Jalles Machado (JALL3) Q1 2027 earnings summary

Executive summary

• Operational improvements led to higher harvested area (+2.5%), yield (+7.4%), and milling volume (+10.1%) year-over-year for 1Q27, with a production mix shift toward ethanol and robust inventory build-up strategies.

• Hedging strategies delivered R$112.2 million in settled gains, supporting margins amid volatile sugar and ethanol prices.

• Net revenue and profits declined sharply due to lower sales volumes and weaker prices, with net loss widening to R$74.1 million from R$14.0 million year-over-year.

• Cash and financial investments increased to R$1,640.3 million, maintaining strong liquidity despite negative free cash flow.

• The company operates three industrial units with a combined sugarcane processing capacity exceeding 8.5 million tons per harvest.

Financial highlights

• Adjusted EBITDA surged 149.9% to R$277.0 million, with margin up 24.3 p.p. to 79.1%, despite lower revenue and sales volumes.

• Adjusted EBIT rose 149.7% to R$66.7 million (margin +14.3 p.p.), driven by settled FX and sugar hedges.

• Net loss for the quarter was R$74.1 million, compared to a net loss of R$14.0 million in the same quarter last year.

• Cash and equivalents cover maturities through 2029/30 crop year; average debt term is 5.0 years.

• Free cash flow was negative R$127.8 million, reflecting seasonal inventory build-up and lower operating cash generation.

Outlook and guidance

• Ethanol-oriented production mix expected to continue, leveraging storage capacity and market timing, with hedges in place at favorable price levels.

• Guidance for crushing remains positive, with first quarter volumes exceeding expectations and potential for upward revision.

• Commercial strategy remains focused on pricing discipline, profitability, and long-term customer relationships amid global sugar market uncertainties.

• Decision on corn ethanol investment deferred to next year, pending market and political developments.

• Management expects improved results at the Santa Vitória unit as sugarcane production increases and the production mix is optimized.