Jalles Machado (JALL3) Q1 2026 earnings summary

Executive summary

• Yield for the first quarter was 5.4% below June guidance and 10% below the average crop yield expected, mainly due to adverse weather and organic sugar crop challenges.

• Gross revenues rose 23.2% year-over-year to R$574.5 million, with adjusted EBITDA up 10.5% to R$269.6 million, despite adverse weather and cost pressures.

• Organic sugar production and exports were significantly impacted by weather, weed competition, and new U.S. tariffs, leading to a shift in production mix toward anhydrous ethanol and strong export growth in organic sugar, up 133.6% to R$96.7 million.

• The company is actively managing costs, liquidity, and hedging strategies to mitigate market and operational risks, with cash and cash equivalents reaching R$1,507.9 million, 2.7x short-term debt.

• Net loss of R$14 million, mainly due to negative biological asset revaluation and higher COGS.

Financial highlights

• Adjusted EBITDA margin dropped to 3.8% from 16.8% year-over-year, with a quarterly loss of BRL 14 million.

• Net revenue increased 25.9% year-over-year to R$505.1 million.

• Net debt rose 9.9% to R$1,850 million; net debt/EBITDA LTM at 1.3x.

• Adjusted EBIT dropped 71.4% to R$19.3 million, mainly due to a R$187.2 million negative change in biological assets.

• Financial results improved to R$149.1 million, driven by positive hedge MTM of R$231.7 million.

Outlook and guidance

• Yield guidance was revised down by 5.4% from June and is now 10% below the original forecast, with cane crushing guidance for 2025/26 revised down to 7.5 million tons.

• Average TRS guidance lowered 1.6% to 137.7 kg/ton; total Capex guidance reduced to R$717.5 million.

• Only 83.5% of installed capacity will be used, with a 1.6% drop in TRS expected.

• Production mix will favor anhydrous ethanol (due to better returns) over conventional sugar.

• Focus remains on operational efficiency, selective capital allocation, and maintaining strategic investments.