Três Tentos Agroindustrial S/A (TTEN3) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, and welcome to Tres Tentos Q4 2025 Earnings Call. Joining us today are Mr. Joao Marcelo Dumoncel, Chief Executive Officer and Investor Relations Officer; Mr. Cristiano Costa, Chief Financial Officer; and Mr. Eduardo Motter, Investor Relations Manager at Tres Tentos. Please note that today's conference call is being recorded and will be made available at the company's IR website, where you can also find the presentation. [Operator Instructions] Before we begin, we would like to remind you that any statements made during this call regarding the company's business outlook, operational and financial projections or targets and its future growth prospects are forward-looking statements based on management's current expectations and the information available at this time. These statements involve risks and uncertainties, and therefore, depend on circumstances that may or may not materialize. Investors should keep in mind that general economic conditions, developments in agribusiness and other operational factors may affect Tres Tentos future performance and could lead to results that differ materially from those expressed in these forward-looking statements. I will now turn the call over to Mr. Joao Marcelo Dumoncel. You may go ahead, now, sir.

Thank you. Good morning, everyone. Thank you for attending our Q4 2025 earnings call and for the entire year. All right. To kick us off, let me just say the following highlights for the fourth quarter, and of course, involving the year of 2025, an outstanding year, we celebrated our 30th anniversary. We were fortunate enough to reach excellent numbers, reaching BRL 809 million, record number, record revenues as well. That was indeed a year of major achievements. Despite all the challenges in agri business, Tres Tentos, however, managed to go through the year in its ecosystem by providing results to farmers. This is yet again another cycle that has been concluded with major achievements. We've had consistent results driven by this growth. We have kept on implementing our strategy to diversify regionally. Mato Grosso has become even more important to Tres Tentos, that's part of our business plan. And at year-end, we made relevant investments in many expansion projects, expanding our industrial footprint, both processing industries for soybeans as well as in our first ethanol or corn-based ethanol plant in the state of Mato Grosso. Well, these are the highlights in numbers, that's for the fourth quarter and for the entire year. We ended the year with growth of 28.1%, record revenue of BRL 16.4 billion. In the quarter, we had a smaller growth when compared to the year but still a very important number there, positive results as well. The same thing applies to the net income as in the adjusted EBITDA. On to the next slide. This is now broken down by segment in the same format you have all been used to. Tres Tentos analyzes 3 separate businesses: ag inputs, grains and industry. In all of them, we have positive growth both for the quarter and the year. Especially in grains, the highlight is there, the growth is very significant in terms of volumes. Let me point out the corn volumes, that's what we focused on throughout the year and growth was very significant in Q4 as well. These volumes have been focused on, and from the grains point of view and from the trading point of view, but again, as a result, that will impact the ethanol plant. I'll be addressing that shortly. As far as inputs go, a very positive highlight. We have been monitoring this segment that has been under many challenges in recent years. Fortunately, Tres Tentos has been able to perform effectively in this industry. It's a 21% growth in revenue for the year, smaller growth for the quarter, but still a very important growth at 7%. Let me just say that in Q4, we shifted input sales. Especially in Rio Grande do Sul, there was some planting delays due to delays weather related, and there was a delay in planting winter crops, especially wheat and canola in the state of Rio Grande do Sul and that happened late in the year. As to the industry, results are important on that front as well. Despite a significant retraction in prices, especially soybean meal, that is an important element in the company's revenue. Despite that, our growth was 15% for the year and 7% for the quarter. And that growth in the quarter, I would like to highlight that it occurred despite the 2 scheduled shutdowns in Ijui and Vera. So these shutdowns happened at the end of that capacity expansion effort. As I said, throughout 2025, we invested there. Our 3 soybean crushing plants were expanded, both Ijui, Vera and Cruz Alta, all of them went through the process, and in Q4, we had those scheduled shutdowns. And to a certain extent, volumes processed were down in that industry. And of course, that impacted results for the fourth quarter. Let me give you more color on the numbers. And I'd like to turn it over to Cristiano to discuss the EBITDA.

