Q1 2021 Bioceres Crop Solutions Corp Earnings Call
[laughter].
[music].
Yeah.
[music].
Good day, everyone and welcome to buy your fears <unk> first quarter 2021.
Buyers your crop solution score fiscal first quarter 2021.
Conference call today's call is being recorded following the speakers remarks, there will be a question.
And answer session I'd now like to turn the conference over to Mr., Maximo going <unk> Investor Relations.
Who will make some opening remarks and introduce todays other speakers. Please go ahead.
Thank you.
Good day, everyone and thank you for joining us for.
Presenting during today's earnings call will be paid equally.
Yes, it is cheap I could be off to another good luck for Nucor or Chief Financial Officer, both India, We look forward to your <unk>.
Before we proceed I would like to make the following each a public statement.
Today's call will contain forward looking statements and I refer you to a forward looking statement section of today's earnings release in person feature that's one.
Sure you know recent filings with the FTC, we assume no obligation to update or revise any forward looking statements to appeal or change bands or sort of institute.
Also please note that for comparison purposes, another done by responding to public companies.
Good lighting performance yeah. They should do is catching up for <unk>.
Besides getting old person picture.
<unk> today, we will discuss comparator result.
Excluding the impact hyperinflation accounting in Argentina.
I think you're an information in connection with the application of the <unk> I assume today can be phone no earnings report.
I would now like to Davita Cordoba goals feel fairly comfortable.
Thanks, Nick.
Although these goals or regionally intended to discuss our first quarter financial performance recent.
Recent significant developments one on time in today's presentation.
As announced earlier today, we're acquiring MTTS bio sciences.
But it seems like and then see a.
A joint venture we launched 20 below.
For the development of second generation Biotechnologies for soybean Inc.
Including the development of H.B. forcefully.
In conjunction with the acquisition of our Tds investing.
Yeah Yeah.
Playing rights for Acadia genome editing wheat varieties designed to improve health and shelf life aspects has lead flowers sunflower derived products.
I saw the IP assets.
The addition of these technologies for pipeline.
Yeah. There was a recent approval of H. before we'd in Argentina, which we will discuss later in this presentation helpful.
Health officials said, it's a sudden either thing these biotech koersplan you had incredibly important staple crop.
Finally, I don't think it will comment on the strong.
Momentum that our core business untamed as we enter into the new fiscal year.
The emerging an 8% growth in comparable revenues and a 30% increase in adjusted EBITDA.
Please turn to slide four for an overview of the various.
That said we are acquiring.
With full ownership in battle it out we'll be able to consolidate one of the most important technologies in order pipeline.
H. before sorry.
How do you think you can put on at least before soi relating tens or ability to negotiate reading and goals.
The market's collaboration partners in new and existing geographies.
Allowing us to execute our strategy at a faster pace.
Well no no huh.
On the ongoing breeding regulatory or working capital efforts.
We believe that the incremental economics.
So being from Mr. instruction.
Ranging between an additional 25% to 42.5%.
They are all in the orthopedic revenues, depending on your go to market channel and other third party obligations will provide a very attractive return on I know Pete its gabi.
People.
On a per hectare basis, the additional revenues may equate to approximately $6.
Well take two and a half dollars a value that is not insignificant over the 21.5.
Okay Theres.
We just did with age before sorry.
Yeah.
Therapy in which the technology has already been approved by regulators.
Through the deal we also receive exclusive rights to other soybean traits as well as assumed ownership of Connecticut, Bedsit Library of gene edited soybean materials, which can.
Used to cost effectively source you feel like the quality plates.
Beyond soybean we have negotiated rights to gene edited wheat varieties is that for like the health benefits. Another quality attributes to further consolidate deal said its lease position indeed.
Another important crop.
In addition to other minor intellectual property rights.
On slide five to preserve the week technologies being in licensed for Latin America.
While we are sentences issues for technology substantially improves gross yields.
And provide a range of significant environmental benefits, including increased carbon sequestration and reduce water usage. We are now expanding our portfolio to quality todays which offer tremendous health benefits, including persistent starch and reduce gildan.
Resistant starch varieties have 10 times, the dietary fiber of come shortly.
Anda by just more slowly.
Presenting the rapid production of flat shoes that normally occurs when we lead based products such as Pascal Brett and pizza.
Reduce gluten.
And varieties have 65% less capital.
