Good day and welcome to the Marrone Bio Innovations’ Third Quarter 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Linda Moore, General Counsel. Please go ahead Ma'am.

Good afternoon everyone and thank you for joining our call. Before beginning, I would like to remind you that this conference call may contain statements regarding management's expectations, hopes, beliefs, intentions, or strategies regarding the future as well as projections, forecasts, or other characterizations of future events or circumstances. Such statements are based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that management has anticipated. Such statements involve a number of risks and uncertainties, some of which are beyond management’s control or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these statements. Important factors that could cause differences are contained in the reports filed by the Company with the Securities and Exchange Commission, including the Form 10-K that the Company has filed on March 30, 2016 and our Form 10-Q that was filed today for the third quarter of 2016, under the heading Risk Factors and elsewhere and in our earnings release posted on the Company’s website. Should one or more of these risks or uncertainties materialize or should any of management’s assumptions prove incorrect, actual results may vary in material respects from those discussed today. Additionally, the Company will be making reference to certain non-GAAP financial measures on this call. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the Company’s earnings press release published today, which is posted on the Company’s Investor Relations site. Any guidance that management may offer in this conference call represents a point-in-time estimate. 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 answer your questions. Now, I will turn the call over to our Chief Executive Officer, Pam Marrone. Pam.

Thank you, Linda. Good afternoon and thank you to everyone for joining us. With me today is Jim Boyd, our Chief Financial Officer; and as you just heard, Linda Moore, our General Counsel. We are excited to report our results for the third quarter. This marks our fourth consecutive quarter of solid performance and year-over-year improvement. We are demonstrating increasing consistency and our ability to deliver revenue growth, margin improvement and expense control. We also remain disciplined and executed well again this quarter. I’m very proud of the great work that our teams are doing across the entire Company. We were really pleased to celebrate our 10th anniversary just a few weeks ago. In 10 years, we have registered and commercialize four new active ingredients and launch by products with global potential, this is a remarkable achievement. Our newest product newest product Majestene and Nematicides was recognized that the best new products in the Biopesticide category by Agrow, one of our industry’s leading trade publication. Majestene is off to a strong commercial start and we believe to deploy to become a major product in our portfolio. As we discussed last quarter, we have been intently focused on growth, domestic growth, international growth, growth of existing products, growth with new products, and growth we create through partnerships. Our third quarter performance includes success in each of these areas despite a generally soft agricultural market environment. This gives us confident that we are positioned for continued progress in the fourth quarter and next year. It’s worth stressing as we have discussed before better products to farmers with the short-term economic return associated with better yield, higher gross quality and an expanded export capability. At the same time, our product also provide farmers with the longer term economic benefit by mitigating the development…

Thank you, Pam. Good afternoon everyone. I would like to walk you through our third quarter results. Our GAAP revenue in the third quarter was $3.6 million, up 46.8% as compared to $2.5 million in the third quarter of last year. In addition, during the first nine-months of 2016 we have grown our GAAP revenues to $11.4 million up 43.9% versus the prior year nine-months totaled of $7.9 million. This GAAP revenue number does not include deferred revenues not yet recognized from customers on the sell-through revenue recognition method versus the sell-in method. Please note that while we use the sell-through method for certain customers, our standard terms of sale do not include any return or inventory rights or other than normal warranty claims. As we did in prior quarters, we are also providing information on product shipments, a non-GAAP measure of sales that includes the net change in deferred revenues in the period, in order to represent the value of our product shipment volumes in a given period and to provide additional insight into our business performance. In the third quarter, we grew product shipments by 72.2% to $3.1 million as compared to $1.2 million in the third quarter of last year. In addition, during the first nine-months of 2016, we grew our product shipments to $11.2 million up 72.7% versus the prior year nine-months total of $6.5 million. Our GAAP gross margin in the quarter increased to 31.4% as compared to 5.5% margin last year. The improvements reflect growth and revenues and more diverse product mix and improved manufacturing efficiencies. We were very pleased to see unabsorbed manufacturing cost from idle capacity during the quarter drop to $169,000 from $718,000 in the third quarter of 2015. For the first nine-months of the year, our gross margin increased to…

Thank you. [Operator Instructions]. And we will take our first question from Laurence Alexander with Jefferies.

