Bioceres Crop Solutions Corp. — Form 6-K Summary
Filing date: February 11, 2021; signed February 12, 2021. The filing reports fiscal second-quarter and six-month results ended December 31, 2020. Results are presented in U.S. dollars under IFRS and are unaudited.
Business Context and Operational Developments
Bioceres is an integrated provider of crop productivity technologies, including seeds, microbial agricultural inputs, crop nutrition and crop protection products. Its HB4 program is intended to improve crop yields and support more sustainable agricultural practices.
- Argentina approved Bioceres’ drought-tolerant HB4 wheat, described as the first and only drought-tolerant wheat to receive regulatory approval.
- HB4 wheat was planted on approximately 7,000 hectares with 25 growers, compared with approximately 400 hectares and four growers in the prior-year quarter.
- HB4 wheat out-yielded commercial varieties by 13.5% on average across locations; the yield advantage was 42% in lower-yielding environments.
- HB4 soybean was planted on approximately 23,000 hectares with 148 growers, versus approximately 3,000 hectares and 15 growers in the prior-year quarter.
- Following the acquisition of the remaining Verdeca interest, Bioceres entered a partnership with Nature Source Improved Plants to develop HB4 soybean varieties for the United States and other markets.
Financial Results and Liquidity
| Metric | Three months ended December 31, 2020 | Three months ended December 31, 2019 | Six months ended December 31, 2020 | Six months ended December 31, 2019 |
|---|---|---|---|---|
| Total revenue | $48.7 million | $63.0 million | $91.1 million | $99.2 million |
| Gross profit | $23.7 million | $30.0 million | $42.9 million | $45.9 million |
| Gross margin | 48.6% per key metrics table | 47.7% per key metrics table | 47.1% | 46.3% |
| Adjusted EBITDA | $14.2 million | $21.1 million | $24.7 million | $29.2 million |
| Adjusted EBITDA margin | 29.1% | 33.5% | 27.1% | 29.5% |
| Profit/(loss) for the period | $1.8 million | $12.6 million | $(4.6) million | $4.7 million |
| Operating profit | $11.4 million | $19.6 million | $19.8 million | $25.7 million |
| Finance result | $(5.8) million | $(3.5) million | $(18.5) million | $(19.9) million |
The earnings release states second-quarter revenue of $47.7 million, while the accompanying financial tables show $48.7 million. The filing text does not clearly reconcile this discrepancy.
- Reported second-quarter revenue declined 23%; comparable revenue declined 17%, excluding the impact of IAS 29. Six-month reported revenue declined 8%, or 7% on a comparable basis.
- Second-quarter gross profit decreased 21%, while gross margin improved by 88 basis points on a reported basis. Adjusted EBITDA decreased 33% and adjusted EBITDA margin declined 442 basis points.
- Trailing-twelve-month comparable revenue increased 8% to $167.8 million from $155.5 million. LTM EBITDA increased to $42.0 million from $41.3 million.
- Cash and cash equivalents were $19.1 million at December 31, 2020, compared with $27.2 million at June 30, 2020. The key metrics table separately reports $35.9 million of cash and cash equivalents for the first half, which is not consistent with the balance-sheet figure.
- Net debt to LTM EBITDA increased to 3.06x from 2.31x, according to the key metrics table.
- At December 31, 2020, current assets were $185.7 million and current liabilities were $165.2 million. Total assets were $345.2 million, total liabilities were $267.3 million and total equity was $77.9 million.
- Contributed goods for the HB4 program increased to $3.6 million, including $1.4 million for HB4 wheat and $2.2 million for HB4 soybean. These amounts are expected to be recognized as revenue when the related inventories are sold as seed or grain rather than contributed.
Material Changes Versus the Prior Comparable Period
- Revenue declined across all reported segments in the second quarter: Crop Protection fell to $27.1 million from $33.1 million, Seed and Integrated Products to $12.5 million from $13.9 million, and Crop Nutrition to $9.2 million from $15.9 million.
- For the first half, Seed and Integrated Products revenue increased 9% to $21.2 million, while Crop Protection declined 5% to $48.7 million and Crop Nutrition declined 26% to $21.2 million.
- Dry weather in certain South American regions adversely affected second-quarter results.
- Borrowings increased to $118.8 million in total at December 31, 2020, from $104.9 million at June 30, 2020, based on current and non-current borrowings.
- Intangible assets increased to $57.8 million from $35.3 million, and a $7.6 million financed payment for acquisition of assets was recorded, reflecting acquisition and technology-related activity.
Outlook, Commentary and Risks
Management indicated that HB4 wheat seed inventory was sufficient to support approximately 60,000 to 130,000 hectares in the next crop season. Management also expects participating HB4 growers to repeat or increase adoption. The company is preparing for a broader commercial launch and plans to accelerate HB4 inventory development.
Management characterized the business as resilient despite drought-related pressure, highlighted lower financing costs and financial flexibility initiatives, and stated that the Verdeca acquisition had been completed. No formal revenue or earnings guidance was provided in the filing text beyond the stated planting-range expectation.
- Key execution risks include scaling seed inventories, coordinating a broad commercial launch and converting contributed goods into realized sales.
- Regulatory approvals remain relevant for HB4 products in markets outside Argentina.
- Weather conditions, particularly drought, may materially affect customer demand, crop yields and revenue timing.
- COVID-19 could affect employees, farming customers, operations, liquidity and financial results.
- Forward-looking statements are subject to risks and uncertainties described in the company’s SEC filings; actual results may differ materially from management expectations.
Facts Investors Should Verify
- Reconcile the $47.7 million second-quarter revenue stated in the release with the $48.7 million revenue shown in the financial tables.
- Reconcile the $35.9 million cash figure in the key metrics table with the $19.1 million balance-sheet cash figure at December 31, 2020.
- Confirm the composition, maturity profile and interest costs of the company’s borrowings, convertible notes and acquisition-related financing.
- Assess whether the projected 60,000 to 130,000 HB4 wheat hectares can be supplied and commercialized as planned.
- Evaluate the sustainability of reported yield advantages across geographies and crop conditions, and the timing of additional regulatory approvals.