Bioceres Crop Solutions Corp.

Hello and welcome to the Bioshares Crop Solutions Fiscal Fourth Quarter 2022 Financial Results Conference Call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star 1 on your telephone keypad. If you'd like to withdraw your question, you may press star 2. I'll now hand over to your host, Head of Investor Relations, Paola Savanti. Paola, please go ahead.

Thank you. Good morning, everyone, and thank you for joining. Presenting today during the call will be Federico Trucco, our chief executive officer, and Enrique Lopez-Lecube, our chief financial officer. Both will be available for the Q&A session. Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements, and I refer you to the forward-looking statement section of today's earnings release and presentation, as well as our recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances. Also, please note that for comparison purposes and a better understanding of our company's underlying performance, we will discuss during our presentation as reported results as well as comparable results, which exclude the impact of hyperinflationary accounting in Argentina. Additional information in connection with the application of the rule IAS 29, can be found in our earnings report. Finally, this conference call is being webcast. The webcast link is available at the BUSINESS Crop Station Investor Relations website. At this time, I will turn the call over to our CEO, Federico Trucco. Thank you.

Thank you, Paula, and good morning to everyone on the call. Thank you for joining us today. Please turn to slide three. for a quick overview of the main highlights for the quarter and the fiscal year. I would like to start by saying that we are extremely proud of the performance delivered by our teams in the fourth quarter and full fiscal year 2022. This last quarter was particularly challenging since we are comparing to a record-setting quarter in 2021. when we grew at close to 40% compared to the fourth quarter of fiscal 2020. Consequently, the 44% top-line growth observed in the current quarter represents an amazing closing to an amazing year, with an end-to-end 62% revenue growth for the 12-month period. Adjusted EBITDA for the year ended at $61.9 million, after excluding HB4 ramp-up costs. Although this number represents a 24% improvement over last year's metric, it fails to capture the full magnitude of our EBITDA expansion as IAS 29 accounting rules artificially magnified some of our costs. This will be explained in more detail by Enrique during his part of the presentation. Fiscal 2020 was not only an amazing year due to our financial performance, but also in terms of achieving gatekeeping regulatory clearances. Most importantly, feed and food approvals for HB4 wheat in Brazil and for HB4 soy in China. These approvals placed us in a very select club of companies. We're for the first time reporting revenues associated to the HP4 technology, with $12.4 million recognized in the quarter for HP4 wheat, representing a 94% increase when compared to contributed goods reported for the HP4 program in the year-ago period. Finally, and as an important subsequent event to the quarter's end, We have successfully culminated our merger with Marron Bio Innovations and have integrated and delisted the company in less than four months since announcing the transaction. Like the re-selected integration back in 2016, we believe this merger will be transformational for us. I will provide a brief update on the integration process later in the presentation. Please turn to slide four to better understand the growth acceleration that we're currently experiencing. And for this purpose, we're going back to 2019 when we became listed. Top line revenue growth has accelerated in the past fiscal year with a growth rate at 62% that is more than four times the average of the last two years. Similarly, our adjusted Avista growth has more than doubled the average growth of the last two years and more than tripled that of last year. Enrique will explain the drivers behind the current performance, but I would like to highlight that what we are seeing today is the outcome of decisions that we took many years back, only modestly reflecting initial entry for sales and not accounting in any form for the growth we expect from our recent merger and international expansion. Likewise, on slide 5, you can see the evolution of HB4 revenues or contributed goods since we launched the HB4 program. The HB4 program was designed to parallel track product development in terms of geographic targeting and performance valuation for pre-launch varieties with an inventory ramp-up process. Fiscal 2022 revenues and contributed goods represent a 74% increase over the year-before period with an overall gross margin expansion of 900 basic points. You can see that almost all the growth experienced in fiscal 22 was achieved in the currently reported quarter with HB4 wheat, which is discussed in more detail in slide 6. HB4 revenues, wheat revenues were generated with the HB4 program kept at a steady state, slightly over 50,000 hectares. and with initial sales to conventional channel participants such as multipliers and distributors, something we can only do now after being granted registration for the first five materials. Growing conditions are very challenging now in Argentina with many regions being affected by a long-standing, long-lasting drought. Although it is too early to tell, HB4 varieties are favorably withstanding the current stress, and we look forward to report on their evolution in upcoming polls. To minimize disruption in the commercial chain, we continue to build our downstream channel for HB4 wheat, as shown in slide 7. In the past quarter, we doubled the number of processors onboarded, now reaching a total of 25, and we are currently working with 23 new processors to be onboarded in the next few quarters. Total processing capacity stands at over 1 million tons, a number that far exceeds HB4 grain current or near-term availability. We're also working to take advantage of existing input approvals and have recently finalized our first final export of HB4 flour to Brazil. To leverage on the identity preserve capabilities developed for the HP4 program and expand our relationships with downstream players, we have planted the first 300 hectares of good wheat materials. These are wheat varieties genetically edited to meet consumer demands, such as increased dietary fiber or reduced gluten content. Although these materials have not yet yet being improved to perform competitively, something that is currently ongoing, the produced grain will allow us and our partners to jointly develop consumer interests in anticipation for a future technology launch. Turning now to slide eight, we have finished harvesting last season's HB4 soy crop and are moving forward to launch two of the varieties with selected multipliers and distributors in the upcoming season. We have also redesigned the HB4 program to allow growers to test a larger set of materials within their production regions, and this will allow us to accelerate new variety validation and geographic positioning. We intend to have more materials available for launch in upcoming seasons. We are also making good progress in Brazil, where we are advancing two varieties under the HB4 program approach. to be ready for launch in the 23-24 season. Based on our ongoing conversations, we also expect our leading licensees to be able to launch their first materials during the 23-24 season, and this is both for Argentina and probably less to the extent to Brazil. Slide 9 provides an overview of the progress we are Sorry, slide nine provides an overview of the progress we made during the last fiscal year in terms of regulatory clearances. We are thrilled to see the evolution of approval for HB4B since the initial green light in Argentina back in 2021. The approval in Brazil was particularly important since this was a prerequisite to be able to get varieties registered in Argentina and, consequently, revenues booked. We intend to seize the current regulatory momentum in which we can continue to submit applications in important import geographies, such as those of Southeast Asia. We have already filed in Indonesia, for instance, and we are looking forward to file in the upcoming months in Thailand, Vietnam, and the Philippines. The approval of HP4.0 in China carries a similar implication for us, to that of within Brazil, as we now can register varieties and enable conventional sales in Argentina. Also, China's approval was a triggering event for our licensees, which are now free to launch in their respective geographies. We expect to be able to recognize HP4 soy revenues in the upcoming season. Right after the quarter's end and less than four months since the announcement, we have successfully merged with and delisted Maroon Bioinnovations. A brief update of the integration process can be found in slide 10. We have rebranded the company under the ProPharm name and promoted Maddy Tjajinen, a founder of the ProPharm subsidiary, as Group President and managing director for these business units. The ProForm business unit will manage the portfolio and pipeline of Legacy Monroe globally and have channel responsibilities in North America and Europe. Similarly, Resolactor will remain our de facto commercial channel in South America and other rest of the world geographies. On the cost synergies front, we're already at 60% of the $8 million target we set for ourselves and expect to be able to fully achieve this goal in the upcoming months. Finally, I would like to thank former CEO, Kevin Tidesh, and the XCT Maroon board for their contribution to this successful integration process. I would also like to welcome Jogesh Nagu and Keith McGovern as continuing board members. as well as Cathy Fielder and Agustin Giajoni, who have taken key VP roles for the integration process and future operations of the company. Enrique, all yours.