SLC Agrícola S.A.

[Abrupt Start] Q1 2025 Earnings Webcast. My name is André Vasconcellos, I am the Planning and Investor Relations Manager.

Also joining me this morning, we have our CFO and IRO, Ivo Brum. It’s a pleasure to have you with us this morning.

Please note that this webcast is being recorded and will be available on the company’s Investor Relations website, where you can also find the presentation. For those who need simultaneous interpretation, we have this feature available on Zoom under Interpretation located at the bottom center of your screen, just choose your preferred language, Portuguese or English.

Those listening to the webcast in English have the option to mute the original Portuguese audio by clicking on Mute Original Audio. For the Q&A session, we kindly ask you to submit your questions via the Q&A icon at the bottom of your screen.

As usual, firstly your names will be announced and then you can ask your question live. At that time, a prompt to enable your microphone and camera will appear on your screen.

If you prefer not to enable your microphone and camera, please write no Microphone at the end of your question and then we will read it aloud. We emphasize that the information shared in this presentation and any forward-looking statements made during the webcast regarding business outlook, projections and operational and financial targets of SLC Agricola are based on the management’s beliefs and assumptions, as well as currently available information.

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur.

Investors should understand that general economic conditions, market dynamics and other operational factors could impact SLC Agricola’s future performance, potentially leading to results that differ materially from those expressed in such forward-looking statements. I will now turn the floor over to our CFO and IRO, Ivo Brum, to begin our presentation.

Ivo, please proceed.

Thank you, Andre. Good morning to all.

We appreciate your participation in SLC Agricola’s Q1 2025 Earnings Webcast. Let’s please move to Slide 4, where we will discuss the cotton market.

Cotton prices closed April at approximately BRL0.66 per pound, reflecting the instability globally. The global supply and demand outlook for the ‘24-25 harvest indicates a surplus of 4.4 million bags.

According to SCA, production is reached to – is expected to reach 121.1 million bales. The ‘24-25 harvest in the United States has already concluded.

Initially, production was estimated at 17 million bales, but the final output came in at 14 million bales due to the hot and dry weather and additional losses caused by an unusual hurricane season. In Brazil, the harvest is still underway and CONAB reports production is expected to reach 3.9 million tons, an increase of 5.1% in spite of the decline in yield.

The high production is a result of a 6.9% increase in the planted area. Despite higher production, cotton prices remain under pressure due to a challenging macroeconomic environment.

The trade war between the U.S. and China continues to impact prices through risk aversion and shifts in trade relations.

On the other hand, the potential imposition of new tariffs by the United States could open opportunities for Brazilian cotton exports, for which Brazil is well positioned. Brazil cotton remains cost competitive and its quality could also serve as a differentiating factor.

Additionally, Brazil’s agricultural practices are characterized by advanced technology, which enhance the country’s standing as a reliable cotton supplier. Regarding the ‘25-26 U.S.

cotton harvest, planting has already started. The planted area was reduced by 12% compared to the previous harvest.

According to the latest USDA report, the ‘25-26 season should result in a deficit of 300,000 bales. Let’s now move to Slide 5 to discuss the soybean market.

Soybean prices have been highly volatile, particularly after the implementation of tariffs between the United States and China. The premium for Brazilian soybeans has appreciated, partially offsetting the decline in prices in CVOT.

This was driven by the potential for increased exports from China to Brazil. Regarding the global supply and demand outlook, the global balance for the ‘24-25 harvest is expected to show production exceeding consumption by 10.6 million.

In the United States, the ‘24-25 season was positive, closing with a significant recovery in production compared to the previous year, reaching 119.8 million tons. In Argentina, harvesting is nearing completion.

And in Brazil, despite the delays in rainfall at the start of the planting season, the harvest is expected to reach a record of 169 million tons. For the ‘25-26 U.S.

bean soybean harvest, the planted area has decreased by 4% and planting is already underway, showing good development. According to the USDA, the ‘25-26 harvest is expected to show a surplus of only 2.8 million tons between production and consumption.

Now let’s turn to Slide 6. Corn prices in the CBOT spot contract and the Brazilian domestic market followed a positive trajectory throughout the quarter.

