Davis, California, USA
April 28, 2021
Marrone Bio Innovations, Inc. (NASDAQ: MBII), an international leader in providing growers with sustainable bioprotection and plant health solutions to support global agricultural needs, today released an update letter to shareholders from Chief Executive Officer Kevin Helash.
Dear Shareholders,
Spring has arrived in the Northern Hemisphere, and, with it, the start of a new growing season for all crops. This is a key time of year for Marrone Bio as well, as our products are rapidly moving through the distribution channel to the farm. With roughly one-third of the year behind us, early indicators point to a strong 2021 for MBI.
This will be a pivotable year in MBI’s growth trajectory, as we launch four new products, expand our distribution partnerships, and extend our global market reach with innovative, sustainable biological products that create exceptional value for our distribution partners and our growers. There is a lot to do, but we feel confident we are on-track to deliver on all our key objectives in 2021.
We’ll issue our first-quarter results in mid-May, and I’m pleased to report that performance was in line with our expectations in what is typically our seasonally slowest period. Our shipments in April started strong, and we are continuing the momentum we saw at the end of the first quarter.
We now are increasing our forecast for full-year revenue growth to the upper 20% range. We also are raising our annual gross margin target to the upper 50% range. In addition, we continue to judiciously manage operating expenses to meet our goal of driving top-line revenue growth and achieving positive Adjusted EBITDA.
Market signals support greater demand for our seed treatments. Corn and soybean prices are at their highest levels since the spring of 2014 and are sparking higher projected plantings in the United States. The start to the growing season in Europe also looks strong, with a rebound expected for both cereal and oilseed planted areas. In the Southern Hemisphere, expectations for the safrinha crop season -- the second and largest corn planting in Brazil -- are solid despite some early season weather issues.
Long-term expansion in seed treatments and row crops is central to our growth strategy. In 2020, our biological seed treatments were used on approximately 6% of soybeans, corn and cotton planted in the United States, and we are rapidly growing our share on the corn, sunflower and rapeseed acres planted in the European Union and neighboring countries. Obviously, the greatest opportunity in the seed treatment market is ahead of us.
Seed-and-soil treatments were 37% of our sales in 2020, and, in 2023, we would anticipate that they will be 45% of an ever-larger revenue pie. This correlates to our 2023 target of expanding row crops to more than 50% of our revenues and will support the diversification of our sales mix to a roughly even split between North America and the rest of the world. Furthermore, we will be launching two new seed treatments in the EU this year – Takla™ and Ympact™ – which will add to our market expansion and profitability in the coming years.
Biological seed treatments have become a vital tool for growers seeking more sustainable crop protection solutions. We will be releasing shortly an independent study of our leading seed treatment product. This intensive analysis showed that use of the product reduces greenhouse gas emissions in soybeans and corn by 85%+ when compared with the use of conventional pesticides. We continue to demonstrate that our seed treatment product line not only delivers outstanding crop protection performance and industry leading return on investment for our grower customers, but also serves to protect the environment and beneficial organisms, including pollinators.
Our growth – now and in the future -- is predicated on the demand for a more sustainable approach to agriculture. We are clearly at an inflection point as we move ever closer to breakeven on an Adjusted EBITDA basis through a combination of robust top line growth, continued strong margins, and a flattening operating expense curve. We look forward to sharing more details with you in a few weeks when we release our first-quarter results.
All the best,
Kevin Helash
Chief Executive Officer
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