Lavoro Q1 2025 Earnings Report

Lavoro EPS Results

• Actual EPS: -$0.39
• Consensus EPS: -$0.01
• Beat/Miss: Missed by -$0.38
• One Year Ago EPS: N/A

Lavoro Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $373.85 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Lavoro Announcement Details

• Quarter: Q1 2025
• Date: 2/3/2025
• Time: Before Market Opens
• Conference Call Date: Monday, February 3, 2025
• Conference Call Time: 8:00AM ET

Lavoro (NASDAQ:LVRO) (NASDAQ: LVRO) is a global financial technology company specializing in currency risk management and cross-border payment solutions for corporate clients. The company’s proprietary platform integrates foreign exchange trading, payment execution and liquidity management to streamline international transactions and mitigate currency exposure. Through an intuitive, cloud-based interface, Lavoro enables businesses to automate hedging strategies, manage multi-currency accounts, and access real-time market data across major currencies.

The company’s product suite includes customizable hedging tools, multi-bank payment routing, virtual account services and detailed analytics dashboards. By offering both spot and forward foreign exchange contracts alongside tailored algorithmic execution options, Lavoro empowers treasury teams to optimize cash flows and reduce transaction costs. In addition to core FX and payment capabilities, the platform supports value-added services such as regulatory compliance monitoring, payment status tracking and secure data encryption to ensure operational resilience.

Lavoro’s solutions serve a diverse range of industries, including manufacturing, technology, retail and professional services. The company maintains a global footprint with offices and strategic partnerships in Europe, the Middle East, Asia-Pacific and North America. This international presence allows Lavoro to provide localized support, access to regional liquidity pools and integration with local banking networks, meeting the complex requirements of clients operating across multiple jurisdictions.

Founded in 2022 and publicly listed on Nasdaq the following year, Lavoro has been guided by a management team of payments and FX veterans. Leadership draws on decades of experience from prominent financial institutions and global banks, with a focus on innovation, client service and regulatory adherence. Under this oversight, Lavoro continues to expand its technology platform and extend its service offerings, reinforcing its position as a trusted partner for corporate treasury and financial operations worldwide.

Lavoro Q1 2025 Earnings Call Transcript

Key Takeaways

• Crop Care segment delivered 68% year-over-year revenue growth, 11% increase in gross profit, and 24% growth in adjusted EBITDA.
• Tighter credit policy and input price deflation in Brazil ag retail drove a 23% year-over-year revenue decline, while farmer liquidity constraints reduced cash-based purchases to low single digits.
• Brazil ag retail achieved a 7% year-over-year gross profit increase with 350 bps expansion in gross margin, supported by improved distribution margins and stabilized input prices.
• Escalating liquidity constraints and a major ag retailer’s judicial reorganization led to severe inventory shortages in November–December, disrupting operations with full normalization still pending.
• The company updated its FY2025 outlook, now expecting flat adjusted EBITDA compared to FY2024 and consolidated net revenue of BRL 6.5–7.5 billion (USD 1.12–1.28 billion).

Presentation

[Operator]

Welcome to the Navarro's Fiscal 2025 First Quarter Earnings Conference Call. At this time, all participants are in listen only mode. Please note this conference call is being recorded and a replay will be made available on the company's Investor Relations website at ir.luvorrow agro.com. I will now turn the conference over to Tigard Karpyshyn, Head of Investor Relations. Thank you. You may now begin.

[Tigran Karapetian, Head of Investor Relations at Lavoro Limited]

Thank you for joining us today on Lihora's fiscal 2025 Q1 earnings conference call for results ended on September 30, 2024. On today's call are Chief Executive Officer, Jui Coimha and Chief Financial Officer, Julian Garrido. The company has provided supplemental earnings presentation on its Investor Relations website at ir.lavorogro.com that may be helpful in your analysis and the quarterly performance. Before we begin, please remember that during the course of this call, management may make forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results and operations and financial position, business strategy and market growth, among others. These statements are based on management's current expectation, belief and involve risks and uncertainties that could differ materially from actual events or those described in these forward looking statements.

