Marrone Bio Innovations, Inc. Reports Second-Quarter and First-Half 2019 Financial Results

 

Second Quarter 2019 Revenues Rose 22 Percent to $7.0 Million; First Half 2019 Revenues Increased 56 Percent to $15.7 Million

 

Company Also Announces Pro Farm Acquisition to Accelerate Growth, and Establishes Financing Facility to Fund Acquisition and Operations

 

DAVIS, Calif. – August 8, 2019 – Marrone Bio Innovations, Inc. (NASDAQ: MBII), an international leader in sustainable bioprotection and plant health solutions

, has provided its financial results for the second quarter and first six months ended June 30, 2019.

 

Selected Operating and Financial Highlights

 

$ in millions 

Q2

2019

  

Q2

2018

   % Increase (Decrease)  

H1

2019

  

H1

2018

   % Increase (Decrease) 
Revenues  $7.0   $5.8    22%  $15.7   $10.1    56%
Gross Profit  $3.8   $2.7    40%  $8.8   $4.8    83%
Gross Margin   54.4%   47.3%   +710bps   56.0%   47.7%   +830bps
Operating Expenses  $10.2   $7.2    41%  $18.9   $14.8    27%
Loss from Operations  $(6.4)  $(4.5)   42%  $(10.1)  $(10.0)   1%
Net Loss  $(6.8)  $(4.9)   39%  $(10.7)  $(10.1)   5%
Cash Used in Operations  $(3.0)  $(5.2)   (42)%  $(10.6)  $(15.0)   (29)%

 

Q2 2019 Financial Highlights

 

Revenues for the second quarter of 2019 increased 22 percent to $7.0 million from revenues of $5.8 million in the second quarter of 2018. The record second-quarter sales reflected the company’s continued growth in the seasonally smaller specialty markets for trees, fruits, nuts, vegetables and vines. Significant uptake in various nuts, strawberries, tomatoes and wine grapes was driven by the company’s BioUnite™ strategy, which offers growers unique combinations of bio-based crop protection products with chemical options in their integrated pest management programs. Revenue growth was led by foliar applications of the Venerate, Grandevo and Regalia product families for insect and fungal disease control, respectively.
Gross margins in the second quarter improved 710 basis points to 54.4 percent as a result of a favorable product mix.
Operating expenses were $10.2 million in the period, as compared with operating expenses of $7.2 million in the second quarter of 2018. The increase was driven primarily by additional legal, accounting and acquisition -related expenses. Planned investments in strategic research and development programs and employee-related expenses also led to the higher level of spending.

 

   
 

 

Net loss for the second quarter of 2019 was $6.8 million, or $(0.06) per share, compared with a net loss of $4.9 million, or $(0.04) per share, for the same period in 2018.
Cash used in operations was $3.0 million in the second quarter of 2019, a 42 percent decrease from the cash used in operations in the second quarter of 2018, primarily from a more favorable working capital position.

 

H1 2019 Financial Highlights

 

Revenues for the first half of 2019 reached $15.7 million, a 56 percent increase and a record for first-half sales. The strong performance in the first half reflected continued growth across the Venerate, Regalia and Grandevo families of products. The company had strong use of Venerate in the first quarter of the year for soil- and seed-applications in row crops and in the first half for foliar applications in fruits, vegetables and nuts. Regalia sales increased in the first six months of the year from expanded in-season market reach to treat fungal diseases in trees, nuts and vines. Use of Grandevo for in-season insect control continued to expand in the major fruit and vegetable crops.
Gross margins reached 56.0 percent for the first six months of 2019, benefiting from a favorable product sales mix and improved manufacturing efficiencies as a result of higher volumes.
Operating expenses in the first half were $18.9 million, compared with $14.8 million in the first six months of 2018. The increase reflected planned investments in commercial operations – Including for marketing programs driven by higher sales – and in key research and development projects. Operating expenses for the first six months of the year also included higher employee-related expenses, legal costs, and additional acquisition and financing-related expenses.
Net loss in the first half of 2019 was $10.7 million, or $(0.10) per share, as compared with a net loss of $10.1 million, or $(0.11) per share, in the same period in 2018.
On a comparative basis, the first half of 2018 included a non-recurring net benefit of $1.8 million to other income related to the Company’s comprehensive financing and debt restructuring transactions. Additionally, the diluted weighted-average shares outstanding in the first half of 2019 were 110.7 million shares, compared with 91.7 million shares in the first half of 2018.
Cash used in operations in the first six months of 2019 was $10.6 million, a 29 percent decrease from the cash used in operations of $15.0 million in the same year-ago period, primarily from the Company’s improved working capital position.

 

   
 

 

Pro Farm Acquisition Announcement

 

Separately today, Marrone Bio announced the entry into a definitive agreement for the acquisition of Pro Farm Technologies OY, which will expand the company’s portfolio of bio-based products for integrated pest management and plant health. Pro Farm is being acquired for an agreed enterprise value of $31.8 million, including a combination of $6.2 million cash and 12.7 million shares of Marrone Bio stock to be paid to Pro Farm’s equity holders, debt holders and advisors upon the closing of the transaction, as well as the opportunity for potential payment of a total of up to $7.5 million of additional shares of stock deliverable from 2021 through 2024 based on the achievement of agreed commercial milestones. The transaction is expected to close in the third quarter of 2019, subject to satisfaction of customary conditions.

