Verde AgriTech Limited (NPK) Earnings Call Transcript & Summary

This call to discuss the results for Q2 2022. If you're attending this event live, thank you very much for your interest in the company. If you're watching it on YouTube, thank you as well. And if you want to support us, please like the video, please share the video. This is how you can tell YouTube that other people like minded, other people like yourself or other people might equally be interested with this content. Please help us growing awareness to what we're doing, to our purpose to the reasons we're trying to grow the business. So as usual, we will have a presentation, which will be undertaken by our Chief Financial Officer, Felipe Paolucci, who is right by my side here. And then at the end, we are going to be addressing as many questions as we possibly can. We are in a bit of a busy schedules down here in Brazil. So we will -- this call is going to be lasting 1 hour, as soon as it's finished I have another call I will have to jump to. I couldn't reschedule. It was something important for all of us, co-owners of Verde. So with no further ado, I will allow Felipe Paolucci to go over the presentation, and then I will be addressing. If you have any questions, please send it on the Q&A option, as usual, at the bottom of the screen. I can see a very exciting number of people attending this call live. Thank you again very much for your interest and all your support over this journey. So thank you, Felipe. Please go ahead.

Hello, everyone. Good evening. So I'm going to start now saying, again, that like the old quarter, prior quarter that you have 5% of Q1 count for USA in our Super Greensand sold at Amazon, unfortunately, for this moment, we are sold out at Canada, but you can buy the product purchase it at Amazon U.S.

I guess you don't have many public companies, but even the CFO is here helping you guys, helping to sell the products. So well done, Felipe, for helping to sell Super Greensand to our U.S. and Canadian resident shareholders, who I'm pretty sure right now logging on to Amazon and placing orders for their family and friends and neighbors so everyone can try to experience the benefits of Super Greensand in North America as well.

Thanks. So moving forward to the presentation. The first chart, that's #5, and this presentation will be also shared later on our website and also on YouTube. So on summary here, you can see that Verde has concluded its re-domiciliation in Singapore. And now we are a new Singaporean company under Verde AgriTech Ltd. We became the holding company of the U.K. company Verde AgriTech Plc. So Verde's trading symbols did not change at TSX, continues as NPK. The company’s growth over Q2 2022 was mainly driven by an increase of productivity, market growth and also price increase. On Q3 and Q4 2022, Verde expects to meet the overall revised guidance for the year, which is 1 million tonnes. On Q2 2022 highlights related on cash, we still have an ability to generate significant free cash flow in the long term. Although we can see the increase in our receivables. Also, this is something that we already expected, and for the year-end, the beginning of Q1 next year, we expect to have very relevant cash flow on hand. Cash utilized from investing activities increased over 2,000% in Q2 2022 to over $12 million compared to $577,000 last year. Trade and other receivables increased over 279% in Q2 2022 to $20.5 million compared to $5 million in Q2 2021. Total loans for CapEx and working capital in March 31 -- sorry, in June was $8.9 million. On profitability, the revenue increased over 362% in Q2 2002 to $24.8 million compared to $5.4 million last year and, in Brazilian reals, increased by 327 million in Q2 2022 to close to BRL 100 million compared to BRL 23 million last year. Sales by volume increased by 112% in Q2 to 202,000 tonnes compared to 95,500 tonnes in Q2 2021. Gross margin size increased to 79% in Q2 this year compared to 72% Q2 2021. On EBITDA, before non-cash events, there was an increase by 782% this year compared to $10.7 million compared to $1.2 million in 2021 and, on net product, an increase by 3,426% in Q2 2022 versus up to $9.6 million compared to $273,000 last year. On operations side, Plant 2 is expected to be commissioned by the end of August, which means like in 15 days from today, revising up an initial production capacity of 1.2 million tonnes per year. And also the full Capacity of 2.4 million tonnes per year is expected to be reached in nearly Q4 2022, which is 4x Verde's Plant 1 current production capacity. That's 600,000 tonnes. Now a bit on our financial statement, then the charts, we have some graphs, and that's going to be easier to -- for everyone to understand. We can see here a comparison of Q2 2022 for the same quarter last year and also the year-to-date cumulative from January up to June. So as I mentioned on revenue side, you see an increase in the quarter of 362% and year-on-year, close to 500% growth. And on gross margin, it's also is interesting to highlight here, you can see delivery gross margin of 79% in Q2 2022 against 72% last year. And compared to year-on-year, year-to-date, we also are 10% higher on EPS compared to last year of 78% compared to 68%. On the EBITDA side, we can see $10.7 million Q2 against $1.2 million last year and cumulative $14.4 million versus close to $333,000 last year. And then in the bottom line side, we can see a huge increase. Last year, we had a loss of $1.5 million cumulative side, and now we delivered over $12 million on net profit year-to-date 2022. On operational summary, now this chart shows the tonnes sold per ton, revenue per tonne. So you can see also a relevant increase in the revenue sold per