Good day, ladies and gentlemen. And welcome to the Marrone Bio Innovations Second Quarter 2014 Financial Results Call. (Operator Instructions) As a reminder, today's call is being recorded. I would now like to turn the conference over to James Palczynski from ICR. Sir, you may begin.

Thank you. Good afternoon and thanking everyone for joining us on today’s conference call to discuss Marrone Bio Innovations' second quarter 2014 results. I would just like to note this call is also being broadcast live over the web and can be accessed in the Investor Relations section of the Marrone Bio Innovations website at investors.marronebioinnovations.com. With us on call today are Pam Marrone, Chief Executive Officer; and Jim Boyd, our Chief Financial Officer. After the market closed today, Marrone issued a press release announcing the results for second quarter ended June 30, 2014. Additionally, there’s a slide deck that accompanies the call that can be downloaded from the Investor Relations portion of the website. Before beginning, I would just like to also remind you that today’s conference call may contain statements regarding management's expectations, believes, hopes, 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 expectation and belief concerning future developments and a potential effect 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'’ 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-Q that the company filed on March 25, 2014 and our earnings release posted on the company’s website. Should one or more of these risks or uncertainties materialize or any of the management’s assumptions prove incorrect, actual results may vary in material respects from those discussed today. 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 statement to reflect events or circumstances that may arise after the date of this call. Now with that out of the way, I would like to introduce Pam Marrone, Chief Executive Officer of Marrone Bio Innovations.

Thank you, James. And also thank you to everyone for joining us on the call today. Our second quarter was notable, not for our financial results, which reflect the challenging agricultural market, but for the strategic and operational progress we made. Our strategy remains to diversify and grow the business through new products, new customers, international expansion, and new crops segment. We are making good progress on all fronts. We had a very successful launch of a new insecticide, Venerate, this quarter and sold out all initial inventory. In terms of new customers, in California we saw significant increases in adoption for both Regalia and Grandevo. Internationally, key regulatory milestones have been achieved in both Brazil and Europe for Regalia. Regarding new crops, we made progress for Regalia for wheat and cotton, obviously very large opportunities. Additionally, we were very pleased to have had our official ribbon-cutting of our new Bangor, Michigan manufacturing plant this past quarter. We continued to develop a great network of suppliers and partners with whom we will grow, develop new products, and create tremendous value for our communities and our shareholders. Perhaps most importantly, we have continued our efforts to build and motivate highly capable dedicated teams in every department of the company to ensure we achieve our potential. That having been said, as you should have seen this afternoon, we issued a separate press release announcing the resignation of our COO, Hector Absi. This leaves us with a gap in our team-building plan. We understand his decision, which was personal and family-related. While this gap in our team is temporary, it does reduce our short-term visibility at a point in time where we are contending with some adverse market conditions. As you know, we've communicated that our goal was to double our revenues this…

Thanks, Pam and good afternoon, everyone. Total revenues for the quarter were $3.6 million, compared to $4.5 million last year. The tough environment in the first half of the year has caused us to come off our original revenue target of doubling. To clarify the environment, weather conditions adversely affected a number of sprays and the acreage planted in the first half of 2014, which thus reduced demand for our products. Revenues were most impacted in the Southeast with our Grandevo sprays. This represents our largest gap. Due to a very compressed blooming period, aggressive spray practices became necessary to control the pests. Grandevo did not disperse ultimately under the required aggressive spraying conditions. We have since developed a more versatile formulation which improves dispersion during mixing for all applications and crops, and registration is now pending at the EPA. In addition, we have recently developed and implemented procedures that can be used to improve applications of the existing formulation. We believe we will see significant improvements in the second half of the year from the continued penetration of Regalia Rx in the row crops, continued growth for Grandevo and Venerate, some additional international sales, and the launch of Haven. These are anticipated to create a seasonally strong fourth quarter and momentum for 2015. Gross margins for the second quarter of 2014 was 21.5%. This compares to 24.5% for the second quarter of 2013. Approximately 6.5 percentage points of the lower second quarter margin was from a write-down of inventory we determined to be substandard. Absent that gross margins and margins improved over the prior year's quarter. As capacity utilization ramps up, we expect to benefit from volume increases. Manufacturing efficiencies, improved formulations, and other productivity enhancing technologies. M3 holds the promise of improved margins, quality, consistency and turnaround time.…

Thank you. (Operator Instructions) Our first question comes from Laurence Alexander of Jefferies. You may begin. George D'Angelo – Jefferies & Company: Good afternoon. This is George D’Angelo sitting in for Laurence. The new partnership with Evogene, what sort of ramifications might there be there, more products in the pipeline or better quality products with a higher hurdle rate?