Hi Pam. This is Jeff on for Laurence. In your prepared remarks, you highlighted the pipeline and number of products in trials. Can you size some of the opportunities let’s say Haven, 601 and maybe one or two others that are close to commercialization and I guess are these $25 million, $50 million and $100 million opportunities at peak and how should we think about it?

We are not going after the blockbuster drug strategy, each one of our product is going to be equally important, I would say the same for our pipeline product as well. So the range you gave is appropriate in terms of the sizing, but let's take the biofumigant category, nine million pounds of fumigants were used in California last year in 2015 and a lot of them are heavily restricted. So it's the significant market need and so that's also global need as well for new fumigants. And then with the 110s is also win. We have been focusing 110 on white mold and downy mildews and the few other things, but it's got a lot for other spectrum than that. so I think it will be as large as for Regalia overtime. Haven, we are just we have seen some great results on reduce on suns stress and yield improvements and we are also just scratching the surface on the yield improvements that we are seeing it seems to be quite broad across quite a number of crop categories.

And 010?

010? Well that one has to be potential that overtime I think could be the biggest one in the portfolio because it's a herbicide that we needed [Indiscernible] weeds. Technically the most challenging, so we are working on it's a real excited that R&D has done a awesome job in the first 10 months of the year as the main thing what they have accomplish in the getting that new formulations and stabilizing the actives and so forth for this that particular one and for both organic and conventional.

And the pre and post increases from our side.

Yes, it does. We knew long years ago that the pre-emergence activity we had it but pick up bound within the soil and our crack team to formulations people we are able to make it active so we are excited by that.

Great, and then, on the pipeline our most of the products that you have developed are spearheaded by customers or your distribution partners or you developing them and then trying to find the demand in the market?

So it's kind of a little bit of legacy of both, some of them like Haven we have had an portfolio for a long time. The other ones were by design based on market needs we heard from our customers of course organically the control is always sighted as the number one by all customers whether it's the most chemically intensive distribution or not, because they have a lot of customers that need that. And then the 110 was specifically screened to look for a downy mildews, white mold products and then the fumigant was also specifically selected, because it was a large unmet need as well.

And then I guess last one if I can. Any early thoughts on the elections or it relates to approval biological?

I have seen a lot of administrations come and go over my carrier and it's really hard to predict, it really depends on the political points and the senior staff EPA and how they manage the staff, but we do have a Pesticide Registration Improvement Act. That is actually legislated in the time frames that we get our products approve so there is not a lot of wiggle room, we like to think any way there is not a lot of wiggle room in those timelines because they are statutory.

Got it. Thanks for your time.

[Operator Instructions] We will now move to Tyler Etten with Piper Jaffray.

Good afternoon, guys. How are you doing?

Good.

I guess can you talk a little bit about the bio-stack corn seed treatments and what sort of timeline, that looks like the commercialization obviously very impressive year left out of the trial?

Yes, we are too excited. So the uses for our microbes on corn for that some of those trials. Some already registered by EPA and then one of the uses is pending and will be registered next year on arrangement that one. Yes, it will be registered next year. But, so it’s relatively near-term in terms of the ability to get it out in the market, but we have set no commercialization timing for that product yet.

Okay. I guess kind of building off of that. In row crop market, has there been any sentiment change confirmers about biological and just to [Indiscernible] obviously the row crop farmer still very challenge. But any incremental interest in these types of products compared to a year ago?

We see the trends remain the same that if you can demonstrated ROI, attractive ROI performer regardless of the price the point of yielding and is a pace for yielding the cross of the input pace of the yield increase they are interested. And we are seeing that increasingly with our partner [Indiscernible] taking into the partner that Regalia, which we expect it would be based on all our trial data demonstrates that continue to show that ROI. Some of these new seed treatment, clearly there is ROI there. So I think that’s really, what it’s come down willing to try something that’s going to make them money.

