Bioceres Crop Solutions Corp. Ordinary Shares 2026 Q4 Earnings Call

Paula, please go ahead. Good morning and thank you.

Welcome everybody to Bioceres 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 Simmermacher. 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 3 for today's highlights. Fiscal 2026 was a challenging year for Bioceres, 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%, with its consequential decline in gross profits and adjusted EBITDA. Excluding changes associated to our new seed business strategy, the decline in revenues has been most significant in our international business. While 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, reduce 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 Simmermacher 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. Prior year amounts have been recast to exclude Pro Farm Group and are presented on a comparable basis. With that, let's turn to slide 4 and our revenue performance. Revenues for the fourth quarter were $55.9 million, slightly above the $55.4 million the prior year. The main source of growth during this quarter came from the Crop Nutrition segment, increasing by 36% year-over-year, mainly as a result of a strong performance in microbeaded fertilizer. This increase was offset by lower revenues in Crop Protection and in Seeds. For the full year, revenues declined 18% to $238 million. Approximately half of that decline was associated with the beforementioned seed business reconfiguration.

Most of the remaining 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 offset by lower inoculant revenues. Moving to gross profit, let's turn to slide 5. Reported gross profit for the quarter was $12.7 million, down 6%, with gross margin of 22.8%. There are a few important factors behind those reported numbers. First, the quarter included approximately $4 million of non-recurring inventory adjustment related to obsolescence following a comprehensive review. This had a meaningful impact on reported gross profit and masked improved profitability across several of our gross product categories. Crop Nutrition is probably the clearest example. Gross profit increased 37%, led by microbeaded fertilizer, where we had both higher revenues and improved margins. In Crop Protection, the decline was concentrated in third-party and other products.

Our adjuvants portfolio actually delivered higher gross profit and improved margins year-over-year. Within Seeds and Integrated Products, the remaining seeds continue to weigh 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 signs of 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%, with gross margin of 34.8%. As with the quarterly numbers, understanding the component of that decline is important. There were some significant effects during the year. The higher inventory obsolescence 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. Microbeaded fertilizers 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 obsolescence charge. While reported consolidated gross margin declined, the underlying composition of the portfolio continues to improve with a greater concentration of product that offers stronger profitability. Turning to slide seven to look at 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 Operating Expense base.

SG&A was down 19% in the quarter, with reduction in both fixed and variable expenses, and those savings more than offset the decline in reported gross profit. Other income also contributed positively during the quarter, reflecting gains from joint farming and barter arrangements. Although $2.6 million is still a modest level of EBITDA, the important point for us is that the magnitude in the year-over-year improvement and the fact that the cost action taking during fiscal year 2026 are now clearly flowing through the P&L. For the full year, adjusted EBITDA was $25.5 million, compared to the $28.9 million in fiscal year 2025. The read illustrates the scale of the cost reset. Gross profit declined by approximately $22 million year over year, but this was substantially offset by the more than $20 million of improvement in Operating Expense.

Despite the 18% reduction in revenues and a 21% reduction in reported gross profit, adjusted EBITDA declined by only 12%. We think that demonstrate the magnitude of the cost actions implemented during the year and the significant leaner operation structure 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 with the end of the third quarter. Cash and short-term investment totaled $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 holder's 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 Pro Farm foreclosure.

The company continues to dispute the acceleration of the note and the foreclosure process, which remains subject to ongoing legal proceedings. Outside the secure notes, we also made meaningful progress on the liability management during the year that was completed through the fourth quarter. At resolution actor, we successfully pursue 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 remains a key priority as we enter fiscal year 2027, alongside the operation and work capital initiatives Federico mentioned.