Q1 2020 Earnings Call
Good day and welcome to the Morone bio innovations first quarter Twentytwenty earnings Conference call. Today's conference is being recorded not just trying not to turn the conference over to into more. Please go ahead now.
Good afternoon, everyone and thank you for joining our call welcome to the Twentytwenty first quarter earnings conference call for Morone Bio innovation.
On the call today, our founder and CEO Pam Morone.
President and CFO, Jim Boyd and Chief commercial officer, Kevin handle.
If you would please refer to slide.
I would like to remind you that this conference call may contain statements regarding managements expectations hope.
[laughter] intentions or strategies regarding the future as well its projections forecasts or other characterizations of future events or circumstances.
Such statements are based on managements current expectations and beliefs concerning future development and their potential effects on the company.
There could 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 under the heading risk factors and elsewhere in the company's annual report on form 10-K for the year ended 2019 and in our earnings release posted on the company's web.
Sorry.
Should one or more of these risks or uncertainties materialize or should any of managements assumptions prove incorrect actual results may vary in material respects from those discuss today.
Any guidance that management may offer in this conference call represent 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 hold a question and answer session.
I will now turn the call over to our President and CFO, Jim Boyd Jim.
Thank you Andrew and thank you everyone for joining us on this call.
She would turn to slide three.
Sales in the first quarter were $9.7 million, our largest quarter ever in our seventh consecutive quarter of year over year revenue growth.
Margins came in at a record, 57.7% also our largest quarter ever and our sixth consecutive quarter of gross margins greater than 50%.
We saw continued momentum in the demand for products in the specialty markets for Fruge notch leafy Greens jump in Canada as growers are preparing for their critical spring season in the United States.
Our largest products in the quarter word galleries, and battery, which continued to see increased adoption.
Well my answer was particularly strong in California, Despite one of the drives february's on record.
Sales in California were driven by our bio your night program and almost.
Sales to our crops six specialty crops distributors grew 35% year over year, representing the effectiveness of our investment in our commercial team that we had been talking about over the past earnings calls.
As you May recall in our last earnings call. We said expect greater growth in 2020 than we had in 29 tea.
We continue to expected notwithstanding the cold at 19 and damage.
Therefore, we do not think 20 Twentys first quarter year over year revenue growth is representative of our revenue growth for the balance of 2020.
Which we expect will be higher.
Since because the first quarter 2020 at a larger percentage of our total annual seed treatment sales for 2019, then we expect in 2020.
We're also seeing a seasonal shift in our sales pattern as row crops to become a more significant part of our portfolio.
We benefited modestly from the addition of flow from seed treatments in the first quarter, but seasonally we would anticipate a greater contribution from our pull farm portfolio starting in the second quarter as distributors and seed companies prepare for the growing season in Europe.
Hi, I'm, particularly pleased please that we continue to realize record gross margins with the first quarter coming in.
57.7% driven by are continuously improving product level gross margins as well as a favorable product mix.
Well, we achieved record revenues and record margins in the first quarter.
You're taking a very cautious approach to operations as we navigate the effects of working through a global economy ravaged by the corporate 19 can damage.
Health and safety ever employees customers and suppliers, our first priority.
However.
As a result of these uncertain economic times, we have taken several steps to reduce or operating expenses.
We have done so in a manner that preserves jobs as we remain primarily focused on serving our customers and supporting farmers through these difficult times.
We're very conscious and concern than anyone who is suffering in the current environment and we think the best way. We can help it's continuing to support food and agriculture, what the products and services we provide.
For the first quarter operating expenses for $11.2 million, an increase of $2.6 million year over year.
That 2.6 million dollar increase $900000 were non cash expenses.
$600000 of which wasn't amortization charge and $300000 of which was an increase in stock compensation.
Finally $1.1 million. So the increase was due to the addition, or pro forma operating expenses, which we consider reasonable for the value that this acquisition represents three morone bio shareholders.
The integration of pro farm is progressing well and we are realizing meaningful operational and commercial synergies from the acquisition.
The net loss of $7 million in the first quarter 2020 compares with a net loss of $3.9 million and 29 team and increased $3.1 million.
$1.4 million. So the increase was a noncash adjustment from our 2019 weren't transaction.
$600000 was a noncash amortization of intangibles associated with the Profarma acquisition.
$300000 with a noncash increase in stock compensation expenses.
