Hello and welcome to today’s Bioceres Crop Solutions Fiscal Third Quarter 2023 Financial Results Conference Call. My name is Bailey, and I'll be your operator today. I would now like to pass the conference over to our host Paula Savanti, Head of Investor Relations. Paula, please go ahead.

Good morning, thank you and welcome to everybody for joining our call. Presenting today will be Federico Trucco, our Chief Executive Officer, Enrique Lopez Lecube, our Chief Financial Officer. Both of them 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 the recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances. This conference call is being webcast and the webcast link is available at Bioceres Crop Solutions Investor Relations website. At this time, I will turn the call over to our CEO, Federico Trucco. Thank you.

Thank you, Paula, and welcome everyone to our fiscal third quarter earnings call. We're delighted to resume our growth trajectory with solid numbers being reported in this quarter, despite the historical drought in Argentina, which continued to affect our sales in these important markets. Please turn to slide two for our key business and financial highlights. Our outstanding performance in this quarter results from the combination of strategic actions we have taken over the last year to diversify the product and geographic exposure of our business. Total revenues were up by 33% when compared to the pro forma numbers for the third quarter of last year, which are inclusive of historical revenues from Pro Farm. Top line growth was primarily driven by revenues in the crop nutrition segment, resulting from the initial proceeds generated by the strategic partnership with Syngenta, which more than offset the negative impact of the extended drought in Argentina. Adjusted EBITDA was $35.8 million in the quarter, mainly benefited from proceeds from the Syngenta agreement that were recognized in this period. On an LTM basis, adjusted EBITDA stood at $85.3 million, and Enrique will discuss our financial performance in greater depth during his part of the presentation. We are also making great strides internationally on the HB4 front. Brazil's recent full commercialization and cultivation approval for HB4 wheat consolidated our collaboration with local institutions and seed developers, such as EMBRAPA and Sementes. Additionally, the approval of HB4 grain importation by Brazil, adding to the prior approval for flour importation, allows us to further diversify our go-to-market strategy in Argentina, as I will discuss later in today's call. Also in Brazil, our HB4 Soybean program is steadily advancing with an initial set of varieties tested by farmers in five states, with at least one variety consistently outperforming the top commercial alternatives. I will provide an update on the current soy harvest in Argentina and more information about next steps later in the call. Finally, during this quarter, we published our inaugural sustainability report, and I will briefly discuss some key aspects of our sustainability strategy towards the end of today's call. Now, let's pass over the presentation to Enrique.

