Bay Street News

Lavoro Reports Fiscal Second Quarter 2024 Earnings Results

SÃO PAULO, Brazil, March 07, 2024 (GLOBE NEWSWIRE) — Lavoro Limited (Nasdaq: LVRO, LVROW), the first U.S.-listed pure-play agricultural inputs retailer in Latin America, today announced its financial results for the fiscal second quarter of 2024, which ended on December 31, 2023.

Ruy Cunha, CEO of Lavoro, commented, “Our second-quarter results underscore our resilience in the face of challenging market conditions not seen in our industry for well over a decade. Our model is intact, as demonstrated by the performance of our Brazil Ag Retail operations that produced yet another quarter of strong unit volume growth and market share gains, which offset the impact of the deflationary environment in crop protection and fertilizer inputs. Supporting these share gains is momentum in attracting seasoned technical sales representatives (RTVs) to the Lavoro organization, which is illustrated by 25% sequential growth in RTVs to just over 1,040 sales reps in Brazil. We are in a great position and anticipate the positive contribution of these new hires to help drive growth next fiscal year.”

Mr. Cunha added, “Second quarter gross margins experienced sequential improvement, signaling the beginning of a path to recovery supported by stabilizing local input prices from the retail channel to farmers, and by the continued improvement in our average cost of goods sold, as we gradually cycle through our higher-cost inventory. Moreover, Crop Care’s performance in the quarter was a stand-out, with double-digit year-over-year growth in revenue and gross profit in spite of the market headwinds, and demonstrating yet again the synergies associated with the vertical integration with Lavoro Ag retail.

“Our market outlook remains consistent with our late January assessment. We still foresee a 25% decrease in Brazil’s retail inputs market for the 2023/2024 crop year, concluding in June 2024. Although price competition within the retail channel has broadly stabilized, disparities persist across Brazil’s various regions, influenced by the ongoing destocking of excess agrochemical inventories. We are encouraged by the recent favorable weather conditions, which have contributed to an uptick in farmer sentiment, evidenced by the strong start to the safrinha corn planting season—currently at 71%, exceeding the five-year average of 52%.”

* Financials presented in US dollars throughout this release are converted using the following average period USD/BRL exchange rate: 4.955 for 2Q24; 5.265 for 2Q23; the 1Q24 period was calculated using monthly exchange rates (4.801 for Jul-23, 4.904 for Aug-23, 4.937 for Sep-23); 1Q23 period was calculated (5.368 for Jul-22, 5.143 for Aug-22, 5.237 for Sep-22)

FY2Q24 Financial Highlights

Consolidated Results (USD)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of US dollars)                
                 
Revenue by Segment   611.7   618.7   1 %   1,048.5   1,101.8   5 %
Brazil Ag Retail   524.8   528.7   1 %   883.1   940.6   7 %
Latam Ag Retail   57.0   55.8   (2 )%   123.7   122.1   (1 )%
Crop Care   57.7   72.8   26 %   93.7   108.5   16 %
Intercompany eliminations1   (27.8 ) (38.6 )     (52.0 ) (69.4 )  
                 
Revenue by Category   611.7   618.7   1 %   1,048.5   1,101.8   5 %
Inputs revenue   606.7   610.8   1 %   1,021.2   1,047.4   3 %
Grains revenue   5.0   7.9   57 %   27.3   54.4   99 %
                 
Gross Profit   123.7   103.0   (17 )%   214.4   162.6   (24 )%
Brazil Ag Retail   99.7   73.3   (27 )%   169.1   108.9   (36 )%
Latam Ag Retail   11.5   9.9   (14 )%   21.0   19.1   (9 )%
Crop Care   21.3   25.7   21 %   38.1   41.2   8 %
Intercompany   (8.8 ) (5.9 )     (13.7 ) (6.6 )  
                 
Gross Margin   20.2 % 16.7 % (360) bps   20.5 % 14.8 % (570) bps
Gross Margin (% of Inputs revenue)   20.4 % 16.9 % (350) bps   21.0 % 15.5 % (550) bps
                 
SG&A (excl. D&A)   (50.5 ) (69.7 ) 38 %   (102.3 ) (125.0 ) 22 %
Other operating income (expense)   3.4   4.4       6.0   4.4    
EBITDA   76.6   37.7   (51 )%   118.2   42.0   (64 )%
(+) Adjustment items   0.9   2.4       3.7   9.3    
Adjusted EBITDA   77.5   40.1   (48 )%   121.9   51.3   (58 )%
Brazil Ag Retail   64.3   26.7   (58 )%   97.4   30.9   (68 )%
Latam Ag Retail   7.1   4.7   (34 )%   11.5   7.8   (32 )%
Crop Care   15.0   16.2   8 %   26.8   21.7   (19 )%
Corporate / Intercompany   (8.8 ) (7.4 ) n.m.   (13.7 ) (9.2 ) n.m.
                 
