Welcome all to the Bioceres Crop Solutions Fiscal Fourth Quarter and Full Year 2025 Financial Results. My name is Drew, and I'll be the operator on the call today. With that, it's now my pleasure to hand over to Paula Savanti from Investor Relations to begin. Please go ahead when you're ready.

Thank you. Good morning, everyone, and welcome to Bioceres Crop Solutions Fiscal Fourth Quarter and Full Year 2025 Earnings Conference Call. Our prepared remarks today will be led by our Chief Executive Officer, Federico Trucco; and myself as Head of Investor Relations. Both of us will be available for the Q&A session following the presentation. 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 no or changed circumstances. Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release. The conference call is being webcast, and the webcast link is available at our Investor Relations website. It is now my pleasure to turn the call over to Federico.

Good morning, and thanks, everyone, for participating in today's call. I wanted to start today's call by looking at this year's performance considering the trajectory of our company since 2019. 2019 is the year we launched Bioceres Crop Solutions to the public equity markets. As you can see, this is the first down year in the series and one that comes with important lessons in terms of risk management and financial prudence, which I'll address towards the end of the presentation today. We are reporting a very disappointing final quarter to an extremely challenging fiscal year. Challenges in fiscal '25 cannot be attributed to a single factor, but rather stem from a combination of circumstances, including most significantly the macro shift in Argentina, our main market. In fiscal '24, clients anticipated a significant devaluation of the Argentine peso and as a result, hedged against this event by prepurchasing some of the inputs required for the following year. In contrast, with no expectation of currency devaluation for fiscal '25, clients in Argentina had no incentive to maintain high inventory levels. Adverse on-farm economics also led to reduced spending on ag inputs, further exacerbating the company's exposure to the shifting cycle. These circumstances coupled with deteriorating financial conditions for the sector in general and our own shift in strategy around the HB4 seed business have landed us in the position we are reporting today. I will now ask Paula to go over the specifics of the quarter and the year before we discuss lessons learned and next steps.

Thank you, Federico. Let me take you now through our financial results for the quarter and for fiscal year '25. In the fourth quarter, we reported revenues of $74.7 million, a 40% decline compared to the same period last year. This decline is explained primarily by two factors. One is a winding down of our seed business. Sales in the seed segment were $25 million lower than last year, accounting for about 50% of the quarterly year-over-year decline. The other 50% of the decline is roughly equally split between crop nutrition and crop protection, with both segments affected by the weaker demand for crop inputs in Argentina given the dynamics that Federico has just explained. In Crop Protection, we didn't see in Q4 the typical pattern of preseason sales ahead of the spring planting season as producers continue to operate this year and/or more just-in-time purchasing modality. In this sense, we expect activity to pick up as planting season begins this spring. The decline in sales in Argentina eclipsed the fact that international sales of some of our core technologies grew strongly in the quarter, with for example, adjuvant sales in Brazil almost doubling and bioprotection products in the U.S. growing almost 40%. In Crop Nutrition, sales declined by 34% for the quarter, driven by lower micro-beaded fertilizer sales in Argentina as well as lower inoculant revenues in other markets due to the calendar-based timing of the Syngenta agreement which caused some misalignment with our reporting quarters. For the full fiscal year, revenues came in at $335.3 million, down 28% year-over-year, with declines in all three of our reporting segments. In Crop Protection revenues, were $181.9 million, down 20% from the prior year, with full-year dynamics very similar to those seen in the quarter, a strong decline in Argentina offsetting growth in bioprotection in the U.S. and adjuvants in Brazil. In Crop Nutrition, revenues for the full year were $89.5 million, down 37% year-over-year. Again, as in the quarter, the main driver of the decline were micro-beaded fertilizers in Argentina. Sales of this product were negatively affected by a lower corn acreage this year. As farmers feared a repeat of the corn stunt disease, corn acreage fell by about 20% compared to the year before. Additionally, weak on-farm economics and elevated channel inventories generated price pressure, which compressed margins. In this segment, the expected reduction of $15.7 million related to the Syngenta down payment further weighed on comparisons. Lastly, revenues in the Seed & Integrated Products segment were $63.9 million for the year, representing a reduction of 34%. As explained before, this reduction reflects the scaling back of the HB4 program as we transition the seeds business into a royalty-based model. It's important to highlight that while the new strategy reduces upfront revenue recognition, it sets the stage for a more capital efficient and scalable business, which we expect will drive growth and improve profitability going forward. Now, let's please turn to Slide 5 to look at the quarterly gross profit by business segment. In the fourth quarter, gross profit was $25.4 million, a 47% reduction compared to the same quarter last year. Most of the decline is accounted for by the Crop Nutrition and Seeds segments. The $10.6 million decline in crop nutrition for the quarter is driven by lower gross profit for micro-beaded fertilizer sales for fertilizers, where lower sales in terms of volume were coupled with margin compression on account of pricing pressures in the market. Overall, gross margin for the quarter contracted from 38% in Q4 '24 to 34% this quarter on account of the margin compression in Seeds and Crop Nutrition.

