Marrone Bio Innovations (MBII) 17 Aug 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Marrone Bio Innovations Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Ms. Linda Moore, General Counsel. ahead. go Please

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

and Helash; Our Technical by Q&A Officer Vasavada, President of Chief Tiainen, Vice CFO, CEO, International today Matti Hammill, be of Kevin and Officer; Development. Vice presenters Sue for Senior are Kevin Cheung; Research Chief Senior they Manufacturing the Sales; will joined Amit and and President and

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

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

Core the long-term team staying I’m the has and challenges to the clear XX and our we this market top keen permeates that would growth discipline sailing ride is our extensions for you ready create bring on profitability. is targets. Agriculture turn Two, one, a us being to manage things, be smooth staying by path efficacious believe at on I our a to joined three success. months never say the and company a flexible, made being Slide I what and And while waves cash we accelerating when three rough ago, to to strides allowed with to in proactively on while line course, has the company MBI brand If expansion. X, all for dynamic outlined proud with remaining our expenses committed that to adjust job running quarter, three, objectives. to products operating on track to leveraging brilliant novel our and course of global significant eye to pipeline to strategic deliver second mindset culture the focus the The returns stakeholders. out basics flow. ensure face all greatest we to the that were

our The a was and second unexpected the our manage of control controllables. quarter test to ability

than more operating COVID-related supply widespread strong If X, several to prudently gross you expenses. second the the originally pressure again, drought our sales versus and with expectations on X% external had Slide would we, but we’re United once chain quarter, due refer our Western and revenues headwinds. anticipated. our Despite to grew in combined Europe States brought down margins we managed in to The these growth bear challenges our delivered and challenges, Latin America in

we’ve significantly. the The line adjusted managed bottom and result to end our up business on Our line. hold ending cash our improved is was EBITDA the

highly platform. our in confident are We

our meet right the with products to note several needs. customers’ We’re in markets proof right the delivering I’d partners points. recent right the

we on inventories diversification from have particular. strategic growing areas. crops of as portfolio our channels distribution Strong Slide in X, and in emphasis show the key our soybeans benefit corn First, row depleted and and to continue global we on demand for

the result, portfolio. a season growing strong, sustainable treatments. our shift longer-term the is near-term for XXXX heart As demand outlook the of the to which for products, is seed the particularly more performing high a Underlying MBI is

America have Second, agriculture. as players shown We on the most supply partnerships Corteva. in of excellent influential the with with Europe, distributors including leading relationships in distributors Slide North forged six, and we have top in many

to for the distributors recently billion Brazil. also our with largest We and treatment an provides to dollar treatment South by This biological dwelling one America represent the opportunity in of in seed us sold Brazilian an XXXX. in nematodes market expanded announced participate seed Rizobacter, excellent agreement with insects

be Third, very product In and launches on with new our as X. United are we are pleased show progressing on four first States, XXX,XXX to Slide we track the year sales Pacesetter on expect of our a partners soybeans is start platform Takla and acres Europe, from This upon. Optima, to demand strong for fantastic great our and corn from a Ympact. year. channel of seeing which this In build and we’re

herbicide I’m exciting have have the same made pleased seed we over we’ve to a the products and three and we progress to We’ve fantastic our committed bringing had to soil solution quickly profit with is become advance to year revenue time, material also and highlighted potential near-term. a slide. next some phenomenal on for believe the breakthroughs our the past program. in our say and market customers demand platform generation contributors. treatment that the At materially viable these expect We bioherbicide this remain nematodes. our MBI-XXX, that to insects for bioherbicide We

to enhance this great and redeployed project accelerate a our novel announced development and platforms in to and front, ongoing Terramera’s to bioherbicides. market. This screening provide tap and bioprocessing to on for part it on technology effort toward today. projects both a is hope will submission, pipeline. This platforms quarters. and up us research dollars Also the advancements move resources our combine regulatory into we our earlier capabilities performance R&D be powerful news our will Terramera we new levels strong that complement frees with multiple As like collaboration model partnership of other R&D on updates coming product to with we time the new to our and is

