Hello, everyone, and welcome to today's Bioceres Crop Solutions Fiscal Third Year -- Third Quarter 2022 Financial Results Conference Call. My name is Emma, and I'll be coordinating your call today. [Operator Instructions] I will now pass the call over to Rodrigo Krause to begin. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us. Presenting during today's call will be Mr. Federico Trucco, our Chief Executive Officer; and Enrique López Lecube, our Chief Financial Officer. Both 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 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 as reported results during our presentation today, we will discuss comparable results which exclude the impact of hyperinflation accounting in Argentina. Additional information in connection with the application of the rule IAS 29 can be found in our earnings report. Finally, this conference call is being webcast. The webcast link is available at the Bioceres Crop Investor Relations site. At this time, I would like to turn the call over to our CEO, Federico Trucco. Thank you.

Thank you, Rodrigo, and thanks to everyone on the call for joining us today. Please turn to Slide 3 for a quick overview of the quarter's main highlights. Our third fiscal quarter has been historically our weakest and less eventful quarter for various reasons, most importantly because it overlaps with the Latin American summer, not an important planting period for any one product. The third quarter of fiscal year 2022, which we are currently reporting, deviates from this historical rule. And this is not only because of the great momentum we continue to observe in ourselves, with revenues increasing 72% on a comparable basis, but also and significantly due to the business development and regulatory milestones that were achieved during the period and subsequently thereafter. As we announced in March, we are pursuing a transformational merger with Marrone Bio Innovations to become an undisputable leader in the ag biological space. And recently, in April, we have received the long-awaited regulatory green light from China that allows us to move HB4 soy into its commercialization phase. With regards to the MBI merger, we were able to file F-4 documents with the SEC this last Monday, and we continue to be on track for a first quarter closing in fiscal 2023, that is, between July and September of this year. In terms of HB4 Soy, we are today providing guidance for fiscal year '25, where we expect HB4 Soy to contribute between $20 million and $25 million of incremental EBITDA. We expect this contribution only after 2 prior commercial seasons in Latin America, as we will describe in more detail in a few minutes. Outside from these important milestones, we are taking advantage of the current momentum in wheat interest to advance commercial agreements for HB4 Wheat within Latin America and expand…

Thanks, Enrique, and I think we can now open up the call, operator, for Q&A.

[Operator Instructions] Our first question today comes from Ben Klieve from Lake Street Capital Markets.

All right. And congratulations on all the developments here. I have a couple of questions on HB4 Wheat as there's been an awful lot of news here. Regarding Australia, which is a really exciting development for a lot of reasons, I think you mentioned you said an acquisition of S&W's wheat varieties. Are you making any cash payments to S&W for this? Or is the implication here that S&W is going to be contributing its lead assets to the joint venture on a noncash basis?

Ben, it's great to have you here in the call, as always. So it's a combination of cash and receivable ownership for S&W into the new entity as consideration for the assets that we are receiving.

Got it. Got it. Okay. And then my second question on HB4 Wheat in Australia is, has there been any work done on developing this kind of under the radar historically? I mean, have -- between Bioceres, Florimond and S&W, have you been working on development work prior to this announcement? Or are these efforts really starting today?

So we've been working under the radar in Australia for some time. We've done this initially with a partner helping us on the regulatory front. And when we decided that to move forward in this particular geography, and that was a joint decision with Florimond Desprez, our JV partner, we immediately engaged with S&W, which we knew acquired the Corteva seed assets, wheat seed assets, a few years back. And worked towards this, that we are announcing today. It all sort of came together. At the same time, we received news from the New Zealand and Australia regulatory body recommending an approval for HB4 use in feed and food within these 2 countries. So things are coming together in a nice way in a market that is, as I indicated, bigger than Latin America.

Got it. Got it. That's helpful. Regarding soy, it looks like a lot of progress here. Great to see the 75% levels which you noted converting to inventory. The thing that was the most notable to me, that you talked about expectations here for kind of a modest launch in the U.S. in 2025, which is a little earlier than I would have anticipated. Can you talk about -- can you provide just a bit of context around that? I mean, are you -- is your intention here that you think you will be a seed company selling seed in the U.S. in 2025? Do you think this is going to be the royalty business? Do you have any geographies lined up that you're going to launch? Any detail there would be helpful.

