Bioceres Crop Solutions Corp. — Form 6-K Summary
Business context and reporting period
Bioceres filed this Form 6-K on May 12, 2022, reporting unaudited IFRS financial and operating results for the fiscal third quarter and nine months ended March 31, 2022. The company provides crop productivity technologies, including crop protection, seeds and integrated products, crop nutrition, and the HB4 wheat and soybean programs.
Key financial metrics
| Metric | 3Q22 | Prior comparable period | Change |
|---|---|---|---|
| Comparable revenue | $60.1 million | $35.0 million | Up 72% |
| Reported revenue | $69.5 million | $36.2 million | Up 92% |
| Comparable gross profit | $25.4 million | $16.0 million | Up 59% |
| Comparable gross margin | 42.3% | 45.6% | Down 339 basis points |
| Reported net loss | $7.0 million | $0.6 million | Loss increased |
| Adjusted EBITDA | $4.8 million | $6.9 million | Down 30% |
| Baseline Business Adjusted EBITDA | $7.1 million | $7.4 million | Down 4% |
| LTM Baseline Business Adjusted EBITDA | $61.3 million | $47.1 million | Up 30% |
Crop Protection comparable revenue increased 118% to $35.8 million, Crop Nutrition increased 38% to $20.8 million, and Seed and Integrated Products was flat at $3.5 million. The lower consolidated comparable margin primarily reflected a less profitable product mix, particularly increased Crop Protection sales.
Reported third-quarter operating profit was $2.1 million, compared with $4.8 million in the prior-year quarter. Net finance result was a loss of $3.5 million, versus a loss of $2.9 million. Nine-month reported revenue was $229.1 million, reported net income was $0.6 million, and nine-month operating profit was $29.9 million.
Cash flow information is not provided in the filing text. Cash and cash equivalents were $39.0 million at March 31, 2022, and cash plus other short-term investments totaled $41.3 million. Total financial debt was $205.0 million, net financial debt was $163.7 million, and reported net debt to LTM Adjusted EBITDA was 3.06x.
Material changes versus the prior comparable period
- Revenue growth was led by Crop Protection and Crop Nutrition, supported by strong adjuvant and micro-beaded fertilizer demand, market shortages, and advance purchases.
- Comparable gross margin declined 339 basis points because of product mix, while reported results were also affected by IAS 29 inflation accounting in Argentina.
- SG&A increased to $18.0 million from $10.2 million. Drivers included higher HB4 pre-launch costs, Argentine inflation and foreign-exchange effects, sales-related taxes, and $1.6 million of unusual incremental freight and logistics costs.
- Third-quarter HB4 pre-launch costs increased to $2.3 million from $0.5 million, including inventory ramp-up and data acquisition costs.
- Interest expense and financial commissions increased to $4.0 million from $2.3 million, reflecting higher debt.
- Following the quarter end, holders converted 75% of the outstanding 2019 convertible notes, representing approximately $37.6 million of principal and 4.6 million shares. Pro forma current debt decreased to $76.4 million and net debt to LTM Adjusted EBITDA decreased to 2.38x.
Guidance, outlook, risks and unusual items
- China granted food and feed approval for HB4 Soy in April 2022, enabling unrestricted commercial launch in Argentina and commercial activity by third-party licensees in multiple geographies.
- Management targets $20 million to $25 million of incremental HB4 Soy EBITDA in fiscal 2025. The filing estimates a combined additional EBITDA contribution of $35 million to $45 million from HB4 Soy and HB4 Wheat over the next two to three years.
- HB4 Soy was planted on approximately 23,000 hectares in Argentina, with harvesting approximately 52% complete at the time of the filing.
- HB4 Wheat received regulatory approvals in Colombia and a positive food-and-feed safety assessment in Australia and New Zealand. Final Australian and New Zealand approval was expected in the fourth quarter of fiscal 2022. Management expected approximately $10 million to $12 million of HB4 Wheat revenue in the upcoming planting season, subject to plant variety protection registrations.
- Trigall Genetics reached a preliminary understanding to acquire the wheat breeding program and assets of S&W Seed Australia and planned to develop an Australian platform. The parties had not described the transaction as completed.
- Bioceres announced a merger with Marrone Bio Innovations, with closing expected in the first quarter of fiscal 2023 after MBI shareholder approval. The parties filed an F-4 registration statement on May 9, 2022.
- Key risks include regulatory and plant variety protection approvals, commercialization and adoption of HB4 products, supply-chain and logistics constraints, inflation and foreign-exchange volatility in Argentina, COVID-19-related disruptions, leverage and refinancing requirements, and execution of the MBI merger.
- The filing relies on non-IFRS measures including Comparable revenue, Comparable gross profit, Adjusted EBITDA, and net debt. These measures exclude or adjust for IAS 29 effects and may not be comparable with similarly titled measures used by other companies.
Facts investors should verify
- Completion and terms of the MBI merger, including shareholder and regulatory approvals and the expected fiscal 2023 closing.
- Final Australian and New Zealand HB4 Wheat approval and plant variety protection registrations required for invoicing.
- Actual HB4 Soy and HB4 Wheat planting areas, commercial volumes, revenue, and EBITDA versus management targets.
- Completion and accounting treatment of the 75% convertible-note conversion, including the resulting share count and debt balances.
- Liquidity, cash generation, and upcoming debt maturities; the filing text does not provide a cash flow statement.
- The effects of Argentine inflation, foreign-exchange movements, IAS 29 accounting, supply-chain costs, and product mix on reported margins and EBITDA.