Earnings call transcript: Verde AgriTech’s Q1 2024 challenges and strategic pivots

Verde AgriTech (market cap: $638 million) reported a challenging first quarter of 2024, with significant declines in sales and revenue compared to the previous year. The company experienced a 25% drop in total sales and a 43% reduction in revenue, leading to a net loss of $12.6 million. Despite these setbacks, Verde AgriTech is implementing cost-reduction strategies and exploring new product innovations to stabilize its financial position. According to InvestingPro data, the company maintains strong fundamentals with a P/E ratio of 15.35 and healthy balance sheet metrics. The company remains cautiously optimistic about its future, aiming for increased production capacity and reduced debt obligations.

Key Takeaways

• Total sales decreased by 25% to 319,000 tons in 2024.
• Revenue fell by 43% to $21.6 million, resulting in a net loss of $12.6 million.
• Significant cost-reduction efforts have been implemented.
• The company is focusing on specialty fertilizers and potential new products.
• Verde AgriTech is optimistic about improving sales in 2025.

Company Performance

Verde AgriTech faced a tough start to 2024, with sales and revenue dropping significantly compared to the previous year. The company managed to reduce its total loan balance by 16% to $39.7 million, demonstrating a commitment to improving its financial health. InvestingPro analysis shows the company holds more cash than debt and maintains a strong current ratio of 4.93, indicating robust liquidity. The agricultural market’s cyclical nature and external factors such as currency devaluation and geopolitical shifts in potash supply have impacted the company’s performance, though the company’s Altman Z-Score of 7.74 suggests financial stability.

Financial Highlights

• Revenue: $21.6 million, down 43% from 2023.
• EBITDA: -$2.5 million, compared to +$2 million in 2023.
• Net loss: $12.6 million, compared to $6 million in 2023.

Outlook & Guidance

Verde AgriTech is cautiously optimistic about 2025, with sales for the first 79 days of the year already reaching 60% of the total for 2024. The company aims to achieve full production capacity of 3 million tons per year, which is expected to dilute fixed costs and improve profitability. InvestingPro research indicates the company is currently trading near its Fair Value, with analysts forecasting EPS growth to $6.19 in FY2025. For deeper insights into Verde AgriTech’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Debt payments in 2025 are projected to be reduced to approximately $300,000, further easing financial pressures.

Executive Commentary

CEO Christian emphasized the cyclical nature of agriculture, stating, "Agriculture is cyclical, absolutely cyclical." He also highlighted the company’s focus on profitability, saying, "As we increase volume, we can dilute a lot of the costs, a lot of the variable costs, and that’s what drives profitability."

Risks and Challenges

• Continued volatility in the agricultural market could impact sales and profitability.
• Fluctuations in currency exchange rates may affect production costs.
• Geopolitical shifts in potash supply could alter market dynamics.
• Achieving planned production capacity increases may face operational hurdles.
• Potential delays in new product development or market acceptance.

Q&A

During the earnings call, analysts raised concerns about Verde AgriTech’s sales performance and the challenges posed by the agricultural market. The company addressed these issues, explaining its strategies for international debt financing and its approach to carbon offsetting and pricing.

Full transcript - National Presto Industries Inc (NPK) Q4 2024:

Christian, CEO/Founder, Verde AgriTech: And today, it’s a very special one. In all those years, I have never been as excited as I am right now with the strength, capability, and results being delivered by our current team. I am very proud to say at the current configuration, Verde Agritech is second to none in the Brazilian agriculture sector. And most certainly, we are already harvesting this year the results from the preparation we did last year throughout, as you all know, an absolutely terrible market. So as usual, if you have any questions throughout the presentation, please send them in the q and a.

We will try to answer as many of them as possible. If you’re watching this video on YouTube, please share, please like, and if there’s any question you want answered, do not hesitate to reach out to us. Before we begin the results presentation and the q and a session, I will be introducing our new team, the leaders of our new team. And, after this brief presentation, I will then allow them to go back to what matters the most, which is carry on the communication, the relationship with our customers. So they will be with us here for the first couple of minutes of the presentation, and then they have other priorities.

So I would like to start by introducing Marcus Hiberu. Marcus is our chief revenue officer. Marcus has been doing an absolutely amazing job by gathering the great leaders we have in this call here. Marcus has a very successful career in specialty fertilizer sales, having worked for some of the leading companies in Brazil. We also have in this call, Guilleherme Meteiras, which is our recently appointed, and with spoilers, there will be a press release as well with more of his background.

So he has been recently appointed as our chief marketing officer. Gileadmi is an agronomist. Gileadmi has worked for very leading companies as well, developing markets for specialty products. And he will be responsible not just for marketing, but he is also gonna be leading our technical team. One mistake I did in the past was to have separate leaderships for our technical team and for our marketing team.

With

Felipe Balmucci, Chief Financial Officer, Verde AgriTech: excited

Christian, CEO/Founder, Verde AgriTech: about the transfer of knowledge from research, from all the benefits we’re seeing, all the way to the marketing and communication with our customers. I was just in a call just right now with our private team, and the level of feedbacks and results which are coming from the relationship with the customers already is phenomenal. And I’m pretty certain that with Guilherme now, we’re gonna be able to amplify that to the rest of the company. So I will now present our four directors, sales directors. Each one is responsible for a different region of Brazil, and each one of those four directors leads a team that goes from nine to 12 of the field sales managers, all of them agronomists, all of them with extensive expertise in selling specialty products.