The global supply and demand balance for the ‘24-25 season is expected to show a production deficit of 23 million tons, the largest shortfall in the last 4 years. This deficit is primarily a result of the losses experienced by Argentinian farmers in the ‘23-24 cycle, along with a 16% reduction in planted area according to the Buenos Aires Grain Exchange.

Additionally, Ukraine’s production is expected to decline by 18% compared to the previous year. In Brazil, the harvest is ongoing with good yield potential.

Demand remained strong, primarily driven by the corn ethanol industry, which is also reducing the exportable balance of the commodity. In the U.S., the ‘25-26 corn harvest has already started and showing good yield potential.

The planted area has grown by 5% compared to the previous harvest. According to the USDA, the global corn market for ‘25-26 is projected to show a deficit of 1.1 million tons.

Now let’s proceed to Slide 8, where we discuss our operational performance. The soybean harvest experienced a delay in planting due to late rainfall in Mato Grosso in September in 2024.

Additionally, the harvest was delayed as a result of excessive rainfall in January. Despite these challenges, the soybean crop achieved a strong performance, reaching a yield of 3,958 kilograms per hectare.

This result is 0.5% below the initial forecast, but it represents a 21.3% increase over the previous harvest and a 12% increase over the national average. Regarding cotton and corn, the ideal planting window achieved, and we expect an average yield for cotton at 1,917 kilograms per hectare and which is 3% below our projected yield.

For corn, the current yield estimate is 7,534 kilograms per hectare, representing a 3.7% increase over the previous year. As for the cost per hectare breakdown, we’re going to break down by crop.

The estimated cost per hectare for the ‘24-25 harvest is projected to decline by 5.4% compared to the ‘23-24 forecast. This reduction is mainly due to lower prices for fertilizer pesticides, which are closely correlated with commodity prices.

Comparing to the actual cost of the ‘23-24 season, we achieved a 10% reduction in costs. Now let’s move to Slide 10, where we’ll discuss our hedging for the ‘24-25 harvest compared to ‘23-24.

The hedge positions for the ‘24-25 crop have evolved. Currently, we have 83.8% of soybean production hedged in 50.6% of corn and 49.6% of cotton.

At the same time, we have taken advantage of the peaks in the dollar rate to lock the hedging for the crops. The exchange rate more than offset the decline in commodity prices.

The price of soybeans in reais remained stable, while cotton was 5.6% higher than the previous crop and corn showed a 5.5% increase. Now I would like to hand the floor over to our planning and IR Manager to discuss our financial performance.

Andrea, please proceed.

Okay. Could we please go to Slide 12, where we highlight some of our key points from our income statement.

The 10% increase in planted area, along with the recovery in soybean yields were the main factors driving our results in 1Q ‘25. Net revenue closed the first quarter at BRL2.3 billion, an increase of 19.1% compared to 1Q ‘24.

This was driven by a record volume invoiced during the quarter. We achieved 83,000 tons invoice, mainly due to larger volumes of soybeans and cotton from the ‘23-24 harvest.

Adjusted EBITDA reached BRL943 million with an adjusted EBITDA margin of 40.5%. Net income was BRL510.7 million, an increase of BRL123.1% compared to 1Q ‘24.

The main factor contributing to this change was the increase of BRL429.9 million in gross revenue. Cash flow for the quarter was BRL1.4 billion negative, mainly due to the payment of BRL635 million related to land acquisitions.

We paid out BRL180 million for the final installment of Paysandu Farm and BRL361 million for the purchase of Fazenda Paladino and BRL95 million for the Unai farm. Additionally, we made payments for crop inputs and paid out the final installment for the acquisition of a minority stake in SLC LandCo, totaling BRL280.9 million.

On Slide 13, we present our debt position. The adjusted net debt of the company closed the first quarter of ‘25 at BRL5.2 billion, an increase of BRL1.5 billion compared to 2024.

The net debt during the period was mainly impacted by investments made during the quarter and the payment of crop inputs. The net debt over adjusted EBITDA ratio ended the period at 2.27x.

The debt structure was strategically balanced with a focus on the long-term. Now let’s go to Slide 14 to discuss the distribution of the parent company’s net income.

Our ordinary and extraordinary General Meeting was held on April 29, 2025, where shareholders approved the distribution of BRL241 million, representing 50% of the parent company’s adjusted net income. Dividends will be distributed to shareholders of the company who held shares on May 5.

