Hello, and welcome to the Bioceres Crop Solutions Fiscal First Quarter 2022 Financial Results Conference Call. My name is Lauren, and I will be coordinating your call today. I will now hand you over to your host, Rodrigo Krause, Head of Investor Relations, to begin. Rodrigo, please go ahead.

Good day, everyone, and thank you for joining us. Presenting today's 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. I would like to take a moment to inform you that Maximo Goya, Head of Investor Relations, is leaving Bioceres to pursue an enriching personal and academic opportunity. I, Rodrigo Krause, have joined the company to take over Maximo's responsibilities and want to thank him for his support. Everyone at Bioceres, including management, would like to thank Maximo for his excellent work and wish him success in his new endeavors. Back to our presentation. 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 statements section of today's earnings release and presentation, as well as in our recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Also, please note that for comparison purposes and a better understanding of our company's underlying performance and in addition to discussing reported results today, we will discuss comparable results, which exclude the impact of hyperinflation accounting in Argentina. Additional information regarding the application of the IAS 29 rule can be found in our earnings report. Finally, this conference call is being webcast. The webcast link is available at the biocerescrop.com Investor Relations site. At this time, I would like to turn the call over to our CEO, Federico Trucco. Thank you.

Thanks, Rodrigo, and welcome to the Bioceres team. I would also like to welcome the investors and analysts who are joining us today. We are pleased to report that we had a very strong quarter in terms of financial performance. Please refer to Slide 3 for a brief overview of the business and financial highlights we will discuss during this call. We are excited to share the financial results for the first quarter, which show that the positive momentum we observed in the past two quarters has continued to accelerate. For the first fiscal quarter, comparable revenues increased by 54% year-over-year, leading to an adjusted EBITDA of slightly above $50 million on a last twelve months basis. I will give a high-level overview, and Enrique will provide more details about our financial performance later in the presentation. As we have done in previous calls, we will give a brief update on the HB4 rollout and regulatory processes. We will also introduce a new level of ESG reporting on HB4 inventories that will help us evaluate environmental exposure to chemicals and promote reduced chemical footprints in our seed and grain production systems. Finally, we will report the completion of Rizobacter's $16 million public offering of Series VI corporate bonds during the quarter. This capital raise strengthens our financial position, ensuring we can meet working capital needs in the quarters ahead. Now, please turn to Slide 4 for a quick look at the robust self-driven growth we've experienced over the last three quarters. Comparable last twelve months revenues reached $220 million, marking a 24% increase from the same period last year based on this metric. We saw double-digit growth in the top line, fueled by the successful implementation of new strategies in the Crop Protection and Nutrition segments, with revenue growth accelerating from approximately 35% to 40% in the first half of the calendar year to about 50% in the current period. The expansion in the first fiscal quarter was primarily driven by a combination of the newly implemented commercial strategies, product launches, and overall positive sector dynamics in Latin America. The trend towards increased sales of micro-beaded fertilizers continued for the third consecutive quarter, with the Crop Nutrition segment accounting for 44% of growth during this period. Our installed capacity has now reached 48%, an increase of 60% from last year. The innovative bionutrition products launched ahead of the summer crop planting season also performed well in the quarter, with Integral Microstar Bio and Microstar PED Bio making up nearly 10% of segment sales. The Crop Protection segment benefited from the full impact of the sales force and channel reorganization, contributing to nearly 55% of the growth observed in this period. We anticipate similar growth in the Seeds and Integrated Products segment in the upcoming quarters, primarily as HB4 inventories transition from being held to being sold as seed or grain and also due to an ongoing process within this segment. This growth in the Seeds and Integrated Products segment should help us maintain our current momentum from the first quarter of this fiscal year. Please turn to Slide 5 for an update on the ongoing HB4 initiatives. The ramp-up of HB4 inventory processes is progressing as we discussed in our last earnings call. Early season HB4 soy plantings have been completed, and late-season planting, which represents the majority of our targets, is set to start shortly. The HB4 wheat harvest has commenced, currently at about 10%, particularly in the northern regions of Argentina where wheat matures earlier. We will provide updates on operational metrics in the upcoming quarters after the completion of the HB4 wheat harvest and HB4 soy planting seasons. On the regulatory side, we have not received any additional requests for information since our September report from Chinese regulatory authorities regarding HB4 soy or from Brazil's CTNBio concerning their ongoing evaluation of HB4 wheat. As previously stated, we believe that both regulators will be able to resolve approval requests in their upcoming meetings, and we look forward to updating you on our findings as they become available. As you know, end-to-end traceability is a core feature of our company, and is considered a key approach in the early aspects of our program as we create tools for consumers and growers to communicate effectively. In Slide 6, you'll find a snapshot of various points within our HB portfolio where we are collecting data. We have invested significant time and resources into integrating various technologies into a comprehensive traceability platform, including the use of a ledger to enhance transparency and accountability for all stakeholders. A tangible outcome of these efforts is the ESG reports, which aim to track farmers' performance while providing consumers with reliable traceable data on grain scoring. We are also excited to announce the incorporation of ecotoxicological indexes into our ESG reporting process for HB4 inventories, which you will see in Slide 7. We have chosen to produce a blended ecotoxicological score that combines assessments of environmental impact with a pesticide risk approach. These metrics take into account factors such as thermal toxicity, effects on birds, bees, and beneficial insects, soil health, surface contamination potential, plant surface half-life, and systemic risk, among other considerations impacting the environment and consumers, particularly for the most frequently used pesticides. We believe this report will establish a new industry standard. Understanding the environmental impacts of exposure to various active ingredients, along with the carbon intensity of production processes and the water footprint of agricultural ecosystems, are all crucial components in fostering and promoting 21st-century regenerative agriculture. This concludes my prepared remarks. I will now hand over the call to our CFO, Enrique Lopez Lecube, to discuss our fiscal first quarter financial performance.