Good morning, everyone. In Q4, we have 13.3% in our net operating revenue BRL 4.361 billion. That's part of our growth strategy, very close to the CAGR we've had in the past 10 years. When we look at our adjusted EBITDA margin, Q4 was under more pressure than Q4 of '24. Let me remind you that Q4 '24, that was a very good quarter, above our historical averages. Our CEO, Mr. Joao Marcelo Dumoncel talked about grains and corn, more specifically, which is in preparation of our plant in Porto Alegre do Norte to start origination there. Margins were impacted by several elements, especially that of soybean meal. SG&A was slightly higher than what we had, had in previous quarter, putting a lot of pressure in the adjusted margin. But let me point out that part of that effect will come back through defense strategies that we've used in our positions through derivatives, commodities and exchange. So there was partial recovery in the EBITDA margin through those liquidations. It's a 5.4% margin when we take those effects into account. Looking at the quarter more specifically, we do have a margin that is somewhat hurt by all those factors. But when you look at the year, the way we like to analyze it, we do have that drop but it's 1.6 percentage points when we compare '25 to '24 numbers. So there's the effect of a more challenging second half of the year. We've had effects from several origins, even politicals and the trade wars, the Trump tariffs and the movement of Chinese demand. However, the way we see it, based on projections for 2025, the numbers are very close to our expectations when we made our internal projections for the year back in 2024. On to the next slide, that's the leverage behavior. Record revenue, record profits, but record investments as well. CapEx for just mobilized fixed assets, BRL 1.658 billion. And what does that mean? So we've reached that peak, we may detect some reductions in 2026. We're going to implement a maintenance CapEx with very occasional investments, that will impact our leverage. When we look at the net debt in numbers on to net debt, the number is 1.87. We have to remind you that we have to take into account to put back the hedging effect because it's off EBITDA. It will impact financial results. But when we look at the number, the number we get to is 1.20. When we make those initial projections, we did not want to get to 1.5, but we are always looking at the effect with those price variations that may cause us to liquidate our protection measures. So this is according to our projections. So we implemented a plant in Porto Alegre do Norte. So we conclude that cycle. And now to 2026, we believe that this is going to be a deleveraging scenario. On to the next slide, that's the cash generation dynamics, BRL 931 million. We paid out dividends at BRL 95 million. We made all this CapEx, BRL 1.6 billion on top of the BRL 1,658 million of in mobilized, we have some intangible assets. That's the reflection of our investments in forests so that we can have our biomass for Porto Algere do Norte, reaching BRL 1.8 billion. So we are replenishing the corn inventories. And our strategies with suppliers to extend our payments so that we can keep the historical levels between BRL 400 million and BRL 500 million. We've invested BRL 1.7 billion. We paid out dividends and still had the growth of that net debt variation from BRL 1,375 million. So we have already generated net BRL 1,375 million. And we believe that with the CapEx reduction, we'll be able to bring that cash back to levels to prepare our cash position so that in the second half of 2027, we can start our [ redemption ] project. And we expect to prepare the financing plans for that construction, looking for credit in the market. That's our take. Looking at the big picture of 2025 in financial numbers. We've worked on our projections, what we have indicated as far as leverage, inventory preparation so that we can start operating our plant in Porto Alegre do Norte. There will be many positive effects in 2026 numbers, SG&A, bringing in more margins, so that we can achieve our goal for the year 2026. 2025 was a very sustainable year. Based on our projections, we remain confident for 2026. I'll turn it over back to Mr. Joao Marcelo Dumoncel to talk about our projections and the plan and the outlook for 2026.

