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Lavoro Reports Fiscal Third Quarter 2023 Earnings Results

  • Lavoro’s revenue reached $1.5 billion USD for the nine months period ended March 31, 2023, representing growth of 25% versus the prior year period
  • For the nine months ended on March 31, 2023, gross profit was $285 million USD, increasing 35% over the previous year and representing a margin of 18.6%
  • Lavoro successfully completed the acquisition of Cromo Química on May 31, 2023, adding further products and expertise in high-performance adjuvants to Lavoro’s Crop Care Cluster
  • In accordance with its growth strategy and commitment to offering comprehensive services to farmers, Lavoro entered into a strategic partnership in May 2023 with a subsidiary of Banco do Brasil to deliver tailored agricultural insurance solutions
  • Due to an extended duration of the diligence process, Lavoro does not anticipate completing the NS Agro transaction by the end of this fiscal year. As a result, the Company is now expecting fiscal year 2023 pro forma Adjusted EBITDA of $172 million to $178 million. Excluding the impact of delaying the closing of the NS Agro transaction, the Company expects to meet its previously provided guidance for fiscal year 2023 pro forma Adjusted EBITDA

SÃO PAULO, Brazil, June 01, 2023 (GLOBE NEWSWIRE) -- Lavoro Limited (Nasdaq: LVRO; LVROW), the first U.S.-listed pure-play agricultural inputs distributor in Latin America, today announced its financial results for the fiscal third quarter, ended on March 31, 2023.

Ruy Cunha, CEO of Lavoro commented, “We produced strong year-to-date results that have us on track to deliver pro forma Adjusted EBITDA for fiscal year 2023 in the range of $172-178 million, inclusive of two new M&As. The first one, which was concluded on May 31, is Cromo Quimica. This company is a strategic addition to our vertically integrated Crop Care platform, adding high-performance adjuvants to our portfolio and further supporting this high-growth category. The other is the Brazilian distribution business, Referência Agroinsumos, which we expect to close by the end of the year. Additionally, we are pleased to offer yet another value-added service to our customers with the launch of our agricultural insurance solutions in partnership with Brasilseg, an insurance company owned by Banco do Brasil. These strategic additions are aimed at leveraging our vertically-integrated Crop Care solutions business and penetrating other related services that are expected to add fuel to the significant margin expansion that we anticipate in the coming years.”

Fiscal Third Quarter 2023 Highlights as Compared to Fiscal Third Quarter 2022:

  • Consolidated revenue declined by 2.6% to $486 million in 3Q23 compared to the same period in 2022, affected mainly by (i) the decrease in grain sales; (ii) currency devaluation of the Colombian peso adversely impacting the LatAm Cluster revenue by approximately $10 million (excluding this impact, consolidated revenue for 3Q23 would be basically flat to 3Q22), (iii) biological inputs sales from Crop Care that were brought forward to the end of 1H23 and (iv) reduced prices for fertilizers and herbicides products. On a year-to-date basis, revenue increased 25.3%, reaching $1.5 billion.
  • Gross profit declined by 15.2% to $71.9 million in 3Q23, while gross margin decreased by 2.2 percentage points to 14.8%, primarily reflecting the lower mix of Crop Care on consolidated sales, and lower product margins from fertilizers and herbicides (e.g. glyphosate) owing to decline in prices. To mitigate the impacts, the Company is in negotiations with suppliers regarding the volume of herbicides already acquired (mainly sold). It is worth mentioning the increase in specialties in the mix of inputs sold, a segment with a high margin contribution, represented almost 10% of 3Q23 input revenue (up from 7% last year). On a year-to-date basis, gross profit reached $285 million, up 35% and gross margin improved 1.4 percentage points to 18.6% versus the same period last year.
  • Operating expenses increased by 17.4%, or ~$7 million in 3Q23, of which $2 million was related to new acquisitions infrastructure and $5 million of investments aligned to Lavoro’s organic growth plan (RTVs, back-office enhancement, and points of sale). On a year-to-date basis, operating expenses increased by 32% (~$35 million), similar to the drivers in 3Q23.
  • Non-recurring expenses increased ~ $5 million, due to one-time SPAC bonus to employees in 3Q23. On a year-to-date basis, expenses increased ~ $10 million ($3 million of difference between the fair value of the Union Agro’s net assets and the price paid by the Company, recorded as a gain on 9M22; plus $2 million of impact from stock option plan expenses; plus one-time SPAC bonus).
  • Nasdaq listing expenses (market value adjustment) reflected in 3Q23 $61.5 million of difference between the fair value of the Lavoro Limited shares issued and the fair value of TPB Acquisition Corp.’s identifiable net assets received in exchange.
  • Financial results were $13 million higher in 3Q23 than 3Q22, as a result of the M&A activities, and market interest rates increase. On a year-to-date basis, financial results were $66 million higher than the previous year, owing to the same drivers.
  • Net loss was $74.3 million in 3Q23 compared to a net profit of $14.5 million in the prior year, primarily reflecting one-time costs ($61.5 million + $5 million, due to SPAC bonus), currency devaluation in Colombia, biological inputs sales from Crop Care that were brought forward to the end of 1H23, and higher financing expenses.
  • Adjusted EBITDA in 3Q23 was $25.2 million, reflecting the sales phasing and operating investments aligned with Lavoro’s growth plan strategy. On a year-to-date basis, Adjusted EBITDA grew 38% to $147.9 million and Adjusted EBITDA margin rose 0.9 percentage points to 9.7%
  • Adjusted Net Loss was $7.3 million in 3Q23, as compared to Adjusted Net Profit of $15.1 million in the prior year period. On a year-to-date basis, Adjusted Net profit was $46 million, increasing 8% over the previous year.
  • Lavoro continues to execute its M&A strategy and on May 31 it concluded the acquisition of Cromo Química, a leading company specializing in high-performance adjuvants and enhancers for agriculture. This acquisition strengthens Lavoro’s Crop Care business segment, which focuses on biological inputs, specialty fertilizers, and post-patent crop protection products.
  • On May 3, 2023, Lavoro announced its partnership with Brasilseg, an insurance company and affiliate of the Banco do Brasil group, to provide agricultural insurance solutions to Brazilian farmers. This collaboration aligns with Lavoro’s expansion strategy, which aims to offer integrated services in what we understand to be an underexplored market in Brazil.
Summary of Fiscal Third Quarter 2023¹
        
