Adecoagro S.A. (NYSE:AGRO) Q1 2025 Earnings Call Transcript

Adecoagro S.A. (NYSE:AGRO) Q1 2025 Earnings Call Transcript May 13, 2025

Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro’s First Quarter of 2025 Results Conference Call. Today with us, we have Mr. Juan Sartori, Executive Chairman; Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP; and Mrs. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event has been recorded, and all participants will be in listen-only mode during the company’s presentation. After the company’s remarks are completed, there will be a question-and-answer section. At that time, further instructions will be given. Before proceeding, let me mention that forward-looking statements, are based on the beliefs and assumptions of Adecoagro’s management and on information currently available to the company.

They involve risks, uncertainties and assumptions, because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro, and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Mariano Bosch: Good morning, and thank you for joining Adecoagro’s 2025 first quarter results conference. Before we start with the highlights of the performance of the company, we would like to comment on the recent transaction. As you may all be aware, Tether has completed its tender offer process, and has become our largest shareholder holding 70% of the company’s equity. This is clearly the start of a new era for the company, and we are all very excited and enthusiastic about the future prospects, with this new venture. I still remember when we founded Adecoagro back in 2002, we had the idea of producing each of the commodities where we could achieve being the low cost producer worldwide. Within this concept, is that it has taken us more than 20 years, to develop our current four business segments.

In each one, we leveraged on the best combination of soil, climate and people to develop our existing sustainable production systems. We are very happy that a significant shareholder such as Tether, a leader in technology and innovation in its field, has acknowledged our work and wants to support us. I am certain that through the implementation of cutting edge technologies, we will be in a position to continue transforming the traditional agribusiness space, while we venture into potential new exciting projects. Having said all this, we had invited today our Executive Chairman, Mr. Juan Sartori. Juan has recently joined the new Board representing Tether, together with other four new Directors. Juan, welcome to Adecoagro. I will pass the floor to you.

Juan José Sartori Piñeyro: Thank you, Mariano. Good morning, everyone. I am Juan Sartori. It’s an honor to join the board of Adecoagro as newly appointed Executive Chairman, representing Tether, now a significant shareholder in the company. Following the completion of the tender offer, we have appointed a newly formed Board, which we believe that in combination with the continuing members, and the quality of management is now an ideal composition of experience and new ideas that will support and lead the company into the future. Tether is the creator of the largest, most transparent and liquid stablecoin in the industry, and its mission is to build sustainable and resilient infrastructure, for the benefit of underserved communities, by leveraging cutting edge block-chain and peer-to-peer technology.

It is committed to improving financial inclusion, while fostering economic growth in emerging countries, where there is a huge opportunity to unlock growth. The company currently has more than 400 million users around the world, and recently surpassed $150 billion in assets and $13 billion in profits in 2024. Tether’s investment in Adecoagro is part of its strategy, to invest in reserve tangible assets with limited supply, which supports sustainable developments that create real impacts. We are excited to become part of this remarkable company, which owns some of the best agricultural and energy assets in the world. Assets of particular importance for Tether as it sees in Bitcoin, gold and farmland, the basic assets for stable and uncorrelated long-term reserves.

We recognize in Adecoagro a platform of management efficiency in integrating and operating agricultural, and energy assets that will only be improved, by the incorporation of a successful and committed long-term shareholder. We are committed to supporting Adecoagro’s management in executing its current strategy, and contributing to its future growth journey. We currently see organic and inorganic opportunities in Latin American countries, with very attractive returns, which we may explore and are ready to provide financial support if needed in order to execute. We are here to help strengthen what the company already does so well, which is operating, integrating and managing complex businesses with discipline and excellence. We will contribute to maximize long-term value, maintaining a disciplined capital allocation strategy including a firm commitment to keeping a healthy balance sheet, and the company’s leverage levels while pursuing aggressive growth opportunities when they present themselves.

We will also maintain the current shareholder distribution policies, by focusing on dividends and a strong emphasis on maximizing the stock price, sometimes by remaining open to opportunistic buybacks to the extent we conclude it is the best use of the company’s resources, as well as aligning management compensation even more to the subside. In addition, we intend to offer Adecoagro, the latest technological innovation and capabilities, areas where Tether has deep expertise and success and is currently transforming around the world. We see opportunities to explore leveraging stablecoins and block-chain technology to increase efficiency in commodity trading, explore real asset tokenization and potentially integrate AI and peer-to-peer technologies under development to further strengthen operational performance.

We are looking forward to working with the Board, management team and investor community on this journey. Thank you, and back to you, Mariano.

Mariano Bosch: Thank you, Juan. Now, going into the results of the quarter, consolidated adjusted EBITDA reached $36 million. Starting with our businesses in Argentina and Uruguay, our rice operations achieved a new record in productivity, proving that all the investment made in seed genetics, land laboring and machinery paid off. Nevertheless, rice prices, as you’ve seen, are going down. In theory, our presence in the retail and export markets grants us commercial flexibility to maximize the production of the product that offers the highest margin, which continues to be the fluid milk. Although the crops business is facing another challenging year in terms of prices and costs, we are seeing an improvement in crop productivity versus last year.

Let’s move into the sugar, ethanol and energy business. During the quarter, we sold all the ethanol that was stored in our tanks at prices significantly higher than in the previous periods. Now that the new season has started, we have once again the flexibility to build up inventories in our storage tanks if needed. In the meanwhile, we are strategically crushing all cane that has impacted by the dry weather, in order to maximize productivity during the second half as we accelerate our crashing pace, and reach our annual target. The higher the milling, the better we will be diluting our costs, as we always say. To conclude, I would like to reiterate my gratitude to all our people in Adecoagro, but this time I would like a special thank for our former Directors Plínio Musetti, Alan Boyce, Guillaume van der Linden, Andrés Velasco, Ana Russo for their support and valuable contributions throughout all these years.

Now, I will let Emilio walk you through the numbers of the quarter.

Emilio Gnecco: Thank you, Mariano and Juan. Good morning, everyone. Please turn to Page 5 with a summary of our consolidated financial results. New sales totaled $324 million during the first quarter, 28% higher year-over-year on higher volumes sold mainly ethanol, as we emptied our tanks, which in turn fully offset the lower prices for some of the commodities that we produce. Despite an increase in sales, adjusted EBITDA was down to $36 million marking a 60% year-over-year decrease. The year-over-year decline in EBITDA, was mainly explained by losses in our biological assets line in our rice and sugar ethanol and energy businesses, due to lower prices as well to lower production in the case of our Brazilian operations. In addition, results were also negatively impacted by one-off expenses incurred by the company in connection with the tender offer.

Now please turn to Slide 6, regarding our production figures in the bottom right chart, we can see that crushing volume in our sugar, ethanol and energy business was down 31% year-over-year, due to the slower and selective milling pace adopted during the first quarter, which we will describe in more detail during the presentation. On the other hand, total production in our farming division reported a 25% year-over-year increase explained by higher planted area, as well as record productivity in our rice operations. Let’s move to Slide 8, with the operational performance of our sugar ethanol and energy business. In our prior release, we anticipated that during the first quarter our crushing volume would decline, compared to the same period of the last year, as a result of the dry weather experience throughout 2024, which got extended into the first month of this year affecting the yields of our sugarcane plantations.

In this scenario, we made the decision to harvest old cane that were in the fifth or sixth cut, and had less potential, allowing the younger cane to continue growing, and recover productivity indicators in the event we received rains. As a result, we can see a decrease in both yields and TRS content during the period. We continue to maximize sugar production given its attractive premium. Our production mix stood at 42% on lower sugar content of the cane, for the reasons previously explained, which resulted in less production flexibility within our ethanol production. We continue to prefer hydrous ethanol over anhydrous ethanol, giving the better margin. Please turn to Slide 9, where we describe sales conducted throughout the period. Net sales amounted to $119 million during the quarter, 15% higher year-over-year.