So look, we are looking forward to the combination with Marrone, and we do expect to have some of those capabilities become available for us to develop an organic strategy, particularly in the area where we believe HB4 to be most valuable in the U.S., which is kind of Dakota, Minnesota and Southern Canada -- Central Southern Canada part, where we expect the technology to deliver significant yield increases. Now we are realistic in terms of our current status in terms of germplasm assets. So what you see there under our proprietary strategy is coming together by us being able to in-license genetics from existing participants in the U.S. market. So we're not able to disclose today who the providers are, but we were able to secure genetics that are locally adaptive so that we can have these earlier opportunity. Now we understand that, for us to be able to fully penetrate this market, we need to develop these third-party channels, like we are doing in Latin America. I mean, even though initially we take sort of a lion's share of the bigger share of the effort, we do expect third-party, well-established soybean seed companies to generate royalties for us in the medium- to longer-term strategy. And in the U.S., that is critical. So we want to be the first-to-market channel. We are incorporating third-party germplasms to be able to do so. And hopefully, as we validate the U.S. as a valid market for HB4 Soy, we will have third-party seed companies doing the work like they are in Argentina and Brazil.

Got it. Got it. Very helpful. My last question, and then I'll get back in queue. Now that HB4 is -- it's here. I'm wondering if you can help us a bit with kind of modeling the seasonality. How much revenue from wheat and soy do you expect will be concentrated in your fourth and second fiscal quarters, respectively, versus kind of being extended throughout the entire year? Enrique López Lecube: Ben, this is Enrique. Thanks for joining the call. Look, I think that, obviously, these are products that are tailored for planting. And while Argentina and Brazil remain to be an important part of the revenue stream and profits of this particular initiative of the company, I think, that our fourth quarter will be probably when we recognize the revenues coming from wheat. It might fall -- some of that might fall into the first quarter of our fiscal. And the second quarter of our fiscal is when we're going to get most of the revenues coming out of soybean, and that's the summer crop planting season in Latin America. This will begin to even out when we start getting revenues from the U.S., but I would expect our Q4 and Q2 to be where we get most of the revenues from HB4 Wheat and Soy, correspondingly.

Our next question today comes from Brian Wright from ROTH Capital Partners.

Congrats on all the progress. I wanted to just get a sense, did you speak about the revenue basis for the EBITDA for HB4 Soy in 2025?

So a few things to consider there. Obviously, the revenue from licensees or royalties coming from third parties will tend to be small, but with a high gross margin contribution because obviously, there are no cost of goods or relatively small cost of goods to that revenue; compared to the proprietary revenue, where we are selling the fully integrated seed product. And there, we will be operating on the gross margins you've been seeing from the HB4 program already. I will let Enrique complete the answer in terms of what to expect on a per hectare basis, perhaps, which is I think probably the best way to model total revenues for fiscal year '25. Enrique López Lecube: Brian, so that is a good question. That's why on the presentation, we provided an overview of what we think will be the split between proprietary channel and non-proprietary channels. So I think that, for what it's worth, a back of the envelope calculation that you can do is that a nonproprietary channel sale would bring probably 1/3 of the revenues than a nonproprietary channel would bring, but as Federico said, with a much higher margin as we are only accounting for royalty. So cost of goods sold would rather low. So I think that 1/3 of our revenue for nonproprietary channel versus proprietary channel, it's a good back of the envelope or rule of thumb to use.

Great. I just want to make sure I understand that. So 1/3 of, if it were proprietary? Or split amongst the 2 buckets? Enrique López Lecube: So let me put it in numbers. So if we are pricing a bag of soybeans, some $30 to $35, and that would mean done on an nonproprietary channel, we would be charging about $10.

Perfect. Got it. Got it. And then if I could, just one real quick detailed follow-up. Could you give us the exact percentage on the Trigall ownership for Australia?

So obviously, that is still to be finalized. But we will have a controlling interest of 60% on day 1, jointly with Florimond Desprez, and the ability to increase that up to 80% according to the current terms.

