Bioceres Crop Solutions Corp. (BIOX) Q4 2026 Earnings Call Transcript

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

Good morning, and thank you. Welcome, everybody, to Biasares Crop Solutions' fourth fiscal quarter and full year 2026 earnings conference call. Our prepared remarks today will be led by our chief executive officer, Federico Trucco, and our chief financial officer, Ezequiel Simelmajer. Both of them will be available for the Q&A session following the presentation. During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. I refer you to the forward-looking statements section of the earnings release and presentation, as well as the recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances. In today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release. The conference call is being webcast, and the link is available at our investor relations website. It is now my pleasure to turn over the call to Federico.

Thanks, Paula, and thank you, everyone, for joining us today. Good morning. Please turn to slide number three for today's highlights. fiscal 2026 was a challenging year for bioseres marked by the ongoing litigation with certain of our creditors and the business consequences emanating from these disputes revenues from our continuing operations declined by 18 percent with its consequential decline in gross profits and adjusted evita excluding changes associated to our new seed business strategy the decline in revenues has been most significant in our international business but in Argentina our commercial operations have mostly stabilized in part because of the successful reprofiling of our local debt obligations towards the beginning of the fourth quarter against that backdrop our priorities have been to focus the business on our core capabilities reduced our cost structure and strengthen operating discipline. Fourth quarter results provide encouraging evidence of progress. Revenues from continuing operations were broadly stable year over year, with improved performance across several of our core product categories. At the same time, the cost actions implemented throughout the year resulted in a materially lower expense base, allowing us to return to positive adjusted EBITDA in the quarter. Ezequiel will now review our financial performance for the quarter and the full year. I will then return to discuss our outlook towards the end of today's call. Ezequiel.

Thank you Federico and good morning everyone. Before I begin I want to remind everyone that unless otherwise indicated the result I will discuss today reflects our continuing operation for all periods presented. Pre-year amounts have been recast to exclude pro-farm group and are presented on a comparable basis. With that, let's turn to slide four and our revenue performance. Revenues for the fourth quarter were 55.9 million, slightly above with the 55.4 million the pre-year. The main source of growth during this quarter came from the crop nutrition segment increasing by 36 percent year over year mainly as a result of a strong performance in micro-printed fertilizer. This increase was upset by lower revenues in crop protections and in seeds. For the full year revenues declined 18 percent to 238 millions. Approximately half of that decline was associated with the before mentioned seeds business reconfiguration most of the reminding decline was in crop protection while crop nutrition revenues were broadly stable for the year within crop nutrition the strong performance of microbeaded fertilizer was upset by lower inoculant revenues moving to gross profit let's turn to slide five reported gross profit for the quarter was 17 12.7 million down six percent with gross margin of 22.8 percent there are a few important factors behind those reported number first the quarter included approximately four million of non-recruent inventory adjustment related to obsolescence following a comprehensive review this had a meaningful impact on reported gross profit and mask improved profitability across several of our cross product categories carbon nutrition is probably the clearest example gross profit increased 37 percent lead by microbrit fertilizer where we had both high revenues and improved margins in crop protection the world decline was concentrated in third party and other products Our abjurement portfolio actually deliver higher gross profit and improved margins year over year. And within seeds and integrated product, the remaining seeds continue to wait on reported results, but seed treatment packs delivered higher sales and approximately 40% growth in gross profit. Reported consolidated gross margin does not yet tell the full story. Beneath the headline numbers, we are seeing early sanctioning improvement across several of our core business, providing a strong foundation for future performance. Turning to the slide to look for the full year gross profit results. For the full year, reported gross profit was 82.9 million, down 21 percent, with gross margin of 34.8 percent. As with the quarterly numbers, understanding the component of that decline is important. There were some significant effects during the year, the high inventory of solace charge we just discussed, and the wind down of the seed business model. Looking at the underlying product performance, crop protection margins were broadly stable for the year despite lower revenues. Microbited fertilizer increased gross profit by approximately 20%, and seed treatment packs also delivered higher gross profit and improved margins. The largest reported decline was in crop nutrition, particularly inoculants, where the year-over-year comparison was significantly affected by the inventory of solace charge. So while reported consolidated gross margin decline, the underlying composition of the portfolio continues to improve with a greater concentration of product that offers stronger profitability. Turning to slide 7, to look at the adjusted EBITDA, there is where the impact of the cost actions we have been implementing throughout the year becomes much more visible. Adjusted EBITDA improved by approximately $10 million year-over-year, from negative $9.6 million to positive $0.6 million. The main driver was a reduction in our operation expense base. AG&A was down 19% in the quarter, with reduction in both fixed and variable expenses, expenses and those savings more than upset the decline in reported gross profit other income also contributed positively during the quarter reflecting gains on from joint farming and barter arrangements so although 0.6 million is still a modest level of a bit the important point for us is that the magnitude of the year-over-year improvement and the fact that the cost action taken during fiscal year 2026 are now clearly flowing through the pnl for the full year adjusted the beta was 25.5 million compared to the 28.9 million in fiscal year 2025. the breed illustrates the scale of the cost reset gross profit declined by approximately 22 million year over year but this was substantially upset by the more than 20 million of improvement in operating expense. Despite the 18% reduction in revenues and the 21% reduction in reported gross profit adjusted the bid that declined by only 12%. We think that demonstrates the magnitude of the cost actions implemented during the year and the significant linear operation structure within with which we are entering fiscal year 2027. Finally, turning to the balance sheet, Total financial debt on June 30 was 225.9 million broadly stable compared within the end of the third quarter cash and short-term investment total 12.2 million resulting a net financial debt of 213.6 million as we have previously discussed following the acceleration note associated with the note holders dispute substantially all of the related secure note 118.6 million at year end remains classified as short term the outstanding balance does not reflect any reduction in connection with the profound foreclosure the company continues to dispute the acceleration of the note and the foreclosure process which remains subject to ongoing lead proceedings outside the secure notes we also made meaningful progress on liability management during the year that was completed during the fourth quarter. At Rizzo-Actar, we successfully pursued the reprofiling of approximately $28 million of bank debt obligations and completed a voluntary maturity extension process for our local bonds debts in Argentina, covering $46.5 million in aggregate principal amount of outstanding notes this initiative further strength our liquidity profile and extend our debt material schedule managing liquidity and the capital structure reminds a key priority as we enter fiscal year 2027 alongside the operation and world capital initiatives Federico mentioned. So let's turn to Federico.