This was fully explained by our commercial strategy, to sell our last year’s carry of ethanol to profit from the significant recovery in prices, during the first quarter of 2025. In 2024, we held to our ethanol inventories waiting for an improvement in prices. Throughout the period, we sold over 160,000 cubic meters of ethanol, representing 30% of the total volume produced in 2024, at an average price of R$2,700 Brazilian per cubic meter, 31% higher year-over-year. Regarding sugar, the combination of lower prices, and the decline in production given the lower crushing were the main drivers towards the decline in sales. In the case of energy, and despite the lower volume milled, we produced energy using our stored bagasse, and were able to profit from the hike in spot prices throughout the quarter.

Regarding cargo credits, we sold over 110,000 CBios at an average price of $12 per CBio. Please go to Page 10, where we would like to present the financial performance of the sugar, ethanol and energy business. Adjusted EBITDA amounted to $30 million during the first quarter, 42% lower than the same period of last year. Despite presenting higher sales and a year-over-year gains in the mark-to-market of our commodity hedge position, results were mainly offset by year-over-year losses in the mark-to-market of our biological assets on lower crushing and consecrate prices on harvested cane. Finally, to conclude with the sugar, ethanol and energy business, Please turn to Slide 11, where we would like to briefly talk about the current outlook. Rainfalls received over the last few weeks, eight yield recovery assuming weather going normal, we expect to accelerate our crushing pace, during the second half of the year and reach an annual crushing figure, in line to slightly above the previous year.

Also our unitary costs in cents per pound should decline as crushing increases, and productivity recovers. From a commercial point of view, the evolution of sugar prices will mostly depend on Brazil’s production, while it is still subject to gain productivity, industrial flexibility and logistics. Consequently, we still see some upside to current spot prices. Reason why we have hedged less than 50% of our 2025 sugar production. In the case of ethanol, consumer preference continues to favor ethanol, but supply may be limited given the industry expectations, to continue maximizing sugar production, due to the greater premium that commands. Moreover, new demand is expected to come with the implementation of E30, adding more pressure to the trade balance.

Now we would like to move on to the farming business. Please go to Slide 13. We are currently undergoing harvesting activities for most of our grains. As of the end of April, we harvested 52% of the 305,000 hectares of planted area, and produced over 790,000 tons of agriculture produce. Despite the precipitations received from February onwards, the productivity of some of our crops such as wheat and early corn, was impacted by the dry weather and high temperatures registered during December and January. On the other hand, we foresee a recovery in our late corn production, due to the improved weather conditions experienced so far as well as to the absence of spiroplasma, the bacteria that drove the declining yields in the previous campaign. For the rest of our crops, we are forecasting a slight improvement in yields versus the prior year, but in line with historical levels.

In rice, we are almost done with the harvesting activities. Our average yield reached eight tons per hectare, a new record for this business and a significant year-over-year improvement. Lastly, we continue enhancing efficiencies in our dairy free stalls, despite the declining crop productivity reported in the quarter, which we expect to reverse throughout the following months. At the industry level, we are working on product development for the domestic and export markets, while expanding our presence across different price tiers with our consumer product brands. On the following Page 14, we present the financial performance of our farming business. Adjusted EBITDA for the farming business totaled $17 million in the quarter, making a $27 million year-over-year decrease.

Starting with our Crops segment, the year-over-year decrease in results, was mainly driven by lower international prices, lower than expected productivity, and higher costs in U.S. dollars, which combined continued to pressure margins during the period. Moving on to rice. Adjusted EBITDA reached $10 million in the quarter despite the record productivity and the increase in sales, the decline in EBITDA generation was mainly explained by an uneven year-over-year comparison. As during the first quarter of 2024, we were able to profit from record prices explained by India’s policy to prohibit the exports of white long grain, and a very poor production of rice in South America. Prices have currently come down to normal levels, given higher global supply.

On an annual basis, we expect a similar performance of this segment, compared to 2024, but more evenly distributed during the quarters. Lastly, adjusted EBITDA in our Dairy segment totaled $7 million during the period, driven by higher sales on higher prices, as we improve the mix of value added products, and continue to maximize the production of fluid milk for the domestic market. Let’s now turn to Page 16, where we would like to present our capital allocation strategy. According to our distribution policy, we are committed to a minimum distribution of 40% of the cash generated during the previous year via a combination of cash dividends and share repurchase. Based on 2024’s net cash from operations, the minimum amount to be distributed under the policy this year is $64 million, out of which we have already committed $45 million between dividends and share repurchases.

