Q3 2021 Bioceres Crop Solutions Corp Earnings Call
Good day, everyone and thank you for joining us and something we're getting great growth would be critical to go and sort of.
Executive Officer, and I think a lot on nickel rich.
Our Chief Financial Officer, both would you already know for the Q&A session. Before we proceed I would like to make the polo and trade policy debates going on will contain forward looking statements and I refer you to reported income statement section.
And presentation.
And on the recent filings with the U S.
We assume no obligation to update or revise any forward looking statements to reflect new or change events per se.
Also please note.
And purposes, and a better understanding on the company's underlying performance.
This includes catching us reported results during our presentation today.
Discuss comparative results, which exclude the impact I bring peace and accounting.
Additional information you can actually be application on.
And yes, 29 can be found malware earnings before.
Finally, this conference call is being webcast and what GAAP.
You probably know on Investor Relations section.
Gross dotcom and <unk>.
And I would like and Niccolo.
And if you've got too.
Thanks, Max and thank you all for joining us today.
Please turn to slide two for a brief overview of the business and financial highlights we will discuss in today's call.
And we have done in past calls, we will discuss the progress and the rollout of H before we don't sorry from a number of seats and perspectives and clothing and see.
We'll get vacation perspectives.
And so we're on boarding and validation of our value proposition right.
Our regulatory activities.
And you can see framework and consumer engagement.
We will also discuss the realignment of non core G. L. A assets and exchange for a 6% ownership interest and more life science I'm on.
Pardon me and company pursuing a hybrid concept between land and cell based technologies.
And of animal free food solutions.
From a base business perspective, we.
We will discuss some reorganization of activities implemented through our second quarter results and are starting to bear fruit.
Most significantly you know on crop nutrition segment with a four times increase and micro beaded fertilizer sales year over year.
And you've got 35 per cent pill.
Comparable revenue growth for the quarter.
These top line growth combined with operating leverage enabled the company to that and either improved adjusted EBITDA and margin expansion during the reported period.
Positioning our financial profile and to be.
And the double digit growth trajectory on an LTM basis.
Now.
Let us discuss these highlights and greater depth.
Please turn to slide three for an update on the upcoming H before we'd production season.
The strong performance of H before we bought Ids observed during the last crop cycle and reported in our second quarter earnings call.
That's great and excellent free sheets and momentum.
Contracts already in place hold over 60000 hectares.
And our baseline target prior to Brazil, and put up at a low.
We have collected that will continue to collect and patience for additional hectares until the end up on me.
We will only turn between patients and two contracts, we'd love that.
Yeah, and obtain and viewpoint.
Not cease and H before we'd all yielded conventional varieties by 13, 5%.
All in all environments and locations and all.
242% low yielding and environments.
As we look forward to the planting season, and we've got ready to leave half 200 growers and engaged across 550 locations.
We are near 100% gasoline that would be great.
And with five participants more than tripling the number of hectares planted last year.
Really the strong adoption and validates the H reported value proposition and stuff do they contributed goods and H before we'd Hector average approximately $100 with a gross margin above our company life average and <unk>.
Terms of financial reporting day value of these completed goods will be recognized as revenues once and we got life inventories are sold a C or a drain and not longer contributed and cause seed multiplication agreements.
And the time being because of financial benefits for the company like corresponding gross profit from contributed goods implies less cash required for the H before and basketball he buildup process.
Turning to slide four you can see and we have made substantial progress leveraging technology to interact.
With respect to growers and manage their H B Fuller program on boarding.
We have on boarded almost 50% of our customers.
Our generation H before digital platform.
On the automated and it'll be commercially and production, they scoring contract execution and input logistics.
In terms of functionality on the left side of the slide you can see on mobile like App that makes lineup Adi and tree and navigation all seamless.
While income and Pasadena, and secure environment with biometric and trip barometers.
Hours and sign up for the program by geopolitical and fields and risk.
Even and automated sheep recommendation and.
The inputs are projecting and only six simple steps.
And so we look to the right you can see a comprehensive dashboard.