Thanks, Paula, and please turn to Slide #11 for an overview of our current financial strategy. As we discussed in our last earnings call, we continue to focus on cash generation and improving our working capital profile where we are targeting a running rate of between 5 to 6 months of sales, which will better reflect our current business model and product mix priorities. Also, we have accelerated adjustments to our cost structure, targeting operating expense savings of around 10% to 12%. These savings will average about $3 million to $3.5 million per quarter as we started to see in the last quarter of fiscal '25. And we have reduced our rate of incremental CapEx and R&D investments by 50%, lowering it from nearly 6% of sales to between 2.5% and 3% for fiscal year '26 and '27. Importantly, we do not expect this slower pace of investment to affect near-term growth as we already have the key registrations and manufacturing capacity in place to deliver on our 3-year plus business plan. Finally, and without undermining the current financial challenges, we'll continue to work closely with our creditors to comply with our existing financial obligations and roll over part of our upcoming debt maturities as we have done in the past. With these actions, a more normalized ag input market in Argentina, and continued positive momentum in the U.S. and Brazil, we expect to improve our EBITDA margin levels and steadily progress towards a more robust balance sheet, preparing us for the next phase of growth. Our main focus will be on scaling up our biological initiatives, including using our key actives such as Rinotec and UBP to functionalize and further differentiate important revenue generators for us, such as adjuvant and micro-beaded fertilizers. On the seed front, we'll continue to support our key partners in Latin America while we onboard new partnerships in other geographies, mainly the U.S. and Australia. I will pause now and open up the floor for Q&A.

Our first question today comes from the line of Kristen Owen from Oppenheimer.

I want to pause here on the slide that you left us on here Slide 12 with looking ahead. Understanding that the 40% gross margin, 22% EBITDA margin, this is sort of where we are targeting over time. But as we think about the transition of the business, what are the metrics that we should be focused on, say, the next 6 to 9 months initially, it was this top line growth and EBITDA dollars, cash generation? Just want to know what we should be focused on, on this interim term at this stage of the corporate evolution.

Kristen, thanks for joining the call today, and thank you for your question. I think, obviously, cash generation will continue to be a strong focus for us as we try to get leverage ratios back to more normal levels. I believe that top line growth is less of a priority under the current circumstances and that expansion of our profitability will depend on our ability to scale up the most profitable products in our portfolio. Remember, we've recently achieved registration of Rinotec in the U.S. and Brazil, and we're starting to generate revenues from that new family of insecticides and nematicides. Also, most of the pain from the shifting of the seed business away from the identity preserve scheme has already occurred. So I think that will be an important contributor to going back to sort of the plus 40% overall gross margin profile. And with the cost reductions that are meant to right-size the organization for the current business opportunity, we will get to these kind of metrics sooner rather than later. But I would say working capital, making sure we're below 5 months of sales, moderate top line growth, but expanding profitability at the EBITDA level and gross margin level are key indicators as we track progress towards a more stabilized situation.

Okay. And if I could just add as a quick follow-up there. It sounds like these targets are not reliant on any real growth beyond market growth in the portfolio. It's just growing those products which are new and differentiated, not necessarily a robust return of the end market?

Absolutely. So what I would say is that part of what we need is the rebound to some extent of the input market in Argentina, which is not something affecting us specifically. In fact, we have lost market share in any of our key products. So if we see that tracking positively, I think that will do a lot in terms of us achieving these metrics. The type of growth that we need in the other geographies as the portfolio scales up is not different from the one we saw last year. That is what is required for us to get to these more stabilized, more profitable numbers.