Actually, we think it will lead to royalty revenues from traits that are engineered at the plant. So the idea is that they’ll mine our collection of certain specific strains we give them and they’ll look for insect control genes which can then put into plants. If they could be cloned into a microbe and then used as a sprayable, that's certainly possible for us. They could go both ways. George D'Angelo – Jefferies & Company: Okay, thanks. And one more, I know you suspended your guidance, but can you provide any color on a run rate for sales for the next few quarters?

Well, we’ve always said that we were going to be heavily weighted to Q4, and we’re still working on that plan, the same plan, which was getting an increase in Regalia Rx on row crops, and then specialty crops for Regalia, Grandevo and Venerate in the Southeast and also in the West, and then some international and new products for that fourth quarter. And that fourth quarter was going to be a big one. But no, we’re not providing any guidance. And our decision to suspend was driven by a combination of the tough environment and the timing of Hector’s resignation which was Tuesday night. So we wanted to double check our assumptions and provide guidance with more confidence. George D'Angelo – Jefferies & Company: Okay, thanks.

Thank you. Our next question is from Michael Cox of Piper. You may begin. Michael Cox – Piper Jaffray: Thanks a lot. I guess it sounds like as the news from Hector is pretty recent here. But it was – I was hoping you could talk about the process you plan to go through to replace him, and any early thoughts on what the timeline might look like for that.

So we’ve already launched the search. I move fast. And even have some of the first resumes, and so in the meantime we’re splitting the operational responsibilities between Jim and Scott Peeples, our VP of Marketing. So the commercial side to Scott and the operation side to Jim. And I don’t know of an exact timeframe, but we’ll do it as quickly as we can, as possible, and look for someone to replace. Michael Cox – Piper Jaffray: It sounds good. And as you look ahead to the fourth quarter, given some of the challenges, the weather related that we’ve seen and obviously in the row crop side you have much lower grain prices. Can you speak to where? I guess where the confidence resides or where the visibility resides in seeing such a big ramp up in the fourth quarter, given the backdrop that we’re in right now, either anecdotes from your distribution partners or something of that sort?

Based on the really good results we had last year, and the fact that a lot, most of the inventory is already moved out on the ground from the fourth quarter of last year load, has moved out on the ground and was sprayed out. There is reports from the field everything is okay. But we won’t really know until they harvest in the fall the exact yield results. But I mean there’s nothing to say right now that would have us come off a strong fourth quarter in Rx. And even with the lower prices, I think as you saw at the conference, technologies that increase yields to the level that something like Regalia does, would still be attractive, economically attractive, even under low grain prices. Michael Cox – Piper Jaffray: Okay. That sounds good. And my last question is on the facility. Can you provide of the trajectory of how that facility will ramp up, just so we have some sense as to that margin variability and startup cost that you reference in the prepared remarks?

Yes, it’s really difficult to predict. We’re starting production. We are producing Regalia, Grandevo and Zequanox in the plant. We’re doing a lot of training and startup type of exercises, and it will take some time for us to get into steady production to be able to switch between the various products smoothly and efficiently. I’m thinking it’s going to take quite to get to the maximum. But I think you should see steady improvement in cost out of that Michigan facility over, say, the next six to 12 months. Michael Cox – Piper Jaffray: Okay. Thanks a lot.

Thank you. Our next question is from Paul Baltimore of Stifel. You may begin. Tony Shin – Stifel Nicolaus & Company: Hi guys. This is Tony Shin sitting in for Paul. Thank you for taking my question. I was wondering if you guys made any pricing concessions during the quarter. I’m just trying to reconcile the lower year-over-year revenue with the higher adoption across all products.

So, the higher adoption was in the West and the miss in the second quarter was in the Southeast. And so it wasn’t due to any pricing considerations. It was Grandevo in the bloom sprays were so compressed that they went through the field everything is okay. But we won't through the field very aggressively, and we they used a lot what product was in the channel, but didn’t restock. There was no need to restock Grandevo at that point. Tony Shin – Stifel Nicolaus & Company: Okay, okay. Thank you. And is it possible for you to quantify the negative impact or of weather during the quarter?

No. But I would say the significant impact was the Southeast compressed bloom. That was the bulk of the difference. Tony Shin – Stifel Nicolaus & Company: Okay, great. Thank you, guys.

