Bioceres Crop Solutions Corp. annual report, Q4 FY2022

Bioceres Crop Solutions Corp. — FY2022 Form 20-F

Reporting period: Fiscal year ended June 30, 2022; audited consolidated financial statements prepared under IFRS. The filing is an annual report, not a standalone 2021 Q4 filing. Pro Farm’s merger closed on July 12, 2022, after year-end, so it was not included in Bioceres’ FY2022 consolidated results.

Financial performance and position

Metric	FY2022	FY2021
Total revenue	$334.8 million	$209.5 million
Gross profit / margin	$126.4 million / 37.8%	$90.9 million / 43.4%
Operating profit	$39.9 million	$38.4 million
Net loss	$3.9 million	$3.8 million
Adjusted EBITDA (non-IFRS)	$51.5 million	$48.3 million
Operating cash flow	$(17.5) million	$(6.2) million

• Revenue by segment: Crop Protection $174.4 million (29% gross margin); Crop Nutrition $109.1 million (43%); Seed and Integrated Products $51.3 million (57%). FY2022 segment revenues exclude Pro Farm.
• Cash and liquidity: Cash and cash equivalents were $33.5 million and other current financial assets $5.4 million at June 30, 2022. Current assets were $297.7 million versus current liabilities of $222.7 million. Management said available liquidity, operating inflows and borrowing/refinancing access should meet anticipated needs for the next 12 months.
• Debt: Outstanding borrowings, including accrued interest, were $145.5 million; the company also reported $12.6 million of convertible notes, bringing total indebtedness to approximately $158.0 million. About $71.3 million of borrowings were current, including $48.3 million of short-term portions of long-term loans. The filing says $71.3 million of total indebtedness matures in FY2023.
• Balance sheet: Total assets were $518.2 million, total liabilities $359.9 million, and equity $158.3 million at June 30, 2022. Inventory rose to $126.0 million from $61.0 million; trade receivables rose to $111.8 million from $88.8 million.

Changes versus prior comparable period

• Revenue increased 60% year over year; excluding IAS 29 inflation accounting effects, management reported growth of approximately 62%, led by Crop Protection (+$58.8 million), Crop Nutrition (+$45.1 million) and Seed and Integrated Products (+$17.9 million).
• Gross profit increased, but reported gross margin contracted to 37.8% from 43.4%. Management cited unfavorable Argentine inflation and foreign-exchange dynamics affecting costs.
• Operating profit rose modestly, while the net loss remained broadly flat. Higher income tax expense and increased selling, general and administrative costs offset revenue and gross-profit growth.
• Operating cash outflow increased, with working-capital outflows of $62.3 million, driven principally by inventory and receivables. Financing activities provided $14.8 million, and investing activities provided $2.9 million.
• FY2022 other comprehensive income was $35.2 million, largely reflecting foreign-currency translation; total comprehensive income was $31.3 million. This did not eliminate the reported net loss.

Outlook, management commentary and notable items

• Management’s strategy centers on scaling biological crop inputs, expanding internationally, commercializing HB4 drought-tolerance seed technology and pursuing selective partnerships and acquisitions. It did not provide quantified consolidated revenue or earnings guidance in the supplied filing text.
• HB4 Wheat generated $12.4 million of reported program revenue in FY2022. The program covered approximately 50,000 hectares; approximately 23,000 hectares of HB4 soybean were harvested in the Southern Cone. The company reported $14.4 million of HB4 program revenues and contributed goods, up 74% year over year.
• On July 12, 2022, Bioceres completed the all-stock Pro Farm merger at a fixed exchange ratio of 0.088 Bioceres ordinary shares per Pro Farm share. Pro forma combined FY2022 revenue was presented as $375.1 million and net loss as $32.1 million; these unaudited figures are illustrative, based on preliminary estimates and exclude future integration savings and costs.
• On August 5, 2022, the company issued $24.0 million of secured notes due 2026 and $55.0 million of secured convertible notes due 2026. The non-convertible notes carry stepped interest rates of 9%, 13% and 14%; the convertible notes carry 5% cash plus 4% payment-in-kind interest and are convertible at $18 per share. These are post-year-end financing events.
• A September 2022 Syngenta agreement, also post-year-end, provides for a $50 million upfront payment, distribution of specified biological seed-care products, and a shared R&D program. Syngenta is to fund 70% of selected R&D investment; Bioceres is entitled to 30%–50% of sales profits, subject to geography and year, with stated minimum profit targets totaling $230 million over the agreement term.
• Key risks include dependence on regulatory approvals and licensed HB4 technology; agricultural seasonality and weather; intense competition; Argentine inflation, currency controls, taxes and political/economic volatility; debt-service and refinancing requirements; and integration and valuation risks from acquisitions. The company also disclosed an injunction affecting shares in Rizobacter: an adverse ruling could require surrender of shares and reduce Bioceres’ ownership; 30% of dividends on affected shares are escrowed.
• Management reported effective disclosure controls and internal control over financial reporting as of June 30, 2022. The auditor did not attest to internal controls because the company qualified as an emerging growth company. The company reported no cash dividends and stated it did not expect to pay dividends in the foreseeable future.

Important facts for investors to verify

• Reconcile the FY2022 reported revenue growth and segment results with the effects of IAS 29 and the company’s constant-currency or other adjusted presentations.
• Review working-capital quality, especially the sharp increase in inventory and receivables, and assess cash conversion and collection risk.
• Confirm debt maturities, covenant compliance, foreign-exchange payment restrictions in Argentina, and the cash and dilution implications of the 2026 notes.
• Track final Pro Farm purchase accounting, goodwill and intangible-asset valuations, integration costs, and actual combined-company performance against the unaudited pro forma information.
• Verify execution and regulatory conditions for the Syngenta agreement, including upfront-payment receipt, profit-sharing economics and minimum targets.
• Monitor HB4 commercialization, regulatory approvals by jurisdiction, realized margins and adoption rates, as well as the outcome of the Rizobacter share injunction.