Bioceres Crop Solutions Corp. annual report, Q4 FY2021

Business context and reporting period

Bioceres Crop Solutions Corp. is an agricultural technology and inputs company operating mainly in Latin America, with products spanning crop protection, crop nutrition, seeds and integrated products. This Form 20-F is the annual report for the fiscal year ended June 30, 2021, prepared under IFRS in U.S. dollars. The request metadata says “2020 Q4,” but the supplied filing covers FY2021, not a standalone 2020 fourth quarter.

The company reported 41.1 million ordinary shares outstanding at June 30, 2021. Bioceres S.A. held approximately 57.4% of voting power.

Financial performance and position

FY2021 revenue from customer contracts was $206.7 million; total revenue also included grants and changes in the fair value of biological assets. Crop protection contributed $114.1 million, crop nutrition $60.6 million, and seed and integrated products $34.8 million. Segment gross margins were 34%, 50%, and 63%, respectively.

At June 30, 2021, cash and cash equivalents were $36.0 million and other current financial assets were $11.2 million. Current assets were $211.5 million and current liabilities $168.0 million. Total liabilities were $304.3 million and equity $90.3 million. Borrowings were $124.8 million; convertible notes were $48.7 million, bringing reported total indebtedness to approximately $173.4 million. The company stated that $76.8 million of indebtedness matured in FY2022 and that available liquidity and expected financing were adequate for the next 12 months.

Material changes versus the prior comparable year

• Revenue increased $36.4 million, with growth in all three segments. Management cited stronger later-year sales, including fertilizer volume growth and improved crop-protection performance; drought in key South American markets weighed on the second quarter.
• Gross profit rose $11.4 million, but reported gross margin declined from 45.9% to 43.4%, reflecting product mix and unfavorable Argentine inflation and foreign-exchange effects on costs.
• Operating income decreased slightly as higher selling, general and administrative expenses and R&D spending offset gross-profit growth.
• The company moved from a $4.2 million profit to a $3.8 million loss. Income-tax expense increased to $14.4 million from $2.2 million, including deferred-tax effects; other comprehensive income improved to $10.1 million from a $9.7 million loss.
• Operating cash flow swung to a $6.2 million outflow, principally due to a $52.7 million working-capital outflow, including increased inventories. Cash declined by $7.2 million during the year.

Outlook, commentary, risks and unusual items

No formal revenue, earnings or cash-flow guidance is provided. Management’s strategy emphasizes scaling Rizobacter products, expanding international sales, and commercializing HB4 seed products. Adjusted EBITDA is a non-IFRS measure and should not be treated as a substitute for IFRS results or cash flow.

• HB4 commercialization: Argentina had approved HB4 wheat subject to Brazilian import approval; approvals for wheat in other jurisdictions and Chinese import clearance for HB4 soy remained key dependencies. Management described the HB4 program as progressing, but commercial value depends on regulatory clearance, seed multiplication, adoption and partner execution.
• Liquidity and financing: Near-term maturities, 11.5% convertible-note interest, covenant compliance and refinancing access merit attention. Argentine foreign-exchange controls can restrict debt payments, dividend transfers and movement of funds.
• Country and operating exposure: Approximately 95% of consolidated sales were attributed to Latin American operations. Argentine inflation, peso depreciation, tax changes, export duties and exchange controls, as well as Brazilian economic and political conditions, may affect results and cash availability.
• Seasonality and agriculture: Sales depend on planting cycles, weather, commodity prices and inventory planning. COVID-19 had not materially affected operations through the reporting date, according to the company, but future effects remained uncertain.
• Contingencies and unusual items: A judicial injunction affects certain Rizobacter shares and dividends; if lifted, the Parent may owe a contingent $17.3 million purchase payment, while an adverse ruling could require return of shares. The company also recognized a $6.2 million financial loss associated with its 2020 warrant exchange and redemption, and a $1.6 million incremental tax expense associated with Argentine tax changes.
• Acquisitions and investment: The company acquired the remaining Verdeca interest for cash and shares, with additional contingent and royalty payments, and acquired control of Insuagro. It also announced an approximately $8 million planned Brazilian adjuvant-facility investment.
• Governance and shareholder returns: The company is controlled by Bioceres S.A., does not anticipate dividends, and its convertible notes restrict dividend distributions. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation because of the company’s emerging-growth-company status.

Investor verification priorities

1. Confirm the applicable period: this is FY2021, not a standalone 2020 Q4 report.
2. Review the audited IFRS statements and reconcile reported revenue, segment margins and the non-IFRS Adjusted EBITDA measure.
3. Assess working-capital conversion, especially inventory growth, receivables quality and the cause of negative operating cash flow.
4. Verify the schedule and funding plan for the $76.8 million due in FY2022, convertible-note terms, covenants and refinancing capacity.
5. Track HB4 regulatory approvals, commercialization milestones and any resulting payments or royalties to partners.
6. Monitor the Rizobacter share injunction, the potential $17.3 million payment and restrictions on pledged shares and dividends.
7. Evaluate Argentine inflation, exchange controls and tax effects on reported earnings and the ability to move cash across the group.