This team you guys are seeing right now was assembled in the later part of last year when a lot of the market had already purchased fertilizers. So this is really the first season. This is really the first year that they will have an opportunity to start developing the market. So starting with Muriel, she is responsible for the Seraga region, has been doing an amazing job. She won last year our award for the for the for the person who has done the most in the company, and and and then we we we’ve named this trophy, Alison Polinelli, after our former director and huge leader.

So Muriel, she is the one leading this Serrada region. All of them, I won’t go into details with the companies, but all of them are agronomists with several years experience with some of the leading specialty companies. I’m really highlighting the word specialty here on purpose because because there has been a lot of frustration over the years about, so how come, you know, our product delivers so much more? How much how come our product costs so much more in The US and so many more people buy our product in The US looking at those those added benefits? How come more of the Brazilian agronomists or the Brazilian farmers, they can’t perceive this value?

And a lot of it was our fault in terms of having a a team which was equipped in helping the customers in the ground to understand and and and fully benefit from those those advantage. We also have Iceland who leads the team responsible for the North Of Minasirai State, an area in the vicinity of our our our mine. Iceland, likewise, very experienced, very successful sales professional, very technical. We have Fabrizio Santos, another phenomenal sales executive responsible for the South Of Minas Gerais state where the mine is as well as Espiritu Sant, One of the important states for for coffee growing. And our fourth director here is Mauricio Bono, who’s responsible for the state of Sao Paulo and Parana State.

Again, several years of experience selling specialty products, great relationships with number of porta distributors. And it’s it’s it’s a joy to be a witness of the meetings when they are leading their teams, and and and it’s hard to put in words how exciting we all are. We have in the call as well, Mayade Santos. Mayade Santos eight, the nominal leader. Mayade started with us in our, as an SDR.

So as a as a as an intern trying to develop the market, cold calling customers to talk about our product. She went forward to start dealing, leading that that sales development team. Then she assembled both the direct the the the inside sales team and the SDR team, and now she managed about 10 people looking at all the inside sales we have. We already have several customers who are dealt inside as well as playing a very crucial role supporting the other directors when it comes to scheduling calls and and and creating demand. So, I mean, she also leads our our Salesforce, our CRM team, which use some very advanced techniques for customer relationship, generation of demand, and and and all the benefits.

We also have Diana. Diana also started as an intern at Veggie a few years ago. She was in our customer success team. He also in our SDR team. She was in our direct sales team, and now she’s leading a very important new team we put together, which is our customer success team.

Diana. She has in her team the present six, another one being hired. And and what they do is is to properly follow in the field the usage of our product, the benefits the farmers are having, the challenge they might be facing, looks at results, so the opportunities for innovation. So a very strategic team as well we have in place. We also have in this call, as as the other leader from our sales team, Eheke Villele, who has been responsible for our international sales team for a number of years now and has been able to open other markets internationally, both in South America and Asia, several new clients in North America.

He has developed all the key relationships throughout last year, which are translating into more sales for this year when we look at exports. Finally, we have Luisa, who makes it all happen, our investor relations manager. She also started as an intern, has been progressing, has been doing an amazing job, has been responsible not just for the finals, but I ask your emails every time and and has been doing an amazing job. And Felipe Baluchi, who you all have known for a while, our great chief financial officer. So thank you very much, Guilherme, Muriel, Marcus Azela, Ejiki, Fabrice, Diana, Maurizio, Luisa will stay with us in Mayade.

So thank you. It was an opportunity for us. Very thankful for you to take your time away from your busy schedule talking to our customers so we could introduce you all to our co owners. And and I will then allow you to go back to what matters the most, which is keeping our our customers happy. Thank you very much for for attending attending the call.

We shall now begin the boring part of the conversation. Thank you very much. So starting with the presentation, if you could please share your screen with the deck we prepared for today, which, as you may expect, will have a lot of terrible, ugly news from this this hopefully soon to be forgotten last couple of years in the agriculture space in Brazil has been extraordinarily tough, and we will begin the presentation looking at at how how depressing it has been. So next slide, please. We have another slide with all the disclaimers, which is very familiar for everyone and should be on the very first slide as well.

When we upload the video, Luisa, this should be at the very beginning of the the investor’s video, the the disclaimer. Showing the results may differ. We have, you know, forward looking statements. It can all go wrong. You can all lose all your money, but we’re doing the best here.

And among the the among the the challenge to make sure to make sure it doesn’t happen. So the next slide. Oh, who hasn’t bought a bag of Supergreen sand? I hope you go on Amazon right now if you’re in The US. We have a 5% off coupon, and we will be sending you one of our amazing products.

And you can enjoy the thousands of customers who have bought our product in North America and are very happy with them. Next slide. So let’s start looking at how awful the market was for 02/2024. Please go ahead, Felipe. There it is.

