Prepared remarks
Hello, everyone, and thank you for joining us on today's Bioceres Crop Solutions Fiscal Third Quarter 2025 Financial and Operational Results. My name is Drew and I'll be the operator on today's call. After the prepared remarks, there will be a Q&A session. It's now my pleasure to hand over to Paula Savanti, Head of Investor Relations, to begin.
Thank you. Good morning, and welcome, everyone to Bioceres Crop Solutions Fiscal Third Quarter 2025 Earnings Conference Call. Our prepared remarks today will be led by our Chief Executive Officer, Federico Trucco; and our Chief Financial Officer, Enrique López Lecube; as well as our Chief Commercial Officer, Milen Marinov, all of whom will be available for the Q&A session following the presentation. During this call, we will make 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. Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP financial measures can be found in our earnings press release. This conference call is being webcast, and the webcast link is available at our Investor Relations website. It is now my pleasure to turn the call over to Federico.
Thanks, Paula, and good morning to everyone, and welcome Milen Marinov, our Chief Commercial Officer, on his first earnings call with us. Please turn to Slide number 3 for an overview of this quarter's main highlights. Our third fiscal quarter is typically uneventful, as it falls in the off-season for most of our geographies. In the past two years, it stood out as extraordinary due to the accrual of portions of the $50 million upfront payment from Syngenta, which significantly improved the P&Ls of the quarter. This year, however, it stands out for a non-P&L achievement, which is our exceptional cash flow performance. We're very pleased to report a $40 million improvement for this metric on a year-over-year basis, which helped us reduce our debt and improve our cash position, as Enrique will describe in a minute. An important contributor to our cash flow performance this quarter is a shift in our seed business strategy, which is also enabling a more focused approach. Some early benefits of these changes are already visible this quarter, with more expected in the quarters to come, as I will describe later in the presentation. We're also very excited about the long-awaited EPA approval of Rinotec. As Milen will describe in a few minutes, we can now offer growers and partners a full suite of on-seed and on-field biological solutions for pest control and plant health and nourishment alike, for both cash and row crops across the world's largest agricultural markets. We are indeed in a unique position to facilitate the transition to a more sustainable, yet more productive agricultural reality. Let me now pass the presentation over to Enrique for a deeper look at this quarter's financial performance.
Thank you, Federico, and good morning to everyone. Good to have you on the call, and good to have Milen for the first time with us as well. Let's please turn to Slide 4 and take a look at the revenues in the quarter. Like Federico mentioned, there is nothing particularly eventful in the third quarter as it is off-season in almost every geography and not much activity for most of our product portfolio. So not a great quarter in terms of things like thinking of revenue-generating opportunities in the context of a tough year for the industry as a whole. We are seeing signs of normalization in some of the markets we target, which is good in terms of confirming that the overall industry is stabilizing after a couple of rough years, but it's surely not evident that we are seeing a bounce back yet. For the quarter, total revenues came in at $60.6 million compared to last year's $84 million. As expected, the accrual in the third quarter of last year of almost $16 million from Syngenta's initial down payment related to our inoculants collaboration was too big of a gap to be closed with business as usual in a particularly slow quarter. Even more so, considering that profits from the global distribution agreement will now be evenly distributed throughout the year as opposed to the accruals of the initial compensatory payment that were done in the third quarter of fiscal '23 and then again in the third quarter of '24. This effect alone explains two-thirds of the top-line negative change and was something to be expected. Aside from this accounting impact, Argentina had a particularly slow third quarter with overall reduced commercial activity for our inputs compared to prior years. In general, what we are seeing in the Argentine market lately is that more stable macroeconomic conditions have driven farmer and distributor purchasing behavior to become more closely linked to the agronomic calendar as opposed to a financially speculative pattern in the past where maybe hedging or taking currency risk was part of the decision-making process for these players. With that in mind, it's natural to see that during the third quarter, the commercial pace was increasingly dictated by on-field use of inputs and particularly for crop protection. In contrast, and like I mentioned, other geographies outside of Argentina are showing early signs of recovery and delivered good growth during the quarter. We had a particularly good quarter in the U.S. and Mexico as well as other smaller Latin American geographies. But I think that the important takeaway here is that this seems to be steady growth in priority countries and with selected bioprotection technologies that we're targeting to become increasingly important in terms of contributing to incremental sales. From a geographic standpoint, in summary, I'd say that the performance in Argentina this quarter is not particularly indicative of market status other than what I mentioned about seasonality becoming more