Thanks, Federico. Good day to everyone, and thank you for joining us today. Moving over to the financials. Please turn to Slide 8 as we frame the impact of our quarterly performance on an LTM basis. As Federico outlined a few minutes ago, we had a strong first quarter performance at the run-off of the high season of sales in key markets across South America, with comparable revenues rising 54% to roughly $65 million. Now for the third consecutive quarter, our top line has outperformed the previous fiscal year period, clearly offsetting the blowback in the second quarter of the previous fiscal year, which had been negatively affected by serious droughts in South America. As a result, LTM comparable revenues were up 24% to $220 million, even as the LTM metric of this year's seed accounts for that soft second quarter. Execution during the quarter consolidated the successful outcome from the initiatives taken in the second half of fiscal 2021 to reignite growth in our Crop Protection and Nutrition business segments. Segregation of commercial teams and enough sales force power allowed the implementation of a more customized market approach with a product-centered strategy for high-technology categories such as micro-beaded fertilizers versus an opportunistic and market-driven approach for third-party products. Crop Nutrition was the segment that benefited the most from the doubling sales versus the year-ago quarter. In particular, we saw a two-fold growth in micro-beaded fertilizer volumes as a result of the combination of increased sales force focus and market conditions. Growing sales of product lines that minimize negative externalities from farming activities continue to be a key element of our baseline business. And this quarter's performance is a testimony to that. Moving on to Slide 9 that compares LTM EBITDA as of September 2021 with LTM EBITDA in September 2020. Growth in profitability was more modest than top-line growth. This year's LTM EBITDA metrics fully account for $3.4 million in pre-operational expenses related to the rollout of the HB4 program that we discussed in the previous fiscal year LTM EBITDA. Profitability from our baseline business is currently supporting expenses related to HB4, but still has no record in reported revenues and gross profit. It is important to note that the inventory ramp-up process being executed is generating deferred revenues and profitability from contributed goods that will be recognized in a timely fashion once inventories are sold as seed or grain. Furthermore, the LTM EBITDA metric for this year also accounts for the drawback in the second quarter of fiscal '21 that had been hit by dry weather, as mentioned before, as well as unfavorable dynamics from inflation and depreciation of the local currency in Argentina, where we hold most of our manufacturing and support functions. LTM EBITDA stands at over $50 million and slightly increased even as we account for these key elements that had no impact in the previous fiscal year, proving the strength and resiliency of our baseline business and giving us great confidence as we move forward. Let's please move to Slide 10 for a breakdown of first quarter revenues for business segments. The $22.6 million increase in comparable revenues was driven by an almost even contribution from Crop Protection and Crop Nutrition, with Seed and Integrated Products almost flat versus the previous quarter. Crop Protection sales were up 58%, reaching $34.3 million. Crop Protection global supply chain conditions provided tailwinds of product shortages and low prices higher in South America, which was further reinforced by sustained agricultural commodity prices. As I mentioned earlier, the reorganization of the commercial teams in the segment favored an opportunistic approach to leverage market momentum with higher sales of third-party products, mainly in Argentina. On the flip side, the mix during the quarter drove adjuvant volumes down compared to the year-ago quarter, a situation we believe could normalize during the current quarter. The average gross margin for the segments declined from 38.6% to 33%, primarily due to the increase in sales of lower-margin third-party products, which detracted from sales contribution from higher-margin adjuvants. The Crop Nutrition segment grew an impressive 83% to almost $22 million. The expansion in the segment was mainly explained by micro-beaded fertilizer sales that benefited from a combination of factors. First, increased focus from commercial teams with expertise in conducting sales based on product attributes rather than market conditions alone. This was possible, thanks to the incorporation of new salespeople who are focused on lower-margin and more opportunistic sales. Secondly, the commodity fertilizers market macro conditions also provided the opportunity to ramp volumes up with healthy margins. Commodity fertilizer supply shortages resulting from China's energy crisis and global logistic challenges drove prices higher, which favored market penetration and adoption of high-tech specialty fertilizers. Throughout the quarter, 30 distributors incorporated different presentations