Welcome to Lavoro's Fiscal Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. If anyone requires operator assistance during the conference, please press star and then 0 on your telephone keypad. A question-and-answer session will follow the formal presentation. Please note that this conference call is being recorded, and a replay will be made available on the company's investor relations website at ir.lavoroagro.com. I will now turn the conference over to Tigran Karapetian, head of investor relations. Thank you, and you may begin. Thank you for joining us today on Lavoro's Fiscal 2024 Second Quarter Earnings Conference Call, which report results ended December 2023. On today's call are Chief Executive Officer Ruy Cunha and Chief Financial Officer Julian Garrido. The company has provided supplemental earnings presentation on its investor relations website at ir.lavoroagro.com. That may be helpful in your analysis for the quarterly performance. Before we begin, please remember that during the course of this call, management may make forward-looking statements with the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results and operational and financial position, industry and business trends, business strategy, and market growth, among others. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the company's registration statement on Form F-1 filed with the SEC on March 23rd, 2023, or our report on Form 20-F for the period ended June 30th, 2023, filed with the SEC. Please note that on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, adjusted EBITDA margin, pro forma adjusted EBITDA, pro forma adjusted EBITDA margin, 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 financial information presented in accordance with the IFRS. Please refer to today's release for reconciliation of non-IFRS measures to the most comparable measures prepared in accordance with IFRS. I'd like now to turn the call over to Ruy Cunha, CEO. Thank you, Tigran. Good afternoon, and thanks everyone for joining. I'll begin by touching upon the overall business landscape and the broader economic context, after which Julian will delve into our financial highlights, and I'll return for some concluding remarks. For fiscal second quarter 2024, ending in December, Lavoro delivered revenues of $618 million, marking a 1% increase compared to prior year periods, as volume growth led by market share gains helped to offset continuous significant input price deflationary pressures in crop protection and fertilizers across our retail footprint. In our Brazil ag retail segment, second quarter volumes for crop protection, fertilizers, and specialty products, respectively, grew 46%, 63%, and 29% year over year. The benefits of scale of our platform and strong execution from our commercial team led to another quarter of strong market share gains. Our strategic priorities of attracting seasonal technical sales representatives continue in its momentum. We concluded the second quarter with just over 1,040 RTVs in Brazil, an increase of 25% versus our first quarter. We anticipate the positive contribution of these new hires to finally materialize in our next fiscal year. Crop Care delivered a standout performance in the quarter, as revenue and gross profit saw both a year-over-year growth of more than 20% in spite of the challenging overall market environment and the adverse impact of El Niño to demand for biologicals in the quarter. Crop Care's share of portfolio consolidated gross profit continued to expand, reaching nearly 24%, up from 16% in the prior year. This further validates the importance of our vertically integrated business model. Second quarter consolidated gross profit of $103 million and Adjusted EBITDA of $40 million decreased 17% and 48%, respectively, over the prior-year period, as the headwinds from the industry-wide input price deflation in crop protection and fertilizers continue to adversely impact our margins. With that said, it's noteworthy to highlight the meaningful sequential improvement in the year-over-year changes to our margins from our first quarter to the second quarter. I'd like to spend a few moments here to explain certain key fundamental drivers to ag input distribution margins, as we had a lot of discussions on this important topic following our last earnings call, where we briefly touched on them. Simply put, we generate gross margins by selling our inventory at a certain target markup over cost. The size of the markup depends on the nature of the product category. With more technical or specialized products, such as biologicals, foliar fertilizers, adjuvants, or seeds, commanding premium margins relative to crop protection or fertilizers, for instance. There are three critical factors that impact our gross margins. Number one is the price we pay to suppliers to purchase our inputs, which is effectively the COGS embedded in our inventory. Second is the price that we sell to farmers, which is a function of localized supply and demand and which is impacted by things such as weather, farmer profitability and sentiment, relative price competition, etc. And third, the overall pricing trend lines, whether inflationary or deflationary environment. This factor plays a role due to the time delay between when we purchase products to build inventory and when we sell our inventory. Our inventory