tonne over 100% from $56 last year to over $123 this year. Also year-to-date is also the same trend with a growth of over 110% on sales per tonne. On the production side, also, we had an increase. This is basically driven by diesel cost and mix change. As I explained in the MD&A., we are spending much more on big bags than before, which also increased our costs. And on the other hand, you can see a chart from the end of this presentation also that shows the increase on diesel, which is basically driven by the crude oil also increased in the period. If we exclude freight from the numbers, which is very relevant for us, every time Verde sell CIF, of course, Verde's has to pay for the freight, and this increase our revenue and in the other side, increase our expense with freight. So you can see here on the revenue sold per tonne will decrease from $123 to $88 per tonne, but -- and the gross margin would reduce from 79% to 70%. But the key point appears to compare in the same pace, so you can see gross margin coming from 58% last year to 70% this year compared to the same period of last year. And also year-to-date, currently, we are over 15% higher on gross margin as well. These charts, you can see on the left side of the screen, the sales per tonne development since Q1 2018. Actually, the first period that we sold product which are reflected to us in Q3 2018 with 9,000 tonnes in the trimester. And now we do have only one less quarter over 202,000 tonnes. So the growth is really very, very big compared to prior periods. The gray bar here, we can see the difference that we have in this year against 2021, 2020 and also 2019. In the right side, you can see even higher growth. This was driven by the volume and also by price, sales prices are much higher than last year. So you can see that in Q2 of this year, we delivered was $25 million in revenue, which is more than 4x or close to 4x what we had last year that was $5.3 million. Now another one, we can see projections just on an annual basis. The company started in 2018 with less than 30,000 tonnes sold, then 120,000 tonnes in 2019 up to 243,000 in 2020, 400,000 last year. And this year, we do expect it to deliver close to 1 million tonnes of product. In the revenue side, also had a growth from $1.3 million to close to more than $100 million since 2018, which is like close to 100x growth, which is very big also. On sales, general and administrative expense, you can see that was already expected, but you can see that we have additional expenses in most of the lines, most of the items especially because they need to support and to hire people and prepare the company for this growth. We can see that sales and marketing expenses increased close to 100%. Fees paid to sales agents are also close to 500%. It's a big increase. I can see a chart here as well that shows that sales throughout distributors and direct sales are higher than the prior period. And on freight, freight also a huge impact. You can see that we had over $7 million expense in freight in Q2 2022. On general, administrative expenses as well, we had an increase, so as we have in IT, taxes and total general expense by the end of 55% growth year-on-year. Some other highlights here. We've chose freight to explain and general expenses. Freight, you can see in the left side, FOB against CIF. We can see that the total volume sold last year on FOB, for example, to us like 54,000 tonnes, and it increased only to 64,000 tonnes this year. In the other hand, you can see CIF that had a growth of over 3x year-on-year from 41,000 on to 137. This is the trend also for the next -- for the coming quarters. We've seen our mix between FOB and CIF maybe close to 70% now in Q3 on CIF against FOB, and last quarter, it was a 68% also CIF. On the right side, the total expenses, you can see that we have general and administrative expenses, an increase of 62% fees paid to sales agents , close to 500% and sales and marketing expenses, an increase of $700 from $347,000 to $711,000. This is the chart as mentioned before, the sales channel comparison between the left side of Q2 and the right side compared against year-to-date this year against last year, you can see that in Q2, the indirect sales increased from 37% of total products sold to 41% now in this quarter. The same trend you can see as well year-to-date. This means that we have an additional cost with sales agents and also a price reduction to distributors that we have discount applied in the products that they purchase to receive. On interest-bearing loans, we had some additional capital with the market, a bank as a total score at the moment is $8.9 million in June 30. And we are doing most for working capital and is kind of loans for working capital and for equipment purchase for factory 2 and also to support our growth. So this is -- most of these are over 24 months with a competitive interest rate. In Brazil, currently, the government rate is close to between 13% and 14% and expectations that by the end of the year, it has a decrease. And so it will decrease most of our loans that are linked to the CDi that we call that's directly connected to the government interest rate paid to investors. Related to our guidance, as we can see here in Q2 2022 that we've achieved the sales started per tonne. And our expectation now is to remain with the same guidance for 2002, which is 1 million tonnes with revenue of $109 million and EPS earnings per share of $0.87. Now in the chart we have also a highlight here related to the guidance. One point that was also mentioned at the MD&A that we had an increase in diesel price during Q2 an additional 23%. So year-on-year, we have over 78% increase on diesel price. Of course, it had an impact