While resulting flower, but it's substantially equivalent in taste and portfolios to conventional flower.
For producers and retailers have we derive products.
CSC stability technology will also in licensing.
Will enable enhanced product shelf lives.
For consumers, having these attributes straight from the foreign will help them obtained a quality products, they see with cleaner shorter product labels.
An important consumer trend these days.
It is also.
For them to know that by expanding our portfolio of fee based.
He will be leveraging buyer services investment in identity preserve production platforms and tracing systems.
Such as those currently being used for HCC program.
The data gathered.
Through these platforms will allow consumers to make more informed decisions.
Hi, understanding their health and environmental aspects underlying adjusted for the next day Bye.
Before moving to the next slide it is important to know that some of these technologies in licensed our subject to third.
Market clearance.
And therefore to our Clawback provision in our agreement with Arcadia.
We will discuss this provision when we look at the total consideration for this transaction from the following slide.
Please turn to slide six.
So far as a full interesting Veronica.
And rights to other intellectual property that I have discussed.
We are paying a total of 32 million cash and equity as shown in this slide.
Of this amount $20 million is being paid upfront.
From pricing $5 million in cash in $15 million in stock at a value of $8 per share.
This 1.875 million newly issued shares will lead to a total of 40.6 million shares outstanding.
With $8 per share representing a meaningful premium compare.
Compared to Yesterdays closing price.
One third of these shares.
That is $5 million up the value of that section.
Has pledged in favor of your centers that will be released once all clearances rig.
In third party rights to a lease portfolio being in licensed are achieved.
All shares will be locked up for the six month period.
The remaining $12 million in cash will be paid post closing and air conditioned on regulatory milestones.
And 84 sites and.
Penetration levels.
More specifically.
2 million will be paid upon achieving import approval in China, or reaching 200000 hectors of HP for Soi in a single growing season.
The remaining 10 million will be deducted from commercial ROI.
Multistate to limelight got from HP for PSAI sales of which 6% when gold was a key area until the 10 million consideration it's Matt.
These numbers do not include $1 million of fees and other transaction related costs that we will reimburse our.
Arcadia.
And nothing vertical royalties that may be paid once non soy intellectual property is commercialized.
Please move to slide seven.
Last month was particularly important in our company's history as we achieve the long awaited approval.
Trench before lead in Argentina I.
Our technology, we've been developing with French quarter floating on the trend for more than eight years.
Argentina is Latin America, most importantly producer.
Accounting for roughly 70% of where we produced in the region.
3% to 4% of the rows production.
Today that our color and HP for lead to be sold so the only genetically modified read to be approved.
And on commercial path to market anywhere in the world.
Which represents a major milestones in weeds global.
Our value chain January.
Generating significant media backslash highly regulated.
If you turn to slide eight you will see that until now was an orphan crop in the sphere of biotechnology.
Despite being planted in $200 million sectors globally the highest.
Have any drop.
By comparison quarter was 10% or less hectare slightly down lead had 44 biotechnology event approvals, while signing on rise half 24 and nine at these events each.
These comparisons make clear that the approval of 80.
Before we are in the beginning of a monumental but achievable quest to modernize and transform with production around the world.
For the benefit of both consumers and growers alike.
For growers or eight before we increased yields by an average of 20%.
We are in growing seasons impacted by drought, which is increasingly frequent across the world and increasingly threatening our food supplies.
Suffice it to say agency force economic as well as human benefits are clear and indisputable and.
Based on over 10 years of field validation.
For consumers our entry for technology helps mitigate climate change by facilitating double cropping.
Which seasonally rotates wheat and soybean.
An environmentally friendly or growing system that is added.
Other life limited by water availability.
When combined with soil regenerative practices, an evergreen cropping system made possible by age before captures more Tyrone and commercial growing practices.
I will quantify the carbon sequestration passed it for you.
For each Hector farm per year, the resulting sequestration is equivalent to six months of carbon emitted by FCC automobile.
The other major environmental benefit by reduced water consumption and higher crop yields that reduce the need to expand agriculture screwed level.
Brent, particularly with regard to rain forest as well as marginal and fragile ecosystems.
Of course, some market participants have expected 30 concerns as to the potential disruption. This technology, maybe second trial for the combination where we value chain.
To address these concerns around with global trade, we have adopted the general principles shown in the next slide.
