Lavoro Limited (LVRO) Q2 2025 Earnings Call June 18, 2025 05:00 PM ET Speaker0 Welcome to Lovallo's Business Update Conference Call. Please note that this conference call is being recorded and a replay will be made available on the company's Investor Relations website at ir.lavoroagro.com. I will now turn the conference over to Tigran Karpishin, Head of Investor Relations. Thank you. You may begin. Speaker1 Thank you for joining us today to discuss our business update. We will be covering the out of court r ...

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 - Management has withdrawn its fiscal 2025 guidance due to the complexities associated with the EJ Plan [14].