Q1 2022 Bioceres Crop Solutions Corp Earnings Call
Thank you for your patience the Barneys theorists Cook solutions fiscal first quarter 2022 financial results conference call will begin shortly.
During the presentation, you will have the opportunity to ask a question by pressing star one on telephone keypads.
[music].
Hello, and welcome to the Pony Cirrus solution fiscal first quarter 2022 financial results conference call.
My name is Lauren and I will be couple of tonight's equal today.
If you would like to ask a question during the presentation you may do so by pressing star one telephone keypads.
I would now how do you like that you host what recourse head of Investor Relations cheap again, which we guide. Please go ahead.
Good day, everyone and thank you for joining us.
Presenting today's call will be Federico Trucco, our Chief Executive Officer, and then didn't get lump is Nick <unk>, our Chief Financial Officer, both will be available for the Q&A session.
I would like to take a moment to inform you that maximo Goya head of Investor Relations is leaving <unk> to pursue and enriching personal and academic venue hi, Rodrigo crowds.
And the company to take over Maximo responsibilities and want to thank him for his open arms support everyone admires service, including management I'd like to thank Maximo for all his excellent work and wish him success in his new endeavors.
Back to our presentation and before we proceed I would like to make the following safe Harbor statement.
Today's call will contain forward looking statements and I refer you to the forward looking statements section of today's earnings release and presentation as well as in our recent filings with the SEC.
We assume no obligation to update or revise any forward looking statements to reflect new word changed events or circumstances. Also please note that for comparison purposes, and a better understanding of our company's underlying performance and in addition to discussing as reported results during our presentation today.
We will discuss comparable results, which exclude the impact of hyperinflation accounting in Argentina.
Additional information in connection with the application of the rule.
29 can be found in our earnings report.
Finally, this conference call is being webcast.
Webcast link is available at the bias service crop Dot Com Investor Relations site.
At this time I would like to turn the call over to our CEO.
Thank you.
Thanks, Bob and.
Welcome to the <unk>.
Welcome as well as investors and analysts joining us today as we will report we believe very good quarter for them.
So performance perspective.
Please turn to slide three for a bit.
Leaf overview of financial highlights and will discuss in today's call.
We are thrilled to report the first quarter's financial performance and show that the positive momentum observed in the last two quarters has further accelerated in the reported period.
Fiscal first quarter comparable revenues were up 54% year over year.
Consolidated and adjusted EBITDA.
Now you've got about $50 million on an LTM basis.
I will provide a high level overview and then we can really expand.
Hormones during his section of the presentation.
As we have done much close we will provide a brief update on each before well now and regulatory processes.
We will also take a minute to introduce a new level of ESG reporting on H before somebody bodies that will help us measure environmental exposure to chemicals.
Remotely used chemical footprints.
Seed and grain production systems.
Yes, no <unk> will report on the completion of theirs.
$16 million public offering of series six corporate bonds.
Water.
The capital raise adds to the financial strength required to support.
Working capital needs in the coming quarters.
Please now turn to slide four.
A quick review of our strong sales momentum.
The last three quarters.
Comparable LTM revenues reached $220 million up 24% from the same period last year.
LTM metric.
We absorb top line double digit growth trajectory results from the effective implementation of new strategies in the crop protection and nutrition segments.
With revenue growth accelerating from the 35% to 40% level in the first half of the calendar year, well above 50% in the current period.
First fiscal quarter expansion was driven primarily by the combination of the new commercial strategy recently mentioned.
Product launches and generally positive sector dynamics nothing dramatic.
The rising trend micro beaded fertilizer sales continues for the third consecutive quarter.
The crop nutrition segment, explaining 44% of the growth in the period.
We believe both capacity reaching 48%.
60% from the year ago period.
Now, let the bio nutrition products launched ahead of the summer planting Keystone also showed solid performance during the quarter.
Vitagliano.
Micro start bio and Microsoft are easy.
<unk> bio already represent close to 10% of.
The segment sales.
