Calyxt, Inc. (CLXT) Q2 2019 Earnings Call Transcript

Calyxt, Inc. (CLXT 7.38%)
Q2 2019 Earnings Call
Aug 07, 2019, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Calyxt Q2 earnings conference call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Simon Harnest, vice president, corporate strategy and finance. Please go ahead.

Simon Harnest -- Vice President, Corporate Strategy and Finance

Thank you. Welcome, and thank you for joining us today for Calyxt second-quarter 2019 financial results conference call. Joining me on the call today with prepared remarks are Jim Blome, our chief executive officer; and Bill Koschak, our chief financial officer. Yesterday evening, Calyxt issued a press release reporting our financial results for the three months ended June 30th, 2019.

This press release is available on our website at calyxt.com. As a reminder, we will make forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in last year's Form 10-K on file with the SEC.

Any forward-looking statements made by us is based only on information currently available to us, and we do not assume any obligation to publicly provide revisions or updates to any forward-looking statements. And with that, I would like to turn the call over to Jim. Please go ahead.

Jim Blome -- Chief Executive Officer

Thank you very much, Simon. Good morning, everyone. We're excited that Calyxt is at the forefront of a new breed of healthy, food-focused technology companies. In the second quarter of 2019, we continued to post solid progress on the commercial launch of our first product. We have increased our customer base to nearly 20 and approximately a quarter of those are oil customers.

Our sell-through at Sysco is gaining momentum. Our kick-off with Sysco's sales team in late June has already placed Calyno in over 30 additional food service operators. We are pleased with the successful entry into the commercial food service market segment and are excited to report that Calyno will also have a presence at the upcoming Minnesota State Fair. We have increased our first-mover advantage by expanding our supply chain through our agreement with Landus Cooperative, one of the world's largest agricultural cooperatives and soybean processors as a crusher and distributor of our soybean meal. While we expected to have our first crush with Landus in June, weather forced us to delay it to mid-July. When we executed our largest crush to date, over 200,000 bushels of our high oleic soybeans, we have subsequently sold out of that soybean meal, and as a result, July will be our best revenue month so far. Our crush plan for the remainder of the year will result in all grain from prior harvests being crushed and the meals sold before year-end.

Landus also gives us operating scale and future crushing capacity. This is the first opportunity to operate our grain purchasing activity at scale with our growers. And we are pleased to report that as of late July, we had purchased more than 75% of all 2018 Calyxt high oleic soybean grain from our contracted growers. Closing out these purchases of 2018 contracted grain helps us prime our supply chain, validate our identity-preserved supply chain and further the confidence our valued growers have in Calyxt and our model. The first half of 2019 also saw the impact of severe weather on the U.S.

farm economy. The delayed planting season was felt across the Plains states and nowhere more than in South Dakota. Our primary growing region is South Dakota. So nevertheless, our planted acres were slightly more than 36,000, doubling the acres planted in 2018 and consistent with our original plans for 2019. Our 2020 acreage goal remains at 100,000 acres.

The 100,000-acre mark is an important milestone as we believe it inspires confidence in our potential future customers related to our ability to supply them. We see strength in the value of our offer to the U.S. farmer and we'll leverage these relationships underlying our 56,000 2019 contracted acres, our supporting distribution channels and two to four new varieties of high oleic soybeans that will launch next spring to increase penetration with existing growers and expand geographically out from our current base. Geographic expansion reduces the weather risk like that experienced in 2019.

We have also launched our acreage acquisition plan for 2020, the earliest launch in our history, and we expect to have great success contracting acres by year-end. With this, I'd like to hand the call over to Bill Koschak, our chief financial officer. Bill?

Bill Koschak -- Chief Financial Officer

Thank you, Jim, and good morning, everybody. Our revenues for the quarter were 408,000 and were impacted by the shift in the timing of a planned crush of soybeans from June to July. Our revenue in the month of July will exceed $1.5 million as a result of this shift in timing. We've also invoiced over 1.3 million for seed in the quarter, and as of today, nearly all of those invoices have been collected. We've also completed the seed distribution process for 2019 and have experienced less than $60,000 of returns of seed in the period.

We also wrote off excess seed inventory of $82,000 in the quarter. And in both cases, we do not expect any future losses. R&D expenses were $2.7 million for the quarter, driven by a 0.8 million decrease in noncash stock compensation expense year over year. Cash R&D expenses increased as we continue to add resources to our R&D team. SG&A expenses were 6.4 million for the quarter, an increase of 2.4 million over 2018. The increase was due to higher compensation and benefits associated with the addition of personnel, including contractors, to support the commercialization of our high oleic soybean products in sales and in supply chain, and an increase in noncash compensation expense of 0.8 million.

