Marrone Bio Innovations, Inc.

Good afternoon, ladies and gentlemen, and welcome to the first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to hand the conference over to your host, Ms. Linda Moore. Ma'am?

Good afternoon, everyone, and thank you for joining our call. Welcome to the 2022 First Quarter Earnings Conference Call for Marone BioInnovations. Our presenters today are CEO Kevin Helash and Interim CFO LaDawn Johnson, and they are joined by Matis Vanden, Senior Vice President for International Sales, and Kamal El Mernissi, Senior Director of Product Marketing, for the Q&A session at the end of the call. 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 reports, 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 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 today. I would be remiss if I did not start by expressing our sympathies to all those impacted by the conflict in Ukraine. Many of us in the MBI family have personal ties to the country. Our thoughts and prayers are with them, and we hope for a quick end to this humanitarian crisis. I'm proud to say reports indicate that even under the worst of all circumstances, the farmers in Ukraine have been able to plant over 30% of their spring crops according to the country's grain traders union. To illustrate the tenacity this has taken, a recent Reuters report spoke of growers wearing body armor as they go to work in their fields. While we anticipate some effect on our full year revenues in Europe due to the Ukraine conflict, we will work diligently to make up the difference in other parts of the business. Turning specifically to the first quarter, I'd like to speak broadly to the macro conditions we faced and provide additional color on our outlook for the second quarter and first half of 2022. LaDawn will then go into more details on the numbers. To start, please turn to slide three. Our first quarter results with solid revenues in the row crop markets and difficult weather conditions for specialty crop growers in the western U.S. underscore the importance of our strategy to diversify our product mix and our geographic reach, and why our merger agreement with BioSeries is key to the expansion of our business across these segments. We were very pleased with our North American seed treatment business, which expanded in the first quarter thanks to the strong demand for our bio-insecticide, bio-nomadicide product. As you know, in the fourth quarter of last year, our North American customers stocked up in anticipation of a normal season. For our partners serving the row crop markets, we saw an increase in sales in the first quarter as these products began to move through the channel and be placed on farm. The dynamic was different for specialty crops. For the second year in a row in the western United States, severe drought conditions curtail early season use of our fungicides. This is not an issue of performance. Our products continue to have strong support from the market. The challenge is that the dry conditions negate the overall demand for fungicides, which in turn lowers the need for our customers to restock. Just to give you a feel for the severity of the circumstances growers faced, the USDA reported that March precipitation in California was less than half an inch versus more than two inches in an average year. Additionally, Northern California and the Pacific Northwest incurred frost damage in the fruit and nut trees. The impact of the frost and its effect on orders going forward is still being determined. On a positive note, as we indicated in our fourth quarter call, we continue to foresee a sharp rebound in revenues in the second quarter, putting us on track for low to mid-teens growth for the first half of the year, which would represent a material increase over our revenue growth in the first half of 2021. Our forecast is supported by a healthy order book with strong demand from some of our most significant repeat customers. A key component of our growth in the first half will be sales of foliar and seed treatments for major row crops in the United States, Europe, and Latin America. In the US, our seed treatments are primarily used on soybeans, And the latest USDA planting intentions report indicates the potential for a record 91 million acres of soybeans, up 4% from acres planted in 2021. This builds well for the use of our products and sales going into the 2023 season. To a certain degree, the anticipated increase in U.S. soybean plantings is a function of the drought in Brazil, Argentina, and Paraguay, which is expected to reduce yields. Despite those conditions, the outlook for our business in Latin America is very healthy going into the 2022 growing season. As we discussed previously, we have made decisions regarding our manufacturing facility and our commercial activity in Russia, which are fully aligned with the broader international community in condemning the current actions by Russia in Ukraine. Our pro-farm team has built a healthy level of inventory within Europe for its line of seed treatments and foliar products. By the end of this month, we expect to have enough seed treatment materials in Europe to supply our customers for the 2023 and 2024 planting seasons. Regarding our four-year products, we plan to have enough inventory by the end of May to cover at least one year of expected demand. We are also moving quickly with our plans to geographically expand the production capabilities of our pro-farm portfolios. We believe that our current scope of options for manufacturing locations, combined with robust inventory, will carry us through any supply chain constraints that are related to Russia going forward. The diversification of our production outside of Russia is a strategy we have been working on due to commercial reasons for some time, but that timeline has been dramatically accelerated in today's environment. All told, while the start to the year was challenging in the Western U.S., the outlook for the first half and remainder of 2022 remains promising. The continued diversification of our portfolio from a crop and geographic perspective remains critical to our long-term success. Of course, our proposed merger with Bioseries will play a key role in meeting that objective. The necessary steps towards completing the merger are well underway, And as previously reported, we expect to close the transaction in the third quarter of 2022. I'd like to turn the call over to LaDawn now to go into the financials beyond revenues in more detail, and then I'll sum up what I believe our key performance indicators are for the remainder of 2022. Over to you, LaDawn.