The crop protection segment benefited from the impacts of Salesforce and channel.
<unk>.
With each segment, explaining close to 55% of the growth.
Observe in the periods.
Finally, we expect to see similar growth and to keep the integrity of that segment.
Coming quarters right.
H before inventory.
No wonder contributed but are sold.
Oh great.
And also as a result of an ongoing reorganization process within the segment materializes.
Growth in the seed <unk> integrated products segment should help us keep the kind of momentum towards the third or fourth quarter of the current fiscal year.
Please turn to slide five.
Nowadays on the alloy.
Rich before you ship gifts.
H before inventory ramp up processes are moving forward as discussed in our previous earnings call.
Early season, H B Fuller soy plantings.
Were completed.
While <unk>, which represent the majority of the target detectors is about to start in the coming days.
H before wheat harvest started and is currently up about 10%.
Mainly in the northern regions of Argentina, where we which is physiological materially earlier.
Operational metrics will be updated in the upcoming orders at the end of each reporting with Congress and HP for soy planting seasons.
On the regulatory front no additional information has been requested.
Timber.
By Chinese regulatory authorities regarding the soil.
Nor by the skill.
<unk> regard to meet their ongoing evaluation of H b.
As we said before we need both the regulator should EBIT for yourself.
Requests in the upcoming meetings I look forward to communicating their findings.
For them to us.
As you well know influenzae serene is a central feature of our company and discuss either a broad across the board approach.
The aspect of the HP <unk> program as we generate information and defined a piece of consumers and growers to talk to each other.
In slide six you will find a snapshot of different points.
<unk> hundred four program process.
The data collection.
We have dedicated significant time and resources to integrate different technologies into a comprehensive traceability platform.
The use of blockchain ledger to bulk purchase turnkey.
EBIT for all stakeholders.
A tangible solution to life for Lisa.
The ESG reports, which aims to keep track with farmers performance right.
Life consumers.
Traceable ESG seed and grain scoring.
We're taking this opportunity to announce the addition of equinox ecological indexes, our ESG reporting breakfast or H before inventories.
You will see in slide seven.
We have decided to produce a blended echo toxicological score combining Cornell university's environmental impact Bush portions with those.
Dose dependent pesticide risk approach.
These measurements go see those factors such as thermo toxicity.
CCT to birds east fish and beneficial arthropods soil.
Soil health life.
Surface potential now.
Surface how flights.
Seaspan ECP nietzschean potential among other factors effecting bottom workforce environment or your consumers.
Our estimated for the most frequently used.
We believe this report will set a new industry standard.
The environmental impact of exposure that we put in active ingredients.
Currently production processes and the water footprint of agricultural ecosystems.
Element in designing and promoting a 20 <unk> century regenerative agriculture.
This concludes my prepared remarks, I will now turn the call over to our CFO and he can look like.
To discuss our fiscal first quarter financial performance and recur.
Thanks, Paul.
Good day to everyone and thank you for joining us today.
Moving over to the financial please turn to slide eight as we frame the impact in the fourth quarter your performance on an LTM basis.
A critical learning a few minutes ago, we had a strong first quarter performance.
The run up the high season of sales in key markets across South America.
With comparable revenues rising, 64% roughly $65 million.
Now for the FERC consecutive quarter, our topline have outperformed the previous fiscal year period.
Clearly offsetting the robot in the second quarter.
All year, which had been negatively impacted by severe droughts in South America.
As a result, LTM comparable revenues were up 24% to 200, frankly Lithia motors.
Even though the LTM metric copies here seed accounts for that.
Second quarter.
Execution during the quarter consolidated the successful outcome from the initiatives taken in the second half of fiscal 2021 to reignite growth.
Protection and nutrition business segments.
Segregation of commercial teams and no sales for power, allowing the implementation of a more customized market approach.
Product center strategy for high technology categories, such as microwave fertilizers.
Versus kind of opportunistic in market driven approach for third party abroad.
Property attrition was the segment that benefited the most from there.