Adjusted EBITDA Margin %   12.7 % 6.5 % (620) bps   11.6 % 4.7 % (700) bps
Adjusted EBITDA Margin (% of Inputs)   12.8 % 6.6 % (620) bps   11.9 % 4.9 % (700) bps
                 
Share of profit of an associate     (0.2 )       (0.4 )  
D&A2   (7.0 ) (7.0 )     (15.5 ) (17.3 )  
Finance income (costs)   (31.9 ) (37.3 )     (60.0 ) (63.3 )  
Income taxes, current and deferred   (2.4 ) 8.6       7.8   26.3    
Net profit (loss)   35.3   1.9   (95 )%   50.4   (12.6 ) n.m.
(+) Adjustment items   3.2   1.2       6.3   9.9    
(+) Income tax impact of adjustments   (1.1 ) (0.4 )     (2.2 ) (3.4 )  
Adjusted net profit (loss)   37.4   2.6   (93 )%   54.6   (6.1 ) n.m.

1  Intercompany eliminations represent sales between Crop Care and Brazil Ag Retail
2  Depreciation & amortization, which includes the fair value adjustment on inventory sold from acquired companies, a non-cash expenses resulting from purchase price allocation of past acquisitions

Consolidated Results (BRL)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of Brazilian reais)                
                 
Revenue by Segment   3,220.2   3,065.9   (5 )%   5,506.1   5,431.8   (1 )%
Brazil Ag Retail   2,763.0   2,619.9   (5 )%   4,637.8   4,637.8   0 %
Latam Ag Retail   300.3   276.3   (8 )%   649.6   600.5   (8 )%
Crop Care   303.5   360.8   19 %   491.5   535.8   9 %
Intercompany eliminations   (146.6 ) (191.1 )     (272.8 ) (342.3 )  
                 
Revenue by Category   3,220.2   3,065.9   (5 )%   5,506.1   5,431.8   (1 )%
Inputs revenue   3,193.7   3,026.7   (5 )%   5,363.0   5,166.6   (4 )%
Grains revenue   26.5   39.2   48 %   143.1   265.2   85 %
                 
Gross Profit   651.1   510.6   (22 )%   1,125.3   803.9   (29 )%
Brazil Ag Retail   525.1   363.2   (31 )%   887.6   539.5   (39 )%
Latam Ag Retail   60.5   49.2   (19 )%   110.5   93.9   (15 )%
Crop Care   112.0   127.4   14 %   199.5   203.3   2 %
Intercompany   (46.5 ) (29.2 )     (72.2 ) (32.8 )  
                 
Gross Margin   20.2 % 16.7 % (360) bps   20.4 % 14.8 % (560) bps
Gross Margin (% of Inputs revenue)   20.4 % 16.9 % (350) bps   21.0 % 15.6 % (540) bps
                 
SG&A (excl. D&A)   (265.9 ) (345.3 ) 30 %   (536.8 ) (615.4 ) 15 %
Other operating income (expense)   18.1   21.6       31.7   21.9    
EBITDA   403.3   186.8   (54 )%   620.2   210.4   (66 )%
(+) Adjustment items   4.9   12.1       19.7   46.2    
Adjusted EBITDA   408.2   198.9   (51 )%   640.0   256.7   (60 )%
Brazil Ag Retail   338.3   132.3   (61 )%   511.4   155.3   (70 )%
Latam Ag Retail   37.4   23.1   (38 )%   60.5   38.4   (37 )%
Crop Care   79.0   80.2   1 %   140.4   108.4   (23 )%
Corporate / Intercompany   (46.5 ) (36.7 ) n.m.   (72.2 ) (45.4 ) n.m.
                 
Adjusted EBITDA Margin %   12.7 % 6.5 % (620) bps   11.6 % 4.7 % (690) bps
Adjusted EBITDA Margin (% of Inputs)   12.8 % 6.6 % (620) bps   11.9 % 5.0 % (700) bps
                 
Share of profit of an associate     (0.8 )       (1.8 )  
D&A3   (37.1 ) (34.8 )     (81.6 ) (85.0 )  
Finance income (costs)   (167.9 ) (184.7 )     (315.7 ) (313.6 )  
Income taxes, current and deferred   (12.5 ) 42.6       41.0   128.2    
Net profit (loss)   185.8   9.2   (95 )%   263.9   (61.8 ) n.m.
(+) Adjustment items   16.9   5.7       33.5   49.1    
(+) Income tax impact of adjustments   (5.8 ) (1.9 )     (11.4 ) (16.7 )  
Adjusted net profit (loss)   197.0   12.9   (93 )%   286.0   (29.4 ) n.m.