evident. More than halfway into Q4, I'd say that the winter crop season is showing good progress, but still the biggest part of the Argentine market is dependent on the summer crop season that starts in our September. So it's a bit early to know what the market will look like after a rough year. On other geographies, great to see good results in U.S. and Mexico despite noise from tariffs and maybe early signs that market headwinds have bottomed and that we're slowly moving to a new cycle there. Finally, also a low season quarter in Brazil with no particular news other than the impact from tariffs has been somewhat positive to Brazilian soybean prices, which has improved farmer sentiment and there is somewhat of a reasonable expectation that next year will look stronger than this one. From a segment standpoint, the increasing crop protection revenues were fully driven by lower sales of non-core products in Argentina and were partially offset by higher sales of bioprotection solutions. In seed and integrated products, revenues increased by 26%, primarily fueled by accelerated sales of HB4 grain from existing inventory, which is in line with the reorganization efforts for the seed business, including transition to this working capital lighter model. And finally, crop nutrition was primarily shaped by what I already mentioned about the impact from the Syngenta down payment. Excluding that effect, inoculant sales and underlying operation inoculant sales were up and slightly offset by the Argentine seasonality effect on fertilizers. Let's please now turn to Slide 5, where we will take a look at the gross profit, which for the quarter totaled almost $24 million compared to $42.6 million in the same period last year. That included the full $15.7 million accrual from Syngenta. As expected, the trend in gross profit largely follows what we saw on the revenue slide. What I would say is that the consolidated level gross margin decline from 51% to 39% is explained in full by that comparison effect to the Syngenta down payment last year, which carried 100% margin. So without this effect, consolidated gross margin remained roughly flat at 39%. When we look at historicals for this quarter, this is a 40% quarter usually, if you look at the last four years. So we're slightly below that but not far from where it was historically. From a segment standpoint in crop protection, despite the gross profit decrease, which is in line with revenues, we saw a favorable shift in product mix with growing sales of proprietary adjuvants and bioprotection solutions. This led to a margin expansion from 38% to 41%, which is what we want to see going forward in this segment: a margin recovery. That also carries a benefit in terms of working capital, which I will address further in the presentation. In seed and integrated products, the gross profit was slightly below last year, mainly because the growth in revenues was primarily explained by the divestment of HB4 grain inventories, which carry a low margin. That, to some degree, diluted the margin of the rest of the products that we report in this segment that are particularly seed treatment packs. Finally, in crop nutrition, again, the impact is mainly explained by the Syngenta on-payment accrual last year. When we exclude that, margins remain fairly stable for the products that we report here, particularly in this quarter: inoculants and fertilizers. Let's now please move to the next slide, Slide 6, to look at our adjusted EBITDA results. The quarter came in at $9 million compared to $21.1 million last year, a decline that was expected following what I already described about Syngenta's on-payment accrual in crop nutrition results last year. The impact from that drop in EBITDA was partially offset by other income stemming from portfolio actions that we took as part of the seed business reorganization process. This other income contribution reflects a favorable exchange of non-core soybean trades and intellectual property assets for the prepayment of outbound royalties to third parties, as well as the expansion of rights on selected technologies. It's part of us cleaning up our portfolio in seeds and making that particular business more working capital efficient as we pivot to the new model. Regarding OpEx, we saw a modest decline that reflects the early impact of our ongoing efforts to realign the company's cost structure to the new market reality that has been ongoing on multiple fronts, not only on seeds. We are also adjusting part of our SG&A for us to have a lighter company, a lighter business, and prepare to capitalize on what will come hopefully in the next couple of years with a more normalized industry. These measures were put in place late in the quarter, so we're seeing only partial results of that. Going forward, we do expect to see further benefits from this contributing to the operational leverage and helping us increase our EBITDA margins back to normal levels and not where we see them today. Let's please move to Slide 7, which I think it's like Federico mentioned, an important and high point for the quarter. That refers to cash from operating activities. As we communicated in prior quarters, this was a key focus for the year: us driving and improving cash generation. To that regard, working capital management was definitely a key component. This is probably the first quarter in which we clearly see tangible results from the efforts that were put in place before. So despite this being a weak year in terms of the P&L performance, the quarter delivered $23.3 million in net cash from operating activities, which is in my view an impressive $40.7 million improvement compared to the $17 million in cash that was required by operations in the same quarter of the prior year. Just to break it down: working