Doubling sales versus the year ago quarter.
In particular, we saw a twofold growth microwave for larger volumes.
12 of the combination of an increase towards focus.
End market conditions.
Growing sales broad line, but many might make up 90% from Permian activity is continues to be a key element of our baseline business and this quarter's performance you can settle into that.
Moving on to slide nine the compare of BMO.
September 2021.
LTM EBITDA in September.
Number 25.
<unk> profitability was more modest than top line growth.
Your LTM EBITDA metric.
Really accounted for $3 $4 million pre operational expenses related to the rollout of two core program had been not exceed that.
Fiscal year LTM EBITDA.
Profitability from are based on.
Currently supporting expenses related to our Q4.
You have no currency, our reported revenues and gross profit.
It is important though.
Note that the inventory ramp up process that is being executed generating deferred revenue and profitability from contributed goods that will be recognized in the timely fashion one inventory sold.
Oh great.
Furthermore, the LTM EBITDA metrics for this year also accounts when the drawback in the second quarter of fiscal 'twenty, one and have been hit by dry weather as mentioned before.
As well some favorable dynamics from inflation and depreciation of local currency in Argentina, where we hold most apartment structuring.
Awesome.
Having our LTM EBITDA.
Over $50 million and slightly increase even if we account for the element.
But have no impact to the PUC school year.
<unk> of the strength and resiliency of our baking business and gives us great confidence as we move forward.
Let's please move to slide 10 for a breakdown of first quarter revenues for business segment.
The $22 6 million of our increase in comparable revenues was driven by an almost even contribution from crop protection and club nutrition with integrated products almost flat versus the previous quarter.
Crop protection sales were up 8%, reaching $34 $3 million.
For our protection global supply chain conditions provided tailwind.
Product shortages drove prices higher in South America.
Was further reinforced by sustained agricultural commodity prices.
I mentioned earlier the reorganization of our commercial teams in the segment favored an opportunistic approach to leverage market momentum.
With higher sales of third party products.
Finally in Argentina.
Flip side.
Spring during the quarter drove adjuvant volume was down compared to the year ago quarter.
A situation, we believe could get normalized during the current quarter.
The average gross margin for the segment declined from 38, 6% from 33% primarily due to the increasing sales of lower margin third party product.
Detrimental to Philip's contribution from higher margin Agila.
The crop nutrition segment grew an impressive 83% to almost $22 million.
The expansion in the segment was mainly explained by microwave prototype store sales benefited from a combination of factors.
<unk>.
We focus from commercial teams with expertise conducting sale.
From product attributes rather than market conditions alone.
This was possible thanks to the incorporation of new salespeople, who are focused on lower margin and more opportunistic sales.
Secondly, the commodity fertilizers market macro conditions also provided an opportunity to ramp volumes up with healthy margins.
Commodity fertilizer supply shortages, resulting from China energy crisis, and global logistics challenges low prices higher.
Which favored market penetration and adoption of high Tech specialty fertilizers.
While the quarter 30 distributors have incorporated newsprint presentations, you're going to start our main Brian for microwave devices through our product offering.
The eco previously mentioned.
Sales were also higher during the quarter. Despite volumes remaining flat this was due to a shift in.
And the product mix from conventional documents.
Higher volume.
Similar to long life to them and their lives.
Proprietary technology of PFS.
And then I have been gaining popularity among growers because of the higher microorganism survival rate and greater and all you have dry mouth.
The overall gross margin for the segment increased.
90% to 51%.
Higher sales contribution from microwave pretty nicely, which have lower margins trending upward.
The microwave fertilizer margins remained fairly stable driven by economies of scale as volumes increase as well as favorable market conditions.
<unk> margins increased a responsive to shifts to other life unconventional nonetheless.
Finally for your integrated product comparable revenues in the first quarter of fiscal 'twenty two.
At $8 7 million voters flat compared to the first quarter of fiscal 'twenty one.
Seatback volumes remained flat in the first quarter. The HiseQ4 seed treatment solutions in South America begins.
