Terra Santa Propriedades Agrícolas (LAND3) Q2 2024 earnings summary

Executive summary

• Net revenue for Q2 2024 was R$17.8 million, down 28.5% year-over-year, mainly due to a 32% drop in the fixed soybean price for the 2023/24 crop cycle, with land lease, sustainable forestry, and property rentals as main contributors.

• Q2 2024 ended with a net loss of R$694 thousand, compared to a net profit of R$5.4 million in Q2 2023.

• EBITDA for Q2 2024 was R$6.5 million, down 59.8% from Q2 2023, with EBITDA margin dropping 28.3 percentage points to 36.4%.

• April 2024 saw receipt of R$67.7 million from the main lease contract, used for debt amortization, dividend payments, and operational commitments.

Financial highlights

• Consolidated net revenue for H1 2024 was R$34.1 million, a 31.6% decrease year-over-year.

• Gross profit for Q2 2024 was R$16.6 million, down from R$23.7 million in Q2 2023, with gross margin at 93.2%.

• Operating expenses rose 28.5% year-over-year to R$10.9 million in Q2 2024, mainly due to higher third-party services, personnel, management remuneration, and provisions for civil contingencies.

• Financial result was a net expense of R$6.5 million in Q2 2024, up 27.9% year-over-year, mainly due to higher financial expenses and negative FX/derivatives results.

• Net income for H1 2024 was R$5.7 million, down from R$13.6 million in H1 2023.

Outlook and guidance

• 80% of 2024/25 crop lease revenue is hedged against currency fluctuations via NDF contracts, with no direct price fixing yet.

• Management is advancing the sale of a rural property, expected to close by Q3 2024.

• The company continues to monitor market conditions for future price fixing and hedging strategies.