Core Viewpoint - Lavoro Limited has received a notice of non-compliance from Nasdaq due to the delayed filing of its interim financial information for the six-month period ended December 31, 2024 [1][2]. Group 1: Compliance and Regulatory Actions - The notice indicates that Lavoro is not in compliance with Nasdaq Listing Rule 5250(c)(2) [1]. - The company must submit a plan by September 8, 2025, to address how it intends to regain compliance with Nasdaq's listing rules [3]. - If the plan is accepted, Nasdaq may grant an exception of up to 180 calendar days, allowing compliance to be regained by December 29, 2025 [3][4]. Group 2: Company Background - Lavoro is Brazil's largest agricultural inputs retailer and a leading producer of agricultural biological products [5]. - The company operates across Latin America, including Brazil, Colombia, Uruguay, and Ecuador, and was founded in 2017 [5]. - Lavoro empowers small and medium-sized farmers to adopt emerging agricultural technologies to enhance productivity [5].

Financial Data and Key Metrics Changes - Consolidated preliminary revenue for the second quarter declined 27% year over year to $1 billion, primarily due to inventory shortages in Brazil ag retail, which led to purchase order cancellations [13] - In U.S. Dollar terms, revenue decreased 38% year over year to $384 million, reflecting a 15% depreciation of the Brazilian real relative to the U.S. Dollar [14] - Consolidated preliminary gross profit decreased 28% to R366 million, with gross margins contracting 40 basis points to 16.3% [17] Business Line Data and Key Metrics Changes - Brazil ag retail segment revenue declined 30% year over year to R1.84 billion due to inventory shortages [14] - Top Care segment revenue decreased 30% year over year, primarily impacted by regulatory uncertainty and product shortages [15] - LATAM Ag retail revenue grew 4% to $XX million, supported by stable market conditions and the appreciation of the Colombian peso [16] Market Data and Key Metrics Changes - Brazil's agricultural inputs market faced historical headwinds, including input price deflation of 40% to 60% in crop protection and fertilizers, and drought conditions [4] - The percentage of on-time farmer repayments improved notably versus last year, reflecting better farmer liquidity [15] Company Strategy and Development Direction - The company announced an out-of-court restructuring plan to address inventory financing constraints and improve supplier relationships [6][7] - The reorganization plan aims to create a standardized multi-year contractual framework with suppliers, enhancing predictability and operational efficiency [9][10] - The company is focused on restoring profitability and positioning the business for growth from a leaner base [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the extraordinary challenges faced by the Brazilian ag inputs distribution industry and emphasized the need for fundamental changes to the inventory financing model [4][5] - The reorganization plan is expected to strengthen supplier alignment and enhance operational efficiency, forming a foundation for a more resilient and profitable platform [19] Other Important Information - The company has withdrawn its previously issued fiscal 2025 financial outlook due to complexities associated with the reorganization plan [13] - The reorganization plan is subject to court approval, which typically takes between three and five months to complete [12] Summary of Q&A Session - There was no Q&A session held during this conference call due to ongoing court proceedings and the status of the audit processes [3]

Financial Data and Key Metrics Changes - Consolidated preliminary revenue for the second quarter declined 27% year over year to 2.25 billion reais, primarily due to inventory shortages in Brazil ag retail [14] - In US dollar terms, revenue decreased 38% year over year to $384 million, reflecting a 15% depreciation of the Brazilian Real relative to the US dollar [14] - Consolidated preliminary gross profit decreased 28% to 3.066 billion reais, with gross margins contracting 40 basis points to 16.3% [17] - Gross margin for the Brazil Ag Retail segment contracted by 240 basis points to 11.5% [17] Business Line Data and Key Metrics Changes - Brazil Ag Retail segment's revenue declined 30% year over year to 1.84 billion reais due to inventory shortages [14] - Crop care segment revenue was 251 million reais in the second quarter, a decrease of 30% year over year, impacted by uncertainty in the biologicals market and product shortages [15][16] - LATAM Ag retail revenue grew 4% to $287 million, reflecting stable market conditions and appreciation of the Colombian peso [17] Market Data and Key Metrics Changes - The Brazilian agricultural inputs market faced historical headwinds, including input price deflation of 40% to 60% in crop protection and fertilizers, and drought conditions [4] - The judicial reorganization of a major agricultural retailer triggered a tightening of inventory financing conditions across the industry [4][5] Company Strategy and Development Direction - The company announced an out-of-court restructuring agreement with suppliers to extend payment terms and secure future product supply [6][8] - The reorganization plan aims to create a standardized multi-year contractual framework with suppliers, enhancing predictability and operational efficiency [10][11] - The company is implementing a retail network right-sizing plan and actions to reduce overhead to restore profitability [12] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenging period for the Brazilian ag inputs distribution industry and emphasized the need for fundamental changes to the inventory financing model [4][5] - The company believes the reorganization plan will position Lavoro Brazil as a leaner and more resilient business unit [6][19] - Management expressed confidence in the long-term thesis for Lavoro Brazil despite current challenges [18][19] Other Important Information - The company has withdrawn its previously issued fiscal 2025 financial outlook due to complexities associated with the reorganization plan [13] - The reorganization plan is subject to court approval, which typically takes three to five months in Brazil [12] Summary of Q&A Session - No Q&A session was held during this conference call due to ongoing court proceedings and the status of the audit processes for the second quarter [3]

