BIOX

Hello, everyone. Thank you for joining us, and welcome to Bioceres Crop Solutions Fiscal Third Quarter 2026 Financial and Operational Results Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star and the number 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the call conference over to Paula Savanti, Head of Investor Relations. Paula, please go ahead.

Thank you, and good morning, everyone. Welcome to Bioceres Crop Solutions 3rd fiscal quarter 2026 earnings conference call. Our prepared remarks today will be led by our Chief Executive Officer, Federico Trucco, our General Counsel, Jose Roque, and our Chief Financial Officer, Ezequiel Simmermacher. All of them will be available for the Q&A session following the presentation. During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. I refer you to the forward-looking statements section of the earnings release and presentation, as well as the recent filings with SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances. In today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release. This conference call is being webcast, and the link is available at our investor relations website. It is now my pleasure to turn the call over to Federico.

Thanks, Paula, good morning to everyone. Thanks for joining us today. Please turn to slide number 3 for today's key business and financial highlights. This quarter reflects a period of transition and operational refocusing for the company. While it is historically our weakest quarter from a baseline business perspective, total revenues and gross profits showed a decline compared to the same quarter last year, which was partially offset by an improvement in operational expenses. Net loss was $10 million, primarily reflecting lower gross profit as well as increased financial expenses, all of which will be described in greater detail later in the presentation. In the last 3 years, we have booked profits from IP rights and other commercial arrangements in this quarter, which help us offset baseline operating losses.

Although we continue to explore strategic arrangements with our partners on a regular basis and see these as a recurrent source of profitability, this year, the timing of profit-generating arrangements did not coincide with the initial months of the calendar year. As I have stated in my message to shareholders of March 16th, we recognize the significance of the events surrounding ProFarm and the uncertainty generated by the ongoing litigation process. Jose Roque, our General Counsel, will now provide an update of the ongoing litigation. Please turn to slide number 4.

Thank you, Federico, and good morning to everyone on the call. As previously disclosed, in November 2025, 4 holders of secured notes issued under note purchase agreements dated August 2022 filed a lawsuit in New York against the company and certain guarantor affiliates. The plaintiffs allege that defaults occurred under those agreements and are seeking payment of amounts they say became immediately due. The company strongly disputes these allegations. As explained in court filings, each of the alleged defaults turns on contested facts. The company has at all times acted in good faith and under active board supervision to manage liquidity and preserve enterprise value. We have also asserted counterclaims against the plaintiffs and third-party individuals. On January 20, 2026, as part of the litigation process, the note holders conducted a foreclosure auction involving the ProFarm Group, Inc. collateral.

A note holder-affiliated entity was the only qualified bidder and acquired the assets through a $50 million credit bid. We believe and continue to argue in litigation that the foreclosure was conducted in a commercially unreasonable manner, and we have asserted counterclaims challenging the process. The case remains in its early stages, and the company intends to continue both our active defense against note holders' allegations and the pursuit of our affirmative claims. While we remain confident in our legal position, I would remind listeners that my statements regarding the litigation are subject to the usual disclaimers regarding forward-looking statements and that actual results may differ materially. The company intends to continue updating shareholders regarding material developments in the litigation through appropriate disclosures, including, where applicable, reports on Form 6-K.

Thank you, Jose. Please now turn to slide number 5 for an introduction to Ezequiel Simmermacher, who joined us as CFO at the beginning of the year. Ezequiel comes to us after a nearly 20-year career in agriculture with positions of increasing seniority at Monsanto first and then at CHS, where he was regional finance director, and then director of operational excellence for South America until joining us. We're delighted to have Ezequiel in the team and very grateful for his commitment to our organization, particularly in light of joining at a time of significant uncertainty. Ezequiel, welcome. Now turning the call over to you to discuss the accounting impact of the ProFarm foreclosure, as well as the quarter's financial performance for our continuing operations.

Thank you, Federico, for the introduction, and good morning, everyone. It is a great to be here in my first earning call with Bioceres. Let's begin with the slide 6, which as Federico mentioned, detail the impact of the January 2026 foreclosure auction involving the ProFarm Group on our financials. As a result of the foreclosure process, the ProFarm business was classified as discontinued operations, and its assets and liabilities were reclassified accordingly in our financial statements. Based on the expected proceed from the foreclosure auction, the company recognized a non-cash impairment and loss associated with the transaction during the second quarter of fiscal year 2026. In total, approximately $194 million of the net assets associated with the ProFarm Group business was de-recognized or reclassified.

