Bioceres Crop Solutions Corp (NYSEMKT:BIOX) Q1 2021 Results Conference Call November 12, 2020 8:30 AM ET
Maximo Goya – Investor Relations
Federico Trucco – Chief Executive Officer
Enrique Lecube – Chief Financial Officer
Conference Call Participants
Sally Yanchus – Brookline Capital Markets
Benjamin Klieve – National Securities
Good day everyone and welcome to the Bioceres Crop Fiscal First Quarter 2021 Earnings Conference Call. Today’s call is being recorded. Following the speakers’ remarks, there will be a question-and-answer session.
I would now like to turn the conference over to Mr. Maxmio Goya, Investor Relations, who will make some opening remarks and introduce today’s other speakers. Please go ahead.
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 Lopez Lecube, our Chief Financial Officer. Both will be available for a 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 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 better understanding of our Company’s underlying performance 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.
I would now like to turn the call over to our CEO, Federico Trucco.
Thanks, Max. Although today’s call is originally intended to discuss our first quarter financial performance, recent significant developments were in time in today’s presentation. As announced earlier today, we are acquiring Arcadia Biosciences full interest in Verdeca LLC a joined the venture we launched in 2012 for the development of second generation biotechnologies for soybean, including the development of HB4 soil.
In junction and the acquisition of Arcadia’s interest Bioceres, we are acquiring rights to Arcadia genome edited wheat varieties, designed to improve health and shelf life aspects of wheat flowers and flower derived food products as well as our IT assets.
Addition of these technologies to our pipeline together with a recent approval HB4 in Argentina, which we will discuss in this presentation, helped to Bioceres as a leader in this biotech, yet incredibly important stapled crop.
Finally, Enrique will comment on the strong momentum that our core business and our retained as we enter 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 will be able to consolidate one of the most important technologies in our pipeline, HB4 soil.
Having full control of HB4 soil will intense our ability to initiate breeding and go-to-market collaboration partners in new and existing geographies, allowing us to execute our strategy at a faster pace.
Although we are now have to 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 the technology 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 basis, the additional revenues may equate to approximately $6, give or take $2.5 starters, a very that is not insignificant over the 21.5 million hectors targeted with HB4 soil in geographies, in which technology has already been approved by regulators.
Through the year, we also received exclusive license in trade as well as assumed ownership of Verdeca library of gene editing, soybean, which turned to use to brought in effect the source of new profitability and quality price.
Beyond soybean, we have negotiated rights through gene editing wheat varieties that provides health benefits and other quality attributes to further consolidate the position in these other important crops, in addition to other minor intellectual property rights.
On Slide 5 represent the technologies being in license for Latin America. While the HB4 technology substantially improves, growers yield and provides a range of significant environmental benefits, including increased carbon sequestration and reduce water usage, we are now expanding our portfolio to quality trades which offer tremendous health benefits, including the system starts and reduce gluten.
The system starts varieties have 10 times of dietary fiber of wheat and digest more slowly, preventing the rapid production blood sugar that normally occurs in wheat based products such as pasta, bread and pizza. The reduced gluten varieties have 65% less gluten while resulting flower that is substantially equivalent in taste and portfolio to conventional flower.
For producers and retailers of wheat derived products the stability technology is also enabling products shelf life. For consumers having wheat attributes straight from the farm without paying the quality products they seek is cleaner, shorter product labels and important consumer trend these days.
It is important to know that by expanding our portfolio of wheat price we will be leveraging Bioceres’s investment in identity preserved for production platforms and tracing systems, such as those currently being used for HB4. The data gathered should release platforms will allow consumers to make their farms efficient by understanding their health and environmental aspects on the line.
Before moving to the next Slide, it is important to know that some of these technologies being in-licensed are subject to third-party peers and to a flow back in our agreement with Arcadia. And we will discuss this provision, when we looked at the total consideration for this transaction on the following slide.
Please turn the Slide 6. [indiscernible] full interest in Verdeca and rights to other intellectual property that I have discussed, we are paying a total of $72 million in cash in equity as shown in these Slide.
Off this amount, $20 million being paid upfront from pricing $5 million in cash and $15 million in stock, at a value of $8 per share. These 1.875 million newly issued shares will lead to a total of 40.6 million shares outstanding with $8 per share, representing a meaningful premium, compared to yesterday’s closing price.
