AgroGalaxy Participações S.A. (AGXY3) Earnings Call Transcript & Summary

[Interpreted] Hello, and welcome to the video conference of the results of the first quarter of 2024 for AgroGalaxy. I want to thank the market for coming and those who are here of us in another results call. [indiscernible] here of our CEO today. My name is Flavia Alves Costa, and we also have our CFO with us. This video conference is being called and will be made available on ir.agrogalaxy.com.br where you'll see the full material of our results call. It's also possible to see and download the information on the chat. After the call, we will open for questions and answers. [Operator Instructions] We would like to say that the information in this presentation as well as declarations made throughout the video conference about business perspectives, financial and operational goals for AgroGalaxy constitute the beliefs and premises of the company as well as the information that's currently available. Future considerations are not assurances that things will go our way. They involve risk, uncertainty and our premises or predictions. So they depend on the macroeconomic scenario, which may or may not occur. Investors [ did ] understand that other operational factors may affects AgroGalaxy's performance and [ conduct to ] information, which is different than what is shared. With that I will pass the word to Axel, so he can start our presentation.

[Interpreted] Thank you, Flavia. Welcome to the results call for the first quarter of 2024. Before we start off our presentation, a first comment about the climatic and humanitarian crisis in Rio Grande do Sul. Our prayers and thoughts are with the 2,000 AgroGalaxy collaborators that are also thinking of their families, colleagues and friends that are suffering the situation. We are confident that the country will improve and things will slowly -- the country will do what needs to be done and things will improve slowly. Our hearts, minds and thoughts and prayers are with you. Let's go to our highlights then, AgroGalaxy highlights. I would like to remind you of the priorities that have been defined in 2023. Those continue to be the priorities that direct the agenda of our collaborators in 2024. The first pillar is to start with improving the margins of the company. The second pillar is cutting costs to keep our structure lighter, more agile and a structure which can answer to the farmers' needs more dynamically. The third point in this period of readjusting agro business is focusing on the diligence of protecting cash flow and besides the difficulties that we're facing in agro, which have been a bit more intense because of capital costs [indiscernible]. So let's talk about the highlights for this first quarter. Here, you'll see some of the fruits that we have gathered in the first month of 2024 when compared to 2023. So 2024 quarter when compared to 2023, the category with highest margins for AgroGalaxy presented a growth of 73 percentage points growing from [indiscernible]. Specialties continue to be our registered brand of the company, focused not only our sales team, so that through managing our mix, where we have categories at cost, better returns on investment, we can then improve the general margin of the company. It's also important that I mention that aligned with this focus on the expansion of categories, which give us higher margin, we are also decreasing the specific way of fertilizers, which besides a better return on investment, better margins, needs to have a more intense use of the working capital on the company. So what does this bring when we consider together with the effects on the gross margin inputs? Gross market input, as you can see, had a small increase from 2023 to 2024, going from 15.1% to 15.6% in 2024 first Q. And in a context that you will be able to see on the next slide where producers are decreasing investment to try to face this need for greater productivity, efficiency, and AgroGalaxy has been able to protect its margins as well as increase them aligned with what we have announced in some of the quarters of 2024. Part of this health that we are working to achieve by improving margins, also improving the predictability and robustness of our revenue when we consider the returns from the first quarter of 2024, where we have seen growth in [indiscernible]. So when we compare it to 2023, we have been able to deliver more than 65% of BARDA requests in the first quarter of 2024, this besides helping us to manage margins where the focus of farmers is much more in the BARDA relationship but also allows us to receive the contracts and have a more robust understanding of what is happening. And expecting the margins for the next quarters. Just to remind you and highlight on the 6th of February, we concluded the process we began in second quarter of 2023 in the strategy of access to market besides working to save and have a lighter weight company. The main intention is to be a more agile company and understand that the Brazilian market has many markets within it, thus making the end-consumers more autonomous, the end-users more autonomous. So we were able to go from 8 units to 5 net [indiscernible] distribution, eliminating 2 organizational layers. We went from a 7-layer -- and the executive leadership of the company. So in the first quarter of 2023 when compared to the first Q of 2024, this reflects a BRL 40 million of savings of administrative sales considering amortization and depreciation, and this represents 21% of reduction of the amount in 2023. So more specifically on the issue of our working capital, which is the third pillar and access of our strategic agenda at AgroGalaxy, when