Davis, Califronia, USA
May 13, 2021
Marrone Bio Innovations, Inc. (NASDAQ: MBII), an international leader in providing growers with sustainable bioprotection and plant health solutions to support global agricultural needs, today released an update letter to shareholders from Chief Executive Officer Kevin Helash.
Dear Shareholders,
Today we announced our first quarter 2021 results, and I am very pleased with the start to the year. We reported our 11th consecutive quarter of increased revenues, and our 10th consecutive quarter of gross margins above 50%.
First-quarter spending declined on an absolute basis by 11%, and the ratio of operating expenses to sales was 91%. Both metrics are a testament to our ability to grow revenue and margins while managing costs -- a feat not easily accomplished in any company. We believe this quarter was an early indicator of our capabilities and of our upward trajectory as we target reaching breakeven on an Adjusted EBITDA basis.
Our revenue growth in the first quarter was driven by sales into markets for fruits, vegetables, trees, nuts and vines. We remain highly committed to the specialty crop segment. However -- given the market size and global reach -- seed-and-soil applied products in the major row crops are a major opportunity for us.
The global seed treatment market is forecasted to grow at approximately a 12% CAGR through 2025.* Our growth rate in revenues from seed treatments over the past four years has been more than double that of the industry, and we expect our outsized growth in this area to continue.
We are offering the right products at the right time. In four short years, we have expanded our seed treatment portfolio from one product to five. We expect MBI biological seed treatments will be used on approximately 11 million acres of soybeans, corn and cotton in the United States this year. In Europe, we anticipate more than 24 million acres of corn, sunflower and rapeseed will be treated with products based on our UBP technology in the 2021 planting season.
The good news is that we have an established market presence; the better news is that the opportunity ahead of us is larger than what we’ve already achieved. I would point to several opportunities:
- We are launching three new seed treatments in Europe this year -- Optima, Takla and Ympact. All have demonstrated significant returns on investment, coupled with favorable environmental profiles.
- We continue to advance next-generation products that offer new levels of efficacy with better returns. MBI-306, an enhanced seed treatment formulation, has the potential to be a blockbuster product that could add an estimated incremental $50 million in peak annual revenues.
- Latin America is key area for expansion. We are working actively with some of the large seed companies in Brazil to demonstrate the efficacy and novel position of biologicals. Our most recent large-scale trials in corn show that we are extremely competitive in the region with plant health products as well as our biopesticide portfolio. In other parts of Latin America, we continue to work with key regional partners -- including Rizobacter and PGG Wrightson -- to bring products to market this year and expand our relationships.
We recently raised our outlook for 2021 to grow revenues in the upper 20% range and target annual gross margins in the upper 50% range, while we manage operating expenses to flat with 2020 levels, plus inflation. We are on the path to bring MBI to a positive Adjusted EBITDA position through a combination of robust sales growth, strong gross margins and prudent cost management. In addition, we continue to pursue strategic, accretive acquisitions that could accelerate our growth even faster than our base case. We are pleased with the start to the year, and confident in our ability to deliver on our forecasts and bring greater value to our shareholders.
All the best,
Kevin Helash
Chief Executive Officer
* MarketsandMarkets, September 2020
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