3 Depreciation & amortization, which includes the fair value adjustment on inventory sold from acquired companies, a non-cash expenses resulting from purchase price allocation of past acquisitions

Segment Results

Brazil Ag Retail

Brazil Ag Retail (USD)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of US dollars)                
                 
Inputs revenue   520.6   521.7   0 %   861.9   893.3   4 %
Grains revenue   4.2   7.0   66 %   21.3   47.3   122 %
Revenue   524.8   528.7   1 %   883.1   940.6   7 %
                 
Gross Profit   99.7   73.3   (27 )%   169.1   108.9   (36 )%
Gross Margin   19.0 % 13.9 % (510) bps   19.1 % 11.6 % (760) bps
Gross Margin (% Inputs revenue)   19.2 % 14.0 % (510) bps   19.6 % 12.2 % (740) bps
                 
Adjusted EBITDA   64.3   26.7   (58 )%   97.4   30.9   (68 )%
Adjusted EBITDA margin   12.2 % 5.0 % (720) bps   11.0 % 3.3 % (770) bps
Adjusted EBITDA (% Inputs revenue)   12.3 % 5.1 % (720) bps   11.3 % 3.5 % (780) bps
Brazil Ag Retail (BRL)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of Brazilian reais)                
                 
Inputs revenue   2,740.7   2,585.0   (6 )%   4,526.5   4,407.6   (3 )%
Grains revenue   22.3   34.9   56 %   111.4   230.3   107 %
Revenue   2,763.0   2,619.9   (5 )%   4,637.8   4,637.8   0 %
                 
Gross Profit   525.1   363.2   (31 )%   887.6   539.5   (39 )%
Gross Margin   19.0 % 13.9 % (510) bps   19.1 % 11.6 % (750) bps
Gross Margin (% Inputs revenue)   19.2 % 14.0 % (510) bps   19.6 % 12.2 % (740) bps
                 
Adjusted EBITDA   338.3   132.3   (61 )%   511.4   155.3   (70 )%
Adjusted EBITDA margin   12.2 % 5.0 % (720) bps   11.0 % 3.3 % (770) bps
Adjusted EBITDA (% Inputs revenue)   12.3 % 5.1 % (720) bps   11.3 % 3.5 % (780) bps
Brazil Ag Retail KPIs   2Q23 2Q24 Chg. %
         
Retail stores   175 172 (2 )%
Number of RTVs   736 1,040 41 %

Latam Ag Retail

Latam Ag Retail (USD)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of US dollars)                
                 
Inputs & services revenue   56.2   54.9   (2 )%   117.7   115.0   (2 )%
Grains revenue   0.8   0.9   11 %   6.0   7.1   17 %
Revenue   57.0   55.8   (2 )%   123.7   122.1   (1 )%
                 
Gross Profit   11.5   9.9   (14 )%   21.0   19.1   (9 )%
Gross Margin   20.2 % 17.8 % (230) bps   17.0 % 15.6 % (140) bps
Gross Margin (% Inputs revenue)   20.4 % 18.1 % (230) bps   17.9 % 16.6 % (130) bps
                 
Adjusted EBITDA   7.1   4.7   (34 )%   11.5   7.8   (32 )%
Adjusted EBITDA margin   12.4 % 8.4 % (410) bps   9.3 % 6.4 % (290) bps
Adjusted EBITDA (% Inputs revenue)   12.6 % 8.5 % (410) bps   9.8 % 6.8 % (300) bps
Latam Ag Retail (BRL)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of Brazilian reais)                
                 
Inputs & services revenue   296.1   272.0   (8 )%   617.9   565.6   (8 )%
Grains revenue   4.2   4.3   4 %   31.7   34.9   10 %
Revenue   300.3   276.3   (8 )%   649.6   600.5   (8 )%
                 
Gross Profit   60.5   49.2   (19 )%   110.5   93.9   (15 )%
Gross Margin   20.2 % 17.8 % (230) bps   17.0 % 15.6 % (140) bps
Gross Margin (% Inputs revenue)   20.4 % 18.1 % (230) bps   17.9 % 16.6 % (130) bps
                 