The remaining 800000 dollar increase is largely due to the addition of so far as previously mentioned operating expenses offset by increased gross profits during the quarter.
Adjusted EBITDA, a non-GAAP measure increased to 3.7 billion dollar loss in the first quarter of 2020.
From a 2.6 million dollar launched into first quarter 2019, a $1.1 million difference.
The increase was primarily due to the addition of pro firms operating expenses.
Cash used in operations decreased to $6.3 million into fourth quarter of first quarter, rather up to 2020, an increase of 17 or decrease or other of 17.8% from $7.7 million in the first quarter of 2019.
The decrease was primarily driven by changes in working capital partially offset by the addition of pro farms operating expenses.
Turning to our balance sheet.
As of March 31st 2020.
Unrestricted cash and cash equivalents were $10.1 million compared to $6.3 million as of December 30, Onest 2019.
The increase was due to a 6 million dollar draw under our early warning facility and the initial 3 million dollar draw on our new inventory line of credit.
Backing out those two items, we had a cash burn a $5.2 million in the quarter or approximately $1.7 million per month in line with our expectations.
Before I discuss my last two topics I would like to state in my career I've been through several crises, including Black Friday, 911, and the 2008 recession and in my opinion, you do not want to underestimate the seriousness of anyone of them.
We recognize purely the potential severity of the worldwide Kogut 19, pandemic and we moved quickly to adjust or operating budget to reflect that uncertainty.
Including a voluntary 10% salary cost for our executive team a freeze on raises during 2020 and a cut in our regulatory budget among other serious cats, but we are maintaining everyone's job.
With that in mind and turning to slide four.
Subsequent to the ended the quarter, we took two more actions to significantly reduce our company's business risk and strengthen our balance sheet and the new Kogut 19 economy.
First in May April in mid April we applied for and received 1.7 million dollar loan hundreds a paycheck protection program as part of the Corona virus eight relief and economic Securities Act or Cures Act that was signed into law on March 27.
2020.
Criticism has been level that public companies for participating but the fact that the matter is that act helped us maintain our workforce in the face of economic uncertainty.
Our people are most valued assets and the PPP loan allowed us to maintain our workforce. During this time of crisis.
Second we moved quickly to sign a warrant exchange agreement with the existing institutional investors that provided $2.5 million in financing earlier. This month and May result in up to $20 million in additional proceeds if the warrants are exercised unfold over the next two years.
The amount and timing of each tranche is designed to take us to an adjusted EBITDA breakeven level of operations, given our current outlook and plan.
It. Therefore also gives you insight as to how we see our path to breakeven.
This transaction immediately reduces.
Our total number of outstanding warrants by approximately 31%.
Specifically this transaction plus other normally expiring warrants will result in 73% reduction in warrants outstanding by the end of this year and a 19% reduction in warrants outstanding by the end of 2021.
Therefore, effectively eliminating any warrant overhang.
We believe this transaction is very positive for the company and its shareholders removing the question of funding risk and significantly reducing potential dilution.
In conclusion.
Like everyone else, we're taking a cautious approach to the remainder of the year.
Farmers are entering a critical period for their business and it is imperative that we deliver a strong balance sheet as part of our plan to support them safely and cost effectively.
We had a good first quarter that continues to sales momentum we saw in 2019, and we expect that momentum to continue into the balance of 2020.
Six quarters that margins in excess of 50% tight control over operating expenses and our newly strengthened balance sheet give us confidence during these uncertain times. It was we look forward to the remainder of the year.
With that I would now like to turn the call over to Pam for her comments.
Thank you Jim.
Turning to slide five.
The first quarter was highlighted by continued commercial progress in a tough economic environment farmers around the world I working tirelessly to ensure a safe inadequate food supply as they adjusted for changes brought on by the covert 19 pandemic.
Like growers.
Hey, Matt Brown bio has been hard at work with significant year over year increases in our specialty crop account.
Since last earnings call, they've gotten some insight into our market penetration by crop.
Treated acres in 2019, venerate Rainbow increased by 50% driven by honest Strawberry, maybe Greens pistachios and stone fruit.
We saw strong results with our launch of the buyer they like program for often test in California.
That's right Randy boat used in combination with the top two insecticide for neighbor Orange woman, Mike you did cause damage above the grower standard program, providing a three to one return on investment.
Also want to push through our by overnight program in 2019, regardless, our oldest product for sprayed on 11% more acres in California and on 80% more on the bankers.
