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Marrone Bio Innovations, Inc. has provided its financial results for the second quarter ended June 30, 2020.
1Adjusted 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.
Second Quarter 2020 Financial Summary
| • | Revenues in the second quarter of 2020 increased 74% to an all-time record of $12.2 million, and the company’s eighth consecutive quarter of year-over-year growth. The increase was driven by global sales in row crops, including Pro Farm’s UBP and Foramin seed treatments. Sales in the specialty crop markets also contributed to the improvement, particularly from the family of Regalia fungicides and Venerate and Grandevo insecticides. |
| • | Gross margins in the second quarter of 2020 were 60.6%, the seventh consecutive quarter in which gross margins exceeded 50%. The margin improvement reflected the mix of high-margin foliar and seed treatment products sold in the second quarter. Second quarter 2020 gross profit of $7.4 million was nearly double gross profit of the same period in 2019. |
| • | Operating expenses in the second quarter of 2020 decreased 8% to $9.4 million, compared with $10.2 million in the comparable period in 2019. Operating expenses 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. Spending in the quarter also included the addition of operating expenses from the 2019 acquisition of Pro Farm. |
| • | The operating expense ratio – comparing operating expenses to revenues – was 77% in the second quarter of 2020, as compared with 146% in the second quarter of 2019. The ratio improvement quarter-to-quarter reflected significant revenue growth coupled with cost savings efforts and the benefit of the PPP loan. |
| • | Net income (loss) in the second quarter of 2020 decreased 58% to a loss of $2.9 million, as compared with a net loss of $6.8 million in the second quarter of 2019. The net loss in the quarter included non-cash adjustments for warrant exercises, stock compensation and the amortization of intangibles related to the Pro Farm acquisition. |
| • | Adjusted EBITDA improved by 61%, with a loss of $1.5 million in the second quarter of 2020 as compared with a loss of $3.8 million in the same period last year. Record revenues and gross profit, plus lower operating expenses, drove the improvement in both the net loss and Adjusted EBITDA. Adjusted EBITDA is further described under “Use of Non-GAAP Financial Information” below. |
| • | Cash used in operations in the second quarter was $1.5 million, a 52% decline from $3 million in the same period in 2019. Cash used in operations in the quarter included $1.7 million in proceeds from the PPP loan. |
First Half 2020 Financial Summary
| • | Revenues in the first half of 2020 increased 39% to a record $21.8 million, as compared with $15.7 million in the first half of 2019. The company achieved higher sales in the specialty crop markets, and benefited from its successful BioUnite program with products such as Regalia fungicide and Venerate insecticide. First-half results also grew from sales in the row crop markets, particularly Pro Farm’s UBP and Foramin seed treatments. |
| • | Gross profit in the first half rose 47% to $13 million. Gross margins increased by 330 basis points to 59.3%, reflecting product mix. |
| • | Operating expenses increased 9% to $20.6 million in the first half of 2020, compared with operating expenses of $18.9 million in the first half of 2019. The increase was driven by the addition of six months of operating expenses from Pro Farm, somewhat offset by the benefit of $1.4 million from the PPP loan. |
| • | The operating expense ratio for the first half of 2020 was 94%, a 2,600 basis point improvement that reflected a higher rate of growth for revenues. |
| • | Net income (loss) in the first half decreased to a loss of $9.9 million, an improvement over the net loss of $10.7 million in the same period last year. Record revenues and gross profit contributed to the improvement in net loss, somewhat offset by the increase in operating expenses, plus non-cash adjustments related to warrant exercises, stock compensation and amortization charge. |
| • | Adjusted EBITDA in the first half of 2020 was a loss of $5.2 million, an 18 percent improvement from an Adjusted EBITDA loss of $6.4 million in the first half of 2019. Adjusted EBITDA is further described under “Use of Non-GAAP Financial Information” below. |
| • | Cash used in operations in the first half was $7.7 million, a 27% decline from $10.6 million in the first half of 2019. As in the second quarter, cash used in operations in the first half benefited from $1.7 million in proceeds from the PPP loan. |
Management Commentary
“The second-quarter financial results highlight the momentum our team has created, as well as the opportunity to accelerate our commercial velocity and break out as a market leader,” said Chief Executive Officer Kevin Helash, who joined Marrone Bio effective August 3, 2020. “Our goals to drive profitability are gaining traction as the company transforms itself into a top-tier commercial-scale player in the biological agriculture sector.
“This has been a strong start to the year, and it is the foundation from which we can leverage our base business, execute our expansion plans and broaden our global reach. Coupled with a customer-centric culture, and a focus on the execution of our operational and financial objectives, I believe the path to profitability can be accelerated, which will, in turn, create enhanced shareholder value,” added Helash.
“We expect to drive continued revenue growth and international expansion in the second half of the year, with gross margins in line with achieving our annual target in the mid-50% range. The integration of the Pro Farm acquisition is going very well, and is tracking to be accretive to net income and cash from operations this year, as we had forecast. While we remain optimistic about the remainder of the fiscal year, plans remain in place for the potential effect that the COVID-19 pandemic may have on macro conditions in the agricultural sector,” Helash concluded.
Operational Highlights
| • | Regalia® Maxx biofungicide received the first approval for indoor and outdoor use on cannabis and hemp in Canada, providing farmers an effective new tool to manage difficult diseases, such as botrytis and powdery mildew. |
| • | The company entered into a warrant exchange agreement with existing institutional investors, which, assuming exercise in full, is expected to provide adequate cash to reach cash flow breakeven under the company’s current operating plan. The total number of outstanding warrants was reduced by approximately 35%, from 52.6 million to 36.5 million. Expiration dates were significantly shortened ,with new warrants issued in five tranches, expiring by the end of 2021. |
| • | Entered into an agreement with Vive Crop Protection to offer a suite of ground-breaking products for U.S. growers that combines the active ingredient in Regalia® with a proven fungicide. The pre-mix product also will contain Vive’s Allosperse Delivery System technology for use in multi applications in major crops, pending regulatory approvals. The company will have rights to directly market a version of the product to specialty crop growers in California. |
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| Source: | Agropages.com |
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