Adecoagro S.A.: Adjusted EBITDA reached $155.3 million in 3Q23, 27.0% higher year-over-year. Crushing volume at an all-time record. Second installment of the $35 million cash dividend to be paid in November.

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Adecoagro S.A. (NYSE: AGRO) announced its third-quarter results, reporting a 1.6% increase in gross sales, 27.0% rise in Adjusted EBITDA, and 87.6% surge in adjusted net income. The company also shared operational highlights across its Sugar, Ethanol & Energy, Crops, Rice, Dairy & Land Transformation segments. Additionally, it provided updates on shareholder distribution, farmland sale, and independent farmland appraisal report.

LUXEMBOURG, Nov. 13, 2023 /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 third quarter ended September 30, 2023. The financial information contained in this press release is based on consolidated 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 26 for a definition and reconciliation to IFRS of the Non - IFRS measures used in this earnings release.

Main highlights for the period:

• Gross sales were 1.6% higher in 3Q23 and 7.5% higher in 9M23 driven by greater productivity indicators in our Sugar, Ethanol & Energy division, which enabled us to increase our sugar production and execute sales at solid prices; coupled with an increase in average selling prices captured for rice and dairy.
• Adjusted EBITDA presented a year-over-year increase of 27.0% in 3Q23 and 16.4% in 9M23. This was explained by (i) an outperformance of the Sugar, Ethanol & Energy and Rice divisions, coupled with (ii) a farm sale conducted in Argentina. This, in turn, fully offset the decline reported in the Crops division driven by a record drought and higher costs.
• Adjusted net income in 3Q23 was $88.6 million, 87.6% higher than the previous year, while year-to-date it stood at $169.9 million, presenting a 60.3% year-over-year increase.
• Net debt/LTM Adjusted EBITDA of 1.5x, down 29.4% compared to 3Q22 on greater cash generation. Liquidity ratio (3) stood at 1.8x

Financial & Operational Highlights:

Sugar, Ethanol & Energy business

• In 3Q23, we crushed 4.5 million tons of sugarcane, 19.6% higher YoY, and an all-time record for our operations. TRS per hectare increased 31% as a consequence of enhancing the productivity of our sugarcane plantation and better weather conditions. We diverted 49% of TRS to produce sugar, which commanded an average premium of 55% to hydrous ethanol in Mato Grosso do Sul. By solving minor bottlenecks in our sugar kitchen, we were able to operate above nominal capacity and produced a record quarterly volume of 320 thousand tons of sugar. In terms of ethanol, we took advantage of our storage capacity to carry over 250 thousand m3 into the following quarters, to profit from higher expected prices. Results were further positively impacted by lower unitary cost of production driven by better yields and higher TRS production.
• All of the above, contributed to our Adjusted EBITDA, which in 3Q23 reached $114.6 million, 3% higher YoY. Year-to-date, Adjusted EBITDA amounted to $308.2 million, 13% higher YoY, explained by the same drivers.
• Sugar continues to be supported by strong fundamentals and is trading, on average, above 27 cts/lb. We are in an excellent position to profit from this scenario as we remain unhedged in 11% of our expected 2023 sugar production and in 82% of 2024's production (hedged volume at 23.5 cts/lb and 23.8 cts/lb, respectively). In terms of ethanol, we expect prices to recover towards the end of the harvest season, when the storage pressure is over and demand is greater. In the meantime, we are profiting from opportunities in the export market - 25 thousand m3 exported to Europe post 3Q23. Assuming normal weather, we maintain our expectation to increase 2023's crushing volume by 15% compared to 2022. This, in turn, would result in a further reduction in unitary cash cost, due to better dilution of fixed costs.