Finally, capacity is facility would product on time. our by if at ramping you year, the create producing a a XX/X our to anticipation schedule be turn testament is capabilities the The and start July We growing of up switching time. to for progressing X, to budget the we quality and demand the of passed will This product. in this in to expansion growers of the manufacturing product successfully utilization and to of our the is products. first project venerate demand we manufacturing the for for Slide excellent on production the major expanded a milestone meet the team. Michigan both value is By of our

and first The behind half. of half of the the replace loss we is in can’t revenue second now year the us all

of of grow in we building, the the game I However, momentum business the the half remainder ability firmly to does it this is first are for we’re XXXX. believe indicative our revenue long nor and our through not haul

gross we bridge the bottom expected for contribute Sales year. our illustrates U.S. top Looking growth deliver forward, commitment on quarter-over-quarter, track margins XXXX, delivering the I historical line second improve of we’ll year-over-year. to Slide to specialty in our continue X, to will and line that be revenues to our the while of half how upon perceive strong XX% second half crops continuously growth. into are maintaining the

second We of normal complete half distribution expect a progression the the we product year. into moves the position as and channel as

come easing with the sales have chain to prices season. America Final the strong we again, the channel disruptions anticipate growth Latin quarter Another growers. seed restrictions upcoming from the translate expect delayed sales for COVID sales will originally XXXX that low Central XXXX growth internationally. for growing in into channel second seed United One In will of XX% typical sales. sales commodity the for for going treatment so to We from outreach come in Europe, X% growing In specialty quarter. comes anticipate and related in increased America, we distribution end, pattern following of much use demand ready is and forecast of the along will this supply product By to from year our States, recover some treatment crops. those slowed inventories that season. a

our jeopardizing growth our disciplined we in reduce efficient are and is effective this As specialty focus the management and to organization running international A in first contributor key our remains growth we upon a half, have ability initiatives. is our are end good products seeing at to highly for result response area at markets. to able that in expenses world and operating operating our invest to key company a expense to in approach good all without levels. The relentless we this this

As carefully cash you would revenue light year. managing expect, we our use are of our this expectations in of

to backed robust Our distribution by and achieve pipeline. a through is new global adjusted break expansion broader product EBITDA launches, objective even R&D

turn the second that, have like can we advantages. advance the effectively we maintain near Sue. disruptions, term With quarter, strategic to our over and As demonstrated through I’d long-term our manage call to momentum

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

trends want our to part If EBITDA. commitment adjusted to two to are there XX, this you positive Slide refer achieve

second, to deliver gross effectively to we And spending. continue we’ll First, and strong manage profit gross margins. continue

see positive can trend upward adjusted emerging you As EBITDA. a line a result, with

quarter revenues revenue second XXth million, consecutive our quarter of Our of growth. $XX.X marked

was of chain gains challenges. and somewhat offset and COVID the conditions market made related pace supply we However, by

in for profit for and quarter to move and reflected The second mix half. product first were continues a Our gross margins positive This XX.X% gross our the direction. is margin. in XX.X% gross

is Overall, the mixing bottom improvement line. given this quarter continuous driving might gross margin our Although, any strength the at shift margins.

Our flat for expense the was as year operating a hold plus to commitment inflation.

loan. expenses the XXXX the on and with for $X.X by PPP Slide second XX, commitment half. both We’re quarter right on operating track show in benefited million We that first

quarter for Excluding flowed XXXX, by second expenses adjusted this and first loss X.X% been and management margin for expansion benefit cost lower X.X% Gross and EBITDA. net half. the would operating through have

or PPP million the been second period loss net set than of have the the benefit better in last $X quarter would XX% loan Excluding year.

first is and second with net We the half, to contributed XX% and in favorable EBITDA half. in the adjusted positive of working a results future in the the continuous growth. type improvement quarter improvement progress in XX% XX% a capital XX% loss believe improvement. of improvement used half. the changes our the performance for first a strong of cash be million financial shows The indicator picture Reduce clear in For in would first net loss operations a $X.X this

growth expenses prospects. have fund We believe cash continue usage. carefully we cash the our we noted, Kevin our to As and that ongoing operations to sufficient and both manage support operating a

to We’re solid positioned the year. of results through well the deliver operating remainder

continue we’re course operating cost expect on strong With to revenue margins meaningful for back We remarks. growth, a gross cash, improvements in and our following the remains closing EBITDA profitability. to change to call and I’d of our turn careful make to management to clearly reach a said, like defined path his that Kevin and adjusted

Thank you, Sue.

