted ask to top was a dialogue And couple a should and Marrone it. I Africa your around just I analysts the think the company. think thing got a with I positive going actually comment.

good interest on it's that front. all So to hear the

the thanks join you, time Thank today. and to Nathan, taking the for Yes. call

closing I'd And additional with or turn today's conclude speakers the back for our that to does comments. question-and-answer to like call that any session.

time appreciate in your operator. and Thank today you, everybody's MBI. interest We

a believe start raise with to coupled to we The cross EBITDA year breakeven to management you on has to our strong to our adjusted Our when returns given you we this of and look us basis. a shareholders. the XXXX our we a forecast confidence speaking point and again will for strength ability time our continued greater be focus and to globally on soon. with to key forward offerings our to continued Thank will success provide cost commercial an

does participation. We'd that And you that call. everyone to with again for thank like today's your conclude

You disconnect. may now