Adjusted EBITDA   37.4   23.1   (38 )%   60.5   38.4   (37 )%
Adjusted EBITDA margin   12.4 % 8.4 % (410) bps   9.3 % 6.4 % (290) bps
Adjusted EBITDA (% Inputs revenue)   12.6 % 8.5 % (410) bps   9.8 % 6.8 % (300) bps
Latam Ag Retail KPIs   2Q23 2Q24 Chg. %
         
Retail stores   40 37 (8 )%
Number of RTVs   276 263 (5 )%

Crop Care

Crop Care (USD)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of US dollars)                
                 
Revenue   57.7   72.8   26 %   93.7   108.5   16 %
                 
Gross Profit   21.3   25.7   21 %   38.1   41.2   8 %
Gross Margin   36.9 % 35.3 % (160) bps   40.6 % 37.9 % (270) bps
                 
Adjusted EBITDA   15.0   16.2   8 %   26.8   21.7   (19 )%
Adjusted EBITDA margin   26.0 % 22.2 % (380) bps   28.6 % 20.1 % (850) bps
Crop Care (BRL)   2Q23 2Q24 Chg. %   1H23 1H24 Chg. %
(in millions of Brazilian reais)                
                 
Revenue   303.5   360.8   19 %   491.5   535.8   9 %
                 
Gross Profit   112.0   127.4   14 %   199.5   203.3   2 %
Gross Margin   36.9 % 35.3 % (160) bps   40.6 % 37.9 % (260) bps
                 
Adjusted EBITDA   79.0   80.2   1 %   140.4   108.4   (23 )%
Adjusted EBITDA margin   26.0 % 22.2 % (380) bps   28.6 % 20.2 % (830) bps

Full Fiscal Year 2024 Consolidated Outlook4

Lavoro is maintaining its FY2024 guidance, with consolidated revenue projected between USD $2.0 billion and $2.3 billion, consolidated Inputs revenue expected to range from $1.7 billion to $2.0 billion, and consolidated Adjusted EBITDA anticipated to be between $80 million and $110 million.

    FY2024 Guidance
Consolidated Financials Outlook   Low High
(in millions of US dollars)      
       
Revenue   2,000 2,300
       
Inputs revenue   1,700 2,000
       
Adjusted EBITDA   80 110

Conference Call Details

The Company will host a conference call and webcast to review its fiscal Second Quarter 2024 results on March 7, 2024, at 5 pm ET / 7 pm BRT.

Participant numbers: 1-877-407-9716 (U.S.), 1-201-493-6779 (International)

The live audio webcast will be accessible in the Events section on the Company’s Investor Relations website at https://ir.lavoroagro.com/disclosure-and-documents/events/.

4 USD/BRL average period exchange rate embedded in our financial outlook: monthly exchange rates (4.801 for Jul-23, 4.904 for Aug-23, 4.937 for Sep-23) used for 1Q24; 4.955 for 2Q24; 4.95 for the remainder of FY24

Non-IFRS Financial Measures

This press release contains certain non-IFRS financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit/Loss and Adjusted Net Profit/Loss Margin. A non-IFRS financial measure is generally defined as a numerical measure of historical or future financial performance, financial position, or cash flow that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. The Company believes these non-IFRS financial measures provide meaningful supplemental information as they are used by the Company’s management to evaluate the Company’s performance, and provide additional information about trends in our operating performance prior to considering the impact of capital structure, depreciation, amortization and taxation on our results, as well as the effects of certain items or events that vary widely among similar companies, and therefore may hamper comparability across periods, although these measures are not explicitly defined under IFRS. Management believes that these measures enhance a reader’s understanding of the operating and financial performance of the Company and facilitate a better comparison between fiscal periods. Adjusted EBITDA is defined as profit (loss) for the year, adjusted for finance income (costs), net, income taxes, depreciation and amortization and excluding the impact of certain revenues, expenses and costs that we believe are isolated in nature incurred as part of our expansion, namely: (i) fair value on inventories sold from acquired companies, (ii) M&A adjustments that in management’s judgment do not necessarily occur on a regular basis, (iii) listing and other expenses recognized in connection with the Business Combination, (iv) share-based compensation expenses, (v) bonuses paid out to our employees as a result of the closing of the Business Combination, (vi) expenses paid to Patria in connection with management consultancy services, (vii) depreciation and amortization recognize on cost of goods sold and (viii) losses/gains on the fair value of commodity forward contracts. Adjusted EBITDA Margin is calculated as Adjusted EBITDA as a percentage of revenue for the period/year. Adjusted Net Profit/Loss is defined as Net Profit/Loss excluding the impact of certain revenues, expenses and costs that we believe are isolated in nature incurred as part of our expansion, namely: (i) fair value on inventories sold from acquired companies, (ii) M&A adjustments that in management’s judgment do not necessarily occur on a regular basis, (iii) listing and other expenses recognized in connection with the Business Combination, (iv) share-based compensation expenses, (v) bonuses paid out to our employees as a result of the closing of the Business Combination, (vi) expenses paid to Patria in connection with management consultancy services, (vii) depreciation and amortization recognize on cost of goods sold and (viii) losses/gains on the fair value of commodity forward contracts. Adjusted Net Profit/Loss Margin is calculated as Adjusted Net Profit/Loss as a percentage of revenue for the period/year.