you year. Before outlook me we questions, your our to XX, remainder turn if for Slide let summarize the would the go to of

strong combined diversified product a and with a built portfolio. have We broad base customer geographically

season with typical demand them. we XXXX the customers our gearing the In now time expect the year, working of customers planting solid are half planning we year, products. this to move season, we to our is hemisphere, their where our prepare and As for supply up of Latin into Northern for American are for second the as for we’re

confidence We the have strong ability for positioned year. to half, our partners of the aggressively in channel sales line This coming as to sight how product and maintaining in our to our a us are good second margins. while gives grow movement

Our cash in limiting growth continue solid prudently to spending. we’ll discretionary and position invest while is

breakeven positioned path to well EBITDA us team I to effectively have are first We the on year, half give of our for adjusted full and profitability. our to a credit challenging managing through reach keeping while

to to questions. turn position are your to leadership Operator? from solutions agricultural call here. and over operator I’d have unique now for the the in a like accelerate we We created sustainable poised

[Operator Street first Capital Markets. question We Thank Instructions] with you. have from Ben your Klieve Lake

line is Your open.

Ben. Hello,

Kevin. for Hi, Thanks my taking questions.

going and couple First, your – comments got that sorry was made put you – noted remarks, I’m you seed to the there you the here, there expect when QX in words revenue something that in treatment a your was a to regarding the was the but effect of couple pushed you side. mouth one prepared into for that in get of QX to in

to should going that’s really able It for up. doesn’t can season I’m maybe in be to It’s be second, how you realized be be revenue First, can us? just revenue, my wrong. seem think that quantify that but that initial it’s be And isn’t this about at made to to be that? would pick, then all going

of or revenue out. So should that can out how you think of help that’s whether us and about the that’s understand missed then kind we push that’s scale revenue pushed just really

Ben. Yes, Right.

So here’s I the characterize it. way would

years So with several into for to QX how the second in end busy, year I very QX. QX, the door there, about getting up is of We up half it’s sizable end on the needs. trended out work of of and in out QX to us may be bump going until if forecasting sales We our of bit it you or QX the in the pushing the some And track right? were less meeting PO that growth. terms think over But more we way right more. QX it add is, that shipment our last slipped the up to anticipating on month, we’ve then it a had we a customer to think little the or in

So it’s revenue, we’re quarters. just between lost anticipating, shifted it’s Ben, not

Okay.

seed wasn’t of would you for get get product that for hoped in spring to XXXX. going treatment product the planted That spring. for treatment that’s that’s So planted next had seed

correct. That’s

guys if And an Was bit what that that I that, of it? especially, you of can wondering second, more was to failed the COVID inability transportation some the here really this. granular these on mean, Okay. of then get materials access what I’m What a secure were raw to this related you – headwinds you this kind faced. headwinds exactly? was

Ben. Yes,

launching was had farm, belly Hammill few certainly the Kevin to would noteworthy impacted our ability with are And that have to a training to supply demand I are in do say, customers our Definitely, our the getting well. on ask when production I’ll the some additional belly get to those the and but ones, meet time there’s demo trials, I’d impact. do any chime as big products they if in on new and commentary. you’re Matti say facilities raw chain, out So materials

that luckily some for us Kevin, it. let Yes. Thanks. definitely. light of the to appeals That’s as QX, COVID for there I a the that have Kevin same to being Hammill then all mentioned was think most next course year. us that seed also countries from covered here, for planting able being good touched time, think there us, the to launching pushed majority question. able And affects that products mean, of we mentioned more Kevin material to you’re it I mean, do At I’ll some it getting been been others. saw you And still been new season others the this I some effective them some raw in time, sales when effective is the fulfill the shed more but channel. base have of putting but channel. more has hasn’t But whole that impact but and the going disrupted I of has got on on to some XXXX the than basically it than especially, regions training, it’s the for and been QX through in channel

nothing works. this channel and all or products, good is this negative supply our the to no it’s and our has among that think client news the within up I fundamental really experienced churn, how there tied demand So chain the clientele been been year but for we’ve happening

talked Hammill, agree there little that seed selling year, lead little significant some this bit been Helash in Kevin constraints material Yes. this of said. not Matti increase delay treatment Kevin times, longer terms but price pressure. on for, push supply getting of raw – I Matti about a an bit terms about ground. what a to short has Yes, and I’ll add apply, it, just in is

bio In second of to bit all terms little timeliness, of more we the the able are in which customer protection a terms quarter. were demand products, meet

chain resolve from raw raw to took are supply However, lot the we minimize of to sure materials increases, multi-sourcing also material production. those price it that make and a continue

as Kevin said, third quarter in and the Helash both year. constraints anticipate this as Matti quarter we coming any and as don’t up So we supply fourth finish

