Bioceres Crop Solutions Corp. — Form 6-K Summary
Reporting period: Fiscal first quarter 2022 ended September 30, 2021. The Form 6-K was filed November 10, 2021 and reports unaudited consolidated results under IFRS in U.S. dollars.
Business Context and Reporting Period
Bioceres provides crop productivity technologies, including seed and trait technologies, biological inputs, crop nutrition and crop protection products. The quarter reflected continued momentum in Crop Protection and Crop Nutrition, while the company advanced the HB4 wheat and soybean inventory build-up.
Key Financial Metrics
| Metric | 1Q22 | Prior period | Change |
|---|---|---|---|
| Reported revenue | $66.9 million | $42.4 million | +58% |
| Comparable revenue, excluding IAS 29 | $64.8 million | $42.2 million | +54% |
| Gross profit | $29.0 million | $19.2 million | +51% |
| Reported gross margin | 43.4% | 45.4% | Down 204 basis points |
| Adjusted EBITDA | $12.4 million | $10.5 million | +18% |
| Adjusted EBITDA margin | 18.6% | 24.9% | Down 632 basis points |
| Profit for the period | $2.3 million | Loss of $6.4 million | Improved by $8.4 million |
| Net finance result | Loss of $4.7 million | Loss of $11.3 million | Improved by $6.7 million |
| Operating profit | $10.1 million | $8.4 million | +20% |
Comparable gross profit increased 39% to $27.9 million, while comparable gross margin declined 442 basis points to 43.1%. Management attributed the margin pressure primarily to product mix, Argentine inflation and foreign-exchange effects on production costs.
Trailing 12-month Adjusted EBITDA reached $50.2 million, compared with $48.9 million at September 30, 2020. The metric includes $3.4 million of HB4 pre-operational expenses.
Segment Performance
- Crop Protection: Comparable revenue increased 58% to $34.3 million; comparable gross profit increased 35% to $11.3 million. Growth benefited from channel reorganization, higher third-party product sales and favorable supply conditions. Segment gross margin fell to 33.0% from 38.6%.
- Seed and Integrated Products: Comparable revenue increased 1% to $8.7 million; comparable gross profit declined 6% to $5.5 million. Seed-pack volumes declined 4% to 2.1 million doses, and gross margin fell to 62.9% from 67.7%.
- Crop Nutrition: Comparable revenue increased 83% to $21.8 million; comparable gross profit increased 90% to $11.1 million. Micro-beaded fertilizer volumes more than doubled to 7.4 thousand tons, while inoculant volumes were broadly flat at 4.2 million doses. Gross margin increased to 51.0% from 49.1%.
Liquidity, Debt and Balance Sheet
- Cash and cash equivalents were $36.6 million at September 30, 2021; other short-term investments were $5.3 million, for total cash and short-term investments of $41.9 million.
- Total financial debt was $179.5 million, comprising $66.7 million of short-term debt and $112.8 million of long-term debt in the company’s summary presentation. The consolidated statement separately reports borrowings of $66.7 million current and $62.6 million non-current, plus $50.2 million of convertible notes.
- Net financial debt was $137.6 million, compared with $103.5 million at September 30, 2020.
- Net debt to trailing 12-month Adjusted EBITDA increased to 2.74x from 2.12x a year earlier and 2.61x at June 30, 2021, primarily because of working-capital needs related to HB4 inventory build-up and seasonal sales.
- Rizobacter Argentina completed a $16.1 million public offering of Series VI corporate bonds to support working capital.
The filing does not provide a clear consolidated cash-flow statement or a separate operating cash-flow figure for the quarter.
Material Changes, Outlook and Risks
- HB4 inventory ramp-up continued as planned. Early-season HB4 soybean planting was complete, late-season planting was expected to begin shortly, and HB4 wheat harvest was approximately 10% complete.
- The filing states that no additional information had been requested by Chinese regulators or Brazil’s CTNBio regarding HB4 Soy and HB4 Wheat, respectively. Regulatory approvals and commercialization remain important contingencies.
- Management expects continued growth in Crop Protection and Crop Nutrition and anticipates stronger performance from Seeds and Integrated Products as HB4 inventories are sold as seed or grain rather than contributed.
- HB4 pre-operational expenses totaled $1.9 million in the quarter, including $1.1 million in SG&A and $0.8 million in other income and expenses. Management expects these costs to be offset by profits when HB4 inventory is sold.
- Key risks include Argentine inflation and currency movements, product mix and margin pressure, global logistics and supply constraints, elevated working-capital requirements, debt-service obligations, regulatory uncertainty for HB4, COVID-19 effects and the execution risk associated with scaling HB4 inventories.
- The company added ecotoxicological scoring to its ESG reporting for HB4 inventories, alongside carbon and water-footprint measurements.
Important Facts for Investors to Verify
- Reconcile reported versus IAS 29-excluded comparable revenue and gross profit, including the $2.1 million IAS 29 revenue adjustment in 1Q22.
- Assess whether Crop Protection and Crop Nutrition growth can continue without further deterioration in consolidated margins.
- Monitor HB4 regulatory approvals, planting and harvest progress, inventory conversion and the timing of sales as seed or grain.
- Review working-capital consumption, cash generation and the company’s ability to fund HB4 expansion while net leverage remains elevated.
- Confirm the composition, maturities and terms of borrowings, convertible notes and Rizobacter’s newly issued bonds.
- Consider the limitations of Adjusted EBITDA and comparable metrics, which are non-IFRS measures and may not reflect cash requirements, debt service or capital expenditures.