SLC Agrícola (SLCE3) Q3 2024 earnings summary

Executive summary

• Net revenue for 9M24 was R$4.94 billion, down 7% year-over-year, with Q3 2024 revenue stable but impacted by lower prices and volumes in some crops.

• Net income for 9M24 was R$533 million, down 51.1% year-over-year, and turned negative in 3Q24.

• Adjusted EBITDA for 3Q24 was R$463 million (28.4% margin), with 9M24 EBITDA at R$1.43 billion, down 30% year-over-year.

• Planted area for 2024/25 will increase 11% to 734,000 hectares, driven by joint ventures and land leases, with significant expansion in soybeans (+18.2%), corn (+25.9%), and cotton (+1.8%).

• Acquisition of SLC LandCo minority interest for R$524.8 million, enhancing asset strategy flexibility.

Financial highlights

• Net revenue in 3Q24 was R$1.63 billion, down 1% year-over-year; gross margin declined to 17.1% in 3Q24.

• Adjusted EBITDA margin for 3Q24 was 28.4%; 9M24 margin at 28.9%.

• Net debt at R$4.2 billion, up R$1.37 billion from 2023; net debt/EBITDA at 2.00x (up from 1.06x at end-2023).

• Free cash generation was positive at R$147.5 million in 3Q24, but negative R$591.3 million in 9M24 due to lower yields and investments.

• Gross and operational margins declined year-over-year, reflecting margin compression.

Outlook and guidance

• 2024/25 planted area to reach 734,000 ha (+11%); soybean seed sales target for 2025 is 1.4 million bags (+12%), cotton seed 145,000 bags (+1.2%).

• Input purchases for 2024/25 nearly complete; costs per hectare budgeted to fall 5.2% year-over-year to R$6,666.

• For 2025/26, tight margins are expected, with little room for further input cost reductions; profitability will depend on yield and timing of price locks.

• Soybean planting for 2024/25 is 77.5% complete; cotton and corn planting have not started.

• 2025/26 input purchases underway; 80% of potassium chloride acquired, 33.7% of soybeans hedged.