Investor Relations

Glossary

AgroGalaxy Glossary:

Barter – this means the sale of inputs 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 market price of the commodity, and transactions are formalized with clients in Barter agreements.

CAGR – Compound Annual Growth Rate: this is the constant percent growth rate during each period in a comparison, to calculate the growth result between the periods.

CTV (TSC) – Technical sales consultant: a field agronomist responsible for serving rural producers, including providing recommendations and prescriptions of agricultural inputs (fertilizers, pesticides, seeds, specialties, etc.), financial and agricultural services, crop planning, among others.

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 inputs 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 capitals market, usually through a financial institution. Finally, this securitization company will pay the company for the assigned receivables. In this way, the company will be able to obtain early payment of its receivables.

Crop – Crop and/or Summer Crop refers to the soybean crop.

Digital Enabled – transactions made possible through digital means, such WhatsApp-based bots, and also apps, and websites.

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization: net profits plus income tax and social contribution expenses, financial earnings and depreciation. EBITDA is considered the indicator that comes closest to representing the cash generation of Company operations, since it excludes the impact of the financial earnings and taxes. Furthermore, AgroGalaxy understands that adjusted EBITDA more closely represents the generation of operating cash, and therefore, allows us to more assertively measure and evaluate operating capacity. Adjustments to EBITDA do not include: (i) gains or losses with fluctuations in the fair value of commodities, since the marking of fair value at the end of each year does not affect cash and does not represent the result of purchases and sales; (ii) exchange rate fluctuations on hedging transactions carried out with the purpose of protecting the revenue or cost of products; (iii) considerations paid for property leases (CPC 06(R2)/IFRS16) and extraordinary income and/or expenses (such as extemporaneous credits, restructuring consultancy fees, shared expenses, consultancy fees and M&A expenses, public offering, subsidiary share-based payments); (iv) non-recurring items, and; (v) non-cash items, in which the adjusted EBITDA margin is calculated as the ratio between adjusted EBITDA to operating revenues.

ESG – Environmental, Social and Corporate Governance: refers to the three central factors in measuring the sustainability and social impact of an investment into a company or business.

Financial leverage (measured as Net Debt/EBITDA) – Leverage is a technique used to multiply profitability based on indebtedness. The level of leverage of the Company 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 in 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;
  • Sale;
  • 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, receipt of the crop and purchase of lots in the available market.

Gross profit and gross margin – the difference between a company’s revenue in relation to its variable costs, adjusted gross profit: it excludes gains or losses with fluctuations 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.

Interim Harvest (Safrinha) – Interim Harvest and/or Winter Harvest refers to the corn crop.

LTM – Last Twelve Months: values accumulated over the last twelve months. LTM is also known as previous 12 months.

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 mere 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 the production of soy seeds.

NDF – Non-Deliverable Forward: a currency forward contract, traded on the over-the-counter market; it is used to set in advance an exchange rate to be applied on a future date. On the maturity date, settlement is calculated from the difference between the contracted forward rate and the market rate defined as reference.

Net Debt – Adjusted net debt, considering 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 of vehicles and other items (machinery).

PDD – PDD and/or Allowance for Bad Debtors refers to a cash reserve made by the company to deal with cases of default. 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, thus, 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 to make contractual payments on debts overdue for more than 180 days.

Pesticides – Among pesticides, Agrogalaxy works with fungicides, herbicides, insecticides, both oils and spreaders.
Fungicides are one of the most used to control fungi in plantations, helping with the prevention, control of, and cure from fungi.
Herbicides are used in the desiccation of crops for harvesting or in the formation of straw and in the control of weeds.
Insecticides are used in the prevention and control of insect pests. They are very important 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.

ROIC – The return on invested capital, that is, Agrogalaxy states the profitability level the company is capable to 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, which are 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 are products that provide full 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 the natural organo-mineral fertilizers formulated from the fermentation of special yeasts.

SSS – Same-Store Sales: this metric serves to measure the percentage change of 2-year-old stores or more, i.e., it measures the performance of mature stores in the portfolio.