Boa Safra Sementes S.A. (SOJA3) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon. Welcome to our Boa Safra Earnings Release, Second Quarter 2026. The conference is being recorded. You may access the recording from our website, ri.boasafrasementes.com.br. This presentation will be also available for downloading. [Operator Instructions] Prior to the commencement, I would like to highlight the fact that all declarations are based on beliefs and suppositions from Boa Safra Sementes' management team and current information available to the company. All information might include risks and uncertainties considering that there are events in the future that may not or may occur. Investors, analysts, journalists should consider that we are relating all the information to the macroeconomic environment to the sector, and other factors that may interfere on the results different from what are going to be expressed here in this conference. I'd like to share the floor with Marino Colpo, CEO; and Felipe Marques, CFO and DRI, and also our Investor Relations present here. I'd like to pass the floor to Felipe Marques, who will start the presentation. Felipe, you may go ahead.

Good afternoon. It is a pleasure to be here sharing this comment with you guys to talk about the second quarter 2026 and our earnings release with this investors' conference today. We would like to consider our different scenario, different from what it is usually seen. And thank you very much for your participation. I'd like to pass the floor now to Marino so that we might start our presentation.

Good afternoon to all. Great pleasure that we start disclosing all the information about our second quarter 2026. It sounds like we have technical issues here. Let me see what happened. Here we go. Let me just give you an overview of our history. You are quite acquainted with it. Nevertheless, I would like to mention that the company was founded in 2009. The first cold chamber, 2013, the start of operations of the first cold chamber. And then 2016, our industrial seed treatment, TSI technology. 2018 and the launch of seed lab. 2019, the company's largest GBS starts operation. And 2020, the TSI. In 2024, we had a follow-on and then we -- in 2024, we started a new -- with new crops, which actually gave room to new additions to our portfolio. In 2025, 2 emissions of [CRAs Boa Saffra]. In 2026, we started increasing our participation with corn. And with our new unit, from Syngenta located in Ituiutaba and a joint venture in Nigeria, the investment that we have in Africa. Talking about figures, second quarter, we can see that -- or Page 5. On the first line, we have our net operating revenue, 23%. Gross profit, 83% from BRL 38 million to BRL 69 million. I think the good thing here is the new crops. This is the reason for our gross growth. It is important to highlight the fact that through us at Boa Safra, we still have the third and the fourth quarter, which are actually the most important part of the year. This is when we have the invoicing for soya, for soybean. But then we also have other cultures. As we mentioned, we started in 2024 with other crops. So basically, we have those years with new crops. If the investor pays attention to the fact that there is this detail in our history for the first and the second quarters, we usually have a very low margin, even negative values, which is different from the third and the fourth quarter when we're talking about results. We still depend on soybean seeds in the third and the fourth quarter, but less dependent now because of the other crops, and that is shown on the presentation with the new crops and the additions to the result of the company causing this growth in our gross margin, principally in the case of EBITDA. You can see that we're coming from a negative EBITDA to a positive value, and the adjusted EBITDA, the same. And the final net income, we move to the results that you see. So basically, this is the result that we had for the second quarter. So from now on, we are likely to keep growing with those new crops and to be a little bit less dependent on soybean as a matter of fact. And nevertheless, soya is still growing, and there's still great potential. Let us now talk about capacity and production. We're talking about soybeans. This is the first year -- the first year, we don't grow in capacity. You can see when we moved from -- in 2021 from 130 thousand to 170 thousands, then 200 thousands and 240 thousands to 280 thousands. So we increased a little bit of the hired area. You can see in the second graph, the contracted area is basically production fields. Those are growers that are our partners. They are producing seeds. Despite of the fact that we haven't increased our plant capacity, we hired more area or we contracted more areas, as he says. It sounds like we were kind of envisioning, right? No. But as a matter of fact, we wanted to have more available fields, more area available to have -- to count on high-quality standards. It was difficult to produce seeds, and this contracted area helped us quite a lot. And here, on the bottom of the page, you can see the stock of our finished products from BRL 743 million, there was a drop to BRL 621 million. We have less stock this year. So we kind of managed to decrease those figures, not because of volume, not focusing on volume, but also focusing or centering our attention to price. So we actually get to have less expensive raw material with a drop of price. Now we have less value from raw material. And then there was less need for cash. Let me mention a little bit of our units, 18 in total, including our offices. Two offices that we have there, 16 units. Those are the units that we count on today. Let me mention that right here, you have a contracted area of Ituiutaba. This is unit number 12. And we have our fodder plant, our unit 13. And then you have Boa Safra plant. And we have 2 plants also that I would like to highlight, #7 and #8 located in Parana. When you look at the map, when you check out the map, you see our national presence throughout the territory. We are present in main soya areas. So we are present in those areas of production of soya. Let me show you now a bit of our order backlog. It is very important to see that our backlog shows how much we have in terms of products. I always like to compare same period, second quarter of 2024, a little bit before in time, right? So you can see BRL 1.2 billion in our order backlog comparing to the second quarter of '25, BRL 1.7 billion. And currently, we have BRL 1.8 billion. And that brings us to a record in our history. Most of that will start to be invoiced in August, in September. Now this is when we start planting or sowing. So we keep our invoicing our turnover. You can see on the third and the fourth quarter, so this is very interesting. This gross revenue, you can see how it is linked to what we have in our backlog orders. There is an increase on the first and the second. And then the third and fourth, it goes -- dropped, it goes down. But then, of course, the invoicing is totally the opposite. So it starts slow, and then it moves up. Talking about diversification of our portfolio, you can see the presence of new businesses, new crops. This year, BRL 59 trillion in seeds is value and BRL 31 million in the crops this year. So you can see the comparison. We increased 90% from BRL 31 million to BRL 59 million. And if you check what we had in 2024, you can see how much we had. So basically, are twice folding every year. We're twice folding our invoicing or our results every year with the new crops. Now specifically talking about new crops in the last 12 months, new crops represent 14% in the entire result of the company. We believe that there will be a little bit more than that by the end of this year. So basically, this is something that didn't happen in 2024. That is just 2 years ago. So the result -- the curve is going up at a very good pace. Let me pass the floor to Felipe Marques, who will talk about our financial data prior to our Q&A session.

