Jalles Machado (JALL3) Q1 2026 earnings summary

Executive summary

• 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 adverse weather, cost pressures, and negative biological asset revaluation; net loss was R$14 million.

• Record daily sugar production at Santa Vitória and strong export growth in organic sugar, up 133.6% to R$96.7 million; VHP sugar export revenue rose 528.5% to R$40.2 million.

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

• U.S. tariffs on organic sugar and adverse weather prompted a shift in production mix toward ethanol and crystal sugar.

• The company is actively managing costs, liquidity, and hedging strategies to mitigate market and operational risks.

Financial highlights

• Adjusted EBITDA margin was 53.4%, down from 60.8% year-over-year; gross margin fell to -20.4% due to higher COGS and negative biological asset revaluation.

• Net loss for the quarter was R$14 million, mainly due to a negative R$187.2 million biological asset fair value adjustment and increased cost of goods sold.

• Net debt increased 6.6% to R$1.85 billion, with net debt/EBITDA LTM at 1.3x and average debt maturity of 4.7 years.

• Financial results improved to R$149.1 million, driven by positive hedge MTM of R$231.7 million.

• Capex totaled R$131.6 million, down 21.1% year-over-year, with focus shifting from expansion to operational improvements and irrigation.

Outlook and guidance

• Cane crushing guidance for 2025/26 revised down 5.4% to 7.5 million tons due to prior drought impacts; average TRS guidance lowered 1.6% to 137.7 kg/ton.

• Mix guidance revised to 51.8% sugar and 48.2% ethanol, reflecting strategic shift and market conditions.

• Capex for the cycle revised to R$717.5 million, down 3.9% from original guidance.

• Only 83.5% of installed capacity will be used, with ongoing cost reduction and efficiency initiatives to partially offset losses.

• Management cautions that outlooks are estimates subject to market, economic, and international risks.