The Company does not intend for the non-IFRS financial measures contained in this release to be a substitute for any IFRS financial information. Readers of this press release should use these non-IFRS financial measures only in conjunction with comparable IFRS financial measures. Reconciliations of the non-IFRS financial measures Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit/Loss and Adjusted Net Profit/Loss Margin, to their most comparable IFRS measures, are provided in the table below.

Reconciliation of Adjusted EBITDA

Reconciliation of Adjusted EBITDA (USD)   2Q23 2Q24   1H23 1H24
(in millions of US dollars)            
             
Net profit (loss)   35.3 1.9     50.4   (12.6 )
(+) Income taxes, current and deferred   2.4 (8.6 )   (7.8 ) (26.3 )
(+) Finance income (costs)   31.9 37.3     60.0   63.3  
(+) Depreciation and amortization   7.0 7.0     15.5   17.3  
(+) Share of profit of an associate   0.2       0.4  
(+) M&A expenses   0.5 0.5     1.0   3.9  
(+) Stock-based compensation   0.5 1.0     2.2   2.2  
(+) DeSPAC related bonus   0.1       1.4  
(+) Related party consultancy services   0.9     0.6   1.8  
(+) Other non-operating (benefits) expenses          
Adjusted EBITDA   77.5 40.1     121.9   51.3  
Reconciliation of Adjusted EBITDA (BRL)   2Q23 2Q24   1H23 1H24
(in millions of Brazilian reais)            
             
Net profit (loss)   185.8 9.2     263.9   (61.8 )
(+) Income taxes, current and deferred   12.5 (42.6 )   (41.0 ) (128.2 )
(+) Finance income (costs)   167.9 184.7     315.7   313.6  
(+) Depreciation and amortization   37.1 34.8     81.6   85.0  
(+) Share of profit of an associate   0.8       1.8  
(+) M&A expenses   2.4 2.4     5.0   19.3  
(+) Stock-based compensation   2.5 4.7     11.4   10.7  
(+) DeSPAC related bonus   0.4       7.0  
(+) Related party consultancy services   4.4     3.1   8.7  
(+) Other non-operating (benefits) expenses   0.1     0.2   0.6  
Adjusted EBITDA   408.2 198.9     640.0   256.7  

Reconciliation of Adjusted Net Profit (Loss)

Reconciliation of Adjusted Net Profit (USD)   2Q23 2Q24   1H23 1H24
(in millions of US dollars)            
             
Net profit (loss)   35.3   1.9     50.4   (12.6 )
(+) Fair value of inventories sold from acquired companies   2.3   (1.4 )   2.6   0.2  
(+) Share of profit of an associate     0.2       0.4  
(+) M&A expenses   0.5   0.5     1.0   3.9  
(+) Stock Option Plan   0.5   1.0     2.2   2.2  
(+) DeSPAC related bonus     0.1       1.4  
(+) Related party consultancy services     0.9     0.6   1.8  
(+) Other non-operating (benefits) expenses            
(+) Income tax impact of adjustments   (1.1 ) (0.4 )   (2.2 ) (3.4 )
Adjusted net profit (loss)   37.4   2.6     54.6   (6.1 )
Reconciliation of Adjusted Net Profit (BRL)   2Q23 2Q24   1H23 1H24
(in millions of Brazilian reais)            
             
Net profit (loss)   185.8   9.2     263.9   (61.8 )
(+) Fair value of inventories sold from acquired companies   12.0   (7.2 )   13.8   1.1  
(+) Share of profit of an associate     0.8       1.8  
(+) M&A expenses   2.4   2.4     5.0   19.3  
(+) Stock Option Plan   2.5   4.7     11.4   10.7  
(+) DeSPAC related bonus     0.4       7.0  
(+) Related party consultancy services     4.4     3.1   8.7  
(+) Other non-operating (benefits) expenses     0.1     0.2   0.6  
(+) Income tax impact of adjustments   (5.8 ) (1.9 )   (11.4 ) (16.7 )
Adjusted net profit (loss)   197.0   12.9     286.0   (29.4 )