After considering the $50 million credit bid submitted by note holders, this results in accumulated non-cash loss of approximately $179 million. The largest impact were reductions in intangible assets and goodwill, together with reductions in property, plant, and equipment, and working capital balance. These were partially offset by the derecognition of liabilities associated with the ProFarm Group business. These impacts were recognized in the second quarter and are reflected in the current balance sheet presentations. Let's walk through the financial results for the quarter. First, let me remind you that all financial results discussed below reflect the company's continuing operation for all periods presented, and previous years' amount have been recast to exclude the ProFarm Group business unless otherwise noted. Let's turn to slide 7 to begin looking at revenues.

Total revenues for the quarter were $39.4 million, representing a 23% decline versus the same period last year. Before discussing the segments, I think it's important to remember that the fiscal third quarter is seasonally the lowest quarter for our continuous operation, particularly following the Pro Farm foreclosure auction and the resulting reduction in North America operations. This quarter typically coincides with lower planting and harvesting activities in the Southern Hemisphere, meaning that fluctuation in demands, pricing, and products mix tend to have a more visible impact on quarterly performance. Looking at segments performance, we saw a mixed dynamic across the portfolio. In Crop Protection, revenue were $24.6 million, down 18% year-over-year. The decline was mainly driven by softened demand and competitive pressure in certain categories, particularly in adjuvants and third-party products in Argentina.

We also continue to see inventory adjustments across the nutrition channel, which affected purchasing activity. In third-party products, pricing pressure in post-patent categories also weighted on revenues. In Seed and Integrated Products, revenues declined 71% year-over-year. This continues the trend we've seen over the last several quarters as downstream seeds and grain sales are phased out as part of the strategic shift towards a more asset-light and lower working capital-intense model in seeds. As we discussed before, this transition reduced reported revenues in the near term, while also lowering exposure to lower margin and more working capital-intense activity. Crop Nutrition was the 1 segment that posted growth during the quarter, with revenues increased 15% year-over-year to $11.6 million.

Growth was mainly driven by microbial fertilizer, supported by a low comparable base and stronger demand dynamics during the quarter amid global supply and pricing uncertainties associated with geopolitical tensions. Overall, revenues performance during the quarter reflect a combination of softer market conditions in certain categories together with our ongoing portfolio transition effects. Moving now to gross profit on slide 8. Gross profit for the quarter was $12.7 million, compared to $18.1 million in the same period last year, representing a 30% year-over-year decline. The decline was relatively broad-based across the 3 segments. In Crop Protection, gross profit performance largely mirrored the decline in revenues. Margins across the different product categories were generally stable, although overall segment margin came down from 37% to 35%, mainly due to the lower contribution from adjuvants within the mix this quarter.

In Seed and Integrated Products, gross profit declined in absolute terms, but significantly less than revenues. As a result, gross margin improved from 19% to 30%, reflecting a more favorable mix with a higher relative contribution from seed treatment packs versus downstream grain sales. Crop Nutrition gross profit declined 38% despite higher revenues. The main driver here was obsolescence adjustment related to inoculants following an update inventory assessment during this quarter. Excluding this adjustment, underlying profitability in the inoculants business remained broadly stable year-over-year. Overall, gross margin declined from 35%-32%, reflecting lower revenues, product mix effects and inoculants adjustment disclosed above. Excluding that non-recurring adjustment, underlying gross margin performance remains broadly in line with the prior year period. Now, let's please turn to slide 9 for a review of the adjusted EBITDA.

Adjusted EBITDA for the quarter was -$0.6 million, compared to $9.1 million in the pre-prior year quarter. When looking at this year-over-year comparison, it is important to separate a couple of non-recurring items affecting comparability across periods. First, the prior year quarter included approximately $7.7 million of non-recurring other income associated with changes in contractual obligations and intellectual property arrangements as part of the reorganization in Seeds. The absence of that income had a significant impact on comparability versus last year. Second, during the current quarter, Crop Nutrition results were impacted by a non-recurring inoculant obsolescence adjustment associated with an update inventory assessment. Looking beyond these items, underlying operations performance reflect lower gross profit across part of the business, particularly in Crop Protection.

The iteration was partially upset by continuous progress on cost control organizational streamlining initiatives. These actions resulted in a meaningful reduction in operation expense during the quarter, while joint ventures result also improved year-over-year and provided an additional positive contribution to EBITDA. Let's turn to slide number 10 to review our balance sheet, cash position, and a brief update on the debt situation. As of March 31, 2026, total financial debt stood at approximately $229 million, broadly stable compared to the previous quarter. Cash, cash equivalents, and short-term investments totaled approximately $14 million, resulting in a net financial debt of approximately $214 million, also stable on a sequential basis.