 

This transaction is expected to lift market share and create a larger global platform for Marrone Bio in the $4.6 billion seed- and soil-treatment market. With the acquisition of Pro Farm, Marrone Bio will add proprietary nutrient and biostimulant technology and products for seed and foliar treatments to its portfolio. The acquisition also will give the company a significant opportunity to leverage an expanded global distribution network for all of MBI’s products.

 

Marrone Bio expects to benefit from partial-year sales in 2019 as a result of the transaction. With historical gross margins significantly higher than Marrone Bio’s current product portfolio average, the Pro Farm acquisition is expected to be accretive to net income and cash flow from operations in 2020.

 

For further information on this announcement, please click here.

 

Financing Facility

 

Also announced today, Marrone Bio has established a $36.6 million financing facility through a right to call the exercise of certain outstanding warrants at $1.00 per share, which Marrone Bio expects to draw upon only as needed. The company has issued an initial $10 million drawdown of the facility, which is scheduled to complete by early September. In addition to using a portion of the drawn funds for the Pro Farm acquisition, any resulting cash raised is anticipated to be sufficient to fund the current operating plan to a breakeven level, as well as fund near-term strategic alternatives. New warrants to purchase shares at a higher exercise price of $1.75 will be issued on a one-for-one basis along with every called share under the outstanding warrants.

 

Management Commentary

 

“The commercial, financial and strategic results of the first half of 2019 underscore the breadth of the transformation we are undergoing at Marrone Bio,” said Dr. Pam Marrone, chief executive officer of Marrone Bio Innovations. “We see a clear path forward to leverage our scientific, manufacturing and commercial expertise into a global platform of biologically based crop protection and crop stimulant products.”

 

“With the announcement of today’s acquisition and the financing facility, we are creating the capacity to break through with a larger commercial presence and enhanced long-term strategic options as a partner of choice with our growers, distributors and agriculture company peers.”

 

   
 

 

Operational Highlights

 

Marrone Bio and Compass Minerals (NYSE: CMP) Plant Nutrition formed a research collaboration to develop new specialty plant nutrient products enhanced with microorganisms. The new products will be developed with patented technologies aimed at helping crops take up nutrients more efficiently, to increase crop health and reduce crop stress.
   
The Company entered into a global, non-exclusive research collaboration with Valagro S.p.A to leverage a subset of Marrone Bio’s collection of 18,000 microorganisms in conjunction with Valagro’s biostimulant products that enhance crop yield and quality.
   
Marrone Bio received a notice of allowance from the U.S. Patent and Trademark Office for key claims covering the composition and method of formulating for Grandevo WDG microbial-based bioinsecticide.

 

Conference Call and Webcast

 

Management will host an investor conference call today, August 8, 2019, at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss Marrone Bio Innovations’ second quarter and first half 2019 financial results, and today’s Pro Farm acquisition and warrant financing transactions, among other corporate updates. The call will conclude with a Q&A from participants. To participate, please use the following information:

 

Q2 2019 Conference Call and Webcast

 

Date: Thursday, August 8, 2019

Time: 1:30 p.m. Pacific time (4:30 p.m. Eastern time)

U.S. Dial-in: 1-888-220-8451

International Dial-in: 1-323-794-2588

Conference ID: 7511917

Webcast: http://public.viavid.com/index.php?id=135553

 

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 September 8, 2019. 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 7511917. A webcast will also be available for 30 days on the IR section of the Marrone Bio Innovations website or by clicking here: MBII Q2 2019 Webcast.

 

   
 

 

About Marrone Bio Innovations

 

Marrone Bio Innovations Inc. (NASDAQ: MBII) is a growth-oriented company leading the movement to more a 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® and Amplitude®, Zelto® and Zequanox®, with a breakthrough bioherbicide and biofumigant in the Company’s product pipeline.

 

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 acquisition of Pro Farm, including the completion of such a transaction and the benefits of such a transaction, the Company’s use of its warrant financing facility and the completion of the initial drawdown of the facliity, the Company’s positioning for becoming a commercial leader, and the potential benefits of 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, satisfaction of the closing conditions for the Pro Farm acquisition and any difficulty in integrating the acquired 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)

 

   JUNE 30, 2019   DECEMBER 31, 2018 
   (Unaudited)     
Assets          
Current assets:          
Cash and cash equivalents  $9,471   $18,221 
Accounts receivable   7,401    2,720 
Inventories, net   8,456    8,224 
Prepaid expenses and other current assets   1,263    971 
Total current assets   26,591    30,136 
Property, plant and equipment, net   13,754    14,512 
Right of use assets, net   4,922    - 
Restricted cash   1,560    1,560 
Other assets   520    359 
Total assets  $47,347   $46,567 
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable  $2,268   $1,692 
Accrued liabilities   9,503    6,871 
Deferred revenue, current portion   359    438 
Lease liability, current portion   813     
Debt, current portion, net   4,459    2,318 
Total current liabilities   17,402    11,319 
Deferred revenue, less current portion   2,270    2,399 
Lease liability, less current portion   4,395    - 
Debt, less current portion, net   11,708    11,819 
Debt due to related parties   7,300    7,300 
Other liabilities   776    794 
Total liabilities   43,851    33,631 
Commitments and contingencies (Note 9)          
Stockholders’ equity:          
Preferred stock: $0.00001 par value; 20,000 shares
authorized and no shares issued or outstanding at June 30,
2019 and December 31, 2018
        
