BrasilAgro Companhia Brasileira de Propriedades Agrícolas : 1Q24 Earnings Release

Earnings Release

1Q24

	Conference Call
November 08,2023	Portuguese
	(with simultaneous translation into English)
10 a.m (Brasília Time)
08 a.m (NY Time)	Click here to participate

EARNINGS RELEASE 1Q24

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São Paulo, November 7, 2023 - BrasilAgro (B3: AGRO3) (NYSE: LND) announces its consolidated results for the quarter ended September 30, 2023 ("1Q24"). The consolidated information is prepared in accordance with the International Financial Reporting Standards (IFRS).

1Q24 Highlights

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(R$ thousand)	1Q24	1Q23	Change
Revenues from Operations	271.759	298.324	-9%
Revenues from Farm Sales	413	1.481	-72%
Net Sales Revenue	272.172	299.805	-9%
Variation in the fair value of biological assets	(7.519)	15.721	n.a.
Net Revenue¹	264.653	315.526	-16%
Adjusted EBITDA from Operations	23.053	106.241	-78%
Adjusted EBITDA Margin from Operations (%)	8%	36%	-27 p.p.
Adjusted EBITDA²	23.424	107.143	n.a.
Adjusted EBITDA Margin (%)	9%	34%	-25 p.p.
Net Income from Operations	29.613	41.100	-28%
Net Operating Margin (%)	11%	14%	-3 p.p.
Net Income	29.985	42.002	-29%
Net Income Margin (%)	11%	13%	-2 p.p.

• Net Revenue: Considers the change in fair value of biological assets and agricultural product and Impairment.
• Adjusted EBITDA was calculated by excluding biological assets in progress (sugarcane and grains planted) and adjusted for the harvest's derivative results and depreciation expenses, including depreciation of fixed assets of the farms, developed areas and permanent crops.

23/24 Harvest Estimates - Review

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Planted area per culture (hectare)	22/23 Harvest	23/24 Harvest	Change	23/24 Harvest	Change
Realized	Estimated	(%)	Projected	(%)
Grains	89.523	108.201	21%	105.742	-2%
Soybean	65.772	74.996	14%	78.678	5%
Corn and Corn 2nd Crop	20.293	26.623	31%	17.463	-34%
Bean 2nd Crop	3.457	6.582	90%	9.601	46%
Sugarcane	27.586	25.758	-7%	25.700	0%
Pasture	16.080	15.374	-4%	15.374	0%
Cotton	7.142	7.074	-1%	7.172	1%
Other	28.443	29.284	3%	25.775	-12%
	168.774	185.691	10%	179.763	-3%

MESSAGE FROM MANAGEMENT

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We began the 2023/24 crop year with net income of R$30.0 million, net margin of 11%, and adjusted EBITDA of R$23.4 million, with net margin of 9%, reflecting the net revenue of R$272.2 million.

The decrease in net income compared to the same period last year, from R$42.0 million in 1Q23 to R$30.0 million in 1Q24, reflects the decline in commodity prices, especially soybeans, corn, and sugarcane, which costs still high, compressing operating margins. This impact was partially offset by the adjustment of the fair value of receivables from farm sales in the period.

The macroeconomic scenario remains uncertain, with the conflicts between Russia/Ukraine and Israel/Hamas, we remain attentive to the possible impacts on input prices. Until today, we have already made 81% of the purchases of inputs. Based on this, we moved forward with the hedging of 23/24 grains. On September 30, we had 49% of soybeans and 45% of corn volume sold.

The agribusiness scenario, on the other hand, was impacted by a super harvest of soybeans and corn, which put pressure on the premiums of these commodities, causing a high impact on prices, especially corn. As a result, we rethought the Company's planting strategy and changed the product mix for the 23/24 harvest. To mitigate operational losses, we reduce the corn area (1st and 2nd crop) by 9,200 hectares, this reduction was partially offset by an increase in soybeans and beans areas, crops that have better margins.