About Lavoro

Lavoro is Brazil’s largest agricultural inputs retailer and a leading producer of agricultural biological products. Lavoro’s shares and warrants are listed on the Nasdaq stock exchange under the tickers “LVRO” and “LVROW.” Through its comprehensive portfolio of products and services, the company empowers small and medium-size farmers to adopt the latest emerging agricultural technologies and enhance their productivity. Since its founding in 2017, Lavoro has broadened its reach across Latin America, serving 72,000 customers in Brazil, Colombia, and Uruguay, via its team of over 1,000 technical sales representatives (RTVs), its network of over 210 retail locations, and its digital marketplace and solutions. Lavoro’s RTVs are local trusted advisors to farmers, regularly meeting them to provide agronomic recommendations throughout the crop cycle to drive optimized outcomes. Learn more about Lavoro at ir.lavoroagro.com.

Reportable Segments

Lavoro’s reportable segments are the following:

Brazil Cluster (Brazil Ag Retail): comprises companies dedicated to the distribution of agricultural inputs such as crop protection, seeds, fertilizers, and specialty products, in Brazil.

LatAm Cluster (Latam Ag Retail): includes companies dedicated to the distribution of agricultural inputs outside Brazil (currently primarily in Colombia).

Crop Care Cluster (Crop Care): includes companies that produce and import our own portfolio of private label products including specialty products (e.g., biologicals and specialty fertilizers) and off-patent crop protection.

Lavoro’s Fiscal Year

Lavoro follows the crop year, which means that its fiscal year comprises July 1st of each year, until June 30 of the following year. Given this, Lavoro’s quarters have the following format:

1Q – quarter starting on July 1 and ending on September 30.
2Q – quarter starting on October 1 and ending on December 31.
3Q – quarter starting on January 1 and ending on March 31.
4Q – quarter starting on April 1 and ending on June 30.

Definitions

RTVs: refer to Lavoro’s technical sales representatives (Representante Técnico de Vendas), who are linked to its retail stores, and who develop commercial relationships with farmers.

Forward-Looking Statements

The contents of any website mentioned or hyperlinked in this press release are for informational purposes and the contents thereof are not part of or incorporated into this press release.

Certain statements made in this presentation are “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “aims,” “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the expectations regarding the growth of Lavoro’s business and its ability to realize expected results, grow revenue from existing customers, and consummate acquisitions; opportunities, trends, and developments in the agricultural input industry, including with respect to future financial performance in the industry. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by any investor as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Lavoro.

These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to, the outcome of any legal proceedings that may be instituted against Lavoro related to the business combination agreement or the transaction; the ability to maintain the listing of Lavoro’s securities on Nasdaq; the price of Lavoro’s securities may be volatile due to a variety of factors, including changes in the competitive and regulated industries in which Lavoro operates, variations in operating performance across competitors, changes in laws and regulations affecting Lavoro’s business; Lavoro’s inability to meet or exceed its financial projections and changes in the consolidated capital structure; changes in general economic condition; the ability to implement business plans, forecasts, and other expectations, changes in domestic and foreign business, market, financial, political and legal conditions; the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; costs related to the business combination and being a public company and other risks and uncertainties indicated from time to time in the proxy statement/prospectus filed by Lavoro relating to the business combination or in the future, including those under “Risk Factors” therein, and in Lavoro’s other filings with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Lavoro currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Lavoro’s expectations, plans, or forecasts of future events and views as of the date of this presentation. Lavoro anticipates that subsequent events and developments will cause Lavoro’s assessments to change. However, while Lavoro may elect to update these forward-looking statements at some point in the future, Lavoro specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Lavoro’s assessments as of any date subsequent to the date of this presentation. Accordingly, undue reliance should not be placed upon the forward-looking statements.

