MBII: The addition of pro Farm makes for a blow-out quarter. Biologicals continue to outpace the pesticide industry’s growth rate.

By Ian Gilson, PhD, CFA

NASDAQ:MBII

READ THE FULL MBII RESEARCH REPORT

Marrone Bio Innovations (NASDAQ:MBII) reported its second quarter financial results on August 11, 2020 with outstanding gains in revenue and a significant reduction in the net loss.

With the inclusion of Pro Farm revenue increased by 74% Y/Y and the net loss dropped from $6.8 million to $2.8 million. This was despite a shift in revenue of about $1.4 million from 2Q20 into 3Q20 from a customer that purchased product in 2Q19 but delayed purchase in 2Q20. Gross margins exploded from 54.

The markets for crop treatments continue to move into biological rather than chemical treatments, especially in pesticides and fungicides. This is a major driver for product demand that favours Marrone Bio Innovations. The company continues to innovate and introduce new products and new methods of product applications.

In response to the potential problems caused by COVID-19 Marrone had tightened its belt and cut as many costs as possible. Operating expenses declined from $10.2 million in 4Q19 and $11.2 million in 1Q20 down to $9.4 million in 2Q20. Some of these reductions are deferrals and would occur when the longer term impact of COVID-19 is better known. Some of these costs are field trials, which are very expensive, which may be deferred indefinitely as new products are developed and new relationships evolve.

Crops that were harvested in 2Q20 will produce seeds that will be treated in 3Q20 and 4Q20. On a historical basis revenue in the second half of the year is lower than in the first half (53% to 47% in 2019). We expect the gap to narrow somewhat this year.

Marrone Bio Innovations intends to expand its markets as it receives registrations for its products. The company has many applications in progress. In Canada, a major producer of cereals, corn and Canola oil the company has several registrations that could be granted over the next few years.

Vive Crop Protection, Toronto Canada, and Marrone Bio have announced an agreement to provide products that combine Vive’s chemical products with Marrone’s biologicals based on Regalia in new modes of delivery based on Vive’s technology. The products improve plant health causing crop yields to increase. The combinations could reach the market in mid 2021.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $40,000 annually for these services. Full Disclaimer HERE.

COMMENTS

WORDPRESS: 0
DISQUS: