Adecoagro S.A. Q4 FY2022 Earnings Call

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's Fourth Quarter 2022 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; and Mr. Renato Junqueira Pereira, Sugar, Ethanol & Energy VP; and Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer section. At this time, further instructions will be given. Before proceeding, let me mention that forward-looking statements are based on beliefs and assumptions of Adecoagro's management and all information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro, and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning, and thank you for joining Adecoagro's 2022 fourth quarter results conference. 2022 was a challenging year for the company. We faced cost pressure in all our segments, and weather challenges in Argentina and Uruguay, where our farming operation is based. However, despite such unfavorable conditions, we delivered strong financial results and generated adjusted EBITDA in line with 2021. This was possibly thanks to our focus on efficiency, our operational flexibility, and our very well-executed commercial strategy that allowed us to profit from opportunities in the domestic and export markets. A clear example of this is that we captured record prices of over $0.26 per pound in sugar equivalent in more than 20% of our ethanol sales. Since we started our growth plan, our goal was to generate positive cash flows and share results with our shareholders. I'm happy that we achieved what we proposed and are now in that situation. 2022 was the first year of our formal distribution policy, but the second consecutive year where we distributed more than 40% of the cash generated, while keeping our debt levels below 2x EBITDA. We paid out $35 million in cash dividends, which equals approximately $0.32 per share. In addition, we invested $37 million in our buyback program, repurchasing more than 4% of the equity of the company. Between dividends and buybacks, we distributed 47% of the net cash from operations generated in 2021, exceeding the 40% minimum established in our policy. This equals a distribution yield of more than 7%. Now, based on the results we are presenting today, during 2023, we will distribute a minimum of $57 million, of which $35 million will again be via cash dividends and the balance via buyback. Now, some words regarding the outlook for 2023. Here, I want to separate two very different situations; one is Argentina and Uruguay, and another is Brazil. As you may know, the dry weather experienced in Argentina and Uruguay during 2022 has extended its effects into 2023. Crop production at the national level is experiencing considerable losses. In our case, being diversified in terms of crop produced and geography gives us the flexibility to make some adjustments to our planting plans towards more resilient crops for this situation. However, the weather scenario is still adverse. Because of this, we expect yields in our crop business to be lower compared to the past harvest season. But let me be clear on this; our crop business is responsible for less than 10% of the company's EBITDA and it's only one out of three segments that makes up our farming operations. In the case of our rice business, we expect better results compared to last year. Higher prices and a better mix of higher value-added products will offset any impact on yield that might be observed in some of our farms. In the case of dairy, although the cost of cow feed will increase, we expect results in line with last year because of the more stable nature of this business. Now, more than ever, we have to continue to focus on maintaining an efficient operation in all our businesses and periodically reassessing our cost structure and expenditures. Brazil is in a very different situation. We have a very positive outlook for our Sugar, Ethanol & Energy business, which accounts for the majority of the company's EBITDA generation. Over the years, we have expanded our sugarcane plantation area, and it is currently in excellent condition; productivity indicators are solid, sugar prices are trading above $0.20 per pound, and we have very good operational and commercial flexibility. We operate based on a continuous or non-stop harvest model. So, we are one of the few crushing and the only player producing sugar in Brazil today. Weather permitting, we expect our crushing volumes in 2023 to be around 15% higher than in 2022, and this, in turn, will result in a reduction in annual unitary cash cost. One brief comment on ESG. We are very excited about the progress made in our biogas project, which transfers vinasse into biogas to be used in the production of energy and in the conversion into biomethane to replace diesel consumption. We have already adapted 13 vehicles and expect to test their performance in the upcoming days. This is one of the many examples of the initiatives we are working on that result in an improved sustainability profile while reducing our costs. Together with our ESG committee that oversees all of our developments, we continue to enhance our sustainable action models. To conclude, we have a year full of challenges ahead of us. However, I feel confident that if we remain focused on reducing costs and closely follow our day-to-day operations, we will continue to generate good returns and value for our shareholders. Now, I will let Emilio walk you through the numbers of the quarter.