[Tigran Karapetian, Head of Investor Relations at Lavoro Limited]

Please refer to the company's registration Form 6 ks filed with the SEC today and other reports filed from time to time with the SEC for detailed discussions of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today. Please note today, management will refer to certain non IFRS measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted profit or loss, among others. While the company believes that these non IFRS financial measures will provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with the IFRS. Please refer to today's release for a reconciliation of non IFRS measures to the most comparable measure prepared in accordance with the IFRS.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

I will now turn it over to Rui Cune, CEO. Thank you, Tigran. Good morning, everyone, and thank you for joining us today as a review of Ouro's Q1 2025 results. As outlined in today's earnings release, our Q1 2025 results largely mirror the trends in prior quarters across our operating segments. Crop Care continued to demonstrate strength and resilience delivering double digits year over year growth in revenue, gross profit and adjusted EBITDA.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Progress made with initiatives aimed at enhancing the vertical integration between Crop Care and our retail operations in Brazil are continuing to yield strategic benefits. LATAM Ag Retail reported its 2nd consecutive quarter of revenue and gross profit growth as market conditions improved with the easing of input price deflation pressures and the residual impact of last year's dry growing season. Brazil ag retail achieved 7% year over year growth in gross profit supported by 3 50 basis points in gross margin expansion. This is more than offset by the impact of revenue decline by the tightening of our credit policy with farmers and the carryover effect of last year's input price declines. Now let's discuss the evolving market landscape, which has seen considerable changes since the end of our Q1.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

If you recall in our last earnings call, we described the Brazilian ag inputs market inputs market has been shaped by contrasting dynamics. On one hand, expectations for notable improvement in farmer profitability for the 2024, 2025 crop year alongside stabilizing input prices. On the other hand, worsening farmer liquidity and tighter credit availability adversely impacting near term demand and purchasing behavior. Fast forward to today, the outlook for farmer profitability for this year and next has improved further. Favorable weather conditions during the soybean growing season have improved yields expectations across Brazil.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

In addition, rainfall projections for saffrinha season appear encouraging, particularly as local corn cash prices have risen above R70 dollars per bag for the first time since early 2023. Meanwhile, agrochemical prices at the farm gate have remained stable for the 2nd consecutive quarter, suggesting that the issue of excess channel inventories has been largely resolved. In contrast to these positive developments, liquidity constraints in the agribusiness sector escalated significantly in the last 2 months of the calendar year. As a reminder, credit plays a fundamental role in Brazil's retail sector. Retailers extending financing to small and medium sized farmers for input purchases at the start of crop season, with repayments expected at harvest.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Similarly, input suppliers provide credit to retailers expecting repayments on a similar timeline, making liquidity a critical factor across the value chain. Farmers liquidity restrictions have resulted in a significant decline in cash based input purchases, which ordinarily are in cash based input purchases, which ordinarily account for 25% to 30% of farmers' purchase orders. In this first half of this year, this percentage fell to low single digits increasing Lavoro's working capital financing requirements. In addition, the judicial reorganization proceedings of a major ag retailer in Brazil triggered a sudden shift in risk aversion among suppliers and financial institutions, which led to a significant tightening in inventory financing conditions for LaVora and retail industry peers. This abrupt tightening of supplier inventory finance coupled with the decline in cash based purchase orders from farmers led to severe inventory shortages for our Brazil retail operations in key product categories during November December, a critical window for the first soybean crop.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

In early January, successful renegotiations with key suppliers helped partially ease these bottlenecks, though inventory replenishment and new purchase order activity have yet to fully normalize. I'll now pass it over to Julian for a deeper look at the financial results.

[Julian Garrido, CFO at Lavoro Limited]

Thanks, Louis. In Q1 2025, Valvora's consolidated revenue totaled BRL 2,000,000,000, a 13% year over year decline. This decrease was primarily driven by the lingering effects of input price deflationary headwinds in Brazil ag retail, partially offset by strong growth in crop care, which saw 68% revenue increase led by Unioracru and Perterra. In U. S.