Crops, Rice, Dairy & Land Transformation

• Adjusted EBITDA totaled $46.7 million in 3Q23, marking a $29.6 million increase YoY. This was mainly explained by the sale of a 6,302 hectare farm in Argentina, which generated an Adjusted EBITDA of $29.8 million during the period. Moreover, our Rice business booked an $8.6 million year over-year gain in Adjusted EBITDA driven by higher average selling prices. As expected, results were partially offset by our Crops business which broke even. Lower crop output, in particular corn silage, also drove a year-over-year decline in Adjusted EBITDA for our Dairy business. However, cow productivity reached an all-time high, and we leveraged on our flexibility to shift processing production to fluid milk for domestic consumption, which continued to offer a higher marginal contribution. During 9M23, Adjusted EBITDA for our segments in Argentina and Uruguay was $89.5 million, 23.3% higher YoY driven by the above mentioned drivers.
• Planting activities for our 23/24 campaign have concluded for our winter crops, and are underway for summer crops and rice. Recent rains registered in all of the productive regions of Argentina and Uruguay allowed for an improvement in soil moisture and a recovery of water reservoirs, favoring the outlook of our Crops and Rice segments. We expect a full recovery in Adjusted EBITDA generation for 2024, as there is no long term impact in our earnings potential from the past dry weather.

Remarks

2023 Shareholder Distribution Update

• Share repurchase during the first ten months of the year amounted to 2.6 million shares (2.4% of the company's equity) at an average price of $9.45 per share, totaling $24.3 million.
• On November 24th, we will make our second cash dividend payment of $17.5 million (approximately $0.1649 per share) to shareholders of the Company of record at close of business on November 9th. The first installment was paid on May 24th in an equal cash amount (approximately $0.1626 per share), resulting in an annual cash dividend of $35 million.

Farmland Sale at Premium to Independent Appraisal

• In September 2023, we completed the sale of El Meridiano farm located in the Province of Buenos Aires, Argentina, for a selling price of $48.4 million ($7,681/hectare) fully collected at the closing date. The selling price represents a 29% premium to Cushman & Wakefield's independent appraisal dated September 30, 2022. The transaction generated an Adjusted EBITDA of $29.8 million.

Independent Farmland Appraisal Report

• As of September 30th, 2023, Cushman & Wakefield (C&W) updated its independent appraisal of Adecoagro's farmland which consists of 213,548 hectares valued at $695.3 million. On a comparable basis, current valuation of our land portfolio represents a year-over-year increase of 0.8%.

Non-Gaap Financial Measures: For a full reconciliation of non-gaap financial measures please refer to page 26 of our 3Q23 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 3Q23 earnings release, please access ir.adecoagro.com. A conference call to discuss 3Q23 results will be held on November 14, 2023, with a live webcast through the internet:

Conference Call

November 14, 2023 
10 a.m. US EST 
12 p.m. Buenos Aires 
12 p.m. Sao Paulo 
4 p.m. Luxembourg

To participate, please register at the link   

Investor Relations Department

Emilio Gnecco  
CFO

Victoria Cabello
IRO

Email: ir@adecoagro.com

About Adecoagro:

Adecoagro is a leading sustainable production company in South America. Adecoagro owns 213.5 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 2.8 million tons of agricultural products and over 1 million MWh of renewable electricity.

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SOURCE Adecoagro S.A.

FAQ

What are Adecoagro's financial highlights for the third quarter?

Adecoagro reported a 1.6% increase in gross sales, 27.0% rise in Adjusted EBITDA, and 87.6% surge in adjusted net income.

What are the operational highlights for Adecoagro's Sugar, Ethanol & Energy business?

The company achieved record sugarcane crushing, increased TRS per hectare, and a 3% rise in Adjusted EBITDA.

What are the operational highlights for Adecoagro's Crops, Rice, Dairy & Land Transformation segments?

The company marked a significant increase in Adjusted EBITDA, driven by a farm sale in Argentina and higher average selling prices for rice, partially offset by lower crop output and a decline in Adjusted EBITDA for the Dairy business.

What updates did Adecoagro provide on shareholder distribution?

The company repurchased 2.6 million shares and announced a second cash dividend payment of $17.5 million.

What details did Adecoagro share about its farmland sale and independent farmland appraisal report?

The company completed the sale of El Meridiano farm at a premium to independent appraisal and updated its farmland valuation, showing a 0.8% increase on a comparable basis.