Thank you, Federico, and good morning to everyone on the call today. I'd like to dive further into our financial performance and expectations for the remainder of the year. Before we start, let me remind everyone that, as on the previous two earnings calls, all yearly comparisons in this presentation are made on a pro forma basis, meaning that they include Pro Farm numbers for fiscal year 2022. So, let's jump to slide four, which provides some context on the evolution of the fiscal year-to-date. As you might recall, we started the fiscal year with an outstanding first quarter in which revenues increased by 71% year-over-year and EBITDA almost doubled, continuing the growth momentum from previous quarters. This was partly a result of early sales that our commercial teams locked in ahead of what looked like a challenging summer crop season in one of our primary end markets, Argentina. During the second quarter, an impressive streak of continuous quarterly growth that spanned across more than two years was interrupted by a severe drought in Argentina, with overall revenues declining 7% year-over-year. This climatic event had a particularly negative impact on our micro-beaded fertilizers business, which had been previously delivering outstanding growth and, of course, also reduced the need for some of our crop protection products. It was not surprising to see that demand for insecticides and fungicides was substantially weaker, along with a pullback in demand for fertilizers as farmers dealt with getting planters into solid fields. Despite these headwinds, we saw our revenues decline only 7% on the back of geographic diversification and commercial savviness, which brings us to the third quarter, a period for which, as Federico mentioned, we are delighted to report a 33% increase in the top line compared with the pro forma numbers from a year ago. This is important for multiple reasons, but I would argue that resuming growth and being able to successfully navigate challenging conditions in a key end market are amongst the most important. You might recall that at the time of our second quarter earnings call, we indicated that weather conditions had started to improve in Argentina. However, the transition from La Niña to El Niño was slower than what all forecasts had expected, and the months of February and March were still dry and unseasonably hot. This ruled out the possibility of pre-season sales of fertilizers in the third quarter. Now, the strategic agreement for our inoculants business with a market leader such as Syngenta is what allowed us to more than offset the impacts of this unforeseen scenario. We will get into a bit more detail in coming slides. Finally, looking at the year-to-date revenues, performance in the first and third quarters allowed us to offset the decline in the second quarter, our most important quarter in terms of sales, and still achieve a 28% increase compared with a pro forma nine month period of 2022. With year-to-date revenues standing at $315 million, if the weather situation in Argentina finally improves in the coming weeks, we believe we are in good shape to reach our target of 20% top line growth for the full fiscal year from the roughly $359 million in revenues for fiscal 2022 on a pro forma basis. Now turning to slide five, let's take a look at this quarter's revenues in more detail. Revenues in crop nutrition doubled, driving most of the growth in the quarter, while seed and integrated products grew 65%, more than offsetting the decline in crop protection. The performance in crop nutrition was mainly driven by inoculant results from the agreement with Syngenta. To recap briefly, in September 2022, we announced a partnership with Syngenta Seed Care to accelerate and expand the international growth of our inoculant business. Under this agreement, Syngenta became the exclusive distributor of certain Bioceres’ biological seed treatment solutions, mainly inoculants, for a period of 10 years in geographies outside of Argentina. The agreement includes contractually stipulated minimum profit-sharing targets that Syngenta must meet annually, as well as an upfront consideration to compensate for transition costs and profits shared with Syngenta over the initial 12 months of the agreement. A period during which Syngenta is expected to take over the commercial operation and prepare to achieve the agreed growth goals. In this quarter, we are recognizing both initial operational profits from the agreement, as well as $33 million from the upfront compensatory payment that corresponds to the countries in which profit sharing already began in January 2023. Although we expect operational profit sharing with Syngenta to continue flowing throughout the remainder of 2023. We do not expect any additional compensatory payments to be recognized until January 2024. When new countries will be incorporated to the profit-sharing framework and an additional $17 million in compensatory payment is expected to be booked. The performance from the agreement with Syngenta is what drove the increase in revenues in our most relevant segment for the quarter, and allowed us to successfully weather the storm under an unprecedented halt in demand of fertilizers in Argentina, which we estimate to have reduced sales by $10 million compared with a year-ago quarter. The inoculants agreement reflects the value of strategic actions taken a few months back that allowed us to monetize our extensive portfolio of technologies in alternative ways. Turning to crop protection revenues declined 3% with lower insecticide, fungicide and adjuvant sales in Argentina, and that decline