Highlights of Consolidated Results
(US$, Million)
 3Q233Q22Chg. %9M239M22Chg. %
Revenue by Segment  486,414   499,347  -2.6% 1,529,300   1,220,133  25.3%
Brazil Cluster 426,509 432,106 -1.3%1,304,928 1,034,733 26.1%
LatAm Cluster 48,248 54,847 -12.0%171,287 156,480 9.5%
Crop Care Cluster 17,054 19,766 -13.7%110,147 48,936 125.1%
Intercompany² (5,396)(7,372)-26.8%(57,063)(20,016)185.1%
Revenue Breakdown  486,414   499,347  -2.6% 1,529,300   1,220,133  25.3%
Input 432,176 440,564 -1.9%1,447,654 1,129,754 28.1%
Grains 54,239 58,783 -7.7%81,646 90,379 -9.7%
Gross Profit  71,898   84,812  -15.2% 285,037   210,501  35.4%
Gross Margin % 14.8%17.0%-2.2 p.p.18.6%17.3%1.4 p.p.
Brazil Cluster Margin % 12.1%15.8%-3.7 p.p.16.8%16.2%0.7 p.p.
LatAm Cluster Margin % 15.8%13.9%1.9 p.p.16.7%16.3%0.3 p.p.
Crop Care Cluster Margin % 46.8%33.7%13.0 p.p.41.5%35.9%5.6 p.p.
Operating Expenses  (48,648) (41,444)17.4% (141,656) (107,058)32.3%
SG&A (46,206)(38,346)20.5%(145,220)(109,865)32.2%
Others (2,442)(3,099)-21.2%3,564 2,808 26.9%
Non-recurring Expenses (5,462)(609)796.6%(8,770)1,511 -680.5%
Nasdaq Listing Expenses³ (61,531)- 0.0%(61,531)- 0.0%
EBITDA  (41,769) 44,062  -194.8% 77,623   109,104  -28.9%
EBITDA Margin % -8.6%8.8%-17.4 p.p.5.1%8.9%-3.9 p.p.
Depreciation and Amortization (8,811)(6,757)30.4%(24,274)(20,414)18.9%
Financial Results (29,365)(16,356)79.5%(91,071)(25,353)259.2%
Income taxes current and deferred 5,631 (6,482)-186.9%13,391 (19,144)-170.0%
Net Profit  (74,313) 14,467  -613.7% (24,331) 44,194  -155.1%
Net Profit Margin % -15.3%2.9%-18.2 p.p.-1.6%3.6%-5.2 p.p.
Adjusted EBITDA  25,224   44,671  -43.5% 147,923   107,594  37.5%
Adjusted EBITDA Margin % 5.2%8.9%-3.8 p.p.9.7%8.8%0.9 p.p.
Adjusted Net Profit  (7,320) 15,076  -148.6% 45,969   42,683  7.7%
Net Margin % -1.5%3.0%-4.5 p.p.3.0%3.5%-0.5 p.p.
            

Note: (1) The amounts in reais provided by Lavoro have been translated to U.S. dollars for illustrative purposes only. The average exchange rate for the third quarter of 2023 (January to March 2023) was BRL 5.1934 to US$1.00, and for the third quarter of 2022 (January to March 2022) it was BRL 5.2264 to US$1.00. The exchange rate for the six months ended on December 31, 2022, was BRL 5.279 to US$1.00, based on the FX rate on the last day of the period. The exchange rate for the six months ended on December 31, 2021, was BRL 5.5700 to US$L1.00, based on the FX rate on the last day of the period. Source: Refinitiv.
Note: (2) Comprehend sales between Crop Care and Brazil Cluster.
Note: (3) Represents expenses related to the business combination with TPB Acquisition Corp I.

Segment Summary of Fiscal Third Quarter 2023:

Brazil Cluster

Brazil Cluster revenue decreased by 1.3% to $426.5 million, mainly driven by the reduction in grain revenue. Revenue generated from inputs remained consistent with 3Q22. The rise in specialties revenue offset the lower prices for fertilizers and herbicides, which have now returned to historical levels after the supply shortage risk in 2022. The seasonality of input sales also showed a moderate change compared to the previous year but still aligned with Lavoro’s historical averages. Segment gross margin declined by 3.7 percentage points to 12.1%, reflecting the lower margins from herbicides (e.g. glyphosate). Gross margin reduction was partially offset by the increased contribution of specialties in the overall mix of inputs sold.

Brazil Cluster Summary
(US$, Million)
 3Q233Q22Chg. % 9M239M22Chg. %
Revenue Category  426,509   432,106  -1.3%  1,304,928   1,034,733  26.1%
Inputs 372,504 374,246 -0.5% 1,229,516 948,001 29.7%
Grains 54,005 57,859 -6.7% 75,412 86,732 -13.1%
Gross Profit  51,616   68,432  -24.6%  219,732   167,208  31.4%
Gross Margin % 12.1%15.8%-3.7 p.p. 16.8%16.2%0.7 p.p.
             

LatAm Cluster

The LatAm Cluster experienced a 12% decrease in revenue, primarily driven by the devaluation of the Colombian currency. On a constant currency basis (local currency, Colombian peso, COP$), the segment achieved 7.1% growth driven by a 7.9% increase in input revenue, specifically in specialties, crop protection, fertilizers, and corn seeds. Additionally, services revenue, which includes the application of inputs for clients, realized a 22% increase, reflecting Lavoro’s focus on efficiency and profitability through growth in treated acreage and the acquisition of new clients. LatAm Cluster demonstrated improved operational efficiency, driven by a favorable mix of high-margin inputs and an enhanced commercial strategy, which led to a gross margin expansion of 1.9 percentage points to 15.8% in 3Q23.

LatAm Cluster Summary
(US$, Million)
 3Q233Q22Chg. % 9M239M22Chg. %
Revenue Category  48,248   54,847  -12.0%  171,287   156,480  9.5%
Inputs 46,142 52,058 -11.4% 159,881 150,212 6.4%
Services 1,873 1,865 0.4% 5,172 2,621 97.4%
Grains 234 924 -74.7% 6,234 3,648 70.9%
Gross Profit  7,609   7,631  -0.3% 28,535 25,579 11.6%
Gross Margin % 15.8%13.9%1.9 p.p. 16.7%16.3%0.3 p.p.
             

Crop Care

Crop Care segment revenue declined by 13.7% to $17.1 million primarily due to the phasing of biological input sales to the Brazil Cluster, which part of them was moved forward from 3Q23 to the end of 1H23. Gross margin demonstrated significant improvement, rising by 13 percentage points to reach 46.8%. This increase was primarily driven by the 18% revenue growth in specialty fertilizers, a high-margin product, which experienced both volume and price growth. It is worth noting that Crop Care is a high-margin segment, representing 11% of the total Group’s gross profit in 3Q23.

Crop Care Cluster Summary
(US$, Million)
 3Q233Q22Chg. % 9M239M22Chg. %
Revenue   17,054   19,766  -13.7%  110,147   48,936  125.1%
Intercompany4 5,396 7,372 -26.8% 57,063 20,016 185.1%
Gross Profit  7,974   6,664  19.7%  45,755   17,586  160.2%
Gross Margin % 46.8%33.7%13.0 p.p. 41.5%35.9%5.6 p.p.
             

Note: (4) Intercompany revenue comprehends sales between Crop Care and Brazil Cluster.

Recent Business and Commercial Updates

Partnership with Brasilseg to provide rural insurance
On May 3, 2023, Lavoro announced its agreement with Brasilseg, an insurance company and affiliate of the Banco do Brasil group, to offer agricultural insurance solutions to Brazilian farmers. The partnership reflects Lavoro’s expansion strategy, which seeks to implement integrated services aimed at farmers in a market that is still largely unexplored in Brazil. The type of insurance to be offered is called Agrícola Flex, which provides productivity coverage for soybean, corn, and wheat crops. Lavoro will offer insurance products at all its points of sale in Brazil, whether at our retail stores or through on-site visits by our RTVs.

Recent M&As Updates

Closed agreements

Cromo Química
On May 31, Lavoro concluded the acquisition of a majority stake in Cromo Química, a company based in Rio Grande do Sul, in southern Brazil, specializing in the production of high-performance adjuvants for agriculture, focusing on soybean, corn, cotton, and winter crops. The company has a strong presence in the South and Midwest regions of Brazil. The acquisition will be integrated into the Company’s vertically integrated business segment, Crop Care, which operates with biological inputs, specialty fertilizers, and off-patent crop protection products.

Signed acquisitions (Binding MoUs)

NS Agro
As previously announced on August 25, 2022, Lavoro entered into an agreement to acquire an 82% interest in NS Agro, a holding company of agricultural inputs retailers in Chile and Peru, specializing in crop protection and fertilizers.

Due to an extended duration of the diligence process, Lavoro does not anticipate completing the NS Agro transaction by the end of this fiscal year. Given this, the Company believes it is prudent to remove NS Agro from our proforma guidance for 2023. In the meantime, Lavoro remains closely engaged with NS Agro and will provide further updates as appropriate.

Referência Agroinsumos
On February 28, 2023, the Company entered into an agreement to acquire a controlling interest in Referência Agroinsumos. Founded in 2006, Referência has nine distribution locations and more than 80 employees, serving approximately 2,000 customers in the South of Brazil. Referência, which sells inputs of major brands such as Bayer and Corteva, has grown approximately 43% per year in the last four years, opened seven locations in the state, and reported net revenue of approximately BRL 300 million in the 2022 fiscal year. The completion of this acquisition is subject to the usual precedent conditions for this type of transaction, including approval by the regulatory authorities in Brazil.

Pro forma Financial Information5

Consolidated Pro forma
(in US$ million)
 3Q233Q22Chg. % 9M239M22Chg. %
Pro forma Revenue by Segment  486,415   539,075  -9.8%  1,590,606   1,418,471  12.1%
Pro forma COGS (414,516)(446,611)-7.2% (1,296,141)(1,171,792)10.6%
Pro forma Gross Profit  71,898   92,464  -22.2%  294,466   246,679  19.4%
Pro forma Gross Margin 14.8%17.2%-2.4 p.p. 18.5%17.4%1.1 p.p.
Pro forma Operating Expenses  (59,010) (49,684)18.8%  (173,046) (139,097)24.4%
% Pro forma Revenue -12.1%-9.2%-2.9% -10.9%-9.8%-1.1%
Pro forma Adjusted EBITDA  27,013   50,298  -46.3%  154,527   126,955  21.7%
Pro forma Adjusted EBITDA Margin % 5.6%9.3%-3.8 p.p. 9.7%9.0%0.8 p.p.
Pro forma Profit  (74,324) 19,211  -486.9%  (19,038) 57,024  -133.4%
Pro forma Net Margin % -15.3%3.6%-18.8p.p. -1.2%4.0%-5.2 p.p.
             

Note: (5) Pro Forma financial information is calculated assuming the acquisitions occurred at the beginning of the period presented and the prior year (rather than just the partial “stub period” contribution). Pro Forma Revenues represent fully combined revenues, which include revenues from non-controlling minority shareholders.

Full Fiscal Year 20236,7 Guidance

Pro forma Guidance6,7,8Full Year Fiscal 2023
(US$, Million)
Pro forma Revenue1,990 ≤ ∆ ≤ 2,130
Pro forma Adjusted EBITDA172 ≤ ∆ ≤ 178
Pro forma Adjusted EBITDA Margin %8.4% ≤ ∆ ≤ 8.6%
  

Note: (6) Fiscal year starting on July 1, 2022, and ending on June 30th, 2023.
Note: (7) The amounts in reais provided by Lavoro have been translated to U.S. dollars for illustrative purposes only. The exchange rate used was a spot rate of 5.13 for fiscal year 2023.
Note: (8) Pro Forma financial information is calculated assuming the acquisitions occurred at the beginning of the period presented and the prior year (rather than just the partial “stub period” contribution). Pro Forma Revenues represent fully combined revenues, which include revenues from non-controlling minority shareholders.

Pro forma guidance represents (i) the pro forma performance of the Company for FY23 including the full year impact from closed acquisitions. As previously mentioned, the pro forma guidance no longer includes contributions from NS Agro given the delayed completion of the transaction. Excluding the impact of NS Agro, the company anticipates meeting its previous pro forma Adjusted EBITDA guidance.

Consolidated Guidance – Excluding Future M&As6,7Full Year Fiscal 2023
(US$, Million)
Consolidated Revenue1,950 ≤ ∆ ≤ 2,050
Consolidated Adjusted EBITDA154 ≤ ∆ ≤ 159
Consolidated Adjusted EBITDA Margin %7.8% ≤ ∆ ≤ 7.9%

Note: (6) Fiscal year starting on July 1, 2022, and ending on June 30th, 2023.
Note: (7) The amounts in reais provided by Lavoro have been translated to U.S. dollars for illustrative purposes only. The exchange rate used was a spot rate of 5.13 for fiscal year 2023.

The consolidated view accounts for Lavoro’s fiscal year-to-date consolidated reported results, plus an expectation for its to be reported fiscal fourth quarter results (which reflect the lower seasonality inherent in the business). It accounts for Cromo Química’s expected results for the month of June 2023 (one month of acquisition).