By the end of this release, we had planted 35% of the soybeans in the optimal planting window. The weather forecast continues to indicate a moderate El Niño year, with a higher point of attention in the Bahia region, due to the long-term drought forecast.

We have already delivered 1,6 million tons of sugar cane from the 2023 harvest, with emphasis on harvesting in the Midwest where we had good productivity. By the end of the harvest, we must deliver 2.1 million tons, in line with the estimate.

The Shareholders Meeting held on October 24 approved the distribution of R$320.0 million in dividends, equivalent to R$3.21 per share, corresponding to dividend yield of 13%, reaffirming our commitment to generating returns for our shareholders.

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1Q24

Despite the challenges, we are confident of delivering good results in yet another cicle of agricultural production with crop 23/24, proud of our contribution to one of the most attractive sectors of the country's economy. We continue with the protagonism, working in the search for new opportunities for growth and generation of value not only for investors and stakeholders, but for the whole society.

André Guillaumon, CEO of BrasilAgro

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1Q24

Property Portfolio

The Company's property portfolio comprises 273,486 hectares across five Brazilian states, as well as in Paraguay and Bolivia.

LOCATION	TOTAL AREA (ha)	ARABLE AREA (ha)
	Owned	Leased	Owned	Leased
Brazil	144.732	59.092	98.217	59.092
Bahia	86.241	-	61.142	-
Maranhão	17.566	15.000	10.137	15.000
Mato Grosso	12.224	30.623	6.188	30.623
Minas Gerais	24.212	-	17.846	-
Piauí	4.489	13.469	2.904	13.469
Bolivia	9.875	1.065	7.925	1.065
Paraguay	58.722	-	33.555	-
Total	213.329	60.157	139.697	60.157
Total (Owned + Leased)	273.486		199.854

The current mix of the production area, which includes owned and leased land, enables greater flexibility in portfolio management and reduces volatility in operating cash flow.

	22/23	Participation (%)	23/24	Participation (%)
Owned	217.737	78%	213.329	78%
Leased	60.157	22%	60.157	22%
Total Area	277.894	100%	273.486	100%
Owned	142.899	70%	139.697	70%
Leased	60.157	30%	60.157	30%
Total Area	203.056	100%	199.854	100%

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1Q24

OPERATIONAL PERFORMANCE

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The table below shows the projected planted area in the 2023/24 crop year by region.

Crop	BA	MA	MT	PI	Brasil	Bolivia	Paraguay	Total
Ratoon Cane	-	15.500	4.737	-	20.237	2.529	-	22.766
Plant Cane	-	1.872	683	-	2.555	380	-	2.934
Soybean	18.302	7.168	27.912	14.821	68.203	3.125	7.350	78.678
Corn	794	-	-	1.352	2.146	498	2.067	4.711
Corn 2nd Crop		1.075	10.605	1.072	12.752	-	-	12.752
Bean	4.692	-	-	-	4.692	-	-	4.692
Bean 2nd Crop	957	-	3.952	-	4.909	-	-	4.909
Cotton	1.458	-	-	-	1.458	-	2.223	3.681
Cotton 2nd Crop	1.461	-	2.029	-	3.490	-	-	3.490
Others	16.890	-	875	-	17.765	4.785	3.225	25.775
Agricultural Total	44.554	25.615	50.792	17.245	138.207	11.317	14.865	164.389
Pasture	10.519	-	700	-	11.219	-	4.155	15.374
Grand Total	55.073	25.615	51.492	17.245	149.425	11.317	19.021	179.763

Due to the high volatility in corn price, which compressing the margins, we changed the mix of planted area. To mitigate operational losses, we reduce the corn area (1st and 2nd crop) by 9,200 hectares, this reduction was partially offset by an increase in soybeans and beans areas, crops that have better margins.

As a result, we plan to reduce the planted area by 3% compared to the initial estimate. In comparison to the last season, the total planted area grew 6.5%.