Professional services expenses were slightly down year over year. Our cash burn rate for the quarter was 7.8 million, and we ended the quarter with cash, cash equivalents and restricted cash of 77.9 million. We are continuing to actively manage the use of cash and expect to have sufficient cash to fund the business into early 2021. We have also updated the range of our cash spend for the remainder of 2019 at between 3 and 3.25 million per month based on the updated planted acres, and we've focused on supporting our product pipeline, continuing to drive the commercialization of our high oleic soybean products and strengthening our organization to enable us to continue to scale. With that, I'd like to turn the call back to Jim.

Jim Blome -- Chief Executive Officer

Thank you, Bill. Our TALEN technology provides us clear freedom to operate in the gene editing space, and we are using it to create a pipeline of products that we intend to bring to the market either through our commercial organization or in collaboration with other companies who have established market access and scale as we are doing with our alfalfa project. Several of our growers, our manufacturing partner; Landus, one of our crushing partners; Agtegra, our agronomy and grain handling partner; and Sysco, our largest food service customer and oil distribution partner, all participated in our 2019 investor and analyst day in late June. We appreciate everyone who made the trip to our offices to see what we are building as one of the first movers in the industry. In summary, we're excited about how we are driving our competitive advantages and taking advantage of our head start. We continue to surpass our operational milestones.

We have assembled a great leadership team to guide the business. We have built out a world-class supply chain. Working with Agtegra, we are in the market contracting acres for next year and expect to achieve 100,000 contracted acres for 2020. We are seeing opportunities for acceleration of revenue and are working well together with our customers, including Sysco. With that, I'd like to open up the call for any questions.

Operator, please go ahead.

Questions & Answers:

Operator

[Operator instructions] Our first question today comes from Adam Samuelson of Goldman Sachs. Please go ahead.

Adam Samuelson -- Goldman Sachs -- Analyst

Yes, thank you good morning, everyone. So I guess, first, I just wanted to clarify on the acreage expectations for this year and understanding that South Dakota and that kind of Western Corn Belt area had challenging planting conditions. Can you just walk through a little bit kind of the sharp decline in your own acres that are going to get planted, relative to what you thought a couple of months ago? Is it all weather? Just help us walk through the decision tree for farmers as they had to prioritize what fields got planted and how you think your seed and your acres kind of fell out on that?

Jim Blome -- Chief Executive Officer

Great question, Adam, and thank you for that. Yes, our original business plan said that we would double our acreage each year in our business plan, and we had the great fortune in 2018 to triple our acreage in contracted acres. These are acres that were literally signed up under contract for production, full intention to be planted if the season would have allowed it, and we experienced one of the worst in our lifetime for many of these growers, worst planting season ever. So South Dakota, if you look at the declines from year on year and what was expected this year, was at the top of pre-bid and plant. But we still ended up with double our acreage from last year, which was our original plan and it was always our business plan.

So we're off to a great start. We had growers fully intended to plant, which I think is a great base for next year, we're counting on it for our 100,000 base delivered next year. But the result is we planted just over 36,000. We consider that ratio of intended versus planted to be exceptional in our minds and leading in that area. And we think it's a great base to build going forward with our new varieties, our new geographic expansion and our abilities to sell more than one variety due to the same grower.

He wants to diversify his risk with portfolio diversification, just like you do in your portfolio and different sites on his farm need different varieties. We've done all this with proof-of-concept with just one variety. So further penetration into these growers next year with new varieties and expanding geographically to diversify our weather -- mitigate weather risk are important expansions for us at this time of growth.

Adam Samuelson -- Goldman Sachs -- Analyst

OK. That's helpful. And then just on the business performance this year, the -- it just doesn't seem like there was a material amount of Calyno that actually got sold in the second quarter, despite the new agreement with Sysco -- or that coming into effect, I should say. Just help me understand the cadence of kind of revenue recognition on the oil side.

And I didn't see in the press release you reiterating the revenue guidance in the analyst day in June of 7 to 8 million, is that still valid?

Jim Blome -- Chief Executive Officer

Yes, I'll talk to food service and Sysco, and I'll let Bill reconfirm our guidance. So Calyno was the first product to go through regulatory approval in the first quarter. We immediately been sending samples when we could to several customers. We got into the Sysco system and others in getting that set up with vendors and then got on their sales rep training dates, which happened in late June.