days range between 90-130, depending on the seasonality, and there is some variability depending on the product category. In essence, our COGS tend to lag our average sales by 3-5 months. A deflationary environment acts as a headwind to gross margins so long as the trend line remains intact. For illustrative purposes, one would purchase an inventory at 100 with the goal of selling at 120 around the time of planting. Yet, 4 months later, the prevailing retail price has decreased to 110 or 105. Once pricing flattens out, both from suppliers to retailers and retailers to farmers, COGS gradually catch up to retail prices as the higher-cost inventory cycle's over. In a normal market environment, by which I mean an environment where input prices are not declining by 30%, 40%, or even 60% year-over-year, such as what we experienced this year, this third factor of pricing tends to play a relatively minor role, which is manageable, as farmers start placing purchase orders with retailers most in advance, and these booking curves build as the crop season unfolds. In contrast, when the deflationary environment is as intense as we have witnessed in the past few quarters, this adverse pressure is difficult to mitigate. Moreover, Brazilian farmers have been uncharacteristically placing orders much closer to the point of use, which has diminished the role that bookings and purchase orders played in providing retailers visibility. With all that said, the mechanics I just described will help to explain what is happening with our Brazil ag retail business. Our second quarter gross margins in Brazil saw a meaningful sequential improvement in the last year-over-year trends, with margins contracting 510 basis points to 13.9% compared to a year-over-year decline of -1,070 basis points to 8.7% in our first quarter results. This improvement is largely explained by the mechanics I just described, with local input prices from retailers to farmers having broadly stabilized in recent months, and as we gradually cycle through our higher-cost inventory, driving an improvement in our COGS. Margins are consequently recovering. The sequential improvement was most pronounced in the product categories most affected by deflationary trends, such as crop protection, where second quarter gross margins year-over-year contraction went from -1,300 basis points in the first quarter to -206 basis points in the second quarter. To conclude, our financial outlook remains unchanged. Our market outlook remains consistent with our assessment in our last earnings call in late January. We continue to foresee a 25% decrease in Brazil's retail input market for 2023-2024 crop year ending in June 2024. As previously mentioned, local input prices from retailers to farmers in Brazil have broadly stabilized, though disparities remaining across various regions, influenced by the ongoing destocking of excess agrochemicals inventories. In conclusion, the accelerated pace of progress of the first soybean harvest, combined with recent favorable weather conditions, have led to a strong start to Safrinha corn planting season, which currently stands at 71% above the five-year average of 52%. Now, with that, I'll pass to Julian for further details on our financial results. Thanks, Ruy. Good morning, afternoon, good evening, wherever you are. So let's cover our consolidated financial results for this fiscal second quarter 2024, ended on December 31st, 2023. So let me start with the revenues. The consolidated revenue for the second quarter rose by 1% to $618.7 million, as we have mentioned before. In constant currency terms, the revenue decreased by 5%. If I split in between inputs revenue and grains revenue, inputs revenue increased 1% driven by volume growth expansion resulting from market share gain upsetting price declines. The grain revenue resulted in an increase of 57% driven by greater desire of our customers for entering into barter transactions. Now, if I look at the revenue by segment, the first segment, Brazil ag retail, revenue increased by 1%, reflecting the unit volume growth in crop protection, fertilizer, specialty products, seeds, which increased by 46%, 63%, and 29%, respectively. These increases were offset by price deflation and negative product mix across all categories, notably due to the impact of El Niño, which decreased the mix of higher technology corn seed varieties and changes in farmers' purchasing time. Seed product revenue declined by 11% year-on-year. Once again, Lavoro gained share in the quarter, driven by good execution for our local commercial teams. Contribution from recently acquired companies Referência and Coram together contributed 6% to the overall revenue growth for the segment. Now, taking a look at Latin ag retail, the revenue totaled $55.8 million, which is a 2% decrease from previous year, a 17% decline in Colombian peso terms. This drop mainly due to challenges in fertilizer and crop protections distribution revenue, along with the lingering effects of discounting paraquat, the herbicide from a supplier product lineup. However, growth in specialty products, seeds, and service sales, as well as the Colombian peso's appreciation against the US dollar and Brazilian real, partially offset this revenue decline. Last but not least, Crop Care recorded revenue of $72.8 million in the second quarter 2024, demonstrating