Lavoro (LVRO) Q3 2024 earnings summary

Executive summary

• Q3 revenue rose 6% year-over-year to $514.2 million, driven by strong grains revenue, market share gains, and double-digit volume growth, offsetting input price deflation in Brazil and Colombia.

• Crop Care segment revenue increased 30% to $22.1 million, with biologicals revenue up 53–57% and the segment now representing 22% of year-to-date gross profit.

• Adjusted EBITDA dropped to $3.7 million from $24.8 million, with margin down 440 bps to 0.7%, reflecting gross margin compression and higher operating expenses.

• Net loss for the quarter was $64.8 million, an improvement from $74.3 million loss in the prior year, mainly due to the absence of one-time Nasdaq listing expenses.

• Market share gains were driven by increased share of wallet with existing clients and strategic hiring of agronomists, adding up to $150 million in future net sales potential.

Financial highlights

• Consolidated Q3 revenue rose 6% year-over-year to $514.2 million; 9M24 revenue was $1,615.9 million, up 5% year-over-year.

• Gross profit fell 16% to $60.2 million, with gross margin contracting 310 bps to 11.7% due to input price deflation and a higher mix of low-margin grain revenue.

• Adjusted EBITDA for Q3 was $3.7 million, down from $24.8 million, and for 9M24 was $55.1 million, down 63% year-over-year.

• Net loss for Q3 was $64.8 million; adjusted net loss was $62.7 million, mainly due to lower gross profit and higher finance costs.

• SG&A (excluding D&A) increased 21% year-over-year in Q3 to $60.8 million.

Outlook and guidance

• FY2024 revenue guidance revised to $1.8–$1.95 billion (from $2.0–$2.3 billion); inputs revenue to $1.6–$1.75 billion; Adjusted EBITDA to $46–$55 million.

• Guidance revision driven by delayed farmer purchasing, credit term extensions, and supplier bonuses shifting to next fiscal year.

• Most revenue deferred from Q4 is expected to shift into Q1 of the next fiscal year, not lost.

• For FY2025, the market is expected to decline 10% in value but grow low single digits in volume; company expects to outpace the market and improve gross margins and Adjusted EBITDA.

• Prudent credit policy maintained for clients with outstanding balances.