capital is the main component of us having more efficient cash performance. At the inventory level, we kept operating just in time compared to what we used to do, leading us to a reduction of $13.5 million during the quarter, as opposed to a $6.1 million use of cash last year. It is important to note that the acceleration of HB4 grain divestment was partially responsible for improving this number. Of course, this is something that is one-time, but it was important for us to show progress in terms of making that particular business be more capital light. Inventories were a big part of that. We also placed a strong emphasis on accounts receivables management and that brought in roughly $31 million in cash during the quarter, compared to a negative $16 million number in the prior year. Apart from the progress that this shows in terms of trending our accounts receivables back to what they were historically, the important point here is that it also speaks to the quality and health of our accounts receivables, which allows us to eventually hit the gas on improving that number. Finally, I also think it's worth noting that these improvements on the asset side of working capital were achieved while reducing our accounts payable during the quarter by $20 million. We're not relying on delayed payment to suppliers or vendors to improve our networking capital. This is a healthy improvement and something that we aim to maintain going forward. I think that enhancing cash generation and ensuring efficient capital allocation, as generic as that might sound, is an important part of our strategy and will continue to be an important part of our strategy. We think this is homework we need to do ahead of us capitalizing on the expansion of our portfolio and the introduction of new technologies that Milen will refer to further in the presentation. Finally, let's please turn to Slide 8. Of course, these cash flow performance have had a positive effect on our cash position and our total debt at the end of the quarter. Sequentially, cash increased by a bit less than $10 million, and total debt decreased by $13 million by the end of the period. This is also in part reflective of what we've been communicating in these calls—that our debt position is highly reflective of what we do with working capital and that eventually streamlining our working capital will have an effect on our total debt position. That led us to a leverage ratio slightly above 4.1 at the end of the quarter. That concludes my part of the presentation. With that, I will turn it back to Federico.
Thanks, Enrique. Let's please turn to the next slide. I'll try to move faster so that we have enough time at the end for Q&A. As we transition in our seed business model, we want to provide an update in terms of what is going on in the field as well as what we have done already organizationally to achieve a more focused business. The soybean harvest in Argentina has been delayed by about one month due to late season rains and it's generally expected to be a good crop. Once we collect variety performance data, we'll be transferring the continuing good performing HB4 materials to our main multipliers and customers for them to multiply in future seasons and develop commercially, directly with their farmer base. Also, we expect an initial set of materials from the Verdeca-GDM collaboration to be registered, subject to field performance from combines in the coming days so that these materials can be made available to the GDM network in the upcoming season as we described in our last earnings call. Outside of Argentina, our regional partners in Uruguay and Paraguay are moving forward with the registration and multiplication processes in the current season so that we can have initial commercial activity in both countries in fiscal '26. In Brazil, which is seasonally ahead of the rest, we have already started commercializing our inventories and compare this to last year where first sales occurred in July and August, so we're in good shape there. More importantly, in Brazil, the variety registration trials have been initiated for HB4 wheat with 28 proto tentative varieties developed by EMBRAPA being tested in 12 locations in central Brazil. Similarly, the best materials will be registered and offered to our main customers and partners for them to continue down the seed value chain. Please now turn to the next slide for an overview of our reorganizational process. During the quarter, we have adjusted our personnel and structural costs to reflect the new focus of the business, resulting in a 68% reduction in payroll, which, together with a reduction of other structural costs associated with seed production and commercialization activities, as well as breeding activities at the JV level, will give us an annualized savings of approximately $5 million, which will show more significantly as of the fourth quarter of this year. As part of the new arrangement with Florimond Desprez in Australia, where we now hold exclusive rights for HB4 wheat outside of the Trigall Genetics JV, we have secured $1 million in pre-commercial royalties that will help us offset in-country regulatory costs as well as investments needed in some Asian wheat export destinations to fully enable HB4 wheat in that region. Finally, as we transition organizationally, we have exchanged some non-core trades and IP, mostly from our teething library resources at Verdeca, streamlining third-party royalty commitments and other obligations. This not only benefits us financially but also positions us to better serve our partners and licensees. So a lot going on in the seed business unit to deliver better results than what we have in the past. I think with this, I'll now pass the presentation over to Milen so that we can have enough time at the end for Q&A.