1 important point to highlight is that following the acceleration notice received in connection with the noteholder situation discussed earlier in the call, substantially all of the related debt is currently classified as short-term in our balance sheet presentation. As Federico and Jose previously noted, the company continues to dispute both the purported acceleration of the notes and the commercial reasonableness of the Pro Farm foreclosure auction. These matters remain subject to ongoing legal proceedings, and the company intends to continue vigorously defending its position and pursuing its claims and counterclaims in the litigation. At the same time, we continue to evaluate constructive alternatives and maintain dialogue with relevant stakeholders where appropriate. As Federico mentioned earlier, we are also advancing a reprofiling process for retroactive debt obligations in Argentina, including voluntary maturity extensions, discussions with bondholders, and continued coordination with key banking partners.

More broadly, management remains highly focused on liquidity preservation, working capital discipline, and tighter capital allocation across the organization as we continue to stabilize the platform and improve financial flexibility over time. With that, I will turn the call back over to Federico. Thank you.

Thanks, Ezequiel, please turn to slide 11, our final slide for today. While market conditions in several areas of our business remain challenging and the effects of the transition in Seeds continue to weigh on reported results, we are increasingly focused on strengthening the fundamentals of the organization and prioritizing disciplined execution across the business. During the quarter, we continued advancing initiatives aimed at simplifying the organization, improving operational efficiency, strengthening working capital management, and improving cash generation, while advancing liability management initiatives across key operating subsidiaries. In parallel, we are reinforcing governance and internal processes and conducting a strategic review of our continuing operations, including initiatives focused on organizational streamlining and capital allocation optimization.

To ensure that capital management attention and resources remain aligned with the areas where we believe we can create the greatest long-term value. We recognize the uncertainty generated by the ongoing litigation. While we continue to pursue the appropriate legal course and evaluate constructive alternatives where possible, our priority remains clear: stabilizing the business, preserving the value of our core operations, and positioning the company for a more resilient and sustainable future. With that, I think we can now turn the call over to Q&A.

Thank you. We will now begin the question and answer session. To ask a question, please press star and the number 1 on your telephone keypad to raise your hand now. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Again, to ask a question, press star 1 on your telephone keypad now. Please stand by while we compile the Q&A. Your first question comes from the line of Kemp Dolliver with Brookline Capital Markets. Your line is open. Please go ahead.

Thank you, and good morning. I did miss the first few minutes of the presentation, but think you can go on to add some information on this. What are you doing with regard to collections? It looks like you've made some progress on reducing receivables, but it's hard to tell, given the restatements, you know, where you stand currently on that initiative. Thank you.

Hi, Kemp. Thanks for joining us today. It's good to hear you. I will pass that question over to Ezequiel. First I'll say that we're emphasizing, obviously, reducing receivables and advancing collections to prioritize liquidity and keep working capital discipline. Ezequiel might be able to provide more color into this.

Oh, hi. Hi, Kemp. A pleasure. Two angles first is we have been working on, let's say, giving alternatives to our customers to advance the receivables with some type of incentive. On the other side, we have been working on new sales being done in lower sell period by giving some attracting to shorter terms that are more common to the industry.

Okay. What was operating cash flow for the quarter and then year-to-date?

No, we can provide that after.

We don't have the number, the exact number here, but we can provide that information on the analyst session with you, Kemp.

Okay. Thank you. That's all I have. Thank you.

Thank you.

As there are no further questions at this time, I will turn the call back to Federico Trucco for closing remarks.

Thank you. Thanks again, everyone, for joining. We remain available for any additional information that might be required and hope everyone has a great rest of the week.

This concludes today's call. Thank you all for attending. You may now disconnect.

Good morning all, and thank you for joining us on today's Bioceres Crop Solutions Fiscal First Quarter 2026 Financial and Operational Results. My name is Drew, and I'll be the operator on the call today. [Operator Instructions] With that, it's my pleasure to hand over to Paula Savanti, Head of Investor Relations, to begin. Please go ahead when you're ready.

Thank you. Good morning, and welcome, everybody, to Bioceres Crop Solutions Fiscal First Quarter 2026 Earnings Conference Call. Our prepared remarks today will be led by our Chief Executive Officer, Federico Trucco; myself as Head of Investor Relations. Both of us as well as will be available for the Q&A session afterwards. We're also joined in today's call by our General Counsel, Jose Roque. During this call, we will make forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. I refer you to the forward-looking statements section of the earnings release and presentation as well as the recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances. In today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release. This conference call is being webcast and the link is available at our Investor Relations website. It is now my pleasure to turn the call over to Federico.

