Q1 2025 Bioceres Crop Solutions Corp Earnings Call
Speaker #1: Good morning, all, and thank you for joining us on today's Bioceres Crop Solutions fiscal first quarter 2026 financial and operational results. My name is Drew, and I'll be the operator on the call today.
Speaker #1: After the prepared remarks, we will have a Q&A session. If you would like to register for a question today, please press start, followed by one on your telephone keypad, and to withdraw your question, it's star followed by two.
Speaker #1: With that, it's my pleasure to hand over to Paola Savanti, Head of Investor Relations, to begin; please go ahead when you're ready.
Speaker #2: Thank you. Good morning, and welcome, everybody, to Bioceres Crop Solutions fiscal first quarter 2026 earnings conference call. Our prepared remarks today will be led by our Chief Executive Officer, Federico Trucco.
Speaker #2: Myself as Head of Investor Relations. Both of us, as well as, will be available for the Q&A session afterwards. We're also joined in today's call by our General Counsel, Jose Roque.
Speaker #2: During this call, we will make forward-looking expectations and assumptions that are subject to statements. These statements are based on current various risks and uncertainties.
Speaker #2: statements section of the earnings release and presentation, as well I refer you to the forward-looking as the recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances.
Speaker #2: In today's presentation, certain non-GAAP financial we will be making references to non-GAAP measures can be found in our earnings press release. This conference call is being webcast, and the link is available at our investor relations website.
Speaker #2: It is now my pleasure to turn the call over to Federico.
Speaker #3: Thanks, Paola, and good morning to everyone. Thank you for joining us today. Please turn to slide number three for an overview of the highlights of our first fiscal quarter.
Speaker #3: Despite the drop in revenues in the quarter, compared numbers, gross profit remained almost equal to the year-ago at 36 million dollars, with 650 basic This shows a gross margin expansion of how the seed business model transition, as well as a lower emphasis on opportunistic third-party product sales, are resulting in a similar aggregated gross profit at a much lower working capital expense.
Speaker #3: In fact, we have seen a despite the first quarter's sequential improvement of working capital discuss in a minute. On the cost front, we continue to see the results of our cost reduction initiatives as well as business model transition.
Speaker #3: We're both variable and fixed SG&A, declining significantly, resulting in meaningful improvements in operating profits and adjusted EBITDA. Please turn to the next slide. This quarter reflects clear progress on year.
Speaker #3: Improve the quality of the priorities we set for the margins, and operate with discipline. While we continue to pursue our core purpose, which is to our revenues, protect enable a better, still highly productive agriculture.
Speaker #3: This slide shows the three main KPIs that will track throughout the year. In to operating above the 40% gross margin level, getting closer to four months of our last call, we committed working capital in terms of annual sales, and targeting profitability above 20% of adjusted EBITDA over sales, for which we needed not only to expand margins, as we are doing, but also to reduce costs, targeting a 10 to 12 million dollar reduction in annual SG&A.
Speaker #3: As you can see in the numbers here, we have operated well above the gross margin limit we established for ourselves. Doubled our percent adjusted EBITDA compared to that of fiscal year '25, and already got to the same level, 17%, that we achieved in fiscal remaining close to our working capital '24.
Speaker #3: a seasonally demanding target of four months in quarter. One important highlight is our SG&A We have done this while improvement. Both variable and fixed SG&A have improved significantly, achieving 50% of our top-of-the-range expected annualized savings in just one quarter.
Speaker #3: I will now pass on the call to Paola for a more in-depth analysis of these and other aspects of our financial performance.
Speaker #2: Thank you, Federico. Let's look at the financial results for the quarter. Please turn to slide five, starting with revenues. Total revenues for the quarter were $77.5 million, a 17% decline versus the same period last year.
Speaker #2: The decline reflects, to a large degree, the strategy communicated in previous quarters toward a more scalable and capital-efficient model, and deprioritizing transitioning our seed business to capital-intensive sales.
Speaker #2: Results were lower margin working, also shaped by sales timing effects in some Latin American countries, particularly Uruguay, and an uneven recovery in Argentina.