So please turn to slide nine.
There are five primary conditions. The company is pursuing to launch HP for leading uneven country was.
Regulatory clearance.
Is achieved.
These include.
Satisfying the requirements of the resolution until regulatory approval for instance, in the case of Argentina separately, we'll need to obtain input approval in Brazil before a commercial launch maybe.
In Argentina.
The field is Argentina is most important in the importer.
In product rewarding and geographies, where our regulatory system exists and which represents at least 5% of the total weak exports.
From the country, where we want to launch based.
On a five year moving average that's the second condition.
Certainly the availability of low cost production method with a 1% sensitivity now.
This has already been achieved for all geographies.
For.
The existence of a value capture so.
Mhm and an identity reserve channel.
Insurers IP protection as well as minimizing disruption to conventional channels, while at the option is initiated and that has single digit market share.
And lastly, the assistance of an outreach and energy.
Special program in the country of interest for growers and consumers.
Please turn to slide 10 for an overview of our go to market roadmap.
For our go to market robot, we have prioritized our target countries ground.
Logically for regulatory approval of HP facility.
In total we are targeting at this stage about one third of the global tech acreage dedicated to needs.
In three phases.
In the next two years, we are pursuing approvals and launch.
Keith in Argentina, Uruguay, Paraguay and Brazil.
Representing 9.4 million hectares, or close to 13% of our initial addressable market.
Immediately following we expect to launch in South Africa malaria.
Sure well as the United States, where we have already applied for food and feed approval.
These markets allow us to move from 9.6 million hectares to $25.3 million vectors and represents about 35% of our targeted markets.
Starting today.
Hi, Doug.
Anticipating a longer process, we will pursue launches in Australia, Canada and Russia.
Along with the previously mentioned countries. These geographies represented 72.5 million hectares.
One third of all hectares planted in the delay on an annual basis.
Please turn to slide 11.
Argentina's regulatory clearance HP closing it eliminates significant operating challenging or challenges for us and we lower the cost of working with growers to multiplier related with varieties and building up see inventories ahead.
Our phased commercial non case across the world in the coming years.
In effect, we are now able to transition saving thousands to hundreds of thousands of factors in our next week cycle.
As you can see on the slide our ramping up of atrium.
London studies will expand from less than 7000 hectares in the current cycle to more than 60000 hectares in the next cycle and in Brazil import approval is granted in time it will be twice that number of factors.
It is important to note that this process will continue into the.
Accordingly, we continue working to enhance the state of the our digital farming tools, but are an integral part of our each reported.
The room for lead and soybeans.
In addition to generating extensive and detailed data sets for each production fields that is meaningful we are applying and leveraging data science and block chain technology to other areas of the value chain, such as storage statistics and processing in.
In order to R&D complete farm to fall straight solidity.
As those of you who follow our company know our HP for programs for leaders soy entails a formal agreement with growers to build new countries, whose agricultural inputs.
Which comprised by asset.
Hi, this is siti chunk levels and growth corridor trays customized microbial solutions as well as our nexgen crop protection and nutrition technologies.
In the aggregate the combination of these technologies from our age before need from numerous solutions that not only.
Our intensive deal activity that optimizes water resources increases carbon sequestration and reduces the use of agricultural chemicals device.
The value of these contributed fruits for our H.B. Fuller program with growers will be weaker players as revenues.
Once that realized inventories are solved.
Seed ordering patterns.
But not longer contributed.
Near the bottom of this slide of the estimated metrics that we will be using to account for and try to the underlying economic performance of our age before we'd program ahead of reporting Athree for revenues.
Related accounting measures.
By publishing the level of country. It includes the investment community can also use this information to better for low power process.
For the next ramping up basis, we estimate that the athree for approval implies an economic impact of four.
To 15 million in additional revenues for concrete goods for fiscal year Twentytwenty, depending on Brazil approval.
We'll we'll be using the same accounting for HP for soi for them in the upcoming quarters, which.
Which is currently progressing a fixed gas delivering.
Our last earnings call.
Please turn to slide 12.
Before turning the call over to recap for an overview of the quarter's financial performance I would like to close my presentation. The slide that shows a fill in portola.
In which received almost no rainfall during the winter sea.
Yes.
The right half of the image capture we'd grow with buyer services HIV sales lead and illustrates the full potential of our drought tolerant we today.