Thanks, Paula, and good morning to everyone. Thank you for joining us today. Please turn to Slide #3 for an overview of the highlights of our first fiscal quarter. Despite the drop in revenues in the quarter compared to the year ago numbers, gross profit remained almost equal at $36 million with a gross margin expansion of 650 basis points. This shows how the seed business model transition as well as a lower emphasis on opportunistic third-party product sales are resulting in a similar aggregated gross profit at a much lower working capital expense. In fact, we have seen a sequential improvement in working capital despite the first quarter's seasonally high needs as we'll discuss in a minute. On the cost front, we continue to see the results of our cost reduction initiatives as well as business model transition with both variable and fixed SG&A declining significantly, resulting in meaningful improvements in operating profits and adjusted EBITDA. Please turn to the next slide. This quarter reflects clear progress on the priorities we set for the year, improve the quality of our revenues, protect margins and operate with discipline, while we continue to pursue our core purpose, which is to enable a better, still highly productive agriculture. This slide shows the 3 main KPIs that we'll track throughout the year. In our last call, we committed to operating above the 40% gross margin level, getting closer to 4 months of working capital in terms of annual sales and targeting profitability above 20% of adjusted EBITDA over sales, for which we needed not only to expand margins as we are doing, but also to reduce costs, targeting a $10 million to $12 million reduction in annual SG&A. As you can see in the numbers here, we have operated well above the gross margin limit we established for ourselves, doubled our percent adjusted EBITDA compared to that of fiscal year '25 and already got to the same level, 17% that we achieved in fiscal '24. We have done this while remaining close to our working capital target of 4 months in a seasonally demanding quarter. One important highlight is our SG&A improvement. Both variable and fixed SG&A have improved significantly, achieving 50% of our top of the range expected annualized savings in just 1 quarter. I will now pass on the call to Paula for a more in-depth analysis of these and other aspects of our financial performance. Paula?

Thank you, Federico. Let's look at the financial results for the quarter. Please turn to Slide 5, starting with revenues. Total revenues for the quarter were $77.5 million, a 17% decline versus the same period last year. The decline reflects to a large degree, the strategy communicated in previous quarters, transitioning our seed business toward a more scalable and capital-efficient model and deprioritizing lower-margin working capital-intensive sales. Results were also shaped by sales timing effects in some Latin American countries, particularly Uruguay and an uneven recovery in Argentina. Looking at performance by segment, most of the reduction came from Crop Protection and Seed and Integrated Products. Crop Protection revenues were $39.9 million, a 16% decline with respect to the same quarter last year. This decline is explained by still sluggish demand in Argentina, where while there are generally signs of normalization compared to an unusually weak prior year, tight credit conditions and uncertainty ahead of the midterm elections that were held in late October implied that normalization was slower to materialize despite favorable weather and planting conditions. Outside Argentina, lower sales of bioprotection products in the U.S. and adjuvants in Brazil also weighed in on segment results, reflecting timing of sales that is expected to even out over the coming quarters. In Seed and Integrated Products, revenues were $12.6 million, a 37% decline compared to last year. This performance is an expected outcome from the unwinding of the HB4 downstream program. We expect this revenue decline in seeds to continue for at least 2 more quarters as we compare against quarters where seeds inventory was being sold off. While this transition is temporarily lowers revenue recognition, it improves working capital and supports a more profitable business model going forward. Finally, in Crop Nutrition, revenues were $25.1 million, broadly in line with last year. Within this segment, higher biostimulant sales in Argentina and Brazil were offset by weaker fertilizer dynamics. In contrast to the past year, demand for micro-beaded fertilizers improved in Argentina, particularly in terms of volumes, supported by strong corn planting intentions. But there were delayed purchases in Paraguay and Uruguay that offset these gains and resulted in a modest 2% year-over-year decline for the segment. Let's move on to the next slide to look at profitability. Gross profit for the quarter was $36.2 million, a decrease of 3% year-over-year, much smaller than the decline in revenues, reflecting improved product mix and margin expansion. As Federico mentioned, gross margin expanded significantly this quarter at 47% versus 40% in the same quarter last year. Looking at this by segment. In Crop Protection, gross profit was $17.6 million, a 5% decrease with respect to last year, with gross margin improving from 39% to 44%. This reflects a more favorable product mix within the portfolio, where there were stronger contributions from adjuvant and bioprotection products as well as efficiency gains that reduced unit costs in products such as adjuvants. In Seed and Integrated Products, gross profit was $7.5 million, slightly higher than last year despite the lower revenue. Segment margin expanded substantially from 36% to 60% as very low-margin seed sales were nearly phased out and higher-margin seed treatment packs represented a greater share of total segment sales. Margins on these packs also expanded during the quarter, further lifting profitability. Finally, gross profit in Crop Nutrition was $11.1 million, a 6% decline with respect to last year, with gross margin decreasing from 46% to 44%. Margin compression resulted mainly from competitive pricing in fertilizers in Argentina, where sales volumes increased, but market prices declined. In addition, revenues under the Syngenta agreement included a higher proportion from the supply agreement relative to the profit sharing agreement. Increased products supplied to Syngenta typically precedes revenue recognition under the profit sharing agreement, creating some quarterly lumpiness that evens out on an annual basis. Please turn to the next slide to look at EBITDA. Adjusted EBITDA for the quarter was $13.6 million, a 61% increase compared to $8.5 million in the same period last year, reflecting a material improvement in operating performance. The increase was largely driven by the $5.9 million reduction in operating costs described earlier by Federico. Joint venture results also contributed positively, adding $0.9 million as the fertilizer business began to recover from prior quarter's weakness. Gross margin expansion further supported the results with the contribution from gross profit only $1.1 million lower despite a much larger decline in revenues. Finally, let's turn to the next slide to review our balance sheet, cash position and a brief update on the debt situation. For that, I will hand the call back to Federico.