In terms of dividends, a distribution of $35 million was approved. The first installment of $17.5 million will be paid on May 16, representing $0.175 cents per share, whereas the second installment will be payable in November in an equal cash amount. In addition, we have already repurchased $10 million in shares under our buyback program representing approximately 1.1% of the company’s equity. Please turn to Page 17, for a broader view of our debt position. Net debt amounted to $679 million, 6% higher year-over-year. This was explained by the increase in short-term debt throughout the period, as we were able to secure new financing at attractive rates to finance part of our working capital consisting of the planting and harvesting activities of our crops.

As shown in our financial figures. This was achieved without attending our distribution policy and growth projects, nor compromising our liquidity ratio, which stood at 1.6 times showing the company’s full capacity to repay short-term debt, with its cash balances. By the end of the quarter, our net leverage ratio reached 1.7 times, given the lower results presented. We expect to reduce our short-term debt exposure, throughout the second half of the year, as we collect the cash from our sales, as well as to reduce our net leverage ratio on graded expected results in the upcoming quarters. On the following slide, we describe our CapEx program. In the first quarter of 2025, we invested $30 million in expansion projects in Brazil. Expansion CapEx was mostly allocated to increasing our sugarcane plantation size, and expanding our harvesting equipment with the acquisition of two-row harvesters and grunner trucks.

In our farming business, our main CapEx program consisted of the development of rice production areas, the expansion of our drying and storage capacity in our Paso Dragon rice mill, and the construction of a new warehouse for dairy products at our Chivilcoy dairy processing facility. Thank you very much for your time. We will now open the call to questions.

Operator: Thank you. [Operator Instructions] Our first question comes from Thiago Duarte with BTG Pactual. Your microphone is opened.

Q&A Session

Thiago Duarte: Yes, thank you. Good morning guys. Thanks for the opportunity. Yes, I have a couple of questions. The first one is on the sugar ethanol energy business, and trying to reconcile your expectations that you throughout the year, you should be able to meet last year’s sugarcane crushing volumes, and coming from a pretty weak quarter on a year-over-year basis. So I’m just – I’m just trying to understand whether this is. You expect this to come from better yields. So last year you delivered, if I’m not mistaken, 70 tons of cane per hectare. So if you expect to be able to meet that on the balance of the year, or if we should be looking for higher harvested area. So whether the cane availability improvement should come from higher area or higher yields, that would be the first question.

The second question comes from is related to the crops business. I was wondering if you could provide a little bit more color in terms of the unit economics for the different crops. Because this quarter, what we saw was a bigger representation of corn in terms of your sales volumes relative to soybean and wheat mainly. And so, I was wondering how those unit economics compare, and whether they could explain, or at least partially explain the low margin that you delivered this quarter in the crop segment. And if I may, a third question, and I’m not sure Juan is in the call, but in his prepared remarks he talks about one of the things he talked about, was providing financial support if necessary for Adecoagro’s growth. And he even mentioned both organic and inorganic opportunities across Latin America.

So I was wondering what kind of opportunity he sees as compelling in the region, what segment within Adecoagro’s different business segments would make some sense, and whatever other color he could provide on the opportunities that he foresees in terms of growth for Adeco, that would be it? Thank you.

Mariano Bosch: Hi Thiago, thank you for your questions. Yes, Juan is with us in the call, so I’m going to take the opportunity of starting answering your third question. So I’m going to ask Juan to take that question that is directed to for him. Juan, do you want to take that question?

Juan José Sartori Piñeyro: Yes. Perfect. Hello Thiago, very nice meeting you and thank you for the question. All those strategic directions that the company are going to take now in the future with the shareholder, I think are a combination of continuation. We believe the company is well managed and it owns very high quality, low cost production assets that are well positioned into the future. So what we want to do on top of that continuation, is simply giving it a little bit more dynamism and acceleration when capital is needed, or strategic direction needs to be supported. And I think what we are seeing right now, because of the timing is that in most of those four segments there are integration opportunities. That’s what we mean by organic.

