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NASDAQ:MBII
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Marrone Bio leading the charge toward more environmentally-conscious effective pest management for farmers

Snapshot

The company's biopesticides unleash "Bio with bite" on an industry that has long been overdependent on chemical pesticides

Crops

Quick facts: Marrone Bio Innovations

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NASDAQ:MBII

Price: 0.8789 USD

Market Cap: $154.94 m
  • Marrone's products are made from naturally-occurring substances like bacteria or plant extracts
  • Biopesticides used in conjunction with chemical ones gives growers more control over pests
  • The biopesticide industry is projected to more than double to $6.4 billion by 2023

What Marrone Bio does:

Marrone Bio Innovations Inc (NASDAQ:MBII) is leading the charge toward more environmentally-conscious effective pest management for farmers with its unique line of biological pesticides.

Its products are made from naturally occurring substances such as microbes, bacteria, plant extracts, fatty acids or pheromones, and it is currently the only publicly traded biopesticide company on the US market.

Marrone’s biopesticides, used alone or in combination with traditional chemical pesticides, help customers operate more sustainably while controlling pests, improving plant health, and increasing crop yields.

Founded in 2006, the Davis, California-based company holds more than 400 issued and pending patents and has brought six US Environmental Protection Agency-registered biological product lines and one biostimulant to market.

Its suite of biologicals includes a bevy of bacteria strains and plant extracts that fight pests, control plant diseases and reduce stress from sun and water.

Besides its California operation, Marrone cultivates its biologicals at a facility in Bangor, Michigan armed with three 20,000 litre fermentation tanks.

How is it doing:

Marrone’s first quarter 2021 results highlighted its 11th consecutive growth quarter with revenues increasing 14% year-over-year to $11 million.

The group attributed the revenue growth to “further market penetration” for its biological crop protection products, particularly driven by its Venerate, Grandevo, and Regalia brands.

CEO Kevin Helash told shareholders in a statement that the firm was getting closer to breaking even on an adjusted EBITDA basis after the firm posted a loss of $1.2 million, compared to the $3.7 million adjusted EBIDTA loss it put up a year ago. Marrone also said that a “favorable” product mix and improved absorption of manufacturing overhead resulted in a 25% increase in gross profit to $7 million, while gross margins improved to 63.1%.

The firm’s 1Q net loss came in at $3.3 million versus the $7 million in the comparable year-ago quarter as a function of higher sales and better margins as well as lower operating expenses.

Meanwhile, Marrone Bio inked a few deals at the start of 2021.

On January 14, 2021, Marrone announced that it had received approval for its Grandevo WDG Bioinsecticide for use in New Zealand and Chile.  In addition, Grandevo WDG and Grandevo CG have also been approved for use on hemp by the US Environmental Protection Agency, the company said.

Marrone Bio said that in New Zealand, Grandevo WDG will be sold by Nufarm as BioGro and is approved for controlling mealybug on New Zealand’s famous wine grape crop. BioGro is registered and approved by Sustainable Winegrowing NZ (SWNZ), a world-leading sustainability program for growing wine grapes, and is allowed for use on both organic and conventional grape-growing systems from pre-flowering to bunch closure. Additional crops and pests are expected for approval in the coming year.

The company noted that Grandevo WDG was approved for use in blueberries, grapes, stone fruit, tomatoes, avocados, and onions by the Ministry of Agriculture in Chile (Servicio Agricola y Ganadero - SAG) in November 2020 and is distributed by Anasac, a leading Chilean agriculture inputs provider.

In the boardroom, on January 28, Marrone Bio announced the appointment of Suping (Sue) Cheung as its chief financial officer. She started in the role on February 18, succeeding James Boyd, who had already announced his intention to retire. 

Marrone Bio noted that Cheung, a certified public accountant, brings to Marrone Bio 28 years of experience in international strategic and financial operations, including financial reporting, forecasting, and budgeting, mergers and acquisitions, equity and debt financing, internal controls, and investor relations.

And in other news, at the end of March Marrone Bio revealed that it had joined the United Nations (UN) Global Compact, the world’s largest corporate sustainability initiative committed to aligning business strategy and operations with universal principles on human rights, labor, environment and anti-corruption. The company said it has been actively implementing and tracking corporate performance on a number of the UN’s sustainable development goals (SDGs) including those around sustainability (water, land, energy and climate change), gender equality and global partnerships.

Inflection points:

  • Further expansion of product line and international footprint
  • Ongoing cost savings and efficiencies from new management
  • Release of independent study of its leading seed treatment product

What the broker says:

In a note to clients on March 24, 2021, following the company's fourth-quarter results, Canaccord Genuity reiterated a 'Buy' rating on Marrone Bio with an unchanged price target of $3,50, having raised the target from $2.00 in a note on February 19.

The Canaccord analysts said: "New management is delivering solid execution out of the gate with top-line momentum complemented by margin upside and a lower-than-expected adjusted EBITDA loss. We believe revenue guidance for 2021 is appropriately cautious considering lingering COVID uncertainty and some weather headwinds in Q1.

"Nevertheless, the implied adjusted EBITDA outlook for the current year (guided revenue, gross margins and opex) looks essentially in line with our estimates, and we believe offers room for upside on product mix and as management continues to look for cost savings and efficiencies."

They concluded: "We are trimming our revenue and increasing our EBITDA (2022) assumptions, while leaving our $3.50 PT unchanged. Our DCF-based price target assumes a discount rate of 10% along with a terminal growth rate of 2% and reflects an EV/Sales multiple of 9x our 2022 estimate."

What the boss says:

“Our success in the first quarter underscores our confidence in our ability to deliver full-year revenue growth in the upper 20% range with target annual gross margins in the upper 50% range, while we manage operating expenses to 2020 levels, plus inflation,” CEO Kevin Helash said in a statement accompanying Marrone’s 1Q results.

Helash added that the company’s focus is now on major row crops in the second quarter, particularly in the Northern Hemisphere.

“We anticipate continued adoption of our novel seed treatments to drive further expansion globally, as will the launch of four new products in the major US and European markets,” Helash added. “The value of our sustainable biological solutions continues to be borne out scientifically with the recent, highly positive Climate Impact Score for our nematicide seed treatment and, most important, with broader use on farm of all our products.”

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

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