Adecoagro´s Adjusted EBITDA reached $109.1 million during 1Q21, marking a record high for the first three months of the year

Rhea-AI Summary

Adecoagro S.A. (NYSE: AGRO) announced robust results for Q1 2021, reporting an Adjusted EBITDA of $109.1 million, a 78.7% year-over-year increase. Key drivers included a 42.1% rise in the Sugar, Ethanol & Energy segment and over 2x growth in Farming and Land Transformation. Adjusted Net Income reached $54.5 million, up 24.4% from the prior year. The company also continued its share repurchase program, acquiring 1.5 million shares at an average price of $7.96 per share, totaling $12 million.

Positive

• Adjusted EBITDA increased by 78.7% year-over-year to $109.1 million, a record high for Q1.
• Adjusted Net Income rose to $54.5 million, marking a 24.4% increase compared to last year.
• The Sugar, Ethanol & Energy segment saw a 42.1% increase in Adjusted EBITDA to $58.2 million.
• Farming and Land Transformation segment adjusted EBITDA surged over 2x to $56.2 million.

Negative

• A $23.8 million loss incurred from the mark-to-market of commodity hedge positions due to rising sugar and ethanol prices.

LUXEMBOURG, May 13, 2021 /PRNewswire/ --  Adecoagro S.A. (NYSE: AGRO, Bloomberg: AGRO US, Reuters: AGRO.K), a leading agro-industrial company in South America, announced today its results for the first quarter ended March 31, 2021. 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 30 for a definition and reconciliation to IFRS of the Non - IFRS measures used in this earnings release.

Main highlights for the period:

• Adjusted EBITDA(3) during 1Q21 was 78.7%  higher than in the same period of last year driven by a 42.1% increase in the Sugar, Ethanol & Energy segment, and an increase of over 2x in the Farming and Land Transformation segment.
• Adjusted Net Income reached $54.5 million during 1Q21, 24.4% higher year-over-year.

Financial & Operational Highlights

• In our Sugar, Ethanol & Energy business, Adjusted EBITDA reached $58.2 million in 1Q21, 42.1%, or $17.2 million higher compared to the same period of last year. Financial results were positively impacted by (i) our strategy of extracting the highest value from our sugarcane and maximizing production of the product with the highest marginal contribution, enabling us to capture high sugar prices during the quarter. Out of the total TRS produced during the quarter, we diverted as much as 40% to sugar production, compared to only 5% in 1Q20, evidencing the high degree of flexibility of our industrial assets and marking a record high for the first quarter considering the inherent seasonality in the content and quality of cane. Financial results were also favored by a (i) lower unitary cost of production as a consequence of a 58.3% increase in crushing volume and enhanced efficiencies at the farm and industry level; (ii) the depreciation of the Brazilian Real, that further contributed to reduce costs measured in U.S dollar; coupled with (iii) a $26.5 million gain derived from the mark-to-market of our biological asset and agricultural produce, out of which $15.0 million is harvested sugarcane and hence, realized margin, while the balance will become cash in the upcoming quarters. This was partially offset by a $23.8 million loss derived from the mark-to-market of our commodity hedge position following the increase in sugar and ethanol prices.
  
  
• Adjusted EBITDA in the Farming and Land Transformation businesses reached $56.2 million in 1Q21, $31.5 million, or over 2x higher year-over-year. The increase was mostly attributable to the Farming business, which registered a year-over-year increase in Adjusted EBITDA of $28.7 million, explained by the $13.2 million higher results in our Rice business, $14.0 million in our Crops business and $1.6 million in our Dairy business.

Adjusted EBITDA in the Rice business during 1Q21 reached $28.3 million, 86.7% higher compared to the same period of last year. This increase was explained by (i) an 11.9% increase in yields and an increase in prices which led to a $13.7 million increase in the mark-to-market of our biological asset and agricultural produce; and (ii) an increase in gross sales driven by higher average selling prices. We were able to achieve these results because for the past years we have focused on three main goals: (i) productivity as the key variable to minimize costs per ton, (ii) grain quality to improve industrial efficiencies coupled with traceability to be used as a commercial tool; and (iii) efficiency throughout the value chain by focusing on synergies at every level. In this line, by carrying out investments to improve logistics and enhance efficiencies at the farm level we were able to achieve higher yields and reduce cost per ton. And by diversifying our product portfolio, offering tailor-made products traceable from field to fork, working on our own genetics and achieving a customer centric view, among others, we have successfully increased our average selling prices and opened doors to new markets.