we compare the stock of our pesticides with AgroGalaxy for the quarter of 2023 and 2024, we have a reduction of our stocks in almost 50%, which puts us in a very favorable position. Now we start rebuilding our stock so we can -- or in a situation that's favorable for buying products at the lowest cost possible and contributing to rebuilding the margin. I would like to -- before passing the word to Eron, remind you a bit of the market context we are currently undergoing. What is the market's perspective? Let's remember that in the first quarter of the year 2024 the predominant culture in Brazil is the off-season harvest corn, this is usually planned at the second quarter of the last year. So the second quarter of 2023 is when the harvest for -- well, planting happens in January to March. And then there are some regions where planting or sowing will happen in the second quarter, but it's important to understand how the farmers plan their off-season harvest, how they're managing their off-season harvest, and how this will affect the industry's performance. On the lines that you can see here, you'll see the level of sales, [ soy ] sales for each harvest as well as the off-season harvest. So you can see that 48% of soy grains had been sold in Brazil, very much aligned with what 2022 and 2023 meant, with significant delay when compared to the cross-service of 2021, 2022, 2023, which means that farmers are being very precautious. They're being very careful about when is the best moment for the barter so they can maximize the grains, monetize and invest in the '24-'25 cost of harvest, which takes us to the interpretation at this moment. The farmer is trying to recompose their margins as we'll see. We'll continue to work, aiming to find the best moment to monetize those grains. When we look more specifically to the issue of the off-season harvest, remember that in the second quarter of 2023, there was a barter process for corn, which was one of the worst in the recent history. Usually, [ corn crop ] culture is a crop that helps to recompose cash flow. As you'll see, the profitability of corn is at a very low level and farmers planned and worked to plan for their off-season harvest when considering climate irregularities where most of Brazil, especially in the [ Sehato or Savana ] seasons, we have 3 different seasons, which were highly impacted by climate instability and which affected not only soy but also corn. As you know, this off-season harvest, corn implantation decreased 9%, which directly affects the off-season harvest 2024. Here, you can see the historic perspective for soy and corn, the prices of grains and the average profitability of farmers. So as you can see to the left of the graph, even though prices for soy in the last 2 harvests are above the historic [ series ] of '19, '20, '17, '16 because of this radical change from '21 to '22 to 2023, '24, farmers' profitability is much lower. So this process started in 2023. We call it an adjustment, but it's a process and period, which continues to be the case. So with soil for a lower impact than in corn, on to the right, you'll see that today, where our profitability, average profitability in Brazil that can be compared to the worst years in '17 and '18, where the price of the corn grains are a bit better than in that time, but besides the need to equate capital cost that were conducted in '22 and [ '23 ]. So climate costs, capital costs and profitability, capitalize the predominant agenda in 2024, which as a consequence of that, we can see a significant drop of investment, which you can see in this bar chart as the level of technology. So the money in reais invested per each hectare for each crop. As you can see here, when we look at the numbers, the good news is that the trend for improvement continues. Why does this continue? Well, because the focus on productivity for producers in Brazil, for farmers is the best thing that can possibly be done. So how many bags more [indiscernible] can I get? So even though from '22 to '23, a technological index or investment per acre has decreased in '23 to '24. When we compare this to the past harvest, the technological index continues to be on the high. Once the process of adjustment, which will probably be extending to the end of the year and once farmers are able to balance their debt, recompose their margins, investment in technological investment index to improve productivity, quality and growth will once again adjust. Just to back up this theory that the process of recovery will probably start in the second quarter, I'd like to say 2 things. First of all, probability of the La Nina climate effect have been increasing. So this is beneficial to Brazil somehow. But when we look at this relationship with exchange, probably one of the biggest, most important metrics for farmers today. Ehen you look at soy to the left, you'll see that we're already in relationships coming near those in the years where profitability was better. So 2021 and the past. So we're optimistic in terms of planning and investments that farmers will do for the '24-'25 harvest moving forward. And while in corn, we're talking about still high exchange relations, which take us to conclude that this '24 off-season harvest is low profitability harvest and harvest where producers and farmers continue to look for efficiency, austerity and also explains the transition from the off-season corn to other crops, demand lower investment and may also help to soften the cash flow [indiscernible]. So I'm going to now pass the word to Eron, he can go into the specific details of this first quarter '24 and then I'll come back with the expectations for the rest of the year.

