Jalles Machado (JALL3) investor relations material

Executive summary

• First quarter of crop year 2025/2026 began with yields 5.4% below guidance and 10% below average, mainly due to adverse weather and organic crop challenges, resulting in a net loss of R$14 million.

• Gross revenues rose 23.2% year-over-year to R$574.5 million, with adjusted EBITDA up 10.5% to R$269.6 million, despite cost pressures.

• Record daily sugar production at Santa Vitória and organic sugar export revenue up 133.6% to R$96.7 million.

• The company shifted its production mix toward anhydrous ethanol due to better returns and market conditions.

• U.S. tariffs on Brazilian organic sugar are expected to reduce exports and impact cash flow by R$20–25 million.

Financial highlights

• Adjusted EBITDA for the quarter was R$269.6 million, with a net loss of R$14 million due to negative biological asset revaluation and higher COGS.

• Adjusted EBIT margin dropped to 3.8% from 16.8% year-over-year.

• Net debt rose 9.9% to R$1,850 million; net debt/EBITDA LTM at 1.3x.

• Production costs rose 18.4% due to lower yields and crushing volumes, though cash costs decreased 1% after adjustments.

• Cash and cash equivalents reached R$1,507.9 million, 2.7x short-term debt, reflecting robust liquidity.

Outlook and guidance

• Yield and cane crushing guidance for 2025/26 was reduced by 5.4% to 7.5 million tons, with TRS per hectare down 1.6%.

• CapEx guidance reduced by R$40 million to R$717.5 million, with further cost-saving measures in crop management and equipment replacement.

• Management expects gradual recovery in yields, contingent on weather, with investments in irrigation and technology to support future growth.

• Focus remains on operational efficiency, selective capital allocation, and maintaining strategic investments.

• Sugar mix revised up by 2.2 p.p. to 51.8%, ethanol mix revised down by 2.2 p.p. to 48.2%.