Thank you, Mariano. Good morning, everyone. Let's start on Page 5 with a brief note on the rains in Mato Grosso do Sul. As you can see on the chart, during 2022, rains in our cluster presented a 9% increase compared to last year. Good precipitation levels throughout the year favored the development of our sugarcane plantation and improved its productivity outlook as we will see in the next slides. Let's move ahead to Slide 6, where we would like to describe our sugarcane crushing. In the last quarter of 2022, crushing volumes amounted to 3.2 million tons, driven by good cane availability and solid productivity indicators. Compared to last quarter of 2021, we increased our crushing by 1.9 million tons. This increase was mostly explained by 2021's lower effect in milling days and weaker cane productivity due to the frost that impacted Brazil's productive areas during 2021. Consequently, and despite our continuous harvest model, from December 2021 to March 2022, we decided to enter into an inter-harvest period and perform maintenance works in our mills to allow our sugarcane to recover from the frost effects. On an annual basis, crushing volume reached 10.5 million tons, making a decrease of only 0.5 million tons compared to 2021 despite the late start of our crushing activities. In our next page, Number 7, we show our agriculture productivity indicators. Sugarcane yields during the last quarter of 2022 were 24% higher compared to the same period of last year, reaching 81 tons per hectare and TRS content presented a 12% improvement, amounting to 134 kg per ton. Looking at the full year picture, sugarcane yields gradually improved throughout the year, going from 44 tons per hectare in the first quarter to solid levels in the fourth quarter as we expected, whereas TRS content reached 131 kg per ton, making a 2% increase year-over-year. Let's move ahead to Slide 8, where we have our production mix. As always, our production strategy constantly switches to always produce a product that offers the highest marginal contribution, provided the high degree of flexibility of our mills. During the quarter, on average, anhydrous ethanol in Mato Grosso do Sul traded at $0.196 per pound, a 2% premium to sugar, whereas hydrous ethanol traded at $0.179 per pound, a 7% discount to sugar. We diverted as much as 56% of our TRS to ethanol production. At the same time, we took advantage of our capacity to dehydrate ethanol already stored in our tanks. In total, we produced 93% of anhydrous ethanol that we sold domestically and exported to Europe at very attractive prices. The production mix for the full year favored ethanol at 65% compared to 62% in 2021. Anhydrous ethanol during the year amounted to 66% of total ethanol production compared to 45% during last year. Let's please turn to Slide 9, where we would like to describe our selling volumes and average selling prices by product. As you can see on the left chart, ethanol reported a 17% increase in selling volumes to 552,000 cubic meters, mostly driven by anhydrous ethanol sales, which increased by 49%. Moreover, average selling prices went up by 14% year-over-year to $0.22 per pound. This was thanks to our commercial strategy of cleaning out our tanks at the peak of prices, enabling us to sell 23% of our volume at prices over $0.26 per pound equivalent. Also, having the necessary certifications to export to Europe and the industrial capacity to meet product specifications granted us the flexibility to sell into the domestic markets and also export markets. We will go into more detail in the following slide. In the case of sugar, average selling prices were up 10% compared to 2021, even though volumes sold were down 20% due to lower production. It is worth highlighting that sugar continued to trade at stable levels throughout the quarter, driven by strong global demand. Energy selling volumes were down 24% versus 2021 due to our commercial decision to use our bagasse to dehydrate ethanol rather than to produce energy and sell it at low spot prices. Regarding carbon credits, in 2022, we sold 551,000 CBios, 9% higher than the previous year at an average price of $18 per CBio, having captured peaks as high as $40 per CBio. On Page 10, we would like to make a special remark on our anhydrous ethanol sales strategy. During the quarter, the European export market remained an attractive outlet for anhydrous ethanol production. In this line, our commercial strategy during the quarter focused on the commercialization of sugar and the export of anhydrous ethanol, which amounted to 41,000 cubic meters at an average price of $751 per cubic meter or $0.204 per pound equivalent. At the same time, we built an inventory of hydrous ethanol either to be sold at higher prices at a later stage or be converted into anhydrous ethanol. On a full year basis, anhydrous ethanol sales were 66% higher compared to 2021 on higher