MBII - Earnings call transcript Q1 2018 | Marrone Bio Innovations Inc

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Operator

Good day, and welcome to the Marrone Bio Innovations First Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Linda Moore, General Counsel. Please go ahead.

Linda Moore

Good afternoon, everyone, and thank you for joining our call.

as like statements you beliefs, future regarding strategies the would call this intentions events I forecasts regarding contain projections, may management's future or beginning, circumstances. to characterizations that remind conference or or Before other as of well expectations, hopes, Such based current on expectations future beliefs concerning statements and the their company. are developments potential management's and effects on will that be no can assurance future developments the anticipated. be that those company management has There affecting and uncertainties, may statements of a or involve by of risks or from that Such beyond these are assumptions performance different control, implied cause some management's expressed materially number which results or those statements. to other be actual Securities that contained on under differences posted are including quarter on the could and filed the our in heading factors website. and Risk by for release in XX-Q cause of report Exchange with quarterly and XXXX the company's in Factors Commission, reports Important first the the elsewhere Form the the company's company earnings Should may one management's actual or incorrect, uncertainties assumptions respects prove more any results risks or should materialize in those discussed of material from today. of vary or these that in a estimate. represents offer conference call point-in-time management guidance may this Any update disclaims that reflect The to company statements the call. arise any any guidance date forward-looking revise after events expressly other or may or circumstances obligations to or of this question-and-answer remarks, our session. hold will After a we to over call Pam and Founder the turn our Chief now will I Marrone. Officer, Executive Pam?

Pam Marrone

General Financial everyone and Counsel. thank our to our and Good for us. heard, Chief you, Thank Jim afternoon, just Linda as today Officer; you Boyd, With joining Linda. President and you Moore, me is

dramatically us our debt our execute by our to refinancing business balance was sheet The initiatives, first of XXXX allow comprehensive capital quarter raise plan. upon aggressively and and improved which highlighted

the I've CEO and of optimistic been several the ways. more seen our never I'm that can Bio the say growth today I The opportunities business Founder is company. health in about than As confidently of Innovations, Marrone of

us converted raised have our proceeds financing, from principle these of the with company our sale as the sufficient connection $XX stronger million purchase customers, we the provides growers foreseeable and with to and can net our which of million distributors in confidence. with balance First, $XX stock to debt, planned products currently in sheet, in fund common long-term our future. for resources With operations

XXXX: we products Second, already And launched we've in first protectant of March Zelto our two January biofungicide bioinsecticide/nematicide, new and sun in Stargus in Haven brand launched in XXXX. turf December.

markets into Officer the of years of Philippines Kevin MBI's leadership trials back and team areas, industry. in Hammill biologicals large commercial as other global pesticide the agrichemical within have we really hire experience. U.S., Chief and commercial -- Kevin presence recently we has a develop managerial, Commercial and come promising very worldwide. key XX Vietnam, Brazil, including Third, Fourth, to and the field Europe, announced position

MBI's which As we you events In we today and than distribution and momentum were follows: issued total America. stronger a weeds execution, even key our through XXXX, control can of continued new rice the expanded received one positive and ago. XXX turf, U.S. deals in than network of pending we Philippines see, are and for and as for year international of patents. our in first to Central strengthening use company Israel, quarter clearly the included operational bioherbicide property of much we the MBI MBI's noteworthy a portfolio more patent intellectual several a

treatment XXXX. into launched One of market our crop our microbes seed was row via partner, in strategic successfully Albaugh,