Thanks Ezequiel and please now turn to slide 10 for a brief discussion on what to expect for the year ahead. We have now substantially completed the nearly two-year reconfiguration of our seed business and concluded an external strategic assessment of our continuing operations. That work has provided a clear roadmap for the next phase of the business, including rationalizing our portfolio and go-to-market channels, revisiting some of our commercial policies and strategic relationships, and realigning our R&D and R investments with defined financial objectives, while continuing to explore further efficiencies on the OPEX front and non-core asset monetization opportunities. These actions are also beginning to translate into improved portfolio profitability, although the benefits are not yet fully reflected in reported gross margins as we work through the portfolio and commercial transition described before. For instance, if you now turn to the next slide, you will see that if we adjust the non-recurring obsolescence associated to the portfolio transition, gross profit percent has already expanded from fiscal year 25 to fiscal year 26. For fiscal year 27 and beyond, we are targeting about 40% gross margins. We believe that this can be achieved by focusing growth on higher quality core revenue streams, particularly in Brazil as well as simplifying the product portfolio to focus on the most valuable and value accretive SQUs. Just for reference, 99% of the aggregated gross profit from fiscal year 25 resulted from less than 50% of the SQUs in our catalog. So we see a great opportunity in this work. We have also made great progress on the SG&A front, as we have already discussed during the presentation, and you can see this summarized in the next slide. Yet, we believe that we can continue to improve on this front, targeting a combined 23% total SG&A as a percent of revenues for fiscal year 28. We believe this is achievable as we implement new systems and simplify our organizational arrangement in terms of processes cost centers and legal entities as we enter fiscal 27 our focus remains on improving the performance and cash generation of our continuing business maintaining cost and working capital discipline and actively addressing the company's capital structure and liquidity position we believe the actions taken during fiscal 26 have established a more focused operating base from which to move forward. We continue to recognize the significance of the ongoing litigation process in New York, where we'll continue to pursue the appropriate legal course, as well as evaluate constructive alternatives where possible. With this, we end our prepared remarks. We can now open the call for Q&A. Operator?

Thank you. We will now begin the Q&A session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. There are no questions at this time. I will now turn the call back over to Federico Trucco for closing remarks.

Thank you. With this, we can end the call for today. Have a great rest of the week.

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