volumes sold abroad at more attractive selling prices than in the domestic market. Exports amounted to 123,000 cubic meters at an average price of $762 per cubic meter or $0.208 per pound equivalent. Please move to Page 11, where we would like to walk you through our overall sales. Net sales amounted to $198 million during the fourth quarter of 2022, a 26% increase compared to the same period of last year. This increase was driven by higher selling volume and price of sugar, coupled with higher selling volume of anhydrous ethanol. On a full year basis, net sales amounted to $593 million, 13% higher year-over-year. As explained, this was driven by 37% higher ethanol sales, which fully offset the 12% reduction in sugar sales and 31% in energy. CBio sales in turn reached $10 million in 2022 compared to the $4 million reported in 2021. On the following slide, Number 12, we explain our cash cost. Total cash cost reflects how much it cost us to produce one pound of sugar and ethanol in sugar equivalent. Maintenance CapEx is included in the calculation since it is a recurring investment necessary to maintain the productivity of the sugarcane plantation. As we are calculating sugar and ethanol costs, energy is considered a byproduct and thus deducted from total costs. As for the tax recovery line, it includes ICMS tax rebate incentive that the state of Mato Grosso do Sul granted us until 2032. Total cash costs on a per unit basis in 2022 increased by 25% compared to the previous year, reaching $0.131 per pound of sugar equivalent. This is explained by a 21% year-over-year increase in total production cost due to lower dilution of fixed costs and lower crushing volume, coupled with higher costs of inputs, diesel and salaries among others. Moreover, there was: first, a 12% year-over-year increase in maintenance CapEx, driven by a higher renewal area of our sugarcane plantation in addition to an increase in the cost of inputs for such planting renewal; second, a 24% year-over-year reduction in energy cogeneration as we used our bagasse to dehydrate our hydro stocks; and third, a 14% year-over-year reduction in tax recovery due to lower ethanol sales into the domestic market. All of our efforts are in order to further enhance efficiencies to continue reducing total cash costs. As we continue ramping up our operations in our cluster, cash costs shall go down as more fixed costs will be diluted. Please go to Page 13, where we present the financial performance of the Sugar, Ethanol & Energy business. Adjusted EBITDA during the fourth quarter was $101 million, 56% higher year-over-year. This was explained by the increase in sales and by a $13 million year-over-year increase in the mark-to-market of our harvested cane on higher crushing volume. Results were partially offset by higher costs. On an annual basis, adjusted EBITDA amounted to $374 million, 12% higher year-over-year. This was explained by higher net sales and year-over-year gains in the mark-to-market of our commodity hedge position and of our unharvested gain, as a productivity outlook has improved. Results were partially offset by increasing costs as we described before. Finally, to conclude with the Sugar, Ethanol & Energy business, please turn to Slide 14, where we would like to briefly talk about the current outlook for 2023. We have entered into 2023 with good sugarcane availability and solid productivity indicators. As expected, this has enabled us to resume our continuous harvest model. And as highlighted by Mariano a few minutes ago, we are one of the very few sugar, ethanol, and energy producers in Brazil currently conducting harvesting and crushing activities, and for sure, the only one producing sugar. Being able to grasp year-round even during the traditional inter-harvest period is one of our main competitive advantages. While the sugar and ethanol industry in Brazil must rely on inventories carried over from the past year, we are able to supply new products into the market and maximize the product that offers the highest marginal contribution, which currently is sugar. Weather permitting, we expect our crushing volume in 2023 to be around 15% higher than in 2022 on account of better productivity outlook and greater sugarcane availability. This, in turn, will result in a reduction in unitary cash costs due to better dilution of fixed costs. From a commercial point of view, sugar prices are trading at solid levels and there have been positive developments for ethanol prices. After being zeroed since mid-2022, the Brazilian government recently announced a gradual return of further tax PIS/COFINS on gasoline and ethanol as of March 01, 2023. This will aid in restoring ethanol competitiveness. Now, we would like to move on to the Farming business; please go to Slide 16. We ended up our 2021-'22 harvest season with over 1.1 million tons of agricultural produce. For the new