Got it. And then one more if I could and I apologies if this already asked, I was disconnected briefly. Could you talk about the biofungicide market, what kind of cross make-up that market and which opportunities that your products target?

So the [indiscernible] regulation data face that’s public estimated in 2015, nine million pounds of fumigants were used last year in California alone. California, we do have some carryover of the methyl bromide which under the [Indiscernible] is being passed out for 2017 is the last year. So replacement for methyl bromide has been a number of chemical fumigants, which are quite toxic and California has restricted them with very larger buffer zone. So they are difficult to use and they require prior notice and county notices and all that. And so what we are talking about it would be California strawberries would be our number one target crop and that’s one of the crops we have it out in the field right now. Leafy green, tomatoes peppers in Florida. Those are some of the top crops, tress and wines replant disease in any tree and wine when they are replanted in the same location nematodes and other diseases often cause of yield drop and that’s why those fields are fumigated, that’s another market for us. We have post harvest market with our fumigant as well, which we would be putting it inside of the boxes for preventing fruit rot in shipping that is a longer term market, which we will target but right now, we are focusing on the soil fumigation.

Got it, and of the top of your head do you know the dollar amount of those nine million pounds or fumigant in California?

I don’t at the correct time.

Okay, no problem.

Thank you.

We will now go to Amit Dayal with Rodman & Renshaw.

Thank you, good evening Jim, Pam how are you. In regard to the gross margin Jim. We came in at 31.4% this quarter, we were at around 38% last quarter is it just the function of the lower sales number this quarter?

It's a combination of mix that's really impacting it and the amount of unabsorbed manufacturing cost there or plant utilization rather, which was about six percentage points.

Okay, understood. And then maybe to the gross margin. You have shown a lot of improvement in the yield across the product line; in respect to that aspect of the story like how should we think about potential opportunities for further improvements in yield across different product lines.

Well, I think we should continue to experience improvements in yields as we get the yield up in any particular product and as we develop more process improvement within the plant and with our third-party manufactures. That will be moderated a bit by the introduction of new product, so introduced our products and our model is such that we don’t have them perfected in terms of yields or production capabilities when we introduce them so they start out at lower margins and would approve over several years.

As time goes on, a steady run rate margin will certainly we are expecting it to continue to increase.

Got it. Pam in regards to your comments around Zequanox partnerships the European partner I guess you found at least one partners. Is this exclusive for all over Europe or is this just with bean?

We are starting with same for now.

Okay, so you potentially will be looking for other partners in other countries.

Not clearly yet. We may use this one for the entire Europe.

And in regards to the U.S. partnership opportunity do you think by the end of the year you may have somebody or will this potentially lead into 2017?

We are in discussions with the number of partners. It’s hard for me to predict the timing when you start getting holidays and larger companies go on their own time schedule. I'm not going to make the prediction on that one.

Understood. And then you mentioned one new commercial product to be launched in 2017, actually cash the name, if you could recap this.

I didn’t actually say which one so we can't we have several opportunities for more than what I think so because there are…

Yes, because I see from your last presentation I think you have around four products potentially available for commercialization in 2017. So I was wondering which one of those this might be.

We are working on that now in terms of which ones. we know first of all 110 won't be approved, its target approval date is in the latter half of next year so 110 would be later, , 010 also would be later. So your first two up would be the biofumigant and the [ISx.1] (Ph) and Haven MBI-505.

So then the way to read it is basically at least one commercial product?

I think I, said at least one.

I heard that just one more total.

No, no. At least one, I'm pretty sure I scripted at least one.

All right. That’s all I have. Thank you so much. I’ll take it off.

Okay. Thank you.

I will now turn the conference back over to Mr. Pam Marrone for any additional or closing remarks.

Thank you all for listening. We are excited about our momentum, solid growth, improved margins, new opportunities and our growing technology platform. We have a clear vision for our future and we look forward to talking with you again soon. Thank you.

Ladies and gentlemen this does conclude today's conference. We thank you for your participation.