for us in Q2. However, we do see a trend on Brazil since 3 days ago. We have already had a reduction which is not that big, of course, but it was maybe 5% reduction, and we do expect additional reduction from now to the end of the month to follow the crude oil price that internationally is dropping in the market. And for 2023 guidance, also, we expect to remain with 2 million metric tonnes to be sold next year. On Brazil economic scenario, you can see Brazilian real against the U.S. dollar and also the Canadian dollars against Brazilian real. You can see here that the trend remains the same. We can see that by the end of August, 2 days ago, we had BRL 5.07 per U.S. dollar and close to BRL 4 to CAD 1. Comparing periods, you can see now that Brazilian real is stronger than before, and it's expected to remain as it is asset according to the banks and in business analysts, at least for a few months. Potassium Chloride price and also diesel and crude oil price, you can see in the first chart here that as expected to be presented at the KCL, CIF, Minas Gerais price had a significant increase of close to 163%. And in the highest price, it's the right side of the table, you can see 128% growth on KCL price, which also had impacted our sales price per tonne as well. And in the second chart, diesel and crude oil prices, you can see that the diesel here that's the price to the distributors where the gas stations and the company also purchased the diesel. It came from BRL 2.80 per liter to over BRL 5.20 here in August. And you can see also the trend of the crude oil from $59 in Q1 2021 now to close to $100 now had a decrease to $92 in August 2022. And so I think announced $87 per crude oil value. So that's what I have, Cristiano for today. So I'll pass it back to you, so you can ask the Q&A session from our shareholders.

Thank you very much, Felipe. We only have 47 questions here on the Q&A so far. So let's begin just -- or okay, first question. There's some speculation in the media about the location of the third plant. Yes, there is, as you might expect, there are several different places in Brazil we're interested in that, some very strong candidates. We're very happy about what's being discussed, and we hope to be making a decision in the future about where the third plant will be located. The second part of the question, is there reason why it would be far away from the mine. There are some advantages, some disadvantage. We are looking at all of that, but there isn't much to report at this stage. Second question, how much of a discount do we offer in comparison to provision of potash prices. It depends. It's not -- it depends on the situation, commercial reasons, context. So there isn't a set formula. The question here about our announced partnership with Lavoro, if they're going to be able to sell Q1 2023 production. Yes, given where we are in the season right now, we expect that partnership to be more effective in terms of new sales from next year and the years after. Next question, does or could Verde research into a product application of similar consumer potash in a multiple potash needs to be applied with brands to produce leads to enhanced availability, this could mean -- so the question here is about the product having a greater economic efficiency in comparison to conventional potash given its benefits. And yes, we've seen that happening in some situations. We have and it's public over 85 testimonials or around 85 testimonials, I think, in our YouTube channel. There are reports there of better yields, but for now with a foreseeable future, we are focusing as a direct replacement against potash, and we are not really focusing on those added benefits in terms of monetizing it. The next question from a foreign investor in the company. Can you give any reassurance that given the difficulty political climate in Brazil, a long-term investment by me in Verde will be safe in terms of respect of my right of ownership, especially in mind, the concerns around the potential for threats to produce democracy on the coming election. I cannot give you an assurance, but in Brazil's history, there has never been, to the best of my knowledge, any problem in terms of appropriation. When you look at the 2 candidates who will likely, one of them would win, one is the current President where despite of the media, trying to suggest something. Similar to what happened in the United States with Trump might happen in Brazil. I personally think the risk is closely significant. And I think lots of the financial community agree to that. The other President, again, is someone who ruled Brazil for 8 years. So there is already a track record. So I think in terms of uncertainty from an investor's perspective, there's no one here who might be elected as President in Brazil, [indiscernible] might be reelected or someone who was in power for 8 years. So there is a certain predictability in terms of what might happen. And the market seems to like it. At least we've seen strong group rising on Brazilian equities. And whenever I talk to investors, the institutional investors seem to be -- good expectations from them or a positive expectation, regardless of who gets elected. What portion of your customers use K-Forte as standalone versus in conjunction with conventional potash. I don't know. But yes, some customers, they will be using both products, both sources of potash that often happens when the level of potash in the soil of farm is very low or is a culture that has a very short cycle. So there are some farmers that like to combine 2 different sources of potash. Can you confirm that trees being planted on the mine site or being watered and looked after and to establish? Yes. we look after them