There are CapExes to be approved with a much higher return on equity than the average of the company. There are maybe acquisitions to be considered around all of those segments. But also there are some areas, which start going a little bit beyond. For example, we believe that energy, which so far was mostly a byproduct of agricultural production, could be an area where Adecoagro could have a stronger focus, generating some stable long-term returns there. And there’s people retreating from Latin America right now. There are areas related to the inputs of agriculture that could provide, both a hedge and even long-term exposure, because of the correlation to the demand. What we mean in tether by supporting, and even very aggressively is that we believe this management team has the capacity of integrating, and operating assets in Latin America in an incredible fashion.

And I think if it was needed of any type of capital. Whether it’s debt, equity, partnering or joint venturing, we would be ready to anchor any of those transactions, always with an idea of focusing on a disciplined allocation of capital with a strong return on equity. So we may analyze stock buybacks, or repurchase or issuing debt, or making or not acquisitions internally or externally, always compared with the average return that the company is doing in current operations, and in order to improve it in the long-term.

Mariano Bosch: Thank you, Juan very much for the question. Very clear. Nothing to add there. So I’m going to ask Renato to go on the first part of your questions regarding our sureness, and all expectations for crashing volumes?

Renato Junqueira Pereira: Hi Thiago. Good morning. As Emilio mentioned, the weather was very dry both during the whole 2024, and also the first quarter of this year. That’s the reason our yield declined. But despite this dry weather, we had a crushing record last year. So we anticipated the sugarcane that otherwise would be crushed in the first quarter. That’s why we had a less intensive quarter in terms of crushing. And we did the strategy to leave the sugarcane for better potential to grow to be crushed in the second part of the year. I think this strategy was good, because in April the weather changed. We had a lot of rains in April. Actually the rains in April was 50% higher than the historical average. So the sugar can outlook, the biological asset looks much better now.

So we expect that the yields of this year is going to be higher than, than the one that we had last year. I would say something between 5% and 10% higher. I think the challenge now will be crush, the sugarcane that we have. We have the sugarcane, but the challenge will be the time to crush the sugarcane. So use of time is going to be the key point to be following now. But since we have the continuous harvest model, if we don’t crush the sugarcane this year, we can crush more in the first quarter of next year, and have much more intensive quarter there. So we think that is possible to crush. But the key point now is the use of time from now on.

Mariano Bosch: Okay. Thank you, Renato clear. And then on your second question regarding the economic unit of the traditional crops here, it is important to understand that the crops have to be analyzed in a campaign. It’s difficult to analyze within only a quarter, how the economic performance of a crop is. So when we think on what are the economic benefit of the different traditional crops today, the first crop is the corn full season. Then we have the wheat and soybean double crop, and third, the soybean full season. So within these three allocations of land, when we decide our planting crop, that is what we are deciding now. That’s going to be the priorities. Corn full season, wheat, soybean, double crop, and then full season of soybean.

Within those three that are in a rotation, we can always change 10%, 15% in a notice system, to maintain our sustainable production system. We cannot do 100% of corn. So we cannot. We have to always maintain this rotation. But we are going to be a little bit more inclined. So we may have 10% or 15% more on corn, compared to soybean food season, when we think on the economic results on these traditional crops. So those were the three questions you were asking. If you don’t have any follow-up question, we can go to the next one.

Thiago Duarte: No, that’s all. That’s all very clear. Thank you, Mariano and Renato.

Mariano Bosch: Thank you, Thiago, for your question.

Operator: Our next question comes from Julia Rizzo with Morgan Stanley. Your microphone is open.

Julia Rizzo: Hello. Good morning. Are you hearing me? Yes. Thank you very much for having me, [Mr Juan]. Thank you, Mariano for the remarks. I would like to direct my question to Mr. Juan, if possible. Sir, Adecoagro is one of the largest agricultural companies in Latin America. It’s known for being low cost producer with great assets, strong management, as you already probably know. But also it has a great reputation for transparency, fairness with shareholders. In that sense. I would like to ask if the new control group in place, will the Adecoagro keep its high standards of transparency, good governance for all shareholders? How do you think is. How important do you think is that? And lastly, a follow-up on the first question from my colleague Thiago, Adecoagro also generates a lot of cash over time, even at low cycles, times like this year.