in increasing in research efforts of the and successfully manufacturing our We Majestene. filling the management for and a industrial estimated cannabis, Stargus several anticipate for year consistent exclusive million already by customers. and Grandevo our scaled rice basis. Use with show apples. moth the R&D improvement XX% in Grandevo more been consolidated sales high rice disease automatic production on on its represent of grape treatment use packaging has to on and properties on Zequanox with exceptional than and We XX process results. Northwest. the outstanding third-largest is grape yields targeting positive go-forward years. that coming for of against rapidly golf growth world's exporter to in the growth showed million this acres, of in We enhanced a seed courses. and MBI insecticide We and of significant a believe Zelto, margins. turf development, We growing on expect in Stargus trials Also we and of protection and XXXX, distribution control improved key Zequanox efficiency strong is the in Vietnam, acres growth this and drive From partnership an An power pipeline and X market applied Venerate quarter favorable Grandevo In launched a efficacy mealybugs efficiency $X recognized another in the mildew, on MBI. Regalia estimate berry installed mix, line a $XX which Grandevo improving of Pacific in XX% translate agreement commercial that markets increased We to for results announced have several significant this continued first and has increase gross standpoint standard. cleared Vietnam, quarter, programs in could X three into marketplace. nematicide of plant, apples company. gross significant million Regalia a Michigan partnership the there Data as manufacturing Venerate plant the potential an been to gross in the nematicidal biological are million states downy plant. revenue We showed million MBI custard Regalia, Europe, product made an Michigan as trial in and on margins, while In margin next a will for Solenis, area and to

in The all been next the MBI-XXX too in preparing caterpillars typical to the The progressing major greenhouse California rains for Pacific are phase we with field from sucking candidates for quarter. late accomplishments a plants in in of In achieved XXXX quarter bioherbicide and expected cotton. We these entire development collaboration into beetles, homestretch presented Evogene, validation view submission. with conditions and with unfavorable are trials of the moved our to and EPA of first several again, the markets, of the ag activity that results next spraying yet in season. sprays followed bugs. weather against have announced as steps the We many key in in have soybeans of reduced of Weather, came the especially the challenges where number the industry. Northwest, first by

success portfolio one product impact to the variable growth the to our average. approach on as reduce We of allowed marketing industry above the Fortunately, portfolio a and is development the has designed approach and product achieve whole. believe historically any base company diversify to revenue of us our this

which In we out addition, in fluctuations will to help term. geographically, diligently longer work the seasonal grow should continue smooth to to sales

additional our on A of the like walk that the formulations was ease you live and like for on now new The not products, us of before and have one our stronger microbes as more biostimulant financial by MBI-XXX. robust other As spectrum. go use, now pending and patent a and some in six pipeline These on of numbers significant on life chemistry, call products patent up call shelf and of national proprietary biopesticide market. balance a product to to the protected new the going But product XXX noted Q&A. I before Jim through products our microorganisms, I'll companies covering position terms performance. are chemistry turn further, other with provides pipeline EPA-approved issued robust over detail products XXXX portfolio the very products, wrapping strategic are provide natural uses in XXXX received to through and of pests. over Jim? based initiatives Afterwards, well herbicide, we would as product our second other mixtures, and patents, fact previously, and

Jim Boyd

Thank you, Pam.

first affected increased quarter the I noted, million you compared to $X.X quarter like results. spray season walk revenues As XXXX typical XXXX. of first million lack first through a our first in turnover our as Pacific California's Revenues the were $X.X of sales quarter for by the XXXX would to well of in to in rain quarter GAAP and as during Northwest the force.

method, business, first we quarter have our Our sell-in upon on adopted force and to sheet new the will generally in as X, were believe the we strengthening January Starting recognize ASC our the during addressed perceived to to impacted be similar us a which distributors. XXX. accounting revenues product regarding revenue April by and basis to old XXXX. commonly we XXXX, standard revenues GAAP allowing shipment balance our uncertainties go-forward sales revenues by referred

run a sheet XXXX will As XXX. compared earnings XX.X% be in be not will under and reporting that the no recognized XXXX shipments our the Gross ACS quarter with XX.X% to income as GAAP statement note the 'XX, number mean. $X.X of deferred this first revenue retained Please through in result, million deferred in to starting balance quarter. revenues XXX. booked estimated accordance product quarter not in our we in Instead, XXXX were be an non-GAAP million XXXX revenues of longer first as will margins the ASC -- I our $X.X

mix favorable benefited First production from a gross in product improvements quarter and margins efficiencies.

