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 second quarter ended December 31, 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
Historical drought during 2Q23 in Argentina slashed wheat output by 50% countrywide and delayed soybean and corn planting. Planting progress for soybeans lagged by 20-to-30 percentage points as compared with the historical average for the entire optimal planting window.
Total revenues in 2Q23 were $94.4 million, a 7% decrease compared with the pro forma revenues for the second quarter of last year, which include historical revenues from Pro Farm. Sales growth in North America partially offset the decline in Argentina.
Adjusted EBITDA for the quarter was $10.3 million and was primarily affected by a decline in gross profit contribution from sales in Argentina.
Under severe drought conditions HB4 Wheat showed higher yields than conventional varieties across all environments, with an average 43% yield improvement in targeted environments. Seed inventories and product performance are on track to meet FY23 expectations.
HB4 Soy is on track despite unusually difficult planting conditions in Argentina. Half of the current seed multiplication area has been planted with new generation varieties. HB4 Soy program was launched with growers in Brazil.
Trigall Genetics (a Bioceres joint venture) closed the 80% acquisition of wheat breeding assets in Australia.
Mr. Federico Trucco, Bioceres´ Chief Executive Officer, commented: ″As we anticipated during our prior earnings call, our growth momentum has been transiently interrupted by unusually severe drought conditions in Argentina, which extended throughout the entire planting window for summer crops. Although we are flat when compared with last year’s revenue for the quarter, we are down by 7% year-over-year for this three-month period on a pro forma basis after including Pro Farm’s operations. This circumstantial decline interrupts a run of seven consecutive quarters of top-line growth and profitability expansion, which we expect to resume in the second half of the fiscal year as weather conditions have turned more favorable in our key commercial regions.″
″On a less circumstantial and more permanent front, the severe drought conditions in Argentina have allowed us to put HB4 technology to the test, like never before. The performance of HB4 wheat has been outstanding on all fronts. In environments yielding less than 2 tons per hectare, HB4 wheat has outperformed commercial materials by an average yield improvement of 43%, winning in seven out of every 10 locations and, averaging a win rate of eight out of 10 when aggregating the last three seasons. When confounding effects from background genetics are neutralized ‒ as is the case for comparisons among isogenic varieties (i.e. varieties that are nearly genetically identical except for the presence of the HB4 gene) ‒ HB4 win rates increase to above 80%, across all environments, not just those with yields below 2 tons per hectare, ratifying the broad hectare opportunity resulting from the technology.″
″From an HB4 wheat inventories perspective, we can cover up to one-third of next season’s HB4 plantings with second generation materials, allowing us to replace first generation varieties almost fully by FY24, when we expect HB4 wheat to deliver $15-to-$20 million in incremental EBITDA. As a reminder, second-generation materials show a double-digit genetic gain when compared with first-generation materials in high-yielding environments, outperforming top commercial varieties even when yields average more than 4 tons per hectare.″
Mr. Enrique Lopez Lecube, Bioceres´ Chief Financial Officer, noted, ″While our fiscal second quarter results were adversely affected by the severe drought in Argentina, we also saw the benefit of strategic actions that drove our positive performance for the first half of 2023 and will benefit our results going forward. Our priorities to diversify our product portfolio, expand our geographic presence and maintain a strong alliance with our grower customers – all with an eye on managing costs – will allow us to continue the momentum we saw in the first half of the year, and drive further Adjusted EBITDA improvement. Moving forward, we believe the extreme weather conditions we are seeing around the world highlight the increasing need for our products. While weather may temporarily affect our quarterly results from time to time, our long-term growth trajectory remains robust.″
KEY FINANCIAL METRICS
(In millions of U.S. dollars, unless where otherwise stated)
Table 1: 2Q23 & 1H23 Key Financial Metrics
Revenue by Segment
Seed and Integrated Products
1. 2Q22 and 1H22 pro forma financials include Pro Farm historical numbers.
Summary: Drought in Argentina drove the decline in 2Q23 Crop Protection and Crop Nutrition revenues, partially offset by moderate growth in the Seed and Integrated Products segment, which included first-time HB4 Soy sales. Lower sales in Argentina were partially offset by growth in other Latin American geographies. Additionally, Pro Farm biological products delivered higher sales in North America in the quarter, diversifying the product portfolio internationally and in new product markets. Some 2Q23 sales were realized in 1Q23 as commercial teams in Argentina locked-in early sales to distributors and growers in anticipation of challenging weather conditions. As a result, while revenues for 2Q23 decreased 7%, sales for 1H23 increased 26%. Overall gross profit declined 27% in the quarter, a function of product mix and lower pricing for key products in Argentina, where the commercial strategy focused on increasing farmer proximity and preserving market share. Lower sales and gross margins resulted in a lower Adjusted EBITDA of $10.3 million. For the first half of FY23, gross profit was up 5% and Adjusted EBITDA, at $34.9 million, was 13% higher year-over-year on a pro forma basis.
For a full version of Bioceres fiscal second quarter 2023 earnings release, click here.