SLC Agrícola (SLCE3) Q3 2024 earnings summary

Executive summary

• Net revenue for 9M24 was R$4.94 billion, down 7% year-over-year, mainly due to lower soybean and corn yields and prices, despite record cotton yields and expanded planted area.

• Adjusted EBITDA for 9M24 reached R$1.43 billion, a 30% decrease year-over-year, with margin at 28.9%. Net income for 9M24 was R$533 million, down 51% from 9M23.

• Free cash flow was negative R$591 million in 9M24, impacted by lower crop yields and investments in expansion, but positive R$147.5 million in 3Q24 due to seasonal cash conversion.

• Planted area for 2024/25 is forecast at 734,000 ha, up 11% from 2023/24, with significant expansion in joint ventures and leased areas.

• Advanced hedging: 99.6% of 2023/24 soybean, 96.4% corn, and 85.8% cotton production hedged; for 2024/25, 63.6% of soybean, 44% of cotton, and 18% of corn production hedged.

Financial highlights

• Gross margin declined to 35.6% in 9M24 (from 46.8% in 9M23); adjusted EBITDA margin at 28.9% (down from 38.3%).

• Net margin was 10.8% in 9M24 (down from 20.5% in 9M23); net loss in 3Q24 was R$17.3 million.

• Cash generation was positive at R$147.5 million in 3Q24, but negative R$591.3 million for 9M24.

• Net debt rose to R$4.2 billion, with Net Debt/Adjusted EBITDA at 2.00x, up from 1.06x at end-2023.

• Selling and administrative expenses increased in 3Q24, mainly due to higher cotton volumes and modernization investments.

Outlook and guidance

• Planted area for 2024/25 will reach 734,000 hectares (+11%), with cost per hectare budgeted at R$6,666, a 5.2% decrease from the previous year.

• Soybean seed sales target for 2025 is 1.4 million bags (+12% YoY); cotton seed target is 145,000 bags (+1.2% YoY).

• Input purchases for 2024/25 nearly complete; 2025/26 input purchases underway with 80% of potassium chloride acquired and 33.7% of soybeans hedged.

• Growth strategy targets 5% annual expansion, with flexibility to accelerate based on market opportunities.

• Soybean planting for 2024/25 is 77.5% complete; cotton and corn planting have not started.