Lavoro Limited Q2 FY2025 earnings call

• Acknowledged an extraordinarily challenging period for Lavoro in the Brazilian ag inputs distribution industry, including severe input price deflation, El Nino-induced drought, and farmer liquidity constraints.
• Brazil Ag Retail faced inventory shortages leading to purchase order cancellations impacting Q2/Q3 results.
• Announced an out-of-court restructuring agreement with key suppliers to extend payment terms and secure multiyear product supply, submitted to Brazilian courts.
• Withdrew previously issued fiscal 2025 financial outlook due to complexities of the reorganization plan.
• Brazil Ag Retail revenue declined 30% y-o-y due to inventory issues, but farmer profitability recovery expected with improved weather and commodity prices.
• Crop Care segment revenue down 30% y-o-y due to biologicals regulatory uncertainty and bundled order cancellations.
• Latam Ag Retail revenue grew 4% due to stable market conditions and peso appreciation.

Consolidated preliminary revenue for the second quarter declined 27% year-over-year to BRL 2.25 billion. In U.S. dollar terms, revenue decreased 38% year-over-year to $384 million. Brazil Ag Retail segment's revenue declined 30% year-over-year to BRL 1.84 billion. Crop Care segment revenue was BRL 251 million in the second quarter 2025, a decrease of 30% year-over-year. Latam Ag Retail revenue grew 4% to BRL 287 million. Consolidated preliminary gross profit decreased 28% to BRL 366 million, with consolidated gross margins contracting 40 basis points to 16.3%. Brazil Ag Retail segment gross margin contracted by 240 basis points to 11.5%. Crop Care gross margins contracted 1,160 basis points to 23.7%. Latam Ag Retail gross margin expanded by 480 basis points to 22.6%.

• Withdrew previously issued fiscal 2025 financial outlook.
• Reorganization plan's supply and financing terms already in effect, normal inventory flow from partners resumed in Q4.
• The reorganization plan provides a unified path to resolve inventory financing constraints for the 2025-'26 crop season.

• External factors like 40%-60% input price deflation, El Nino-induced drought, and farmer liquidity constraints.
• Uncertainty around court approval of the out-of-court reorganization plan.
• Impact of regulatory changes on Crop Care segment's biologicals business causing temporary demand pause.

Q: Will there be a Q&A session today?

A: No, we will not be hosting a Q&A session today due to ongoing core proceedings and not yet finalizing audit processes for the second quarter 2025.