Bioceres Crop Solutions Corp.

Good day, everyone, and welcome to Bayer Sears Crop First Quarter 2021, Bayer Sears Crop Solutions Corp. Fiscal First Quarter 2021 conference call. Today's call is being recorded. Following the speaker's remarks, there will be a question and answer session. I'd now like to turn the conference over to Mr. Maximo Guglia, Investor Relations, who will make some opening remarks and introduce today's other speakers. Please go ahead.

Thank you. Good day, everyone, and thank you for joining us. Presenting during today's earnings call will be Federico Trucco, the OSERES Chief Executive Officer, and Enrique López Lecube, our Chief Financial Officer. Both will be available for the Q&A session. Before we proceed, I would like to make the following self-help statement. Today's call will contain forward-looking statements, and I refer you to a forward-looking statement section of today's earnings release and presentation, as well in our recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or change events or circumstances. So, please note that for comparison purposes and a better understanding of our company's underlying performance, in addition to discussing its reported results, during our presentation today, we will discuss comparative results, which exclude the impact of hyperinflation accounting in Argentina. Additional information in connection with the application of the Rule IIS 29 can be found in our earnings report. I would now like to turn the call over to our CEO, Federico Trucco.

Thanks, Max. Although today's call was originally intended to discuss our first quarter financial performance, recent significant developments warrant time in today's presentation. As announced earlier today, we are acquiring Archeria's Biosciences' full interest in Verdeca LLC, a joint venture we launched in 2012 for the development of second-generation biotechnologies for soybean, including the development of HV4 soy. In conjunction with the acquisition of Archeria's interest in Verdeca, We are acquiring rights to Archeria genome-edited wheat varieties designed to improve health and shelf-life aspects of wheat flours and flour-derived food products, as well as other IP assets. The vision of these technologies to our pipeline, together with the recent approval of H3-4 wheat in Argentina, which we will discuss later in this presentation, helped position the Aceres as a leader in this biotech orphan, yet incredibly important staple crop. Finally, Enrique will comment on the strong momentum that our core business maintained as we entered into the new fiscal year, delivering an 8% growth in comparable revenues and a 30% increase in adjusted EBITDA. Please turn to slide four for an overview of the various assets we are acquiring. With full ownership in Verdeca, we'll be able to consolidate one of the most important technologies in our pipeline, HP4 soil. Having full control of HP4 soil will enhance our ability to initiate breeding and go-to-market collaborations with partners in new and existing geographies. Allowing us to execute our strategy at a faster pace. Although we now have to fully fund the ongoing drilling, regulatory, and working capital efforts, we believe that the incremental economics resulting from this transaction, ranging between an additional 25% to 42.5% of Technology Associated Revenues, depending on the go-to-market channel and other third-party obligations, will provide a very attractive return on allocated capital. On a per hectare basis, the additional revenues may equate to approximately $6. give or take two and a half dollars, a value that is not insignificant over the 21.5 million hectares targeted with HB4 soil in geographies in which the technology has already been approved by regulators. Through the deal, we also receive exclusive rights to other soybean traits, as well as assume ownership of Cardicat's budget, and Ezequiel Simmermacher, Jose Roque, Maria Paula Savanti. On slide 5, we present the wheat technologies being in-licensed for Latin America. While the appearance of HEP4 technology substantially improves growers' yields and provides a range of significant environmental benefits, including increased carbon sequestration and reduced water usage, We are now expanding our portfolio to quality traits which offer tremendous health benefits including resistant starch and reduced gluten. Resistant starch varieties have 10 times the dietary fiber of conventional wheat and thus digest more slowly, preventing the rapid production of black sugar that normally occurs when we eat wheat-based products such as pasta, bread, and pizza. Reduced gluten varieties have 65% less gluten, while resulting in flour that is substantially equivalent in taste and performance to conventional flour. For producers and retailers of wheat-derived products, the oxidative stability technology, while also in licensing, will enable enhanced product shelf lives. For consumers, having these attributes straight from the farm will help them obtain the quality products they seek with cleaner, shorter product labels, an important consumer trend these days. It is also important to know that by expanding our portfolio of wheat trades, we will