Adjustment at present value (AVP) – Considers the time frames and fees embedded in sales and purchases on credit. For Supplier AVP (COGS Reducer) and Client AVP (Revenue Reducer), the impact on Gross Margin occurs at the time of merchandise sales. In the Supplier AVP, Financial Expenses are deferred from the moment of purchase until the moment of payment. In the Client AVP, Financial Revenues are deferred from the moment of Sales until the moment of Receipt.
Barter: this means the sale of input on credit in exchange for the delivery of commodities, mainly soy and corn, when harvesting comes. The exchange ratio between the amount owed in reais by the clients of the Company and the number of bags of soy and corn to be delivered to the Company is defined according to the commodity’s market price, and transactions are formalized with clients in Barter agreements.
CAGR – Compound Annual Growth Rate: the constant percent growth rate during each period in a comparison, to calculate the growth result between the periods.
Churn – a metric to calculate Company lost revenues or lost clients in a certain period.
Closing – completion of the acquisition of a company or asset.
COGS – Cost of Goods Sold, includes the amount paid for the goods that make up the inventory, in addition to expenses with transportation, taxes, storage, etc.
CRA (ARC) – Agribusiness receivables certificate: these are fixed-income securities backed by receivables from operations between rural producers and third parties, including financing or loans related to production, marketing, processing or industrialization of products, agricultural input or machinery and implements used in agricultural production. In these operations, companies assign their receivables to a securitization company, which will issue the CRAs and make them available for trading on the capital market, usually through a financial institution. Finally, this securitization company will pay the Company for the assigned receivables. In this way, the Company can obtain early payment of its receivables.
CTV (TSC) – Technical sales consultant: a field agronomist responsible for serving rural producers, including providing recommendations and prescriptions of agricultural input (fertilizers, crop chemicals, seeds, specialties, etc.), financial and agricultural services, crop planning, among others.
Crop chemicals – Among crop chemicals, Agrogalaxy works with fungicides, herbicides and insecticides, as oils and spreaders. Fungicides are one of the most used to control fungi in plantations, helping prevent, control and cure fungi.
Herbicides are used in the desiccation of crops for harvesting or in the formation of straw and the control of weeds. Insecticides are used in the prevention and control of insect pests. They are vital because the damage caused by pests can be very intense, quickly destroying plant tissue at any stage of crop development, with a precipitous drop in production being caused under inefficient control conditions.
Crop/Harvest – Crop and/or Summer Crop/Harvest refers to the soybean crop.
Digital-Enabled – transactions through digital means, such as WhatsApp-based bots, apps and websites.
EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization: net profits plus income tax and social contribution expenses, financial earnings and depreciation. Adjusted EBITDA is impacted by the cash generated from payments made for the real estate leasing (stores) during the period and disregards: (i) MTM commodities: gains or losses from the variation of the fair value of the commodities, as the fair value on the closing of each fiscal year does not impact the cash and does not reflect the results from purchase and sale; (ii) exchange variation of hedge operations carried out to protect revenue or cost of products; (iii) non-recurring items (e.g., extemporaneous credits and strategic consultancy); and (iv) commercial and financial results: interest expense, interest-earning assets and discounts granted and obtained.
ERP – Enterprise Resource Planning is a management system that allows easy, integrated and reliable access to business data. Information collected through the software enables in-depth diagnoses to base initiatives to reduce costs or increase productivity.
ESG – Environmental, Social and Corporate Governance: refers to the three central factors in measuring an investment’s sustainability and social impact on a company or business.
Financial leverage (measured as Net Debt/EBITDA) – Leverage is a technique used to multiply profitability based on indebtedness. The Company’s leverage level may adversely affect our ability to refinance our existing indebtedness or raise additional resources to finance operations, limit our ability to react to changes in the economy or the agribusiness sector and prevent us from fulfilling our obligations established in our debt instruments.
Foreign exchange swap – A swap is a derivative that serves to exchange positions – and indexations, according to the assessment and the investor’s interest in the operation. The exchange rate swap is one type of swap and is, therefore, characterized by swapping exchange rate fluctuation for other financial market indexes.
Grain origination – Origination is the soy and corn collection and sale service provided to producers. The main purpose of the grain origination system is to optimize demand during a new harvest cycle through management, with the main operations supported by the origination being:
- Purchase;
- Sales;
- Storage; and
- Logistics.
Therefore, the origination process attends to different stages of agricultural management, from planting and harvesting the crop to stocking and storage. Our sales are approximately 30% in barter; the remainder of the grain volume is from pure origination, harvest receipt, and purchase of lots in the available market.
