Expansion in international and seed treatment markets led revenue growth and gross margin improvement
DAVIS, Calif., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Marrone Bio Innovations, Inc. (NASDAQ: MBII) (“Marrone Bio” or the “company”), an international leader in providing growers with sustainable bioprotection and plant health solutions to support global agricultural needs, has provided its financial results for the third quarter ended September 30, 2020.
Selected Financial Highlights
$ in millions
Q3 2020
Q3 2019
% Increase (Decrease)
YTD 2020
YTD 2019
% Increase (Decrease)
Revenues
$8.8
$7.0
27%
$30.7
$22.7
35%
Gross Profit
$5.0
$3.6
40%
$18.0
$12.4
45%
Gross Margin
56.7%
51.5%
+520bps
58.6%
54.6%
+400bps
Operating Expenses
$10.4
$13.4
(22%)
$31.1
$32.2
(4%)
Operating Expense Ratio
118%
192%
-7,300bps
101%
142%
-4,100bps
Net Income (Loss)
($6.1)
($16.4)
(63%)
($16.0)
($27.0)
(41%)
Adjusted EBITDA1
($3.6)
($4.3)
(18%)
($8.8)
($10.7)
(18%)
Cash Used in Operations
($0.9)
($5.7)
(85%)
($8.6)
($16.4)
(48%)
1Adjusted EBITDA is a non-GAAP financial measure and is described in relation to its most directly comparable GAAP measureunder "Use of Non-GAAP Financial Information" below.
Third-Quarter 2020 Financial and Operational Summary
The company’s 27% increase in third-quarter revenues reflected growth from its strategic expansion in international and seed treatment markets. In the United States, Marrone Bio’s biological seed treatments for corn and soybeans are entering their third year in the market, and delivering positive performance that supported the sales increase in the quarter. Sales also benefitted in the quarter from the introduction in Latin America of a new foliar treatment to promote plant health for soybeans.
Gross profit and margins benefitted from the positive mix effect of sales into high-value markets. Gross profit in the quarter rose 40% to $5 million, with gross margins of 56.7%.
Operating expenses in the third quarter declined 22% to $10.4 million, reflecting the benefit of cost savings measures put in place earlier in the year in response to the COVID-19 pandemic, partially offset by the addition of operating expenses from the acquisition of Pro Farm. In comparison, operating expenses in the third quarter of 2019 were $13.4 million, which included $3.7 million in acquisition-related expenses.
The operating expense ratio – a key performance indicator that compares operating expenses to revenues – declined by 7,300 basis points to 118% as a result of lower expenses and higher revenues.
Net income (loss) in the third quarter improved 63% to a loss of $6.1 million, and benefitted from increases in revenues and gross profit, and a decrease in operating expenses. In comparison, the $16.4 million net loss in the third quarter of 2019 included $6.3 million in non-cash charges related to the estimated fair value of a warrant exercise and modification.
Adjusted EBITDA improved 18% to a loss of $3.6 million in the third quarter. The improvement reflected the increase in revenues and gross profit, as well as lower operating expenses. Adjusted EBITDA is further described under “Use of Non-GAAP Financial Information” below.
Cash used in operations in the third quarter was $0.9 million, an 85% improvement when compared with $5.7 million of cash used in operations in the third quarter of 2019. The combination of higher revenues and lower operating expenses contributed to the reduction.
Year-to-Date 2020 Financial and Operational Summary
Revenues for the first nine months of 2020 increased 35% to $30.7 million as the company gained greater market penetration across its portfolio of crop protection, crop health and crop nutrition product families. Year to date September, the company has gained share in both fungicides and insecticides in the key California market for fruits and vegetables, despite difficult market conditions. The portfolio performed particularly well in strawberries and wine grapes. Regalia bio-fungicide was one of the market leaders in its category in California. In row crops the company expanded its international presence for seed treatments and foliar applications.
Gross profit rose 45%, with gross margins of 58.6% year to date in 2020. A higher value sales mix drove the 400 basis point improvement from gross margins in the first nine months of 2020.
Operating expenses in the first nine months of 2020 decreased 4% to $31.1 million. Cost savings were partially offset by the addition of nine months of operating expenses from Pro Farm. Year-to-date operating expenses in 2020 also benefited by $1.4 million from a Paycheck Protection Program (PPP) loan secured to retain employees supporting the essential agricultural industry during the COVID-19 pandemic, which has since been forgiven.
The operating expense ratio of 101% was a step change from the operating expense ratio of 142% in the first nine months of 2019, and reflected the reduction in spending while revenues grew.