You know, price for agriculture commodity prices coming down. What you can see in this chart on the top for soybeans, when you start looking at 02/2025, you can see the prices is strengthening a little bit. But one thing which this presentation doesn’t have and the next one will have is something called or the exchange ratio, which essentially means how many soybeans bags you need in order to to buy the inputs you need. And this is what really matters to your farms, and this is starting to look look quite promising. So the farmers are seeing some sort of stabilization, and there is a, an excitement for for this year.

Unfortunately, some regions of Brazil are dealing with bad weather. So, for example, Matagoros do Sul, I was just in a call earlier today with with a lot of customers, and he was just reporting how how terrible it has been with the weather. But several of other regions are experience are experiencing much better yields. You can see corn prices performing really well. Corn prices performing really well.

Brazil’s using corn for ethanol production as well in addition to sugarcane. There’s a lot of of new plants being built. There’s a big bullish excitement about, corn production in in Brazil, and and it’s amazing, like, how how how growing, how producing ethanol out of corn is is is is good as a market, as as something that expands our market because you don’t you don’t only need corn, you also need biomass in order to fuel your your your your industry. And the biomass which is used is eucalyptus, so it is also another a lot of new eucalyptus being grown in Brazil as energy source for, those plants. So this is this is quite bullish.

But in terms of soybeans, again, from a geopolitical perspective, looking at 02/2025, where we had the previous Trump administration administration and when we had the the tariffs and the tariffs war with with China, and the sanctions. The country that most benefited from all of that was Brazil. There were Brazilian farmers because China had to pivot and start buying more. The price went up. So hopefully, we’ll see Brazil as the world’s largest soybeans exporter, and there is excitement about that as well.

Next slide, please. You can see potash price collapsing, but you can also see how in the beginning of this year, there is some there’s some recovery there. So some literally recovery from from $2.90 up to $3.40. But that even though when you look at a chart like that, even though the number doesn’t seem to be very big, for a farmer, it has a very strong psychological impact when the, you know, when they start seeing fertilizer price going up. Drives consumption and and and and quite frankly helps us all.

I don’t think I’m often asked if I think, you know, potash price, fertilizer price are gonna go through the roof again any anytime soon. I personally find it unlikely, but I’ve already come across several different geopolitical theories to why this might happen. I I I don’t know. They they they all might be right. Hopefully, they are.

Why there would be a strong increase. But as far as how we run the company, as far as how we’re planning, and how far as we are we are looking at our future, we’re really looking at the base case scenario without big increases and making sure we can be very profitable no matter what. Next slide. Oh, this is painful, isn’t it? This is so so painful.

I’m watering to see how the exchange rates in Brazil have been going up brutally all the way from, you know, ’17. That’s when we started. Seventeen was when I when we built our first plant, when I had to sign off as a as a guarantor to borrow money on on on, you know, personally guaranteeing the loans. Otherwise, the banks wouldn’t lend us the money to build the first first operation. The market, you remember, was also terrible back in 02/2017.

I went there, signed it. I put, you know, everything, you know, everything there. And and and and, of course, it worked out. Had some amazing years. It went back went down.

The went down the the interest rates, but you you can see how how how how how how terrible how terrible. Hopefully, it will start cooling down soon, and and we’re gonna go back to some sort of normality. There’s a lot of pressure in Brazil for for interest rates to come down. The government seems to to understand. They seem to be trying to put some some measures in place.

So fingers crossed, they can they can resolve that. Some people say, you know, if we had DOGE in Brazil, if we had Elon Musk or someone trying to to cut costs down in Brazil, this this this interest rate could come down crashing. Because if there’s one thing just between us, don’t tell anyone, but it’s it’s appalling, appalling the wastage you see in Brazil. In in if The US is bad, you know, I think Brazil I think if if we were to do something similar in the country, it would be transformational. Trend, absolutely transformational.

How much scope there is in the country and there are all sorts of level of administration, to cut down wastage. Who knows? Maybe maybe one day. Exchange rate keeps changing. The weaker the Brazilian currency is, the better it will always be for us, the better it will always be for farmers.

Next slide. Oh, that’s a painful slide. That’s an atrocious and absolutely sad slide. The number of bankruptcies in Brazil in the agriculture sector has been at record levels. What we’re seeing here is is even worse.

You know? This this this is an older an older source of insolvency. I know you we know of of of a number of very even larger companies that even it is it isn’t even showing here in this chart. But if you look at, for example, the bottom one, Agro Galaxy, they owe us money, unfortunately. And and that’s an insolvency filing they did.

The total amount of money, though, is is 4,000,000,000 hai, so about a billion dollars. And and this is a very successful corporate. It’s backed by one of the most successful private equity groups in agriculture. I know the the founder, phenomenal guy, and and that’s that’s that’s what it is. And what the big problem was when this company filed for the solvency protection was that a lot of the banks, they got completely spooked and started canceling credit to a lot of other important suppliers to a lot of farmers.

So there was a little bit Lehman Brothers moment last year for the agricultural sector and put us all, quite frankly, in a very difficult spot. Because if before, you wanted to sell as much as you possibly could, now it’s not just about selling. It’s selling and being certain you’re gonna be get back. It’s it’s it’s tough. And we had a lot of tough conversations with with Felipe, our CFO, and and our salespeople who wanted to make some sales.

There were some great opportunities, great possibilities, significant volumes, but there was an equally large risk of insolvency. There was an equally large risk that we might do the sale but might not be receiving any money. So if you keep looking, you have another company. This group of practice is close where we are. It’s another company, same thing.

And then you have a number of other another agricultural groups and others as an example. So so all really bad. But, again, it has been two years now. And this is all an impact from all the way back in ’22. We’ve written that in in several press releases.

We’ve written that in several MDNAs. We’ve written that all over the place. But what happened was ’22, agriculture input prices went up a lot. Agricultural commodity prices equally went up a lot. What a lot of farmers did was to buy those very expensive agricultural input prices, finance them.

But when it got to the point in time when they had to pay for those expensive agricultural input prices, which was when they were to sell their agricultural production, the price for corn, soybeans, everything else had crashed. So they were faced with big bills to pay and had much less money from the sale of their their production. So that’s that ruined a number a number of groups, unfortunately. Next slide. Next slide is the number with with the Philippe is gonna be showing.

But but before Philippe starts showing all the bad news, just go to the slide where there’s good news there, Philippe. I wanna I wanna be I wanna be talking about the good news. Go go next one. Just go skip. You can go go back.

Go one back.

Felipe Balmucci, Chief Financial Officer, Verde AgriTech: Yes, ma’am.

Christian, CEO/Founder, Verde AgriTech: Yeah. So the key the key information here is if you look at what we’ve accomplished, if you look at what this new team I introduced in the beginning of the call, if you look at what they’ve accomplished in the first seventy nine days of the year year, it’s 60% already of everything we did last year. And that’s amazing. Absolutely amazing. One shareholder already responded to a to a post I did on on x.

But what it did was to calculate on a per day basis and extrapolate that for the full year, and you start getting some exciting numbers. And that’s why we are cautiously optimistic, cautiously optimistic about about 2025 and beyond. Having said that, Felipe, the floor is yours, please, to all those terrible, terrible numbers, which hopefully we’re gonna start making them making them look great again very

Felipe Balmucci, Chief Financial Officer, Verde AgriTech: soon. Okay. Thank you, Christian. Thanks, everyone, for joining the conference. I’ve been now presenting Q4 and full year’s 2024 results.

And first, a bit on cash and profitability. So the cash held by the group decreased by 3,500,000.0 from 6.9 in full year 2023 to 3.4 in full year 2024. Additionally, the group has 6,900,000.0 in short term receivables. So the total cash and other receivables, we are close to 10,300,000.0 in the end of twenty twenty four. In terms of profitability, sales 2024 were 319,000 tons, a ’25 reduction compared to 2023.

In terms of revenue, 2024 was 21,600,000.0, a 43% reduction compared to 2023. EBITDA before no cash events was negative $2,500,000 Canadian compared to $2,000,000 positive in 2023. And in terms of net loss, we had 12,600,000.0 negative compared to 6,000,000 negative in 2023. In terms of sales in general, administrative expenses, we had a relevant reduction, which I will get more in details the coming chart. But we had 10.1 total million compared to 11 point seven 20 20 three.

So first, in terms on P and L, you can see here the results in the left side of the table, the q four twenty twenty four compared to to the to the prior quarter of 2023. And then in the right side of the table, 2024 full year compared to full year 2023. So the key points, that you might comment here is, like, as expected, we had a much lower level on on total costs, meaning by the the lower volume. We have also as well, as I explained before, and I will explain later on, the reduction on sales and marketing expenses among the general administrative expense as well. However, at the end of the day, due to the high level of investments we’ve made, we have a significant amount on depreciation and also on interest rates to be booked in each month or each year.

So at the end of the day, we had full year losses on $12,500,000 compared to 5.9 in 2023. Of course, we expect this number to to prove after we see the company start to grow again. In terms of operation summary, on this chart, we can see the numbers per ton. The first table, we see that it is. And then the second one, we have the adjustment here, excluding freight, which is very relevant for our business.

Sometimes the product is cheaper than the freight. So for a full analysis on margin or in the cost, for example, etcetera, it’s better to analyze without freight on it. So, although we had a lower volume in the year, we were able to decrease the production cost per ton for basically two reasons. First reason, we use a bit more our plant two, which has a more effective cost since it’s right next to the to the mine, compared to the plant one. And also, on additional, we had the Brazilian Real devaluation evaluating as well.

But on top of it, I think what you should empathize and and and explain a bit how the effort that the team has made since the end of 02/2022. And but but mostly in the beginning of 02/2024, reducing costs, we revised all the contractors and suppliers’ contracts and and costs one by one, line by line from the the the biggest one, the largest one to the smallest ones. So we were able to reduce a lot of of costs, of fixed costs, for example, rental and other type of of costs that we have, expenses a key, very important point is that, when we use more of the plan two, we have much lower number of employees needed to operate the lines. So we do have also a reduction, in people, which explains basically the the the cost point here, reduction per ton. In terms of sales in general and administrative expenses, what we can see here on terms, for example, of of sales and marketing was a reduction of close to $700,000 in the year.