Core Viewpoint - Lavoro Limited's subsidiary, Lavoro Brazil, has reached an out-of-court restructuring agreement with key suppliers to extend payment terms and secure multi-year product supply, aiming to mitigate supply chain disruptions and enhance operational efficiency [1][2][3]. Group 1: Restructuring Agreement - The agreement with suppliers includes BASF, FMC Agrícola, UPL Brasil, EuroChem, and Ourofino, and aims to support Lavoro Brazil's reorganization plan [3]. - The restructuring plan, known as the EJ Plan, will be binding upon court approval and is designed to ensure broad-based effectiveness across all eligible suppliers [2][4]. - The EJ Plan restructures approximately R$2.5 billion in trade payables owed to suppliers, categorizing them into different creditor classes with tailored repayment obligations [10][11]. Group 2: Financial Impact - Preliminary unaudited consolidated revenue for 2Q25 was R$2.25 billion, a decrease of 27% year-over-year, primarily due to inventory shortages [7][22]. - Preliminary unaudited gross profit for 2Q25 decreased by 28% to R$366.9 million, with gross margins contracting to 16.3% [22]. - The Brazil Ag Retail segment saw a 30% decline in revenue to R$1.84 billion in 2Q25, attributed to product availability constraints [22]. Group 3: Market Context - The 2023/24 crop year in Brazil faced challenges such as falling commodity prices, declining farmer profitability, and severe droughts, impacting Lavoro Brazil's operations [6]. - Despite these challenges, Lavoro Brazil gained market share and is positioned to benefit from signs of market stabilization entering FY25 [6]. Group 4: Future Outlook - The EJ Plan aims to standardize inventory supply and financing terms, ensuring reliable product availability and mitigating risks from future credit condition changes [5][9]. - Management has withdrawn its fiscal 2025 guidance due to the complexities associated with the EJ Plan [14].

