Key Takeaways
- Lavoro Limited, a leading U.S.-listed agricultural inputs distributor in Latin America, reported a 17% increase in consolidated revenue in 4Q23, reaching $265.6 million.
- The company anticipates an overall decline of approximately -20% in retail ag inputs in Brazil for fiscal year 2024 due to ongoing pricing challenges. Still, it expects these trends to stabilize and not affect long-term growth.
- Lavoro’s Crop Care segment played a pivotal role in revenue generation, with its revenue growth surpassing 90% in FY23.
- The company benefited from a successful renegotiation with suppliers, which brought a $12 million advantage.
- Lavoro announced a significant partnership with Stenon, a leader in soil chemistry testing, aiming to enhance nitrogen application recommendations and improve crop yields.
A Deeper Dive into Lavoro’s 4Q23 Financial Results
Lavoro Limited’s performance for the fiscal fourth quarter ending June 30, 2023, reflects the company’s resilience and adaptability amidst global economic challenges. The firm has witnessed sharp pricing declines in crop protection and fertilizers, exacerbated by excess inventory in Brazil. Despite these hurdles, CEO Ruy Cunha remains optimistic about the company’s future growth, attributing recent setbacks to temporary external factors like the COVID-19 pandemic and the War in Ukraine.
Pricing Woes but Unwavering Optimism
The CEO’s statement stressed that while the short-term pricing outlook seems unfavorable, it’s essential to recognize these as temporary setbacks. Lavoro is well-equipped to maneuver through these challenges, thanks to its diversified product portfolio, robust balance sheet, and unique positioning in the market.
Financial Highlights Breakdown
- Revenue Analysis: The impressive 17% surge in consolidated revenue, driven primarily by higher input sales from Brazil Ag Retail, shows the company’s ability to capitalize on market conditions. Factors such as increased unit volumes of fertilizers, crop protection, and specialties were instrumental in this growth.
- Profit Indicators: A noteworthy 27% increase in gross profit, reaching $46.9 million in 4Q23, was driven mainly by positive segment mix shifts and the commendable performance of Lavoro’s biological product line.
- Adjusted EBITDA: The upward trajectory is evident in the company’s Adjusted EBITDA for 4Q23, which stood at $2.4 million, marking an improvement of $18.7 million y/y.
Specific Segment Highlights
- Brazil Ag Retail: This segment reported a stellar 45% revenue growth, with unit volume growth playing a significant role despite the pricing challenges.
- Latam Ag Retail: On a constant currency basis, this segment experienced a 10% growth, primarily attributed to sales in specialties and corn seeds.
- Crop Care: While the segment witnessed a revenue decline of 21% for 4Q23, the growth in biologicals led to a substantial expansion in gross margin.
A New Partnership Paving the Way
Lavoro’s collaboration with Stenon marks a significant advancement in the company’s offerings. Stenon’s FarmLab solution promises real-time soil analysis, and with this partnership, Lavoro aims to provide timely nitrogen application recommendations to farmers, targeting an initial 100,000 acres.
Lavoro Limited Acquires Controlling Interest in Brazil-Based Referência Agroinsumos, Expanding Presence in Latin America (2023/08/02)
Lavoro Limited (Nasdaq: LVRO; LVROW), the first U.S.-listed pure-play agricultural inputs distributor in Latin America, has announced the successful completion of its acquisition of a controlling interest in Referência Agroinsumos, a prominent distributor based in Brazil. Established in 2006, Referência operates nine retail locations in the state of Rio Grande do Sul and employs 26 technical sales representatives (RTVs) who serve approximately 2,000 customers. The company’s sales mix primarily consists of crop protection and seeds, along with a wide range of granulated fertilizers and specialty products. Through its partnership with Ricetec, one of the world’s largest seed producers, Referência has become a key distributor of hybrid rice seeds in the state. Lavoro’s CEO, Ruy Cunha, expressed excitement about the acquisition, stating that it marks the company’s second acquisition in Rio Grande do Sul and further strengthens Lavoro’s brand and presence in Brazil.
Lavoro Limited Partners with Stenon to Deploy Groundbreaking Real-Time Soil Analysis Technology in Latin America
Lavoro Limited has announced a strategic partnership with German agricultural innovator, Stenon. Stenon has earned the backing of The Production Board, a San Francisco-based agriculture-focused investment holding company. Stenon’s innovative tool, FarmLab, uses sensor technology to provide immediate, cost-effective soil analysis. This marks a first-of-its-kind service for Latin America, giving farmers real-time access to crucial soil health data.
Through this partnership, the Latin America Agricultural Company will offer on-demand soil analyses to its customers. This service allows farmers to accurately identify levels of essential chemical elements for plant growth, such as nitrogen, phosphorus, and magnesium. It measures other vital soil parameters like temperature, pH, and moisture within seconds.
FarmLab is already operative in Europe and Asia, marking positive outcomes for corn, potato, and vegetable growers. This partnership signifies its inaugural deployment in Latin America, with initial tests anticipated with Lavoro’s clients in the Paraná state of Brazil.