a notable 26% increase compared to the prior year. This growth was driven by robust performance in the specialty fertilizer products category, showing a remarkable 55% increase. Additionally, the recent acquisition of adjuvant and enhancer manufacturer Cromo Química contributed 5% to Crop Care segment revenue for second quarter 2024. Now, let's go and talk about consolidated gross profit. The consolidated gross profit for the quarter decreased by 17% to $103 million, gross margin contracted by 360 basis points to 16.7%, and the main driver was the steep price decline in crop protection and fertilizers in our Brazil agriculture retail segment detailed by Ruy before. Latin agriculture retail on the gross margin perspective declined by 230 basis points to 17.8%, driven by compression in crop protection and fertilizer distribution margins. The gross margins of Crop Care retreated by 160 basis points to 35.3%, primarily due to unfavorable mix effects resulting from the performance of high-margin biological products during the quarter. However, the financial contribution from the recently acquired Cromo Química, which has gross margin higher than the Crop Care average, helped offset some of these effects. The Adjusted EBITDA in the second quarter, 2024, was $40.1 million, down $37.4 million from the prior year quarter, while adjusted EBITDA margin contracted by 48.8% to 6.5%, again, primarily influenced by the gross margin compression discussed earlier. The SG&A, excluding the depreciation amortization, to sales ratio increased by 300 basis points to 11.3%, mainly due to higher investments as the hiring of new 291 RTVs who have yet to contribute to our sales. We also had the increase in the allowance for expected credit losses resulting from the impact of the El Niño on our expected payment schedule from farmer clients. All three operating segments are negative year-over-year change in adjusted EBITDA, as well as EBITDA. Adjustment items excluded from adjusted EBITDA increased by $1.5 million to $2.4 million for the second quarter, 2024, due primarily to higher stock-based compensation expense of $0.5 million right there, and an increase in related party consultancy service expenses into $2.9 million. Last but not least, the adjusted net profit was $2.6 million, a decline of $34.8 million over the prior-year quarter, driven by the lower Adjusted EBITDA, higher financial costs of $5.4 million there, reflecting high interest rates on trade payables, and it was partially offset by an increased positive contribution from our income tax. Now, I hand back to Ruy. Thank you, Julian. Thank you all for participating in today's conference call. For your ongoing interest in our company progress, allow me to highlight some key points from our discussion today. Our second quarter results underscore Lavoro's resilience in the face of challenging market conditions. Our retail operation in Brazil has demonstrated robust year-over-year volume growth even amidst one of the most competitive market environments we have witnessed in over a decade. Similarly, our Colombian operation has also shown a comparable trend with notable gains in market share. Furthermore, our industrial division, Crop Care, achieved double-digit growth in both revenues and gross profit compared to previous year, and this growth was primarily driven by strong performances in specialty fertilizers and adjuvants, which offset any temporary setbacks experienced in the biological solution segment. Lavoro's significant volume gains validate the continual interest of farmers in investing in agricultural inputs further solidifying Lavoro's position as their preferred partner. The confidence expressed by farmers is reinforced by the substantial investments the company is currently making to enhance its sales teams, placing Lavoro in an advantageous position to capitalize on the anticipated market recovery. I firmly believe that the current market landscape has the potential to accelerate the ongoing transformation within the agricultural retail sector in Brazil and South America. In this regard, I'm confident that Lavoro will maintain its prominent role in the market and continue to lead the way in driving positive changes. And with that, I'll come back to the operator for questions. Thank you very much. Ladies and gentlemen, we will now begin with a question-and-answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the list. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Bobby Burleson of Canaccord. Please go ahead. Hi. Thanks for taking my questions. So I guess the first one is, can you just remind us maybe some of the factors in addition to kind of the planting activity on the Safrinha corn that you guys were watching throughout so far in calendar 2024 to decide whether or not you were able to kind of maintain the guidance that you laid out back in January? What were those main kind of things that you guys were looking at? Hi, Bobby. Thanks for the question. So yeah, I'll talk a few components on that. So first, one of the key elements in driving our vision was the expectation regarding the overall market for this fiscal year. So we continue to see an overall decline in markets, about 25%, and this has not changed too much. It's mainly driven by price. We also mentioned that the area of corn in the second crop will see a