production yields gross implement quarter and We of increases first manufacturing. SG&A our $X.X expenses. life $X.X as quarter same in managing expenses to our and compared products $X remain potencies improve last of in compared to expect to million continue the million focused to year. first see first the R&D we the were in on each period operating as over and XXXX increase decreased million the quarter margins in in to of XXXX. $X.X efficiencies of million We processes the

and our expect expenses will of in slightly up departments We which XXXX. all to exception the in approximately sales marketing, be operating flat with be

on million in as which investing million Interest was in well fourth as should to new expense expand compared putting first of XXXX. are $X.X quarter develop customers quarter in quarter $X.X grower more marketing existing increase first by We customers. sales boots business ground, and the -- demand, of with of the XXXX the

out less interest future conversion the $X.X in be remaining expense principal expense interest $XX debt pay long-term X and the note our loan balance as a credit Snyder of of significantly we plant of expense million & under all guaranteed million quarters, on have we expect notes. Waddell which other our outstanding the interest of on $X.X capitalization XX, capital including March will a recognize to due million USDA and our for million Please line working and Michigan under continue promissory to the that in basis. to of the loans, and Reed on go-forward under We $X our future XXXX,

a shares XX, fair common of ended well During of a moment, XXXX of net the significant that, our for market as receive I gain, XXXX, share agreed March a number $X.X quarter, per value gain a in in below increase debt months to will book debt recognized equity respectively. is our share equity. essentially on value. $X.XX three the to This stock the $X.XX of discuss loss means as conversion What outstanding, million per share with holders with per this reduced our to from and in the transaction connection some our we the

equivalents balance the $XX.X $XX.X $XX at -- sheet. was of cash raised the as cash quarter quarter. additional Noted in of 'XX. December end net included this at first to the turning million the million proceeds million note, at Both end million an restricted April. compared cash and Inventory $X.X of the end to we Now was in

on debt quarter, the of During at was part common above in stock comprehensive that closed transaction more converted our market XX% per share, was our two holders of in date February the financing conversion. price of XXXX. converted debt the $X.XX long-term million to price debt than by The as $XX a

$X.X transaction the XX, We XXXX. the also over all the of paid outstanding the of accounting the balance be principal of at continue after December with have X associated defer to extinguishment, and by After with those increase outstanding interest portion were the debt expected combined of to maturity we life of were payments reduced the remaining remaining on conversion, to notes debt principal rules until holders a Because able to that required notes. amount the debt remaining interest million. due

As outstanding result, is debt a balance notes. higher GAAP contractual million approximately our than principal $X.X those principal under the amount

in two these loan was February with loan not outstanding XX, will XXXX. were In converted. offering connection generated the we treatment, which future. the our to truly under investors which $XX believe outstanding with sold we XXXX, April initiatives equity warrants where was was proceeds I'd million which bridge in expense net of loan common million currently sold February we back to net inclusive sufficient comprehensive on the From notes million now some October XXXX, institutional as XXXX, common proceeds interest fund accounting proceeds. the additional Significantly, December bridge we million $XX.X period transaction $X the in that at XX, through on this which to million a our stock stock raised in completed was to March under we planned of loan the placement of gross we for a in public closed as for converted transactions have Net the the resources proceeds $XX.X recognize borrowed in a were of equity, with zero $XX.X financing $XX bridge sales year. approximately the our facility. turn our and a totally of XXXX, million. financing like common X because connection any million for comprehensive XXXX transactions, a transformative we in and transaction call company the $XX However, to certain on principal private Pam? attached remainder These as of of converted of in Pam million foreseeable to debt basis. of in proceeds and as the of go-forward January approximately bridge of closed long-term in gross with operations discussion also point stock XXXX,

Pam Marrone

Jim. you, Thank

where on focus key want remain great goals will have our the XXXX. made operations. progress highlight balance and of to for I We strategic now

our manufacturing Operationally, facility; a increase we and continued regulatory margin global In and team for XXXX leading company Morocco, least targeted Europe, initiatives early and companies On New the driver growth continued business acre cannabis international, the we to sales around of our us MBI; our on our represent focused than MBI-XXX seed production of CG in BioAg; cannabis with international stronger treatment three product of with large Ecuador, brand international Canada and Regalia, into we bio-stacked approvals, front, as anticipate partner, the market, continue with on placement seed Canada, execution international including Majestene for targeted laser dry use expect in the more biofumigant, organic partner, to regulatory home Ennoble, with markets; and Amplitude to treatment several Canada. beans, crops, our market a potential Albaugh; Hammill. improvement Regalia ever, basis; expect significant launch pipeline industrial the biofungicide Australia growth agreements plant our growers; at sales Zealand; in a Kevin into Philippines segment hire as we seed marketing on of we and and gross of a we Kenya, R&D remain significant Groundwork And Grandevo the approval Africa, to our including of sales in Officer, key our expect garden sign submissions, with new placement adopter the of several of Venerate, Solenis. Commercial growth distribution South such launch build high-performance which Zequanox and the Chief as Brazil, Venerate efficiencies. and adding commercial for go-forward power building to Michigan with in customers new