Thank you, Cristiano. Just like we've done in recent calls, this is a more specific view of the ethanol plant. We are at the final stages in the Araguaia river valley. The plant is almost ready. We can put it that way. We are at the final stages of getting -- acquiring the licenses. We've already been granted the fire department license. Also, the environmental agency license has been granted. And just last week, we submitted that license to ANP, which is the final license, the final regulatory approval we need to start operations. So we expect that the plant can be operating in a matter of weeks as we had planned in Q1 or the very first days of April. The plant is well prepared. So we have high hopes. We already have the biomass that has been purchased, prepared. The forestry activity now with the first cycle of planting already underway, a lot of corn origination, we've already started doing it back -- or we started doing it in 2025 with barter operations. We're getting ready for yet another plant to join our systems, providing value, bringing economic developments for the region, for the company. And on to the last slide before the Q&A session. Let me give you the outlook for 2026. We believe 2026 will be a great year despite all the challenges we've had in agribusiness. We have several projects focused on growth, added value, operational improvements. These projects have been worked on last year. They received many investments. And of course, they'll bring in important results for the year 2026. The outlook, as we mentioned in Tres Tentos Day in December, we're going to have a faster pace of store openings, 4 new states, Para, Tocantins, Goias and Minas Gerais, and we expect to open up to 10 stores in these new states. Last year, as you know, Tres Tentos opened origination offices, preparing the ground, doing the groundwork to start selling inputs and now taking the second pillar of our ecosystem to these new states. We expect to expand or to conclude our industrial expansion. 2025 was a transition year, and that was clearly noted in Q4. These 2 plants were in that active phase of generation -- of construction. And now in 2026, they'll be contributing with a lot of additional capacity, providing operational gains and gains of scale. Three plants were brownfield expanded. All of them will be providing advanced technology with even better productivity numbers. As I said, we're starting the ethanol operation. It's a new plant. It's a new industry we are entering. It will complete and supplement our ecosystem. It's a new biofuel, new dynamics play out in this industry, a very important product to us, which is corn. It will expand on the potential of the system. We are now working -- focusing on barter operations focusing on this crop year. This double crop corn that has already been planted. And that dynamics will play out not only for our company, but for the entire ecosystem will benefit from it. And last but not least, that's the canola project in the state of Rio Grande do Sul. Now in 2026, we'll be expanding it. We've already mentioned it a number of times, in 2025, we focused on an area of about 50,000 hectares in Rio Grande do Sul. And now in 2026, we've already contracted over 100,000 hectares to promote canola production. Results are very promising or were very promising in 2025, both for farmers and for us, and are expanding the area significantly, about 100% increase, that will be even more beneficial both in selling inputs, a crop that was not planted before, it's going to be helping as well as grain movement as well as in the industrial operations. It will provide the diversification. It's a product that has an oil generation potential, even greater than that of soybeans. These are the highlights. Of course, we'll be addressing other points during the Q&A session. But the outlook, in summary, is an important year, consolidated results were very gratifying to the company. And in 2026, we remain optimistic. We hope to harvest good results in these coming months.

[Operator Instructions] Pedro Fonseca from XP asks the first question.

Let me address 2 issues. Number one, logistics expenses. You mentioned a couple of factors in your release. Can you determine the weight of each one of those factors in increasing costs? Were there any route changes, something that may have impacted the costs for the quarter? And what's the outlook onwards? What is one-off event? What is more structure so that we can better project that line in 2026? And my second question is about inputs. What about the conflict in the Middle East, which is important for the fertilizers? What can the company do? What has the company been doing to mitigate the risk and ensure the sourcing of those products?