We had, in terms of fee based to sales agents an increase, but this was mainly driven by a 2023 reversion that we’ve made, to adjust the lines. But on the other hand, we as Christian said before, we increased our sales team, and we do expect to have a higher cost during 2025 in terms of fee paid to sales agents. But this is, of course, it depends on the volume and depends on the value of FOB price are being made in the marketplace. In terms of general and strategic expenses, we also saw a relevant reduction. Here we can we can’t we can keep commenting on the terms I said on a few contracts that we had that were not connected to cost but on expenses, like containers, like metal structures, and among other other other rentals that we had in the past.

And we did have a relevant reduction on staff, on deck of people from all the all over the areas. We really made cost reduction, expense reduction plan. Was not easy to do, but was needed to be made. So the expectation for 02/2025 is also to remain the same level or even lower level of expenses. And, of course, once we increase volume, most of these expenses in general are fixed costs.

This could be diluted by a higher volume in the end of the day, delivered towards a higher ABH and profitability. So this is what we are thinking for the coming periods. Another point that’s important to raise is, like, what was found by Christiane. We had some clients that were on insolvency as well, and we had to book, some relevant amount here. So we had an increase on allowance for expected credit loss, which we used to stop that.

Just call bad debt bad debt bad debt. But now it’s allowance of for expected credit losses in prison, 32% for 2,300,000.0 compared to 1,700,000.0 in 02/2023. And this, we are working on since the beginning of the crisis to be more restricted in terms of credit, etcetera, to avoid this number to increase even more. So this effort, I think, was very helpful to avoid this to be more than this and, of course, to make our results worse and cash flow as well even worse. In terms on that overview, that’s a very good news for the moment.

We were able to renegotiate as we had already two or three press releases on this matter. But as most of the ones that have been following us knows, we we have already negotiated with our key creditors, and we were able to to exchange the profile of our debts from the short term to the long term. So, basically, at the end of the day, for 2025, we do not we do have an expectation to pay on that, including interest and principal of our loans, no more than $300,000 If we did nothing, do nothing scenario, prior to April when we started this renegotiation, we would have to pay during 02/2025 over $27,100,000 which would be very, very hard work for us. So I think now with this plan, ongoing with nine years payment terms after we have the grace period finalized, which will be in April 2026. And the other point, which is very important in this scenario, we do have to pay the first three years ten percent per year.

And then in the last six years or four years, net of the period, you pay the other 60. So this is very helpful for cash flow projections and will allow us to keep investing in commercial area and sales field team and then other research that might be needed to improve our volumes. And and, of course, the key idea is like how can we grow to achieve our full capacity, which is 3,000,000 tons per year, and then reduce, of course, the fixed costs and also the variable costs. Since we are being a larger company, of course, contracts are better, everything gets better, and in the end of the day, profitability and our ability to pay the creditors as well. So, in the end of twenty twenty four, the group had a total loan balance of $39,700,000 compared to $46,100,000 20 20 3.

So it was a reduction of 16%. This was driven by two two key points. We we paid in the first trimester of 2024 a relevant amount to the banks. And, of course, also, the Brazilian Real evaluated a bit what, also helps to reduce the amount of debt in Canadian dollars. So this is what I had for today in terms of number.

I will revert it back to Christian who will be leaving now the q and a sections. Thank you.

Christian, CEO/Founder, Verde AgriTech: Thank you, Felipe. I hope I hope soon we start reporting phenomenal profits again. You know? We we we all we’re looking forward we’re all looking forward to that. So we have received a bunch of questions here, which I’m very thankful for.

As I always say and I always will, those questions make us all think about the business as well. So when I get those questions, it’s not just, you know, trying to answer them. It allows me to reflect on them, and we often see some some good suggestions here as well. So I’m quite excited about this this conversation we’re about to have altogether here. First one, can you talk about the pipeline and order book and compare it to other years.

Seem like the order book is ahead of schedule. Please provide more details. I think we’ve shared a lot already in terms of of being having done 60% of what we did last year between between product delivered and between signed orders with with customers. It’s still early days. People have done their own calculations of of what it might turn out to be.

But that team, you all saw at the beginning of that call, they are not working for Verde AgriTech because of the salary they get paid. I tell you that. Those guys are awesome. It’s like daily contact by headhunters trying to get them out of Verde Agritech. The reason they are here with us is because they truly believe on the potential for exponential growth from where we are.

And that’s why we’re all here, quite frankly, and and and we can look at the previous couple of years and think that this is all a terrible disaster scenario when we should all run for the hills, or we can look at that and say, hey. There was a pause. You know, let’s do a phenomenal product, still get great feedback. It’s still the best country you can you can have for agriculture. Market seems to be shaping up, and and and, you know, moments come back to being back on track.

So each one can can take their own view. I feel very similar to how I felt back in 02/2017, in the early days when no one cared about what we do. No one cared about about our potential. No one cared about anything. And then we started proving everything, you know, everyone wrong.

We started growing and and and getting better and people seeing the benefits with the technology and then and then having some phenomenal years, as you all know, which we would like to think that we’re just interrupted by by by the disaster that was agriculture in in Brazil for for a little while. But it’s all cyclical, And and and, fingers crossed, we’ve hit bottom already. H ’1 ’2 thousand ’20 ’5 still sees the negative impact of ’24, but second half is is is looking promising. I’ve said a lot, but I didn’t answer the questions. He’s asking about the pipeline order book.