The company’s shares were traded ex dividend starting on May 6, 2025. The distribution of dividends will occur on May 15, 2025.

Based on the 2024 closing, the dividend yield is 3.1%. And over the past 4 years, it averaged 4.9%.

Now I will turn the floor over again to Ivo Brum to present our perspectives for the 2025-26 season. Ivo, please proceed.

On Slide 15, we will talk about the prospects for the ‘25-26 crop season. We have already made significant progress in purchasing fertilizers and pesticides with the acquisition of 57% of nitrogen fertilizers, 82% of potash chloride, 69% of phosphate and 57% of pesticides.

On Slide 17, we present our hedge position. We have already advanced in our hedge positions for the ‘25-26 season already locking 44.8% of soybeans, including commitments and securing 7% of cotton.

Corn is a crop traded in the short-term, so there is no mark liquidity for hedging the ‘25-26 crop. Now let’s move to Slide 18, where we show our current expectations for planted area after the announced transactions, acquisition of Sierentz Agro Brasil.

This new operation will allow for a 13.6% growth in planted area. Additionally, there are advances in terms of strategic diversification in our land portfolio, which helps mitigate climate risk.

Moreover, in terms of our business model, we will have approximately 62% allocated to lease land and 38% to own land, fully aligned with our strategy. Thank you very much.

And now we will open the floor for the Q&A session.

So we are starting now the Q&A. Please submit your questions in writing all at once and wait for the company’s answer.

To ask any questions, please use the Q&A icon that you’ll find at the bottom of your screen. As usual, your names will be announced, so that you can ask your question live.

And at this time, a prompt to activate your microphone and camera will appear on your screen. If you prefer not to activate your microphone or camera, please write no microphone or camera at the end of the question that I can read it aloud.

So we begin with a question from Mr. Gabriel Barra, Citi.

Yes, we can hear you. Okay.

I have a broader question about the macroeconomic scenario. I would like to understand your trading strategy.

We have been talking about all these changes in geopolitics and new tariffs. And there is this belief that Brazil could come out a winner from the tariff war, especially in relation to the exports to China.

There were some changes this weekend with a new agreement. And I would like to hear your views on this.

What is the impact of this on your strategy, thinking of this season and ‘26 – ‘25-26, considering all of the uncertainty around this tariff war. Also, we saw that you increased your landholdings with a series of acquisitions.

But with this, leverage has climbed at a time when interest rates are now higher in Brazil as well. And there is this tendency that they will remain at high levels.

So I would like to know about your deleveraging perspectives. I wouldn’t say that it’s a concerning level of leverage, but it’s higher than usual, especially when we consider deleveraging and your investments, you have been distributing dividends according to your principles, but we would like to understand a little more about deleveraging, dividends and even cash generation in the near future.

Thank you very much, Barra, for this question. Okay.

Let’s talk about our capital structure. We have made significant investments recently.

This changed our leverage. In fact, we prepared for this moment – for a very long time, our net debt over EBITDA ratio was below 2x.

So our Board said that this was the time to go. But at the same time, we’ll work very hard to return to the appropriate levels.

So of course, with these investments also, we had an increased number of needs in terms of inputs. We were closer at 1.8 last year.

Now we are at 2.27 with this – with the new acquisitions, and this was expected. This year, leverage will remain a little higher.

We’ll start shipping out cotton. And with this, we’ll generate a lot of cash and the level will reduce again.

The company generates cash. It does generate a lot of cash.

And historically, this has been the case. So we expect that starting 2026, we’ll start going back to the levels below 2.

So I don’t envisage any risks in terms of reducing the payout of dividends. There’s nothing being analyzed in that regard, even though interest rates are higher right now.

We believe that by mid-2026, we’ll be back to levels below 2. And EBITDA has also increased which helped balance this relation.

As for our selling strategy, this trade war was in the horizon. We sold soybeans in the exchange and waited for the increase in premiums.

And now recently, we were able to sell out those contracts. We sold out the premiums.

So it was a good way to manage this scenario with gains. I think there will be many oscillations in the market because there is a temporary agreement for 90 days.

We don’t know what to expect. After that, prices are reacting.