Gross profit and gross margin – the difference between a company’s revenue concerning its variable costs and adjusted gross profit. It excludes gains or losses with variations in the fair value of commodities and includes gains or losses with exchange rate fluctuations adjusted in the EBITDA for margin calculation purposes. Gross margin is the difference between gross profit and net revenues.
Hub and side-by-side areas – Both are testing areas in producer-client plots of land. The hub area is different because it constitutes a complete management trial, while side-by-side areas are trials for isolated products.
Interim Harvest (Safrinha) – Interim Harvest and/or Winter Harvest refers to the corn crop.
KPI –Key Performance Indicator – these are indicators or quantitative values that can be measured and compared and followed to verify the performance of a process or strategy.
LTM – Last Twelve Months: values accumulated over the last twelve months. LTM is also known as the previous 12 months.
Martech – companies whose scope of work combines marketing with technology.
M&A (Mergers and acquisitions) – M&A operations make it possible to expand the business and reach of one or more companies, taking advantage of what each one does best, joining efforts and building something much greater than the simple sum of the two operations. Agrogalaxy has already proven our ability to deliver organic growth combined with expansion via M&A, with a rapid process of professionalization of family businesses. The Company was formed from the acquisition of leading companies in their operating regions, notably two base companies, one in the Brazilian cerrado, which grew organically towards a solid presence in the region, and the other in the South/Southeast, which it grew organically and also significantly through acquisitions aimed to strengthen its presence in key regions. In addition, the Company also acquired companies to implement our vertical integration strategy for producing soybean seeds.
NDF – Non-Deliverable Forward: a currency forward contract traded on the over-the-counter market; it is used to set an exchange rate in advance to be applied on a future date. On the maturity date, the settlement is calculated based on the difference between the contracted forward rate and the market rate defined as a reference.
NDVI (Normalized Difference Vegetation Index) – This vegetation status index indicates primary production (chlorophyll production) and local humidity through a numerical indicator obtained by remote sensing.
Net Debt – Considers loans and financing, deducted from cash and cash equivalents and financial investments, as well as obligations with securitized securities CRA – Agribusiness Receivables Certificates – which are entered as debt in Current Liabilities and refer to transactions involving bonds from clients placed on the market to finance rural producers. Just as there is a liability obligation upon the issuance of CRA securities, the Company acquired securities, entered in non-current assets, as subordinated quotas to support any possible unpaid securities from those obligations recorded in liabilities. Thus, the two ends are represented in accounting: assets and liabilities, as well as liabilities related to leasing vehicles and other items (machinery).
PDD or PCDA: The Provision for Bad Debtors (PDD) or Provision for Credit to Doubtful Accounts (PCDA) refers to a cash reserve made by the Company for cases of delinquency. Thus, the greater the risk of a client not paying what they owe, the greater must be the amount saved by the Company under PDD. Agrogalaxy has a timetable for the maturities of overdue and falling due notes, meaning that any accounts receivable from clients are written off when there is no reasonable expectation of recovery. Indications that there is no reasonable expectation of recovery include, among others, the debtor’s inability to participate in a plan to renegotiate their debt with the Company or make contractual payments on overdue debts overdue for more than 180 days.
POC – Proof of Concept, the documented evidence that a piece of software can be successful.
PSA – Payments for environmental services.
ROIC – The return on invested capital, that is, AgroGalaxy states the profitability level the Company can generate from the entire invested capital, both our own (equity) and third parties (net debt).
SG&A – Selling, General and Administrative Expenses: refers to selling, general and administrative expenses, one of the main non-production costs entered in the income statement.
Specialties – Agrogalaxy sells specialties whose production process is outsourced to trusted partners of the Company. One of the specialties of the soy crop is products that provide complete coverage of Copper (Cu), Sulfur (S) and Phosphorus (P) particles over the plant’s leaf area. The synergistic action between the three elements (Copper, Sulfur and Phosphorus) has an antifungal and bacteriostatic effect, as it induces the production of phytoalexins (natural defense substances), protecting the plant against diseases caused by fungi and bacteria. In Corn Cultures, we offer natural organo-mineral fertilizers formulated from the fermentation of special yeasts.
SSS – Same-Store Sales: this metric measures the percentage change of 1-year-old stores or more, in other words it measures the performance of mature stores in the portfolio.
Tooling – when seeding production is outsourced; not only is the structure is rented, but a third party is also in charge of production.
UX – User Experience, that is, how users evaluate their relationship with and usability of a product or service.
Washout – the amount of contractual indemnity agreed between the parties in case of non-compliance or cancellation of grain or barter contracts.