MBII - Marrone Bio Innovations Inc. Reports Record Fourth Quarter and Full Year 2019 Financial Results
Full Year Revenues Rose 38 Percent to a Record $29.4 Million, Driving Record Annual Gross Margins of 54.9 Percent
Record Fourth Quarter Revenues Increased 17 Percent, with Record Gross Margins of 55.8 Percent
DAVIS, Calif., March 12, 2020 (GLOBE NEWSWIRE) -- 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
| $ in millions |
| Q4 2019 |
| Q4 2018 |
| % Increase (Decrease) |
| FY 2019 |
| FY 2018 |
| % Increase (Decrease) |
| Revenues |
| $6.7 |
| $5.7 |
| 17% |
| $29.4 |
| $21.2 |
| 38% |
| Gross Profit |
| $3.7 |
| $2.9 |
| 29% |
| $16.1 |
| $10.3 |
| 56% |
| Gross Margin |
| 55.8% |
| 50.5% |
| + 530bps |
| 54.9% |
| 48.6% |
| + 630bps |
| Operating Expenses |
| $11.9 |
| $8.3 |
| 44% |
| $44.1 |
| $29.8 |
| 48% |
| Net Loss |
| $(10.1) |
| $(5.6) |
| 80% |
| $(37.2) |
| $(20.2) |
| 84% |
| Adjusted EBITDA1 |
| $(5.6) |
| $(4.3) |
| (19%) |
| $(16.0) |
| $(15.7) |
| 2% |
| Cash Used in Operations |
| $(5.0) |
| $(2.6) |
| 92% |
| $(21.4) |
| $(19.4) |
| 10% |
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.
Conference Call and Webcast
Management will host an investor conference call today, March 12, 2020, at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss Marrone Bio Innovations’ 2019 fourth quarter and full year financial results. The call will conclude with a Q&A from participants. To participate, please use the following information:
Q4 2019 Conference Call and Webcast
Date: Thursday, March 12, 2020
Time: 1:30 p.m. Pacific time (4:30 p.m. Eastern time)
U.S. Dial-in: 1-888-220-8451
International Dial-in: 1-323-701-0225
Conference ID: 3434674
Webcast: http://public.viavid.com/index.php?id=138332
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 April 12, 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 3434674. A webcast will also be available for 30 days on the IR section of the Marrone Bio Innovations website or by clicking here: http://public.viavid.com/index.php?id=138332.
Use of Non-GAAP Financial Information
This earnings release discusses Adjusted EBITDA, which is not a financial measure as defined by generally accepted accounting principles in the United States (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. 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, and (6) from time to time, certain specific transaction-related costs and other non-cash charges related to debt and equity instruments.
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 a substitute for or superior to performance measures calculated in accordance with GAAP and should be read in conjunction with the financial statement tables.
| GAAP to non-GAAP Reconciliation |
| YEARS ENDED DECEMBER 31, |
| 2019 |
| 2018 |
| Net Loss |
| $ |
| (37,175) |
| $ |
| (20,213) |
| Income taxes expense |
| 15 |
| - |
| Depreciation and amortization |
| 2,349 |
| 1,890 |
| Stock based compensation |
| 3,686 |
| 1,850 |
| Acquisition related costs |
| 3,744 |
| - |
| Litigation cost and settlement |
| 1,914 |
| 111 |
| Interest expense |
| 1,474 |
| 2,057 |
| Interest expense, related parties |
| - |
| 451 |
| Change in fair value of financial instruments |
| - |
| 5,177 |
| Loss on debt extinguishment, net |
| - |
| 2,196 |
| Gain on debt extinguishment, related party |
| - |
| (9,183) |
| Incremental charge related to warrant modification |
| 1,564 |
| - |
| Fair value of new warrants issued related to call of previous warrants |
| 6,065 |
| - |
| Change in fair value of contingent consideration |
| 342 |
| Adjusted EBITDA |
| $ |
| (16,022) |
| $ |
| (15,664) |
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®, Jet-Ag® and Zequanox®, with a breakthrough bioherbicide and biofumigant in the Company’s product pipeline. MBI’s Finland-based subsidiary Pro Farm® 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 the seed treatment and bionutrient products UBP-110®, Foramin®, LumiBio™, LumiBio Valta™?, and LumiBio Kelta.™
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.
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 statements regarding the Company’s future financial results, future adoption of the Company’s products, including growth in seed treatment sales, and the potential benefits of recent acquisitions and 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 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:
Pam Marrone, CEO and Founder
Jim Boyd, President and CFO
Telephone: +1 (530) 750-2800
Email: Info@marronebio.com
Investor Relations:
Greg Falesnik
Managing Director
MZ Group – MZ North America
Main: 949-385-6449
MBII@mzgroup.us
MARRONE BIO INNOVATIONS, INC.
