Brasilagro Brazilian Agric Real Estate Co Sponsored ADR (Brazil)

Good morning, everyone. We're here for another earnings call from Brazil Agro third quarter, meaning January to March 2024. For those of you who are not familiar with our calendar, this is what our fiscal year looks like. Thank you to Andre and Gustavo for joining us. For those of you who are watching this in English, the presentation will be made available in the chat. If you want to listen to this earnings call, please make sure you select the language of your choice at the bottom part of your Zoom screen. In this quarter, we're going to see some results that are lower than expected. So, Andre and Gustavo will have a hard time. job to accomplish during this call. However, I believe we're very resilient in our business. And once again, we have proven that we have a winning strategy. With that, I'll hand the floor over to Andre and Gustavo. Good morning, everyone. Once again, it is my joy to join you today. I'll talk about our Last quarter, in the previous earnings releases, we talked about possible sales. I told you we were working for that, and today we're going to give you more details on these commercial transactions. After that, I will give you more details on the harvesting details for the summer crops. I'll talk about how things have been evolving. We've got quite a lot of information to share with you. Now, on the slide, you see the highlights, 552 million of net revenue, 6 million negative net income and 16 million is our adjusted EBITDA. After that, we'll give you more details on the numbers and we'll talk about our strategy for that. We harvested 66,000 hectares of soybeans totaling 202.2 thousand tons in Brazil, Paraguay and Bolivia. The main news we have to share with you during this earnings call is the fact that we sold a fraction of the Chaparral farm, 364 million real worth of sales and We have finally arrived to the state of Sao Paulo, growing sugarcane. We're looking for more of an attractive mix between ethanol and sugar production. We saw that in the past year this correlation was a bit hard, and most recently with the pricing policy or the pricing policies from Petrobras. Now, number one, let's talk about transactions. Chaparral Farm is where we've been working with our portfolio for over 16 years. Many changes have been implemented over this time, and so far we have not sold any plots of this land. Now, this is an important transaction. to show you that the frontier to the state of Bahia that we decided to go for back in the day was the correct decision to be made. Between the acquisition price and investments that were made in land, I'm talking about capex, infrastructure, buildings, they total 125 million BRL. We worked on this. arable lands of 26,000 hectares. We sold 8.8 thousand hectares. We sold this for 364 million BRL. And this comes to show that We've always been quite conservative and careful as we assess and price the company's lands. If you do the math and if you look at 364 million BRL and you divide that by the acreage we sold, and if we multiply that by 26, then you see that this farm is worth 1.9 billion BRL. That is to say that we sold a third of the farm for 364 million. That shows how much value we can generate. We invested 125 million and if everything goes well in terms of sales and I believe that in the next years we should have more aggressive multiple rates for soybeans. We're talking about more than 1 billion. So 125 million was invested and this value increased to more than 1 billion in assets. That's how much value we can generate in our business. To your right-hand side, you can see a new farm that we have leased to grow sugar cane. It's an important plot. We're now working with an important national player. We're beginning this season with 5,000 hectares. We'll get to an additional 1.9 thousand hectares by 2029, and we should total 7,000 hectares. In this transaction, it's important to highlight that we now have sort of a different commodity mix now. We've got sugar and ethanol production. We had been talking about this challenge beforehand. We said we were going to go for that move. We said we were going to sell farms. And we also said we were going to lease land to grow sugarcane so that we could improve the company's commodity mix. And that's what we're now delivering. Now let's talk about our season. Moving away from real estate, I wanted to show you some charts so we can use them as guidance to discuss our numbers. On the first chart, you can see the macro region of Araguaia where we have our operations. What do we see here? November and December were below average. The yellow line is the history average. So you can see November and December were below average. October was quite close to average numbers, which allowed us to plant everything inside the proper planting window. It was a fantastic year in terms of planting speed. And despite November and December, despite the fact that they were below average, that didn't really hurt the crops as happened in other Mato Grosso farms. But you can see how hard it was for everyone really to finish the planting season and have space for the second crop. And then January, February and March were critical months as per usual.

That's quite an attractive rainfall rate.

Now, the second chart shows rainfall in Bahia that will be reflected in the company's acreage. Well, the planting window in the state of Bahia is a bit, happens a bit later as compared to Mata Grosso. Mata Grosso September, October and Bahia late October, early November. And what you can see on the chart is that there was not accumulated rainfall to start planting earlier in Bahia, but it's quite a particular state. This is one of the new lands we're now planting. In Bahia, we have to be quite careful when it comes to the planting season. So, what you see in November and in October, like we said in previous earnings calls, that got in the way of this planting window for soybeans and we are quite mindful of that, so we reduced soybeans acreage in the company and the two first charts show you that. November and December were quite critical months for us. Then Bahia crops did really well. As of January, February, March and April, they really contributed to our soybeans production. Our yields were great. and we're now harvesting corn and cotton, and we should see quite great yields as well. So we saw that Mato Grosso was not as hurt as the central region in Bahia. We benefited. from rainfall this year and in paraguay the last chart you see a positive surprise once again when you look at the average numbers and the charts well they're quite different rainfall happened in april in paraguay critical months in paraguay happened later january february and march so you see rainfall quite below average which made our yields decrease