Financial Data and Key Metrics Changes - In Q1 2025, Lavoro's consolidated revenue totaled BRL2.05 billion, a 13% year-over-year decline, primarily due to input price deflation in Brazil Ag Retail, partially offset by a 68% revenue increase in Crop Care [17][18] - Gross profit increased 10% to BRL321.2 million, with gross margin expanding 320 basis points to 15.6%, driven by improved distribution margins in Brazil Ag Retail [18] - The company reported a net loss of BRL267.1 million, compared to a net loss of BRL71 million in Q1 2024, reflecting an increase of BRL196.1 million year-over-year [19] - Adjusted EBITDA declined 5% to BRL54.4 million, impacted by higher SG&A expenses [20] Business Line Data and Key Metrics Changes - Brazil Ag Retail revenue declined 23% year-over-year to BRL1.55 billion, driven by last year's input price declines and farmer liquidity constraints, while gross profit grew 7% to BRL189 million [22] - Latam Ag Retail revenue increased 4% year-over-year to BRL337 million, benefiting from a 12% appreciation of the Colombian Peso [23] - Crop Care segment revenues grew 68% year-over-year to BRL293.7 million, with gross profit increasing 11% to BRL84.3 million [25] Market Data and Key Metrics Changes - The Brazilian ag inputs market is experiencing contrasting dynamics, with improved farmer profitability expectations for the '24/'25 crop year alongside stabilizing input prices [11] - Favorable weather conditions during the soybean growing season have improved yield expectations across Brazil, with local corn cash prices rising above BRL70 per bag [12] - Liquidity constraints in the agri business sector escalated significantly, leading to a decline in cash-based input purchases from farmers [14] Company Strategy and Development Direction - The company is focused on enhancing vertical integration between Crop Care and Retail operations in Brazil, which is yielding strategic benefits [8] - Cost-saving initiatives include retail network optimization and fixed cost reductions, with plans to consolidate several stores within Brazil [30][31] - The company expects to capitalize on early signs of end-market recovery while navigating inventory financing disruptions [30] Management Comments on Operating Environment and Future Outlook - Management expressed optimism regarding improved farmer sentiment in Brazil due to enhanced profitability prospects for the upcoming crop season [29] - The company updated its full-year 2025 outlook, expecting consolidated net revenue between BRL6.5 billion and BRL7.5 billion, with no anticipated growth in adjusted EBITDA compared to 2024 [27][28] - Management acknowledged challenges in credit and liquidity in the market but remains focused on improving profitability [80] Other Important Information - The company is experiencing significant inventory shortages in key product categories due to tightened inventory financing conditions [15] - Successful renegotiations with key suppliers in January helped ease some inventory bottlenecks, although full normalization has yet to occur [16] Q&A Session Questions and Answers Question: Guidance for 2025 - Management noted that the revised guidance is primarily due to the timing of inventory deliveries impacting the second half of the fiscal year [38][54] Question: Farmer Sentiment and Cash Conversion - Management indicated that improved farmer sentiment is linked to favorable crop conditions and expected strong yields, which should enhance cash conversion [44][45] Question: Store Count Reduction and Competitive Dynamics - The decision to reduce store count is part of a strategy to consolidate nearby stores while maintaining profitability, with no direct impact on the revised guidance [55] Question: Government Financing Activity - Management believes that improvements in farmer profitability will primarily drive recovery, rather than government intervention [64] Question: Geopolitical Impact on Brazilian Farmers - Management expressed cautious optimism that geopolitical changes could positively affect Brazilian farmers, particularly regarding commodity prices and export opportunities [77]

FY1Q25 Earnings Presentation Forward Looking Statements The contents of any website mentioned or hyperlinked in this presentation are for informational purposes and the contents thereof are not part of or incorporated into this presentation. Certain statements made in this presentation release 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 wor ...