Condensed Consolidated Balance Sheets
(In Thousands, Except Par Value)
| DECEMBER 31, |
| 2019 |
| 2018 |
| Assets |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 6,252 |
| $ |
| 18,221 |
| Accounts receivable |
| 5,925 |
| 2,720 |
| Inventories, net |
| 8,149 |
| 8,224 |
| Prepaid expenses and other current assets |
| 1,390 |
| 971 |
| Total current assets |
| 21,716 |
| 30,136 |
| Property, plant and equipment, net |
| 13,260 |
| 14,512 |
| Right of use assets, net |
| 4,567 |
| — |
| Intangible assets, net |
| 23,842 |
| — |
| Goodwill |
| 6,764 |
| — |
| Restricted cash |
| 1,560 |
| 1,560 |
| Other assets |
| 1,008 |
| 359 |
| Total assets |
| $ |
| 72,717 |
| $ |
| 46,567 |
| Liabilities and stockholders' equity |
| Current liabilities: |
| Accounts payable |
| $ |
| 3,379 |
| $ |
| 1,692 |
| Accrued liabilities |
| 12,467 |
| 6,871 |
| Deferred revenue, current portion |
| 427 |
| 438 |
| Lease liability, current portion |
| 913 |
| — |
| Debt, current portion, net |
| 3,899 |
| 2,318 |
| Total current liabilities |
| 21,085 |
| 11,319 |
| Deferred revenue, less current portion |
| 1,986 |
| 2,399 |
| Lease liability, less current portion |
| 3,970 |
| — |
| Debt, less current portion, net |
| 11,847 |
| 11,819 |
| Debt due to related parties |
| 7,300 |
| 7,300 |
| Other liabilities |
| $ |
| 2,971 |
| $ |
| 794 |
| Total liabilities |
| 49,159 |
| 33,631 |
| Commitments and contingencies |
| Stockholders' equity: |
| Preferred stock: $0.00001 par value; 20,000 shares authorized and no shares issued or outstanding at December 31, 2019 and December 31, 2018 |
| — |
| — |
| Common stock: $0.00001 par value; 250,000 shares authorized, 139,526 and 110,691 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively |
| 1 |
| 1 |
| Additional paid in capital |
| 344,206 |
| 296,409 |
| Accumulated deficit |
| (320,649) |
| (283,474) |
| Total stockholders' equity |
| 23,558 |
| 12,936 |
| Total liabilities and stockholders' equity |
| $ |
| 72,717 |
| $ |
| 46,567 |
MARRONE BIO INNOVATIONS, INC.
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
| YEARS ENDED DECEMBER 31, |
| 2019 |
| 2018 |
| Revenues: |
| Product |
| $ |
| 28,912 |
| $ |
| 20,775 |
| License |
| 461 |
| 445 |
| Total revenues |
| 29,373 |
| 21,220 |
| Cost of product revenues |
| 13,260 |
| 10,907 |
| Gross profit |
| 16,113 |
| 10,313 |
| Operating Expenses: |
| Research, development and patent |
| 14,022 |
| 10,662 |
| Selling, general and administrative |
| 30,061 |
| 19,155 |
| Total operating expenses |
| 44,083 |
| 29,817 |
| Loss from operations |
| (27,970 |
| ) |
| (19,504 |
| ) |
| Other income (expense): |
| Interest expense |
| (1,474 |
| ) |
| (2,057 |
| ) |
| Interest expense, related parties |
| — |
| (451 |
| ) |
| Change in fair value of financial instruments |
| — |
| (5,177 |
| ) |
| Loss on extinguishment of debt, net |
| — |
| (2,196 |
| ) |
| Gain on extinguishment of debt, related party |
| — |
| 9,183 |
| Loss on modification of warrants |
| (1,564 |
| ) |
| — |
| Loss on issuance of new warrants |
| (6,065 |
| ) |
| — |
| Change in fair value of contingent consideration |
| (342 |
| ) |
| — |
| Other income (expense), net |
| 255 |
| (11 |
| ) |
| Total other expense, net |
| (9,190 |
| ) |
| (709 |
| ) |
| Loss before income tax expense |
| (37,160 |
| ) |
| (20,213 |
| ) |
| Income tax expense |
| 15 |
| — |
| Net loss |
| $ |
| (37,175 |
| ) |
| $ |
| (20,213 |
| ) |
| Basic and diluted net loss per common share: |
| $ |
| (0.32 |
| ) |
| $ |
| (0.20 |
| ) |
| Weighted-average shares outstanding used in computing basic and diluted net loss per common share: |
| 117,982 |