Good morning, everyone, and thank you for being with us. I would like to give a quick update on Rinotec and also on the key commercial focus areas for us into next year and into the near term. The Rinotec platform is truly a novel enterprise for us, and 2025 is our pre-launch year. As you know, as of today, we have registrations in the United States and Brazil with state-by-state approvals ongoing as we speak. In terms of what we expect around Rinotec, the number one market for us is obviously to be positioned in all the key states in the United States, and the second most important one is to have the right select channel and strategic partnerships. What's unique about Rinotec is that we've developed this platform for conventional acreage for both row crops and specialty crops, including corn, soybean, cotton, tree nuts, potatoes, and others. We're incredibly hopeful and placing a big bet on Rinotec because of that. Usually, in biologicals, you tend to target niche and often organic markets. Here, we were very deliberate and purposeful in targeting the conventional acreage. Conventional acreage for us with our biocontrol platform represents essentially new acres because today most of our business at the ProFarm business unit is organic. Close to 70% is organic. It is critical for us, as we continue to complete our registration, to also line up the right partners. We're currently in discussions with what we think are the right and committed partners for this opportunity because, at the end of the day, it is a scale game. We're approaching the market under four brands: three in the United States—Arino, Neovo, and Bronte—along with one in Brazil, Magnavas. In Brazil, our introduction into the market is focused around seed treatment. In the United States, we're targeting a broad spectrum of crops. Again, we are really focused on launching this the right way. Arino is focused predominantly on potatoes in the Northwest today. Neovo is primarily focused on Midwest and Mid-South corn. Bronte is targeting conventional acreage around the specialty horseshoe area in the United States. We're getting positive traction. We believe that this positions us for an ability to double our growth of the PFG platform over the next three to five years. We see Rinotec as highly differentiated and really focused on the grower. It directly addresses key customer concerns, such as overcoming pest resistance. It comes with proven yield increase, solid shelf life, a mix as well, including with fertilizer. It also comes with superior profitability for us and our partners. I'd be happy to entertain more questions afterward. Moving on to the next slide, I think this is important to emphasize, and Federico mentioned this earlier. With Rinotec as part of the solution set, we now have a full suite of opportunities ahead of us. We have the right solutions for our customers in biocontrols, biostimulants, plant and soil health, and advanced nutrition alike. We are now able to service conventional, organic, and regenerative acres. We're able to target both row crops and specialty crops. Additionally, we now have the technology that allows us to leverage multiple vectors to scale our biological business: in-furrow, foliar, seed treatment, as well as a solid B2B business. Our focus will continue to be on scaling into biologicals and improving profitability through the right product mix. It is essential for us to continue fulfilling our mission to deliver viable and profitable biological solutions to growers across all our key markets, with a particular focus on Brazil, the United States, Mexico, and Europe. What I would say today, despite a challenging year, one of the things that we have done right is to remain close to our customer base. I believe that positions us for further growth in the future. In the midterm, if we look at our efforts, we see growing adoption of biologicals across our key markets. We see a solid business and early shoots of recovery in Argentina. We're doubling down on our commercial platforms in Brazil, the United States, and Mexico. These are markets that we will continue to prioritize and build out. We're also reorienting our resources to better leverage and monetize the technology platforms that we have developed over the last decade, increasing our ability to work with select strategic and channel partners in developing value-added product offerings. We're also unleashing the full potential of our highly trained and committed commercial teams. Finally, I will say that as we're looking into more of a tailwind for us in biologicals with all the right ingredients in our hands today, there are a couple of areas where we continue to do additional work. One is our strategy for growth beyond our traditional markets. The other one is our focus on large grower accounts, particularly in Argentina and Brazil. Lastly, we have more work to do on continuing to leverage and strengthen our brand recognition globally. With that, I will close my remarks, and I look forward to your questions later.
Okay. Thanks, Milen, for that overview. I think, why don't we just go to Q&A directly so that we can have enough time to address questions from the audience.
Questions and answers
Thank you, we'll now start today's Q&A session. Our first question on today's call comes from Kristen Owen from Oppenheimer. Your line's now open. Please go ahead.
Enrique, this first one is for you. Just congratulations on the nice cash advancement here in the quarter. I'm just wondering as we're working through some of those remaining grain inventories, how much of the working capital unwind is there still to come? And then as we look further out, I'm not necessarily looking for specific guidance, but just some directionality on your expectations for sort of a look at annual EBITDA to free cash flow conversion. How should we think about that evolving over time?