Net loss for the first nine months of 2020 was $16.0 million as compared with a net loss of $27 million in the same period last year. The 41% improvement was a function of revenue and gross profit growth coupled with reduced spending. The net loss for the first nine months of 2020 included non-cash adjustments related to warrant exercises, stock compensation and amortization charges. The net loss in the first nine months of 2019 also included a non-cash charge related to a warrant exercise.
Adjusted EBITDA was a loss of $8.8 million year-to-date in 2020, as compared with a loss of $10.7 million for the same period in 2020. The improvement in Adjusted EBITDA reflected the benefit of higher sales and gross profit, and lower operating expenses. Adjusted EBITDA is further described under “Use of Non-GAAP Financial Information” below.
Cash used in operations was $8.6 million year-to-date, a 48 percent improvement that reflected revenue and gross profit growth coupled with cost containment. Cash used in operations in the first nine months of 2020 also benefited from $1.7 million in proceeds from the PPP loan.
Management Commentary
“Our third-quarter results were particularly encouraging as we delivered on our ambitions to expand our international presence and to further penetrate the seed treatment market for row crops,” said Chief Executive Officer Kevin Helash. “The benefit of this strategic shift was reflected in another quarter of gross margins in line with our annual target in the mid-50% range, and sales that keep us on track to achieve full year revenue growth in the range of our historical levels. Additionally, we continue to make progress on cost management, reducing our operating expense ratio while making targeted investments in the areas that will accelerate our path to profitability.
“While we are expanding our business in Latin America, the second half of the year is typically a smaller period for us in terms of revenue,” Helash added. “While we anticipate that our 2020 full-year revenues will be in the range of our historical growth rate, we continue to believe that our sales mix will continue on the historical trend of being stronger in the first half of the year than the second, and will continue to do so as we move forward.”
Conference Call and Webcast
Management will host an investor conference call today 1:30 p.m. PST (4:30 p.m. EST) to discuss Marrone Bio Innovations’ third quarter 2020 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
Q3 2020 Conference Call and Webcast Date: Monday, November 9, 2020 Time: 1:30 p.m. PST (4:30 p.m. EST) U.S. Dial-in: 1-800-437-2398 International Dial-in: 1-323-289-6576 Conference ID: 1021625 Webcast: http://public.viavid.com/index.php?id=141814
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
A playback of the call will be available through December 9, 2020. To listen, call 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally. Please use the replay pin number 1021625. A webcast will also be available for 30 days on the IR section of the Marrone Bio Innovations website or by clicking here: MBII Q3 2020 Webcast
About Marrone Bio Innovations Marrone Bio Innovations Inc. (NASDAQ: MBII) is a growth-oriented company leading the movement to a more sustainable world through the discovery, development and sale of innovative biological products for crop protection, plant health and waterway systems treatment that help customers operate more sustainably while increasing their return on investment. MBI has screened over 18,000 microorganisms and 350 plant extracts, leveraging its in-depth knowledge of plant and soil microbiomes enhanced by advanced molecular technologies and natural product chemistry to rapidly develop seven product lines. Supported by a robust portfolio of over 400 issued and pending patents, MBI’s currently available commercial products are Regalia®, Stargus®, Grandevo®, Venerate®, Majestene®, Haven®, Pacesetter™, Zelto® Jet Oxide® and Jet Ag® and Zequanox®, with a next-generation insecticide-nematicide, a breakthrough bioherbicide and a biofumigant in the Company’s product pipeline. MBI’s Pro Farm Finland-based subsidiary employs a proprietary technology derived from wood waste to stimulate plant growth and improve plant health, resulting in improved yields and crop quality. Products include UBP™ 110, Foramin®, UBP™ Seed Treatment, Foramin® ST.
Learn more about Marrone Bio Innovations at www.marronebio.com. We also use our investor relations website, https://investors.marronebio.com, as well as our corporate Twitter account, @Marronebio, as means of disclosing material non-public information, and encourage our investors and others to monitor and review the information we make public in these locations. Follow us on social media: Twitter, LinkedIn and Instagram.
Non-GAAP Financial Measures This earnings release discusses Adjusted EBITDA which is not a financial measure as defined by GAAP. This financial measure is presented as a supplemental measure of operating performance because we believe it can aid in, and enhance, the understanding of our financial results. In addition, we use Adjusted EBITDA as a measure internally for budgeting purposes.