Thanks, Paula. As of September 30, 2026 (sic) [ 2025 ], total financial debt stood at $242.5 million, down from $260.2 million at the end of the previous quarter, mainly due to the repayment of working capital loans in Argentina. As we have disclosed in our 6-K filings of October 2 and yesterday, we are undergoing a dispute with holders of our secured convertible and nonconvertible notes. As a result, we've decided to show the noncurrent portion of that debt as current as well as include the prepayment fees that would be owed under an acceleration event. Consequently, current debt totaled $188.7 million, of which $103.6 million are classified as accelerated debt, including $7.4 million of additional costs related to the acceleration process. The company disputes the allegation made by our noteholders and intends to vigorously defend its position. Importantly, all principal and interest payments remain current. Cash, cash equivalents and short-term investments totaled $16.6 million, resulting in net financial debt of $225.9 million, essentially flat versus the prior quarter. The net debt to adjusted EBITDA ratio improved to 6.8x. We continue to actively manage liquidity and debt maturities, maintaining constructive dialogue with lenders and prioritizing financial flexibility and disciplined capital allocation. To wrap up, we are operating in a complex environment, but we continue to execute with discipline and focus on the fundamentals we control, profitability, liquidity and capital efficiency. We believe these actions are building a stronger and more resilient company over time. With that, let's open for Q&A.

[Operator Instructions] Our first question comes from the line of Austin Moeller from Canaccord.

So just my first question here. There's been some discussion of higher beef imports to the U.S. from Argentina. And now that the election is over, is there any potential for either raw crops or inputs like fertilizers and pesticides to be imported from Argentina into the U.S., which would either create demand for your farmers or for you?

We've seen sort of the news as well and beef production, milk production in Argentina are booming currently. So profitability is probably at an all-time high. I think the news about U.S. imports or exports from Argentina to the U.S. are obviously further fortifying that process. In terms of ag inputs, I think also that Argentina being classified on the low tariff end, if you will, on the current trade situation is a benefit to us when we are trying to serve that market from Argentine-manufactured ag input products. Remember that we also hold manufacturing capacity in the U.S. So we are manufacturing most of our bioprotection solutions in-country in the U.S. So that has also been beneficial for us in addressing that particular market.

Okay. And the previous quarter, we had discussed that the company expected some Corteva sales of biopesticides into Europe would likely fall into Q1. How is that playing out with relative to what you expected?

So we currently don't have bioprotection products registered in Europe. What we do have is the biostimulant package where Corteva is our main customer in Europe. And we've basically historically had a very significant contribution from Europe in the last quarter of each fiscal year, which we didn't see last quarter and we have only achieved some marginal sales of biostimulants in Europe in the current quarter. I think most of the biostimulant improvement has been in Argentina and Latin America, as Paula alluded to in the call. And the Corteva Europe sales are due to come later in the year.

[Operator Instructions] It looks like we have no further questions registered at this time. So with that, I'll hand back over to Federico Trucco for some closing comments.

Thank you, and thank you, everyone, for joining us today. I think this was a quick earnings call. We remain available for follow-ups if required. And I hope you all have a great rest of the week. Thank you.

Thank you all for joining. That does conclude today's call, and you may now disconnect your line.