Davis, California, USA
March 12, 2020

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Marrone Bio Innovations, Inc. (NASDAQ: MBII) (“Marrone Bio” or the “Company”), an international leader in sustainable bioprotection and plant health solutions, has provided its financial results for the fourth quarter and full year ended December 31, 2019.

Selected Operating and Financial Highlights

1) 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.

Fourth Quarter 2019 Financial Summary

• Fourth quarter 2019 revenues increased 17 percent to $6.7 million, driven primarily by increased sales of the Company’s Regalia biofungicide and Majestene/Zelto nematicide, as well as the Company’s recently acquired Pro Farm bionutrient products.  Sales of seed treatments continued to be strong, including revenues in Europe from the Company’s Pro Farm products.
   
• Gross margins improved by 530 basis points in the fourth quarter of 2019 to 55.8 percent with gross profits of $3.7 million, as the company logged its fifth consecutive quarter of achieving gross margins above 50 percent. 
   
• Operating expenses were $11.9 million in the fourth quarter of 2019, and included $1.1 million in specific transaction-related, legal settlement and acquisition-related expenses. The remaining increase was due to planned strategic investments to drive commercial growth and accelerate research and development (R&D) programs, as well as incremental operating expenses from newly acquired businesses and products.
   
• Net loss in the fourth quarter of 2019 was $10.1 million, as compared with a net loss of $5.6 million in the fourth quarter of 2018. The increase in net loss was a result of higher operating expenses, primarily attributed to $0.8 million in acquisition and litigation-related expenses, as well as a $1.3 million non-cash charge related to the estimated fair value of a warrant exercise made under the Company’s new financing facility. Adjusted to exclude acquisition related expenses as well as the non-cash charge associated with the Company’s new warrant facility, net loss from continuing operations decreased by $2.0 million.
   
• Adjusted EBITDA, a non-GAAP financial measure, was a $5.6 million loss in the fourth quarter of 2019, compared with a $4.3 million loss in the fourth quarter of 2018.  Adjusted EBITDA is further described in relation to its most directly comparable GAAP measure under “Use of Non-GAAP Financial Information” below.
   
• Cash used in operations in the fourth quarter of 2019 was $5.0 million, compared with cash used in operations of $2.6 million in the same period in 2018, reflecting an increase in operating expenses for select R&D pipeline projects, investment in commercial operations and the addition of Pro Farm.

Full Year 2019 Financial Summary

• Revenues increased 38 percent to $29.4 million in 2019, compared with revenues of $21.2 million in 2018. Record revenues in 2019 reflected double-digit sales growth across the Venerate and Regalia product families, and the addition of partial year sales for the newly acquired Pro Farm portfolio and Jet-Ag/Jet-Oxide assets.
   
• Gross profit growth in 2019 outpaced revenue growth and rose 56 percent to $16.1 million.  Gross margins reached 54.9 percent in 2019, a 630 basis point improvement over 2018. Strong sales and a favorable product mix drove the gross margin improvement.
   
• Operating expenses for 2019 were $44.1 million, compared with $29.8 million in 2018.  The increased spending included $6.4 million in specific transaction, litigation and acquisition-related expenses.  The remaining difference of $7.9 million, or approximately $2 million per quarter, reflects the Company’s investments in the company’s commercial operations, R&D pipeline as well as incremental operating expenses from newly acquired businesses and products.
   
• Net loss in 2019 was $37.2 million, compared with a net loss of $20.2 million in 2018. The increase in net loss reflected the $6.4 million in acquisition and litigation related expenses as well as $7.6 million in non-cash charges related to the company’s new warrant financing facility – excluding these expenses, there was a net $3.0 million increase over last year.
• Adjusted EBITDA, a non-GAAP financial measure, remained approximately flat year over year at a $16.0 million loss in 2019, as compared to a $15.7 million loss in 2018. Adjusted EBITDA is further described in relation to its most directly comparable GAAP measure under “Use of Non-GAAP Financial Information” below.
   
• Cash used in operations in 2019 was $21.4 million, compared with cash used in operations of $19.4 million in 2018.

Management Commentary

“The company delivered across the board on its growth initiatives in 2019. The investments made in our commercial operations and R&D-led process improvements paid significant dividends with substantial revenue growth and gross margin expansion,” said Dr. Pam Marrone, Chief Executive Officer of Marrone Bio Innovations. “The success of our BioUnite program, the power of biology with the performance of chemistry, drove home the value of biologicals in our customers crop production programs.”

“We also delivered significant advancements from our strategic investments in R&D this year, and this pipeline portends well for the long-term growth of the company,” Dr. Marrone added.  “With the acquisition of Pro Farm and our continued investment in our bioprotection seed treatment portfolio, we have significantly transitioned the company to a point where row crop seed treatments represent approximately one third of our 2019 revenue, and we expect will continue to grow as we move forward – making us an emerging leader in the significant row crop seed treatment market.”

Operational Highlights

• 2019 field trial results for the Company’s MBI-203 and MBI-206 biological seed treatments in Europe demonstrated improved yields and cost-effective control of soil insects and nematodes equivalent to or better than current industry standards.
   
• Results of 2019 U.S. field trials at six Midwest locations of the company’s next-generation nematicide/insecticide showed cost-effective control of yield-robbing corn pests (corn rootworm, seed corn maggot) and lesion nematodes equivalent to or better than current industry chemical standards.
   
• In U.S. corn and soybean field trials showing the power of Marrone Bio’s BioUnite programs, Regalia biofungicide, or the Company’s Pro Farm products, combined with a chemical fungicide significantly increased yields above the chemical fungicide or Marrone Bio’s products used alone. In addition, in a total biological program, Regalia combined with Marrone Bio’s Pro Farm product also increased yields in combination better than either alone.
   
• Market share in California almonds increased substantially due to Marrone Bio’s BioUnite integrated pest management programs for key pests such as navel orangeworm.
   
• Two of the company’s biofungicide products — Stargus® and Regalia® — have been approved by the U.S. Environmental Protection Agency (EPA) for indoor and outdoor use on hemp plants. This is the first time that the EPA has approved crop protection products on hemp since the crop became legal to grow under the 2018 Farm Bill.
   
• Marrone Bio’s novel, patented Bacillus biofungicide, Stargus®, has been approved by the California Department of Pesticide Regulation for immediate use by growers in California on several crops, including grapes, leafy greens, brassicas, strawberries, cucurbits and fruiting vegetables.
   
• A new study, the first of its kind, was conducted to determine the greenhouse gas effects of selected Marrone Bio biopesticides and plant health products compared with conventional chemical pesticide products. Based on a comparative assessment of pesticidal products’ manufacturing processes, labeled rates and seasonal use practices, using current MBI biopesticides would, on average, potentially result in net reductions of greenhouse gas emissions of 69% to 91% (or 39 to 46 Kilograms of CO2 equivalents per acre per year).
   
• Marrone Bio announced a $13.0 million expansion of its existing accounts-receivable credit facility, which now totals $20.0 million, as well as the addition of a $3.0 million inventory-backed credit facility to support the company as it continues to grow its revenue.

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Website: http://marronebioinnovations.com/

Published: March 12, 2020