That concludes my portion of the presentation I'll now turn the call over to Enrique.
As a review of our first quarter results.
Thank you for already gone.
Please turn to slide 13.
We are glad to report that the significant milestones on development for PFS like the regulatory approval of 84 week in Argentina.
And the acquisition of strategically relevant assets and licenses from Arcadia. We're also match.
The growth momentum, we maintained in sales and profitability of our core business as we enter the new fiscal year.
Provide context and for comparison purposes.
Let me remind you of the fees.
Each of our business.
She is the performance of a significant portion of our broad portfolio is tied to planting activities for row crops.
As you can see on the slide high season begins a late in our first fiscal quarter with our strongest performance taking place in the second quarter.
And the lowest sales level occurring in the third.
Our top line during the quarter ended September Thirtyth grew 8% year over year on a comparable basis to $42.2 million, which implies and 9% CAGR for the Q1 over the last two years.
This level of growth signals, a good start of the system and confirms the growth trend our sales.
Even without benefiting from H. before revenues remained catalyst for our next phase of growth.
Furthermore, since the beginning of our current fiscal year in July we have seen soybean and corn.
Selling prices trade up significantly predicting an increase in progress profitability across markets, where we operate commercial.
As we have learned from past experience and past profits for farmers, usually cast hand to hand with appetite for that probably competing products. So we will keep a close eye on commodity.
Price behavior, and how that can provide additional benefit for our business going forward.
Please turn to slide 14 for a closer look at what drove sales and profitability during the quarter.
As you can see crop protection and seed on integrated products contributed to the.
Orders, 8% revenue growth versus Q1 of the prior year, while sales in crop nutrition decline.
From a fraction maintained its growth momentum in the quarter with revenue, increasing $2.1 million or 11% to $21.8 million consistent with our expansion of.
These four reps you a new way.
On the product category level. This segment's main driver was annual volumes, which increased 40% and 50% in Brazil at Uruguay, respectively.
I don't volumes also grew in Argentina during the quarter, increasing nearly 30%.
Year over year as a point of reference regarding the magnitude of our commercial footprint for this product category are adamant reached over 13 million hectors farmland.
Growth driven by as loans was partially offset by lower b to b sale of seed treatment insecticide and fungicide.
Frank Divina compared to strong sales of these products in the first quarter of last year.
Sales in our ceded integrating product segment grows significantly by $3.1 million, which represented a 57% year over year increase reaching a total of $8.6 million for.
Quarter.
Growth in this segment was mainly due to a 69% increase in sales volumes of seed treatment path, which accounted for 85% of this segments revenue.
Our ready to use stock solutions for on part C. Treaters reached two point.
Two medium hectors during this quarter.
This performance was on the heels of strong fourth quarter sales tax in Argentina, where we had executed a highly successful presale campaign ahead of the summer crop season.
I should note here that some of the year over year growth was due to weaker revenues.
Fronts in last year's quarter, when Argentina growers had delayed purchases of seed treatment bass.
Finally, before compensation offset the growth achieved in the other business segments lower sales of migrants fertilizers in Argentina and climbing in outlet sales in Brazil Leslie.
15% decrease in the segments revenue year over year, which totaled $11.9 million.
Indeed bring both in certain parts of Argentina cost growers to delay purchases of our fertilizers ahead of planting with volumes declined 10% compared to last year's quarter, which by the.
The way it was a strong one.
Anticipatory purchases by growers that drove double digit growth in the fourth quarter of the prior fiscal year also impacted our first quarter volumes still.
We were able to maintain capacity utilization of our fertilizer plant unchanged sequentially.
Actually on a 12 month basis at 30%.
And we remain optimistic about the evolution of this product moving forward.
Inoculum volumes also declined mainly due to strong sales of this product in Brazil during the fourth quarter of the prior fiscal year.
Hectors wires are not tenants reached four.
4.1 million Hectors during this quarter.
In terms of margins growth in comparable revenues was achieved profitably.
As overall gross margins expanded 200 basis points year over year from 45.5% to 47.5%.
Gross margins in crop protection decreased from 40.5% to 38.6% as growth in Brazil was achieved through a greater proportion of fee to be active on sales.
And FX and inflation dynamics in Argentina negatively affected inventory valuation of advanced sold during the quarter, our notably.
Increased sales of Cedar integrating products was achieved with relatively steady margins at 67.7% and.