Margins in the segment dropped to almost 63% mutual payroll cost dynamics in Argentina or seed treatment packs are manufactured.
Overall, it was a great quarter for top line growth, let's please move on to slide 11 for a look at how these translate into gross profit contributions.
Total comparable gross profit for the quarter grew to roughly $28 million, almost 40% more compared to a year ago quarter proving that expansion of our topline was done properly.
Arbitration contributed roughly two thirds of the growth in the quarter sales grew with gross margin expansion.
Despite contributing roughly half of the growth in revenues crop protection only contributed one third of the growth in gross profit.
Functioning sales was driven by lower margin third party product.
Overall gross margin sales dropped from 47, 5% to 43, 1%.
Claimed by the product mix shifts and probably before.
So by unfavorable cost comparison versus the prior year.
Cost of goods sold during this year's quarter have been negatively impacted by inflation dynamics in Argentina.
While the last 12 months inflation of the country has outpaced depreciation of the local currency.
The negative effect on dollar linked businesses like ours.
Situation, we believe should be normalized combined in the near future based on past experience.
Let's now please turn to slight growth for you on EBITDA performance for the quarter.
Adjusted EBITDA increased 18% totaling $12 $4 million in the first quarter of fiscal 2018.
Reported gross profit rose by $9 $8 million from both the $7 $9 million increase in comparable gross profit and $1 $9 million.
29 positive adjustment.
Operating expenses and other income and expenses collectively increased by $7 $5 million, partially offsetting growth in gross profit.
Importantly, and as discussed at the beginning of my presentation.
Seven $5 million increase includes $1 9 million.
Return on expenses.
During the quarter, we made important Q4.
$1 $1 million accounted for in SG&A, and <unk> $8 million accounted for another income and expenses.
These pre operational expenses are fully accounted for in our adjusted EBITDA and therefore supported by our facing business.
I will take a minute to further discuss the G&A, which totaled $16 $2 million in the first quarter of fiscal <unk> compared to $10 $1 million in the first quarter of fiscal 'twenty one.
Increase is mainly explained by a combination of video and semi fixed expenses.
Honeywell sales related tax on logistics expenses grew by $2 $7 million.
Nine with growth in revenues and increased freight expense and global trade challenges.
Employee salaries and social security costs are semi fixed expense increased by $1 $7 million.
Building resources assigned to Q4.
Finally, similar to cost of goods sold FX and inflation dynamics in Argentina also played a negative role on operating expenses.
Despite the year over year increase total SG&A expenses remained almost flat, but the percentage of revenue or 24, 2%.
Next please turn to slide 13 to address our debt evolution in cash position before turning it over to say, let's go for final remarks.
Total financial debt by quarter end was roughly $180 million of which approximately 63% consisted of long term obligations.
And then according to current cash cash equivalents and short term investments.
We were up $42 million and represented approximately 63% of the <unk>.
Current portion of debt.
The total financial debt increased by $6 million from the fourth quarter of fiscal 'twenty one.
The increase in total financial debt LTM financial expenses increased by 7% from $14 $6 million grew $13 $5 million.
Net debt by quarter end was $137 $6 million and $2 seven ratio of net debt to LTM adjusted EBITDA.
The sequential increase in the net financial debt is explained by a slight increase in total debt.
Cash position as we enter high season market and working capital requirements.
This concludes my remarks for today.
Recall.
Thanks Enrique.
I will now open up the floor for questions at this for closing remarks.
Gulf Coast.
Please note that just like to ask a question then please dial into the conference call.
Ask a question. Please press star followed by one on your telephone keypad.
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Our first question comes from the line of Ben <unk> from Lake Street Capital markets. Please proceed.
Alright, Thanks for taking my questions and congratulations on a really good quarter here.
Got a question.
For probably Enrique here on the breakdown of SGA that you talked about.
I appreciate the breakdown on the H before pre operational expense, especially but I would say, it's kind of unclear to me why this number is coming up now is I can't really tell what what does it really change within H before this quarter versus prior quarters. So can you help me kind of understand what these expenses are confirmed.