Well, Marino already mentioned some figures to you. You can see here our growth of our LTM when you see that you have to consider the seasonality at the 35%, when you see the quarter. Actually, we are aligned with what happened at previous year, with much more -- more than 68% due to new crops compared to soya seeds. That shows our diversification strategy. Now the gross profit from 82%, when we talk about the quarter in 2025, when we talk about the LTM, we have the increase of 24%. We're reaching BRL 280 million adjusted EBITDA. With this new improvement, we can see that we moved from BRL 5 million to BRL 28 million LTM also, a 4% increase. So every project that is efficient. Of course, based on our decisions in December last year, with the expenditures of the company, we can see the results being reaped after 6 months. This is the new restructuring. And now we can show how much improvement we had with our indicators with this quest on improving our efficiency. Our net income, BRL 3 million. That is a very positive result. So that shows -- improves the impact of our diversification. The LTM, of course, in the wake of what happened in 2025. That was a major impact. And the result here, you can see the reduction of BRL 21 million when you analyze what happened in the last 2 semesters. The debt profile is very important. That shows our work. We were trying to, in long term, get less stress. And that was actually a decision that strengthened the results of the company. And now we have the optimizations and negotiations with the traders. And with this kind of a small growth in soya and give a boost to other crops. So that demands less cash from us, less working capital. And you can see here, the net debt, comparing to the results from BRL 800 million to BRL 620 million, we maintain the current ratio of 2.9x. Considering the accounts receivable, short term, very short. When you reduce that, you have only BRL 407 million of net debt in accounts receivable. We are actually forming stock. Actually, this is the worst moment to us when we talk about working capital. We will be talking about working capital further down today. And our amortization schedule, 92% in the long term. It shows that we are actually getting these high levels of liquidity, which is one of the strength aspects -- or strong aspects in the agri business. At least in most companies, this is always a bottleneck. Now with regards to working capital, there was a relevant reduction in our new -- with our new efficiency project, capital allocation or MCG. When you check 2025, BRL 1.2 billion, it drops to BRL 769 million. Even growing in terms of revenues, you can see that we managed to work well, principally with regards to the working capital requirements of the company. So that proves that we are being quite efficient in terms of efficiency and renegotiation with the suppliers. So at this moment, we are quite sturdy. We are able to renegotiate our terms, payment terms. We have greater demands from the stock point of view. Principally, when you see the issues related to accounts receivable, our clients, and it is a good way to offset those increases. And principally, with regards to capital allocation and when we are dealing with our suppliers. With regards to our accounts receivable, you can see that from the second quarter, so we have an increase in 80%, of course, due to our diversification with the new crops. Principally on the second crop, you can see that there is more time, but our CTB BRL 16 million, of receivables, 14% receivables of the second quarter of 2025, you can see that it goes up to BRL 30 million. But very close in terms of percentage. If you compare to the receivables of '25 compared to the receivables of the second quarter '26. So our policies are very strict. There is austerity. As long as we managed to get diversification, we are bringing those results. Out of BRL 230 million that we had in our receivables, BRL 39 million have been cashed in. BRL 114 million still to come, and that is with regards to accounts receivable. And in our cash flow, the main aspect, we talked about the growth of the company with a new structure, negotiating terms with the suppliers. There is a good cash flow, BRL 204 million. Investments, a little bit more than what we had expected. It was more investment in some units, specifically with fodders covering much more volume. There's more volume to increase those results, of course, because of the price, the drop in price. We had to increase our installed capacities. There was more investment for seeds used in fodder. Cash flow, second quarter, as we mentioned before, was to combine investments of the company, along with the capital allocation, you can see this cash generation and CapEx of BRL 150 million. And this is the intention. We want to do or generate more cash and increase liquidity, and keep growing in other sectors of Boa Safra where we operate. That's it. With that, we conclude our presentation. We shall move now to our Q&A.