Financial Performance - Total revenue for the period ended September 30, 2024, was R$2,052,720, a decrease of 13.2% compared to R$2,365,956 for the same period in 2023[6] - The company reported a loss for the period of R$267,058, compared to a loss of R$70,997 in the same period last year, representing an increase in losses of 276.5%[6] - Operating profit for the period was R$13,715, a recovery from an operating loss of R$27,568 in the same period last year[6] - The company reported a basic and diluted loss per share of R$2.19 for the period ended September 30, 2024, compared to a loss of R$0.59 in the same period of 2023[160] - Revenue from contracts with customers totaled R$2,052,720 for the three months ended September 30, 2024, down from R$2,365,956 in the same period of 2023, primarily due to lower retail sales in Brazil[163] Assets and Liabilities - Total current assets rose to R$7,017,632, an increase of 12.9% from R$6,215,124 as of June 30, 2024[3] - Total liabilities increased to R$7,970,042, up from R$6,989,709 as of June 30, 2024, reflecting a rise of 14.2%[5] - Total assets as of September 30, 2024, amounted to R$9,058,371,000, with Brazil Ag Retail holding R$7,345,163,000[36] - Total liabilities decreased to R$63,191 as of September 30, 2024, from R$77,542 on June 30, 2024, indicating a reduction in financial obligations[137] Cash Flow and Liquidity - Cash equivalents decreased to R$510,862 from R$911,335, a decline of 43.9%[3] - Net cash flows used in operating activities amounted to R$735,772 thousand for the three months ended September 30, 2024, compared to R$590,494 thousand in the same period of 2023, reflecting an increase of approximately 24.6%[10] - The Group's cash equivalents at the end of the period were R$510,862 thousand, a decrease from R$564,312 thousand at the end of September 30, 2023, representing a decline of about 9.5%[10] Trade Receivables and Inventories - Trade receivables increased significantly to R$3,286,144, up 18.6% from R$2,769,757 in the previous quarter[3] - The Group's trade receivables increased to R$467,085 thousand in September 2024 from R$446,075 thousand in September 2023, showing a rise of approximately 4.4%[10] - The Group's inventories decreased significantly from R$643,982 thousand in September 2023 to R$387,419 thousand in September 2024, a reduction of about 39.8%[10] - The company reported a total of R$2,184,810,000 in inventories, which is crucial for meeting future demand[36] Financing and Debt - Total borrowings as of September 30, 2024, were R$1,257,240, a slight increase from R$1,225,570 as of June 30, 2024, reflecting a growth of 2.6%[108] - The average interest rate for debt contracts in Brazilian reais indexed to CDI increased to 16.19% as of September 30, 2024, from 14.52% as of June 30, 2024[109] - The Group's total financial liabilities due within one year as of September 30, 2024, amounted to R$7,262,315 thousand, compared to R$6,308,701 thousand as of June 30, 2024, indicating an increase of about 15.1%[69][70] Risk Management - The Group's liquidity risk management includes maintaining sufficient cash reserves and bank credit facilities to meet obligations without incurring losses[67][68] - The Group's exposure to foreign exchange risk is primarily related to the U.S. dollar, affecting the pricing of agricultural inputs[76][78] - The sensitivity analysis indicates that a 25% increase in the CDI Rate could lead to an expense impact of R$250,061 thousand on profit or loss[75] Corporate Strategy and Development - The company is focusing on expanding its market presence in Latin America, particularly in Colombia and Ecuador[35] - New product development efforts are ongoing, particularly in the Crop Care segment, which includes proprietary products[35] - The Group's strategy includes entering into purchase and sale contracts at similar conditions to manage commodity price exposure effectively[85] Other Financial Metrics - The Group's interest paid on borrowings increased to R$91,764 thousand in September 2024 from R$84,501 thousand in September 2023, reflecting an increase of about 8.5%[10] - The Group's share of profit from an associate showed a loss of R$3,915 thousand in September 2024, compared to a profit of R$967 thousand in September 2023, indicating a significant decline in performance[10] - The total provisions for probable losses from civil, tax, labor, and environmental contingencies amounted to R$15,354 as of September 30, 2024, up from R$14,002 as of June 30, 2024[132]

Core Viewpoint - Lavoro Limited reported a challenging fiscal first quarter of 2025, with significant revenue declines driven by market headwinds and liquidity constraints in Brazil's agricultural sector, while also indicating a commitment to strategic measures for recovery [2][4][23]. Financial Performance - 1Q25 consolidated revenue decreased by 13% year-over-year to R$2.05 billion (-24% in USD), with Inputs revenue down 9% and Grains revenue down 52% [4][5]. - Gross profit increased by 10% to R$321.2 million, with gross margins expanding by 320 basis points to 15.6% [5][8]. - Net loss for 1Q25 was R$267.1 million, compared to R$71.0 million in the prior year, largely due to changes in deferred tax assets and higher finance costs [5][8]. Segment Performance Brazil Ag Retail - Revenue decreased by 23% year-over-year to R$1.55 billion (-32% in USD), with Inputs revenue down 19% and Grains revenue down 63% [13][14]. - Gross profit grew by 7% to R$189.0 million, with gross margin expanding by 350 basis points to 12.2% [13][14]. - Adjusted EBITDA decreased by 6% to R$45.1 million, impacted by higher SG&A expenses [13][14]. Latam Ag Retail - Revenue increased by 4% to R$337.0 million (-8% in USD), supported by a stronger Colombian peso [17]. - Gross profit rose by 7% to R$47.8 million, with gross margins expanding by 40 basis points to 14.2% [17]. - Adjusted EBITDA decreased by 32% to R$10.4 million, primarily due to increased credit provisions and personnel costs [17]. Crop Care - Revenue surged by 68% to R$293.7 million (+48% in USD), driven by strong performance from subsidiaries [21]. - Gross profit rose by 11% to R$84.3 million, but gross margins contracted to 28.7% due to changes in product mix [21]. - Adjusted EBITDA increased by 24% to R$35.9 million, reflecting improved gross profit [21]. Revised Guidance - Lavoro revised its FY2025 revenue outlook to a range of R$6.50 billion to R$7.50 billion, with Inputs revenue projected between R$5.90 billion and R$6.90 billion [23][24]. - In USD terms, FY2025 consolidated revenue is now projected to range between $1.12 billion to $1.28 billion [24].