was not fully offset by increased sales in other countries in Latin America. Pro Farm product sales in the US also saw some softness shaped by heavy rains in California which prevented growers from accessing their fields and pushed demand for bio insecticides into the fourth quarter. Seed and integrated products revenues increased 65% driven by sales of seed treatment packs in Argentina as well as increased sales in Europe. Let's now turn to slide six please. Gross profit was up by 84% year-over-year with increases driven by the same dynamics I just described for revenues. Gross profit from the Syngenta agreement both from shared profits as well as the compensatory payment largely offset the decline in micro-beaded fertilizer profits. And the fact that in the year-ago quarter we had recognized 100% of the profit generated by inoculants, while in this year's quarter we began sharing profits with Syngenta. Although going forward, we do not expect to maintain an 84% growth margin in crop nutrition, it does illustrate the outsized effect on margins that proceeds from the inoculant agreements can have. We expect these profits to be uneven at first, as revenue recognition will not be dictated by our own commercial efforts, but by how Syngenta channels to market. Going forward, we expect the profit sharing to become a stable and meaningful contributor to our financial results over the life of the agreement. Regarding our two segments with a much stronger profitability profile, the gross profit increase brought by seed and integrated products almost doubled the decline of gross profit from lower margin crop protection products. Overall gross margin for the quarter stood at 61%. Now considering that some of the profits we booked from Syngenta this quarter covered calendar 2023 in full, this margin level is not something we expect to repeat in the coming quarters, but rather targeting a range of 42% to 48% depending on revenue composition. Turning to slide seven, adjusted EBITDA reached $35.8 million this quarter, which is traditionally our lowest due to revenue seasonality, as was the case with gross margin. This quarter’s EBITDA received the full benefit of profits from Syngenta, some of which account for full calendar 2023. On a different note, a proactive controlling costs implemented in Argentina during the quarter to offset headwinds from dry weather as well as the realization of cost synergies in Pro Farm further contributed to the improvement of the adjusted EBITDA metric. The continued execution of cost synergies in Pro Farm gives us confidence in our plan to be adjusted EBITDA neutral on these assets by the end of fiscal 2023. Assuming we benefit from this year's rainfall in California. This quarter reminds us that our business sometimes does not lend itself to evenly balanced quarters and is usually best understood on an annual basis. For the last 12 months, adjusted EBITDA was at $85.3 million, a 67% improvement compared with the same period of the previous year on a pro forma basis. Now, please turn to slide eight, to wrap up with some brief remarks on our financial debt and cash position. Total financial debt as of March 31 was $250 million. The increase year-over-year is driven by the financing agreements linked to the merger with Pro Farm as well as new financing obtained during the last quarters to support working capital. As mentioned in our last earnings call, in February, we issued a $26.6 million public bond in the Argentine local market, of which roughly $21 million mature in February 2025, and the remaining amount in February 2026. All the proceeds were used to pay down short-term debt, thus extending our debt maturity profile and reducing the portion of current debt to 42% from 56% in the year-ago quarter. It is also important to note that our cash position and working capital long exceed short-term debt. Importantly, all profits from Syngenta operational and compensatory flow from the top line to the bottom line of the P&L very efficiently and have a high conversion to cash. Along with our February issuance, this drove our cash balance to $71 million at the end of the quarter. A much desirable position to be in considering the growth nature of our business, the turmoil in the global markets and the headwinds from drought. Our leverage ratio was 2.1 times, a significant improvement compared to 3.06 at the end of the year-ago quarter and 3.13 times in the previous quarter. As we look ahead, we are cautiously optimistic about the fourth quarter. In South America, farmers in Argentina are still waiting for a couple more rains to occur before feeling confident about winter crops, plantings. If soil moisture gets close to normal levels, we see strong activity coming. Not only do we have a unique technology at a moment when farmers have a fresh memory of what climate change can do to their businesses, but we also have wheat seed availability and input that could be in short supply if acreage returns to normal. Brazil is coming out of a bumper crop which makes us feel confident about allocating capital to move HB4 soybeans forward as fast as biology allows. And finally on the Pro Farm front, we are well aligned with our cost targets, and if weather supports demand for bioinsecticides in California, we are on track to achieve our EBITDA neutral target by fiscal year-end. Although last year's fourth quarter was a strong one, we are confident that with the right conditions, we will be able to deliver growth and improve on the $85 million in last 12 months EBITDA that we reported today. That concludes my remarks. I will hand the floor over to Federico now.

