Lavoro (US:LVRO)2023-11-03 14:46Financial Data and Key Metrics Changes - For fiscal year 2023, the company reported revenue of $1.8 billion and adjusted EBITDA of $150 million, representing increases of 24% and 64% respectively [44] - Consolidated revenue for Q4 2023 rose by 16.6% to $266 million, driven by a 31.9% year-over-year growth in the Brazil Ag Retail segment [27][22] - Adjusted EBITDA improved to a positive $2.4 million compared to a negative $16.3 million in the prior year, with an adjusted EBITDA margin increase of over 800 basis points year-over-year [55] Business Line Data and Key Metrics Changes - The Crop Care segment accounted for nearly 19% of adjusted EBITDA in fiscal year 2023, up from 8% the previous year, with revenues and gross profit expanding by 94% and 138% respectively [21][45] - The Brazil Ag Retail segment saw improved sales volumes of fertilizers, crop protection, and specialty products, which more than offset price declines [27] - Gross profit for the quarter increased by 26.7% to $46.9 million, with gross margin widening by 140 basis points to 17.7% [52] Market Data and Key Metrics Changes - The company anticipates a nearly 20% decline in the ag input market in Brazil for the 2023/2024 crop year, reflecting ongoing pricing pressures [33][47] - The Colombian operations experienced a 3% decline compared to the prior year, driven by the devaluation of the Colombian peso, although local currency growth was 10% [51] - Price volatility in commodities like soybean and corn, along with declining fertilizer and agrochemical prices, posed challenges to operations in Brazil [46] Company Strategy and Development Direction - The company is focused on enhancing agronomic and financial services offerings, including a partnership with Stenon for soil testing technology [5][60] - The M&A strategy remains active, with seven signed MOUs and ongoing discussions with various companies, emphasizing a disciplined approach to acquisitions [59] - The company aims to leverage its scale and technology investments to improve market share and financial performance as market conditions normalize [62] Management's Comments on Operating Environment and Future Outlook - Management noted that farmers remain profitable, which is a key indicator for future input purchases, despite current market challenges [9][66] - The company expects the first half of fiscal year 2024 to experience pricing headwinds, with normalization anticipated in the second half [66] - Management expressed confidence in long-term growth fundamentals, despite short-term adjustments due to market conditions [76] Other Important Information - The company is expanding its crop insurance offerings through partnerships with Brasilseg and BTG to provide tailored insurance against weather events [61] - The company has seen positive feedback from clients regarding its new services and anticipates strong demand for its Crop Care products [60] Q&A Session Summary Question: Confidence in the second half and purchasing metrics - Management indicated that farmers are delaying purchases but are expected to make necessary purchases, suggesting a temporary delay rather than a loss of business [39][66] Question: Pricing assumptions for the fiscal year - Management confirmed that pricing pressures are expected to persist in the first two quarters, with normalization anticipated in the latter half of the fiscal year [66] Question: Growth potential for Crop Care - Management believes there is significant potential for Crop Care to increase its market share and shelf space, particularly in the biologics segment [82]