And finally with their volumes in crop nutrition compared to the first quarter of the prior fiscal year were backwards by higher profitability with a margin expansion of 120 basis points.
From 43.9% to 49.1%.
Please turn to slide 16, now look at how revenues and gross margins per segment contribute to growth of our overall gross profit for the quarter.
In line with the gross margin expansion and just described.
Comparable gross profit increased 13% year over year higher growth rate than our revenue growth, reaching $20 million for the fiscal first quarter.
Sales growth in crop protection was slightly offset by the gross margin decline, resulting in 5% gross profit growth in the segment, which total.
$8.4 million.
Pete and integrated product compatible gross profit increased $2.1 million or 58% in line with sales growth, reaching $5.8 million for the quarter and becoming the main contributor of gross profit growth.
Lastly, our crop nutrition.
Performers.
Gross profit decreased 5% to $5.8 million after declining sales was positively offset by higher gross margin in fertilizers.
Please turn to slide 16, which breaks down the growth in DS Services' first quarter adjusted EBITDA.
Which increased 30% to $10.5 million on higher revenues and an increase in our EBITDA margin.
The margin expanded 246 basis points, mostly due to a total increase of $3.2 million related gross profit.
Which was mostly driven by.
The GAAP profitable growth in secret impact that I highlighted.
As regards the DNA expenses these were flat as a percentage of sales.
On a nominal basis as Jenny increased nearly 16% in the quarter due to an unfavorable FX and inflation dynamics in Argentina, where most of our own lease.
Excellent shells are located.
Expenses incurred in this country are largely denominated in local currency and therefore exposed to fluctuations related to affect inflation adjustments.
Finally, let's please turn to slide 17 for an update on our financial position.
We have been assessed the tropical has into.
Uhhuh considerably since last year with long term debt accounting for 62% of total debt.
Versus 33% at the end of first quarter of fiscal Twentytwenty.
Also following the $70 million public offering of free select their bonds earlier in the quarter, our cash position strengthened.
Further.
At the end of September cash and short term investments stood at $60 million nearly five times the level at the end of first quarter of the previous year.
From a liquidity standpoint does cash represented around 97% of the current portion of our debt.
In terms of leverage.
Ticked down to 2.4 times net debt to EBITDA.
Despite the year over year increase in net debt as we generated significantly higher levels of leased up.
In addition to the strength of your businesses core business, our solid balance sheet and leading position are serving as a strong today.
Nation for executing our HP or weakened soy striking.
However, the sample we are now in a position to find working capital requirements for the accelerating inventory buildup process in both wheat and soybeans that theoretical had discussed.
As well as fund expansion of our global regulatory footprint wheat.
And the advancement of our breeding programs.
Our strong financial position has also allowed us to regain full control of its report soy and given us access to cutting edge technologies that reinforce our leading position in this process.
This not only provides an attractive ROI accompanied by also.
Has the potential of being highly accretive for our shareholders.
As we advance stage before we I'm sorry.
This concludes our presentation for today and with that I will ask the operator to open up the line for any questions that expand in today's call might have.
At this time, if you would like to ask a question. Please press star one on your telephone keypad.
Please hold for your first question.
And your first question comes from selling alcohol per client.
Hi, Federico and regain.
Congratulations good quarter.
I have a question.
On the in the income statement what is that what's the reason for the high finance cost for 12.7 million.
What's the source of that.
Hi, Charlie Thanks.
Thanks for joining todays call.
With regards to your question keep in mind that we.
You should be separate.
Non cash expenses that are more related to inflation and FX adjustments.
Under accounting adjustments from our cash financial expenses. So if you look at the cash financial expenses, you will see that we were.
Below what we spent last year that will be.
Around $3.9 million.
So we have not only.
We improved our cash generation by lowering financial expenses, but also we are spending less cash in the expenses will be higher debt. So that you need to keep in mind that we separate cash financial expenses from non cash financial expenses that.
Hi related to FX translation adjustments.
[music].
Okay. So do you expect.
Level around that level for the next couple of quarters.
For the finance cost, yes, so if you.
If you take a look at the press.
Press release that we should certainly you will see that the cash financial expenses for the quarter were at 3.9.
Million dollars compared to $4.5 million from the prior year's quarter, So again with significantly higher that we are spending.
Yes on the non interest expenses on most be moving forward, we believe that.