Thank you, Enrique. Brazil's full approval of HB4 Wheat completes our regulatory process in this country, complementing the key approval received in 2021 for feed and food use of HP4 flour. This regulatory milestone has two important implications. It adds a 3.2-million-hectare market to our current 6.5-million-hectare market in Argentina, which is a 50% increase in our current available market opportunity, which translates to an incremental target of 1.1 million HB4 hectares, two-thirds of which we expect to result from the southern region of Brazil. To be able to meet this target, we have established two important collaborations with EMBRAPA, as previously announced, aimed at combining HB4 technology with EMBRAPA’s tropical wheat genetics, currently utilized in 50% of wheat hectares. And with Sementes, a historical provider of top-performing wheat genetics utilized in 20% of Brazil's wheat area. A second aspect derived from this approval is the clearance for HB4 grain importation, which is very important in terms of further diversifying our commercial strategy in Argentina, with low-level presence of HB4 grain no longer being a matter of regulatory concern. In just a moment, I will try to summarize where we stand in terms of go-to-market channels for HB4 seeds. But first, please turn to slide 10 for an update on our soybean efforts. We're very happy to show our initial results from 800 hectares planted in Brazil with an initial set of 16 generation HB4 farmers. Each farmer tested one or two HB4 varieties against several top-performing commercial controls. And what you see in the chart is the win rate of the top-performing material in each of eight regions, with 6 to 56 sites per region. It is important to note that drought was not significant in Brazil in the last season, so these results are derived from generally high-yielding conditions. We are now doing off-season seed increases to be able to expand the program to 50 farmers in the upcoming cycle, covering a total area of approximately 10,000 hectares. In Argentina, 26% of the hectares with HB4 soy have been harvested already, and we expect all fields to be finalized by the end of the month. We will report the performance of the current portfolio varieties once the harvest is completed in our next earnings call. However, it is important to note that seed quality in fields harvested to date is very poor, and this will affect seed availability in the next season. Seed quality for the next season is an industry-wide concern, and we are analyzing off-season strategies to try to minimize any inventory gaps. Regarding our commercial approach, in slide 11 you can find a summary describing our current proprietary and non-proprietary channels for both crops. In the case of wheat, we are significantly expanding access to multipliers and distributors in Argentina following Brazil's grain import approval. We have currently enabled 45 seed multipliers, who can now develop their own inventories for future direct-to-farmer certified seed sales. At the same time, we have enabled third parties such as Buck Semillas to develop HB4 varieties with their own genetics, allowing us to address the needs of farmers more quickly in certain regions. Collectively, our proprietary and non-proprietary channels supply more than 40% of the conventional wheat genetics in Argentina. As discussed before, our Brazilian collaborators currently provide genetics to 25% of that market. And although we are not clear yet for cultivation in Australia, our recently acquired assets in that country can provide a projected 5%-10% footprint once approvals are in place in an initial phase. In the case of soy, we expect to initiate multiplier relationships in Argentina in the next campaign, although these may be initially limited by the seed availability due to quality considerations as we just discussed. In Argentina, our existing collaborators provide genetics for 30% of the market, whereas in Brazil they may cover up to 80%, giving us access to the genetics required to address our targeted expectations. Finally, we would like to take a few minutes to discuss our sustainability strategy. As described in our recently published sustainability report, in addition to our internal sustainability efforts, our portfolio of products, technologies, and contractual arrangements, such as those in Generation HB4 services contracts, promote efficient resource use and protect soil health and ecosystem biodiversity while strengthening crops against weather conditions associated with climate change. We are encouraged to see that farmers' adoption of good agricultural practices can be independent of regulations when science and business models are used to align productivity incentives with positive externalities. This concept is at the heart of our all-around value proposition. Let me just provide some examples by showing you what happened in Generation HB4 wheat fields over the last two seasons. Please turn to the next slide for that. What you see here are the average improvements in utilized water or the reduction in CO2 emissions per ton of grain produced under the HB4 program compared to the non-HB4 fields. What you see in terms of water is a 5% reduction on a per ton basis and a 30% reduction in carbon footprint on a per ton basis. Also, and importantly, as we deployed our biological solutions like we do today with our Rizoderma biofungicide, we can significantly reduce the environmental impact quotient of the seed treatments. So, what you see there is the environmental impact of a standard seed treatment with synthetic chemistries compared to the expected impact of a Rizoderma seed treatment that is six times less in terms of active ingredient exposure to the environment. We think these types of measurements will be significantly improved, particularly in markets where we are deploying our bio-insecticidal solutions as well, like Rizoderma in Brazil, which is coming up as a replacement for chemical nematicides and other insecticides. Being able to discontinue neonicotinoids and abamectin that are often associated with toxic effects on bees. And these are products that have shown zero effect of toxicity in non-target organisms such as pollinators and bees. So, we will start to emphasize the biodiversity metrics on top of the water and carbon footprint metrics that we're showing here to be a pioneer in this important aspect of sustainability going forward. So, with that, I think we can close today's presentation and open up the floor for any questions that you may have.