Thank you, Pedro, for your questions. Yes, I think we can get started with the first question about logistics. It's clear to us that, that was a detractor of our results that was above our expectations and what we have been delivering in recent quarters. Let me be very honest with you. There are many business-related or the conditions. It's a scenario -- it's a one-off event. It's not structural. Logistics costs did not had one driver behind it, as we said. It's a combination of factors when we make the comparison, the yearly comparison, Q4 '25 with Q4 '24. The geographic mix and the product mix will play a role in there. We have been increasing the part of longer routes, especially in the Brazilian Midwest as well as the product mix as you can see in our numbers and you have been monitoring our releases. The spike was in the grains trading activities. And we have to take that into account. And we have to take into account the role that corn plays in grains overall, but corn more specifically. Corn has a small amount of price relatively to -- or relative to freight. Freight of course, plays a more important role in the cost when you bring it from the countryside to the port, especially in long haul and corn trend operated at depressed prices, more specifically in the second half and especially in Q4. But there's the reason behind it. I told you that we have been expanding our corn operations. The company increased its volumes mostly because 2025 was a preparation year, as I said, for this new situation. And more specifically, in corn, we're now becoming -- we are a company that will have a corn-based ethanol plant, our corn supply becomes strategically. So that's why we started that in 2025. 2025 was not focused on the industry, but we had to connect farmers to start our barter operations. In other words, to have that supply and be more active in this market. As a consequence, we had more trading volumes with corn. And that's why structurally, margins are smaller in corn. It was even more pressured in the second half, higher premiums when farmers were skeptical in selling its production, the dynamics was very challenging, especially for corn, for exports. Now when we come to think of it, the supply is well balanced for the ethanol plant. Corn was -- or had expensive premiums for export but that kept corn in the country and now ethanol plants have the appropriate supply of corn, especially during this period between 2 seasons. We also had some model differences. We worked very hard in the second half, more specifically in Q4, and those corn volumes were in the Araguaia river valley for that preparation effort, as I said, and we did that through highways both for Barcarena and Santos. When you look at the operation from the valley to the port is over BRL 400 per ton, that will impact freight and that's the reason behind it. So that combination of factors -- and there's something else, from time to time, we have to look at logistics in longer periods of time because the quarter may bring in some distortions. There is some movement as far as freights and payments. In other words, the volume you sell for the quarter is not exactly the same amount you transport. They're close when you look at the longer period of time, they tend to go hand-in-hand. But in any specific quarter, if you take a snapshot there, there may be some differences. Just like I said, Pedro, it's a combination of factors. Of course, we remained completely focused. We know it's a relevant cost, strategic to the company's results. We are paying close attention to it, therefore. And we'll keep on doing it and trying to control and improve. Looking ahead, we don't see that as something that will last longer. It's a consequence of those situations I've just described. Let me move on to the second question. I'll try to be brief. Inputs related to the war. Impact is in fertilizers, especially for those nitrogen-based fertilizers. Prices are very volatile because we are at an early stage of the war. We don't know what the developments will be and not how long it will impact us. What can help us minimize those effects, especially in the short term, we're not purchasing all that much. Especially for nitrogen-based, we purchased them later in the middle of the year. That's the double crop, which is the crop that demands nitrogen. The 2025, '26 crop has already been applied. So that indicates that we may have higher production costs. That's to the farmer, and we are a link in that chain. We are first prepared to ensure supply through our partners. And we'll do what we'll have to do. We may have to transfer those higher costs if that disturbs or the war disturbs the logistics.

If I may, Pedro, at year's end, we had good fertilizer inventory. The problem is not having access to the product, but the problem is the price variations. The company has gone through similar situations, especially at the start of the war in Ukraine, but we are applying our business intelligence, trying to understand the dynamics, how it plays out, just like Joao Marcelo said. If necessary, we'll make price adjustments and we'll try to understand how those prices will be in the next season. But the company was already anticipating to be prepared as far as inventory goes as well as to diversify suppliers. Recent experience has helped us in that sense.

Gabriel Barra from Citi asks the next question.

I have 2. The first one is about your point of view as far as ethanol goes. Can you give us more color as to the time line? When can we expect the first batch delivered? In the Vera ramp up, there were some ANP issues as to the plant's commission. What's your take on the licenses? If you please could elaborate on that. My second question is about biodiesel. There have been discussions about biodiesel imports, even the Bio-16 discussions for this year. What's your take on the negotiations with the government, with the CNPE, what's the business case for 2026? And my final question about the war in Iran. What about diesel prices and the B16, will that contribute to the discussion of Bio-16?