Maybe it’s a good moment to fix prices. And unless that we find a good balance in the United States, it could be that we’ll see once again pressure in Chicago with an increase in basis.

So we’re being very cautious, but what we see is that we observed that spot prices have been between BRL110 and BRL120 a bag. So we could try to make additional gains, but prices have remained relatively stable.

The global demand and supply equation is very balanced. There’s no room for losses, and we are monitoring the conditions in the United States for the soybean crops.

So in the Chicago Exchange, we could see some oscillation because of the trade war. But in Brazil, prices are being traded at a firm level.

And I think that is very balanced between supply and demand. So I think that nothing to be expected.

Let’s now move to a question from Matheus, UBS.

My first question is about the monetization of your lands. Well, if we think of the past years, maybe you could think of JVs, partnerships.

So I would like to hear if there are any developments or if you’re actually backtracking on that strategy? And also to – in order to accelerate the deleveraging process, doesn’t it make sense to think of this asset differently, for example, establishing JVs or partnerships for your own land?

Is there any way that you can use this land as an asset in order to keep the same level of own land, but at the same time, create some short-term relief. Now thinking of costs for ‘25-26, based on the comments from the last call, you are now at a lower level, but I think that you made advances in terms of your purchases from the previous call.

And was this due to increased prices that you detected in the market? Or how can this – how will this compound the costs for ‘25 to ‘26?

Should we expect flat costs or dwindling costs, also considering inflation? How those are the questions that I have?

Well, about monetizing on our land, I think that joint ventures make all sense. It’s not a simple process because when you consider the return obtained through leasing, we’re talking about 4% to 5%, which is what we get from leases.

And with the interest rate at 15%, it doesn’t add up. So we have to believe that the land will appreciate in time with a level of 5%, 6% above inflation.

So if we add up the 5% with 5%, we reached 11% with an interest rate of 15%. Again, it doesn’t add up, but we’ve always used this alternative.

But once again, it’s important to find the right partner. We had a partner with us for 12 years.

And then eventually, the fund had to realize and return the capital to the investors. But definitely, this is part of our investment portfolio.

About inputs, we have made progress in the beginning of the year. Yes, fertilizer prices went up during the period.

We decided to wait because our agricultural planning was underway, and we try to stick to the necessary volumes initially. And then we do the fine adjustment.

Now we have clarity on how much more fertilizer will need nitrogen specifically, we have an expectation of a reduction in prices because oil prices have gone down substantially. And this will also impact nitrogen prices.

And China also announced that they will go into the market offering fertilizers, especially phosphates this could also create some shifts. Once again, we are expecting that in the coming weeks, there will be good opportunities for us to complete our input purchases.

But when you think of the cost increases in dollars, especially when we compare this year’s cost with last year costs, we’re trying to prevent increased costs in dollars because Chicago prices have all remained stable also on the year-on-year comparison because oscillations have been dramatic. But we expect to maintain the margins for next year and especially with the increase in planted area, our results should also grow in tandem because in the next season, we’ll have 100,000 more hectares.

So this is very substantial.

So let’s now advance with a new question. It’s going to be from Pedro Fonseca, XP.

I have a question about costs.

Sorry, the audio is breaking up. The interpreter cannot hear everything.

Could you give us some color in relation to what we can expect in relation to production costs? And I couldn’t understand and also about costs, when we consider crop protection, I think that you’re actually a little advanced in relation to the schedule in the comparison with last year.

So is this why because you’re expecting costs to increase further down the road? Or was it more an opportunity that you were trying to seize?

Thank you, Pedro. Well, okay, everything that involves seeds, fertilizers, pesticides, we don’t know yet how much this will cost in the next crop season.

We know that fertilizers and crop protection inputs, our objective is to keep them stable. But sometimes the one fertilizer increases in price, but then we try to balance this with another one, but we want 0 increase in costs, in inputs.

So in phosphates, we reduced the percentage because when doing our planning, there was an increase in the need for phosphate. So that’s why we decided to buy a little more than in the previous package, considering the conditions out on the fields.

And this is why there was a change in what we intend to purchase. Now crop protection, it’s all about seizing opportunities.

