Bioceres Crop Solutions Corp. — Form 6-K Summary
Filing date: February 10, 2022. Reporting period: Fiscal second quarter and six months ended December 31, 2021. Results are presented in U.S. dollars under IFRS and are unaudited. The company provides crop protection, seed and integrated products, crop nutrition, and HB4 agricultural technologies.
Financial Performance and Position
| Metric | 2Q22 | Prior period | Change |
|---|---|---|---|
| Reported revenue | $92.7 million | $48.7 million | +90% |
| Comparable revenue, excluding IAS 29 | $90.3 million | $47.7 million | +89% |
| Reported gross profit | $37.3 million | $23.7 million | +58% |
| Comparable gross profit | $42.2 million | $25.0 million | +69% |
| Reported gross margin | 40.3% | 48.6% | Down 827 basis points |
| Comparable gross margin | 46.7% | 52.4% | Down 563 basis points |
| Adjusted EBITDA | $19.7 million | $14.3 million | +38% |
| Baseline Business Adjusted EBITDA | $22.7 million | $14.5 million | +57% |
| Net income | $5.3 million | $1.8 million | +197% |
Six-month revenue was $159.7 million versus $91.1 million in the prior-year period. Six-month net income was $7.6 million, compared with a net loss of $4.6 million previously. Six-month operating profit was $27.7 million versus $19.9 million.
- Revenue drivers: Crop protection comparable revenue increased 76% to $46.6 million; seed and integrated products increased 26% to $15.3 million; and crop nutrition increased 212% to $28.4 million.
- International growth: Combined Europe and United States revenue increased 146% year over year during the quarter.
- Operating expenses: SG&A increased to $18.8 million from $11.2 million, partly due to HB4 spending, higher sales taxes and freight, and unfavorable Argentine peso inflation and foreign-exchange effects. R&D increased to $1.4 million from $1.1 million.
- Finance results: Net finance loss increased to $7.8 million from $3.7 million, primarily reflecting inflation-related and other non-cash finance effects.
- HB4 costs: Quarterly HB4 pre-launch costs were $3.0 million; trailing-twelve-month costs were $6.2 million, including a $1.9 million negative IAS 29 adjustment on HB4 grain inventories.
- Cash and liquidity: Cash and cash equivalents were $36.2 million at December 31, 2021, with other short-term financial assets of $3.7 million, for total reported liquidity of approximately $39.9 million.
- Debt: Total financial debt was $187.8 million, including $48.1 million of current debt and $139.6 million of long-term debt in the capitalization table. Net debt was $147.9 million, and net debt to LTM Adjusted EBITDA was 2.66x versus 3.05x a year earlier.
- Debt financing: Rizobacter issued $20.0 million of Series VII corporate bonds maturing in December 2024 with a 1.49% annual nominal interest rate. The long-term share of total debt increased to 74%, and the reported average cost of debt was 7.1%.
Material Changes Versus the Prior Comparable Period
- Revenue growth accelerated across all three operating segments, with particularly strong crop nutrition performance from micro-beaded fertilizers and inoculants.
- Gross profit increased substantially, but margins contracted because crop protection growth included a greater proportion of lower-margin third-party products and because of IAS 29 effects.
- Adjusted EBITDA improved despite higher SG&A and HB4 pre-launch spending. Baseline Business Adjusted EBITDA margin declined to 24.5% from 29.7%.
- The company returned to profitability for the six-month period, compared with a prior-year loss.
- Debt increased, but the maturity profile improved, current debt declined, liquidity strengthened, and leverage decreased.
- HB4 Wheat grower exposure expanded substantially: reported hectares increased from 7,000 in FY20 to 53,000 in FY21, growers increased from 25 to 225, and contributed goods increased from $1.4 million to $6.4 million.
- HB4 Soy hectares remained at 23,000, while growers declined 31% to 102 and contributed goods declined 10% to $2.0 million.
Outlook, Commentary, Risks, and Unusual Items
- Brazil’s CTNBio approved importation of HB4 Wheat flour for human and animal consumption in November 2021. The company stated that inventory levels and regulatory approval supported a limited commercial launch in the fourth quarter of fiscal 2022.
- Management estimates a potential HB4 Wheat opportunity of approximately 2.3 million hectares and $195 million of peak revenue in the current market.
- Management targets incremental HB4 Wheat EBITDA of $15 million to $20 million for fiscal 2024.
- HB4 Wheat outyielded non-HB4 varieties by an average of 12.8% across environments and locations, with a 49% average improvement in targeted environments.
- HB4 Soy rollout was affected by severe drought and reduced late-season plantings in December. Third-generation varieties were planted across all available inventory, while second-generation varieties were planted on 60% of planned hectares.
- Key risks include regulatory and commercialization execution for HB4, drought and other agricultural conditions, inflation and foreign-exchange pressure in Argentina, supply-chain and logistics disruptions, product mix and margin pressure, debt servicing requirements, COVID-19 uncertainty, and the need to ramp inventory.
- The release contains forward-looking statements and non-IFRS measures, including Comparable revenue, Comparable gross profit, Adjusted EBITDA, and net debt. These measures may not be comparable with similarly named measures used by other companies.
Important Facts for Investors to Verify
- Whether the limited HB4 Wheat launch occurred as planned and whether the projected FY2024 EBITDA contribution remains achievable.
- Actual regulatory, planting, grower adoption, yield, inventory, and contributed-goods trends for HB4 Wheat and HB4 Soy.
- Whether gross-margin pressure persists as crop protection sales increasingly include third-party products.
- Cash conversion and working-capital requirements; the filing text does not provide a clear cash-flow statement or operating cash-flow figure.
- Debt maturities, covenant requirements, interest-rate exposure, and the ability to fund inventory expansion while maintaining liquidity.
- The effect of Argentine inflation, currency movements, IAS 29 accounting adjustments, and non-cash finance items on reported results.
- Reconciliation of non-IFRS metrics to IFRS results and the sustainability of Adjusted EBITDA excluding HB4 pre-launch costs.