[Operator Instructions] Our first question comes from Guilherme Guttilla from BTG.

Our question is with regards to cash flow generation and this working capital. This condition is quite along with the line in the operation with the suppliers. Of course, if I'm not mistaken, that is with regards -- it is related to the royalties of the seeds. I would like to understand from you, how we should look at this? Have you changed the payment terms or dates -- days for the second semester, perhaps you need less working capital from now on? So -- and the second aspect of my question is, if you could, can you tell us how you see our backlog order for soya? Because since we are kind of 1.5 months after the end of the quarter. So is there any kind of that a reaction from growers, any kind of signs from them?

Thank you very much for your question, first of all. Now talking about the suppliers. As a matter of fact, this is something that we somehow had more impact. There are 2 aspects here you have to consider. First, we are the best company in terms of liquidity in the sector. There are several restrictions on other companies. There are many growers that are having issues regarding liquidity, which is the reality in the market. We managed to postpone payments to suppliers, considering our solidity. So we feel comfortable about allowing this to happen. If there is any case of having to pay on this third quarter of the year, we can't find or achieve better conditions which would be much more favorable to us. We are negotiating individually. That depends on the evolution, on the negotiation. And if we kind of pay down in advance, we are probably going to get much better conditions. If we cannot, we are still postponing the payment, which is giving some release or relaxing a little bit more. We have less pressure of our working capital, and that would be a positive thing for the third quarter. And with regards to backlog order, let me ask Marino to give you the answer.

We have good businesses every day to us. Less volume of businesses is not common in the third quarter. As a matter of fact, it's much related to having growers that kind of enter in deals in the beginning of the year. But then there was a war, and that was that question mark. Is this war going to take -- last 20 days, 30 days. So most growers ended up paying more money for input. And of course, you know that fertilizers play a very important part. They bought at a much higher price, and now they're buying the seeds. So in this, we'll kind of generate this or produce this delay for both fertilizers and chemicals used on the seeds. So we've been running market researches. Considering to -- considering the results that we got so far, we're kind of ahead if we compare our situation to the rest out there. So there are many growers that haven't got their seeds as yet. So we're cool about it. And our orders are supposed to keep growing in the third quarter.

Our next question comes from Henrique Brustolin from Bradesco.

There are 2 questions. The first is about production volume. You mentioned that you have 90% of our need for soya until the end of June. I understand if we are considering our production capacity, we're talking about 252,000 big bags compared to 305,000 last year, which was beyond our capacity. Considering the volume of production to the whole year, was there any evolution in the most recent months? Or let me know if you're kind of going to an year in which production will be less important. Is there any change in the expectations with regards to the form of selling seeds? Last year, we had a lot of production, but like a high discharge as well. So is there any change in expectations in terms of the sale of seeds? So this is the first aspect of my question. The second is a follow-up with regards to the back log order. Marino, perhaps for you. To you, if you can classify your portfolio today. If you can compare this today to what we had last year, I know that you were not talking about price. But what about quality? Quality of sales. Is this something that is making headway in a better dynamics, even considering the last volume in the production in the market, perhaps something similar. This would help us understand how this is going to be on the second semester.