Welcome to Lavoro's fiscal 2025 Q1 earnings conference call. At this time all participants are in listen-only mode. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. Question and answer session will follow the formal presentation. Please note 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. You may now begin. Thank you for joining us today on Lavoro's fiscal 2025 Q1 earnings conference call. Our results ended on September 30, 2024. On today's call are CEO Ruy Cunha and CFO Julian Garrido. The Company has provided a supplemental earnings presentation on its investor relations website at ir.lavoroagro.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 of operations and financial position, 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 form. 6-K 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. I'll now turn it over to Ruy Cunha, CEO. Thank you, Tigran. Good morning, everyone, and t hank you for joining us today as we review Lavoro'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. CropCare continued to demonstrate strength and resilience delivering double digits year-over-year growth in revenue, gross profit and adjusted EBITDA. Progress made with initiatives aimed at enhancing the vertical integration between CropCare and our retail operations in Brazil are continuing to yield strategic benefits. LATAM Ag Retail reported its second consecutive quarter of revenue and gross profit growth as market conditions improve 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 350 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. If you recall, in our last earnings call we described the Brazilian ag inputs market as being shaped by contrasting dynamics. On one hand, expectations for notable improvement in farmer profitability for the 2024-25 crop year alongside stabilization 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 yield expectations across Brazil. In addition, rainfall projections for Safrinha season appear encouraging, particularly as local corn cash prices have risen above 70 reais per bag for the first time since early 2023. Meanwhile, agrochemical prices at the farm gate have remained stable for the second 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 two 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. 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 account for 25-30% of farmers' purchase orders. In this H1 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 Lavoro 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 and December, a critical window for the first soybean crop 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. Thanks, Ruy. In Q1 2025, Lavoro's consolidated revenue totaled 2.0 billion reais, 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 CropCare which saw a 68% revenue increase led by Union Agro Perterra. In U.S. 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 321.2 million reais in Q1 2025 with gross margin expanding 320 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. Lavoro reported a net loss of BRL 267.1 million compared to a net loss of BRL 71 million in Q1 2024, representing an increase of 196.1 million year-over-year. This higher loss was primarily due to deferred tax assets which accounted for BRL 152.1 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 BRL 60.7 million mainly due to higher interest expenses, foreign exchange impacts and other financial expenses. In U.S. dollar terms, net loss was $48.2 million and compared to $14.5 million in the prior year period. Adjusted net loss was BRL 269.2 million compared to adjusted net loss of BRL 42.9 million in the prior year quarter with similar key drivers. Adjusted EBITDA declined 5% to BRL 54.4 million as higher SG&A expenses driven by personnel costs and inventory provisions offset gross profit growth. In U.S. dollar terms, adjusted EBITDA was $9.8 million, 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 billion driven by last year's input price declines and farmer liquidity constraints. Input revenue fell 19%. The increase in sales volumes in crop protection in specialty products were more than offset price mix headwinds in crop protection in specialties and sales volume decline. As you can see, gross profit grew 7% to BRL 1.89 million with margin expanding 350 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 45.1 million reais, impacted by higher provisions on expired inventories and personnel costs, partially offset by lower allowance for expected credit loss. Now let's talk about Lavoro ag retail revenue. In Lavoro ag retail increased 4% year-over-year to 337 million reais, benefiting from the 12% appreciation of the Colombian peso relative to the Brazilian real. Gross profit grew 7% to 47.8 million reais with margin expanding 40 basis points to 14.2%. Adjusted EBITDA declined 32% to 10.4 million reais as higher credit provisions and personnel costs more than offset the increase in gross profits. Last but not least, our CropCare segment. So revenues in our CropCare segment grew 68% year-over-year to BRL 293.7 million, with Union Agro posting a 49% increase in revenue supported by strong commercial execution and external sales growth also saw significant expansion, benefiting from expanded portfolio product registrations and improved S&OP coordination with Bunge. Gross profit increased 11% to BRL 84.3 million while gross margin declined around 1400 basis points to 28.7%, reflecting changes in product category mix. Adjusted EBITDA increased 24% to $35.9 million, driven by higher gross profit and operational efficiency, partially offset by increased personnel costs. Now turning to our outlook for fiscal year 2025, as Julian mentioned, the widespread supply constraints in the Q2 had a material impact on Lavoro's 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 6.5 billion reais and 7.5 billion reais. Imports net revenue between 5.9 billion reais and 6.9 billion reais in U.S. dollar terms. Based on an assumed average U.S. dollar Brazil exchange rate of 5.9, we expect consolidated net revenue between $1.12 billion and $1.28 billion while inputs net revenue between $1.02 billion and $1.18 billion. 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 Ruy for some concluding remarks. Thank you, Julian. Looking ahead, we are e ncouraged by the improvement in farmer sentiment in Brazil. In light of the prospects for enhanced profitability in the 2024-25 crop season, we expect the potential cash proceeds from the upcoming soybean harvest should help ease farmers' liquidity constraints, which will have a positive e ffect 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 focus on retail network optimization and fixed cost reductions are now in motion. 