[Julian Garrido, CFO at Lavoro Limited]

Dollar terms, consolidated revenue declined 24% year over year, impacted by 12% depreciation of the Brazilian real compared to the prior year period. Despite low revenue, gross profit increased 10% to BRL 321.2 million in Q1 2025, with gross margin expanding 3 20 basis points to 15.6%, mainly driven by improved distribution margins in Brazil ag retail. In U. S. Dollar terms, gross profit declined 4% year over year, reflecting the currency translation effect.

[Julian Garrido, CFO at Lavoro Limited]

Movota reported a net loss of BRL267.1 million compared to a net loss of BRL 71 1,000,000 in Q1 2024, representing an increase of R196.1 million dollars year over year. This higher loss was primarily due to deferred tax assets, which accounted for BRL152.1 million of increase as those tax assets were created last year, but we suspended the creation this year as per current results. Besides that, we had higher finance costs of R60.7 million dollars mainly due to higher interest expenses, foreign exchange impacts and other financial expenses. In U. S.

[Julian Garrido, CFO at Lavoro Limited]

Dollar terms, net loss was $48,200,000 compared to $14,500,000 in the prior year period. Adjusted net loss was BRL269.2 million compared to adjusted net loss of BRL42.9 million in the prior year quarter with similar key drivers. Adjusted EBITDA declined 5% to $54,400,000 as higher SG and A expenses, driven by personnel costs and inventory provisions, offset gross profit growth. In U. S.

[Julian Garrido, CFO at Lavoro Limited]

Dollar terms, adjusted EBITDA was $9,800,000 a 16% decline compared to Q1 2024. Turning now to our segment results. Let's start with the Brazil ag retail. Revenue in Brazil ag retail declined 23% year over year, BRL 1,55,000,000, triggered by last year's input price declines and former liquidity constraints. Input revenue fell 19%, but current sales volumes in crop protection and specialty products were more than offset price mix headwinds in crop protection and specialties and sales volume declines in sea.

[Julian Garrido, CFO at Lavoro Limited]

Gross profit grew 7% to BRL189 million with margin expanding 3.50 basis points to 12.2%, supported by stronger distribution margins, led by a combination of better inventory cost positioning and stabilized input prices on a sequential basis. Adjusted EBITDA declined 6% to BRL35.1 million, impacted by higher provisions on expired inventories and personnel costs, partially offset by lower allowance for expected credit loss. Now let's talk about LATAM Ag Retail. Revenue in LATAM Ag Retail increased 4% year over year to BRL337 1,000,000, benefiting from the 12% appreciation of the Colombian peso relative to the Brazilian real. Gross profit grew 7% to BRL47.8 million, with margin expanding 40 basis points to 14.2 percent.

[Julian Garrido, CFO at Lavoro Limited]

Adjusted EBITDA declined 32% to BRL10.4 million as higher credit provisions and personnel costs more than offset the increase in gross profit. Last but not least, our Crop Care segment. So revenues in our Crop Care segment grew 68% year over year to BRL 293.7 million with Unilagro posting a 49% increase in revenue, supported by strong commercial execution and external sales growth. Certerra also saw significant expansion, benefiting from expanded portfolio of product registrations and improved S and OP coordination with Brazil Ag Rating. Gross profit increased 11% to BRL 84,300,000, while gross margin declined around 1400 basis points to 28.7 percent, reflecting changes in product integrity mix.

[Julian Garrido, CFO at Lavoro Limited]

Adjusted EBITDA increased 24% to BRL 35,900,000, dollars driven by higher gross profit and operational efficiency partially offset by increased personnel costs. Now turning over to our outlook for fiscal year 2025. As Julio mentioned, the widespread supply constraints in the Q2 had a material impact on Lagodas commercial operations, with residual effects expected throughout the fiscal year. Consequently, we are updating our full year 2025 outlook to better align with the current business environment. We now expect consolidated net revenue between R6.5 billion dollars R7.5 billion dollars imports net revenue between R5.9 billion dollars and R6.9 billion dollars In U.