very well in terms of making sure they survive throughout the dry period. And next, question what percentage of sales this quarter was BAKS? And how much higher was the average sales price for BAKS? I don't know from memory, what percentage was in BAKS. 12%, well done, Felipe. So 12% of sales were BAKS, which is a product that has essentially been sold out for a long time. And we have limited production capacity. Another question here, how farmers tend to buy fertilizers. Do they buy NPK separately or they buy all 3 components directly from a blended? They do both. So usually smaller farmers, they will buy NPK blends. Larger, more technical corporate farmers they will prefer to buy -- most of them will prefer to buy each nutrients separately, so they can apply it more precisely depending on the ratio of nutrients they need. In the U.S., for example, due to the order market is single agent rather than applying NPK blends. What happened to the OTC listing? We have had some problems with OTC listing right after the reconciliation to Singapore, but I've been told this has been resolved. So several of the U.S. brokers understand, and are already being able to trade, but there are some U.S. brokers who still need to go through their own internal process so they can resume trading. So I would suggest just -- I mean your broker that it has resumed and they need to go and figure it out. There was a change in ticket. So the new ticket symbol is VNBKF. So it's no longer AMHPF, which was on the old ticker from when the company used to report Amazon Mining. So there's a difference in that. How much of the potash sold in Brazil is from the blended to the farmers. The fact that your competitors are all owners of blend is a problem? It is a problem, especially if you're a very small farmer and you want to own nutrients. However, the farmers were already used to buying different nutrients from different suppliers, different products from different suppliers. So we don't see that as a major problem. We actually see that more as an opportunity for -- at some point in the future that we also start selling the other nutrients and benefit from that relationship we've been creating with our customers. Most of the competitors are far from -- most of the competitors are far from Brazil, but you need to move sustainable product than they do, which is easier? Do high fuel prices hurt down or hurt you? It depends. So when you look at the fuel cost element, this is only part of the problem. To give you an idea, after your ship gets in Brazil, gets through a port. At the moment, it needs to wait anything from 45 to 60 days before you unload it. So the logistical hurdle for you to bring imported fertilizers into -- is a nightmare. So there's no doubt that being local has significant benefits. The price of ammonia is very high. All people are looking for K-Forte and BAKS because of [indiscernible], we're not getting that as a driver for growth, even though the price for nitrogen is very high. The next question -- another question here about trading. I apologize. I know how frustrating it is. We've done and keeping everything we can, and we've done so. It just seems to be -- some of them is -- it's each one of the brokers that needs to do something to allow trading to resume. If there's a broker that raises anything, a bank, just please, and there is anything we might be able to help, just let us know. Another question here. Verde costs have increased much more rapidly, they increase in the potash price charge to farmers. And that's in a peak potash environment. This might think why that Verde is over earning? Talk about it. And a slight correction, the potash price, the company lose substantial money, hard to reconcile the low price, potash or what the actual potash has been in the entire year, please explain. Sure. Just as a reminder, we've been making money since potash prices were USD 250. I think it sounds unlikely that most of the market believes it's unlikely for the prices to come that low when we look at the most respected analysts for potash whose long-term prices $400, which is already a phenomenal price for us. But even if you were going to look at a doomsday scenario $250 when most of the supply can be economic for distributing product in Brazil, we always have the fallback plan to sell closer to the mine rather than the way we currently operate where we sell across the whole Brazil. So we have that choice if the market completely crashes on potash, which seems to be very unlikely. That's not a question here . Why are we selling at such low prices compared to Brazilian potash market price? When you see the results on the quarter, that's historical price. And a lot of it or some of the volume gets priced in previous quarters. Some of it gets priced in previous years when we do long-term sales. And of course, the problem or the big impact we had was because we were sold out for Plant 1 for so long. There wasn't much opportunity to sell at spot. We hope that with Plant 2 to come into production and the fact we will be increasing our production past fivefold, this will get minimized going forward and in the -- especially in next year. Another question here. Why is the CEO so promotional? Why the need to pay for social media ads to the investor site? And why doing that together when the CEO is selling shares, especially before supposedly ramp-up in revenues? I've seen long-term holders losing faith in the management team. Based on that, why I should still believe in this team, especially under a valuation that requires future execution. I think the fact I'm reading this question here, I could have just chose to ignore it and move on, probably speaks very loudly. We -- I don't know