At this point, we'd like to open the call to your questions.
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Questions and Answers
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Operator [1]
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(Operator Instructions) We'll take our first question from Ben Klieve, National Securities.
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Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [2]
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Congrats on a nice quarter here. First question for you. I'm trying to gauge kind of the sustainability of these 57% growth margins. Jimmy touched on the product mix being a positive contributor, but I'm wondering if you can comment at all on kind of the effect of R&D improvement and manufacturing initiatives on that 900 basis points? I mean if the sales mix was reversed, do you think you could have had still a few hundred points of gross margin improvement? Or do you think that sales mix really contributed heavily to that improvement?
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Pamela G. Marrone, Marrone Bio Innovations, Inc. - Founder, CEO & Director [3]
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Yes. Ben, we got -- as you mentioned, we've been keenly focused on improving our margins through improved manufacturing processes, efficiencies and R&D work on process improvement. But as you noted, we have a different product mix this quarter and that is because of the row crop business with Venerate family of products. So you are going to see that contributing to a higher margin in last quarter and this quarter. And Jim, do you want to comment further?
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [4]
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Yes. Ben, yes, I think we've long said that we're going to continuously improve our margins, and that both manufacturing efficiencies in the plant and increased utilization as volume grows in the plant plus yield improvements and potency increases, all contribute to our positive margins. I think that the margins are improving across all products. But having said that, we did mention in the script that mix is an important part of the quarterly fluctuations in our margins, and those seed and soil products are contributing to that higher 15% this quarter -- 57% rather.
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Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [5]
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Okay. Perfect. I guess turning to the revenue line, you guys touched on, I think, in your prepared remarks regarding the seasonality, but I just want to revisit this briefly here. Do you think that seasonality is shifting such that the first quarter may be your peak revenue quarter for the year? Or do you still think some sequential improvement here from the first to the second quarter could come, given that the second quarter is traditionally your strongest quarter?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [6]
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Yes. This is Kevin. Just let me talk about the progress in season a little bit and then probably I'll turn over to Jim for more deeper explanation. But so far the season is progressing well. Commercial team is really focused on partnering with the channel and understanding and meeting the grower needs. But let's look -- dig a little bit deeper into the U.S. domestic business in the 2 parts: one is the seed and soil platform; and then secondly, that foliar business for ourselves. Starting with the soil treatment business. Currently, that business is beginning for nematode control in various crops. In the first quarter, the seed treatment business actually finished, and now we're actually planting those seeds that were treated with our seed treatment products. This business will pick up again in the fall after harvest where the seed companies will treat their seeds with our products planting in 2020. Our foliar business, we actually increased our share in the first quarter with the bloom sprays of Regalia. Now we're starting the maze sprays in almonds with Venerate in combination with grower chemistry to improve the control of navel orange worm. The other thing is, right now, we're also starting the California fruits and vegetable plantings. This was a little bit delayed. But however, we've seen good uptick with our insecticides and fungicides so far. And just one final note, the northern U.S. has not started spring -- is upon us right now and they'll be starting in the business soon. But Jim?
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [7]
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Yes. Ben, I'm actually glad you asked that because I think that's an important thing to understand about our business. We said in our prepared remarks that 2019 is a transformative year. I think that's because all the things that are in place or should be in place are in place. But we're going to see all that hard work start to emerge this year. And I think your question really centers on that. Our seed and soil business is a new segment for us. It's coming out. You're starting to see it. It's augmenting and complementing the specialty crop business. It has a different seasonality that is important to note as you see our -- as we report our business results. With its -- having its biggest influence in that fourth and first quarters. It's going to augment our specialty crop business or layer on, on top of it in the fourth and first quarters. Well, I'm not talking about specialty crops yet, but in -- but I would also expect our specialty crops to grow in all quarters and have its strongest influence in that second and third quarter. So I think you're right. It's going to contribute to margins. The specialty crop business does have slightly higher margins, and we're going to continue to see quarterly fluctuations because of that different seasonality. But I think the specialty crop business will still continue to do very well in the second and third quarters.
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Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [8]
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Perfect. That's very helpful. Another question I have is regarding the sales force and the retention rate within the sales force. So if you look back at the transition in that team from -- in late 2017, early 2018. The physicians that were still backfilled after that transpired. Those members of your sales force are now kind of ending their first year, beginning their second year with your company. And I'm curious if you can comment about the retention rates for those employees that were brought in a year ago. Have you maintained the same people on the team that are now beginning their second year? Or has there been some kind of continued reshuffling within that group over the past year?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [9]
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Yes. This is Kevin again. In May, I'll be -- I've been coming here for about a year now. And so after we went through our strategic plan here in the summer and fall and realigned our whole sales force, we've really had strong retention of the players that we selected to be on the team and going forward. And I think we had only less than 5% to 10% departure rate after that. So really good, strong retention going forward. And the people here are really a strong team, a diversified team. We really value their experience and skill set. And everyone right now is focused on working with the distribution and partnering with them to understand and meet the grower's needs. And what we're doing with this team is actually we're helping them accelerate the learning curve for these team members to technical and customer-centric training. From -- anywhere from our technical team for finding insight, external vendors, peer groups, customer support, peer interface and on-the-job training. So we're very happy with the acceleration of the learning curve for them, and we look forward to getting stronger every day in the -- and create in the future for Marrone Bio.
