Davis, California, USA
Nov. 9, 2020

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

 * Adjusted EBITDA is a non-GAAP financial measure and is described in relation to its most directly comparable GAAP measure under "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.”

Website: http://marronebioinnovations.com/

Published: November 9, 2020