Well, thank you for your questions. Let me address the ethanol question. There are 3 main licenses in sequence, fire department, environmental and ANP. We are at the late -- the last stage. And of course, the timing is something that is not in our control. We do have some expectations, of course. We have been scheduling that license. It's now with ANP. We're just waiting for their visit and we believe everything is going to be according to plan. The startup may be in April. That's our expectations today. Earlier in the month, in the middle of the month or later in the month, that will depend on the agency's own pace. Based on information we've had, based on the project we have, that's our expectation. Operationally, the plant is okay. We are testing it with no products. We've been testing circuits, we've been testing all the equipment there and everything is under control. We remain optimistic, very anxious, of course. It's a journey, and we want to turn the key as soon as possible to start producing. The team is ready. The inputs are there. The technical element has already been addressed. We remain anxious, but very confident. That's how we feel today. Pretty soon, we'll be making important announcements for the project. On to biodiesel now. Well, we've been discussing that issue for quite some time. B16, B15 last year was expected for March and it happened in August, the fuel for the future as well, it was expected to be released in March. It hasn't been regulated. So the market has been waiting on those delays. However, the war can provide that new scenario that is again reinforces what we have been saying, strategic value of a more diversified energy matrix, less dependent on imports. We import 25% of the diesel we use. We cannot process it in Brazil and every percentage point of biodiesel reduces diesel imports, less expenses, more jobs that are created here, more products in-house. We are developing the entire nation and all the economic and social aspects of the entire industry, something we have been harping on for quite some time. So we believe in the B16 implementation in the year, and there will be an important driver, maybe even before the regular schedule that we would expect that mandate to be implemented. As to imports, again, the way I see it -- well, let me start from the strategic point of view. It doesn't make any sense. Brazil has that capacity. We have soybeans, we have plants, we have logistics to meet the domestic market. Brazil is a major biodiesel producer. We have to become an exporter. Forget about being an importer. But imports or imported diesel play important roles that must be analyzed. Brazilian biodiesel plays a social role, the social seal, imported products will not be able to fulfill that purpose. But we still have to meet or to face the quality challenges. Our quality is better than those countries that would export to Brazil. This is something that has to be addressed. Well, but this is a very important topic. We believe that it's not going to go any further because when you think strategically about the country's economy as well as the quality aspect I have just mentioned and it cannot meet any social biodiesel goals.

Isabella Simonato from Bank of America is up next.

My question is about the farmers point of view. What is your outlook for TentosCap? You look at higher -- you mentioned higher production costs, droughts in Rio Grande do Sul and the commodity performance prices are not helping. Can you give us some color as to projections for early this year? Some volumes were carried over from Q4 to Q1. Is delinquency a problem? What's you take on that farmers' financial health?