And that manages the and value experience with an optional communication on tool.
Lighting and AI chatbot.
And these dashboard you can manage orders invoicing and billing like stability stewardship and customized kpis.
The platform and feeling a beta testing stage and we hope that input from the current cycle will allow us to perfect. It further.
And make it the prevalent girl or acquisition and relationship management channel and coming cycles.
Please turn to slide five four and.
And I played on H before site.
I'll say close to 23000 hectares planted.
Seven different H before soy varieties, we have already part of the states slightly over collecting cash.
And the factors with yields averaging one eight tons on a per hectare basis.
Bear in mind that we position garden variety and she made before target regions with yields normally be dealt with two five tons per Hector.
We expect harvest, we almost completed before the end up and mountain.
Resulting inventories from the current and next soybean cycles.
And from the upcoming week cycle should put us in an excellent position per I'm, a little pull lunch once the regulatory clearances are achieved.
Turning to slide six.
As we look to our H before regulatory progress.
The fiscal third quarter, our team made a formal submission what H before wheat production approval to the U S D E and the United States.
Although this is not an immediate opportunity for us.
Southern regions of the U S represent attractive medium term markets.
Progress on.
And he got consoles to be favorable.
You will see similar submissions to other medium term geographies and quarters to come.
No on additional information has been requested and during the quarter by Chinese regulatory authorities regarding HP foresight.
Nor by Brazil had been and meal regarding their ongoing and realization of H B Fuller weeks.
We believe both the regulators should be able to resolve approval requests and the upcoming meetings and look forward to communicating their findings and theory and for them to us.
Now, let's review, our new corporate ESG initiatives.
Turning to slide seven.
Our value proposition has always been centered on developing highly differentiated solutions that can read economic incentives and.
And the form of improved yield management practices and other efficiencies.
Further decarbonize, our customers' production processes, while regenerating agricultural and ecosystems.
Even though our HBV program and degree several good funding and practices such as crop rotation and no till farming biological nutrition and protection I'm on hours aligned with regenerative agriculture.
He decided to initially go serves our sustainability framework on the H reported technology alone.
H free for seed varieties increased yields by 10 to 20 per cent and does that all conditions, resulting in up to 7% and these shale fields and savings on average when compared to non H before varieties, we have engaged with the G. L. A DS.
A global leader and ESG assessment.
And these are independent living and learn on our sustainability Award.
The G L. A D S. Each of the opinion that the selected TPI tons of C O two equity volume.
And that these savings inside and then we'd probably make the actual systems.
Relevant coherent and material from an environmental standpoint on.
Why does it reflects relevant and sustainability challenges for the activity picks up their company related to the agricultural sector.
The United Nations Sustainable development goals, two and 13.
And really zero hunger and climate action.
But over the framework set to be upset or split cheap ambitious goal of exceeding 156, thousands and thousands of C. L.
Like Cleveland and by 'twenty five.
And for soy and wheat rollout per deck shows our net.
And he's turned to slide eight.
Subsequent to the closing of that piece.
Third quarter and on the heels of body that you dmitry for sustainability framework.
We entered into our first agreement with a consumer brands and honor roll.
So rollout football that's manufacture with interest for wheat flour.
And your agreement with <unk>, a lot of like optimizing and there's a lot of Argentina.
Option to choose football actually that significantly reduce carbon footprint and other environmentally positive NAV.
And the only piece.
All right, so that net change and preserve.
Those systems.
Importantly.
And farm to fork identity preserved process structure and that would be on volume generation H B Fuller program will enable and I know you said its products.
Crude steel specific information and climate facts and other key data and what they've said and that's the consumers.
All secured on blockchain technology.
How old it in 19 and 47 and.
And it has to become a leading player and the high and coffee shops, Beckman and South America.
And over 300, and sports and premium relocations that crop, Argentina, Brazil, Chile, and Peru, as well as Spain and to get out of state.
Turning now to slide nine.
Towards the end of our fiscal third quarter, we realized non core GLA assets and exchange for a 6% ownership interest Malik signs and molecular farming company pursuing and hybrid concept between land and cell based technologies for the production of animal free food solutions.
