Adecoagro´s Adjusted EBITDA reached $437.1 million in 2021, 27.8% higher year-over-year, while net sales exceeded $1 billion.

Rhea-AI Summary

Adecoagro S.A. (NYSE: AGRO) reported significant financial results for the year ended December 31, 2021. Gross sales reached $1.1 billion, a 33.5% increase year-over-year. Adjusted net income for 2021 stood at $156.8 million. The company announced a minimum dividend distribution of $35 million in 2022, alongside a share repurchase of 6.2 million shares. Additionally, Adecoagro plans to acquire rice production operations in Uruguay for approximately $18 million, aiming for an annual Adjusted EBITDA contribution of $10 million.

Positive

• Gross sales increased by 33.5% year-over-year to $1.1 billion.
• Adjusted net income in 2021 was $156.8 million, marking a significant gain.
• Adjusted EBITDA for Sugar, Ethanol & Energy was $334.9 million, a 31.9% improvement.
• Plans to distribute $35 million in dividends in 2022.
• Acquisition of rice operations expected to contribute $10 million to Adjusted EBITDA annually.

Negative

• Higher cash costs increased by 33.4% year-over-year to 10.5 ct/lb.
• Challenging weather conditions reduced yields by 13.3%, impacting overall production.
• Expectations of below-average agricultural productivity in the first half of 2022.

LUXEMBOURG, March 14, 2022 /PRNewswire/ -- Adecoagro S.A. (NYSE: AGRO, Bloomberg: AGRO US, Reuters: AGRO.K), a sustainable production company in South America, announced today its results for the year ended December 31, 2021. The financial information contained in this press release is based on audited condensed 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 38 for a definition and reconciliation to IFRS of the Non - IFRS measures used in this report.

 Main highlights for the period:

• Gross sales reached $1.1 billion in 2021 and $320.5 million in 4Q21, marking a year-over-year increase of 33.5% and 32.3%, respectively.
  
  
• Adjusted Net Income registered a gain of $156.8 million in 2021 and $56.9 million in 4Q21, reporting a year-over-year increase of $25.0 million and $26.6 million, respectively.
  
  
• Adjusted Free Cash Flow from Operations amounted to $152.1 million in 2021, resulting in a minimum distribution of $60.8 million to be paid in 2022 via dividend and share repurchase.

Financial & Operational Highlights

Sugar, Ethanol & Energy business

• Adjusted EBITDA in our Sugar, Ethanol & Energy business reached $334.9 million in 2021, 31.9%, or $81.1 million higher compared to 2020. In spite of the challenging weather scenario which led to a reduction in yields of 13.3% and an early end of harvesting activities, the reduction in total crushing volume was only 1.5% year-over-year. We successfully crushed 10.9 million tons of sugarcane thanks to our ongoing strategy of expanding our sugarcane plantation, which enabled us to add 15.5% of more area. Price scenario for sugar, ethanol and energy continued to improve throughout the year as the market factored in the impact of the dry weather in Center-South Brazil, the frost and fire events. We were able to capture the high prices favored by our low hedging commitments at the beginning of the season, which granted us the flexibility to continuously maximize the product with the highest marginal contribution. In this line, 62% of total TRS produced was diverted to ethanol, especially anhydrous ethanol which traded on average at a 9.2% premium to sugar.
  
  
• During 2021 adjusted EBITDA was positively impacted by (i) a $149.2 million year-over-year increase in net sales mainly driven by an increase in the price of all three products, coupled with (ii) a $38.3 million year-over-year gain in the mark-to-market of our harvested cane led by a 54.0% increase in Consecana prices. It is worth highlighting that due to the fact that 95% of crushed volume is own cane, every time Consecana´s price increases our agricultural margin improves. These positive effects were partially offset by an increase in cost mostly explained by (i) the above mentioned increase in harvested area and (ii) an increase in the price of fertilizers, fuel and lubricants among other inputs, coupled with a lower depreciation of the Brazilian Real. Higher fertilizer costs, in turn, were partially offset by the use of concentrated vinasse. Total cash cost in 2021 stood at 10.5 ct/lb, 33.4% higher compared to 2020. EBITDA price reached 16.4 ct/lb, resulting in a 5.9 ct/lb margin. During the year we generated $3.7 million from the sale of over 500 thousand carbon credits under the Renovabio program.
  
  
• Going forward we expect to resume crushing activities in March 2022, and use this short interharvest period to perform maintenance programs. We foresee below average agricultural productivity indicators during the first semester of the year. However, a recovery in productivity towards the second semester along with strong prices should continue to drive solid results. We are in a good position to continue to capture the increase in prices as 76% of our expected sugar production and 100% of ethanol production related to the 22/23 campaign remain unhedged. In addition, carry-over stocks into 2022 amounted to $79.9 million, marking a 2.3x year-over-year increase, led by our view of higher expected prices.