Thank you, Isabella. That was a great question. Well, the scenario remains challenging for farmers. Prices are under pressure, grain prices, I mean, despite a slight improvement in the post war, both in Chicago and the exchange rate. The price in reals have picked up. Still, they are under pressure, below farmers' expectations, and prices that could provide more profitability similar to what we had in recent years. In other words, prices are under pressure. Farmers remain leveraged in most cases, and interest rates remain high. These 3 elements combined provide that pressure, financial pressure, and that remains as a challenge for farmers. Our take now, well, we have to separate these different regions. Let's take Mato Grosso first. There was a good crop year last year despite those challenges, but the production was good. And now they're finishing harvest, where we operate. That was not as good as last year's maybe down 5%. That's our estimate, but still a good crop year. Well, production is the #1 factor. If you have grain, they can fulfill its obligations, especially those physical commitments. At Tres Tentos, we work on -- we focus on barter operations. We provide that advantage. When they have plenty of grains, barter is easier for liquidity purposes. So in Mato Grosso, the crop year is almost concluded. Liquidity levels, especially for barter because we do that already, so these levels are very good. Liquidity levels are very good in that sense. And we believe that this is going to be a year in which farmers may not be able to deleverage, but they'll be able to pay their bills, and they will keep on planting. So the wheels will keep on turning and they will maintain their operations, achieving better yields and all that. So now when we look at Rio Grande do Sul separately, we had major or occasional weather-related issues that the crop year was not as expected but way better than those of previous years, a regular crop year, if I may put it that way. But in that state, the situation was similar to what we see in Mato Grosso. There will be some grains. They'll be able to fulfill their physical commitments as we put it. Again, barter is included there. And farmers will be able to pay their duties or their bills on a short-term basis and we'll have a harder time to deleverage. So we remain under pressure, but it's a year we'll be able to go through with no major problems. If there are more challenges, there will be the result of major stresses from -- that are carried over from other years, not from 2026. 2026, farmers will be able to go through. As to Tres TentosCap, it's been integrated to the Tres Tentos business. That company, TentosCap, grew substantially in our portfolio. We expect to see that growth to continue. It's a very strategic element in Tres Tentos but it's connected to the Tres Tentos business. The role of Tres TentosCap is a link in the ecosystem as an integrated solution for farmers, providing more and more competitive costs for inputs and farmers will also be able to have that tool, just like barter, which is very important to Tres Tentos. TentosCap is a tool to improve liquidity, to improve production costs so that we can ultimately add value to farmers. In summary, I gave you a very long answer, but still we remain relatively optimistic as far as liquidity and production goals. And farmers keep on investing. It may sound contradictory but farmers invest in technology. They want to produce more. And that production they've been able to extract is what help them, give them more some leeway in their production -- in their operation.

Lucas Ferreira, JPMorgan is up next.

Let me do some follow-up as far as freights are concerned. Number one, is it going back to normal numbers in Q1? Freight as a percentage of revenue is still above what you expected. And what about the outlook for the year as far as freight is concerned? Supply and demand, when you exclude Q4 numbers, you mentioned that most of it is occasion there, it's punctual. When you compare freight compared to volumes and revenue, do you believe it's going to be a more normal number in the past, in the last 12 months? And the second question is about spread, both crushing, what's your take for 2026?

Thank you for your questions, Lucas. Let me address freight first. Cristiano may even jump in. Well, we believe that Q4 was just a one-off. We detected some improvements in Q1. And I failed to mention in Pedro's answer, there were some specific movements in specifically for the quarter. In other words, Q4 is for wheat and canola, the month they harvest. And these 2 products are not traded, not everything you transport is traded in the same window, the same quarter. But canola and wheat happened in Q4 and we did not sell those products in the same quarter. In answering your question, we do detect some differences in Q1. But when you look at freight, you also -- it's market dependent. It has some markets that will be adapted based on the supply and demand and the size of production, the mode of transportation, but except or taking that out of the equation the market, maybe fuel prices may impact it, the size of the crop year, there are no major spikes. We do not see that coming. But when we think about freight structurally, there is a major shift. The ethanol plant will shift that corn dynamics we had in 2025. The way we see it, that was the major driver or the major detractor in boosting or increasing freight prices. And that happens to soybeans as well. We've expanded our industrial capacity. Volumes from trading were transferred to industrial volumes. When you think about the volume for the entire industry, everything that becomes biofuel is sold through the industry, 0 freight, in other words, the distributors will pick it up. Well, if you're talking about meal, of course, there's some exports, but not everything, more in soybeans. But when you take into account DDG in corn, the trend is to fulfill local markets closer to the plant. So there is a shift in 2026, except from the market dynamics. There's a shift in the structure of the company. Would you like to answer that freight question?