Speaker #2: Looking at performance by segment, most of the reduction came from crop protection products. Crop protection and seed integration showed a decline of $39.9 million, a 16% decrease compared to the same quarter last year.
Speaker #2: This decline is explained by still sluggish demand in Argentina, where, while there are generally signs of normalization compared to an unusually weak prior year, tight credit conditions and uncertainty ahead of the midterm elections that were held in late October implied that normalization was slower to materialize.
Speaker #2: Despite favorable weather and planting conditions, outside Argentina, lower sales of bioprotection products in the US and adjuvants in Brazil also weighed in on segment results, reflecting timing of sales that is expected to even out over the coming quarters.
Speaker #2: In seed and integrated products, revenues were 12.6 million dollars, a 37% decline compared to last year. This performance is unexpected outcome from the unwinding of the HB4 downstream program.
Speaker #2: We expect this revenue decline in seeds to continue for at least two more quarters, as we compare against quarters where seeds inventory was being sold off.
Speaker #2: While this transition is temporarily lower revenue recognition, it improves working capital and supports a more profitable business Finally, in crop nutrition, revenues were 25.1 million model going forward.
Speaker #2: year. Within this segment, higher stimulant biostimulant sales in Argentina and Brazil were offset by weaker fertilizer dynamics. In contrast to the past year, demand for microbeaded fertilizers improved in Argentina, particularly in terms of volume, supported by strong corn planting intentions.
Speaker #2: But there were delayed purchases in Paraguay and Uruguay that offset these gains. And resulted in a modest 2% year-over-year decline for the segment. Let's move on to the next slide to look at profitability.
Speaker #2: Gross profit for the quarter was 36.2 million dollars, a decrease of 3% year-over-year, much smaller than the decline in revenues, reflecting improved product mix and margin expansion.
Speaker #2: As Federico mentioned, gross margin expanded significantly this quarter at 47% compared to 40% in the same quarter last year. Looking at this by segment, in crop protection, gross profit was $17.6 million, a 5% decrease compared to last year, with gross margin improving from 39% to 44%.
Speaker #2: This reflects a more favorable product mix within the portfolio, where there were stronger contributions from adjuvants and bioprotection products as well as efficiency gains that products such as adjuvants.
Speaker #2: In seed and integrated products, gross profit was 7.5 reduced unit costs in million, slightly higher than last year, despite the lower revenue. Segment margin expanded substantially from 36% to 60%, a very low margin and higher margin seed treatment packs seed sales were nearly phased out, represented a greater share of total segment sales.
Speaker #2: Margins on these packs also expanded during the quarter, further lifting profitability. Finally, gross profit in crop nutrition was 11.1 million dollars, a 6% decline with respect to last year, with gross margin decreasing from 46% to 44%.
Speaker #2: compression resulted mainly from competitive Margin pricing in fertilizers in Argentina, where sales volumes increased but market prices declined. In addition, revenues under the Syngenta agreement included a higher proportion from the supply agreement relative to the profit-sharing agreement.
Speaker #2: Increased product supply to Syngenta typically precedes revenue recognition under the profit-sharing lumpiness that evens out on an agreement, creating some quarterly annual basis. Please turn to the next slide to look at EBITDA.
Speaker #2: Adjusted EBITDA for the quarter was 13.6 million dollars, a 61% increase compared to 8.5 million in the same period last year, reflecting a material improvement in operating performance.
Speaker #2: The increase was largely driven by the 5.9 million reduction in operating costs, described earlier by Federico. Joint venture results also contributed positively, adding 0.9 million dollars as the fertilizer business began to recover from prior quarter's weakness.
Speaker #2: Gross margin expansion further supported the results, with a contribution from gross profit only 1.1 million lower despite a much larger decline in revenues. Finally, let's turn to the next slide to review our brief update on the debt situation.
Speaker #2: For that, I will hand the call back to Federico. Thanks, Paula. As of September 30th, 2026, total financial debt stood at 242.5 million, down from 260.2 million at the end of the previous quarter.