We’ve seen good opportunities for purchasing. The costs today are below last year, but there are still some of the substances that we need to buy yet, and they are more expensive now than in the previous year, but we are still betting on 0% increase, but our supplies department will have to work very hard so that we avoid price increases because some of the molecules are really now being sold at higher prices.

So we’re still holding on, and we’ll only have clarity in relation to the costs for the next crop season towards August and September once we have concluded the purchasing process, and we have a clear idea of the areas that will be planted with what crops and what regions. And this is something that we’re still working on.

We will need an additional 2 month. So it’s usually by September and October that we approve the budget with the Board.

And in the meantime, we present some of the preliminary versions to them. But our objective is zero increase in inputs for all crops.

So let’s continue now with a question to Henrique Brustolin from Bradesco.

Two points, please. First of all, I would like a broader overview of commodities.

We saw some reports being published recently with the first projections for the ‘25-26 crop season. How does this impact the risks that you expect for your main commodities, such as soybeans and cotton.

And also, I know that it’s early on and it’s difficult to make decision. But when you think of the yield for soybeans and cotton and the uncertainty around commodity prices, what can we affirm in relation to the planted area mix, thinking of this balance between risk and opportunity for the 2 crops.

Okay. First of all, let’s start talking about soybeans and cotton.

Well, the market is really proceeding in line with our expectations. Why do I say this?

Because the current season shows a very favorable tendency for soybeans. This concerns us because this will create an impact in prices.

And we thought that the United States had to reduce the soybeans planted area to offset this. So they did this.

They increased corn. And for the next crop season, we’ll have a much better balance between the 2 crops, which is positive.

Today, the market is balanced. There’s no exceeding numbers of these 2 crops.

But I don’t suppose that there will be because the forecast is always very optimistic in terms of the volume of production. So it’s unlikely that we’ll see a very big harvest for next year.

So the prices will be the same as we expect, unless there is a climate event or some other turbulence. So for the next crop season, everything is neutral, but we could have La Nina, which means good rains in the Cerrado region and lower rainfall in the south of the continent, which could lead to problems in Argentina and Rio Grande do Sul.

About yield, when we talk about margins, the soybeans margins are higher than cotton. But when we think of return per hectare in numbers, I think that cotton is still the best investment that you can make.

The return is higher than soybeans. So our main asset is the land, right, whether leased or our own, this is the most important component.

So it makes sense for us to continue growing cotton also because we have high yields and proper risk management. So it makes sense to continue planting cotton and expanding the area whenever possible.

So this is the strategy that we’ll pursue in the short term. But in a unique region or an only region then cotton is risky because the investment is BRL12,000 per hectare in terms of cost.

So if there are losses, this will hurt. Now since we have extensive diversification in terms of geographies, I know that you – I know that we try to stick to the averages that we announced to the market as targets, but we can clearly see that one region can outperform the others because of climate aspects or when – but there is an offset.

If you had losses in Bahia, you had gains in another region. And all of this is very helpful in maintaining our productivity.

But in spite of this, I have to say that cotton with lower margins and high risk delivers more to the company per hectare.

So let’s continue now with the next question, Mr. Lucas Ferreira, JPMorgan.

Well, with the announcement of renegotiation with Terra Santa, I would like to ask, considering your leasing portfolio in average, what’s the interval for you to negotiate or renegotiate leasing agreement? I think that probably yield is one of the considerations, but also the value of the land.

So – and how can we project this for the future? Looking at lease yield per bags, what’s the expectation for the next 5 years?

Is leasing very different in the different regions? Do you think that there could be an inflation of this number in some regions?

So how can we – what we can expect in that regard basically?

In fact, I was waiting for someone to ask me just this question. So let me explain.

Terra Santa, well, the agreement was signed in 2020. The negotiation was virtual because it was the height of COVID and we only took over the following year.

At the time, there was a lot of instability in the market. So we closed this lease at 17 bags per hectare.

That was the number. And thinking of the margins, they were quite low for the different crops because of the instability because cotton was being sold at very low prices and it was mostly grains that was – that were in demand, right?

We had to supply the market. So then the terms of the agreement were signed, but it was a bearish moment.

And with Terra Santa, well, we renegotiate every 3 years. In 2020, we had great results, 2022 as well with increase in margins.

And then the lease market also started to adjust. There was an increment in the number of soybean bags per hectare.