One third of these shares that is $5 million at the value of a transactions are pledged in favor of Bioceres and will be released once all clear regarding third-party rights to a wheat portfolio being in-license are achieved. All shares will be locked up for a six months period. The remaining $12 million in cash will be paid post closing under conditions on regulatory milestones and HB4 penetration allows.
More specifically, $2 million will be paid upon achieving interest in China or reaching 200,000 hectares of HB4 soil in a single growing season. The remaining $10 million would be deducted from commercial royalties paid to Verdeca from HB4 soil sales, of which 60% will go to Arcadia until $10 million consideration is met.
These numbers does not include $1 million of fees and other transaction related costs that we will reimburse Arcadia and royalties that maybe paid once soy intellectual property is commercialized.
Please move to Slide 7. Last month was particularly important in our Company’s history as we achieved long awaited approval for HB4 in Argentina, a technology we have been developing with French partner [indiscernible] for more than eight years.
Argentina is Latin America’s most important wheat producer, accounting for roughly 70% of wheat produced in the region and 3% to 4% of the world’s production. Today [indiscernible] and HB4 wheat are only genetically modified wheat to be approved and on commercial part of market anywhere in the world, which represents a major milestone in wheat’s global value chain, generating significantly media backslash round the globe .
If you turn to Slide 8, you will see that until now, wheat was an orphan crop in the sphere of biotechnology. Despite being planted in 200 million hectors globally, the highest of any crop. By comparison, 10% of hectors planted have 44 technology events approvals for soil in rise have 29.9 approve event each.
Different persons make clear that the approval of HB4 wheat is a beginning of monument of achievable quest to modernize and transform wheat production around the world for the benefit of both consumers and growers alike, for growers our 84th week increases yields by an average of 20% during growing seasons, impacted by droughts, which is increasingly frequent across the world, and increasingly threatening our food supplies.
Suffice it to say, HB4, economic as well as human benefits are here and indisputable and are based on over 10-years of field validation. For consumers, or HB4 technology have mitigated climate change by facilitating double cropping, which seasonally rotates wheat and soybean an environmentally friendlier growing system that is otherwise limited by water availability.
When combined with soil regenerative practices, an evergreen cropping system made possible by HB4 captures more carbon and commercial growing practices. We will quantify the carbon sequestration benefit for you.
For each hectare farm for a year, the resulting sequestration is equivalent to six months of carbon emitted by a suited automobile. The other major environmental benefits are reduced water consumption and higher crop yields that reduce the need to expand agriculture’s footprint, particularly with regarding to rain forests as well as marginal and strategies ecosystems.
Of course, some markets are visible have expressed the COVID concerns as to the potential disruption this technology may signify for the commercial weed value chain. To address these concerns around global trade, we have adopted the general principles shown in the next slide.
So, please turn to Slide 9. There are five primary conditions the company is pursuing to learn HB4 wheat in a given country once regulatory clearance is achieved. These include satisfying the requirements of the resolution granting regulatory approval. For instance, in the case of Argentina, we need to say input zero before commercial loans may be issued in Argentina.
Brazil is Argentina’s most important HB quarter. Input approval in a geography where our regulatory system exists, and which represents at least 5% of the total exports from the country where we want to launch based on a five year moving average. That is the second condition.
Thirdly, the availability of a low cost protection method is 1% of [indiscernible] these have already been achieved for all geographies. Four, the existence of a value capture system, and an identity preserve channel that ensures IP protection as well as minimizing disruptions to promotional channels, while the adoption is initiated and have a single digit market share. And lastly, the systems of an outreach and education in the country of interest for growers and consumers.
Please turn to Slide 10, so, I now overview of our go-to-market roadmap. For our go-to-market roadmap, we have prioritized our target countries chronologically for regulatory approval of HB40. In total, we are targeting at this stage about one third of global tech bridge, dedicated tools and in three phases. In the next two years, we are pursuing approvals and launches in Argentina, Uruguay, Paraguay and Brazil representing 9.4 million hectares, or close to 13% of our initial addressable market.
Immediately following, we expect to launch in South Africa, Bolivia as well as the United States, where we have already applied for food and feed approval. These markets allow us to move from 9.6 million factors to 25.3 million vectors and represent about 35% of our targeted markets.