We have. And while I was answering the question, I was saying, sure, I give a a spoiler here. But, yes, I can I can click here, and I can see from our Salesforce dashboard how much products we have on on each one of the phases of of of our pipeline? It’s looking good. It’s looking good for the rest of the year.

Next question. Hello. Are there any news regarding enhanced rock weathering? I had a paragraph in the press release about ERW, but at the the last second, I I I decided to to remove it. We’re working on a on a dedicated press release on ERW.

We’ve been doing a lot with scientists in that front. It’s it’s it’s looking good, and hopefully, we will have some some very material information in connection to it. Right now, there is there’s nothing more I can say other than saying that we’ve worked really hard over the last few months. And the reason we had to work really hard was because the market for ERW changed a lot. The science required, the level of of of field validation required by the certifiers changed radically, from when we first announced ERW, and we’ve been doing the homework to be able to comply with all of that.

We’re very lucky with the scientist who has been advising us and and leading this effort. Couldn’t have been luckier with with the lady who’s working on it for us and and something we remain very bullish. What about Obi Rare Earths? Will it be introduced on ASEC as as previously announced? Obi Rare Earths, for those of you who were shareholders in Verdi Agritech on the 01/27/2025, that was the record date.

Anyone who bought shares after the January 27 will not be getting shares in OB. Those shares should have been issued already, but there was some some administrative issues and, you know, being a a private Australian company. There’s something called CDS in Canada, which doesn’t allow us to see who our shareholders are in the company. So there was a lot of, you know, admin stuff navigating how to do that. It seems like it’s it’s gonna be fixed soon, so we should soon be be doing it.

What we will also gonna be doing is is doing a webinar, a conference call with the shareholders of of Obi. So we should announce that at some point, try to communicate so everyone can can be brought up to date with the company and and what’s going on. And and and but, yes, it remains as a very exciting, and there’s a lot going on there as well. Next question. So the next question, you stated in the fourth quarter fully highlights that in 02/2025, after only seventy nine days, Page already has orders and delivered products representing 60% of all products delivered in ’24.

This is a rather extraordinary acceleration in orders. Did this happen all of a sudden, or was there a noticeable acceleration that had already begun at the end of twenty four? It’s a good question. I I wouldn’t say it happened all of all of all of a sudden. It’s something that has been consistently improving throughout the beginning of this year and and pretty much in line with all the planning and preparation we did throughout last year.

So it’s like good things. They hold they tend to happen, you know, all at once, and and and and we saw that happening again before with with Vertigo AgriTech. But but, I tell you, it’s it comes from a lot of preparation work, hard work ahead of that. Has the improvements in the economic environment for Brazil been so exaggerated this requires this, or are there other factors at play? I think the key factor is really why I would like to think we’re coming to a bottom in this in this terrible disastrous last couple of years or three years that has been for for for agriculture in face of what I I said during the main presentation.

Agriculture is cyclical, absolutely cyclical. And and it’s hard to to think about things getting much worse, and you can see the record level with solvency and and did everything that has happened. And and then and then it’s hopefully no. It’s it’s it’s looking it’s looking better. Some other question, which isn’t here, but like someone else, which was a shareholder the other day, and he was from Shanghai, how how how currently The United States represents 70% of all all stock market value in the world.

So The United States is 70%, the rest of the world is 30%, and how he’s seeing some institution investors, retail investors looking away from The United States. And and this hit to me a a trend that can that can benefit us. There’s also perhaps this is worth it saying. I I I posted it on on x. I’m trying to build it a bit more active on x.

So if you’re not following me, try to find me there and and then follow it. But there was a there was a a very obscure article, which was in one of the Russian newspapers about the president, I think, saying that he had requested a study on potash with a view of creating quotas. So something along those lines, which, it was some sort of official obscure Russian paper. And it was the first time I I saw Russia publicly talking about using potash as a geopolitical weapon. So those of you who have been following Verdi for a while, you’ve seen me for the last fifteen years saying that no one is is is more powerful in the world than than Vladimir Putin because he can independently decide whether or not the world will be able to eat.

It’s it’s a fact if Russia stops supplying potash or starts deciding who gets potash, there will be starvation, not straight away, but the following harvest will be completely atrocious. Brazil cannot grow food economically, and Brazil is the bread bread basket of the world. I’ll do a post showing the the growth of Brazilian agriculture versus the growth of agriculture, for example, in The US, and you can see how Brazil is indeed the reason the rest of the world can eat. And and this isn’t possible without potash. So there’s there’s massive massive geopolitical play here, and and I really wonder if this is a card the Russians will ever wanna play.

And and it’s something that’s quite interesting, like, whenever it start and how long will we have to do that? Let’s let’s just move on. The other question here is, is this uptick in orders potentially lumpy and therefore not indicative of a trend that will last throughout ’25? I don’t think so because I can see the pipeline for new orders, and the pipeline is looking strong, and it’s growing consistently strong as well. So I don’t think it’s just an uptick.