We confidence have to key force existing longer-term us. presence strengthening up realize the have tremendous the global dedication. our thank biologicals our building their ag and and partnerships, synergistic significant a channel other all technologies. like with debt increasing market questions. We growers and in large now responsibility as of work our for combined holders placed for on focused and hard the call production. our own being are the our the open products our to that, I'd potential proud of and recognize they extremely products, vision I'm through our With we investors crop employees also in and new leading MBI's while Operator? leading company with We biologicals for

Operator

And go Instructions] first we'll H.C. [Operator Joshi Wainwright. to Sameer with

Sameer Joshi

question first around going you team building any a great The relates role, these or person to mentioned will are some to more hires? you Can and that. international in will if of us give to recent in It's hire. be you there be see your terms on where experienced distributed that sales be geographically light that

Pam Marrone

have an additional Latin budget We the Sure. in America do resource.

We -- apples tree there. fruit to apples, serve Eastern significant there organic market, added the Washington have are of acres particularly considerable and fruit

added market, territory that, have service potato segment, which we the beans also have We is to in a large Idaho dry which and now a the market. Amplitude new for

the have I Majestene offerings but in additional anything, an in are but for and and Did now Regalia, already soil we miss added adding are No. person Amplitude And added or additional had lot we gets the California, well. -- Jim? the potatoes Southeast. in have like -- we as California, person -- diseases adding then of we We we some

that's it, Okay. I right? think

Sameer Joshi

Okay.

just So hire. international, American one your in terms in up approach be with going The signing of is that Latin was this list hire mentioned Is only distributors. to correct? you

Pam Marrone

That's right. correct. We Right. --

or distributors manage and for them. people to international then national distributors and have use strategy help regional to is exclusive those -- Our territory in

the there's And in more various Black Sigatoka intensive ground. market we which a that's gets, other also ground, opportunity we'd to once and offering a we And where and the in have then above is considerable then banana spray for there Majestene diseases. and Regalia they for add -- bananas, even than to all a on someone week market, us there's like of package. help really America in a so Grandevo see we then beautiful for full pests to very below and banana Now a Venerate control Latin in that data the thrips and good have

Sameer Joshi

West. rebound impact remarks, you which Thanks have in of weather may mentioned the the do effects XQ Or you Is unfavorable topline? that lingering prepared are -- XQ? In seeing some the there you color. already see your in -- for that, you

Pam Marrone

half Well, the we in are looking for the second growing year. a and of momentum QX then stronger

Sameer Joshi

You are.

Okay.

you product the homestretch of idea like of give launches, then you're Can mentioned time terms a In filing MB-XXX. timing approval you on and expected of us of line? actual

Pam Marrone

Well, a the than longer And team think next Registration do Improvement controls grower on the this Pesticide of up getting of X is I targeting. time tox but statutory taking months there's hard years working a XX months we under months. The took PRIA, that dossier. we we're or the lot had finishing have studies because the keen in the expected, on so, couple product then resistant Act, are frame typically pigweed. They're but to XX of groups it

potentially will And the conservative at at we're emergency time more an use them but get petition for looking it so having on look we planning sooner, could which line.