Common stock: $0.00001 par value; 250,000 shares
authorized, 110,725 and 110,691 shares issued and
outstanding as of June 30, 2019 and December 31, 2018
   1    1 
Additional paid in capital   297,638    296,409 
Accumulated deficit (1)   (294,143)   (283,474)
Total stockholders’ equity   3,496    12,936 
Total liabilities and stockholders’ equity  $47,347   $46,567 

 

   
 

 

MARRONE BIO INNOVATIONS, INC.

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

   THREE MONTHS ENDED
JUNE 30,
   SIX MONTHS ENDED
JUNE 30,
 
   2019   2018   2019   2018 
Revenues:                    
Product  $6,882   $5,637   $15,483   $9,861 
License   115    115    230    215 
Total revenues   6,997    5,752    15,713    10,076 
Cost of product revenues   3,188    3,030    6,917    5,272 
Gross profit   3,809    2,722    8,796    4,804 
Operating Expenses:                    
Research, development and patent   3,634    2,493    6,576    5,027 
Selling, general and administrative   6,604    4,746    12,278    9,777 
Total operating expenses   10,238    7,239    18,854    14,804 
Loss from operations   (6,429)   (4,517)   (10,058)   (10,000)
Other income (expense):                    
Interest expense   (353)   (340)   (659)   (1,459)
Interest expense, related parties       (17)       (451)
Change in fair value of financial instruments               (5,177)
Loss on extinguishment of debt, net (1)               (2,196)
Gain on extinguishment of debt, related party (1)               9,183 
Other income (expense), net   30    4    48    (27)
Total other income (expense), net   (323)   (353)   (611)   (127)
Net loss (1)  $(6,752)  $(4,870)  $(10,669)  $(10,127)
Basic and diluted net loss per common share:  $(0.06)  $(0.04)  $(0.10)  $(0.11)
Weighted-average shares outstanding used in computing basic and diluted net loss per common share:   110,723    108,647    110,707    91,713 

 

   
 

 

MARRONE BIO INNOVATIONS, INC.

Condensed Consolidated Statements of Cash Flows

(In Thousands)

 

   SIX MONTHS ENDED JUNE 30, 
   2019   2018 
Cash flows from operating activities          
Net loss (1)  $(10,669)  $(10,127)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   903    983 
Gain on disposal of equipment   (6)   - 
Right of use assets amortization   402    - 
Share-based compensation   1,164    873 
Non-cash interest expense   145    722 
Change in fair value of financial instruments       5,177 
Loss on extinguishment of debt, net (1)       2,196 
Gain on extinguishment of debt, related party, net (1)       (9,183)
Net changes in operating assets and liabilities:          
Accounts receivable   (4,681)   (937)
Inventories   (232)   646 
Prepaid Expenses and other assets   (453)   163 
Deferred cost of product revenues       2 
Accounts payable   622    (2,159)
Accrued and other liabilities   2,800    (1,692)
Accrued interest due to related parties       (1,614)
Lease liability   (302)   - 
Deferred revenue   (342)    
Net cash used in operating activities   (10,649)   (14,950)
Cash flows from investing activities          
Purchases of property, plant and equipment   (185)   (478)
Net cash used in investing activities   (185)   (478)
Cash flows from financing activities          
Proceeds from issuance of common stock, net of offering costs       34,496 
Proceeds from issuance of debt       2,000 
Proceeds from secured borrowings   15,126    9,754 
Reductions in secured borrowings   (12,981)   (8,670)
Net settlement of options   42     
Proceeds from employee stock purchase plan   23     
Repayment of debt   (126)   (129)
Net cash provided by financing activities   2,084    37,451 
Net (decrease) increase in cash and cash equivalents and restricted cash   (8,750)   22,023 
Cash and cash equivalents and restricted cash, beginning of period   19,781    2,833 
Cash and cash equivalents and restricted cash, end of period  $11,031   $24,856 
           
Supplemental disclosure of cash flow information          
Cash paid for interest  $504   $2,481 
Supplemental disclosure of non-cash investing and financing activities          
Property, plant and equipment included in accounts payable and accrued liabilities  $5   $236 
Embedded derivative liability associated with bridge loan  $   $573 
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 

 

(1) The above includes revised numbers for the six months ended June 30, 2018 as disclosed in the Notes 16 to our accompanying Notes to Consolidated Financial Statements included in Part II-Item 8-“Financial Statements and Supplementary Data” of the Annual Report on Form 10-K filed on March 29, 2019.

 

   
 

 

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