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [10]
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This is Jim. I'd like to add a few comments to that. I've been here sort of before and after and watched the transitions. And I think that we've got the best commercial function that we've ever had. We've moved all 3 sales, marketing and product development under Kevin, and I really think they're functioning on all cylinders. I think we've got the right people, the right products and the strategy to really continue the momentum.
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Benjamin David Klieve, National Securities Corporation, Research Division - Analyst [11]
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Perfect. And I guess one last one for me, I'll get back in queue. Just a quick question on your CapEx plans for the year. How do you see that playing out here for the balance of the year, especially with regards to potential on investments in your Michigan facility?
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [12]
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Yes. Thanks, Ben. It's Jim again. We're going to be moving the Venerate family of products into the plant. We'll probably begin construction on that this year. I would consider the capital cost to do that rather modest at below $5 million. But our plan is to finance that through a USDA-guaranteed loan as we did with the original construction of the plan.
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Operator [13]
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We'll take our next question from Sameer Joshi with H.C. Wainwright.
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Sameer S. Joshi, H.C. Wainwright & Co, LLC, Research Division - Associate [14]
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The question about -- just touching upon what Ben was asking on the top line. Should we expect a seasonality to become a lesser and lesser factor going forward based on the product mix and the geographic reach of your products? And so the part b of that question is, do you expect revenues to sequentially increase going forward?
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [15]
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Thanks, Sameer. This is Jim. Let me answer that. Let me start by just saying that in the past we've said that we expect our growth to exceed the biological growth rate of 17%. With the strong performance that we've had in the last few quarters, we might add that we might see significant growth in some instances. It's rather early in the year, but -- and it's a challenging year for our growers, but we -- we're going to focus on continuing the momentum of our business. Now having said that, we did mention that the seed and soil business has its biggest influence on the second -- the first and fourth quarters. And I would expect that to -- that different season -- that elementary seasonality to effect, both our margins and our sales. I would expect there to be a smoothing effect for revenues and continued fluctuations with seed and soil contributing positively to the margins in the fourth and first quarters.
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Pamela G. Marrone, Marrone Bio Innovations, Inc. - Founder, CEO & Director [16]
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And we tried to capture that concept of the smoothing that Jim mentioned with the Slide 6 in the slides, showing that as we add the southern hemisphere and we add the row crop business to the specialty crops that we will be smoothing it out all year long.
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Sameer S. Joshi, H.C. Wainwright & Co, LLC, Research Division - Associate [17]
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Yes. No, I did note that. And even before, I saw that slide. One of the questions I had was, were the Venerate sales or other, what was the geographic distribution of the Venerate sales for the quarter?
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Pamela G. Marrone, Marrone Bio Innovations, Inc. - Founder, CEO & Director [18]
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Kevin?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [19]
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Yes. This is Kevin. The majority of the Venerate sales was a combination of -- in the U.S. between the -- our foliar business and our seed and soil business. So it's a combination and a blend of both of them, but mainly in the USA.
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Sameer S. Joshi, H.C. Wainwright & Co, LLC, Research Division - Associate [20]
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Okay. So just continuing the geographic discussion. I know you have initiatives in South Korea, Brazil and Argentina. Can you provide some color on how those initiatives are going? And do you expect sales from all these respective regions of the world going forward?
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Pamela G. Marrone, Marrone Bio Innovations, Inc. - Founder, CEO & Director [21]
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No. We did mention last quarter -- was it last quarter? Yes, last -- or this quarter, that we got expanded label in Brazil. So that then will -- for Regalia, that will -- our revenue will start kicking in there. And we are moving along very successfully with registrations in some of those countries that you named. So while we're not seeing the effect dramatically yet, we do expect to see more of that influence in the latter part of this year and into next year.
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [22]
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Yes. This is Kevin again. And we're really -- there's 3 pillars that we're looking at in terms of how we're diversifying outside of the USA. The first one is, we've done a deep analysis of the market attractiveness. How does the market needs and sales potential line up with our product costs and market-entry adoption? The second is regulatory approval. Meeting regulatory requirements of each individual country is a little bit of a challenge, but the regulatory team is working hard to gain these registrations in key countries. And then our go-to-market strategies. So the third key is how is our international team working with the channel partners to understand their local market and have the ability to create market demand and sales in countries. So when you combine these 3 pillars together, we see a great opportunity to expand outside of the USA by looking at the market attractiveness, regulatory approval and our go-to-market strategy. We're actively doing that right now.
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Sameer S. Joshi, H.C. Wainwright & Co, LLC, Research Division - Associate [23]
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Understood. Moving to some financial questions. I noticed that the accounts receivable is actually higher than the revenues this quarter. Is it because of any timing issues? Most of the sales happened in the latter half of the -- later part of the quarter? Or is it that there is long lead times in paying?