Confirm that these are in fact, new expenses realized this quarter.
And then talking about kind of what your outlook is for that.
Throughout the next few quarters.
Hi, Ben Thanks for the question I'm not sure how you on the call.
Thanks for joining.
So the real operational expenses that were recorded during the quarter.
Bucket of different things so it's a.
A good question. So there's a piece of that has to be.
Data acquisition costs that eastern nature of variable expense because it relates directly to how many bonds. We are acquiring from farmers I should say are being constructed.
Farmers so they in nature.
He said why do you have an expense and depends on one partners decide to price.
Significant vacation services that they're providing to us.
For which we obtained.
Music like brain. So that is why do you want to size it depends on.
The timing of that expense depends on when farmers to price to that.
About two thirds of the SG&A costs related to <unk> for <unk> data acquisition costs.
One third.
<unk> expense in the past.
<unk> support functions for the AG platform.
So.
Does that answer your question Daniel.
Do you need further expansion on any aspect.
No.
That's a that's a helpful start I guess, but I guess my my follow up question on that though is is collectively.
Collectively that I forget what it was like 115 million something like that in the in the first quarter is that kind of a good run rate that you expect going forward do you expect that that's going to pick up in coming quarters. What's your what's your outlook for that line item.
Here down the road.
Again it is difficult.
<unk>.
The object with a run rate that's going to be because that depends on when farmers choose to price. The service. They provided what I can tell you is that we recorded in this quarter has a substantial portion of the services that we have constructed to mobile Blake soybeans.
There is.
A big portion of the soybeans.
<unk> and <unk> growing in the last season and had been already priced. So this number in this quarter has been low.
That service under lead acquisition related to see some of soybean.
Going forward that its going to depend on when farmers.
<unk> do a service that we're providing.
For us to move it by the 55000 hectares of wheat or some portion of SaaS and has been already we can personalize the about a third of that it's going to happen.
In the second quarter on third quarter.
But their steel price that needs to be done to us so well for.
For us to project that run rate, what I can tell you that.
Most of soybeans from the last C. Some of already be priced under data acquisition related to that has already been April.
Got it okay, great. Thanks.
A couple of other questions for me you talked about the difficulties in your second quarter of last year, given given weather conditions. It appears from from my vantage point that conditions here are much more favorable this year I'm wondering if you can just kind of provide adequate boots on the ground update of of growing conditions.
This year, and especially relative to last year.
Hi, Brian This is our third eco.
Thanks for joining us today.
We were having a normal conditions in Latin America.
Primarily this year. So we don't expect to see the same weather effects that we saw last year.
So we hope to be able to keep the current momentum on the second quarter.
That's probably as far as I would like to go today in terms of guiding towards a second quarter.
Look.
Okay.
That's helpful and understood last question for me and then I'll get back in queue, you talked about the challenges around kind of transportation logistics et cetera that everybody seems to have right now.
You you guys have had been able to weather that pretty well can you talk about the the conditions in Argentina and throughout your supply chain.
And the.
How problematic.
The transportation issues really are and and to the extent to which it's really impacted your ability to.
Get your.
You'll get your product to customers and that'll do it for me.
Well, that's an excellent question and I think when we talk about transportation and logistical complications were mostly.
Focusing on international.
Logistics.
I mean, the country logistics are somewhat normal and we are not having major difficulties. There. It is in terms of sourcing from raw material for adjuvant that we have to take NBC battery.
Luke if you will that do play out.
As you can see we did see some incremental costs, but.
Nowhere close to the magnitude that other industry participants have observed so.
Likewise in terms of.
Our international business, where we source, but I'll explain some of our manufacturing facilities in Argentina.
We take.
We believe inventories are way ahead of what we used to to make sure that the farmers have put all that seeing the shelf when they need them or we do recognize that gaining customers. It's not always easy when you're sort of playing internationally. So we don't want the lack of inventory to be an issue.