campaign that we are currently engaging, we have completed planting activities in 267,000 hectares, marking a 6% decrease in planted area compared to the previous campaign. In this regard, we cannot help but mention that the La Nina weather event has extended its effects during the beginning of 2023 and continues to impact production as of today. Almost all the productive regions of Argentina and Uruguay are experiencing losses in their summer crop productions. Although we are diversified in terms of crops and geographical regions, due to the lack of soil moisture, because of the drought, we had to adjust our planting calendar and reduce area. We are constantly reviewing the evolution of each crop and expect yields to be lower than the previous year. On the other hand, our rice and dairy businesses, which were less affected by the drought, have a much better outlook for the current campaign. On Page 17, we would like to present the financial performance of our Farming & Land Transformation businesses. Adjusted EBITDA amounted to $83 million for the full year, representing a 33% year-over-year reduction. The improved performance in our dairy business, driven by volume and better mix of higher value-added products, was fully offset by lower contributions from our crops and rice businesses into the overall results. Results were mainly impacted by higher costs and mixed performance of yields and lower rice prices. In our crop business, adjusted EBITDA for the full year amounted to $27 million, marking a 48% year-over-year decrease. Results were mainly impacted by higher costs in dollar terms, driven by global inflation and uneven performance in yields, loss in the mark-to-market of our forward contracts and higher selling expenses due to higher freight costs. Adjusted EBITDA in our rice business was $21 million, presenting a 49% decrease compared to 2021. As explained in prior releases, results were mainly impacted by lower yields caused by the impact of La Nina in some of our rice farms and lower rice prices. EBITDA generation was also negatively impacted by higher costs in dollar terms. Moving on to the dairy business, adjusted EBITDA marked a year-over-year increase of 37% to $31 million for the full year. Higher results were explained by an increase in both volume and average prices as we increased the mix of higher value-added products coupled with our continuous focus on achieving efficiencies in our vertically-integrated operations. Again, results were partially offset by higher costs in dollar terms driven by the global inflationary environment. In the case of land transformation, although no farm sales were concluded, results reflect the mark-to-market of an account receivable corresponding to the latest sale of farms in Brazil, which tracks the evolution of soybean prices. Let's now turn to Page 19, which shows the evolution of Adecoagro's consolidated operational and financial performance. In 2022, gross sales exceeded $1.3 billion, representing a 23% year-over-year increase, as well as a new record high for the company. Adjusted EBITDA reached $433 million in line with 2021, despite higher global costs and a challenging weather scenario. At the same time, we marked the first year of our distribution policy announced back in November 2021. We distributed a total of $71.8 million or 47% of the net cash from operations generated in 2021. This was executed via the repurchase of $36.8 million in shares coupled with cash dividends in the amount of $35 million. In 2022, we generated $141 million of net cash from operations, which equals a minimum distribution of $56.5 million during 2023. Pending approval of the Annual General Meeting, cash dividends will amount to $35 million to be paid in two installments of $17.5 million each on or about May and November of 2023. The balance will be distributed via buybacks and/or dividends, as the case may be. Year-to-date, we have already repurchased $5.5 million in shares. To conclude, please turn to Slide 20 to take a look at our net debt position. On a year-over-year basis, net debt was 10% higher compared to 2021. This was mainly explained by financing our working capital needs to secure our supply chain along with higher costs of inputs coupled with financing our CapEx. These working capital requirements are being financed by short-term borrowings in our Farming division at attractive rates. Thus, short-term debt was $168 million higher compared to last year. Our liquidity ratio reached 1.7x. This clearly shows the full capacity of the company to repay its short-term debt with cash balance without raising external capital. We believe that our balance sheet is in a healthy position, not only based on the adequate overall debt levels, but also on the term of our indebtedness, most of which is long-term. Our net debt ratio was 1.6x in this quarter, 24% lower than the previous quarter.