Starting today, by anticipating a longer addresses we will pursue launches in Australia, Canada and Russia. Along with the previously mentioned countries, these geographies represent 73.5 million hectares. One third of all hectors planted in the world on an annual basis.
Please turn to Slide 11. Argentina’s regulatory appearance of HB4wheat illuminates significant operating challenges for us and we lower the cost of working with growers to multiply related varieties and building up seed inventories ahead of our phased commercial launches across the world in the coming years. In fact, we are now able to transition from thousands to hundreds of thousands of factors in our next week cycle.
As you can see on the slide, our ramping up of HB4 wheat inventories will expand from less than 7000 hectors in the current cycle to more than 60,000 hectors in the next cycle and is if the regulatory approval is granted in time, it would be twice that number of factors.
It is important to know that this process will continue to be assured by robust gross growing systems which along with identity preservation and traceability are still paramount importance for us. Accordingly, we continue working for enhance the state-of-the-art digital farming tools that are an integral part of our HB4 for wheat and soybean.
In addition to generating extensive and detailed data sets for each production [Indiscernible], we are applying and leveraging data science and block chain technology to other areas of the value chain such as storage, logistics and processing, in order to guarantee complete farm to full traceability.
As those of you who follow on [Indiscernible], or HB4 programs for wheat and soybean sells a former agreement with growers within the country we produce agricultural inputs, which comprise Bioceres’ seed trunk levels and drought tolerant dress customize microbial solutions, as well as our next gen crop protection and efficient technologies.
In the aggregate, the combination of these technologies on our HB4 wheat program deliver solutions that not only enhances the selectivity but optimizes water resources, increases carbon sequestration, and reduces the use of agricultural chemicals. The value of these contributing for our HB4 program growers with unique of licensed revenues. One realized inventories are sold our seeds could grain but not longer contributed.
Near the bottom of this slide of the estimated metrics that we will be seeing and tracking the underlying economics of our HB4 wheat, we are reporting HB4 revenues and related accounting measures. By publishing the level of continuing with the investment community also use this information to better follow our process.
For the next ramping our basis, we estimate that the HB4 approval implies an economic impact of $4 to $15 million in additional revenue for contributed goods for fiscal year 2021, depending on the real approval. We’ll be using the same accounting process program in the upcoming quarters, which is currently progressing as discussed during our last earnings call.
Please turn to Slide 12. Before turning the call over to Enrique for an overview of the quarters financial performance, I would like to close my presentation with the Slide that shows [indiscernible] which received almost no rainfall during the winter season. The right half of the image captures wheat grown by HB4 wheat and illustrates the full potential of our growth wheat grade.
That concludes my portion of the presentation. I will now turn the call over to Enrique for review of our first quarter results.
Thank you, Federico. Please turn to Slide 13. We are glad to report that the significant milestones on development of [indiscernible] got the regulatory approval of in Argentina and the acquisition of strategic assets from Arcadia were also matched by the growth momentum we are seeing in sales and profitability of our core business as we enter the new fiscal year.
For right context and for comparison purposes, let me remind you of the seasonal nature of our business. Since the performance of the significant portion of our portfolio is tied to planting activities for crops.
As you can see on this Slide, high season begins delay in our first fiscal quarter was the strongest performance taking place in the second quarter and the lowest sales level occurring in the third. Our top-line during the quarter ended September 30th grew 8% year-over-year on a comparable basis to $42.2 million which implies a 9% CAGAR for Q1 over the last two years.
This level of growth signals a good start of the season and confirms the growth trend of our sales, even without benefiting from HB4 revenues, the main catalyst for our next phase of growth.
Furthermore, since the beginning of our currency in July, we have seen soybean and corn prices trade up significantly, registering an increase in farmers profitability across markets where we operate commercially.
As we haven’t learned from past experience and profits for farmers, you should have an appetite for technology and premium products so we will keep close eye on commodity price behavior and how that can provide an additional benefit for our business going forward.
Please turn to Slide 14 for closer look at what drove sales and profitability during the quarter. As you can see from crop protection and Seed & Integrated products contributed in the quarter 8% revenue growth versus Q1 of the prior year, while sales in concentration declined. Crop protection and payments growth momentum in the quarter with revenue increasing $2.1 million, or 11% to $21.8 million.