And now you'll see this is taking off as they've taken -- our short customer list, they've taken that that we actually sell to. Their customer list is almost twice that now, and we're excited by the penetration that's come every week now since that training and program and stocking at Sysco. So large companies, you have to penetrate in, you have to have your trial period, you have to follow up, you have to prove your service as a new company. We've done all that in the last 60 days, and that's key to our penetration and key to the oil movement in our next crush. Bill?

Bill Koschak -- Chief Financial Officer

Yes. Thanks, Jim. And then, Adam, to build on what Jim talked about, so we've sold plenty of Calyno in the quarter. We haven't broken out the ratio between the two.

We've sold tankers of oil. We've sold JIBs of oil through Sysco and we've watched their velocity increase week on week. We've also confirmed this morning our guidance for revenue for the year at between 7 and 8 million. We expect it to be probably more weighted to Q3 than Q4 in terms of how it will come in through the year, but the number I referenced for the month of July alone.

And that crush plan that Jim talked about, should be two factors you consider as you think about that guidance number for the year.

Adam Samuelson -- Goldman Sachs -- Analyst

OK. That's very helpful. I'll pass it on.

Bill Koschak -- Chief Financial Officer

Thanks very much.

Operator

The next question is from Ken Zaslow of Bank of Montreal. Please go ahead.

Ken Zaslow -- BMO Capital Markets -- Analyst

Good morning, everyone. Just a couple of questions. Do you need any new customers to sell the Calyno and the soybean meal from the 2020 acreage of 100,000, does that change anything? Or are you set with your customers and that will sell right through and that -- how do you think about that?

Jim Blome -- Chief Executive Officer

We'll continue with our customer acquisition plan as you've seen us divide our sales into food service and food ingredients. Food service is easier as customers can move that in, test it. And so you've seen that shorter pipeline resort to more immediate customers. The food ingredients, we think 100,000 acres in proof of -- once they substitute our oil into their recipes, we prove shelf life, all of the things you have to do and then get into their system.

They don't like to change that very often. So we see that progressing over this winter with that separate customer acquisition line and that really allowing us to show proof-of-concept on scale, which is important for those. So we will need -- we have big customers now. We continue to seek customers in the premium oil-priced market and competing with the benefits of non-GMO, traceability, local and then the three times the fry life for food service, and less varnish and less oil absorption, all of the benefits in the food service, we expect them to continue to test in food ingredients. And the second thing that we're doing for customer acquisition is now that we've got world-class crushers, grain handlers, railcar access and all the things you need for this bulk market, along with the path to move the soybean meal, which is very important as it's perishable. So you can get the oil, but you have to have great customers and have a plan to move the oil.

We've done that -- the meal. We've done that. And then you take the oil, you refine it and you move it out. So as we do that, we're right at this stage in our very young -- this is just a quarter old really, our commercialization, we're just at the stage now of fulfilling our food ingredient sales force and that go-to-market strategy to supplement our food service sales group and customer acquisition.

Ken Zaslow -- BMO Capital Markets -- Analyst

Then my follow-up is, obviously, the yield -- the acreage plan for this year came down. But the bigger question with this is -- obviously, it's not good that it came down. But the reality is, does it change the proof-of-concept of the team? People are -- form its ability to want to plant next year. Does it change anything for the outlook? Or it's an isolated event in of itself? Can you kind of talk to that and give me your perspective on that?

Jim Blome -- Chief Executive Officer

Well, thanks, Ken. And actually, the acreage didn't come down it doubled from last year, but we had such success in contracting growing intention, literally signing a contract that it tripled. So it did come down from contracted, but it did double from last year. And we see two things helping us.

We contract with a guaranteed premium over the Chicago board. So as we see continued strife in the trade markets and soybean pricing for farmers, this premium, this guaranteed above-revenue contract, becomes even more exciting for growers. And we have a lot of interest. In fact, we now are on plan to start signing up growers in August of this year, which is our earliest launch ever.

But we see that as in this trade -- in this background of the macro farm environment, we see that as even more coming our way. Our seeds are non-GMO, so they're cheaper upfront to buy for the grower, much cheaper than a GMO-traded seed. So bankers appreciate that the cash flow event of putting that very first dollar, the longest into this season, it's appreciated by everybody in that system. And then the fact that we're not round-up ready. So many growers are looking to rotate away from a round-up ready program that they've been doing for over 10 years because it's created weed resistance.