Fair There’s queue. right. questions All probably back get to talk plenty enough. Okay. more about, to that’s leave for for me it. I’ll in good my and Thanks place taking

Ben. Thanks,

Rodriguez Jefferies. have We Edlain your from with question next

open. Your lines

Quick in guys. Can major – like the inventory mean, in you in and I the you seen of in regions, levels, you’ve Kevin, channels think America channel talk inventory the the afternoon, talked good the America. all terms Europe? in Hi, about Latin levels about Latin in U.S., one, like like what I

at But Yes. in hand our first and by for anticipating in customers crack – I I’ll I’m levels. restock strong I’d prices the to the the were second product over and categories a half commodity on that, the back in around world major then year. eye And definitely strong they’re it take I say would demand their a will for backed we’re quarter in certainly for Matti? going first second the they Matti. say, it keeping to And the started crops. out say expecting of I’d inventories, the keen good a product shape. over us our and inventory our all quarter,

Thanks, for question. And the thanks Kevin.

region category. So it’s of seeing and I when said, by by again, here what region and we’re Kevin echo course I think

going South on. see records seed, being assume planted that and broken We also we acres. in there’s drought of So business look at in terms treatment seed some America the some we

treated the up. seed So going pressure is

to stable looking next at seed be Europe, pretty Also for are So in treatment. year. that’s good going things

made crop which for high optimism, production, slight again, that foliar if think there driven at where on look seeing depending terms of we’re is And production, region, the America, In you commodity prices. I channel partnerships year for the example, South by the new to recently. clear out bad so bad blowing have they debt in couple some – and the after we’re big seasons products of Farmers or past some the suffered. been able really after that

over People expect the more into face are going some that And to track back to a we a higher that we the thinking in still in channel I concern biggest just But optimism going that or are fully but and normal. the COVID positive there’s recently back when or not I would it’s on programs mean demand that So and And doesn’t are kicking inventory moment. was the comes we mean, in. channel be turn meeting there. life levels that’s that the the the forward. from is face, don’t think to vaccination general, at slight to it hearing

it way. this put Let’s

Good. outperformance? extremely the sense. treatments That go long have the how yes, business. And I you’ve like business. or there. quick I in can this essentially all that doing had growth for is think, outsize long like, next mean, well mean, – makes one I can you on something the do treatment crops, you a Like think the outperformance the Like, there. sustain you seed four years, five can that you’re seed on sustain for major you how

I’m the you’re surface. Yes. scratching comment to just going to it hand we’re you in a the is, second. – My question. Great quick Matti,

on soul globally you on and MBI-XXX I’ll terms treatment. the including acres we’re is that coming for have, Farm to commentary. I’ll going our we’re We I just seed heart we we it robust what If for acres this say about as leave said, up. a pipeline insecticides a Matti, in as portfolio – with to plus through line. see, nematicides I’d pipeline add through the our being of getting the Pro your think the you have

the all on that experience that we’re Yes. why as think said, asked I it’s at Thanks. in we But we’re, and is seed that Thanks. question treatment I this time that’s ask can mean, the another ourselves And of time, something testament the put acres footprint now the Kevin we’re our of all And combined getting something I And getting to is great which that, we a products seeds. same the that current question. time. this on industrial ask started. we’re just course we platform And real business. we that that, think proper is the

and in the this on the time, at still pipeline – now through we pipeline the a four we’re same aid new come partners. But only treatments. platform we businesses of carefully a seed midstream We’re designed to we’re products downstream products accessing many the same to have launching of we’ve that of but have be more other year,

the So products, the basically find real still developing. is the that that deliver synergies to market value also between but

seed to it’s have relatively So it’s treatment remember growth new to are we lot seed right time, with products same and years, other that a that treatment – is to also survive at so is rate in bring seed we understand fundaments well, dose stored other that outpacing seeds, the the how the ag. a can the at the two growth perform of the products compatible certain we And as right. the business that markets can for very there – with