[Julian Garrido, CFO at Lavoro Limited]

S. Dollar terms, based on an assumed average U. S. Dollar Brazil exchange rate of R5.9 we expect consolidated net revenue between $1,120,000,000 $1,280,000,000 while we put some net revenue between $1,020,000,000 $1,180,000,000 Finally, we no longer expect adjusted EBITDA to grow in full year 2025 compared to full year 2024. With all that said, I'll pass back to Rui for some concluding remarks.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Thank you, Julian. Looking ahead, we are encouraged by the improvement in farmer sentiment in Brazil in light of the prospects for enhanced profitability in the 2024, 2025 crop season. We expect the potential cash proceeds from the upcoming soybean harvest should help ease farmers' liquidity constraints, which will have a positive effect on the rest of the value chain. As we navigate through these near term inventory financing disruptions, we remain committed to executing the factors within our control and implementing strategic measures to ensure Lavoro is well positioned to capitalize as early signs of end market recovery continue to gain momentum. The cost savings initiatives outlined in our last earnings call focused on retail network optimization and fixed cost reductions are now in motion.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

As part of this effort, we have identified 70 stores within our Brazil retail footprint that are in close proximity to more profitable locations and will be consolidated. RTV from affected locations will be reassigned to nearby stores, minimizing the impact on market reach and revenue potential. We estimate these store closures will reduce Lavoro's Brazil ag retail inputs revenue input revenue potential by approximately 10%, all else equal. Overall, these initiatives will lower fixed costs by eliminating duplicative administrative and freight expenses, while also enhancing working capital efficiency. We expect the benefits of these cost saving measures to materialize in the second half of the fiscal year.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

With that, thank you. And I'll pass over for Q and A.

[Operator]

Thank you. We'll now be conducting a question and answer Thank you. And our first question is from the line of Kristen Owen with Oppenheimer. Please proceed with your questions.

[Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.]

Hi, good morning. Thank you for taking the question. I wanted to start first with the guidance, the updated guidance for 2025. I guess I'm just a little bit surprised by the comment that you're no longer anticipating EBITDA growth in the fiscal year. So understanding some of the severe headwinds that we should be expecting in Q2, but from a sentiment perspective and some of your comments on the end market, it sounds like there may be some room for improvement in the back half of your fiscal year.

[Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.]

So maybe it would be helpful to start if you can help us understand the magnitude of the 2Q impact. I mean, should we be thinking about that as being the difference in the guidance? Just any additional color you can provide on 2Q versus maybe the rest of the year?

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Hi, Christian. This is Rory. Thanks for your question. I think we the main fact is really on the timing that we got the inputs. As we mentioned, we actually had a very good Q1 given all the conditions, so margins improving.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

And we also saw the sentiment of farmers improving year over year. Now with the delays in getting inventories for the deliveries of the soy crop have impacted our second half. Today, we won't provide much more detail on the specific impact on the second quarter. But what I can say is that we do expect if the things are normalized in terms of supply for us to have a second semester with a good result. But today, this point is yet to be confirmed.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

So what we know for sure is that the deliveries for the soy crop were affected. We did our best in terms of replacing the products of orders with the products that we had in inventory, but that had an effect on our mix. So we couldn't supply all the products we needed at that time.

[Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.]

Okay. That's helpful. Thank you. One more related just to the sentiment and then I'm sorry, I do have a follow-up. But on the sentiment piece, the debottlenecking in January, can you maybe help us unpack how much of that is OEM willingness to put more product in the channel versus just improved cash conversion on the farmer side now that we're starting to get into harvest edifice?

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Sorry, you mean the farmer sentiment on the markets or I'm not sure if I got the question.

[Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.]