And in that sense.
There are ongoing difficulties in the.
Thereby we have.
Taken anticipates our anticipatory.
Sure.
Measures to try to minimize disruption and there are also likely implement our cost I think if we get them to come into us.
Nothing to be too concerned about.
Yes.
Right.
Because of you keep any space and tell the shipping and more expensive.
If you will.
And that basically happens from fixed lease in.
Documents, which is the high margin product. So we tend to we tend to manage is depending on marginal HPE, so lower margin books out there.
<unk> said in terms of imports.
The only but we needed to take some precautions, where <unk> come from outside of Argentina.
CDP.
Remember that biologicals don't have any one off deals that are sourced from outside of Argentina at the end of the remanufacture and then for fertilizers.
AAP in Meps, Walmart Ceos that bulk low supply chain has not be disrupted variety of containers. So that continued to flow pretty nicely for the quarter and continues to do so now.
Got it Thats all very helpful. Thank you for that context, congrats on again on a really good quarter here and then I'll get back in queue.
Our next question comes from the line of Brian Wright from Roth Capital Partners. Brian. Please go ahead.
Thanks, Good morning, just a quick question.
Can you give us some color on how much the market for the micro beaded fertilizer. So it's the only just wanted to get a sense of market share gains.
Yes.
Hi, Glenn you're happy to have you on the call. Thanks for joining.
So if I understood correctly 32 market share gain microwave fertilizers.
That is a great question bearing in mind that the main competitor for micro <unk> lasers today are basically commodity even 30 days or so.
All technologies.
Higher technology, 40 nights or a specialty fertilizer. So our main challenge is to get farmers to adopt this.
Keith technologies, while in competing with other companies.
There are obviously other players, but the right senior fertilizers Lars in South America, mainly but you do have a competitive advantage.
The OLED.
The lighter.
Nisource, but its manufacturing in country. So both in terms of gaining market share versus commodity fertilizers and also competing with other providers specialty fertilizers.
Linked quarter for starters, because through our price and commodity prices.
Prices allowed us.
Enabled a more receptive market.
Hi Tech products and the other one is that in terms of the challenges of logistics have been alluded to these questions you have the competitive advantage of manufacturing in country.
And therefore, making sure that we have a steady supply of these flows.
Great and it just seems like given what.
And in the futures market for the commodity pricing, but it seems like this tailwind should last for quite some time.
Yes, I am hearing you quite low, but if I heard you correctly the <unk> 13.
The agricultural commodity prices.
So what we've seen also.
While this quarter steady commodity agricultural commodity prices and more than anything <unk> corn and wheat.
<unk> provided a very healthy profit IDP environment for farmers reduce metric, where we keep an eye.
But that is what since the new acquiring hydro plants like the ones that he commercialized in particular I think that from our product lines. The one that is more exposed to these dynamics are the microwave pretty nicely just because fertilizers.
A big portion of the farmer spending every year.
Having said that we tend to seed, but theres a formulation of prices between our cultural commodities and <unk> that are will not be able to watch some of our main competing.
Products for the microwave prototypes or so.
Moving on cultural commodity prices fertilizer sent to adjust.
With the lack of a big tend to adjust and that has happened now.
We are seeing now is that commodity prices are I won't say softer, but it seems like each of you on farmer sentiment I'm thinking around that.
No.
Metals prices stay where they are in terms of nisource on bicultural commodities I think the thesis that makes it up.
Great. Thank you.
As a reminder.
Any further questions. Please press star followed by one on your telephone keypad.
Our next question comes from the line of Stephen Volkmann.
Definitely such Steven Please go ahead.
Good morning, and congratulations on the successful execution of your two strategies in crop nutrition and crop protection.
Okay.
Can you hear me. Thank you Steven Yeah. Thank you Stephen it's great to have you hearing the call.
Could you help me understand what management's expectations are on the mix shifts that are occurring in your three segments.
It seems like each segment has a very targeted strategy.
And crop protection.
