Rosario, Argentina
November 9, 2022

• Revenues increased 71% compared to 1Q22 pro forma numbers
• 1Q23 Adjusted EBITDA nearly doubled YoY, reaching $73 million on an LTM basis after excluding HB4 pre-launch costs
• Announced agreement with Syngenta Seedcare supporting inoculant growth internationally

Bioceres Crop Solutions Corp. (Bioceres) (NASDAQ: BIOX), a fully integrated provider of crop productivity solutions designed to enable the transition of agriculture towards carbon neutrality, announced financial results for the fiscal first quarter ended September 30, 2022. Financial results are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards. All comparisons in this announcement are year-over-year (YoY), unless otherwise noted.

FINANCIAL & BUSINESS HIGHLIGHTS

• Total revenues in 1Q23 were $127.1 million, a 71% increase with respect to the comparable pro forma numbers for the first quarter of last year, which are inclusive of historical revenues from Pro Farm. Top line growth was driven by continued outstanding performance in micro-beaded fertilizers, as well as inoculants, adjuvants and third-party products.
• Gross profit for the quarter increased 52% year over year compared to 1Q22 pro forma numbers, reaching $51.4 million, with all three product segments contributing to gross profit growth.
• Adjusted EBITDA for the quarter was $24.5 million, nearly doubling last year’s quarterly result, reflecting strong top line and gross profit growth.
• The company announced an agreement with Syngenta Seedcare for the development and commercialization of certain biological seed treatments. The partnership will drive global expansion, sustain double digit growth in the category, and provide a baseline of minimum profit sharing over the life of the agreement. Additionally, an upfront payment of $50 million was received in early October 2022.
• HB4 Wheat harvest and Soy planting are beginning in Latin America, a season characterized by a very severe drought. HB4 Soy hectares more than double year ago seed multiplication level, for early season plantings. Two soybean varieties are being scaled in Brazil for an upcoming launch in this territory.
• Merger with Pro Farm triggers adoption of the U.S. dollar as the functional currency in main operational subsidiaries, starting in 1Q23. The Pro Farm merger and subsequent business integration drove a functional currency switch from local currency to the U.S. dollar in the main Argentine subsidiaries, whose operations are carried out almost exclusively in U.S. dollars. The shift eliminates the need for IAS 29 inflationary adjustments going forward.
• Completion of previously announced $5 million share buy-back program. Program to be extended through the approval of an additional $5 million.

MANAGEMENT REVIEW

Mr. Federico Trucco, Bioceres´ Chief Executive Officer, commented: “We are delighted to report on a fantastic beginning to FY23, with revenues growing 71% for the quarter and adjusted EBITDA almost doubling for the period. This achievement is even more remarkable after six consecutive quarters of revenue expansion. Severe drought conditions in Argentina may transiently slow down sales in the current quarter for our core portfolio, an impact which we expect to be partially moderated with Pro Farm sales in North America and Europe. At the same time, the drought is creating a unique opportunity to showcase HB4 technology, with the country-wide wheat crop decline expected to be at the 40% level compared to last year’s harvest. We are also making good progress with HB4 Soy breeding and multiplication efforts, with early season plantings well under way and, with two varieties being scaled in Brazil for an upcoming launch with multipliers in this important geography.”

Trucco continued, “As exciting and promising as these data points may be, they are not the highlights of the quarter. In 1Q23 we have closed two transactions that give us an unmatched platform for future growth in biological ag inputs, positioning our company as a clear leader in sustainable solutions for the agriculture of the future. With the integration of Pro Farm (formerly Marrone Bio Innovations), we now have an existing portfolio - or pipeline - of products designed to replace or significantly reduce the use of synthetic chemicals in most functions for which they are required in high productivity agriculture. Where we can most immediately achieve this substitution is in the seed care segment of the industry, a $4-5 billion market where biologicals have already achieved a 20% penetration. And we are starting this journey with the recent announcement of a long-term collaboration agreement with one of the segment leaders, Syngenta.”

“We have been collaborating with Syngenta Seedcare for 20 years in Argentina and have jointly achieved and held the #1 position for our inoculants, bio fungicides and Syngenta molecules for a long time. This new collaboration creates the right structure to expand this success internationally, at an accelerated pace. We expect the international revenues generated by our inoculants alone to at least double in the next two years. While Syngenta will now cover working capital needs as well as sales and marketing activities, we have secured minimum profits that average $23 million per year over the life of the agreement, not including an upfront fee of $50 million in exchange for the different rights granted for the collaboration. On top of these annual minimum profits, we will receive between 50% and 30% of the incremental profits generated by the collaboration, depending on the geography and the year. The collaboration is not just designed to maximize our commercial reach, but it is also focused on accelerating our R&D efforts, with Syngenta covering 70% of the R&D investments required for early pipeline products and new products that we may opt to develop jointly within this framework." Trucco finished by adding, “we want to thank Syngenta Seedcare leadership for their trust and hard work to get to this point and reassure them of our full commitment to the success of this joint endeavor.”

Mr. Enrique Lopez Lecube, Bioceres´ Chief Financial Officer, noted, “This was an extremely important quarter from a strategy standpoint. We started the fiscal year on a strong note with the completion of the merger with Pro Farm and made considerable progress on our integration and synergy efforts throughout the quarter. Simultaneously we executed an ironclad agreement with Syngenta Seedcare that solidifies a profitable long-term growth path for our inoculants. These two milestones put us in a unique position to structurally benefit from the secular growth trend and high profitability profile that biologicals offer. Our first quarter financial performance continued to build on past execution, adding a 71% top line expansion to the already outstanding 62% growth reported for our last full fiscal year. Importantly, this growth transcended revenues and brought a record-high $24.5 million Adjusted EBITDA for the quarter, even as we account for HB4 inventory ramp-up costs and negative EBITDA from Pro Farm. Our balance sheet and cash position remain strong, particularly after the issuance of the $55 million convertible notes in July, followed by the $50 million upfront payment received from Syngenta in early October”. Lopez Lecube added, “Despite severe weather conditions currently affecting farmers in an important end market like Argentina, our strong first quarter results and the revenue diversification we gained from Pro Farm, make us feel confident about the growth outlook for the full fiscal year. We will remain focused on executing our HB4 strategy and making Pro Farm assets EBITDA contributors before year end”.

KEY FINANCIAL METRICS

(In millions of U.S. dollars, unless where otherwise stated)

Table 1: 1Q23 Key Financial Metrics

1. 1Q22 pro forma financials include Pro Farm historical numbers and Bioceres comparable metrics.

2. Only excludes HB4 ramp-up cost. The remaining HB4 operating expenses are included in the Adjusted EBITDA metric.

1Q23 – Summary: 1Q23 was an outstanding quarter with revenues increasing 71% to $127.1 million when compared to 1Q22 pro forma revenues that include historical sales from Pro Farm. Top-line growth was driven by continued strong performance in micro-beaded fertilizers, as well as adjuvants, third-party products, and seed treatment packs. Gross profit increased 52%, with an overall growth margin of 40.5%. Adjusted EBITDA nearly doubled at $24.5 million. This number includes the effect of HB4 ramp-up costs and negative EBITDA from Pro Farm.

For a full version of Bioceres first quarter 2023 earnings release, click here .

Website: https://investors.biocerescrops.com/home/default.aspx

Published: November 9, 2022