• Total Revenue: $93.3 million, a 20% decrease from the previous year.
• Gross Margin: Expanded from 38% last year to almost 40% this year.
• Adjusted EBITDA: $8.5 million for the quarter.
• Total Financial Debt: $250 million at quarter end.
• Cash Position: Almost $40 million.
• Leverage Ratio: Increased to 2.9 turns.

• Warning! GuruFocus has detected 4 Warning Signs with BIOX.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bioceres Crop Solutions Corp (NASDAQ:BIOX) reported significant growth in North America and Brazil, with contributions from the Syngenta collaboration expanding 2.5 times as a percent of total gross profit.
• The company's technologies received global recognition, including the prestigious EPA Green Chemistry Award for its bio insecticidal platform.
• Regulatory approvals for HP4 soy cultivation were granted in Uruguay and Bolivia, making it the second most broadly approved soybean GMO event.
• The company is seeing positive momentum in new markets such as Mexico and from recent product launches in Uruguay.
• Gross margin expanded from 38% last year to almost 40%, indicating improved profitability despite revenue challenges.

Negative Points

• Total revenues for the quarter were $93.3 million, a 20% decrease from the previous year, primarily due to a lack of rain in Argentina.
• The Argentine market remains a significant factor in shaping the company's performance, with a substantial shift from corn to soybeans impacting sales.
• The crop nutrition segment saw a significant year-over-year decline, explaining more than half of the top-line decrease.
• The company consciously decided to forego sales with unattractive margins and cash conversion cycles, affecting crop protection sales.
• Financial debt stood at $250 million, with a leverage ratio increase to 2.9 turns, approaching the company's maximum leverage target.

Q & A Highlights

Q: Can you discuss the state of the market in Argentina and the impact of late-season rains on revenue and earnings for Q1 and expectations for Q2? A: Enrique Lecube, CFO, explained that the Argentine market experienced delayed purchasing and commercial activity, particularly in crop protection, which resumed after abundant rains in October. This could lead to a good crop season. However, for fertilizers, the impact depends on late corn planting, which will determine if sales were pushed from Q1 to Q2 or forgone due to lower corn acreage.

Q: Can you elaborate on the seasonality expectations for the Syngenta agreement now that it has shifted to a product-based agreement? A: Enrique Lecube, CFO, noted that Brazil is a significant market for Syngenta in Q1 and Q2. The agreement involves profit sharing when the product is sold in the end market, with a more even distribution of profit sharing from quarter to quarter. Federico Trucco, CEO, added that the agreement is now more evenly distributed across quarters, with significant contributions from Brazil in Q1 and Q2.

Q: What is the current sentiment among farmers in Argentina regarding spending cycles as we enter Q2? A: Enrique Lecube, CFO, stated that farmer sentiment is shifting from cautious to optimistic due to recent rains. There is also an expectation that export tax duties might be lifted, which would positively impact profitability and spending.

Q: How is the transition to a more trait-like model for HP4 soy progressing, and what feedback have you received? A: Federico Trucco, CEO, mentioned that the transition is a work in progress, with internal efforts and increased industry engagement to explore conventional sales channels. More specific information will be provided in the near future.

Q: What are your expectations for cash flow improvement, particularly regarding working capital management? A: Enrique Lecube, CFO, emphasized a focus on structural changes to improve cash flow, with efforts on reducing days sales outstanding (DSO) and managing inventories. The goal is to shift from negative to positive cash generation, with a permanent change in approach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.