This quarter, we launched page that are in the United States, our full year biological plant health product for row crops.
This plant health product is the newest addition to our bio your night portfolio.
Okay setter acts synergistically with conventional fungicides to improve plant health and vigor, resulting in increased deals above the chemical alone.
By up to seven bushels per acre in soybean and 13 bushels per acre in corn.
We're also excited about you bought our geographical expansion with darkest Biofungicide with our first sales into letter from strawberries in California, and eminent sales in Mexico and Canada.
Additionally, our get oxide, 15% industrial disinfecting products was recently approved by the U.S. EPA for used against human Corona viruses, sanitize industrial food and agricultural hard surfaces.
Not only as it's currently represents an exciting new application for Jack and jet oxide product suite as we've seen a nice boost in awareness along with increased sales for both hard surface and direct crop sanitation for food borne pathogens, including eco white and Salmonella.
On the field trial front, we continue to expand seek treatment trials in the U.S., Europe, and Latin America, particularly with our secret and partner for our next generation insecticide, Nevada side as well as a new liquid formulation of Randy boat foresee treatment and follow your applications.
Even with the disruption caused by the covert 19 pandemic wherever possible, we are not slowing I feel the valuation efforts for our products in development, including our pro form products.
From a regulatory perspective, we have continued to make progress recently, so biddings darkest biofungicide registration into Europe, the second largest fungicide market in the world After Brazil.
We also submitted an expanded disease and crop less to the started as California in Canada label.
Also of note we received approval in Canada for regarding your back on both indoor and outdoor cannabis.
And have the first approval for any product for these uses in Canada.
We are pleased with the progress we have made with the pro form integration and the opportunities to cross sell and expand geographically.
We continue to find exciting synergies, where both morone bio and profarma benefit from leveraging our existing partner relationships to expand field testing of each other's products and create new product combination.
For example, we have an integrated Profarma immobile R&D and field testing program in both North and South America in Europe, with major seed and Agrochemical company customers.
Our international growth and diversification opportunities continue to expand.
Where they use the biological is growing more rapidly than the United States market period, then we recently signed a commercial agreement with honest Soc to like a leading to an agricultural inputs provider with significant market share and the export driven front line and not market also we signed an agreement with U.P.L. in South Africa, where.
Regarding abaxis currently registered for great.
Grandevo and venerate have shown strong performances field trial against devastating pests, such as false, causing more and Mike.
Now turning to slide six.
I'd like to provide an update on corporate 19, and how it affects both morone by when the industry.
But it's still too early to know the full effect on food production on the I can put supply chain farmers are entering a critical period ramping up production to meet changing retail demand. For example, some segments are up significantly in the first quarter fabric and more nimbly switch from food service to supermarket retail packaging, well, others with more rigid supply.
James I'm, having a harder time adapting to the changing demand.
For example, organic produce was up 25% in the first quarter I cant fruit cannot as easily pick it up to meet additional supermarket demand.
I think potato acres are expected to decline, 10% to 20% versus the original 2020 expectations.
Unconventional leafy Greens in California are expected to declined 15% that's come air compare to the original forecast.
Due to the lower food service demand.
Bonds are generally on effective.
Farm access to labor continues to be very difficult and is exacerbated by the challenges of implementing new cobot, Nike Inc. health and safety precaution.
Fiber access to add inputs has remained steady at distributors have pre built inventory.
We anticipate industry challenges throughout the year, they've taken steps to retain our workforce. Our most important aspect and ensuring we are safely meeting the needs of our customers and our employees.
Sounds good distribution is usually a combination of working with distribution staff and assisting them in called growers.
Distribution rules around cobot 19 have made it such that our sales and product development staff have an increasingly active with electronic communication via phone video conferencing and webinars.
In person visits are only made on the rosebel allow and social dispensing practices can be strictly solid.
Our own bio management is doing lets just as much as possible to support these activities as creatively as we can during these difficult times.
In addition to our PPP loan and our weren't restructuring as you heard from Jim we've implemented a reduction in spending to further extend our runway we reduced our 2020 operating budget by approximately 10%, including a voluntary 10% reduction senior management 20 Twond salary.
Our top two management level or not getting cash bonuses. This year and we've also put a freeze on salary increases this year.
In addition, we reduced toxicology and field trial budgets.
With that smaller toxicology testing budget, we're prioritizing Superman distinct first and our one five bio herbicide as resources permit.
