Adecoagro S.A. (AGRO) Earnings

Management highlights

### Organizational Restructuring - Starting January 2026, Adecoagro reorganized its operations into three reportable segments: Sugar, Ethanol and Energy; Fertilizer (reflecting ProFertil results); and Food and Agriculture (integrating the previously separate crops, rice, and dairy verticals). - This new structure creates a more diversified, resilient agro-industrial platform with a more robust earnings profile and more stable, sustainable cash generation across commodity cycles. ### Operational Milestones - The major maintenance turnaround of the fertilizer plant was completed at year-end, and the plant has operated at full capacity since ramp-up. - Brazil operations achieved a new first quarter crushing record, reflecting returns on prior planting expansion investments. - The company's flexible mill configuration allowed production of nearly 100% ethanol in Q1 to capture better ethanol pricing margins, even during ongoing maintenance work. - The new crop harvest in the Food and Agriculture segment is well advanced with positive early productivity indicators. ### Capital Structure and Shareholder Returns - The $1.1 billion acquisition of a 90% stake in ProFertil was financed with $400 million in cash, $400 million in new long-term debt, and $300 million in equity proceeds. - Net debt increased to $1.6 billion in Q1 2026, driven by seasonal working capital requirements for planting and harvesting; excluding this seasonal effect, net debt has already declined compared to 2025. - Pro forma net leverage stands at 3.2x, aligned with the planned deleveraging path. Currency composition of debt is well aligned with the company's revenue mix to mitigate currency risk, and liquidity is strong with full ability to repay short-term obligations. - A $35 million cash dividend was approved, with the first $17.5 million installment payable May 19 and the second equal installment payable in November.

Guidance

- Full-year crushing volume is expected to see low double-digit growth, driven by greater cane availability, and the company anticipates full-year ethanol production maximization under the current price scenario. - 2026 full-year adjusted EBITDA for the fertilizer segment is expected to be stronger than previously anticipated and potentially exceed 2025 levels, supported by the favorable urea market price outlook. - Margins in the Food and Agriculture segment are expected to improve in coming quarters as the new crop is harvested and commercialized, supported by implemented cost reduction initiatives. Dairy processed milk volumes are expected to grow with the launch of new retail branded products. - Net leverage is expected to decline continuously driven by higher adjusted EBITDA generation primarily from the fertilizer segment. Management now expects to reach the target leverage of 2.0x net debt to adjusted EBITDA by the end of 2026, much sooner than the prior expectation of 1 to 2 years. - The company expects stronger overall earnings performance and higher cash generation in 2026, enabling faster-than-expected deleveraging, which is a top priority following the ProFertil acquisition.

Segment performance

Overall gross sales for Q1 2026 totaled $394 million, a 22% year-over-year increase. Adjusted EBITDA reached $86 million, more than doubling the prior year level. 1. Sugar, Ethanol and Energy: Achieved a new Q1 crushing record of 2.2 million tons of cane, a 49% year-over-year increase on higher productivity despite a smaller harvested area. The segment held a 96% ethanol product mix to capitalize on superior margins, though quarterly sales were lower year-over-year due to reduced sugar sales amid weak global prices. Adjusted EBITDA for the segment was $41 million, exceeding prior year performance. 2. Fertilizer: Urea production increased year-over-year driven by fewer downtime days (10 days in Q1 2026 vs. 19 days in the prior year period). Following the year-end major maintenance turnaround, the plant now operates at full capacity. Sales grew 68% year-over-year, driven by a 16% improvement in urea prices following the Middle East conflict escalation. Adjusted EBITDA for the segment reached $53 million, showing a strong year-over-year recovery. 3. Food and Agriculture: Q1 results were negatively impacted by lower commodity prices for peanuts and rice and higher USD-denominated costs, as the segment finalized sales of carryover inventories from the prior harvest. Over half of the planted area for the 2025/2026 campaign has been harvested, producing over 700,000 tons of agricultural products. Dairy processing volumes increased year-over-year on improved cow productivity at the company's Fristall facilities. This segment contributed the remaining negative adjusted EBITDA to offset the other two segments' positive results, bringing the company total to $86 million. Revenue contribution share is not explicitly provided in the transcript.

Risks & headwinds

- Forward-looking statements are inherently subject to risks and uncertainties, as they depend on future circumstances that may not occur. General economic conditions, industry conditions, and other operating factors could cause actual results to differ materially from projected outcomes. - Commodity price volatility continues to create uncertainty for segment results, particularly for sugar, peanuts, and rice in the Food and Agriculture segment. - Currency exchange rate fluctuations can impact production costs, as seen in Q1 2026 where appreciation of the Brazilian real put upward pressure on Sugar, Ethanol and Energy segment costs. - A stronger-than-forecast El Niño event could potentially impact agricultural productivity and commodity pricing across the company's segments, though management notes its core sugarcane growing region is not highly vulnerable to productivity impacts from El Niño. - Urea pricing and demand are exposed to geopolitical volatility, as demonstrated by the price spike following the escalation of the Middle East conflict.

Analyst Q&A

• Q: Could ProFertil capacity expansion be accelerated with a partner to capitalize on sustained high urea prices, and how does domestic urea pricing and contracting work in Argentina?

  A: Argentina is a structural net urea importer, so domestic pricing always follows import parity, with main demand concentrated in June–August for wheat and September–November for corn. A new urea plant takes a minimum of 4 years to build, so current high prices do not change the timeline for a final investment decision. Management confirms expansion makes long-term sense given Argentina's growing natural gas production and regional net import demand for urea, and is evaluating all options including partnership financing, but no decision on timing has been made.

• Q: Can we expect continued correlation between Adecoagro's urea prices and Brazil CFR prices in Q2, and are farmers delaying purchases amid high prices? Do you expect unit cost normalization for sugar and ethanol later this year?

  A: Yes, domestic Argentine urea prices are highly correlated with CFR Brazil spot prices, so the trend will continue. No meaningful demand reduction is seen, as urea delivers the highest productivity impact for farmers, so purchases remain on track. For sugar and ethanol, unit costs are expected to decline by BRL 10–15 per ton for the full year, driven by volume dilution, efficiency gains, and lower Consecana prices. The Q1 cost increase was driven by anticipated agricultural activities that will not repeat in later quarters.

• Q: What is your ethanol-sugar mix strategy for the full crop season after recent ethanol price declines, and when will you reach the 2.0x leverage target amid the strong fertilizer market?

  A: Even after the 20% Q1 price drop, ethanol prices still offer superior margins relative to sugar, so the company will continue maximizing ethanol production for the full year. The company paused Q2 ethanol sales to store inventory for later in the year when demand is expected to rise. Leverage is already down after accounting for seasonal working capital effects, and management now expects to reach the 2.0x target by the end of 2026, much earlier than the prior 1–2 year timeline.

• Q: What is your medium-term outlook for the Food and Agriculture segment, and could you pursue M&A or divestments now that fertilizer has gained more relevance? Are you at risk from a strong El Niño?

  A: El Niño is expected to have limited productivity impact on Adecoagro's core operations, as the main sugarcane growing region is not vulnerable to major disruptions, and higher rainfall could boost global fertilizer demand, creating a potential upside. Food and Agriculture is expected to deliver improving results in coming quarters as the new higher-margin crop is commercialized. Management is committed to the segment as a low-cost producer in all its product lines, and has no plans for targeted divestments.