Hi, Kristen, thank you for joining us and thanks for the question. I think you're right in mentioning that this is an important part, like I mentioned, of our cash generation. This specific quarter comes from that reorganization and that's more of a one-timer. I think that going forward, we can expect probably an additional $10 million coming from that transition into a later model with HB4. Once that's in our balance sheet, it won't longer be an ongoing effect. The other one on the sort of conversion of EBITDA into free cash flow, I think without getting into guidance, and again, we are in a transitioning period now, so it's harder for me to give specifics. What I think I can tell you as a reference point is that we do want to go back to what we had historically—a working capital of four months to 4.5 months of sales. That also carries something that Milen referred to, that is the type of portfolio that we'll end up shaping our sales. There’s a close connection between the technologies we prioritize to sell, the gross margins we make, the SG&A those require, and how that translates into EBITDA margins. Lastly, what is the working capital required for that type of portfolio sales. All that is strictly connected. At the end of the day, we'll translate into what I told you about the four months of working capital. Regarding EBITDA to free cash flow, we're aiming for that to be as similar as possible. I won’t give you guidance today, but that's what we're aiming for. I can tell you that we are aiming, at some point in the future when we return to a more normal industry, to get back to EBITDA levels around 25%, to trend our margins back up to the high 40s, if not 50. That will have an impact on working capital and the quality of free cash flows to EBITDA. Hopefully, in the coming quarters, when we find more stability in the industry, we can provide some sort of guidance on that. This probably isn't the right time to do it as we're transitioning.
The four to 4.5 months is something that we can understand. Given that there is some reliance on a return to stability, at least in the end markets, I mean, this is agriculture; it's never stable. We are also keenly aware here in North America of all of the political volatility that's happened over the last, call it, three months that some may have missed some of the things that have also happened in Argentina, some of the updates like the removal of certain currency controls. So, Enrique, you also started to talk a little bit about an early look into the fiscal fourth quarter. Just wondering if you can give us a little more color on the ground sentiment in Argentina, whether it's from a broad-based macro perspective, but also how that's going to manifest for your farmers and customers.
Yeah, no, I think that that's the right assessment of the situation, Kristen. Like I mentioned in the call, and probably I will defer to Milen or Federico, but I think that sentiment in Argentina is slowly building up, which is what you want to see if you aim for a more stable market. If you have the big swings of people feeling depressed or feeling excited, that's usually more volatile. What we're seeing is that with more stable macroeconomic conditions, the market is normalizing. That's why I mentioned that this quarter was a sort of go back to normality seasonal quarter in terms of slowdown, where people are just purchasing what they're putting on the field, and that's normal as opposed to what happened in the past that was more of speculative behavior linked to currency. We're transitioning to a normal to good winter crop season with enough moisture. Recently, the government has confirmed that they will keep export tax duties on winter crops unchanged. There won't be an increase in export tax duties that was previously expected. That should build up into commodity prices and help farmers' profitability. I don't think we're heading into a bumper crops season, but I believe we're moving towards a healthy one. I mentioned earlier that the confirmation of a comeback or not will happen with summer crops. Summer crops remain the big part of the party in Argentina. I like how things are shaping up as we walk into the new year. I don't think we will have a Q4 that allows us to recover what we lost in a particularly rough year in Argentina, but I'm optimistic about the next season. I don't know if Federico or Milen have any other comments on that.
No, I agree with that. The other part I would mention is that, unlike last year, this year's harvest is going to be good. We haven't seen a severe effect of drought like it was last year. So the P component will be favored to some extent by the reduced taxation, even though international prices remain low. The Q part of the equation, I believe, will be good. For farmers who are usually productivity-focused, it's quite a positive aspect emotionally.
Another way to look at this is that we're probably in the onset of emerging from the perfect storm: weather, farmer, geopolitical conflicts. The way I see it helps maintain clarity on where the issues are. In Argentina, we're roughly 30% down to 24%, mostly due to microgranular and a convergence of negative events over which we have very little control. Our performance there is perhaps not as challenged as other competitors and peers, but it's still been a challenge. Looking towards '26, what we see is positive. Growers are expected to have a good crop. The winter season is looking up so far, and corn acreage is increasing compared to soy acreage in Argentina, which is a net positive for us from a nutrition point of view. Farmer sentiment seems to be more optimistic, pricing is stabilizing, and inventories in the channel at the farms are low. We ourselves spent year to date 25 fully focused on sell-out across the board. I think as we pursue operational and commercial excellence, we remain optimistic about being positioned well for growth. Regarding tariffs, that's net positive for both Brazil and Argentina, where we obviously have quite a bit of exposure. The big question always revolves around the United States; it's hard to predict where things will settle at the end. However, close to 90% of what we sell in the U.S. we make here, somewhat insulating us from potential volatility in this particular market. Historically, we've been incredibly strong in cash crops as we ramp up Rinotec, giving us new exposure to conventional row crop acres, which should be a meaningful growth driver for us. We're looking at initial revenue coming close to the second half of 2026. By then, the dust will have settled and we should all have greater visibility regarding tariffs in the ag market in the U.S.