We believe these efforts will help us like through these uncertain times on our path to becoming the leading AG biologicals inputs supplier.
Turning to slide seven.
As a result will be uncertainty in the market and our recent balance sheet strengthening we want to provide investors and idea of how would your revenue growth going forward.
As you know since 2015, we've successfully grown revenue at a compound annual growth rate of approximately 32%.
Far outpacing both the biologicals and now the chemical industries.
In 2019 revenue growth accelerated to 38%.
And due to the strategic steps, we've taken going forward, we're expecting a revenue growth to further accelerate barring complications from covert 19.
In summary, we're excited about the company's progress on trajectory.
Well covered I seem to have presented challenges and uncertainties accompany isn't the strongest position it has ever been to continue our momentum to profitability I.
I am privileged to be up the helmet, one more quarter with such excellence and dedicated employees, who step up no matter what the challenges are facing them.
With that I'd like to turn the call over to the operator to begin or too when I session operator.
Thank you if you'd like to ask a question for you signaled by pressing star one on your telephone keypad to using a speakerphone. Please make sure. Your mute function is turned off to low single to reach or equipment again that is sort of one to ask a question on pause for just a moment.
Alright, well now take our first question from Laurence Alexander at Jefferies. Please go ahead.
Good afternoon could you give a feel for how youre sort of dealing with bad debt management and watch.
How your position that's changed in this environment compared with the I guess in terms of two years ago.
And.
Lastly, can you characterize how is that correct for the supply chain.
Or.
For the energy corridor Volaris applications, what will be the difference in the selling channel or did you get harder extra status to manage that channel.
Okay. The first one on the bad that Jim do you want to pick that one.
Yeah, Laura we've never had a bad debt, we've never had anybody not pay ability even on time, I believe and I wouldn't anticipate that will change going forward even in this new coconut environment.
And the second question that was a little hard.
Really what we're dealing with large distributors who.
Typically large companies and so a.
Yeah, they there that reliable supplier so.
Well then the second in the second was the guard to supply chain I believe.
Oh, God, new coal, but nine because I know corona virus product that we had to change our distribution strategy for that one.
Back like Kevin you want to take that.
Yeah no football.
As a comment the Jed I can jump oxide sales are going well.
Condition. The second third quarter sales is strong for these products.
So the jet oxide specific certain industrial markets, we're going through or condition distribution also with what we want bonds set up some alternative distribution, who typically service that markets outside the.
Traditional distribution.
The great thing about that other than some opportunistic sales is bad it's gonna be.
Wait to just reinforce and strong brain damage of both Jed I can get outside.
Yeah.
And then with respect to the real call kind of rotation build up well bores jurors of data showing the you'll gains and key.
Differences in your pricing for value or.
How are you could or the adoption curve.
Kevin you could give that.
Yeah, So you're talking about our thin set upon okay I assume.
So just a little bit of backgrounds on page seven before we get into we just recently got Steve registrations.
So we will see the personnel pennsaid, two little crops like corn and soybean.
Last week.
So could boost your 20 twond.
Well suited to ramp up you're able to chat on growers as we build on the Queen Mary two great performance from our internal two of them demonstrations.
People, we're gonna do 2020.
Yes, we're going to Uh huh.
Do you will test pro forma GBP politics.
To settle.
And we expect some really good yourself. So we were expecting a greater than 2020 look on the continued to build on the successful implementation.
2020 volt greatest well growers not by the way to go forward.
Then just lastly, with respect to the purchaser EBITDA breakeven can you just got child, the biggest swing factors that you see forgetting to them.
Well this is Jim.
Obviously sales growth and and margins improvement I think we've got pretty tight control over operating expenses.
The.
The other variable with our with our cash is of course working capital needs, but we've got some pretty good lines of credit in place to handle those.
I, we did say during our prepared remarks that.
The trenches and the timing of the trenches in or warrant give you insight as to how we view that path to breakeven.
Did that answer think aren't yep perfect. Thanks.
Alright, well now take or next question from severe Joshi H.C. Wainwright. Please go ahead.
HM claim so I'm thinking for taking my question.
First question relates to revenue growth.
We're expecting or even though I go to eat up and can be quite easily Grupo gondi 19, compared to can be made people would be.
At the same time, you're also reducing costs like go slow to cool I didn't quite as these.
Uh huh.
The reason that you're doing this because the only phone 16, some pressure on your gross margins.