Ruy Cunha, CEO of Lavoro, stated, “Our collaboration with Stenon aligns perfectly with our strategy of providing Lavoro’s customers with innovative tools to boost their productivity. We anticipate that integrating FarmLab with our technical sales team will enable us to offer specific product recommendations, optimizing yields while reducing costs, land use, energy consumption, water usage, and carbon footprint.”
The FarmLab device, engineered by Stenon, facilitates on-farm measurements of soil nitrogen and other parameters. Its user-friendly interface allows farmers to store and track all measurement records and diagnoses, providing a comprehensive overview of soil health. This real-time analysis replaces traditional methods of soil sample lab testing, offering farmers immediate insight into the health of their soil and enabling them to begin necessary soil treatments promptly.
Cunha added, “Nitrogen and phosphorus deficiency, stemming from the region’s natural acidity, is a significant concern for Brazilian farmers. Real-time analysis can immediately identify the levels of these crucial nutrients and, where needed, suggest a corrective action based on the quantity of necessary replacement. We believe this will boost productivity gains and lead to cost savings for our farmers.”
This partnership between Lavoro and Stenon symbolizes a significant step forward in harnessing technology to drive sustainable farming practices, marking a significant milestone in advancing precision agriculture in Latin America.
Lavoro Reports Strong Financial Growth, Acquires Cromo Química, and Forges Insurance Partnership with Banco do Brasil Subsidiary (23/05/2023)
Lavoro, the global agricultural solutions provider, reported substantial revenue growth, reaching USD 1.5 billion for the nine months ending March 31, 2023. This marks a 25% increase compared to the same period in the previous year, reflecting the company’s robust business performance amidst the evolving agricultural landscape.
The Latin American agricultural company also registered an impressive surge in gross profit, totaling USD 285 million, a significant 35% increase over the prior year. This profit represented a healthy margin of 18.6% and demonstrated the company’s strong operational efficiency. Lavoro’s financial growth was complemented by strategic moves, such as the successful acquisition of Cromo Química on May 31, 2023. This move bolstered Lavoro’s Crop Care Cluster by adding a wide range of products and specialized expertise in high-performance adjuvants.
In alignment with its growth strategy and commitment to providing comprehensive services to farmers, Lavoro initiated a strategic partnership in May 2023 with a subsidiary of Banco do Brasil. The partnership aims to offer tailored agricultural insurance solutions, further enhancing Lavoro’s service portfolio. However, due to a prolonged diligence process, the company does not foresee the completion of the NS Agro transaction within this fiscal year. This delay led to a revised projection for the fiscal year 2023 pro forma Adjusted EBITDA, now expected to be between $172 million and $178 million. Excluding the impact of the NS Agro transaction delay, Lavoro is on track to meet its previously issued guidance for the fiscal year 2023 pro forma Adjusted EBITDA.
To Report Its Q3 2023 On June 1st 2023
After the market close, Lavoro Limited announced that it would release its third quarter fiscal 2023 earnings results on Thursday, June 1, 2023.
Lavoro Limited Starts Floating On NASDAQ (2023/03/02)
Lavoro Limited, Brazil’s leading agricultural inputs retailer, has debuted on the Nasdaq Stock Market after merging with TPB Acquisition Corporation I. The Latin America Agricultural Company’s portfolio includes a range of products such as seed, fertilizer, crop protection, emerging biologics, and other specialty items, catering to farmers across Brazil, Colombia, Peru, Chile, and Uruguay.
The Latin American agricultural company’s Crop Care business stands out as a significant supplier of biologics and specialty fertilizers in Brazil, which help farmers safeguard their crops from pests, disease, and weeds without relying on traditional synthetic crop chemistry. This approach enhances soil health and productivity while reducing the environmental footprint, a pressing concern today.
Ruy Cunha, Lavoro’s CEO, expressed his excitement for the company’s next development phase as it begins trading on Nasdaq. According to Cunha, the gross proceeds generated by the transaction will provide the company with a prime opportunity to drive shareholder value as it executes its growth strategy. This strategy focuses on enhancing the penetration of agricultural technologies across Latin America, further strengthening the company’s continuous efforts to expand its footprint through organic growth and market consolidation.
Cunha highlighted the company’s mission to tackle food insecurity and empower farmers by providing greater access to innovative agricultural solutions. By leveraging its expertise and resources, Lavoro aims to support sustainable agriculture and increase the productivity of the farm sector in the region. The CEO’s statement underscores the company’s commitment to creating a positive impact in Latin America while delivering value to its shareholders.
Over the past few years, the company has made over 20 acquisitions, resulting in USD 1.56 billion in pro forma revenue in the fiscal year ending June 30, 2022. The company also generated USD 28.77 million in pro forma net income in the same period. Lavoro’s revenue grew at a CAGR of 69% between the fiscal year 2020 to the fiscal year 2022, including 23% and 14% year-over-year organic growth in the fiscal year 2021 and fiscal year 2022, respectively.
Photo by Tiago Araújo on Unsplash