[Interpreted] Axel, thanks for passing the word to me. Let me give you some information on results from the first quarter. But first, I think I can start with a backdrop. So I want to talk about profitability here, but I was looking that -- I [ think ] that we have competitors, I have banks, I have investors, I have journalists participating in this call. So we have a very wide audience. And I think everyone that knows agro business knows that after the poor off-season we detected in the end of the year, the profitability levels of this quarter would obviously be below any other year. So Axel mentioned this very well. We're talking about decreasing of stability for producers. We're also talking about profitability levels, which affected the plantable area, so for us the numbers in the first quarter are not surprising. They backup what we know was happening. Also important to see that the efforts AgroGalaxy has employed since last year. So we're prepared for a smaller year. We've re-dimensioned the company, and you'll see this when I show you the numbers. We continue to keep which -- those which are the 3 fundamental pillars of our management, focus on equal margins be it through managing prices or the mix or -- and you'll see that in what I'm saying. We continue to work based on expenses. We concluded our process of resizing and expenses are there quarter-by-quarter, we see a decrease in costs, the full year effect and also we've been working strongly on our risk capital and our working flow cash so that we can -- our receivables and accounts payable can be balanced. So you can look here at net revenue. Net revenue is lower than first quarter last year. So you can see here the numbers. And it's important to tell 2 different stories. The first story is that there was a drop in inputs, BRL 176 million. This drop, 29% is because of volume. What is volume? Better off-season harvest. So we sold less because the off-season harvest was poorer [ and farmers didn't ] invest as much. I think that's a tonic of the market because of all of the interactions that we've had of our suppliers. That's what we understand. Unfortunately, those numbers are going to be there for everyone. But what's our advantage? We're ready for that. Another important component was price reductions in the first quarter last year. We still had inflated prices for fertilizers. And here, the price effect, we have 26.9% drop [indiscernible] [ grains ] even though you can see that [indiscernible] effects have had good news. We grew 2.5% reminding you that this harvest is a drop in grains because of the last effect. AgroGalaxy has shown a growth of grain. So that's basically because of the price of commodities, price of grains, as you can see on the screen. When we look at the detail, when we look at the mix, which is what will show up on the next slide, so I would ask you to focus on 2 points of this mix. So this is part of our mix of last year. Now we're dropping to 24.9%. So what -- does that mean that we're taking our fee off of fertilizers from 29.5% to 24.9%? No, we are focusing our sales teams to sell fertilizers in packages. So it only makes sense to sell fertilizers if you're selling the full package because then in the mix, you can make on margin. So that reduction is much more the focus of the sales team to sell these packages, mainly packages in terms of exchange relationships. This is a positive point. And we'll have to improve our margins. Another important point, which has been told in the last few quarters is the increase in expertise, I guess, to 11.5% in this quarter and of last year. The challenge is to remember 2 producers [indiscernible] profitability. So they invest more -- [Foreign Language] Gross margin is margin plus inputs, so part of our operation is [indiscernible] and here you'll see the gross margin of inputs and shows you one more time the increase of margin and percentage from 15.1% to 15.6%, improving mix, as we've shown you, price control and a better partnership with our suppliers. If you look at our consolidated gross margin [ grains ] plus inputs, there's a drop of 9.2% to 6.2%. And that is not -- it's nothing more than the mechanical effect that grains maintained in profitable levels, important relevant levels of profitability. And there was a drop in the inter-season harvest, as I mentioned. Since inter-season harvest has a big margin, as I