Jalles Machado (JALL3) Q3 2026 earnings summary

Executive summary

• Third quarter of crop year 2025-2026 was marked by challenging weather, crop failure, and lower sugarcane yields, but net income rebounded to R$60.4 million for 9M26, reversing prior losses, with strong hedging and improved financial results supporting margins.

• Adjusted EBITDA for 9M26 reached R$1,023.7 million, up 7.7% year-over-year, and margin expanded to 62%, with EBIT and EBITDA showing significant year-over-year growth.

• Production mix shifted toward ethanol (up to 63.6% in some periods), capitalizing on favorable price parity and market conditions, while sugar prices fell and ethanol prices rose.

• Focus on cost optimization, efficiency gains, and maintaining competitiveness amid sector headwinds, including workforce reduction and establishment of a cost commission.

• Operational and financial highlights included improved sales, market context, and reversal of prior year losses.

Financial highlights

• Net revenue for 9M26 was R$1,661.1 million, down 1.4% year-over-year, while net income for 9M26 was R$60.4 million, reversing a R$42.1 million loss in 9M25.

• Adjusted EBITDA margin reached 62%, with hedge settlements and derivatives gains up 168.6%–182.4% year-over-year, supporting revenue protection.

• Net debt stable at R$1,832.1 million, leverage at 1.2x net debt/EBITDA, and cash position of R$2,060.4 million, covering debt maturities through 2029-2030.

• Cash profit and free cash flow increased year-over-year; average debt cost at CDI +0.0% to +0.1%.

• COGS increased due to crop failure and lower productivity, with 75% of costs fixed.

Outlook and guidance

• Management expects a 5%-10% reduction in unit costs next crop year, contingent on yield recovery and favorable climate outlook.

• 75% of 2026/27 sugar production is hedged at R$2,475/ton, above historical averages, providing margin predictability.

• Ethanol expected to be favored in the production mix early in the crop year, with convergence to sugar later; ethanol price parity projected to increase to 68.3% in 2025/26.

• No formal guidance or buyback program provided; focus remains on cash preservation and essential investments.

• Management projects continued volatility due to market, economic, and sector-specific risks.