This transaction allowed us to gain exposure to a possibility no therapy for the industry and.
Industry aligned with our per.
Purpose of helping them put systems transition to carbon neutrality.
We believe based on sexual will unlock greater potential value from these assets and.
Contribute to our consumer and market exposure.
This concludes my prepared remarks and I.
I'll turn the call over to our CFO and retailer.
Sure.
Discuss our fiscal third quarter financial results and take care.
Thanks for that equal with day to everyone and thanks for joining us today.
Before entering into financial performance review I would like to recall that during the quarter. We completed the transfer of our listing from and ACR American to the NASDAQ Global select market.
We are grateful to and IC for having being such great Coast you were more than two years since our initial listing back in March 19.
We're not thrilled about our new partnership with NASDAQ.
D O piece for us if they represent some of the leading biotech technology and active companies and the world.
This move also aligns with U S citizens and E S.
G initiatives, and Nasdaq's, ESG platform and suite of products and services.
Now getting into the financials. Please turn to slide 10 for a review on the revenue performance during the quarter and on NAV.
P M basis.
Even when our fiscal third quarter is the slowest from a seasonal perspective.
And we had an outstanding performance with a historic high and revenue.
Total comparable revenue rose by more than $9 million from $26 million and the third quarter of fiscal year 2022.
And $235 million and the third quarter of the current fiscal year.
35% increase.
On a reported basis the increase for the quarter was slightly above 40% from $25 7 million borders.
$6 2 million voters crop.
Crop nutrition expansion whats behind the growth achieved during the quarter characterized by the lack of planting activities across the markets in which we operate.
And so we discussed on previous calls just moved down the effect of seasonality and have a good grasp of the midterm performance of the business. We also keep a close eye on the trailing 12 months.
Exceptional performance and a rather usually no see some quarter got us back on track with growth.
Leaving behind the slowdown and I've seen and the second quarter.
On an LTM basis revenue on soft March 2021 was 100 on $77 million 12 per cent increase compared to the year ago period, confirming the potential of our based on business to a lever attractive growth, even a hands on page before impacting our topline.
Please move on to slide 11, now for a breakdown and revenues per business segment.
And so I just explained the $9 1 million dollar growth for the quarter was there and you weren't entirely by the crop nutrition segment that grew to pinpoint on $1 million.
And yes, and more specifically fully explained by four times.
<unk> and micro beaded fertilizer sales.
Our strong performance and this particular product line during the quarter. The initial outcome of a shift and the commercial strategy to improve the attractiveness of the value proposition to farmers.
We fundamentally believe and showing conviction and their technology and making the first move with a more aggressive pricing structure will allow us to achieve higher volume started faster base.
And a higher use of our installed capacity, which increased from 25 per cent to 34% on a sequential basis.
We expect capture economies of scales.
In turn will allow us to crystallize the level of gross margins that we have seen until now which are very attractive compared to conventional and fertilizers.
With a significantly bigger business line in terms of revenues and profits.
Our current momentum and grain commodity prices could not have been and better scenario to launch this new value proposition as farmers are more inclined to spend some dollars on on fertilizing their fields.
Margins for fertilizers remained pretty stable with the overall crop nutritional segment, dropping only 89 basis points versus the year ago quarter, basically explained by significantly higher participation on fertilizers versus higher margin loans.
Crop protection on sales in the third quarter of fiscal 2021 were roughly flat compared to the year ago quarter at $16 4 million orders average gross.
Margin per segment expanded by 148 basis points to 39, 4% on a positive shift and the product mix.
The higher contribution to sales from adjuvant and lower sales of third party products.
Or SEDAR and integrated products comparable revenues and the third quarter of fiscal 2021 were $3 $5 million slightly down from the year ago quarter.
Most but not all of the 96% and seed treatment packs growth.
Our French subsidiary had accomplished now you're what are we paying.
Which explains the $400000 decline.
Margins for the segment remained pretty flat at 68, 3%.