mentioned, this mix is what brings this mechanical drop to 6.2%. Focus here, 15.6% better margins than last year. First, our management and resales controlling margin. And in here, we show that it's very well controlled. Next [ axis ] is expenses and costs. Expenses and costs, in the next slide, you'll see in the quarter, a reduction of BRL 40 million because when compared to the same period last year. So you can add what we've been presenting quarter-by-quarter here. We are walking towards the -- we have the full year effect. We can have over BRL 200 million in economy and SG&A. So this shows how prepared we are for what happened in the first quarter here. When we decided in the past to adapt the structure, decrease the amount of layers, the idea was to have a resilient company that could be resilient enough for the inter-season [ off-season ] from '23 to '24. It's important that I say that we've reduced a lot of people. We are -- we off-boarded 300 people. So 12 months ago. Our team is now 300 people less. This was done in a coordinated, organize, well thought out way, without in any way disturbing the day to day. We gained speed and also productivity. Next slide you'll see what the EBITDA looks like. And what's important to consider here -- even though we were able to increase margins, cut costs, $40 million in savings, there is no miracle. We are resellers, resellers need to profit. And this drop in profit of our users will take us -- will bring EBITDA to a negative layer, which is a [indiscernible] -- so lower expenses, margin increase. It's perfectly well thought -- what happens is that the market needs to do its part. And we have signs that the market is coming back. So the relationship between -- is coming back to levels close to [indiscernible] and the business starts moving. So, producers come with business models and our base of sales and selling margin is [ done ]. So we have this impact in EBITDA. I think it's important to show that the gap in EBITDA -- is the same gap we have for adjusted losses. So we continue to maintain control over the financial expenses of the next slide, which shows that -- I'll talk about net debt soon, but I first want to finish showing the third pillar here. So let's go to [indiscernible] In this quarter, I'm sure you know our presentation, I show you always the table to the right, which is a working cash flow to the left. I don't show the consolidated one. But first [indiscernible] month, it will be important to consolidate one because in inputs, we today have a negative cash flow of BRL [ 21 ]. We are financing externally. And you'll see that we have deadlines for paying suppliers, which increased to 349, which is a mechanical detail. From the 31st of March. we already had a contract of grains for trading for suppliers of over BRL 400 million. So from the 31st, we had already clicked okay to pay those suppliers. Now when the money goes to the suppliers' account, well, that would depend exactly when the trading to make the payments, but it's securitized. So you don't have the [ firing ] risk but you have the trading risk, which is much lower. So I want to show you the right and left columns here because when you look at the total working capital of the company, you can see a big evolution. So while I show you this evolution of 46 days, the company evolved, 33. So we're still on a good path of working capital with low stock accounts payable, walking hand-in-hand with this detail of more than [ BRL 400 million ] being destined to -- this is what keeps us robust so we can continue facing these moments of market changes. And now you'll see in the following slide that even having the year 2023, a very challenging year of 2023 -- and even [ adequating ] teams and [ companies ], we still were able to keep the levels of debt at the same they were last year and working in the short and long-term metrics. So they can reflect the waivers that we obtained first quarter as well as numbers from last year, and I can share with you that we have short-term debt, which is normal for our type of business that we have obviously negotiated with each of our banking partners, have been able to renew most short term but there are some positive surprises from the 30 months, being able to extend to 30 months. Now I'll pass it over to Axel. Axel can give us a perspective of what we're going to see -- what we imagine for the rest of 2024.

