Q4 2020 Bioceres Crop Solutions Corp Earnings Call

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Yeah, I led by the pound.

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So for sure.

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So.

Over 30%.

Yes.

22%.

Yes.

Your end Twentytwenty.

This drove much of your 18% revenue growth.

Ill now discuss profitability you starting with gross profits and margins on slide flows.

For the quarter gross profit growth across all three segments, increasing 51%. The result of the higher revenues and the 138 basis point expansion in our margin.

The greater proportion of Cdone integrated product revenues, our fate splaine about higher seed treatment pack sales drove the expansion with margin in this segment in particular, increasing 337 basis points.

We achieved healthy sales local crop protection gross profit growth in line with revenues and a stable margin and finally crop nutrients margin constructing 245 basis points in the quarter as Micromill fertilizers comprise a larger portion of the mix compared to non plants that usually have higher margins.

For the full year gross profit rose, 13% slightly below our growth in revenues due to a slight margin decline of 177 basis points explained by the shift in our product mix and distribution channels.

With that brings us to adjusted EBITDA, which you will find on slide 13.

Our sales growth and more profitable revenue mix during the quarter.

Along with significantly lower expenses drove much of the 67% increasing adjusted EBITDA operating expenses for the quarter were favorably impacted by inflation and FX dynamics in Argentina, where most of our administrative functions our base as well as reduced travel expenses and professional fees.

For the year, the 13% increasing adjusted EBITDA was in line with our profitable sales growth, while our JV performance improvement, partially offset higher operating expenses, which tend to be less pronounced on annual basis with regards the effect of inflation and effects dynamics in Argentina.

Operating commissioned earlier fiscal 2020 was a particularly satisfying year in terms of improving our cash position and strengthening our balance sheet in a complex context. So let's please turn to slide 14 for an overview of our financial position.

During the quarter Restocked, Argentina, I mean subsidiary improve its long term credit rating and subsequently issued a third corporate bond racing $15 billion, an attractive rate of four point, 73%.

For the year on total net debt remained fairly stable at $91.9 million only zero point Ninemillion style from June 2019, but with a much stronger cash position that profile long term debt at the end of the fiscal year accounted for 57% total debt versus.

37% at the end of fiscal 2018.

And cash and cash equivalents at $56 million by the end of the year represented 90% of the current portion of our debt.

This financial performance, coupled with our operational performance significantly lowered our leverage ratio to one point 98 times net debt to EBITDA, which was both sequential and year over year cooking.

Subsequent to our fiscal yearend, we were able to seize the opportunity of favorable market conditions for corporate debt issuers in Argentina I last month, we raised another $17 million through a right. So dr. bone that bears fewer percent interest matures in August 2023.

With this last one difference our total capital raised since January totaled $82 million, not only improving our cash position substantially but also extending our debt maturity.

We are very pleased with what has been achieved and I want to thank the institutions and investors that supported this front sections for their trust an interesting BSS.

Although we will continue to work on improving maturity of our debt. The accomplishments we have achieved so far coupled with the successful withdrawal of the warrants from our equity aside equally spread before providing a well suited capital structure head up our next steps with age before.

Finally, let's please turn to slide 15 for short review our interest expense.

As you can see the improvement to our debt structure, how to significantly positive impact on our financing costs as we were able to better manage our working capital cash interest expenses for the quarter were down 56%, which led to a total spending of $17.3 million over the fiscal year.

25% improvement versus our previous fiscal 2019. This together with limited capex requirements. He led to improved cash generation.

With that I will like to thank you for your time on turning back to 30 call.

Thanks Enrique.

Fiscal Twentytwenty was a year that presented many challenges that we successfully navigated but also opportunities that we were able to capitalize on.

Demonstrating our agility as much as our resiliency.

We're far stronger company today are many accomplishments this year have served to strengthen our confidence in our growth plans.