That's up lifesize or any other factors.
This is Jim again, no actually not at all or we just did that could be cautious we're cutting expenses and most of them. You know, it's not as we said cutting people, but cutting our own salaries cutting or bonuses cutting our R.R. racism increases.
Oh, and some you know expensing in terms of registration fees fees things that we can kind of pushed off a advantage it slows or growth a little bit, but no I wouldn't say materially it slows launch a new pipeline products.
But we just thought that was cautious that none of US know how this is going to churn out.
With respect to margins.
We have seen some supply chain disruptions, mainly along transportation lines getting things true ports and and truckers lined up.
We are third party supplier in Germany did not shut down although we were concerned that they might get some sort of outbreak.
Our our Ah knotweed supplier did shut down in China, but is now open again in the shipping, but we had.
A year's worth of inventory backed up that we did for the tariffs. So we were in pretty good shape when the covert 19.
Hit us.
So I think you know I think we're in good shape, I think I would anticipate or margins to over the longer term continue to improve I expect him in the 50% to 57% range over the shorter term, but we've got lots of opportunity to keep keep improving those product level margins through a manufacturer.
Inefficiencies and formulation improvements.
Okay, and then just go to that Oh This group.
Good good they've been doing by the pool from.
And I just have done a walk is helping to know when people.
Good and bad.
[laughter].
This is Jim I'll take the the first or actually the last part of that about the Opex increase.
And then I'll, Kevin I'll, let you talk about the sales opportunity with pro firm. So first on the operating Ics expense side.
I think our operating expenses have been rather stable, if you pull out financing and acquisition related charges and all the noncash associated with those.
Charges I think you'll find that are we've managed or operating expenses very tightly first.
Sort of.
Pre fourth quarter 2018.
They were at one level and we increased them about a million to $2 million per quarter started even in the fourth quarter 2018 really through the acquisition of Pro farm and then I think.
Starting this quarter with the first full quarter of pro firms expenses that their expenses that we announced in our prepared remarks are probably indicative of what they'll be for the balance of the year.
Yeah, and I'm, just kind of normal here.
Jim you want me to speak about the revenue.
For the second third and fourth quarter, we update screen revenue drivers.
In the second quarter, the specialty business plan into the third quarter Imobile key driver when we expect acres stability in the permanent crops like comments.
But somewhat downside acres in the personal crops like let us.
Well I'm not going to continue to build on successful 20 monkey bio United strategy.
Expand geographically with chronic started its into California next door.
The recent warm weather in California.
We expect to see some includes into explains.
You mentioned about pro forma this is gonna be or something major revenue driver.
Although in the first quarter pro forma had minimum contributions to the to the revenue line, but we've seen sales accelerating no second quarter.
Solution on the fall Pumpkin seeds, and we also expect a good third quarter Maxim fourth quarter from coupon or we have not seen in the first quarter because of seasonality on their sales.
And the last big revenue driver for us well be a U.S. she couldn't business.
Which will start up again in the third quarter, we should be in good shape. When you start to treatment applications at the harvest because of the projected moved down in the 2020 soybean and corn acres.
This will help has overcome some of the challenges from the significant we could decrease in 21 team.
For bullet play will buy there's not as big of drivers.
Continued growth in international business.
Got it and that's it thanks for that kind of gun and then just on the high level or not to them, but to your what kind of some of the.
You can't live so.
Any approved so and come back and should be looking for.
I didn't quite catch that if somebody could <unk>.
Yeah could you repeat that Oh, yeah, just keep Kathy so to you and so that we should we think about or Uh huh.
No.
Okay.
Catalyst for the rest of year, I think Kevin Kevin alluded to some and his or just in the previous answer to the question that Ah seek treatment will kick in for pro form in the second quarter and then are you, let's see treatment in the third and fourth quarter.
Kevin any other other revenue catalyst you see.
Just some continued growth in are especially since we've had great success would there be by you a nice strategy and also just.
So a biological products were excited there, we're getting new registration expansion into international bark markets. So too. It's a combined efforts a team effort in terms of pumps you couldn't at U.S.C. treatment.
Specialty business in the U.S. and then international expansion.
Okay, great. Thanks, as Dick maybe two questions on.
We have more question.
What happened.
Hello.
Oh, the all else can you hear me.
Yes, Okay I like it here, Okay are there any more questions.
So I'll take your next question. Please go ahead mr. once they noted aegis capital.