Okay. One final question for me. If you could just say more about the cost savings initiatives. I think you said the cadence beginning in fiscal fourth quarter here was about $3 million to $3.5 million a quarter, and that's going to be pro rata across 2026. Just help us with a little bit of how you're thinking about those cost savings initiatives.

Look, I have my own sort of back-of-the-envelope numbers. I think if we were between $28 million and $30 million a quarter in terms of overall OpEx to get to closer to $25 million, it’s where we think we are with the things we have already done. So what I'm talking about are the results that we will obtain from streamlining workforce and rightsizing sudden capacities that has already occurred. A contributor to that is obviously the shift in the seed uses strategy, but we have also made changes on other aspects of the organization to give us those savings on a per quarter basis. So we should see that reported every quarter on a forward-going basis because we have already seen some of it in the final quarter of the fiscal year we just reported.

Our next question comes from Ben Klieve from Lake Street Capital Markets.

First on the Syngenta agreement. I understand that last year, $16 million was the recognition of that upfront payment. What was the gross profit within fiscal '25 from that agreement?

Ben, thanks for joining us today. Paula, do we have a specific number there?

So the $16 million was from the upfront payment, which we don't have this year since it was already accounted for in the last two quarters. This year, we are receiving profit sharing from the Syngenta payment for the full year, not the upfront payment.

Yes. However, we do have a minimum profit-sharing amount. The profit sharing from Syngenta is calculated on a calendar year basis, and we can provide that figure. For fiscal year '25, part of the calendar year is still ongoing, as half of the year remains. From what we observed in '23 and '24, they met the minimum payment requirements. Syngenta has been selling at a slower rate than expected, so the minimum payment requirements are linked to the gross profits we're realizing, and we are not seeing results that exceed that.

Yes. For the full year, we have approximately $18 million gross profit from them.

Okay. That's helpful. I'm sorry, you broke up a little bit at the end there, but I think I caught it, and I'm sure that was on my end. Okay. So next question, the HB4 outlook. I understand this is a fluid situation and you have a lot of different efforts here to try to extract some value from this. But I'm curious if you can look back over the last year. A year ago on this call was when I think really the air began to go out of the balloon regarding HB4. What specifically has been done within HB4 over the past year that you can point to as efforts that are really beginning to gain traction here that could give you a hopeful outlook for the future of that product?

Yes. That's a great question, Ben. The most important effort over the last year was the agreement with GDM, which we announced in the February earnings call. Even though that might have been overshadowed by other things discussed during that call, I think the key there was that in soybeans, which was the crop where we have a huge opportunity in Latin America, we achieved an agreement where they are now using exclusively the technology in Latin America. This new platform branded as Wales offers a way to provide a weed control platform that should be attractive to farmers in the region. That platform has already been launched and is being scaled up with a selective number of GDM multipliers. We will be starting to generate revenues in the upcoming fiscal year, which is very meaningful to us. We cannot control the go-to-market effort there or the inventory ramp-up, but that is the most significant achievement over the last 12 months to reignite the opportunity around the HB4 event under a different strategy in soybeans. In wheat, we have opened our business to some of our key customers in Argentina so that we wouldn't have to do multiplication and go-to-market ourselves. We structured a master agreement in the U.S. with Colorado withdrawers, as an entry point into a consortium of different breeding programs. This will scale that opportunity in the U.S. market. Even though this is still a few years away, I think that jointly with what we are doing in Latin America, it will reshape the opportunity behind the soy and wheat events. We've learned from the past, and we're not going to provide any guidance in terms of revenues. But I think it's a dramatic shift, one that can be managed with a small dedicated group.

Our next question comes from Austin Moeller from Canaccord.

I know you talked about earlier in the remarks about the plans for further diversification of revenues into the U.S. and Brazil. But how should we be thinking about the upcoming spring planting season in Argentina? It just looks like at least so far, there hasn't been a lot of advanced purchasing of inputs yet, and there's still a lot of currency and on-farm economic risk in Argentina.