Next question. Judging by the realized price per ton, the sales plan to disconnect from conventional potash pricing and command premium has not worked. Yeah. So that’s a statement, which it’s something we can’t start judging yet because in all honesty, this team I introduced at the beginning of the call, they’re the ones who know how to sell specialty products, and their work is literally beginning in this season. So this is gonna be the very first year when our team is gonna be validating and following in the ground the added benefits and demonstrating value from replacing a conventional potash with our with our project.

So it’s starting now. Even the shift that you go from digital sales market to the current hybrid approach has resulted in a drop. Again, we can’t be judged by last year because this field sales team really, really, really, really was was savage percent assembled, in the last quarter of last year. And even like the beginning of this year, we’re still, like, hiring for key positions and finalizing setting up the team. So it’s too soon to be judged one way or another.

Some extremely unlikely potash supply shock event. What can you offer your very concerned investors that the operation can really be turned around? I cannot offer any guarantee that it can be turned around, unfortunately. But I think both myself and the the sales team, we all, doing our best, and we are excited about the feedback and thankful to the feedback we’re receiving from our investors sorry, from our customers. Well, some investors maybe, but mainly from our customers, some from from our farmers.

And we we believe this will be able to carry on translating into into growth in sales after we see a normalization of agricultural markets. Next question. Is the LCA audit complete? Is there anything positive you can share with regard to whether it’s any commitments from corporate producers committed to reducing the carbon footprint of their supply chains? That’s a good question.

So yes. So we or may maybe we should press release that. That that that would be a good press press release, Louisa. It’s not materials, but but I think I think we’re added to the story. So let’s let’s press put together a press release on a not material press release.

Okay? Otherwise, I wouldn’t be able to talk about it. But let’s put together an informative press release, both to our investors and the the rest of the corporate and the cultural market, where we talk about bureau veritas auditing our our life cycle analysis and showing the the very small carbon footprint our product has. I know there is a paper that has been written on conventional potash showing some very big numbers. So perhaps later on, we can we can zoom fee along those lines.

But let’s let’s let’s work on that on that press release, which isn’t material for for, you know, you say. So there’s another question here which is saying, I see you are slated to be the CEO of Obi. I don’t know if I will be the CEO of Obi. Obi is in the process of of raising money to develop. And and and for now, you know, I would say most of our shareholders or shareholders in OOBE are helping, making sure the project the company can be put together for success.

But at this point in time, I have not committed to any sort of full time role at OB. And most certainly, I would not be committing to a full time role with any other company rather than Verdi Agritech, which which remains as my as my main focus. Yes. My main focus here is this turnaround, which I’d like to think is in progress of happening right now. So that’s a concern.

It’s a valid concern about me changing, being distracted with with another venture. I take that very serious. And and even though I have been doing this for over twenty years now, it’s something we most certainly learn something new every day. And I hope we carry on learning something new every day along this this journey of several ups and downs, which I hope we will start exiting from this fourth or fifth downturn very soon. Next question.

Q four saw corn and coffee prices strengthen significantly while the Brazilian real weakened, a great deal causing MLP to be considerably more expensive. These developments should have strengthened the sales opportunity, and yet this was the weakest quarter the company had in many years. Why? Coffee. The reason prices for coffee went up was because farmers were completely devastated with with with weather issues, in the last harvest.

Lots of them struggled with cash flow problems as a consequence of not having enough to sell even if at a greater price. What we were able to do, which we’re very excited about about this next year, is to test a lot of the new technologies with a lot of of of our customers. Those are specialty products which command much greater margins. Lots of those products, you make more money out of the technology than you do on potash itself. And and the sustaining higher prices of coffee or even if they were to weaken is something that makes us excited about that.

When we talk about corn prices and the increase in recovery, those were sales that pretty much all of them took place earlier in the year as part of farmers buying for both soybeans and corn being grown. So pretty much all of that potash or fertilizer had already been been negotiated much earlier on and was negotiating that scenario, which we went through in detail the conversation where there was a massive risk of insolvency, where there’s several distributors going going going broke, where a lot of sales were made and there isn’t as much visibility whether or not whether or not money will be coming into their bank accounts. Next question. With the Celiq rate now, which is the Brazilian interest rate at 14.25%, while Canada’s rate is at 2.75%, The borrowing differential has continued to widen further and further. Is this the primary cause of negative sales growth?

It’s one of the reasons, cumulative with the other one expressed, which is the very high risk of insolvency. And if so, is there anything that can counter this challenge? I think the dream scenario would be to be able to raise debt in Canada. We’ve looked into it several times before, but because of the exposure, because of the operations in Brazil, we end up being penalized with with something similar for a small company like ours. As we grow, hopefully, we can be issuing bonds in international markets, and that would be a huge game changer for the company.

The problem is that issuing those bonds to a broader market requires a minimum of a hundred million dollars plus on a bond issuance, which is far greater than what what what what what, you know, could work for a small company like like us at the moment. But growing, and the reason it needs to be so much money is because usually the people who are buying those bonds, they hope to have some sort of secondary market. And unless there is a significant amount, there isn’t coverage, there isn’t research, there isn’t there isn’t even rating. It doesn’t work economically. So what you end up with is is smaller dedicated funds, smaller dedicated hedge funds, smaller dedicated outfits who look to to to lend you money, but it it it ends up with an all in cost identical or or or to to what you would get in in in Brazil because they know who they are competing against.

