Release Date: May 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bioceres Crop Solutions Corp (BIOX, Financial) reported a significant $40 million improvement in cash flow performance year-over-year, aiding in debt reduction and cash position enhancement.
- The company received EPA approval for Rinotec, allowing them to offer a comprehensive suite of biological solutions for pest control and plant health across major agricultural markets.
- There was a 26% increase in revenues from seed and integrated products, driven by accelerated sales of HB4 grain from existing inventory.
- The company achieved a favorable shift in product mix within crop protection, leading to a margin expansion from 38% to 41%.
- Bioceres Crop Solutions Corp (BIOX) successfully reduced its payroll by 68%, resulting in annualized savings of approximately $5 million.
Negative Points
- Total revenues for the quarter decreased to $60.6 million from $84 million the previous year, primarily due to the absence of a significant upfront payment from Syngenta.
- Gross profit declined from $42.6 million to $24 million, with a consolidated gross margin drop from 51% to 39%, largely due to the previous year's Syngenta payment.
- The Argentine market experienced a particularly slow third quarter, with reduced commercial activity impacting input sales.
- Adjusted EBITDA fell to $9 million from $21.1 million last year, reflecting the absence of the Syngenta payment.
- The company is still in a transitioning period, making it challenging to provide specific guidance on future EBITDA to free cash flow conversion.
Q & A Highlights
Q: Congratulations on the cash advancement this quarter. How much of the working capital unwind is still to come, and what are your expectations for EBITDA to free cash flow conversion over time?
A: We expect an additional $10 million from the transition to a lighter model with HB4. Regarding EBITDA to free cash flow conversion, we aim to return to historical levels of four to 4.5 months of sales in working capital. Our goal is to align EBITDA and free cash flow as closely as possible, targeting EBITDA margins around 25% and gross margins in the high 40s to 50s once the industry stabilizes.
Q: Can you provide more color on the ground sentiment in Argentina and how it might affect your farmers and customers?
A: Sentiment in Argentina is slowly building up, with more stable macroeconomic conditions leading to market normalization. The winter crop season is progressing well, and export tax duties on winter crops will remain low, benefiting commodity prices and farmer profitability. While Q4 may not recover from a challenging year, the outlook for the next season is positive.
Q: Was the $7.5 million non-operating income payment related to HB4 soy royalties a cash or non-cash item?
A: It was primarily a non-cash transaction, involving an exchange of intellectual property and intangible assets.
Q: What are the key drivers for Bioceres' commercial initiatives in fiscal '26, and how do you see Rinotec contributing?
A: Our focus is on improving performance in Argentina and expanding commercial excellence in Brazil, the US, and other regions. We aim to scale our biologicals portfolio and manage product mix effectively. Rinotec is expected to contribute significantly, with initial revenue anticipated in the second half of fiscal '26, and we aim to double our growth in the biocontrol platform over the next three to five years.
Q: Have tightening credit conditions in Brazil affected your customers' purchasing behavior?
A: We have been largely insulated from the credit tightening in Brazil. While the market is under stress due to increased interest rates, the offsetting factor has been the favorable impact of tariffs on Brazilian soybean prices, which has improved farmer sentiment and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