Production Area by Crop (ha)

23/24 Harvest

(projected)

		14%
4%
9%	179.763	44%
		hectares
14%
		5% 10%
	Soybean			Corn and Corn 2nd Crop
	Bean 2nd Crop			Sugarcane
	Pasture			Cotton
	Other

23/24 Harvest

(projected)

38%

179.763

hectares 55%

7%

Operated by BrasilAgro Leased to third parties Leased area

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1Q24

Status of the Operation

Operation Schedule

1Q

2Q

3Q

4Q

Jul

Ago

Set

Out

Nov

Dez

Jan

Fev

Mar

Abr

Mai

Jun

Soybeans

Planting

Crop

Corn

Planting

Crop

Corn 2nd Crop

Crop

Planting

Beans

Planting

Crop

Beans 2nd Crop

Planting

Crop

Cotton

Crop

Planting

Cotton 2nd Crop

Crop

Planting

Sugarcane

Crop

Planting

Crop

Grains and Cotton

Production per product (tons)	22/23 Harvest	23/24 Harvest	Change	23/24 Harvest	Change
Realized	Estimated	(%)	Projected	(%)
Soybean	204.606	248.471	21%	248.471	0%
Corn	53.700	60.853	13%	29.521	-51%
Corn - 2nd Crop	69.628	102.566	47%	72.062	-30%
Beans	2.057	5.631	n.a.	5.631	0%
Beans - 2nd Crop	1.957	2.221	13%	5.715	n.a.
Cotton	13.345	13.546	2%	13.789	2%
Cotton - 2nd Crop	8.795	12.740	45%	12.740	0%
Total	354.088	446.028	26%	387.929	-13%

With the change in the planted area mix, we estimate a reduction of 13% in our grain and cotton production in relation to the initial estimate disclosed last quarter.

So far, we have planted 35% of the soybean crop. Note that we have already planted 71% of soybean in Mato Grosso, within an optimum planting window, with the Jataí Farm already having completed 95% of the planting.

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1Q24

Sugarcane

	2022 Harvest	2023 Harvest	Change	2023 Harvest	Change
Sugarcane Harvest Year Result	Realized	Estimated	Realized
(%)	(%)
	(Apr/01 to Dec/31)	(Apr/01 to Dec/31)	(Apr/01 to Sep/30)
Tons harvested	1.941.421	2.121.691	9%	1.624.127	-23%
Hectares harvested	24.857	25.178	1%	18.059	-28%
TCH - Harvest tons per hectares	78,10	84,27	8%	89,93	7%

Unlike other crops, the sugarcane crop spans from April to December. By September 30, 2023, we had harvested 1,600 tons of sugarcane, corresponding to 89.96 tons of cane per hectare (TCH).

Below is the current status of the sugarcane harvest. We should conclude the harvest by the end of November.

Harvest Area	Production (thousand
(hectares) until nov/23	tons) until nov/23

96%

96%

25.178 Hectares

2.121,7 Tons

Cattle Raising

Cattle Raising	22/23 Harvest	23/24 Harvest	Change	23/24 Harvest	Change
Realized	Estimated	(%)	Realized	(%)
Hectares	16.080	15.374	-4%	14.715	-4%
Number of heads	21.652	20.164	-7%	20.740	3%
Meat production (kg)	2.572.377	2.918.317	13%	310.064	-89%
Weight Gain per Day	0,61	0,56	-9%	0,26	-54%
Weight Gain per hectare	160	190	19%	21	-89%

Cattle raising is a transitory activity for the Company, aimed at land transformation. We have an inventory of 20,700 head of cattle over 14,715 hectares of active pasture in Brazil and Paraguay.

Note that the first four months of each crop year historically register lower weight gain, due to the distribution of rainfall and availability of pasture.