Consistent with our expansion strategy [indiscernible]. And product categories, these segments main driver was add-on volumes which increase 40% and 50% in Brazil and Uruguay respectively.
Aggregate volumes also grew Argentina during the quarter increasing nearly 30% year-over-year as a point of reference regarding the magnitude of our commercial footprint for this product category, or in aggregate reached over 30 million hectares [indiscernible]. Growth driven by adjuvant was partially offset by lower B2B sales of — and insecticides and fungicides in Agrentina compared to strong sales of these products in the first quarter of last year.
[indiscernible] segment grows significantly by $3.1 million, which represented a 57% year-over-year increase using a total of $8.6 million for the quarter. Growth in this segment was mainly due to an 69% increase in sales volumes of [indiscernible] which accounted for 85% of these segments ready. Our ready to use prior solutions for on farms reached 2.2 million hectares during this quarter.
This performance was on the heels of strong fourth quarter of sales back in Argentina, where we had executed a highly successful pre sale campaign ahead of the summer crop season. As here, that some of the year-over-year growth was due to weaker revenues in last year’s quarter when Argentina growers have delayed purchases of [indiscernible].
Timer before arbitration offset the growth and achieved in the other business segments, lower sales of microwave fertilizers in Argentina, and in regarding the sales in Brazil, let to a 15% increase in the segment’s revenue year-over-year, which totaled $11.9 billion. In certain parts of Argentina costs growers relate to changes of our fertilizers ahead of planning.
With volumes getting 10% compared to last year’s quarter, which by the way, was a strong one and fixed batteries purchases by growers that drove double digit growth in the fourth quarter of the prior fiscal year also impacted our first quarter volumes.
Still we were able to maintain capacity utilization of our fertilizer plant unchanged sequentially on a 12-month basis, at 30%. And we remain optimistic about the evolution of this product moving forward.
Inoculants volumes also declined mainly due to strong sales of these products in Brazil during the fourth quarter of the prior fiscal year. Hectares wise our inoculants reached 4.1 million hectares during this quarter.
In terms of margins, growth in compiler revenues was achieved profitability, as overall gross margins expanded 200 basis points year-over-year from 45.5% to 47.5%. Gross margins in crop protection decrease from 40.5% to 38.6%, and growth in the field was achieved through a greater proportion of B2B adjutants sales, and the FX and inflation dynamics in Argentina negatively affected inventory valuation of adjutants sold during the quarter.
A notable increase in sales of seed integrated products was achieved with relatively steady margins at 67.7%. And finally, retail volumes in crop protection compared to the first quarter of the prior fiscal year went backwards by higher profitability, with a margin expansion of 520 basis points from 43.9% to 49.1%.
Please turn to Slide 15 now to look at how revenues and gross margins for segments contribute to growth of our overall gross profit for the quarter. In line with the gross margin expansion I just described, comparable gross profit increased 13% year-over-year.
Higher growth rate and our revenue growth, reaching $20 million for the fiscal first quarter. Sales growth in crop protection was slightly offset by the gross margin decline resulting in 5% gross profit growth in the segment, which totaled $8.4 million.
Seed & Integrated product comparable gross profit increased $2.1 million, or 58%in line sales growth, reaching $5.8 million for the quarter and becoming the main contributor from the gross profit growth.
Lastly, our propositions performance, gross profit decreased 5% to $5.8 million after declining sales was positively offset by higher gross margins in fertilizers.
Please turn to Slide 16, which breaks down the growth in Bioceres’ first quarter adjusted EBITDA which increased 30% to $10.5 million on higher revenues and an increase in our net EBITDA margin.
The margin expanded to 146 basis points, mostly due to a total increase of $3.2 million related to gross profit, which was mostly driven by significant profitable growth in [frequent] (Ph) impacts that I highlighted.
With regards the G&A expenses, these were flat as a percentage of sales on a nominal basis SG&A increased nearly 16% in the quarter due to an unfavorable FX and inflation dynamics in Argentina, where most of our administrative functions are located. Expenses incurred in this country are largely eliminated local currency and therefore exposed to fluctuations related to FX and inflation adjustments.