Thank you for your question. In terms of Argentina, the situation is a bit counterintuitive because whenever there is a risk of devaluation that tends to drive farmers to prepurchase products like they did in fiscal '24. After the elections of last weekend, that seems to be becoming a driver. We expect an accelerated pace of input sales due to that. Most importantly, rain and weather conditions have been very favorable, and we foresee a great planting season. Remember, we operate on a dollar-denominated business. Whenever there is a potential devaluation, that tends to accelerate our sales and dilute part of our fixed expenses, which are the peso-denominated salaries we pay in the country. In terms of diversifying away from Argentina, we've seen good growth last year in the U.S. and in Brazil as well as in other parts of the world. The biostimulant platform is key in Europe as those products go into the Americas. We expect to see revenue increases from the UBP derived technologies. Also, the registration of Rinotec in the U.S. and Brazil is allowing us to be more competitive on seed-applied insecticides and nematicides, which will also provide significant growth in those markets. There's an aspect of these two products that I also wanted to emphasize, which is the opportunity to sell them not as standalone biologicals, but as a way to functionalize some of our big revenue generators. You can use UBP today in adjuvants to improve herbicide application recovery on certain crops. That is a meaningful technological aspect that we're planning to take advantage of. On the Rinotec front, similarly, we can use that to functionalize the adjuvants used in insecticidal applications, which is a way we can perceive growth without the necessity of selling the products on a standalone basis.

Okay. And just a follow-up. How should we be thinking about the cadence of the Syngenta revenue ramp in the new fiscal year? Previously, you discussed that as sort of being a two-year ramp process to hit what you expect to be the run rate over the term of the agreement for $230 million in minimum profits. How much should we be thinking about in the next fiscal year?

The $230 million are over the 10-year period. We started with smaller numbers, and that’s why we had the down payment upfront to compensate for the gap in the first and second year. I think Paula mentioned the $18 million we had in fiscal year '25 coming from the Syngenta agreement. We expect that to increase in the current fiscal year as we continue to discuss the agreement with Syngenta and look for opportunities to fortify the relationship. This is ramping up as projected without undermining some of the challenges we have seen in agriculture in general, particularly early on in the agreement in Brazil and other geographies.

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

Could you talk a little bit more about the current state or level of inventories held in the channel? There seems to be one of the most significant obstacles other than improvement in on-farm conditions to your driving growth and improving your profitability, et cetera.

In terms of Argentina, the inventory situation has almost been depleted. I’ll give you a concrete example. In the micro-beaded fertilizer business, which has been significantly affected over the last 12 months, we did about 30,000 tons in fiscal '24. Of the 30,000 tons we sold in fiscal '24, 5,000 were in inventory. This year, we did less than 15,000. We believe on a forward-going basis, we'll see recovery because those dynamics indicate zero inventory in the channel. There might even be a supply concern if products cannot be manufactured in time to fully address the planning needs of farmers. In biologicals, inventories are less of a concern because of the shelf-life issues. You cannot keep inventories forever when talking about seeds or crops as they decline over time. In general, those products are less exposed to inventory situations. In the U.S. and Brazil, inventory problems were prior to last year and what we see now is consistent with our pace of sales.

Great. And do you have your accounts receivable and inventories and accounts payable at year-end at hand?

Give me a second, I'll pass it on to Paula for that information.

Yes, can you repeat what was the question? The level of accounts receivables?

At the year-end, also on payables and inventories.

Account payables at year-end are $145 million. Inventories were $90 million, rounding numbers, but fairly close. And trade receivables were $170 million.

And then one last question relates to the changing role of the Chief Commercial Officer. What thoughts do you have regarding what that position should look like going forward?

Kemp, that's a great question. We're still discussing with the Board whether this should integrate operations more fully or be strictly dedicated to commercial the way it was before. I have to indicate that the departure of Mile Marinof is because he has accepted the CEO position of a company starting September 1. So it wasn't something that was planned. We were probably intending to continue with the current Chief Commercial Officer role. Because of that departure, we're reconsidering whether we should keep that format or have one that is more integral in its nature.

With that, that concludes the Q&A portion of today's call. I'll now hand back over to Federico for some closing comments.

I want to thank everyone for participating in the call. For the patience, we had some technical difficulties today. We are available to address further questions and hopefully, turn the page on a very difficult year as we look forward into a more normalized set of circumstances and a new path of growth for Bioceres Crop Solutions on a forward-going basis. Thanks, everyone, and have a great rest of the day.

Thank you all for joining. That does conclude today's call. You may now disconnect your lines.