With your pricing strategy, even though you're compressing the margins our sales.
Sales are growing very nicely.
In nutrition.
Sales are even growing faster in the margin is expanding.
And this has caused some compression in the corporate margin.
<unk>.
But it seems like when H B four technology really gain some traction which is a very high margin segment.
That would drive that corporate margin higher.
Is that the way management is looking at it or.
Could you just help me understand that.
<unk>.
How do you on the call and thanks for joining so I think that.
I know youre thinking about it correctly, so youre seeing the protection is some margin compression that might be.
Aspect.
Bear in mind that we are also working on growing our <unk> business in Brazil, where we intend to invest in expanding our manufacturing capabilities.
The category that has the higher margin protection, but that is something that will take some time. So we will be building CDP throughout the next 12 months quality, but.
I don't see if the trend is margin compression and perfection that something seasonal.
<unk>.
We expanded sales and margins expanded.
I think that the.
This is also kind of like a steady state for the margins.
Assuming that we have won 30 nisource significantly and have been able to maintain the margin for the segment.
On the corporate margin.
In the long run as you correctly mentioned HVAC for Hi, Tech probably more than Florida, So when those revenues.
Thanks, Keith a P&L that should be something that allows us to get our adjusted EBITDA margin to levels seen a level of what we have seen in the past umbrella operates at some point between 25% to 30%, but that it's going to depend on where we are.
We're able to get those revenues and profits to keep their P&L and buttons.
Water.
Long term view.
Although we believe that the need to operate once with <unk> go to market.
Thank you.
Could you clarify the dynamics that are occurring in the distribution channel and crop nutrition.
You mentioned that you have 30, new distributors that incorporated micro star.
Clarification of that are these.
Are they adopting micro star for the very first time or are they.
Do you already have a relationship with these distributors and they're just extending it to micro star.
So it's a great question Steve.
So these were 30 distributors.
We're already CDP Archrock incorporated need for some patients with Microsoft So we went to market with.
More conventional presentation, if you will or less technology, we have.
<unk> been working on uniqueness and patients are new technology, Microsoft off the main blending microwave pretty nicely. So while the quarter was <unk> 30 existing distributors incorporate new for some patients of Microsoft.
So you expanded the relationship with these distributors are I think a couple of years ago, you put out a chart of all your distributors in Argentina, which is impressive.
How much more potential is there to broadening your.
It's a micro star into other distributors that you're already having relationships with.
Hi, Steve This is Phil I think there's a tremendous potential I mean, we probably we will not expand deal at all.
Point of sale and four hour.
Portfolio, which today are in excess of 700, and Argentina, but they'll be there for these new presentations that <unk> alluded to that were sold by a very small group or subsegment of the distributors.
That are likely to be adopted by the majority of them.
It might mean that some of that.
Sure.
The bio version of micro Star that has micro organisms and incorporate it. So we are not only providing the formulation advantage, where you have one quarter of application rate probably make the niches themselves more readily available with us.
Sort of the microbial.
Sure.
Adding to the formulation on today, you can see that closer to 10% of the segment revenues unexplained by these new product launches now they are in a subtraction of a small fraction of the 700 sale sales blades that we currently have 30 that were added in the last quarter and we believe that's a while.
We should get to the majority of each participants are not beyond.
The distribution footprint that we currently have for the <unk> family of products.
Thank you for taking my questions.
Our next question comes from Ken <unk> from Brooklyn cap to market Ken. Please proceed.
Great.
And good morning.
Apologies if you covered this.
Earlier, but Cts bio is meeting I think today and tomorrow.
And echo wheat is on the agenda.
Can you talk about what we should expect that.
If they approve your application.
When we would see an announcement or.
Yeah.
And is there anything left with regard are there any other steps in the approval process between.
A vote.
This meeting and then final approval. Thank you.
So thank you Ken for your question, we have not discussed that during the call, but I think we.
Should know the outcome of the current meeting Tomorrow I believe on the leverage.
And there are two potential outcomes.
Our view one is that.