Looking ahead, we'll continue to consolidate our age we fore sight Ingredion program, while actively engaging with our existing licensees and other bringing partners to expand on our genetics offering and accelerate our international each with full deployment plans, particularly in the United States.

In Brazil.

As we always emphasizes the Osiris has a well develop asset base that is the foundation of our near term growth.

We expect to continue to expand production microbiome fertilizers.

Further expanding Brazil borrowing base agile and markets as well as further penetrate Europe, and South Africa with our integrated seed treatment products.

Lastly, we will continue to find new ways to improve our capital efficiency as another way to drive shareholder value.

Operator, please open the call for questions.

Thank you as a reminder to ask your question here on the depressed star one on your telephone.

Mr. On your question, please press the pound or hash key.

Please standby as the compiled acuity roster.

Your first question today comes from Ben Katz from National Securities.

Please go ahead.

Alright, Thanks for taking my questions here first of all congratulations on a strong into the year.

And first question for use regarding the capital structure on the congratulations on removing a warrants first of all but but but I'm wondering where you stand on removing.

The higher interest working capital sources have had these all been eliminated at this point or is there some that are still so on the balance sheet.

Hi, Ben Thanks for joining the call good talking to them to you pieces and recur.

So to your question.

We have been able now to find on sort of the working capital with efficient sources.

So again that many showing if you will in the interest expense line of Q4.

It doesn't show in the full fiscal year, because that's started net restructuring of working capital sources began a couple of quarters ago on was not something on was down low to full year, but as of now.

We are in their position to finance one of our cap that working capital needs in an efficient way.

Okay, perfect that's that side.

I appreciate the color there.

Couple of questions on the HP for inventory build on first.

Federico in your prepared remarks, you commented that.

That that the fiscal 2020 harvest had.

50% plus meet your quality standards I'm curious.

For those that did not meet your quality standards, what do you attribute that to with that was that issues with specific growers.

Was it.

With that and processing, where that was it that the genetics just didn't didn't deliver as you do you expected what really what really wanted to to that number being on.

Being being as a substantial otherwise.

Hi, Ben Thanks, Thanks for joining the call. It's it's actually a very important question, which.

Hi, Thank you for essentially what we're trying to accomplish this year is a part of a process that is often done sequentially endeavoring industry, where materials that are well validated from a genetics performance.

Then air multiplied and scaled up here as we are trying to.

Speed up the process, we're doing both things in parallel so we are bringing materials to will deploy acacia.

Probably not extensively validated.

And given sort of the high standards that we have four years before technology, where we want that technology not only to the LIBOR higher.

Yields.

In in restricted environments, but also at Knotts penalize farmers when things go right and we have decided to eliminate varieties.

That do not provide these two components and this first year as we scaled out there were somewhat deals.

That did not meet that criteria. So we expect that as we move forward endeavoring program and materials that go for one year two nx have more extensive validation the number of materials that are discarded is reduced.

And we're only multiplying things.

We will then fully deployed.

But that is one of the reasons why.

We provided a range of.

Of Hectors for the at upcoming season.

Where we were targeting 60000 hectares of multiplication now in the next soybean see some and we are now same between 20000 60000, probably towards the lower part of that range. It's just because of that recent up of the pedal packing process.

And seeing some varieties that we need to this car because they don't fully meet our criteria now what I'd say these I'm, referring to the background genetics and I'm not referring to treat performance now which is well validated.

I don't know that's clear.

Yeah that was very helpful. Thank you and I guess as a follow up then the call. It call. It 20000 factors that you are expecting the plant this year.

Our.

How many of those how much of that acreage is is what with.

With varieties that are maybe.

Not as well develop genetically and therefore have kind of risk in.

You know is risk in the extent to which you can build inventory for the following year versus versus variety that you feel very comfortable and can can be on can be plant can be harvest and multiply that at the kind of maximum maximum level.

