Lavoro (LVRO) Q1 2025 earnings summary

Executive summary

• Q1 2025 consolidated revenue declined 13% year-over-year to R$2.05 billion, mainly due to input price deflation and a 23% drop in Brazil Ag Retail, partially offset by 68% growth in Crop Care and 4% in LATAM Ag Retail.

• Gross profit rose 10% to R$321.2 million, with gross margin expanding 320 basis points to 15.6%, driven by improved distribution margin in Brazil Ag Retail.

• Adjusted EBITDA declined 5% to R$54.4 million, impacted by higher SG&A, personnel costs, and inventory provisions.

• Net loss widened to R$267.1 million from R$71 million in Q1 2024, mainly due to deferred tax asset changes and higher finance costs.

• Inventory shortages in Brazil retail operations during November and December impacted product availability for the critical soybean crop window.

Financial highlights

• Consolidated revenue was R$2.05 billion, a 13% year-over-year decline (24% in USD), mainly due to input price deflation and currency depreciation.

• Gross profit increased 10% to R$321.2 million, with gross margin expanding 320 basis points to 15.6%.

• Adjusted EBITDA margin improved to 2.7% from 2.4% year-over-year.

• Adjusted Profit/Loss was a loss of R$48.5 million in 1Q25 vs. R$8.8 million in 1Q24.

• Net loss increased significantly, mainly due to deferred tax asset changes and higher finance costs.

Outlook and guidance

• FY2025 consolidated net revenue is now expected between R$6.5–7.5 billion (USD 1.12–1.28 billion), with Inputs revenue at R$5.9–6.9 billion (USD 1.02–1.18 billion), and no anticipated Adjusted EBITDA growth versus 2024.

• Management expects cost-saving initiatives and store consolidations (~70 stores in Brazil to close by year-end FY25) to benefit results in the second half of the fiscal year.

• Forecast assumes an average USD/BRL exchange rate of 5.90 for the remaining three quarters.

• Farmer sentiment and profitability are improving, with expectations for a strong soybean and corn crop supporting future liquidity.

• Guidance was revised downward due to inventory financing disruptions in Brazil.