Adecoagro approved a cash dividend of $35 million. Net sales in 1Q22 of $201 million, 18.1% higher year-over-year

Rhea-AI Summary

Adecoagro S.A. (NYSE: AGRO) reported its Q1 2022 results with net income soaring to $65.2 million, a 3.4x increase year-over-year, while adjusted EBITDA fell by 20.8% to $86.5 million, primarily due to lower yields and prices in its rice segment. The company declared a cash dividend of $35 million, payable in two installments, with $17.5 million on May 17, 2022. Additionally, Adecoagro's strong performance in sugar and ethanol sales helped offset some losses from the agricultural sector, particularly rice, which suffered due to adverse weather.

Positive

• Net income increased to $65.2 million, 3.4x higher YoY.
• Declared a cash dividend of $35 million, reinforcing shareholder value.
• Strong sales in sugar and ethanol boosted financial performance despite lower overall adjusted EBITDA.

Negative

• Adjusted EBITDA decreased by 20.8% to $86.5 million due to reduced yields and prices in the Rice business.
• Farming and Land Transformation business saw a 36.6% decline in adjusted EBITDA, largely due to losses in the Rice segment.

LUXEMBOURG, May 12, 2022 /PRNewswire/ -- Adecoagro S.A. (NYSE: AGRO, Bloomberg: AGRO US, Reuters: AGRO.K), a leading sustainable production company in South America, announced today its results for the first quarter ended March 31, 2022. The financial information contained in this press release is based on unaudited condensed consolidated interim financial statements presented in US dollars and prepared in accordance with International Financial Reporting Standards (IFRS) except for Non - IFRS measures. Please refer to page 27 for a definition and reconciliation to IFRS of the Non - IFRS measures used in this earnings release.

Main highlights for the period:

• Adjusted EBITDA reached $86.5 million in 1Q22, 20.8% lower year-over-year driven by lower yields and prices in the Rice business. Adjusted EBITDA in the Sugar, Ethanol & Energy business was flattish year-over-year despite lower crushing, on account of strong sales.
  
  
  
• Net income reached $65.2 million during 1Q22, 3.4x higher year-over-year.

Financial & Operational Highlights

Sugar, Ethanol & Energy business

• Adjusted EBITDA in our Sugar, Ethanol & Energy business reached $57.3 million in 1Q22, only 1.5% lower compared to 1Q21. Crushing volume during 1Q22 amounted to 0.3 million tons as we resumed harvesting activities in our Cluster in mid-March, following a short interharvest period. Despite the lower production volume, our commercial strategy to carry-over 153 thousand m3 of ethanol and 23 thousand tons of sugar from 4Q21 into 1Q22 enabled us to benefit from attractive prices of ethanol and sugar. Strong ethanol prices continued during April, supported by the delay in the Center-South's beginning of harvest, and we were able to capture them by selling our remaining ethanol stocks in addition to our monthly production. During April we made a monthly record sale of 125 thousand cubic meters comprised of 70% hydrous ethanol and 30% anhydrous at an average price of 26.4 cts/lb sugar equivalent (6.7 cts/lb higher than the average price for sugar).
  
  
  
• Operational results achieved are not an indication of our expectation for the full year. As anticipated in past releases, we expect crushing volume during 2022 to be in line with 2021 but concentrated towards the second semester, as our plantation continues to recover from 2021's adverse weather. In line with this strategy, during 1Q22 we focused on harvesting reform areas mainly related to 5th cut and above, with limited growth potential. This enabled us to (i) maximize ethanol (97% mix) and capture attractive prices; (ii) allow sugarcane areas with greater potential to continue to grow; and (iii) liberate area to plant new cane that will be harvested next season. The improvement in cane availability and the positive outlook in terms of productivity favored by above average rainfalls during March and April, will allow us to continue to take advantage of the constructive price scenario. We believe we are in a solid position to benefit from this due to our low sugar commitments (38% hedged) which grants us the flexibility to continuously maximize the product with the highest marginal contribution.

Farming & Land Transformation businesses

• Adjusted EBITDA in the Farming and Land Transformation business amounted to $35.6 million in 1Q22, marking a 36.6% or $20.6 million decrease compared to 1Q21. Despite the good performance of the Crops and Dairy businesses, the decline was mainly explained by a lower contribution from our Rice business. Lower rice prices at the time of harvest coupled with lower yields as a consequence of La Niña weather effect, resulted in a $16.3 million year-over-year loss in the valuation of our biological asset and agricultural produce.
  
  
  
• In May, we closed the acquisition of Viterra's rice operations in Uruguay and Argentina, as reported in our past release. We believe this transaction will enhance the performance of our Rice business, as it will contribute Uruguayan branded rice and a better mitigation of weather risk, in addition to providing further commercial and logistics advantages.