In the leases, we have several agreements with 19 bags per hectare, which is how much we are paying for Terra Santa, 1.5 bags for infrastructure, 1.5 bags, and this is okay. This is expected depending on the infrastructure that you’ll find.

So we try to bring to market the Terra Santa agreement. And this is something that’s done every 3 years.

And this is the current – the go in prices in Mato Grosso in line with what the market is paying. But usually, leases are adjusted every 5 years because 3 years is a short time for major changes but Terra Santa, since it was a unique moment, right?

COVID had a term of 3 years, future. We are not saying that our margins will continue to grow.

We say, well, the historical EBITDA margin will be 33%, 14%, 15%. This is the historical level.

If margins start to grow more than that, we’ll have an increase in leases because then, of course, the owners of the land will want their share in growth. Also when the same happens with inputs when the margins are too high, when margins go up for any given reason, for persistent drought extending over 2 years, then machinery prices go up as well because everybody wants to get a piece of the pie.

And with leases, it is the same because leases are – it’s very difficult to reduce prices of leases. The negotiations are tough because they are more long-term.

We have some long-term agreements and we don’t want to have long-term agreements with high prices because we know commodities are based on cycle. So we cannot accept pricing only in a bullish moment.

But everything, of course is explained to the landowners for them to understand. And that’s why we will renegotiate agreement systematically.

It’s very clear. Thank you.

Unfortunately, I couldn’t find this information, Lucas, but our average is 16 bags per hectare, I believe. This is the average.

Mato Grosso, 19 bags per hectare. Maranhão, 12, 13 as payment by 13, 14, if it’s cotton.

Each region has the lease price, also depending on rainfall, etcetera, so this is it. We have been tracking this and everything is in line.

We have several agreements paying 19 bags. I think that the market was a little bit scared when they heard about it, but you have to take into account that the agreement was negotiated at the time that was difficult and it was very difficult to make this measurement and assessment at that time.

So, even with high real interest rates, you don’t expect this to grow above 4% to 5%.

No. Also because it’s important to remember, it’s the farmer who takes on the risk of climate, inputs, etcetera.

So, sometimes the operator risk becomes so high that they will lose interest in the deal. So, even if you have hedging, even if you do everything right, you are working for the owner of the land.

And if you follow us, we really focus on leases, and we never take on expensive lease, because we know this is unsustainable in the long-term, and we are very critical and we do our due diligence before closing any deals. Thank you, Lucas.

Okay. So, now let’s continue with Guilherme Palhares, Santander.

Guilherme, could you please open your camera and microphone, I mean activate.

Hello André and Ivo. Just allow me to follow-up on Luca’s question.

Ivo, you were saying that you were trying to bring the agreements to-date. And I would like to hear about your negotiations calendar from now on.

If we think of the renegotiations in your portfolio, could you shed some light on that? Also, in your planning that you are working on right now, I think that ‘25, ‘26 should be seen from the perspective of your budget.

So, we want – I would like to know if there is a disparity between farms and if we can expect continuity with an increase in the long-term.

Thank you, Palhares. I will start with the last one, okay, about productivity and yields.

We have some farms making 80 bags per hectare. And this is the project.

This is the expectation. In Mato Grosso do Sul, it’s very common to reach 80 bags.

But we have to think of the other ones and their potential. Since this is the second crop, this is a shorter cycle, and then you can use it for second crop corn or cotton.

But the – I wouldn’t say that we should expect a significant increase in yield. I think a more leveled level of yield, especially in Bahia because there, the climate events have greater impact like this year.

Up to January, our performance was wonderful. The crops were developing to their full potential.

So, we were probably going to outperform the project. But in February, there was no rain.

And so we ended up losing the adherence to our project. We have potential for that, but I think that in the near future, we will do this gradually.

We started this in the Piratini farm with irrigation of 4,000 hectares. We will do this once again next year, and we will close the season with 12,000 hectares being irrigated.

So, I think that in terms of yield, growth will follow the curve, the trend curve. We look at the trending curve, and this is the target for the following year.

If you look at our yield and productivity history and if you crunch the numbers, you will reach the expectation for the coming year. And this is the cycle, every 5 years we are in renegotiations in the case of Espirito Santo [ph] just 3 years.