| 101,248 |
MARRONE BIO INNOVATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
| YEARS ENDED DECEMBER 31, |
| 2019 |
| 2018 |
| Cash flows from operating activities |
| Net loss |
| $ |
| (37,175 |
| ) |
| $ |
| (20,213 |
| ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
| Depreciation and amortization |
| 2,349 |
| 1,890 |
| Gain on disposal of equipment |
| (21 |
| ) |
| — |
| Right of use assets amortization |
| 805 |
| — |
| Share-based compensation |
| 3,686 |
| 1,850 |
| Non-cash interest expense |
| 277 |
| 994 |
| Change in fair value of financial instruments |
| — |
| 5,177 |
| Loss on extinguishment of debt, net |
| — |
| 2,196 |
| Gain on extinguishment of debt, related party, net |
| — |
| (9,183 |
| ) |
| Loss on modification of warrants |
| 1,564 |
| — |
| Loss on issuance of new warrants |
| 6,065 |
| — |
| Change in fair value of contingent consideration |
| 342 |
| — |
| Net changes in operating assets and liabilities: |
| Accounts receivable |
| (2,622 |
| ) |
| 1,065 |
| Inventories |
| 599 |
| 1,603 |
| Prepaid Expenses and other assets |
| (327 |
| ) |
| 34 |
| Accounts payable |
| 1,129 |
| (2,028 |
| ) |
| Accrued and other liabilities |
| 3,223 |
| (857 |
| ) |
| Accrued interest due to related parties |
| — |
| (1,614 |
| ) |
| Lease Liability |
| (627 |
| ) |
| — |
| Deferred revenue |
| (681 |
| ) |
| (339 |
| ) |
| Net cash used in operating activities |
| (21,414 |
| ) |
| (19,425 |
| ) |
| Cash flows from investing activities |
| Asset acquisition |
| (594 |
| ) |
| — |
| Business combination, net of cash acquired |
| (5,849 |
| ) |
| — |
| Purchases of property, plant and equipment |
| (275 |
| ) |
| (580 |
| ) |
| Net cash used in investing activities |
| (6,718 |
| ) |
| (580 |
| ) |
| Cash flows from financing activities |
| Proceeds from issuance of common stock, net of offering costs |
| — |
| 34,486 |
| Proceeds from issuance of debt |
| 141 |
| 2,000 |
| Proceeds from secured borrowings |
| 29,376 |
| 21,844 |
| Repayment in secured borrowings |
| (27,822 |
| ) |
| (21,046 |
| ) |
| Repayment of debt |
| (1,715 |
| ) |
| (254 |
| ) |
| Financing costs |
| — |
| (201 |
| ) |
| Exercise of stock options |
| 55 |
| 40 |
| Proceeds from employee stock purchase plan |
| 128 |
| — |
| Net settlement of options |
| — |
| (14 |
| ) |
| Exercise of warrants |
| 16,000 |
| 98 |
| Net cash provided by financing activities |
| 16,163 |
| 36,953 |
| Net (decrease) increase in cash and cash equivalents and restricted cash |
| (11,969 |
| ) |
| 16,948 |
| Cash and cash equivalents and restricted cash, beginning of period |
| 19,781 |
| 2,833 |
| Cash and cash equivalents and restricted cash, end of period |
| $ |
| 7,812 |
| $ |
| 19,781 |
| Supplemental disclosure of cash flow information |
| Cash paid for interest |
| $ |
| 1,175 |
| $ |
| 2,772 |
| Supplemental disclosure of non-cash investing and financing activities |
| Property, plant and equipment included in accounts payable and accrued liabilities |
| $ |
| — |
| $ |
| 51 |
| Fair Value of non-cash consideration issued in acquisition transactions |
| 21,694 |
| Conversion of debt to equity |
| $ |
| — |
| $ |
| 10,000 |
| Conversion of bridge loan (convertible note) to equity |
| $ |
| — |
| $ |
| 6,000 |
| Conversion of debt, related party to equity |
| $ |
| — |
| $ |
| 35,000 |
| Conversion of accrued liabilities into equity associated with the granting of restricted stock units |
| $ |
| — |
| $ |
| 205 |
| Embedded derivative liability associated with bridge loan |
| $ |
| — |
| $ |
| 573 |
| Conversion of accrued interest, related party, into debt, related party |
| — |
| 324 |