Overall, we are very satisfied with growth during the quarter, which was achieved with an average margin and expansion of 362 basis points, achieving a 50% average gross margin for the business.
Now looking to our near future Similarly to the reorganization on process, we pursued and the crop nutrition segment, which has already begun to show results.
We are currently and beverage initiatives, leading nice profitable growth and our base thing crop protection and seed and integrated products business segments.
We are optimistic about the near and midterm effects of the strategy adjustments and expect them to positively impact our financial performance and the coming quarter and in the.
Second half of the year respectively.
Moving on to slide 12, now which shows the breakdown on gross profits per business segment.
What do we mean, increasing revenue and margin expansion that we just discussed comparable gross profit rose by $5 $5 million during the quarter moving from $12 million and the third quarter of fiscal 2020 to $17 $5 million during the third quarter of the current fiscal year.
At 45, 4% increase.
Reported gross profit increased from $10 $8 million to $15 $3 million.
And while our gross profit for.
Crop protection was $6 5 million voters and the third quarter of fiscal 2021.
Slightly above the gross profit of the previous fiscal year quarter.
The slight drop in revenue.
This was primarily due to higher participation of our drugs and the mix and detrimental lower margin third party products.
You go on integrated products contributed $2 $4 million and comparable gross profit during the quarter slightly down from the year ago period and in line with the revenue dynamics that I described and the previous slide costs margins remained flat.
Finally crop nutrition delivered $8 $7 million and comparable gross profit during the third quarter of fiscal 2020, one which represented almost half of the total comparable gross profit for the quarter, something unusual and compared to past force and which probably attrition we presented on average and no more than 20 to 25 per se.
And the overall gross profits.
Let's please move on to slides 13, and 14 for a review on EBITDA performance for the quarter on.
On the last 12 months respectively.
The $5 5 million dollar increase in comparable gross profit versus the year ago quarter was partially offset by Ias 29 adjustments, netting and four $6 million increase reported gross profits.
The sharp increase in gross profits fully impacted on adjusted EBITDA, which totaled $6 9 million voters and.
And 163 per cent increase versus the year ago quarter, but stood at $2 $6 million.
David and results were also the main contributor to adjusted EBITDA improvement with $1 million.
Microwave FERC Nisource performance increased results from senior Tech R. Berkley Nisource manufacturing JV, which is equity accounted for in the adjusted EBITDA line.
A separate note on operating expenses, which totaled $11.7 million up 17% from the year ago quarter.
And the increasing SG&A expenses was primarily due to additional outsourced professional services, partially upset by degrees and travel expenses and lower distributions of share based incentives.
SG&A expenses down 659 basis points as a percentage of revenue day, noting continued operational leverage SG&A gross a slower pace than our gross profits.
R&D expenses were also up in the quarter explained by the development of weak oriented technologies, including the registration of HB for wheat.
Our production and the U S saying.
Which vertical previously mentioned.
And slide 14.
Similarly to what I mentioned about revenue, we usually keep an eye on profitability over a period of 12 months to assess the performance of the business.
The 12% growth and sales on an LTM basis versus the year ago period delivered a solid 14% increase and adjusted EBITDA growing from $40 6 million on lawyers and the previous 12 months through March 'twenty 'twenty two.
And to $46 $4 million over the 12 month period, ending March 31 2021.
Now and breaking down contributions to that growth, even when Ias 29, and adjustments significantly eroded and increase our net.
And one $8 million and comparable gross profit on.
Operational performance that you were almost $2 $8 million from additional reported gross profit versus the year ago LTE M.
<unk> was further increased by a reduction in operating expenses on Jv's performance.
Finally, let's please turn to slide 15 to address our debt and cash position together with our performance on financial expenses.
We continue to make good use of free selectors partnership with Argentina grade markets, while the border as we completed a 26 medium daughter public offering of Sirius five corporate bonds in early March.
20% of this issuance corresponded to class, a which had a one year maturity and an annual coupon rate of <unk> 98 per cent.
And the remaining 80 per cent was issued with a maturity of 36.