Thank you very much for your time. We will now open the floor to questions.

Hi. Good morning, everyone. Thanks for taking my questions. I have two. The first one, on the sugar and ethanol business. I just wanted to hear an update on how you are seeing the commercialization strategy for the year, right, when we put together current sugar prices, the return of federal taxes on fuels and eventual opportunities that you see for exporting anhydrous ethanol. So when you put it out together, right, how that should play out in terms of your production mix in the sugar and ethanol business? And more importantly, based on the prices that you are seeing in eventual opportunities for the year, how should we think about the unitary, right, realized selling price relative to what it was in 2022? So, that's the first one on the sugar and ethanol. And the second, in terms of capital allocation, right, leverage ratio is now below the 2x threshold. There is more visibility on the sugar and ethanol business in general. So, I just wanted to hear a little bit in terms of how you are seeing the levels of CapEx for this year. And what should be the main projects that might come under way right now? Those are the two. Thank you.

Thank you for your question, Henrique. I'll address your second question first before handing it over to Renato for more details on the first question. Regarding capital allocation, as we've stated in our previous calls and as outlined in our recent presentation, we are sticking to our existing policies. Therefore, a minimum of 40% will be allocated for dividends and buybacks. The remaining portion will support some interesting projects. You can expect our CapEx to be slightly below last year's levels, with current projections indicating a decrease compared to 2022. I want to clarify two key perspectives. First, for Argentina and Uruguay, we're facing some challenging conditions. Consequently, we are postponing certain CapEx while working diligently to find savings throughout our operations. We're making significant progress in this area. Therefore, for Argentina and Uruguay, you should anticipate lower CapEx and reduced maintenance CapEx. On the other hand, our Sugar, Ethanol, and Energy segments are performing well. The climate conditions have normalized, and Renato will provide more specifics shortly. We have several attractive projects that align with our sustainability and efficiency goals. Additionally, we are seeing positive results from our continued sugarcane planting initiatives. Overall, in the sugar and ethanol sector, expect slightly higher CapEx compared to 2022, but a decrease in the farming segment. Now, I'll turn it over to Renato to address your first question regarding our commercialization strategy and to share any insights on the sugar and ethanol CapEx.

Hi, Henrique. We are positive about the scenario of both sugar and ethanol. So, in sugar, our strategy is to take advantage of our continuous harvest model. We are currently harvesting in Mato Grosso do Sul to produce as much sugar as possible. We are maximizing sugar now in the first quarter. Just as an example, we have already crushed more than 800,000 tons and produced more than 40,000 tons of sugar. And we are producing and selling it against the March contract. We feel very good prices on average between $0.20 and $0.22 per pound. We can also increase our sugar mix compared to last year. Last year, we finished the year with a 35% sugar mix. We can achieve a mix close to 50% by taking advantage of the higher sugar price. And we are still open in terms of hedging. Our position now has 40% of our production hedged at an average price of $0.194 per pound. In ethanol, we are also optimistic about the scenario. We are maximizing anhydrous ethanol. If you consider our dehydration capacity, we can produce almost 100% of anhydrous. Anhydrous today in Mato Grosso do Sul is being traded at prices equivalent to $0.20 per pound, very close to sugar. We will also take advantage of export markets; we just completed a transaction this week. So, the first transaction of the year exporting ethanol achieved a 10% premium over the internal anhydrous market. And I think it's good to mention that our potential to export anhydrous has increased compared to last year, increased by 50%. So, we can export 40% of our total ethanol production, and we will do this according to the opportunities that we see throughout the year.

That's very clear. Thanks very much.

Our next question comes from Mr. Guilherme Paredes. Mr. Guilherme, your mic is now open.

Good morning, everyone. Thank you for taking my questions. Just a follow-up. Renato, you already said that you are able to produce 100% of anhydrous ethanol. And when you look in terms of the results, you see that there is some inventory of hydrous ethanol in the company right now, right? Can we expect that to be converted to anhydrous ethanol? Or do you seek to continue to have some hydrous ethanol sales as well given the tax benefits that we see on the market? And a second question here is related, just a clarification in terms of the outlook that you designed for the next year with a 15% increase in terms of crushing. But if you could go through in terms of what you expect in terms of total sugar recoverable, right, looking at TRS content as well? I would appreciate that. Thank you.

Thank you for your question. Right now, we are concentrating on producing 100% anhydrous ethanol from our bagasse because energy prices are currently low. Therefore, the best approach is to convert hydrous ethanol into anhydrous ethanol, and that is our plan at this time. If the price of hydrous ethanol changes in the future, we may reconsider this strategy. Could you please repeat the second part of your question?

Sure, Renato. It's basically just trying to understand the 15% higher crushing for next crop season, right? Can you go through in terms of the TRS content when you look in terms of total TRS production, where should we be looking at for the next crop seasons?