Okay. That's also an excellent question, Ben and I think Theres US slide we tried to show that so of the pipeline deals we are.

Scaling up this year. There are two there are coming from last year, and where validated and perform as we expected. So there the risk of sort of not continuing is very very low if not negligible.

There are other two materials.

But we're also use last year, but where we restricted them to areas where drought, it's almost a certainty add because we have doubts about their ability to continue and that sort of what we might have at rates. So I would say, yeah, if last year going into our multi application.

Some process, 100% of M&A deals were not tested at fully yes, we would like at least here the only 50% of the materials there in that space and obviously, there's a new variety that we're bringing from the up see some production site in the U.S.

That comes from a second generation of breeding in which we have very high expectations. So every year and the sort of at least copies continuing but deals as we scale up as should be reduced by 50%.

Got it okay. That's that's helpful.

Okay, perfect I think I think for now that does it for me I appreciate that are taking my questions and I'll get back in Q.

Our next question comes from Salinger from Brooklyn Capital markets. Please go ahead.

Hi.

Hi, Enrique and Federico congratulations on a strong quarter very good to see I'm wondering you you. So you plan to launch.

Started selling the h. before the eco silly seed this fiscal year 2021 on do you know what quarter.

We should start to expect to see the initial sales.

Hi, Sally and thanks for joining and thank you for your cement so.

What you will see in this fiscal year and is basic needs.

What we contribute to farmers that our multiplying seek for us so that.

Nine booked.

Our center sales after my revenue recognition perspective, but these are in places like input at that we use in as prepayment for services that partners like so.

Nice I'd, let's see.

Work to be booked at sales you would see that's coming up in air in the next quarter for soybeans.

What's the border apps and then for we'd add towards the end of the fiscal year I don't know if somebody get wants to add color there.

Okay.

No no that's right the salary was pretty good suspension or these were booked this would be no in the second quarter for soybean second third and fourth quarter four four for weed.

HM Okay.

Alright. Thank you that's helpful.

And then I just want to.

I.

Earlier in the year.

I just want to whats the status of China and their ability to.

You know import products ground with yeah like he goes away seeds is there's still an issue with them.

Not being able to.

You know how to buy exports of soybean ground with the consulting or the seeds himself.

What's the status of that.

So selling things thanks for the question obviously, China.

He is a key market and what we bought setting in the last quarter was that they were initially in the field trials.

The government dust.

Dependent together company at we expect those results to be in the regulators and by end of other summer season in the northern Hemisphere. Another decision soon sooner or that obviously.

We have hopes that that will come this year and so on that.

Yes, we enable soybeans.

We're not anticipating Apple for the process that we just indicated and this is not necessary obviously.

We expect.

The feed 'em food clearance to be in place for the following these are not the upcoming one but the following one and at the probably by the end up this year.

Okay.

So you said there initiating their field trials. The does this mean there actually.

Growing some of these seed.

In in China in fields in China.

Yeah that.

The Chinese regulatory process is different for what it's done in other countries, but the regulators themselves generate independent data for that they need to grow h. before so it means that hasn't already been initiative the planting soccer.

Earlier in the year at the results will be in by the end of this summer season.

Okay.

All right. Thank you thanks very much.

As a reminder, it star one in order to ask a question.

And gentlemen, if I have no further questions in queue I'll turn the call back for any closing remarks.

Yes.

Okay, well, thanks, everyone for joining as I indicated before where we're quite pleased.

We do the results of of fiscal year Twentytwenty.

We look forward to a solid results in the upcoming fiscal year as age before it becomes a reality, that's being into making with a lot of effort and dedication or for the last.

Most almost I should say 10 years. So this is not.

Spontaneous process as everyone knows but one that delays that puts us in a unique position I believe so I hope you have a great day.

And that your old staying safe in this challenging times with no further comments I think we're finishing the call.

Ladies and gentlemen, this does conclude today's conference call. Thank you much more for participating you may now disconnect.

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