Before we talk about spreads, let me just say that there is that transition from inputs from the Q4 to Q1 that will help us dilute costs, the start-up of the ethanol plant, less corn being transported, potential gains to recover margins with crushing more canola. It's -- we do not take into account freight by ton only. Of course, we keep on monitoring, looking for the best alternatives out there, but we're also looking at the bottom line, the movement we saw in the final year. Adjusted EBITDA, including hedge, losing that 1.6 from '24 to '25. We expect to start the recovery to get close to 2024 numbers. That's our goal. Not only in freight, we have to focus, we have to be more efficient in all the other lines in SG&A, freight is #1. But we have been focusing on improving operational efficiency across the board. This is what we planned in the second half of '25, everyone working together to project 2026 with that recovery in mind. That's how we operate on a daily basis. More specifically about freight, there are several elements. We believe they were occasional that brought that result impacting Q4 and that dynamics from the Q3 to Q4. It's not a red sign, it's an orange sign and we are concerned about it. We keep on focusing it. And the spreads impacted by the Trump tariffs but we've detected some better margins in Mato Grosso, meal being recovered, the plant is operating at full capacity. We expect to have better margins and spreads as we start getting the production from the next crop year to consider the price dynamics, we're going to have a greater soybean -- global soybean production. Expectations in Rio Grande do Sul is 30% to 35% growth. There will be more soybeans in the state of Rio Grande do Sul where our plants are located.

Well, speaking about that specific line, there were some premium distortions because of the trade wars, China concentrated many of its purchases in Brazil, increasing premiums, they were not buying from the U.S. 12 million tons were purchased in last year. They're negotiating an increase to 25 million tons that helped us bring soybean prices back to better prices. So it's a more normal market, in other words, and we can feel that in Mato Grosso in the initial months of this year. The crop year is with good volumes, prices are normal. Margins are very appropriate for the region. And we expect the dynamics in Rio Grande do Sul plays out the same way. And now biodiesel, you have the war, B16, we've already talked about it. Those elements will be contributing to the results. Thank you.

Thiago Duarte from BTG is up next.

I would like to address 2 issues. The first one is about inputs. Margins coming back to something we hadn't seen in recent years. What do you believe was the main driver? Stores that are becoming more mature, that are becoming more competitive, something you talked about in the past 2 years? Higher fertilizer prices that are even higher now. Is this yet another driver? If you could please elaborate on the better margins. My second question is a follow-up on the freight issue. In one of your answers, Joao Marcelo, you said it was occasional based on the economic situation. It's not a structural shift. Well, I think you and all of us, of course, what would -- what do you believe it's the structural price increase? The last time we saw that happen is when you opened Vera, you started using freight in Mato Grosso, which is longer hauls. Now that you're exporting corn that would explain freight as a percentage point from the revenue. But when you look at the freight cost per ton or per meal traded or a ton of meal, it's higher as well. So that's why we have come to those prices in Q4. What do you believe is more structural based on all the circumstances you described in late last year?

Thank you, Thiago. I think you've already answered part of your question. Store maturation, as you gain more space, it helps in 2 different areas. Market share. It's a ramp-up that will take 4 to 5 years but also impacts the competition. As you gain market share, customers come back, you're not all that exposed to that price war, but there's something else we have been mentioning time and time again. And I'm referring to the ecosystem, the barter operation. All resellers operate barter, but we have our own barter operation. We take out products, and we are the offtaker with that industrial process as the backbone. That gives us competitiveness so that we can provide better offers to those farmers. But let me point out that higher margins and higher volumes are because of our expansion in the Brazilian Midwest, and in the past, we said when the Midwest becomes more relevant, the input margins will be structurally smaller. We have been able, therefore, to maintain our performance and the Midwest operations have become more and more relevant. And still, we're growing our margins. That has to do with that combination of solutions we provide. It has to do with the stores maturation as you put it. It is connected to market conditions. The market has some weaknesses in some areas, in some cities as far as the competition goes, and we have been effective. We have good relations with our suppliers. We have our business intelligence activities to provide information as far as purchasing is concerned. We have come a long way. We are well structured along those lines. We have been expanding on the added value lines such as biologicals. And there's yet another important factors with store maturation that may be the most relevant element. We had 4 years of weather-related issues in Rio Grande do Sul and those weather-related problems impacted inputs at any point in time and especially those with more added value inputs. So we were a lot of pressure -- under a lot of pressure in crop protection. Dry years, they did not use as they were supposed to, and now 2025, we now have normal situation, very close to a standard technological package that will help us have better margins. It will become more and more relevant when -- and I'm referring to the canola inputs. Canola contribution will become more relevant by providing better profits. Again, that's the composition of that higher volumes, higher value and more importantly, higher margins. Let me go back to the freight. You cannot determine what that number will be. We are aware, however, that these numbers will be improved. We remain confident that, that will happen because the scenario change and the structural change, both things will happen in '26 when compared to 2025 that's how we approach it.