For a reconciliation of the non-GAAP measures presented in this earnings release to their most directly comparable financial measure prepared in accordance with GAAP, see “Non-GAAP Reconciliation” below. Other companies may define or calculate this measure differently, limiting the usefulness as a comparative measure. Because of this limitation, this non-GAAP financial measure should not be considered in isolation or as substitute for or superior to performance measures calculated in accordance with GAAP and should be read in conjunction with the financial statement tables.
We define Adjusted EBITDA as net income (loss) before (1) interest expense (income), net, (2) income tax expense (benefit), (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, plus (6) from time to time, certain other items which are specific transaction-related items.
GAAP to non-GAAP Reconciliation
(in thousands)
QTD Q3
QTD Q3
YTD Q3
YTD Q3
2020
2019
2020
2019
Net Loss (AS REPORTED)
$
(6,063
)
$
(16,366
)
$
(15,957
)
$
(27,035
)
Taxes
37
-
117
-
Interest expense
405
355
1,073
1,014
Depreciation and amortization
885
524
2,666
1,427
EBITDA
$
(4,736
)
$
(15,487
)
$
(12,101
)
$
(24,594
)
Stock based compensation
964
742
2,755
1,906
Acquisition related costs
-
2,690
-
3,744
Litigation cost and settlement
-
1,405
-
1,914
Loss on modification of warrants
-
1,564
-
1,564
Loss on issuance of new warrants
-
4,751
1,391
4,751
Change in fair value of contingent consideration
200
-
563
-
Reduction in expenses related to PPP funds
-
-
(1,396
)
-
Adjusted EBITDA
$
(3,572
)
$
(4,335
)
$
(8,788
)
$
(10,715
)
Marrone Bio Innovations Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations and plans, including assumptions underlying such statements, are forward-looking statements, and should not be relied upon as representing MBI’s views as of any subsequent date. Examples of such statements include financial guidance and other statements regarding the company’s future revenue growth, margins and other financial results; future adoption of the company’s products; and the potential benefits of the company’s products. Such forward-looking statements are based on information available to the company as of the date of this release and involve a number of risks and uncertainties, some beyond the company’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including the recent uncertainty in the global economy and industry-specific economy caused by the COVID-19 pandemic, consumer, regulatory and other factors affecting demand for the company’s products, any difficulty in marketing MBI’s products in global markets, competition in the market for pest management products, lack of understanding of bio-based pest management products by customers and growers, adverse decisions by regulatory agencies and other relevant third parties and any difficulty in integrating the acquired Pro Farm, Jet-Ag and Jet-Oxide businesses. Additional information that could lead to material changes in MBI’s performance is contained in its filings with the Securities and Exchange Commission. MBI is under no obligation to, and expressly disclaims any responsibility to, update or alter forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.
Marrone Bio Innovations Contacts: Kevin Helash, CEO Jim Boyd, President and CFO Telephone: +1 (530) 750-2800 Email: Info@marronebio.com
Investor Relations: Lucas A. Zimmerman Senior Vice President MZ Group – MZ North America Main: 949-259-4987 MBII@mzgroup.us
MARRONE BIO INNOVATIONS, INC. Condensed Consolidated Balance Sheets (In Thousands, Except Par Value) (Unaudited)
SEPTEMBER 30,
DECEMBER 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
8,971
$
6,252
Accounts receivable
6,827
5,925
Inventories, net
6,193
8,149
Prepaid expenses and other current assets
2,016
1,390
Total current assets
24,007
21,716
Property, plant and equipment, net
12,789
13,260
Right of use assets, net
3,977
4,567
Intangible assets, net
22,079
23,842
Goodwill
6,740
6,764
Restricted cash
1,560
1,560
Other assets
911
1,008
Total assets
$
72,063
$
72,717
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
1,985
$
3,379
Accrued liabilities
13,101
12,467
Deferred revenue, current portion
541
427
Lease liability, current portion
981
913
Debt, current portion, net
6,333
3,899
Total current liabilities
22,941
21,085
Deferred revenue, less current portion
1,688
1,986
Lease liability, less current portion
3,303
3,970