A, not for that really I B that So our the create also A, together value the next put five and and ability put but innovate credibility, but C gives way. then just years to and think from us

up long really, said, treatment the we’re coming The sorry answer. that short interesting So Kevin safe for answer just on as really started side. there’s exactly things getting would the some be and

No, this Thank I’ll you. on helpful. really was the back queue. get

you. Thank

[Operator Edlain Instructions] Rodriguez Jefferies. from We have your next with question

is line open. Your

Hey, Edlain.

to that the Yes, your competitive to take industry, smaller so for get think offer, competitors to talk can anyone like the getting and about like one – you pressure scale ramp question. get like, products in Amit, you long answer the seeing a that might – to how not to sense, your you to are level? is essentially, you’ve of it closer the other

forward we mirror, spend XX-year in time the a That start. is Edlain. than looking my We’ve a is answer of rather And a lot head great got looking short question.

market, We deliver a partners. is us. the that commanding already the portfolio to that significant the value our got space in to products products pipeline have with coming shelf bring will years a distribution over We’ve and fantastic fantastic market channel expected bring to

that we’re comfortable spend say the market. us. feel lot I’d certainly in position. time displacing though, we our to Terramera looking growth. more collaborate our today to about coming a sector We are on those So said recently uniquely accelerate as about the we we how of positioned to newer in announced And and and number acres do get With potential now being very the a to position help in of these to than companies the our think retain are that thinking regard with rather we worrying up companies leadership with technologies use we

we is again in going. an an more way terms ROI that’s opportunity us standpoint on with absolutely absolutely think market, of do I our kind the efficacious on of we just our our we’re standpoint. inputs, seed our about the potential make So about And do for thinking of where phenomenal. as I the products Yes, products spending how to it. fantastic. treatment, we’re ag in getting products, acres in untreated our how think crop I whole about better it’s of sustainable from most we’re from talked mean, time remains get the And we terms acre get crop protection

much. very you Thank Yes.

Edlain. you, Thank

Gerry your Capital. next Roth with from question We Sweeney have

line Your open. is

Hey, Gerry.

Thanks for call. Sue, and taking my Kevin, Hey, team.

and should how how easy, – sales that you that? easy any can you much Just curious I drought of say, potentially able to or bite bucket because in the maybe which lost some of question areas a to of be out

be Jerry XXs answer got when our few in we mean we year, the I Well, up the started growth belt. like projecting months upper we out Yes. to is, the short were under a

of So lots happening commodity and there. with lots was optimism out prices, what

kind to extremely So went tough was the hot dry. where was can we are and spray in that previous very U.S. It Western from we of you a projections extrapolate today. year It our

per headwind about is that per good They’re coming The out XX%. So the that down numbers our at of looks looking XX%. it that acres down yet, we’re was are news about not preliminary but like finalized are acres California.

So have much some seeing and we insect spray. to in dry hot don’t suffer as on good spend not fungus that didn’t sense I guess, I are pressure market, or when them, money in growers but the and that to pressure, mean, as they’re it’s they overall

there season, So chunk Gerry in the of States. in good going belt the it hard corn still the I we’re Pacesetter. rest still a soybeans was of were throughout on mean, would and United corn

We’re the Coast. in of lots still spraying still even we’re California and PNW, going in on East activity

the So we’ll see about at definitely the of where expectations, the versus but West. impacted drought, were thinking end if you’re the the just day, I’d it’s most say we

Yes.

That’s Appreciate Okay. I suspect. good XX%. this down you’re it. Thank market you. what And that the detail on down about XX%,

Yeah.

Gerry. welcome, You’re

this would turn CEO back to at [Operator to now any closing for showing further Mr. Kevin I I’m like questions the time. no Helash, Instructions] conference remarks.

the to to we available look year. globally. of the line. forward tools interest you, MBI. Yes. your to our the had time do company expect To number bottom delivered so, rates And this as for of again. Thank and us guided We’ve external our so you. with our everyone make ensure speaking all we use position to call. joining we to We to in Thank leadership fully appreciate you. we We return leverage and near-term Thank more far sincerely a through growth you headwinds effectively on expand aggressive

you call. conference concludes this and for gentlemen, today’s participation. your Ladies Thank

now disconnect. You may