We will have another important renegotiation cycle in the ‘28 ’29 crop year. But the most important contracts are Terra Santa, Ahadac [ph] and Castillo in Bahia.

There are some regions in which we have important purveyors of land and the next important cycle is in ‘28, ’29, where we have some important agreements maturing.

Thank you.

Thank you, Palhares. Our next question is from Julia Rizzo, Morgan Stanley.

Julia, you have the floor.

Hello. Good morning.

Thank you very much. I would like to go back to the leases because in the end, if I don’t understand whether what’s missing in Mato Grosso is below – so did Terra Santa reach the same level as the company, or is the rest of Mato Grosso inching towards the Terra Santa level?

Because when you said, well, the average is 16, 17 bags, this includes Maranhao and Bahia, Mato Grosso today, how many bags in comparison with the market? And could you give us an update on the planned yield for soybean and corn in the region, because I think it makes sense to look at those 19 bags, 20 bags in comparison with your project and the region’s potential.

In relation to the results, could you give us a little more color in terms of working capital? It was very intense in this quarter.

Could you tell us whether there were any advanced payments being made? And finally, cotton, what do you observe in terms of demand levels and prices?

Maybe this is a commodity in which we have the most exposure.

No problem, Julia. About leases in Mato Grosso, well, we have several agreements in Mato Grosso at that level of prices.

So, Terra Santa is not a single agreement. We have Perdizes Farm and others.

So, 19, this is the level in Mato Grosso.

So, this is SLC Mato Grosso or…?

Yes. This is the agreement that we have also with other partners, and we pay 18 bags per hectare.

So, this is the price for the region. So, we are not surprised that it reached this level.

In other regions, of course in all the regions, we pay less. You are not going to pay 19 bags per hectare in Piaui, first of all, because those are not areas where cotton are being planted, so you don’t pay as much, you are going to pay a lot less.

Everything depends on the region. In Mato Grosso, the cotton area, and here, we are talking about 75%.

If it’s just soybean and corn, we would be paying 16, 17 maybe. Everything depends on what is being planted and the location of the land.

Let me clarify this. For soybean, we need to correct 20 centimeters of the soil.

For cotton, it is twice as much, 40 centimeters. So, if we are investing in an area that’s already prepared for cotton, then you can pay 19 bags per hectare.

If it’s not like this, you cannot pay that much, because you will have to invest and maybe down the road after a few years, paying less than that, you could bring the agreement to 19 bags, but not in the initial years. And everything depends on the region, Mato Grosso do Sul is a highly valued region and agreements are signed at higher prices.

About our working capital, the funding was for this crop season and the acquisitions. For example, we paid off Paysandu Farm.

We had a final installment to be paid out and also LandCo, we purchased an area in Minas Gerais, Paladino. You are talking about the BRL1.2 billion in cost in the customers.

I understand, but for example, this is posted to suppliers that I had already – so it appears at the top of a variation in the suppliers because the most recent acquisitions, in fact, that were concluded in March, Unai, Paladino and [indiscernible]. There, we didn’t have suppliers.

Those were related to CapEx. But this is where the adjustments come from, and that’s why they do not appear.

We didn’t make any payments towards the next crop year. Usually, this is posted to January, March next year when we start the soybean harvesting.

So, the payment for the inputs takes place once we start receiving revenue from soybean sales. Cotton is a crop that underwent a few changes and shifts.

Today, there are many on-call contracts at the exchange. So, even if you have, what does it mean after all, that farmers sold more than the traders purchase.

So, whenever there is a price increase and it reaches BRL0.70, then the farmers adjust their contracts. So, this is the level, 70 is like the ceiling for cotton prices recently.

And the increase of on-call contracts, this is something that happened very recently. We never saw this in the past.

So, it was COVID, the need for the reduction of working capital for apparel makers. Usually, they did this six months, seven month in advance now.

It’s two months in advance, negotiations take place and it’s time to ship. This is a shift in the scenario, and this is an important change for us as well.

We have to review our hedging policies because of that. So, I can say that this is a scenario.

We see prices at BRL70, which is a good price for Brazil, maybe not for the United States. It’s low for them.

But for us, it’s very acceptable and the foreign exchange helps us to dilute our costs in BRL. So, we are very attentive to this, paying attention, but we have a ceiling that’s BRL70.

