São Martinho (SMTO3) Q1 2026 earnings summary

Executive summary

• Net revenue reached BRL 1,857.5 million in 1Q26, up 12.2% year-over-year, driven by strong ethanol performance and higher DDGS sales, despite lower sugar prices and volumes and a 7.6% decrease in sugarcane crushing due to adverse weather.

• Adjusted EBITDA rose 19.7% to BRL 805.0 million, with margin expanding 2.7 p.p. to 43.3% compared to 1Q25.

• Net income declined 40.9% to BRL 62.8 million, impacted by changes in fair value of biological assets and timing of Interest on Equity payments.

• Major CAPEX projects include a new corn ethanol plant and warehouse (R$1.1 billion) and acquisition of 10,600ha of biological assets from Santa Elisa for R$242 million.

• Cash income totaled BRL 157.0 million, up 11.8% year-over-year.

Financial highlights

• Adjusted EBIT was BRL 331.1 million (+7.6% vs. 1Q25), with a margin of 17.8%.

• Cash COGS increased 10.4% year-over-year to BRL 926.6 million, mainly due to higher ethanol sales and increased corn processing costs.

• Financial result (cash) was an expense of BRL 124.8 million (+26.5% vs. 1Q25), driven by higher Selic rates.

• Net debt stood at BRL 4.9 billion as of June 30, 2025, with a leverage ratio of 1.36x Net Debt/Adjusted EBITDA LTM.

• Margin for the period was 17.8%; sugarcane margin was 14.4%, while sugarcane ethanol margin was negative at -2% due to higher costs.

Outlook and guidance

• Total Capex guidance for 2025/26 crop year updated to BRL 3.0 billion, reflecting increased investment in corn ethanol and biological assets.

• Maintenance Capex guidance unchanged at BRL 1,990.5 million.

• Ethanol prices are expected to recover post-crop year, with parity projected to improve to 60-70% by year-end.

• Sugar production in Brazil's center-south is forecasted below market consensus, with management expecting under 39 million tons due to adverse weather and fires.

• Forward-looking statements highlight risks from market, operational, and weather-related factors.