Marrone Bio Innovations (NASDAQ:MBII) reported record revenue and a further increase in gross margins in the first quarter of 2020. Costs were impacted by the addition of Pro Farm which did not make a significant impact on revenue. Both Regalia and Venerate were strong contributors during the quarter.
COVID-19 did not have a major impact on the first quarter since the row crops had already been planted and they are major contributors to the company’s revenue in the first part of the year. The back half of the year is expected to be impacted by the reduction in acres planted in prior years for soy beans and corn and any impact from the virus would occur in 2021.
Those crops that have the shortest distribution channels from the farmer to the public have fared best so far in 2020. Treated acres for Venerate and Grandevo increased by 50% and organic crops, where Marrone has a good position in California, were up 25%. Fruit for canning acres declined and potatoes were adversely impacted, with acres dropping between 15% and 20%. Acres for potatoes may decline significantly in 2021.
Acres for almonds and pistachios will probably remain constant but Marrone continues to increase its market penetration.
The company continues to penetrate markets in Canada, especially for cannabis. This is a major opportunity for Marrone.
The company reaffirmed its projection of revenue gains in 2020 exceeding those achieved in 2019. This is, in part, due to the inclusion of Pro Farm which had a minor impact in 1Q20. This should increase in 2Q20 and be a major driver of revenue in 3Q20.
Overall we see significant sequential revenue growth in 2Q20, a modest decline in 3Q20, and then an increase in 4Q20.
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