And finally, please turn to Slide 17, for an update on our financial position. Bioceres’ debt profile has improved considerably since last year with long-term debt accounting for 62% of total debt, versus 33% at the end of first quarter of 2020. Also following the $17 billion public offering of preselected bonds earlier in the quarter, from cash position strengthened further.
At the end of September cash on short term investments stood at $60 million, nearly five times the level at the end of first quarter of the previous year. From [Indiscernible] standpoint that cash will be centered around 97% of the current portion of our debt.
In terms of leverage is down to 2.4 times net debt to EBITDA despite a year-over-year increase in net debt as we generating significantly higher levels of EBITDA. In addition to the strength Bioceres’ quarterly cash our solid balance sheet and leading position are serving us a strong foundation for executing our HB4 wheat and soybean.
[Indiscernible] We are now in a position to fund working capital requirements for the accelerating inventory buildup process in both wheat and soy that Federico had discussed as well as expansion of our regulatory footprint and the advancement of our products.
Our strong financial position has also allowed us to regain full control of HB4 soy and given us access to cutting edge technologies that we reinforced our leading position in this crop. This not only provides constructive ROI for the company but also has the potential of being highly accretive for our shareholders and as we advance HB4 on soil.
This concludes our presentation for today and with that, I will ask the operator to open up the lines for any questions that participants in today’s call might have.
[Operator Instructions]. And your first question comes from Sally Yanchus from Brookline.
Hi, Federico and Enrique. Congratulations. Good quarter. I have a question, in the income statement, what’s the reason for the high finance cost for $12.7 million? What’s the source of that?
Hi, Sally. Thanks for joining today’s call. With regards to that question, keeping in mind that we usually separate non-cash expenses that are more related to inflation and FX adjustments and to accounting adjustments from our cash financial expenses. So if you, she looked up the cash financial expenses, you will see that, we were below what we spent last year’s around but we are around $3.9 million.
So, we had not only improved on cash generation by lowering financial expenses, but also we are spending less cash and interest expense with higher debt. So, you need to keep in mind that we separate cash financial expenses from non-cash financial expenses that are related to FX and inflation adjustments.
Okay. Do you expect along that level for the next couple of quarters for these finance costs?
Yes. So, if you take a look at the press release that we issued Sally, you will see that the cash payments or expenses for the quarter were at $3.9 million compared to $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 we though what we should be expensing if we keep these same net debt levels.
Okay, thanks. And then as far as the acquisition of the rest of the Verdeca JV, have you paid any cash yet for that?
Yes. So for the position of Verdeca there is $5 million upfront payment that is a cash consideration that gets paid at the closing of the transaction. And that goes out immediately. And then there are considerations in cash for $3 million of which $2 are guided to performance [indiscernible] and there is a $1 million reimbursement of expenses. That is all cash consideration that $2 million of HB4 also related under $1 million, reimbursement of expenses will be done both closing while the $5 million are from payments.
[Operator Instructions] And your next question comes from Ben Klieve from National Securities.
Alright, thanks for taking my questions this morning. I got a few here. So, first question on working capital build on Federico, I apologize. I missed a few minutes at the beginning of your prepared remarks. So, if you address this, I’m sorry, but I’m going to 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 are expecting, over the next fiscal year or potentially two fiscal years, if you can elaborate on that, that would be great.
Hi, Ben, it’s great to hear from you that, that is a very important points, because obviously, they control occurred a gap, that also means the source, this full working capital knows, I think that this transaction is one that we decided to lose.
And we saw the ability of the company to source local debt in Argentina in very confusing terms. So, we are also announcing today, our issuance of public bonds at zero interest over the next few years.
And so that, in a way, gave us the confidence that we could take the load, and also, in exchange for that received the economics of these technology that we now owned entirely. I don’t know, Enrique if you want to comment more on the working capital considerations relating to the acquisition?
Yes, I believe your answer is pretty much covers everything. Hi, Ben, pleasure to have you on the corner, talking back to you. So, Rico mentioned this implies that you will need to take care of the burden of the of the working capital.
This is the only thing that I got from 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 a period of time cycles. So, we have been in our business for most of these products.
