Lavoro Reports Fiscal Third Quarter 2024 Earnings Results¹

Core Insights - Lavoro Limited reported a 6% year-over-year revenue growth to $514.2 million in 3Q24, driven by market share gains and volume growth despite input price deflation in Brazil and Colombia [1][4][6] - The company experienced a net loss of $64.8 million, an improvement from a loss of $74.3 million in the same quarter last year, primarily due to the absence of non-recurring expenses from the previous year [1][4][5] - Adjusted EBITDA decreased significantly to $3.7 million from $24.8 million in the prior year, reflecting lower gross profit and increased operating expenses [1][4][5] Financial Performance - Consolidated revenue increased by 6% year-over-year to $514.2 million, with all three operating segments contributing positively [4][6] - Gross profit decreased by 16% to $60.2 million, with gross margins narrowing by 310 basis points to 11.7% due to input price deflation and a less favorable sales mix [1][4][5] - The Crop Care segment showed strong performance, with revenue rising 30% to $22.1 million, mainly driven by growth in biological products [1][4][5] Segment Analysis - Brazil Ag Retail segment revenue grew by 5% to $450 million, supported by a 61% increase in Grains revenue to $87.5 million, while Inputs revenue declined by 1% [4][5][12] - Latam Ag Retail segment revenue increased by 5% to $50.5 million, driven by strong fertilizer sales volumes, despite input price declines [15][16] - Crop Care segment revenue increased by 30% to $22.1 million, with gross profit up 14% to $9.1 million, although gross margins decreased by 550 basis points to 41.2% [18][19][20] Market Conditions - The company noted that farmers in Brazil are currently more risk-averse, leading to postponed purchasing decisions, which may adversely affect future results [3][4] - The impact of El Nino has been significant, affecting farmer profitability and delaying repayments to retailers, although Lavoro's credit standards have mitigated some risks [3][4] - Despite short-term challenges, the company remains optimistic about the long-term fundamentals for Brazilian farmers and aims to improve commercial efficiency and technical sales capabilities [3][4]