reduction as well as some expected reduction in productivity that would, in consequence, also affect farmers' decisions whether to invest in medium technology seeds as opposed to higher technology seeds. And this is also being confirmed. And also some tendency to use a lower, I would say, level of biological solutions. So I would say largely those were the main facts in addition to the normalization of the retail inventory. All of that to say that those indicators, they seem to be progressing as we expected. I think on the positive note, we see that, as we mentioned, the planting of Safrinha is advancing fast. That means that the time window for farmers to operate in Safrinha is going to be improving compared to what we expected originally. Okay? This might encourage some last-minute sales, but yet it is difficult to predict if this is going to have a meaningful impact on the sales volumes or not. Okay. Great. And then just as a quick follow-up with the farmer balance sheets in Brazil, we know that they tend to have healthier balance sheets, but there's definitely some concern on the part of grain traders that bankruptcy filings have increased in the region. And I'm just wondering, your customer cohort in the small and medium farmer, how are they kind of positioned relative to where those filings are happening? Is there anything that's changing rapidly in terms of balance sheet health in the area? Thanks. Yeah. So what we saw, Bobby, is that some areas have been more affected by the drought, and I think this obviously had a more negative impact on farmers in Mato Grosso and in Goiás. I think those were the main affected areas. In some cases with lower productivities, we have some farmers that, particularly those who rent the lands, they are close to a break-even point at this moment. Okay? So I think the most critical areas is Mato Grosso and then part of Cerrado. With that being said, it's not generalized, it's not a generalized problem. The current expectations for the soy crop is something around 150 million tons, which is still a pretty good number. So I would say, in general, farmers should be able to meet their commitments, but yes, we'll see some areas of potential risks. I think another important factor, we will just mention the Chapter 11s or some farmers filing for bankruptcy. Indeed, the number has increased, but it has increased from, I would say, a relatively small number. We'll have to look into the next months to see the extent of the problem. But right now, I think it has not changed our perspective. If anything, maybe a little bit better than we expected considering the current soy production. Regarding Lavoro, I think all the, let's say, the negative effects related to bad debt provisions is already contemplated in our results. So it does not change the perspectives we have for the year. Okay. Thank you for that, Tigran. Thank you very much. The next question is from Benjamin Theurer of Barclays. Please go ahead. Hi, yeah. Good afternoon and evening. Thanks for taking my question. Ruy, wanted to follow up on the crop care business and just to understand a little bit what you kind of looking into the second fiscal half. We obviously had a very soft first quarter, a nice sequential improvement in QQ, but still down on a year-over-year basis. Now, normal seasonality, second half, tends to be lower in crop care than first half. Wanted to understand, within your guidance parameters, how do you think about crop care into the second half just as you're coming out of this whole destocking environment over the last couple of quarters and what's kind of baked in for guidance in specific crop care? And then I have a quick follow-up. Thank you. Okay. Hi, Ben, and thanks for the question. So I think there's two relevant impacts here. The first is a phasing effect, as you mentioned. So we had a very, let's say, slow start in the first quarter, accelerating in the second quarter, and we expect further acceleration in the third and fourth quarter. But with that being said, the mix of Crop Care will probably change with lower participation of biologicals than in what we had in last year. So the acceleration we'll see in the last quarters of the year is being mostly driven by specialty fertilizers and adjuvant business. Even though, as I mentioned, depending on the scenario of Safrinha and the pests that eventually occur, we might get some surprises or some positive surprises when it comes to biologics. I would say, overall, the expectation for the biologics business this year is to be lower volumes than last year. It's not only a phasing effect. We're going to grow in those other categories, but the growth will partially offset the negative margin headwinds. Okay? That is our current considerations. Okay. Perfect. Then just quickly as well on the Latin American business, if we could dig in a little deeper into your expectations for the back half and how maybe some of the phenomena you've talked about with El Niño, obviously, impacting Brazil to a sizable way, but it also does have an impact in LATAM. I just wanted to understand what are the puts and takes here from just the weather pattern and how this could potentially impact the LATAM business into the second fiscal half because that was kind of a little bit of an underperformer, I guess, during the quarter as well. Yeah. So, Ben, on