of Microstar, our main brand for micro-beaded fertilizers, to their product offering as Federico previously mentioned. Inoculant sales were also higher during the quarter despite volumes remaining flat. This was due to a shift in the product mix from conventional inoculants to higher value inoculants, in particular the Long-Life Inoculants, LLI, a proprietary technology of Bioceres. LLI has been gaining popularity among growers because of its higher microorganism survival rate and greater nodular dry mass. The overall gross margin for the segment increased slightly to 51% despite higher sales contribution from micro-beaded fertilizers, which have lower margins than inoculants. Micro-beaded fertilizer margins remained fairly stable, driven by economies of scale as volumes increased as well as favorable market conditions. Inoculant margins increased as a result of the shift to LLIs from conventional inoculants. Finally, Seed and Integrated Products' comparable revenues in the first quarter of fiscal '22 stood at $8.7 million, flat compared to the first quarter of fiscal '21. Seed pack volumes remained flat in the first quarter as the high season for seed treatment solutions in South America begins. Margins in the segment dropped to almost 63% due to unfavorable cost dynamics in Argentina where seed treatment packs are manufactured. Overall, it was a great quarter for our top line growth. Let's please move on to Slide 11 for a look at how this translated into gross profit contributions. Comparable gross profit for the quarter grew to roughly $28 million, almost 40% more compared to the year-ago quarter, driven by the expansion of our top line done profitably. Crop Nutrition contributed roughly two-thirds of the growth for the quarter, as sales grew with gross margin expansion. Despite contributing roughly half of the growth in revenues, Crop Protection only contributed one-third of the growth in gross profit, as the expansion in sales was driven by lower-margin third-party products. Overall, gross margin and sales dropped from 37.5% to 43.1%, explained by the product mix shifts as we said before, but also by unfavorable cost comparison versus the prior year. Our cost of goods sold during this year's quarter has been negatively impacted by inflation and FX dynamics in Argentina. For the last 12 months, inflation in the country has outpaced depreciation of the local currency, which has the negative effect on dollar-linked businesses like ours. This situation should normalize sometime in the near future based on past experience. Let's now please turn to Slide 12 for a review on EBITDA performance for the quarter. Adjusted EBITDA increased 18%, totaling $12.4 million in the first quarter of fiscal '22. Reported gross profit rose by $9.8 million, composed of a $7.9 million increase in comparable gross profit and $1.9 million in IAS 29 positive adjustments. Operating expenses and other income and expenses collectively increased by $7.5 million, partially offsetting growth in gross profit. Importantly, and as discussed at the beginning of our presentation, this $7.5 million increase includes $1.9 million in pre-operational expenses during the quarter related to HB4. $1.1 million accounted for in SG&A and $0.8 million accounted for in other income and expenses. These pre-operational expenses are fully accounted for in our adjusted EBITDA and therefore supported by our baseline business. I'll take a minute to further discuss SG&A, which totaled $16.2 million in the first quarter of fiscal '22 compared to $10.1 million during the first quarter of fiscal '21. The increase is mainly explained by a combination of variable and semi-fixed expenses. Variable sales-related tax and logistics expenses grew by $2.7 million, in line with growth in revenues and increased freight expenses in global trade challenges. Employee salaries and social security costs, a semi-fixed expense, increased by $1.7 million, including resources assigned to HB4. Finally, similar to cost of goods sold, FX and inflation dynamics in Argentina also played a negative role on operating expenses. Despite the year-over-year increase, total SG&A expenses remained almost flat as a percentage of revenue at 24.2%. Turning to Slide 13 to address our debt evolution and cash position before turning it over to Federico for remarks. Total financial debt by quarter-end was roughly $180 million, of which approximately 63% consisted of long-term obligations. The liquidity equivalents, cash, and short-term investments stood at $42 million and represented approximately 63% of the current portion of debt. Total financial debt increased by $6 million from the fourth quarter of fiscal '21. Despite the increase in total financial debt, LTM financial expenses decreased by 7% from $14.6 million to $13.5 million. Net debt by quarter-end was $137.6 million, a 2.7% ratio of net debt to LTM adjusted EBITDA. The sequential increase in net financial debt is explained by a slight increase in total debt and an increase in the cash position as we enter a high season in key markets and working capital requirements increase. This concludes my remarks for today. Federico?