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 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. With that, thank you and I'll pass o ver for Q& A. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, you may press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. And our first question is from the line of Kristin Owen with Oppenheimer. Please proceed with your questions. 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, 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. So maybe it would be helpful to start if you can help us understand the magnitude of the 2Q impact. Should we be thinking about that as being the difference in the guidance, just any additional color you can provide on two Q versus maybe the rest of the year. Hi, Kristin, this is Ruy. Thanks for your question. I think the main fact is really on the timing that we got the input. As we mentioned, we actually had a very good Q1 given all the conditions. So margins improving 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 Q2, but what I can say is that we do expect if 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. 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. 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's side now that we're starting to get into the harvest season. Sorry, you mean the farmer sentiment on the markets, or I'm not sure if I got the question. 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 c omment on some of that, I see. I think it all starts with farming income, right? As we mentioned in the past, we see the right conditions for farmers improving their income this year. We already saw that the prospects for a very strong soy crop that should surpass 170 million tons. We also expect some expansion in the corn area. It's going to be most likely a strong crop year. We also see some other positive effects with the dollar appreciation that should help farmers to sell their crops at interesting prices. 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. And I think this effect has by and large been normalized by this time. So overall it's, 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 in the next month. So the trend is positive on both sides. 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. Yeah, so actually it's both. So for two years already in a row, Perterra 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. And also I think we have also accelerated the integration with retail channel 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 is a very exciting one. Thank you. Our next questions are from the line of Ben Theurer with Barclays. Please receive your questions. 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 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 the Q3, just wanted to understand how we should think about this into fiscal 2026. Once you're doing all these rationalization efforts. Thank you. 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. 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. No. I think the line drops. Yeah, I just heard something about like 70 stores or something like that you said. And that's when I kind of like lost you. Yeah, the full line drop. One second. He's connected. Okay. Sorry for that. No worries. Ben. 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. Okay. Ruy, you're reconnected. Hello. Hello. Thank you. Our next question is from the line of Austin Moeller with Canaccord. Please proceed with your question. Hi, good morning. So the precipitation levels based on the data that we've collected are important. 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? Hi, Austin. Yeah, I mean, that's a topic. Since the government is probably not in shape of providing much additional liquidity 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 most of the improvement is going to come from improved profitability. 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 would do, but I think at this moment, most of what we see as a positive news is actually coming from the farmer's r ight. And so as demand recovers, do you expect to lease new retail space or just sell within the consolidated space that you now have? Since the demand side of the equation seems to be improving. Yeah. 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 one 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. That's very helpful. Thank you for the call. Thank you. As a reminder, if you'd like to ask a question at this time, you may press star one from your telephone keypad. Thank you. Thank you. We do have a follow-up from the line of Ben Theurer, Barclays. Please go ahead with your question, sir. Yeah, good morning. That's just me. Let me just squeeze in the follow up here that I had. So as we look into, well, more 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.S. and obviously with that there might be potential retaliation, etc. 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 six 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 or how do you feel just about the farmer itself and its willingness to kind of go back into the business, if you want? To put it this way. Hi Ben. So farmers are always the first ones to feel the impact, either negative or positive. So I think right now most of the improved sentiment is actually coming from farmers with some of the points you mentioned, including, let's say real depreciation and also more production in terms of grains. 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. I think right now we need to analyze how the things were developed, 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 in North America. With consequent changes in the area of production. 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. 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 good news for Brazilian farmers both in terms of commodity prices and also in terms of their ability to export more. Okay, perfect. Thank you very much. Thank you at this time. I'll now turn the call back to the management for closing remarks. Thank you for once again being with us 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 improvement in margins is highly in line with what you mentioned. We're going to have challenging year ahead. The management is focused on what we can control and improving our profitability over the next months. We'll keep you posted in every change. For now, I would like to thank you and thank the team for the extraordinary job that they have done so far. Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.