Debt, less current portion, net
11,367
11,847
Debt due to related parties
7,300
7,300
Other liabilities
2,359
2,971
Total liabilities
48,958
49,159
Commitments and contingencies
-
-
Stockholders’ equity:
Preferred stock: $0.00001 par value; 20,000 shares authorized and no shares issued or outstanding at September 30, 2020 and December 31, 2019
—
—
Common stock: $0.00001 par value; 250,000 shares authorized, 152,475 and 139,526 shares issued and outstanding as of September 30, 2020 and December 31, 2019
1
1
Additional paid in capital
359,710
344,206
Accumulated deficit
(336,606
)
(320,649
)
Total stockholders’ equity
23,105
23,558
Total liabilities and stockholders’ equity
$
72,063
$
72,717
MARRONE BIO INNOVATIONS, INC. Condensed Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) (Unaudited)
THREE MONTHS ENDED SEPTEMBER 30,
NINE MONTHS ENDED SEPTEMBER 30,
2020
2019
2020
2019
Revenues:
Product
$
8,697
$
6,859
$
30,295
$
22,342
License
131
107
361
337
Total revenues
8,828
6,966
30,656
22,679
Cost of product revenues
3,826
3,381
12,701
10,298
Gross profit
5,002
3,585
17,955
12,381
Operating Expenses:
Research, development and patent
3,112
3,760
8,658
10,336
Selling, general and administrative
7,335
9,598
22,406
21,876
Total operating expenses
10,447
13,358
31,064
32,212
Loss from operations
(5,445
)
(9,773
)
(13,109
)
(19,831
)
Other income (expense):
Interest expense
(405
)
(355
)
(1,073
)
(1,014
)
Loss on modification of warrants
—
(1,564
)
—
(1,564
)
Loss on issuance of new warrants
—
(4,751
)
(1,391
)
(4,751
)
Change in fair value of contingent consideration
(200
)
—
(563
)
—
Other income (expense), net
24
77
296
126
Total other income (expense), net
(581
)
(6,593
)
(2,731
)
(7,203
)
Loss before taxes
(6,026
)
(16,366
)
(15,840
)
(27,034
)
Income Taxes
(37
)
-
(117
)
-
Net loss
$
(6,063
)
$
(16,366
)
$
(15,957
)
$
(27,034
)
Basic and diluted net loss per common share:
$
(0.04
)
$
(0.14
)
$
(0.11
)
$
(0.24
)
Weighted-average shares outstanding used in computing basic and diluted net loss per common share:
150,233
116,186
146,840
112,553
MARRONE BIO INNOVATIONS, INC. Condensed Consolidated Statements of Cash Flows (In Thousands) (Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
2020
2019
Cash flows from operating activities
Net loss
$
(15,957
)
$
(27,034
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
2,666
1,427
Gain on disposal of equipment
(9
)
(9
)
Right of use assets amortization
590
602
Share-based compensation
2,755
1,906
Non-cash interest expense
175
213
Loss on modification of warrants
—
1,564
Loss on issuance of new warrants
1,391
4,751
Change in fair value of contingent consideration
563
—
Net changes in operating assets and liabilities:
Accounts receivable
(902
)
(4,043
)
Inventories, net
1,956
(84
)
Prepaid Expenses and other assets
(529
)
(904
)
Accounts payable
(1,337
)
(384
)
Accrued and other liabilities
981
6,571
Lease Liability
(599
)
(471
)
Deferred revenue
(344
)
(500
)
Net cash used in operating activities
(8,600
)
(16,395
)
Cash flows from investing activities
Payment of contingent consideration in connection with previous asset purchase
(890
)
(544
)
Sale of property, plant, equipment
2
—
Business combination, net of cash acquired
-
(5,849
)
Purchases of property, plant and equipment
(458
)
(218
)
Net cash used in investing activities
(1,346
)
(6,611
)
Cash flows from financing activities
Proceeds from secured borrowings
32,837
24,005
Reductions in secured borrowings
(30,461
)
(21,123
)
Net settlement of options
—
—
Financing costs
(64
)
—
Exercise of stock options
31
55
Proceeds from employee stock purchase plan
179
80
Exercise of warrants
10,580
10,000
Repayment of debt
(437
)
(333
)
Net cash provided by financing activities
12,665
12,684
Net increase (decrease) in cash and cash equivalents and restricted cash
2,719
(10,322
)
Cash and cash equivalents and restricted cash, beginning of period
7,812
19,781
Cash and cash equivalents and restricted cash, end of period
$
10,531
$
9,459
Supplemental disclosure of cash flow information
Cash paid for interest
$
884
$
794
Supplemental disclosure of non-cash operating activities
Reclass of restricted stock units in lieu of cash bonus
$
632
$
—
Supplemental disclosure of non-cash investing and financing activities
Property, plant and equipment included in accounts payable and accrued liabilities
$
35
$
5
Fair value of non-cash consideration issued in acquisition transactions