So many are looking to switch to conventional crops anyway. When you do it with Calyno, you break the weed resistance cycle, you improve or restore the value of your land and you get a handsome guaranteed contracted premium over CBOT from Calyxt.

Ken Zaslow -- BMO Capital Markets -- Analyst

But all in all, because the acreage come down, it has no influence on the outlook, no influence on acceptance, any sort of repercussions from it is kind of in the past. Is that a fair assessment?

Jim Blome -- Chief Executive Officer

That is fair. When we said we contracted 56,000, that's when we gave the guidance for 100,000. And since we had the weather event and we only doubled instead of tripled, we never changed our bases. Our expected base and where we're growing and penetrating with new varieties is still sound and we're still standing by that.

Ken Zaslow -- BMO Capital Markets -- Analyst

Great. Thank you very much.

Operator

The next question is from John Baumgartner of Wells Fargo. Please go ahead.

John Baumgartner -- Wells Fargo Securities -- Analyst

Good morning. Thanks for the question. Just to follow up on -- just wanted a follow up on Ken's question. The smaller crop for '19, so I guess -- I mean, obviously, it's still up year on year.

But I guess, initially, you had the upside to the acreage, now you don't. I just wanted to be clear that you're saying you still have ample supply for testing, customer qualification, it doesn't really slow down development into new customers in that pipeline. You're not really being forced to allocate the tighter supply among regular contracted production versus new testing. Is that a fair statement that nothing really changed even for the kind of the ramp into 2020?

Jim Blome -- Chief Executive Officer

No, we're fine with the guidance we've given for year-end and the crush plan and purchasing the rest of 2018's production. We are -- now as we've gained scale and linked the supply chain together and primed it, we're ready to run it. And we only had a plan for 56,000 ever for about 40 days. We've crossed that threshold.

We always said we wanted to double. We were very pleased with the acceptance and the excitement at the grower level to sign up for soybeans. And if they could have planted, they would've. And so we don't see that -- we see them coming back and signing contracts again.

So that's the basis for which we really think we're going from 56,000 contracted to 100,000 next year, versus the 36,000. And that ratio of 56,000 to 30,000, we're actually very pleased with it for what's going on out there. We're identity preserved, you have to plant our soybeans separately, growers chose to plant ours first because of the premium in many cases. And so that shows you a bit of the commitment in a season that had very few planting days. They packed up the soybean, Calyxt soybean, and put them in the ground.

John Baumgartner -- Wells Fargo Securities -- Analyst

OK. And then, Jim, just kind of thinking through at least 2020, you mentioned the acreage acquisition plan is already under way. And I'm curious from what you've been hearing thus far from farmers. What are the -- I guess what does the composition of the farmer looked like for 2020? Are you seeing existing farmers expanding acreage? Are you seeing farmers' business network bringing more folks in? What is that the profile of that farmer looked like terms of how it's shaping up for next year?

Jim Blome -- Chief Executive Officer

Yes. We've had increased -- we've had great retention and increasing acres each year that we've been in the market. We planted three years in a row now. And the difference from next year is our new partner, which is Agtegra, which is the eighth largest ag retailer in the United States.

They're in 60 different communities. They have a strong group of agronomists. And they have added additional grain storage, dedicated grain storage in new areas for us that allows us to penetrate their growers. We signed them up in March of this year. So they weren't really in a position because of the timing to make a big impact on our 56,000 acres contracted.

Although they made great progress in the short days that they had. But now we're launching with that group of agronomists out in 60 different communities in this area with new identity-preserved, dedicated grain-handling systems and rail access and getting them started in August versus March. So it's a great question, John, and it really is the reason for our confidence in the 100,000 mark.

John Baumgartner -- Wells Fargo Securities -- Analyst

OK. And then just lastly for -- just on the seed write-off, just what was behind that?

Bill Koschak -- Chief Financial Officer

So we're learning as a start-up. So one of the things that we had to address -- because the seed that didn't get put in the ground as we had been primarily selling treated seed, John, and treated seed as you know can't be crushed. So that was the primary reason for the write-off is we had a few units of our treated seed that we had to write off. And then the other piece was a sort of normal return, if you call it that, with our farmers and distributor.

Jim Blome -- Chief Executive Officer

And John, the reason we'll improve on that this year, it's normal practice. We just weren't in front of it, but it's normal practice. Now with somebody like Agtegra, we'll be shipping feed in both proxies. They will be treating it -- we're custom treating it for customers as it goes to the field and therefore any untreated seed in that situation could be taking the grain.