Thank you. Our next question comes from Ben Kallo of Baird. You may begin. Ben Kallo – Robert W. Baird: Hi. Thanks for taking my question. As we look through this year with the lower revenue, how should we think about margin going forward and then kind of position that with the ramp up of the new facility as well?

Yes, so we do have inventory on hand, which is built mainly from the third-party manufacturers. So I don’t think that you’ll? I think margins will probably be at sort of existing levels, slightly higher that we’ve experienced in the last few quarters. But we?

You know, to top end here we expect to see continue in 2015. I think speaking to your question it’s continue growth of Regalia, the Regalia family, Grandevo and Venerate in the U.S. Ben Kallo – Robert W. Baird: No, I'm thinking more of 2014, with the lower volumes.

I think at lower volumes we’re going to burning some of that inventory. We’re going to have Michigan coming online. But again, the Michigan plant, they’re going to be learning. They’re going to be transitioning. I don’t think you’re going to see that significant of improvements coming out of Michigan throughout the end of this year. Ben Kallo – Robert W. Baird: And then in the past, you guys have talked about profitability next year. What do we think about that at this point now?

Well, I think we’re still focused on? We said in the follow-on offering that we felt that we’d get to breakeven in the latter half of 2016. And I think that remains true. Ben Kallo – Robert W. Baird: The latter half of 2016. And then is there a chance that as you go and try to find someone to replace Hector, that you miss this season as far as sales go in some kind of way and you basically push out? Especially in the row crops? And then my last question tied into that is how do crop yields this year impact the adoption of Regalia Rx?

Okay, so it’s clearly very unlikely that will double this year. But we still expect growth. The conditions in the Ag market are not good for anyone. You combine that with Hector’s resignation and we just have to double check our assumptions before giving any specific guidance. As far as grain prices, I was just at another Ag conference, investment conference, and they had a panel from farmers there and all of the farmers on the panel, they were corn and soybean farmers, said that they’re still using technologies that increase yields that give an economic opportunity. And we’re going to need to see this year’s yield data. But there’s no reason to believe otherwise.

But it is a competitive environment with lower corn prices, and a lot of the competition is discounting, while we’re not.

Yes, that’s true. Ben Kallo – Robert W. Baird: All right. Thank you.

Thank you. Our next question comes from Philip Shen of ROTH Capital. You may begin. Matt Koranda – ROTH Capital: Hey guys, it’s Matt on for Phil. Thanks for taking our questions. Just wanted to start out. A lot of them have been answered already, but wanted to start out with Zequanox. Congratulations on receiving the open water certification from the EPA. Could you talk about the opportunity there over the next couple of years and perhaps quantify the impact and sort of how you see revenues trending from that opportunity?

That’s a really interesting one. The open water, I actually think could be bigger than the pipe treatment, but it’s hard to quantify because there’s no chemical allowed for open water treatment currently. And they just let the mussels take over and destroy the lake. So, you can like roll up all the lakes in the U.S. and the private lakes and the Gulf Coast and everything and come up with a number. But we don’t really know exactly what it is for the lake treatment. But we’ve said that the combined in-pipe and open water treatment market is approximately a $1 billion TAM. So that’s kind of where we’re at with that. Matt Koranda – ROTH Capital: Okay, great. That’s helpful. And then you guys held down OpEx quarter-over-quarter here. Can you just talk about where you are with headcount and are you at a comfortable level at this point in time, or do you anticipate adding in the back half of 2014? And then just as a quick aside to that? Do you anticipate any one-time charges associated with Hector’s departure?

Well, let me start at the back end of that question. No, we don’t anticipate any charges with Hector’s departure. And right now our headcount is about 162, and we might have slight headcount adds in the second half, but it will be minimal.

Most of the headcount openings right now are in the commercial side. We have some sales and product manager open slots and where we focusing on openings that drive revenue, and really flat and basically flat in R&D. Matt Koranda – ROTH Capital: Okay, great. That’s helpful, guys. I’ll jump back in queue. Thank you.

Thank you. I’m showing no further questions at this time. I would like to turn the conference back over to Pam Marrone for closing remarks.

Thank you, everyone, for listening to our call. We’re very excited by the progress we’ve made this quarter in the fundamentals of the business for the long-term prospects. Despite the challenging Ag market and the recent news of Hector, we remain very optimistic and confident in the fundamentals of the business. Thank you.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation, and have a wonderful day.