We covers pretty much all the cash that invests in working capital by the time that harvests come. So, that is probably the only the only piece, so we expect that we will be able to reorder the three year corporate bonds issued during the quarter. We believe that there is further working capital sources, short-term working capital sources that can be used to fund investments.
Got it. Okay, and thank you for that. I would like to turn it over to HB4. So, you talked a lot about some 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 what is really being done to really drive demand for the product more downstream? Are farmers comfortable at this point, buying the product once you have import approval from Brazil? Are your farmers comfortable putting your product in the ground or do they need more visibility that there is 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?
Thanks Ben for that question. This is a very important point. From a farmer’s perspective, they are eager, I mean, they are waiting in lines, if you will have to access to technology. So farmers are pro technology in general, and they are eager to adopt solutions that will help them.
We have to be the more cautious party in that relationship because you don’t want them to face commercial problems after we have turned that crop. And for that reason, we then integrate efforts into building a commercial channel that can basically take HB4 before the right wheat products to consumers without disrupting the existing channels.
So, for that purpose, what we are doing is identifying dealers and meeting participants of this new story around environment preservation and improve water and carbon footprints and are using these two different shapes that are not otherwise difficult to differentiate states.
If you look at flowers, and a flower the right product, was this easel differentiation from this perspective and that is something that food processors I think are starting to understand a willing to participate. Now, this has to be done in an identity preserved manner where we can keep these channels isolated to some extent from the conventional channel, at least initially.
If we go above the double digit mark, from a market share and market penetration perspective, I think this will become less of a concern. But initially, that is the way we are operating. And so far, I think we are really encouraged by what we see.
And can I ask a clarifying question? When you say you are identifying partners, are these going to be learning the supply chain? Are you are you targeting and seeing traction? 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 property, are you building partnerships and building advocacy for this?
The main partners [indiscernible]. So these are generic channel without differentiation. Obviously, we want to differentiate on purpose because we believe this is actually better than normal produced wheat because of the [indiscernible] imprecations of HB4. And that is something we are doing is this for very small group of farmers under the HB4 brand, so that these are particular group of consumers that are pro science about climate change and use their purchasing power in a way kept the system.
Now what I’m saying, still remain unseen. I mean kind of the open question, if you will around genetically modified wheat but it is one that I believe is exciting and we are leading with a message studies in way restricted to science around the technology, our understanding some of the emotional elements that make the consumers position.
Perfect. Got it. Very good. Last question I have for you and I will get back in queue here is it, hoping you can comment just kind of on general growing conditions. Now you talked about the drought and that is pervasive throughout your area. What does the current growing condition really kind of imply for the second quarter here and maybe end of the third quarter? Are you expecting any material shifts one way or another on your chemistry or your fertilizer business, given how expansive drought conditions are right now?
Look, drought conditions affected us in the first quarter by now more or less normalized. So, we are not seeing significant delays in the current quarter and I don’t know Enrique if you have additional information in terms of what we expect.
Yes. Sure. Ben, as we stayed over the call, at the beginning of the season, there were a couple of tough months in Argentina roughly I think that went through a smoother beginning of the season, but after that we had couple of tough months and that normalize a couple of weeks ago with rainfall that hit crops.
So, as of today moisture conditions are looking good, but rain fall given this screening Argentina needs to doing this to maintain. So, the other important part here for me is always the commodity prices that have trended up. And so to ask farmers for [indiscernible] is making a lot of sense now. So, if we have normal season during the next couple of months, there should I think [indiscernible] for farmers.
Got it. Very good well thanks for taking my questions and I will get back in the line.
[Operator instructions] And at this time there are no further questions, I would 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 the CEO status back in 2011, 2012 was the agreement with Arcadia Biosciences for reconstitution and financing of [indiscernible].
At that time, this is good value paid as a digital and legal cost access fee transaction. HB4 was a technology promise, our ability to deregulate at GMO event just disputable. And the overall investment requirement to transform this promise in the commercially approved product is estimated at over $100 million by industry experts.
To be able to say that we have successfully overcome these initial difficulties and are today regained full control, not only on HB4 soy but also on other very attractive earlier stage technologies and technology factor [indiscernible].
I would like to thank Arcadia for trusting us [indiscernible] and for helping us advance safely expanding states. We also take this opportunity welcome Arcadia from its shareholder – 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.