In addition, forward-looking statements reflect Lavoro’s expectations, plans, or forecasts of future events and views as of the date of this press release. Lavoro anticipates that subsequent events and developments will cause Lavoro’s assessments to change. However, while Lavoro may elect to update these forward-looking statements at some point in the future, Lavoro specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Lavoro’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Contact

Julian Garrido
julian.garrido@lavoroagro.com

Tigran Karapetian
tigran.karapetian@lavoroagro.com

Fernanda Rosa
fernanda.rosa@lavoroagro.com

Interim condensed consolidated statement of financial position
As of December 31, 2023
(In thousands of Brazilian reais – R$, except if otherwise indicated

  December 31,
2023
June 30,
2023
     
Assets    
Current assets    
Cash equivalents 693,851 564,294
Trade receivables 4,291,676 2,667,057
Inventories 2,648,851 1,868,204
Taxes recoverable 59,451 57,001
Derivative financial instruments 28,908 40,410
Commodity forward contracts 73,264 114,861
Advances to suppliers 358,833 192,119
Other assets 51,625 32,701
Total current assets 8,206,459 5,536,646
     
Non-current assets    
Restricted cash 144,384 139,202
Trade receivables 44,862 41,483
Other assets 5,420 8,390
Commodity forward contracts 20,622  
Judicial deposits 9,007 8,820
Right-of-use assets 192,419 173,679
Taxes recoverable 363,187 282,903
Deferred tax assets 431,135 329,082
Investments 1,879
Property, plant and equipment 214,455 196,588
Intangible assets 979,769 807,192
Total non-current assets 2,407,139 1,987,339
     
Total assets 10,613,598 7,523,984

Interim condensed consolidated statement of financial position
As of December 31, 2023
(In thousands of Brazilian reais – R$, except if otherwise indicated)

  December 31,
2023
June 30, 2023
     
Liabilities    
Current liabilities    
Trade payables 4,699,892   2,575,701  
Trade payables – Supplier finance   26,157  
Lease liabilities 91,885   85,865  
Borrowings 1,613,955   922,636  
Obligations to FIAGRO quota holders 168,892   150,018  
Payables for the acquisition of subsidiaries 248,471   221,509  
Derivative financial instruments 54,354   44,008  
Commodity forward contracts 121,295   207,067  
Salaries and social charges 174,702   223,376  
Taxes payable 61,103   37,105  
Dividends payable 9,263   1,619  
Warrant liabilities 36,613   36,446  
Advances from customers 459,040   488,578  
Other liabilities 54,140   34,388  
Total current liabilities 7,793,605   5,054,473  
     
Non-current liabilities    
Trade payables 889   2,547  
Lease liabilities 112,858   98,554  
Borrowings 32,546   42,839  
Agribusiness Receivables Certificates 403,153    
Commodity forward contracts 410    
Payables for the acquisition of subsidiaries 23,110   53,700  
Provision for contingencies 12,938   8,845  
Liability for FPA Shares 144,306   139,133  
Other liabilities 521   223  
Taxes payable 800   963  
Deferred tax liabilities 18,189   12,351  
Total non-current liabilities 749,720   359,155  
     
Equity    
Share Capital 591   591  
Additional Paid-in Capital 2,108,209   2,134,339  
Capital reserve 25,227   14,533  
Other comprehensive loss (11,460 ) (28,634 )
Accumulated losses (342,258 ) (260,710 )
Equity attributable to shareholders of the Parent Company 1,780,309   1,860,119  
Non-controlling interests 289,964   250,238  
Total equity 2,070,273   2,110,357  
     
Total liabilities and equity 10,613,598   7,523,984  

Interim condensed consolidated statement of profit or loss
(In thousands of Brazilian reais – R$, except if otherwise indicated)

  Three-month period ended December 31, Six-month period ended December 31,
  2023   2022   2023   2022  
         
Revenue 3,065,902   3,220,211   5,431,858   5,506,175  
Cost of goods sold (2,555,320 ) (2,569,096 ) (4,627,991 ) (4,380,852 )
         
Gross profit 510,582   651,115   803,867   1,125,323  
         
Operating expenses        
Sales, general and administrative expenses (380,120 ) (303,013 ) (700,358 ) (618,438 )
Other operating (expenses) income, net 21,560   18,093   21,912   31,710  
Share of profit of an associate (786 )   (1,753 )  
         
Operating profit 151,236   366,195   123,668   538,595  
         
Finance Income (costs)        
Finance income 111,399   71,064   197,298   159,883  
Finance costs (278,248 ) (227,948 ) (514,235 ) (455,368 )
Other financial income (costs) (17,848 ) (10,973 ) 3,288   (20,192 )
         
Profit (loss) before income taxes (33,461 ) 198,338   (189,981 ) 222,918  
         
Income taxes        
Current (6,544 ) (30,535 ) 31,949   (14,303 )
Deferred 49,186   18,007   96,216   55,274  
         
Profit (loss) for the period 9,181   185,810   (61,816 ) 263,889  
         
Attributable to:        
Net investment of the parent/ Equity holders of the parent (15,011 ) 149,695   (81,548 ) 209,310  
Non-controlling interests 24,192   36,115   19,732   54,579  
         