So we -- that's the way is normally done in the industry and we're catching up with that. But quite frankly, it's all due to the really great partner that we have with Agtegra and the many seed treatment facilities they have, and the closeness of the market to those for making sure the grower gets exactly what they need.

John Baumgartner -- Wells Fargo Securities -- Analyst

Thanks for your time.

Jim Blome -- Chief Executive Officer

Thank you.

Operator

The next question is from Jon Hickman of Ladenburg Thalmann. Please go ahead.

Jon Hickman -- Ladenburg Thalmann -- Analyst

Hey, Jim, I wanted to follow-up on the -- so we're expecting two new varieties to be available next year, is that right?

Jim Blome -- Chief Executive Officer

We are in the process of growing and sorting several trials, and so we've committed to two to four. We'll make that determination this fall when we multiply them. We're counter-seasoning -- growing these as well for multiplication. So we're excited by the opportunities, but we haven't narrowed it between two to four yet.

Jon Hickman -- Ladenburg Thalmann -- Analyst

And so, what geographic areas do you hope to open up with those two to four? So you're planting now?

Jim Blome -- Chief Executive Officer

It'll give us -- yes. Right now, we're with one variety that's 1.8 in a maturity group, 1.8, and we're expecting to add -- we're looking to add a point on either side of that or at least 0.5 point, but a point. And of course, you know maturity groups go by latitude lines, so North and South a bit from that geographic area. And one of the things we'll be doing with the new varieties is moving them closer to our crushing partners. So moving new varieties.

You can see the direction we're going to. We've improved much over our proof-of-concept here, but instead of trucking, we now have Agtegra's access to rail. So now we're railing from that production point to the processor. And the next step is to grow the soybeans even closer in that area as we have varieties that will match the growing conditions and pest-resistant tolerance in those areas and in those soils.

Jon Hickman -- Ladenburg Thalmann -- Analyst

OK. So you're talking about opening up like cold states? Or -- you don't hear it, you think about it like that?

Jim Blome -- Chief Executive Officer

We don't. We -- the maturity zone and the latitude lines go all the way -- all across the U.S. So it's really in that area that you can grow, what makes sense for your dedicated grain harvest and your storage facilities, your access to rail and the optimization of logistics to your processors. So there's several things that go into it.

And now that we're in past proof of concept and we're thinking more about optimizing with our cost and scale, with the scale, we're thinking more about how to take costs out of the system.

Jon Hickman -- Ladenburg Thalmann -- Analyst

OK. And then can you -- I don't know how much you can say about this, but the alfalfa product with S&W, can you refresh my memory about where you are in the commercialization stage of that venture?

Jim Blome -- Chief Executive Officer

Sure. It's kind of the example that we have on the collaborations start. So S&W wanted a higher-performing alfalfa product. We, with our scientists, edited down the cellulose and the lignin in the cell walls to make it more digestible for the cow.

So it makes it more efficient. He is getting more nutrients from the alfalfa that he's eating because it's less stemmy, woody and less digestibility. So that was exciting to them because it just improves by about 33% the efficiency of the whole system. They have taken our trades and then, as a collaboration partner, put it into their germ plasm and they're trialing it and they're doing feeding trials. And so that's what's going on right now with that product.

And that's an example where we do the science, we license in and they have the market access and take it. So for crops other than soybeans and the wheat, where we take it to the market ourselves, this is an example where we collaborate with someone who already has market share, knows what the customer needs are and has ready access with no more additional cost to the market.

Bill Koschak -- Chief Financial Officer

So Jon, one thing to add on to what Jim talked about, as we've said previously, that product launches in early 2021. And that is when we would expect, based on the agreement that we are working on with S&W, when we would expect to start to see revenue here at Calyxt.

Jon Hickman -- Ladenburg Thalmann -- Analyst

And you would get a royalty based on the seed belt, I guess? That same ---

Bill Koschak -- Chief Financial Officer

It'll be some form a recurring -- without getting too specific, it'll be a form of a recurring payment to us based on activity in the market.

Jim Blome -- Chief Executive Officer

OK.

Operator

[Operator instructions] Our next question comes from Ben Klieve of National Securities. Please go ahead.

Ben Klieve -- National Securities -- Analyst

All right. Thanks. So quick question on the modeling front first for Bill. On the SG&A line this quarter, I'm wondering if you can elaborate a bit on if you think the number for this quarter is kind of a good run rate going forward? Or do you think you're going to have to continue to increase that line here in a meaningful way as the top line grows?