First, a quick one, Enrique, for you. The $7.5 million non-operating income payment that you noted, which I believe was around the retirement of royalties due for HB4 soy. Was there any cash component to that, or was that largely or entirely a non-cash item?
Hi, Ben. Thanks for joining and for the question. Good to have you. That was primarily non-cash. There was a small cash component to it, but it was largely a non-cash exchange of IP and intangible assets, like Federico mentioned.
One more philosophical question for you, Milen. It's great to hear your thoughts on the call today. You've got a lot of ongoing initiatives to kind of jumpstart the commercial process here at Bioceres. I was wondering if you can help us understand which drivers you think have the greatest visibility of being realized within fiscal '26? It sounds like Rinotec is going to have a kind of soft launch in the second half of fiscal '26. What other initiatives do you think we will be talking about a year from now that have really shown on the financials?
Yeah, that's a good question. Thank you for that. Indeed, it sounds like we have a number of levers. We do. We're actively working to ensure we remain focused on the things that really move the needle. We have a full portfolio today, and usually, you hear feedback from the commercial teams that says we don't have enough. I think we have more than enough. Our number one focus is to continue to improve off of today in Argentina. We just talked about that. I think another positive is that seed treatment seems to be performing well, and that’s an early indicator for us. If we maintain our steady performance and realize our position as a technology innovator – essentially an ag innovation gateway into Argentina – the thing to look for will be our commercial excellence unfolding in markets outside of Argentina. Number one, Brazil. Number two, the U.S. Number three, the rest of LATAM. Lastly, Europe. The first key measure for us is that, while historically Argentina has represented 65% to 70% of our top line, I would like to see that cut in half over the next three years. I believe that even without Rinotec, we can achieve that. Secondly, scaling our biologicals portfolio will be key. We have to manage that product mix, and I think we are well-positioned in all these markets. One of the critical components of this fiscal year, going into next fiscal year, will be our UBP platform, essentially a new class of biologically active super molecules, which allows us to deliver a biostimulant effect and essential macro and micronutrients. It comes with a low dose rate and often provides better agronomic performance at a significantly lower cost than existing biostimulant solutions. I think this is an area where we're just scratching the surface and should deliver additional growth leverage for us going into 2026 and beyond. Let me pause here to see if I answered your question and if you have any follow-ups.
I was just wondering if in the Brazilian market, the tightening of credit conditions has affected any of your customers in their purchasing or procurement of pesticides or fertilizer?
Hi, Austin, this is Enrique. Thanks for joining us and for the question. That's a good question. Actually, no. We've been pretty much isolated from what happened in Brazil, probably in the second half of last year. We didn't have issues there. I do think the increase in interest rates in Brazil has affected our culture to some degree. The offsetting factor to that, which is exogenous to Brazil, is what Milen mentioned regarding the tariffs and how that played out in favor of Latin America, particularly. The primary competitor for Brazilian soybeans in the global market is the U.S. Therefore, the fact that the U.S. has introduced some volatility in how that supply flows into the global market has shifted demand for soybeans into Brazil. You can see that reflected in the Brazilian soybean premiums paid relative to the U.S. reference value. To conclude your question: number one, we have not been affected by that particularly; number two, the market is indeed under stress due to that; but I think the offsetting factor that I mentioned has changed the mood and moved that discussion on financing the chain to a secondary level of importance. This is why we believe we're heading into a better market in Brazil than we had this year.
If we look at the U.S. market, where lending standards and credit are more accessible for U.S. farmers, do you think a continued reduction in interest rates will serve as a demand tailwind for you for procurement of inputs by U.S. customers?
