Jalles Machado (JALL3) Q1 2025 earnings summary

Executive summary

• Achieved 4.7% year-over-year growth in sugarcane crushing and productivity, with the Jalles unit leading at 13% TCH growth, outperforming sector averages.

• Sugar and ethanol prices remained above historical levels, supporting a constructive outlook, though lower sugar sales and a more ethanol-focused mix reduced net income.

• Strategic ethanol stockpiling and expanded hedging positions were adopted to capitalize on expected price improvements and higher parity with gasoline.

• Santa Vitória plant began sugar production in late June and is ramping up as planned.

• Interim financial statements reviewed by KPMG for the quarter ended June 30, 2024, with no material misstatements identified.

Financial highlights

• Adjusted EBITDA reached R$243.9 million (60.8% margin), down 10.1% year-over-year; EBIT improved to R$68.7 million, but net loss was R$2.4 million versus a R$49.5 million profit in 1Q24.

• Net revenue fell 9.8% year-over-year to R$401.3 million, mainly due to lower sugar sales and prices.

• Gross margin improved to 42.7% from 25.6% year-over-year.

• Net debt increased 7.4% year-over-year to R$1,567.3 million; net debt/EBITDA LTM at 1.4x, up from 1.1x in 1Q24.

• Cash and equivalents at R$1,317.2 million, covering 6.1x short-term debt; average debt maturity at 4.8 years.

Outlook and guidance

• Sugar and ethanol prices are expected to remain strong, with a higher sugar mix anticipated as Santa Vitória ramps up; ethanol margins expected to improve with Petrobras' gasoline price adjustment.

• Guidance for 8.23 million tons of sugarcane crushing across three units is confirmed, but productivity may decline next quarter due to a higher share of first-cut cane.

• Strategic ethanol inventory and hedging positions are maintained to benefit from anticipated off-season price increases.

• Cash generation is projected to be strong, sufficient to fulfill expansion commitments without increasing debt.

• Production cost per ton is expected to remain stable, with input prices decreasing and workforce costs rising.