Earnings (loss) per share        
Basic, profit (loss) for the period attributable to net investment of the parent/ equity holders of the parent (0.13 ) 1.32   (0.72 ) 1.84  
Diluted, profit (loss) for the period attributable to net investment of the parent/ equity holders of the parent (0.13 ) 1.29   (0.72 ) 1.82  

Interim consolidated statement of comprehensive income or loss
(In thousands of Brazilian reais – R$, except if otherwise indicated)

  Three-month period ended December 31, Six-month period ended December 31,
  2023   2022   2023   2022  
         
Profit (loss) for the period 9,181   185,810   (61,816 ) 263,889  
Items that may be reclassified to profit or loss in subsequent periods        
Exchange differences on translation of foreign operations 3,146   (89,512 ) 17,340   (28,488 )
         
Total comprehensive income (loss) for the period 12,327   96,298   (44,476 ) 235,401  
         
Attributable to:        
Net investment of the parent/ equity holders of the parent (12,031 ) 61,190   (64,374 ) 181,829  
Non-controlling interests 24,358   35,108   19,898   53,572  

Interim condensed consolidated statement of cash flows
For the three-month period ended December 31, 2023
(In thousands of Brazilian reais – R$, except if otherwise indicated

  2023   2022  
Operating activities:    
Profit (loss) before income taxes (189,980 ) 222,918  
Adjustments to reconcile profit (loss) for the period to net cash flow:    
Allowance for expected credit losses 76,212   17,838  
Foreign exchange differences (30,017 ) 7,705  
Accrued interest expenses 158,715   163,972  
Interest arising from revenue contracts (161,270 ) (139,450 )
Accrued interest on trade payables 323,457   279,176  
Loss (gain) on derivatives 6,947   7,513  
Interest from tax benefits (17,736 ) (10,390 )
Fair value on commodity forward contracts 19,783   4,974  
Gain on changes in fair value of warrants 167    
Amortization of intangibles 35,311   35,677  
Amortization of right-of-use assets 39,247   24,170  
Depreciation 9,708   8,240  
Losses and damages of inventories 5,003   6,103  
Provisions for contingencies 3,941   (2,073 )
Share-based payment 10,694   12,112  
Share of profit of an associate 1,753    
Others (3,162 ) 7,394  
     
Changes in operating assets and liabilities:    
Assets    
Trade receivables (1,690,556 ) (1,759,501 )
Inventories (683,870 ) (753,503 )
Advances to suppliers (159,378 ) 24,043  
Derivative financial instruments 14,901   378  
Taxes recoverable (40,107 ) (116,213 )
Other receivables (78,515 ) 20,514  
Liabilities    
Trade payables 2,113,050   1,420,984  
Advances from customers (34,312 ) 32,293  
Salaries and social charges (53,252 ) 2,350  
Taxes payable 23,310   65,114  
Other payables 48,065   (57,328 )
Interest paid on borrowings and FIAGRO quota holders (132,284 ) (64,546 )
Interest paid on acquisitions of subsidiary (6,328 ) (3,127 )
Interest paid on trade payables and lease liabilities (459,601 ) (248,435 )
Interest received from revenue contracts 206,829   111,731  
Income taxes paid/received 12,976   (28,422 )
     
Net cash flows used in operating activities (630,299 ) (707,789 )
     
Investing activities:    
Acquisition of subsidiary, net of cash acquired (187,723 ) (110,919 )
Additions to property, plant and equipment and intangible assets (47,749 ) (29,399 )
Proceeds from the sale of property, plant and equipment 3,539   1,598  
Net cash flows used in investing activities (231,933 ) (138,720 )
     
Financing activities:    
Proceeds from borrowings 1,702,374   1,105,864  
Repayment of borrowings (1,084,144 ) (199,715 )
Proceeds from Agribusiness Receivables Certificates, net of transaction cost 402,259    
Payment of principal portion of lease liabilities (37,952 ) (22,977 )
Proceeds from FIAGRO quota holders, net of transaction costs 137,496   143,082  
Repayment of FIAGRO quota holders (109,126 )  
Trade payables – Supplier finance (26,157 ) 14,753  
Acquisition of non-controlling interests   (87,500 )
Dividend payments (i) (1,208 )  
Capital contributions   1,871  
     
Net cash flows provided by financing activities 983,542   955,378  
     
Net increase in cash equivalents 121,310   108,869  
Net foreign exchange difference 8,246    
     
Cash equivalents at beginning of the period 564,294   254,413  
     
Cash equivalents at end of the period 693,851   363,282  


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