Sameer Joshi

I different is question, you third in guess in materializing Can means most the so? last be quarter, more cannabis is it the line? Do about what announcement. over next color I from going give actually the it like to quarter? of see guys or states guess, you Or near us to you the My the your top term forward think for important, orders the X going year this do fourth you

Pam Marrone

Washington. and Oregon Colorado, got we So

approved and Regalia, are Venerate. CG Grandevo We brand now for

X still in approved states. now are California, We those pending.

of when regulatory a have business. than in, have commercial federal operations think be the have Canada, there's go whereas whole they of products. we in really be framework row even whole big the patchwork and across a -- U.S., because And going to Canada, supposed will rules then one to country is state we So nice significant lot this going Canada summer U.S. late you bigger and

efficacy Canada but data. requires So --

we the We the data Regalia. efficacy of Regalia in on summer Venerate. Canada Regalia are -- for submission well. Grandevo approval completing have expect We and the data and first in made efficacy already as therefore, And the

then we that sales have So Canada in continue kicks registrations the will certainly to the on U.S. will based existing sales. uptick uptick -- in, the when And the

the... So

Jim Boyd

talk to want about size you Do the market... the of

Pam Marrone

School and said months frame. UC which Canada but sizable. the of a is segment, from we was and $XX billion Davis. by about several Yes. but plus to that of $X Washington before Management TAM pesticides, Vermont fertilizers they other Colorado, than add -- XX It's the over with But already million Well, did $X.X had -- looking and study going is Oregon, now California, and the higher XXXX billion that, that billion to old, the went so Graduate was you That and growth legal, time input then pretty Massachusetts now. grow $X.X states the is to and

been So sustainably certainly pest that we some more are believe more products diseases great to be that and the have our the manage to of than there toxic used. products with

Sameer Joshi

Just a quick follow-up.

are product you cannabis still is have significant had I largest. your the distributor one distributors? saying for that fifth you think So mentioned of lines, you

Pam Marrone

don't but are Yes. I significant. one are -- they our number They five, they five, if they're number are know but of significant

did another our a around add like large significant up way place do and making already. late who we did hydroponic as additional setting Canada to how last we order going well. distributor we're year, are distributors did We But add

Jim Boyd

dedicated sales And to just rep the so calls actually into the voluminous, a we've market address and market. in hired are that quite cannabis influences the company

Operator

Laurence Instructions] Alexander to [Operator We'll Jefferies. of go next

Nicholas Cecero

Nick is Laurence. on This Cecero for

real becomes are and I more other they a health concerns chemical just If of do same the there's related kind press first than protection, rather question differentiated? risk Or the biologicals been So about trend, use formulations this to APIs. additives? crop guess my surfactants

Pam Marrone

sales both like all I beautiful a organic about production. And products question. conventional that our a have one listed of reminder, goes are are our for for that's conventional. to We as love and because of it XX% Oh, to product organic.

seeing risk But in pretty the we are because types that food typically small under list. and formulation products. organic, that's benefits we in use have in growers are much are the have ingredients organic these an allowed Program, National that very our ingredients they low our risk because we of our it's lower grade, of the a products ones conventional Organic they're because in So

advantage not do do chemicals companies number the the chemical have to use that that and we So large inert. of can they

our on be So creative our coming to products with and the have what's stabilize list. products to in up organic using scientists quite preserve ways our

Nicholas Cecero

And few data if guess I stable then as changing, over products have spread commercial changing you time? sense look do the at trial against or the why? field over performance they're are past years, And any you

Pam Marrone

working really What we're interesting, time seeing over I better into that question. why compared globally it's products that's I believe case, resistance that. coming commercial standards. believe that is And the What's good to is our another

we'll gone some the low used priced. back-to-back. have classes chemical see So that heavily of and used generic. been They're around. They've They're

and alternative certainly, intense well, that And incorporated markets, products working into and better these not action make because chemicals our they're as some of the of an in working it's resistance. are they're when mode so And we often probably better. we're breaking programs,

Operator

time, questions. no this show At additional I

it So like I back Marrone. to Pam to would turn

Pam Marrone

I joining In of today. closing, Thank want to us you you, each thank operator. for

shows We continue conferences both to coasts. on conduct and road attend

term. as move the we number contact please key interested over with a or you a arrange. forward to look our you're if progress longer build shareholder firm, meeting, Thank updating you. our IR in We forward initiatives MZ to Group, on So of to management

Operator

This concludes Thank today's for participation. call. you your

disconnect. now may You

Marrone Bio Innovations (MBII) 11 May 182018 Q1 Earnings call transcript