Bill Koschak -- Chief Financial Officer

I think at this point, Ben, given the scale-up that we've seen to get to this point that there will be some level of increase as we go forward, but it's a -- this is a really strong base to build off from a modeling perspective.

Ben Klieve -- National Securities -- Analyst

OK. Perfect. And another question, kind of following up, Jim, on your comments regarding consumer goods companies. It sounds like your -- the sale of oil and the meal has come in more naturally than the consumer goods companies.

And I guess, first of all, can you just confirm that that is accurate? And then second, do you really think -- what really gives you the sense that 100,000 acres is the kind of the bar that needs to be set for some of those buyers to convert from being in development to being actual buyers? And really, what does that market look like? And in particular, is the plant-based protein market a part of this opportunity and one that you are in discussions with?

Jim Blome -- Chief Executive Officer

Yes. That's a great question. We've always said that the two pipelines are one shorter than the other. So just the testing and the swapping out and the ability to do that in food service occurs because it's a weekly use and comes up as a need almost on a daily basis as they rotate prior.

So that shorter pipeline has resulted in the first products for us. As we set up our infrastructure for our crushes and our soybean meal partners that created the oil, this was the first place we went to go with that. So for food ingredient companies, we all know that we're getting qualified by several people, because in my mind, they all know that the future trends are for non-GMO. The future trends are for traceable and being able to tell people where it's coming from and then local. So the ability to qualify us and look at us and try us in their recipes and test shelf life and do things that would make it easy for them to move to us over time when they decided to do that, is important. Your question about 100,000, I think that's just showing that we have scale.

Soybeans are big, they're bulky, they're commodities, and we've come into this market and said we're going to de-commoditize this. So what is the scale you need to do that and how do you demonstrate that proof-of-concept over several years. So it's not only the 100,000 acres. It's the number of years we've been doing it.

When we plant next year, it will be the fourth year that we've been growing soybeans and crushing them with every milestone being met in that process, including our original plan to double acreage even in a year -- in a catastrophic weather year, once in a lifetime season for these growers, we still doubled our acreage like we said. So I think that's as important, demonstrating the scale and the ability to do it and deliver on time. These are food ingredient lines that run and they're not going to stop or requalify or relabel because the supplier didn't supply. So it's a higher bar than just swapping out fryer or doing changing oil every week. This is a higher bar.

It demands that you show stable, reliable supply of a quality product. And you can only do that with time. There's no shortcut. So we see it as a huge value for Calyxt because we're first and we're doing this, and we don't see anybody behind us in this area of doing it yet.

We think this head start and the trust and the reliability standards that we're setting will allow for great growth going forward.

Ben Klieve -- National Securities -- Analyst

Very good. Thank you, all.

Operator

There are no additional questions at this time. I would like to turn the call back to Jim Blome for closing remarks.

Jim Blome -- Chief Executive Officer

Thank you. We've had an exciting journey since our first-quarter approval and regulatory of Calyno and building this new organization, adding some key C-suite people and building out our sales forces that we're just in the middle of. And quite frankly, in this proof-of-concept, you're doing more than that. We started out with one soybean variety. We wanted to move it through the chain and show that we can deliver a product to the customer.

We ended up signing a world-class partner on green handling and agronomy with Agtegra, a world-class partner with Landus on crushing and processing and rail access and scale for the next few years, and a world-class distribution company in Sysco, where we can -- the sky is the limit on what we can do in the world's largest food service business. So all in all, in a year that had one soybean variety and was a proof-of-concept year, we see ourselves accelerated beyond what we thought. We were lucky to have great success contracting, triple the acreage this year. And we didn't know at the time that we needed that just to deliver on our original promise of doubling them, but we're extremely happy with that ratio and that result, and we really do see that as a platform to build for a very successful 2020. So with that, thank you, everyone, and I appreciate your time this morning.

Operator

[Operator signoff]

Duration: -8 minutes

Call participants:

Simon Harnest -- Vice President, Corporate Strategy and Finance

Jim Blome -- Chief Executive Officer

Bill Koschak -- Chief Financial Officer

Adam Samuelson -- Goldman Sachs -- Analyst

Ken Zaslow -- BMO Capital Markets -- Analyst

John Baumgartner -- Wells Fargo Securities -- Analyst

Jon Hickman -- Ladenburg Thalmann -- Analyst

Ben Klieve -- National Securities -- Analyst

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