Lavoro Limited

Welcome to Lavoro's Fiscal Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference call is being recorded and a replay will be available on the company's Investor Relations website at ir.lavoroegro.com. I will now turn the conference over to Jeff Sonick with Investor Relations at ICR. Thank you. You may begin.

Good afternoon, and thank you for joining us today on Livoro's fiscal 2023 third quarter earnings conference call for results ended March 31st, 2023. On today's call are our Chief Executive Officer, Hui Cunha, Chief Financial Officer, Julian Garrido, and Chief Strategy Officer, Gustavo Mondonesi. The company has provided a supplemental earnings presentation on its investor relations website at ir.gov. that may be helpful in your analysis of the quarterly performance. Before we begin, please remember that during the course of this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results and operations and financial position, industry and business trends, business strategy and market growth, among others. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the company's registration statement on Form F-1, filed with the SEC on March 23, 2023, or our report on Form 6-K for the period ended December 31, 2022, filed with the SEC and other reports filed from time to time with the SEC for detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, adjusted EBITDA margin, pro forma adjusted EBITDA, and pro forma adjusted EBITDA margin, among others. While the company believes these non-IFRS financial measures will provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. I'd now like to turn the call over to Huy Cunha, Chief Executive Officer. Huy?

Thank you, Jeff. Good afternoon, and thank you for joining us today. I'll begin with an overview of our business, then pass the call to Julian for his financial remarks, followed by a brief update from Gustavo on our strategic initiatives. In my initial remarks about the business, I'd like to highlight a few key points about the market in our region. First and more important, farming income is expected to continue at healthy levels, which should encourage farmers to keep investing in ag inputs. With that being said, market has been very dynamic in the last months, considering price fluctuations in some important commodity prices like soy and corn, and the price reductions in fertilizer and herbicides back to normal levels. As a result, Many farmers decide to postpone their purchases of egg inputs, waiting for a more stable scenario, and margins in some product categories have been penalized as retailers need to unload excess inventory acquired at higher prices. In this context, Lavoro had a great fiscal third quarter, with results that were consistent with our expectations. we generated $486 million of revenues and $25.2 million of adjusted EBITDA. Although these figures are lower versus prior year, this is largely a function of phasing of sales and related mixed impact on margins. However, on a year-to-date basis, revenues increased 25% and adjusted EBITDA increased 38%, demonstrating the powerful growth of the Lavoro platform which put us in track for a solid finish to our fiscal year. The last quarter, we've also made significant progress in our strategic initiatives, including the successful acquisition of ChromoChemica, a company that is specialized in high-performance adjuvants that will be a great addition to our vertically integrated crop care platform. We're also pleased to announce another value-added service to our customers with the launch of agricultural insurance solutions in partnership with a company from Banco do Brasil. Gustavo will provide more detailed information on those in a minute. Looking forward, we're very excited about future opportunities. Laboro is the largest egg inputs retailer in Brazil, yet we believe you only have 10% share in this market. which presents a tremendous long-term opportunity that we intend to capitalize on. Lavorre is also the first and only Latin America agricultural pure play listed on the U.S. stock exchanges, which we believe presents investors with an amazing opportunity to directly participate in this advantaged agricultural region. We offer farmers a comprehensive portfolio of products and services through our differentiated business model that blends our network of more than 1,000 highly skilled technical sales reps, or RTVs, with our unique ability to offer vertically integrated private label specialty crop input products via our crop care business, which includes our portfolio of propertized biologics as well as nascent digital tools that complement the third-party products that we distribute. Our goal is to help our former clients succeed by providing omnichannel support throughout the crop cycle, generating value for farmers and in turn gaining their trust. By leveraging the direct agronomic services provided by our RTVs with our proprietary analytics tools, we believe that we can build an intimate understanding of our farmer clients and offer products and services tailored to their specific needs. In terms of footprint, We have a broad geographical presence that spans approximately 148 million acres and covers more than 72,000 customers operating the key agricultural centers of Brazil and Colombia. Our customer base is focused on the small to mid-sized farmers whose operations large enough to make growth investments and thus are keen to adopt technology yet have been underserved by the lack of quality consultation and competitive price solutions. These customers are served by our 215 retail locations and supported by our approximately 1,000 RTVs to help them plan, purchase the right inputs, and manage their farming operation to optimize outcomes. With that, I'd like to introduce Julian Garrido, our new CFO who has joined us last month. Julian has over 30 years of executive leadership experience in multinational and publicly traded companies, most recently serving as Chief Financial Officer at Alpargatas S.A., a large Brazilian manufacturing company. His financial depth will be invaluable as we build out our public company infrastructure and execute on our growth strategy. Julian's energy, integrity, and dedication to developing people and partnerships are key traits that we are excited about and we look forward to all of his future contributions.