be leveraging Bioceres' investment in identity preserved production platforms and tracing systems. such as those currently being used for our HP4 premium. The data gathered through these platforms will allow consumers to make more informed decisions by understanding the health and environmental aspects underlying the fictionalized data. Before moving to the next slide, it is important to know that some wheat technologies being in-licensed are subject to third-party peer-ins. and therefore to a CLOVAX provision in our agreement with Arcadia. We will discuss this provision when we look at the total consideration for this transaction on the following slide. Please turn to slide 6. To acquire the full interest in Verdeca and rights to other intellectual property that I have discussed, were paying a total of $32 million in cash and equity as shown in this slide. Of these amounts, $20 million is being paid upfront, comprising $5 million in cash and $15 million in stock at a value of $8 per share. These 1.875 million newly issued shares We lead to a total of 40.6 million shares outstanding, with $8 per share representing a meaningful premium compared to yesterday's closing price. One-third of these shares, that is $5 million at the value of a transaction, are pledged in favor of Yoseres and will be released once all clearances regarding third-party rights to a REIT portfolio being in-licensed are achieved. All shares will be locked up for a six-month period. The remaining 12 million in cash will be paid post-cleansing and are conditioned on regulatory milestones and HB4 soil penetration levels. More specifically, 2 million will be paid upon achieving import approval in China or reaching 200,000 hectares of HB4 soy in a single growing season. The remaining 10 million will be deducted from commercial royalties paid to Baraka from HB4 soy sales, of which 6% will go to Arcadia until the 10 million consideration is met. These numbers do not include $1 million of fees and other transaction-related costs that will reverse Arcadia and non-verdical royalties that may be paid once non-soil intellectual property is commercialized. Please move to slide seven. Last month was particularly important in our company's history as we achieved a long-awaited approval for HP4E in Argentina A technology we've been developing with French partner Florimonde 3 for more than 8 years. Argentina is Latin America's most important wheat producer, accounting for roughly 70% of the wheat produced in the region and 3-4% of the world's production. Today, drought tolerant HB4 wheat is also the only genetically modified wheat to be approved and on a commercial path to market anywhere in the world, which represents a major milestone in wheat's global value chain, generating significant media backslash around the globe. If you turn to slide 8, you will see that until now, wheat was an orphan crop in the sphere of biotechnology. Despite being planted in 200 million hectares globally, the highest of any crop, By comparison, corn with 10% less hectares planted than wheat has 44 biotechnology events approved, while soybean and rice have 24.9 approved events each. These comparisons make clear that the approval of HP4 wheat is the beginning of a monumental but achievable quest to modernize and transform wheat production around the world. for the benefit of both consumers and growers alike. For growers, our HB4 wheat increases yields by an average of 20% during growing seasons impacted by droughts, which is increasingly frequent across the world and that's increasingly threatening our food supplies. Suffice it to say, HB4's economic as well as human benefits are clear and indisputable. and are based on over 10 years of field validation. For consumers, our hreform technology helps mitigate climate change by facilitating double cropping, which seasonally rotates wheat and soybean, an environmentally friendlier growing system that is otherwise limited by water availability. When combined with soil regenerative practices, An evergreen cropping system made possible by HB4 captures more carbon than conventional growing practices. I will quantify the carbon sequestration package for you. For each hectare farmed per year, the resulting sequestration is equivalent to six months of carbon emitted by a city automobile. The other major environmental benefit are reduced water consumption and higher crop yields that reduce the need to expand agriculture's global footprint, particularly with regard to rainforests, as well as marginal and fragile ecosystems. Of course, some market participants have expressed concerns as to the potential disruption this technology may signify for the conventional wheat value chain. To address these concerns around wheat global trade, we have adopted the general principles shown in the next slide. So please turn to slide 9. There are five primary conditions the company is pursuing to launch HP4 wheat in a given country once regulatory clearance is achieved. These include Satisfying the requirements of the resolution granting , for instance, in the case of Argentina's approval, we need to obtain import approval in Brazil before a commercial launch may be initiated in Argentina. Brazil