Months on an annual coupon rate of five per cent.
Proceeds are being used to support and working capital need extended maturities on them and to continue reducing our financing costs.
Discussed in previous calls we have used the capital markets to replace and efficient sources of working capital manufacturing with financial debt.
Even when our total financial debt increased by $35 $7 million from the third quarter of fiscal 2020 first left hand column.
Third quarter of the current fiscal year.
Cash financial expenses decreased by $7 $9 million from $26 million for the 12 months prior to March 'twenty 'twenty.
To $12 $7 million for the last 12 months as of March 31st 2021.
That is <unk> 38 per cent decrease and LTM financial expenses, reflecting significantly lower average cost of debt.
Total net debt as of March 31st thing 31 was $134 $2 million.
289 times net debt to LTM adjusted EBITDA and.
Increasing and the company said ratio compared to the prior fiscal year was primarily due to the aforementioned increase and total financial debt now.
Now on a sequential basis net.
Net debt to LTM adjusted EBITDA decreased from three point on five times on December 31, 2020, primarily due to the adjusted EBITDA growth during the third quarter.
On the liquidity from cash and cash equivalents restricted short term deposits and other short term investments per.
We're centered on approximately 58% on the current portion of debt totaling slightly below $50 million.
No you shouldn't the strength of U S citizens core business, we retain a solid liquidity position to continue serving the rollout of the H before we can soy during the upcoming quarters.
Main growth priority before and company.
That concludes the financial remarks, we had prepared for today's call. So I will now turn into third eco for concluding remarks or to go directly into any questions that you might have.
Thanks, Enrique we will now open up the floor for questions and after that we will add some concluding remarks operator.
Thank you at this time I would like to inform everyone in order to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Your first question comes from the line of Ben <unk> of Lake Street capital.
Alright, Thanks for taking my questions and congratulations on a really good quarter here on the quarter itself I have a question about the fertilizer business I'm really trying to understand who was buying and the high level of their high volume of product here I understand youre using your plant more efficiently you have a new strategy, but I want to understand really who who really.
Drove this volume and was it greater exports.
Existing customers buying more volume wasn't new customers reached by the new strategy.
Any color on this would be helpful.
Hi, Ben it's great to have you on the call did you say equal I will ask that specific question too and again.
Hi, Ben.
Thanks.
And then for the question I think.
And your question.
Combination.
And the factors there was customer repeat rates it looks very good.
So we have seen increased volume per customer that's awareness and your customers. So I think that the.
The new pricing strategy is working fine and the.
The sense of increasing volume per customer.
And also bringing in new customers those are the two body and ones would be happy and monitoring so far in the beginning of this new pricing pricing structure. Most of this happened and the Argentinian market and initially we still will have to wait.
At least the quarter to see per cent impact coming from neighboring countries or neighboring markets such as Brazil.
And why do you view, why where we had been selling pretty nicely.
Got it.
Called micro start, but those are there and why do you want and said we have been monitoring on.
So far we are happy.
And you can see that new customers are joining the technology.
Got it thanks that's helpful.
I'd like to pivot over to a couple of questions on H before Federico I have a question for you regarding the timing of the commercial launch for both the wheat and soybean products.
You talked on your prepared remarks about the new on Brazil, and Chinese approval for <unk> to support a commercial launch if these approvals don't come here and the next few months.
And do you still plan on launching these products locally with and identity preserved supply chain or do we really need those approvals to come here to enable a launch and six months from now.
Yes.
That's a very good question Ben in terms of.
The contracts that we already have in place for 60000 hectares and contracts that we can execute within guidance and you preserve approach and regardless of the resident.
Initially we indicated a range between 60 and 130000 connectors.
Tom.
Number one that would require brings it up and we.
Continued to identify interest and he didn't come and visit approval is obtained before early June.
And we'll probably have some additional acres into the identity preserved channel and.
And all of them, what we are doing.
And now he's identity preserved and in terms of week.
In the case of soy.
The next cycle is somewhat agnostic to the Chinese approval and it.