Conference Call Details

The Company will host a conference call and webcast to review its fiscal third quarter 2023 results on Thursday, June 1, 2023, at 5:00 pm ET / 6:00 pm BRT.

The live telephonic conference call can be accessed following registration via this link https://edge.media-server.com/mmc/p/ox7iv3gg. The webcast link is also available via: https://ir.lavoroagro.com/disclosure-and-documents/events/. An archived replay of the webcast will also be available shortly after the live event has concluded.

The live audio webcast will be accessible in the Events section on the Company’s Investor Relations website at https://ir.lavoroagro.com/disclosure-and-documents/events/.

Non-IFRS Financial Measures

This press release contains certain non-IFRS financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA Margin. A non-IFRS financial measure is generally defined as a numerical measure of historical or future financial performance, financial position, or cash flow that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. The Company believes these non-IFRS financial measures provide meaningful supplemental information as they are used by the Company’s management to evaluate the Company’s performance, and provide additional information about trends in our operating performance prior to considering the impact of capital structure, depreciation, amortization and taxation on our results, as well as the effects of certain items or events that vary widely among similar companies, and therefore may hamper comparability across periods, although these measures are not explicitly defined under IFRS. Management believes that these measures enhance a reader’s understanding of the operating and financial performance of the Company and facilitate a better comparison between fiscal periods. Adjusted EBITDA is defined as profit for the period, adjusted for finance income (cost), net, income taxes current and deferred, depreciation and amortization, M&A expenses that in management’s judgment do not necessarily occur on a regular basis, fair value of inventories sold from acquired companies, minus gain on bargain purchases, to provide further meaningful information to evaluate the Company’s performance. Adjusted EBITDA Margin is calculated as Adjusted EBITDA as a percentage of revenue for the period. Pro Forma Adjusted EBITDA is defined as pro forma profit for the period, adjusted for pro forma finance income (costs), net, pro forma income taxes current and deferred, pro forma depreciation and amortization, fair value on inventories sold from acquired companies, and M&A expenses that in management’s judgment do not necessarily occur on a regular basis, minus gain on bargain purchases. Pro Forma Adjusted EBITDA Margin is calculated as Pro Forma Adjusted EBITDA as a percentage of pro forma revenue for the period.

The Company does not intend for the non-IFRS financial measures contained in this release to be a substitute for any IFRS financial information. Readers of this press release should use these non-IFRS financial measures only in conjunction with comparable IFRS financial measures. Reconciliations of the non-IFRS financial measures, Adjusted EBITDA, and Pro Forma Adjusted EBITDA, to their most comparable IFRS measures, are provided in the table below.

Reconciliation of Adjusted EBITDA and Adjusted EBITDA Pro forma9,10
         
Reconciliation of Adjusted EBITDA
(US$, Million)
 3Q233Q22Chg. % 9M239M22Chg. %
Net Profit/Loss for the Period  (74,313) 14,467  -613.7%  (24,331) 44,194  -155.1%
(+) Finance income (costs) 29,365 16,356 79.5% 91,071 25,353 259.2%
(+) Income taxes current and deferred (5,631)6,482 -186.9% (13,391)19,144 -170.0%
(+) Depreciation and amortization 6,837 5,453 25.4% 19,733 16,263 21.3%
(+) Fair value of inventories sold from acquired companies 1,974 1,304 51.4% 4,542 4,150 9.4%
(+) M&A expenses11 406 609 -33.4% 1,419 1,774 -20.0%
(-) Gain on bargain purchases12 - - -  - (3,285)-100.0%
(+) Nasdaq Listing expenses¹³ 61,531 - 100.0% 61,531 - 100.0%
(+) Stock Option Plan 103 - 100.0% 2,397 - 100.0%
(+) SPAC bonus 4,954 - 100.0% 4,954 - 100.0%
Adjusted EBITDA  25,224   44,671  -43.5%  147,923   107,594  37.5%
(/) Revenue 486,414 499,347 -2.6% 1,529,300 1,220,133 25.3%
Adjusted EBITDA margin % 5.2%8.9%-3.8 p.p. 9.7%8.8%0.9 p.p.


Reconciliation of Pro forma Adjusted EBITDA
(US$ Million)
 3Q233Q22Chg. % 9M239M22Chg. %
Pro forma Net Profit/Loss for the Period  (74,324) 19,211  -486.9%  (19,038) 57,024  -133.4%
(+) Pro forma finance income (costs), net 31,313 16,613 88.5% 91,494 29,296 212.3%
(+) Pro forma income taxes current and deferred (5,631)6,956 -180.9% (12,567)21,263 -159.1%
(+) Pro forma depreciation and amortization 6,689 5,605 19.3% 19,796 16,733 18.3%
(+) M&A expenses¹¹ 406 609 -33.4% 1,419 1,774 -20.0%
(+) Fair value of inventories sold from acquired companies 1,974 1,304 51.4% 4,542 4,150 9.4%
(-) Gain on bargain purchases12 - - -  - (3,285)-100.0%
(+) Listing expenses¹³ 61,531 - 100.0% 61,531 - - 
(+) Stock Option 103  100.0% 2,397  100.0%
(+) SPAC bonuses 4,954  100.0% 4,954  100.0%
Pro forma Adjusted EBITDA  27,013   50,298  -46.3%  154,527   126,955  21.7%
(/) Pro forma revenue 486,415 539,075 -9.8% 1,590,606 1,418,471 12.1%
Pro forma Adjusted EBITDA margin % 5.6%9.3%-3.8 p.p. 9.7%9.0%0.8 p.p.
             