How does the new control group plan to use this cash flow in the future? I know I understand you told about some opportunities that may come. You will be ready to comply. But on the running rate, how you plan to use this cash flow, can we stay with the 40% dividends policies or and the remaining part, what will be done?

Mariano Bosch: Thank you, Julia for your questions. The first part of the question regarding the transparency, I will ask Juan to answer, but – and then I can complement and same thing for the second part of your question. So Juan, if you want to address.

Juan José Sartori Piñeyro: Of course and thank you Julia. Nice meeting you for the questions in the whole. First of all, everything you said about high quality of assets of management, transparency and credibility is what attracted us to invest in Adecoagro in the first place. It was very important in the acquisition for us, to do it in a way that it respects the history, the culture and the existing achievements, particularly in transparency and in corporate governance. One of the main discussions was that we wanted the company, to remain listed precisely, because adhering to all of the standards of being a public listed company in New York, was an important message to the market. That’s how we defined leaving a 30% float in order to be sufficient, for it to have a controlling shareholder, but also have the possibility of investors, to participate in the best way to the growth story that we think is going to happen.

In addition, as we got the, as we became controlling shareholders, we also implemented a lot of minority protections that were not present before. So we committed now to protections that are of a much higher standard than what the stock exchange requires. Until now. Maybe there Emilio can go through each of them, but all related parties have to be validated by independent directors. We are restricted to a full takeover of the company if we ever go beyond 80%. So I believe the company is going to be continuing with everything that’s made it a great company so far, but probably right now has even a higher, higher standard. And that’s what we commit also as controlling shareholder to the market going into the future. On the second aspect of distribution, first of all, 2025 distribution policy is approved.

So it’s going to stay exactly like this and into the future. As you say, the company generates a lot of cash flow and if anything. It was probably consistently misunderstood, or undervalued by the market. So we’re going to be seeing how to invest that cash flow in the most profitable way in the future. First of all by continuing a dividend policy, and then investing in repurchasing shares, or making acquisitions, but always with the idea of improving the return on equity of these investments in the future.

Mariano Bosch: Super clear, Juan. Super clear. Okay, nothing to add. Let’s go to the following question yes.

Operator: [Operator Instructions] Our next question comes from Lucas Ferreira with JPMorgan. Your microphone is opened.

Mariano Bosch: Luca, we cannot hear you.

Lucas Ferreira: Hi. Sorry, I was on mute. Hi everybody. So thanks very much for the space to ask questions. I have a couple for one. And Juan, by the way, I don’t know if you remember me, but I remember you from 2010 or ’11 during the UAG IPO attempt. So we interact a couple of times. So nice to speak to you again. The first question is about the land of the company. So if Tether has any specific plan to monetize the land, that’s one of the key assets for the company. It’s very undervalued in the stock price. So if you see any opportunity, I don’t know if a sale is back, or anything that could unlock value for the land of the company. And the second point, since you just mentioned that the plan, is to keep the company listed if you also have some plan for the liquidity of the stock, because that has been one of the main pushbacks on the Adecoagro’s investment case historically, and now I believe that the liquidity could shrink further, right.

With a large better stake in the company. So for all the minorities here in this. So if there is any plan for liquidity to improve in the future? Thank you.

Mariano Bosch: Hi Lucas, thank you for the question. Juan, do you want to address.

Juan José Sartori Piñeyro: Yes, perfectly, Lucas. Good to reconnect after so many years. So, we’ve all been working for a long time with all these issues, and I think that’s why we may end up having some of the solutions right now. Land as a publicly listed asset has always underperformed, and it’s really one of the biggest challenges that as soon as you have large land holdings in a public company, they tend to be undervalued and underappreciated. For us, a steady land is an excellent long-term assets and we want to have more of it. We think it’s something that’s going to appreciate over time to generate stability. And we think a company, like Adecoagro, solves one of the big problems, which is operating it in an efficient manner at large scale, which as you know, is not easy.