Yes. I think the weather is very good at this moment. The rainfall is very good in terms of volume and also, distribution of rain. So, that's why we're expecting a recovery of our sugarcane yields. Of course, last year was impacted by frost. So, the yield that we had last year was not normal. So, I think this recovery is expected. In terms of TRS, it depends a lot on how the rain is going to be distributed along the year. At this moment, we think that we're going to achieve 15% improvement in TRS processes, which takes into account both the yields and the TRS content.

Great. Thank you, Renato.

Our next question comes from Ms. Larissa Perez. Ms. Larissa, your mic is now open.

Larissa, are you there? We can't hear.

It looks like Larissa has a technical problem. We'll continue with the next question from Santhosh Seshadri. Your mic is now open.

Hi, good morning, everyone. Thanks a lot for taking up my questions. So, firstly, do you have any plans to accelerate your hedging positions for 2023 and possibly even into 2024, given that the sugar prices or the other crop prices might come down from the current levels? If you think that is not necessary, what would be the rationale for that? So that's my first question. And my second question would be on the cost. You mentioned the potential dilution of cost on higher crushing volumes. So, can you talk about your expectation for other input costs as well? And for 2023, should we expect flattish COGS per unit or any further decline in cost? If you can quantify the impact, that would be great. Thank you.

Okay. Thank you for your question, Santosh. Renato, do you want to take the sugar and ethanol part of the question?

We anticipate an increase in yields and sugarcane processing volume of nearly 15%. This will lead to fixed cost dilution since a significant portion of our costs is fixed. With higher volume and yields, the fixed costs become more diluted, which positively impacts our total cash cost. We expect the costs of fertilizer and diesel to be significantly lower than last year, as the pressure on costs has eased. However, there are some rising costs, such as labor and freight, which offset part of the reductions in diesel and fertilizer costs. Overall, we project a decrease in cash costs of about 10%. As for our hedging strategy, we are optimistic about the sugar market outlook for 2024. There are issues in several countries, including Thailand, the European Union, and particularly India, which is unlikely to release additional export quotas. Consequently, the market is heavily reliant on Brazilian exports, and we believe Brazil will not produce enough to cover this shortfall, compounded by short-term logistical challenges. In 2023, we are leveraging market spikes to hedge our position, and for 2024, we remain flexible, awaiting better opportunities to initiate hedging.

Thank you, guys.

And Santosh, regarding the hedging on Argentina and Uruguay production, it is an inverted market. There are many specifics of the commodities for the local market. Therefore, we don't want to be in a heavily hedged position because we anticipate the local market to continue increasing due to various factors, including a special dollar for the soybean sites.

Thanks very much. That's helpful.

Okay. So, we have this last question from Larissa from Itau. Some of them have been answered, but Victoria is going to read one of their questions that is not fully answered yet.

In 2022, you crushed 10.5 million tons of sugarcane or 0.5 million tons less than the previous harvest year. In your release, you mentioned that the company remains confident about its ability to increase crushing volumes by 15% year-over-year. Can you give us some more color on how you plan to achieve this increase other than being benefited by better weather and greater availability of sugarcane? Are there any efficiency projects that we should know about?

Yes, Renato. Yes.

Okay. So, as I was mentioning before, the weather, of course, has an important impact, especially because of the comparison of last year that was very low. But there are a lot of technologies and processes that we are implementing that we think will increase our yields in the long run. A few examples of that include good nutrition. I think it's important to remember that we are replacing 48% of our mineral fertilizer needs with organic fertilizer. We are self-sufficient in potassium, so it helps a lot the yield of the sugarcane. We have also a very good pest and weed control. We have been using drones to control weeds and a lot of biological control to address the most important pests in sugarcane, such as the stalk borer. We are adopting new varieties of sugarcane. In Mato Grosso do Sul, we have a bio-factory that will produce 26 million seeds, which is very important to release new varieties adapted to that particular region, which will eventually produce more sugarcane per hectare. Finally, we have been using a lot of two-row harvester machines. That's very important because we damage less the row of the sugarcane, improving the longevity and yield of the sugarcane. So, those are a few examples of technologies and procedures that we are using that we believe will help a lot our yield in the long run.

Thank you, Renato.

Since there are no more questions, this concludes the question-and-answer section. I would now like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you everyone for participating. I hope to continue seeing you in our next event.

Thank you. This concludes today's presentation. You may disconnect at this time, and have a great day.