A bit of both, a bit of both. If the OEMs are getting more comfortable sending more product to Brazil and then what the sentiment with the farmer is and their cash conversion cycle, so your ability to actually start to collect on some of that.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

I see. Well, I think the all starts with farming income, right? So as we mentioned in the past, so we see the right conditions for farming improving their income this year. We already saw that the prospects for a very strong soy crop that should surpass 170,000,000 tons. We also expect some expansion in the corn area.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

So it's going to be most likely a strong crop year. And we also see some other positive effects with the dollar appreciation that should help farmers to sell their crops at interesting prices. So we do see an improvement in farmer sentiment and also their ability to meet their commitments. Consequently, this should also reflect in better mood for input manufacturers. When it comes to input manufacturers, it's also important to remember that they were affected by the excess inventory in the retail channels in the previous year.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

And I think this effect has by large being normalized by this time. So overall, it's a better mood, both for input manufacturers and also for farmers. Now obviously, the timing is going to be a little bit challenging. We need to follow-up on the next month. So it's the trend is positive in both sides.

[Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.]

Thank you for that. My last question and then I'll turn it over. I did notice the strength of the off patent business this quarter. Just can you articulate how much of that is coming from the internal integration of your own channel versus maybe what you're seeing in terms of the registration pipeline as some of these big patents are starting to roll off? Thank you.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Yes. So actually it's both. So for 2 years already in a row, Pertera has been one of the most prolific companies in terms of product registrations in Brazil. So we now have a very strong pipeline of products and that includes herbicides, insecticides and also fungicides. So that is one key component.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

And also I think we have also accelerated the integration with RetailGen as part of our strategy. But I would say it's a combination of both and I think Perterra has only initiated its path to grow. We do see this business as having much more potential than what we see today. So we should be looking at this part of the business as a very exciting one.

[Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.]

Thank you.

[Operator]

Our next question is from the line of Ben Theurer with Barclays. Please proceed with your question.

[Ben Theurer, Analyst at Barclays Capital]

Yes, good morning and thank you very much for taking my question. Just following up on a couple of topics and really wanted to understand a little bit of your initiatives of reducing the store count and how that relates just to the maybe the competitive dynamics that you're seeing in the market, but also what that potentially means as you think about what your guidance is for this year, how much of that is really just related because of that decision to rationalize your footprint? And as we then move into the next year, which calendar starts for you guys anyway in Q3, just wanted to understand how we should think about this into fiscal 2026 once you're doing all these rationalization efforts? Thank you.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Yes. Hi, Ben. So the reason for revised guidance is mostly what we mentioned about our ability to deliver the products on time for the soy crop. So there's not an impact from the footprint optimization. This initiative of footprint optimization, we have announced it in our last call and we're basically underway.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

But what it does is we looked at our footprint of stores in Brazil. And we obviously, as a company that grew through acquisitions and very aggressive growth over the last years, we saw an opportunity for consolidating nearby stores and maintaining the most profitable ones. As a result, we should be able to reduce something around 70 stores.

[Julian Garrido, CFO at Lavoro Limited]

No.

[Ben Theurer, Analyst at Barclays Capital]

I think the line dropped and Yes. I just heard something around like 70 stores or something like that you said and that's when I kind of like lost you.

[Julian Garrido, CFO at Lavoro Limited]

The phone is dropped. One second is correct. Okay. Sorry for that.

[Ben Theurer, Analyst at Barclays Capital]

No, no worries. And then

[Ben Theurer, Analyst at Barclays Capital]

I'll just keep finishing the answer as far as the cost saving initiatives and how would that benefit next year. It's probably something we'll provide more details as the year progresses.

[Operator]

Rui, you're reconnected. Our next question is from the line of Austin Miller with Canaccord.

[Austin Moeller, Director - Equity Research at Canaccord Genuity - Global Capital Markets]

So the precipitation levels based on the data that we've collected are improving. Is there anything the government can do to improve financing activity? Or will it just take the cash from the new harvest to be able to boost purchasing? Is that really the only option here?

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Hi, Austin. Yes, I mean, this is a tough topic. Since the government is probably not in shape of providing much additional liquid at this moment, we do not believe that that will be something that will happen soon. We still have to see the next year crop year plan. But I would say, as of now, we do believe that the most of the improvement is going to come from improved profitability.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

And also, I think farmers are more risk averse in the sense. So they're trying to take the opportunity to sell their crop at the right time, and that should also help them. We still have to look at what the government will do, but I think at this moment, most of what we see as a positive news is actually coming from the farmers.