[Interpreted] Let's talk about 2024, our expectations, what are the signs that we see and what can we share with you here? At the end of the presentation, we can close with our ending remarks. What we see here on the slide is what's being predicted as the advance of the inputs market in the last 4 harvests. In green, we see the '24-'25 harvest. And as you can see here, in a very illustrative way this advance of the inputs market '24-'25 is materially delayed when compared with other harvests, excluding of the '23-'24 harvest, which already present a delay. So we're talking here about an inputs market until the 30th of April, was 30% advanced while at the same moment in the '22-'24 harvest, advances were closer to [ 8% ], which assesses the [indiscernible] that farmers are really, in fact, carefully looking at, which is the best moment, the best moment not only to monetize trends, but also to plan the costs for the next harvest. So always achieving, obtaining the best relationship of Barter and the immediate improvement of profitability, which today is the priority for anyone. What can I say in terms of inputs and expectations? The biggest part of harvest. Profitability also is going to happen in the second semester as it usually does, but this year, the level of concentration will be higher in the third and fourth quarters. Good news. We said that in Barter, we grew more than 65% in this quarter when compared to last year's same quarter. And if you pay attention to the pending point in the curve of the inputs market, for the '24-'25 harvest, you'll see that between March and the end of April, the pending points of this curve accelerated, which is maintained over the first few days of May. So besides a better relationship, Barter producers are also looking at planning in a more assertive way, culture of corn crops evolving in a big part of Brazil despite the financial difficulties, climate, things are still moving forward well. I was at [indiscernible] and some point parts of [ Parana ]. So good evolution there, except for in some places, some impacts because climate is hotter, higher temperatures and lack of rain. But in general, corn in agronomical terms evolves well. And with this exchange relationship thinking of the '24-'25 harvest first soy, we believe that agricultures are -- farmers are more excited to try to work to improve the productivity of both crops by the year [ 2025 ]. What are the main messages or takeaways we'd like to leave you with here in terms of what happened in the first quarter of '24? So part of this adjustment that we say where all of the business ecosystem is getting up to date after a radical change and also where we still see some negative reflexes and effects of what -- that will stay with us over the next few months. But how are we working on this? Please, let's first go over what our commitment is. Our commitment working with farmers and other partners in the ecosystem is to diligently work in the areas that we have [indiscernible]. So, improved profitability, portfolio mix, improving margins and then at the end of last year, we implemented a system of leveraging prices, which allowed us to decrease prices [indiscernible] which is giving us results. This is giving us results in terms of last year. We see those quarters, those results coming in the quarter -- last quarter last year, this quarter as well where the investment has decreased a lot, and we are still able to protect those margins. We are still able to have superior margins when compared to the last quarter of 2023. In terms of [indiscernible], we continue to find -- to look for [ economy ], a big part of the volume was already done in this quarter. We have already captured 40 million in economies. We are progressing positively with our goal of reaching BRL 250 million in total savings in SG&A, and we continue working on this and a positive will happen. Working capital once again critical and important for successful resale. As Eron mentioned, in this first quarter of 2024, we have been able to improve our cash cycle in 30 days, especially when we look at our inventory where we've been able to decrease that [indiscernible] stock in almost 50% we're going to start in the second quarter, recomposing [indiscernible] at low prices, which will allow us to improve the journey of improving margins. And finally, focus on risk. So focus on giving receivables more predictability. And as a sign of that -- the work that the team has been making to improve and bring the predictability as well as the [indiscernible]. So how is this being done? I were -- it's a strong effort between the grains team, that has been strengthened and sales as well and farmers that are obviously much more aware and conscious that for responsibly managing their harvest, they have to first improve things for the [indiscernible]. We have a good grain team in AgroGalaxy, which is a competitive advantage. So this has allowed us to move forward in an accelerated way. Our goal then is to continue working on this leverage, which is bringing us to this process, which is a challenging [indiscernible] business, but we're optimistic looking towards the future that they are signs from the economic and agronomic point. What are we going to do? What are our actions, our strategic actions in terms of efforts? Here are the leverages. Soy seeds today, high demand market, one of the headlights of AgroGalaxy, we've also been able to mitigate some of the climate impacts and processing soy and today have a very robust plan to take our [indiscernible] to our producers. Remember that our soy sales, we've also been able to see synergies and improvement of margin. So we will continue to improve margin in general, accelerate growth of specialties. We are also accelerating the campaign on biologicals, where all of the AgroGalaxy team as well as our commercial team are working to improve the biologicals, which happens next [ week ] and capturing synergies in grains and bartering as well as origin, which brings us better margins and better predictability of receivables and a tool for [indiscernible] cash flow, which is very important. We're also going to work to not only improve the mix, but also profitability by technical consultants of sales and resellers trying to decrease these life cycles and the maturity of those branches, which are less experienced to AgroGalaxy which worked for us last time and also improving the logistical mesh. We have started a project and we'll continue to bring these gains to 2024. I want to once again highlight that here now in the second quarter of 2024, we will be more massively repositioning our stock for the harvest '24-'25. Together with suppliers, this is probably going to be done with the best costs available in [indiscernible], and it's also important that I mentioned that AgroGalaxy is probably, and we see things this way, has a competitive advantage. We have a lot of competitors that need to equate their high stocks, more expensive stocks from 2023. So AgroGalaxy should be able to, in the second quarter of 2024, capture these benefits [indiscernible]. So we can't run from this, but there is a more concentrated effort of business in the second quarter of 2024 in some categories. Logistics is a bottleneck for us. It is going to be a challenge. So we're working with our operational area, with our commercial area, with our clients, understanding what conditions will help us to anticipate some of these changes. I would also like to tell you that AgroGalaxy keeps working on everything that's in our control, margins, expenses and working capital. And we also believe that the recovery phase will reach the second quarter, and we will be ready to receive that growth. Thank you. I'll stop here and Flavia, let's open to questions and answers.