Thank you. Our first question today comes from Ben Klieve from Lake Street Capital Markets. Please go ahead. Your line is now open.

All right. Excuse me. All right. Thanks everybody for taking my questions. A few for me first. I'll start with HB4. Federico, I appreciated your comments on all the various initiatives under both wheat and soy. All that considered, I'm wondering if you can comment on how, if at all, your expectations have changed for your prior targets for both of these. You had previously targeted $15 million of EBITDA in wheat in ‘24 and $20 million of EBITDA for soy by ‘25. I'm just wondering, given all of these dynamics, are you still confident in those estimates or do you think there's going to be some downside pressure given especially weather conditions?

Hi, Ben. Thank you for your questions. Great to have you on the call. I don't think we can adjust any of our guidance. In wheat, we feel fairly confident in terms of where we stand today. And as Enrique indicated, rains have resumed and with a couple more rains, I think we're going to have a very strong wheat season in Argentina. We have all the inventory that is required. We have the performance. There's the sort of top-of-mind aspect of drought in our customers' heads today. So, I think we're going to have a very good season and one that will put us in place to meet that guidance in the upcoming fiscal year. In soy, we're only 25% done, so we don't know how much inventory we'll have for the upcoming season in Argentina. The good news is that Brazil is moving at a faster pace than what we expected. So, I think there might be some compensatory effect there that might allow us to keep the current target. But today, it's probably too early to tell on the soy front.

Got it, very fair and great to hear your confidence on the wheat side in the face of these weather conditions. Turning to the Syngenta agreement, again, a lot to unpack here. I'm wondering if you guys can help us understand the degree to which the upfront $50 million was a function of effectively replacing profit that now is shared with Syngenta versus upfront payments that Syngenta is making for the agreement itself. How much of that $50 million is effectively just shifting profit from just Bioceres to the joint initiative versus a royalty payment, if you will?

Sure, Ben. So let me tell you how I think about this, and maybe Enrique can then jump in. But essentially the Syngenta agreement has a guaranteed profitability to us of $280 million over 10 years now. Now, that is not $28 million every year. So, the initial years, whether it's a transition or not as efficient as the second and third and fourth year on a forward-going basis. So, part of the initial payment we received compensates in year one and in year two for the onboarding of new geographies and the inefficiencies that may result from passing the business over to Syngenta. But I think, and to be clear on this, is that whatever we are reporting today on an adjusted EBITDA basis is where we expect to deliver growth on top of in future quarters and future years. So, it's not like we believe this represents a new base on top of which we will be able to deliver strong growth and perhaps slightly overloaded in the first quarter where or the calendar year ‘23, where maybe, ideally, it should have been spread over the whole of calendar ‘23. But I will let Enrique add his comments to this aspect.

Hey, Ben, we're having a call. Look, I think that what Federico just said is absolutely correct. This is not a plug and play. I mean, this agreement with Syngenta in our view is a fantastic agreement for the company and requires some hand-holding at the beginning. And what we probably need to sort of like emphasize is that this is not an automatic agreement, it is taking a lot of joint work between the two companies. Not only on the R&D front, like looking ahead on what else we can build together but also on transferring the commercial operation to them. So, the compensatory payment offsets part of that. And as Federico said, it might be a little bit front-loaded on this first calendar quarter. But at the end of the day, we are sort of like setting our minds to build on top of this, there might be some lumpiness, but this is what we're thinking to build on.

Got it. Very helpful. There's plenty of dynamics going on. I appreciate all those comments. There's a lot more to discuss. I'll leave it with one question on HB4 soy and your expansion initiatives in the United States. Can you comment on the initiatives you're taking with the spring planting season now well underway in the U.S. with HB4 soy, specifically how you're working towards getting this to commercial scale?

Sure, Ben. So, in the US, we are probably a year behind or maybe a year and a half behind where we are in Brazil. So, we will be at the 800-hectare level probably next year. We're now developing varieties with the genetics of two providers. One, which we announced, which is Madrone. Another one that has not been announced, but it's a top provider for US soil genetics, and we expect those to be in place depending on what we get in the current, in the upcoming cycle for the fiscal ‘24, ‘25 season, if you will. So, that's what you should think of the US as one coming a year behind Brazil.

Got it? Got it very helpful. Alright, there's plenty more to discuss, but I'll leave it there. Thanks for taking my questions, and I'll get back in line.

Thank you. The next question today comes from the line of Brian Wright from ROTH MKM. Please go ahead. Your line is now open.