Well, let me just add to your answer. Let me give you some quantitative projections. When you think about Q1 and Q2, you take the entire half of the year -- first half of the year. The behavior is better from the year's average, especially Q4, that would bring the average down. And we are considering this. In '25, 2026, the average freight is going to be smaller, better than the average of 2025, despite all that major expansion. The dynamics per unit, we do have some projections there. And if you think about quantitative the SG&A freight, we expect to conclude 2026 below the numbers of 2025. This is what we can say. This is some indication of what we have been doing as far as planning is concerned. I don't know whether that helped.

Yes, it did. I know it's not guidance but just an indication of what you're going to do. That's important. And if I may, let me follow up on the inputs question. When you opened your stores in Mato Grosso, you had gross margin of about 300 points between Mato Grosso and Rio Grande do Sul. Now that you have improved those numbers in Q4 and for the year too, now stores are mature enough, do you believe that the difference remains the same? Or is that better you have managed to close that gap?

It's slightly better than that. There is a difference, but it's slightly better than the expectations we had. The major difference now is a better mix in Rio Grande do Sul as well when compared to recent years because now we have normal weather conditions.

Matheus Enfeldt from UBS is up next.

I have 2 actually. Number one, what's your maintenance CapEx? I believe that 2026, there aren't any major projects. Can you give us some color as to the maintenance CapEx? And how much is it going to be focused on growth? My second question is a follow-up of a previous question. That's the ramp-up for the corn plant. In your guidance, you expected a somewhat fast to ramp up. Have you updated that expectation so that we can calculate the use of that capacity? Is it 80%? Or is it going to be faster than other plants? What's your take on how it's going to be played out once the ethanol plant starts up?

Would you like to address CapEx?

Well, let me address the maintenance CapEx. We do not have official guidance, but I can give you a range. That will be between BRL 300 million to BRL 450 million that's maintenance CapEx for the year. It's not maintenance per se, it's CapEx for minor movements, things that we have to do, maybe replacing a piece of equipment. It's maintenance and with that improvement approach. Yes, there are some improvements and investments in these new stores that's the asset-light strategy. ERP intangible assets and the biologicals continuity. Everything has been included in this. There is some new investments in that number I gave you.

As to the ramp-up, Matheus, yes, that's our expectation. We have to make that happen, of course. But we expect to have a fast ramp up based on the stage where the project is, because of the team we put together, a team that is experienced with a good background and the project per se. It's a project has been tested, has been tropicalized. It's not something new. There is no adventure, so to speak, that will, of course, will gain traction and we're going to stabilize the operational -- the operation very quickly.

Let me just follow up on this last answer, Joao. I believe that you've already mapped that out? Have you started negotiating with DDG buyers?

Yes, both DDG and ethanol buyers. We are -- so we still have -- we've already signed a couple of contracts.

There are no further questions. This concludes the Q&A session. We turn the conference over to Mr. Dumoncel for his final remarks.

Well, thank you. Thank you for your questions. Thank you for attending this call. As I said in my presentation, we remain confident in Tres Tentos model. The company has been growing, has been delivering results. Our operation has been adjusted, we're not overlooking the challenges and freight is indeed a challenge. It was relevant in this past quarter. But we are monitoring it. We are working on it. As I said, we interpret. We understand what the reasons are and what we have to do and the changes and the transitions we were through in that quarter. The reality will be very different in 2026. We remain available to clarify any questions you may have and we're ready to got speed, have a great 2026. Thank you for attending. Have a great day.

This concludes Q4 earnings call. Our IR department is available to answer any questions you may have. Thank you for attending. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]