Note: (9) The amounts in reais provided by Lavoro have been translated to U.S. dollars for illustrative purposes only. The average exchange rate for the third quarter of 2023 (January to March 2023) was BRL 5.1934 to US$1.00, and for the third quarter of 2022 (January to March 2022) it was BRL 5.2264 to US$1.00. The exchange rate for the six months ended on December 31, 2022, was BRL 5.279 to US$1.00, based on the FX rate on the last day of the period. The exchange rate for the six months ended on December 31, 2021, was BRL 5.5700 to US$L1.00, based on the FX rate on the last day of the period. Source: Refinitiv.
Note: (10) Pro Forma financial information is calculated assuming the acquisitions occurred at the beginning of the period presented and the prior year (rather than just the partial “stub period” contribution). Pro Forma Revenues represent fully combined revenues, which include revenues from non-controlling minority shareholders.
Note: (11) M&A expenses primarily include M&A accounting and tax due diligence expenses.
Note: (12) Difference between the fair value of the Union Agro’s net assets and the price paid by the Company, recorded as a gain.
Note: (13) Represents expenses related to the business combination with TPB Acquisition Corp I.

Reconciliation of Adjusted Profit (Loss) 14
         
Reconciliation of Adjusted Profit/Loss
(US$ Million)
 3Q233Q22Chg. % 9M239M22Chg. %
Profit/Loss for the Period  (74,313) 14,467  -613.7%  (24,331) 44,194  -155.1%
(+) M&A expenses15 406 609 -33.4% 1,419 1,774 -20.0%
(-) Gain on bargain purchases16 - - -  - (3,285)-100.0%
(+) Nasdaq Listing expenses17 61,531 - 100.0% 61,531 - 100.0%
(+) Stock Option Plan 103 - 100.0% 2,397 - 100.0%
(+) SPAC bonus 4,954 - 100.0% 4,954 - 100.0%
Adjusted Net Profit/Loss  (7,320) 15,076  -148.6%  45,969   42,683  7.7%
(/) Revenue 486,415 539,075 -9.8% 1,590,606 1,418,471 12.1%
Adjusted Net Profit/Loss margin % -1.5%3.0%-4.5 p.p. 3.0%3.5%-0.5 p.p.
             

Note: (14) The amounts in reais provided by Lavoro have been translated to U.S. dollars for illustrative purposes only. The average exchange rate for the third quarter of 2023 (January to March 2023) was BRL 5.1934 to US$1.00, and for the third quarter of 2022 (January to March 2022) it was BRL 5.2264 to US$1.00. The exchange rate for the six months ended on December 31, 2022, was BRL 5.279 to US$1.00, based on the FX rate on the last day of the period. The exchange rate for the six months ended on December 31, 2021, was BRL 5.5700 to US$L1.00, based on the FX rate on the last day of the period. Source: Refinitiv.
Note: (15) M&A expenses primarily include M&A accounting and tax due diligence expenses.
Note: (16) Difference between the fair value of the Union Agro’s net assets and the price paid by the Company, recorded as a gain.
Note: (17) Represents expenses related to the business combination with TPB Acquisition Corp I.

About Lavoro

Lavoro is Brazil’s largest agricultural inputs retailer and the first in Latin America to be listed on the Nasdaq Stock Market under the “LVRO” and “LVROW” tickers. Through a comprehensive portfolio of products and services, the company empowers farmers to adopt breakthrough technology and boost productivity. Founded in 2017, Lavoro has a broad geographical presence, operating in Brazil, Colombia, and Uruguay, serving about 72,000 customers, through its physical presence, in more than 210 stores distributed in Latin America and with a team of over 1,000 technical sales consultants, and digital, with its marketplace Learn more about Lavoro at ir.lavoroagro.com.

Reportable Segments

Lavoro’s reportable segments are the following:

Brazil Cluster: comprises companies dedicated to the distribution of agricultural inputs such as crop protection, seeds, fertilizers, and specialty products, in Brazil.

LatAm Cluster: includes companies dedicated to the distribution of agricultural inputs outside Brazil (currently primarily in Colombia).

Crop Care Cluster: includes companies that produce and import our own portfolio of private label products including specialty products (e.g., biologicals and specialty fertilizers) and off-patent crop protection.

Lavoro’s Fiscal Year

Lavoro follows the crop year, which means that its fiscal year comprises July 1st of each year, until June 30th of the following year. Given this, Lavoro’s quarters have the following format:

1Q – quarter starting on July 1 and ending on September 30.
2Q – quarter starting on October 1 and ending on December 31.
3Q – quarter starting on January 1 and ending on March 31.
4Q – quarter starting on April 1 and ending on June 30.