[Operator Instructions] Our next question comes from Kemp Dolliver from Brookline Capital Markets.

First question, just continue with Australia. S&W reports that Australia represents about $24 million in annual revenue, but I'm pretty sure that includes pieces of the business that will not be in the JV. So first question is, can you roughly size the revenue -- incremental revenue coming in from the joint venture?

Sure, Kemp. So thanks for joining the call. Those revenues reported out of Australia are probably mostly from pastures and sorghum and other crops. Wheat revenues, if I recall correctly, at less than $1 million from their existing operation. So they're not too significant initially. But obviously, that will give us locally adapted germplasm on which we can breed HB4 right away, and have that technology become available in the next few years. We believe that by fiscal year '25, we're likely to get cultivation clearance, and probably thereafter, being able to launch that commercially in-country. So not meaningful day 1 from a revenue perspective from the conventional business that currently exists.

Super. And you've made a couple of important moves in the last few months that expand your footprint for essentially distribution and marketing purposes. Are there any other markets of consequence on your radar screen that you would like to enter in similar fashion?

Look, obviously, Australia is, from a wheat perspective, is a very logical next step for us. In terms of business opportunity for wheat, the U.S. is one that we would like to put online sooner rather than later for wheat. I think we're likely to do something similar to what we are doing in Australia at a second stage, and that would be our sort of highest priority outside of what we are currently announcing today.

Okay. I'll ask about one market in particular. So in addition to approving HB4 Soy for import in the last couple of months, food security has become a high priority for the Chinese government. They've started to loosen their GMO rules for domestic production. You have a partner there, at least, who has helped you through the regulatory process. Do you see opportunity in China in the next couple of years for domestic growers for HB4 Soy? And possibly wheat, but I think soy is the bigger concern to them.

Yes, definitely. I think even though that's been kind of not in our -- it's something that is not in our immediate plans, I think that the current situation in China, the recent approval of HB4 for feed and food and importation and the growth that we're seeing in our Chinese partner that is becoming a significant player in the biotech sphere within the country, I think, allow us to be more optimistic about the possibility of bringing this technology into China. And I think that you will probably see that materializing in the form of a joint agreement or with a local partner of significance, and not something that we are likely to do ourselves on a stand-alone basis.

Super. And my last question is, in the past, you've given capacity utilization data for the micro-beaded fertilizer plant. Do you have an update on that? Enrique López Lecube: Kemp, this is Enrique. So yes, we are. As we measure use of installed capacity, we are today at roughly 65%. Now you need to bear in mind that, that considers sort of like the annual capacity of the plant. When you go into high season like now, what I can tell you is that we are running at full capacity today because we are building inventories for the high season in the summer crops planting in Latin America and also for winter crops planting now. So today, we're running at full capacity. If you annualize that, it's around 65%. But that 65% doesn't tell the reality because it spreads out capacity throughout the year.

We have no further questions, so I'd like to hand the call back for closing remarks.

Thank you, operator. Well, I mean, I think that it's very rewarding for us to see that the momentum that we've been reporting in the last few quarters continues throughout the current quarter. We are moving forward into closing a fiscal year that I believe will be record-setting in many ways. And not only sort of reporting these good numbers, but also finally having all these regulatory clearances that were pending materialize. So we achieved the Brazil approval last year that basically enable us to launch HB4 Wheat in Argentina. Earlier today, we got news that the Ministry of Agriculture here has fully released the commercialization of the first HB4 varieties, so that there are no doubts as to what the Brazil approval means in terms of us being able to bring this forward and materialize the revenues that we are estimating today in the call. And also China that's been long awaited, took us more than 6 years to get to where we are today. So like someone said, nothing is fast in agriculture. But we are, today, monetizing or capitalizing or showing some of the results of investments and decisions we took many years back. And we are very proud of where we are. We are very happy with where we're going. And hopefully, once we get done with the merger with MBI, all of these will become even clearer to investors in the space. So no more than this. I hope everyone can have a great week and looking forward to staying connected as needed.

This concludes today's call. Thank you all for joining. Have a lovely rest of your day.