Thanks, Enrique. I will now open up the floor for questions before concluding remarks.

Our first question comes from Ben Klieve from Lake Street Capital Market.

I got a question for probably Enrique here on the breakdown of SG&A that you talked about. I appreciate the breakdown of the HB4 pre-operational expenses especially, but I'll say it's kind of unclear to me why this number is coming up now, as I can't really tell what has really changed within HB4 this quarter versus prior quarters. So can you help me kind of understand what these expenses are? Confirmed that these are, in fact, new expenses realized this quarter? And then talk about kind of what your outlook is for that throughout the next few quarters?

Ben, I appreciate your question and your presence on the call. The pre-operational expenses we recorded this quarter are due to various factors. One component is related to data acquisition costs, which are variable because they depend on the number of tons we are acquiring from farmers. The timing of these expenses varies depending on when farmers choose to price the services from which we acquire the grain. Approximately two-thirds of the SG&A costs related to HB4 stem from these data acquisition expenses, while the remaining one-third consists of semi-fixed expenses tied to support functions for the HB4 platform. Does that clarify your question, Ben, or would you like me to elaborate on any specific point?

No, that's a helpful start. I guess my follow-up question to that though is collectively that, I forget what it was like $1 billion, something like that in the first quarter. Is that kind of a good run rate that you expect going forward? Do you expect that that's going to pick up in the coming quarters? What's your outlook for that line item here down the road?

No, again, it is difficult to project what the run rate is going to be because that depends on when farmers choose to price the services that they provide. What I can tell you is that what we recorded in this quarter has a substantial portion of services that we have contracted to have been multiplied. So there's a significant portion of the soybean we produced under the HB4 program in the last season that has already been priced. Regarding wheat, we've contracted about one-third of the service, and that will happen in the second and third quarters, but there's still pricing that needs to be established for that. So it's not for us to project that run rate. Most of the soybeans from the last season have already been priced, and the data acquisition related to that has already been paid.

Got it. Okay. Great. A couple of other questions. You talked about the difficulties in your second quarter of last year, given weather conditions. It appears from my vantage point that conditions this year are much more favorable. I'm wondering if you can just provide a quick boots-on-the-ground update of growing conditions this year, especially relative to last year.