Net Income & Adjusted Net Income

• Net Income amounted to $65.2 million during 1Q22, marking a year-over-year gain of $45.8 million. This was mostly explained by the effect of foreign exchange. In the case of Brazil, the domestic currency appreciated 15.1% during 1Q22, compared to a 9.6% depreciation during 1Q21.
  
  
  
• Adjusted Net Income in 1Q22 reached $14.7 million, $39.8 million lower than in 1Q21. Adjusted Net Income excludes, (i) any non-cash result derived from bilateral exchange variations; (ii) any revaluation resulting from the hectares held as investment property; (iii) any inflation accounting result; and includes (iv) any gains or losses from disposals of non-controlling interests in subsidiaries whose main underlying asset is farmland (the latter is already included in Adj. EBITDA). We believe Adjusted Net Income is a more appropriate metric to reflect the Company´s performance.

Remarks

Distribution update

• Our Annual Shareholder Meeting held on April 20th approved a cash dividend distribution of $35 million to be paid in two installments of $17.5 million each. The first installment represents approximately $0.1571 per share and will be paid on May 17th, 2022 to shareholders of the Company of record at close of business of May 2nd, 2022. The second installment shall be payable in or about November 2022 in an equal cash amount. A Luxembourg withholding tax of 15% will be applied to each installment of the gross cash dividend distribution amount.
  
  
  
• In addition, year-to-date we have repurchased 1.5 million shares under our existing share buyback program, totaling $11.6 million.
  
  
  
• Dividend distribution and share repurchases are part of the company's distribution policy, which consists of a minimum distribution of 40% of the Adjusted Free Cash Flow from Operations (NCFO) generated during the previous year. In 2021, we generated $152.1 million of NCFO.

Pioneers in the commercialization of renewable natural gas certificates

• In early April, Adecoagro officially became the first company in Brazil to commercialize renewable natural gas certificates. Gas-recs, as they referred to in the market, attest to the production of renewable natural gas (non-fossil). In this line, industries in Brazil can voluntarily purchase these credits to decarbonize the gas consumed in their operations. The sale involved 25 thousand certificates to Metso Outotec, at a unit price of 1.80 BRL.
  
  
  
• In 2022 our biogas unit in Ivinhema (Mato Grosso do Sul) will be generating 1 gas-rec for every 1 million Btu produced (approximately 30m3 of methane), used both in our industrial process to generate steam, or in its conversion to biomethane.
  
  
  
• We are proud to be the first movers in a market that rewards sustainable operations, as was the case in 2020 when we kickstarted the commercialization of carbon credits under the RenovaBio program.

Non-Gaap Financial Measures: For a full reconciliation of non-gaap financial measures please refer to page 27 of our 1Q22 Earnings Release found on Adecoagro's website (ir.adecoagro.com)

Forward-Looking Statements: This press release contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry.  These forward-looking statements can be identified by words or phrases such as "anticipate," "forecast", "believe," "continue," "estimate," "expect," "intend," "is/are likely to," "may," "plan," "should," "would," or other similar expressions. 

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect.  Our actual results could be materially different from our expectations.  In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this press release might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above.  Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release.  We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

To read the full 1Q22 earnings release, please access ir.adecoagro.com. A conference call to discuss 1Q22 results will be held on May 13, 2022 with a live webcast through the internet:

Conference Call

May 13, 2022
09 a.m. US EST
10 a.m. Buenos Aires
10 a.m. Sao Paulo
3 p.m. Luxembourg

Participants calling from the US: Tel: +1 (844) 435-0324 
Participants calling from other countries: Tel: +1 (412) 317-6366
Access Code: Adecoagro

Conference Call Replay
Participants calling from the US: Tel: +1 (877) 344-7529
Participants calling from other countries: Tel: +1 (412) 317-0088
Access Code: 9810624

Investor Relations Department
Charlie Boero Hughes
CFO

Victoria Cabello
IRO
Email: ir@adecoagro.com
Tel: +54 (11) 4836-8651 

About Adecoagro:
Adecoagro is a leading agroindustrial company in South America. Adecoagro owns 219.8 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 2.7 million tons of agricultural products and over 1 million of MWh of bio-electricity.

View original content:https://www.prnewswire.com/news-releases/adecoagro-approved-a-cash-dividend-of-35-million-net-sales-in-1q22-of-201-million-18-1-higher-year-over-year-301546522.html

SOURCE Adecoagro S.A.

FAQ

What was Adecoagro's net income for Q1 2022?

Adecoagro reported a net income of $65.2 million for Q1 2022.

What is the dividend amount declared by Adecoagro?

Adecoagro declared a cash dividend of $35 million.

When will the first installment of Adecoagro's dividend be paid?

The first installment of $17.5 million will be paid on May 17, 2022.

What factors contributed to the decline in Adecoagro's adjusted EBITDA?

The decline was mainly driven by lower yields and prices in the Rice business.

What are the highlights from Adecoagro's Q1 2022 earnings report?

Highlights include a net income of $65.2 million, adjusted EBITDA of $86.5 million, and strong performances in sugar and ethanol.