Adecoagro S.A.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to ADECOagro's 2026 First Quarter Results Conference Call. Today with us we have Mr. Mariano Bosch, CEO, Mr. Emilio Nieco, CFO, Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP, and Mrs. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question and answer section. At that time, further instructions will be given. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adequagro's management and on information currently available to the company. They involve risk uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adequadro and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, You may begin your conference.

Good morning and thank you for joining ADECO Agro's first quarter 2026 research conference. Today, we are presenting the first results from the new ADECO Agro, a well-diversified agroindustrial platform composed of three segments, sugar ethanol and energy, fertilizers, and food and agriculture. The 86 million adjusted EBITDA generated already reflects the change in scale and earnings potential with further upside ahead. After the major maintenance turnaround in the fertilizer plant, we are pleased with the ramp up of operations with the plant operating at full capacity since then. Due to the conflict in the Middle East, urea prices have spiked and we are progressively capturing the upside, leading to an even better than expected result. In Brazil, we achieved a new first quarter crashing record, reflecting the returns on our planting expansion investments. The high flexibility of our meals enable us to produce almost 100% ethanol, benefiting from better ethanol prices. Harvesting pace remains on track to meet our annual target, supporting further cost dilution. In food and agriculture, results reflect the end of the prior harvest season as we sold our carryover stocks. The harvest of the new crop is well advanced, presenting good productivity indicators. Margins should improve in the coming quarters as we commercialize the new crop, supported by a more efficient cost structure. Overall, higher productivity in Brazil, higher urea prices, and later margins in Argentina and Uruguay should translate into a stronger earnings performance, and most importantly, higher cash generation in 2026. This in turn will enable us a faster than expected deleveraging, one of our main priorities following the acquisition of the fertilizer business. To conclude, I want to reiterate my gratitude to everyone across ADECO Agro. It is thanks to their hard work that we are able to navigate different commodity cycles and continue to deliver attractive results to our shareholders. Now, I will let Emilio walk you through the numbers of the quarter.

Thank you, Mariano. Good morning, everyone. Before turning to the results of the quarter, I would like to briefly remind everyone that as part of our efforts to update and simplify how we view our operations, starting in January 2026, the company now operates under three reportable segments. Number one, the sugar, ethanol, and energy segment. Number two, the fertilizer segment, which reflects Proferty's results. And number three, the food and agriculture segment, an integrated platform focused on agriculture and food production that was previously reported across three countries. separate verticals, crops, rice, and dairy. Please now turn to page 4 where you can see our first quarterly results under this new organizational structure. Growth sales totaled $394 million in the first quarter, representing a 22% year-over-year increase. This growth was driven primarily by a strong performance in our fertilizers business, supported by higher production volumes and slightly improved prices, together with higher ethanol and energy prices in our sugar, ethanol, and energy operations. These factors more than offset the lower prices across the remainder of our commodity portfolio, including sugar, peanuts, and rice. adjusted EBITDA reached $86 million, more than doubling the level reported in the prior year. In addition to higher sales, results benefited from a first-quarter crushing record and our operational flexibility to produce nearly 100% ethanol throughout the period, combined with lower natural gas sourcing costs, which is the main input for urea production. Moving to the financial and operational performance of our operations, let's start with the sugar, ethanol and energy segment on slide 6. Due to the rainfall received in the final months of 2025, the cane that reminded and harvested recovered meaningfully in yield and was collected during the first quarter under our continuous harvest model, one of our key competitive advantages versus other players. As a result, we achieved a new first water crushing record of 2.2 million tons of cane, a 49% year-over-year increase driven by higher productivity despite harvesting a smaller area. In terms of product mix, we reached a 96% ethanol mix during the quarter as ethanol prices traded substantially above global sugar prices and therefore offered superior margins. This highlights the operational flexibility of our industrial assets even while maintenance work was being carried out. On the cost side, production costs were negatively impacted by the appreciation of the Brasilian Real and by the acceleration of certain agricultural expenses that were typically concentrated later in the year, which more than offset the cost dilution from higher crushes. Although we maximized ethanol production and executed sales at higher prices than in the prior year, quarterly sales were below last year, mainly due to lower