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1Q24

Production Cost

23/24 Breakdown Production Cost (%)	Soybean	Corn	Corn -	Beans	Cotton	Sugarcane	Cattle
2nd Crop	Raising
Variable costs	79%	78%	89%	88%	92%	64%	50%
Seeds	15%	18%	22%	1%	14%	0%	0%
Fertilizers	25%	31%	31%	13%	25%	10%	0%
Defensives	16%	13%	9%	30%	27%	6%	0%
Agricultural services	20%	14%	22%	25%	23%	40%	0%
Fuels and Lubricants	2%	3%	4%	5%	0%	9%	0%
Maintenance of machines and instruments	0%	0%	0%	0%	0%	0%	8%
Animal Feed	0%	0%	0%	0%	0%	0%	35%
Others	1%	0%	1%	14%	3%	0%	7%
Fixed costs	21%	22%	11%	12%	8%	36%	50%
Labor	5%	4%	3%	6%	3%	3%	30%
Depreciation and amortization	3%	2%	2%	3%	3%	11%	13%
IFRS 16 and leasing	12%	15%	5%	2%	1%	16%	0%
Others	1%	1%	1%	1%	1%	5%	8%

Production Cost (R$ / ha)	22/23 Harvest	23/24 Harvest	Change	23/24 Harvest	Change
Realized	Estimated	(%)	Projected	(%)
Soybean(1)	5.753	4.956	-14%	4.886	-1%
Corn(1)	5.771	4.918	-15%	4.680	-5%
Corn 2nd Crop	4.267	3.312	-22%	3.528	7%
Beans	3.713	2.835	-24%	2.871	1%
Beans 2nd Crop	2.706	1.943	n.a.	2.076	7%
Cotton	9.169	8.258	-10%	8.227	0%
Cotton 2nd Crop	14.154	10.399	-27%	10.865	4%
Sugarcane	10.065	10.113	0%	10.085	0%
Others (2)	768	1.494	95%	481	-68%

(1) includes area opening amortization

(2) Others: sesame and quinoa

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1Q24

FINANCIAL PERFORMANCE

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The consolidated financial statements were prepared and are presented in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board.

SEASONALITY

The agribusiness sector presents seasonality throughout the harvest year, especially due to the cycles of each crop and the development of crops that depend on specific climatic conditions. Consequently, the Company's operating revenues are also seasonal, as they are directly related to the crop cycle. Furthermore, the commercial strategy adopted in each harvest also has a seasonal effect and a direct impact on the Company's results. In the first and second quarters (July to December) there is a lower concentration in net revenue from grains and cotton. Sugarcane, on the other hand, has a more linear distribution during exercise.

EBITDA and Adjusted EBITDA

EBITDA is presented under the accounting standards, based on Net Income adjusted for interest, taxes, depreciation and amortization.

Adjusted EBITDA was calculated excluding gains from biological assets in formation (sugarcane and grains), adjusted by the realized gains/losses on derivatives and depreciation expenses, including depreciation of the farms' fixed assets, depreciation of the developed areas and depreciation of the permanent crop.

EBITDA (R$ thousand)	1Q24	1Q23	Change
Net Income	29.985	42.002	-29%
Interest	(36.858)	(49.458)	-25%
Taxes	(8.109)	20.246	n.a.
Depreciations and amortizations	31.663	25.339	25%
EBITDA	16.681	38.129	-56%
Adjusted EBITDA (R$ thousand)	1Q24	1Q23	Change
Net Income	29.985	42.002	-29%
Interest	(36.858)	(49.458)	-25%
Taxes	(8.109)	20.246	n.a.
Depreciations and Amortizations	31.663	25.339	25%
Other operating income/expenses, net	1.859	(3.853)	n.a.
Elimination of the effects of gains on biological assets (grains and	7.519	(18.299)	n.a.
sugarcane planted)
Accomplish Fair Value - Biological Asset	(6.010)	86.577	n.a.
Derivatives Results	3.375	4.589	-26%
Adjusted EBITDA	23.424	107.143	-78%

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1Q24