Things, where you can or planning to do all of that on their identity preserved and new ways.
And remember, we still and have small inventories in terms of soy.
Yeah. So the.
We want and be affected.
And the coming cycle and what will dictate.
The hearings and quality.
C D and obtained now.
On the performance of the different varieties of seven with details that are currently being voted on by now.
Going into 2022.
<unk> per ounce to launch about.
And our where we will be from from out of the next site and soybeans would require and approval because how are you.
Thank you for yourselves and will be tough to manage.
How about the 500000 hectares level, if you will and Thats.
We still are not.
Sure.
In terms of how efficiently with people to do this.
But.
And that might be more challenging this is something we can do.
Fairly well today, particularly with the use of the digital platform and but.
Our ability to move above the 1 billion net mark.
Identity preserved and.
It's one that we're not and 40 something wrong and that's absolutely.
Got it.
Very helpful on both fronts on.
On question about the Havana agreement.
On.
The and I know I understand that and maybe too early to get much information on this but do you have a sense of if theyre going to be basically integrating flower from H before we'd into their existing product line and then and as such they would be you know on an almost immediate.
Consumer of that wheat or are they going to be engaged and kind of a long R&D process to figure out the right.
The right products for.
For the four that we too to go into I'm, just trying to understand kind of if if this agreement is affecting the immediate term commercial launch or if this is kind of a longer term thing.
Yeah.
So.
Thanks for the Atlanta question to Us the Yamana agreement and it's more.
Quantitative and qualitative.
And he did.
Yeah.
And we sort of.
Darko this monumental quest with with H before we'd we work on.
And drug development side, and scaling up inventories and the regulatory front.
Frank.
And and we work on the commercial and aspect and a wheel.
Also need to work on consumer engagement and so.
This last.
And then consideration and the one that drove us to Yamana agreement and the.
And it's not wheat flour, and and that will be needed to be.
For a deep into all of your lineup and all that.
There'll be a specific but on that line.
And with the H before claim and.
Where we intend to shell and the.
Water and Cogs and footprint.
And.
And the line these particular products.
And doing so initiate a conversation with consumers. This is not a mean.
Meaningful from a volume perspective in terms on how much non what am I end up and this particular channel on <unk>.
Thank you and ask you read validation.
And greater pump.
Processors.
That might be sort of concerned about the GM aspects of each before REIT everywhere, we can sort of come back.
With a day now from from consumers and and from flow like performance to generate greater comfort and.
And these particular.
So that's kind of.
The approach, we intend to announced on.
And they're agreements with a consumer.
Consumer brands on each.
Before we and create without a platform on consumer engagement.
And to build on these loans.
Aspect of course.
If you will or on the social license and it requires for free I thought I thought these nature.
Got it very very helpful and that's great you guys are able to secure that first first agreement.
I think that does it for me I. Appreciate you, taking my question and I'll get back in queue.
Your next question comes from the line of Kim <unk> of Brookline capital.
Hi, good morning.
I have two questions. The first one relates to the crop protection business and the strategic adjustments here.
Considering could you give more detail with regard to the types of actions you plan to take.
Thanks, again for joining the call and thanks for the question.
And what we would like to do there and the crop protection side is on capital.
It will be.
<unk> proprietary adjuvant.
And this would be.
And post that and put on ice.
Some of which are third party and all that stuff. We usually commercialized also in that segment I think that if we.
And are able to have dedicated teams and structure alternative channels for these two type of.
We currently commercialized and in the segment, we are likely to achieve a better performance.
And that is kind of the reorganization and all.
And on that we are pursuing and that we believe will show some increments.
Incremental growth and in the fourth quarter of the current fiscal year.
That's helpful. Thank you.
Second question relates to <unk>.
Veronika and.
And now that you have.
Complete ownership of it and.
And next steps you plan to take with regard to.
And building out that part of the business.
Right.
I don't know if it's 99 on yours, but it's sort of fading away. If you can repeat the question.
Yes, I hope this is better.
Okay.
Great.