But if anyone in this call has a lead to something that might work, even if it’s something that might, you know, might you should try, please reach out, and and we will certainly see if there’s something if there’s something there to to to be done. Next question. After following the challenge and struggles of this company for many years, the carbon offsetting set opportunity and the ability to offer a subsidized price for farmers appeared to be the only way to finally attract buying demand and grow the sales volume. Jay is asking this question. The team I introduced in this call at the beginning, they don’t want us to discount our product.

If anything, they want us to put the price up given given the the benefits they’re seeing from this product. If anything, that’s what they use for selling. If anything, that’s what they hope to be demonstrating farmers. So the the idea that we would only be feasible economic and growth and profitable by by discounting it with carbon. I I understand how some people might see it this way, but tell you, people who are dedicating their lives and putting their careers and their family, you know, families in in line, you know, as a as a bet on Verti Agritech, the people in that, you know, who are in the beginning of this call, people who, you know, have, in average, fifteen, twenty years of of sale, selling products, specialty products to farmers, they have a radically different opinion in terms of of of of how our products, our technology should be perceived.

The second part of your question is that we’ve received no tangible updates on ERW in almost a year. Is the carbon monotonous modernization plan due o a what’s that? Death of I don’t know what that means, but but due o a, I presume it’s it’s dead or some sort of of of of of anyway anyway, so no. As I said as I said, it’s something very exciting, something we’re working with probably the best scientists we could possibly working on. There’s a lot of work, a lot of discussions, a lot of work literally going on right in it right now working with data.

But we just don’t want given how how much the size and the requirements for you have been changing, advancing the last in the last few months, we don’t want to be saying anything before before it’s concrete just just in case the market moves, ahead of us again. So we we’re working hard on it. And and and if anything, from a technical perspective, are now more excited and concrete than ever in terms of of of of where we are. Doesn’t mean it can’t change tomorrow when more data becomes available, but as it stands now, it’s it’s looking extraordinarily, promising. Next question.

How optimistic, pessimistic are you about expected credit losses in 02/2025? Future losses and recovery loss from ’2 and February. I’m I’m I’m realistic. It’s it’s a write off. I don’t think we’re gonna get any anything back from from from that number.

I’m sorry. If we do, it’s gonna be like 15% of that if if if at most. I I I think, unfortunately, given everything we’re seeing in terms of insolvency, and and I think there’s I think there’s very little hope, very little hope. And and I think it’s thankful. We should all be thankful to to Felipe Balmucci because I think if him and his credit team weren’t as rigorous as they were throughout ’23 and ’24, those numbers would would would look even even uglier than than they do now.

I I know several people in the space. I know several other people who who have companies in in the agriculture import. I know companies who haven’t announced it yet but completely filed soon for for solvency. We’ve stopped selling to some distributors who and and one of those those distributors is is a massive company, a massive public company, which which which which the market is really betting at the moment is gonna be another one going to file for insolvency protection very soon. So it’s been ugly, and I I I don’t see much hope, unfortunately, with with that money.

Next question. How are the sales for 02/2025 located from the plots? That team I presented in the beginning of the call, the four directors, they’re all operating very close to the plant. So, we have two directors in the Israelite state. We have, Muriel looking at the Cerrado, but that’s Goya State.

That’s South Of Bahia. So that’s pretty much very close to the mine as well. And Maurizio, same thing looking at at Sao Paulo. So and and then all the team underneath them, which each one of them have another 10 to 12 people they they manage, they’re all working in this area. So it’s reasonable that that we will be seeing for 02/2025 an increase both in specialty and an increase in in in demand for product close to to to the plants, which command greater prices.

What is is also worth mentioning, and it is in the filing we made, there has been a growth in the sale of specialty products last year, not as big as we would expect or as we see the potential of that growth going in, but there has been, nonetheless, a growth. Do you see any trends there? Also the type of customers farmers changed. I I I think the answer is there. Yeah.

We see a trend as as as because there’s more people there. But, likewise, my other team, which is the inside sales team that look after clients which are a bit further away, they’re also doing a good job. They’re also bringing orders in and and and and and yeah. And then it’s it’s it’s it’s quite it’s quite, brought the the crops which are grown by which are grown by our customers. One other question here is about the, looking at the sales.

The sales price for potash, which would be required to make our to make our project, profitable. The way to look at it is not looking at the price of potash because, this is the point, looking at the price of potash from from the current levels. What what what the key point here, quite frankly, is increasing volume. It’s increasing volume. As we increase volume, we can dilute a lot of the costs, a lot of the variable costs, and and that’s what what drives profitability.

So it’s less less worry about the price of potash and more focus on increasing volumes and diluting overall costs. And that’s what we are working hard to achieve. So this concludes all questions we have received. I would like to thank you all for participating in this results conference today. I look forward to the next one.

But if any of you have any questions in the meantime, any suggestions, any criticism, please do not hesitate to reach out to us via to reach out to us via our email, and and we look forward to to to feedback. Thank you very much. Look forward to seeing again soon. Bye bye.

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