Thanks. Good morning. I wanted to focus on the soy program in Brazil on that chart. I believe it was slide nine or ten depending on which version you’re using. It appears that area 304 had a 100% success rate. Although there were only six data points, that area was not chosen for the targeted region. I'm curious as to why it was excluded.

So, it's not shown I think but it is a targeted region. So, 304 is a targeted region. The only reason that we're only six sites there is mostly due to logistics and our ability to have a greater number of sites. But yeah, it's where we got the best performance. So, we’re definitely going to pursue 304.

I was just curious about your comment regarding dry seed quality issues and whether there is a connection there.

Seed quality is only an Argentine issue, not a Brazil issue. In Brazil, we are doing off-season, but just to have a seed purity guarantee, which you don't get out of the farmer's fields; it has to be done in a special way. And that's probably generating a little bit of confusion there.

Okay, thanks. Thanks for that clarification. And then I just wanted to follow-up a little bit. On the slide on the sustainability factors for HP4 wheat inventories. I just want to make sure I interpreted what you said correctly. And so those benefits from a sustainability perspective were a function of the seed treatment cat packs, and how that does savings. There's no incremental benefit in this analysis for just the higher yields that you get, on average, given diverse climate conditions. Is that?

No. So, there are two elements. So, there are two aspects that we want to address with sustainability. One is climate change. And the other one is biodiversity protection, the shift away from synthetic chemistries. So, in terms of climate change, basically, there's a carbon footprint metric and there's a water footprint metric that are associated with the incremental grain, sorry, incremental yield of an HB4 crop under this particular condition. So, in terms of both of these indicators, what you see is that we're using 5% less water on a per kilo basis or per ton basis. And there's a 30% reduction in CO2 emissions on a per ton or per kilo basis of HB4 grain being produced compared to non-HB4 grain produced by non-HB4 before seeds. On the second aspect, which is okay, to achieve that work, what chemicals were utilized. At the seed treatment level, we have replaced the bio fungicides that are normally used with a biological alternative. And by doing that, we reduce six times the active ingredient or toxicity, if you will, of the active ingredient load to the soil environment. I don't know if that is clear or still confusing to you.

Yeah, no, that's true. It's two different aspects. And in that first aspect with the water reduction and the carbon footprint, it does include the relative yield and tax is part of the driver of that. Okay. Thank you so much.

Thank you. The next question today comes from the line of Bobby Burleson from Canaccord. Please go ahead. Your line is now open.

Thanks for taking my questions. So, maybe just switching gears a little bit, back to the weather outlook for Argentina, maybe help us understand what you're seeing regionally in different areas. And I believe that there's more progress being made in terms of moisture levels in certain regions.

Hi, Bobby, it's great to have you on the call. Yes, I think we were still cautious now because last time we connected in our second quarter earnings call, we felt that we were almost done. And then it didn't rain anymore, and it got worse instead of better. And that in part affected our third quarter results as Enrique just described. Rains have significantly resumed in many areas of Argentina. Still, they haven't replenished the underground water to the extent that would be required for a record harvest. I think we may be two rain events away from that to be simplistic in sort of my comment, but forecasts are looking good. And I think when we look at the monthly dynamics in our business, we're liking what we see. So, we're cautiously optimistic about the weather front. And we believe that farmers will want to recover part of the lost income from the last harvest in the upcoming winter season if conditions align, and we hope for that.

Thank you. Could you help us understand what you're observing regarding international suppliers of crop protection and other products in Argentina amid the current inflation? Are your competitors facing challenges with imports into the country? How does this situation position Bioceres to potentially benefit?

Argentina's central bank lacks sufficient dollars, which limits its ability to import freely. For providers that depend heavily on imported active ingredients, this poses challenges, with the exception of China. Overall, it is increasingly difficult for those reliant on Central Bank dollars for general imports. However, we might experience some temporary advantages since we do not depend on those imports. In our micro-beaded fertilizer business, we have the necessary inventory and access to the raw materials to fully serve our existing customers and recover from the sales we lost in the second and third quarters. This situation may provide a short-term benefit to other entities relying on imports for similar products. Enrique, do you have anything to add?