Ben, this is Federico. Thanks for joining us today. We are having normal conditions in Latin America primarily this year. So we don't expect to see the same weather effect that we saw last year. We hope to maintain the current momentum in the second quarter. That's probably as far as I would like to go today in terms of guiding towards the second quarter outlook.

Okay. No, that's helpful, and understood. Last question from me, and then I'll get back in queue. You talked about the challenges around transportation, logistics, etc., that everybody seems to have right now. It seems that you guys have been able to weather that pretty well. Can you talk about the conditions in Argentina and throughout your supply chain and how problematic these transportation issues really are? And to the extent to which it's really impacted your ability to get your product to customers. And that will do it for me.

No, that's an excellent question. When we talk about transportation and logistical complications, we are mostly focusing on international logistics. Within the country, logistics are somewhat normal, and we are not having major difficulties there. It is in terms of sourcing some raw material for adjuvants that we have to take anticipatory measures. As you can see, we did see some incremental costs, but those were nowhere close to the magnitude that other industry participants have observed. Likewise, regarding our international business, where we source products from our manufacturing facilities in Argentina, we will move inventories ahead of what we used to, to ensure that farmers have products on the shelf when they need them. We recognize that gaining customers isn’t always easy when you're playing internationally, so we don’t want inventory shortages to be an issue. Despite ongoing difficulties in the sector, we have taken measures to minimize disruption, and though there are certain incremental costs, I think it’s manageable.

Yes. Federico, I think it's correct. We're basically seeing shipping expenses and raw materials overall. This mainly occurs with inoculants. We manage this depending on marginality. Lower-margin products have less flexibility. In terms of imports, we've had to really take some precautions for adjuvants that we import, where we have manufacturing facilities. Remember that biologicals don't have any imports outside of Argentina. Again, we manufacture. For fertilizers, where we use DAP and MAP as raw materials, those supplies have not faced as much disruption as container movements.

Our next question comes from the line of Brian Wright from ROTH Capital Partners.

Just a quick question. Can you give us some insights into how much the market for the micro-beaded fertilizer? Is it going to give us a better sense of market share gains?

Brian, it's great to have you on the call. Thank you for joining. If I understood correctly, you're asking about the market share gain in micro-beaded fertilizers. That's an excellent question. It's important to note that our main competitor in this space is essentially commodity fertilizers. We're transitioning from traditional technologies to a more advanced, specialty fertilizer. Our biggest challenge is encouraging farmers to embrace these new technologies instead of focusing on competition with other companies. There are other companies offering similar products, particularly in South America, but we hold a competitive edge as we are the sole manufacturer of these fertilizers within the country. This quarter has shown significant progress since the rise in commodity fertilizer prices has made the market more open to high-tech products.

Great. And it just seems like given what’s happening in the futures market for the commodity pricing, it seems like this tailwind should last quite some time.

Yes. As you noted, the commodity prices have remained steady and moderately soft for corn and wheat. This healthy pricing environment has promoted profitability for farmers, which is important as they decide to purchase high-tech products. We recognize that the correlation between prices for agricultural commodities and MAP and DAP, which are our raw materials, tends to show a lag but inevitably adjusts, as we have seen occur now. What we are observing is a level of stabilizing prices around commodities. As long as they remain in this positive range for farmers, we believe it sets a nice backdrop for our business.

Our next question comes from Steven Ralston from Zacks Investment Research.

And congratulations on the successful execution of your two strategies in Crop Nutrition and Crop Protection. Could you help me understand management's expectations on the mix shifts that are occurring in your three segments? It seems like each segment has a targeted strategy. In Crop Protection, your pricing strategy, even though you're compressing the margins, is resulting in strong sales. In Nutrition, sales are even growing faster with margin expansion. This has led to some compression in corporate margins, but it seems like when HB4 technology gains traction, that would drive corporate margins higher. Is that the management view or could you help clarify?