Our interest expenses today are in line with what we should as.
With what we should be expensing, if we keep the same net debt levels.
Okay. Thanks.
And then as far as the acquisition of some.
The rest of the per docket joins me.
Have you paid any cash yet for that.
Yes, so yes for the acquisition of the Baker area.
$5 million up from payments.
That is the consideration on the cash consideration that gets paid at the closing of the transaction and that those are immediately.
And then there are additional considerations in cash for.
$3 million.
If we turn to our guys to performance of 84, sorry, and there's a 1 million dollar.
Reimbursement of expenses that is all cash consideration.
That.
But that $2 million of eight reports are related.
Payments and the ones.
When we did our reimbursement of expenses will be done post closing, while the $5 billion our upfront payments.
Okay. Thank you.
Thanks, No more cash.
Once again, if you would like to ask a question. Please press star.
One on your telephone keypad.
And your next question comes from Bill five National Securities.
All right. Thanks for taking my questions. This morning, I got a few here.
So first on the first question on working capital build.
So to recap I apologize I missed a few minutes at the beginning of your prepared remarks.
So if you addressed this I'm, sorry, but I'm going to I'm going to ask about the working capital build here and how that changes now so with with Arcadia no longer in the picture on the H. before soy.
[music].
Product from a working capital build perspective, what does this do to your.
To the cash outlay here that you're expecting.
Over the next.
Fiscal year or potentially two fiscal years, if you can elaborate on that that'd be great.
Hi, Ben.
It's great to hear from you that that is a very important point, because obviously as the upstream in control of birds eye care that also means.
The source.
For working capital levels I think that this transaction was one.
With that we decided to go we saw double.
You get the company to source local Debbie Argentina is very committed in terms. So we are also announcing today.
August issuance of public bonds at zero indirect for the next three years and so that in a way given the confidence that we could take that who knows and also in exchange for that as we see the economics of these.
Of these technologies out there.
Our loans.
Entirely I don't know if you want to comment more on the working capital considerations.
Related to the acquisition.
Yes, I believe politico your answer one is pretty much come surety high then pressure having the call for.
I would like to you so.
Third Eco mentioned this implies that we will need to take care of the full burden of the of the working capital piece.
The only thing that I might add that from a working capital perspective. This is.
On an investment that has a crop cycle. So this is.
Regardless of.
The fact that the TD some investments and copy Doug It's only for the video of all of the crop side also.
Within our business for most of its future.
Rich products recoveries pretty much all the cash that invests in working capital by the time that harvest scum. So.
That's probably the only the only piece. So we expect that we will be able to regardless of the 3 billion the three year.
Corporate bond that we issued during the quarter. We knew that there is further working capital sources short term working capital sources that can be used to fund.
Seasonal investment.
Got it okay.
Well, thank you for that.
I'd like to turn it over to each before lead so.
You talked a lot about kind of the economic and environmental benefits of the products, which I think are clear but.
But my question here is is.
While those benefits I think are clear.
Wow.
What is what is really being done to really drive demand for the product on that more more downstream.
Farmers are farmers comfortable at this point buying the product once once you have import approval from Brazil are those are your farmers.
Comfortable putting this product in the ground.
Or or do they need more visibility that there you know that there is going to ultimately be demand from processors and consumer goods companies for the product.
And if there is still has hesitation from those farmers what are you guys doing to drive to drive.
That demand.
Yes.
So Ben Thanks. Thanks for that question I think this is a very important point.
From a partners perspective.
Yeah I mean.
There.
Waiting in line. If you will is would have access.
So farmers are real technology in general.
And they're eager to adopt.
Solutions that will help them to be.
So as we do not believe.
Maybe the more cautious.
Pardon.
In that relationship.
Because we don't want them to face commercial problems. After return the crop and for that reason is that we will.
Integrate efforts into building a commercial channel.
That can be.
Kelly.
Take eight before they arrive.
These products to consumers without disrupting.
The existing channels. So for that purpose. What we are doing is identifying users that are willing participants of this new story around.
Environment preservation and.
Okay.
Sort of improve water and carbon footprint.
And are you seeing these to differentiate.
Another why it's difficult to differentiate.
States noise, if you look at.
Flowers and.
Flower the right products.
This little differentiation from from.
From this perspective on that is.
Something that put processors I think are starting to understand and are willing to participate now this has to be done.
