Lavoro Ltd. Q4 FY2024 earnings call

• Market environment: Turning point in Brazil ag input markets; farmer profitability for crop year ’24/’25 projected to improve; planted acreage for soy and corn expected to grow in low-single digits, yields mid-single digits; input prices stabilized. - Financial results: Fiscal year 2024 consolidated revenue grew 6%, full year gross profit down 19% to $268.4 million, adjusted EBITDA $53.4 million positive but down 64% year-over-year. Fiscal fourth quarter total revenue up 2%, consolidated gross margin contracted to 16.7%, net loss $77.2 million.

Brazil Ag Retail: Inputs revenue declined 16% to $124.8 million; Grains revenues increased by 40% to $67.7 million; Crop Care revenue increased 87% to $19.9 million. Consolidated revenue for fiscal year 2024: Grew by 6% to $1.89 billion, driven by 61% increase in Grain revenue. Fiscal fourth quarter: Total revenue increased by 2% to $271.1 million, with Grains revenue up 41% to $68.3 million and Inputs revenue down 6% to $202.8 million. Brazil Ag Retail revenue decreased 2% to $192.5 million, Latam Ag Retail revenue increased 5% to $65.2 million, Crop Care revenue surged 87% to $19.9 million.

• Ag Retail Inputs markets expected to contract by approx. 10% in fiscal year 2025. - Consolidated revenue projected to range between $1.5 billion and $1.6 billion in US dollars, Inputs revenue $1.35 billion to $1.45 billion, adjusted EBITDA expected to grow relative to fiscal year 2024. - Guidance reflects farmer liquidity constraints and reduced market visibility.

• Deterioration in small and mid-sized farmers' liquidity profile. - Impact of extreme droughts leading to lower than expected harvests and reduced credit availability. - Market uncertainties including potential effects of competitors' bankruptcies.

Q: Kristen Owen asked about channel inventories and the impact of a large competitor's bankruptcy.

A: Ruy Cunha said input prices are stabilizing, inventory is mostly normalized, and while there's short-term noise, demand remains strong.

Q: Ben Theurer inquired about farmer profitability and supplier relationships.

A: Ruy Cunha noted farmers are delaying decisions, concerned about input availability, and the relationship with suppliers is part of a conservative credit environment that will improve as farmer stability returns.

Q: Austin Moeller asked about planting seasons and M&A strategy.

A: Ruy Cunha said soy planting in Brazil is slightly delayed but progressing, and the focus is on organic growth over M&A currently.