Core Viewpoint - Lavoro Limited, the first U.S.-listed agricultural inputs retailer in Latin America, is set to release its financial results for the fiscal first quarter of 2025 on February 3, 2025, before market opening [1] Group 1: Financial Results Announcement - Lavoro will issue its financial results for the fiscal first quarter 2025 on February 3, 2025 [1] - A conference call and audio webcast will be held at 8:00 a.m. ET (10:00 a.m. BRT) to discuss the results [1][2] Group 2: Company Overview - Lavoro is Brazil's largest agricultural inputs retailer and a leading producer of agricultural biological products [3] - The company operates across Latin America, including Brazil, Colombia, Ecuador, and Uruguay, serving approximately 77,000 customers [3] - Lavoro employs over 1,000 technical sales representatives who provide agronomic recommendations to farmers [3]

Financial Data and Key Metrics Changes - Consolidated revenue for fiscal year 2024 grew by 6% to $1.89 billion, driven by a 61% increase in Grain revenue, particularly in barter operations [25] - Full year gross profit decreased by 19% to $268.4 million, with gross margin compressing by 430 basis points to 14.2% due to input price deflation and a less favorable product mix [26] - Adjusted EBITDA for the year was $53.4 million, reflecting a 64% decline year-over-year primarily due to gross margin compression and increased provisions for credit losses [26] - Net loss for the year was $154.6 million compared to a net loss of $43.7 million in the previous year [27] Business Line Data and Key Metrics Changes - In Brazil Ag Retail, revenue decreased by 2% to $192.5 million, with Inputs revenue declining by 16% due to strategic decisions to delay shipments [31] - Crop Care revenue surged by 87% to $19.9 million, but gross profit declined by 29% to $5.8 million due to product mix effects [33] - Latam Ag Retail revenue increased by 5% to $65.2 million, with gross profit rising by 10% to $10.4 million [32] Market Data and Key Metrics Changes - Inputs revenue in Brazil Ag Retail declined by 6% to $202.8 million, affected by lower Input sales and currency conversion [28] - Farmer profitability for crop year 2024/2025 is projected to improve, with increases in local grain prices and stable input prices [14] - Credit dispersed to farmers decreased by 30% year-over-year, reflecting liquidity issues stemming from previous droughts [17] Company Strategy and Development Direction - The company plans to optimize its retail network by consolidating stores to capture fixed cost savings while maintaining service levels [22] - For fiscal year 2025, the company expects consolidated revenues to range between R$8.6 billion and R$9.2 billion, with a focus on improving margins and operating efficiency [23] - The company aims to grow slightly above market rates despite a projected contraction of approximately 10% in Ag Retail Inputs markets [21] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are short-term challenges, farmer demand for inputs is strong, and liquidity issues are expected to resolve with upcoming crop seasons [19][20] - The company anticipates that the market environment in Brazil is turning, with improved profitability for farmers and stabilized input prices [14][35] - Management expressed optimism about the mid-term outlook for farmers, despite current liquidity constraints [35] Other Important Information - The company reported a consolidated net debt-to-adjusted EBITDA ratio of 4.2, which drops to 3.4 when excluding payables related to acquisitions [34] - Adjusted net loss for the year was $144.9 million compared to an adjusted net profit of $30.9 million the previous year [27] Q&A Session Summary Question: Guidance for fiscal year cadence - Management indicated that the seasonality for fiscal year 2025 is expected to be similar to the previous year, with no significant changes anticipated in quarterly performance [39] Question: Channel inventories and competitor bankruptcy impact - Management noted that input prices are stabilizing and channel inventories are mostly normalized, with strong demand from farmers despite competitive pricing in some regions [40][41] Question: Operational cost savings and EBITDA impact - Management expects most EBITDA recovery to come from margin improvements, with additional benefits from optimizing the retail footprint [42] Question: Farmer profitability and behavior changes - Management observed that farmers are currently cautious in their buying decisions but are increasingly concerned about securing input availability, which is driving demand [45] Question: Timing of planting seasons and drought conditions - Management reported that soy planting in Brazil is slightly delayed compared to last year but is progressing faster due to recent rains [51] Question: M&A strategy in the current environment - Management indicated a focus on organic growth opportunities rather than M&A, although they remain open to interesting targets [52]