Marrone Bio Innovations, Inc.

Good day and thank you for standing by. Welcome to the third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Linda Moore, Chief Legal Officer. Please go ahead, ma'am.

Good afternoon, everyone, and thank you for joining our call. Welcome to the 2021 Third Quarter Earnings Conference Call for Morone BioInnovations. Our presenters today are CEO Kevin Helash and CFO Sue Chung. During the Q&A section, we will be joined by Mati Tianan, our Senior Vice President of International Sales. If you would please refer to slide two, I would like to remind you that this conference call may contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding management's future expectations, plans, projections, forecasts, and prospects. Certain material assumptions were applied in reaching these conclusions and making these statements. Therefore, actual results could differ materially from those contained in our forward-looking information. Important factors that could cause differences are contained in the reports filed by the company with the Securities and Exchange Commission, including under the heading Risk Factors, MD&A, and elsewhere in the company's annual report, quarterly report, and other filings. The company expressly disclaims any obligation to revise or update any guidance or other forward-looking statements to reflect events or circumstances that that may arise after the date of this call. After our remarks, we will hold a question and answer session. I will now turn the call over to our CEO, Kevin Helash. Kevin?

Thank you, Linda, and thanks to everyone joining us on the call today. If you would turn to slide three, as COVID restrictions have eased over the past several months, I've been fortunate enough to attend multiple meetings and events with key customers and industry peers. In our business, weather is always a topic of keen interest, and the recent wet weather in California and the Pacific Northwest was certainly welcomed and is a great start to what we hope will be a normal winter in terms of precipitation in the western United States. What is different this year, however, is a hyper focus on rising expenses for seed, fuel, fertilizers, and crop protection products. As just two examples, The price of North American fertilizer set another record late last week, and top producers are signaling that prices will continue to climb. There are also widespread shortages of key herbicides, the costs of which have also ballooned. Inventories are so tight that even growers who are fortunate enough to have storage space on farm and the cash on hand to pay up front may not be able to lock in their supply of certain inputs. Everyone is experiencing supply chain challenges, from basic raw materials to ocean containers, and by all accounts, we will have to manage our way through this situation well into next year. The positive side of the story is commodity prices. Corn and soybeans hit an eight-year high this spring, and while they have moderated somewhat, current projections are for higher net farm income in 2021, which will bode well for crop input with input demand in 2022. All of these factors play into a level of uncertainty as to which products distributors and growers will buy and when. The Latin American growing season is underway and after a year of severe drought, the main growing areas of Brazil have received abundant rainfall leading to revised forecasts of record planting intentions for both corn and soybeans. The southern hemisphere harvest, in turn, will affect commodity prices and planting intentions in the northern hemisphere this spring. In this environment, our greatest strength has been our decision to diversify. We have the product line and, equally important, the distribution channel that will allow us to win whether the farmer chooses corn or soybeans. And we can succeed in specialty crops as well as a large row crop market. We can serve a farmer in Europe as easily as one in Argentina, and we can protect the crop from seed to leaf. In times of uncertainty, optionality like ours is a powerful tool. If you would turn to slide four, let me expand on how I see us positioned for the remainder of the year and into 2022. Sue will go into the third quarter financials in a moment, but my key takeaways are this. First, Our team has been remarkably resilient during this period and their dedication towards supporting our customers continues to impress me. Second, the strength of our portfolio remains a strategic advantage and has allowed us to grow sales in the double digits despite the headwinds we've experienced. And third, access to the market through our channel partners provides us with outstanding opportunities to creatively position our products in all sectors as we move into the 2022 crop year. That being said, we are cautiously optimistic about successfully closing out the year. Given current market dynamics, it is fair to assume there will be greater variability between the fourth and first quarters and therefore prudent to widen the band of expected revenue growth which we now anticipate will be in the low double-digit to mid-teens range for 2021. At roughly the midpoint of the fourth quarter, we have already booked or have purchase orders in hand for half of our targeted revenues for this period. There is still plenty of heavy lifting to be done, but this is solid progress. We continue to expect our product mix will deliver annual gross margins in the upper 50 percent range and operating expenses should remain in line with 2020 plus inflation. As we prepare for more robust sales in 2022, we must execute on some key tactics. First, we must stay ahead of the supply chain to ensure raw materials are in place to manufacture our products without disruption. You'll see this reflected in our balance sheet this quarter. as we were strategically building inventories in anticipation of sales needs in 2022. We believe our manufacturing position in the United States is a competitive advantage in this environment as many of the alternatives are coming to the U.S. from overseas with greater delivery risk. We intend to be the first in line to supply our biological solutions in season to fill potential gaps in the delivery of traditional products many of which are in short supply. Second, we have to be in close concert with our customers to anticipate grower demand during this dynamic environment. We need to have the right product with the right value for our position in the channel well ahead of time to ensure availability to maximize sales. Third, the value of our seed treatment business has never been greater. Growers may pull back on fertilizers and crop protection products in tough times, but if they're going to grow a crop, they have to plant seed. Our products are applied by our seed company channel partners, so it's a near guarantee that when a grower purchases a bag of corn, soybeans, or cotton from one of our seed partners, we're there. Fourth, we need to exploit the advantages of our BioUnite program, as shown on slide five. Our prescribed tank mixes have the opportunity to grow dramatically in a time of tight supply and accelerating costs. We believe this can open new doors for us to demonstrate the tremendous benefits our products offer. This is a unique point in time to promote our BioUnite offerings, allowing growers to stretch their dollars by using cost-effective and sustainable products with their traditional active ingredients. Strategically, Our plan has been validated this year, even as we dealt with external challenges on the revenue front. The macro trend toward growing food with a gentler footprint that preserves natural resources and slows climate change has not changed. MBI has been and continues to be at the cutting edge of meeting this need, and the value of our products is being borne out in this environment. but we can't rest on our current portfolio or market reach to succeed. As you see on slide six, further diversification is critical to accelerating our growth. We've made great strides with a broader portfolio to expand our presence into a wider market, and we intend to maximize these opportunities. At the same time, we are still aggressively pursuing strategic alternatives to expand our capabilities in our core business that support the build-out and our leadership in sustainable agriculture. While it is always challenging to find the right opportunity, I'm confident we will. At the same time, we are pushing hard on a refocused R&D pipeline. The recent regulatory submissions for our novel insecticides and nematicides, MBI 306 in the United States and MBI 206 in Brazil, are major milestones for us. Late-stage developments in our herbicide program are giving us three different products to tap into a $27 billion market that is void of new, efficacious, and cost-effective solutions. Even with these advancements, we can't rest on our laurels. We are also exploring opportunities that will complement and turbocharge our R&D power to ensure we are employing the latest and greatest tools to ensure our long-term success. Having spent most of my career in the distribution side of agriculture, I'm very pleased with the breadth and depth of our distribution network. We're working with the right partners and have reached into all major markets, particularly for row crops. I'm also confident in our manufacturing capabilities. Our decision to invest in our Michigan manufacturing plant looked good when we made it last year, and it looks even smarter in today's environment. Strategically, we are well positioned to regain our momentum and position our products for the upcoming 2022 season. Of all our capabilities, I'm most confident in the commitment and drive of our team to rebound from the challenges of 2021 and deliver on the full potential we offer to change the way food is grown to the benefit of our customers, our shareholders, and our environment. I'd like to turn the call over to Sue now to go further into the financial results for the quarter and year to date. Sue?