Good day, everyone, and welcome to Bioceres Crop First Quarter 2021 -- Bioceres Crop Solutions Corp. Fiscal First Quarter 2021 Conference Call. Today's call is being recorded. [Operator Instructions] I'd now like to turn the conference over to Mr. Máximo Goya, Investor Relations, who will make some opening remarks and introduce today's other speakers. Please go ahead. Máximo Goya: Thank you. Good day, everyone, and thank you for joining us. Presenting during today's earnings call will be Federico Trucco, Bioceres 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 forward-looking statements section of today's earnings release and presentation as well 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, in addition to discussing our 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. I would now like to turn the call over to our CEO, Federico Trucco.

Thanks, Máx. Although today's call was originally intended to discuss our first quarter financial performance, recent significant developments were on time in today's presentation. As announced earlier today, we are acquiring Arcadia Biosciences full interest in Verdeca LLC, a joint venture we launched in 2012, for the development of second-generation biotechnologies for soybean, including the development of HB4 Soy. In conjunction with the acquisition of Arcadia's interest in Verdeca, we are acquiring rights to Arcadia genome-edited wheat varieties, designed to improve health and shelf life aspects of wheat flours and flour-derived food products as well as other IP assets. Addition of these technologies to our pipeline, together with the recent approval of HB4 Wheat in Argentina, which we will discuss later in this presentation, help position Bioceres as a leader in this biotech orphan, yet incredibly important stable crop. Finally, Enrique will comment on the strong momentum that our core business maintained, as we enter into the new fiscal year, delivering an 8% growth in comparable revenues and a 30% increase in adjusted EBITDA. Please turn to Slide 4 for an overview of the various assets we are acquiring. With full ownership in Verdeca, we'll be able to consolidate one of the most important technologies in our pipeline, HB4 Soy. Having full control of HB4 Soy, we'll enhance our ability to initiate, prelim and go-to-market collaborations with partners in new and existing geographies, allowing us to execute our strategy at a faster pace. Although we'll now have to fully fund the ongoing reading, regulatory and working capital efforts, we believe that the incremental economics resulting from this transaction, ranging between an additional 25% to 42.5% of technology-associated revenues, depending on the go-to-market channel and other third-party obligations, will provide a very attractive return on allocated capital. On a per hectare…

[Operator Instructions] And your first question comes from Sally Yanchus with Brookline.

Federico and Enrique, congratulations. Good quarter. I have a question on -- in the income statement. What's the reason for the high finance cost? It's like $12.7 million. What's the source of that? Enrique López Lecube: Sally, thanks for joining today's call. With regards to your question, keep in mind that we usually separate noncash expenses that are more related to inflation and FX adjustments and to accounting adjustments from our cash financial expenses. So if you look at the cash financial expenses, you will see that we were below what we spent last year. That will be around $3.9 million. So we have not only improved our cash generation by lowering financial expenses, but also we are spending less cash and interest expenses with higher debt. So -- but you need to keep in mind that we separate cash financial expenses from noncash financial expenses that are related to FX and inflation adjustments.

Okay. So do you expect levels along that level for the next couple of quarters for the finance costs? Enrique López Lecube: Yes. So if you take a look at the press release that we issued, Sally, you will see that the cash financial expenses for the quarter were at $3.9 million compared with $4.5 million from the prior year's quarter. So again, with significantly higher debt, we are spending less on interest expenses. And obviously, moving forward, we believe that our interest expenses today are in line with what we should be expensing, if we keep the same net debt levels.

Okay. And then as far as the acquisition of the rest of the Verdeca JV, have you paid any cash yet for that? Enrique López Lecube: Yes. So the -- for the acquisition of Verdeca, there is $5 million upfront payment. That is the consideration -- the cash consideration that gets paid at the closing of the transaction, and that goes out immediately. And then there are additional considerations in cash for $3 million, of which 2 are guide to performance of HB4 Soy. And there is a $1 million reimbursement of expenses. That is all cash consideration, that -- but the $2 million of HB4 Soy-related payments and the $1 million reimbursement of expenses will be done post closing, while the $5 million are upfront payments.

[Operator Instructions] And your next question comes from Ben Klieve from National Securities.

I've got a few here. So first question on working capital build. And Federico, I apologize, I missed a few minutes at the beginning of your prepared remarks. So if you addressed this, I'm sorry. But I'm going to ask about the working capital build here and how that changes now. So with Arcadia no longer in the picture on the HB4 Soy product, from a working capital build perspective, what does this do to your -- to the cash outlay here that you're expecting over the next fiscal year or potentially 2 fiscal years? If you can elaborate on that, that would be great.

Ben, it's great to hear from you. That is a very important point because, obviously, as we assume in control of Verdeca, that also means we need to source the full working capital level. I think that this transaction is one that we decided to do where we saw the ability of the company to source local debt in Argentina in very consistent terms. So we're also announcing today our other issuance of public bonds at 0 interest over the next 3 years. And so that, in a way, give us the confidence that we could take the full note and also, in exchange for that, receive the full economics of this technology that we now own entirely. I don't know, Enrique, if you want to comment more on the working capital consideration for the -- related to the acquisition. Enrique López Lecube: Yes. I believe, Federico, your answer was -- is pretty much -- pleasure to have you on the call and talking it about you. So Federico mentioned, this implies that we will need to take care of the full burden of the working capital piece. The only thing that I might add that from a working capital perspective, this is an investment that has a crop cycle. So this is regardless of the fact that it is an investment in capital, it's only for the period of the crop cycle. So within our business, for most of its products, recovers pretty much all of the cash that we invest in working capital by the time that harvests come. So that's probably the only piece. So we expect that we will be able -- regardless of the $3 million -- the 3-year corporate bond that we issued during the quarter. We believe that there's further working capital sources -- short-term working capital sources that can be used to fund a seasonal investment.