The community.
In a way of proofs that technology.
And that is it for the current devaluation or that your questions are requested by committee members not evaluated that and have not submitted your questions since our last.
Filing.
And that was done ahead of the October meeting that they did not have enough time to report on that slows that the October meeting so.
Yeah My leaders themselves, we believe not.
Not to be generating questions, but the committee may request them.
To.
Ask additional aspects in each case, we will open motor, but I'd say those are the two possible outcomes.
11th is there are more questions, we'll try to reply to them quickly. So that we can have it.
You can see that again in the December meeting and.
We are.
Hugh anxiously waiting for the worse results.
That's good.
And just to clarify if they approve.
Does that complete the process and you will be able to.
Effectively move you'll at least any material steps in the process are done and youll be able to move forward with the launch.
So I think if they approve that wouldn't be a huge milestone.
Remember, we indicated five conditions for us to launch and this is one of them.
We have also learned filings in other miner export destinations for Argentine wheat that I believe are globally, 5% level everything above the 5% level. We have that is a requirement for launch proceeds probably today Jan country, where we are consistently now if you really like it.
Five year average application that explains more than 5% of Argentine.
Wheat exports.
Yes, but it was a little light.
Nike be granted.
After the current devaluation is for it.
Flower, so that I think will free up the ability of local meals black sport it flower to the C. L.
We gained approval will come at a later stage and I think that will probably be much to in country production in Brazil.
It's something we're currently pursuing and there'll be a subsequent filings whether they are in.
The coming quarters, but I think it will be huge and seed.
Significantly improve our ability to enroll H before COVID-19 EVP puts into revenues.
Great. Thank you and my last question is as I look at the balance sheet.
Biological assets have increased substantially.
And.
One what accounts for the increase since June and secondly, how should we what should we expect.
For changes in biological assets.
Looking ahead.
I can simply get thanks for joining.
Have you Nicole.
So biological assets, mainly complaints allege depot inventories.
So the reason that perhaps going out.
Journeys basically because we are accounting for all of the <unk>.
Wholesale inventories that were.
At East.
Harvest.
Some of that in.
May June and July.
So that is the reason why do I want to go back to talk about.
Yep.
When we decide to keep all of the blame for future seed or if we decide to restart some of those varieties.
Are the two variables that affect.
Elections going forward during Monday, we will also incorporate into that lease production from this year that will be harvested in.
During December and January in Argentina, so, they're trending biological assets and up and up.
A trend.
Seasonality considering when these harvesting people per week.
The outflow.
Assets is basically when we decide to discard.
Not being moved to seed production of intercept from a dedication for the future. So that is basically the dynamics on Monday, So we see an upward trend as we build up inventories you mentioned.
Okay Super So really this is just a an inventory a separate inventory line item.
Here.
Yes, it is a strong yes.
I'll say Q4 is not converted into a final when we convert that Duane.
<unk> got roughly expect grain into a final tier.
All that is converted.
Moving to inventory guidance, but a slowing of seats explain or profit have been planted on the field you would see some biological assets.
Yeah.
Great. Thank you.
We currently have no further questions. So I'll now hand back to virtually any recast the pacing remarks.
So no nothing much more to add other than we are very happy and satisfied with the performance, where we're showing you today I think this is.
No.
Something too.
I believe that the operations team.
Status for in terms of the different.
Strategies that were implemented and we believe that.
Towards the next few quarters.
And even more importantly to what the second half of the fiscal year.
Seemingly are.
Trend will be seen in the seed <unk> integrated products segment, which is where we are still slightly flat today.
Doesn't materialize right.
<unk> Follicular CVP puts become reported.
Revenues not lowered continued deep.
Likelihood today, so we have a strategy that is moving forward to us.
Projected.
And we are very satisfied with that we remain fully available to address any of these show up questions that you may have.
Hope Alicia everyone.
Great rest of the day to day.
This concludes today's call. Thank you for joining and I Hope you have a lovely rest of your day you may now disconnect your lines.
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