Hi, Panda, Jim Thanks for taking my question as you know, we're witnessing an evolution U.S.G. investing.
Including a recognition that the S.G. criteria can be used as a risk management tool help identify companies, who stocks could outperform the future. So perhaps you could trigger perspective on the evolving U.S.G. landscape, and how well and bio fits into that landscape.
Great question last year I attended a number of but you'll see conference system in AG and related to to the answer that question and.
We kicked into gear to see what kind of metrics that investors would would a warm up to and we actually did a study of our products of the carbon footprint relative to chemical pesticides and it's our products are can reduce.
Carbon load by 60% to 90% comparatively so that was one of the one of the first very powerful metrics our own products themselves are right in tune with a with something that he has seen best are looking for and we're also in and in the throws of a full company.
50 audit with the help help events the group and attempt to get even more granular on what we're doing but suffice to say you know everything we do in the company. Its something that is is geared towards what enhancing investor would be looking for.
Thank you Gary this is Jim I'd like that.
We've been receiving sort of a standard theme with some of the investors that we talk to and that is as one investor told me you know when he talks to his his his investors in is fun.
All they want to talk about his morone, because morone well everybody claims to have E.S.G. Morone really you know is their products are about their culture is about it or they love it and so there there's a lot of interest in our company as and even from the S.G. index.
<unk>.
Got it thanks sort of shameless stops much appreciated.
Thank you that's great question.
All right well now take our next question from Teen Gilson sections Assessment Research. Please go ahead.
Right.
HM.
Couple of financial question.
Uh huh.
On the balance sheet.
Right. If you looked at the the sent to me.
I mean you.
For all the inventory.
It is they will do though no me well do though prior quarterly period.
Uh Huh moving fine.
Right so.
It was slightly below.
Fourth quarter levels that are looking of course, one quarters.
In prior years and plug your inventories down too.
The goal.
Okay.
What what happened though.
Yeah. Yeah. This is Jim again, and then I'm glad you ask I didn't talk about that in my prepared remarks, but I'm actually quite pleased with that also.
Got it represents a couple of things one.
Very tight supply chain management.
In the face increased sales that were expecting you know not in the first half of this year.
But it also does reflect.
That we were keeping about a year's worth or not we extract in inventory as a result of the oh, the terrorists or situation.
And with the Covance 19 actually stopping potentials.
Inflow of that product, we did actually run those inventories down to about four months worth but our supplier in China is now back in operations and the pork is open and we received several new shipments on it. Since then so I don't think those.
Those levels or or anything of that I'm concerned about Ah, but I do and I think they actually represent what we can do as we grow and have sort of economies of scale apply to our business.
And and rather I think of them as good management not not any cause for alarm.
HM Okay. That's good could you go through again, the big gold or increasing the excuse me nine.
Oh, let's see yesterday, a lot of that is it's those noncash charges that I alluded to in my prepared remarks, I believe there was Ah Ah.
Well first there was the 1.1 million of.
Operating expenses associated with pro forma then there was 900009 cash charges.
600000 associated with ER.
Amortization of intangible associated with the acquisition and pro form and then 300000 associated with.
With an increase in stock compensation expense also partially because of the acquisition of a pro farm and if he if you take all that out very little or or it's flat in terms of our normal morone bio standalone operations.
Okay I'm writing.
Disease basically and.
Well that intangible.
Amortization of 600000 will go on for quite some time, it's it's a stable amount, though you can build that into your models going forward and its noncash as I as I mentioned.
The stock compensation expense took a step up here with the acquisition or pro farm and other activities.
And and it'll vary from quarter to quarter Ah, but I I think.
You know when I believe I said in our last earnings call. It expect operating expenses to be in that $10 million to $12 million range and as you're seeing now a substantial amount of that increases is noncash.
Okay fine print it went up.
Thank you.
Well, we have currently has no further questions. So let's turn the conference back to management for any additional or closing remarks. Please go ahead.
Thank you for participating in our first quarter 2020 call our growth underscores the value of our vital like approach, which harnesses the power of biology with the performance of chemistry.
We've built a strong company with the right product right science in the right people to drive growth and expansion opportunities as we lead the way towards sustainable World I'm proud of the continued dedication of our employees. Our hearts go out to everyone impacted and suffering through this global pandemic stay safe everyone.
This concludes todays call. Thank you for your participation you may now disconnect.
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