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [24]
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No. I think it's just the general business and additions to -- it's our biggest quarter, and I think that moved AR up by $6 million. But I think it was applied evenly in the quarter.
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Sameer S. Joshi, H.C. Wainwright & Co, LLC, Research Division - Associate [25]
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And I was not very clear on the operating expenses going forward. The $8.6 million level, are you expecting that to stay the same? Or how should we look at OpEx going forward?
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James B. Boyd, Marrone Bio Innovations, Inc. - President & CFO [26]
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Well, I think we mentioned -- this is Jim. I think we have talked about it in the past that we -- in the past, tightly control of our operating expenses. But a couple of quarters ago, we indicated that we were going to invest in the commercial function and in accelerating a couple of what we think might be breakout products, our oversight and our super managers team. And that we would be doing that over the course of the year in 2019. So I think the level of operating expenses in the first quarter reflects that investment that we're making in both our commercial function and accelerating our pipeline.
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Sameer S. Joshi, H.C. Wainwright & Co, LLC, Research Division - Associate [27]
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Understood. And one last one I promise. Can you comment on the opportunity in your entrance into the cannabis and hemp markets? Any color on that?
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Pamela G. Marrone, Marrone Bio Innovations, Inc. - Founder, CEO & Director [28]
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Sure. It's interesting that a new study by BDS Analytics came out that's at the hemp market. So this should be CBD products. It's $1.8 billion today, and it's going to hit $20 billion by 2024. And so we've been making strategic investments in that space by having some dedicated sales staff, which Kevin can comment on in a minute. And the other thing is we got our Regalia match registration in Canada. And Regalia is one of the best -- well, we think it's the best product for powdery mildew, and we tried it in some of the other diseases that occur in cannabis. So that's an exciting milestone. And likewise, we also got California approval or listing of Venerate as well for Canada. So Kevin, do you want to take that?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [29]
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Yes. There's not much to add there, but I just want to reiterate that cannabis and hemp fall into our broader portfolio that we call cultivated gardens, which is basically the green housing and covered market. And we see a good uptick and great fit for our products in this segment. And as we look at in further registrations going forward, but we also -- as Pam mentioned, we have dedicated sales force to this area to drive this opportunity and take advantage of it.
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Operator [30]
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We'll now take our next question from (inaudible) with Zacks Investment Research.
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Unidentified Analyst, [31]
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Congratulations on a splendid first quarter. A question on the -- not the seasonality but the type of conditions in Canada for the cannabis crop. I understand that a lot of the market out there is in greenhouse space. Is that correct? And then are the pest profile the same as it would be for the cannabis grown in United States?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [32]
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Yes. This is Kevin again. To answer your first question -- the last question first is, the pest profile is very similar between the U.S. and Canada for the greenhouse market. The -- recently, we announced that we actually set up 2 distributors in Canada to manage this market. Our planned products, who have a primary base in Eastern Canada just outside of Detroit. And Terralink, who primarily serves the western Canadian market. So we set them up to service this whole cannabis market. And right now, we're just doing the finalization of our labels and packaging to get aggressively into this market and penetrate it as soon as possible.
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Unidentified Analyst, [33]
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Okay. Both of those distributors do have listed the Regalia on their product slate for sale currently. Is the specifications as a product going to change?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [34]
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No. But what you can -- nuance in Canada is that you have to get -- once you get your label approved, then you have to -- then you start printing your label and packaging your product. So we're just going through that process right now, and it should be available for sale in the next 7 to 10 days in Canada. But you can legally post on your website the label based on what is approved, what's on the PRMA -- PMRA in Canada, which is the regulatory body in Canada.
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Unidentified Analyst, [35]
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Okay. Going back to the product mix in the first quarter of this year versus the first quarter of last year, what were the changes in the crops treated that had a significant impact on the revenue growth?
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Kevin Austin Hammill, Marrone Bio Innovations, Inc. - Chief Commercial Officer [36]
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Well, there is probably 3 different areas. If I look back at some research last year in our foliar business, the uptake in -- with Regalia and almonds was quite significant this year based on our promotion and focus on that area to grow in there. And secondly, also in almond, right now, we're seeing a great uptick in this program of putting Venerate in with the standard products or standard chemistry from the growers for navel orange worm control. Some of the -- last year, you would not have seen in any Venerate -- almonds and Venerate in the market research information. Now that is our #1 crop because we've put a huge focus behind this initiative. So that's one area, the foliar business and primarily in almonds in California. The second area is in our soil treatment business. We also increased our focus with -- in our soil treatment business. Now we're seeing some early adoption with our Majestene programs here in the first 4 months. And then finally, this is probably our first full planting season for a seed treatment business, and so we're seeing an uptake of the expansion and success we're having in the seed treatment business as in our first full season. And as Jim mentioned, seed production is mainly in the fourth quarter and first quarter. So that part -- contributed part of that product mix.
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Operator [37]
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We'll now take our next question from Robert Smith with