if we are very promotional. I think when you look at our IR budget, it's significantly smaller than of most companies which I know, which are public companies. and even significantly lower from the early days. So there's very little budget being allocated. When you mentioned paying for social media, we did some social media ads, and that is because in Brazil, we do a lot of that, just all the products. And we have an in-house team. We have the expertise. So we did make some investments to try with social media angle, and it did raise awareness. We did have some institutional investors who came to us interested and weren't aware about the company and they didn't complain about finding it via a social media ad. So I'm still unsure whether there is a bit of a taboo from certain investors that the company shouldn't be doing social media to increase awareness or this is something we actually should have been doing because I did get some people -- some pushback from some investors saying, we should have been doing that. I post that a few weeks ago or couple of months ago. So there hasn't been any social media ad, but it isn't an issue. I am completely convinced that we should stop. And I would like to hear from our co-owners, there are several in this call. There will be several or watching this on YouTube, we hope, especially because hopefully you guys have clicked and shared, share this video, like this video. So please reach out and let us know your opinion. Should a public company be investing on social media to increase the awareness or should not? We should or should the company be relying on more conventional types of IR investment? The other question is about me selling shares. I remember when I sold some of the first amount of shares and it was kind of like rather painful because I had a hold -- held on to them for 17 years. So remember having this very weird conversation with the traders saying, look, this is my older child. You're going to be selling a small chunk of it. So make sure you find good hands for that. So it's still something that myself -- self psychologically, a person struggled with debt. However, it's something that I'm no longer in the early 20s or early 30s when I started the company, I have a family now. There is a diversification issue going forward. And in all fairness, I have even had some investors who turned to me and say, well, no, I think my opinion about you went high. I think high of you now that you're selling some shares because it just never made any sense for you to be so concentrated, and that was also something I had to. So there will be mixed opinions on that, and I do respect either opinion. Next question, but -- thank you for your question and giving me the opportunity to talk about that with our fellow co-owners. Another question. The estimated production capacity for 2023 is 3 million tonnes, but the sales guidance is 2 million tonnes. Do you see guidance being reviewed upwards? We would love to review this guidance upward, we will carry on working hard to make that a reality. We also need to be cognizant of the fact it's growing 100%, it's not easy like we've been doing. So hopefully, we can share the burden of this growth or this new growth with more partners like the one we announced today. Okay. Another question here about trading in the U.S., again, I apologize for that. As you all know, we've been working on listing in a main stock exchange in the United States. And hopefully, that will resolve it for forever. But if there's anything we can talk to a broker or you can put us in the loop, put our lawyers on the loop, we're happy to help. The other question here, excellent presentation at the Canaccord conference. So the link for that conference presentation is available. Some of you haven't seen it. It's on our website or Twitter feed. NPV of $245 per share. What was the total time frame the discount rates used in the calculations? My guess is 40 years in discount rate for 80%. Am I correct? Yes, you're correct. I think the biggest scenario, it was a bit less than 40 years. But more importantly, all of that information is available on our website. So there is a 300 -- the 200-page long independent report with all the assumptions behind that expansion feasibility study. Next question. Why is the Q2 average selling price so low when compared to potash price for the same period for the 16 factor? I've answered part of this question by saying some of it gets sold ahead of time. We do offer discounts and commercial reasons, regulation of potash, but we also need to be a bit careful about just making a direct calculation because, for example, when you sell via distributor, a distributor will get 15%. And that also has an impact on the price you see there. So it's very difficult. What I'm trying to say is you will never be able to reconcile the price you see is at our average sales price in the quarter just with by 6 and make a direct reference to KCl. Next question. Will Verde's shares continue to be listed on OTC? And with what symbol? We discussed that one. How Verde can benefit from the carbon credit market? What is the average size of the farms and hectares of Verde clients? This carbon credit market, the other day I heard something quite interesting. It's a phosphate company claiming that they expect to be getting absolutely all the revenues from -- or the profit from carbon credit. So in other words, the farmer wouldn't need to be paying for it. It's just a carbon credit, which this company is sharing with farmers is going to build and has already started building the businesses. So it's something we probably should start focusing a little bit more attention towards. We're doing some stuff. We're doing some