sugar sales reflecting weaker global prices and lower volume sold. Overall, adjusted EVDA for the period reached $41 million, exceeding the performance reported in the previous year. As of today, Our crushing pace remains on track to meet our full-year target. Accordingly, we expect low double-digit growth in crushing volumes driven by greater cane availability, and we anticipate a full year of ethanol maximization given the current price scenario. On page 8, we present the fertilizer segments. The year-over-year increase in urea production was primarily driven by a higher number of operational days compared to the same period last year. As mentioned in our previous call, the fertilizer plant experienced 19 days of downtime during the first quarter of 2025, mainly due to adverse weather conditions that disrupted gas supply. By contrast, This quarter, we recorded only 10 days of downtime as we ramped up operations following the major maintenance turnaround executed at year-end. As of today, the plant is operating continuously at full capacity. In terms of sales, the 68% year-over-year increase was mainly driven by a 16% improvement in urea prices. Following the escalation of the conflict in the Middle East, a region that accounts for approximately 30% of global rare trade, prices began rising sharply in early March, which only a partial impact reflected in this quarter's results. As a result, adjusted EBITDA showed a strong year-over-year recovery, reaching $53 million, In addition to higher sales, performance also benefited from greater cost solution due to the increase in production and lower gas sourcing costs as we leveraged contractual flexibility to secure a portion of our gas supply at more competitive prices. Looking ahead, we expect adjusted EBITDA in 2036 to be stronger than previously anticipated potentially exceeding prior year levels supported by a favorable market price outlook. Please move to page 10. In our food and agriculture segment, first quarter results were impacted by lower commodity prices, mainly in peanuts and rice, as well as by higher costs in U.S. dollar terms as we finalized the sale of carryover inventories from the previous harvest season. Regarding the 2025-26 campaign, we are currently in the harvesting phase, which we expect to complete over the coming months. As of today, more than half of the planted area has been harvested, resulting in over 700,000 tons of agricultural products. In our dairy operations, processing volumes increase year-over-year, driven by higher raw milk production at our freestall facilities, reflecting improved cow productivity. We expect margins to improve over the coming quarters as the new crop is harvested and commercialized, reflecting the cost initiatives implemented. In dairy, we also anticipate further growth in processed milk volumes, supported by the launch of new products under our retail brands please turn to page 12 of the presentation where we outline our capital allocation strategy starting with our capex program during the first quarter of 2026 we paid the final installment related to the acquisition of a 90 equity stake in profitability as a reminder the 1.1 billion dollars transaction was financed through a combination of $400 million in cash in hand, $400 million in new long-term debt facilities, and $300 million in equity proceeds. On the following page 13, we present our debt profile. Our net debt increased to $1.6 billion in the first quarter of 2026, reflecting the seasonal working capital requirements associated with planting and harvesting activities in our food and agriculture business. Excluding this seasonal effect, net debt would have already declined compared to the fourth quarter of 2025. On a pro forma basis, net leverage stood at 3.2 times, consisting with our ongoing deleveraging path supported by improved operating results, despite the seasonality in cash needs. Looking ahead, we expect this metric to continue to decline, driven by higher adjusted VTA generation, primarily from our fertilizers sector. It is also worth noting the company's strong liquidity position and full capacity to repay short-term debt. The majority of our indebtedness is in the long term, and its currency composition is well aligned with our revenue mix, mitigating currency risk. Finally, regarding shareholder returns, A cash dividend of $35 million was approved. The first installment of $17.5 million will be paid on May 19th, with the second installment payable in November in an equal amount. Before concluding, I would like to share a brief closing remark. These are the first quarterly results we present under the new corporate structure, representing an important milestone for the company. The performance already reflects a stronger and more resilient platform, supported by increased diversification and a more robust earnings profile. As shown in the top right pie chart, our revenue base is now more diversified than in the past. This evolution enhances our ability to deliver consistent performance across different cycles. improving the stability and sustainability of our cash generation. Over the years, we have demonstrated a strong track record of consistent results and cash flow generation, despite commodity price volatility and adverse weather conditions. Today the company is particularly well positioned to benefit from upside in fertilizer prices, which could translate into stronger than anticipated results while we continue to scale our platform and reinforce our strategic relevance within the sector. Thank you very much for your time. We will now open the call to questions.