[Interpreted] We're going to start with questions and answers now. [Operator Instructions] Let's go to our first question from Gabe Baha from Citi Bank.

I think these might be more high-level questions if we think of the company as a whole and strategy, we look -- thinking of the conference call, I want to think of what you're thinking in terms of capital structure, the needs for more capital or if you think that was recently done already, adequate the structure of the company or if you see that there are any next possible next step? And then this would take me to my second question about the investment in the sowing process. I don't know how you can divide -- how much you can tell us about that? If you can give us any sort of color on the going? What's time line like? And is this process where there's no return? Or do we think that this capital structure already gives us a very well equated structure? Does it make sense to keep selling in the business given that you are able to keep a lot of margin. keeping seeds in the business? So it is a question that was already a decision that was made? Or is it an ongoing process that can be revisited given the company's capital structure?

[interpreted] Sure, Gabriel. I will answer the first question, and then I'll answer the second. So capital structure, I think I did tell you in the last presentation have 2022 because of the effects of retail. Financial banking for retail of everything that happened in agro business has had a yellow light from banks. So what we've done is found alternative solutions. Everything regarding [indiscernible] structure is down exactly with an alternative plan available, so we can start conducting our business the way we need to do it. So it's an alternative. We'd say today, we are well positioned in terms of this alternative for financing. And we did a part in December, our time for integrating capital. So it's open for shareholders also to be able to participate in. And I would say that from the perspective of capital structures, we're well placed. Another point I would like to say is, well, rigorous discipline in the cash flow management. We have some suppliers here on the call. There are discussions about what they pay when they pay, what is the moment you paid. And basically, by respecting our cash flow limits, working on receivables, make payments, this brings us the security we need go through a moment like this. So we have our Plan B, which is almost a plan -- and we also have rigorous discipline from a cash flow perspective. Now about selling or not selling the [indiscernible] data. I'll pass -- the seed, I'll pass the word to Axel, I think it goes beyond the cash flow issue.

[Interpreted] Let's remember the thesis of what AgroGalaxy does. We believe, as many in the market do that there are -- there will be a fragmented soy seed farming and we also understand 2023 as an emblematic year. How important it is and how much synergy there is between having the process and the structure for multiplying seeds close to flow and our channels. We have captured a big part of that synergy. And we believe that, that is the path forward. -- and we have been able to, with the industry, have a use of our capacity, update it and use it in a way which allows us to understand that the focus needs to be on maintaining synergies -- the idea of finding possible partners that can feed the ceiling so that I can keep growing the seed business, decreasing the cost of production, maintaining quality high is not in line of the investment. It's finding a business model, keeping sowing closed and helps us to capture the synergy of having the channel close to the selling. That's the first point. We're not close to total deinvestment, but we would have to assess these policies and see how we're going to move forward. We want to feed the seed business as much as we need to grow in the business in soy and corn over the next few years in AgroGalaxy bout the process specifically of finding partners. I could tell you that we are satisfied with the level of interest that has been shown until now. And we are -- everything is moving forward. Otte expected deadlines and by the end of this week would be weak in which people interested can submit their proposals. We'll have some novelties over the next few weeks.

[Interpreted] [Operator Instructions] The next question comes from Pedro Ponceca from XP. So he mentioned that we did a good job of increasing Barter, and it seems to be above average in the sector. So in your perspective, why do you think you were able to reach this level -- this higher level in terms of the rest of the [indiscernible]?

[interpreted] Let me answer that question real quickly and then it becomes easier. So Axel give us a good introduction at the end of this presentation. And I think it's a series of issues. I think that the most important thing is having a commercial or a sales team that understands the importance of far not only for us but for producers. I have producers that lag more than 5,000 hectares and do barge. -- abate is safe for the farmer. So I've heard a saying that says, farmers a barter plant the next year. So we value this. We've explained this. On the other hand, we have an important and robust priority. So as Axel mentioned, we strengthened our Barter structure and this movement decentralizing business units. And today, they are autonomous to do business and have decentralized control. So we have a high level of policies of acquisition exchange. And you have to recognize -- Axel mention also after some very favorable years a year of trouble makes everyone do their [indiscernible]. So this context allows us to make this relevant leap of almost more than 70% of the volume of buyers that we've done.

[Interpreted] The next question, as was mentioned 1/3 was a weekend and impacted the short-term receivables. What is the volume looking like for [indiscernible]?