studies looking at it, but my time personally and my focus personally hasn't been much on it. There was a little bit of an eye-opener, and probably I should spend more time looking into it and because this sounds interesting. The average size of the funds and hectares of Verde client is about 1,000 hectares. Nutrien recently announced that they purchased a Brazilian distributor. Did they sell any of the product? No, that distributor didn't sell any of Verde product -- our product. Could that sale jeopardize our sales? No, not at all. It's a very competitive market when it comes to distribution. I believe today's press release also is an interesting one. Another question again, my apologies about the OTC trading. Please put us in contact if you can help. The good news is that we can see trading happening in the U.S. on the new ticker. So I think it's now more down to each one of the brokers figuring stuff out internally rather than anything too complicated having to be done. Another question here about the cost sensitivity regarding the change in price of fuel per tonne of products sold, fuel up 5% production costs up x percentage fuel up 25% production costs up 5%. I'll ask Felipe to have a look at this question. And then perhaps for the next quarter, we can look into doing a little sensitivity analysis on costs. But the good news is fuel prices have been going down. And today, there was another price decrease announced in terms of diesel prices here in Brazil. Has Plant 2 produced yet? No, it hasn't produced yet. We're very anxious. It's going well. The team is doing an amazing job. Let's remember when we started building this plant, it was 1.2 million tonnes, we doubled that to 2.4 million tonnes. We have at some point over 600 people working on the construction. And we're doing everything, and our team is doing everything we can to start production as soon as possible. And we're still working with production to start next month. So we might be 14 days. We really hope from starting production and so with our customers, we're equally really hope we will be able to do that. Next question. Looking at Page 26 of the corporate presentation, price competitiveness versus other potash producers. Verde seems to be more secure to fuel costs. I understand that other components like international freight are also affected by inflation, but how has the big increase in Brazil fuel cost affected your relative competitive position versus international competitors? Verde just need some more trucks to transport the same of KCl content to farmers. As you saw from our results, diesel price does bite in our mass sales prices as we have to pay more expensive distribution costs. So in an extreme, potash, extreme high diesel price like the one we saw of $130. I would say we will be losing some of that competitively. However, in that extreme scenario, which isn't reflected in that table on the presentation, the international supplies are equally impacted on freight -- on freight costs, also on the local distribution costs. So we would need to look into it in more detail. But because it's such a big stream and things have already reversed to the [ main ] or at least it started to, we -- I think as a long-term situation, it seems not much too different from what you saw there. What's the typical purchasing behavior for farmers in Brazil with regards to potash procurement? Do they typically buy today for immediate use, for use in next quarter or for next year? Any insights you can share? There is that -- unfortunately, there isn't a typical behavior. It will vary a lot. We had some farmers who in the past would be buying 1 year ahead, who for this year chose to buy just now for immediate delivery. I had a meeting with our sales guys yesterday, and they were reporting several farmers who haven't bought any fertilizer yet and are kind of getting desperate to secure supply now. So it does vary. It does vary. Because our market share at this stage is still so small, it means that we can keep looking for each one of those customers or that sort of customer behavior depending on where in the -- depending on where we are in terms of the season, in the buying season. Could you please provide us with an idea of how far into the future you're already making pre sales for newly added plant to capacity? We're already selling for next year. We don't have any sales for 2024. We have not, so up to 2023 year, we already have -- we already have sales for next year. Next question. Should the 2022 on products CIF and FOB average cost for the full year, including all orders of CAD 109. Can you say what the average price has been at the half year? I don't know but it wouldn't be very different that, I would say. Can you help us understand what has changed on the taxation side? There hasn't been any change on the taxation side at this point in time. Can you please provide an update on Bio Revolution? We're already selling Bio Revolution last week, did a big sale of it, about 5,000 tonnes of product with Bio Revolution. And we sell it for BRL 40 per tonne. And the cost is less than BRL 1 per tonne. I cannot conceive why would anyone buy the product without Bio Revolution. I think that will in just a matter of time until everyone appreciates that. Another question in Portuguese. I would like to know how much percentage of the cost of freight, diesel accounts for and how you intend to reduce the cost of transportation. I think the -- as we grow to the bigger volumes, rail becomes a reality, and there is some scope to reduce from rail. As we become more consolidated and the location of the plant becomes more consolidated, we start seeing an even greater offer of freight. We start increasing our relationship with