Definitions

RTVs: refer to Lavoro’s technical sales representatives (Representante Técnico de Vendas), who are linked to its retail stores, and who develop commercial relationships with farmers.

Forward-Looking Statements

The contents of any website mentioned or hyperlinked in this press release are for informational purposes and the contents thereof are not part of or incorporated into this press release.

Certain statements made in this press 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 words such as “aims,” “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the expectations regarding the growth of Lavoro’s business and its ability to realize expected results, grow revenue from existing customers, and consummate acquisitions; opportunities, trends, and developments in the agricultural input industry, including with respect to future financial performance in the industry. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by any investor as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Lavoro.

These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to, the outcome of any legal proceedings that may be instituted against Lavoro related to the business combination agreement or the transaction; the ability to maintain the listing of Lavoro’s securities on Nasdaq; the price of Lavoro’s securities may be volatile due to a variety of factors, including changes in the competitive and regulated industries in which Lavoro operates, variations in operating performance across competitors, changes in laws and regulations affecting Lavoro’s business; Lavoro’s inability to meet or exceed its financial projections and changes in the consolidated capital structure; changes in general economic conditions, including as a result of the COVID-19 pandemic; the ability to implement business plans, forecasts, and other expectations, changes in domestic and foreign business, market, financial, political and legal conditions; the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; costs related to the business combination and being a public company and other risks and uncertainties indicated from time to time in the proxy statement/prospectus filed by Lavoro relating to the business combination or in the future, including those under “Risk Factors” therein, and in TPB Acquisition Corp.’s or Lavoro’s other filings with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Lavoro currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements.

In addition, forward-looking statements reflect Lavoro’s expectations, plans, or forecasts of future events and views as of the date of this press release. Lavoro anticipates that subsequent events and developments will cause Lavoro’s assessments to change. However, while Lavoro may elect to update these forward-looking statements at some point in the future, Lavoro specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Lavoro’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.


 
Interim condensed consolidated statement of financial position
As of
(In thousands of Brazilian reais - R$, except if otherwise indicated)
 
  March 31, 2023  June 30, 2022 
  Unaudited  Audited 
Assets      
Current assets      
Cash equivalents 739,085  254,413 
Trade receivables 4,679,529  1,794,602 
Inventories 2,133,367  1,749,041 
Taxes recoverable 132,370  93,725 
Derivative financial instruments 101,471  7,677 
Commodity forward contracts 62,463  32,800 
Advances to suppliers 222,064  383,257 
Other assets 58,750  60,165 
       
Total current assets 8,129,099  4,375,680 
       
Non-current assets      
Restricted cash 147,003  1,344 
Trade receivables 60,920  39,751 
Other assets 230  2,473 
Judicial deposits 8,723  3,887 
Right-of-use assets 163,297  140,179 
Taxes recoverable 127,956  50,937 
Deferred tax assets 285,174  200,986 
Property, plant and equipment 175,747  146,205 
Intangible assets 796,757  724,321 
       
Total non-current assets 1,765,807  1,310,083 
       
Total assets 9,894,906  5,685,763 


  March 31, 2023  June 30, 2022 
  Unaudited  Audited 
Liabilities     
Current liabilities     
Trade payables 4,590,284  2,301,700 
Trade payables – Supplier finance 4,918  - 
Lease liabilities 88,463  69,226 
Borrowings 1,334,690  681,217 
Obligations to FIAGRO quota holders 147,119  - 
Payables for the acquisition of subsidiaries 211,517  111,684 
Derivative financial instruments 24,552  7,121 
Commodity forward contracts 144,111  27,038 
Salaries and social charges 215,094  187,285 
Taxes payable 60,699  34,216 
Dividends payable 411  411 
Advances from customers 342,841  320,560 
Other liabilities 123,565  95,893 
      
Total current liabilities 7,288,264  3,836,351 
      
Non-current liabilities     
Trade payables 2,709  - 
Lease liabilities 91,805  86,027 
Borrowings 70,512  29,335 
Payables for the acquisition of subsidiaries 43,485  52,747 
Provision for contingencies 9,856  2,966 
Warrant liabilities 32,459  - 
Liability for FPA Shares 146,674  - 
Other liabilities -  1,119 
Taxes payable 650  - 
Deferred tax liabilities 11,519  7,491 
      
Total non-current liabilities 409,669  179,685 
      
Equity / Net investment     
Net investment from the parent   1,451,647 
Share Capital 591  - 
Additional Paid-in Capital 2,155,391  - 
Capital reserve 12,647  - 
Other comprehensive loss (45,171) - 
Accumulated losses (178,237) - 
Equity attributable to shareholders of the Parent Company / Parent Company's Net investment 1,945,221  1,451,647 
Non-controlling interests 251,752  218,080 
Total equity / net investment 2,196,973  1,669,727 
      