Steven, this is Enrique. Thanks for having you on the call, and thanks for joining. You're correct in your understanding. We do see some margin compression, but that is also seasonal in nature. Bear in mind that we are working on expanding our capabilities in Brazil, where we intend to invest in manufacturing capacity, likely a category that holds higher margins in Crop Protection. This will take some time, as we will be building that facility over the next 12 months. I don't view this margin compression in Crop Protection as a long-term trend but rather as a reflection of seasonal dynamics. The growth in Crop Nutrition, where both sales and margins are expanding significantly, looks stable.

Thank you. Could you clarify the dynamics that are occurring in the distribution channel in Crop Nutrition? You mentioned that you have 30 new distributors that incorporated Microstar. Are these adopting Microstar for the first time, or do you already have a relationship with these distributors that are just expanding the relationship?

That is a great question, Steve. These are 30 distributors that are already executing our products, and they incorporated new presentations of Microstar. So we previously had a more conventional presentation or less technology. Now we have introduced new presentations for our main brand in micro-beaded fertilizer. Throughout the quarter, these existing distributors adopted the newer presentations of Microstar.

You expanded the relationship with these distributors. A couple of years ago, you put out a chart of all your distributors in Argentina, which I found impressive. How much potential is there to broaden Microstar into other distributors that you're already working with?

Steve, this is Federico. There's significant potential here. We probably will not expand the overall points of sale for our portfolio, currently exceeding 700 in Argentina. However, these new presentations that Enrique mentioned are likely to be adopted by a majority of these distributors. The bio version of Microstar contains microorganisms, offering formulation advantages. Today, close to 10% of segment revenues are explained by these new product launches. They are still a fraction of our sales points, but we believe we will see wider adoption over the coming year within existing distributor relationships.

Our next question comes from Kemp Dolliver from Brookline Capital Markets.

Great. Apologies if you had covered this earlier, but CTNBio is meeting today and tomorrow, and HB4 wheat is on the agenda. Can you talk about what we should expect? If they approve your application, when would we see an announcement? Are there any other steps in the approval process between a vote at this meeting and final approval?

Thank you, Kemp, for your question. We have not discussed that earlier in the call, but we expect to know the outcome of the current meeting tomorrow. There are two potential outcomes. One is that the committee approves the technology, or new questions may be requested by committee members. We believe the evaluators have not generated questions since our last filing made ahead of the October meeting, but the committee may still ask for additional information. In either case, we will know tomorrow. Those are the two possible outcomes.

Yes, that's great. Just to clarify, if they approve, does that complete the process? You will be able to move forward with the launch?

If they approve, that will be a significant milestone. We indicated five conditions for us to proceed with the relaunch, and this is one of them. We have also made findings in other minor export destinations for Argentine wheat which I believe does not represent a significant portion of Argentine exports. Approval will likely free up our ability to export. We gained approval in a later stage and that will lead us towards in-country production in Brazil. We'll have a subsequent filing in the coming quarters.

Great. And my last question is looking at the balance sheet. There has been a substantial increase in biological assets. What accounts for the increase since June? What should we expect for changes in biological assets looking ahead?

Kemp, this is Enrique. Good to have you on the call. Biological assets comprise HB4 inventories. The increase after June is mainly the accounting for all of the HB4 soy inventories produced in the last harvest season in Argentina, which occurred in May, June, and July. That’s why biological assets have gone up. We will also incorporate into that wheat production for this year harvested in December and January in Argentina. So the trend in biological assets will likely trend upward due to seasonality related to wheat and soy harvesting schedules. The change in these assets will be influenced by whether we decide to process that inventory into seeds or retain it as grain.

We currently have no further questions. We'll now hand back over to Federico and Enrique for the closing remarks.

Not much more to add other than we are very happy and satisfied with our performance we're showing you today. I would like to congratulate the operations team for their implementation of various strategies. We believe in the next few quarters, especially toward the second half of the fiscal year, we will see a similar trend in the Seed and Integrated Products segment, which is currently flat. This is where HB4 contributed goods will start translating into revenues. We have a strategy moving forward as projected, and we are very satisfied with that. We remain fully available to address any additional questions. I wish everyone a great rest of the day today.

This concludes today's call. Thank you for joining. I hope you have a lovely rest of your day. You may now disconnect your lines.