is Argentina's most important lead importer. Import approval in a geography where a regulatory system exists and which represents at least 5% of the total Greek exports from the country where we want to launch, based on a five-year moving average. That's the second condition. Thirdly, the availability of a low-cost detection method with a 1% sensitivity level. This has already been achieved for all geographies. Fourth, the existence of a value capture system and an identity reserve channel that ensures IP protection as well as minimizes disruption to conventional channels while adoption is initiated and at a single digit market share. And lastly, the existence of an outreach and educational program in the country of interest for growers and consumers. Please turn to slide 10 for an overview of our go-to-market roadmap. For our go-to-market roadmap, we have prioritized our target countries chronologically for regulatory approval of HB50. In total, we are targeting, at this stage, about one-third of the global tech bridge dedicated to it, and in three phases. In the next two years, we are pursuing approvals and launches in Argentina, Uruguay, Paraguay, and Brazil, representing 9.4 million hectares, or close to 13% of our initial addressable market. Immediately following, we expect to launch in South Africa and Bolivia, as well as the United States, where we have already applied for food and feed approval. These markets allow us to move from 9.6 million hectares to 25.3 million hectares and represent about 35% of our targeted markets. Starting today, but anticipating a longer process, we will pursue launches in Australia, Canada and Russia. Along with the previously mentioned countries, these geographies represent 72.5 million hectares. One third of all factors planted with these immunoids on an annual basis. Please turn to slide 11. Argentina's regulatory tier eliminates significant operating challenges for us and will lower the cost of working with growers to multiply related with varieties and building up seed inventories ahead of our faced commercial launches across the world in the coming years. In effect, We are now able to transition from thousands to hundreds of thousands of hectares in our next week cycle. As you can see on this slide, our ramping up of H340 inventories will expand from less than 7,000 hectares in the current cycle to more than 60,000 hectares in the next cycle. And if the real input approval is granted in time, it would be twice that number of hectares. It is important to note that this process will continue to be assured by robust, close growing systems which, along with identity preservation and traceability, are still of paramount importance to us. Accordingly, we continue working to enhance the state-of-the-art digital farming tools that are an integral part of our HV4 program for wheat and soybean. In addition to generating extensive and detailed datasets for each production field that is monitored, we are applying and leveraging data science and blockchain technology to other areas of the value chain, such as storage, logistics, and processing, in order to guarantee complete farm-to-fold traceability. As those of you who follow our company know, Our HB4 program for wheat and soy entails a formal agreement with growers to clearly contribute to goods, agricultural inputs, which comprise bioceresis seed germ plasms and drought tolerant traits, customized microbial solutions, as well as our next-gen crop protection and nutrition technologies. In the aggregate, the combination of these technologies and our HB4 wheat program deliver a solution that not only enhances the activity, but optimizes water resources, increases carbon sequestration, and reduces the use of agricultural chemicals. The value of these contributed goods for our HB4 program with growers will be recognized as revenues once the realized inventories are sold as seed or grain, but not longer contributed. Near the bottom of this slide are the estimated metrics that we will be using for account four and track the underlying economic performance of our HB4 week program ahead of reporting HB4 revenues and related accounting measures. By publishing the level of contributed goods, the investment community can also use this information to better follow our process. For the next ramping up phases, we estimate that the HB4 approval implies an economic impact of 4 to 15 million in additional revenues for contributed goods for fiscal year 2021, depending on Brazil approval. We will be using the same accounting for HB4 SOI program in the upcoming quarters, which is currently progressing as discussed during our last earnings call. Please turn to slide 12. Before turning the call over to Enrique for an overview of the quarter's financial performance, I would like to close my presentation with a slide that shows a field in Cordoba, which received almost no rainfall during the winter season. The right half of the image captures wheat grown with bioceresis HV4 wheat and illustrates the full potential of our drought-tolerant wheat trade. That concludes my portion of the presentation. I'll now turn the call over to Enrique for the review of our first quarter results.