Total liabilities and equity / net investment 9,894,906  5,685,763 


 
Interim condensed consolidated statement of profit or loss
(In thousands of Brazilian reais - R$, except if otherwise indicated)
 
   Three-month period ended
March 31,

  Nine-month period ended
March 31,

 
   2023  2022  2023  2022 
   Unaudited  Unaudited 
          
Revenue  2,526,155  2,609,800  8,032,330  6,624,581 
Cost of goods sold  (2,152,758) (2,166,538) (6,533,610) (5,481,228)
          
Gross profit  373,397  443,262  1,498,720  1,143,353 
          
Operating expenses         
Sales, general and administrative expenses  (303,900) (232,096) (912,221) (697,163)
Other operating (expenses) income, net  (332,235) (16,195) (300,525) 35,001 
          
Operating (loss) profit  (262,738) 194,971  285,974  481,191 
          
Finance Income (costs)         
Finance income  167,112  141,896  324,354  342,312 
Finance costs  (319,618) (227,378) (802,654) (477,909)
          
Profit (loss) before income taxes  (415,244) 109,489  (192,326) 345,594 
          
Income taxes         
Current  (3,618) (29,171) (17,921) (117,836)
Deferred  32,864  (4,707) 88,138  13,432 
          
Profit (loss) for the period  (385,998) 75,611  (122,109) 241,190 
          
Attributable to:         
Net investment of the parent/ Equity holders of the parent  (387,547) 66,604  (178,237) 187,643 
Non-controlling interests  1,549  9,007  56,128  53,547 
          
Earnings (loss) per share         
Basic, profit (loss) for the period attributable to net investment of the parent/ equity holders of the parent  (3.41) 0.58  (1.57) 1.65 
Diluted, profit (loss) for the period attributable to net investment of the parent/ equity holders of the parent  (3.41) 0.58  (1.57) 1.65 


 
Interim condensed consolidated statement of cash flows 
(In thousands of Brazilian reais - R$, except if otherwise indicated)
 
  2023  2022 
  Unaudited  Unaudited 
     
Operating activities:    
Profit (loss) before income taxes (192,327) 345,594 
Adjustments to reconcile profit (loss) for the period to net cash flow:    
Allowance for expected credit losses 39,442  24,066 
Listing expense 319,554  - 
Foreign exchange differences 17,988  (22,184)
Accrued interest expenses 678,894  433,726 
Interest arising from revenue contracts (229,681) (312,913)
Loss (gain) on derivatives (68,278) 35,450 
Other finance loss, net 17,528  6,675 
Fair value on commodity forward contracts 80,964  2,056 
Amortization of intangibles 52,921  43,580 
Amortization of right-of-use assets 38,160  38,284 
Depreciation 12,512  6,850 
Losses and damages of inventories 11,061  8,920 
Share-based payment expense 12,647  - 
Others (3,533) (4,688)
     
Changes in operating assets and liabilities:    
Assets    
Trade receivables (2,592,910) (1,992,828)
Inventories (200,666) (530,739)
Advances to suppliers 161,193  271,725 
Taxes recoverable (115,664) (33,791)
Other receivables (77,216) (12,682)
Liabilities    
Trade payables 1,764,935  1,949,259 
Advances from customers (38,834) (380,324)
Derivative financial instruments (8,085) (2,850)
Salaries and social charges 27,809  59,416 
Taxes payable 41,250  5,408 
Other payables 14,204  (85,489)
     
Interest paid on borrowings (76,159) (19,888)
Interest paid on trade payables, acquisition of subsidiary and lease liabilities (151,026) (263,133)
Interest received from revenue contracts 94,131  214,534 
Income taxes paid (28,173) (101,182)
     
Net cash flows used in operating activities (397,359) (317,148)
       
Investing activities:      
Acquisition of subsidiary, net of cash acquired (121,410) (123,566)
Acquisition of non-controlling interests (87,500) - 
Additions to property, plant and equipment and intangible assets (52,540) (34,389)
Proceeds from the sale of property, plant and equipment 1,289  - 
       
Net cash flows used in investing activities (260,161) (157,955)
       
Financing activities:      
Proceeds from borrowings 1,142,491  377,766 
Repayment of borrowings (624,453) (212,321)
Payment of principal portion of lease liabilities (36,262) (31,166)
Proceeds from FIAGRO quota holders, net of transaction costs 147,119  - 
Trade payables – Supplier finance 4,918  - 
Dividend payments (3,485) (3,376)
Proceeds from SPAC merger 463,909  - 
Capital contributions 60,880  191,895 
       
Net cash flows provided by financing activities 1,155,117  322,798 
       
Net increase (decrease) in cash equivalents 497,597  (152,305)
Net foreign exchange difference (12,924) (427)
       
Cash equivalents at July 1 254,413  459,458 
       
Cash equivalents at March 31 739,085  306,726 

 


Contact

Julian Garrido
julian.garrido@lavoroagro.com

Fernanda Rosa
fernanda.rosa@lavoroagro.com


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