It’s plus the premium because in Brazil, SLC Agricola, of course, has a name, and this gives us a kept market. And with this, we can increase the price by 4% to 5%, so we can reach up to BRL0.75, which is what we – the price that we use.

Okay. So, I would like to follow-up since you were talking about the basis, how much could you allocate for the soybean crop season?

Did you use that moment when basis increase with – from China crisis?

Yes, our hedge increased a lot for soybean. We have reached 87%.

So, there is just a minor share of soybeans to be sold. So, we use the stressful times.

And we have a limiting factor that we cannot reach 80% before the harvest. So, there is a small room to make changes.

So, since we didn’t lock the hedging for all inputs, we are moving slowly on soybean. But for next year, we actually got some very fair prices for soybeans, but soybeans is stable, BRL110, BRL120, sometimes you get some gains, but nothing that will be very representative, 10% more maybe.

Thank you very much.

Thank you, Julia. So, now Thiago Duarte from BTG.

Thiago, please activate your camera.

Good morning Ivo and André. It’s a pleasure to a lot to you.

I have two questions. Can we please turn back to the leasing, go back to the leasing and the Terra Santa and the agreement, because I think that this is a discussion that goes straight to the heart of the business strategy, which is asset-light.

And this will enable us to understand – it’s important to compare this with productivity, this line with productivity. So, when we look at the combined SLC productivity and compare it to the guidance for this year, we are talking about 62 bags going to 66 bags, an increase of 4 bags in soybean.

So, for Terra Santa, where you have to adjust the lease, how did yield evolve from the time the agreement was signed in terms of the increased number of bags per hectare? And the second question is, in the last quarter, as harvesting advanced, you made an adjustment of the second crop area, increased corn and reduced cotton.

And last night, we saw that you also increased the yield expectations both for corn and cotton. So, is this something that was caused by rainfall in the two last months that was very beneficial for the two crops?

So, could we imagine that this shift perhaps shouldn’t have happened.

Thank you, Thiago. Okay.

First of all, the second question. The reduction of the planted area, this happened because the ideal planting window was behind us.

So, we reduced the planted area for cotton and increased corn because the corn has a longer window. Then I had to make adjustments to yields.

So, right now, rainfall levels are within historical levels. At the time of the forecast, we were a little bit worried because with the window, planting window being off the planting window, maybe rainfall would be lower than what we needed.

From April – in fact, April and May, we had even rainfall above historical levels. Corn yield increases because of this better conditions in rainfall.

And the same applies to cotton. So, if you just say, shouldn’t this have happened or should this have happened, this is very difficult to a farm.

And there is also the level of sunlight needed. And I am not sure if we had maintained more second crop cotton instead of corn, would we reach a better condition, I don’t know.

It was a decision we had to make in early February, because it’s the end of the double crop cotton, and I would never – I don’t think we would be able to tell whether it would have been better to plant double crop corn at the end of February. I think that we acted conservatively and technically in this decision.

About the leases, yes, it has to do with the farmers’ margin, but it doesn’t restrict itself to this. Yield grows and with this, the lease prices increase, the input vendors also increase their prices.

So, there is a correlation, but it’s not only that. And if everybody increases prices, the margins will remain the same.

Unfortunately, I cannot disclose to you the Terra Santa yields also because of confidentiality issues, but an important driver is definitely yield.

So, I agree with you. So, if yield increases, will lease prices increase in tandem?

Yes, of course, because everybody wants a piece of the pie. There is no reason why the producer would get more than everybody else.

So, it makes sense to make this. So, to rephrase my question, is it reasonable to assume that yield increase was higher in this area than in others?

No, it’s not only soybean, we are talking about soybean and cotton. 75% of the area is used for cotton.

So, it’s a combination of these two crops that are sustaining this increase. So, we can state that, yes, the increase was enough to sustain this.

But if I increase productivity too quickly, I will have gains up until the time of renegotiation of the agreement. So for those of you following us closely, sometimes you see that we are sometimes as we grow margins, and we see that the suppliers start also raising their prices.

Thank you.

Thank you, Thiago. So, the 1Q ‘25 conference call is now closed.

Our Investor Relations department will be happy to take any of your questions. So, thank you for watching and have a great day everyone.