[Austin Moeller, Director - Equity Research at Canaccord Genuity - Global Capital Markets]

Right. And so as demand recovers, do you expect to lease new retail space or just sell within the consolidated space that you now have just since the demand side of the equation seems to be improving, so?

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Yes. In terms of strategy, I think we do have a very, let's say, comprehensive footprint already and a very large base of clients. So our main interest right now is to consolidate our position and make sure that we continue the trend of improving margins, which is after 1 year of very tough market conditions. Our main focus is to protect our client base and improve the operational results. I think there will be opportunities here and there for, let's say, tactical movements, but our priority is not to expand our base right now.

[Austin Moeller, Director - Equity Research at Canaccord Genuity - Global Capital Markets]

That's very helpful. Thank you for the color.

[Operator]

Thank you. Thank you. And we do have a follow-up from the line of Ben Theurer, Barclays. Please go ahead with your question, sir.

[Ben Theurer, Analyst at Barclays Capital]

Yes, good morning. That's just me. Let me just squeeze in the follow-up here that I had. So as we look into, well, Eskimo geopolitics and how you think about this, this could potentially impact the Brazilian farmer sentiment. So obviously over the weekend, a lot has happened in the United States with like tariff announcements and all that kind of stuff against countries that tend to be big buyers of agriculture commodities from the U.

[Ben Theurer, Analyst at Barclays Capital]

S. And obviously was that there might be potential retaliation, etcetera. So I just want to get maybe some of your initial thoughts as to how that could put Brazil into maybe a little bit of a better spot? And how also in light of where we are on the FX side, obviously, versus a year ago, the BRL closer to 6 now, has that helped somewhat the sentiment? And it's just that we still need to go through a little bit of like these remaining destocking issues, but moving forward sentiment could actually trigger an overall better environment?

[Ben Theurer, Analyst at Barclays Capital]

Or how do you feel just about the farmer itself and its willingness to kind of like go back into the business if you want to put it this way?

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Hi, Ben. So as farmers are always the first ones to feel the impact, either negative or positive, right? So I think right now, most of the improvement sentiment is actually coming from farmers with some of the points you mentioned, including, let's say, a hail depreciation and also more production in terms of cranes. Now with that being said, when it comes to the changes in the global environment and the election in U. S, in 2018, the effect of Trump was positive to Brazilian farmers, as we all know.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

I think right now, we need to analyze how the things will develop, but the overall mood is positive. I think it's already known that he decided to increase the taxes on Mexico and Canada. Obviously, Canada is a major producer of potash. So this might have an impact in fertilizer prices and in North America with consequent changes in the area of production. So overall, this might have a positive impact on the soy prices and also maybe a positive impact for Brazilian farmers when it comes to exports as China will also be taxed even though to a lower extent.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

So overall, I think we expect positive news. Obviously, we're still cautious because there's a lot of moving parts in this equation. But I would say it's probably a good news for Brazilian farmers, both in terms of commodity prices and also in terms of their ability to export more.

[Ben Theurer, Analyst at Barclays Capital]

Okay, perfect. Thank you very much.

[Operator]

Thank you. At this time, I'll now turn the call back to management for closing remarks.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

Well, thank you for once again being involved in this call. I think the quarter results showed the trends that we anticipated in the first call when we outlined the expectations for this year. Obviously, some additional challenges when it comes to the credit and liquidity in the market. But I think the overall trends and the improvement in margins is far in line with what you mentioned. We're going to have a challenging year ahead.

[Ruy Cunha, Chief Executive Officer at Lavoro Limited]

The management is focused on what we can control and improving our profitability over the next months. And we'll keep you posted in every change. But for now, I would like thank you and thank the team for the extraordinary job that they have done so far. Thank you.

[Operator]

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Tigran Karapetian, Head of Investor Relations
• Ruy Cunha, Chief Executive Officer
• Julian Garrido, CFO

Analysts

• Kristen Owen, Executive Director & Senior Analyst at Oppenheimer & Co. Inc.
• Ben Theurer, Analyst at Barclays Capital
• Austin Moeller, Director - Equity Research at Canaccord Genuity - Global Capital Markets