different transportation companies all over Brazil, different independent truck drivers. We improved the systems. All of that should help contribute towards that. What's the company's strategy to do it Bio Revolution? Has the technology been patented? Yes, we've applied for patent. And the strategy there is a good video on YouTube, where I go through detail what I call fertilizer 1.0 versus fertilizer in 2.0. I believe before Bio Revolution, a fertilizer would only be providing nutrients, be in nitrogen phosphate, whatever, potash, manganese, magnesium. With Bio Revolution, you can now start adding microbes, and those microbes, you have them for all sorts of different purposes. So you have microbes that will be capable of storing nitrogen in the soil, microbes which will increase the availability of certain nutrients in the soil that will act increasing plant protection, increasing the resilience of crops against drought, too much cold. And we see when the Bio Revolution will turn our products into a platform like a smartphone with different apps, with different developers, with different scientists, with different companies that come up with solutions and would be used by Bio Revolution, our products to deploy in those to the field. When will Verde announce buyback or distributing a dividend. We're very anxious about that as well. Excited, we're talking. We're making our calculations, and we hope in the next months, we will and certainly this year we hope we're going to be announced something along those lines, hopefully. Next question. How much of the 2023 volumes have already been told? Not material. Why some trades in the U.S. are not recognize the new Verde share symbol. Again I apologize, I think it's more to do with the broker taking some time. Some -- well, please let us know if there's anything you can help. Regarding the recent increase in sales and marketing costs, do you expect this trend to continue as the company ramps up sales? Our cost of sales and marketing is significantly lower than competitors, significantly lower than competitors. We're way more efficient than they are because we rely so much in digital sales. If it will carry on, yes, it should vary on increasing as we go after the very significant volumes we've been aiming. But there's no doubt there should be -- and there should continue to be some significant gains of scales in that front. Realized price in the quarter 1, 2 and 3 -- realized price in the quarter was $123 times 6 is $738. This is a far cry from the lowest price during the quarter. What prevents Verde achieving full price? And what can we expect going forward in the future? Again, we can't just multiply by 6 because that doesn't take into account the distribution -- distributors, 15%. That doesn't take into account the fact we were sold out for Q2 for a long time, volumes and that we also give -- we also offer a discount. But I think the fact that $123 was already a significant great multiple of what the previous quarter had been. I think that is already very encouraging. Another question. Are you aware that last week, Petrobras has several land leases of sales of potash available? This is in the Amazon Basin, but Petrobras had some old concessions there, which it's trying to sell. But I was told recently by a geologist in Brazil, which was commenting the Amazon Basin where there's potash there, he was just saying how anyone can go and apply for as much land with potash occurrences in the Amazon Basin as you. Supposedly, there isn't no shortage of potash and beneath the Amazon Forest. The issues there seems to be of a completely different nature and nothing to do about the availability of land available for people to develop. So we'll be interested to see if there will be any interest whatsoever on this attempt of Petrobras to sell their possessions they currently have. Are you aware -- some other question that was on Petrobras. From the past can you talk to us about Verde's orders or contracted price or better? So when price goes up, there's a delay. But when it drops, they happens immediately or other industry participants work in the same way? Good question. Contractually, you might have some fertilizer distributors that will say that if you buy it for future delivery, and if the price goes down, you have to pay the reprice. That might be in a contract. However, what we see happening in real life talking to the other distributors and to the players is that no fertilizer company in Brazil chooses to enforce that. So at the end of the day just as usual negotiation and the farmer gets the lowest price. The difference in terms of our approach is that we're fully transparent in terms of making sure we get pass to the farmer. Contributing here the American symbol for Verde AgriTech change to VNPKF in my account this week. Another question, is it possible to increase BAKS reduction above 10% to 12% over time? Yes, it is possible. As we start using Plant 2 produce K Forte at bulk, we will equally increase the production capacity of BAKS. I'm now officially going to be a bit late for my next meeting, but there aren't many questions left here, and I want to -- I will sleep better tonight if I know that I've actually answered all of the questions. So let me be a bit late to the next call. What has been on average of customer [indiscernible] rates for the past year? It's a very good question. We've discussed that in several of the other pools. There's a press release we discussed that. I'd refer you -- I would like to refer you to it. It's the one we talk about the EGR earned growth rate if you -- it was published earlier this year. Would there need to be a stock split to provide liquidity for more institution in retail investor? I