Adecoagro SA Q1 FY2025 earnings call

Recent Transaction

• Tether completed its tender offer, becoming Adecoagro's largest shareholder with 70% of equity, marking a new era for the company.

Business Segments

• Developed over 20 years, leveraging soil, climate, and people across four business segments.

Q1 Results

• Consolidated adjusted EBITDA was $36 million. Rice had record productivity but faced declining prices. Sugar, ethanol, and energy sold stored ethanol, but crushing volume was down. Farming had increased production but was impacted by weather.

Capital Allocation

• Committed to distributing at least 40% of 2024 net cash from operations ($64 million), with $45 million already committed to dividends and share repurchases.

Debt

• Net debt was $679 million, 6% higher year-over-year due to increased short-term debt for working capital.

CapEx

• $30 million invested in Brazil expansion, including sugarcane plantations and farming infrastructure like drying/storage capacity and dairy warehouses.

Sugar, Ethanol and Energy: Adjusted EBITDA was $30 million in Q1 2025, a 42% year-over-year decrease. Sales were $119 million, 15% higher year-over-year due to selling stored ethanol at higher prices. Crushing volume was down 31% year-over-year. Farming: Adjusted EBITDA totaled $17 million in Q1 2025, a $27 million year-over-year decrease. Rice achieved a new record in productivity with an average yield of 8 tons per hectare. Crops were impacted by weather, but late corn was expected to recover. Dairy EBITDA was $7 million, driven by higher sales and value-added products.

Sugar, Ethanol and Energy

• Expect to accelerate crushing in the second half of the year, with unit costs expected to decline as crushing increases. Sugar prices dependent on Brazil's production; ethanol supply may be limited due to focus on maximizing sugar production.

Farming

• Forecast slight yield improvement for crops, rice at record productivity, and dairy efficiencies to improve throughout the following months.

• Weather impacts on crop yields and sugarcane productivity.
• Fluctuations in commodity prices affecting EBITDA.
• Liquidity and debt management risks due to increased short-term debt.
• Challenges with land valuation and liquidity of publicly listed land holdings.

Q: On the sugar ethanol energy business, expectations for crushing volumes and unit economics of crops.

A: Renato explained that weather was dry in 2024 and early 2025, leading to lower yields, but with improved weather in April, yields were expected to be 5%-10% higher. Mariano discussed crop rotation and unit economics, noting crops are analyzed by campaign and rotated between corn, wheat, and soybean.

Q: About transparency, governance, and cash flow use.

A: Juan emphasized maintaining high transparency and governance standards, including minority protections and adhering to public listing standards. The 40% distribution policy would continue, with dividends and share repurchases planned.

Q: On land monetization and liquidity.

A: Juan discussed land as a long-term asset and plans to crystallize its value through mechanisms, while Mariano noted a 30% float and minority protections to maintain liquidity.

Q: Timeline and size of future growth.

A: Juan and Mariano discussed thorough project due diligence, potential M&A, and capital deployment considerations, noting that projects would be analyzed carefully with no rush to execute, and access to financing from Tether could support growth.