Farming & Land Transformation businesses

• Adjusted EBITDA in the Farming and Land Transformation businesses was $123.8 million for the fullyear, marking a 15.8% or $16.9 million year-over-year increase. All segments outperformed 2020's EBITDA generation except for Land Transformation since we did not conduct any farm sale during the year. Key drivers that contributed to this growth include (i) constructive price scenario; (ii) increase in harvested area; (iii) higher yields especially in the Rice segment which marked a record-high of 7.8 Tn/ Ha; and (iv) an increase in milk production in our Dairy business as we continue to increase our cow herd and maintain high productivity levels in our four free-stalls.

Net Income & Adjusted Net Income

• Net Income during 4Q21 was positive at $58.8 million, marking a 24.2% or $11.4 million year-over-year increase compared to 4Q20. The 28.7% reduction in Adjusted EBITDA generation was fully offset by a higher income tax benefit coupled with lower D&A. On an annual basis, net income resulted in a gain of $130.7 million, compared to the $1.1 million reported in the previous year. The large increase is mainly explained by the $95.2 million year-over-year increase in Adjusted EBITDA generation and a decrease of $99.9 million in Financial results, driven by the reduction in the nominal depreciation of both the Brazilian Real and Argentina Peso.
  
  
• Adjusted Net Income reached $56.9 million during 4Q21 and $156.8 million during 2021, $26.6 million and $25.0 million higher year-over-year, respectively. Adjusted Net Income excludes: (i) any non-cash result derived from bilateral exchange variations, (ii) any revaluation result 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

• The company announces the distribution of dividends in the amount of $35 million to be paid in two installments of $17.5 million each, on or about May and November 2022. Such dividend distribution is subject to the approval of the annual shareholder meeting to be held on April 20th.
  
  
• The dividend is part of the company's distribution policy announced in November 2021 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.
  
  
• In addition, during 2021 we repurchased 6.2 million shares under our existing share buyback program, totaling $55.5 million net of the issuance of restricted share, representing 51% of 2020's NCFO.

Adecoagro to acquire high quality rice operations in Uruguay

• Adecoagro signed an agreement to acquire the rice production operations in Uruguay and Argentina owned by certain subsidiaries of Viterra Limited. The operations are conducted through four rice processing and storage plants in Uruguay and one in Argentina. The assets acquired will include all biological assets and inventories of processed and rough rice. The acquisition is subject to the satisfaction of customary closing conditions, including the receipt of certain government approvals in Uruguay, which are still pending as of the date of this release.
  
  
• The price, subject to certain adjustments, amounts to approximately $18 million payable in three annual installments, and contemplates the assumption of financial debt for an amount of approximately $20 million, to be finally determined at closing. Under current price scenario we believe the transaction will generate a very attractive IRR, and expect contribution to our Adjusted EBITDA of $10 million per year.
  
  
• Uruguayan rice is internationally recognized as being of the highest quality standards. The expansion of Adecoagro's rice business into Uruguay will provide geographic diversification and hence contribute to mitigate weather risk, bring logistics synergies, increase our current capacity by 230 thousand tons (150 thousand in Uruguay and 80 thousand in Argentina) totalizing 580 thousand tons; and expand our product portfolio by incorporating high quality Uruguayan branded rice, and therefore access to new markets.

Non-Gaap Financial Measures: For a full reconciliation of non-gaap financial measures please refer to page 38 of our 4Q21 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 4Q21 earnings release, please access ir.adecoagro.com. A conference call to discuss 4Q21 results will be held on March 15, 2022 with a live webcast through the internet:

Conference Call

March 15, 2022 09 a.m. US EST
10 a.m. Buenos Aires 10 a.m. Sao Paulo
2 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: 10158085

Investor Relations Department
Charlie Boero Hughes
CFO

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

About Adecoagro:

Adecoagro is a sustainable production company in South America. Adecoagro owns over 220 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 were Adecoagro's gross sales in 2021?

Adecoagro's gross sales reached $1.1 billion in 2021.

When will Adecoagro distribute dividends?

Adecoagro plans to distribute $35 million in dividends in two installments in 2022, subject to shareholder approval.

What is the adjusted net income for Adecoagro in 2021?

The adjusted net income for Adecoagro in 2021 was $156.8 million.

What is the significance of the rice operations acquisition in Uruguay?

The acquisition is expected to contribute $10 million to Adecoagro's Adjusted EBITDA annually.

How did weather affect Adecoagro's production?

Weather conditions in 2021 led to a 13.3% reduction in yields.