don't anticipate doing the stock split. Obviously New York listing going, we're working on it. It's not new. We are focusing on NASDAQ. Any news on smart money taking larger blocks. Can you talk about BlackRock? So no doubt, BlackRock is a big fund. But I wouldn't -- I've been doing this thing for 17 years now. I've met hundreds not thousands of retail investors, fund managers, what you guys are calling smart money. But I wouldn't make assumptions. I've come across a lot of private investors, a lot who -- I would rank very high and certainly much higher than a lot of institutional investors or what you call it smart money I've met over the years. So do not underestimate your capacity to do your due diligence. You talk today. Look at it, and yes. Next question, another one about the Petrobras. This doesn't affect us whatsoever. The problem isn't lack of availability of potash mine rights. The problem there is another one, are other ones. Is the company finally listing? Yes. We hopefully will be on NASDAQ because the capacity -- no capacity trends on BAKS, how much higher BAKS total sales would be. I think it's a matter of time and letting the people who love K Forte so much understand of all benefits of BAKS. But when you start doing the calculations, [indiscernible] as a farmer, it's BAKS Bio Revolution. No doubt, it's a no-brainer. But same thing with investments, same thing with stocks. Sometimes takes people to appreciate value. What was the average discount given on K Forte? I don't know. It varies and it's exactly because there you're asking for an average. So my apologies, I don't have an answer. Freight, cost and transportation is 86% of total costs. Does Verde have some way to reduce the transportation costs? Yes, I think we've addressed a little bit about that. As we consolidate the price as of the plant, the availability of transportation increases. You start having more business that getting developed surrounding the logistical issues. So you tend to see this happening, yes. Policy and buyback, we're still working on that. Potentially selling K Forte to Bio Revolution in Asia in the future, will Verde look for distribution partner? Yes, we already have a partner, and we're always open to new partners, very interested. I think K Forte, BAKS, Bio Revolution is to gain a lot of penetration into international markets as well as ratio for customers. This is something else we track a lot. Our NPS is pretty high. And again, [indiscernible] I suggest, you have a look at this EGR press release we put out, because it's the same guy who came up with NPS. He created , what he calls NPS 2.0, which is earned growth rate. And yes, it's a good press release to be read. Can you comment on the listing? I've answered that. Capital purchase. We're not looking to sell and need to raise any capital. Will Verde expand the amount of shares outstanding? Or have a share sale? We're not planning to raise money. An interesting question. When do you expect to have a granulated project? I think it's part of Plant 3, we will have a granulation units as well. When you're doing direct sales, the 15% come out to pay distributor and then another fee for commission? No. So if you're a distributer, you've got a 15% discount. And it is 15% because then the distributor also has to pay some taxes. It's a bit more very efficient towards tax perspective. If you're an independent agent, it's 5% because that way we sell directly to farmers. And of course, if a distributor, the distributor takes the credit risk by selling to the farmer as well. What are you most excited about? I'm very excited about Plant 2 starting production, very excited about Bio Revolution getting consolidated and new microbes being now added to our products. I'm very excited to see how our team has been evolving and how strategy for hiring has worked to build a very, very strong team, which I've no doubt is just as important to our growth as it's important to our product and our technologies. Patent on Bio Revolution. How long is the patent? It hasn't been granted yet. How much of the sales of 2023, 2024, or Bio Revolution over K Forte? We don't have a breakdown at this point. Why not build Plant 3 on Cerrado Verde? [indiscernible] and we may get tax rebates somewhere else. But if rate drops, it isn't more Verde advantage. It's a good point. This has been taken into account. When will Plant 2 be commissioned? Later -- it's later this month. Will you be able to meet the projected numbers? We- at this point, we believe we will be. We'll be very busy September, but we're already lined up for the new plant being commissioned to be worked in the same way as Plant 1, 24 hours per day, 7 days per week so we can supply all the orders we have on file. The BRL 40 is quoted is the additive, correct. It's the micro added credit. That's what the BRL 40 are. And that completes all of our questions, which leaves me a 2 minutes to be 10 minutes late for my next call. So in those 2 minutes, I would like to thank you all for joining us live today. Soon this video will be available on YouTube. If you thought it was a good call, the content, what was discussed, please go back on our YouTube channel. Please like the video, please click share. That's how you tell YouTube this is a content that people who are like-minded, should yourself might equally be interested in the video, and that's how we help to increase awareness about what we're doing without the company having to spend some minor amount in social media to promote this video. So please go and share. Thank you very much for your support. We're very excited, and we look forward to talking to you guys again on a Q3 results or sooner. Thank you very much. Have a great day. Bye-bye.