The Crops business generated an adjusted EBITDA of $17.9 million in 1Q21, more than 4x higher than during 1Q20. Gross sales decreased compared to 1Q20, despite an increase in average selling prices, due to a 43.8% reduction in selling volumes mainly explained by the intensive rains registered during March which led to a lower harvesting progress achieved during the quarter, which has since been resumed with no impact on yields. This was fully offset by (i) a $5.8 million gain in the mark-to-market of our biological assets, driven by an increase in commodity prices especially soybean and corn, despite lower yields and harvested area; and (ii) a $9.0 million cost reduction due to lower volume, enhanced efficiencies and the depreciation of the Argentine peso, which led to a dilution of costs in U.S. dollars.

• Net Income in 1Q21 resulted in a gain of $19.3 million, compared to a loss of $54.4 million recorded during the same period of last year. The $73.8 million increase is mainly explained by the year-over-year increase in EBITDA generation coupled with a lower FX loss. In the case of Brazil, currency depreciation presented a nominal decrease from 28.9% during 1Q20 to 9.6% during 1Q21.
  
  
• Adjusted Net Income in 1Q21 reached $54.5 million, $10.7 million higher than in 1Q20. 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

A solid start to the year

• During 1Q21 Adecoagro achieved solid results both from an operational and financial point of view. Adjusted EBITDA amounted to $109.1 million, 78.7% higher year-over-year, marking a new record high for the first three months of the year. This is the result of the success of the investments we made across all our businesses, which are driving our EBITDA and cash generation. Since we started our 5 Year Plan – back in 2017 – we have invested approximately $400 million in growth projects both in our Farming and SE&E businesses which are generating attractive returns on invested capital, as we projected. Now that the results are in front of us, we expect our operating cash flow to continue increasing going forward. This places us in a position where we feel confident that we will generate enough cash to first distribute to our shareholders and, in addition, to pursue growth opportunities to the extent that projected ROICs are in line with those already achieved.

Share repurchase program update

• As part of our commitment to generate long term value for our shareholders, we have continued our share repurchase program. As of the date of this report we have purchased over 1.5 million shares at an average price of $7.96 per share, totaling $12.0 million. Going forward we expect to continue repurchasing shares, as our buyback program is part of our strategy to return capital to shareholders.

Non-Gaap Financial Measures: For a full reconciliation of non-gaap financial measures please refer to page 30 of our 1Q21 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 1Q21 earnings release, please access ir.adecoagro.com. A conference call to discuss 1Q21 results will be held on May 14, 2021 with a live webcast through the internet:

Conference Call

May 14, 2021
9 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: 101552278

Investor Relations Department
Charlie Boero Hughes
CFO

Juan Ignacio Galleano
IRO
Email: ir@adecoagro.com
Tel: +54 (11) 4836-8624 

About Adecoagro:
Adecoagro is a leading agricultural company in South America. Adecoagro owns over 247 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 1.9 million tons of agricultural products including sugar, ethanol, bio-electricity, milled rice, corn, wheat, soybean and dairy products, among others.

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SOURCE Adecoagro S.A.

FAQ

What is Adecoagro's adjusted EBITDA for Q1 2021?

Adecoagro's adjusted EBITDA for Q1 2021 was $109.1 million, representing a 78.7% increase year-over-year.

How much did Adecoagro report in adjusted net income for Q1 2021?

Adecoagro reported an adjusted net income of $54.5 million for Q1 2021, which is 24.4% higher than the previous year.

What were the main growth drivers for Adecoagro in Q1 2021?

The main growth drivers for Adecoagro in Q1 2021 were the Sugar, Ethanol & Energy segment, which saw a 42.1% increase in adjusted EBITDA, and the Farming and Land Transformation segment, which grew over 2x.

What is the status of Adecoagro's share repurchase program?

As of the report, Adecoagro has purchased over 1.5 million shares at an average price of $7.96 per share, totaling $12 million.

What losses did Adecoagro incur in Q1 2021 related to commodity hedging?

Adecoagro incurred a $23.8 million loss from the mark-to-market of its commodity hedge positions in Q1 2021.