I'll give my 30,000 feet view and probably let Milen comment on that. I do think that it's good. Having said that, it's one of the drivers that made the industry get into trouble in the past, so we're not counting on that. We're focused, like Milen said, on driving growth from the technologies that are a priority to us, which carry good profits not only for us but also for our customers. To some degree, this should isolate us from discussions about the cost of money whether it is up or down. That's not the path we want to follow because of past experiences. That said, obviously it helps offset volatility introduced by tariff discussions, particularly for row crops. Another vital distinction is that the game differs completely between high-value crops and row crops. Milen, I’ll let you add on that.
I see optimism in this area. People have undergone major exercises they hadn't done in a while regarding better managing working capital across the board. I believe we have been in tune with this. Recognizing these challenges early on, we concentrated on sell-out, aligning incentives across internal and channel national retail to fit with the current customer sensitivity around cash flow. If you were referencing general credit rating and the continued rise in the 10-year notes, then the larger unknown remains tariff situations from a macro view. Our crop mix, product mix, and how our solutions impact profits and yield for our customers, which offers far more appeal than our size suggests, ultimately insulates us.
I was just curious whether you had any field trial results from the Neovo product for corn in the U.S., perhaps from land grant universities, your own field trials, or evaluations from the retail channel or seed companies. I'm curious if you have some data that highlights the impact on yield versus conventional or synthetic chemicals. Also, are you likely to pursue a partnership on this with seed companies as a seed treatment or through the retail channel and co-ops for more of an in-furrow application?
Yes. Thank you. It's a substantive question about Rinotec. I'm not in a position to share specific data, but what I can say is that we'll have a technical bulletin on our website regarding this. In addition to previous trials, we have ongoing replicated third-party field trials. Neovo has data from five years of trials demonstrating results equivalent to the leading grower standard. Regarding partnerships, we are working with both strategic and channel partners. We're being very careful and deliberate, recognizing the importance of this launch and the quality of partnerships necessary for scaling effectively. They've seen the data and are impressed. We are not in the early phases of these conversations. We remain focused on refining our alignment with conventional IPM spray programs to deliver unique, differentiated value. We've conducted over 65 trials in corn alone with universities and CROs over the past five years. Today, our U.S. field development has more than 120 replicated trials covering key use patterns such as seed treatment, foliar, and soil applications, targeting various pests. Globally, we’re likely over 400 trials, including replicated NLAB trials.
One more quick question on the HB4 soybean and wheat; is there interest from seed companies in the U.S. and Canada for those traits?
Hi, Steve. This is Federico. Nice to have you on the call. Yes, in terms of HB4 wheat, we're progressing in the U.S. with a network of public and private institutions to deliver that solution in the near term, particularly to the Midwest. We’re looking to make an announcement on that front in the coming weeks. In terms of soy, we're mostly focused on Latin America, particularly with the GDM collaboration, trying to move outside the drought-tolerant space into wheat management. That is our top priority today. There's an opportunity for that to expand into the U.S. and Canada, but I think it won’t be something you see in the near future; this is more than two to three years out.
One quick question: there was a comment earlier about Rinotec potentially doubling the growth of the crop protection platform over the next few years. Would you say that this means that if we normalize the growth rate of crop protection from the recent downturn and come up with a number, Rinotec would effectively double that number, or do you see it differently?
Yeah. The way I look at this is that this comment was geography-specific, largely around the U.S., where we have the largest crop protection markets, where we have secured registrations, and done the majority of the groundwork in developing brand partnerships. I would point out that we haven't experienced the kind of hits others might have faced, thanks to steady growth in our flagship portfolio. This is largely a result of brand recognition, longevity, and the legwork our excellent commercial team does in the field; it also relates to crop mix. In the next three years, I see potential for additional growth from Rinotec, starting with a slower ramp-up into '26 and a target of roughly 10% coming from Rinotec as we go; however, more details depend on how we finalize partnership discussions. If I had to estimate, we’re looking to double revenue in biocontrol alone with Rinotec being the base scenario. That said, we haven't quite focused on the rest of the portfolio we currently possess in North America, including biostimulants and other parts of Bioceres.
We have no further questions in the queue at this time. So that does conclude the Q&A session on today's call. I'll now hand back over to Federico Trucco to do some closing remarks.
Thank you, and thanks everyone again for participating in today's call. Please feel free to reach out to our Investor Relations team if you want further information on the quarter's performance. We're looking forward to positive momentum in the remaining quarters and delivering on some of these very exciting opportunities that we have commented on during the call. Have a great rest of the week. I think with this, we can conclude the call.
Thank you. That concludes today's call. You may now disconnect your line.