Now, in order to treat the other side of that challenge. I think definitely one of the big win works that we have to do is, what are the mechanisms whereby we can materialize, or crystallize the evaluation of those land holdings into the Adecoagro story and we will be working definitely on several mechanisms, to present to the market in the coming months, in order to see how we can attack that usual challenge.

Mariano Bosch: Thank you. Very clear. And regarding liquidity, I think Juan was also clear explaining how minority shareholders will be protected, and have even better protections than what they had before. And having a 30% on the float, we believe is something that can continue to have liquidity.

Juan José Sartori Piñeyro: Yes. If you allow me, Mariano, one more comment. I mean, the float is definitely smaller from a technical point of view, but you had before relatively large shareholders that would not trade. So I don’t think the float has dramatically being reduced. Of course the transaction plays part of it, but we have seen in the latest trading days that post transaction the liquidity, is not worse than before. And maybe we can expect that to continue in the future. And at the same time, what we had is a big amount of people, who would follow the stocks purely as NAV discount traders. They would buy this company at a strong discount to NAV, and then sell it when it gets close to NAV. And I think what we have done also is remove a lot of that structural overhang.

So our perception is that we are interested in a high stock price, in maximizing the stock price and having a liquid, and well covered stock for the future. And we’re going to be trying to operate on that basis, the future of the strategy of the company.

Lucas Ferreira: Thank you very much, guys.

Mariano Bosch: Thank you. Next question.

Operator: Our next question comes from Bruno Tomazetto with Itau BBA. Your microphone is open.

Bruno Tomazetto: Good morning everyone. Mariano, two questions on our side, if I may. Mr. Juan already presented some interesting topics, about the new investment plan mentioned by Tether. We appreciate all information provided, but it would be great to also discuss the expected timeline for this in both terms of implementing, these new projects, or even how quickly could we expect see results to be reflected on companies results, with higher relevance. If you could breakdown this answer between projects to accelerate current operations, or new projects to be implemented moving ahead, it would be great. And my second question is focus on operations in Argentina. Just to point with your most recent thoughts on the macroeconomic environment in Argentina.

We recently had some new developments on export tariffs, and of course effects dynamics. So we are glad to discuss what you guys can already perceive in the country, or expected in terms of impacts for the company, and also to hear your general perception about these operations in the medium to long-term. That’s it. Thank you.

Mariano Bosch: Okay. Thank you Bruno, for your question. I’m going to address the second part of your question regarding Argentinian economic development, here there are two main forces. Number one is now we have the same dollar when we export, and we export all our sales for export. So we are receiving the real dollar for first time in a long period of time. So that’s of course very much welcome conceptually. And then the overall costs are increasing. So in dollar terms, that is how we report the costs, and the overhead cost and the general costs are increasing. Although variable costs, as they have always been in dollar terms, not necessarily increasing in the same pace, are in some cases even reducing. So we are now in a much more real system.

We are very happy to be in this system. We’ve been always working to be the local producer in each one of the segments that we have. So we are optimistic that we can improve in the long-term our results in Argentina. So we are in a better situation than before, within this whole economics research for Argentina. Then we are affected by commodity prices, et cetera. That of course affects in different ways our EBITDA one way or the other. So that’s conceptually what’s going on in Argentina. So we welcome all these changes in Argentina for our company in the medium and long-term and in the short-term also. And then regarding the timeline of these projects that Juan has been explaining pretty well, I would add one comment, and then let Juan comment on top of this.

These projects take time. All our projects that in the organic projects that Juan was talking about, they are all carefully analyzed. Execution for us is the key element. And we don’t need to be in a hurry to execute, because that’s when execution doesn’t go perfect. So the projects take time, and we are analyzing each one of the projects with the right timing, and we are not in a hurry to do them. So they will be done in the way we’ve been always working. That is maximizing or minimizing the execution risks and maximizing our execution fashion. So Juan, I don’t know if you want to complement something on timing.