No, I think that's fine. And obviously, that's a structural advantage, probably to biologicals, you're just ramping up bacteria. So, I think that structurally speaking, this is an example of why biologicals not only makes sense from a sustainability perspective, from a biodiversity perspective, but also from a logistics perspective. I mean, with global supply chains having been disrupted more than a few times in the last five years, having the ability to manufacture locally, I think has become more important than it probably was in the past.

Great. Well, congratulations on the strong results. And I'll hop back into the queue.

Thank you. The next question today comes from the line of Kemp Dolliver from Brookline Capital Markets. Please go ahead. Your line is now open.

Hi, thank you. And good morning. I want to be sure I understand the payments in the context of the profit guarantee. So, in October, you received the $50 million upfront payment. And it looks like you will recognize that when you recognize $33 million of it. In the quarter just reported, you will recognize the balance in the third quarter, fiscal third quarter of 2024. So, the first question will be is that correct? And then the related question is, is this $50 million part of the $280 million profit guarantee? Or is it separate? Thank you.

Hi, Kemp. Thank you for being on the call. You are correct; these amounts are included in the 280 million. However, they were not distributed evenly throughout the year, which is why the upfront payment helped offset the slow start of profit sharing. As we introduce new regions to Syngenta, we aim to reach a consistent annual level of 280 million. In this quarter, there are 33 million, and there will be 17 million in the same quarter next year, in addition to whatever we generate from the various regions at that time. This should normalize over the next ten years. It's important to remember that 280 million is the baseline, which is the minimum profit guarantee. Beyond that, we also share 50% of the profits in Brazil and between 35% and 45% of the profitability elsewhere, excluding Argentina, where we retain full rights.

Excellent, thank you. And the other question, which is pretty straightforward is what's the definition of win rate that you show on slide 10?

The win rate is essentially how many times was our variety the number one variety compared to the rest of the commercial varieties? So, a win rate of 100% means that we won in every single instance, in the six sites, we were the number one. 80% would say we won in eight sites out of 10 sites.

Is there a minimum threshold for performance, such as having to be 10% better or 15% better, or is it just any improvement?

So, anything above 50% means that your genetics are at par with the top performing materials for that particular region. Remember, this is not under drought. So, what we want here is to have genetics that have no penalty so that the farmer if there's a good year, the odds of being at par with any of the other alternatives should be 50-50, almost random. Above 50 is great, below 50 means we need to improve the genetics to be able to not penalize the farmer on a good year. But this is not looking at the drought effect. This is looking at the genetic background of these materials so that they can be competitive under all conditions.

Great, thank you.

Thank you. Our next question today comes from Kristen Owen from Oppenheimer. Please go ahead. Your line is now open.

Great, thank you. Good morning, and appreciate you taking the question. Enrique, you started to mention this in some of your prepared remarks. But I'm wondering if you can give it a bit more of a detailed update on where we stand with Pro Farm. First in terms of the demand outlook, given some of the weather conditions that you discussed in California. But then also, if you could expand on the update around breakeven profitability for that business? Thank you.

Hi, Kristen, good to have you on the call. And thanks for the question. Sure, look, in terms of Pro Farm, I think that we are confident about the cost piece because that's something that is not dependent on any exogenous factors. So, there we are tracking well, both in terms of the synergy costs and also sort of streamlining the R&D work in such a way that we don't jeopardize long-term value, but that we make that efficient. At least, under what we consider to be efficient out of the 20 years of R&D experience that Bioceres has. On the revenue side, what we saw is that California got too much water now. So, farmers were not able to get on the field to spray, which at the end of the day should push demand into the fourth quarter. So, if that happens, and we are well aligned with our plans for revenues, in the fiscal year, we should be able even to beat the EBITDA neutrality because what we're seeing in Pro Farm is better margins than the historical margins. So, good on the margin side, check on the cost side. Now what we need is the market to be there. And by the way, I'm saying that from a very short-term framework. We're not expecting demand to be there. The factor that will be driving revenues up there's a lot of work that we can do in the midterm with Pro Farm to continue expanding the market, but in the short term, it is what it is. What Pro Farm had accomplished in terms of commercial expansion is what it was. And we're working to expand that market penetration. In the short term, we are still dependent on whatever was built in the past to be there for us in terms of demand. So, if those things happen, I think that we are in very, very good shape to have Pro Farm be contributing to our EBITDA. And as I said, we hope to build on top of the $85 million of EBITDA that we are reporting today on an LTM basis.