the LATAM business, I think that the dynamic, even though they're subject to the same global trends, I think there's some different aspects to consider. The first one is our LATAM business is being able to hold gross margins better than the Brazil retail business, and then the competitive environment is, I would say, less intense. So we are holding margins a little better. The challenge remains in sales, partially driven by price, but it's also partially being driven by unfavorable climate conditions that we're having in that region. So right now, we'll depend we expect the second half of the year to be considerably stronger than the first half, but that will also depend on, let's say, some of the climate conditions that are postponing farmers' decisions to buy to be normalized. We do expect, I would say, a stronger second half of the year. Okay. Perfect. Thank you very much. I'll pass it on. Thank you very much. The next question is from Vincent Anderson of Stifel. Please go ahead. Yeah. Thanks. Good evening, gentlemen. I was just hoping to kind of get an update on how you feel about your sales staff. You hired a lot, but I'm curious how you're tracking against your three-year ramp-up algorithm. And then just remind me how the performance compensation metrics work for them between revenues, volumes, and gross profit dollars. Oh, hi. Vincent. We're executing our hirings according to plan, actually. I think we're even with better performance than we expected in the last month. So we saw a significant growth in the last quarter, but I would say largely in line with what we expected to bring in new sales teams. Most of them, I mean, the compensation structure in the market is fairly standard. So we have, I would say, relatively low fixed salary, but then you have a relatively larger variable compensation, which is approximately something around 1% of their sales. Okay? What we expect is, I mean, some of those guys are already having a positive impact in sales, I would say, mostly in Safrinha, but the full benefit will only be achieved next year, right, with their full year of working with us. I think the interesting thing is also that we're trying to hire experienced sales consultants, and we're being able to bring consultants with a very large potential order book with them. And those experienced sales consultants, they tend to be much more productive than the new ones, right? So it usually takes between 3-4 years to have a sales consultant fully operational or to the maximum capacity. And many of those guys that are bringing right now, they're already experienced, and they're already operating the region that they've been working on. So I think that we may experience, I would say, accelerated growth coming from those new sales guys in the next year. That's very helpful. Thank you. And then my other question was just I'm trying to get a feel for your pricing model in these kinds of market conditions in terms of how you are able to monitor prices across all the growing regions you sell to and coordinate price and margin targets kind of from a centralized position down to your individual locations, or is it still mostly a bottoms-up effort and these individual locations are loosely held to a goal of some kind? Yeah. So in the way that we are organized, I would say, in Brazil, but it's also valid for Colombia. So we have decentralized pricing decisions because we need to be mindful of the right pricing being performed at the market. So we have Brazil divided in clusters, and we have three major clusters in Brazil: north, south, and east. And each one of those clusters, they have specialized marketing and pricing teams that are fully dedicated to looking to the overall farm gate price being performed by product, and then with that, and based on that, taking our price and markup decisions. So I would say it's decentralized to the point that we need to have adequate pricing levels to where we compete. And then on the COGS side, I would say it's probably more centralized because then we also need to leverage our scale and ability to discuss margin recomposition with suppliers at a central level, right? So we try to maximize that by combining our negotiations with suppliers on a central level and then taking tactical pricing decisions at the regional level. Okay. All right. No, that's helpful. I was trying to get a feel for when you have these kinds of price movements, if there's a mechanism to communicate that individual locations should not sell below a certain price or anything like that. But what you described sounds pretty robust, and I appreciate that detail. All right. Thank you very much. Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to management for some closing remarks. Oh, again, thank you all for your participation in the meeting. Again, I think, once again, the company has shown the resilience of this platform. We're very excited about the second half of the year. We continue to be strong believers in the fundamentals of the Brazilian and the South American markets, and we'll keep you posted in new developments. But right now, I think we're tracking in line with what we have already projected as planned for this year. Thank you very much. Thank you very much, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for your participation, and you may now disconnect your line.