Juan José Sartori Piñeyro: Oh, I support 100% what Mariano said. The idea is not announcing for announcing things. They all had to go through a thorough process of due diligence. But the new Board, which was incorporated last week, already has the different strategic lines inside. We’ll start working on validating several of the areas that we discuss discussed about. And I think it would be likely over the next 12 months. I hope that we see results and execution in several ones of those lines. But we cannot commit to a timing or a short-term timing on any of them, because they will be probably validated, or not based on the outcome and the results rather than the absolute necessity to do something quick.

Bruno Tomazetto: That’s super clear. Thank you.

Operator: [Operator Instructions] Our next question comes from Matheus Enfeldt with UBS. Your microphones opened.

Matheus Enfeldt: Hi, good morning. Thank you for taking my questions, and congrats on the positive conclusion of the tender offer. I think I was very clear on the direction and what is the strategic rationale behind the stake in Adecoagro from Tether. But I was wondering if you could discuss sizing, or what size of Adecoagro could take in a couple years from now, right. Because if we look over the past four or five years, CapEx has been around $200 million, $400 million per year, which has allowed Adeco to deliver a strong growth over the past number of years. But looking forward, my question here is, what’s the size that Adeco could become in the near future, right? Because there are M&A potential deals in Brazil, this is public that could essentially increase the Adeco’s capacity by like 50% or something like that.

But that would require a very large amount of capital in the near term. So I’m really trying to get a sense of. I know the timing is over the next 12 months, to get a bit more visibility as in the previous question. But my question is more on size. If we could see Adecoagro taking this large step, seeing CapEx and double for the year, or over the next couple of years to really increase the size of the company, or if it’s much more a complementary approach for the existing projects in existing capacity moving forward. I think that that’s my only question? Thank you.

Mariano Bosch: Thank you, Matheus, for your question. Juan, do you want to address or you want me to offer it?

Juan José Sartori Piñeyro: No, I have to give a quick comment, but I think the size will be or usually it’s determined by two things. The first one is the capacity to integrate good assets and this management team has shown that it’s capable to do much more. We actually see that Adecoagro the platform to be able to deploy capital very successfully, because they can manage and integrate those assets. And I think now you have a shareholder whose net profits last year were $13 billion. So the access to financing, if the deals are good are I would say guaranteed just from the support of the existing shareholder. So I think that if we find good deals to deploy and we add those two factors, we could grow quite a lot.

Matheus Enfeldt: Thank you. If I could just follow-up on that, then there’s obviously a limitation on how much of a stake Tether could reach in Adecoagro go up to 80%, which implies there’s a limitation to how much capital at the end of the day Tether could be allowed to inject into Adeco on that. What’s the leverage that Adeco would be comfortable in an expansion cycle like 2.5, three times, which is sort of what we discussed for the sector. Would that be a reasonable leverage to support growth moving forward?

Mariano Bosch: I think Juan, let me jump in here. As Juan explained at the beginning, there are several ways on how we can explore opportunities together with Tether. And of course this 80% minimum in terms of the potential growth, is taken into account. And also the level of debt that we can get into, is also going to be taken into account. So according to all these things and depending on how interesting are all the projects that we have in the pipeline, that’s the decision that we will be taking and we’ll be sharing with you how this evolves.

Matheus Enfeldt: Okay. Thank you.

Juan José Sartori Piñeyro: One more thing is that we mentioned strategically tokenization in areas of technology whereby capital, can be opened by technology on other routes, the traditional ones. I think we can analyze that. Also a way of putting more capital into assets can be through joint ventures, or capital intensive assets, partnership with other companies, or other ways of financing. That doesn’t mean dilution of the equity.

Matheus Enfeldt: Okay. Thank you.

Operator: This concludes the question-and-answer section. At this time I would like to turn the floor back to Mr. Bosch for any closing remarks.

Mariano Bosch: I simply want to thank everyone for participating in our call, and we hope to see you in our upcoming events. Thank you, everyone, very much.

Operator: Thank you. This concludes today’s presentation. You may disconnect at this time, and have a very nice day.