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, has reported financial results for the third quarter 2022, ended March 31, 2022. Financial results are expressed in US dollars and are presented in accordance with International Financial Reporting Standards. All comparisons in this announcement are year-over-year (“YoY”), unless otherwise noted.
FISCAL THIRD QUARTER & SUBSEQUENT FINANCIAL & BUSINESS HIGHLIGHTS
Comparable Revenues up 72% to $60.1 million and Comparable Gross Margin at 42.3%, leading to $25.4 million in Comparable Gross Profit. Growth in all product categories of the Crop Protection segment combined with continued momentum in micro-beaded fertilizers sales lead to record-high fiscal third quarter sales.
LTM Adjusted EBITDA for the Baseline Business, which excludes HB4 pre-launch costs, reached $61.3 million, a 30% increase compared to the previous fiscal year. LTM Adjusted EBITDA relatively flat on a sequential basis as a result of IAS29 accounting adjustments to third quarter reported gross profit and higher third quarter SG&A due to anticipated expenses and unfavorable inflation and FX effects.
Announcement of the merger with Marrone Bio Innovations, Inc. to create a global leader in the development and commercialization of sustainable agricultural solutions. F-4 was filed with the U.S. Securities and Exchange Commission (SEC) on May 9, 2022. The transaction is expected to close in the first quarter of fiscal 2023, after MBI’s Shareholders’ Meeting.
FISCAL THIRD QUARTER & SUBSEQUENT HB4 HIGHLIGHTS
China´s Ministry of Agriculture granted food & feed approval for HB4 Soy this past April. The approval was a necessary step for the unrestricted commercial launch of HB4 Soy in Argentina, which had been conditional on Chinese food & feed approval. Chinese approval also enables commercial launch by third-party licensees in multiple geographies. HB4 Soy is now cleared for growth and commercialization in the United States, Canada, Brazil, Argentina and Paraguay, together representing roughly 85% of the global soybean trade.
HB4 Soy EBITDA target for fiscal year 2025 at $20-25 million. Total addressable market estimated at an aggregate of 35 million hectares for the top three soybean markets, Argentina, Brazil and the United States. Estimations based on portfolio evolution, seed multiplication processes and proprietary and non-proprietary channels sales plans.
HB4 Soy was planted in Argentina in approximately 23,000 hectares in the second quarter of fiscal 2022. Harvesting has already begun and is currently about 52% concluded.
On May 6, 2022, the Food Standards Australia New Zealand (FSANZ), agency in charge of providing the safety assessment in Australia’s and New Zealand’s regulatory processes, notified the HB4 Wheat Approval Report considering HB4 Wheat to be safe for food and feed. The final approval from the Food Minister’s Meeting (FMM) is expected to be received in 4Q22.
Trigall Genetics and S&W Seed Company entered into discussions to create a new entity, Trigall Australia, to develop wheat varieties for all Australian regions and uses. Trigall Australia would acquire all of the breeding assets of S&W Seed Australia. The newly formed entity would be expected to be the platform for Bioceres Crop Solutions and Florimond Desprez, co-owners of Trigall Genetics, to develop their activities in the region. With a 13 million hectares planted and 27 million tons in exports in the past year, Australia is a priority development geography for Trigall Genetics.
Colombia’s regulatory authority granted HB4 Wheat food & feed approval this past February 2022.
HB4 Wheat on track and expected to generate revenues of approximately $10-12 million in the upcoming planting season, revenue recognition subject to the granting of plant variety protection registrations required for invoicing.
Collaboration agreement reached with African Agricultural Technology Foundation (AATF), to develop drought tolerance technology in wheat in Sub-Saharan Africa. The combined efforts will be focus on introgressing the HB4 trait into locally adapted wheat varieties for drought-prone environments in the region.
Mr. Federico Trucco, Bioceres´ Chief Executive Officer, commented: “Our third fiscal quarter has been historically our weakest and less eventful quarter for various reasons, most importantly because it overlaps with the Latin American summer, not an important planting period for any one crop. The third quarter of fiscal year 2022, which we are currently reporting, deviates from this historical rule. And this is not only because of the great momentum we continue to observe in our sales, with revenues increasing 72% on a comparable basis, but also and significantly due to the business development and regulatory milestones that were achieved during the period and subsequently thereafter.”
Trucco added, “As we communicated in March, we are pursuing a transformational merger with Marrone Bio Innovations (MBI) to become an undisputable leader in the ag biologicals’ space, and just recently in April we have received the long-awaited regulatory green light from China which allows us to move HB4 Soy into its commercialization phase. With regards to the MBI merger, we were able to file F-4 documents with the SEC this last Monday, and we remain on track for a first quarter FY23 closing. In terms of HB4 Soy, we are today providing guidance for FY25, when we expect HB4 Soy to contribute between $20 million and $25 million of incremental EBITDA.”
“Outside of these important milestones, we are taking advantage of the renewed global interest in wheat to advance commercial agreements for HB4 Wheat within Latin America and expand outside of the region. Our wheat subsidiary, Trigall Genetics, has reached a preliminary understanding with S&W Seed of Australia to acquire all of its wheat breeding program and assets. This agreement is reached at the time when a positive recommendation is obtained from regulators in Australia regarding the use of HB4 wheat for food and feed. We have also reached a collaboration agreement with the African Agricultural Technology Foundation to start the path to bring HB4 Wheat into Sub-Saharan Africa. All these opportunities are now available due to investment decisions we made many years ago, which position us as a technology leader for this critical crop,” Trucco concluded.
Mr. Enrique Lopez Lecube, Bioceres´ Chief Financial Officer, added, “Following a solid performance in the first half of our fiscal 2022, this third quarter brought record-high sales. Comparable revenues for the quarter reached $60.1 million and YTD comparable revenues have accumulated $215.2 million, both representing a 72% increase versus the year-ago quarter and YTD metrics. LTM Adjusted EBITDA for our baseline business stood at $61.3 million despite some macro headwinds affecting costs in our Argentine operations and unusually high logistics costs as we decided to anticipate shipment of high-margin products to end markets as a precautionary measure to the constraints in global supply chains.”
“Subsequent to the quarter´s closing we announced the conversion of 75% of the outstanding amount of the convertible note issued in 2019, reducing our short-term debt by roughly $37 million as we prepare for two major events, the closing of the merger agreement with MBI and the commercial launch of HB4. Following the recent approval in China, it is reassuring to have set targets for HB4 Wheat and Soy that would imply an additional contribution of $35 million to $45 million of EBITDA in the next two to three years to a healthy and growing baseline business”, Lopez Lecube concluded.
Key Operational Metrics (In millions of US dollars, unless where otherwise stated)
Table 1: Key Financial Metrics
Revenue by Segment
Seed and Integrated Products
HB4 pre-launch costs
Baseline Business Adjusted EBITDA
1. Comparable excludes the impact of IAS29 as discussed in more detail on page 15.
For a full version of Bioceres Fiscal Third Quarter 2022 Earnings Release, click here.
“2022 Seed Treatment Special” magazine will come out this June. For Feature sponsoring or advertising, please contact Christina at email@example.com.
Read 2021 editon of "Seed Treatment Special"