Speaker #2: Mainly due to the repayment of working capital loans in Argentina. As we have disclosed in our 6K filings of October 2nd and yesterday, we are undergoing a dispute withholders of our secure convertible and non-convertible notes.
Speaker #2: As a result, we've decided to show the known current portion of that debt as current, as well as include the prepayment fees that would be owed under an acceleration event.
Speaker #2: Consequently, current debt totals 188.7 million, of which 103.6 million are classified as accelerated debt. Including 7.4 million of additional costs related to the acceleration process.
Speaker #2: The company disputes the allegation made by our noteholders and intends to vigorously defend its position. Importantly, all principal and interest payments remain current. Cash, cash equivalents, and short-term investments total 16.6 225.9 million, financial debt of million, resulting in net essentially flat versus the prior quarter.
Speaker #2: The net debt to adjusted EBITDA ratio improved to 6.8x. We continue to actively manage liquidity and debt maturities, maintaining constructive dialogue with lenders and prioritizing financial flexibility and disciplined capital allocation.
Speaker #2: To wrap up, we are operating in a complex environment, but we continue to execute with discipline and focus on the fundamentals we control. Profitability, liquidity, and capital efficiency.
Speaker #2: We believe these actions are building a stronger and more resilient company over time. With that, let's open for
Speaker #2: Q&A.
Speaker #3: We can
Speaker #3: now begin today's Q&A session. If you please press start, followed by one on your telephone keypad, and if you would like to withdraw your question, then it is start, followed by two.
Speaker #3: Our first question comes from the line of Austin Moller from Canaccord. Your line is now open; please go ahead with your question.
Speaker #4: Hi, good morning Federico and Paula. So just my first question here, there's been some discussion of higher BFIM ports to the US from Argentina.
Speaker #4: Now that the election's over, is there any potential for either row crops or inputs like fertilizers and pesticides to be imported from Argentina into the U.S., which would either create demand for your farmers or...
Speaker #4: you? Hi,
Speaker #2: Austin. Thanks for joining the call. We've seen sort of the news as well,
Speaker #2: and beef production and milk booming currently. So production in Argentina are profitability is probably at an all-time high. I think the news about US for Argentina to the US are obviously further fortifying that process.
Speaker #2: In terms of ag inputs, I think also that Argentina being classified end, if you will, on the current trade situation is a benefit to us when we're trying to serve that market from Argentine manufactured ag input on the low tariff products, remember that we also hold manufacturing capacity in the US.
Speaker #2: So we are manufacturing most of our bioprotection US. So that has solutions in-country in the addressing that particular also been beneficial for us in
Speaker #4: Okay. And the
Speaker #4: previous quarter, we had market. discussed that the company expected some quartet of sales of biopesticides into Europe, would likely fall into Q1. How is that playing out with relative to what you expected?
Speaker #2: So we currently don't have bioprotection products registered in Europe. What we do have is the biostimulant package, where Corteva is our main customer. In Europe, and we've basically historically had a very significant contribution from Europe in the last quarter of each fiscal year, which we didn't we have only see last quarter.
Speaker #2: achieved some marginal sales of biostimulants in Europe in the current quarter. I think most of And the biostimulant improvement has been in Argentina and Latin America, as Paula alluded to in the call.
Speaker #2: And the Corteva Europe sales are due to come later in the
Speaker #2: year.
Speaker #4: Great. Thanks for the
Speaker #4: details. I'll pass back
Speaker #4: there. As a reminder, if you would like to
Speaker #3: ask a question on today's call, please press start, followed by one on your telephone keypad, and to withdraw your question, start, followed by two.
Speaker #3: It looks like we have no further questions registered at this time. So with that, I'll hand back over to Federico Trucco for some closing
Speaker #3: comments. Thank you.
Speaker #2: And thank you, everyone, for joining us today. I think this was a quick earnings call. We remained available for follow-ups if required. And I hope you all have a great rest of the week.
Speaker #2: Thank
Speaker #2: you.
Speaker #3: Thank you all for joining.