Okay, that's super helpful. Thank you for that update. And then I wanted to ask you a question around the incremental HP4 grain opportunity, the additional 3.4 million hectares. So, you talked about some of the seed inventory efforts now underway, but just help us understand or contextualize, given some of the other comments that you've made about weather how quickly you can move to serve that additional acreage opportunity. And how we can think about quantifying that growth opportunity in the model? Thank you.

So, hi, Kristen. This is Federico. In terms of the 3.2 million hectares of Brazil. Obviously, the genetics that we have in Argentina are not applicable to Brazil. So, that's why we partner with EMBRAPA and Sementes to develop locally adapted varieties. These will take a few years before we can be at the stage where we are today in Argentina. And also, I think this is not something that will result in an impact on the guidance that we provided. So, the guidance that we provided for fiscal ‘24 in wheat will be 100% met with Argentine acreage; these will build on top of that as these 3.2 million hectares become onboarded. Now, Brazil wants to be self-sufficient in wheat. And to be able to do that. They need the productivity and the acreage in the southern region to materialize. And that can be done today with a combination of HB4 technology with tropical genetics that is unique to us and EMBRAPA collaboration. So, it may take us a few years to be there. But I think it can become a very meaningful market for us bringing incremental growth to the guidance we provided for fiscal ‘24.

Yeah, and complementing what Federico said, Kristen, I think the only reason why we're not still putting an EBITDA number behind the target market is because we want to figure out how long it's going to take us to get there in terms of the variety development that Federico just mentioned. Now, once we have a little bit more visibility on that, we will provide some guidance because we think this is for sure, a very clear opportunity for HP4, probably a much clearer opportunity in Argentina that is an already existing market where you need to make yourself some room. Despite having a unique technology here, we're talking about sort of shaping the landscapes, shaping the market and changing the supply and demand dynamics for Brazil. So, we're probably working with some partners that might help us do that faster. When we have more visibility, we will throw some numbers into this.

Okay. Thank you very much. That's extremely helpful for contextualizing that announcement. Last one, if I could just squeeze it in, given some of the return to normal seasonality, some of the unusual things that were going on fourth quarter last year, just for modeling purposes, help us understand how you're thinking about working capital needs for this fourth quarter, and how that could compare to last year's fourth quarter? And I'll leave it there. Thank you.

Yeah, I mean, look, I think that we touched upon this on the last earnings call. We do expect working capital to still be on the current levels for the foreseeable future, probably the next two quarters. And this is a higher working capital position than what we would like to have. But coming out of sort of like the dry weather situation in Argentina, where we want to stand by our distributors, that's one thing and obviously ramping up HP4. Those two things are probably the biggest drivers for our working capital position. I wouldn't expect it to go any higher in terms of proportionality to sales, but rather, we're going to keep an eye on trying to streamline our working capital position that might take us two or three additional quarters. But don't expect this to continue going up on a proportion to sales, but rather going back to what was in the last couple of years.

And I think an important element to what Enrique is saying is the fact that we're now enabling, for instance, in the HP4 Wheat business multipliers. So now the burden of the working capital for incremental inventories is not on our shoulders. For the multipliers that are producing seeds for future sales. It's on their shoulders and having that network become available, I think takes part of the working capital pressure off from the seed side of the business.

Right, thank you.

Thank you. There are no additional questions waiting at this time. So, I'd like to pass the conference over to Federico Trucco for any closing remarks. Please go ahead.

I want to thank everyone again for joining the call. I think we had a great quarter and one that in a way helps us better illustrate the value of some of the strategic agreements with the last year in moments when we need them the most. Because we had a historical drought in Argentina, which still remains a very important market for us. So, we hope that in the future, we can do more of these types of fields. I think we have a portfolio with multiple technologies and technology families that can give us incremental diversification, incremental profitability, and more diversified go-to-market approach. We're actively working on that. We believe we are going to close a good fiscal year, and please feel free to reach out if you want to follow-up on any of the different aspects we discussed today. Have a great day and looking forward to connecting in the future.

This concludes today’s conference call. Thank you for your participation. You may now disconnect your line.