The second question is your plant and plans with Veronika now that you have.
100% ownership.
And some of the specific actions you are planning to take.
And now and now that now that you're totally control it.
Okay, and sorry, if I understood correctly. The question is around the full control and.
And how we intend to.
And sort of move forward.
Oh, and 100% of G E M S.
Really what that is three and four is giving us greater flexibility.
And engaging with third parties.
For the.
Development of alternative and geographies.
Mainly and the U S S.
And to some extent in Brazil, where we have that and he study called relationship with DMG.
And so we are now actively.
And working too.
<unk> here.
And plasm and that is complementary to that one.
And with me, having barely GAAP.
To be able to other S T south eastern on geography for instance, there's a meaningful day area on the U S.
We're age before and it can potentially deliver significant value when we need them at videos that dollar and maturity groups two and below.
We currently don't have within devoted and got breeding program. So that is one and space, where we are at a low.
Looking to secure.
Relationships with germplasm providers that are already on boarded with age before so that we can address.
That particular.
Opportunity, which is upwards of 10 million hectares. Similarly.
For maturity groups Center box, which are important and some areas of their deal and now.
And theyre tropical regions of the world.
And we can now engage without sort of.
The necessity to negotiate with our partner.
And in the day, because we're fully on it and so that we can have.
Relationships that allow us to them.
And I think incremental hectare sunrise and.
With HV force choice and that's.
For me and most of them full aspect of growth.
And all in the JV and cool.
Great. Thank you very much.
As a reminder to ask a question. Please press star one on your telephone.
Your next question comes from the line of Steven Ralston and Zacks.
Good morning.
Thank you for taking going on.
Oh, I'm, sorry, I was in the middle of transitioning from the web cast.
Cash to the telephone during the first question.
Which was about the micro beaded fertilizer.
I had assumed that because there was the delay and the soybean planting.
Planting season this year.
That sparked the incremental demand.
Micro beaded fertilizer.
Is that correct I'm, sorry, I missed that first answer.
Hi.
So somebody can thanks for joining us.
Question, if I understood correctly, you are referring to it and so now the deal.
We see sales from the micro <unk>.
Correct.
And that is correct.
Yeah, So look the income.
<unk> sales have you seen them and micro beaded fertilizers.
East corresponding.
Ooh and Ah C zone.
Winter crop planting season, and Argentina. So this is kind of like the beginning of sales for winter crops mainly.
In Argentina, so that is what we're seeing on in Greece.
This is a product that is even more suited for soybeans. So that is something that.
It makes us be.
Optimistic about the share.
We're able to capture demand for winter crops.
And he is already published Fisher and should be working even better.
For some of the growth but to your specific question. This is demand for the winter crop strength here in.
In America on more specific free Argentina.
Thank you and in the second quarter call you mentioned that there was an increase in commodity fertilizer sales.
We're competing against the micro beaded fertilizer on final series.
Did that fade out some or is there another dynamic about the commodity fertilizers.
And Steve and hold on a second operator can we switch to the backup line, because we are and having a lot of difficulties with the slide.
Yes, one moment.
Okay, and then I complain has been transferred.
Yes.
Do you want me to repeat the question.
Yes, please Steve we can hear you much better now.
And thank you.
And in the second quarter call you mentioned that Oh.
Basically commodity fertilizers, we're gaining share and that's one of the reasons for the lower level of micro beaded fertilizer during your second fiscal quarter.
Did that dynamic change as you went into the third quarter.
[laughter].
Yes, that's a very good question, so absolutely I think.
The upper right and we've seen the steep up pricing and commodity prices.
Made farmers more technology and go.
And so farmers are by contract and we are adopting new technologies that provide rois, even when they require more investments. So does she sees this perfectly and ideal for their microwave fertilizers, where you might.
Need to have on technology adoption and gold versus conventional and technologies that is something Doug and Mike.
Haven't changed.
Hmm.
From the second quarter into the third quarter, and even more now with our with the commodity brakes and Youre seeing these particular months.
Great.