Got it. Okay. I'd like to turn it over to HB4 Wheat. So you talked a lot about kind of the economic and environmental benefits of the products, which I think are clear. But my question here is, while those benefits, I think, are clear, what is really being done to really drive demand for the product more downstream? Farmers -- are farmers comfortable at this point buying the product once -- once you have the import approval from Brazil, are those -- are your farmers comfortable putting this product in the ground? Or do they need more visibility that they're -- that there's going to ultimately be demand from processors and consumer goods companies for the product? And if there is still hesitation from those farmers, what are you guys doing to drive that demand?

So Ben, thanks for that question. I think this is a very important point. From a farmer's perspective, they're eager. I mean they're waiting in line, if you will, to have access to the technology. So farmers are pro technology, in general, and they're eager to adopt solutions that will help them improve productivity. So we have to be the more cautious party in that relationship because we don't want them to face commercial problems after they plant a crop. And for that reason is that we went into great efforts into building a commercial channel that can basically take HB4-derived wheat products to consumers without disrupting the existing channels. So for that purpose, what we are doing is identifying millers that are willing participants of this new story around environment preservation and sort of an improved water and carbon footprint and are using these to differentiate an otherwise difficult to differentiate space. If you look at flours and flour-derived products, there's little differentiation from this perspective. And that is something that good processors, I think, are starting to understand and willing to participate. Now this has to be done in an identity-preserved manner, where we can keep this channel isolated to some extent from the conventional channel, at least initially. If we go above the double-digit mark from a market share or market penetration perspective, I think this will become less of a concern. But initially, that's the way we're operating. And so far, I think we're really encouraged by what we see.

And can I ask you a clarifying question? When you say you're identifying partners, are these going to be -- where in the supply chain are you targeting and seeing traction? Is this -- you mentioned processors, but are you also seeing the final consumer goods companies, considering this or somewhere else in the supply chain? I mean where specifically once the farmer sell the crop are you building partnerships and building advocacy for this?

The main partners today are the leaders. Remember, there are geographies in which there are no mandatory labeling. So this can go through a generic channel without differentiation. Obviously, we want to differentiate this on purpose because we believe this is actually better than normally produced wheat because of the carbon sequestration implications of HB4. And that is something we're doing with a very small group of leaders under the HB4 brand. So that this particular group of consumers that are pro science and concerned about climate change can use their purchasing power to, in a way, help us visualize this demand. Now what I'm saying still remains to be seen. I mean this is kind of the open question, if you will, around genetically modified wheat. But it's one that, I believe, is exciting and that we are leading with a message that is, in a way, restricted to the science around the technology, but understanding sort of the emotional elements that play in the consumer's decision.

Perfect. Got it. Very good. Last question I have for you, and I'll get back in queue here. Is it -- hoping you can comment just kind of on general growing conditions. Now you talked about the drought that's pervasive throughout your area. What does the current growing condition really kind of imply for the second quarter here and maybe into the third quarter? Are you expecting any material shift, one way or another, on your chemistry or your fertilizer business, given how expansive drought conditions are right now?

Look, the site conditions that affected us to some extent in the first quarter have by now more or less normalized. So we are not seeing significant delays in the current quarter. I don't know, Enrique, if you have additional information in terms of what we expect. Enrique López Lecube: Yes. Sure, Federico. So Ben, as we stated over the call, at the beginning of the season, there were a couple of tough months in Argentina. Russia, I think, that went to a smoother beginning of the season. But in Argentina, there were a couple of tough months. And that normalized a couple of weeks ago with rainfall that helped crops. So as of today, moisture conditions are looking good, but rainfall during this spring Argentina needs to maintain. So the other important fact here for me is obviously commodities prices that have trended up. And so to us, performance, profitability [indiscernible] this making a lot of sense now. So if we have a normal season during the next couple of months, they should have profitability for farmers in Argentina and Brazil.

[Operator Instructions] At this time, there are no further questions. I'd like to hand the call back over to Federico Trucco for some closing remarks.

Thank you. I would like to close the call with perhaps a personal reflection. My first relevant transaction as CEO of Bioceres back in 2011, 2012 was the agreement with Arcadia Biosciences for the constitution and financing of Verdeca. At that time, Bioceres could barely pay the due diligence and legal costs associated with the transaction. HB4 was a technology promise. Our ability to deregulate a GMO event was disputable, and the overall investment requirement to transform this promise into a commercially approved product was estimated at over $100 million by industry experts. To be able to say that we have successfully overcome these initial difficulties and are today regaining full control, not only on HB4 Soy, but also on other very attractive earlier-stage technologies and technology platforms within Verdeca's portfolio, fills me with enormous pride. I would like to thank Arcadia for the trust in us back in 2012 and for helping us advance Verdeca's pipeline to its current state. We also take this opportunity to welcome Arcadia as new shareholder of our company. Thank you for joining our call today. As always, we appreciate your interest in Bioceres. We look forward to meeting more of you in person in the future and to updating you on our progress during our next earnings call. In the meantime, please do not hesitate to contact us with any questions you may have. Please stay safe, and enjoy the rest of the day. Thank you.

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