And to be preserved manner, where we can keep.
This channel.
Isolated some expenses from the conventional channel at least initially if we.
Go above the double digit mark from our market share and market penetration perspective, I think this will become less of a concern.
But initially that's the way we are operating.
And so far.
I think there were really encouraged by what we see.
And can I ask a clarifying question when you say you're identifying partners on are these are the.
Or are these going to be where in the supply chain.
Are you targeting and seeing and seeing.
Traction business.
You mentioned processors, but but are you also seeing.
The final consumer goods companies.
Considering this.
Or.
Or somewhere else in the supply chain I mean really.
Where specifically once the farmer sells the crop are you are you building partnerships and build a building advocacy for this.
Yes.
The main partner reality nurse remember they are very efficient in which there are no london, but enabling so.
Both.
Eric.
Capital.
Depreciation obviously one of the currency.
On purpose, because we believe it's actually.
Better.
And then maybe you could use the because of the.
I will take a straight Sharon.
The cases of H before.
And that.
Something we are doing it on a very small group of reverse.
Under the HB core brands, so that these particular entity, but the humor, but our crop science and concern about climate change and.
Use their purchasing power to our way.
Help us visualize this demand now what I'm, saying so.
Still remains to be seen I mean, this is kind of the.
Open question, if you will around genetic anymore.
But it's one that I believe is exciting.
And now we are at.
Yeah.
Good evening.
Good.
With.
With a message studies.
Yes.
We now way restricted to the science.
Around the technology.
At understanding sort of the emotional elements.
The name of consumers position.
Perfect got it on.
Very good last question I have for you and I'll get back in queue. Here is it hoping you can comment just kind of on general growing conditions now you talked about the drought.
Thats pervasive throughout the throughout.
So area on what is what does the current growing condition really.
It kind of imply for for the second quarter here and.
And maybe into the third quarter are you.
Expecting any material shifts one way or another on your chemistry or your fertilizer business given given how.
How how expansive drought conditions are right now.
Yes.
So I conditions that affected us to some extent in the first quarter capped by now more or less normalized so we are not seeing.
Significant delay.
In the current quarter.
And I don't know if you have additional information in terms of what we expect.
Yes, you are very caso.
Ben as you asked.
Yes, we stated over the call.
At the beginning of the season.
There were a couple of months in Argentina, we don't feel I think that when the two smoother bina.
Beginning of the season, but there were a couple of talk tough moms and dads normalized a couple of weeks ago with green phones that helped crops. So.
Lots of today moisture conditions are looking good.
Yeah.
But the but great rainfall during the screening Argentina needs two to two point gain so the other important fact here for me.
Obviously commodity prices that have trended up and so.
So for us the farmers proprietary to you began skew.
These are making a lot of sense now so we have a norm on normally see some during the next couple of months.
I agree that these are going to have more farmers.
In Brazil.
Got it very helpful.
Thanks for taking my questions.
And I'll get back in line.
If you would like to ask a question. Please press star one on your telephone keypad.
Again that is star one to ask a question.
At this time there are no further questions I would like to hand, the call back over to Frederic entry so for some closing remarks.
Well thank you.
I would like to close the call with perhaps a personal reflection.
Not my first relevant transaction as CEO you have set us back in 2011 2012 was.
The agreement with Ikea by scientists political institution and financing of start up again.
Okay.
That time.
This is good value bay, the due diligence and legal costs associated with the transaction.
HP for where that technology from us.
Our ability to deregulate and DML event was disputable Emil.
And the overall investment requirement to transform this promising but commercially.
With that let's estimated at over $100 million.
The experts.
To be able to say that we have successfully overcome this initial difficulties and on today regaining control not only on H., we pause soy, but also on other very attractive.
Stage technologies and technology platforms is anybody like us portfolio.
Healthy with an almost right.
I would like to thank our Tdf trusting us package impede growth and.
And for helping us at viruses that as pipeline to it's got many states.
We also take this opportunity to all other fee.
As a new shareholder of the company.
Thank you for joining our call today as always we appreciate your interest in this area. We look forward to meeting more viewing first some in the future and to updating you on and our progress during our next earnings call.
In the meantime, please do not hesitate to contact us.
And with any questions you may have.
Stay sane and enjoy the rest of it.
Thank you.
Thank you for participating this concludes today's conference call you may now disconnect.