And I'm I'm, sorry, I didn't see it but what is your capacity figure and now you usually give it on a 12 month trailing basis.
Of the micro beaded fertilizer plant.
Yeah. So we moved on and trailing 12 months basis, we've moved from 25% to 34%.
To 32%.
34, three for non <unk>.
And 34%.
Thank you and also to tag on to the other.
Analyst's question.
About your reorganization.
I would assume that they're going to be costs involved in building up these dedicated teams to emphasize your branded products.
And crop protection and seed.
In your comments. It seems like you are also going to and say deemphasize the micro beaded fertilizer and maybe I read too much into that.
So the net.
Be specific as I can as these state, but in terms of and micro beaded fertilizer. The strategy was already put in place and what is yielding results today and.
And in the current quarter, it's more around price.
<unk> seen and scaling up capacity, so that we can retain the same level of profitability and.
As we become more price competitive obviously with improved commodity prices and that has that sort of that incremental effect and.
Beyond what we need ourselves not ease and creating that kind of outcome.
And that Youre seeing and the current numbers now.
And the crop nutrition segment and in the crop protection segment, we are not.
Sort of.
Investing in a new team and we're just reassigning if you will resources and that we currently have so we don't expect to see and a significant increase in sort of operational costs or.
Management costs.
Costs to have the.
The strategy and the crop protection.
And thanks for the segment and put in place.
We believe that if we can it's essentially a channel strength strategy, where we are on operating at two different channels. Instead of just one day and where we have one channel dedicated to the high value put on X.
The ones, where we make.
Significant profits and and another one for equal sponsor and products that we commercialized as a compliment and.
And finally on the on the cheap drones and we'd see.
Is something we expect to be.
And in place and the second half of this year.
And what we are doing is also structuring and alternative channel.
Yeah for the conventional seeds. This is not inclusive of the age before program is this just flow to conventional soy and wheat and currently sell and expand on that portfolio. So that we can materialize on number of synergies with our existing organization and yeah. So.
And those are the two a reorganization.
Initiatives.
That will be executed in the coming days and months and that we expect weeknight growth, particularly in our main market of Argentina.
Yeah, just to rephrase it sounds like the goal of the program is to enhance your product mix to your higher margin products.
So if you will the.
Our current channel will be more dedicated to that and so and that is correct and.
And that is not to the detriment of on the post patent products on the government and B cell because there will be an alternative channel operating on those.
And that we expect will generate growth as well.
All right.
Thank you for taking my questions.
And are usually comes from the line of Mathias Comanche of Delta asset management.
Hi, guys good morning, and congratulations for the results.
And I'm wondering if you can comment on the rationale of the acquisition and Chicago to and what type of incremental revenue synergies do you expect to capture there.
Well thanks, Mike.
And your.
And your comment and your question and then the rationale of each language right on the line of what we discussed before.
In terms of them the crop protection segment to provide that alternative channel for post patent products. So that we can have our resold on their channel fully dedicated to larger ones and biologicals and.
And then we do sound like.
The.
My fungicides for instance.
And plus.
Thank you and any color on synergies or incrementally day there.
Yes.
And weekend.
Yes.
And that.
The question is kind of like overlapping theoretical set about the Chinese I think the synergies that you might see there is basically having.
Specific channels flow specific types of technologies.
This is a channel that can be.
Better on commercializing.
Lower technologies or products that are replacing commercial and people won't be so there might be some synergies also and some opportunities where personalized search for example to further.
Get capillarity on on.
On the market.
And these new channel, but that needs to be seen and that is not something that we are computing non soft today, but there might be some opportunities for our products and replace conventional technologies.
Okay great.
Yeah.
And at this time and there are no further questions I would now like to turn the call back over to frederico for any closing or additional comments.
Well and I want to thank everyone for joining I think we are at an inflection point in the company S. We gained a significant low.
Mentum with not only the baseline business, but also the H before.
Progress. We appreciate everyone's interest that we remained fully available and portfolio ups.
And.
Wish everyone a great week.
And thank you that does conclude today's conference call you may now disconnect.
Yeah.