[Interpreted] Look, starting November last year, we already saw the effect of El Nino and the drop in the price of commodities. So we've been doing some work to take our receivables that were purely in reals. So that's why in my working capital, I indicated that we had already received over BRL 400 million in grains that were destined directly to paying suppliers and they went through the AgroGalaxy. So there is when migrated to grains protected us from the challenges of receivables for 2024. So today, we have indexes that are better than 2023. Obviously, still not perfect. So we have some states in Brazil that had climate change. to gross close to Bolivia, [indiscernible] you walk for 10 kilometers, you have 1 meter high corn, then you have 30 cm high corn. So this strategy somehow has protected us on why it's happening. We also understand that like in 2023, there are producers that hold back to their grains is an gas and that very well that our commercialization indexes are still low. We're using the same tools as last year, but you have to see that. Like everyone else last year, we went through a peak of delinquency in the first few months, and we left at the end of last year, we're at a level very close to bringing in our partners and valuing the grains that farmers receive. I think another good indicator that the off-season harvest of corn is coming strong and maybe farmers who are not going to be able to pay their bills, all of soy we'll be able to pay with the offseason corn like Axel said, and even though profitability is higher, we have been looking at this case by case. Myself spent the last 45 days on the road, out of Sao Paulo with our sales team, our credit team following this process closely.

[Interpreted] And then I think we have one last question. His last question was about what is the stock perspective for that chain and what is the expectation for pricing for second quarter '24 and the rest of the year?

[Interpreted] Flavia, I'd say in terms of stock, as I mentioned, we are in a situation that we understand is very comfortable. We're looking at low stock and starting a process of rebuilding that stock. I need to -- we need to open by category. So what I would say is that this is the case for agrochemicals and specialties, fertilizers also probably -- it's important to say we don't store fertilizers when we sell. And this generally goes from the supplier to the farmer, which decreases exposure to price variability of pesticides. But we understand that we're in a great situation. We see that the market still needs to equalize those stocks. I think the first quarter of 2024 was a bit of a reflection of this. So we saw in the market some competitors that were doing very aggressive pricing. -- which gives us the idea that there's a need to transform that working capital and equalize that mobilize working capital at a high cost. I would say first semester, first quarter this year, there will be stock and that's -- we're going to be buying great prices. And I would say except for soy maybe because in the last 3, 4 months, there were very few situations and climate irregularity, excessive rain in some parts of Brazil, lack of rain and others which will probably have implications in terms of the availability. -- and some soy variations. So I would see that specifically -- we still have to mention the impact of the climate scenario and [indiscernible] a lot of soy is being produced. So I would say that the focus and we see a market of soy seeds in the last 2, 3 weeks, which has really heated up in the last few days and the Demand for some varieties has changed exponentially. This is the time for me. For us, we'll have [indiscernible] close to try to maximize this opportunity, not only from pricing, but also from the mix perspective, assuring the quality for producers. So the situation is a bit different in soy than it is in the rest of the stock... But... I would say that AgroGalaxy is in a better position than its competitors. I guess we'll close. It seems they're asking why there was an increase in the percentage in this quarter. Do you want to ask that question? I'll just do it here. I think it's a question from Carlos from [ Catania ]. So fourth quarter of '23, the expenses represented percentage of the revenue or 7% retinal revenue. For fourth quarter of sales is always the highest quarter for harvest. We showed the first quarter because of the inter-season harvest, the levels of revenue drop. So even though sales teams need to try to make their variable remuneration, a lot of what they make even commissioning and bonuses, we still have a fixed cost structure, which does have its impact, especially when the percentage is connected to lower revenue for the first quarter 4. Flavia, I think we're coming to the end of this call. I thank everyone for coming. I think we can wrap up those questions and answers, whatever was not answered here. Please email as e-mail us will give you details. Flavia is our focal point of Investor Relations. She's helping us supporting us of this today. We can receive your questions and answer you by e-mail. We are also ready to answer and organize over the next few days, have the month to talk about our thesis. We -- summary is first quarter was below expected when compared with last year because enter season harvest that already showed itself to be a poor harvest at the advantages -- we have been able to positive since, increment Barter and a beginning what we've been noticing in the field. and like to recognize and thank the work and focus of the almost 2,000 collaborators, [indiscernible] AgroGalaxy and the partnership of our suppliers of our financial institutions and the banks, which have helped us through adjustments and building a more efficient AgroGalaxy, a lighter weight AgroGalaxy that could answer to the needs of the producers. They followed us and some tough conversations and are supporting us in terms of what they bring to the table. So thank everyone thank them for their efforts, what they bring to the table and keep looking at helping Agribusiness to recover and come to more profitable levels. Thanks for coming once again. See you next quarter.