Lavoro (US:LVRO)2025-06-18 22:00Financial 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long-term thesis for Lavoro Brazil despite current challenges [18][19] Other Important Information - The company has withdrawn its previously issued fiscal 2025 financial outlook due to complexities associated with the reorganization plan [13] - The reorganization plan is subject to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]