Bioceres Crop Solutions (US:BIOX)2023-02-09 20:09Financial Data and Key Metrics Changes - The company reported flat revenue compared to the previous year for the quarter, but a 7% year-over-year decline on a pro forma basis after including Pro Farm's operations [4][9] - Adjusted EBITDA for the first half of fiscal year 2023 reached almost $35 million, representing a 13% improvement compared to the first half of the previous fiscal year on a pro forma basis [81] - The company experienced a significant increase in debt due to the merger with Pro Farm, with a net financial debt of $170 million as of December 31, 2022 [107] Business Line Data and Key Metrics Changes - The Seed & Integrated Products segment saw a 7% growth, supported by the first HB4 soybean revenues despite overall revenue decline [10] - Crop Nutrition experienced the largest sales decline at 16%, primarily due to lower microbeaded fertilizers sales in Argentina [79] - Crop Protection revenues declined by 5%, with decreased demand for fungicides, insecticides, and adjuvants in Argentina, although growth continued in other regions of Latin America [104] Market Data and Key Metrics Changes - The severe drought conditions in Argentina led to a significant decline in wheat output by 50% compared to the prior year, with summer crop planting displaced by 20 to 30% outside the optimal planting window [100] - The company anticipates that improved rainfall could lead to increased winter crop acreage, helping to recover profitability losses from soybeans and corn [11] Company Strategy and Development Direction - The company aims to expand HB4 technology beyond Latin America, with plans to introduce HB4 wheat in Australia [18][85] - The merger with Pro Farm is expected to deliver substantial revenue growth and is on track to be adjusted EBITDA neutral for the full year [81][103] - The company is focusing on geographic diversification to mitigate weather-related risks, as evidenced by the HB4 soy program initiated in Brazil [104] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the drought but expressed confidence in the underlying fundamentals of the business and the potential for recovery in the second half of the fiscal year [98][108] - The company expects to see a favorable scenario for the rollout of HB4 wheat, which could help recover some of the sales lost due to drought [105] Other Important Information - The company completed a $26.6 million public offering of corporate bonds in the Argentine market to support local business operations [14] - The company has a strong cash position, with approximately $87 million available, which is well above short-term debt obligations [82] Q&A Session Summary Question: Clarification on revenue headwinds due to weather - Management noted that $20 million to $25 million in revenue was lost due to weather, with half of it being a permanent loss related to fertilizers and seed treatment packs [20][46] Question: Impact of drought on farmer spending - Management explained that farmers reduced spending on technology due to drought complications, affecting sales expectations [22] Question: Pro Farm impact on top line - Management indicated that Pro Farm's integration is progressing well, with cost synergies contributing positively to EBITDA [53] Question: Future wheat prices and planting decisions - Management stated that wheat prices are expected to remain high due to global shortages, and planting decisions will depend on weather conditions [31] Question: Updates on Syngenta agreement - Management confirmed that the Syngenta agreement is progressing well, with expectations for increased revenues from biological seed treatments [120]